VACATION BREAK USA INC, DEF 14A, 1997-05-30

VACATION BREAK USA INC
DEF 14A, 1997-05-30
REAL ESTATE AGENTS & MANAGERS (FOR OTHERS)

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SCHEDULE 14A

(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the registrant [X]
Filed by a party other than the registrant [ ]

Check the appropriate box:

[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

VACATION BREAK U.S.A., INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(4)
0-11.
(1) Title of each class of securities to which transaction applies:

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

N/A

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:

N/A

(4) Proposed maximum aggregate value of transaction:

N/A

(5) Total fee paid:

N/A

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

(1) Amount previously paid:

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

(2) Form, schedule or registration statement no.:

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

(3) Filing party:

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

(4) Date Filed:

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

<PAGE>

VACATION BREAK U.S.A., INC.
6400 N. Andrews Avenue
Park Plaza - Suite 200
Ft. Lauderdale, Florida 33309
___________________

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on June 27, 1997
___________________

To the Shareholders of Vacation Break U.S.A., Inc.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of Vacation Break U.S.A., Inc., a Florida corporation (the "Company"),
will be held at 12:00 p.m., local time, on Friday, June 27, 1997, at the Sea
Gardens Beach and Tennis Resort, 615 N. Ocean Blvd., Pompano Beach, Florida, for
the following purposes:

(1) To consider and vote upon a proposal approving an amendment to the
Company's Articles of Incorporation to provide that the number of directors
constituting the Company's Board of Directors shall not be less than three (3)
nor more than fifteen (15);

(2) To elect ten members to the Company's Board of Directors to hold office
until the Company's 1998 Annual Meeting of Shareholders or until their
successors are duly elected and qualified;

(3) To consider and vote upon a proposal approving an amendment to the
Company's Directors' Stock Option Plan to increase from 40,000 to 100,000 the
number of shares of Common Stock reserved for issuance pursuant to the
Directors' Stock Option Plan; and

(4) To transact such other business as may properly come before the Annual
Meeting, including any and all adjournments or postponements thereof.

All shareholders are cordially invited to attend the Annual Meeting;
however, only shareholders of record at the close of business on April 30, 1997
are entitled to vote at the Annual Meeting or any adjournments thereof.

Should you have any questions concerning the accompanying Proxy Statement,
or require assistance in completing your proxy card, please feel free to contact
Kevin Sheehan, President of the Company, or Henry Cairo, Chief Financial Officer
of the Company, at 6400 N. Andrews Avenue, Park Plaza - Suite 200, Ft.
Lauderdale, Florida 33309, (954) 351-8500.

By Order of the Board of Directors

RALPH P. MULLER
Chairman of the Board and
Chief Executive Officer
Fort Lauderdale, Florida
June 7, 1997

WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENCLOSED RETURN ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
SHAREHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING,
REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.

<PAGE>

ANNUAL MEETING OF SHAREHOLDERS
OF VACATION BREAK U.S.A., INC.

_____________________

PROXY STATEMENT
_____________________

This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Vacation Break U.S.A., Inc., a Florida corporation
(the "Company"), of proxies from the holders of the Company's Common Stock, par
value $.01 per share (the "Common Stock"), for use at the Annual Meeting of
Shareholders of the Company to be held at 12:00 p.m., local time, on Friday,
June 27, 1997, at the Sea Gardens Beach and Tennis Resort, 615 N. Ocean Blvd.,
Pompano Beach, Florida, or at any adjournment(s) or postponement(s) thereof (the
"Annual Meeting"), pursuant to the foregoing Notice of Annual Meeting of
Shareholders.

The approximate date that this Proxy Statement and the enclosed form of
proxy are first being sent to shareholders is June 7, 1997. The Company's
principal executive offices are located at 6400 N. Andrews Avenue, Park Plaza -
Suite 200, Ft. Lauderdale, Florida 33309, and its telephone number is
(954) 351-8500.

INFORMATION CONCERNING PROXY

The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should any shareholder giving a proxy so desire. Shareholders have an
unconditional right to revoke their proxies at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Company's
Secretary at the Company's principal executive offices a written revocation or
duly executed proxy bearing a later date; however, no such written revocation
will be effective until written notice of the revocation is received by the
Company at or prior to the Annual Meeting.

The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Shareholders and the enclosed proxy is to be borne
by the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone. The Company's employees will
receive no compensation for soliciting proxies other than their regular
salaries. The Company may request banks, brokers and other custodians, nominees
and fiduciaries to forward copies of the proxy material to their principals and
to request authority for the execution of proxies. The Company may reimburse
such persons for their expenses incurred in so doing.

PURPOSES OF THE MEETING

At the Annual Meeting, the Company's shareholders will consider and vote
upon the following matters:

(2) To elect ten members to the Company's Board of Directors to hold office
until the Company's 1998 Annual Meeting of Shareholders or until their
successors are duly elected and qualified;

1
<PAGE>

(4) To transact such other business as may properly come before the Annual
Meeting, including any and all adjournments or postponements thereof.

Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth above)
will be voted (1) FOR the proposal approving the amendment of the Articles of
Incorporation to provide that the number of directors constituting the Company's
Board of Directors shall not be less than three (3) nor more than fifteen (15),
(2) FOR the election of the ten nominees for director named below, and (3) FOR
the proposal approving the amendment of the Directors' Stock Option Plan to
increase from 40,000 to 100,000 the number of shares of Common Stock reserved
for issuance pursuant to the Directors' Stock Option Plan. In the event a
shareholder specifies a different choice by means of the enclosed proxy, his or
her shares will be voted in accordance with the specification so made.

The Board does not know of any other matters that may be brought before the
Annual Meeting nor does it have reason to believe that proxy holders will have
to vote for substitute or alternate nominees. In the event that any other matter
should come before the Annual Meeting or any nominee is not available for
election, the persons named in the enclosed Proxy will have discretionary
authority to vote all proxies not marked to the contrary with respect to such
matters in accordance with their best judgment.

OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS

The Board of Directors has set the close of business on April 30, 1997 as
the record date (the "Record Date"), for determining shareholders of the Company
entitled to notice of, and to vote at, the Annual Meeting. As of the Record
Date, there were 8,612,525 shares of Common Stock issued and outstanding, all of
which are entitled to be voted at the Annual Meeting. Each share of Common Stock
is entitled to one vote on each matter submitted to shareholders for approval at
the Annual Meeting. Shareholders do not have the right to cumulate their votes
for directors.

The attendance, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum. Directors will be elected by a plurality of
the votes cast by the shares of Common Stock represented in person or by proxy
at the Annual Meeting. The affirmative vote of a majority of the issued and
outstanding shares of Common Stock is required to approve the amendment to the
Articles of Incorporation to provide that the number of directors constituting
the Company's Board of Directors shall not be less than three (3) nor more than
fifteen (15). The affirmative vote of a majority of the shares of Common Stock
present and voting at the Annual Meeting is required to approve the amendment to
the Directors' Stock Option Plan to increase from 40,000 to 100,000 the number
of shares of Common Stock reserved for issuance pursuant to the Directors' Stock
Option Plan. Any other matter that may be submitted to a vote of the
shareholders will be approved if the number of shares of Common Stock voted in
favor of the matter exceeds the number of shares voted in opposition to the
matter, unless such matter is one for which a greater vote is required by law or
by the Company's Articles of Incorporation or Bylaws. If less than a majority of
outstanding shares entitled to vote are represented at the Annual Meeting, a
majority of the shares so represented may adjourn the Annual Meeting to another
date, time or place, and notice need not be given of the new date, time or place
if the new date, time or place is announced at the meeting before an adjournment
is taken.

Ralph P. Muller, the Chairman of the Board and Chief Executive Officer of
the Company, has indicated his intention to vote all of the shares of Common
Stock owned by him or his affiliates in favor of each of the nominees for
director and for each of the other matters to be presented at the Annual
Meeting. As of April 30, 1997, Mr. Muller and his affiliates beneficially owned
approximately 60.1% of the Common Stock and it is therefore likely that all
nominees for director will be elected and all other matters to be presented at
the Annual Meeting will be approved. Mr. Muller's undertaking to vote in favor
of each such matter is subject to his obligation to discharge faithfully his
duty as a director, officer and principal shareholder of the Company.

2
<PAGE>

Prior to the Annual Meeting, the Company will select one or more inspectors
of election for the meeting. Such inspector(s) shall determine the number of
shares of Common Stock represented at the meeting, the existence of a quorum and
the validity and effect of proxies, and shall receive, count and tabulate
ballots and votes and determine the results thereof. Abstentions will be
considered as shares present and entitled to vote for purposes of determining
the outcome of any matter submitted to the shareholders for a vote, but will not
be counted as votes cast "for" or "against" any given matter.

A broker or nominee holding shares registered in its name, or in the name
of its nominee, which are beneficially owned by another person and for which it
has not received instructions as to voting from the beneficial owner, may have
discretion to vote the beneficial owner's shares with respect to the election of
directors and other matters addressed at the Annual Meeting. Any such shares
which are not represented at the Annual Meeting either in person or by proxy
will not be considered as shares present at the Annual Meeting, and will not be
considered to have cast votes on any matters addressed at the Annual Meeting.

A list of shareholders entitled to vote at the Annual Meeting will be
available at the Company's offices, 6400 N. Andrews Avenue, Park Plaza, Suite
200, Ft. Lauderdale, Florida for a period of ten (10) days prior to the Annual
Meeting and at the Annual Meeting itself for examination by any shareholder.

SECURITY OWNERSHIP

The following table sets forth information as of the Record Date with
respect to the beneficial ownership of shares of the Common Stock by (i) each
person known by the Company to beneficially own more than 5% of the outstanding
shares of Common Stock, (ii) each director and director nominee of the Company,
(iii) the Company's Chief Executive Officer and each named executive officer
listed in the Summary Compensation Table below (collectively, the "Named
Executive Officers") and (iv) all directors and executive officers of the
Company as a group:

Name and Address of Amount and Nature Percentage of Outstanding
Beneficial Owner(1) of Beneficial Shares Owned
Ownership(2)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Ralph P. Muller .................... 5,172,026(3) 60.1%
Kevin Sheehan....................... 1,291,072(4) 15.0%
Joyce North......................... 450,000(5) 5.2%
Henry M. Cairo...................... 25,000(6) *
Steven McPhee....................... 12,500(7) *
Marco Manzie........................ 17,500(8) *
Richard Adrey....................... 4,000(9) *
Ronald J. Korn...................... 5,500(10) *
Arthur Weinstein.................... 2,500(11) *
Allen C. Harper..................... 2,200(12) *
Michael J. Kollender................ 8,000(13) *
Edward R. Allen..................... 1,000 *
Francis X. Maguire.................. 0 *
All directors and executive officers
as a group (13 persons)......... 6,578,798(14) 76.4%

<FN>
____________________
* Less than 1%.
(1) Unless otherwise indicated, the address of each of the beneficial owners identified above is c/o
Vacation Break U.S.A., Inc., 6400 N. Andrews Avenue, Park Plaza - Suite 200, Ft. Lauderdale, Florida
33309.
(2) A person is deemed to be the beneficial owner of securities that can be acquired by such person within
60 days upon the exercise of options or warrants. Each beneficial owner's percentage ownership is
determined by assuming that options or warrants that are held by such person (but not those held by any
other person) and that are exercisable within 60 days have been exercised. Unless otherwise noted, the
Company believes that all persons named in the table have sole voting and investment power with respect
to all shares of Common Stock beneficially owned by them.
(3) Includes 5,150,526 shares of Common Stock held by R & A Partnership, Ltd., a Texas limited partnership
(the "Partnership"). RPM Investments, Inc., a Texas corporation wholly-owned by Mr. Muller, is the sole
general partner of the Partnership. Mr. Muller along with his wife and children hold limited
partnership interests in the Partnership. Also includes (i) 21,500 shares of Common Stock owned by
Ralph P. Muller and Alice Muller, his wife, as joint tenants with rights of survivorship and (ii)
350,000 shares of Common Stock subject to an option granted to Joyce North. See Note (5) below. Does
not include 165,902 shares of Common Stock beneficially owned by The Ralph Muller Irrevocable Trust
established for the benefit of Mr. Muller's children, as to which Mr. Muller disclaims beneficial
ownership.
(4) Includes 37,500 shares of Common Stock issuable at $5.50 per share upon the exercise of currently
exercisable options. Also includes 50,000 shares subject to an option granted to Joyce North. See note
(5) below.

3
<PAGE>

(5) Includes: (1) 50,000 shares of Common Stock issuable at $5.00 per share upon the exercise of currently
exercisable options; (ii) 350,000 outstanding shares of Common Stock purchasable at $5.00 per share upon
the exercise of a currently exercisable option granted to Ms. North by Mr. Muller; and (iii) 50,000
outstanding shares of Common Stock purchasable at $5.00 per share upon the exercise of a currently
exercisable option granted to Ms. North by Mr. Sheehan.
(6) Represents 25,000 shares of Common Stock issuable at $5.00 per share upon the exercise of currently
exercisable options.
(7) Represents 12,500 shares of Common Stock issuable at $6.50 per share upon the exercise of currently
exercisable options.
(8) Represents shares of Common Stock issuable at $5.00 per share upon the exercise of currently exercisable
options.
(9) Includes 2,000 shares of Common Stock issuable at $6.50 per share upon the exercise of currently
exercisable options granted under the Directors' Stock Option Plan.
(10) Includes 2,000 shares of Common Stock issuable at $6.50 per share upon the exercise of currently
exercisable options granted under the Directors' Stock Option Plan.
(11) Includes 2,000 shares of Common Stock issuable at $6.50 per share upon the exercise of currently
exercisable options granted under the Directors' Stock Option Plan.
(12) Includes 2,000 shares of Common Stock issuable at $6.50 per share upon the exercise of currently
exercisable options granted under the Directors' Stock Option Plan.
(13) Includes currently exercisable options to purchase 2,000 shares of Common Stock at $10.50 per share that
were granted pursuant to the Company's Directors' Stock Option Plan and currently exercisable warrants
to purchase 5,000 shares of Common Stock at $6.00 per share that were granted in connection with the
Company's initial public offering.
(14) See footnotes (3) - (13) above.
</FN>
</TABLE>

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than ten percent (10%) of the Company's outstanding Common
Stock, to file with the Securities and Exchange Commission (the "SEC") initial
reports of ownership and reports of changes in ownership of Common Stock. Such
persons are required by SEC regulations to furnish the Company with copies of
all such reports they file.

To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written or oral representations that no
other reports were required for such persons, during the fiscal year ended
December 31, 1996, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent (10%) beneficial owners were
complied with.

ELECTION OF DIRECTORS; NOMINEES

The Company's Bylaws provide that the number of directors shall be fixed
from time to time by resolution of the majority of the Board of Directors. The
Board of Directors has fixed at ten (10) the number of directors that will
constitute the Board of Directors for the ensuing year, assuming approval of the
amendment to the Company's Articles of Incorporation to provide that the number
of directors constituting the Company's Board of Directors shall not be less
than three (3) nor more than fifteen (15), with the exact number of directors to
be fixed from time to time in the manner provided in the Company's Bylaws. Each
director elected at the Annual Meeting will serve for a term expiring at the
Company's 1998 Annual Meeting of Shareholders or when his or her successor has
been duly elected and qualified.

4
<PAGE>

The following table sets forth certain information with respect to the
persons who have been nominated by the Company to be elected as directors at the
Annual Meeting. The Board of Directors has no reason to believe that any nominee
will refuse or be unable to accept election; however, in the event that one or
more nominees are unable to accept election or if any other unforeseen
contingencies should arise, each proxy that does not direct otherwise will be
voted for the remaining nominees, if any, and for such other persons as may be
designated by the Board of Directors of the Company.
<TABLE>
<CAPTION>

Name Age Position with Company
- ----------------------------------- ----------------- -------------------------------------------------
<S> <C> <C>

Ralph P. Muller 56 Chairman of the Board of Directors and Chief
Executive Officer
Kevin Sheehan 38 President and Director
Joyce North 54 Executive Vice President - Sales and Director
Henry M. Cairo 49 Chief Financial Officer and Chief Operating
Officer and Director
Steven McPhee 55 Executive Vice President - Corporate
Development and Director Nominee
Richard Adrey 50 Director
Ronald J. Korn 55 Director
Michael J. Kollender 31 Director
Edward R. Allen 56 Director Nominee
Francis X. Maguire 63 Director Nominee
</TABLE>

Ralph P. Muller co-founded the Company, and has been serving the Company
full-time since its inception in 1985 as Chairman of the Board and Chief
Executive Officer, and served as President of the Company from its inception
until May 1995. Mr. Muller is also the President, Chief Executive Officer and
Director of each of Serenity Homes, Inc., a company engaged in the business of
purchasing and developing for sale residential real property, Sea America, Inc.,
a company engaged in the business of owning and administering a fleet of fishing
and recreational boats as part of a 400-member boat club, and USA Today Realty,
a full-service real estate brokerage firm. Mr. Muller has over 25 years of
experience in the vacation/leisure industry. Mr. Muller has served on the South
Florida Better Business Bureau.

Kevin M. Sheehan co-founded the Company and has served as President and a
director of the Company since May 1995. Mr. Sheehan served as Executive Vice
President of the Company from January 1991 until May 1995. From October 1987 to
January 1991, Mr. Sheehan served as the Company's Vice President - Marketing.
Prior to joining the Company in 1987, Mr. Sheehan served in various positions in
the vacation interval ownership industry.

Joyce North has served as the Executive Vice President - Sales of the
Company since January 1991 and as a director of the Company since May 1995. From
1980 to 1990, Ms. North marketed and sold vacation interval ownership interests
for independent developers in the Pocono Mountains in Pennsylvania,
Williamsburg, Virginia and French Lick, Indiana.

Henry M. Cairo, a certified public accountant and an attorney-at-law, has
served as Chief Financial Officer and Chief Operating Officer of the Company
since June 1995 and has been a director of the Company since the consummation of
the Company's initial public offering in December 1995. From December 1990 to
May 1995, Mr. Cairo was a partner with the certified public accounting firm of
Checker Simon & Rosner, where he specialized in the hospitality and real estate
industries. Prior to joining Checker Simon & Rosner, Mr. Cairo was a partner
with Laventhol & Horwath, an accounting firm. Mr. Cairo has over 14 years of
experience in the vacation interval ownership industry, representing developers,
lenders, marketing and management companies and homeowner associations. Mr.
Cairo is a member of ARDA, where he has spoken at numerous conferences on
subjects relating to the vacation interval ownership industry, including
developer profitability and operational matters. Mr. Cairo currently serves as a
member of the ARDA Resort Development Forum, and formerly served as the Chairman
of the ARDA Accounting and Taxation Committee and Finance Committee.

5
<PAGE>

Steven McPhee has served as Executive Vice President - Corporate
Development of the Company since February 1996. Prior to joining the Company,
Mr. McPhee was the President of IMC Consulting Corporation, a private business
consulting firm specializing in the resort/recreation industry. Mr. McPhee has
been involved in the resort/recreation industry in various capacities since
1976. Mr. McPhee has been a member of ARDA since 1976. Mr. McPhee currently
serves on the ARDA Meetings Committee and the ARDA Sales and Marketing Task
Force.

Richard Adrey, the President of Coastline Financial Group, Inc., a firm
which serves as principal or advisor in the placement of debt or equity
securities, has been a director of the Company since the consummation of the
Company's initial public offering in December 1995. Prior to joining Coastline
Financial Group, Inc. in 1992, from 1986 until 1991, Mr. Adrey served as the
Senior Vice President of Associated Investment Company, a company engaged in
arranging for the financing, syndication and sale of real estate.

Ronald J. Korn, a certified public accountant and an attorney-at-law, has
been a director of the Company since the consummation of the Company's initial
public offering in December 1995. Since July 1991, Mr. Korn has served as
President of Ronald Korn Consulting, a business consulting firm, and as Chairman
of the Board of Carole Korn Interiors, Inc., an interior design firm. From 1961
to 1991, Mr. Korn was a partner with the certified public accounting firm of
KPMG Peat Marwick, including six years in which Mr. Korn served as Managing
Partner of KPMG Peat Marwick's Miami, Florida office. Since October 1991, Mr.
Korn has served as a director and Chairman of the Compensation and Audit
Committees of the Board of Directors of Engle Homes, Inc., a company whose
common stock is traded on the NASDAQ National Market. Since 1996, Mr. Korn has
served as a director of Magicworks Entertainment Incorporated, a public company.

Michael J. Kollender has been a director of the Company since August 1996.
Mr. Kollender is a Senior Vice President, Investment Banking, at Josephthal Lyon
& Ross Incorporated ("Josephthal"), an investment banking firm. Prior to joining
Josephthal, from 1987 to 1994 Mr. Kollender was a Senior Manager at BDO Seidman,
a national certified public accounting firm. Mr. Kollender is a member of both
the American Institute of Certified Public Accountants and the New York State
Society of Certified Public Accountants.

Edward R. Allen has held various offices at InterCoastal Communities, Inc.,
a real estate development company, since 1981. Mr. Allen currently serves as
Chairman of the Board and Chief Executive Officer of InterCoastal. Mr. Allen is
a Director of Chateau Communities, Inc., a company whose securities are traded
on the New York Stock Exchange.

Francis X. Maguire has served since 1985 as the President and Chief
Executive Officer of Hearth Communications Inc., a management consulting
communications firm. He has previously served, among other positions, as Senior
Vice President at Federal Express, Senior Vice President at Kentucky Fried
Chicken, and Director of Marketing and Public Relations at American Airlines.

MANAGEMENT

Election of Executive Officers

The Company's officers are elected annually by the Board of Directors and
serve at the discretion of the Board of Directors, subject to the terms of
employment agreements with the Company. See "Executive Compensation-Employment
Contracts and Termination of Employment and Change-in-Control Agreements."

Information concerning the Company's executive officers is included in Part
I of the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996, as amended, which report was first filed with the Securities and
Exchange Commission on March 31, 1997.

Committees of the Board of Directors and Meeting Attendance

During the year ended December 31, 1996, the Company's Board of Directors
held 10 meetings and took certain actions by written consent once. No director
attended fewer than 75% of the meetings of the Board of Directors or any
committee thereof held during 1996 during the period of such director's service.

6
<PAGE>

The only committees of the Board of Directors are the Audit Committee and
the Compensation Committee. The Board does not have a nominating or similar
committee.

Messrs. Adrey, Korn and Harper are the current members of the Audit
Committee, which held four meetings during 1996. The duties and responsibilities
of the Audit Committee include (a) recommending to the Board of Directors the
appointment of the Company's auditors and any termination of engagement, (b)
reviewing the plan and scope of audits, (c) reviewing the Company's significant
accounting policies and internal controls and (d) having general responsibility
for all related auditing matters.

Messrs. Weinstein, Korn and Harper are the current members of the
Compensation Committee, which held three meetings during 1996. The Compensation
Committee reviews and approves the compensation of the Company's executive
officers and administers the Company's 1995 Stock Option Plan.

Directors' Fees and Compensation

Directors who are not employees of the Company each receive an annual
retainer of $10,000. In addition, in March 1997 the Board of Directors approved,
and each of the nonemployee directors of the Company received, an additional
$10,000 retainer. No director of the Company receives any directors' fees
for attendance at meetings of the Board of Directors or committees thereof,
although members of the Board do receive reimbursement for actual travel-related
expenses incurred in connection with their attendance at meetings of the Board
of Directors. Directors of the Company who are also employees of the Company do
not receive additional compensation for their services as directors.

7
<PAGE>

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth, for the years ended December 31, 1996, 1995
and 1994, the aggregate compensation awarded to, earned by or paid to the Named
Executive Officers. The Company did not grant any restricted stock awards or
stock appreciation rights or make any long-term incentive plan payouts during
such fiscal years.
<TABLE>
<CAPTION>

Summary Compensation Table

Long-Term
Annual Compensation Compensation Award
--------------------------------------------------------------------------------------
All Other
Annual
Name and Principal Position Year Salary Bonus Compensation(1) Options(#)(2)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ralph P. Muller
Chairman of the Board 1996 $ 375,000 -0- -0- -0-
and Chief Executive 1995 $1,297,643 $ 75,000 -0- -0-
Officer 1994 -0- $1,351,547 $266,344(3) -0-

Kevin Sheehan
President 1996 $ 365,000 -0- -0- -0-
1995 $1,105,215 $ 75,000 -0- 75,000
1994 -0- $1,205,597 -0- -0-

Joyce North 1996 $ 350,000 $ 330,000 -0- -0-
Executive Vice President 1995 $ 175,564 $ 858,072 -0- 100,000
- Sales 1994 -0- $ 992,500 -0- -0-

Henry M. Cairo 1996 $ 250,000 -0- -0- -0-
Chief Financial Officer 1995 $ 138,640 $ 75,000 -0- 50,000
and Chief Operating 1994 -0- -0- -0- -0-
Officer (4)

Marco Manzie 1996 $ 166,000 $ 170,000 -0- -0-
Vice President - Resort 1995 $ 184,462 $ 75,000 -0- 35,000
Services 1994 $ 141,254 -0- -0- -0-

Steven McPhee 1996 $ 185,000 -0- -0- 25,000
Executive Vice - President 1995 -0- -0- -0- -0-
Corporate Development (5) 1994 -0- -0- -0- -0-
<FN>

(1) Does not include the dollar value of personal benefits, such as the
cost of automobiles and health insurance, the aggregate value of which for each Named Executive Officer
was less than 10% of such Named Executive Officer's salary and bonus.
(2) The amounts in this column represent options granted pursuant to the Company's 1995 Stock Option Plan.
(3) Represents premiums paid by the Company under insurance policies on the lives of Mr. Muller and his
spouse.
(4) Mr. Cairo joined the Company in June 1995. Therefore, compensation information for the fiscal year 1995
represents the period from June 1995 through December 1995, and no compensation information is presented
for Mr. Cairo for 1994.
(5) Mr. McPhee joined the Company in February 1996. Therefore, compensation information for the fiscal year
1996 represents the period from February 1996 through December 1996, and no compensation information is
presented for Mr. McPhee for 1995 or 1994.

</FN>
</TABLE>

8
<PAGE>

Employment Contracts and Termination of
Employment and Change-in-Control Arrangements

The Company has entered into employment agreements, effective as of January
1, 1996, with Ralph P. Muller, Chairman of the Board and Chief Executive Officer
of the Company, Kevin Sheehan, President, Joyce North, Executive Vice President
- - Sales, Henry M. Cairo, Chief Financial Officer and Chief Operating Officer,
Steven McPhee, Executive Vice President - Corporate Development and Marco
Manzie, Vice President - Resort Operations. In the case of Messrs. Muller,
Sheehan, Cairo, McPhee, Manzie and Ms. North, these agreements will expire in
December 1997, subject to automatic one-year renewal periods unless 60 days
prior written notice is given by the Company or such executive. These agreements
provide for an annual base salary to Mr. Muller, Mr. Sheehan, Ms. North, Mr.
Cairo, Mr. McPhee and Mr. Manzie of $375,000, $365,000, $350,000, $250,000,
$200,000, and $166,000, respectively. The employment agreements of Messrs.
Muller, Sheehan, Cairo, and McPhee also provide for an annual bonus as
determined by a majority of disinterested members of the Company's Board of
Directors, subject to a maximum bonus during the first two years of each such
agreement of $375,000, $365,000, $250,000, and $200,000, respectively. The
employment agreement of Ms. North provides for an annual bonus equal to (A) 3.0%
of the Company's income before taxes, and (B) an additional amount equal to
$100,000 if the Company's net income before taxes exceeds $12.5 million, and an
additional $100,000 for each incremental increase of $5 million of net income
before taxes in excess of $12.5 million, subject to a maximum bonus during the
first two years of her employment agreement commencing January 1, 1996 of
$625,000. Upon the Company's termination of the employment of any of the
executives for any reason other than for cause, as specified in their respective
employment agreements, each of the executives shall be entitled to receive a
payment equal to (A) 12 months' base salary at the then prevailing rate plus (B)
100% of the most recent annual bonus paid to the executive under his or her
employment agreement. Upon termination for "cause" or upon voluntary
resignation, each of these executives shall be entitled to receive his or her
base salary through the date of such termination and, in the case of voluntary
resignation, subject to the approval of the Company's Board of Directors, his or
her bonus, reduced, pro rata, to reflect the duration of his or her employment
by the Company prior to such resignation. In addition, upon the actual or
constructive termination of employment of Ms. North, Mr. Cairo or Mr. McPhee
following the occurrence of a change in effective control of the Company, such
person shall be entitled to receive a payment equal to (A) 200% of his or her
base salary at the rate prevailing at the time of such change in control plus
(B) 200% of the most recent annual bonus paid to him or her under his or her
employment agreement, and Mr. Manzie shall be entitled to receive a payment
equal to (A) 100% of his base salary at the rate prevailing at the time of such
change in control plus (B) 100% of the bonus paid to him under his employment
agreement. Each of these executives is prohibited from competing with the
Company for the duration of their respective employment agreements and, if
terminated for cause or upon voluntary resignation, for a period of one year
thereafter.

Aggregated Fiscal Year-End Option Value Table

The following table sets forth certain information concerning unexercised
stock options held by the Named Executive Officers as of December 31, 1996. No
stock options were exercised by the Named Executive Officers during the year
ended December 31, 1996. No stock appreciation rights have been granted or are
outstanding.
<TABLE>
<CAPTION>

Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values

Shares Value Number of Securities Value of Unexercised
Acquired Realized Underlying Unexercised in-the-Money Options at
on Options at FY-End (#) FY-End (1)
----------------------------- ----------------------------
Name Exercise (#) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------- ------------ --------- ------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Kevin Sheehan 0 $0 37,500 37,500 $553,125 $553,125
Joyce North 0 $0 50,000 50,000 $762,500 $762,500
Henry M. Cairo 0 $0 25,000 25,000 $381,250 $381,250
Marco Manzie 0 $0 17,500 17,500 $266,875 $266,875
Steven McPhee 0 $0 12,500 12,500 $171,875 $171,875
<FN>

9
<PAGE>

________________
(1) The closing price for the Common Stock as reported on the NASDAQ National Market System on December 31,
1996 was $20.25. Value is calculated by multiplying (i) the difference between $20.25 and the option
price of $5.00 (with the exception of Kevin Sheehan, as to whom such option price is $5.50 and Mr.
McPhee as to whom such option price is $6.50) by (ii) the number of shares of Common Stock underlying
the option.
</FN>
</TABLE>

Compensation Committee Interlocks and Insider Participation

Ralph P. Muller, the Chairman of the Board of Directors and Chief Executive
Officer of the Company, and Kevin Sheehan, the President of the Company,
participated in deliberations of the Company's Board of Directors concerning
executive compensation during 1996.

Board Compensation Committee Report on Executive Compensation

Philosophy. The Compensation Committee's executive compensation philosophy
is to provide competitive levels of compensation, integrate the compensation of
its executive officers with the achievement of the Company's annual and
long-term performance goals, reward above average corporate performance,
recognize individual initiative and achievement and assist the Company in
attracting and retaining qualified management. To meet these objectives, the
Compensation Committee attempts to set the compensation of its executive
officers at levels that it believes are competitive with other companies of the
same size in the Company's industry, in light of the Company's then current and
anticipated performance. The Compensation Committee endorses the position that
equity interest in the Company by management is beneficial in aligning executive
officers' and shareholders' interests in the enhancement of shareholder value.

Components of Executive Compensation. Compensation of the Company's
executive officers consists of both cash payments and grants of stock options.
The annual cash compensation consists of a base salary and a bonus. Long-term
incentives are provided through the grant of stock options under the Company's
1995 Stock Option Plan.

Base Salaries and Bonuses. The Compensation Committee attempts to set base
salaries and bonuses of its executive officers at levels that it believes are
competitive with other Companies of the same size in the Company's industry.
Information about appropriate salary and bonus levels has been determined by
reviewing the public disclosure of the Company's competitors and through the
Company's recruiting activities.

Stock Options. The Compensation Committee grants stock options to the
Company's executive officers pursuant to the Company's 1995 Stock Option Plan.
The Compensation Committee has the authority to determine the individuals to
whom stock options are awarded, the terms at which option grants are made, the
duration of the options and the number of shares subject to each option. The
size of the option grants are generally based on the position level of the
recipient. Through the award of stock options, the objective of aligning
executive officers' long range interests with those of the shareholders is met
by providing the executive officers with the opportunity to build a meaningful
stake in the Company.

In December 1994, the Internal Revenue Service issued amendments to the
proposed regulations previously issued under Section 162(m) ("Section 162(m)")
of the Internal Revenue Code of 1986, as amended. In general, Section 162(m)
disallows a public company's deduction for compensation to any employee in
excess of $1.0 million per year, unless such compensation is paid in connection
with the attainment of performance goals established by the compensation
committee of the board of directors and approved by the shareholders of such
company in advance of the period during which services relating to such
compensation were rendered. None of the executive officers of the Company
presently receives, and the Compensation Committee does not anticipate that such
persons will receive, annual cash compensation in excess of the $1 million cap
provided in Section 162(m). The Compensation Committee intends to take the
necessary steps to ensure compliance with Section 162(m).

10
<PAGE>

CERTAIN TRANSACTIONS

Coconut Bay Resort

Ralph P. Muller, the Chairman of the Board, Chief Executive Officer and the
majority shareholder of the Company, owns 49% of the issued and outstanding
capital stock of Coconut Bay Resort Properties, Inc. ("Coconut Bay"). In 1992,
Coconut Bay developed the Coconut Bay Resort, located in Fort Lauderdale,
Florida, consisting of 52 units which were sold as approximately 2,300 VOIs. The
Company serves as exclusive sales agent for the sale of vacation ownership
interests ("VOIs") at this resort, for which it receives a net commission equal
to 45% of the purchase price of each VOI sold. During the year ended December
31, 1996, the Company received sales commissions from Coconut Bay of
approximately $54,000. Substantially all VOIs in this resort were sold as of
December 1993. However, the Company may in the future serve as sales agent with
respect to VOIs which are re-acquired by Coconut Bay upon foreclosure or
otherwise, although it does not anticipate that the revenues from such
activities will be significant. The Company believes that the marketing fees it
receives in connection with sales of VOIs in the Coconut Bay Resort are at rates
which are no less favorable than the rates it receives in connection with sales
of VOIs in properties owned by unaffiliated developers.

Surfsider and Surfrider Resorts

Mr. Muller also owns approximately 33% of the issued and outstanding
capital stock of Intracoastal Resorts, Inc. ("Intracoastal"). In 1993,
Intracoastal developed the Surfsider resort, in Pompano, Florida, consisting of
17 units for sale as 884 VOIs. The Company served as exclusive sales and
marketing agent for the sale of VOIs at this resort, for which it received a net
commission equal to 46% of the purchase price of each VOI sold. The Company did
not receive any sales commissions from Intracoastal from sales of VOIs at the
Surfsider resort during the year ended December 31, 1996. As of December 31,
1993, substantially all of the VOIs had been sold at this resort.

In addition to Surfsider resort, in 1994 Intracoastal developed the
Surfrider resort, in Pompano Beach, Florida. Surfrider consists of 15 units for
sale as 780 VOIs. As with the Surfsider resort, the Company served as exclusive
sales and marketing agent for the sale of VOIs at this resort, for which it
received a net commission equal to 46% of the purchase price of each VOI sold.
For the year ended December 31, 1996, the Company received sales commissions
from Intracoastal of approximately $20,000 from sales of VOIs at the Surfrider
resort. As of December 31, 1995, substantially all of the VOIs had been sold at
this resort.

The Company believes that the commissions it receives in connection with
sales of VOIs in the Surfsider and Surfrider resorts are at rates which are no
less favorable than the rates it receives in connection with sales of VOIs in
properties owned by unaffiliated developers.

Coconut Bay Loan

During 1993, Coconut Bay loaned the Company an aggregate principal amount
of $1,250,000. This loan was evidenced by a promissory note, bearing interest at
an annual rate of prime plus 3.25% and is due and payable in August 1998. In
August 1996, the Company made principal payments of $125,000 to Coconut Bay on
account of this loan. As of December 31, 1996, $435,000 of the principal amount
of this loan remained outstanding. The Company believes that the loan from
Coconut Bay is on terms which are no less favorable than the Company could
obtain from an unaffiliated lender.

11
<PAGE>

Financial Consulting Agreement

Effective January 1, 1996, the Company entered into a one year Financial
Consulting Agreement with Josepthal pursuant to which it pays to Josepthal a
monthly consulting fee of $5,000. Michael J. Kollender, a director of the
Company, is a Senior Vice President at Josepthal.

Advances to Certain Executive Officers

During 1996, the Company made advances to Kevin Sheehan, President of the
Company, and to Henry Cairo, Chief Financial Officer and Chief Operating Officer
of the Company, in the amounts of $156,300 and $69,000, respectively. Such
amounts were advanced against the bonuses of Messrs. Sheehan and Cairo for 1996.
There was no bonus granted to these individuals in 1996 and, as a result,
Messrs. Sheehan and Cairo are indebted to the Company in the amounts of $156,300
and $69,000, respectively.

The Company and Messrs. Sheehan and Cairo intend to negotiate the terms of
repayment of such debts.

Director's Fee

During the years ended December 31, 1994 and 1995, the Company paid Alice
Muller, Ralph Muller's wife, an annual director's fee of approximately $104,000
and $76,000, respectively. Mrs. Muller resigned as a director of the Company in
June 1995 and no longer receives any compensation from the Company.

Loan to Executive Officer

In 1994, the Company made a loan to Kevin Sheehan, the Company's President,
in the principal amount of $440,000, bearing interest at an annual rate of
approximately 10%. The entire amount of this loan, together with all accrued
interest, was paid by Mr. Sheehan in March 1995.

Sea America Option

In March 1995, Mr. Muller granted the Company an option, exercisable at any
time during the three-year period following the consummation of the Company's
initial public offering, to purchase all of the outstanding capital stock of Sea
America, Inc. for $10,000.

Tax Indemnification Agreements

Mr. Muller has entered into Tax Allocation and Indemnification Agreements
with certain affiliates of the Company which were S corporations prior to the
consummation of the Company's initial public offering. These agreements
generally provide that Mr. Muller will be indemnified by each of the S
Corporations for any taxes due from Mr. Muller with respect to income derived by
the S Corporations during periods covered thereby, and the S Corporations will
be indemnified by Mr. Muller with respect to any overpayment to Mr. Muller in
connection with estimated tax obligations of the S Corporations. The amount of
Mr. Muller's obligation to indemnify any of the S Corporations, however, is
limited to the amount of any corresponding reduction in Mr. Muller's liability
for tax, interest or penalties (reduced by any related costs he incurs), while
the S Corporations are obligated to indemnify Mr. Muller by paying him an amount
that, after taking into account the tax effects to Mr. Muller of his payment of
tax, interest or penalties and of his receipt of the indemnification payment
made to him, equals the increase in Mr. Muller's liability for tax, interest and
penalties. In addition, Mr. Muller need not make any indemnification payment to
any of the S Corporations until he receives a refund or credit in respect of his
corresponding liability for tax, interest or penalties, although the S
Corporations are obligated to indemnify Mr. Muller at the time he pays tax,
interest or penalties, irrespective of when the S Corporations receive a
corresponding refund or credit. Finally, if Mr. Muller receives a refund or
credit of tax, interest or penalties in respect of which he has been
indemnified, he is obligated to repay the entity that indemnified him, upon
receipt of the refund or credit, but the amount of his repayment cannot exceed
an amount that, after giving effect to the tax consequences to Mr. Muller of the
repayment and of the refund or credit he received (together with any interest or
other amounts received), does not exceed the amount of that refund or credit
(together with any interest or other amounts received), while the corresponding
obligation of the S Corporations is to repay Mr. Muller the amount of the
indemnification payment it received from him (together with any interest or
other amounts received), irrespective of the amount of the refund or credit or
the tax consequences of the refund or credit or of the repayment to Mr. Muller.

In 1995, the Company adopted a policy that it will not enter into any
transaction with any officer, director or principal shareholder of the Company
or any entity controlled by such persons other than transactions which have been
approved by a majority of the then outstanding shares of Common Stock held by
shareholders who do not have an interest in such transaction, excluding shares
owned by Ralph P. Muller, the Company's Chairman of the Board and Chief
Executive Officer.

12
<PAGE>

INDEPENDENT PUBLIC ACCOUNTANTS

The firm of Coopers & Lybrand L.L.P. has served as the Company's
independent accountants since January 1994. Since its appointment, Coopers &
Lybrand L.L.P. has performed audit services for the Company commencing with the
year ended December 31, 1993. Representatives of Coopers & Lybrand L.L.P. are
expected to be present at the Annual Meeting and will be afforded the
opportunity to make a statement if they so desire and to respond to appropriate
shareholder questions.

13
<PAGE>

STOCK PERFORMANCE GRAPH

Set forth below is a graph comparing the cumulative shareholder returns
from a $100 investment in the Company's Common Stock and reinvestment of
dividends from December 22, 1995 (the date the Common Stock was first offered to
the public at an initial public price of $5.00 per share) through December 31,
1996 with the NASDAQ Stock Market-US Index and the Nasdaq Financial Index. The
Company did not pay any dividends on its Common Stock during this period.

DATE COMPANY INDEX MARKET INDEX PEER INDEX
---- ------------- ------------ ----------

12/21/95 100.000 100.000 100.000
12/29/95 104.878 101.113 101.308
01/31/96 136.585 101.613 101.793
02/29/96 148.781 105.485 103.286
03/29/96 134.146 105.836 105.397
04/30/96 185.366 114.618 105.713
05/31/96 180.488 119.881 107.675
06/28/96 251.220 114.476 107.889
07/31/96 239.024 104.380 105.115
08/30/96 185.366 110.122 111.891
09/30/96 219.512 118.547 116.950
10/31/96 170.732 117.237 120.693
11/29/96 351.220 124.489 128.419
12/31/96 395.122 124.362 129.848

The comparisons in this table are required by the Securities and Exchange
Commission and are not intended to forecast or be indicative of possible future
performance of the Common Stock.

14
<PAGE>

PROPOSAL TO APPROVE THE AMENDMENT OF THE COMPANY'S ARTICLES OF
INCORPORATION TO INCREASE FROM NINE (9) TO FIFTEEN (15) THE MAXIMUM NUMBER OF
DIRECTORS THAT MAY CONSTITUTE THE BOARD OF DIRECTORS

The Company's Board of Directors has proposed an amendment to the Company's
Articles of Incorporation that would increase from nine to fifteen the maximum
number of directors that may sit at any time on the Board of Directors. The
adoption of the amendment requires approval of the amendment by the Company's
shareholders.

The Board of Directors believes that it is in the best interest of the
Company to increase the authorized number of directors that may sit on the board
because it will allow the Company increased flexibility to nominate members of
the Board with a broader range of experience and expertise.

The Board recommends that the first paragraph of Article V of the Company's
Articles of Incorporation be amended to read as follows:

The number of directors constituting the Corporation's Board of Directors
shall not be less than three (3) nor more than fifteen (15), the exact number to
be fixed from time to time in the manner provided in the Bylaws of the
Corporation.

A copy of the entire text of the Company's Articles of Incorporation,
amended as proposed herein, is provided herewith as Appendix A to this Proxy
Statement. The bold face portions of the first paragraph of Article V, as set
forth in Appendix A, reflect the changes in the Company's Articles of
Incorporation that will result from the approval of this proposed amendment at
the Annual Meeting.

If the amendment to the Articles of Incorporation is approved at the Annual
Meeting, it will become effective upon the filing of the amendment with the
Secretary of State of the State of Florida, which is expected to be accomplished
as promptly as practicable after such approval is obtained.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THIS PROPOSAL TO
AMEND THE COMPANY'S ARTICLES OF INCORPORATION TO INCREASE FROM NINE (9) TO
FIFTEEN (15) THE MAXIMUM NUMBER OF DIRECTORS THAT MAY CONSTITUTE THE COMPANY'S
BOARD OF DIRECTORS.

15
<PAGE>

PROPOSAL TO APPROVE AN AMENDMENT TO THE DIRECTORS' STOCK OPTION PLAN TO
INCREASE FROM 40,000 TO 100,000 THE NUMBER OF SHARES OF COMMON STOCK RESERVED
FOR ISSUANCE PURSUANT TO THE DIRECTORS' STOCK OPTION PLAN

The Company's Board of Directors has unanimously approved, subject to
approval by the Company's shareholders, an amendment to the Directors' Stock
Option Plan to increase from 40,000 to 100,000 the number of shares of Common
Stock reserved for issuance pursuant to such plan. The text of the Directors'
Stock Option Plan, as amended by the Company's Board of Directors, is attached
hereto as Exhibit B. The material features of the Directors' Stock Option Plan
are discussed below, but the description is subject to, and is qualified in its
entirety by, the full text of the Directors' Stock Option Plan.

The purpose of the Directors' Stock Option Plan is to attract and retain
non-employee directors by providing additional incentives and to encourage stock
ownership in the Company by such persons. The Directors' Stock Option Plan is to
be administered by the Company's Board of Directors who shall have the authority
to adopt those rules and regulations and make those determinations not
inconsistent with the terms of the plan that are necessary or desirable for the
implementation and administration thereof.

An aggregate of 100,000 shares of Common Stock have been reserved, subject
to approval by the Company's shareholders, for issuance upon exercise of options
("Options") granted under the Directors' Stock Option Plan. As of the date
hereof, Options to purchase 50,000 shares of Common Stock at an exercise prices
ranging from $6.50 to $ 10.50 per share have been granted, subject to
shareholder approval of the amendment to the Directors' Stock Option Plan, to
the Company's non-employee directors. The shares acquired upon exercise of
Options granted under the Directors' Stock Option Plan will be authorized and
unissued shares of Common Stock. The Company's shareholders will not have any
preemptive rights to purchase or subscribe for the shares reserved for issuance
under the Directors' Stock Option Plan. If any Option granted under the
Directors' Stock Option Plan should expire or terminate for any reason other
than having been exercised in full, the unpurchased shares subject to that
Option will again be available for the grant of additional Options.

Eligibility

Any person who is a member of the Company's Board of Directors and who is
not an employee, full-time or part-time, of the Company or its subsidiaries is
eligible to receive grants of Options under the Directors' Stock Option Plan
(each an "Eligible Director").

Terms and Conditions

Pursuant to the Directors' Stock Option Plan, each Eligible Director shall
receive the grant of an Option to purchase 2,000 shares of Common Stock on the
date such individual is first elected as a member of the Company's Board of
Directors. Thereafter, each Eligible Director shall receive an annual grant of
an Option to purchase 2,000 shares of Common Stock on the date of each annual
meeting of the Company's shareholders subsequent to such Eligible Director's
election as a director of the Company, beginning with the first such annual
meeting following election that occurs after December 31, 1996. Upon the grant
of Options, the Company and each Eligible Director shall enter into an Option
agreement, which agreement shall specify, among other things, the grant date and
the exercise price.

The exercise price of any Option granted pursuant to the Directors' Stock
Option Plan shall be the "Fair Market Value" of the Common Stock underlying such
Option at the close of business on the date of grant of such Option unless the
Board of Directors shall determine otherwise in a fair and uniform manner. "Fair
Market Value" on any date of reference shall be the closing price of the Common
Stock on the business day immediately preceding such date of grant. For purposes
of determining Fair Market Value, the closing price of the Common Stock on any
business day shall be (i) if such Common Stock is listed or admitted for trading
on any United States national securities exchange, or if actual transactions are
otherwise reported on a consolidated transaction reporting system, the last
reported sale price of Common Stock on such exchange or reporting system, as
reported in any newspaper of general circulation, (ii) if the Common Stock is

16
<PAGE>

quoted on the National Association of Securities Dealers Automated Quotations
System ("NASDAQ"), or any similar system of automated dissemination of
quotations of securities prices in common use, the last reported sales price of
Common Stock on such system or, if sales prices are not reported, the mean
between the closing high bid and low asked quotations for such day of the Common
Stock on such system, or (iii) if neither clause (i) or (ii) is applicable, the
mean between the high bid and low asked quotations for the Common Stock as
reported by the National Quotation Bureau, Incorporated if at least two
securities dealers have inserted both bid and asked quotations for the Common
Stock on at least five (5) of the ten (10) preceding days.

Options granted under the Directors' Stock Option Plan are not exercisable
until after six (6) months following their grant to an Eligible Director.
Thereafter, such Options shall be exercisable in full for a period of ten (10)
years from the date of grant. No Option granted under the Directors' Stock
Option Plan is assignable or transferable, other than by will or by the laws of
descent and distribution. During the lifetime of an optionee, an Option is
exercisable only by such optionee.

Under the Directors' Stock Option Plan, an Option is deemed exercised when
(i) the Company has received written notice of such exercise in accordance with
the terms of the Option (as set forth in the Option agreement); (ii) full
payment of the aggregate Option price of the shares as to which the Option is
exercised has been made; and (iii) arrangements that are satisfactory to the
Board of Directors, in its sole discretion, have been made for the payment to
the Company of the amount that is necessary for the Company to withhold in
accordance with applicable Federal or State tax withholding requirements.

Shares of Common Stock purchased upon the exercise of Options must be paid
for in cash, by certified or official bank check or personal check, by money
order, with already owned shares of Common Stock, or a combination of the above.
If paid in whole or in part with shares of already owned Common Stock, the value
of the shares surrendered is deemed to be their Fair Market Value on the date
the Option is exercised. Proceeds from the sale of Common Stock pursuant to the
exercise of Options will be added to the general funds of the Company to be used
for general corporate purposes.

Pursuant to the Directors' Stock Option Plan, if an optionee ceases to be a
director for any reason other than for cause, which includes removal as a result
of acts of (i) fraud or intentional misrepresentation or (ii) embezzlement,
misappropriation or conversion of assets or opportunities of the Company or any
subsidiary, the unexercised portion of the optionee's Options shall terminate
three (3) months following such termination. If an optionee is removed for
cause, the unexercised portion of such optionee's Options shall terminate
immediately upon such termination. If an optionee's employment is terminated by
reason of the optionee's death, the unexercised portion of the optionee's
Options shall terminate twelve (12) months after the optionee's death.

FEDERAL INCOME TAX CONSEQUENCES OF THE DIRECTORS' STOCK OPTION PLAN

The Directors' Stock Option Plan is not qualified under the provisions of
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
nor is it subject to any of the provisions of the Employee Retirement Income
Security Act of 1974, as amended. All Options granted under the Directors' Stock
Option Plan will be non-qualified stock options.

On exercise of an Option, a director generally will recognize ordinary
income on the earlier of (i) the expiration of the six (6) month period after
the exercise of the Option and (ii) the first day on which a sale at a profit of
shares acquired on exercise of the Option would not subject the director to
liability under Section 16(b) of the Exchange Act. The amount of ordinary income
will equal the excess, if any, of the fair market value of the shares on the
date the income is recognized over the exercise price of the Option. The
director, however, is entitled under section 83(b) of the Code to elect to
recognize ordinary income on the date of exercise of the Option, in which case
the amount of income will be equal to the excess, if any, of the fair market
value of the shares on that date over the exercise price of the Option. A
section 83(b) election must be made within 30 days after exercising an Option.
The income recognized by the director will be subject to the withholding of
Federal income tax. The director's tax basis in the shares of Common Stock

17
<PAGE>

acquired on exercise of any Option will be the fair market value of those shares
used in determining the amount of ordinary income recognized by the director.
The director's holding period for those shares will begin on the date of
exercise of the Option.

If an optionee pays for shares of Common Stock on exercise of an Option by
delivering shares of the Company's Common Stock, the optionee will not recognize
gain or loss on the shares delivered, even if their fair market value at the
time of exercise differs from the optionee's tax basis in them. The optionee,
however, otherwise will be taxed on the exercise of the Option in the manner
described above as if he had paid the exercise price in cash. If a separate
identifiable stock certificate is issued for that number of shares equal to the
number of shares delivered on exercise of the Option, the optionee's tax basis
in the shares represented by that certificate will be equal to his tax basis in
the shares delivered, and his holding period for those shares will include his
holding period for the shares delivered. The optionee's tax basis and holding
period for the additional shares received on exercise of the Option will be the
same as if the Optionee had exercised the Option solely in exchange for cash.

The Company will be entitled to a deduction for Federal income tax purposes
equal to the amount of ordinary income taxable to the optionee, provided that
amount constitutes an ordinary and necessary business expense for the Company
and is reasonable in amount, and either the employee includes that amount in
income or the Company timely satisfies its reporting requirements with respect
to that amount.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
PROPOSAL APPROVING THE AMENDMENT OF THE DIRECTORS' STOCK OPTION PLAN TO INCREASE
FROM 40,000 TO 100,000 THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR
ISSUANCE PURSUANT TO THE DIRECTORS' STOCK OPTION PLAN.

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OTHER BUSINESS

The Board knows of no other business to be brought before the Annual
Meeting. If, however, any other business should properly come before the Annual
Meeting, the persons named in the accompanying proxy will vote proxies as they
may deem appropriate, unless they are directed by a proxy to do otherwise.

INFORMATION CONCERNING SHAREHOLDER PROPOSALS

Pursuant to Rule 14a-8 promulgated by the Securities and Exchange
Commission, a shareholder intending to present a proposal to be included in the
Company's proxy statement for the Company's 1998 Annual Meeting of Shareholders
must deliver a proposal in writing to the Company's principal executive offices
no later than February 1, 1998.

By Order of the Board of Directors

RALPH P. MULLER
Chairman of the Board and
Chief Executive Officer

Fort Lauderdale, Florida
June 7, 1997

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<PAGE>

EXHIBIT A

ARTICLE I - NAME

The name of the Corporation is VACATION BREAK U.S.A., INC. (hereinafter
called the "Corporation").

ARTICLE II - PRINCIPAL OFFICE

The address of the principal office and the mailing address of the
Corporation is 6400 N. Andrews Avenue, Park Plaza, Suite 200, Ft. Lauderdale,
Florida 33309.

ARTICLE III - CAPITAL STOCK

The aggregate number of shares of capital stock which the Corporation shall
have the authority to issue is (i) 25,000,000 shares of Common Stock, par value
$.01 per share (the "Common Stock") and (ii) 25,000,000 shares of Preferred
Stock, par value $.01 per share (the "Preferred Stock").

A. Provisions Relating to the Common Stock.

1. Voting Rights. Except as otherwise required by law or as may be
provided by the resolutions of the Board of Directors authorizing the issuance
of any class or series of the Preferred Stock, all rights to vote and all voting
power shall be vested exclusively in the holders of the Common Stock. The
holders of the Common Stock shall be entitled to one vote per share on all
matters submitted to a vote of shareholders, including, without limitation, the
election of directors.

2. Dividends. Subject to the rights of the holders of the Preferred
Stock, the holders of the Common Stock shall be entitled to receive, when, as
and if declared by the Board of Directors, out of funds legally available
therefor, dividends payable in cash, stock or otherwise.

3. Liquidating Distributions. Upon any liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary, and after the
holders of the Preferred Stock shall have been paid in full the amounts to which
they shall be entitled (if any) or a sum sufficient for such payment in full
shall have been set aside, the remaining net assets of the Corporation shall be
distributed pro rata to the holders of the Common Stock in accordance with their
respective rights and interests to the exclusion of the holders of the Preferred
Stock.

B. Provisions relating to Preferred Stock.

1. General. The Preferred Stock may be issued from time to time, in one
or more classes or series, the shares of each class or series to have such
designations and powers, preferences and rights, and qualifications, limitations
and restrictions as are stated and expressed herein and in the resolution or
resolutions providing for the issue of such class or series adopted by the Board
of Directors as hereinafter prescribed.

2. Preferences. Subject to the rights of the holders of the Corporation's
Common Stock, authority is hereby expressly granted to and vested in the Board
of Directors to authorize the issuance of the Preferred Stock from time to time,
in one or more classes or series, to determine and take necessary proceedings
fully to effect the issuance, conversion and redemption of any such Preferred
Stock and, with respect to each class or series of the Preferred Stock, to fix

20
<PAGE>

and state by the resolution or resolutions from time to time adopted providing
for the issuance thereof the following:

a. whether or not the class or series is to have voting rights, special
or conditional, full or limited, or is to be without voting rights;

b. the number of shares to constitute the class or series and the
designations thereof;

c. the preferences and relative, participating, optional or other special
rights, if any, and the qualifications, limitations or restrictions thereof, if
any, with respect to any class or series;

d. whether or not the shares of any class or series shall be redeemable
and if redeemable the redemption price or prices, and the time or times at which
and the terms and conditions upon which, such shares shall be redeemable and the
manner of redemption;

e. whether or not the shares of a class or series shall be subject to the
operation of retirement or sinking funds to be applied to the purchase or
redemption of such shares for retirement, and if such retirement or sinking fund
or funds be established, the periodic amount thereof and the terms and
provisions relative to the operation thereof;

f. the dividend rate, whether dividends are payable in cash, stock or
other property of the Corporation, the conditions upon which and the times when
such dividends are payable, the preference to or the relation to the payment of
the dividends payable on any other class or classes or series of stock, whether
or not such dividend shall be cumulative or noncumulative, and if cumulative,
the date or dates from which such dividends shall accumulate;

g. the preferences, if any, and the amounts thereof that the holders of
any class or series thereof shall be entitled to receive upon the voluntary or
involuntary dissolution of, or upon any distribution of the assets of, the
Corporation;

h. whether or not the shares of any class or series shall be convertible
into, or exchangeable for, the shares of any other class or classes or of any
other series of the same or any other class or classes of the Corporation and
the conversion price or prices or ratio or ratios or the rate or rates at which
such conversion or exchange may be made, with such adjustments, if any, as shall
be stated and expressed or provided for in such resolution or resolutions; and

i. such other special rights and protective provisions with respect to
any class or series as the Board of Directors may deem advisable.

The shares of each class or series of the Preferred Stock may vary from the
shares of any other class or series thereof in any or all of the foregoing
respects. The Board of Directors may increase the number of shares of Preferred
Stock designated for any existing class or series by a resolution adding to such
class or series authorized and unissued shares of the Preferred Stock not
designated for any other class or series. The Board of Directors may decrease
the number of shares of the Preferred Stock designated for any existing class or
series by a resolution, subtracting from such series unissued shares of the
Preferred Stock designated for such class, or series, and the shares so
subtracted shall become authorized, unissued and undesignated shares of the
Preferred Stock.

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<PAGE>

ARTICLE IV - REGISTERED AGENT

The street address of the Corporation's registered office in the State of
Florida is 6400 N. Andrews Avenue, Park Plaza, Suite 200, Ft. Lauderdale,
Florida 33309, and the name of its registered agent at such address is Ralph P.
Muller.

ARTICLE V - BOARD OF DIRECTORS

ARTICLE VI - LIMITATION ON DIRECTOR LIABILITY

A director shall not be personally liable to the Corporation or the holders
of shares of capital stock for monetary damages for breach of fiduciary duty as
a director, except (i) for any breach of the duty of loyalty of such director to
the Corporation or such holders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 607.0831 of the Florida Business Corporation Act (the "FBCA"), or (iv)
for any transaction from which such director derives an improper personal
benefit. If the FBCA is hereafter amended to authorize the further or broader
elimination or limitation of the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the FBCA, as so amended. No repeal or modification
of this Article VI shall adversely affect any right of or protection afforded to
a director of the Corporation existing immediately prior to such repeal or
modification.

ARTICLE VII - SHAREHOLDER ACTION

Any required action or vote of shareholders of the Corporation must be
taken at a meeting duly called and held, and may not be taken by written consent
in lieu of a meeting.

ARTICLE VIII - SPECIAL MEETINGS OF SHAREHOLDERS

Except as otherwise required by law and subject to the rights of the
holders of the Preferred Stock, special meetings of shareholders of the
Corporation may be called only by (i) the Board of Directors pursuant to a
resolution approved by a majority of the entire Board of Directors, (ii) the
Corporation's Chief Executive Officer or (iii) the holders of at least one-third
of the outstanding shares of capital stock of the Corporation.

ARTICLE IX - INDEMNIFICATION

The Corporation shall indemnify and advance expenses to, and may purchase
and maintain insurance on behalf of, its officers and directors to the fullest
extent permitted by law as now or hereafter in effect. Without limiting the
generality of the foregoing, the Bylaws may provide for indemnification and
advancement of expenses to officers, directors, employees and agents on such
terms and conditions as the Board of Directors may from time to time deem
appropriate or advisable.

ARTICLE X - AMENDMENT

Except as provided herein, these Amended and Restated Articles of
Incorporation may be altered, amended or repealed by the shareholders of the
Corporation in accordance with Florida law.

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<PAGE>

EXHIBIT B
VACATION BREAK U.S.A., INC.
___________________________________

DIRECTORS' STOCK OPTION PLAN
____________________________________

1. Purpose. The purpose of this Plan is to advance the interests of
VACATION BREAK U.S.A., INC., a Florida corporation, by providing an additional
incentive to attract and retain nonemployee directors through the encouragement
of stock ownership in the Company by such persons.

2. Definitions. As used herein, the following terms shall have the
meaning indicated:

(a) "Annual Meeting Date" shall mean the date of the annual meeting of
the Company's shareholders at which the Directors are elected.

(b) "Board" shall mean the Company's Board of Directors.

(d) "Common Stock" shall mean the Company's Common Stock, par value $.01
per share.

(e) "Company" shall refer to VACATION BREAK U.S.A., INC., a Florida
corporation.

(f) "Director" shall mean a member of the Board.

(g) "Eligible Director" means any person who is a member of the Board and
who is not an employee, full time or part time, of the Company or its
subsidiaries. For purposes of this Plan, a director who does not receive regular
compensation from the Company or its subsidiaries, other than directors' fees
and reimbursement for expenses, shall not be considered to be an employee of the
Company, even if such director is an officer of a subsidiary of the Company.

(h) "Fair Market Value" of a Share on any date of reference shall mean
the "Closing Price" (as defined below) of the Common Stock on the business day
immediately preceding such date, unless the Board in its sole discretion shall
determine otherwise in a fair and uniform manner. For the purpose of determining
Fair Market Value, the "Closing Price" of the Common Stock on any business day
shall be (i) if the Common Stock is listed or admitted for trading on any United
States national securities exchange, or if actual transactions are otherwise
reported on a consolidated transaction reporting system, the last reported sale
price of Common Stock on such exchange or reporting system, as reported in any
newspaper of general circulation, (ii) if the Common Stock is quoted on the
National Association of Securities Dealers Automated Quotations System
("NASDAQ"), or any similar system of automated dissemination of quotations of
securities prices in common use, the last reported sale price of Common Stock on
such system or, if sales prices are not reported, the mean between the closing
high bid and low asked quotations for such day of Common Stock on such system,
as reported in any newspaper of general circulation or (iii) if neither clause
(i) or (ii) is applicable, the mean between the high bid and low asked
quotations for the Common Stock as reported by the National Quotation Bureau,
Incorporated if at least two securities dealers have inserted both bid and asked
quotations for Common Stock on at least five of the ten preceding days.

(i) "Initial Grant Date" means the later of (i) March 25, 1996, and (ii)
the date on which a person is elected as a member of the Board.

(j) "Option" (when capitalized) shall mean any option granted under this
Plan.

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<PAGE>

(k) "Option Agreement" shall mean the agreement between the Company and
the Optionee for the grant of an option.

(l) "Optionee" shall mean a person to whom a stock option is granted
under this Plan or any person who succeeds to the rights of such person under
this Plan by reason of the death of such person.

(m) "Parent" shall mean a "parent corporation" as defined in Section
425(e) and (g) of the Code.

(n) "Plan" shall mean this Directors' Stock Option Plan for the Company.

(o) "Share(s)" shall mean a share or shares of the Common Stock.

(p) "Subsidiary" shall mean any corporation (other than the Company) in
any unbroken chain of corporations beginning with the Company if, at the time of
the granting of the Option, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50 percent or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.

3. Shares and Options. Subject to Section 9 of this Plan, the Company may
grant to Optionees from time to time Options to purchase an aggregate of up to
one hundred thousand (100,000) shares from authorized and unissued Shares. If
any Option granted under the Plan shall terminate, expire, or be canceled or
surrendered as to any Shares, new Options may thereafter be granted covering
such Shares.

4. Grants of Options.

(a) On the Initial Grant Date, each Eligible Director shall receive the
grant of an Option to purchase 2,000 Shares.

(b) Each Eligible Director shall receive an annual grant of an Option to
purchase 2,000 Shares on each Annual Meeting Date, beginning with the first
Annual Meeting Date that occurs after December 31, 1996 and that is after the
Initial Grant Date for each such Eligible Director.

(c) Upon the grant of each Option, the Company and the Eligible Director
shall enter into an Option Agreement, which shall specify the grant date and the
exercise price and shall include or incorporate by reference the substance of
this Plan and such other provisions consistent with this Plan as the Board may
determine.

5. Exercise Price. The exercise price per Share of any Option shall be
the Fair Market Value of the Shares underlying such Option on the date such
Option is granted.

6. Exercise of Options. An Option shall be deemed exercised when (i) the
Company has received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment of the aggregate exercise price of the
Shares as to which the Option is exercised has been made, and (iii) arrangements
that are satisfactory to the Board in its sole discretion have been made for the
Optionee's payment to the Company of the amount that is necessary for the
Company or Subsidiary employing the Optionee to withhold in accordance with
applicable Federal or State tax withholding requirements. The exercise price of
any Shares purchased shall be paid in cash, by certified or official bank check
or personal check, by money order, with Shares or by a combination of the above.
If the exercise price is paid in whole or in part with Shares, the value of the
Shares surrendered shall be their Fair Market Value on the date the Option is
exercised. No Optionee shall be deemed to be a holder of any Shares subject to
an Option unless and until a stock certificate or certificates for such Shares
are issued to such person(s) under the terms of the Plan. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which the record date is
prior to the date such stock certificate is issued, except as expressly provided
in Section 9 hereof.

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<PAGE>

7. Exercise Schedule for Options. Each Option granted hereunder shall not
be exercisable until after six months following the date of grant of the Option
to the Eligible Director. Thereafter, such Option shall be exercisable in full.
The expiration date of an Option shall be 10 years from the date of grant of the
Option.

8. Termination of Option Period.

(a) The unexercised portion of any Option shall automatically and without
notice terminate and become null and void at the time of the earliest to occur
of the following:

(i) three months after the date on which the Optionee ceases to be a
Director for any reason other than by reason of (A) "Cause" (which, for purposes
of this Plan, shall mean the removal of the Optionee as a Director by reason of
any act of (1) fraud or intentional misrepresentation, or (2) embezzlement,
misappropriation, or conversion of assets or opportunities of the Company or any
Subsidiary), or (B) death;

(ii) immediately upon the removal of the Optionee as a Director for
Cause;

(iii) one year after the date the Optionee ceases to be a Director by
reason of death of the Optionee;

(b) The Board in its sole discretion may, by giving written notice
("Cancellation Notice"), cancel any Option that remains unexercised on the date
of the consummation of any corporate transaction:

(i) if the shareholders of the Company shall approve a plan of merger,
consolidation, reorganization, liquidation or dissolution in which the Company
does not survive (unless the approved merger, consolidation, reorganization,
liquidation or dissolution is subsequently abandoned); or

(ii) if the shareholders of the Company shall approve a plan for the
sale, lease, exchange or other disposition of all or substantially all the
property and assets of the Company (unless such plan is subsequently abandoned).

Any Cancellation Notice shall be given a reasonable period of time prior to
the proposed date of such cancellation and may be given either before or after
shareholder approval of such corporate transaction.

9. Adjustment of Shares.

(a) If at any time while the Plan is in effect or unexercised Options are
outstanding, there shall be any increase or decrease in the number of issued and
outstanding Shares through the declaration of a stock dividend or through any
recapitalization resulting in a stock split-up, combination or exchange of
Shares, then and in such event:

(i) appropriate adjustment shall be made in the maximum number of Shares
available for grant under the Plan, so that the same percentage of the Company's
issued and outstanding Shares shall continue to be subject to being so optioned;
and

(ii) appropriate adjustment shall be made in the number of Shares and
the exercise price per Share thereof then subject to any outstanding Option, so
that the same percentage of the Company's issued and outstanding Shares shall
remain subject to purchase at the same aggregate exercise price.

(b) Subject to the specific terms of any Option, the Board may change the
terms of Options outstanding under this Plan, with respect to the exercise price
or the number of Shares subject to the Options, or both, when, in the Board's
sole discretion, such adjustments become appropriate by reason of a corporate
transaction described in Subsections 8(b)(i) or (ii) hereof.

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<PAGE>

(c) Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities convertible
into shares of capital stock of any class, either in connection with a direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number or exercise price of the Shares then subject
to outstanding Options granted under the Plan.

(d) Without limiting the generality of the foregoing, the existence of
outstanding Options granted under the Plan shall not affect in any manner the
right or power of the Company to make, authorize or consummate (i) any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger or consolidation of
the Company; (iii) any issue by the Company of debt securities, or preferred or
preference stock that would rank above the Shares subject to outstanding
Options; (iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.

10. Transferability of Options. Each Option shall provide that such
Option shall not be transferable by the Optionee otherwise than by will or the
laws of descent and distribution, and each Option shall be exercisable during
the Optionee's lifetime only by the Optionee.

11. Issuance of Shares. As a condition of any sale or issuance of Shares
upon exercise of any Option, the Board may require such agreements or
undertakings, if any, as the Board may deem necessary or advisable to assure
compliance with any such law or regulation including, but not limited to, the
following:

(a) a representation and warranty by the Optionee to the Company, at the
time any Option is exercised, that he is acquiring the Shares to be issued to
him for investment and not with a view to, or for sale in connection with, the
distribution of any such Shares; and

(b) a representation, warranty and/or agreement to be bound by any
legends that are, in the opinion of the Board, necessary or appropriate to
comply with the provisions of any securities law deemed by the Board to be
applicable to the issuance of the Shares and are endorsed upon the Share
certificates.

12. Administration of the Plan. The Plan shall be administered by the
Board, which shall have the authority to adopt such rules and regulations and to
make such determinations as are not inconsistent with the Plan and as are
necessary or desirable for the implementation and administration of the Plan.

13. Interpretation. If any provision of the Plan should be held invalid
or illegal for any reason, such determination shall not affect the remaining
provisions hereof, but instead the Plan shall be construed and enforced as if
such provision had never been included in the Plan. The determinations and the
interpretation and construction of any provision of the Plan by the Board shall
be final and conclusive. This Plan shall be governed by the laws of the State of
Florida. Headings contained in this Plan are for convenience only and shall in
no manner be construed as part of this Plan. Any reference to the masculine,
feminine, or neuter gender shall be a reference to such other gender as is
appropriate.

14. Term of Plan; Amendment and Termination of the Plan.

(a) This Plan shall become effective upon its adoption by the Board, and
shall continue in effect until all Options granted hereunder have expired or
been exercised, unless sooner terminated under the provisions relating thereto.
No Option shall be granted after 10 years from the date of the Board's adoption
of this Plan.

(b) The Board may from time to time amend the Plan or any Option;
provided, however, that, without approval by the Company's shareholders, no such
amendment shall (i) materially increase the benefits accruing to participants
under the Plan, (ii) materially increase the number of Shares or other
securities reserved for issuance upon the exercise of Options, (iii) materially
modify the requirements as to eligibility for participation under the Plan or

26
<PAGE>

(iv) otherwise involve any other change or modification requiring shareholder
approval under Rule 16b-3 of the Securities Act of 1933, as amended; and,
provided, further, that, except to the extent otherwise specifically provided in
Section 8, no amendment or suspension of the Plan or any Option issued hereunder
shall substantially impair any Option previously granted to any Optionee without
the consent of such Optionee.

(c) Notwithstanding anything else contained herein, the provisions of
this Plan which govern the number of Options to be awarded to nonemployee
directors, the exercise price per share under each such Option, when and under
what circumstances an Option will be granted and the period within which each
Option may be exercised, shall not be amended more than once every six months
(even with shareholder approval), other than to conform to changes to the Code,
or the rules promulgated thereunder, and under the Employee Retirement Income
Security Act of 1974, as amended, or the rules promulgated thereunder, or with
rules promulgated by the Securities and Exchange Commission.

(d) The Board, without further approval of the Company's shareholders,
may at any time terminate or suspend this Plan. Any such termination or
suspension of the Plan shall not affect Options already granted and such Options
shall remain in full force and effect as if this Plan had not been terminated or
suspended. No Option may be granted while the Plan is suspended or after it is
terminated. The rights and obligations under any Option granted to any Optionee
while this Plan is in effect shall not be altered or impaired by the suspension
or termination of this Plan without the consent of such Optionee.

15. Reservation of Shares. The Company, during the term of the Plan,
will at all times reserve and keep available a number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

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<PAGE>

VACATION BREAK U.S.A., INC.
6400 N. Andrews Avenue
Park Plaza, Suite 200
Ft. Lauderdale, Florida 33309

THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS

The undersigned holder of common stock of Vacation Break U.S.A., Inc., a
Florida corporation (the "Company"), hereby appoints Ralph P. Muller and Henry
M. Cairo, and each of them, as proxies for the undersigned, each with full power
of substitution, for and in the name of the undersigned to act for the
undersigned and to vote, as designated below, all of the shares of common stock
of the Company that the undersigned is entitled to vote at the 1997 Annual
Meeting of Shareholders of the Company, to be held on Friday, June 27, 1997, at
12:00 p.m., local time, at the Sea Gardens Beach and Tennis Resort, 615 N. Ocean
Blvd., Pompano Beach, Florida, and at any adjournment(s) or postponement(s)
thereof.

The Board of Directors recommends a vote FOR the election of all the
director nominees listed in proposal (1) below and the other proposals set
forth.

Proposal 1. Election of Ralph P. Muller, Kevin Sheehan, Joyce North, Henry
M. Cairo, Steven McPhee, Ronald J. Korn, Richard Adrey, Michael J. Kollender,
Edward R. Allen and Francis X. Maguire as directors of the Company.

VOTE FOR all nominees listed above, except vote withheld from the following
nominee(s) (if any).
________________________________________________________________________________

VOTE WITHHELD from all nominees.

Proposal 2. Approval of the amendment to the Articles of Incorporation to
provide that the number of directors constituting the Board of Directors shall
not be less than three (3) nor more than fifteen (15).

[ ] FOR [ ] AGAINST [ ] ABSTAIN

Proposal 3. Approval of the amendment to the Directors' Stock Option Plan
and the reservation of 100,000 shares of Common Stock for issuance pursuant to
the Directors' Stock Option Plan.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting, and any adjournments or
postponements thereof.

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<PAGE>

(continued from other side)

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED "FOR" ALL OF THE PROPOSALS.

The undersigned hereby acknowledges receipt of (i) the Notice of Annual
Meeting, (ii) the Proxy Statement and (iii) the Company's 1996 Annual Report to
Shareholders.

Dated: _______________________________, 1997

__________________________________________
(Signature)

__________________________________________
(Signature if held jointly)

IMPORTANT: Please sign exactly as your name
appears hereon and mail it promptly even though
you may plan to attend the meeting. When shares
are held by joint tenants, both should sign. When
signing as attorney, executor, administrator,
trustee or guardian, please give full title as
such. If a corporation, please sign in full
corporate name by president or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.

PLEASE MARK, SIGN AND DATE THIS PROXY CARD AND
PROMPTLY RETURN IT IN THE ENVELOPE PROVIDED. NO
POSTAGE NECESSARY IF MAILED IN THE UNITED STATES.