ESCROW AGREEMENT


                  THIS ESCROW  AGREEMENT (this  "Agreement") is made and entered
into as of December  19,  1997,  by and among  Fairfield  Communities,  Inc.,  a
Delaware corporation  ("Fairfield"),  Ralph P. Muller ("RM"), R & A Partnership,
Ltd., a Texas limited partnership  ("R&A"), and Kevin Sheehan ("KS" and together
with RM and R&A, the "Stockholders"), and Mercantile Bank of Arkansas, as Escrow
Agent ("Escrow Agent").

                                    RECITALS

         A.  Fairfield,  FCVB  Corp.,  a Florida  corporation  and wholly  owned
subsidiary of Fairfield  ("Merger  Sub") and Vacation Break USA, Inc., a Florida
corporation  ("Vacation  Break"),  have entered  into an  Agreement  and Plan of
Merger (as the same may be amended or  modified  from time to time,  the "Merger
Agreement"),  pursuant to which and upon the terms and subject to the conditions
thereof,  Merger Sub will be merged with and into  Vacation  Break and shares of
Common  Stock,  par  value  $.01  per  share,  of  Vacation  Break   outstanding
immediately  prior to the effective  time of the Merger (the  "Effective  Time")
will be converted into and represent the right to receive, among other things, a
number of shares  of Common  Stock,  par  value  $.01 per  share,  of  Fairfield
("Fairfield Common Stock").

         B. Concurrently with the execution of the Merger Agreement,  Fairfield,
Merger Sub, and the Stockholders entered into a Principal Stockholders Agreement
(as the same may be  amended  or  modified  from  time to time,  the  "Principal
Stockholders  Agreement"),  pursuant to which and upon the terms and  conditions
thereof, RM and R&A, jointly and severally as a group, and KS, severally and not
jointly,  will  indemnify  and hold  Fairfield and its  subsidiaries  (including
Vacation Break and its  subsidiaries)  (each an "Indemnified  Person")  harmless
from and against certain liabilities.

         C. As  security  for the  respective  obligations  of RM and R&A,  as a
group,  and KS,  to  indemnify  and hold the  Indemnified  Persons  harmless  as
described in Section 5 of the Principal Stockholders  Agreement, RM and R&A have
given  irrevocable  instructions  to cause to be  deposited  222,287  shares  of
Fairfield  Common  Stock (the "RM/RA  Shares")  with the Escrow Agent and KS has
given  irrevocable  instructions  to  cause to be  deposited  55,572  shares  of
Fairfield Common Stock (the "KS Shares") with the Escrow Agent.

                  NOW,  THEREFORE,  in  consideration  of the  foregoing and the
mutual covenants and agreements  contained  herein,  and intending to be legally
bound hereby, the parties agree as follows:
<PAGE>

                  1.       Certain Definitions.

                  For the purposes of this Agreement,  the following terms shall
have the following meanings:

                  "Additional Matter" shall mean the matter described in Section
5(a)(iii) of the Principal Stockholders Agreement.

                  "Disbursement Notice" shall mean any notice delivered pursuant
to  Section  7(a) or 7(b)  instructing  the Escrow  Agent to release  any Escrow
Shares or Escrow Funds from the escrow under this Agreement.

                  "Escrow  Funds"  shall  mean any and all  proceeds  of  Escrow
Shares sold or disposed of in  accordance  with Section 4(c) of this  Agreement,
any interest or increase  received on the investment of such  proceeds,  and any
cash dividends paid on Escrow Shares held in escrow.

                  "Escrow Shares" shall mean (i) the shares of Fairfield  Common
Stock,  deposited  in escrow as provided  in Section 4 together  with all rights
associated  with such shares,  plus (ii) subject to Section 4(b),  all shares or
other  securities or property  (other than cash) paid as a dividend on or issued
or  distributed  in respect of such  deposited  shares,  and any shares or other
securities into which such deposited shares may be changed or for which they may
be   exchanged   pursuant   to   any   stock   split,   dividend,   combination,
reclassification  or other  corporate  action of Fairfield  affecting  shares of
Fairfield Common Stock generally.

                  "Indemnified  Matter"  shall  mean  each  matter  that  is the
subject of the proceedings described on Schedule 1 hereto.

                  "KS  Indemnified  Matter  Escrow  Amount"  shall  mean (i) the
number of KS Shares that have on the date of this  Agreement an aggregate  Share
Value  equal  to the KS  Indemnified  Matter  Maximum  Amount  for a  particular
Indemnified  Matter  less the  number of those  shares  sold or  disposed  of in
accordance with Section 4(c),  plus (ii) the Escrow Funds directly  attributable
to that number of KS Shares,  such KS Shares and Escrow  Funds  being  allocated
under this  Agreement to be released  under Sections 7(a) and 7(b) in respect of
that Indemnified Matter.

                  "KS Indemnified Matter Maximum Amount" shall mean with respect
to each Indemnified Matter the amount listed opposite such Indemnified Matter in
the column so named on Schedule 1.
<PAGE>

                  "RM/RA  Indemnified  Matter Escrow  Amount" shall mean (i) the
number of RM/RA  Shares  that have on the date of this  Agreement  an  aggregate
Share  Value  equal  to  the  RM/RA  Indemnified  Matter  Maximum  Amount  for a
particular  Indemnified  Matter less the number of those shares sold or disposed
of in  accordance  with  Section  4(c),  plus  (ii) the  Escrow  Funds  directly
attributable to that number of RM/RA Shares,  such RM/RA Shares and Escrow Funds
being allocated under this Agreement to be released under Sections 7(a) and 7(b)
in respect of that Indemnified Matter.

                  "RM/RA  Indemnified  Matter  Maximum  Amount"  shall mean with
respect to each  Indemnified  Matter the amount listed opposite such Indemnified
Matter in the column so named on Schedule 1.

                  "Share  Value"  shall  mean $43 3/16  per  share of  Fairfield
Common Stock, subject to equitable adjustment by Fairfield to give effect to any
stock split, stock dividend or combination or  reclassification of or in respect
of Fairfield Common Stock.

     "Stockholder  Percentage"  shall  mean 80% in the case of RM and R&A,  as a
group, and 20% in the case of KS.

                  "Stockholder  Sub-account" shall mean the separate sub-account
for each of RM and R&A, as a group,  and KS  established  and  maintained by the
Escrow Agent in which the RM/RA  Shares and KS Shares  deposited on behalf of RM
and  R&A,  as a  group,  and KS,  respectively,  and the  Escrow  Funds  derived
therefrom, shall be held on deposit in escrow as provided in this Agreement.

                  2. Appointment of Escrow Agent. The Stockholders and Fairfield
hereby appoint  Mercantile Bank of Arkansas as Escrow Agent for the purposes set
forth in this  Agreement,  and the Escrow Agent hereby accepts that  appointment
and agrees to be bound by the terms and conditions of this Agreement.

                  3.  Deposit in Escrow.  The  Stockholders  have,  pursuant  to
irrevocable instructions,  directed the Exchange Agent (as defined in the Merger
Agreement) to deposit on behalf of RM and R&A, as a group, and KS in escrow with
the Escrow Agent a certificate or certificates representing the RM/RA Shares and
the KS Shares,  respectively,  registered in the name of the Escrow Agent or the
nominee  or  nominees  of the Escrow  Agent.  The Escrow  Agent  shall  issue an
appropriate  receipt  for the RM/RA  Shares  and the KS Shares so  deposited  on
behalf of RM and R&A, and KS upon delivery of such  certificate or  certificates
and shall hold the RM/RA  Shares and the KS Shares and any and all Escrow  Funds
derived  therefrom  in  separate  Stockholder  Sub-accounts  for the  benefit of
Fairfield and the  applicable  Stockholder as the source of payment to Fairfield
of any  amount  owed  by  the  Stockholders  under  Section  5 of the  Principal
Stockholders Agreement (an "Indemnifiable Loss").

     4. Voting Rights and Distributions; Conversion of Escrow Shares.

                  (a) Voting  Rights of Escrow  Shares.  All voting  rights with
respect  to the  Escrow  Shares  held in  each  Stockholder  Sub-account  may be
exercised by the applicable  Stockholder and the Escrow Agent shall from time to
time execute and deliver to the  Stockholders  such  proxies,  consents or other
documents  as may be  necessary  to enable the  Stockholders  to  exercise  such
rights.
<PAGE>

                  (b)  Distributions  on Escrow  Shares.  All cash and  non-cash
dividends and other  distributions paid or made with respect to or on the Escrow
Shares held in the  Stockholder  Sub-account for each  Stockholder  from time to
time, including,  without limitation, all shares or other securities or property
paid as a dividend on or distributed in respect of such Escrow Shares,  shall be
received by the Escrow Agent and held in the same Stockholder Sub-account as the
Escrow  Shares  on  which  or in  respect  of  which  they  were  paid,  pending
disbursement or distribution thereof in accordance with this Agreement.

                  (c)  Conversion  of Escrow  Shares.  The Escrow Agent shall be
entitled,  upon the written direction of each  Stockholder,  to effect the sale,
for cash, of any or all of the Escrow Shares held in the Stockholder Sub-account
for such  Stockholder in market  transactions  with  unrelated  third parties at
market prices reflecting arm's-length negotiation, provided that all proceeds of
any such sale of Escrow Shares are held as Escrow Funds, pending disbursement or
distribution thereof in accordance with this Agreement.  All Escrow Funds may be
invested  exclusively in one or more of the investments  described in Schedule 2
hereto as each  Stockholder  shall  direct in writing with respect to the Escrow
Funds held in the Stockholder  Sub-account for such Stockholder and any interest
or increase  received in respect of any investment  will be held as Escrow Funds
pending disbursement or distribution thereof in accordance with this Agreement.

                  (d) Reliance on Stockholder Action. The applicable Stockholder
for the  Stockholder  Sub-account  in which the RM/RA Shares are deposited is RM
and  R&A,  as a  group,  and the  Escrow  Agent  shall  be  entitled  to rely on
directions  from  either  RM or R&A  with  respect  to any  action,  consent  or
directive to be taken or given in respect of the Escrow  Shares and Escrow Funds
in that Stockholder Sub-account.

                  (e) Release of Excess Escrow Funds.  If at the time of payment
of any cash dividend on or  distribution in respect of any Escrow Shares held in
any Stockholder Sub-account, the receipt of proceeds from the sale of any Escrow
Shares in accordance with Section 4(c) or receipt of any interest on or increase
in respect of any  investment  of the proceeds  thereof held in any  Stockholder
Sub-account, the sum of (i) the aggregate value of the Escrow Shares (based upon
the Share  Value) and the  Escrow  Funds  held in such  Stockholder  Sub-account
comprising  the KS  Indemnified  Matter Escrow  Amount or the RM/RA  Indemnified
Matter Escrow Amount, as applicable,  for each Indemnified Matter, plus (ii) the
aggregate value of the Escrow Shares and Escrow Funds theretofore disbursed from
such Stockholder  Sub-account to Fairfield for application against Indemnifiable
Losses in respect of each  Indemnified  Matter,  exceeds  the  corresponding  KS
Indemnified Matter Maximum Amount or RM/RA Indemnified Matter Maximum Amount for
each Indemnified  Matter,  then, to the extent of such excess,  the Escrow Agent
shall  distribute the cash dividends,  distributions,  sale proceeds or interest
payments to the applicable Stockholder.

                  5. Assessments on Escrow Shares and Escrow Funds.  Each of the
Stockholders  shall be  liable  for,  and  shall  from time to time when due and
payable,  pay and discharge all taxes,  assessments  and  governmental  charges,
including,   without   limitation,   income  taxes  assessed  on  dividends  and
distributions  on the Escrow  Shares and  Escrow  Funds held in the  Stockholder
Sub-account for such Stockholder or any sale or other  disposition of any Escrow
Shares,  imposed on the  Escrow  Shares  and  Escrow  Funds in such  Stockholder
<PAGE>

Sub-account,  or on any cash,  securities or other  property then held in escrow
hereunder  or on any  dividends or interest or other  income  arising  therefrom
payable  to such  Stockholder  under  this  Agreement.  If the  Escrow  Agent is
obligated to withhold any amount of any cash  dividend or cash  distribution  or
sale proceeds,  interest  thereon or other amount for payment of a Stockholder's
taxes,  the Stockholder  upon 2 business days' notice from the Escrow Agent will
promptly pay that amount to the Escrow Agent or deposit an equal amount of funds
in the escrow.

                  6. Beneficial Ownership;  No Liens or Encumbrances.  Except to
the extent otherwise contemplated by this Agreement,  each Stockholder shall, at
all times,  beneficially  own all Escrow Shares and Escrow Funds on deposit with
the Escrow Agent in the applicable  Stockholder  Sub-account.  The  Stockholders
shall not pledge,  encumber or permit the imposition of any pledge, claim, lien,
charge,  encumbrance  or security  interest of any kind or nature on, the Escrow
Shares or Escrow  Funds or any rights of the  Stockholders  in, to, or under the
Escrow Shares, Escrow Funds or this Agreement in any manner whatsoever.

                  7.       Release of Escrow Shares and Escrow Funds.

                  (a)  Litigation  Expenses.  Promptly  following  receipt  of a
Disbursement  Notice in the form of Exhibit A signed by Fairfield and specifying
the amount of the  Indemnified  Matter Escrow Amount to be released,  the Escrow
Agent will  release  Escrow  Shares or Escrow Funds or both in  accordance  with
Sections 7(c),  7(d) and 7(e) equal to the amount set forth in the  Disbursement
Notice.  A  Disbursement  Notice under this Section 7(a) may be delivered at any
time and the Escrow Agent will release the  specified  amount  within 5 business
days after receipt of that Disbursement Notice.

                  (b)      Settlements; Other Releases.

                  (i)  If  Fairfield  is  required  under  Section  5(g)  of the
         Principal  Stockholders  Agreement to obtain the Stockholders' approval
         of a settlement of an Indemnified Matter,  Fairfield, KS, and RM or R&A
         will deliver a Disbursement  Notice in the form of Exhibit B specifying
         the amounts of the Indemnified Matter Escrow Amount to be released from
         the escrow. The Escrow Agent will release Escrow Shares or Escrow Funds
         or both in accordance  with Sections  7(c),  7(d) and 7(e) equal to the
         amount specified in the Disbursement Notice.

                  (ii) If Fairfield is not  required  under  Section 5(g) of the
         Principal  Stockholders  Agreement to obtain the Stockholders' approval
         (or the Stockholders are deemed to have approved) of a settlement of an
         Indemnified  Matter or a final,  nonappealable  judgment  or order of a
         court has been entered in respect of a  Indemnified  Matter,  Fairfield
         may deliver to the Escrow  Agent a  Disbursement  Notice in the form of
         Exhibit C  specifying  the  amounts of the  Indemnified  Matter  Escrow
         Amount to be released.  The Escrow Agent will release  Escrow Shares or
         Escrow Funds or both in accordance  with Sections  7(c),  7(d) and 7(e)
         equal to the amount specified in the Disbursement Notice.
<PAGE>

                  (iii) Promptly  following the full and final settlement of, or
         the entry of a final, nonappealable judgment or order in respect of, an
         Indemnified  Matter  and the  payment  of all  Indemnifiable  Losses in
         connection  therewith,  Fairfield  shall  deliver to the Escrow Agent a
         Disbursement  Notice in the form of  Exhibit  B,  directing  the Escrow
         Agent release to KS the remaining portion of the KS Indemnified  Matter
         Escrow Amount and to release to RM and R&A the remaining portion of the
         RM/RA  Indemnified  Matter Escrow Amount in respect of that Indemnified
         Matter.

                  (iv)  If  permitted   under  Section  5(k)  of  the  Principal
         Stockholders  Agreement,  Fairfield and the Stockholders may deliver to
         the  Escrow  Agent a  Disbursement  Notice  in the  form of  Exhibit  D
         specifying  the amounts of the  Indemnified  Matter Escrow Amount to be
         released.  The Escrow Agent will release  Escrow Shares or Escrow Funds
         or both in accordance  with Sections  7(c),  7(d) and 7(e) equal to the
         amount specified in the Disbursement Notice.

                  (v) A Disbursement  Notice may be delivered under this Section
         7(b) at any time,  and the Escrow  Agent  will  release  the  specified
         amount within 5 business days after receipt of the Disbursement Notice.

                  (c)  Priority.  The Escrow Agent shall  release to each Person
specified  in a  Disbursement  Notice  the  required  amount  of  each of the KS
Indemnified  Matter Escrow Amount and the RM/RA Indemnified Matter Escrow Amount
from the Escrow Funds and/or Escrow  Shares that  comprise  that KS  Indemnified
Matter  Escrow  Amount  and  RM/RA  Indemnified  Matter  Escrow  Amount  for the
applicable  Indemnified  Matter up to the  corresponding  KS Indemnified  Matter
Maximum Amount and RM/RA  Indemnified  Matter Maximum Amount for the Indemnified
Matter.  The number of Escrow  Shares to be released  will be based on the Share
Value.

                  (d)  Certificates.  Certificates  and other evidence of Escrow
Shares delivered to Fairfield  pursuant to this Agreement shall be duly endorsed
(with signature guaranteed) by the Escrow Agent for transfer to Fairfield or its
nominee or designee.  Certificates and other evidence of Escrow Shares delivered
to the  Stockholders  shall be duly endorsed (with signature  guaranteed) by the
Escrow Agent for transfer in such name or names as they shall direct.

                  (e)  Allocation  Among  Sub-accounts.  The  Escrow  Shares and
Escrow Funds to be released  under  Sections 7(a) and 7(b) shall be withdrawn by
the Escrow  Agent from the Escrow  Shares  and Escrow  Funds that  comprise  the
appropriate KS  Indemnified  Matter Escrow Amount and RM/RA  Indemnified  Matter
Escrow Amount in the Stockholder  Sub-accounts in the following  manner:  first,
Escrow Funds to the extent thereof,  and,  second,  such number of Escrow Shares
(to the nearest whole Escrow Share).  In no event will the sum of (i) the amount
of Escrow Funds and value of Escrow Shares to be released from each  Stockholder
Sub-account pursuant to a Disbursement Notice, plus (ii) the aggregate amount of
Escrow  Funds  and  value  of  Escrow  Shares  theretofore  released  from  such
Stockholder   Sub-account  and  delivered  to  Fairfield  with  respect  to  the
particular Indemnified Matter to which that Disbursement Notice relates,  exceed
the applicable KS Indemnified  Matter Maximum Amount or RM/RA Indemnified Matter
Maximum Amount for such Indemnified  Matter.  Of any amount to be released under
Sections 7(a) or 7(b) to satisfy a Stockholder's  obligation  under Section 5(a)
of the  Principal  Stockholders  Agreement,  an  amount  equal  to 20% and  80%,
respectively,  of that amount shall be  withdrawn  (to the extent of the balance
thereof) from Escrow Funds and/or  Escrow  Shares then held in each  Stockholder
Sub-account  that  comprise  such KS  Indemnified  Matter Escrow Amount and such
RM/RA  Indemnified  Matter Escrow Amount.  No fractional  Escrow Shares shall be
created or released under this Section 7.
<PAGE>

                  8.       Escrow Agent.

                  (a)  Agreements to Govern.  The duties and  obligations of the
Escrow Agent hereunder shall be determined  solely by the express  provisions of
this Agreement.

                  (b) Liability.  The Escrow Agent shall not be liable to anyone
whatsoever  by reason of any error of judgment or for any act done or step taken
or  omitted by it in good  faith or any  mistake of fact or law or for  anything
which it may do or refrain from doing in connection  herewith,  unless caused by
or arising out of its own gross negligence or willful misconduct.  Fairfield and
the  Stockholders  shall,  jointly and severally,  indemnify and hold the Escrow
Agent harmless from any and all liability and expense which may arise out of any
action taken or omitted by it as Escrow Agent in accordance with this Agreement,
as the same may be amended, modified or supplemented,  except such liability and
expense as may result from the gross  negligence  or willful  misconduct  of the
Escrow Agent.

                  (c)  Reliance  on  Instructions.  The  Escrow  Agent  shall be
entitled  to rely  and  shall  be  protected  in  acting  in  reliance  upon any
instructions  or  directions  furnished  to it in  writing by  Fairfield  or the
Stockholders,  or  pursuant  to any  provision  of this  Agreement  and shall be
entitled to treat as genuine, and as the document it purports to be, any letter,
paper or other  document  furnished to it by Fairfield or the  Stockholders  and
believed by it to be genuine and to have been signed and presented by the proper
party or parties.

                  (d) Resignation of Escrow Agent; Appointment of Successor. The
Escrow Agent, or any successor to it hereafter appointed, may at any time resign
by giving  notice in  writing to  Fairfield  and the  Stockholders  and shall be
discharged  from its duties  hereunder  upon the  acceptance of appointment of a
successor  Escrow  Agent  as  hereinafter  provided.  In the  event  of any such
resignation,  a successor Escrow Agent, which shall be a title insurance company
or  financial  institution  acceptable  to  Fairfield,  shall  be  appointed  by
Fairfield.  Any such  successor  Escrow Agent shall deliver to Fairfield and the
Stockholders a written  instrument  accepting such  appointment  hereunder,  and
thereupon  it shall  succeed to all the  rights  and duties of the Escrow  Agent
hereunder  and shall be  entitled  to receive  all the Escrow  Shares and Escrow
Funds held by the predecessor Escrow Agent hereunder.

                  (e)  Consultation  with Counsel.  The Escrow Agent may consult
with counsel to be selected and employed by it and shall be fully protected with
respect to any action  under this  Agreement  taken or suffered in good faith by
the Escrow Agent in accordance with the opinion of such counsel.
<PAGE>

                  (f) Compensation and Expenses.  The Escrow Agent shall receive
compensation  for its services at its customary  rates as in effect from time to
time,  together with reimbursement of out-of-pocket  expenses incurred by Escrow
Agent in connection with this Agreement,  including  reasonable  attorneys' fees
incurred  pursuant to Section 9(e).  Fairfield shall pay such  compensation  and
expenses to the Escrow Agent and shall be  reimbursed by RM and R&A, as a group,
and KS, in accordance with their respective Stockholder  Percentages,  up to 50%
of the  aggregate  amount  thereof that  Fairfield  has paid at the time of each
distribution to any of the Stockholders under this Agreement, such reimbursement
to be payable solely from amounts that would have been otherwise  distributed to
the Stockholders.

                  (g)  Records;   Reports.   The  Escrow  Agent  will   maintain
sufficient  records to determine the  Indemnified  Matter Escrow Amount for each
Indemnified  Matter and will provide monthly reports in reasonable detail of the
Indemnified Matter Escrow Amount and its components for each Indemnified Matter.
The Escrow Agent will also provide a monthly report of any amounts released from
the escrow in respect of each Indemnified Matter.

                  9.       Miscellaneous.

                  (a) Amendment. This Agreement may be amended only by a writing
executed by Fairfield, each of the Stockholders, and the Escrow Agent.

                  (b) Entire Agreement.  This Agreement and the other agreements
expressly  referred to herein set forth the entire  understanding of the parties
hereto  regarding the subject  matter hereof and supersede all prior  contracts,
agreements,  arrangements,  communications,   discussions,  representations  and
warranties,  whether oral or written,  between the parties regarding the subject
matter hereof.

                  (c)      Notices.

                           If to Fairfield:

                           Fairfield Communities, Inc.
                           11001 Executive Center Drive
                           Little Rock, Arkansas  72211

                           Attention:  Mr. John W. McConnell

                           with a copy to:

                           Jones, Day, Reavis & Pogue
                           2001 Ross Avenue, Suite 2300
                           Dallas, Texas  75201

                           Attention:  Mark V. Minton, Esq.



<PAGE>


                           If to RM:

                           Mr. Ralph P. Muller
                           Vacation Break USA, Inc.
                           6400 N. Andrews Avenue
                           Park Plaza, Suite 200
                           Ft. Lauderdale, Florida  33309

                           with a copy to:

                           Greenberg, Traurig, Hoffman,
                             Lipoff, Rosen & Quentel, P.A.
                           1221 Brickell Avenue
                           Miami, Florida  33131

                           Attention:  Gary M. Epstein, Esq.

                           If to R&A:

                           R & A Partnership, Ltd.
                           2435 S. Ocean Boulevard
                           Highland Beach, Florida  33487

                           Attention:  Mr. Ralph P. Muller

                           with a copy to:

                           Baker & McKenzie
                           Barnett Tower
                           701 Brickell Avenue
                           Suite 1600
                           Miami, Florida  33131-2827

                           Attention:  Nicholas DeNovio, Esq.

                           If to KS:

                           Mr. Kevin Sheehan
                           Vacation Break USA, Inc.
                           6400 N. Andrews Avenue
                           Park Plaza, Suite 200
                           Ft. Lauderdale, Florida  33309

                           with a copy to:

                           Greenberg, Traurig, Hoffman,
                             Lipoff, Rosen & Quentel, P.A.
                           1221 Brickell Avenue
                           Miami, Florida  33131

                           Attention:  Gary M. Epstein, Esq.

                           If to the Escrow Agent:

                           Mercantile Bank of Arkansas
                           One Riverfront Place
                           North Little Rock, Arkansas  72114

                           Attention:  Cecil H. Hull

                  (d)  Governing  Law. This  Agreement  shall in all respects be
governed by, and construed in accordance with, the laws of the State of Florida,
regardless of the laws that might otherwise govern under  applicable  principles
of conflicts of laws thereof.

                  (e)   Severability.   Each  section  and  subsection  of  this
Agreement constitutes a separate and distinct provision hereof. It is the intent
of the parties  hereto that the  provisions of this Agreement be enforced to the
fullest extent permissible under the laws and public policies applicable in each
jurisdiction in which  enforcement is sought.  Accordingly,  if any provision of
this Agreement shall be adjudicated to be invalid, ineffective or unenforceable,
the remaining provisions shall not be affected thereby. The invalid, ineffective
or  unenforceable  provision  shall,  without further action by the parties,  be
automatically  amended to effect the original purpose and intent of the invalid,
ineffective or unenforceable provision;  provided,  however, that such amendment
shall  apply  only  with  respect  to the  operation  of such  provision  in the
particular jurisdiction with respect to which such adjudication is made.
<PAGE>

                  (f)  Waivers.  Any  waiver by any party of any  violation  of,
breach of or default under any provision of this  Agreement,  by the other party
shall not be construed as, or constitute, a continuing waiver of such provision,
or waiver of any  other  violation  of,  breach  of or  default  under any other
provision of this Agreement or any other agreements provided for herein.

                  (g)  Headings.  The headings in this  Agreement are solely for
convenience  of reference and shall not be given any effect in the  construction
or interpretation of this Agreement.

                  (h) Counterparts. This Agreement may be executed in any number
of  counterparts,  each of which shall be deemed to be an  original,  and all of
which together will constitute one and the same instrument.

                  (i)  Third  Parties.  Nothing  expressed  or  implied  in this
Agreement is intended, or shall be construed,  to confer upon or give any person
or entity  other than  Fairfield,  the  Stockholders,  and the Escrow  Agent any
rights or remedies under, or by reason of, this Agreement.

                  (j) Assignment.  Neither this Agreement nor any of the rights,
interests or obligations  hereunder  shall be assigned,  in whole or in part, by
operation of law or otherwise  by any of the parties  without the prior  written
consent of the other parties.  This Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective heirs, legal
representatives, successors and assigns.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


<PAGE>


         IN WITNESS WHEREOF,  the parties have signed this Agreement  personally
or by their respective  officers  thereunto duly authorized,  all as of the date
first written above.

                           FAIRFIELD COMMUNITIES, INC.


                           By:/s/Robert W. Howeth
                             ---------------------------------
                           Name: Robert W. Howeth
                               -------------------------------
                           Title:Sr. Vice President and CFO
                                 -----------------------------

                    R & A  PARTNERSHIP,  LTD.,  a  Texas limited partnership


                            By:RPM Investments, Inc., General Partner
                               -------------------------------------
                            By:/s/Linda M. Fenner , as General Partner
                               ---------------------------------------
                            Name: Linda M. Fenner
                                 -------------------------------------
                            Title: President
                                  ------------------------------------



                                            Ralph P. Muller



                                            Kevin Sheehan


                                      MERCANTILE BANK OF ARKANSAS,
                                            as Escrow Agent


                                       By:/s/ Cecil H. Hull
                                         -------------------------
                                       Name: Cecil H. Hull
                                            ----------------------
                                       Title: Vice President
                                             ---------------------


<PAGE>


                                   SCHEDULE 1


<TABLE>
----------------------------------- ---------------------------------------------------------

      Indemnified Matters             KS Indemnified Matter    RM/RA Indemnified Matter
                                         Maximum Amount             Maximum Amount
----------------------------------- ------------------------ ---------------------------
----------------------------------- ------------------------ ---------------------------
<S>                                       <C>                       <C>         
1. Market Response Group and Laser        $ 1,200,000               $4,800,000
   Company, Inc. v. Vacation Break
   USA, Inc.
----------------------------------- ------------------------ ---------------------------
------------------------------------ ----------------------- ---------------------------

2. Global Marketing & Travel, Inc. v.         100,000                  400,000
   Vacation Break USA, Inc.
----------------------------------- ------------------------ ---------------------------
----------------------------------- ------------------------ ---------------------------

3. David Johnson, et al. v. Vacation          100,000                  400,000
   Break USA, Inc.
----------------------------------- ------------------------ ---------------------------
----------------------------------- ------------------------ ---------------------------

4. Additional Matter                        1,000,000                4,000,000
----------------------------------- ------------------------ ---------------------------

</TABLE>




<PAGE>


                                   SCHEDULE 2

         Obligations issued or  unconditionally  guaranteed by the United States
government, or issued by any agency or instrumentality thereof and backed by the
full faith and credit of the United States government,  which obligations mature
within one year from the date of investment.


<PAGE>


                                    EXHIBIT A




Mercantile Bank of Arkansas
One Riverfront Place
North Little Rock, Arkansas 72114
Attention:  Hank Hull

Re: Escrow Agreement,  dated as of December 19, 1997, among Fairfield,  RM, R&A,
    KS and Mercantile Bank of Arkansas, as escrow agent (the "Escrow Agreement")

Gentlemen/Ladies:

         Unless otherwise  defined in this Disbursement  Notice,  all terms used
with initial capital  letters will have the meanings  ascribed to those terms in
the Escrow Agreement.  This Disbursement Notice is delivered pursuant to Section
7(a) of the Escrow  Agreement.  Attached is a  reasonably  detailed  schedule of
litigation  expenses  incurred  which  constitute   Indemnifiable   Losses.  The
undersigned  hereby  certifies  that it is  entitled  pursuant  to the  terms of
Section  5(d)  of  the  Principal  Stockholders  Agreement  to  the  release  of
$___________  of  the  Indemnified  Matter  Escrow  Amount  in  respect  of  the
[first/second/third/fourth]  Indemnified  Matter identified on Schedule 1 to the
Escrow Agreement.  Release that amount to Fairfield. A copy of this Disbursement
Notice has been sent to the Stockholders.

                                                 Very truly yours,

                                            Fairfield Communities, Inc.



                                            By:
                                          Name:
                                         Title:


<PAGE>


                                    EXHIBIT B

Mercantile Bank of Arkansas
One Riverfront Place
North Little Rock, Arkansas 72114
Attention:  Hank Hull

Re: Escrow Agreement,  dated as of December 19, 1997, among Fairfield,  RM, R&A,
    KS and Mercantile Bank of Arkansas, as escrow agent (the "Escrow Agreement")

Gentlemen/Ladies:

         Unless otherwise  defined in this Disbursement  Notice,  all terms used
with initial capital  letters will have the meanings  ascribed to those terms in
the Escrow Agreement.  This Disbursement Notice is delivered pursuant to Section
7(b)(i)   or   (iii)   of   the   Escrow    Agreement    in   respect   of   the
[first/second/third/fourth]  Indemnified  Matter  on  Schedule  1 to the  Escrow
Agreement.  Of the KS  Indemnified  Matter  Escrow  Amount  in  respect  of that
Indemnified Matter, release $_________ of that amount to Fairfield. Of the RM/RA
Indemnified Matter Escrow Amount in respect of that Indemnified Matter,  release
$_________ of that amount to Fairfield.

                                           Very truly yours,

                                           Fairfield Communities, Inc.


                                            By:
                                          Name:
                                         Title:



                                            Ralph P. Muller



                                            Kevin Sheehan

                                            R & A Partnership, Ltd.


                                          By:
                                          By:              , as General Partner


<PAGE>




                                    EXHIBIT C

Mercantile Bank of Arkansas
One Riverfront Place
North Little Rock, Arkansas 72114
Attention:  Hank Hull

Re: Escrow Agreement,  dated as of December 19, 1997, among Fairfield,  RM, R&A,
    KS and Mercantile Bank of Arkansas, as escrow agent (the "Escrow Agreement")

Gentlemen/Ladies:

         Unless otherwise  defined in this Disbursement  Notice,  all terms used
with initial capital  letters will have the meanings  ascribed to those terms in
the Escrow Agreement.  This Disbursement Notice is delivered pursuant to Section
7(b)(ii) of the Escrow  Agreement in respect of the  [first/second/third/fourth]
Indemnified  Matter  on  Schedule  1 to the  Escrow  Agreement.  [Attached  is a
reasonably  detailed  schedule  of  amounts  paid or  payable  which  constitute
Indemnifiable  Losses.] Of the KS Indemnified Matter Escrow Amount in respect of
that   Indemnified   Matter,   release   $_______________   of  that  amount  to
[Fairfield/KS]. Of the RM/RA Indemnified Matter Escrow Amount in respect of that
Indemnified Matter release  $_____________ to  [Fairfield/RM].  All payments and
deliveries  should be made at the addresses  identified in the Escrow  Agreement
[or identified as the attached Schedule 1.].
A copy of this Disbursement Notice has been sent to the Stockholders.

                                            Very truly yours,

                                            Fairfield Communities, Inc.


                                          By:
                                        Name:
                                       Title:


<PAGE>


                                    EXHIBIT D

Mercantile Bank of Arkansas
One Riverfront Place
North Little Rock, Arkansas 72114
Attention:  Hank Hull

Re: Escrow Agreement,  dated as of December 19, 1997, among Fairfield,  RM, R&A,
    KS and Mercantile Bank of Arkansas, as escrow agent (the "Escrow Agreement")

Gentlemen/Ladies:

         Unless otherwise  defined in this Disbursement  Notice,  all terms used
with initial capital  letters will have the meanings  ascribed to those terms in
the Escrow Agreement.  This Disbursement Notice is delivered pursuant to Section
7(b)(iv) of the Escrow Agreement in respect of the fourth  Indemnified Matter on
Schedule 1 to the Escrow Agreement.  Of the KS Indemnified  Matter Escrow Amount
in respect of that Indemnified Matter,  release $_________ of that amount to KS.
Of the RM/RA  Indemnified  Matter Escrow  Amount in respect of that  Indemnified
Matter, release $_________ of that amount to RM.

                                          Very truly yours,

                                          Fairfield Communities, Inc.


                                         By:
                                       Name:
                                      Title:




                                             Ralph P. Muller



                                              Kevin Sheehan


                                          R & A Partnership, Ltd.


                                      By:
                                      By:                   , as General Partner