PROMISSORY NOTE



$450,000                                                   Orlando, Florida
                                                           November 12, 1999

         FOR  VALUE  RECEIVED,  Franz S.  Hanning,  individually,  and  Kelly M.
Hanning,  individually  (together,  the  "Co-Makers,"  and each, a  "Co-Maker"),
having a residence at 2137 Lake Vilma Drive, Orlando,  Florida 32835, or at such
other address as the  Co-Makers may designate in writing,  jointly and severally
promise  to pay,  without  setoff,  deduction  or  reduction,  to the  order  of
Fairfield Communities,  Inc. (the "Holder") at 8669 Commodity Circle, Suite 200,
Orlando,  Florida  32819,  or at such other place as the Holder may designate in
writing,  the principal sum of Four Hundred  Fifty  Thousand and No/100  Dollars
($450,000.00),  the receipt of which by the  Co-Makers  is hereby  acknowledged,
plus  interest  on the  unpaid  principal  balance  thereof  from  time  to time
outstanding  at the rate of zero  percent  (0%) per annum  from the date of this
Note until paid, or such higher rate specified  below in the event of default or
failure to pay this Note at maturity,  in lawful  money of the United  States of
America, as hereinafter provided.

                                REQUIRED PAYMENTS

         Co-Makers  shall repay the principal and interest,  if any, as follows,
without limitation to other payments required hereunder:

        (1)     simultaneously with the completion of the sale of the Co-Makers'
                current  residence  situated at 2137 Lake Vilma Drive,  Orlando,
                Florida 32835,  the Co-Makers shall make a payment that is equal
                to seventy-five percent (75%) of the difference between (a) such
                residence's  sale  price  and  (b)  the  sum of (i)  the  amount
                necessary  to  pay  off  the  closing   date   balances  of  any
                mortgage(s) existing as of October 1, 1999 on such residence and
                (ii) real estate  commissions and other closing costs (excluding
                the  mortgage  payments  described  in clause (i) above) paid to
                unrelated third parties by either of the Co-Makers in connection
                with the sale of such  residence,  in the amount and of the type
                normally borne by the seller of a house in the Orlando,  Florida
                area;

        (2)    as and when payable to Co-Maker  Franz S. Hanning at or following
               the effective date of Co-Maker Franz S. Hanning's  termination of
               employment   with  the  Holder,   regardless   of  whether   such
               termination   is  due  to   resignation   by  Franz  S.  Hanning,
               termination  of Franz S.  Hanning's  employment by the Holder for
               cause or without cause,  death or for any other reason whatsoever
               (and  regardless of whether or not such  termination is deemed to
               have been proper under  Co-Maker  Franz S.  Hanning's  Employment
               Agreement  with  the  Holder  described  below or  alleged  to be
               wrongful),  the  Co-Makers  shall make a payment  (and the Holder
               shall  have  the  right to  offset  an  amount)  that is equal to
               one-hundred percent (100%) of any bonus or incentive compensation
               (net of income taxes, at the applicable statutory rate (currently
               28% for federal  income taxes)) that is owed to Co-Maker Franz S.
               Hanning as of the effective date of termination; and


<PAGE>


        (3)    not later than the later of (a) three business days following the
               date all of the shares are sold  underlying  in each  instance an
               exercise of any part or all of Franz S.  Hanning's  stock options
               or stock  warrants  or (b) such time as the Holder  delivers  the
               stock certificate representing such underlying shares of stock to
               the Co-Makers'  securities broker against receipt of payment, the
               Co-Makers  shall pay (or cause their  broker to pay,  pursuant to
               the terms of the Letter Agreement  described below) to the Holder
               an amount equal to one-hundred percent (100%) of the net proceeds
               or gain (net of (i) income  taxes,  at the  applicable  statutory
               rate (currently 28% for federal income taxes), (ii) normal broker
               commissions  and expenses  associated with the sale of the stock,
               (iii) payment of the exercise price and (iv) margin loan interest
               payable to the broker solely to fund payment to the Holder of the
               exercise price) of such sale or exercise.

                              MATURITY AND DUE DATE

         Notwithstanding  anything  to the  contrary  in this  Note,  the entire
unpaid principal and interest,  if any, hereunder,  as well as any fees or costs
chargeable to Co-Makers hereunder, shall be immediately due and payable upon the
earliest of (the "Due Date"):  (1) April 1, 2003;  or (2) the  occurrence  of an
event of  default  as  provided  below;  or (3) the first to occur of any of the
accelerated maturity dates provided below:

         (a)   365 days following the death of Co-Maker Franz S. Hanning;

         (b)   six  months  following  the date  Co-Maker  Franz  S.  Hanning's
               employment with the Holder is terminated by the Holder by reason
               of  "Disability,"  as defined and provided for in the Employment
               Agreement,  dated October 23, 1998,  between  Co-Maker  Franz S.
               Hanning and the Holder, as amended or replaced from time to time
               (the "Employment Agreement");

         (c)   immediately  upon the termination of Co-Maker Franz S. Hanning's
               employment  with the  Holder  (i) as the  result of  resignation
               (other than  resignation for  "Constructive  Discharge") or (ii)
               for  "Cause,"  as defined  and  provided  for in the  Employment
               Agreement;

         (d)   365  days  following  the   termination  of  Co-Maker  Franz  S.
               Hanning's  employment with the Holder (i) by Franz S. Hanning as
               the result of resignation for  "Constructive  Discharge" or (ii)
               by the Holder  without  "Cause," as defined and  provided for in
               the Employment Agreement; or

         (e)   immediately upon the Co-Makers' sale or transfer of the residence
               situated at 6001 Greatwater Dr., Windermere, Florida 34786.

                                    INTEREST

         Any interest on the unpaid  balance of this Note shall be calculated on
the basis of the actual  number of days elapsed in a 365 or 366 day year, as the
case may be.

                        DEFAULT, ACCELERATION AND SETOFF

         Any one of the following shall constitute an event of default under the
terms of this Note and, upon the  occurrence  of any such event of default,  the
entire unpaid  principal  amount of this
<PAGE>

Note shall become  immediately  due and payable  (without  presentment,  demand,
protest or notice of any kind, all of which are hereby expressly waived) and the
Holder shall  thereupon  be entitled to exercise  all of the  Holder's  remedies
hereunder and under the Security Agreement described below:

       (1)    the  Co-Makers'  default  under  any  mortgage  on the  residence
               situated at 6001 Greatwater Dr.,  Orlando,  Florida 34786,  which
               entitles  the  mortgage   holder  to  commence   foreclosure   or
               collection proceedings;

       (2)     the  insolvency  or  inability  to pay  debts as they  mature of
               either of the Co-Makers,  or the application for the appointment
               of a receiver  for either of the  Co-Makers,  or the filing of a
               petition  under any  provision of the  Bankruptcy  Code or other
               insolvency  law,  statute or proceeding by or against  either of
               the Co-Makers or any  assignment for the benefit of creditors by
               or against either of the Co-Makers;

       (3)     the entry of a judgment  against  either of the Co-Makers in the
               amount  of  $50,000  or more  (excluding  any  judgment  that is
               manifestly fully payable by insurance  confirmed in writing by a
               financially  solvent,  reputable  third party insurer (which has
               neither reserved rights to dispute coverage nor denied coverage)
               to  provide   coverage)  or  the  issuance  or  service  of  any
               attachment,  levy or garnishment against either of the Co-Makers
               or the property of either of the Co-Makers,  or the repossession
               or seizure of property of either of the Co-Makers;

       (4)     the  notice  of  either  of the  Co-Makers  given  to the  Holder
               purporting to terminate  such party's  obligations  under or with
               respect to this Note;

       (5)     the  sale  or  transfer  by  either  of the  Co-Makers  of all or
               substantially all of such party's assets;

       (6)     either  of the  Co-Makers  commits  fraud  or  makes  a  material
               misrepresentation at any time in connection with this Note;

       (7)     either  of the  Co-Makers  fails  to  make a  timely  payment  as
               provided in this Note; or

       (8)     either of the  Co-Makers  breaches any provision of or obligation
               arising  under  or in  connection  with (a)  this  Note,  (b) the
               Security Agreement, of even date herewith,  between the Co-Makers
               and the Holder, as amended or replaced from time to time, (c) the
               Letter Agreement, in the form attached to the Security Agreement,
               to be entered into by and between the  Co-Makers,  the Holder and
               Co-Maker Franz S. Hanning's  stock broker in connection  with the
               exercise of any stock  options or stock  warrants and sale of the
               underlying stock, or (d) the Employment Agreement.

         From and  following  the Due Date,  the  Holder  shall be  entitled  to
interest on the unpaid  balance at twelve  percent  (12%) per annum from the Due
Date until paid in full. To the extent  permitted by law, from and following the
Due Date,  the Holder will have the right,  in  addition  to all other  remedies
permitted  by law,  to setoff  and  deduct the amount due under this Note or the
Security  Agreement or Letter  Agreement  herein  described  against any and all
amounts due to either of the Co-Makers from the Holder of any nature  whatsoever
on deposit with,  held by, owned by or in the possession of the Holder or any of
its  affiliates to the credit of or for the account of either of the  Co-Makers,
without notice to or consent by either of the  Co-Makers.  The Holder's right of
setoff

<PAGE>

and deduction shall extend and apply to any and all unpaid salary, wages, bonus,
incentive  compensation or benefits (to the extent permitted by law) and any and
all outstanding  stock options and stock warrants relating to the Holder's stock
that the  Holder  has  granted  or in the  future  grants to  Co-Maker  Franz S.
Hanning,  and the right of setoff and deduction shall permit the Holder,  at its
election,  to sell,  exercise,  rescind,  cancel,  revoke or  otherwise  proceed
against such stock options and stock  warrants,  the  underlying  shares and any
proceeds therefrom to the extent necessary to recover the unpaid balance of this
Note,  including any costs and charges payable by either of the Co-Makers to the
Holder in  connection  herewith and any accrued  interest,  and Franz S. Hanning
hereby  grants unto the Holder and its officers and agents his power of attorney
to sign any and all  documents  necessary  or deemed  desirable  to  effect  any
alternative  or combination of  alternatives  in connection  with the foregoing,
which power of attorney  shall be deemed to be coupled  with an interest  and be
irrevocable,  all without  liability to Franz S. Hanning for any and all actions
reasonably taken in connection therewith.  The foregoing power of attorney shall
expire upon full payment of the principal  balance hereof,  any interest and any
costs and charges payable by the Co-Makers to the Holder in connection herewith.
The remedies provided in this Note and any other agreement(s) between the Holder
and the  Co-Makers  are  cumulative  and not  exclusive  of any  other  remedies
provided by law. Any indulgence granted by the Holder from time to time shall in
no event be considered as a waiver of the Holder's rights hereunder or estop the
Holder from exercising any such rights thereafter.

         All payments  hereunder shall be applied first toward costs and charges
payable by Co-Makers to the Holder in connection  herewith,  secondly toward the
payment of  interest,  if any, and thirdly  toward the payment of the  principal
balance hereof.

         This Note may be prepaid in whole or in part without penalty.

         Should it become  necessary  to collect the  indebtedness  evidenced by
this Note through an attorney, by legal proceedings or otherwise,  each Co-Maker
shall be jointly and severally  liable to the Holder for all costs of collection
where the Holder pursues its rights hereunder,  including,  without  limitation,
attorneys'  and  paralegals'  fees for legal  services  rendered  in  connection
therewith,  including, without limitation, fees and costs incurred in litigation
and in administrative and bankruptcy proceedings and appeals therefrom,  and the
Co-Makers shall pay such sums to the Holder upon demand.

         It is the intent of all parties to this transaction to abide by any and
all interest  limitations of any applicable usury law and it is expressly agreed
that the Holder shall not be allowed or entitled to collect any interest (or any
sum which is  considered  interest  by law) which is in excess of any legal rate
applicable  hereto.  Should any amount be collected  hereunder which would cause
the interest to exceed said lawful  rate,  such part of said amount in excess of
the  lawful  rate shall  automatically  be  credited  to  principal,  or, if all
principal amounts have been paid, shall be refunded to the Co-Makers.

         It  is  the  intent  of  all  parties  to  this  transaction  that  the
transaction and this Note and its terms and conditions may be disclosed to third
parties,  including,   without  limitation,  the  shareholders  of  the  Holder,
governmental  entities  (such as the  Securities  and  Exchange  Commission  and
Internal Revenue Service) and the general public.

         This Note,  for all  purposes,  shall be governed by and  construed  in
accordance with the laws of the State of Florida.

         Co-Makers hereby waive presentment, demand, protest, notice of dishonor
and any other
<PAGE>

notice of any kind in connection with this Note.

         This Note shall bind Co-Makers and their  successors  and assigns,  and
shall inure to the benefit of the Holder, its successors and assigns.

         Any tax on this Note  pursuant to Florida  Statutes,  Chapter  201, has
been or will be paid on the Security Agreement.

         NEITHER THE HOLDER,  CO-MAKERS OR OTHER PERSON OR ENTITY LIABLE FOR THE
INDEBTEDNESS  EVIDENCED HEREBY,  NOR ANY ASSIGNEE,  SUCCESSOR,  HEIR OR PERSONAL
REPRESENTATIVE OF THE HOLDER, CO-MAKERS OR ANY SUCH OTHER PERSON OR ENTITY SHALL
SEEK  A JURY  TRIAL  IN  ANY  LAWSUIT,  PROCEEDING,  COUNTERCLAIM  OR ANY  OTHER
LITIGATION  PROCEDURE  BASED  UPON OR  ARISING  OUT OF THIS  NOTE,  ANY  RELATED
INSTRUMENT OR AGREEMENT,  ANY  COLLATERAL FOR THE PAYMENT HEREOF OR THE DEALINGS
OR THE RELATIONSHIP  BETWEEN OR AMONG SUCH PERSONS OR ENTITIES,  OR ANY OF THEM.
NEITHER THE HOLDER,  CO-MAKERS  OR ANY SUCH OTHER  PERSON OR ENTITY WILL SEEK TO
CONSOLIDATE  ANY SUCH ACTION,  IN WHICH A JURY TRIAL HAS BEEN  WAIVED,  WITH ANY
OTHER  ACTION  IN  WHICH A JURY  TRIAL  CANNOT  BE OR HAS NOT BEEN  WAIVED.  THE
PROVISIONS OF THIS  PARAGRAPH HAVE BEEN FULLY  DISCUSSED BY THE PARTIES  HERETO,
AND THE PROVISIONS HEREOF SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANY
WAY AGREED WITH OR  REPRESENTED  TO ANY OTHER PARTY THAT THE  PROVISIONS OF THIS
PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.

         IN WITNESS WHEREOF,  the Co-Makers have caused this Note to be executed
and delivered on the date first above written.

                                             CO-MAKER:

ATTEST:

/s/  Sandra Romero                                /s/  Franz S. Hanning
------------------------------                    -----------------------
  Sandra Romero                                        Franz S. Hanning
------------------------------


                                              CO-MAKER:

ATTEST:
  /s/  Abigail Thomason                           /s/  Kelly M. Hanning
------------------------------                    -----------------------
  Abigail Thomason                                     Kelly M. Hanning
------------------------------



<PAGE>


                                 ACKNOWLEDGEMENT

STATE OF FLORIDA
COUNTY OF ORANGE

     The  foregoing  instrument  was  acknowledged  before  me this  12th day of
November,  1999 by Franz S. Hanning.  Franz S. Hanning is personally known to me
or has produced sufficient identification.



My commission Expires:                        /s/  Serina Sherman
                                             --------------------------------
                                                    Notary Public
         (SEAL)
                                              /s/ Serina Sherman
                                             ----------------------------------
                                                     (Printed Name)



                                 ACKNOWLEDGEMENT

STATE OF FLORIDA
COUNTY OF ORANGE

     The  foregoing  instrument  was  acknowledged  before  me this  12th day of
November,  1999 by Kelly M. Hanning.  Kelly M. Hanning is personally known to me
or has produced sufficient identification.


My commission Expires:                        /s/  Serina Sherman
                                             ---------------------------------
                                                  Notary Public
         (SEAL)
                                              /s/ Serina Sherman
                                            ----------------------------------
                                                   (Printed Name)

<PAGE>



                               SECURITY AGREEMENT

         This SECURITY AGREEMENT (the "Agreement") is effective and entered into
this 12th day of November,  1999, among FRANZ S. HANNING,  an individual ("Franz
Hanning"),  KELLY M. HANNING,  an individual  ("Kelly  Hanning"),  and FAIRFIELD
COMMUNITIES, INC., a Delaware corporation ("Secured Party").

                                   WITNESSETH:

         WHEREAS, Franz Hanning and Kelly Hanning (the "Debtors") have requested
a loan from the  Secured  Party in the  amount of  $450,000  for the  purpose of
paying off a portion of the construction  loan associated with the building of a
residence located at 6001Greatwater Dr., Windermere, Florida 34786 (the "Loan");

         WHEREAS,  the Debtors (as Co-Makers) have executed a Promissory Note of
even date herewith (the "Promissory Note");

         WHEREAS,  one of the primary  sources of fund for the  repayment of the
Promissory  Note is  anticipated  to be funds  generated  from the  exercise  of
certain stock  options and stock  warrants  previously  granted and which may be
granted in the future by the Secured  Party to Franz Hanning for the purchase of
shares  of the  Secured  Party  and  the  sale  of the  underlying  shares  (the
"Options");

         WHEREAS, the Debtors wish to grant a security interest in and to pledge
the Options, the shares of the Secured Party related to the Options, and any and
all  proceeds  from the  exercise of the Options or the sale of such  underlying
shares and, in certain instances,  a portion of the net equity payable upon sale
of the Debtors'  current  residence  located at 2137 Lake Vilma Drive,  Orlando,
Florida 32835,  and unpaid salary,  wages,  bonus,  incentive  compensation  and
benefits owed by the Secured Party to the Debtors (the "Collateral"); and

         WHEREAS,  the Secured  Party is willing to make the Loan upon the terms
and subject to the conditions set forth herein and in the Promissory Note;

         NOW,  THEREFORE,  in  consideration  of  the  above  premises  and  the
agreements,  covenants  and  conditions  set forth  herein,  and other  good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto covenant and agree as follows:

1.        GRANT OF SECURITY  INTEREST.  As collateral  security for the full and
          ---------------------------
          prompt payment when due (whether at stated  maturity,  by acceleration
          or otherwise)  of, and the  performance  of, all the  Obligations  (as
          defined herein), and to induce the Secured Party to make the Loan, the
          Debtors hereby  assign,  convey,  mortgage,  pledge,  hypothecate  and
          transfer to the Secured Party,  and hereby grant to the Secured Party,
          a first  priority  security  interest in, all of the  Debtors'  right,
          title and interest in, to and under the Collateral,  and to the extent
          not otherwise included,  all proceeds of and from the Collateral.  For
          purposes  of this  Agreement,  the term  "Obligations"  shall mean the
          outstanding  indebtedness  under the  Promissory  Note,  and all other
          advances, debts, liabilities,  obligations, covenants and duties owing
          by the Debtors to the Secured  Party,  of every type and  description,
          present or future,  whether or not  evidenced  by any  separate  note,
          guaranty or other instrument,  arising under the Promissory Note, this
          Agreement or the Letter Agreement (as defined herein),  whether or not
          for the  payment of money,  whether  direct or  indirect,  absolute or
          contingent,  due or to become due,
<PAGE>

          now  existing or  hereafter  arising and  however  acquired.  The term
          "Obligation" includes,  without limitation,  all principal,  interest,
          charges,  expenses, fees, attorneys' fees and any other sum chargeable
          to the Debtors under the Promissory Note, this Agreement or the Letter
          Agreement. For purposes of this Agreement, the term "Collateral" shall
          extend to all of the  Options,  including  those  Options that are now
          vested or that may in the future become  vested,  and including  those
          Options  already  granted to or  acquired  by Franz  Hanning and those
          hereafter   granted  to  or  acquired  by  Franz  Hanning.   The  term
          "Collateral"  shall also include all rights and property of every kind
          at any time in the possession or control of the Secured Party,  or any
          of its agents,  or in transit to it by mail or carrier,  belonging to,
          for the account of, or subject to the order of the Debtors.

2.       FINANCING  STATEMENTS.  The Debtors  will execute from time to time any
         ---------------------
         financing statements or other documents and do other acts considered by
         the  Secured  Party  (in  its  sole  and  absolute  discretion)  to  be
         appropriate to perfect or protect the security interest created herein.
         The  Debtors  agree  to pay  all  costs  and  expenses  related  to the
         preparation  and  filing  of  any  financing  statements,  continuation
         statements or other documents related to the protection of the security
         interest created herein.

3.       DEBTORS' DUTIES WITH RESPECT TO THE COLLATERAL.
         ----------------------------------------------

        (a)    Until  all  of  the  Debtors'   obligations   arising  under  the
               Promissory Note have been performed or otherwise satisfied:

              (i)   the Debtors  will not  exercise  any of the  Options  except
                    pursuant  to the terms  hereof and the Letter  Agreement  or
                    dispose  of,  sell or transfer  the  Collateral  without the
                    prior written consent of the Secured Party;

              (ii)  the Debtors  will not permit any lien or  security  interest
                    other than that created  hereby to attach to the  Collateral
                    nor permit the  Collateral  to be levied  upon,  attached or
                    seized; and

              (iii) the Debtors  will defend the  Collateral  against the claims
                    and demands of all persons except the Secured Party.

         (b)   It shall be a condition  precedent for the Secured Party to honor
               any  exercise  or  purported  exercise  of the  Options  that the
               Debtors,  the Secured Party and a broker nominated by the Debtors
               and  reasonably  acceptable to the Secured  Party (the  "Broker")
               shall  have  executed  and  delivered  the Letter  Agreement,  in
               substantially  the form attached to this  Agreement as Exhibit A.
               The  Debtors  agree  to  comply  with  provisions  of the  Letter
               Agreement  and to use their  best  efforts to cause the Broker to
               comply with the Letter Agreement.

4.       LIABILITY FOR TAXES. In the event that any tax under Florida  Statutes,
         -------------------
         Chapter 201, is payable by any of the parties hereto in connection with
         the Loan, the Promissory Note, this Agreement or the Letter  Agreement,
         including  any  documentary  stamp tax, the Secured Party shall pay any
         such tax, and the Debtors shall reimburse the Secured Party within five
         (5) days of  delivery  to the  Debtors of a receipt  or other  document
         evidencing payment of such tax.
<PAGE>

5.       DEFAULT. The failure of either of the Debtors to perform or comply with
         -------
         any of their respective  obligations arising under this Agreement,  the
         Promissory Note or the Letter Agreement shall be considered an event of
         default (an "Event of Default").  Upon an Event of Default, the Secured
         Party shall be entitled  to exercise  any or all of its rights  arising
         under this  Agreement,  the Promissory  Note, the Letter  Agreement and
         applicable law, including,  without limitation, the right to accelerate
         the maturity date under the Promissory  Note, the right to assemble the
         Collateral,  and the right  pursue all  remedies  provided by Florida's
         Uniform Commercial Code.

6.       APPLICATION OF PROCEEDS OF SALE OF COLLATERAL.  The Debtors acknowledge
         ---------------------------------------------
         and agree  that the  proceeds  of any sale of the  Collateral  shall be
         applied  first to the payment of any  federal,  state and local  income
         taxes and payroll taxes  (including FICA and FHI taxes) that may be due
         or  required to be withheld  and then to the unpaid  balance  under the
         Promissory Note in accordance with the terms of the Promissory Note.

7.       INCORPORATION AND PRIORITY OF RELATED  AGREEMENTS.  The Promissory Note
         -------------------------------------------------
         and the Letter Agreement are incorporated  herein by reference.  In the
         event of any  conflict  between  or among  the  Promissory  Note,  this
         Agreement, and the Letter Agreement, the order of priority shall be the
         Promissory Note, this Agreement and finally the Letter Agreement.

8.       ATTORNEY'S  FEES AND COSTS.  In the event of any action by any party in
         --------------------------
         any  way  connected  with  the  enforcement  of this  Agreement  or the
         enforcement of the party's rights under this Agreement,  the Promissory
         Note and the Letter  Agreement,  the prevailing party shall be entitled
         to its costs incurred in prosecuting such action and to such reasonable
         sum as the  court may  establish  in said  action  for  attorneys'  and
         paralegals' fees for legal services  rendered in connection  therewith,
         including,  without  limitation,  fees and costs incurred in litigation
         and in administrative and bankruptcy proceedings and appeals therefrom,
         and shall pay such sums to the Secured Party upon demand.

9.       PARTIES BOUND.  This Agreement  shall be binding upon and inure to the
         -------------
         benefit  of  the  parties  hereto  and  their  permitted  assigns  and
         successors.

10.      GOVERNING  LAW. This  Agreement  shall be governed by, and construed in
         --------------
         accordance  with,  the internal  laws of the State of Florida,  without
         giving effect to the principles of conflict of laws thereof.  Venue for
         any action to enforce the  provisions  of this letter of  understanding
         shall be properly laid in any federal court in the State of Florida. In
         case any  provision  of this  Agreement  shall be  invalid,  illegal or
         unenforceable,   the  validity,  legality  and  enforceability  of  the
         remaining provisions of this Agreement shall not in any way be affected
         or impaired thereby.

11.      NOTICE.  Notice required or permitted to be given pursuant to the terms
         ------
         of this  Agreement  shall be deemed given five (5) calendar  days after
         deposit into the United States mail, postage prepaid,  certified return
         receipt and addressed as provided  below,  or upon receipt if delivered
         by any other method:

                  If to Secured Party: Fairfield Communities, Inc.
                                       8669 Commodity Circle, Suite 200
                                       Orlando, Florida 32819


<PAGE>
                           Attn: Robert W. Howeth, Executive Vice President and
                           Chief Financial Officer

           With a copy to: Fairfield Communities, Inc.
                           8669 Commodity Circle, Suite 200
                           Orlando, Florida 32819
                           Attn: General Counsel

           If to Debtors:  Mr. Franz S. Hanning
                           Ms. Kelly M. Hanning
                           2137 Lake Vilma Drive
                           Orlando, Florida 32835

12.      ENTIRE AGREEMENT;  AMENDMENT. Except as expressly provided herein, this
         ----------------------------
         Agreement constitutes the entire agreement between the parties relating
         to the subject matter contained herein and supersedes any prior oral or
         written agreements, understandings, representations and warranties, and
         courses of conduct  and  dealing  between  the  parties on the  subject
         matter hereof. This Agreement may not be amended, modified or waived by
         the  express  or  implied  conduct  of the  parties,  except by written
         instrument signed by the parties.

13.      OTHER AGREEMENTS.  This Agreement,  the Promissory Note, and the Letter
         ----------------
         Agreement do not confer upon the Debtors any rights with respect to the
         continuance  of Franz  Hanning's  employment  with the Secured Party or
         with  respect to the grant,  vesting  and  exercise  of any  options or
         warrants  relating to shares of the Secured  Party.  Any such rights to
         continued  employment are governed solely by the Employment  Agreement.
         Any such rights to the grant,  vesting  and  exercise of the options or
         warrants are governed  solely by the relevant  option and warrant plans
         and the corresponding option and warrant agreements.

14.      MISCELLANEOUS.   This   Agreement   may  be   executed   in   multiple
         -------------
         counterparts,  each of which shall  constitute  an original but all of
         which shall constitute but one and the same instrument.

         IN WITNESS WHEREOF, the parties hereto have set their hands the day and
year first above written.
                                           /s/Franz S. Hanning
                                           -----------------------------
                                           Franz S. Hanning, individually

                                           /s/Kelly M. Hanning
                                           -----------------------------
                                           Kelly M. Hanning, individually


                                           FAIRFIELD COMMUNITIES, INC.


                                           By:/s/Marcel J.Dumeny
                                              --------------------------
                                              Marcel J. Dumeny
                                              Executive Vice President