<PAGE>
As filed with the Securities and Exchange Commission on March 18, 1998.
Registration No. 333-43045
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
PRE-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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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
(501) 228-2700
(Address and telephone number of Registrant's principal executive offices)
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Marcel J. Dumeny With a copy to:
Senior Vice President and General Counsel Mark V. Minton
11001 Executive Center Drive Jones, Day, Reavis & Pogue
Little Rock, Arkansas 72211 2300 Trammell Crow Center
(501) 228-2700 2001 Ross Avenue
(Name, address, and telephone Dallas, Texas 75201
number of agent for service) (214) 220-3939
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Approximate date of commencement of proposed sale to the public: The securities
being registered on this Form are to be offered and sold from time to time after
the effective date of the Registration Statement by a selling stockholder.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] __________.
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=======================================================================================================================
Amount Proposed Maximum Proposed Maximum
Title of Securities to to be Offering Price Aggregate Offering Amount of
be Registered Registered per Share Price Registration Fee
<S> <C> <C> <C> <C>
Common Stock, par value $0.01 per share (1) 8,051,194 (1)(2) $20.796875 (3) $161,370,768.90 $47,605 (4)
Common Stock, par value $0.01 per share (1) 145,812 (1)(5) $ 21.50 $ 3,134,958 $ 925 (6)
=======================================================================================================================
</TABLE>
(1) Includes associated share purchase rights pursuant to a Rights Agreement
adopted by the Registrant. Pursuant to Rule 416, there are also registered
hereunder such indeterminate number of additional shares of Common Stock
as may become subject to awards under the Vacation Break U.S.A., Inc. 1995
Stock Option Plan, as amended (the "Plan") or warrants previously granted
by Vacation Break U.S.A., Inc. pursuant to several warrant agreements (the
"Supplemental Warrant Agreements") , as amended, supplemented and assumed
by the Company, as a result of the antidilution provisions contained in
the Plan and the Supplemental Warrant Agreements, respectively.
(2) Includes the 4,025,597 shares previously shown as the amount to be
registered by this Registration Statement as initially filed plus an
additional 4,025,597 shares to be registered as a result of the
Registrant's two-for-one Common Stock split in the form of a 100% stock
dividend paid January 30, 1998 (the "Stock Split")
(3) Ajusted to reflect the Stock Split.
(4) Amount previously paid upon initial filing of this Registration Statement.
Pursuant to Rule 416, no additional fee is being paid with respect to the
4,025,597 additional shares of Common Stock to be registered as a result
of the Stock Split.
(5) Additional shares to be offered, which shares are subject to
warrants.
(6) Additional amount payable pursuant to Rule 457(a) as a result of increase
in shares to be offered, which amount is estimated solely for the purpose
of calculating the registration fee under paragraphs (c) and (g) of Rule
457 based upon the average high and low prices of shares of Common Stock
on the Composite Tape of the New York Stock Exchange, Inc. on March 13,
1998 with respect to shares subject to warrants.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
<PAGE>
Subject to Completion, Dated March 18, 1998
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
PROSPECTUS
8,197,006 SHARES
FAIRFIELD COMMUNITIES, INC.
COMMON STOCK
This Prospectus relates to an aggregate of up to 8,197,006 shares (the
"Shares") of Common Stock, par value $0.01 per share ("Common Stock"), of
Fairfield Communities, Inc. (the "Company" or "Fairfield") that may be offered
by the selling stockholders listed herein (collectively, the "Selling
Stockholders") from time to time. Up to 212,626 Shares are issuable to Kevin
Sheehan upon the exercise of options (the "Assumed Options") previously granted
by Vacation Break U.S.A., Inc. ("Vacation Break") under the Vacation Break
U.S.A., Inc. 1995 Stock Option Plan, as amended (the "Plan") and up to 145,812
Shares are issuable to certain Selling Stockholders upon the exercise of
warrants (the "Supplemental Warrants") previously granted by Vacation Break
pursuant to several warrant agreements, as amended and supplemented (the
"Supplemental Warrant Agreements"). The Company assumed the Assumed Options and
the Supplemental Warrants in connection with the merger (the "Merger") of FCVB
Corp., a wholly owned subsidiary of the Company ("Merger Sub"), with and into
Vacation Break. In addition, this Prospectus relates to such indeterminate
number of additional shares of Common Stock as may become subject to Assumed
Options or Supplemental Warrants as a result of the antidilution provisions
contained in the Plan and the Supplemental Warrant Agreements, respectively.
The Shares are listed on the New York Stock Exchange (the "NYSE") under the
trading symbol "FFD."
--------------------------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK.
---------------------------------------------
The Shares will be sold either directly by the Selling Stockholders or
through brokers, dealers, or agents. The Company will not receive any part of
the proceeds from sales of the Shares by the Selling Stockholders. At the time
any particular offer of Shares is made, if and to the extent required, the
specific number of Shares offered, the offering price, and the other terms of
the offering, including the names of any brokers, dealers, or agents involved in
the offering and the compensation, if any, of such brokers, dealers, or agents,
will be set forth in a supplement to this Prospectus (a "Prospectus
Supplement"). Any statement contained in this Prospectus will be deemed to be
modified or superseded by any inconsistent statement contained in any Prospectus
Supplement delivered herewith.
Unless this Prospectus is accompanied by a Prospectus Supplement stating
otherwise, offers and sales may be made pursuant to this Prospectus only in
ordinary broker's transactions made on the NYSE in transactions involving
ordinary and customary brokerage commissions.
The Company will bear all expenses in connection with the registration under
the Securities Act of 1933, as amended (the "Securities Act"), and the listing
on the NYSE of the Shares. The Selling Stockholders will bear all other
expenses in connection with sales of the Shares. The Company and each of the
Selling Stockholders have agreed to indemnify each other against certain
liabilities including liabilities under the Securities Act. See "Selling
Stockholders."
---------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------------------------------
The date of this Prospectus is March 18, 1998.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The reports, proxy
statements and other information filed by the Company with the Commission may be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the public reference facilities maintained by the Commission at The
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
and at 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of
such materials may also be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission and that is located at http://www.sec.gov.
Documents filed by the Company may also be inspected at the offices of the NYSE,
20 Broad Street, New York, New York 10005, on which exchange the Common Stock
is listed.
The Company has filed a Registration Statement on Form S-3, as amended (the
"Registration Statement") under the Securities Act. This Prospectus omits
certain of the information contained in the Registration Statement, and
reference is hereby made to the Registration Statement and to the exhibits
relating thereto for further information with respect to the Company and the
securities offered hereby. Any statements contained herein concerning the
provisions of any document are not necessarily complete, and in each instance
reference is made to the copy of such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Fairfield (Commission
File No. 1-8096) pursuant to the Exchange Act are incorporated by reference into
this Prospectus:
(i) the Company's Annual Report on Form 10-K for the year ended December
31, 1997; and
(ii) the description of the Company's Common Stock contained in the
Company's Registration Statements on Form 8-A (Commission File No. 1-8096)
filed December 8, 1995.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, prior to the termination of the offering
made hereby, shall be deemed incorporated by reference in this Prospectus and to
be a part of this Prospectus from the date of the filing of such reports. 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 purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
Any person receiving a copy of this Prospectus may obtain, without
charge, upon written or oral request, a copy of any of the documents
incorporated by reference herein, except for the exhibits to such documents
(other than the exhibits expressly incorporated in such documents by reference).
Requests should be directed to: Fairfield Communities, Inc., 11001 Executive
Center Drive, Little Rock, Arkansas 72211, Attention: Investor Relations
(telephone: (501) 228-2700).
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<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus, the
following risks and investment considerations should be carefully considered in
evaluating the Company and its business before purchasing any of the Shares
offered hereby. Each of the following factors may have a material adverse
effect on the Company's operations, financial results, financial condition,
liquidity, market valuation or market liquidity in future periods.
TIMESHARE INDUSTRY OPERATING RISKS
The Company's business is subject to all of the operating risks inherent in
the timeshare industry. These risks include an oversupply of timeshare units, a
reduction in demand for timeshare units, changes in travel and vacation
patterns, changes in governmental regulations of the timeshare industry and
increases in construction costs or taxes, as well as negative publicity
concerning the industry. The timeshare industry is highly fragmented,
containing a large number of developers. In the past, the timeshare industry as
a whole has experienced a negative image as a result of various developers
employing high pressure sales and marketing tactics, constructing low quality
units and engaging in other potentially misleading practices. Consequently,
negative publicity with respect to any one or more developers in the timeshare
industry could have a disproportionate effect on all of the developers in the
industry.
RISKS RELATED TO VACATION BREAK MERGER
On December 19, 1997, the Company acquired Vacation Break U.S.A., Inc., a
Florida corporation ("Vacation Break"), pursuant to a merger of a wholly owned
subsidiary of the Company with and into Vacation Break. The Company believes
that the Vacation Break Merger will offer opportunities for long-term
efficiencies in operations that should positively affect future results of the
combined operations of the Company and Vacation Break. However, the Vacation
Break Merger may adversely affect the Company's financial performance in 1998
and future years until such time as the Company is able to realize the positive
effect of opportunities for long-term efficiencies in operations. In addition,
the combined companies will be more complex and diverse than the Company
individually, and the combination and continued operation of their distinct
business operations will present difficult challenges for the Company's
management due to the increased time and resources required in the management
effort. While the Company's management and Board of Directors believe that the
combination may be effected in a manner which will realize the value of the
companies, there can be no assurances as to the effect of the Vacation Break
Merger.
In order to maintain and increase profitability, the combined companies will
need to successfully integrate and streamline overlapping functions. The
Company and Vacation Break have different systems and procedures in many
operational areas which must be rationalized and integrated. There can be no
assurance that integration will be successfully accomplished. The difficulties
of such integration may be increased by the necessity of coordinating
geographically separate organizations. The integration of certain operations
will require the dedication of management resources which may temporarily
distract attention from the day-to-day business of the combined companies.
Failure to effectively accomplish the integration of the companies' operations
could have an adverse effect on the Company's results of operations and
financial condition.
The Attorney General of Vermont has filed litigation against Vacation Break
relating to its marketing of vacation packages alleging that Vacation Break
violated the consumer protection or telemarketing laws of Vermont. Vacation
Break is actively attempting to settle that proceeding and is engaged in
settlement discussions. The marketing practice in question involves a prior
direct mail campaign and telemarketing. The issues raised concern whether the
solicitations of a vacation package properly disclosed that the offers required
the vacation package to be purchased, or whether, if applicable, a tour of a
timeshare resort was required in connection with the purchase of the vacation
package. The Company does not anticipate that the legal and settlement costs it
expects to incur will have a material impact on its results of operations,
liquidity or financial condition. However, there can be no assurance that
settlement of the pending proceeding can be reached on terms acceptable to the
Company, or at all, or that additional states will not commence similar
proceedings. Accordingly, future legal and settlement costs incurred, or fines
assessed if settlement cannot be reached, could be substantially greater than
expected.
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<PAGE>
RISKS ASSOCIATED WITH ACQUISITIONS AND NEW DEVELOPMENT OF RESORTS
A principal component of the Company's strategy is to acquire and develop
new destination resorts. The Company's future growth and financial success will
depend upon a number of factors, including its ability to identify attractive
resort acquisition and development opportunities, consummate the acquisition or
development of such resorts on favorable terms, profitably sell vacation
ownership interests ("VOIs") at such resorts, and successfully integrate the
newly acquired or developed resorts into the Company's sales and marketing
programs. The Company's ability to execute its growth strategy depends to a
significant degree on the existence of attractive resort acquisition and
development opportunities and its ability to obtain additional debt and equity
capital and to fund such acquisitions and development. There can be no assurance
that the Company will be successful with respect to such factors.
REGULATION OF MARKETING AND SALES OF VOIS
The Company's marketing and sales of VOIs and other operations are subject
to extensive regulation by the federal government and by the states in which the
Company's resorts are located and in which its VOIs are marketed and sold. The
federal government and many states have adopted specific laws and regulations
regarding the sale of timeshares, telemarketing and certain of the Company's
other activities. The Company believes that it is in substantial compliance
with all laws and regulations to which it is currently subject. However, there
is no clear guidance regarding the scope and interpretation of the registration
requirements of various state laws regulating certain types of timeshare
marketing and sales programs.
No assurance can be given that the cost of complying with laws and
regulations in all jurisdictions in which the Company desires to conduct sales
would not be significant, would not impair the cost-effectiveness of its
marketing programs, or that the Company is in fact in compliance with all
applicable laws and regulations. If the Company is not in substantial
compliance with applicable laws and regulations, among other consequences, it
could be subject to regulatory actions and purchasers of VOIs could have certain
rescission rights. In addition, there can be no assurance that laws and
regulations (including existing interpretations thereof) applicable to the
Company in any specific jurisdiction will not be revised or that other laws or
regulations will not be adopted which could increase the Company's cost of
compliance or prevent the Company from selling VOIs or conducting other
operations in a jurisdiction. In particular, the Company has become more
reliant on telemarketing based marketing programs. Regulation of and laws
governing the use of telemarketing have grown in the recent past and additional
laws and regulations governing these activities may be adopted in the future.
Any failure to comply with any applicable law or regulation, or any increases in
the costs of compliance could have a material adverse effect on the Company.
PENDING LITIGATION
The Company and its subsidiaries have certain lawsuits pending against them,
as described in Note 17 of the Notes to Consolidated Financial Statements
in the Company's Annual Report on Form 10-K for the year ended December 31,
1997, incorporated by reference herein. There can be no assurance that those
lawsuits or any other litigation pending against the Company or its subsidiaries
previously disclosed will not be decided adversely and, if decided adversely,
will not have a material adverse effect on the financial condition, liquidity or
results of operations of the Company.
RISKS ASSOCIATED WITH FINANCING; HEDGING ACTIVITIES
The Company offers financing to buyers of VOIs at the Company's resorts,
which bears interest at fixed rates and is collateralized by a first mortgage
on, or retention of title under an installment sales contract for, the
underlying VOI. The Company and its wholly owned finance subsidiary, Fairfield
Acceptance Corporation ("FAC"), have revolving credit
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<PAGE>
facilities to finance the Company's contracts receivable. The Company's current
credit facilities which finance contracts receivable are, and are expected to
continue to be, at variable interest rates. The Company presently believes it
has adequate borrowing availability under its credit facilities, however, any
significant increase in interest rates on the Company's financing or prepayment
rates on the contracts receivable could have an adverse effect on the
profitability of the Company's portfolio of contracts receivable or the future
availabilities under its credit facilities or its ability to obtain future
financing. The Company attempts to retain borrowing availability under its
revolving credit facility by periodically selling contracts receivable to FAC.
The Company uses the proceeds from these sales to reduce the outstanding balance
under its revolving credit facility. FAC and its subsidiaries periodically
securitize such receivables through financings with third parties. The proceeds
from the securitization transactions are then used to reduce the balances of
FAC's revolving credit facility. However, there can be no assurance that the
Company and FAC will be able to successfully continue such securitizations, and
any failure to continue such securitizations could result in the Company and FAC
having insufficient borrowing availability under their credit facilities to
maintain their operations at current levels. In connection with certain of FAC's
securitization transactions issued with variable interest rates, FAC has sought
to limit its exposure to possible future increases in interest rates by
purchasing interest rate caps. No assurance can be given that FAC will be able
to obtain interest rate caps or other hedging instruments in connection with
future securitization transactions or that the cost associated with interest
rate caps or other hedging instruments will not increase FAC's operating
costs.
IMPACT OF ECONOMIC CYCLES
Any substantial downturn in economic conditions or any significant price
increases related to the travel and tourism industry could significantly depress
discretionary consumer spending and have a material adverse effect on the
Company's business. Any such economic conditions, including inflation, may also
affect the future availability of attractive financing rates for the Company or
its customers and may materially adversely affect the Company's business.
Inflation may also affect the Company's income derived from sales of vacation
packages to the extent that the Company's costs of providing vacation packages
increases from the time the vacation package is sold until the time the vacation
is taken. Furthermore, adverse changes in general economic conditions may
adversely affect the collectability of the Company's loans to VOI purchasers.
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<PAGE>
RISKS ASSOCIATED WITH CUSTOMER DEFAULT
The Company bears the risk of defaults by purchasers of VOIs. Because VOIs
are vacation homes and not primary residences, purchasers of VOIs who finance a
portion of the purchase price present a greater risk of default than typical
borrowers under home mortgages. Private mortgage insurance or its equivalent is
not readily available to cover VOIs. If a purchaser of a VOI defaults on the
loan made by the Company to finance the purchase of such interest during the
early part of the repayment schedule, the associated marketing costs other than
certain sales commissions are not recoverable and they must be incurred again
after the VOI has been returned to the Company's inventory for resale.
Commissions paid in connection with the sale of VOIs may be recoverable from
sales personnel upon default in accordance with contractual arrangements with
the Company, depending upon the amount of time that has elapsed between the sale
and the default and the number of payments made prior to such default. Although
the Company in many cases may have recourse against sales agents for commissions
paid, no assurance can be given that any commissions will be fully recovered in
the event of purchaser defaults.
POSSIBLE ENVIRONMENTAL LIABILITIES
Under various federal, state and local laws, ordinances and regulations, the
current or previous owner, manager or operator of real property may be liable
for the costs of removal or remediation of certain hazardous or toxic substances
located on or in, or emanating from, such property, as well as related costs of
investigation and property damage. Such laws often impose such liability
without regard to whether the owner, manager or operator knew of, or was
responsible for, the presence of such hazardous or toxic substances. The
Company believes that it is in compliance in all material respects with all
federal, state and local ordinances and regulations regarding hazardous or toxic
substances, but no assurance can be given that hazardous or toxic substances
will not be found on its properties or properties that it previously owned or
may acquire.
COMPLIANCE WITH LAWS GOVERNING ACCESS
A number of state and federal laws, including the Fair Housing Act and the
Americans with Disabilities Act, impose requirements related to access and use
by disabled persons of a variety of public accommodations and facilities.
Although the Company believes that its resorts are substantially in compliance
with these laws, the Company may incur additional costs of complying with such
laws. The ultimate amount of the cost of compliance with such legislation is
not currently ascertainable, and, while such costs are not expected to have a
material effect on the Company, such costs could be substantial.
UNINSURED LOSS; NATURAL DISASTERS
There are certain types of losses (such as losses arising from acts of war)
that are not generally insured because they are either uninsurable or not
economically insurable and for which the Company does not have insurance
coverage. Should an uninsured loss or a loss in excess of insured limits occur,
the Company could lose its capital invested in a resort, as well as the
anticipated future revenues from such resort, and would continue to be obligated
on any mortgage indebtedness or other obligations related to the resort.
Moreover, if the property owners association fails to adequately insure the
units, any uninsured or underinsured casualty may affect the collectability of
the contracts receivable related to those units. In addition, the Company's
resorts could suffer significant damage as a result of hurricanes, earthquakes,
floods and other natural disasters. Any such damage, as well as adverse weather
conditions generally, could reduce the Company's ability to sell VOIs at its
resorts.
COMPETITION
As the Company develops destination resorts, the Company may experience
significant competition for qualified personnel, favorable sites and customers
at those resorts from other entities engaged in the business of resort
development, sales and operation, including VOI ownership, condominiums, hotels
and motels. Many well-known lodging, hospitality and entertainment companies
have begun to develop and sell VOIs in resort properties. While many of those
companies have targeted a more narrow market segment than the Company's
historical market segment, there can be no assurance
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<PAGE>
that the Company and those companies will not compete more broadly at
destination locations. In such event, the Company will be required to compete
with companies that may have significantly greater resources.
CONCENTRATION IN FLORIDA MARKET
As a result of the Merger, the Company will operate twenty-five resorts
and anticipates approximately one-half of the VOI revenues will be concentrated
in the Florida market. The Company believes that certain fundamental aspects of
Florida as a location for resort properties (including climate, quality of life,
and opportunities for sports and leisure activities) have contributed and will
continue to contribute to the Company's abilities to sell VOIs in the Florida
market. The Florida market is one of the largest markets for VOI sales in the
United States. However, Florida is also one of the most competitive markets for
VOI sales. In addition, historically, natural disasters and media coverage of
crimes committed in Florida have had significant adverse effects on tourism in
Florida. Accordingly, there can be no assurance that the Florida market will
continue to be favorable for VOI sales or that the business of the Company will
not be adversely affected by the concentration in the Florida market.
APPLICABILITY OF FEDERAL SECURITIES LAWS TO THE SALE OF VOIS
It is possible that the VOIs sold by the Company may be deemed to be
securities as defined in Section 2(1) of the Securities Act. If the VOIs were
determined to be securities for that purpose, their sale would require
registration under the Securities Act. The Company has not registered the sale
of VOIs under the Securities Act and does not intend to do so in the future. If
the sales of VOIs were found to have violated the registration provisions of the
Securities Act, purchasers of VOIs would have the right to rescind their
purchases of those VOIs. If a substantial number of purchasers sought
rescission and were successful, the Company's business, results of operations
and financial conditions could be materially adversely affected.
ANTI-TAKEOVER MATTERS
The Company is subject to various factors that could have the effect of
making it more difficult for a party to acquire control of the Company, which
could adversely affect the market price of the Common Stock. The Company's
Certificate of Incorporation grants the Company's Board of Directors (the
"Board") the authority to issue up to 5,000,000 shares of preferred stock, par
value $0.01 per share ("Preferred Stock"), having such rights, preferences and
privileges as designated by the Board without stockholder approval. The rights
of the holders of the Common Stock will be subject to, and may be adversely
affected by, the rights of the holders of any Preferred Stock that may be issued
in the future. In addition, the Company has adopted a Rights Agreement which
provides for the issuance of a 1/3 right (a "Right") for each outstanding share
of Common Stock. The Rights entitle the holder to purchase, under certain
circumstances, one one-hundredth of a share of the Company's Series A Junior
Participating Preferred Stock at $25.00 per share. The Rights may have the
effect of discouraging an unsolicited takeover proposal. Section 203 of the
Delaware General Corporation Law is also applicable to the Company and contains
provisions that restrict certain business combinations with interested
stockholders. Section 203 may have the effect of inhibiting a non-negotiated
merger or other business combination involving the Company.
THE COMPANY
The Company is one of the largest vacation ownership companies in the United
States in terms of property owners and vacation ownership units constructed. The
Company's 25 resorts are located in 11 states and the Bahamas; 15 resorts are in
destination areas with popular vacation attractions and 10 regional resorts are
in scenic locations. The Company's principal business is selling VOIs, commonly
known as timeshares, primarily through its innovative points-based vacation
system, Fair share Plus(R). The Company also offers financing for VOI purchasers
through its wholly owned subsidiary, FAC.
The Company's principal executive offices are located at 11001 Executive
Center Drive, Little Rock, Arkansas 72211 and its telephone number is
(501) 228-2700.
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<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the Shares
by the Selling Stockholders.
SELLING STOCKHOLDERS
Effective upon consummation of the Merger on December 19, 1997, Vacation
Break became a wholly owned subsidiary of the Company. As a result of the
conversion of shares of Vacation Break Common Stock, the assumption of Vacation
Break options in the Merger, the payment of the Company's two-for-one Common
Stock split in the form of a 100% stock dividend paid January 30, 1998 (the
"Stock Split"), and the adjustments made to the Assumed Options to reflect the
Stock Split, the Company (i) issued 6,315,480 shares of Common Stock that are
beneficially owned by Ralph P. Muller, which includes 6,245,738 shares of Common
Stock owned of record by R&A and beneficially by Mr. Muller, 56,742 shares of
Common Stock owned of record by Mr. Muller and 13,000 shares of Common Stock
owned of record by Alice Muller, Mr. Muller's wife, (ii) issued 1,523,088 shares
of Common Stock to Kevin Sheehan, and (iii) assumed options exercisable by Mr.
Sheehan which are deemed Assumed Options to purchase 212,626 shares of Common
Stock. Of the shares of Common Stock issued to Mr. Muller and R&A, Joyce North,
the former Executive Vice President - Sales of Vacation Break, has an option to
acquire 425,250 shares. Of the shares of Common Stock issued to Kevin Sheehan,
Joyce North has an option to acquire 60,750 shares. If Ms. North exercises
these options to acquire an aggregate of 486,000 Shares, she has the right to
sell those Shares pursuant to this Prospectus. Ralph P. Muller is the former
Chairman of the Board and Chief Executive Officer of Vacation Break and,
effective upon consummation of the Merger, became a director of the Company.
Kevin Sheehan is the former President of Vacation Break and is a consultant to
the Company.
As a result of the assumption of Vacation Break warrants in the Merger, the
payment of the Stock Split and the adjustments made to the Supplemental Warrants
to reflect the Stock Split, the Company assumed warrants exercisable by each of
the Selling Stockholders named below other than Ralph P. Muller, R&A
Partnership, Ltd., Kevin Sheehan and Joyce North (collectively, such other
Selling Stockholders are referred to as the "Supplemental Warrant holders")
which are deemed Supplemental Warrants to purchase an aggregate of up to 145,812
shares of Common Stock. The Vacation Break warrants assumed by the Company were
originally granted by Vacation Break to Josephthal, Lyon & Ross Incorporated
("Josephthal) and were subsequently transferred by Josephthal to each of the
Supplemental Warrantholders. Josephthal was one of two lead underwriters in
Vacation Break's initial public offering in December 1995, served as Vacation
Break's principal financial advisor and investment banker thereafter and served
as co-advisor to Vacation Break in connection with the Merger. Vacation Break
warrants which represented the right to acquire 90,000 shares of Vacation Break
Common Stock prior to the Merger were granted to Josephthal in consideration of
its services as a lead underwriter in Vacation Break's initial public offering.
The remaining Vacation Break warrants assumed by the Company, which represented
the right to acquire 30,000 shares of Vacation Break Common Stock prior to the
Merger, were granted to Josephthal in consideration of its financial advisory
services in connection with a proposed merger (which was not consummated) with
various companies owned or controlled by James E. Lambert. All of the
Supplemental Warrantholders are affiliates of Josephthal. In addition, Michael
J. Kollender, a Senior Vice President - Investment Banking of Josephthal, was a
director of Vacation Break prior to the Merger.
-8-
<PAGE>
The Shares offered by this Prospectus may be offered from time to time by
the Selling Stockholders.
<TABLE>
<CAPTION>
COMMON STOCK NUMBER OF COMMON STOCK
OWNERSHIP SHARES OF OWNERSHIP
PRIOR TO OFFERING (1)(2) COMMON STOCK AFTER OFFERING(2)
-------------------------- -------------- ---------------------------
NAME AND POSITION NUMBER PERCENTAGE OFFERED HEREBY NUMBER PERCENTAGE
- ------------------------ -------------- ---------- -------------- ------- ------------------
<S> <C> <C> <C> <C> <C>
Ralph P. Muller, and 6,315,480 (3) 14.01% 6,315,480 0 *
R&A Partnership, Ltd.
Kevin Sheehan 1,746,164 (4) 3.85% 1,735,714 10,450 *
Joyce North 607,500 (5) 1.34% 486,000 121,500 *
Matthew Balk 5,326 (6) * 5,326 0 0%
Franklin Berger 110 (6) * 110 0 0%
Lawrence Borgman 110 (6) * 110 0 0%
Dennis Burke 110 (6) * 110 0 0%
Estate of Peter Sheib 4,370 (6) * 4,370 0 0%
Paul Fitzgerald 6,450 (6) * 6,450 0 0%
Anthony Guzzi 48 (6) * 48 0 0%
Alan Jacobs 6,076 (6) * 6,076 0 0%
Josephthal Holdings 15,796 (6) * 15,796 0 0%
Michael J. Kollender 36,448 (7) * 18,226 18,222 *
Steve Kowitski 110 (6) * 110 0 0%
Sherwood P. Larkin 5,158 (6) * 5,158 0 0%
Michael Loew 1,404 (6) * 1,404 0 0%
Raymond Mando 32 (6) * 32 0 0%
Dennis McAlpine 3,038 (6) * 3,038 0 0%
Dan Purjes 56,706 (6) * 56,706 0 0%
James Raphalian 1,216 (6) * 1,216 0 0%
Lawrence Rice 5,286 (6) * 5,286 0 0%
Charles Roden 3,740 (6) * 3,740 0 0%
WBM, LLC 2,320 (6) * 2,320 0 0%
Scott A. Weisman 11,392 (8) * 10,180 1,212 *
</TABLE>
- ---------------
*Less than 1% of class.
(1) Based on ownership of Common Stock as of March 13, 1998.
(2) Based on 45,091,505 shares of Common Stock outstanding as of March 13, 1998
and assuming all Shares offered hereby are sold.
(3) Includes 6,245,738 shares of Common Stock owned of record by R&A. RPM
Investments, Inc., a Texas corporation wholly-owned by Mr. Muller, is the
sole general partner of R&A. Also includes (i) 13,000 shares of Common
Stock owned of record by Alice Muller, Mr. Muller's wife, and (ii) 425,250
shares of Common Stock subject to an option to purchase such shares granted
to Joyce North.
(4) Includes (i) 212,626 shares of Common Stock issuable upon exercise of
Assumed Options, (ii) 10,450 shares issuable upon exercise of Assumed
Options which are exercisable by Jennifer Gelet-Sheehan, Mr. Sheehan's wife,
and (iii) 60,750 shares of Common Stock subject to an option to purchase
such shares granted to Joyce North.
(5) Includes (i) 121,500 shares of Common Stock issuable upon exercise of
Assumed Options, (ii) 425,250 shares of Common Stock beneficially owned by
Ralph Muller which are purchasable by Joyce North upon exercise of an
-9-
<PAGE>
option granted by Mr. Muller, and (iii) 60,750 shares of Common Stock
beneficially owned by Kevin Sheehan which are purchasable by Joyce North
upon exercise of an option granted by Mr. Sheehan.
(6) Consists of shares of Common Stock issuable upon exercise of Supplemental
Warrants.
(7) Includes (i) 18,226 shares of Common Stock issuable upon the exercise of
Supplemental Warrants, (ii) 17,010 shares of Common Stock issuable upon the
exercise of Assumed Options, and (iii) 1,212 shares of Common Stock, all of
which are beneficially owned by Mr. Kollender.
(8) Includes (i) 606 shares of Common Stock owned of record by Scott A. Weisman
Profit Sharing Plan C and (ii) 10,180 shares of Common Stock issuable upon
exercise of Supplemental Warrants.
The Company agreed to register the offering and sale of the Shares, other
than the Shares issuable upon exercise of the Supplemental Warrants, under the
Securities Act pursuant to the terms of a Registration Rights Agreement into
which the Company and Messrs. Muller and Sheehan and R&A entered at the
effective time of the Merger. Ms. North has been assigned the rights, and has
assumed the duties, of Messrs. Muller, Sheehan and R&A, under such Registration
Rights Agreement to the extent of any Shares she may acquire. The Company
agreed to register the offering and sale of the Shares subject to the
Supplemental Warrants under the Securities Act pursuant to the terms of the
separate Supplemental Warrant Agreements between the Company and each of the
Supplemental Warrantholders. The Company has agreed to bear all expenses
incurred in connection with the registration under the Securities Act and the
listing on the NYSE of the Shares. The Selling Stockholders will bear all other
expenses in connection with sales of the Shares.
Pursuant to the Registration Rights Agreement and each of the Supplemental
Warrant Agreements, each of the Selling Stockholders has agreed to indemnify the
Company, and its directors, officers and any controlling person of the Company
against certain liabilities based on information furnished for use in this
Prospectus, and the Registration Statement of which this Prospectus is a part,
by the Selling Stockholders. The Company has agreed to indemnify the Selling
Stockholders and any controlling persons of the Selling Stockholders against
certain liabilities based on information contained in this Prospectus, and the
Registration Statement of which this Prospectus is a part, which was not
furnished by the Selling Stockholders.
PLAN OF DISTRIBUTION
Offers and sales of Shares pursuant to this Prospectus may be effected by the
Selling Stockholder from time to time in one or more transactions through any
one or more of the following: (i) through brokers, acting as principal or
agent, in transactions (which may involve block transactions) on one or more
exchanges on which the securities are then listed, including the NYSE, in
special offerings, exchange distributions pursuant to the rules of the
applicable exchanges or in the over-the-counter market, or otherwise, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices, at negotiated prices or at fixed prices, (ii) directly or through
brokers or agents in private sales at negotiated prices; (iii) by any other
legally available means; or (iv) the pledge of the Shares as security for any
loan or obligation, including pledges to brokers or dealers who may, from time
to time, themselves effect distributions of the Shares or interests therein.
In effecting sales, brokers or dealers may arrange for other brokers or
dealers to participate. The Selling Stockholder or any successor in interest,
and any brokers, dealers or agents that participate in the distribution of the
Shares, may be deemed to be "underwriters" within the meaning of the Securities
Act, and any profit on the sale of the Shares by them and any discounts,
commissions or concessions (which discounts, commissions, or concessions will
not exceed those customary for the types of transactions involved) received by
any such brokers, dealers or agents may be deemed to be underwriting commissions
or discounts under the Securities Act.
In addition, any of the Shares covered by this Prospectus which qualify for
sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to
this Prospectus.
-10-
<PAGE>
LEGAL MATTERS
Certain legal matters in connection with the validity of the Common Stock
offered hereby have been passed upon for the Company by Jones, Day, Reavis &
Pogue, Dallas, Texas.
EXPERTS
The consolidated financial statements and schedule of the Company
incorporated by reference in the Company's Annual Report (Form 10-K) for the
year ended December 31, 1997, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon incorporated by
reference therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
The consolidated balance sheet of Vacation Break at December 31, 1996 and
consolidated statements of operations, stockholders' equity and cash flows for
each of the two years in the period ended December 31, 1996, incorporated by
reference in this Prospectus, are incorporated by reference in reliance on the
report of Coopers & Lybrand, L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
FORWARD-LOOKING STATEMENTS
This Prospectus (including the documents incorporated by reference herein)
contains certain forward-looking statements (as such term is defined in the
Private Securities Litigation Reform Act of 1995), 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 relating to the Company. When used in
this Prospectus, words such as "anticipates," "believes," "estimates,"
"expects," "intends," "should" and variations of these words and similar
expressions, as they relate to the Company or its management, are intended to
identify forward-looking statements. Forward-looking statements made by the
Company and its management are based on estimates, projections and beliefs of
the management of the Company, as well as assumptions made at the time of such
statements by and information then currently available to the management of the
Company, as applicable, 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
relating to the operations and results of operations of the Company following
the Merger. Representative examples of these factors include (without
limitation) general industry and economic conditions; interest rate trends;
regulatory changes; cost of capital and capital requirements; availability of
real estate properties; competition from national hospitality companies and
other competitive factors and pricing pressures; shifts in customer demands;
changes in operating expenses, including employee wages, commission structures,
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, assumed cost savings and other synergistic benefits of the Merger; the
success achieved or problems encountered in integrating the operations of
Vacation Break into the Company and each of the factors identified in the
section "Risk Factors" set forth in this Prospectus. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results or outcomes may vary materially from those described
herein as anticipated, believed, estimated, expected or intended.
-11-
<PAGE>
NO PERSON HAS BEEN AUTHORIZED IN
CONNECTION WITH THE OFFERING HEREBY
TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATION NOT CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION 8,197,006 SHARES
MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS
PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES TO ANY
PERSON OR BY ANYONE IN ANY JURISDICTION FAIRFIELD
WHERE SUCH OFFER OR SOLICITATION WOULD COMMUNITIES, INC.
BE UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY DATE SUBSEQUENT
TO THE DATE HEREOF.
------------------------ COMMON STOCK
TABLE OF CONTENTS --------------------------------
PROSPECTUS
---------------------------------
PAGE
----
Available Information.......... 2
Incorporation of Certain
Documents by Reference...... 2
Risk Factors................... 3
The Company.................... 7
Use of Proceeds................ 7
Selling Stockholders........... 7
Plan of Distribution........... 9
Legal Matters.................. 10
Experts........................ 10
Forward-Looking Statements..... 10 March 18, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses to be incurred in connection with the issuance and
distribution of the Common Stock covered by this Registration Statement are as
follows:
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission filing fee.. $48,530
Printing expenses.............................. 2,000
Accounting fees and expenses................... 10,000
Legal fees and expenses........................ 20,000
Miscellaneous.................................. 470
-------
Total.......................................... $81,000
=======
</TABLE>
The Company has agreed to bear all expenses incurred in connection with the
registration under the Securities Act and the listing on the NYSE of the Shares.
The Selling Stockholders will bear all other expenses in connection with sales
of the Shares.
ITEM 15. 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 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.
II-1
<PAGE>
ITEM 16. EXHIBITS
EXHIBIT DESCRIPTION
NUMBER
2.1 Agreement and Plan of Merger, dated as of August 8, 1997, among the
Company, FCVB Corp., and Vacation Break U.S.A., Inc. (previously filed
as Exhibit 2.1 to the Form S-4, filed by the Registrant on November 4,
1997, SEC File No. 333-39615, and incorporated herein by reference).
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
Registrant on September 1, 1992, SEC File No. 92-22-6962, and
incorporated herein by reference).
4.2 Certificate of Amendment to Amended and Restated Certificate of
Incorporation of the Company (previously filed as Exhibit 4.2 to the
Registrant's Registration Statement, SEC File No. 333-42901, on
Form S-8, and incorporated herein by reference).
4.3 Fifth Amended and Restated Bylaws of the Company (previously filed as
Exhibit 3.(ii) to the Form 8-K, filed by the Registrant on May 22,
1996, SEC File No. 001-08096, and incorporated herein by reference).
4.4 Supplemented and Restated Indenture between the Registrant, Fairfield
River Ridge, Inc., Fairfield St. Croix, Inc. and IBJ Schroder Bank &
Trust Company, as Trustee, and Houlihan Lokey Howard & Zukin, as
Ombudsman, dated September 1, 1992, related to the Senior Subordinated
Secured Notes (previously filed as Exhibit 3.3 to the Form 8-K filed
by the Registrant on September 24, 1992, SEC File No. 92226962, and
incorporated herein by reference).
4.5 First Supplemental Indenture to the Supplemented and Restated
Indenture referenced in 4.4 above, dated September 1, 1992 (previously
filed as Exhibit 3.4 to the Form 8-K filed by the Registrant on
September 24, 1992, SEC File No. 92226962, and incorporated herein by
reference).
4.6 Second Supplemental Indenture to the Supplemented and Restated
Indenture referenced in 4.1 above, dated September 1, 1992 (previously
filed as Exhibit 4.3 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1992, SEC File No. 93083843, and
incorporated herein by reference).
4.7 Third Supplemental Indenture to the Supplemented and Restated
Indenture referenced in 4.1 above, dated March 18, 1993 (previously
filed as Exhibit 4.4 to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1993, SEC File No. 93130289, and
incorporated herein by reference).
4.8 Certificate of Designation, Preferences, and Rights of Series A Junior
Participating Preferred Stock, dated September 1, 1992 (previously
filed as Exhibit 3.11 to the Form 8-K filed by the Registrant on
September 24, 1992, SEC File No. 92226962, and incorporated herein by
reference).
4.9 Form of Warrant Agreement, dated as of December 27, 1995, between
Vacation Break U.S.A., Inc. and individual warrant holders (filed
herewith).
4.10 Form of First Amendment and Supplement to December 27, 1995 Warrant
Agreement, dated as of March 4, 1998, between Fairfield Communities,
Inc. and individual warrant holders (filed herewith).
II-2
<PAGE>
4.11 Form of Warrant Agreement, dated as of May 22, 1997, between Vacation
Break U.S.A., Inc. and individual warrant holders (filed
herewith).
4.12 Form of First Amendment and Supplement to May 22, 1997 Warrant
Agreement, dated as of March 4, 1998, between Fairfield Communities,
Inc. and individual warrant holders (filed herewith).
5.1 Opinion of Jones, Day, Reavis & Pogue (filed herewith).
23.1 Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP (filed herewith).
23.3 Consent of Coopers & Lybrand, LLP (filed herewith).
24.1 Powers of attorney (previously filed).
II-3
<PAGE>
ITEM 17. 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;
(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 a
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
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 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, 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; and
(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 Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in this 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 may be permitted to directors, officers, and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer, or controlling person of the Company 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 Company 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 Securities Act and will be governed by the final
adjudication of such issue.
II-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-3 and has duly caused this Pre-Effective
Amendment No. 1 to the Registration Statement (Commission File No. 333-43045) to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Little Rock, State of Arkansas, on March 18, 1998.
FAIRFIELD COMMUNITIES, INC.
By: /s/ J. W. MCCONNELL
---------------------------------
J.W. McConnell
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Pre-
Effective Amendment No. 1 to the Registration Statement has been signed below by
the following persons in the capacities indicated on March 18, 1998.
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
Director
- -----------------------------
Bryan D. Langton
Director
- -----------------------------
Charles D. Morgan
/s/ William C. Scott* Director
- -----------------------------
William C. Scott
Director
- -----------------------------
Ralph P. Muller
*The undersigned, by signing his name hereto, does sign and execute this Pre-
Effective Amendment No. 1 to the Registration Statement pursuant to the Powers
of Attorney executed on behalf of the above-named officers and directors and
previously filed with the Commission.
/s/ J.W. McCONNELL
-----------------------------
J.W. McConnell
II-5
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
NUMBER
2.1 Agreement and Plan of Merger, dated as of August 8, 1997, among the
Company, FCVB Corp., and Vacation Break U.S.A., Inc. (previously filed
as Exhibit 2.1 to the Form S-4, filed by the Registrant on November 4,
1997, SEC File No. 333-39615, and incorporated herein by reference).
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
Registrant on September 1, 1992, SEC File No. 92-22-6962, and
incorporated herein by reference).
4.2 Certificate of Amendment to Amended and Restated Certificate of
Incorporation of the Company (previously filed as Exhibit 4.2 to the
Registrant's Registration Statement, SEC File No. 333-42901, on
Form S-8, and incorporated herein by reference).
4.3 Fifth Amended and Restated Bylaws of the Company (previously filed as
Exhibit 3.(ii) to the Form 8-K, filed by the Registrant on May 22,
1996, SEC File No. 001-08096, and incorporated herein by reference).
4.4 Supplemented and Restated Indenture between the Registrant, Fairfield
River Ridge, Inc., Fairfield St. Croix, Inc. and IBJ Schroder Bank &
Trust Company, as Trustee, and Houlihan Lokey Howard & Zukin, as
Ombudsman, dated September 1, 1992, related to the Senior Subordinated
Secured Notes (previously filed as Exhibit 3.3 to the Form 8-K filed
by the Registrant on September 24, 1992, SEC File No. 92226962, and
incorporated herein by reference).
4.5 First Supplemental Indenture to the Supplemented and Restated
Indenture referenced in 4.4 above, dated September 1, 1992 (previously
filed as Exhibit 3.4 to the Form 8-K filed by the Registrant on
September 24, 1992, SEC File No. 92226962, and incorporated herein by
reference).
4.6 Second Supplemental Indenture to the Supplemented and Restated
Indenture referenced in 4.1 above, dated September 1, 1992 (previously
filed as Exhibit 4.3 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1992, SEC File No. 93083843, and
incorporated herein by reference).
4.7 Third Supplemental Indenture to the Supplemented and Restated
Indenture referenced in 4.1 above, dated March 18, 1993 (previously
filed as Exhibit 4.4 to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1993, SEC File No. 93130289, and
incorporated herein by reference).
4.8 Certificate of Designation, Preferences, and Rights of Series A Junior
Participating Preferred Stock, dated September 1, 1992 (previously
filed as Exhibit 3.11 to the Form 8-K filed by the Registrant on
September 24, 1992, SEC File No. 92226962, and incorporated herein by
reference).
4.9 Form of Warrant Agreement, dated as of December 27, 1995, between
Vacation Break U.S.A., Inc. and individual warrant holders (filed
herewith).
4.10 Form of First Amendment and Supplement to December 27, 1995 Warrant
Agreement, dated as of March 4, 1998, between Fairfield Communities,
Inc. and individual warrant holders (filed herewith).
II-6
<PAGE>
4.11 Form of Warrant Agreement, dated as of May 22, 1997, between Vacation
Break U.S.A., Inc. and individual warrant holders (filed
herewith).
4.12 Form of First Amendment and Supplement to May 22, 1997 Warrant
Agreement, dated as of March 4, 1998, between Fairfield Communities,
Inc. and individual warrant holders (filed herewith).
5.1 Opinion of Jones, Day, Reavis & Pogue (filed herewith).
23.1 Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP (filed herewith).
23.3 Consent of Coopers & Lybrand, LLP (filed herewith).
24.1 Powers of attorney (previously filed).
II-7
<PAGE>
EXHIBIT 4.9
WARRANT AGREEMENT
VACATION BREAK U.S.A., INC.,
AND
___________________________
DATED AS OF DECEMBER 27, 1995
<PAGE>
WARRANT NO. ____ Warrant to Purchase
Void after 5:00 P.M. _______ Shares
Eastern Time of Common Stock ($.01
December 21, 2002 par value)
COMMON STOCK PURCHASE WARRANT
VACATION BREAK U.S.A., INC.
(One Warrant is required for the purchase of one Share,
subject to adjustment as provided below)
This is to certify that, for value received and subject to the conditions
herein set forth, __________________, or his registered assigns is entitled to
purchase, at any time during the period (the "Term") commencing on December 21,
1996 and ending at 5:30 P.M. Eastern time, December 21, 2000 (the "Expiration
Date"), such number of shares of the Common Stock ($.01 par value) ("Common
Stock" or "Company Shares") of Vacation Break U.S.A., Inc., a Florida
corporation (the "Company"), as shall equal the number of warrants (the
"Warrants") evidenced by this Certificate (such Shares purchasable upon exercise
of the Warrants are herein called the "Warrant Shares"). The purchase price of
each Warrant Share shall be the applicable rate set forth in Section 1, as may
be adjusted from time to time pursuant to the provisions hereof (the "Purchase
Price"). The Warrants represented hereby are part of an aggregate of 90,000
Warrants (collectively, the "Josephthal Warrants"), 90,000 of which were issued
as of December 27, 1995 in connection with the Company's initial public
offering.
The term "Holder" as used herein shall mean_______________ and/or his
assigns to whom Warrants have been duly transferred. The Company shall maintain,
at its principal office, a Warrant Register containing the name and address of
each Holder, the number of Warrants registered in the name of each Holder, the
number of the Certificate representing such Warrants, the date of such
Certificate and any other pertinent information.
1. GRANT. The Holders are hereby granted the right to purchase, at any
-----
time during the Term, up to an aggregate of ___________ shares of Common Stock
at an initial exercise price (subject to adjustment as provided in Section 8
hereof) of $6.35 per share of Common Stock subject to the terms and conditions
of this Agreement. Except as expressly set forth herein, the shares issuable
upon exercise of the Warrants (the "Warrant Shares") are in all respects
identical to the shares of Common Stock being purchased by the Representatives
for resale to the public pursuant to the terms and provisions of the
Underwriting Agreement.
2. WARRANT CERTIFICATES. The warrant certificates (the "Warrant
--------------------
Certificates") delivered and to be delivered pursuant to this Agreement shall be
in the form set forth in Exhibit A attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
-2-
<PAGE>
3. EXERCISE OF WARRANT.
-------------------
3.1 METHOD OF EXERCISE. The Warrants initially are exercisable at an
------------------
exercise price (subject to adjustment as provided in Section 8 hereof) per share
of Common Stock as set forth In Section 6, hereof payable by certified or
official bank check in New York Clearing House funds. Upon surrender of a
Warrant Certificate with the annexed Form of Election to purchase duly executed,
together with payment of the Exercise Price (as hereinafter defined) for the
shares of Common Stock purchased at the Company's principal offices presently
located in Fort Lauderdale, Florida, the Holder shall be entitled to receive a
certificate or certificates for the shares of Common Stock so purchased. The
purchase rights represented by each Warrant Certificate are exercisable at the
option of the Holder thereof, in whole or in part (but not as to fractional
shares of the Common Stock underlying the Warrants). In the case of the purchase
of less than all the shares of Common Stock purchasable under any Warrant
Certificate, the Company shall cancel said Warrant Certificate upon its
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the shares of Common Stock purchasable thereunder.
3.2 EXERCISE BY SURRENDER OF WARRANT. In addition to the method of
--------------------------------
payment set forth in Section 3.1 hereof and in lieu of any cash payment required
thereunder, the Holder(s) of the Warrants shall have the right at any time and
from time to time to exercise the Warrants in full or in part by surrendering
the Warrant Certificate in the manner specified in Section 3.1 in exchange for
the number of shares of Common Stock equal to the product of (x) the number of
shares as to which the Warrants are being exercised multiplied by (y) a
fraction, the numerator of which is the Market Price (as defined below) of the
Common Stock less the Exercise Price, and the denominator of which is such
Market Price. Solely for the purposes of this paragraph, Market Price shall be
calculated either (i) on the date which the form of election attached hereto is
deemed to have been sent to the Company pursuant to Section 13 hereof (the
"Notice Date"), or (ii) as the average of the Market Prices for each of the five
trading days immediately preceding the Notice Date, whichever of (i) or (ii) is
greater.
3.3 DEFINITION OF MARKET PRICE. As used herein, the phrase "Market
--------------------------
Price" at any date shall be deemed to be the last reported sale price, or, in
case no such reported sale takes place on such day, the average of the last
reported sale prices for the last three (3) trading days, in either case as
officially reported by the principal securities exchange on which the Common
Stock is listed or admitted to trading by NASDAQ, or, if the Common Stock is not
listed or admitted to trading on any national securities exchange or quoted by
NASDAQ, the average closing bid price as furnished by the National Association
of Securities Dealers, Inc. ("NASD") through NASDAQ or similar organization if
NASDAQ is no longer reporting such information, or if the Common Stock is not
quoted on NASDAQ, as determined in good faith by resolution of the Board of
Directors of the Company, based on the best information available to it.
4. ISSUANCE OF CERTIFICATES. Upon the exercise of the Warrants, the
------------------------
issuance of certificates for shares of Common Stock or other securities,
properties or rights underlying such Warrants, shall be made forthwith (and in
any event within four (4) business days thereafter) without charge to the
Holders thereof including, without limitation, any tax which may be payable in
respect of the issuance thereof, and such certificates shall (subject to the
provisions of Sections
-3-
<PAGE>
5 and 7 hereof) be issued in the name of, or in such names as may be directed
by, the Holders thereof; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any such certificates in a name other than that
of the Holders, and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Common Stock
(and/or other securities, property or rights issuable upon the exercise of the
Warrants) shall be executed on behalf of the Company by the manual or facsimile
signature of the then present Chairman or Vice Chairman of the Board of
Directors or President or Vice President of the Company under its corporate seal
reproduced thereon, attested to by the manual or facsimile signature of the then
present Secretary or Assistant Secretary of the Company. Warrant Certificates
shall be dated the date of execution by the Company upon initial issuance,
division, exchange, substitution or transfer.
5. RESTRICTION ON TRANSFER OF WARRANTS. The Holder of a Warrant
-----------------------------------
Certificate, by their acceptance thereof, covenants and agrees that the Warrants
are being acquired as an investment and not with a view to the distribution
thereof; and that the Warrants may not be sold, transferred, assigned,
hypothecated or otherwise disposed of, in whole or in part, for a period of one
(1) year from the date hereof, other than (i) by operation of law or (ii) to (a)
an officer, director or partner of such Holder, (b) any Underwriter (as defined
in the Underwriting Agreement) or (c) any officer or partner of any Underwriter.
6. EXERCISE PRICE.
--------------
6.1 INITIAL AND ADJUSTED EXERCISE PRICE. Except as otherwise provided
-----------------------------------
in Section 8 hereof, the initial exercise price of each Warrant shall be $6.35
per share of Common Stock. The adjusted exercise price shall be the price which
shall result from time to time from any and all adjustments of the initial
exercise price in accordance with the provisions of Section 8 hereof.
6.2 EXERCISE PRICE. The term "Exercise Price" herein shall mean the
--------------
initial exercise price or the adjusted exercise price, depending upon the
context.
7. REGISTRATION RIGHTS.
-------------------
7.1 PIGGYBACK REGISTRATION. For a period of seven (7) years from the
----------------------
effective date (the "Effective Date") of the Company's registration statement on
Form S-1, if the Company proposes to register any of its securities under the
Act (other than in connection with a merger or pursuant to Form S-8) or sell any
of its securities pursuant to Regulation S under the Act, it shall give written
notice by registered mall at least thirty (30) days prior to the filing of each
such registration statement or the commencement of each such Regulation S
offering, as the case may be, to all other Holders of the Warrants and/or the
Warrant Shares of its intention to do so. If the Holders of the Warrants and/or
Warrant Shares notify the Company within twenty (20) days after
-4-
<PAGE>
receipt of any such notice of its or their desire to include any such securities
in such proposed registration statement or offering, as the case may be, the
Company shall afford each such Holders of the Warrants and/or Warrant Shares the
opportunity to have any such Warrant Shares registered under such registration
statement or included in the Regulation S offering, as the case may be.
Notwithstanding the provisions of this Section 7.1, the Company shall have
the right at any time after it shall have given written notice pursuant to this
Section 7.1 (irrespective of whether a written request for inclusion of any such
securities shall have been made) to elect not to (a) file any such proposed
registration statement, or to withdraw the same after the filing but prior to
the effective date thereof or (b) commence such proposed Regulation S offering
or terminate the same after the commencement but prior to the closing thereof.
7.2 DEMAND REGISTRATION.
-------------------
(a) For a period of five (5) years from the Effective Date, the
Holders of the Warrants and/or Warrant Shares representing a "Majority" (as
hereinafter defined) of such securities (assuming the exercise of all of the
Warrants) shall have the right (which right is in addition to the registration
rights under Section 7.1 hereof), exercisable by written notice to the Company,
to have the Company prepare and file with the United States Securities and
Exchange Commission, on one occasion, a registration statement and such other
documents, including a prospectus, as may be necessary in the opinion of both
counsel for the Company and counsel for the Holders, in order to comply with the
provisions of the Act, so as to permit a public offering and sale of their
respective Warrant Shares for nine (9) consecutive months by such Holders and
any other Holders of the Warrants and/or Warrant Shares who notify the Company
within ten (10) days after receiving notice from the Company of such request.
(b) The Company covenants and agrees to give written notice of
any registration request under this Section 7.2 by any Holder or Holders to all
other registered Holders of the Warrants and the Warrant Shares within ten (10)
days from the date of the receipt of any such registration request.
(c) In addition to the registration rights under Section 7.1 and
subsection (a) of this Section 7.2, for a period of five (5) years from the
Effective Date, any Holder of Warrants and/or Warrant Shares shall have the
right, exercisable by written request to the Company, to have the Company
prepare and file, on one occasion, with the Commission a registration statement
so as to permit a public offering and sale for nine (9) consecutive months by
any such Holder of its Warrant Shares provided, however, that the provisions of
Section 7.3(b) hereof shall not apply to any such registration request and
registration and all costs incident thereto shall be at the expense of the
holder making such request.
(d) Notwithstanding anything to the contrary contained herein,
if the Company shall not have filed a registration statement for the Warrant
Shares within the time period specified in Section 7.3(a) hereof pursuant to the
written notice specified in Section 7.2(a) of a Majority of the Holders of the
Josephthal Warrants and/or Warrant Shares issuable thereunder, upon the written
notice of election of a Majority of the Holders of the Warrants
-5-
<PAGE>
and/or Warrant Shares it shall have the option to repurchase (i) any and all
Warrant Shares at the higher of the Market Price per share of Common Stock on
(x) the date of the notice sent pursuant to Section 7.2(a) or (g) the expiration
of the period specified in Section 7.3(a), and (ii) any and all Warrants at such
Market Price less the Exercise Price of such Warrant. Such repurchase shall be
immediately available funds and shall close within two (2) days after the later
of (i) the expiration of the period specified in Section 7.3(a) or (Ii) the
delivery of the written notice of election specified in this Section 7.2(d).
7.3 COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION. In
-----------------------------------------------------
connection with any registration or Regulation S offering, under Section 7.1 or
7.2 hereof, the Company covenants and agrees, to the extent applicable, as
follows:
(a) The Company shall use its best efforts to file a
registration statement within thirty (30) days of receipt of any demand
therefor, shall use its best efforts to have any registration statements
declared effective at the earliest possible time, and shall furnish each Holder
desiring to sell Warrant Shares such number of prospectuses or offering
memorandum as shall reasonably be requested.
(b) The Company shall pay all costs (excluding fees and expenses
of Holder(s)' counsel and any underwriting or selling commissions), fees and
expenses in connection with all registration statements filed or offering
memorandum prepared pursuant to Sections 7.1 and 7.2(a) hereof including,
without limitation, the Company's legal and accounting fees, printing expenses,
blue sky fees and expenses. The Holder(s) will pay all costs, fees and expenses
in connection with any registration statement filed pursuant to Section 7.2(c).
(c) The Company will take all necessary action which may be
required in qualifying or registering the Warrant Shares included in a
registration statement for offering and sale under the securities or blue sky
laws of such states as reasonably are requested by the Holder(s), provided that
the Company shall not be obligated to execute or file any general to service of
process or to qualify as a foreign corporation to do business under the laws of
any such jurisdiction.
(d) The Company shall indemnify and hold harmless the Holder(s)
of the Warrant Shares to be sold pursuant to any registration statement or
offering memorandum and each person, if any, who controls such Holders within
the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange
Act of 1934, as amended ("Exchange Act"), from and against any and all loss,
claim, damage, expense or liability (including all expenses reasonably incurred
in investigating, preparing or defending against any claim whatsoever including,
without limitation, the fees and expenses of legal counsel) to which any of them
may become subject under the Act, the Exchange Act or otherwise, arising from
such registration statement or offering memorandum but only to the same extent
and with the same effect as the provisions pursuant to which the Company has
agreed to indemnify Josephthal Lyon & Ross Incorporated and Cruttenden Roth
Incorporated (collectively, the "Representatives") contained in section 7 of the
Underwriting Agreement pursuant to which the Representatives have agreed to
indemnify the Company.
-6-
<PAGE>
(e) The Holder(s) of the Warrant Shares to be sold pursuant to a
registration statement or an offering memorandum, and their successors and
assigns, shall severally, and not jointly, indemnify the Company, its officers
and directors and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, from and
against any and all loss, claim, damage or expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which they may become subject under the Act, the
Exchange Act or otherwise, arising from information furnished in writing by or
on behalf of such Holders, or their successors or assigns, for specific
inclusion in such registration statement or offering memorandum to the same
extent and with the same effect as the provisions contained in Section 7 of the
Underwriting Agreement pursuant to which the Representatives have agreed to
indemnify the Company.
(f) Nothing contained in this Agreement shall be construed as
requiring the Holder(s) to exercise their Warrants prior to the initial filing
of any registration statement or the effectiveness thereof.
(g) The Company shall not permit the inclusion of any securities
other than the Warrant Shares m any registration statement filed pursuant to
Section 7.2 hereof, or permit any other registration statement to be or remain
effective during the effectiveness of a registration statement filed pursuant to
Section 7.2 hereof, without the prior written consent of the Holders of the
Warrants and Warrant Shares representing a Majority of such securities.
(h) The Company shall furnish to each Holder participating in
the offering and to each underwriter, if any, a signed counterpart, addressed to
such Holder or underwriter, of (i) an opinion of counsel to the Company, dated
the Effective Date (and, if such registration includes an underwritten public
offering, an opinion dated the date of the closing under the underwriting
agreement), and (ii) a "cold comfort" letter dated the Effective Date (and, if
such registration includes an underwritten public offering, a letter dated the
date of the under the underwriting agreement) signed by the independent public
accountants who have issued a report on the Company's financial statements
included in such registration statement or offering memorandum, in each case
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) or offering memorandum and, in
the case of such accountants' letter, with respect to events subsequent to the
date of such financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to underwriters in
underwritten offerings of securities.
(i) The Company shall as soon as practicable after the Effective
Date of the registration statement, and in any event within 15 months
thereafter, make "generally available to its security holders" (within the
meaning of Rule 158 under the Act) an earnings statement (which need not be
audited) complying with Section 11(a) of the Act and covering a period of at
least 12 consecutive months beginning after the Effective Date.
(j) The Company shall deliver promptly to each Holder
participating in the offering requesting the correspondence and memoranda
described below and to the managing underwriters, copies of all correspondence
between the Commission and the Company, its counsel
-7-
<PAGE>
or auditors and all memoranda relating to discussions with the Commission or its
staff with respect to the registration statement or offering memorandum and
permit each Holder and underwriters to do such investigation, upon reasonable
advance notice, with respect to information contained in or omitted from the
registration statement or offering memorandum as it deems reasonably necessary
to comply with applicable securities laws or the rules and regulations of NASD.
Such investigation shall include access to books, records and properties and
opportunities to discuss the business of the Company with its officers and
independent auditors, all to such reasonable extent and at such reasonable times
and as often as any such Holder or underwriter shall reasonably request.
(k) The Company shall enter into an underwriting agreement with
the underwriters selected for such underwriting by the Holders of a Majority of
the Josephthal Warrant Shares requested to be included in such underwriting,
which may be Josephthal Lyon & Ross Incorporated. Such agreement shall be
satisfactory in form and substance to the Company, each Holder and such managing
underwriters, and shall contain such representations, warranties and covenants
by the Company and such other terms as are customarily contained in agreements
of that type used by the managing underwriter. The Holders shall be parties to
any underwriting agreement relating to an underwritten sale of their Warrant
Shares and may, at their option, require that any or all the representations,
warranties and covenants of the Company to or for the benefit of such
underwriters shall also be made to and for the benefit of such Holders. Such
Holders shall not be required to make any representations or warranties to or
agreements with the Company or the underwriters except as they may relate to
such Holders and their intended methods of distribution.
(l) In addition to the Warrant Shares, upon the written request
therefor by any Holder(s), the Company shall include in the registration
statement or offering memorandum any other securities of the Company held by
such Holder(s) as of the date of filing of such registration statement or the
distribution of the offering memorandum, including without limitation restricted
shares of Common Stock, options, warrants or any other securities convertible
into shares of Common Stock.
(m) For purposes of this Agreement, the term "Majority" in
reference to the Holders of Josephthal Warrants and/or Warrant Shares issuable
thereunder, shall mean in excess of fifty percent (50%) of the then outstanding
Josephthal Warrants and/or Warrant Shares that (i) are not held by the Company,
an affiliate, officer, creditor, employee or agent thereof or any of their
respective affiliates, members of their family, persons acting as nominees or in
conjunction therewith and (ii) have not been resold to the public.
8. ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SECURITIES.
------------------------------------------------------
8.1 SUBDIVISION AND COMBINATION. In case the Company shall at any
---------------------------
time subdivide or combine the outstanding shares of Common Stock, the Exercise
Price shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
8.2 STOCK DIVIDENDS AND DISTRIBUTIONS. In case the Company shall pay
---------------------------------
a
-8-
<PAGE>
dividend in, or make a distribution of, shares of Common Stock or of the
Company's capital stock convertible into Common Stock, the Exercise Price shall
forthwith be proportionately decreased. An adjustment made pursuant to this
Section 8.2 shall be made as of the record date for the subject stock dividend
or distribution.
8.3 ADJUSTMENT IN NUMBER OF SECURITIES. Upon each adjustment of the
----------------------------------
Exercise Price pursuant to the provisions of this Section 8, the number of
Securities issuable upon the exercise at the adjusted exercise price of each
Warrant shall be adjusted to the nearest full amount by multiplying a number
equal to the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares issuable upon exercise of the Warrants immediately
prior to such adjustment and dividing the product so obtained by the adjusted
Exercise Price.
8.4 DEFINITION OF COMMON STOCK. For the purpose of this Agreement,
--------------------------
the term "Common Stock" shall mean (i) the class of stock designated as Common
Stock in the Articles of Incorporation of the Company as may be amended as of
the date hereof, or (li) any other class of stock resulting from successive
changes or reclassifications of such Common Stock consisting solely of changes
in par value, or from par value to no par value, or from no par value to par
value. In the event that the Company shall after the date hereof issue
securities with greater or superior voting rights than the shares of Common
Stock outstanding as of the date hereof, the Holders, at their option, may
receive upon exercise of any Warrant either shares of Common Stock or a like
number of such securities with greater or superior voting rights.
8.5 MERGER OR CONSOLIDATION. In case of any consolidation of the
-----------------------
Company with, or merger of the Company with or merger of the Company into,
another corporation (other than a consolidation or merger which does not result
in any reclassification or change of the 0utstanding Common Stock), the
corporation formed by such consolidation or merger shall execute and deliver to
the Holders a supplemental warrant agreement providing that the holder of each
Warrant then outstanding or to be outstanding shall have the right thereafter
(until the expiration of such Warrant) to receive, upon exercise of such
warrant, the kind and amount of shares of stock and other securities and
property receivable upon such consolidation or merger, by a holder of the number
of shares of Common Stock of the Company for which such warrant might have been
exercised immediately prior to such consolidation, merger, sale or transfer.
Such supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in Section 8. The above provision of this
subsection shall similarly apply to successive consolidations or mergers.
8.6 NO ADJUSTMENT OF EXERCISE PRICE IN CERTAIN CASES. No adjustment
------------------------------------------------
of the Exercise Price shall be made:
(a) Upon the issuance or sale of the Warrants or the shares of
Common Stock issuable upon the exercise of the Warrants; or
(b) If the amount of said adjustment shall be less than two
cents ($.02) per Warrant Share, provided, however, that in such case any
adjustment that would otherwise be required then to be made shall be carried
forward and shall be made at the time of and together with the next subsequent
adjustment which, together
-9-
<PAGE>
with any adjustment so carried forward, shall amount to at least two cents
($.02) per Warrant Share.
9. EXCHANGE AND REPLACEMENT OF WARRANT CERTIFICATES. Each Warrant
------------------------------------------------
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Warrant Shares in such denominations as
shall be designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
10. ELIMINATION OF FRACTIONAL INTERESTS. The Company shall not be required
-----------------------------------
to issue certificates representing fractions of shares of Common Stock upon the
exercise of the Warrants, nor shall it be required to issue scrip or pay cash in
lieu of fractional interests, it being the intent of the parties that all
fractional interests shall be eliminated by rounding any fraction up to the
nearest whole number of shares of Common Stock or other securities, properties
or rights.
11. RESERVATION AND LISTING OF SECURITIES. The Company shall at all times
-------------------------------------
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issuance upon the exercise of the Warrants, such number of
shares of Common Stock or other securities, properties or rights as shall be
issuable upon the exercise thereof. The Company covenants and that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of common Stock and other securities issuable upon such exercise shall be duly
and validly issued, fully paid, non-assessable and not subject to the preemptive
rights of any stockholder. As long as the Warrants shall be outstanding, the
Company shall use its best efforts to cause all shares of Common Stock issuable
upon the exercise of the Warrants to be listed (subject to official notice of
issuance) on all securities exchanges on which the Common Stock issued to the
public in connection herewith may then be listed and/or quoted on NASDAQ/NM.
12. NOTICES TO WARRANT HOLDERS. Nothing contained in this Agreement shall
--------------------------
be construed as conferring upon the Holders the right to vote or to consent or
to receive notice as a stockholder in respect of any meetings of stockholders
for the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Company. If, however, at any time prior to
the expiration of the Warrants and their exercise, any of the following events
shall occur:
(a) the Company shall take a record of the holders of its shares
of Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or
-10-
<PAGE>
retained earnings, as indicated by the accounting treatment of such dividend or
distribution on the books of the Company; or
(b) the Company shall offer to all the holders of its Common
Stock any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the Company, or
any option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall be
proposed; then, in any one or more of said events, the Company shall give
written notice of such event at least fifteen (15) days prior to the date fixed
as a record date or the date of closing the transfer books for the determination
of the stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment of any such
dividend, or the issuance of any convertible or exchangeable securities, or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
13. NOTICES. All notices, requests, consents and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly made and
sent when delivered, or mailed by registered or certified mail, return receipt
requested:
(a) If to the registered Holders of the Warrants, to the address
of such [Holder] as shown on the books of the Company; or
(b) If to the Company, to Vacation Break U.S.A., Inc., 6400 N.
Andrews Avenue, Suite 200, Ft. Lauderdale, Florida 33309, Attention: President
or to such other address as the Company may designate by notice to the Holders.
14. SUPPLEMENTS AND AMENDMENTS. The Company may from to time supplement or
--------------------------
amend this Agreement without the approval of any Holders of Warrant Certificates
in order to cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any provisions herein, or to
make any other provisions in regard to matters or questions arising hereunder
which the Company may deem necessary or desirable and which the Company deems
shall not adversely affect the interests of the Holders of Warrant Certificates.
15. SUCCESSORS. All the covenants and provisions of this Agreement shall
----------
be binding upon and inure to the benefit of the Company, the Holders and their
respective successors and assigns hereunder.
-11-
<PAGE>
16. TERMINATION. This Agreement shall terminate at the close of business
-----------
on December 21, 2002. Notwithstanding the foregoing, the indemnification
provisions of Section 6 shall survive such termination until the close of
business on December 21, 2008.
17. GOVERNING LAW: SUBMISSION TO JURISDICTION. This Agreement and each
-----------------------------------------
Warrant Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of New York and for all purposes shall be construed in
accordance with the laws of said State without giving effect to its rules
governing the conflicts of laws.
The Company and the Holder hereby agree that any action, proceeding or
claim against it arising out of or relating in any way to, this Agreement shall
be brought and enforced in the courts of the State of New York or of the United
States of America for the Southern District of New York, and irrevocably submit
to such jurisdiction, which jurisdiction shall be exclusive. The Company and the
Holder hereby irrevocably waive any objection to such exclusive jurisdiction or
inconvenient forum. Any such process or summons to be served upon the Company or
the Holder (at the option of the party bringing such action, proceeding or
claim) may be served by transmitting a copy thereof, by registered or certified
mail, return receipt requested, postage prepaid, addressed to it at the address
set forth in Section 13 hereof. Such mailing shall be deemed personal service
and shall be legal and binding upon the party so served in any action,
proceeding or claim. The Company and the Holder agree that the prevailing
party(ies) in any such action or proceeding shall be entitled to recover from
the other party(ies) all of its/their reasonable legal costs and expenses
relating to such action or proceeding and/or incurred in connection with the
preparation therefor.
18. ENTIRE AGREEMENT: MODIFICATION. This Agreement (including the
------------------------------
Underwriting Agreement to the extent portions thereof are referred to herein)
contains the entire understanding between the parties hereto with resect to the
subject matter hereof and may not be modified or amended except by a writing
duly signed by the party against whom enforcement of the modification or
amendment is sought.
19. SEVERABILITY. If any provision of this Agreement shall be held to be
------------
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.
20. CAPTIONS. The caption headings of the Sections of this Agreement are
--------
for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
21. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
--------------------------
construed to give to any person or corporation other than the Company and the
Holder(s) of the Warrant Certificates or Warrant Shares any legal or equitable
right, remedy or claim under this Agreement; and this Agreement shall be for the
sole and Certificates or Warrant Shares.
22. COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
-12-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
[SEAL] VACATION BREAK U.S.A., INC.
By:
-------------------------------------
Attest: Name:
Title:
- --------------------------
Secretary
----------------------------------------
Name:
-13-
<PAGE>
EXHIBIT A
FORM OF WARRANT CERTIFICATE
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
ON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE 5:30 P.M.,
NEW YORK TIME, December 21, 2000
No. W-
WARRANT CERTIFICATE
This Warrant Certificate certifies that ___________________, or registered
assigns, is the registered holder of ________ Warrants, each Warrant to purchase
initially, at any time from December 21, 1996 until 5:30 p.m. New York time on
December 21, 2000 ("Expiration Date"), one fully-paid and non-assessable share
of common stock, $.01 par value ("Common Stock") of VACATION BREAK U.S.A., INC.,
a Florida corporation (the "Company"), at the initial exercise price, subject to
adjustment in certain events (the "Exercise Price"), of $6.35 per share of
Common Stock upon surrender of this Warrant Certificate and payment of the
Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the Warrant Agreement dated as of December
27, 1995 by and among the Company, JOSEPHTHAL LYON & ROSS INCORPORATED and
CRUTTENDEN ROTH INCORPORATED (the "Warrant Agreement"). Payment of the Exercise
Price shall be made by certified or official bank check in New York Clearing
House funds payable to the order of the Company or by surrender of this Warrant
Certificate.
No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, hereby shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a
-14-
<PAGE>
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair, the rights of the
holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax or other governmental charge
imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such numbered unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly exercised under its corporate seal.
Dated as of December _____, 1995.
VACATION BREAK U.S.A., INC.
By:
-----------------------------------
[SEAL] Name: Kevin Sheehan
Title: President
ATTEST:
- --------------------------
Secretary
-15-
<PAGE>
FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase __________ shares of Common
Stock and herewith tenders in payment for such securities a certified or
official bank check payable in New York Clearing House Funds to the order of
___________ in the amount of $________ , all in accordance with the terms of
Section 3.1 of the Representative Warrant Agreement dated as of December 25,
1995 between VACATION BREAK U.S.A., INC. and ____________. The undersigned
requests that a certificate for such securities be registered in the name of
________ whose address is and that such Certificate be delivered to
____________whose address is_________.
Dated: _________________
Signature_________________________________
(Signature must conform in all respects to name of holder as specified on
the face of the Warrant Certificate.)
(Insert Social Security or Other Identifying Number of Holder)
-16-
<PAGE>
FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.2
The undersigned hereby irrevocably elects to exercise the right, represented by
this Warrant to purchase ________ shares of Common Stock all in accordance with
the terms of Section 3.2 of the Representative Warrant Agreement dated as of
December 25, 1997 between VACATION BREAK U.S.A., INC. and ______________. The
undersigned requests that a certificate for securities be registered in the name
of _________whose address is_________ and that such Certificate be delivered to
_______whose address is_________.
Dated:_______________
Signature __________________________________
(Signature must conform in all respects to name of holder as specified on
the face of the Warrant Certificate.)
(Insert Social Security or Other Identifying Number of Holder)
-17-
<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
(FOR VALUE RECEIVED) __________________________ hereby sells, assigns and
transfers unto __________________ .
(Please print name and address of transferee)
this Warrant Certificate, together with all right, tide and interest therein,
and does hereby irrevocably constitute and appoint _________ Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Dated:___________________
Signature________________________________
(Signature must conform in all respects to name of holder as specified on
the face of the Warrant Certificate.)
(Insert Social Security or Other Identifying Number of Holder)
-18-
<PAGE>
EXHIBIT 4.10
FIRST AMENDMENT AND SUPPLEMENT TO
WARRANT AGREEMENT
FIRST AMENDMENT AND SUPPLEMENT TO WARRANT AGREEMENT, dated as of March 4,
1998 (the "Agreement"), by and among FAIRFIELD COMMUNITIES, INC., a Delaware
corporation (the "Company"), and _______________ ("Holder").
WITNESSETH
WHEREAS, pursuant to the Warrant Agreement, dated as of December 27, 1995
(the "Warrant Agreement"), among Vacation Break U.S.A., Inc. ("Vacation Break")
and Holder, Vacation Break issued to the Holder warrants ("Vacation Break
Warrants") to purchase up to an aggregate of _________ shares of common stock,
$.01 par value, of Vacation Break ("Vacation Break Common Stock") at an exercise
price of $6.35 which Vacation Break Warrants were part of an aggregate of 90,000
warrants issued to Josephthal Lyon & Ross Incorporated ("Josephthal") pursuant
to the Representatives' Warrant Agreement, dated as of December 27, 1995, among
Vacation Break, Josephthal and Cruttenden Roth Incorporated;
WHEREAS, Vacation Break has become a wholly owned subsidiary of the Company
as a result of the consummation of the merger of FCVB Corp., a wholly owned
subsidiary of the Company, with and into Vacation Break (the "Merger") on the
terms and subject to the conditions provided for in the Agreement and Plan of
Merger, dated as of August 8, 1997 (the "Merger Agreement"), among the Company,
FCVB Corp., and Vacation Break; and
WHEREAS, the Merger Agreement provides that the Company will deliver to
each holder of a Vacation Break Warrant, upon such holder's delivery of its
warrant certificate ("VB Certificate") representing Vacation Break Warrants to
purchase shares of Vacation Break Common Stock to the Company, a supplemental
warrant agreement representing the right (until the expiration of such holder's
Vacation Break Warrants) to receive upon the exercise thereof, such number of
shares of common stock, par value $.01 per share, of the Company ("Common
Stock") rounded up or down to the nearest whole share that is equal to the
product of .6075 multiplied by the number of shares of Vacation Break Common
Stock subject to such Vacation Break Warrants immediately prior to the effective
time of the Merger, at a price per share equal to the aggregate exercise price
for the shares of Vacation Break Common Stock subject to such Vacation Break
Warrants divided by the number of shares of Common Stock deemed to be
purchasable pursuant to such Vacation Break Warrants; and
WHEREAS, the Company effected a two-for-one stock split of Common Stock
(the "Stock Split") in the form of a 100% stock dividend distributable on
January 30, 1998 and pursuant to the Warrant Agreement, the number of shares of
Common Stock subject to the Warrants (as defined below) and the exercise price
thereof was adjusted to reflect the Stock Split.
<PAGE>
NOW, THEREFORE, in consideration of the premises, the agreements set forth
herein and in the Warrant Agreement and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. The First paragraph of the Warrant Agreement is hereby amended and
restated in its entirety to read as follows:
This is to certify that, for value received and subject to the conditions
herein set forth, ____________ or his registered assigns is entitled to
purchase, at any time during the period (the "Term") commencing on the date
hereof and ending at 5:30 p.m. Eastern time, December 21, 2000 (the
"Expiration Date"), such number of shares of the common stock, par value
$.01 per share (the "Common Stock") of Fairfield Communities, Inc., a
Delaware corporation (the "Company"), as equals the number of warrants (the
"Warrants") evidenced by this Agreement (such shares purchasable upon
exercise of the Warrants are herein called the "Warrant Shares"). The
Holder acknowledges and agrees that the foregoing constitutes a complete
and accurate description of all Vacation Break Warrants granted to the
Holder and waives any other entitlement to, or options to acquire, Vacation
Break Warrants arising prior to December 19, 1997.
2. Section 1 of the Warrant Agreement is hereby amended and restated in
its entirety to read as follows:
1. COMMON STOCK. Up to an aggregate of __________ shares of Common Stock
------------
will be issuable upon exercise of the Warrants at an initial exercise price
(subject to adjustment as provided in Section 8 hereof) of $5.225 per share
of Common Stock subject to the terms and conditions of this Agreement.
3. Section 2 of the Warrant Agreement is hereby amended and restated in
its entirety to read as follows:
2. SUPPLEMENTAL WARRANT CERTIFICATES. The Holder shall surrender to the
---------------------------------
Company his warrant certificate ("VB Certificate") representing Vacation
Break Warrants to purchase an aggregate of _______ shares of Vacation Break
Common Stock. The Company will issue to the Holder a supplemental warrant
certificate (the "Warrant Certificate") in the form set forth in Exhibit A
attached hereto and made a part hereof, with such appropriate insertions,
omissions, substitutions, and other variations as required or permitted by
this Agreement.
4. Section 3.1 of the Warrant Agreement is hereby amended and restated in
its entirety to read as follows:
3.1 METHOD OF EXERCISE. As a condition to exercise of the Warrants,
------------------
the Holder must sign and return to the Company c/o Jones, Day, Reavis &
Pogue copies of this Agreement and a Representation Letter addressed to the
Company regarding the Holder's status as an accredited investor, together
with the VB
-2-
<PAGE>
Certificate relating to the Vacation Break Warrants, by which
execution and delivery the Holder shall be deemed to have surrendered the
VB Certificate to the Company for cancellation of the Vacation Break
Warrants. The Company will mail to the Holder the Warrant Certificate
within 5 business days from the receipt by the Company of this executed
Agreement, the executed Representation Letter and the VB Certificate. The
Warrants initially are exercisable at the exercise price (subject to
adjustment as provided in Section 8 hereof) per share of Common Stock as
set forth in Section 6 hereof payable by certified or official bank check
in New York Clearing House funds or, upon prior approval, personal check.
Upon surrender of a Warrant Certificate with the annexed Form of Election
to Purchase duly executed, together with payment of the Exercise Price (as
hereinafter defined) for the shares of Common Stock purchased at the
Company's principal offices presently located in Little Rock, Arkansas, the
Holder shall be entitled to receive a certificate or certificates for the
shares of Common Stock so purchased. The purchase rights represented by
each Warrant Certificate are exercisable at the option of the Holder
thereof, in whole or in part (but not as to fractional shares of the Common
Stock underlying the Warrants). In the case of the purchase of less than
all the shares of Common Stock purchasable under any Warrant Certificate,
the Company shall cancel said Warrant Certificate upon surrender thereof
and shall execute and deliver a new Warrant Certificate of like tenor for
the balance of the shares of Common Stock purchasable thereunder.
5. Section 3.3 of the Warrant Agreement is hereby amended and restated in
its entirety to read as follows:
3.3 DEFINITION OF MARKET PRICE. As used herein, the phrase "Market
--------------------------
Price" at any date shall be deemed to be the last reported sale price of a
share of Common Stock, or, in case no such reported sale takes place on
such day, the average of the last reported sale prices of a share of Common
Stock for the last three (3) trading days in either case as officially
reported by the New York Stock Exchange or, if the Common Stock is not then
listed on the New York Stock Exchange, the principal national securities
exchange on which the Common Stock is then listed or admitted to trading
or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, the average closing bid price as furnished by
the National Association of Securities Dealers, Inc. ("NASD") through
Nasdaq or a similar organization if Nasdaq is no longer reporting such
information, or if the Common Stock is not quoted on Nasdaq, as determined
in good faith by resolution of the Board of Directors of the Company, based
on the best information available to it.
-3-
<PAGE>
6. Section 6 of the Warrant Agreement is hereby amended and restated in
its entirety to read as follows:
6. EXERCISE PRICE.
--------------
6.1 INITIAL AND ADJUSTED EXERCISE PRICE. Except as otherwise provided
-----------------------------------
in Section 8 hereof, the initial exercise price of each Warrant shall be
$5.225 per share of Common Stock. The adjusted exercise price shall be the
price which shall result from time to time from any and all adjustments of
the initial exercise price in accordance with the provisions of Section 8
hereof.
6.2 EXERCISE PRICE. The term "Exercise Price" herein shall mean the
--------------
initial exercise price or the adjusted exercise price, depending upon the
context.
7. The last sentence of Section 11 of the Warrant Agreement is hereby
amended and restated in its entirety to read as follows:
As long as the Warrants are outstanding, the Company shall use its best
efforts to cause all shares of Common Stock issuable upon the exercise of
the Warrants to be listed (subject to official notice of issuance) on all
securities exchanges on which the Common Stock issued to the public in
connection herewith may then be listed and/or quoted.
8. Section 13.(b) of the Warrant Agreement is hereby amended and restated
in its entirety to read as follows:
13. NOTICES.
-------
(b) If to the Company, to Fairfield Communities, Inc., 11001 Executive
Center Drive, Little Rock, Arkansas 72201, or to such other address as the
Company may designate by notice to the Holders.
9. COVENANT. IN ORDER TO EXERCISE HIS WARRANTS, THE HOLDER MUST
--------
REPRESENT AND WARRANT TO THE COMPANY THAT HE IS AN "ACCREDITED INVESTOR" AS
DEFINED IN RULE 501(A) PROMULGATED UNDER THE SECURITIES ACT AT THE TIME OF
EXERCISE. As a condition to exercise of his Warrants, at the time the Holder
presents his Warrant Certificate to the Company in order to exercise his
Warrants, the Holder will deliver to the Company a letter containing the
representations and warranties set forth below:
(a) he has reviewed any relevant reports, proxy statements or other
information filed by the Company with the Securities and Exchange
Commission or has otherwise obtained copies of such documents from the
Company (which were provided to him at no cost), which he deems necessary
in order to make the investment decision.
-4-
<PAGE>
(b) he is acquiring the Warrant Shares for his own account and for
investment purposes and does not intend to redistribute the Shares except
in a transaction or transactions exempt from registration under the federal
and state securities laws or pursuant to an effective registration
statement under such laws.
(c) he (i) is an "accredited investor" as defined in Rule 501(a)
promulgated under the Securities Act, (ii) has such knowledge and
experience in financial and business matters that he is capable of
independently evaluating the risks and merits of acquiring the Warrant
Shares, (iii) has independently evaluated the risks and merits of acquiring
the Warrant Shares and has independently determined that the Warrant Shares
are a suitable investment for him, and (iv) has sufficient financial
resources to bear the loss of his entire investment in the Warrant Shares.
10. REAFFIRMATION OF THE WARRANT AGREEMENT. To the extent that any
--------------------------------------
provision hereof conflicts with any provision of the Warrant Agreement, the
provision hereof shall control. Except as expressly amended hereby, the terms
and conditions of the Warrant Agreement shall remain in full force and effect.
11. EFFECTIVE DATE OF AGREEMENT. Notwithstanding the date of execution
---------------------------
hereof, this Agreement shall be deemed effective as of December 19, 1997, except
Sections 1, 2 and 6 of this Agreement which shall be deemed effective as of
March 4, 1998.
12. COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
[REMAINDER OR PAGE INTENTIONALLY LEFT BLANK]
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of March 4, 1998.
FAIRFIELD COMMUNITIES, INC.
By:
------------------------------------------
Marcel J. Dumeny
Senior Vice President and Secretary
---------------------------------------------
Name:
-6-
<PAGE>
EXHIBIT A
FORM OF SUPPLEMENTAL WARRANT CERTIFICATE
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
ON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
AND MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE EXTENT APPLICABLE, RULE
144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE
DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION
SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT AND THE FIRST AMENDMENT AND
SUPPLEMENT TO WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE 5:30 P.M.,
NEW YORK TIME, December 21, 2000
No. W-______
SUPPLEMENTAL WARRANT CERTIFICATE
This Supplemental Warrant Certificate certifies that __________ ("Holder") is
the registered holder of ________ Warrants, each Warrant to purchase initially,
at any time from the date hereof until 5:30 p.m. New York time on December 21,
2000 ("Expiration Date"), one fully-paid and non-assessable share of common
stock, $.01 par value per share ("Common Stock") of Fairfield Communities, Inc.,
a Delaware corporation (the "Company"), at the initial exercise price, subject
to adjustment in certain events (the "Exercise Price"), of $5.225 per share of
Common Stock upon surrender of this Supplemental Warrant Certificate and payment
of the Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the Warrant Agreement, dated as of December
27, 1995, among Vacation Break U.S.A., Inc. and Holder and the First Amendment
and Supplement to Warrant Agreement, dated as of March 4, 1998, by and among the
Company and Holder (collectively, the "Supplemental Warrant Agreement"). Payment
of the Exercise Price shall be made by certified or official bank check in New
York Clearing House funds payable to the order of the Company or by surrender of
this Supplemental Warrant Certificate.
No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, hereby shall thereafter be void.
The Warrants evidenced by this Supplemental Warrant Certificate are part of
a duly authorized issue of Warrants issued pursuant to the Supplemental Warrant
Agreement, which Supplemental Warrant Agreement is hereby incorporated by
reference in and made a part of this
<PAGE>
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
The Supplemental Warrant Agreement provides that, upon the occurrence of
certain events, the Exercise Price and the type and/or number of the Company's
securities issuable thereon may, subject to certain conditions, be adjusted. In
such event, the Company will, at the request of the holder, issue a new
supplemental warrant certificate evidencing the adjustment in the Exercise Price
and the number and/or type of securities issuable upon the exercise of the
Warrants; provided, however, that the failure of the Company to issue such new
supplemental warrant certificates shall not in any way change, alter, or
otherwise impair, the rights of the holder as set forth in the Supplemental
Warrant Agreement.
Upon due presentment for registration of transfer of this Supplemental
Warrant Certificate at an office or agency of the Company, a new Supplemental
Warrant Certificate or Supplemental Warrant Certificates of like tenor and
evidencing in the aggregate a like number of Warrants shall be issued to the
transferee(s) in exchange for this Supplemental Warrant Certificate, subject to
the limitations provided herein and in the Supplemental Warrant Agreement,
without any charge except for any tax or other governmental charge imposed in
connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Supplemental Warrant Certificate, the Company shall forthwith issue to the
holder hereof a new Supplemental Warrant Certificate representing such numbered
unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Supplemental Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, and of any distribution to the holder(s) hereof, and for
all other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Supplemental Warrant Certificate which are defined
in the Supplement Warrant Agreement shall have the meanings assigned to them in
the Supplemental Warrant Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of March __, 1998.
Attest: FAIRFIELD COMMUNITIES, INC.
By:
- -------------------------------- ----------------------------------------
Anna Walton Marcel J. Dumeny
Assistant Secretary Senior Vice President and Secretary
-2-
<PAGE>
FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1
The undersigned hereby irrevocably elects to exercise the right,
represented by this Supplemental Warrant Certificate, to purchase ______________
shares of common stock, par value $.01 per share, of Fairfield Communities, Inc.
and herewith tenders in payment for such securities a certified or official bank
check payable in New York Clearing House Funds to the order of _________________
__________________________________ in the amount of $________ , all in
accordance with the terms of Section 3.1 of the Warrant Agreement, dated as of
December 27, 1995, among Vacation Break U.S.A., Inc. and _______________________
("Holder") and the First Amendment and Supplement to Warrant Agreement, dated as
of March 4, 1998, among Fairfield Communities, Inc. and Holder. The undersigned
requests that a certificate for such securities be registered in the name of
________________________________________________________________ whose address
is _____________________________________________________________________ and
that such certificate be delivered to ____________________________________ whose
address is _______________________________________________________.
Dated:
----------------------------
Signature
--------------------------------------------------
(Signature must conform in all respects to name of
holder as specified on the face of the Supplemental
Warrant Certificate.)
-------------------------------------------------------------
(Insert Social Security or Other Identifying Number of Holder)
<PAGE>
FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.2
The undersigned hereby irrevocably elects to exercise the right,
represented by this Supplemental Warrant Certificate to purchase ________ shares
of common stock, par value $.01 per share, of Fairfield Communities, Inc. all in
accordance with the terms of Section 3.2 of the Warrant Agreement, dated as of
December 27, 1995, among Vacation Break U.S.A., Inc. and __________________
("Holder") and the First Amendment and Supplement to Warrant Agreement, dated as
of March 4, 1998, among Fairfield Communities, Inc. and Holder. The undersigned
requests that a certificate for the securities be registered in the name of
whose address is
- ---------------------------------
__________________________________________________________________ and that such
certificate be delivered to __________________________________________ whose
address is __________________________________________________________________.
Dated:
--------------------------
Signature
----------------------------------------------
(Signature must conform in all respects to name of
holder as specified on the face of the Supplemental
Warrant Certificate.)
------------------------------------------------------------
(Insert Social Security or Other Identifying Number of Holder)
<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Supplemental Warrant Certificate.)
FOR VALUE RECEIVED, _____________ hereby sells, assigns and transfers unto
_______________________________________________________________________________
(Please print name and address of transferee)
this Supplemental Warrant Certificate, together with all right, tide and
interest therein, and does hereby irrevocably constitute and appoint
____________________________________________ as Attorney, to transfer the within
Supplemental Warrant Certificate on the books of the within-named Company, with
full power of substitution.
Dated:
-----------------------------------
Signature
---------------------------------------------
(Signature must conform in all respects to name of
holder as specified on the face of the Supplemental
Warrant Certificate.)
------------------------------------------------------------
(Insert Social Security or Other Identifying Number of Holder)
<PAGE>
EXHIBIT 4.11
WARRANT AGREEMENT
VACATION BREAK U.S.A., INC.,
AND
____________________________
DATED AS OF MAY 22, 1997
<PAGE>
WARRANT NO. ____ Warrant to Purchase
Void after 5:00 P.M. _______ Shares
Eastern Time of Common Stock ($.01
May 22, 2002 par value)
COMMON STOCK PURCHASE WARRANT
VACATION BREAK U.S.A., INC.
(One Warrant is required for the purchase of one Share,
subject to adjustment as provided below)
This is to certify that, for value received and subject to the conditions
herein set forth, __________________, or his registered assigns is entitled to
purchase, at any time during the period (the "Term") commencing on May 22, 1997
and ending at 5:00 P.M. Eastern time, May 22, 2002 (the "Expiration Date"), such
number of shares of the Common Stock ($.01 par value) ("Common Stock" or
"Company Shares") of Vacation Break U.S.A., Inc., a Florida corporation (the
"Company"), as shall equal the number of warrants (the "Warrants") evidenced by
this Certificate (such Shares purchasable upon exercise of the Warrants are
herein called the "Warrant Shares"). The purchase price of each Warrant Share
shall be the applicable rate set forth in Section 1, as may be adjusted from
time to time pursuant to the provisions hereof (the "Purchase Price"). The
Warrants represented hereby are part of an aggregate of 120,000 Warrants
(collectively, the "Josephthal Warrants"), 90,000 of which were issued as of
December 27, 1995 in connection with the Company's initial public offering and
30,000 of which became issuable by the Company to Josephthal Lyon & Ross
Incorporated pursuant to action taken by the Company's Board of Directors on May
22, 1997.
The term "Holder" as used herein shall mean Josephthal Holdings and/or his
assigns to whom Warrants have been duly transferred. The Company shall
maintain, at its principal office, a Warrant Register containing the name and
address of each Holder, the number of Warrants registered in the name of each
Holder, the number of the Certificate representing such Warrants, the date of
such Certificate and any other pertinent information.
1. GRANT. The Holders are hereby granted the right to purchase, at any
-----
time during the Term, up to an aggregate of ___________ shares of Common Stock
at an initial exercise price (subject to adjustment as provided in Section 7
hereof) of $7.50 per share of Common Stock subject to the terms and conditions
of this Agreement.
2. WARRANT CERTIFICATES. The warrant certificates (the "Warrant
--------------------
Certificates") delivered and to be delivered pursuant to this Agreement shall be
in the form set forth in Exhibit A attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
-2-
<PAGE>
3. EXERCISE OF WARRANT.
-------------------
3.1 METHOD OF EXERCISE. The Warrants initially are exercisable at an
------------------
exercise price (subject to adjustment as provided in Section 7 hereof) per share
of Common Stock as set forth In Section 5, hereof payable by certified or
official bank check in New York Clearing House funds. Upon surrender of a
Warrant Certificate with the annexed Form of Election to purchase duly executed,
together with payment of the Exercise Price (as hereinafter defined) for the
shares of Common Stock purchased at the Company's principal offices presently
located in Fort Lauderdale, Florida, the Holder shall be entitled to receive a
certificate or certificates for the shares of Common Stock so purchased. The
purchase rights represented by each Warrant Certificate are exercisable at the
option of the Holder thereof, in whole or in part (but not as to fractional
shares of the Common Stock underlying the Warrants). In the case of the purchase
of less than all the shares of Common Stock purchasable under any Warrant
Certificate, the Company shall cancel said Warrant Certificate upon its
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the shares of Common Stock purchasable thereunder.
3.2 EXERCISE BY SURRENDER OF WARRANT. In addition to the method of
--------------------------------
payment set forth in Section 3.1 hereof and in lieu of any cash payment required
thereunder, the Holder(s) of the Warrants shall have the right at any time and
from time to time to exercise the Warrants in full or in part by surrendering
the Warrant Certificate in the manner specified in Section 3.1 in exchange for
the number of shares of Common Stock equal to the product of (x) the number of
shares as to which the Warrants are being exercised multiplied by (y) a
fraction, the numerator of which is the Market Price (as defined below) of the
Common Stock less the Exercise Price, and the denominator of which is such
Market Price. Solely for the purposes of this paragraph, Market Price shall be
calculated either (i) on the date which the form of election attached hereto is
deemed to have been sent to the Company pursuant to Section 12 hereof (the
"Notice Date"), or (ii) as the average of the Market Prices for each of the five
trading days immediately preceding the Notice Date, whichever of (i) or (ii) is
greater.
3.3 DEFINITION OF MARKET PRICE. As used herein, the phrase "Market
--------------------------
Price" at any date shall be deemed to be the last reported sale price, or, in
case no such reported sale takes place on such day, the average of the last
reported sale prices for the last three (3) trading days, in either case as
officially reported by the principal securities exchange on which the Common
Stock is listed or admitted to trading by NASDAQ, or, if the Common Stock is not
listed or admitted to trading on any national securities exchange or quoted by
NASDAQ, the average closing bid price as furnished by the National Association
of Securities Dealers, Inc. ("NASD") through NASDAQ or similar organization if
NASDAQ is no longer reporting such information, or if the Common Stock is not
quoted on NASDAQ, as determined in good faith by resolution of the Board of
Directors of the Company, based on the best information available to it.
4. ISSUANCE OF CERTIFICATES. Upon the exercise of the Warrants, the
------------------------
issuance of certificates for shares of Common Stock or other securities,
properties or rights underlying such Warrants, shall be made forthwith (and in
any event within four (4) business days thereafter) without charge to the
Holders thereof including, without limitation, any tax which may be payable in
respect of the issuance thereof, and such certificates shall (subject to the
provisions of Sections
-3-
<PAGE>
5 and 7 hereof) be issued in the name of, or in such names as may be directed
by, the Holders thereof; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any such certificates in a name other than that
of the Holders, and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Common Stock
(and/or other securities, property or rights issuable upon the exercise of the
Warrants) shall be executed on behalf of the Company by the manual or facsimile
signature of the then present Chairman or Vice Chairman of the Board of
Directors or President or Vice President of the Company under its corporate seal
reproduced thereon, attested to by the manual or facsimile signature of the then
present Secretary or Assistant Secretary of the Company. Warrant Certificates
shall be dated the date of execution by the Company upon initial issuance,
division, exchange, substitution or transfer.
5. EXERCISE PRICE.
--------------
5.1 INITIAL AND ADJUSTED EXERCISE PRICE. Except as otherwise provided
-----------------------------------
in Section 7 hereof, the initial exercise price of each Warrant shall be $7.50
per share of Common Stock. The adjusted exercise price shall be the price which
shall result from time to time from any and all adjustments of the initial
exercise price in accordance with the provisions of Section 7 hereof.
5.2 EXERCISE PRICE. The term "Exercise Price" herein shall mean the
--------------
initial exercise price or the adjusted exercise price, depending upon the
context.
6. REGISTRATION RIGHTS.
-------------------
6.1 PIGGYBACK REGISTRATION. For a period of seven (7) years from the
----------------------
effective date (the "Effective Date") of the Company's registration statement on
Form S-1, if the Company proposes to register any of its securities under the
Act (other than in connection with a merger or pursuant to Form S-8) or sell any
of its securities pursuant to Regulation S under the Act, it shall give written
notice by registered mall at least thirty (30) days prior to the filing of each
such registration statement or the commencement of each such Regulation S
offering, as the case may be, to all other Holders of the Warrants and/or the
Warrant Shares of its intention to do so. If the Holders of the Warrants and/or
Warrant Shares notify the Company within twenty (20) days after receipt of any
such notice of its or their desire to include any such securities in such
proposed registration statement or offering, as the case may be, the Company
shall afford each such Holders of the Warrants and/or Warrant Shares the
opportunity to have any such Warrant Shares registered under such registration
statement or included in the Regulation S offering, as the case may be.
Notwithstanding the provisions of this Section 6.1, the Company shall have
the right at any time after it shall have given written notice pursuant to this
Section 6.1 (irrespective of
-4-
<PAGE>
whether a written request for inclusion of any such securities shall have been
made) to elect not to (a) file any such proposed registration statement, or to
withdraw the same after the filing but prior to the effective date thereof or
(b) commence such proposed Regulation S offering or terminate the same after the
commencement but prior to the closing thereof.
6.2 DEMAND REGISTRATION.
-------------------
(a) For a period of five (5) years from the Effective Date, the
Holders of the Warrants and/or Warrant Shares representing a "Majority" (as
hereinafter defined) of such securities (assuming the exercise of all of the
Warrants) shall have the right (which right is in addition to the registration
rights under Section 6.1 hereof), exercisable by written notice to the Company,
to have the Company prepare and file with the United States Securities and
Exchange Commission, on one occasion, a registration statement and such other
documents, including a prospectus, as may be necessary in the opinion of both
counsel for the Company and counsel for the Holders, in order to comply with the
provisions of the Act, so as to permit a public offering and sale of their
respective Warrant Shares for nine (9) consecutive months by such Holders and
any other Holders of the Warrants and/or Warrant Shares who notify the Company
within ten (10) days after receiving notice from the Company of such request.
(b) The Company covenants and agrees to give written notice of
any registration request under this Section 6.2 by any Holder or Holders to all
other registered Holders of the Warrants and the Warrant Shares within ten (10)
days from the date of the receipt of any such registration request.
(c) In addition to the registration rights under Section 6.1 and
subsection (a) of this Section 6.2, for a period of five (5) years from the
Effective Date, any Holder of Warrants and/or Warrant Shares shall have the
right, exercisable by written request to the Company, to have the Company
prepare and file, on one occasion, with the Commission a registration statement
so as to permit a public offering and sale for nine (9) consecutive months by
any such Holder of its Warrant Shares provided, however, that the provisions of
Section 6.3(b) hereof shall not apply to any such registration request and
registration and all costs incident thereto shall be at the expense of the
holder making such request.
(d) Notwithstanding anything to the contrary contained herein,
if the Company shall not have filed a registration statement for the Warrant
Shares within the time period specified in Section 6.3(a) hereof pursuant to the
written notice specified in Section 6.2(a) of a Majority of the Holders of the
Josephthal Warrants and/or Warrant Shares issuable thereunder, upon the written
notice of election of a Majority of the Holders of the Warrants and/or Warrant
Shares it shall have the option to repurchase (i) any and all Warrant Shares at
the higher of the Market Price per share of Common Stock on (x) the date of the
notice sent pursuant to Section 6.2(a) or (g) the expiration of the period
specified in Section 6.3(a), and (ii) any and all Warrants at such Market Price
less the Exercise Price of such Warrant. Such repurchase shall be immediately
available funds and shall close within two (2) days after the later of (i) the
expiration of the period specified in Section 6.3(a) or (Ii) the delivery of the
written notice of election specified in this Section 6.2(d).
-5-
<PAGE>
6.3 COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION. In
-----------------------------------------------------
connection with any registration or Regulation S offering, under Section 6.1 or
6.2 hereof, the Company covenants and agrees, to the extent applicable, as
follows:
(a) The Company shall use its best efforts to file a registration
statement within thirty (30) days of receipt of any demand therefor, shall use
its best efforts to have any registration statements declared effective at the
earliest possible time, and shall furnish each Holder desiring to sell Warrant
Shares such number of prospectuses or offering memorandum as shall reasonably be
requested.
(b) The Company shall pay all costs (excluding fees and expenses
of Holder(s)' counsel and any underwriting or selling commissions), fees and
expenses in connection with all registration statements filed or offering
memorandum prepared pursuant to Sections 6.1 and 7.2(a) hereof including,
without limitation, the Company's legal and accounting fees, printing expenses,
blue sky fees and expenses. The Holder(s) will pay all costs, fees and expenses
in connection with any registration statement filed pursuant to Section 6.2(c).
(c) The Company will take all necessary action which may be
required in qualifying or registering the Warrant Shares included in a
registration statement for offering and sale under the securities or blue sky
laws of such states as reasonably are requested by the Holder(s), provided that
the Company shall not be obligated to execute or file any general to service of
process or to qualify as a foreign corporation to do business under the laws of
any such jurisdiction.
(d) The Company shall indemnify and hold harmless the Holder(s)
of the Warrant Shares to be sold pursuant to any registration statement or
offering memorandum and each person, if any, who controls such Holders within
the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange
Act of 1934, as amended ("Exchange Act"), from and against any and all loss,
claim, damage, expense or liability (including all expenses reasonably incurred
in investigating, preparing or defending against any claim whatsoever including,
without limitation, the fees and expenses of legal counsel) to which any of them
may become subject under the Act, the Exchange Act or otherwise, arising from
such registration statement or offering memorandum but only to the same extent
and with the same effect as the provisions pursuant to which the Company has
agreed to indemnify Josephthal Lyon & Ross Incorporated and Cruttenden Roth
Incorporated (collectively, the "Representatives") contained in section 7 of the
Underwriting Agreement pursuant to which the Representatives have agreed to
indemnify the Company.
(e) The Holder(s) of the Warrant Shares to be sold pursuant to a
registration statement or an offering memorandum, and their successors and
assigns, shall severally, and not jointly, indemnify the Company, its officers
and directors and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, from and
against any and all loss, claim, damage or expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which they may become subject under the Act, the
Exchange Act or otherwise, arising from information furnished in writing by or
on behalf of such Holders, or their
-6-
<PAGE>
successors or assigns, for specific inclusion in such registration statement or
offering memorandum to the same extent and with the same effect as the
provisions contained in Section 7 of the Underwriting Agreement pursuant to
which the Representatives have agreed to indemnify the Company.
(f) Nothing contained in this Agreement shall be construed as
requiring the Holder(s) to exercise their Warrants prior to the initial filing
of any registration statement or the effectiveness thereof.
(g) The Company shall not permit the inclusion of any securities
other than the Warrant Shares m any registration statement filed pursuant to
Section 6.2 hereof, or permit any other registration statement to be or remain
effective during the effectiveness of a registration statement filed pursuant to
Section 6.2 hereof, without the prior written consent of the Holders of the
Warrants and Warrant Shares representing a Majority of such securities.
(h) The Company shall furnish to each Holder participating in
the offering and to each underwriter, if any, a signed counterpart, addressed to
such Holder or underwriter, of (i) an opinion of counsel to the Company, dated
the Effective Date (and, if such registration includes an underwritten public
offering, an opinion dated the date of the closing under the underwriting
agreement), and (ii) a "cold comfort" letter dated the Effective Date (and, if
such registration includes an underwritten public offering, a letter dated the
date of the under the underwriting agreement) signed by the independent public
accountants who have issued a report on the Company's financial statements
included in such registration statement or offering memorandum, in each case
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) or offering memorandum and, in
the case of such accountants' letter, with respect to events subsequent to the
date of such financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to underwriters in
underwritten offerings of securities.
(i) The Company shall deliver promptly to each Holder
participating in the offering requesting the correspondence and memoranda
described below and to the managing underwriters, copies of all correspondence
between the Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its staff with respect
to the registration statement or offering memorandum and permit each Holder and
underwriters to do such investigation, upon reasonable advance notice, with
respect to information contained in or omitted from the registration statement
or offering memorandum as it deems reasonably necessary to comply with
applicable securities laws or the rules and regulations of NASD. Such
investigation shall include access to books, records and properties and
opportunities to discuss the business of the Company with its officers and
independent auditors, all to such reasonable extent and at such reasonable times
and as often as any such Holder or underwriter shall reasonably request.
(j) If so requested, the Company shall enter into an
underwriting agreement with the underwriters selected for such underwriting by
the Holders of a Majority of the Josephthal Warrants requested to be included in
such underwriting, which may be Josephthal Lyon & Ross Incorporated. Such
agreement shall be satisfactory in form and substance to the
-7-
<PAGE>
Company, each Holder and such underwriters, and shall contain such
representations, warranties and covenants by the Company and such other terms as
are customarily contained in agreements of that type used by the managing
underwriter. The Holders shall be parties to any underwriting agreement relating
to an underwritten sale of their Warrant Shares and may, at their option,
require that any or all the representations, warranties and covenants of the
Company to or for the benefit of such underwriters shall also be made to and for
the benefit of such Holders. Such Holders shall not be required to make any
representations, warranties and covenants of the Company to or for the benefit
of such underwriters and shall also be made to and for the benefit of such
Holders. Such Holders shall not be required to make any representations or
warranties to or agreements with the Company or the underwriters except as they
may relate to such Holders and their intended methods of distribution.
(k) In addition to the Warrant Shares, upon the written request
therefor by any Holder(s), the Company shall include in the registration
statement or offering memorandum any other securities of the Company held by
such Holder(s) as of the date of filing of such registration statement or the
distribution of the offering memorandum, including without limitation restricted
shares of Common Stock, options, warrants or any other securities convertible
into shares of Common Stock.
(l) For purposes of this Agreement, the term "Majority" in
reference to the Holders of Josephthal Warrants and/or Warrant Shares issuable
thereunder, shall mean in excess of fifty percent (50%) of the then outstanding
Josephthal Warrants and/or Warrant Shares that (i) are not held by the Company,
an affiliate, officer, creditor, employee or agent thereof or any of their
respective affiliates, members of their family, persons acting as nominees or in
conjunction therewith and (ii) have not been resold to the public.
7. ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SECURITIES.
------------------------------------------------------
7.1 SUBDIVISION AND COMBINATION. In case the Company shall at any
---------------------------
time subdivide or combine the outstanding shares of Common Stock, the Exercise
Price shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
7.2 STOCK DIVIDENDS AND DISTRIBUTIONS. In case the Company shall pay
---------------------------------
a dividend in, or make a distribution of, shares of Common Stock or of the
Company's capital stock convertible into Common Stock, the Exercise Price shall
forthwith be proportionately decreased. An adjustment made pursuant to this
Section 7.2 shall be made as of the record date for the subject stock dividend
or distribution.
7.3 ADJUSTMENT IN NUMBER OF SECURITIES. Upon each adjustment of the
----------------------------------
Exercise Price pursuant to the provisions of this Section 7, the number of
Securities issuable upon the exercise at the adjusted exercise price of each
Warrant shall be adjusted to the nearest full amount by multiplying a number
equal to the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares issuable upon exercise of the Warrants immediately
prior to such adjustment and dividing the product so obtained by the adjusted
Exercise Price.
7.4 DEFINITION OF COMMON STOCK. For the purpose of this Agreement,
--------------------------
the term
-8-
<PAGE>
"Common Stock" shall mean (i) the class of stock designated as Common Stock in
the Articles of Incorporation of the Company as may be amended as of the date
hereof, or (li) any other class of stock resulting from successive changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value. In
the event that the Company shall after the date hereof issue securities with
greater or superior voting rights than the shares of Common Stock outstanding as
of the date hereof, the Holders, at their option, may receive upon exercise of
any Warrant either shares of Common Stock or a like number of such securities
with greater or superior voting rights.
7.5 MERGER OR CONSOLIDATION. In case of any consolidation of the
-----------------------
Company with, or merger of the Company with or merger of the Company into,
another corporation (other than a consolidation or merger which does not result
in any reclassification or change of the 0utstanding Common Stock), the
corporation formed by such consolidation or merger shall execute and deliver to
the Holders a supplemental warrant agreement providing that the holder of each
Warrant then outstanding or to be outstanding shall have the right thereafter
(until the expiration of such Warrant) to receive, upon exercise of such
warrant, the kind and amount of shares of stock and other securities and
property receivable upon such consolidation or merger, by a holder of the number
of shares of Common Stock of the Company for which such warrant might have been
exercised immediately prior to such consolidation, merger, sale or transfer.
Such supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in Section 7. The above provision of this
subsection shall similarly apply to successive consolidations or mergers.
7.6 NO ADJUSTMENT OF EXERCISE PRICE IN CERTAIN CASES. No adjustment
------------------------------------------------
of the Exercise Price shall be made:
(i) Upon the issuance or sale of the Warrants or the shares of
Common Stock issuable upon the exercise of the Warrants; or
(ii) If the amount of said adjustment shall be less than two
cents ($.02) per Warrant Share, provided, however, that in such case any
adjustment that would otherwise be required then to be made shall be carried
forward and shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall amount
to at least two cents ($.02) per Warrant Share.
8. EXCHANGE AND REPLACEMENT OF WARRANT CERTIFICATES. Each Warrant
------------------------------------------------
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Warrant Shares in such denominations as
shall be designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
-9-
<PAGE>
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
9. ELIMINATION OF FRACTIONAL INTERESTS. The Company shall not be required
-----------------------------------
to issue certificates representing fractions of shares of Common Stock upon the
exercise of the Warrants, nor shall it be required to issue scrip or pay cash in
lieu of fractional interests, it being the intent of the parties that all
fractional interests shall be eliminated by rounding any fraction up to the
nearest whole number of shares of Common Stock or other securities, properties
or rights.
10. RESERVATION AND LISTING OF SECURITIES. The Company shall at all times
-------------------------------------
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issuance upon the exercise of the Warrants, such number of
shares of Common Stock or other securities, properties or rights as shall be
issuable upon the exercise thereof. The Company covenants and that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of common Stock and other securities issuable upon such exercise shall be duly
and validly issued, fully paid, non-assessable and not subject to the preemptive
rights of any stockholder. As long as the Warrants shall be outstanding, the
Company shall use its best efforts to cause all shares of Common Stock issuable
upon the exercise of the Warrants to be listed (subject to official notice of
issuance) on all securities exchanges on which the Common Stock issued to the
public in connection herewith may then be listed and/or quoted on NASDAQ/NM.
11. NOTICES TO WARRANT HOLDERS. Nothing contained in this Agreement shall
--------------------------
be construed as conferring upon the Holders the right to vote or to consent or
to receive notice as a stockholder in respect of any meetings of stockholders
for the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Company. If, however, at any time prior to
the expiration of the Warrants and their exercise, any of the following events
shall occur:
(a) the Company shall take a record of the holders of its shares
of Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
(b) the Company shall offer to all the holders of its Common
Stock any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the Company, or
any option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall be
proposed; then, in any one or more of said events, the Company shall give
written notice of such event at least fifteen (15) days prior to the date fixed
as a record date or the date of closing the transfer books for the determination
of the stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such
-10-
<PAGE>
notice shall specify such record date or the date of closing the transfer books,
as the case may be. Failure to give such notice or any defect therein shall not
affect the validity of any action taken in connection with the declaration or
payment of any such dividend, or the issuance of any convertible or exchangeable
securities, or subscription rights, options or warrants, or any proposed
dissolution, liquidation, winding up or sale.
12. NOTICES. All notices, requests, consents and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly made and
sent when delivered, or mailed by registered or certified mail, return receipt
requested:
(a) If to the registered Holders of the Warrants, to the address
of such Holder as shown on the books of the Company; or
(b) If to the Company, to Vacation Break U.S.A., Inc., 6400 N.
Andrews Avenue, Suite 200, Ft. Lauderdale, Florida 33309, Attention: President
or to such other address as the Company may designate by notice to the Holders.
13. SUPPLEMENTS AND AMENDMENTS. The Company may from to time supplement or
--------------------------
amend this Agreement without the approval of any Holders of Warrant Certificates
in order to cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any provisions herein, or to
make any other provisions in regard to matters or questions arising hereunder
which the Company may deem necessary or desirable and which the Company deems
shall not adversely affect the interests of the Holders of Warrant Certificates.
14. SUCCESSORS. All the covenants and provisions of this Agreement shall
----------
be binding upon and inure to the benefit of the Company, the Holders and their
respective successors and assigns hereunder.
15. TERMINATION. This Agreement shall terminate at the close of business
-----------
on May 22, 2004. Notwithstanding the foregoing, the indemnification provisions
of Section 6 shall survive such termination until the close of business on
December 21, 2008.
16. GOVERNING LAW: SUBMISSION TO JURISDICTION. This Agreement and each
-----------------------------------------
Warrant Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of New York and for all purposes shall be construed in
accordance with the laws of said State without giving effect to its rules
governing the conflicts of laws.
The Company and the Holder hereby agree that any action, proceeding or
claim against it arising out of or relating in any way to, this Agreement shall
be brought and enforced in the courts of the State of New York or of the United
States of America for the Southern District of New York, and irrevocably submit
to such jurisdiction, which jurisdiction shall be exclusive. The Company and the
Holder hereby irrevocably waive any objection to such exclusive jurisdiction or
inconvenient forum. Any such process or summons to be served upon the Company or
the Holder (at the option of the party bringing such action, proceeding or
claim) may be served by transmitting a copy thereof, by registered or certified
mail, return receipt requested, postage
-11-
<PAGE>
prepaid, addressed to it at the address set forth in Section 13 hereof. Such
mailing shall be deemed personal service and shall be legal and binding upon the
party so served in any action, proceeding or claim. The Company and the Holder
agree that the prevailing party(ies) in any such action or proceeding shall be
entitled to recover from the other party(ies) all of its/their reasonable legal
costs and expenses relating to such action or proceeding and/or incurred in
connection with the preparation therefor.
17. ENTIRE AGREEMENT: MODIFICATION. This Agreement (including the
------------------------------
Underwriting Agreement to the extent portions thereof are referred to herein)
contains the entire understanding between the parties hereto with resect to the
subject matter hereof and may not be modified or amended except by a writing
duly signed by the party against whom enforcement of the modification or
amendment is sought.
18. SEVERABILITY. If any provision of this Agreement shall be held to be
------------
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.
19. CAPTIONS. The caption headings of the Sections of this Agreement are
--------
for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
20. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
--------------------------
construed to give to any person or corporation other than the Company and the
Holder(s) of the Warrant Certificates or Warrant Shares any legal or equitable
right, remedy or claim under this Agreement; and this Agreement shall be for the
sole and Certificates or Warrant Shares.
21. COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
-12-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
[SEAL] VACATION BREAK U.S.A., INC.
By:
-------------------------------------
Attest: Name:
Title:
- -------------------------------
Secretary
----------------------------------------
Name:
-13-
<PAGE>
EXHIBIT A
FORM OF WARRANT CERTIFICATE
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
ON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE 5:00 P.M.,
NEW YORK TIME, May 22, 2002
No. W-
WARRANT CERTIFICATE
This Warrant Certificate certifies that ___________________, or registered
assigns, is the registered holder of ________ Warrants, each Warrant to purchase
initially, at any time from May 22, 1997 until 5:00 p.m. New York time on May
22, 2002 ("Expiration Date"), one fully-paid and non-assessable share of common
stock, $.01 par value ("Common Stock") of VACATION BREAK U.S.A., INC., a Florida
corporation (the "Company"), at the initial exercise price, subject to
adjustment in certain events (the "Exercise Price"), of $7.50 per share of
Common Stock upon surrender of this Warrant Certificate and payment of the
Exercise Price at an office or agency of the Company, but subject to the
conditions set forth in the Warrant Agreement dated as of May 22, 1997 by and
between the Company and _________________ (the "Warrant Agreement"). Payment of
the Exercise Price shall be made by certified or official bank check in New York
Clearing House funds payable to the order of the Company or by surrender of this
Warrant Certificate.
No Warrant may be exercised after 5:00 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, hereby shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the
-14-
<PAGE>
company and the holders (the words "holders" or "holder" meaning the registered
holders or registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair, the rights of the
holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax or other governmental charge
imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such numbered unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly exercised under its corporate seal.
Dated as of May 22, 1997.
VACATION BREAK U.S.A., INC.
By:
----------------------------------
[SEAL] Name:
Title:
ATTEST:
- ----------------------------
Secretary
-15-
<PAGE>
FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase __________ shares of Common
Stock and herewith tenders in payment for such securities a certified or
official bank check payable in New York Clearing House Funds to the order of
___________ in the amount of $________ , all in accordance with the terms of
Section 3.1 of the Representative Warrant Agreement dated as of May 22, 1997
between VACATION BREAK U.S.A., INC. and ____________. The undersigned requests
that a certificate for such securities be registered in the name of ________
whose address is and that such Certificate be delivered to ____________whose
address is_________.
Dated:______________________
Signature__________________________
(Signature must conform in all respects to name of holder as specified on
the face of the Warrant Certificate.)
(Insert Social Security or Other Identifying Number of Holder)
-16-
<PAGE>
FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.2
The undersigned hereby irrevocably elects to exercise the right, represented by
this Warrant to purchase ________ shares of Common Stock all in accordance with
the terms of Section 3.2 of the Representative Warrant Agreement dated as of May
22, 1997 between VACATION BREAK U.S.A., INC. and ______________. The
undersigned requests that a certificate for securities be registered in the name
of _________whose address is_________ and that such Certificate be delivered to
_______whose address is_________.
Dated:___________________
Signature _____________________________
(Signature must conform in all respects to name of holder as specified on
the face of the Warrant Certificate.)
(Insert Social Security or Other Identifying Number of Holder)
-17-
<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
(FOR VALUE RECEIVED)_____________________________ hereby sells, assigns and
transfers unto ________________ .
(Please print name and address of transferee)
this Warrant Certificate, together with all right, tide and interest therein,
and does hereby irrevocably constitute and appoint _________ Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Dated:______________________
Signature ________________________________
(Signature must conform in all respects to name of holder as specified on
the face of the Warrant Certificate.)
(Insert Social Security or Other Identifying Number of Holder)
-18-
<PAGE>
EXHIBIT 4.12
FIRST AMENDMENT AND SUPPLEMENT TO
WARRANT AGREEMENT
FIRST AMENDMENT AND SUPPLEMENT TO WARRANT AGREEMENT, dated as of March 4,
1998 (the "Agreement"), by and among FAIRFIELD COMMUNITIES, INC., a Delaware
corporation (the "Company"), and _____________________ ("Holder").
WITNESSETH
WHEREAS, pursuant to the Warrant Agreement, dated as of May 22, 1997 (the
"Warrant Agreement"), among Vacation Break U.S.A., Inc. ("Vacation Break") and
Holder, Vacation Break issued to the Holder warrants ("Vacation Break Warrants")
to purchase up to an aggregate of ________ shares of common stock, $.01 par
value, of Vacation Break ("Vacation Break Common Stock") at an exercise price of
$7.50 which Vacation Break Warrants were part of an aggregate of 30,000 warrants
issued to Josephthal Lyon & Ross Incorporated ("Josephthal") pursuant to a
resolution of the Board of Directors of Vacation Break on May 22, 1997;
WHEREAS, Vacation Break has become a wholly owned subsidiary of the Company
as a result of the consummation of the merger of FCVB Corp., a wholly owned
subsidiary of the Company, with and into Vacation Break (the "Merger") on the
terms and subject to the conditions provided for in the Agreement and Plan of
Merger, dated as of August 8, 1997 (the "Merger Agreement"), among the Company,
FCVB Corp., and Vacation Break; and
WHEREAS, the Merger Agreement provides that the Company will deliver to
each holder of a Vacation Break Warrant, upon such holder's delivery of its
warrant certificate ("VB Certificate") representing Vacation Break Warrants to
purchase shares of Vacation Break Common Stock to the Company, a supplemental
warrant agreement representing the right (until the expiration of such holder's
Vacation Break Warrants) to receive upon the exercise thereof, such number of
shares of common stock, par value $.01 per share, of the Company ("Common
Stock") rounded up or down to the nearest whole share that is equal to the
product of .6075 multiplied by the number of shares of Vacation Break Common
Stock subject to such Vacation Break Warrants immediately prior to the effective
time of the Merger, at a price per share equal to the aggregate exercise price
for the shares of Vacation Break Common Stock subject to such Vacation Break
Warrants divided by the number of shares of Common Stock deemed to be
purchasable pursuant to such Vacation Break Warrants; and
WHEREAS, the Company effected a two-for-one stock split of Common Stock
(the "Stock Split") in the form of a 100% stock dividend distributable on
January 30, 1998 and pursuant to the Warrant Agreement, the number of shares of
Common Stock subject to the Warrants (as defined below) and the exercise price
thereof was adjusted to reflect the Stock Split.
NOW, THEREFORE, in consideration of the premises, the agreements set forth
herein and in the Warrant Agreement and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
<PAGE>
1. The First paragraph of the Warrant Agreement is hereby amended and
restated in its entirety to read as follows:
This is to certify that, for value received and subject to the conditions
herein set forth, ______________ or his registered assigns is entitled to
purchase, at any time during the period (the "Term") commencing on the date
hereof and ending at 5:00 p.m. Eastern time, May 22, 2002 (the "Expiration
Date"), such number of shares of the common stock, par value $.01 per share
(the "Common Stock") of Fairfield Communities, Inc., a Delaware corporation
(the "Company"), as equals the number of warrants (the "Warrants")
evidenced by this Agreement (such shares purchasable upon exercise of the
Warrants are herein called the "Warrant Shares"). The Holder acknowledges
and agrees that the foregoing constitutes a complete and accurate
description of all Vacation Break Warrants granted to the Holder and waives
any other entitlement to, or options to acquire, Vacation Break Warrants
arising prior to December 19, 1997.
2. Section 1 of the Warrant Agreement is hereby amended and restated in
its entirety to read as follows:
1. COMMON STOCK. Up to an aggregate of ____________ shares of Common
------------
Stock will be issuable upon exercise of the Warrants at an initial exercise
price (subject to adjustment as provided in Section 8 hereof) of $6.175 per
share of Common Stock subject to the terms and conditions of this
Agreement.
3. Section 2 of the Warrant Agreement is hereby amended and restated in
its entirety to read as follows:
2. SUPPLEMENTAL WARRANT CERTIFICATES. The Holder shall surrender to the
---------------------------------
Company his warrant certificate ("VB Certificate") representing Vacation
Break Warrants to purchase an aggregate of __________ shares of Vacation
Break Common Stock. The Company will issue to the Holder a supplemental
warrant certificate (the "Warrant Certificate") in the form set forth in
Exhibit A attached hereto and made a part hereof, with such appropriate
insertions, omissions, substitutions, and other variations as required or
permitted by this Agreement.
4. Section 3.1 of the Warrant Agreement is hereby amended and restated in
its entirety to read as follows:
3.1 METHOD OF EXERCISE. As a condition to exercise of the Warrants,
------------------
the Holder must sign and return to the Company c/o Jones, Day, Reavis &
Pogue copies of this Agreement and a Representation Letter addressed to the
Company regarding the Holder's status as an accredited investor, together
with the VB Certificate relating to the Vacation Break Warrants, by which
execution and delivery the Holder shall be deemed to have surrendered the
VB Certificate to the Company for cancellation of the Vacation Break
Warrants. The Company will mail to the Holder the Warrant Certificate
within 5 business days from the receipt
-2-
<PAGE>
by the Company of this executed Agreement, the executed Representation
Letter and the VB Certificate. The Warrants initially are exercisable at
the exercise price (subject to adjustment as provided in Section 8 hereof)
per share of Common Stock as set forth in Section 6 hereof payable by
certified or official bank check in New York Clearing House funds or, upon
prior approval, personal check. Upon surrender of a Warrant Certificate
with the annexed Form of Election to Purchase duly executed, together with
payment of the Exercise Price (as hereinafter defined) for the shares of
Common Stock purchased at the Company's principal offices presently located
in Little Rock, Arkansas, the Holder shall be entitled to receive a
certificate or certificates for the shares of Common Stock so purchased.
The purchase rights represented by each Warrant Certificate are exercisable
at the option of the Holder thereof, in whole or in part (but not as to
fractional shares of the Common Stock underlying the Warrants). In the case
of the purchase of less than all the shares of Common Stock purchasable
under any Warrant Certificate, the Company shall cancel said Warrant
Certificate upon surrender thereof and shall execute and deliver a new
Warrant Certificate of like tenor for the balance of the shares of Common
Stock purchasable thereunder.
5. Section 3.3 of the Warrant Agreement is hereby amended and restated in
its entirety to read as follows:
3.3 DEFINITION OF MARKET PRICE. As used herein, the phrase "Market
--------------------------
Price" at any date shall be deemed to be the last reported sale price of a
share of Common Stock, or, in case no such reported sale takes place on
such day, the average of the last reported sale prices of a share of Common
Stock for the last three (3) trading days in either case as officially
reported by the New York Stock Exchange or, if the Common Stock is not then
listed on the New York Stock Exchange, the principal national securities
exchange on which the Common Stock is then listed or admitted to trading
or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, the average closing bid price as furnished by
the National Association of Securities Dealers, Inc. ("NASD") through
Nasdaq or a similar organization if Nasdaq is no longer reporting such
information, or if the Common Stock is not quoted on Nasdaq, as determined
in good faith by resolution of the Board of Directors of the Company, based
on the best information available to it.
6. Section 6 of the Warrant Agreement is hereby amended and restated in
its entirety to read as follows:
6. EXERCISE PRICE.
--------------
6.1 INITIAL AND ADJUSTED EXERCISE PRICE. Except as otherwise provided
-----------------------------------
in Section 8 hereof, the initial exercise price of each Warrant shall be
$6.175 per share of Common Stock. The adjusted exercise price shall be the
price which shall result from time to time from any and all adjustments of
the initial exercise price in accordance with the provisions of Section 8
hereof.
-3-
<PAGE>
6.2 EXERCISE PRICE. The term "Exercise Price" herein shall mean the
--------------
initial exercise price or the adjusted exercise price, depending upon the
context.
7. The last sentence of Section 11 of the Warrant Agreement is hereby
amended and restated in its entirety to read as follows:
As long as the Warrants are outstanding, the Company shall use its best
efforts to cause all shares of Common Stock issuable upon the exercise of
the Warrants to be listed (subject to official notice of issuance) on all
securities exchanges on which the Common Stock issued to the public in
connection herewith may then be listed and/or quoted.
8. Section 13.(b) of the Warrant Agreement is hereby amended and restated
in its entirety to read as follows:
13. NOTICES.
-------
(b) If to the Company, to Fairfield Communities, Inc., 11001 Executive
Center Drive, Little Rock, Arkansas 72201, or to such other address as the
Company may designate by notice to the Holders.
9. COVENANT. IN ORDER TO EXERCISE HIS WARRANTS, THE HOLDER MUST
--------
REPRESENT AND WARRANT TO THE COMPANY THAT HE IS AN "ACCREDITED INVESTOR" AS
DEFINED IN RULE 501(A) PROMULGATED UNDER THE SECURITIES ACT AT THE TIME OF
EXERCISE. As a condition to exercise of his Warrants, at the time the Holder
presents his Warrant Certificate to the Company in order to exercise his
Warrants, the Holder will deliver to the Company a letter containing the
representations and warranties set forth below:
(a) he has reviewed any relevant reports, proxy statements or other
information filed by the Company with the Securities and Exchange
Commission or has otherwise obtained copies of such documents from the
Company (which were provided to him at no cost), which he deems necessary
in order to make the investment decision.
(b) he is acquiring the Warrant Shares for his own account and for
investment purposes and does not intend to redistribute the Shares except
in a transaction or transactions exempt from registration under the federal
and state securities laws or pursuant to an effective registration
statement under such laws.
(c) he (i) is an "accredited investor" as defined in Rule 501(a)
promulgated under the Securities Act, (ii) has such knowledge and
experience in financial and business matters that he is capable of
independently evaluating the risks and merits of acquiring the Warrant
Shares, (iii) has independently evaluated the risks and merits of acquiring
the Warrant Shares and has independently determined that the Warrant Shares
are a suitable investment for him, and (iv) has sufficient financial
resources to bear the loss of his entire investment in the Warrant Shares.
-4-
<PAGE>
10. REAFFIRMATION OF THE WARRANT AGREEMENT. To the extent that any
--------------------------------------
provision hereof conflicts with any provision of the Warrant Agreement, the
provision hereof shall control. Except as expressly amended hereby, the terms
and conditions of the Warrant Agreement shall remain in full force and effect.
11. EFFECTIVE DATE OF AGREEMENT. Notwithstanding the date of execution
---------------------------
hereof, this Agreement shall be deemed effective as of December 19, 1997, except
Sections 1, 2 and 6 of this Agreement which shall be deemed effective as of
March 4, 1998.
12. COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
[REMAINDER OR PAGE INTENTIONALLY LEFT BLANK]
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, as of March 4, 1998.
FAIRFIELD COMMUNITIES, INC.
By:
---------------------------------
Marcel J. Dumeny
Senior Vice President and Secretary
Name:
-------------------------------
-6-
<PAGE>
EXHIBIT A
FORM OF SUPPLEMENTAL WARRANT CERTIFICATE
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
ON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
AND MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE EXTENT APPLICABLE, RULE
144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE
DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION
SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT AND THE FIRST AMENDMENT AND
SUPPLEMENT TO WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE 5:00 P.M.,
NEW YORK TIME, MAY 22, 2002
No. W-____
SUPPLEMENTAL WARRANT CERTIFICATE
This Supplemental Warrant Certificate certifies that ____________ ("Holder") is
the registered holder of _________ Warrants, each Warrant to purchase initially,
at any time from the date hereof until 5:00 p.m. New York time on May 22, 2002
("Expiration Date"), one fully-paid and non-assessable share of common stock,
$.01 par value per share ("Common Stock") of Fairfield Communities, Inc., a
Delaware corporation (the "Company"), at the initial exercise price, subject to
adjustment in certain events (the "Exercise Price"), of $6.175 per share of
Common Stock upon surrender of this Supplemental Warrant Certificate and payment
of the Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the Warrant Agreement, dated as of May 22,
1997, among Vacation Break U.S.A., Inc. and Holder and the First Amendment and
Supplement to Warrant Agreement, dated as of March 4, 1998, by and among the
Company and Holder (collectively, the "Supplemental Warrant Agreement"). Payment
of the Exercise Price shall be made by certified or official bank check in New
York Clearing House funds payable to the order of the Company or by surrender of
this Supplemental Warrant Certificate.
No Warrant may be exercised after 5:00 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, hereby shall thereafter be void.
The Warrants evidenced by this Supplemental Warrant Certificate are part of
a duly authorized issue of Warrants issued pursuant to the Supplemental Warrant
Agreement, which Supplemental Warrant Agreement is hereby incorporated by
reference in and made a part of this
-7-
<PAGE>
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
The Supplemental Warrant Agreement provides that, upon the occurrence of
certain events, the Exercise Price and the type and/or number of the Company's
securities issuable thereon may, subject to certain conditions, be adjusted. In
such event, the Company will, at the request of the holder, issue a new
supplemental warrant certificate evidencing the adjustment in the Exercise Price
and the number and/or type of securities issuable upon the exercise of the
Warrants; provided, however, that the failure of the Company to issue such new
supplemental warrant certificates shall not in any way change, alter, or
otherwise impair, the rights of the holder as set forth in the Supplemental
Warrant Agreement.
Upon due presentment for registration of transfer of this Supplemental
Warrant Certificate at an office or agency of the Company, a new Supplemental
Warrant Certificate or Supplemental Warrant Certificates of like tenor and
evidencing in the aggregate a like number of Warrants shall be issued to the
transferee(s) in exchange for this Supplemental Warrant Certificate, subject to
the limitations provided herein and in the Supplemental Warrant Agreement,
without any charge except for any tax or other governmental charge imposed in
connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Supplemental Warrant Certificate, the Company shall forthwith issue to the
holder hereof a new Supplemental Warrant Certificate representing such numbered
unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Supplemental Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, and of any distribution to the holder(s) hereof, and for
all other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Supplemental Warrant Certificate which are defined
in the Supplement Warrant Agreement shall have the meanings assigned to them in
the Supplemental Warrant Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of March ___, 1998.
Attest: FAIRFIELD COMMUNITIES, INC.
By:
- -------------------------------- ---------------------------------
Anna Walton Marcel J. Dumeny
Assistant Secretary Senior Vice President and Secretary
-8-
<PAGE>
FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1
The undersigned hereby irrevocably elects to exercise the right,
represented by this Supplemental Warrant Certificate, to purchase __________
shares of common stock, par value $.01 per share, of Fairfield Communities, Inc.
and herewith tenders in payment for such securities a certified or official bank
check payable in New York Clearing House Funds to the order of
__________________________________ in the amount of $________ , all in
accordance with the terms of Section 3.1 of the Warrant Agreement, dated as of
May 22, 1997, among Vacation Break U.S.A., Inc. and ________________ ("Holder")
and the First Amendment and Supplement to Warrant Agreement, dated as of March
4, 1998, among Fairfield Communities, Inc. and Holder. The undersigned requests
that a certificate for such securities be registered in the name of
________________________________________________________________ whose address
is _____________________________________________________________________ and
that such certificate be delivered to
___________________________________________whose address is
_____________________________________________________________________.
Dated:
---------------------------------
Signature
-----------------------------------------------------
(Signature must conform in all respects to name of
holder as specified on the face of the Supplemental
Warrant Certificate.)
--------------------------------------------------------------
(Insert Social Security or Other Identifying Number of Holder)
-9-
<PAGE>
FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.2
The undersigned hereby irrevocably elects to exercise the right,
represented by this Supplemental Warrant Certificate to purchase ________ shares
of common stock, par value $.01 per share, of Fairfield Communities, Inc. all in
accordance with the terms of Section 3.2 of the Warrant Agreement, dated as of
May 22, 1997, among Vacation Break U.S.A., Inc. and ______________ ("Holder")
and the First Amendment and Supplement to Warrant Agreement, dated as of March
4, 1998, among Fairfield Communities, Inc. and Holder. The undersigned requests
that a certificate for the securities be registered in the name of
_________________________________ whose address is
__________________________________________________________________ and that such
certificate be delivered to __________________________________________ whose
address is __________________________________________________________________.
Dated:
---------------------------------
Signature
-----------------------------------------------------
(Signature must conform in all respects to name of
holder as specified on the face of the Supplemental
Warrant Certificate.)
--------------------------------------------------------------
(Insert Social Security or Other Identifying Number of Holder)
-10-
<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Supplemental Warrant Certificate.)
FOR VALUE RECEIVED, _____________________ hereby sells, assigns and transfers
unto
(Please print name and address of transferee)
this Supplemental Warrant Certificate, together with all right, tide and
interest therein, and does hereby irrevocably constitute and appoint
____________________________________________ as Attorney, to transfer the within
Supplemental Warrant Certificate on the books of the within-named Company, with
full power of substitution.
Dated:
-----------------------------------------------------
Signature
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(Signature must conform in all respects to name of
holder as specified on the face of the Supplemental
Warrant Certificate.)
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(Insert Social Security or Other Identifying Number of Holder)
-11-
<PAGE>
EXHIBIT 5.1
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JONES, DAY, REAVIS & POGUE
2001 Ross Avenue
2300 Trammell Crow Center
Dallas, Texas 75201
March 18, 1998
Fairfield Communities, Inc.
11001 Executive Center Drive
Little Rock, Arkansas 72211
Re: Registration of up to 8,197,006 Shares of Common Stock,
par value $0.01 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 offering by certain
stockholders of the Company (the "Selling Stockholders") of up to 8,197,006
shares of common stock, par value $0.01 per share (the "Common Stock"), of the
Company, of which 7,838,568 shares of Common Stock (the "Shares") are currently
issued and outstanding, 212,626 shares of Common Stock (the "Option Shares") are
issuable upon the exercise of options granted pursuant to the Vacation Break
U.S.A., Inc. 1995 Stock Option Plan (the "Plan") and 145,812 shares of Common
Stock (the "Warrant Shares") are issuable upon the exercise of warrants issued
pursuant to Warrant Agreements, dated as of December 27, 1995, among Vacation
Break U.S.A., Inc. and individual warrant holders, as amended and supplemented
and Warrant Agreements, dated as of May 22, 1997, among Vacation Break U.S.A.,
Inc. and individual warrant holders, as amended and supplemented (collectively,
the "Warrant Agreements").
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
are duly authorized, validly issued, fully paid and nonassessable. The Option
Shares, are duly authorized and, when issued and delivered in accordance with
the provisions of the Plan and the related agreements against payment of the
consideration therefore and having a value not less than the par value thereof,
will be validly issued, fully paid, and nonassessable. The Warrant Shares are
duly authorized and, when issued and delivered in accordance with the provisions
of the applicable Warrant Agreement against payment of the consideration
therefore and have a value not less than the par value thereof, will be validly
issued, fully paid, and nonassessable.
In rendering the foregoing opinion, we have relied as to certain
factual matters upon certificates of officers of the Company and public
officials, and we have not independently checked or verified the accuracy of the
statements contained therein. In addition, our examination of matters of law has
been limited to the General Corporation Law of the State of Delaware 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-3 (the "Registration Statement") filed by the
Company to effect registration of the Shares under the Securities Act of 1933,
as amended, and to the reference to us under the caption "Legal Matters" in the
Prospectus constituting a part of the Registration Statement.
Very truly yours,
/s/ Jones, Day, Reavis & Pogue
<PAGE>
EXHIBIT 23.2
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CONSENT OF INDEPENDENT AUDITORS
We consent to reference to our firm under the caption "Experts" in the
Registration Statement Pre-effective Amendent No. 1 to Form S-3, No. 333-43045)
and related prospectus of Fairfield Communities, Inc. for the registration of
8,195,410 shares of its common stock and to the incorporation by reference
therein of our report dated February 2, 1998, with respect to the consolidated
financial statements of Fairfield Communities, Inc. incorporated by reference in
its Annual Report (Form 10-K) for the year ended December 31, 1997 and the
related financial statement schedule included therein, filed with the Securities
and Exchange Commission.
Ernst & Young LLP
Little Rock, Arkansas
March 12, 1998
<PAGE>
EXHIBIT 23.3
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CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this registration statement
on Form S-3 (SEC Registration No. 333-43045) 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 consolidated financial statements of Vacation Break U.S.A., Inc.
as of December 31, 1996, and for the two years in the period ended December 31,
1996, appearing in the registration statement on Form S-4 (SEC Registration No.
333-39615) of Fairfield Communities, Inc. filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933. We also consent to the
reference to our firm under the caption "Experts."
Coopers & Lybrand L.L.P.
Ft. Lauderdale, Florida
March 12, 1998
