<PAGE>
As filed with the Securities and Exchange Commission on December 22, 1997
Registration No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
FAIRFIELD COMMUNITIES, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 71-0390438
(State of Incorporation) (IRS Employer
Identification Number)
11001 EXECUTIVE CENTER DRIVE
LITTLE ROCK, ARKANSAS 72211
(Address of Principal Executive Offices)
VACATION BREAK U.S.A., INC.
DIRECTORS' STOCK OPTION PLAN
VACATION BREAK U.S.A., INC.
1995 STOCK OPTION PLAN
(Full Title of the Plans)
MARCEL J. DUMENY, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
FAIRFIELD COMMUNITIES, INC.
11001 EXECUTIVE CENTER DRIVE
LITTLE ROCK, ARKANSAS 72211
(501) 228-2700
(Name, Address and Telephone Number of Agent for Service)
------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <S>
Proposed Proposed
Maximum Maximum
Title of Amount Offering Aggregate Amount of
Securities to to be Price per Offering Registration
be Registered Registered (1) Share Price Fee (3)
- -------------------------------------------------------------------------------------------------
Common Stock, par value $.01 per share (2). 425,174 $10.68 $4,538,595.60 $1,339
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents the aggregate number of shares of the common stock, par value
$.01 per share, of Fairfield Communities, Inc. (the "Company") issuable
upon the exercise of the outstanding stock options granted by Vacation
Break U.S.A., Inc. ("Vacation Break") under the Vacation Break U.S.A., Inc.
Directors' Stock Option Plan, as amended (the "Directors' Plan") and the
Vacation Break U.S.A., Inc. 1995 Stock Option Plan, as amended (the "1995
Plan"), which options are being assumed by the Company pursuant to the
Agreement and Plan of Merger, dated as of August 8, 1997, among the
Company, FCBV Corp., a wholly owned subsidiary of the Company, and Vacation
Break. Pursuant to Rule 416, there are also registered hereunder an
indeterminate number of additional shares as may become subject to awards
under the Directors' Plan or the 1995 Plan as a result of the antidilution
provisions contained therein, respectively.
(2) Includes associated share purchase rights pursuant to a Rights Agreement
adopted by the Registrant.
(3) The registration fee has been computed in accordance with paragraph (h) of
Rule 457, based upon the stated exercise price of previously granted
options.
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
The information called for by Part I of Form S-8 is included in the
description of the Vacation Break U.S.A., Inc. Directors' Stock Option Plan, as
amended (the "Directors' Plan") and the description of the Vacation Break
U.S.A., Inc. 1995 Stock Option Plan, as amended (the "1995 Plan") to be
delivered to persons purchasing shares pursuant to the Directors' Plan or the
1995 Plan, respectively. Pursuant to the Note to Part I of Form S-8, that
information is not being filed with or included in this Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange
Commission (the "Commission") by the Company are incorporated by reference, in
this Registration Statement:
(a) The Company's Annual Report on Form 10-K, as amended by Forms 10-
K/A, for the year ended December 31, 1996;
(b) The Company's Prospectus, dated November 10, 1997, filed pursuant
to Rule 424(b) under the Securities Act of 1933, as amended;
(c) The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1997, June 30, 1997 and September 30, 1997; and
(d) The description of the Company's common stock, par value $0.01 per
share (the "Common Stock"), contained in the Company's
Registration Statements on Form 8-A (Commission File No. 1-8096).
In addition, all documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof
from the date of filing of such documents. Any statement contained herein or in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for all purposes of this Registration
Statement to the extent that a statement contained herein or therein or in any
other subsequently filed document that also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation provides that the personal
liability of directors of the Company to the Company is eliminated to the
maximum extent permitted by Delaware law. The Company's Certificate of
Incorporation and Bylaws provide for the indemnification of the directors,
officers, employees and agents of the Company to the fullest extent that may be
permitted by Delaware law from time to time. Certain provisions of the
Company's Certificate of Incorporation
-2-
<PAGE>
protect the Company's directors against personal liability for monetary damages
resulting from breaches of their fiduciary duty of care, except as set forth
below. Under Delaware law, absent these provisions, directors could be held
liable for gross negligence in the performance of their duty of care, but not
for simple negligence. The Company's Certificate of Incorporation absolves
directors of liability for negligence in the performance of their duties,
including gross negligence. However, the Company's directors remain liable for
breaches of their duty of loyalty to the Company and its stockholders, as well
as for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law and transactions from which a director
derives improper personal benefit. The Company's Certificate of Incorporation
also does not absolve directors of liability under Section 174 of the Delaware
General Corporation Law, which makes directors personally liable for unlawful
dividends or unlawful stock repurchases or redemptions in certain circumstances
and expressly sets forth a negligence standard with respect to such liability.
Under Delaware law, directors, officers, employees, and other
individuals may be indemnified against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation -- a
"derivative action") if they acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the Company and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
their conduct was unlawful. A similar standard of care is applicable in the case
of a derivative action, except that indemnification only extends to expenses
(including attorneys' fees) incurred in connection with defense or settlement of
such an action and Delaware law requires court approval before there can be any
indemnification of expenses where the person seeking indemnification has been
found liable to the Company.
The Company has also entered into indemnification agreements with its
directors and officers pursuant to which the Company is generally obligated to
indemnify its directors and officers to the full extent permitted by Delaware
law.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
4.1 Second Amended and Restated Certificate of Incorporation of the
Company (previously filed as Exhibit 3.8 to the Form 8-K filed by
the Company on September 1, 1992, SEC File No. 92-22-6962).
4.2 Certificate of Amendment to Amended and Restated Certificate of
Incorporation of the Company (filed herewith).
4.3 Fifth Amended and Restated Bylaws of the Company (previously
filed as Exhibit 3.(ii) to the Form 8-K filed by the Company on
May 22, 1996, SEC File No. 001-08096).
4.4 Vacation Break U.S.A., Inc. Directors' Stock Option Plan, as
amended (filed herewith).
4.5 Vacation Break U.S.A., Inc. 1995 Stock Option Plan, as amended
(filed herewith).
5.1 Opinion of Jones, Day, Reavis & Pogue (filed herewith).
23.1 Consent of Ernst & Young LLP (filed herewith).
23.2 Consent of Coopers & Lybrand L.L.P. (filed herewith)
23.3 Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5.1).
24.1 Powers of Attorney (included on the signature page hereto).
-3-
<PAGE>
ITEM 9. UNDERTAKINGS
A. The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the Commission by the Company pursuant to Section 13 or Section 15(d) of
the Exchange Act that are incorporated by reference in this Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
-4-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Little Rock, State of Arkansas, on December 22,
1997.
FAIRFIELD COMMUNITIES, INC.
By: /s/ J.W. McConnell
---------------------------------
J. W. McConnell
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints John W.
McConnell, Robert W. Howeth and Marcel J. Dumeny, and each of them acting
individually, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them acting individually, full power and authority to do and
perform each and every act and thing necessary or advisable to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on December 22, 1997.
SIGNATURES TITLE
---------- -----
/s/ J.W. McConnell President and Chief Executive Officer; Director
- ----------------------------- (Principal Executive Officer)
J.W. McConnell
/s/ Robert W. Howeth Senior Vice President and Chief Financial Officer
- ----------------------------- (Principal Financial Officer)
Robert W. Howeth
/s/ William G. Sell Vice President/Controller
- ----------------------------- (Principal Accounting Officer)
William G. Sell
/s/ Les R. Baledge Director
- -----------------------------
Les R. Baledge
/s/ Ernest D. Bennett, III Director
- -----------------------------
Ernest D. Bennett, III
/s/ Philip L. Herrington Director
- -----------------------------
Philip L. Herrington
/s/ Gerald Johnston Director
- -----------------------------
Gerald Johnston
-5-
<PAGE>
Director
- -----------------------------
Bryan D. Langton
Director
- -----------------------------
Charles D. Morgan
Director
- -----------------------------
William C. Scott
Director
- -----------------------------
Ralph P. Muller
-6-
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
4.1 Second Amended and Restated Certificate of Incorporation of the
Company (previously filed as Exhibit 3.8 to the Form 8-K filed by
the Company on September 1, 1992, SEC File No. 92-22-6962).
4.2 Certificate of Amendment to Amended and Restated Certificate of
Incorporation of the Company (filed herewith).
4.3 Fifth Amended and Restated Bylaws of the Company (previously filed
as Exhibit 3.(ii) to the Form 8-K filed by the Company on May 22,
1996, SEC File No. 001-08096).
4.4 Vacation Break U.S.A., Inc. Directors' Stock Option Plan, as
amended (filed herewith).
4.5 Vacation Break U.S.A., Inc. 1995 Stock Option Plan, as amended
(filed herewith).
5.1 Opinion of Jones, Day, Reavis & Pogue (filed herewith).
23.1 Consent of Ernst & Young LLP (filed herewith).
23.2 Consent of Coopers & Lybrand L.L.P. (filed herewith).
23.3 Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5.1).
24.1 Powers of Attorney (included on the signature page hereto).
-7-
<PAGE>
Exhibit 4.2
-----------
CERTIFICATE OF AMENDMENT
TO THE AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
FAIRFIELD COMMUNITIES, INC.
Pursuant to Section 242 of the General Corporation Law of the State of
Delaware (the "DGCL"), Fairfield Communities, Inc., a Delaware corporation (the
"Company"), does hereby certify as follows:
1. That the text of Section 1 of Article Fourth of the Amended and
Restated Certificate of Incorporation of the Company (the "Certificate") is
hereby amended to read in its entirety as follows:
"Section 1. Authorized Capital Stock. The Company is authorized to issue
------------------------
two classes of capital stock, designated Common Stock and Preferred Stock.
The total number of shares of capital stock that the Company is authorized
to issue is 105,000,000 shares, consisting of 100,000,000 shares of Common
Stock, par value $0.01 per share, and 5,000,000 shares of Preferred Stock,
par value $0.01 per share."
2. That the foregoing amendments of the Certificate were duly adopted in
accordance with Section 242 of the DGCL.
This Certificate of Amendment shall be effective on the date of its filing
with the Secretary of State of the State of Delaware.
<PAGE>
EXECUTED effective as of December 19, 1997.
FAIRFIELD COMMUNITIES, INC.
By: /s/ J.W. McConnell
----------------------------------------
J. W. McConnell
President and Chief Executive Officer
ATTEST:
/s/ Marcel J. Dumeny
- -----------------------------------
Marcel J. Dumeny
Senior Vice President, General
Counsel and Secretary
<PAGE>
EXHIBIT 4.4
VACATION BREAK U.S.A., INC.
-----------------------------------
DIRECTORS' STOCK OPTION PLAN
-----------------------------------
1. Purpose. The purpose of this Plan is to advance the interests of
-------
VACATION BREAK U.S.A., INC., a Florida corporation, by providing an additional
incentive to attract and retain nonemployee directors through the encouragement
of stock ownership in the Company by such persons.
2. Definitions. As used herein, the following terms shall have the
-----------
meaning indicated:
(a) "Annual Meeting Date" shall mean the date of the annual meeting of
the Company's shareholders at which the Directors are elected.
(b) "Board" shall mean the Company's Board of Directors.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(d) "Common Stock" shall mean the Company's Common Stock, par value
$.01 per share.
(e) "Company" shall refer to VACATION BREAK U.S.A., INC., a Florida
corporation.
(f) "Director" shall mean a member of the Board.
(g) "Eligible Director" means any person who is a member of the Board
and who is not an employee, full time or part time, of the Company or its
subsidiaries. For purposes of this Plan, a director who does not receive regular
compensation from the Company or its subsidiaries, other than directors' fees
and reimbursement for expenses, shall not be considered to be an employee of the
Company, even if such director is an officer of a subsidiary of the Company.
(h) "Fair Market Value" of a Share on any date of reference shall mean
the "Closing Price" (as defined below) of the Common Stock on the business day
immediately preceding such date, unless the Board in its sole discretion shall
determine otherwise in a fair and uniform manner. For the purpose of determining
Fair Market Value, the "Closing Price" of the Common Stock on any business day
shall be (i) if the Common Stock is listed or admitted for trading on any United
States national securities exchange, or if actual transactions are otherwise
reported on a consolidated transaction reporting system, the last reported sale
price of Common Stock on such exchange or reporting system, as reported in any
newspaper of general circulation, (ii) if the Common Stock is quoted on the
National Association of Securities Dealers Automated Quotations System
("NASDAQ"), or any similar system of automated dissemination of quotations of
securities prices in common use, the last reported sale price of Common Stock on
such system or, if sales prices are not reported, the mean between the closing
high bid and low asked quotations for such day of Common Stock on such system,
as reported in any newspaper of general circulation or (iii) if neither clause
(i) or (ii) is applicable, the mean between the high bid and low asked
quotations for the Common Stock as reported by the National Quotation Bureau,
Incorporated if at least two securities dealers have inserted both bid and asked
quotations for Common Stock on at least five of the ten preceding days.
(i) "Initial Grant Date" means the later of (i) March 25, 1996, and (ii)
the date on which a person is elected as a member of the Board.
(j) "Option" (when capitalized) shall mean any option granted under
this Plan.
(k) "Option Agreement" shall mean the agreement between the Company
and the Optionee for the grant of an option.
<PAGE>
(l) "Optionee" shall mean a person to whom a stock option is granted
under this Plan or any person who succeeds to the rights of such person under
this Plan by reason of the death of such person.
(m) "Parent" shall mean a "parent corporation" as defined in Section
425(e) and (g) of the Code.
(n) "Plan" shall mean this Directors' Stock Option Plan for the
Company.
(o) "Share(s)" shall mean a share or shares of the Common Stock.
(p) "Subsidiary" shall mean any corporation (other than the Company) in
any unbroken chain of corporations beginning with the Company if, at the time of
the granting of the Option, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50 percent or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
3. Shares and Options. Subject to Section 9 of this Plan, the Company
------------------
may grant to Optionees from time to time Options to purchase an aggregate of up
to forty thousand (40,000) shares from authorized and unissued Shares. If any
Option granted under the Plan shall terminate, expire, or be canceled or
surrendered as to any Shares, new Options may thereafter be granted covering
such Shares.
4. Grants of Options.
-----------------
(a) On the Initial Grant Date, each Eligible Director shall receive
the grant of an Option to purchase 2,000 Shares.
(b) Each Eligible Director shall receive an annual grant of an Option to
purchase 2,000 Shares on each Annual Meeting Date, beginning with the first
Annual Meeting Date that occurs after December 31, 1996 and that is after the
Initial Grant Date for each such Eligible Director.
(c) Upon the grant of each Option, the Company and the Eligible Director
shall enter into an Option Agreement, which shall specify the grant date and the
exercise price and shall include or incorporate by reference the substance of
this Plan and such other provisions consistent with this Plan as the Board may
determine.
5. Exercise Price. The exercise price per Share of any Option shall be
--------------
the Fair Market Value of the Shares underlying such Option on the date such
Option is granted.
6. Exercise of Options. An Option shall be deemed exercised when (i) the
-------------------
Company has received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment of the aggregate exercise price of the
Shares as to which the Option is exercised has been made, and (iii) arrangements
that are satisfactory to the Board in its sole discretion have been made for the
Optionee's payment to the Company of the amount that is necessary for the
Company or Subsidiary employing the Optionee to withhold in accordance with
applicable Federal or state tax withholding requirements. The exercise price of
any Shares purchased shall be paid in cash, by certified or official bank check
or personal check, by money order, with Shares or by a combination of the above.
If the exercise price is paid in whole or in part with Shares, the value of the
Shares surrendered shall be their Fair Market Value on the date the Option is
exercised. No Optionee shall be deemed to be a holder of any Shares subject to
an Option unless and until a stock certificate or certificates for such Shares
are issued to such person(s) under the terms of the Plan. No adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which the record date is
prior to the date such stock certificate is issued, except as expressly provided
in Section 9 hereof.
7. Exercise Schedule for Options. Each Option granted hereunder shall
-----------------------------
not be exercisable until after six months following the date of grant of the
Option to the Eligible Director. Thereafter, such Option shall be exercisable
in full. The expiration date of an Option shall be 10 years from the date of
grant of the Option.
<PAGE>
8. Termination of Option Period.
----------------------------
(a) The unexercised portion of any Option shall automatically and
without notice terminate and become null and void at the time of the earliest to
occur of the following:
(i) three months after the date on which the Optionee ceases to
be a Director for any reason other than by reason of (A) "Cause" (which, for
purposes of this Plan, shall mean the removal of the Optionee as a Director by
reason of any act of (1) fraud or intentional misrepresentation, or (2)
embezzlement, misappropriation, or conversion of assets or opportunities of the
Company or any Subsidiary), or (B) death;
(ii) immediately upon the removal of the Optionee as a Director
for Cause;
(iii) one year after the date the Optionee ceases to be a Director
by reason of death of the Optionee;
(b) The Board in its sole discretion may, by giving written notice
("Cancellation Notice"), cancel any Option that remains unexercised on the date
of the consummation of any corporate transaction:
(i) if the shareholders of the Company shall approve a plan of
merger, consolidation, reorganization, liquidation or dissolution in which the
Company does not survive (unless the approved merger, consolidation,
reorganization, liquidation or dissolution is subsequently abandoned); or
(ii) if the shareholders of the Company shall approve a plan for
the sale, lease, exchange or other disposition of all or substantially all the
property and assets of the Company (unless such plan is subsequently abandoned).
Any Cancellation Notice shall be given a reasonable period of time prior to the
proposed date of such cancellation and may be given either before or after
shareholder approval of such corporate transaction.
9. Adjustment of Shares.
--------------------
(a) If at any time while the Plan is in effect or unexercised Options
are outstanding, there shall be any increase or decrease in the number of issued
and outstanding Shares through the declaration of a stock dividend or through
any recapitalization resulting in a stock split-up, combination or exchange of
Shares, then and in such event:
(i) appropriate adjustment shall be made in the maximum number of
Shares available for grant under the Plan, so that the same percentage of the
Company's issued and outstanding Shares shall continue to be subject to being so
optioned; and
(ii) appropriate adjustment shall be made in the number of Shares
and the exercise price per Share thereof then subject to any outstanding Option,
so that the same percentage of the Company's issued and outstanding Shares shall
remain subject to purchase at the same aggregate exercise price.
(b) Subject to the specific terms of any Option, the Board may change
the terms of Options outstanding under this Plan, with respect to the exercise
price or the number of Shares subject to the Options, or both, when, in the
Board's sole discretion, such adjustments become appropriate by reason of a
corporate transaction described in Subsections 8(b)(i) or (ii) hereof.
(c) Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities convertible
into shares of capital stock of any class, either in connection with a direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number or exercise price of the Shares then subject
to outstanding Options granted under the Plan.
(d) Without limiting the generality of the foregoing, the existence of
outstanding Options
<PAGE>
granted under the Plan shall not affect in any manner the right or power of the
Company to make, authorize or consummate (i) any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business; (ii) any merger or consolidation of the Company;
(iii) any issue by the Company of debt securities, or preferred or preference
stock that would rank above the Shares subject to outstanding Options; (iv) the
dissolution or liquidation of the Company; (v) any sale, transfer or assignment
of all or any part of the assets or business of the Company; or (vi) any other
corporate act or proceeding, whether of a similar character or otherwise.
10. Transferability of Options. Each Option shall provide that such
--------------------------
Option shall not be transferable by the Optionee otherwise than by will or the
laws of descent and distribution, and each Option shall be exercisable during
the Optionee's lifetime only by the Optionee.
11. Issuance of Shares. As a condition of any sale or issuance of Shares
------------------
upon exercise of any Option, the Board may require such agreements or
undertakings, if any, as the Board may deem necessary or advisable to assure
compliance with any such law or regulation including, but not limited to, the
following:
(a) a representation and warranty by the Optionee to the Company, at the
time any Option is exercised, that he is acquiring the Shares to be issued to
him for investment and not with a view to, or for sale in connection with, the
distribution of any such Shares; and
(b) a representation, warranty and/or agreement to be bound by any
legends that are, in the opinion of the Board, necessary or appropriate to
comply with the provisions of any securities law deemed by the Board to be
applicable to the issuance of the Shares and are endorsed upon the Share
certificates.
12. Administration of the Plan. The Plan shall be administered by the
--------------------------
Board, which shall have the authority to adopt such rules and regulations and to
make such determinations as are not inconsistent with the Plan and as are
necessary or desirable for the implementation and administration of the Plan.
13. Interpretation. If any provision of the Plan should be held invalid
--------------
or illegal for any reason, such determination shall not affect the remaining
provisions hereof, but instead the Plan shall be construed and enforced as if
such provision had never been included in the Plan. The determinations and the
interpretation and construction of any provision of the Plan by the Board shall
be final and conclusive. This Plan shall be governed by the laws of the State
of Florida. Headings contained in this Plan are for convenience only and shall
in no manner be construed as part of this Plan. Any reference to the masculine,
feminine, or neuter gender shall be a reference to such other gender as is
appropriate.
14. Term of Plan; Amendment and Termination of the Plan.
---------------------------------------------------
(a) This Plan shall become effective upon its adoption by the Board, and
shall continue in effect until all Options granted hereunder have expired or
been exercised, unless sooner terminated under the provisions relating thereto.
No Option shall be granted after 10 years from the date of the Board's adoption
of this Plan.
(b) The Board may from time to time amend the Plan or any Option;
provided, however, that, without approval by the Company's shareholders, no such
- -------- -------
amendment shall (i) materially increase the benefits accruing to participants
under the Plan, (ii) materially increase the number of Shares or other
securities reserved for issuance upon the exercise of Options, (iii) materially
modify the requirements as to eligibility for participation under the Plan or
(iv) otherwise involve any other change or modification requiring shareholder
approval under Rule 16b-3 of the Securities Act of 1933, as amended; and,
provided, further, that, except to the extent otherwise specifically provided in
- -------- -------
Section 8, no amendment or suspension of the Plan or any Option issued hereunder
shall substantially impair any Option previously granted to any Optionee without
the consent of such Optionee.
(c) Notwithstanding anything else contained herein, the provisions of
this Plan which govern the number of Options to be awarded to nonemployee
directors, the exercise price per share under each such Option, when and under
what circumstances an Option will be granted and the period within which each
Option may be exercised, shall not be amended more than once every six months
(even with shareholder approval), other than to conform to changes to the Code,
or the rules promulgated thereunder, and under the Employee Retirement Income
Security Act of
<PAGE>
1974, as amended, or the rules promulgated thereunder, or with rules promulgated
by the Securities and Exchange Commission.
(d) The Board, without further approval of the Company's shareholders,
may at any time terminate or suspend this Plan. Any such termination or
suspension of the Plan shall not affect Options already granted and such Options
shall remain in full force and effect as if this Plan had not been terminated or
suspended. No Option may be granted while the Plan is suspended or after it is
terminated. The rights and obligations under any Option granted to any Optionee
while this Plan is in effect shall not be altered or impaired by the suspension
or termination of this Plan without the consent of such Optionee.
15. Reservation of Shares. The Company, during the term of the Plan, will
---------------------
at all times reserve and keep available a number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
<PAGE>
AMENDMENT NO. 1 TO
VACATION BREAK U.S.A., INC.
DIRECTORS' STOCK OPTION PLAN
--------------------------------------------
THIS AMENDMENT NO. 1 to the Vacation Break U.S.A., Inc. Directors' Stock
Option Plan (this "Amendment") is made as of the 19th day of December, 1997, by
Vacation Break U.S.A., Inc., a Florida corporation ("Vacation Break").
W I T N E S S E T H :
WHEREAS, effective as of May 15, 1996, the Board of Directors of Vacation
Break (the "Vacation Break Board") adopted the Vacation Break U.S.A., Inc.
Directors' Stock Option Plan (the "Plan");
WHEREAS, Vacation Break has entered into an Agreement and Plan of Merger,
dated as of August 8, 1997 (the "Merger Agreement"), among Fairfield
Communities, Inc., a Delaware corporation ("Fairfield"), FCVB Corp., a Florida
corporation and wholly owned subsidiary of Fairfield ("Merger Sub"), and
Vacation Break;
WHEREAS, pursuant to the Merger Agreement, among other things, (i) Merger
Sub will be merged with and into Vacation Break, with Vacation Break as the
surviving corporation (the "Merger"), (ii) each issued and outstanding share of
common stock, $.01 par value per share ("Vacation Break Common Stock"), of
Vacation Break will be converted into the right to receive .6075 (the "Exchange
Ratio") of a share of common stock, par value $.01 per share ("Fairfield Common
Stock"), of Fairfield, and (iii) Fairfield will assume each outstanding option
to purchase shares of Vacation Break Common Stock previously granted under the
Plan (each an "Option");
WHEREAS, each Option assumed by Fairfield will be deemed to constitute an
option to acquire Fairfield Common Stock on the terms and conditions described
in the Merger Agreement;
WHEREAS, the Vacation Break Board desires to amend the Plan in order to
adjust the terms of all outstanding Options granted under the Plan to provide
that, at the effective time of the Merger (the "Effective time"), each Option
outstanding immediately prior to the Effective Time will be deemed to constitute
an option to acquire Fairfield Common Stock on the terms and conditions
described in the Merger Agreement, and to provide for the other matters set
forth herein in order to give effect to the Merger;
NOW, THEREFORE, effective as of the Effective Time, the Plan is hereby
amended as follows, subject only to the condition that the Effective Time
occurs:
1. ASSUMED OPTIONS AND SHARES. Each Option assumed by Fairfield shall
--------------------------
constitute an option to acquire, on the same terms and conditions as were
applicable under such Option, the number of shares of Fairfield Common Stock
rounded up or down to the nearest whole share equal to the product of the
Exchange Ratio multiplied by the number of shares of Vacation Break Common Stock
subject to such Option immediately prior to the Effective Time, at a price per
share equal to the aggregate exercise price for the shares of Vacation Break
Common Stock subject to such Option divided by the number of shares of Fairfield
Common Stock deemed to be purchasable pursuant to
<PAGE>
such Option ("Assumed Options"); provided that the conversion of any Option into
an Assumed Option with an exercise price less than $.01 per share of Fairfield
Common Stock will be subject to the Optionee's agreement that upon exercise, (x)
to the extent Fairfield is holding Fairfield Common Stock as treasury shares
that are not reserved for any other purpose, Fairfield shall issue the
appropriate number of such treasury shares to the Optionee and (x) to the extent
that no such treasury shares are available, such Optionee shall pay an exercise
price of $.01 per share of Fairfield Common Stock. Subject to the proviso
contained in the preceding sentence, shares of Fairfield Common will be made
available for issuance upon exercise of Assumed Options from authorized but
unissued shares of Fairfield Common Stock.
2. EXERCISE OF ASSUMED OPTIONS. From and after the Effective Time the
---------------------------
Assumed Options shall be vested and fully exercisable in accordance with their
terms. A holder of an Assumed Option may exercise such Assumed Option in whole
or in part in accordance with its terms by delivering a properly executed notice
of exercise to Fairfield, together with the consideration therefor and the
federal withholding tax information required in accordance with the Plan.
3. TRANSFERABILITY OF ASSUMED OPTIONS. All restrictions or limitations
----------------------------------
on transfer and vesting with respect to Options awarded under the Plan, to the
extent that such restrictions or limitations shall not have already lapsed,
shall remain in full force and effect with respect to the Assumed Options.
4. ADMINISTRATION OF THE PLAN. The Plan as amended hereby (the "Amended
--------------------------
Plan") shall be administered by the Compensation Committee of the Board of
Directors of Fairfield (the "Compensation Committee") and the Board of Directors
of Fairfield (the "Fairfield Board"). The Compensation Committee and the
Fairfield Board shall have the full authority and discretion to administer the
Amended Plan and to take any action that is necessary or advisable in connection
with the administration of the Amended Plan, including without limitation the
authority and discretion to interpret and construe any provision of the Amended
Plan or of any agreement, notification or document evidencing the grant of an
Option or an Assumed Option. The interpretation and construction by the
Compensation Committee or the Fairfield Board, as applicable, of any such
provision or of any agreement, notification or document and any determination by
the Compensation Committee or the Fairfield Board pursuant to any provision of
the Amended Plan or of any such agreement, notification or document will be
final and conclusive; provided that if the Compensation Committee disagrees with
the Fairfield Board with respect to any such interpretation, instruction or
determination, the Fairfield Board's determination will be final and conclusive
except with respect to Assumed Options intended to comply with Section 162(m) of
the Code. In furtherance and without limiting the generality of the foregoing,
all power, authority and discretion to adjust, modify, amend, terminate or
otherwise change the terms of Options or the Plan formerly vested in the
Vacation Break Board or the stock option committee thereof appointed by the
Vacation Break Board pursuant to the Plan shall be vested in the Fairfield Board
and the Compensation Committee with respect to Assumed Options and the Amended
Plan.
2
<PAGE>
5. CERTAIN DEFINITIONS AND INTERPRETIVE MATTERS.
--------------------------------------------
(a) In order to give effect to the Merger, the terms of the Merger
Agreement regarding Assumed Options, and this Amendment, for purposes of the
Amended Plan the following terms, when used in the sections of the Plan
indicated below, shall have the following meanings:
(i) "Company" shall mean Fairfield or Vacation Break when used in
Section 8(a)(i) and shall mean Fairfield when used in Sections 6, 8(b), 9,
11 and 14(b) of the Plan;
(ii) "Board" shall mean the Compensation Committee or the Fairfield
Board, as applicable, when used in Sections 6, 8(b), 9(b), and 14(b) of the
Plan;
(iii) "Option" shall mean "Assumed Option" when used in Sections 6,
8, 9, 10, 11 and 14(b) of the Plan.
(b) The terms and provisions of the Plan shall be liberally construed to
give effect to the Merger, the terms of the Merger Agreement regarding Assumed
Options and this Amendment.
(c) Except as amended or modified hereby or inconsistent with Section 5(b)
of this Amendment, the terms and conditions of the Plan shall remain in full
force and effect.
EXECUTED as of December 18, 1997
VACATION BREAK USA, INC.
By: /s/ Ralph P. Muller
-------------------------
Ralph P. Muller
Charman of the Board and
Chief Executive Officer
3
<PAGE>
EXHIBIT 4.5
VACATION BREAK U.S.A., INC.
-----------------------------------
1995 STOCK OPTION PLAN
------------------------------------
1. Purpose. The purpose of this Plan is to advance the interests of
-------
VACATION BREAK U.S.A., INC., a Florida corporation (the "Company"), by providing
an additional incentive to attract and retain qualified and competent persons
who are key employees and directors of the Company, and upon whose efforts and
judgment the success of the Company is largely dependent, through the
encouragement of stock ownership in the Company by such persons.
2. Definitions. As used herein, the following terms shall have the
-----------
meaning indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Committee" shall mean the stock option committee appointed by the
Board pursuant to Section 13 hereof or, if not appointed, the Board.
(c) "Common Stock" shall mean the Company's Common Stock, par value
$0.01 per share.
(d) "Director" shall mean a member of the Board.
(e) "Disinterested Person" shall mean a Director who is not, during the
one year prior to his or her service as an administrator of this Plan, or during
such service, granted or awarded equity securities pursuant to this Plan or any
other plan of the Company or any of its affiliates, except that:
(i) participation in a formula plan meeting the conditions in
paragraph (c)(2)(ii) of Rule 16b-3 promulgated under the Securities Exchange Act
shall not disqualify a Director from being a Disinterested Person;
(ii) participation in an ongoing securities acquisition plan
meeting the conditions in paragraph (d)(2)(i) of Rule 16b-3 promulgated under
the Securities Exchange Act shall not disqualify a Director from being a
Disinterested Person; and
(iii) an election to receive an annual retainer fee in either cash
or an equivalent amount of securities, or partly in cash and partly in
securities, shall not disqualify a Director from being a Disinterested Person.
(f) "Fair Market Value" of a Share on any date of reference shall be the
"Closing Price" (as defined below) of the Common Stock on the business day
immediately preceding such date, unless the Committee in its sole discretion
shall determine otherwise in a fair and uniform manner. For the purpose of
determining Fair Market Value, the "Closing Price" of the Common Stock on any
business day shall be (i) if the Common Stock is listed or admitted for
<PAGE>
trading on any United States national securities exchange, or if actual
transactions are otherwise reported on a consolidated transaction reporting
system, the last reported sale price of Common Stock on such exchange or
reporting system, as reported in any newspaper of general circulation, (ii) if
the Common Stock is quoted on the National Association of Securities Dealers
Automated Quotations System ("NASDAQ"), or any similar system of automated
dissemination of quotations of securities prices in common use, the mean between
the closing high bid and low asked quotations for such day of Common Stock on
such system, or (iii) if neither clause (i) or (ii) is applicable, the mean
between the high bid and low asked quotations for the Common Stock as reported
by the National Quotation Bureau, Incorporated if at least two securities
dealers have inserted both bid and asked quotations for Common Stock on at least
five of the ten preceding days.
(g) "Incentive Stock Option" shall mean an incentive stock option as
defined in Section 422 of the Internal Revenue Code.
(h) "Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
(i) "Non-Statutory Stock Option" shall mean an Option which is not an
Incentive Stock Option.
(j) "Officer" shall mean the Company's president, principal financial
officer, principal accounting officer and any other person who the Company
identifies as an "executive officer" for purposes of reports or proxy materials
filed by the Company pursuant to the Securities Exchange Act.
(k) "Option" (when capitalized) shall mean any option granted under
this Plan.
(l) "Optionee" shall mean a person to whom a stock option is granted
under this Plan or any person who succeeds to the rights of such person under
this Plan by reason of the death of such person.
(m) "Plan" shall mean this Stock Option Plan for the Company.
(n) "Securities Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
(o) "Share(s)" shall mean a share or shares of the Common Stock.
3. Shares and Options. The Company may grant to Optionees from time to
------------------
time Options to purchase an aggregate of up to Six Hundred Thousand (600,000)
Shares from Shares held in the Company's treasury or from authorized and
unissued Shares. If any Option granted under the Plan shall terminate, expire,
or be canceled or surrendered as to any Shares, new Options may thereafter be
granted covering such Shares. An Option granted hereunder shall be either an
Incentive Stock Option or a Non-Statutory Stock Option as determined by the
Committee at the time of grant of such Option and shall clearly state whether it
is an Incentive Stock Option or Non-
- 2 -
<PAGE>
Statutory Stock Option. All Incentive Stock Options shall be granted within ten
years from the effective date of this Plan.
4. Dollar Limitation. Options otherwise qualifying as Incentive Stock
-----------------
Options hereunder will not be treated as Incentive Stock Options only to the
extent that the aggregate fair market value (determined at the time the Option
is granted) of the Shares, with respect to which Options meeting the
requirements of Internal Revenue Code Section 422(b) are exercisable for the
first time by any individual during any calendar year (under all plans of the
Company), exceeds $100,000.
5. Conditions for Grant of Options.
-------------------------------
(a) Each Option shall be evidenced by an option agreement that may
contain any term deemed necessary or desirable by the Committee, provided such
terms are not inconsistent with this Plan or any applicable law. Optionees shall
be those persons selected by the Committee from the class of all regular
employees of the Company (including Officers) and Directors of the Company, as
well as consultants and independent contractors. Any person who files with the
Committee, in a form satisfactory to the Committee, a written waiver of
eligibility to receive any Option under this Plan shall not be eligible to
receive any Option under this Plan for the duration of such waiver.
(b) In granting Options, the Committee may take into consideration the
contribution the person has made to the success of the Company and such other
factors as the Committee shall determine. The Committee shall also have the
authority to consult with and receive recommendations from officers and other
personnel of the Company with regard to these matters. The Committee may from
time to time in granting Options under the Plan prescribe such other terms and
conditions concerning such Options as it deems appropriate, including, without
limitation, (i) prescribing the date or dates on which the Option becomes
exercisable, (ii) providing that the Option rights accrue or become exercisable
in installments over a period of years, or upon the attainment of stated goals
or both, or (iii) relating an Option to the continued employment of the Optionee
for a specified period of time, provided that such terms and conditions are not
more favorable to an Optionee than those expressly permitted herein.
(c) The Options granted to employees under this Plan shall be in
addition to regular salaries, pension, life insurance or other benefits related
to their employment with the Company. Neither the Plan nor any Option granted
under the Plan shall confer upon any person any right to employment or
continuance of employment by the Company.
(d) Notwithstanding any other provision of this Plan, and in addition to
any other requirements of this Plan, Options may not be granted to a Director or
Officer unless the grant of such Options is authorized by, and all of the terms
of such Options are determined by, a Committee that is appointed in accordance
with Section 13 of this Plan and all of whose members are Disinterested Persons.
(e) Notwithstanding any other provision of this Plan, no Options may be
granted
- 3 -
<PAGE>
to Ralph P. Muller, the Company's Chairman of the Board and Chief Executive
Officer, under this Plan.
6. Option Price. The option price per Share of any Option shall be any
------------
price determined by the Committee but shall not be less than the par value per
Share; provided, however, that in no event shall the option price per Share of
any Incentive Stock Option be less than the Fair Market Value of the Shares
underlying such Option on the date such Option is granted.
7. Exercise of Options. An Option shall be deemed exercised when (i) the
-------------------
Company has received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment of the aggregate option price of the
Shares as to which the Option is exercised has been made, and (iii) arrangements
that are satisfactory to the Committee in its sole discretion have been made for
the Optionee's payment to the Company of the amount that is necessary for the
Company employing the Optionee to withhold in accordance with applicable Federal
or state tax withholding requirements. Unless further limited by the Committee
in any Option, the option price of any Shares purchased shall be paid in cash,
by certified or official bank check, by money order, with Shares or by a
combination of the above; provided further, however, that the Committee in its
sole discretion may accept a personal check in full or partial payment of any
Shares. If the exercise price is paid in whole or in part with Shares, the
value of the Shares surrendered shall be their Fair Market Value on the date the
Option is exercised. The Company in its sole discretion may, on an individual
basis or pursuant to a general program established by the Committee in
connection with this Plan, lend money to an Optionee to exercise all or a
portion of an Option granted hereunder. If the exercise price is paid in whole
or part with an Optionee's promissory note, such note shall (i) provide for full
recourse to the maker, (ii) be collateralized by the pledge of the Shares that
the Optionee purchases upon exercise of such Option, (iii) bear interest at a
rate no less than the rate of interest payable by the Company to its principal
lender, and (iv) contain such other terms as the Committee in its sole
discretion shall require. No Optionee shall be deemed to be a holder of any
Shares subject to an Option unless and until a stock certificate or certificates
for such Shares are issued to such person(s) under the terms of this Plan. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued, except as
expressly provided in Section 10 hereof.
8. Exercisability of Options. Any Option shall become exercisable in such
-------------------------
amounts, at such intervals and upon such terms as the Committee shall provide in
such Option, except as otherwise provided in this Section 8.
(a) The expiration date of an Option shall be determined by the
Committee at the time of grant, but in no event shall an Option be exercisable
after the expiration of ten years from the date of grant of the Option.
(b) Unless otherwise provided in any Option, each outstanding Option
shall become immediately fully exercisable:
(i) if there occurs any transaction (which shall include a series of
- 4 -
<PAGE>
transactions occurring within 60 days or occurring pursuant to a plan), that has
the result that shareholders of the Company immediately before such transaction
cease to own at least 51 percent of the voting stock of the Company or of any
entity that results from the participation of the Company in a reorganization,
consolidation, merger, liquidation or any other form of corporate transaction;
(ii) if the shareholders of the Company shall approve a plan of
merger, consolidation, reorganization, liquidation or dissolution in which the
Company does not survive (unless the approved merger, consolidation,
reorganization, liquidation or dissolution is subsequently abandoned); or
(iii) if the shareholders of the Company shall approve a plan for
the sale, lease, exchange or other disposition of all or substantially all the
property and assets of the Company (unless such plan is subsequently abandoned).
(c) The Committee may in its sole discretion accelerate the date on
which any Option may be exercised and may accelerate the vesting of any Shares
subject to any Option or previously acquired by the exercise of any Option.
(d) Options granted to Officers and Directors shall not be exercisable
until the expiration of a period of at least six months following the date of
grant.
9. Termination of Option Period.
----------------------------
(a) Unless otherwise determined by the Committee in its sole discretion
upon the grant of any Non-Statutory Stock Option, the unexercised portion of any
Option shall automatically and without notice terminate and become null and void
at the time of the earliest to occur of the following:
(i) three months after the date on which the Optionee's
employment is terminated or, in the case of a Non-Statutory Stock Option, and
unless the Committee shall otherwise determine in writing in its sole
discretion, the date on which the Optionee's employment is terminated, in either
case for any reason other than by reason of (A) Cause, which, solely for
purposes of this Plan, shall mean the termination of the Optionee's employment
by reason of the Optionee's wilful misconduct or gross negligence, (B) a mental
or physical disability as determined by a medical doctor satisfactory to the
Committee, or (C) death;
(ii) immediately upon the termination of the Optionee's
employment for Cause;
(iii) one year after the date on which the Optionee's employment is
terminated by reason of a mental or physical disability (within the meaning of
Internal Revenue Code Section 22(e)) as determined by a medical doctor
satisfactory to the Committee; or
(iv) (A) twelve months after the date of termination of the
Optionee's employment by reason of death of the employee, or (B) three months
after the date on which the
- 5 -
<PAGE>
Optionee shall die if such death shall occur during the one year period
specified in Subsection 9(a)(iii) hereof.
(b) The Committee in its sole discretion may by giving written notice
("cancellation notice") cancel, effective upon the date of the consummation of
any corporate transaction described in Subsections 8(b)(ii) or (iii) hereof, any
Option that remains unexercised on such date. Such cancellation notice shall be
given a reasonable period of time prior to the proposed date of such
cancellation and may be given either before or after approval of such corporate
transaction.
10. Adjustment of Shares.
--------------------
(a) If at any time while the Plan is in effect or unexercised Options
are outstanding, there shall be any increase or decrease in the number of issued
and outstanding Shares through the declaration of a stock dividend or through
any recapitalization resulting in a stock split-up, combination or exchange of
Shares, then and in such event:
(i) appropriate adjustment shall be made in the maximum number of
Shares available for grant under the Plan, so that the same percentage of the
Company's issued and outstanding Shares shall continue to be subject to being so
optioned; and
(ii) appropriate adjustment shall be made in the number of Shares
and the exercise price per Share thereof then subject to any outstanding Option,
so that the same percentage of the Company's issued and outstanding Shares shall
remain subject to purchase at the same aggregate exercise price.
(b) Subject to the specific terms of any Option, the Committee may
change the terms of Options outstanding under this Plan, with respect to the
option price or the number of Shares subject to the Options, or both, when, in
the Committee's sole discretion, such adjustments become appropriate by reason
of a corporate transaction described in Subsections 8(b)(ii) or (iii) hereof.
(c) Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities convertible
into shares of capital stock of any class, either in connection with direct sale
or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to the number of or exercise price of Shares then subject
to outstanding Options granted under the Plan.
(d) Without limiting the generality of the foregoing, the existence of
outstanding Options granted under the Plan shall not affect in any manner the
right or power of the Company to make, authorize or consummate (i) any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger or consolidation of
the Company; (iii) any issue by the Company of debt securities, or preferred or
preference stock that
- 6 -
<PAGE>
would rank above the Shares subject to outstanding Options; (iv) the dissolution
or liquidation of the Company; (v) any sale, transfer or assignment of all or
any part of the assets or business of the Company; or (vi) any other corporate
act or proceeding, whether of a similar character or otherwise.
11. Transferability of Options. Each Option shall provide that such
--------------------------
Option shall not be transferable by the Optionee otherwise than by will or the
laws of descent and distribution, and each Option shall be exercisable during
the Optionee's lifetime only by the Optionee.
12. Issuance of Shares. As a condition of any sale or issuance of Shares
------------------
upon exercise of any Option, the Committee may require such agreements or
undertakings, if any, as the Committee may deem necessary or advisable to assure
compliance with any such law or regulation including, but not limited to, the
following:
(i) a representation and warranty by the Optionee to the Company,
at the time any Option is exercised, that he is acquiring the Shares to be
issued to him for investment and not with a view to, or for sale in connection
with, the distribution of any such Shares; and
(ii) a representation, warranty and/or agreement to be bound by any
legends that are, in the opinion of the Committee, necessary or appropriate to
comply with the provisions of any securities law deemed by the Committee to be
applicable to the issuance of the Shares and are endorsed upon the Share
certificates.
13. Administration of the Plan.
--------------------------
(a) The Plan shall be administered by the Committee, which shall consist
of not less than two Directors, each of whom shall be Disinterested Persons to
the extent required by Section 5(d) hereof. The Committee shall have all of the
powers of the Board with respect to the Plan. Any member of the Committee may
be removed at any time, with or without cause, by resolution of the Board and
any vacancy occurring in the membership of the Committee may be filled by
appointment by the Board.
(b) The Committee, from time to time, may adopt rules and regulations
for carrying out the purposes of the Plan. The Committee's determinations and
its interpretation and construction of any provision of the Plan shall be final
and conclusive.
(c) Any and all decisions or determinations of the Committee shall be
made either (i) by a majority vote of the members of the Committee at a meeting
or (ii) without a meeting by the unanimous written approval of the members of
the Committee.
14. Incentive Options for 10% Shareholders. Notwithstanding any other
--------------------------------------
provisions of the Plan to the contrary, an Incentive Stock Option shall not be
granted to any person owning directly or indirectly (through attribution under
Section 424(d) of the Internal Revenue Code) at the date of grant, stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company (or of its subsidiary (as defined in Section 424 of the
Internal Revenue Code) at the date of grant) unless the option price of such
Option is at least 110% of the Fair Market Value
- 7 -
<PAGE>
of the Shares subject to such Option on the date the Option is granted, and such
Option by its terms is not exercisable after the expiration of five years from
the date such Option is granted.
15. Interpretation.
--------------
(a) The Plan shall be administered and interpreted so that all Incentive
Stock Options granted under the Plan will qualify as Incentive Stock Options
under section 422 of the Internal Revenue Code. If any provision of the Plan
should be held invalid for the granting of Incentive Stock Options or illegal
for any reason, such determination shall not affect the remaining provisions
hereof, but instead the Plan shall be construed and enforced as if such
provision had never been included in the Plan.
(b) This Plan shall be governed by the laws of the State of Florida.
(c) Headings contained in this Plan are for convenience only and
shall in no manner be construed as part of this Plan.
(d) Any reference to the masculine, feminine, or neuter gender shall
be a reference to such other gender as is appropriate.
16. Amendment and Discontinuation of the Plan. Either the Board or the
-----------------------------------------
Committee may from time to time amend the Plan or any Option; provided, however,
that, except to the extent provided in Section 10, no such amendment may,
without approval by the shareholders of the Company, (a) materially increase the
benefits accruing to participants under the Plan, (b) materially increase the
number of securities which may be issued under the Plan, or (c) materially
modify the requirements as to eligibility for participation in the Plan; and
provided further, that, except to the extent provided in Section 9, no amendment
or suspension of the Plan or any Option issued hereunder shall substantially
impair any Option previously granted to any Optionee without the consent of such
Optionee.
17. Effective Date and Termination Date. The effective date of the Plan
-----------------------------------
is the date on which the Board adopts this Plan, and the Plan shall terminate on
the 10th anniversary of the effective date.
- 8 -
<PAGE>
AMENDMENT NO. 1 TO
VACATION BREAK U.S.A., INC.'S
1995 STOCK OPTION PLAN
This AMENDMENT is made as of the 8th day of May, 1997 with respect to the
1995 Stock Option Plan (the "Option Plan") of Vacation Break U.S.A., Inc. (the
"Company").
TERMS
WHEREAS, the Board of Directors of the Company believes it to be in the
best interests of the Company and its shareholders to increase the number of
shares of Company common stock available for issuance under the Option Plan from
600,000 to 830,000 in order to provide additional incentives to designated
employees of the Company;
NOW, THEREFORE, effective as of the date first set forth above, the Option
Plan is hereby amended as follows:
ARTICLE I
1.1 AMENDMENT TO SECTION 3. Section 3 of the Option Plan is hereby
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amended in its entirety and replaced with the following:
Shares and Options. The Company may grant to Optionees from time to
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time Options to purchase an aggregate of up to Eight Hundred and Thirty Thousand
(830,000) Shares from Shares held in the Company's treasury or from authorized
and unissued Shares. If any Option granted under the Plan shall terminate,
expire, or be canceled or surrendered as to any Shares, new Options may
thereafter be granted covering such Shares. An Option granted hereunder shall
be either an Incentive Stock Option or a Non-Statutory Stock Option as
determined by the Committee at the time of grant of such Option and shall
clearly state whether it is an Incentive Stock Option or Non-Statutory Stock
Option. All Incentive Stock Options shall be granted within ten years from the
effective date of this Plan.
ARTICLE II
2.1 EFFECT OF AMENDMENT. Except as expressly provided in Article I of
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this Amendment, nothing shall affect or be deemed to affect any provisions of
the Option Plan.
2.2 GOVERNING LAW. This Amendment shall be governed by and construed in
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accordance with the internal laws of the State of Florida without giving effect
to principles of conflicts of laws.
BY ORDER OF THE BOARD OF DIRECTORS
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AMENDMENT NO. 2 TO
VACATION BREAK U.S.A., INC.
1995 STOCK OPTION PLAN
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THIS AMENDMENT NO. 2 to the Vacation Break U.S.A., Inc. 1995 Stock Option
Plan (this "Amendment") is made as of the 19th day of December, 1997, by
Vacation Break U.S.A., Inc., a Florida corporation ("Vacation Break").
W I T N E S S E T H :
WHEREAS, effective as of December 27, 1995, the Board of Directors of
Vacation Break (the "Vacation Break Board") adopted the Vacation Break U.S.A.,
Inc. 1995 Stock Option Plan, which the Vacation Break Board amended by an
amendment (as so amended, the "Plan");
WHEREAS, Vacation Break has entered into an Agreement and Plan of Merger,
dated as of August 8, 1997 (the "Merger Agreement"), among Fairfield
Communities, Inc., a Delaware corporation ("Fairfield"), FCVB Corp., a Florida
corporation and wholly owned subsidiary of Fairfield ("Merger Sub"), and
Vacation Break;
WHEREAS, pursuant to the Merger Agreement, among other things, (i) Merger
Sub will be merged with and into Vacation Break, with Vacation Break as the
surviving corporation (the "Merger"), (ii) each issued and outstanding share of
common stock, $.01 par value per share ("Vacation Break Common Stock"), of
Vacation Break will be converted into the right to receive .6075 (the "Exchange
Ratio") of a share of common stock, par value $.01 per share ("Fairfield Common
Stock"), of Fairfield, and (iii) Fairfield will assume each outstanding option
to purchase shares of Vacation Break Common Stock previously granted under the
Plan (each an "Option");
WHEREAS, each Option assumed by Fairfield will be deemed to constitute an
option to acquire Fairfield Common Stock on the terms and conditions described
in the Merger Agreement;
WHEREAS, the Vacation Break Board desires to amend the Plan in order to
adjust the terms of all outstanding Options granted under the Plan to provide
that, at the effective time of the Merger (the "Effective time"), each Option
outstanding immediately prior to the Effective Time will be deemed to constitute
an option to acquire Fairfield Common Stock on the terms and conditions
described in the Merger Agreement, and to provide for the other matters set
forth herein in order to give effect to the Merger;
NOW, THEREFORE, effective as of the Effective Time, the Plan is hereby
amended as follows, subject only to the condition that the Effective Time
occurs:
1. ASSUMED OPTIONS AND SHARES. Each Option assumed by Fairfield shall
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constitute an option to acquire, on the same terms and conditions as were
applicable under such Option, the number of shares of Fairfield Common Stock
rounded up or down to the nearest whole share equal to the product of the
Exchange Ratio multiplied by the number of shares of Vacation Break Common Stock
subject to such Option immediately prior to the Effective Time, at a price per
share equal to the aggregate exercise price for the shares of Vacation Break
Common Stock subject to such Option divided by the number of shares of Fairfield
Common Stock deemed to be purchasable pursuant to
<PAGE>
such Option ("Assumed Options"); provided that the conversion of any Option into
an Assumed Option with an exercise price less than $.01 per share of Fairfield
Common Stock will be subject to the Optionee's agreement that upon exercise, (x)
to the extent Fairfield is holding Fairfield Common Stock as treasury shares
that are not reserved for any other purpose, Fairfield shall issue the
appropriate number of such treasury shares to the Optionee and (x) to the extent
that no such treasury shares are available, such Optionee shall pay an exercise
price of $.01 per share of Fairfield Common Stock. Subject to the proviso
contained in the preceding sentence, shares of Fairfield Common will be made
available for issuance upon exercise of Assumed Options from authorized but
unissued shares of Fairfield Common Stock.
2. EXERCISE OF ASSUMED OPTIONS. From and after the Effective Time the
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Assumed Options shall be vested and fully exercisable in accordance with their
terms. A holder of an Assumed Option may exercise such Assumed Option in whole
or in part in accordance with its terms by delivering a properly executed notice
of exercise to Fairfield, together with the consideration therefor and the
federal withholding tax information required in accordance with the Plan.
3. TRANSFERABILITY OF ASSUMED OPTIONS. All restrictions or limitations
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on transfer and vesting with respect to Options awarded under the Plan, to the
extent that such restrictions or limitations shall not have already lapsed,
shall remain in full force and effect with respect to the Assumed Options.
4. ADMINISTRATION OF THE PLAN. The Plan as amended hereby (the "Amended
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Plan") shall be administered by the Compensation Committee of the Board of
Directors of Fairfield (the "Compensation Committee") and the Board of Directors
of Fairfield (the "Fairfield Board"). The Compensation Committee and the
Fairfield Board shall have the full authority and discretion to administer the
Amended Plan and to take any action that is necessary or advisable in connection
with the administration of the Amended Plan, including without limitation the
authority and discretion to interpret and construe any provision of the Amended
Plan or of any agreement, notification or document evidencing the grant of an
Option or an Assumed Option. The interpretation and construction by the
Compensation Committee or the Fairfield Board, as applicable, of any such
provision or of any agreement, notification or document and any determination by
the Compensation Committee or the Fairfield Board pursuant to any provision of
the Amended Plan or of any such agreement, notification or document will be
final and conclusive; provided that if the Compensation Committee disagrees with
the Fairfield Board with respect to any such interpretation, instruction or
determination, the Fairfield Board's determination will be final and conclusive
except with respect to Assumed Options intended to comply with Section 162(m) of
the Code. In furtherance and without limiting the generality of the foregoing,
all power, authority and discretion to adjust, modify, amend, terminate or
otherwise change the terms of Options or the Plan formerly vested in the
Vacation Break Board or the stock option committee thereof appointed by the
Vacation Break Board pursuant to the Plan shall be vested in the Fairfield Board
and the Compensation Committee with respect to Assumed Options and the Amended
Plan.
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<PAGE>
5. CERTAIN DEFINITIONS AND INTERPRETIVE MATTERS.
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(a) In order to give effect to the Merger, the terms of the Merger
Agreement regarding Assumed Options, and this Amendment, for purposes of the
Amended Plan the following terms, when used in the sections of the Plan
indicated below, shall have the following meanings:
(i) "Company" shall mean Fairfield when used in Sections 7, 8, 9 and
10 of the Plan; provided, however, that references to termination of
employment shall mean termination of employment with Vacation Break;
(ii) "Committee" shall mean the Compensation Committee or the
Fairfield Board, as applicable, when used in Sections 7, 8, 9, 10 and 16 of
the Plan;
(iii) "Option" shall mean "Assumed Option" when used in Sections 7,
8, 9 and 10 of the Plan.
(b) The terms and provisions of the Plan shall be liberally construed to
give effect to the Merger, the terms of the Merger Agreement regarding Assumed
Options and this Amendment.
(c) Except as amended or modified hereby or inconsistent with Section 5(b)
of this Amendment, the terms and conditions of the Plan shall remain in full
force and effect.
EXECUTED as of December 18, 1997
VACATION BREAK USA, INC.
By: /s/ Ralph P. Muller
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Ralph P. Muller
Charman of the Board and
Chief Executive Officer
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<PAGE>
Exhibit 5.1
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JONES, DAY, REAVIS & POGUE
2300 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75204
December 22, 1997
Fairfield Communities, Inc.
11001 Executive Drive
Little Rock, Arkansas 72211
Re: Registration on Form S-8 of 425,127 Shares of Common Stock,
par value $.01 per share, of Fairfield Communities, Inc.
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Ladies and Gentlemen:
We are acting as counsel to Fairfield Communities, Inc., a Delaware
corporation (the "Company"), in connection with the issuance of up to 425,127
shares (the "Shares") of common stock, par value $.01 per share (the "Common
Stock"), of the Company upon the exercise of the outstanding stock options
granted by Vacation Break U.S.A., Inc., a Florida corporation, under the
Vacation Break U.S.A., Inc. Directors' Plan, as amended (the "Directors' Plan")
and the Vacation Break U.S.A., Inc. 1995 Stock Option Plan, as amended (the
"1995 Plan"), which stock options are being assumed by the Company pursuant to
the Agreement and Plan of Merger, dated as of August 8, 1997 (the "Merger
Agreement"), among the Company, FCVB Corp., a Florida corporation and wholly
owned subsidiary of the Company, and Vacation Break.
We have examined such documents, records, and matters of law as we have
deemed necessary for purposes of this opinion. Based on such examination and on
the assumptions set forth below, we are of the opinion that the Shares will be
duly authorized issued and deliverd in accordance with the terms and provisions
of the Directors' Plan or the 1995 Plan, as applicable, against receipt of the
consideration provided for therein, respectively, and having a value of not less
than the par value of the Shares, will be validly issued, fully paid, and
nonassessable.
In rendering this opinion, we have (i) assumed and have not verified (a)
that all signatures on all certificates and other documents examined by us are
genuine, and that, where any such signature purports to have been in a
corporate, governmental or other capacity, the person who affixed such signature
to such certificate or other document had authority to do so, and (b) the
authenticity of all documents submitted to us as originals and the conformity to
original documents of all documents submitted to us as copies, (ii) as to
certain factual matters, relied upon certificates of public officials and of the
Company and Vacation Break and their respective officers and upon the
representations and warranties set forth in the Merger Agreement and have not
independently checked or verified the accuracy of the factual statements
contained therein, and (iii) assumed that the parties to the Merger Agreement
will comply with the provisions thereof. In addition, our examination of matters
of law has been limited to the General Corporation Law of the State of Delaware
and the federal laws of the United States of America, in each case as in effect
on the date hereof.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement on Form S-8 filed by the Company to effect registration
of the Shares.
Very truly yours,
/s/ JONES, DAY, REAVIS & POGUE
<PAGE>
Exhibit 23.1
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CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8) pertaining to the Vacation Break U.S.A., Inc. Directors'
Stock Option Plan and Vacation Break U.S.A., Inc. 1995 Stock Option plan for the
registration of 425,127 shares of Fairfield Communities, Inc. common stock of
our report dated January 29, 1997, except for Note 11, as to which the date is
February 28, 1997, with respect to the consolidated financial statements
incorporated by reference in its Annual Report (Form 10-K as amended by Forms
10-K/A) for the year ended December 31, 1996 and the related financial statement
schedule included therein, filed with the Securities and Exchange Commission.
Ernst & Young LLP
Little Rock, Arkansas
December 18, 1997
<PAGE>
Exhibit 23.2
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CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this registration statement on
Form S-8 of our report dated March 14, 1997, except for Notes 22 and 24, as to
which the date is October 9, 1997, on our audits of the financial statements of
Vacation Break U.S.A., Inc.
Coopers & Lybrand L.L.P.
Ft. Lauderdale, Florida
December 19, 1997
