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                          AGREEMENT AND PLAN OF MERGER

                                      AMONG

                          FAIRFIELD COMMUNITIES, INC.,

                             FC OCEAN RANCH , INC.,

                                JAMES E. LAMBERT,

                                JAMES R. LAMBERT,

                                 DANIEL LAMBERT

                                       AND

                          OCEAN RANCH DEVELOPMENT, INC.

                          DATED AS OF DECEMBER 10, 1997


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<PAGE>


                                TABLE OF CONTENTS
                                                                           PAGE

ARTICLE I
         THE MERGER.........................................................1
         1.1  The Merger....................................................1
         1.2  Closing.......................................................1
         1.3  Effective Time................................................2
         1.4  Effect of the Merger..........................................2
         1.5  Articles of Incorporation.....................................2
         1.6  Bylaws........................................................2
         1.7  Directors.....................................................2
         1.8  Officers......................................................2

ARTICLE II
         EFFECTS OF THE MERGER ON THE CAPITAL STOCK OF THE
         CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES.................2
         2.1  Effect on Capital Stock.......................................2
         2.2  Surrender and Payment for Shares..............................3
         2.3  Transfer of Shares After the Effective Time...................3

ARTICLE III
         REPRESENTATIONS AND WARRANTIES.....................................4
         3.1  Representations and Warranties of Fairfield and Merger Sub....4
         3.2  Representations and Warranties of Shareholders 
              and Ocean Ranch...............................................4
         3.3  Additional Representation of Shareholders.....................11

ARTICLE IV
         COVENANTS RELATING TO CONDUCT OF BUSINESS..........................11
         4.1  No Solicitation...............................................11
         4.2  Conduct of Business Prior to Effective Time...................11
         4.3  Access to Information.........................................13
         4.4  Investigation by Fairfield....................................13
         4.5  Inspection....................................................13
         4.6  Regulatory Compliance.........................................13
         4.7  Covenants of Fairfield........................................13

ARTICLE V
         ADDITIONAL AGREEMENTS..............................................14
         5.1  Confidentiality...............................................14
         5.2  Indemnification of Shareholders...............................14
         5.3  Indemnification of Fairfield..................................14
         5.4  Procedures for Indemnity......................................14
         5.5  Exclusivity Of Indemnification For Contractual Breaches.......16
         5.6  Reasonable Efforts............................................16

<PAGE>

         5.7  Expenses and Fees.............................................16
         5.8  Consents......................................................16
         5.9  Repayment of PPM Loan; Release of Claims......................16
         5.10  Delivery of Information......................................16
         5.11  Tax Matters..................................................17

ARTICLE VI
         CONDITIONS PRECEDENT; CLOSING......................................20
         6.1  Conditions to Each Party's Obligation to Effect the Merger....20
         6.2  Conditions to Obligations of Ocean Ranch and Shareholders.....21
         6.3  Conditions to Obligations of Fairfield and Merger Sub.........21
         6.4  Frustration of Closing Conditions.............................22
         6.5  Closing Documents and Procedures..............................22

ARTICLE VII
         TERMINATION, AMENDMENT AND WAIVER..................................24
         7.1  Termination...................................................24
         7.2  Effect of Termination.........................................24
         7.3  Amendment.....................................................25
         7.4  Extension; Waiver.............................................25

ARTICLE VIII
         GENERAL PROVISIONS.................................................25
         8.1  Survival of Representations and Warranties....................25
         8.2  Notices.......................................................25
         8.3  Definitions...................................................27
         8.4  Interpretation................................................28
         8.5  Counterparts..................................................28
         8.6  Entire Agreement; No Third-party Beneficiaries................29
         8.7  Governing Law.................................................29
         8.8   Assignment...................................................29
         8.9  Enforcement...................................................29

<PAGE>



     AGREEMENT  AND  PLAN  OF  MERGER  dated  as  of  December 10,   1997  (this
"Agreement"),   among  FAIRFIELD  COMMUNITIES,   INC.,  a  Delaware  corporation
("Fairfield"),  FC Ocean Ranch,  Inc., a Florida  corporation and a wholly owned
subsidiary of Fairfield  ("Merger  Sub"),  JAMES E.  LAMBERT,  JAMES R. LAMBERT,
DANIEL LAMBERT and OCEAN RANCH DEVELOPMENT,  INC., a Florida corporation ("Ocean
Ranch").

     WHEREAS,  the respective  Boards of Directors of Fairfield,  Merger Sub and
Ocean  Ranch  each have  determined  that it is in the best  interests  of their
respective  stockholders  for Merger Sub to merge with and into Ocean Ranch (the
"Merger"),  upon the  terms  and  subject  to the  conditions  set forth in this
Agreement;

     WHEREAS,   James E.   Lambert,   James  R.   Lambert  and  Daniel   Lambert
(collectively,  the  "Shareholders"  and each a  "Shareholder")  hold all of the
outstanding capital stock of Ocean Ranch;

     WHEREAS,  the respective  Boards of Directors of Fairfield,  Merger Sub and
Ocean  Ranch have each  determined  that the  Merger and the other  transactions
contemplated  under this Agreement are consistent  with, and in furtherance  of,
their respective business strategies and goals; and

     WHEREAS, Fairfield, Merger Sub, Shareholders and Ocean Ranch desire to make
certain representations, warranties, covenants and agreements in connection with
the  transactions  contemplated by this Agreement and also to prescribe  various
conditions to the Merger.

     NOW,  THEREFORE,  in  consideration  of  the  representations,  warranties,
covenants and agreements  contained in this Agreement,  the parties hereto agree
as follows:


                               ARTICLE I
                               THE MERGER

     I.1 The Merger.  Upon the terms and subject to the  conditions set forth in
this Agreement, and in accordance with the Florida Business Corporation Act (the
"FBCA"),  Merger Sub shall be merged with and into Ocean Ranch at the  Effective
Time (as  hereinafter  defined).  Following the Merger,  the separate  corporate
existence  of Merger  Sub will  cease  and  Ocean  Ranch  will  continue  as the
surviving  corporation  (the  "Surviving  Corporation")  and will succeed to and
assume all the rights and obligations of Merger Sub in accordance with the FBCA.

     I.2 Closing.  The closing of the Merger (the  "Closing") will take place at
10:00 a.m. on the date that is two  business  days after the  expiration  of the
Inspection  Period (the "Closing Date"),  at the offices of Jones, Day, Reavis &
Pogue, 2300 Trammell Crow Center,  2001 Ross Avenue, Dallas, Texas 75201, unless
another  date,  time or place is  agreed  to in  writing  by all of the  parties
hereto.
<PAGE>

     I.3 Effective Time. Subject to the provisions of this Agreement, as soon as
practicable  on or after the Closing Date the parties shall deliver  Articles of
Merger (the  "Articles  of Merger")  executed in  accordance  with the  relevant
provisions of the FBCA to the Florida Department of State for filing as required
under the FBCA and shall make all other filings or recordings required under the
FBCA. The Merger shall become  effective at such time (the "Effective  Time") as
the Articles of Merger have been  accepted for filing by the Florida  Department
of State (or such later time as stated in the  Articles of Merger and  permitted
by the Florida  Department of State),  which will be the Closing Date or as soon
as practicable thereafter.

     I.4 Effect of the  Merger.  The Merger  shall have the effects set forth in
Section 607.1106 of the FBCA.

     I.5 Articles of  Incorporation.  Articles of  incorporation  of Ocean Ranch
shall be  amended to read in their  entirety  as set forth in Exhibit A attached
hereto and shall be the articles of incorporation  of the Surviving  Corporation
until thereafter changed or amended as provided therein or by applicable law.

     I.6  Bylaws.  The bylaws of Ocean  Ranch  shall be amended to read in their
entirety  as set forth in  Exhibit B and  shall be the  bylaws of the  Surviving
Corporation following the Merger until thereafter changed or amended as provided
therein or by applicable law.

     I.7  Directors.  The directors of Merger Sub at the Effective Time shall be
the  directors of the  Surviving  Corporation  following  the Merger,  until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.

     I.8 Officers. The officers of Merger Sub at the Effective Time shall be the
officers of the Surviving Corporation following the Merger, until the earlier of
their  resignation  or removal or until  their  respective  successors  are duly
elected and qualified, as the case may be.


                                   ARTICLE II
                EFFECTS OF THE MERGER ON THE CAPITAL STOCK OF THE
               CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES

     II.1 Effect on Capital  Stock.  As of the Effective  Time, by virtue of the
Merger  and  without  any  action on the part of the holder of any shares of the
capital stock of the constituent corporations:

     (a)     Merger Consideration. All of the shares of Common Stock, par value
             --------------------
$1.00 per share,  of Ocean Ranch (the "Ocean  Ranch  Common  Stock")  issued and
outstanding  immediately prior to the Effective Time (other than shares of Ocean
Ranch Common  Stock,  if any, to be canceled  under  Section  2.1(c)),  shall be
converted into the right to receive a cash payment in an aggregate  amount equal
to $7,000,000 (the "Merger Consideration").
<PAGE>

     (b)  Certificates.  All shares of Ocean Ranch  Common Stock to be converted
          ------------
into the right to receive the Merger Consideration  pursuant to this Section 2.1
shall cease to be outstanding,  shall be canceled and retired and shall cease to
exist,  and each holder of a certificate  representing  any such shares of Ocean
Ranch  Common  Stock shall  thereafter  cease to have any rights with respect to
such shares of Ocean Ranch Common Stock, except the right to receive for each of
the shares of Ocean Ranch Common Stock,  upon the surrender of such  certificate
in accordance with Section 2.2, the amount of Merger Consideration  specified in
Section 2.2.

     (c) Treasury  Shares.  Shares of Ocean Ranch Common Stock,  if any, held by
         ----------------
Ocean Ranch as treasury  stock  immediately  prior to the  Effective  Time shall
cease to be  outstanding,  shall be canceled and retired  without payment of any
consideration therefor, and shall cease to exist.

     (d) Stock of Merger  Sub.  Each share of common  stock,  par value $.01 per
         --------------------
share, of Merger Sub issued and outstanding  immediately  prior to the Effective
Time shall be converted  into and exchanged for one validly  issued,  fully paid
and nonassessable share of common stock of the Surviving Corporation.

     II.2 Surrender and Payment for Shares. At the Closing the Shareholders will
deliver to  Fairfield a  certificate  or  certificates  representing  all of the
shares  of  Ocean  Ranch  Common  Stock  outstanding  immediately  prior  to the
Effective  Time.  Each  Shareholder  will be  entitled  to receive the amount of
Merger Consideration equal to the product,  rounded to the nearest whole number,
of (a) the Merger Consideration  multiplied by (b) a fraction,  the numerator of
which is the aggregate number of shares of Ocean Ranch Common Stock  represented
by the  certificate or  certificates so surrendered and the denominator of which
is the  aggregate  number of shares  of Ocean  Ranch  Common  Stock  issued  and
outstanding  (the "Ocean Ranch Stock  Percentage").  Fairfield  shall deliver to
each Shareholder the amount in cash which the Shareholder is entitled to receive
under this  Section 2.2 by wire transfer of immediately  available funds to such
account as shall have been designated by such  Shareholder at least two business
days prior to the Closing.

     II.3 Transfer of Shares After the Effective Time. No transfers of shares of
Ocean  Ranch  Common  Stock shall be made on the stock  transfer  books of Ocean
Ranch after the close of business on the day prior to the date of the  Effective
Time. 


                                  ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

     III.1 Representations and Warranties of Fairfield and Merger Sub. Fairfield
and Merger Sub represent and warrant to Ocean Ranch and Shareholders as follows:

     (a)  Organization.  Each of Fairfield and Merger Sub is a corporation  duly
          ------------
organized,  validly  existing  and  in  good  standing  under  the  laws  of its
jurisdiction of incorporation.
<PAGE>

     (b) Binding Agreement.  Each of Fairfield and Merger Sub has full corporate
         ----------------- 
power and authority to execute and deliver this  Agreement and to consummate the
transactions contemplated hereby and has taken all necessary corporate action to
authorize  the execution  and delivery of this  Agreement and to consummate  the
transactions  contemplated  hereby.  This  Agreement  has been duly executed and
delivered  by  Fairfield  and Merger Sub and  constitutes  the valid and binding
agreement of Fairfield and Merger Sub  enforceable in accordance with its terms.

     (c) Governmental Approvals. No consent,  approval,  order, or authorization
         ----------------------
of, or declaration,  filing,  or registration  with, any Governmental  Entity is
required to be obtained or made by  Fairfield or Merger Sub in  connection  with
the  execution,  delivery,  or  performance  by Fairfield and Merger Sub of this
Agreement or the  consummation  by Fairfield and Merger Sub of the  transactions
contemplated   hereby,   other  than  such  consents,   approvals,   orders,  or
authorizations  that,  if not  obtained,  and  such  declarations,  filings,  or
registrations  that, if not made,  would not,  individually or in the aggregate,
have a material adverse effect on Fairfield and its Subsidiaries considered as a
whole.

     (d) Broker's  Fee.  Fairfield has not made any agreement or taken any other
         -------------
action  which  might  cause  anyone  to become  entitled  to a  broker's  fee or
commission as a result of the  transactions  contemplated  under this Agreement,
except for the engagement by Fairfield of any financial advisor,  broker,  agent
or finder for which  Fairfield  will have full  liability for the payment of any
such broker's fee or commission.

     (e) Merger Sub. Merger Sub is a newly formed direct wholly owned subsidiary
         ----------
of Fairfield formed solely for the purpose of engaging in this  transaction.  As
of the Effective Time,  Merger Sub will not have conducted any business nor will
it own any significant assets or owe any significant liabilities.

     III.2  Representations  and  Warranties  of  Shareholders  and Ocean Ranch.
Shareholders and Ocean Ranch hereby jointly and severally  represent and warrant
to Fairfield and Merger Sub as follows:

     (a)  Organization.  Ocean Ranch is a corporation  duly  organized,  validly
          ------------
existing  and in good  standing  under the laws of the State of  Florida.  Ocean
Ranch  has  full  power  to own its  properties  and to  carry  on the  business
currently  being  conducted  by it, and does not  conduct  business in any state
other than Florida. Ocean Ranch does not now own and has never owned any capital
stock or any equity  interest in any  corporation,  limited  liability  company,
partnership  or other entity other than its ownership of the Interest and has no
Subsidiary other than the Partnership.

     (b) Binding Agreement.  The execution,  delivery,  and consummation of this
         -----------------
Agreement has been duly authorized by each of the  Shareholders  and Ocean Ranch
and approved by all necessary action.  This Agreement has been duly executed and
delivered  by Ocean Ranch and each  Shareholder  and  constitutes  the valid and
binding agreement of each of them enforceable in accordance with its terms.
<PAGE>

     (c) No Breach. Neither the execution of this Agreement nor the consummation
         ---------
of the  transactions  contemplated  hereby will (i) result in the breach of any
term or provision of, or constitute a default  under,  or be in violation of any
charter provision,  bylaw,  agreement,  instrument,  order, law or regulation to
which any Shareholder, Ocean Ranch and/or the Partnership is a party or which is
otherwise applicable, (ii) result in the creation or imposition of any Lien upon
any  of  the  property  or  assets  of  the  Shareholders,  Ocean  Ranch  or the
Partnership,  (iii) violate  any Applicable  Law binding upon the  Shareholders,
Ocean Ranch, or the  Partnership,  or (iv) violate  the terms of or constitute a
default under, any note, bond,  mortgage,  indenture,  or other contract between
third parties and the  Shareholders,  Ocean Ranch or the Partnership or by which
the  Shareholders,  Ocean Ranch or the Partnership may be bound or result in the
termination,   acceleration  or  amendment  thereof,  except,  in  the  case  of
clauses (ii) and (iii) above,  for any such conflicts,  violations or Liens that
would not,  individually or in the aggregate,  have a material adverse effect on
Ocean Ranch or the Partnership.

     (d) Governmental Approvals. No consent,  approval,  order, or authorization
         ----------------------
of, or declaration,  filing,  or registration  with, any Governmental  Entity is
required  to be  obtained  or  made  by  any  Shareholder,  Ocean  Ranch  or the
Partnership  in connection  with the  execution,  delivery,  or  performance  by
Shareholders  and Ocean Ranch of this Agreement or the consummation by it of the
transactions contemplated hereby.

     (e) Partnership  Capitalization;  Title to Partnership Interests. Except as
         ------------------------------------------------------------
otherwise set forth in the Partnership Agreement, Ocean Ranch owns and holds the
Interest  beneficially  and of record and free and clear of any Liens and of any
right of assignment or options of any third party.  Ocean Ranch has paid in full
and is not in default  with respect to any capital  contribution  required to be
paid by it pursuant to the Partnership Agreement.  There are no rights, options,
subscriptions,  or other  agreements  of any  kind to  purchase  or to  acquire,
receive or be issued any interest in respect of the  Interest  existing in favor
of any person, and there are no agreements of any kind to which Ocean Ranch is a
party, other than the Partnership Agreement and this Agreement, providing for or
restricting  the  governance  or control of the  Partnership  or the issuance or
transfer, directly or indirectly, of any interest in the Interest. Except as set
forth in the Partnership Agreement, Ocean Ranch has no agreements or commitments
of any kind in its capacity as a general partner of the Partnership to cause the
Partnership to contribute,  make loans, or guarantee the contribution or loan of
any Person,  whether directly or indirectly,  and after the Closing with respect
to the Partnership, Fairfield shall not be deemed to have assumed, been assigned
or otherwise be obligated or responsible for any such agreement or commitment to
the Partnership. The Partnership Agreement is in full force and effect.
<PAGE>

     (f) Financial  Statements.  Shareholders  and Ocean Ranch have furnished to
         ---------------------
Fairfield  unaudited  balance  sheets of Ocean Ranch as of December 31, 1996 and
the related  unaudited  statements of operations  for the fiscal year then ended
and the  unaudited  balance sheet of Ocean Ranch as of November 30, 1997 and the
related  unaudited  statements of operations  for the interim  period then ended
(the  "Unaudited  Financial  Statements").  Those  financial  statements  fairly
present the financial  position of Ocean Ranch at, and the results of operations
for the periods  ending on, such dates,  in a consistent  manner  throughout the
periods  indicated and were prepared  based on the books and records  maintained
for Ocean  Ranch's  business.  Except as  disclosed in the  Unaudited  Financial
Statements  (which includes the notes  thereto),  Ocean Ranch has no liabilities
(contingent,  accrued,  actual or otherwise)  that were not provided or reserved
for in the November  30, 1997 balance  sheet,  other than  liabilities  incurred
since the date of the November 30, 1997 balance sheet in the ordinary  course of
business;  and all  reserves  established  by Ocean Ranch and  reflected  in the
November  30,  1997  balance  sheet  were at the times  they  were  established,
adequate  for  the  purposes  indicated  therein.  Except  as  disclosed  in the
Unaudited  Financial  Statements,  since November 30, 1997, Ocean Ranch has not:
(i)  declared  or set  aside  or paid  any  dividend  or  made  any  payment  or
distribution  in respect of shares of its capital stock;  (ii) made any loans or
advances to any person; (iii) entered into any transaction with any affiliate of
Ocean Ranch or either  Shareholder;  (iv)  incurred any  indebtedness  for money
borrowed;  or (v) made or entered into any agreement or  understanding to do any
of the foregoing.

     (g) Assets.  (i) Ocean  Ranch does not have, and has not had, any assets or
         ------
properties,  whether tangible or intangible,  real,  personal or mixed, owned or
leased  other  than the  Interest.  Ocean  Ranch  is not a party to any  leases,
subleases,  rental agreements,  contracts of sale,  tenancies or licenses of any
assets or  properties.  The Interest  constitutes  all the properties and assets
reflected in the Unaudited Financial Statements and all the assets necessary for
the conduct by Ocean Ranch of its business as now conducted.

     (h) Proceedings. There are currently no pending, and Shareholders and Ocean
Ranch  are  not  aware  of  any  threatened,   actions,  suits,  proceedings  or
investigations against or affecting Ocean Ranch or the Interest.  Ocean Ranch is
not subject to any currently  existing order,  writ,  injunction or decree.  The
Shareholders and Ocean Ranch are not aware of any actions, suits, proceedings or
investigations  pending or  threatened  by or before  any court or  Governmental
Entity  (i) against  or  affecting  the  Partnership  or the Resort  Property or
arising  out  of  the  development,   construction,  operation,  maintenance  or
management  of the Resort  Property  or  (ii) that  would  prevent or hinder the
performance  by any  Shareholder  or Ocean Ranch of its  obligations  under this
Agreement.

     (i) Compliance With Laws.  Ocean Ranch and to the knowledge of Shareholders
         --------------------
and Ocean Ranch, the Partnership,  are and have at all times been, in compliance
in all material  respects  with all  applicable  laws,  rules,  regulations  and
orders.  There are no pending or, to the  knowledge  of  Shareholders  and Ocean
Ranch,  proposed laws or governmental  rules that have been submitted in writing
to any Governmental Entity for due consideration that, if enacted,  would have a
material  adverse effect on Ocean Ranch, the Resort Property or the Partnership.
Except as set forth in Schedule  3.2(i),  none of Shareholders or Ocean Ranch is
charged  or,  to  each  of  their  knowledge,  threatened  with,  or,  is  under
investigation  with respect to, any violation of any provision of any applicable
law, rule, regulation or order.

     (j) Claims. Except as set forth in the Partnership Agreement,  there are no
         ------
claims of the Partnership against, or any obligation owed to the Partnership by,
Ocean Ranch, or any Shareholder.  No affiliate of Ocean Ranch or any Shareholder
is owed  any  obligation  by the  Partnership,  or  holds a  claim  against  the
Partnership, except as set forth on Schedule 3.2(j).
<PAGE>

     (k) PPM Loan.  Schedule 3.2(k) sets forth a true, complete and correct list
         -------- 
of all documents  relating to indebtedness for money borrowed from, or any other
obligations or liabilities of Ocean Ranch or the  Partnership  to, PPM Brokerage
Service,  Inc. ("PPM;" all such indebtedness,  obligations and liabilities,  the
"PPM Loan"), including,  without limitation,  promissory notes and all mortgages
and other collateral security  instruments that secure the PPM Loan and encumber
the  Resort   Property,   including  all  amendments  or   supplements   thereto
(collectively,  the "PPM Loan  Documents").  The PPM Loan  Documents are in full
                     -------------------
force and effect and have not been further modified or amended.  PPM is the sole
obligee of the PPM Loan.  As of December 19,  1997,  the  outstanding  principal
balance of and accrued interest on the PPM Loan was $201,709.50 and $112,379.37,
respectively,  and no  penalties,  fees or other amounts are due or payable with
respect to the PPM Loan. For purposes of this Agreement, "PPM Loan Amount" shall
mean $314,088.87.

     (l) Capital  Contribution Loan. Schedule 3.2(l) sets forth a true, complete
         --------------------------
and correct list of all documents  relating to  indebtedness  for money borrowed
from, or any other  obligations or liabilities of Ocean Ranch or the Partnership
to, any  Shareholder or an affiliate of any  Shareholder in connection  with the
capital   contribution  of  Ocean  Ranch  to  the   Partnership   (the  "Capital
                                                                         -------
Contribution  Loan"),  including,  without limitation,  promissory notes and all
------------------
mortgages  and other  collateral  security  instruments  that secure the Capital
Contribution   Loan,   including   all   amendments   or   supplements   thereto
(collectively,  the "Capital Contribution Loan Documents").  James E. Lambert is
                     -----------------------------------
the sole obligee of the Capital Contribution Loan. The Capital Contribution Loan
Documents  are in full force and effect and have not been  further  modified  or
amended.  As of  December 19,  1997, the  outstanding  principal  balance of and
accrued interest on the Capital  Contribution  Loan was $1,500,000 and $249,375,
respectively,  and no  penalties,  fees or other amounts are due or payable with
respect to the  Capital  Contribution  Loan.  For  purposes  of this  Agreement,
"Capital Contribution Loan Interest Amount" shall mean $249,375.

     (m) Partnership Agreement and Marketing  Agreements.  To the best knowledge
         -----------------------------------------------
of  Shareholders  and Ocean  Ranch,  neither  partner of the  Partnership  is in
violation of either the  Partnership  Agreement or any  marketing  agreements to
which either entity is subject.

     (n) Adverse Change.  Since the date of the Unaudited Financial  Statements,
         -------------- 
Ocean  Ranch has not made or  experienced  any  material  adverse  change in its
working capital, financial condition,  assets, liabilities,  reserves, business,
operations or prospects.

     (o)  Employees.  Ocean Ranch does not have,  and has not had, any employees
          ---------
and has no obligation  to contribute  any amount to any Person in respect of the
compensation,  accrued benefits, or vacation and sick leave of any Person. Ocean
Ranch is not a party to any collective bargaining agreements.

     (p)  Environmental  Matters.  Ocean Ranch has not and, to the  knowledge of
          ----------------------
Shareholders  and Ocean Ranch,  the Partnership and the Resort Property have not
been associated with any spill, disposal,  discharge or release of any hazardous
materials  (which includes any hazardous or toxic  substance,  material or waste
which is  regulated  by any  Governmental  Entity) into or upon or over any real
property or into or upon ground or surface water including without limitation in
either case,  any real property that is or has been leased by Ocean Ranch or the
Partnership.
<PAGE>

     (q) Broker's  Fee.  Neither  Ocean Ranch nor any  Shareholder  has made any
         ------------- 
agreement or taken any other action which might cause anyone to become  entitled
to a broker's fee or  commission  as a result of the  transactions  contemplated
under this Agreement.

     (r) Capitalization. The authorized capital stock of Ocean Ranch consists of
         --------------
1,000  shares of Ocean Ranch  Common  Stock,  of which 100 shares are issued and
outstanding.  All outstanding  shares of Ocean Ranch Common Stock have been duly
authorized and validly issued, are fully paid and  nonassessable,  and are owned
by Shareholders.  No options, warrants,  subscriptions,  rights of conversion or
exchange  exist that may obligate  Ocean Ranch to issue any  additional  capital
stock.  Neither  Ocean Ranch nor any  Shareholder  is party to any  shareholder,
voting or similar  agreement or arrangement of any kind affecting or restricting
the sale,  transfer,  disposition,  voting or other rights of or relating to the
Ocean Ranch Common Stock,  other than the  Partnership  Agreement.  Set forth on
Schedule  3.2(r) are the number and  percentage  of shares of Ocean Ranch Common
Stock held of record by each Shareholder.

     (s) Benefit Plans;  Labor Relations.  Ocean Ranch has no "employee  benefit
         -------------------------------
plan," as such term is defined in Section3(3)  of ERISA or other plan,  program,
policy, contract or arrangement providing for bonuses,  pensions,  deferred pay,
stock or stock related  awards,  severance pay,  salary  continuation or similar
benefits,   hospitalization,   medical,  dental  or  disability  benefits,  life
insurance or other employee  benefits,  or compensation to or for any current or
former employees,  agents,  directors, or independent contractors of Ocean Ranch
("Ocean Ranch  Employees") or any beneficiaries or dependents of any Ocean Ranch
employees.

     (t) Taxes.  
         ----- 


     (i) All Tax  Returns  (as defined in  paragraph  (v) below)  required to be
filed by Ocean Ranch or any  Shareholder  have been duly filed on a timely basis
with the  appropriate  federal,  state,  local and foreign tax  authorities,  or
requests for  extensions  to file such returns or reports have been timely filed
and granted and have not  expired,  and all such Tax  Returns are  complete  and
accurate in all material respects. Ocean Ranch and the Shareholders have paid or
made adequate provision in the Unaudited Financial  Statements for all Taxes (as
defined  in  paragraph  (v)  below)  shown as due from  each of them on such Tax
Returns.  No claim has been made by any authority in a jurisdiction  where Ocean
Ranch does not file Tax Returns that it is or may be subject to taxation by that
jurisdiction.  The Unaudited Financial  Statements reflect adequate reserves for
all Taxes  payable by Ocean Ranch for all taxable  periods and portions  thereof
accrued through the date of such financial  statements,  and no deficiencies for
any Taxes have been proposed,  asserted or assessed against Ocean Ranch that are
not  adequately  reserved  for,  except  for  inadequately  reserved  Taxes  and
inadequately  reserved  deficiencies  that  would  not,  individually  or in the
aggregate, have a material adverse effect on Ocean Ranch. There are no liens for
<PAGE>


Taxes  (other than for current  Taxes not yet due and  payable) on the assets of
Ocean  Ranch.  No requests  for waivers of the time to assess any Taxes  against
Ocean Ranch have been granted or are pending,  except for requests  with respect
to such Taxes that have been adequately  reserved for in the Unaudited Financial
Statements.  Ocean Ranch is not a party to or bound by any  agreement  providing
for the  allocation  or  sharing of Taxes.  Ocean  Ranch has not filed a consent
pursuant to or agreed to the  application of Section  341(f) of the Code.  Ocean
Ranch has  disclosed  on its  federal  income tax returns  all  positions  taken
therein that could give rise to a substantial  understatement  of federal income
tax within the meaning of Section 6662 of the Code.  All Taxes that are required
by the laws of the United States, any state or political subdivision thereof, or
any foreign  country to be withheld or  collected  by Ocean Ranch have been duly
withheld or collected and, to the extent required,  have been paid to the proper
Governmental  Entities or properly  deposited  as required by  applicable  laws.
Except as set forth in Schedule  3.2(t),  the statute of limitations for all Tax
Returns of Ocean Ranch has expired for all federal, state, local and foreign Tax
purposes.  Neither  Ocean Ranch nor any  Shareholder  has received any notice of
deficiency  or  assessment  from any  federal,  state,  local or foreign  taxing
authority  with  respect to  liabilities  for Taxes of Ocean Ranch which has not
been fully paid or finally  settled.  No power of attorney has been executed by,
or on behalf  of,  Ocean  Ranch or any  Shareholder  with  respect to any matter
relating to Taxes  applicable to Ocean Ranch which is currently in force.  Ocean
Ranch is not a party to any agreement, contract, or other arrangement that would
result,  separately or in the aggregate,  in the  requirement to pay any "excess
parachute  payments" within the meaning of Section 280G of the Code. Ocean Ranch
is  not a  party  to a tax  sharing  or tax  indemnity  agreement  or any  other
agreement of a similar  nature that  remains in effect.  Ocean Ranch (i) has not
been a member of an affiliated  group filing a  consolidated  federal income tax
return and (ii) has no liability  for the taxes of any person  (other than Ocean
Ranch) under Treasury Regulation  Section 1.1502-6  (or any similar provision of
state,  local,  or foreign law),  as a transferee  or successor,  by contract or
otherwise.

     (ii)  Schedule  3.2(t)  sets  forth  each  state in which  Ocean  Ranch has
collected or remitted any sales and/or use Taxes since September 1, 1992. To the
knowledge  of Ocean  Ranch  and  Shareholders,  Ocean  Ranch  has not  conducted
activities  in any other state that would  require such Taxes to be collected or
remitted.  No claim has ever been made since  September 1, 1992 by any authority
in a jurisdiction  where Ocean Ranch does not pay sales and/or use Taxes that it
is or may be subject to a requirement to remit such Taxes in that jurisdiction.

     (iii) Ocean Ranch has validly elected under  Section 1362 of the Code to be
an  "S corporation"  (the  "S Election").  The S Election has been in continuous
effect since the formation of Ocean Ranch,  has not been  terminated,  and is in
full force and effect.  Neither  Ocean Ranch nor any  Shareholder  has taken any
action that would  cause  Ocean  Ranch no longer to qualify for the  S Election.
Neither Ocean Ranch nor any  Shareholder is aware of any fact or circumstance on
the basis of which the S Election could be challenged.
<PAGE>

     (iv)  Ocean  Ranch  is  not  liable  for  the  Taxes  of  any  person  as a
"transferee" within the meaning of Section 6901 of the Code.

     (v) For purposes of this Agreement,  "Taxes" shall mean all taxes, charges,
fees,  levies,  penalties  or other  assessments  imposed by any  United  States
federal,  state, local or foreign taxing authority,  including,  but not limited
to, income, gross receipts, excise, property, sales, use (or any similar taxes),
transfer,  franchise,  payroll,  withholding,  social security, business license
fees, or other taxes including any interest, penalties or additions thereto. For
purposes  of this  Agreement,  "Tax  Return"  shall  mean  any  return,  report,
information  return,  schedule  or other  document  (including  any  related  or
supporting  information)  required  to be supplied  to a taxing  authority  with
respect to Taxes.

     (u)Voting  Requirements.  The  affirmative  vote of the  Shareholders  (the
        --------------------
"Ocean Ranch  Shareholder  Approval") to approve this Agreement is the only vote
of the  holders of  capital  stock of Ocean  Ranch  necessary  to  approve  this
Agreement and the transactions contemplated by this Agreement.

     (v)No Misleading Statement. To the best knowledge of Shareholders and Ocean
        -----------------------  
Ranch,  neither this Agreement nor any other  document,  certificate,  financial
statement or other  instrument  delivered to  Fairfield in  connection  herewith
contains any untrue  statement  of a material  fact or omits to state a material
fact necessary in order to make the statements  contained herein or therein,  in
light of the circumstances under which they were made, not misleading.

     III.3  Additional   Representation   of   Shareholders.   Each  Shareholder
represents  and warrants on behalf of such  Shareholder  to Fairfield and Merger
Sub that each Shareholder has relied and will rely upon his own tax advisors for
advice and  counseling in regard to the  structure,  accounting or tax treatment
and all other tax or accounting issues relating to the transactions contemplated
by the parties  hereunder.  No Shareholder has relied,  nor will any Shareholder
rely,  on Fairfield or its tax  advisors,  for any tax advice or  counseling  in
regard to the transactions contemplated hereunder.


                                   ARTICLE IV
                    COVENANTS RELATING TO CONDUCT OF BUSINESS

     IV.1  No  Solicitation.  Prior  to the  Effective  Time,  Ocean  Ranch  and
Shareholders  will not  (a) offer for sale the Interest or any interest in Ocean
Ranch;  (b) solicit  any offers to purchase or make any attempts by  preliminary
conversations  or negotiations to dispose of the Interest or any equity interest
in Ocean Ranch to any person,  firm or entity,  other than to  Fairfield,  or to
engage in any type of  business  combination  with any  person,  firm or entity,
other than  Fairfield;  or (c) provide  anyone with any written or oral offer to
sell,  invitation to purchase or any offering or sales  material with respect to
the Interest or any equity interest in Ocean Ranch.
<PAGE>

     IV.2 Conduct of Business Prior to Effective Time.  Except for  transactions
specifically  permitted  by  this  Agreement  or  consented  to  in  writing  by
Fairfield,  prior to the Effective Time Ocean Ranch shall (and the  Shareholders
will cause Ocean Ranch to):

     (a)  operate  its  business  only in the  ordinary  course,  and  employ no
persons;

     (b)  neither  make,   nor  incur  any   obligation  to  make,  any  capital
expenditures;

     (c)  make  no sale or  other  disposition  of the  Interest  or any  equity
interest in Ocean Ranch;

     (d) not enter into, amend,  rescind or terminate any contract,  arrangement
or commitment;

     (e) not  declare,  set aside or make any  dividend,  distribution,  loan or
other advance to any Shareholder or any other person;

     (f) not  amend its  Articles  of  Incorporation  or  Bylaws,  nor issue any
additional shares of capital stock, or any options, warrants or other securities
under  which any  additional  shares of its  capital  stock might be directly or
indirectly authorized or issued;

     (g) not fail to comply in any material respect with the laws,  regulations,
ordinances or governmental actions or orders applicable to Ocean Ranch;

     (h) not make any  material  tax  elections  or  settle  or  compromise  any
material tax liability;

     (i) not take any action that would materially  adversely affect the ability
of Ocean Ranch or Shareholders  to obtain the consents  required for Ocean Ranch
and  Shareholders  to  consummate  the  transactions   contemplated   hereby  or
materially  adversely  affect the  ability  of Ocean  Ranch or  Shareholders  to
perform their respective covenants and agreements under this Agreement;

     (j) not change its method of accounting in effect January 1, 1997 or during
any other period included in the Unaudited Financial Statements;

     (k) not change its method of reporting income and deductions for federal or
state income taxes in effect January 1, 1997 or during any other period included
in the Unaudited Financial Statements;

     (l) not  permit  or  authorize  any  transfer,  sale,  assignment  or other
disposition of any of the assets of the  Partnership  other than in the ordinary
course of business consistent with past practices;
<PAGE>

     (m) promptly notify Fairfield in writing of any action, suit, proceeding or
investigation  commenced,  pending or threatened  before or by any  Governmental
Entity  concerning  or  affecting  any of the  Interest,  Partnership  or Resort
Property of which Ocean Ranch or any Shareholder becomes aware;

     (n)  provide  Fairfield  copies of any  notices of any event of which Ocean
Ranch or any Shareholder  becomes aware that may have a material  adverse effect
on the  Partnership,  specifically  including,  but not limited  to,  notices of
intent to  accelerate  and notices of  acceleration  of any debt  secured by the
Resort Property;

     (o)  not  permit  or  otherwise  authorize  the  Partnership  to  make  any
distributions  to, or redeem or purchase  the  interests  of the partners of the
Partnership,  or make or repay any loans, advances or capital contributions made
to the Partnership by Ocean Ranch, any Shareholder or any of their affiliates;

     (p) not permit or otherwise  authorize any sale or other disposition of the
Resort Property,  or any part thereof,  nor enter into or permit the Partnership
to enter into any agreement for such purposes,  except in the ordinary course of
business  consistent with past practices;  

     (q) not amend or modify or permit  any  amendment  or  modification  of the
Partnership Agreement; and

     (r) not, without the prior written consent of Fairfield permit or otherwise
authorize any financing, refinancing,  extension, renewal or modification of any
debt of the  Partnership  other  than  draws  under  the  existing  construction
financing with Bank Atlantic.

     IV.3  Access to  Information.  Between  the date  hereof  and the  Closing,
Shareholders   and  Ocean  Ranch   (i) shall  give  Fairfield  and   Fairfield's
representatives  access during normal business hours and upon reasonable  notice
to all books and records  relating to the Interest,  the Resort Property and the
Partnership for purposes of an audit of such books and records and inspection of
the business of Ocean Ranch (the  "Inspection") and all of the personal property
owned by the  Partnership,  to the extent  such books and records are within the
control or in the  possession of  Shareholders  or Ocean Ranch,  and  (ii) shall
cause   Ocean   Ranch's   officers   to  furnish   Fairfield   and   Fairfield's
representatives  with any other information that is to be delivered  pursuant to
this Agreement.

     IV.4  Investigation  by Fairfield.  During the period from the date of this
Agreement through the earlier to occur of the Closing or December 31,  1997 (the
"Inspection  Period"),  Shareholders  and Ocean Ranch shall provide to Fairfield
copies  of  documents   reasonably   requested  by  Fairfield  relating  to  the
Partnership,  the  Resort  Property  and the  Interest  and the  collectibility,
enforceability  and other  legal  matters  related to the  Interest,  the Resort
Property  and the  Partnership.  Such  documents  shall  be for the  purpose  of
enabling  Fairfield  to  evaluate,  prior to the end of the  Inspection  Period,
whether  Fairfield wishes to proceed with the transactions  contemplated by this
Agreement.
<PAGE>

     IV.5  Inspection.  At or prior to the expiration of the Inspection  Period,
Fairfield shall have the right to terminate this Agreement without cause and for
whatever  reason  or no  reason  and  without  liability  on the part of  either
Fairfield,  any  Shareholder or Ocean Ranch by delivering to Ocean Ranch,  at or
prior to the expiration of the Inspection Period,  written notice of Fairfield's
election to terminate this Agreement.

     IV.6  Regulatory  Compliance.  Shareholders  and Ocean Ranch  shall  permit
Fairfield to register or amend existing registrations with Governmental Entities
of the Resort Property and/or the vacation  ownership  intervals relating to the
Resort  Property  from the date of this  Agreement  to reflect  the  anticipated
effects  or, if after the  Closing,  the  effects,  of the  consummation  of the
transactions  contemplated  by this  Agreement  as required in  accordance  with
applicable  law  or as  Fairfield  may  reasonably  deem  necessary,  and  shall
cooperate with Fairfield in effecting such registrations or amendments.

     IV.7 Covenants of Fairfield.  Except for actions specifically  permitted by
this  Agreement or consented in writing by Ocean Ranch,  prior to the  Effective
Time, Fairfield shall not take any action that would materially adversely affect
the ability of  Fairfield  to obtain the  consents  required  for  Fairfield  to
consummate the transactions  contemplated hereby or materially  adversely affect
the ability of  Fairfield to perform its  covenants  and  agreements  under this
Agreement.

                                    ARTICLE V
                              ADDITIONAL AGREEMENTS

     V.1  Confidentiality.  The terms of this Agreement and related  agreements,
the terms of all  transactions  contemplated  hereby,  and all  confidential and
proprietary information furnished to any party pursuant to this Agreement, or in
connection  with  the  transactions  contemplated  by this  Agreement,  shall be
treated as  confidential,  and none of the parties  shall use or  disclose  such
information  except with the prior written  consent of the other parties hereto;
provided,   however,   Fairfield  may  disclose  such  information   (a) to  its
representatives,  advisors and agents for purposes of its  investigation  during
the  Inspection  Period or (b) to comply with any legal  requirement;  provided,
further, however,  Shareholders and Ocean Ranch may disclose such information to
comply  with any legal  requirement  if prompt  advance  notice is  provided  to
Fairfield  at least  two  business  days  prior to any such  disclosure  so that
Fairfield may seek a protective order or other appropriate remedy.

     V.2 Indemnification of Shareholders. Fairfield agrees to indemnify and hold
each  Shareholder  harmless  from  and  against  all  expenses,  losses,  costs,
deficiencies, liabilities and damages (including, without limitation, reasonable
attorneys' fees and expenses)  incurred or suffered by such  Shareholder from or
arising out of (a) any breach of a representation  or warranty made by Fairfield
in or pursuant to this Agreement,  (b) any breach of the covenants or agreements
made by Fairfield  in this  Agreement,  (c) any  inaccuracy  in any  certificate
delivered by Fairfield  pursuant to this Agreement,  or (d)  indebtedness of the
Partnership under the existing  construction  financing with Bank Atlantic,  the
existing guaranty of such indebtedness by any Shareholder,  or any breach of the
terms or provisions of such  indebtedness or guarantees  thereof,  to the extent
arising after the Closing or as a result of the consummation of the Merger.
<PAGE>

     V.3 Indemnification of Fairfield.  Shareholders shall jointly and severally
indemnify and hold Fairfield and its affiliates and their respective  directors,
officers,  employees,  agents  and  attorneys  harmless  from  and  against  all
expenses,  losses,  costs,  deficiencies,  liabilities  and damages  (including,
without  limitation,  reasonable  attorneys'  fees  and  expenses)  incurred  or
suffered  by  Fairfield,   Merger  Sub  or  any  Subsidiary  (including  without
limitation  Ocean Ranch) of Fairfield  resulting  from or arising out of (a) any
breach of a representation or warranty made by any Shareholder or Ocean Ranch in
or pursuant to this  Agreement,  (b) any breach of the  covenants or  agreements
made by any Shareholder or Ocean Ranch in this Agreement,  or (c) any inaccuracy
in any certificate  delivered by any Shareholder or Ocean Ranch pursuant to this
Agreement.

     V.4  Procedures  for  Indemnity.  (a) Whenever any claim shall arise or any
proceeding  shall  be  instituted  involving  any  person  in  respect  of which
indemnity  may be sought  pursuant  to  Section 5.2  or 5.3,  such  person  (the
"Indemnified  Party") shall promptly notify (in no event later than ten business
days after receipt of such notice) the person against whom such indemnity may be
sought (the "Indemnifying Party") thereof in writing, including, when known, the
facts  constituting  the basis for such claim or proceeding and the amount or an
estimate of the amount of the  indemnified  liability  arising  therefrom  (such
notification  being the "Claims  Notice").  To the extent that any Claims Notice
relates to the  assertion  of a claim,  the  commencement  of a suit,  action or
proceeding or the imposition of a penalty or assessment by a third party that is
not an Indemnified  Party (a "Third-Party  Claim"),  the Indemnified Party shall
include with the Claims Notice any written demand, complaint,  petition, summons
or similar  document  relating  thereto that is then in the Indemnified  Party's
possession.  The  failure  by an  Indemnified  Party to  timely  furnish  to the
Indemnifying  Party any notice  document  required  to be  furnished  under this
Section 5.4(a)  shall not relieve the  Indemnifying  Party from any liability or
obligation  hereunder,  except  to  the  extent  that  such  failure  materially
prejudices the ability of the Indemnifying Party to defend such matter.

     (b) In connection with any Third-Party Claim, the Indemnifying Party at its
sole cost and expense may, upon written notice to the Indemnified  Party,  elect
to assume  the  defense  thereof.  If the  Indemnifying  Party has so elected to
assume  the  defense  of any  such  Third-Party  Claim,  such  defense  shall be
conducted  by  counsel  chosen by the  Indemnifying  Party,  provided  that such
counsel is reasonably  satisfactory  to the Indemnified  Party.  The Indemnified
Party shall be entitled to  participate  in (but not control) the defense of any
such  Third-Party  Claim,  with  its  counsel  and at its  own  expense.  If the
Indemnifying Party has elected to assume the defense of any Third-Party Claim as
provided herein,  the Indemnified Party shall not be entitled to indemnification
as to fees and expenses of any counsel  retained by the Indemnified  Party after
the time at which the Indemnifying  Party has so elected.  The Indemnified Party
shall not settle or compromise any  Third-Party  Claim without the prior written
consent of the Indemnifying Party, which shall not be unreasonably  withheld. In
the  event  that  the  Indemnifying  Party  shall  assume  the  defense  of  any
Third-Party  Claim,  it shall not  compromise or settle such  Third-Party  Claim
unless (i) the Indemnified  Party gives its prior written  consent,  which shall
not be unreasonably  withheld, or (ii) the terms of the compromise or settlement
of such  Third-Party  Claim  provide  that the  Indemnified  Party shall have no
responsibility  for the discharge of any  settlement  amount and impose no other
obligations or duties on the Indemnified Party, and the compromise or settlement
discharges  all  rights  against  the  Indemnified  Party  with  respect to such
Third-Party  Claim.  If a firm offer is made to settle a pending  or  threatened
Third-Party   Claim  for  which  the  Indemnified   Party  may  be  entitled  to
indemnification hereunder and the Indemnifying Party desires to accept and agree
to  such  offer,  the  Indemnifying  Party  shall  give  written  notice  to the
Indemnified  Party to that effect.  If the Indemnified Party fails to consent to
such firm offer within ten calendar  days after its receipt of such notice,  the
Indemnifying Party may continue to contest or defend such Third-Party Claim and,
in such  event,  the  maximum  liability  of the  Indemnifying  Party as to such
Third-Party  Claim  shall not exceed the amount of such  settlement  offer.  The
Indemnified Party shall cooperate with the defense of any such Third-Party Claim
and shall provide such personnel, technical support and access to information as
may be reasonably  requested by the  Indemnifying  Party in connection with such
defense.

     (c) Any claim for indemnification hereunder that is not a Third-Party Claim
shall be asserted by the Indemnified Party by promptly delivering notice thereof
to the Indemnifying  Party. If the  Indemnifying  Party does not respond to such
notice within 45 days after receipt  thereof,  it shall have no further right to
contest the validity of such claim.
<PAGE>

     V.5  Exclusivity Of  Indemnification  For  Contractual  Breaches.  No party
hereto is making  any  representation,  warranty  or  covenant  other than those
contained  herein.  Except with respect to the  covenants in Section 5.1 and the
covenants and indemnities in Section 5.11,  following the Closing, the rights of
the parties  under the  provisions of Sections 5.2 and 5.3 shall be the sole and
exclusive  remedy  available  to the parties  with  respect to claims or damages
arising  out  of  breaches  of  the  representations  and  warranties  or  other
contractual obligations of the parties set forth in this Agreement.

     V.6  Reasonable  Efforts.  Upon the terms and subject to the conditions set
forth in this Agreement,  each of the parties will use all reasonable efforts to
take, or cause to be taken, all actions,  and to do, or cause to be done, and to
assist  and  cooperate  with the  other  parties  in  doing,  all  other  things
necessary,  proper or advisable to consummate  and make  effective,  in the most
expeditious   manner   practicable,   the  Merger  and  the  other  transactions
contemplated  by this  Agreement,  including  (i)  the  obtaining  of all  other
necessary   actions  or  nonactions,   waivers,   consents  and  approvals  from
Governmental Entities and the making of all necessary  registrations and filings
(including  filings with  Governmental  Entities,  if any) and the taking of all
other reasonable steps as may be necessary to obtain all necessary  approvals or
waivers form, or to avoid any action or proceeding by any  Governmental  Entity,
(ii) the  obtaining of all necessary  consents,  approvals or waivers from third
parties,  and (iii) the  execution  and delivery of any  additional  instruments
necessary to consummate the transactions contemplated by, and to fully carry out
the purposes of, this Agreement. In further connection with and without limiting
the foregoing,  Ocean Ranch and Shareholders  shall make appropriate  personnel,
contractors  and advisors of Ocean Ranch available to Fairfield and provide such
information  as may be requested by Fairfield for the purposes of conducting the
Inspection.
<PAGE>

     V.7 Expenses and Fees. Except as otherwise provided in this Agreement,  all
costs and expenses  incurred in  connection  with the Merger  Agreement  and the
transactions contemplated hereby shall be paid by the party incurring such costs
or expenses.

     V.8 Consents.  Ocean Ranch shall use its  reasonable  efforts to obtain the
Ocean Ranch Consents (as hereinafter defined) before Closing.

     V.9 Repayment of PPM Loan;  Release of Claims.  At or prior to the Closing,
the  Partnership  will pay the PPM Loan Amount to PPM and the  Shareholders  and
their  affiliates  (including  PPM)  shall  release  all claims  (contingent  or
liquidated and known or unknown)  against Ocean Ranch,  the  Partnership and its
partners  including,  without  limitation,  the PPM Loan and any other claims in
respect  of loans,  advances,  project  management  or  marketing  fees or other
obligations  ("Claims"),  pursuant  to a written  release in form and  substance
reasonably  satisfactory to Fairfield and substantially in the form set forth in
Exhibit C hereto (the "Release").

     V.10  Delivery  of  Information.  Two  business  days before the end of the
Inspection  Period,  Shareholders  shall  deliver  to  Fairfield  a  certificate
executed  by each  Shareholder  certifying  that Ocean Ranch has  delivered  all
relevant information,  documents, agreements, and other materials related to any
written request made by Fairfield during the Inspection Period.

    V.11  Tax Matters.

     (a) Subject to the following  provisions,  Fairfield shall prepare and file
(or cause to be  prepared  and filed) all Tax  Returns  relating  to Ocean Ranch
which are required to be filed (taking into account all  applicable  extensions)
after the Closing, and shall pay all Taxes shown to be due thereon.

     (b) With  respect  to any Tax  Return of Ocean  Ranch for a taxable  period
ending  on or prior to the  Closing  and not yet  filed as of the  Closing:  (i)
within 90 days of the end of the taxable  period to which such  return  relates,
Ocean Ranch and Fairfield shall prepare and deliver (or cause to be prepared and
delivered) to the Shareholders the financial  statements of Ocean Ranch for such
taxable  period;  (ii) the  Shareholders  will direct the tax return preparer of
Ocean  Ranch to  prepare,  at the  Shareholders'  expense,  such Tax  Returns in
accordance  with  the  prior  practice  and  policies  of Ocean  Ranch  and with
applicable  law;  (iii) at least thirty (30) days prior to the due date for such
Tax Returns  (taking into account all available  extensions),  the  Shareholders
will  deliver  to  Ocean  Ranch  completed  versions  of such Tax  Returns;  and
(iv)Ocean  Ranch shall have the right to review such Tax Returns prior to their
filing and, if Ocean Ranch  disputes  or  otherwise  disagrees  with any amounts
shown due on such Tax Returns, Ocean Ranch and the Shareholders shall consult in
good faith to resolve any issues  arising as a result  thereof;  (v) after Ocean
Ranch's  review  of such Tax  Returns  and the  resolution  of any  disputes  or
disagreements described in clause (iv) hereof, Ocean Ranch shall timely sign and
file  such  Tax  Returns  and pay all  amounts  shown as due and  owing  thereon
(reserving  any  right  to  indemnification  by the  Shareholders  if  otherwise
provided by this  Agreement);  and (vi)  Fairfield and Ocean Ranch shall provide
the  Shareholders  and  their  agents   (including  any  return  preparer)  with
reasonable  access during normal business hours to the records of Ocean Ranch as
needed for the preparation of such returns and with such other assistance as may
be reasonably requested by the Shareholders.
<PAGE>

     (c) With respect to each Tax Return which relates,  in whole or in part, to
periods  prior to Closing  (other than Tax Returns  prepared at the direction of
the Shareholders  pursuant to Section 5.11(b) hereof), at least thirty (30) days
prior to the due date for filing such return (including applicable  extensions),
Ocean Ranch will deliver to the Shareholders (i) a draft return,  (ii) copies of
any workpapers or schedules used to prepare such return, and (iii) a calculation
of the excess (if any) of (A) Taxes to be paid with or with  respect to such Tax
Return that relate to periods prior to Closing over (B) the amounts  reserved or
otherwise  provided for. If the  Shareholders  do not agree with the amounts set
forth on such draft Tax Return, the parties shall work diligently to resolve the
dispute.

     (d) If the parties are unable to resolve any dispute  described in Sections
5.11 (b) or 5.11(c)  prior to the  fifteenth  day prior to the due date for such
Tax Return,  the dispute will be submitted to Ernst & Young,  LLP, or such other
nationally  recognized firm of certified  public  accountants as the parties may
agree upon (the "Firm") with the costs of the Firm's  determination to be shared
equally by the  parties,  except  that if the Firm  agrees  completely  with the
calculations  of one party,  the other  party shall bear all costs of the Firm's
determination.

     (e)  Fairfield  shall  pay,  or shall  cause  Ocean  Ranch  to pay,  to the
Shareholders  the  excess,  if  any,  of the  amount  accrued  in the  Unaudited
Financial Statements for current Taxes payable by Ocean Ranch over the aggregate
Taxes  actually  paid by Ocean  Ranch in  connection  with the filing of any Tax
Returns described in Sections 5.11(b) and 5.11(c), within 5 business days of the
filing of the last such Tax Returns. The Shareholders shall pay to Fairfield (or
Ocean Ranch if directed by Fairfield)  the amount of the  shortfall,  if any, by
which the amount accrued in the Unaudited Financial Statements for current Taxes
payable by Ocean Ranch is less than the aggregate  Taxes  actually paid by Ocean
Ranch in  connection  with the filing of any Tax  Returns  described  in Section
5.11(c),  within 5 business  days of the filing of the last such Tax Returns and
receipt of written demand therefore from Fairfield  together with copies of such
Tax  Returns.  Nothing  in this  Section  5.11(e)  shall  be read to  limit  the
Shareholder's indemnification of Fairfield pursuant to Section 5.3 hereof.

     (f) The  Shareholders  shall,  jointly and  severally,  indemnify  and hold
harmless  Fairfield  from and against (i) all Taxes for which Ocean Ranch may be
liable  arising in periods  ending prior to the Closing Date and for the ratable
portion of any period  that begins  before and ends after the  Closing  Date and
(ii) all costs and expenses  (including  reasonable  attorneys' and accountants'
fees)  attributable  to any contest or dispute  involving the foregoing.  In the
case of Taxes that are  payable  with  respect to a taxable  period  that begins
before the Closing Date and ends after the Closing Date, the portion of any such
Tax that is  allocable  to the portion of the period  ending on the Closing Date
shall be:

          (i) in the case of Taxes  that are either (x) based upon or related to
     income or  receipts,  or (y) imposed in  connection  with any sale or other
     transfer  or  assignment  of  property  (real  or  personal,   tangible  or
     intangible),  deemed  equal to the  amount  which  would be  payable if the
     taxable year ended with the Closing Date; and
<PAGE>

          (ii) in the case of Taxes not described in  subparagraph  (i) that are
     imposed on a periodic  basis and measured by the level of any item,  deemed
     to be the amount of such Taxes for the entire  period  (or,  in the case of
     such Taxes determined on an arrears basis, the amount of such Taxes for the
     immediately  preceding  period)  multiplied  by a fraction the numerator of
     which is the number of  calendar  days in the period  ending on the Closing
     Date and the  denominator  of which is the number of  calendar  days in the
     entire period.

For purposes of this Section 5.11(f),  the Taxes  attributable to Ocean Ranch by
reason of such corporation's  distributive share of income,  gain, or loss from,
or otherwise in respect of, any  partnership in which Ocean Ranch is a member on
the Closing Date shall be determined as if such partnership's taxable year ended
on the Closing Date.

          (g)  Fairfield  shall pay,  or shall  cause Ocean Ranch to pay, to the
     Shareholders all refunds or credits of Taxes or similar benefit  (including
     any interest or similar  benefit  received from or credited  thereon by the
     applicable  tax  authority)  received by Fairfield or Ocean Ranch (or their
     respective  successors  and  assigns)  after  the  Closing  to  the  extent
     attributable  to (i) Taxes paid prior to  Closing  by the  Shareholders  or
     Ocean  Ranch,  or (ii) Taxes for which the  Shareholders  have  indemnified
     Fairfield or Ocean Ranch under this Agreement;  provided, however, that the
     Shareholders  shall  not be  entitled  to any such  refund or credit to the
     extent such refund or credit arises as a result of the application of a net
     operating  loss or similar tax benefit of Ocean Ranch which arises during a
     period  after the Closing  Date and which is carried back to a period prior
     to the Closing Date.

          (h) If a Tax  Return  which  relates  in whole or in part to Taxes for
     which the Shareholders  might be obligated to indemnify  Fairfield or Ocean
     Ranch under this  Agreement  (including  without  limitation any Tax Return
     filed prior to Closing or at the direction of the Shareholders  pursuant to
     Section 5.11(b) hereof) is audited by the Internal Revenue Service or other
     tax  authority,  (i)  Fairfield and Ocean Ranch shall  promptly  notify the
     Shareholders  of the  commencement  of such audit,  and any failure to give
     such notice will not constitute a waiver of rights to indemnity  under this
     Agreement for damages  arising from such audit and subsequent  proceedings,
     except to the extent that the  Shareholders are precluded by the failure to
     give prompt notice from  contesting  the asserted Tax liability in both the
     administrative  and judicial forums;  (ii) the Shareholders  shall have the
     right  but not the  obligation  to  control  the  dealings  with  such  tax
     authority  and  any  ensuing   litigation  or  administrative   proceedings
     (collectively,  the "Tax Dispute"),  including without limitation choice of
     tax  accountants  or  counsel  and the right to settle or  compromise  such
     matters,  provided that the  Shareholders  shall consult in good faith with
<PAGE>

     Ocean Ranch and Fairfield about the Tax Dispute and will give due regard to
     such parties'  interests and  provided,  further,  that with respect to any
     taxable  period that begins  before and ends after the  Closing  Date,  the
     Shareholders  shall not be  entitled to settle or  compromise  any such Tax
     Dispute  without  the  consent  of  the  Fairfield,   which  shall  not  be
     unreasonably withheld;  (iii) if the Shareholders have a right to control a
     Tax Dispute  pursuant  to clause  (ii) but do not choose to  exercise  such
     control, Fairfield shall be entitled, but shall not be obligated, to defend
     such Tax Dispute (giving due regard to the Shareholders's interests), shall
     keep the  Shareholders  reasonably  informed  of the  progress  of such Tax
     Dispute  and will not settle or  compromise  such Tax  Dispute  without the
     prior  written  consent of the  Shareholders,  which  consent  shall not be
     unreasonably withheld; and (iv) all parties shall cooperate with each other
     in good faith with respect to any Tax Dispute and provide  such  assistance
     to  the  other  parties  and  their  agents  as may be  necessary  for  the
     resolution  thereof.  The preparation and filing of any amended Tax Return,
     the audit of which  would  otherwise  be subject to this  Section  5.11(h),
     shall be subject to the principles of this Section 5.11(h).

          (i)  Fairfield  and Ocean Ranch shall  retain all records  relevant to
     Taxes and Tax  Returns of Ocean  Ranch for  periods  prior to or  including
     Closing  ("Tax  Records")  for a period of at least  seven  years after the
     Closing. In addition, at all times that such Tax Records are in the custody
     of Fairfield,  Ocean Ranch or their  successors  and assigns,  such parties
     shall  permit  the  Shareholders  and  their  agents   (including   without
     limitation his tax professionals)  reasonable access to such Tax Records in
     accordance  with the  principles  of this  Section  5.11 to the  extent the
     Shareholders reasonably deems such access appropriate for Tax and financial
     matters.

          (j) If  there  is a  disposition  of all or  substantially  all of the
     capital stock, of Ocean Ranch assets, or business of Ocean Ranch, Fairfield
     agrees to use its  reasonable  best efforts to ensure that the successor to
     Ocean Ranch,  such assets or business is contractually  obligated to and in
     fact does comply with the provisions of this Section 5.11.

          (k)  Fairfield  shall be  responsible  for the  timely  payment of all
     sales, use, transfer,  gains, recording, ad valorem and other similar Taxes
     and  fees  ("Transfer  Taxes"),  arising  out of or in  connection  with or
     attributable to the transactions  effected pursuant to this Agreement,  and
     all Taxes  arising as a result of the Merger.  Fairfield  shall prepare and
     timely file all  necessary  documentation  and Tax  Returns  required to be
     filed in respect of Transfer Taxes;  provided,  that the Shareholders shall
     be  permitted  to  prepare  any  such  Tax  Returns  that  are the  primary
     responsibility  of the Shareholders  under applicable law.  Fairfield shall
     provide  Fairfield with final copies of the  documentation  and Tax Returns
     referred to in the  immediately  preceding  sentence not later than fifteen
     days prior to the filing of such documentation and Tax Returns.

          (l) Fairfield,  Ocean Ranch and the  Shareholders  shall treat the day
     prior to the  Closing  Date as the last  day of the  taxable  year of Ocean
     Ranch and shall treat the debt  assumption  described by Section  6.1(f) as
     occurring for all Tax purposes on the day prior to the Closing Date.


                                   ARTICLE VI
                          CONDITIONS PRECEDENT; CLOSING

     VI.1  Conditions  to Each  Party's  Obligation  to Effect the  Merger.  The
respective  obligation  of each  party to effect  the  Merger is  subject to the
satisfaction  or  waiver  on or  prior  to the  Closing  Date  of the  following
conditions:

          (a) Corporate Approval.  The approval of the transactions hereunder by
              ------------------
     Fairfield's board of directors or appropriate  committee thereof shall have
     been received.
<PAGE>

          (b) Consent of Fairfield's  Lender.  Fairfield shall have obtained all
              ------------------------------
     applicable consents required under Fairfield's and its subsidiaries' credit
     agreements.

          (c)  Ocean  Ranch  Consents.  Ocean  Ranch  shall  have  obtained  all
               ----------------------
     applicable consents required from the parties identified on Schedule 6.1(c)
     (the "Ocean Ranch Consents").

          (d) No Injunctions or Restraints. No judgment, order, decree, statute,
              ----------------------------
     law, ordinance, rule, regulation,  temporary restraining order, preliminary
     or  permanent  injunction  or other order  enacted,  entered,  promulgated,
     enforced  or  issued  by any  court  of  competent  jurisdiction  or  other
     Governmental Entity or other legal restraint or prohibition  (collectively,
     "Restraints") preventing the consummation of the Merger shall be in effect;
     provided,  however,  that each of the  parties  shall have used  reasonable
     efforts  to  prevent  the  entry of any such  Restraints  and to  appeal as
     promptly as possible any such Restraints that may be entered.

          (e) No  Litigation.  There  shall not be pending  any suit,  action or
              --------------
     proceeding,  in each case brought by any Governmental  Entity against Ocean
     Ranch,  Fairfield  or Merger Sub with  respect  to or that would  adversely
     affect the Merger or the transactions contemplated under this Agreement.

          (f)  Debt  Assumption.  On the day  prior  to the  Closing  Date,  all
               ----------------
     liabilities  and  obligations  of Ocean Ranch and the  Partnership  arising
     under the  Capital  Contribution  Loan  shall have been  delegated  to, and
     assumed by Ralph P. Muller and Kevin Sheehan (the "Delegees") pursuant to a
     written  agreement of  assumption  in  substantially  the form set forth in
     Exhibit C hereto (the "Assumption Agreement"), and James E. Lambert, as the
     sole obligee of the Capital  Contribution  Loan, (the "Obligee") shall have
     consented  to such  delegation  and  acknowledged  that Ocean Ranch and the
     Partnership shall have no obligations thereunder pursuant to the Assumption
     Agreement.

          (g) Before the Effective Time, the Partnership shall have paid the PPM
     Loan  Amount  to PPM  and PPM  shall  have  released  Ocean  Ranch  and the
     Partnership  from any further  liabilities or obligations in respect of the
     PPM Loan pursuant to the Release.

     VI.2  Conditions  to  Obligations  of Ocean  Ranch  and  Shareholders.  The
obligations  of Ocean  Ranch and  Shareholders  to effect the Merger are further
subject to the following conditions:

          (a)  Actions  of  Fairfield.  Fairfield  and  Merger  Sub  shall  have
               ---------------------- 
     performed and complied with all the covenants,  agreements and  obligations
     and  satisfied  all of the  conditions  required  by this  Agreement  to be
     performed  or  complied  with  or  satisfied  by them  at or  prior  to the
     Effective Time.

          (b) Representations and Warranties. The representations and warranties
              ------------------------------
     of Fairfield and Merger Sub set forth in this  Agreement that are qualified
     as to materiality shall be true and correct,  and the  representations  and
     warranties of Fairfield and Merger Sub set forth in this Agreement that are
     not so  qualified  shall be true and correct in all material  respects,  in
     each case as of the date of this  Agreement  and (except to the extent such
     representations  and  warranties  speak  as of an  earlier  date) as of the
     Effective  Time as though made on and as of the Effective  Time,  except as
     otherwise contemplated by this Agreement.
<PAGE>

     VI.3 Conditions to Obligations of Fairfield and Merger Sub. The obligations
of  Fairfield  and Merger Sub to effect  the Merger are  further  subject to the
following conditions:

          (a) Actions of Shareholders  and Ocean Ranch.  Shareholders  and Ocean
              ----------------------------------------
     Ranch shall have performed and complied with all covenants,  agreements and
     obligations and satisfied all the conditions  required by this Agreement to
     be  performed  or  complied  with or  satisfied  by them at or prior to the
     Effective Time.

          (b) Representations and Warranties. The representations and warranties
              ------------------------------
     of Ocean  Ranch  and  Shareholders  set  forth in this  Agreement  that are
     qualified  as  to   materiality   shall  be  true  and  correct,   and  the
     representations and warranties of Ocean Ranch and Shareholders set forth in
     this Agreement  that are not so qualified  shall be true and correct in all
     material  respects,  in each  case as of the  date  of this  Agreement  and
     (except to the extent such  representations  and warranties  speak as of an
     earlier  date) as of the  Effective  Time as  though  made on and as of the
     Effective Time, except as otherwise contemplated by this Agreement.

          (c) No Material  Adverse  Change.  At any time on or after the date of
              ---------------------------- 
     this Agreement there shall not have occurred any material adverse change in
     Ocean Ranch.

          (d)  Audit  and  Inspection.   The  completion  by  Fairfield  of  the
               ----------------------
     Inspection and Fairfield's satisfaction,  in its sole discretion,  with the
     results of the Inspection.

          (e) Release.  Fairfield  shall have received the Release,  executed by
              -------
     the Shareholders and PPM.

          (f) Vacation  Break Merger.  The Merger of FCVB Corp.,  a wholly owned
              ----------------------
     subsidiary  of Fairfield  with and into Vacation  Break  U.S.A.,  Inc. (the
     "Vacation Break Merger") shall have been consummated.

          (g) Opinion of Ocean Ranch  Counsel.  Fairfield  shall have received a
              ------------------------------- 
    favorable  opinion of counsel for Shareholders and Ocean Ranch with respect
     to the matters set forth on Schedule 6.3(g).

     VI.4 Frustration of Closing  Conditions.  None of Fairfield,  Shareholders,
Merger Sub or Ocean Ranch may rely on the failure of any  condition set forth in
Section 6.1, 6.2 or 6.3, as the case may be, to be satisfied if such failure was
caused by such  party's  failure to use  reasonable  efforts to  consummate  the
Merger and the other transactions contemplated by this Agreement, as required by
and subject to Section 5.6.

     VI.5 Closing Documents and Procedures. In addition to the other obligations
and  procedures to be performed at the Closing,  the parties will  undertake the
following actions:
<PAGE>

          (a) Deliveries of  Shareholders.  At the Closing,  Shareholders  shall
              ---------------------------
     deliver to Fairfield:

               (i) a certificate or certificates representing each Shareholder's
          shares of Ocean Ranch Common Stock  outstanding  immediately  prior to
          the Effective Time.

               (ii) a certificate  executed by each Shareholder  certifying that
          the  representations  and warranties set forth in Sections 3.2 and 3.3
          are true and correct on and as of the  Effective  Time,  with the same
          force and effect as though such  representations  and  warranties  had
          been made on, as of and with  reference to the Effective Time and that
          Shareholders  have  performed  and  complied  with all  covenants  and
          agreements and satisfied all conditions  required by this Agreement to
          be performed or complied  with or satisfied by them for the benefit of
          Fairfield at or prior to the Effective Time;

               (iii)  the  Release,  executed  by  the  Shareholders  and  their
          affiliates; and

               (iv) the Assumption  Agreement,  executed by the Delegees and the
          Obligee.

          (b)  Deliveries  of Ocean  Ranch.  At the  Closing,  Ocean Ranch shall
               ---------------------------  
    deliver to Fairfield:

                    (i) a  certificate  of an officer of Ocean Ranch  certifying
               that the  representations and warranties set forth in Section 3.2
               are true and correct on and as of the  Effective  Time,  with the
               same  force  and  effect  as  though  such   representations  and
               warranties  had been  made on,  as of and with  reference  to the
               Effective  Time and that Ocean Ranch has  performed  and complied
               with all covenants and  agreements  and satisfied all  conditions
               required by this  Agreement to be  performed or complied  with or
               satisfied  by it for the benefit of  Fairfield at or prior to the
               Effective Time;

                    (ii)  certificates of good standing and corporate  existence
               for Ocean  Ranch; 

                    (iii) the  opinion of counsel to Ocean Ranch as set forth in
               Section 6.3(h); and

                    (iv) the Assumption Agreement, executed by Ocean Ranch.

       (c)  Fairfield's Deliveries. At the Closing,  Fairfield shall deliver to 
            ----------------------
            the Shareholders:

                    (i) each Shareholder's  Ocean Ranch Percentage of the Merger
               Consideration;

                   (ii) evidence of payment of the PPM Loan Amount;

                  (iii) evidence of payment of the Capital  Contribution  Loan
               Interest Amount; and
<PAGE>

                   (iv) a  certificate  of an officer of  Fairfield  certifying
               that the  representations and warranties set forth in Section 3.1
               are true and correct on and as of the  Effective  Time,  with the
               same  force  and  effect  as  though  such   representations  and
               warranties  had been  made on,  as of and with  reference  to the
               Effective Time and that Fairfield has performed and complied with
               all  covenants  and   agreements  and  satisfied  all  conditions
               required by this  Agreement to be  performed or complied  with or
               satisfied by it for the benefit of Ocean Ranch at or prior to the
               Effective Time.


                                   ARTICLE VII
                        TERMINATION, AMENDMENT AND WAIVER

     VII.1  Termination.  This  Agreement  may be  terminated,  and  the  Merger
contemplated hereby may be abandoned, at any time prior to the Effective Time:

          (a) by mutual  written  consent  of  Fairfield,  Merger  Sub and Ocean
     Ranch;

          (b) by either Fairfield or Ocean Ranch;

               (i) if the Merger  shall not have been  consummated  on or before
          December 31,  1997, unless the failure to consummate the Merger is the
          result of a breach of this Agreement by the party seeking to terminate
          this Agreement;

               (ii) if any Governmental  Entity of competent  jurisdiction shall
          have  issued  a  restraint  or  taken  any  other  action  permanently
          enjoining,  restraining or otherwise  prohibiting the Merger or any of
          the other actions  contemplated under the Agreement and such restraint
          shall have become final and nonappealable;

          (c)  by  Fairfield   if  there  has  been  a  material   violation  by
     Shareholders of any agreement, representation or warranty contained in this
     Agreement  that has  rendered  the  satisfaction  of any  condition  to the
     obligations  of Fairfield  impossible  and such violation or breach has not
     been waived by Fairfield and is not due to Fairfield's default;

          (d)  by  Fairfield,   if  the  Vacation  Break  Merger  has  not  been
     consummated on or before December 31, 1997;

          (e) by  Fairfield,  at or prior to the  expiration  of the  Inspection
     Period,  without cause and for whatever reason and without liability on the
     part of any party  hereto,  by delivering to Ocean Ranch at or prior to the
     expiration of the Inspection Period, written notice of Fairfield's election
     to terminate this Agreement;

          (f) by either  Fairfield  or Ocean  Ranch if the other  shall  fail to
     fulfill or satisfy any condition  precedent to the performance of the first
     party's obligations in accordance with the terms hereof; and

          (g) by  Ocean  Ranch,  if  there  has  been a  material  violation  by
     Fairfield of any agreement,  representation  or warranty  contained in this
     Agreement  which has  rendered  the  satisfaction  of any  condition to the
     obligations of Shareholders  and Ocean Ranch  impossible and such violation
     or breach has not been  waived by  Shareholders  and Ocean Ranch and is not
     due to Shareholders' or Ocean Ranch's default.
<PAGE>

     VII.2 Effect of Termination.  In the event of termination of this Agreement
by Ocean Ranch or  Fairfield as provided in Section 7.1,  this  Agreement  shall
terminate  and there shall be no  liability on the part of either Ocean Ranch or
Fairfield,  except for (a)  liabilities  arising from a breach of this Agreement
prior to such  termination if the  termination is made under Section  7.1(b)(i),
and (b) liabilities arising from a breach of a provision of this Agreement which
is to be performed regardless of any such termination.

     VII.3 Amendment.  This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.

     VII.4  Extension;  Waiver.  At any time prior to the  Effective  Time,  the
parties may (a) extend the time for the performance of any of the obligations or
other  acts  of  the  other  parties,   (b)  waive  any   inaccuracies   in  the
representations  and warranties  contained  herein or in any document  delivered
pursuant hereto or (c) waive compliance with any of the agreements or conditions
contained herein.  Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an  instrument  in writing  signed on
behalf of such party. No other action or course of dealing,  including,  without
limitation,  the  consummation  of the Merger  with notice or  knowledge  of any
inaccuracy in the representations or breach of the warranties of the other party
or any investigation  thereof, will operate as a waiver of any rights under this
Agreement.  The delay or failure of any party to this Agreement to assert any of
its rights under this  Agreement or otherwise  shall not  constitute a waiver of
such rights.

                                  ARTICLE VIII
                               GENERAL PROVISIONS

     VIII.1  Survival  of   Representations   and  Warranties.   The  respective
covenants, representations,  warranties, covenants and the indemnities set forth
in this  Agreement  shall survive after the Effective Time and shall continue in
full force and effect. VIII.2 Notices. All notices,  requests,  claims,  demands
and other communications hereunder shall be in writing and shall be deemed given
if  delivered  personally  or sent by  overnight  courier  (providing  proof  of
delivery) to the parties at the  following  addresses  (or at such other address
for a party as shall be specified by like notice):

                  (a)      if to Ocean Ranch:

                           Ocean Ranch Development, Inc.
                           3015 North Ocean Boulevard, Suite 121
                           Fort Lauderdale, Florida  33308
                           Attention:  President
<PAGE>

                           with a copy to:

                           Greenspoon, Marder, Hirschfeld,
                             Rafkin, Ross & Berger
                           Trade Center South, Suite 700
                           100 West Cypress Creek Road
                           Fort Lauderdale, Florida  33309
                           Attention:  Gerald Greenspoon, Esq.

                  (b)      if to Shareholders:

                           James E. Lambert
                           3015 North Ocean Boulevard, Suite 121
                           Fort Lauderdale, Florida  33308

                           James R. Lambert
                           3015 North Ocean Boulevard, Suite 121
                           Fort Lauderdale, Florida  33308

                           Daniel Lambert
                           3015 North Ocean Boulevard, Suite 121
                           Fort Lauderdale, Florida  33308

                           in each case, with a copy to:

                           Greenspoon, Marder, Hirschfeld,
                             Rafkin, Ross & Berger
                           Trade Center South, Suite 700
                           100 West Cypress Creek Road
                           Fort Lauderdale, Florida  33309
                           Attention:  Gerald Greenspoon, Esq.

                  (c)      if to Fairfield or Merger Sub:

                           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>

     VIII.3 Definitions. For purposes of this Agreement:

          (a) an "affiliate" of any person means another person that directly or
     indirectly, through one or more intermediaries, controls, is controlled by,
     or is under common control with, such first person;

          (b) "Code" means the Internal  Revenue Code of 1986,  as amended,  and
     all regulations promulgated thereunder, as in effect from time to time;

          (c) an "environmental law" means any law, statute,  regulation,  rule,
     order,   decree,   judgment,   consent  decree,   settlement  agreement  or
     governmental  requirement,  which relates to or otherwise imposes liability
     or standards of conduct  concerning  mining or  reclamation  of mined land,
     discharges,  emissions, releases or threatened releases of noises, odors or
     any pollutants,  contaminants  or hazardous or toxic wastes,  substances or
     materials,  whether as matter or energy,  into ambient air, water, or land,
     or  otherwise   relating  to  the  manufacture,   processing,   generation,
     distribution,  use, treatment,  storage,  disposal,  cleanup,  transport or
     handling of pollutants,  contaminants,  or hazardous wastes,  substances or
     materials,  including (but not limited to) the Comprehensive  Environmental
     Response,  Compensation and Liability Act of 1980, the Superfund Amendments
     and Reauthorization Act of 1986, as amended, the Resource  Conservation and
     Recovery Act of 1976, as amended, the Toxic Substances Control Act of 1976,
     as amended, the Federal Water Pollution Control Act Amendments of 1972, the
     Clean Water Act of 1977, as amended, any so-called "Superlien" law, and any
     other similar Federal, state or local statutes;

          (d) "ERISA" means the Employee Retirement Income Security Act of 1974,
     as amended, and all regulations promulgated  thereunder,  as in effect from
     time to time;

          (e) "Governmental  Entity" means any government or any court, arbitral
     tribunal,  administrative  agency or  commission or other  governmental  or
     other regulatory authority or agency, federal, state, local or foreign;

          (f)  "Interest"   means  the  45%  general  partner  interest  in  the
     Partnership held beneficially and of record by Ocean Ranch;

          (g)  "knowledge"  of any person  means actual  knowledge  and, if such
     person  is  not an  individual,  actual  knowledge  of  the  directors  and
     executive officers or partners of such person;

          (h) "Liens" means liens, charges, pledges, options,  mortgages,  deeds
     of  trust,  security  interests,   conditional  sales  agreements,  claims,
     restrictions (whether on voting, sale, transfer, disposition or otherwise),
     and other  encumbrances,  adverse  claims and  interests  of every type and
     description, whether imposed by law, agreement, understanding or otherwise;
<PAGE>

          (i) "material adverse change" or "material adverse effect" means, when
     used in connection with Ocean Ranch or Fairfield, any change or effect that
     is  materially  adverse  to the  business,  properties,  assets,  financial
     condition,  prospects,  or  results  of  operations  of such  party and its
     Subsidiaries taken as a whole;

          (j) "Partnership"  means Ocean Ranch Vacation Group, a Florida general
     partnership;

          (k)  "Partnership  Agreement"  means that certain Ocean Ranch Vacation
     Group Joint Venture  Agreement of the Partnership,  dated as of January 10,
     1996,  between  Vacation  Break at  Ocean  Ranch,  Inc.,  and  Ocean  Ranch
     Development, Inc.;

          (l) "person"  means an  individual,  corporation,  partnership,  joint
     venture, association, trust, unincorporated organization or other entity;

          (m) "Personal Property" means (a) all tangible personal property owned
     by the Partnership and located on, attached to, and used in connection with
     the  operation of the Resort  Property  including  furniture,  fixtures and
     equipment,  (b)  the  Partnership's  interest  in  all  personal  property,
     licenses,  permits, plans, studies and utility arrangements with respect to
     the  Resort  Property,  (c) the  Partnership's  interest  in  all  service,
     maintenance,  management  or other  contracts  relating to the ownership or
     operation of the Resort Property, and (d) the Partnership's interest in all
     warranties and guaranties, if any, relating to the Resort Property;

          (n) "Resort  Property"  means that certain  resort  property  known as
     Ocean Ranch  owned by the  Partnership,  including  the land upon which the
     Resort Property is situated,  together with all rights appurtenant thereto,
     the building,  fixtures and other  improvements  now or hereafter  situated
     thereon  and all  leases  and/or  occupancy  agreements  for  space in such
     improvements,  including any and all amendments and  modifications  thereto
     and any and all acceptance,  guaranty or other agreements  related thereto,
     and the Personal Property; and
<PAGE>

     VIII.4  Interpretation.  When a reference  is made in this  Agreement  to a
Section,  Exhibit or Schedule,  such  reference  shall be to a Section of, or an
Exhibit or Schedule to, this Agreement unless otherwise indicated.  The table of
contents and headings  contained in this  Agreement are for  reference  purposes
only and  shall not  affect in any way the  meaning  or  interpretation  of this
Agreement.  Whenever the words "include",  "includes" or "including" are used in
this  Agreement,  they  shall be deemed  to be  followed  by the words  "without
limitation".

     VIII.5  Counterparts.  This  Agreement  may be  executed  in  one  or  more
counterparts,  all of which shall be considered  one and the same  agreement and
shall become effective when one or more counterparts have been signet by each of
the parties and delivered to the other parties.

     VIII.6 Entire Agreement; No Third-party  Beneficiaries.  This Agreement (a)
constitutes  the entire  agreement,  and  supersedes  all prior  agreements  and
understandings,  both  written and oral,  among the parties  with respect to the
subject  matter of this  Agreement  and (b) are not  intended to confer upon any
person other than the parties any rights or remedies.

     VIII.7 Governing Law. This Agreement shall 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.

     VIII.8 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, except that Merger Sub may assign, in its sole discretion, any of
or all its rights,  interests and obligations  under this Agreement to Fairfield
or to any direct wholly owned corporate subsidiary of Fairfield.  Subject to the
preceding  sentence,  this Agreement will be binding upon,  inure to the benefit
of, and be  enforceable  by, the parties  and their  respective  successors  and
assigns.

     VIII.9  Enforcement.  The parties agree that irreparable damage would occur
in the event that any of the  provisions of this Agreement were not performed in
accordance  with  their  specific  terms  or  were  otherwise  breached.  It  is
accordingly  agreed that the  parties  shall be  entitled  to an  injunction  or
injunctions to prevent  breaches of this  Agreement and to enforce  specifically
the terms and  provisions  of this  Agreement in any court of the United  States
located  in the State of  Florida  or in  Florida  state  court,  this  being in
addition to any other remedy to which they are entitled at law or in equity.  In
addition,  each of the  parties  hereto  (a)  consents  to submit  itself to the
personal  jurisdiction  of any federal  court located in the State of Florida or
any Florida state court in the event any dispute arises out of this Agreement or
the  transactions  contemplated by this  Agreement,  (b) agrees that it will not
attempt to deny or defeat such personal  jurisdiction by motion or other request
for leave from any such  court and (c) agrees  that it will not bring any action
relating to this Agreement or the transactions contemplated by this Agreement in
any court  other  than a federal  court  sitting  in the State of  Florida or an
Florida state court.


                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


<PAGE>


     IN WITNESS WHEREOF,  Fairfield, Merger Sub and Ocean Ranch have caused this
Agreement to be signed by their  respective  officers  thereunto duly authorized
and  Shareholders  have signed this Agreement,  all as of the date first written
above.

                                 FAIRFIELD COMMUNITIES, INC.


                                 By:     /s/ J.W. McConnell       
                                   ------------------------------------
                                            J.W. McConnell
                                    President and Chief Executive Officer
                                 
                                 FC OCEAN RANCH, INC.


                                 By:     /s/ J.W. McConnell    
                                    ------------------------------------
                                             J.W. McConnell
                                             President


                                 OCEAN RANCH DEVELOPMENT, INC.


                                 By:     /s/ Daniel Lambert
                                     -----------------------------------    
                                 Name:    Daniel Lambert   
                                 Title:   President  



                                        /s/ James E. Lambert 
                                     ---------------------------------- 
                                            James E. Lambert



                                       /s/ James R. Lambert 
                                     ----------------------------------      
                                           James R. Lambert


                                         /s/ Daniel Lambert 
                                     ----------------------------------
                                             Daniel Lambert

<PAGE>

                                    EXHIBIT A

                              SURVIVING CORPORATION
                            ARTICLES OF INCORPORATION

 

                              AMENDED AND RESTATED
                            ARTICLES OF INCORPORATION
                                       OF
                          OCEAN RANCH DEVELOPMENT, INC.


     On December 19, 1997, the Board of Directors and the  shareholders of OCEAN
RANCH DEVELOPMENT, INC. duly adopted the following Amended and Restated Articles
of Incorporation  pursuant to the provisions of 607.0704,  607.1003 and 607.1007
of the Florida Business Corporation Act:

                                    ARTICLE I
                                      NAME

         The name of the corporation is Ocean Ranch Development, Inc.

                                   ARTICLE II
                      PRINCIPAL OFFICE AND MAILING ADDRESS

     The  Corporation's  principal office and mailing address is 11001 Executive
Center Drive, Little Rock, Arkansas 72211.

                                   ARTICLE III
                                     SHARES

     The  Corporation  shall have authority to issue 10,000 common shares with a
par value of $.01 per share.

                                   ARTICLE IV
                           REGISTERED AGENT AND OFFICE

     The street address of its registered office is 1200 South Pine Island Road,
Plantation,  Florida 33324, and the name of its registered agent at that address
is CT Corporation System.




<PAGE>


                                    ARTICLE V
                                    DIRECTORS

     The Corporation  initially shall have three (3) directors,  whose names and
addresses are:

        Name                                             Address

  John W. McConnell                               11001 Executive Center Drive
                                                  Little Rock, Arkansas  72211

  Robert W. Howeth                                11001 Executive Center Drive
                                                  Little Rock, Arkansas  72211

  Marcel J. Dumeny                                11001 Executive Center Drive
                                                  Little Rock, Arkansas  72211

                                   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 VII 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
                                 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.

     IN  WITNESS  WHEREOF,   the   undersigned,   being  the  President  of  the
Corporation,  has signed these  Amended and Restated  Articles of  Incorporation
this 19th day of December, 1997.


                                                     Robert W. Howeth
                                                     Vice President


<PAGE>

                                    EXHIBIT B

                          SURVIVING CORPORATION BYLAWS


 
                           AMENDED AND RESTATED BYLAWS
                                       OF
                          OCEAN RANCH DEVELOPMENT, INC.

                            Adopted December 19, 1997


                                    ARTICLE I
                                     Offices

     SECTION  1.  Principal   Office.   The  principal  office  of  Ocean  Ranch
Development,  Inc. (the  "Corporation")  may be located either within or without
the State of Florida as the board of directors  (the "Board of Directors" or the
"Board") may  designate or as the business of the  Corporation  may require from
time to time.

     SECTION 2. Registered  Office.  The registered  office of the  Corporation,
required by the Florida  Business  Corporation Act to be maintained in the State
of Florida,  may be, but need not be,  identical to the principal  office in the
State of Florida,  and the address of the registered  office may be changed from
time to time by the Board of Directors.


                                   ARTICLE II
                                  Shareholders

     SECTION 1. Annual Meeting.  The annual meeting of the shareholders shall be
held on such date as the Board may determine in each year at such hour as may be
specified in a notice of meeting or in a duly executed waiver of notice, for the
purpose of electing  Directors and for the transaction of such other business as
may come before the meeting.  If the day fixed for the annual meeting shall be a
legal  holiday in the State of Florida,  the  meeting  shall be held on the next
succeeding  business  day. If the  election of  Directors is not held on the day
designated in these bylaws for any annual meeting of the shareholders, or at any
adjournment  of the  annual  meeting,  the Board of  Directors  shall  cause the
election to be held at a special meeting of the  shareholders as soon thereafter
as may be convenient.

     SECTION 2. Special Meetings. Special meetings of the shareholders,  for any
purpose, may be called by the Board, by the holders of not less than ten percent
(10%) of all the votes  entitled to be cast on any issue to be considered at the
meeting, or by the President of the Corporation.

     SECTION 3. Place of  Meeting.  The Board may  designate  any place,  either
within or without the State of Florida,  unless otherwise prescribed by statute,
as the place of meeting for any annual meeting of shareholders.  The Chairman of
the Board, if one is elected,  or the President may designate any place,  either
within or without the State of Florida,  unless otherwise prescribed by statute,
as the place of the meeting. If no designation is made, the place of the meeting
shall be the principal office of the Corporation in the State of Florida.
<PAGE>

     SECTION 4. Notice of Meeting.  Written notice  stating the time,  date, and
place of the  meeting  and,  in the case of a special  meeting,  the  purpose or
purposes for which the meeting is called, shall be delivered to each shareholder
of record  entitled to vote at such meeting not less than ten (10) nor more than
sixty (60) days before the date of the meeting, either personally, by telegraph,
teletype,  or other form of electronic  communication,  or by mail, by or at the
direction of the President,  the Secretary, or the person or persons calling the
meeting.  If mailed,  such notice shall be deemed to be delivered when deposited
in the United  States mail  addressed  to the  shareholder  at his address as it
appears on the stock transfer books of the Corporation, postage prepaid.

     SECTION 5.  Fixing of Record  Date.  The Board may fix a date nor more than
seventy  (70) and not less  than  ten  (10)  days  prior to the date set for any
meeting of the  shareholders  as the record date as of when the  shareholders of
record  entitled to notice of and to vote at such  meeting  and any  adjournment
thereof shall be determined.

     SECTION 6. Shareholders' List for Meeting. After fixing the record date for
a meeting,  an alphabetical  list of the names of all  shareholders  entitled to
notice of the  meeting,  arranged by voting  group,  with the address of and the
number,  class,  and series,  if any, of shares held by each, shall be prepared.
The list shall, upon written demand, be available during regular business hours,
for  inspection by any  shareholder  and at his expense for a period of ten (10)
days prior to the meeting  date,  or such shorter time as may exist  between the
record  date  and the  meeting,  and  continuing  through  the  meeting,  at the
Corporation's  principal  office,  at a place set forth in the meeting notice in
the city where the meeting will be held,  or at the office of the  Corporation's
transfer agent or registrar.  The Corporation shall also make the list available
at the meeting.

     SECTION 7. Quorum. A majority of the outstanding  shares of the Corporation
entitled to vote,  represented in person or by proxy,  shall constitute a quorum
at a meeting of the shareholders.  When a meeting is adjourned,  it shall not be
necessary to give any notice of the  adjourned  meeting if the time,  date,  and
place to which the meeting is  adjourned  are  announced at the meeting at which
the  adjournment  is taken,  and any business may be transacted at the adjourned
meeting that might have been transacted at the original date of the meeting. If,
however,  following the  adjournment,  the Board fixes a new record date for the
adjourned  meeting,  notice  of  such  adjourned  meeting  shall  be  given,  in
compliance  with Section 4 of this Article II, to each  shareholder of record on
the new record date  entitled to vote at such  meeting.  After a quorum has been
established  at  a   shareholders'   meeting,   the  subsequent   withdrawal  of
shareholders,  so as to reduce  the  number of  shares  entitled  to vote at the
meeting below the numbered required for a quorum,  shall not affect the validity
of any action taken at the meeting or any adjournment thereof.

     SECTION 8.  Proxies.  Every  shareholder  entitled  to vote at a meeting of
shareholders,  or to express consent or dissent  without a meeting,  or his duly
authorized attorney-in-fact,  may authorize another person or persons to act for
him by proxy.  The proxy must be executed in writing by the  shareholder  or his
duly authorized  attorney-in-fact.  Such proxy shall be filed with the Secretary
of the  Corporation  before  or at the  time of such  meeting  or at the time of
expressing  such consent or dissent  without a meeting.  No proxy shall be valid
after  eleven  (11)  months  from the date of its  execution,  unless  otherwise
provided in the proxy.
<PAGE>

     SECTION 9. Voting of Shares.  Each  outstanding  share of stock entitled to
vote shall be entitled to one (1) vote upon each matter submitted to a vote at a
meeting of the shareholders.

     SECTION 10. Voting of Shares by Certain  Holders.  Shares of stock standing
in the name of another corporation may be voted by the officer,  agent, or proxy
as prescribed by the bylaws of the corporate  shareholder  or, in the absence of
any applicable  bylaw, by such person as the Board of Directors of the corporate
shareholder may designate. Proof of such designation may be made by presentation
of a  certified  copy  of the  bylaws  or  other  instrument  of  the  corporate
shareholder.  In the  absence  of such  designation,  or in case of  conflicting
designation  by the  corporate  shareholder,  the  Chairman  of the  Board,  the
President, any Vice President, the Secretary, and the Treasurer of the corporate
shareholder shall be presumed to possess, in that order,  authority to vote such
shares.

     Shares of stock  held by an  administrator,  executor,  guardian,  personal
representative,  or  conservator  may be voted by him,  either  in  person or by
proxy, without a transfer of such shares into his name.

     Shares  of stock  standing  in the name of a  trustee  may be voted by him,
either in person or by proxy,  but no trustee  shall be  entitled to vote shares
held by him  without a transfer  of such shares into his name or the name of his
nominee.

     Shares of stock standing in the name of a receiver, a trustee in bankruptcy
proceedings,  or an assignee for the benefit of creditors may be voted by him or
her without the transfer thereof into his or her name.

     A  shareholder  whose shares of stock are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the pledgee,
and  thereafter  the pledgee or his nominee shall be entitled to vote the shares
so transferred.

     Shares of stock owned by another  corporation  the majority of whose shares
of  stock  entitled  to  vote  for  Directors  is  owned  or  controlled  by the
Corporation shall not be voted, directly or indirectly, at any meeting.



                                   ARTICLE III
                               Board of Directors

     SECTION 1. General  Powers.  All corporate  powers shall be exercised by or
under the authority of, and the business and affairs of the Corporation shall be
managed under the direction of, the Board of Directors.

     SECTION 2. Number,  Tenure, and  Qualification.  The number of Directors of
the  Corporation  initially  shall be three (3). The number of Directors  may be
increased or decreased from time to time by amendment of these bylaws,  provided
that the Corporation  shall always have at least one (1) director.  Any increase
in the number of Directors shall be effective  immediately.  Any decrease in the
number of Directors shall be effective at the time of the next succeeding annual
meeting of the  Shareholders  unless there shall be  vacancies on the Board,  in
which  case such  decrease  may become  effective  at any time prior to the next
succeeding annual meeting to the extent of the number of vacancies.
<PAGE>

     Except as otherwise provided by statute,  the Directors shall be elected at
the annual meeting of Shareholders  and, at each meeting of Shareholders for the
election  of  Directors  at which a quorum is present,  the persons  receiving a
plurality of the votes cast at such election shall be elected as Directors.

     Each  initial  director  shall hold  office  until the first  shareholders'
meeting at which  Directors are elected.  Thereafter,  each director  shall hold
office until the next annual meeting of shareholders  and until his successor is
elected and qualified or until his earlier  resignation,  death, or removal from
office.

     SECTION 3. Chairman of the Board. The Board of Directors of the Corporation
may elect a Chairman  who, if so elected,  shall  preside at all meetings of the
Board of Directors.  The Chairman shall have such other powers and shall perform
all duties as from time to time may be granted or  assigned  to him by the Board
of Directors and as provided by law.

     SECTION 4. Annual and Regular Meetings.  The annual meeting of the Board of
Directors shall be held without other notice than this bylaw  immediately  after
and at the same  place as the  annual  meeting  of  shareholders.  The  Board of
Directors may provide, by resolution,  the time, date, and place for the holding
of regular meetings without other notice than such resolution.

     SECTION 5. Special Meetings. Special meetings of the Board of Directors may
be  called  by the  Chairman  of the  Board,  by the  President,  or by any  two
Directors.  The Chairman of the Board, if one is elected, or the President shall
fix the place for holding such special meeting.

     SECTION 6. Notice.  Notice of any special  meeting  shall be given at least
two (2) days before the meeting by written notice  delivered  personally,  or by
mail, telecopy,  telegram,  cablegram, or other form of electronic communication
to each  director at his  business  address,  unless in case of  emergency,  the
Chairman of the Board,  if one is elected,  or the President  shall  prescribe a
shorter notice to be given personally or by telegraph,  telecopy,  cablegram, or
other  electronic  communication  to each  director at his residence or business
address.  If a notice of meeting is mailed,  such  notice  shall be deemed to be
delivered  five (5) days after its deposit in the United States mail, if mailed,
postpaid and correctly addressed.  Any director may waive notice of any meeting,
before or after the meeting.  The  attendance  of a director at a meeting  shall
constitute  a waiver  of  notice  of such  meeting  and a waiver  of any and all
objections to the place of the meeting,  the time or date of the meeting, or the
manner in which it has been called or convened,  except when a director  states,
at the beginning of the meeting,  any objection to the  transaction  of business
because the meeting is not lawfully called or convened.

     SECTION 7. Quorum.  A majority of the number of Directors fixed pursuant to
Section 2 of this Article III shall  constitute a quorum for the  transaction of
business at any meeting of the Board of  Directors.  A majority of the Directors
present, whether or not a quorum exists, may adjourn any meeting of the Board to
another time and place.  Notice of any such adjourned  meeting shall be given to
the Directors who were not present at the time of the  adjournment  and,  unless
the time and place of the  adjourned  meeting are  announced  at the time of the
adjournment, to the other Directors. 
<PAGE>

     SECTION  8.  Manner of Acting.  The act of the  majority  of the  Directors
present at a meeting at which a quorum is present  shall be the act of the Board
of Directors.

     SECTION 9.  Vacancies.  Any vacancy  occurring on the Board,  including any
vacancy  created by reason of an  increase  in the number of  Directors,  may be
filled by the affirmative  vote of a majority of the remaining  Directors though
less than a quorum of the  Board of  Directors.  A  director  elected  to fill a
vacancy shall hold office only until the next annual meeting of shareholders and
until his  successor  shall have been elected and qualified or until his earlier
resignation, removal from office, or death.

     SECTION 10.  Compensation.  By resolution  of the Board of  Directors,  the
Directors may be paid their expenses,  if any, for attendance at each meeting of
the  Board of  Directors,  and may be paid a fixed  sum for  attendance  at each
meeting of the Board or may be paid a stated salary as director. No such payment
shall  preclude any director from serving the  Corporation in any other capacity
and receiving compensation therefor.

     SECTION 11.  Presumption of Assent.  A director of the  Corporation  who is
present at a meeting of the Board of Directors at which action on any  corporate
matter is taken shall be presumed to have assented to the action  taken,  unless
he  objects  at the  beginning  of the  meeting  to  holding  it or  transacting
specified  business  at the  meeting or he votes  against or  abstains  from the
action taken.

     SECTION 12.  Constructive  Presence at a Meeting.  A member of the Board of
Directors  may  participate  in  a  meeting  of  such  Board  by  any  means  of
communication   by  which  all   persons   participating   in  the  meeting  may
simultaneously  hear each other during the meeting.  Participating by such means
shall constitute presence in person at a meeting.

     SECTION 13. Action Without a Meeting.  Any action  required or permitted by
law to be taken at any meeting of the Board or a committee thereof, may be taken
without a meeting if the  action is taken by all  members of the Board or of the
committee.  The  action  must  be  evidenced  by one or  more  written  consents
describing the action taken and signed by each director or committee member. The
action so taken is effective  when the last director  signs the consent,  unless
the consent  specifies a difference  effective date. A consent so signed has the
effect of a meeting vote and may be described as such in any document.


                                   ARTICLE IV
                                    Officers

     SECTION 1. Number. The officers of the Corporation shall be a President,  a
Secretary,  and a  Treasurer,  each of whom  shall be  elected  by the  Board of
Directors.  One or more Vice  Presidents  and such other  officers and assistant
officers  and agents as may be deemed  necessary  may be elected or appointed by
the Board of Directors.  
<PAGE>

     SECTION 2. Election and Term of Office.  The officers of the Corporation to
be elected by the Board of Directors  shall be elected  annually by the Board of
Directors  at the  regular  meeting  of the Board of  Directors  held after each
annual  meeting of the  shareholders.  If the election of officers  shall not be
held at such meeting,  such election shall be held as soon  thereafter as may be
convenient.  Each officer shall hold office until his successor  shall have been
elected and qualified or until his earlier resignation,  removal from office, or
death.  

     SECTION 3. Removal.  Any officer or agent elected or appointed by the Board
of Directors may be removed by the Board of Directors whenever, in its judgment,
the best interests of the Corporation would be served thereby,  but such removal
shall be without  prejudice  to the  contract  rights,  if any, of the person so
removed.  Election  or  appointment  of an officer or agent  shall not of itself
create contract rights.

     SECTION 4. Vacancies.  A vacancy,  however occurring,  in any office may be
filled by the Board of Directors for the unexpired portion of the term.

     SECTION  5.  President.  The  President  shall be the  principal  executive
officer  of the  Corporation  and,  subject  to the  control  of  the  Board  of
Directors, shall in general supervise and control all of the business affairs of
the  Corporation.  He  shall,  when  present,  preside  at all  meetings  of the
shareholders.  The President  shall also preside at the meetings of the Board of
Directors, unless the Board of Directors has elected a Chairman and the Chairman
is present at such meetings. The President may sign any deeds, mortgages, bonds,
contracts,  or other  instruments which the Board of Directors has authorized to
be executed,  except in cases where the signing and  execution  thereof shall be
expressly  delegated  by the Board of Directors or by these bylaws to some other
officer or agent of the Corporation, or shall be required by law to be otherwise
signed or executed.  The President  shall in general  perform all duties as from
time to time may be assigned to him by the Board of Directors.

     SECTION 6. Vice President.  In the absence of the President or in the event
of his death or his inability or refusal to act, the Vice  President,  if one is
elected, shall have the duties of the President,  and when so acting, shall have
all the powers of, and be subject to all the  restrictions  upon, the President.
The Vice President,  if one is elected,  shall perform such other duties as from
time to time may be assigned to him by the  President or the Board of Directors.
If more  than one Vice  President  is  elected,  the  Board of  Directors  shall
designate  which Vice  President  shall serve until the  election of a successor
President.

     SECTION 7. Secretary.  The Secretary shall: (a) keep the minutes of all the
meetings of the  shareholders  and the Board of  Directors  in one or more books
provided for that purpose; (b) see that all notices are duly given in accordance
with the  provisions  of these bylaws or as required by law; (c) be custodian of
the corporate  records and of the seal of the  Corporation and see that the seal
of the  Corporation is affixed to all documents the execution of which on behalf
of the Corporation under its seal is duly authorized; (d) keep a register of the
post  office  address  of each  shareholder  which  shall  be  furnished  to the
Secretary by such  shareholder;  (e) have general  charge of the stock  transfer
books of the Corporation;  (f) authenticate all records of the Corporation;  and
(g) in general,  perform all duties incident to the office of Secretary and such
other duties as from time to time may be assigned to him by the  President or by
the Board of Directors.  

     SECTION 8. Treasurer.  The Treasurer  shall: (a) have charge and custody of
and be responsible for all funds and securities of the Corporation;  (b) receive
and give receipts for monies due and payable to the Corporation  from any source
whatsoever,  and deposit all such monies in the name of the  Corporation in such
banks, trust companies, or other depositories as shall be selected in accordance
with the provisions of Article VI of these bylaws;  (c) in general,  perform all
of the duties  incident to the office of Treasurer and such other duties as from
time  to  time  may be  assigned  to him by the  President  or by the  Board  of
Directors.  If required by the Board of Directors,  the  Treasurer  shall give a
bond for the  faithful  discharge of his duties in such sum and with such surety
or sureties as the Board of Directors shall determine.  
<PAGE>

     SECTION 9.  Compensation.  The  compensation of the officers shall be fixed
from time to time by the Board of  Directors  and no officer  shall be prevented
from  receiving  such  compensation  by  reason  of the  fact  that he is also a
director of the Corporation.


                                    ARTICLE V
                                  Resignations

     Any director of the Corporation may resign by delivering  written notice to
the Board of Directors or its Chairman or to the Corporation. Any officer of the
Corporation may resign at any time by giving written notice to the  Corporation.
Any such  resignation  shall  take  effect  when  delivered  unless  the  notice
specifies a later effective date.



                                   ARTICLE VI
                     Contracts, Loans, Checks, and Deposits

     SECTION 1.  Contracts.  The Board of Directors may authorize any officer or
officers,  agent or agents to enter into any contract or execute and deliver any
instrument  in the name of and on behalf of the  Corporation,  unless  otherwise
restricted  by law.  Such  authority  may be general  or  confined  to  specific
instances.

     SECTION 2. Loans. No loans shall be contracted on behalf of the Corporation
and no evidence of indebtedness shall be issued in its name unless authorized by
a  resolution  of the Board of  Directors.  Such  authority  may be  general  or
confined to specific instances.

     SECTION 3. Checks, Drafts, Etc. All checks, drafts, or other orders for the
payment of money,  notes, or other evidences of indebtedness  issued in the name
of the Corporation, shall be signed by such officer or officers, agent or agents
of the  Corporation  in such manner as shall from time to time be  determined by
resolution of the Board of Directors.

     SECTION 4. Deposits.  All funds of the Corporation  not otherwise  employed
shall be deposited  from time to time to the credit of the  Corporation  in such
banks,  trust  companies,  or other  depositories  as the Board of Directors may
select.

                                   ARTICLE VII
                   Certificates for Shares and Their Transfer

     SECTION 1. Certificates for Shares. Certificates representing shares of the
Corporation  shall  be in such  form as  shall  be  determined  by the  Board of
Directors.  Certificates  shall be  signed  by the  President  or by such  other
officers  as   authorized  by  law.  All   certificates   for  shares  shall  be
consecutively  numbered  or  otherwise  identified.  The name and address of the
person to whom the shares  represented  thereby are  issued,  with the number of
shares and date of issue,  shall be entered on the stock  transfer  books of the
Corporation.  All certificates surrendered to the Corporation for transfer shall
be canceled, and no new certificate shall be issued until the former certificate
for a like number of shares shall have been  surrendered  and  canceled,  except
that in case of a lost, destroyed,  or mutilated  certificate,  a new one may be
issued therefor upon such terms and indemnity to the Corporation as the Board of
Directors may prescribe.
<PAGE>

     SECTION 2. Transfer of Shares.  Transfer of shares of the Corporation shall
be made on the stock transfer books of the  Corporation  only when the holder of
record thereof or his legal representative, or his attorney thereunto authorized
by  power of  attorney  duly  executed  and  filed  with  the  Secretary  of the
Corporation,  shall furnish proper  evidence of authority to transfer,  and when
there is surrendered for cancellation the certificate for such shares,  properly
endorsed.  The person in whose name shares stand on the books of the Corporation
shall be deemed by the Corporation to be the owner thereof for all purposes.


                                  ARTICLE VIII
                                   Fiscal Year

     The fiscal  year of the  Corporation  shall begin on  January 1  and end on
December 31 in each year, except its first fiscal year, which shall begin on the
date of incorporation.


                                   ARTICLE IX
                                    Dividends

     The Board of Directors may from time to time declare,  and the  Corporation
may pay,  dividends on its  outstanding  shares in the manner and upon the terms
and conditions provided by law and its Articles of Incorporation.


                                    ARTICLE X
                           Indemnification of Officers
                         Directors, Employees and Agents

     SECTION  1.  Indemnification.  The  Corporation  shall,  and  does  hereby,
indemnify  and hold  harmless to the fullest  extent  permitted or authorized by
current or future  legislation or current or future  judicial or  administrative
decisions (but, in the case of any such future legislation or decisions, only to
the extent that it permits the  Corporation to provide  broader  indemnification
rights than  permitted  prior to such  legislation  or  decisions),  each person
(including here and hereinafter, the heirs, executors, administrators,  personal
representatives  or  estate  of  such  person)  who  was  or is a  party,  or is
threatened  to be  made a  party,  or was or is a  witness,  to any  threatened,
pending or  completed  action,  suit or  proceeding,  whether  civil,  criminal,
administrative or investigative (a "Proceeding"),  from,  against and in respect
of any  liability  (which for  purposes  of this  Article X  shall  include  any
judgment,  settlement,  penalty or fine) or cost,  charge or expense  (including
attorneys' fees and expenses)  asserted against him or incurred by him by reason
of the fact that such indemnified  person (1) is or was a director or officer of
the  Corporation or (2) is or was an employee or agent of the  Corporation as to
whom the  Corporation has agreed in writing to grant such indemnity or (3) is or
was serving, at the request of the Corporation, as a director, officer, employee
or trustee of another corporation,  partnership,  joint venture,  trust or other
enterprise  (including serving as a fiduciary of an employee benefit plan) or is
or was  serving  as an  agent  of such  other  corporation,  partnership,  joint
venture, trust or other enterprise, in each case, as to whom the Corporation has
agreed in writing to grant such indemnity.  Each director,  officer, employee or
agent of the  Corporation  as to whom  indemnification  rights have been granted
under this Section 1 of this Article X  shall be referred to as an  "Indemnified
Person."
<PAGE>

     Notwithstanding  the  foregoing,  except as  specified in Section 3 of this
Article X,  the  Corporation  shall not be required to indemnify an  Indemnified
Person in connection  with a Proceeding (or any part thereof)  initiated by such
Indemnified  Person unless the  authorization  for such  Proceeding (or any part
thereof)  was not denied by the Board of  Directors  of the  Corporation  within
sixty (60) days after  receipt of notice  thereof from such  Indemnified  Person
stating his intent to initiate such Proceeding and only then upon such terms and
conditions as the Board of Directors may deem appropriate.

     SECTION 2.  Advance of Costs,  Charges  and  Expenses.  Costs,  charges and
expenses  (including  attorneys'  fees and  expenses)  incurred by an officer or
director who is an Indemnified Person in defending a Proceeding shall be paid by
the  Corporation,  to the fullest  extent  permitted or authorized by current or
future  legislation or current or future  judicial or  administrative  decisions
(but,  in the case of any such  future  legislation  or  decisions,  only to the
extent  that it permits the  Corporation  to provide  broader  rights to advance
costs,  charges  and  expenses  than  permitted  prior  to such  legislation  or
decisions), in advance of the final disposition of such Proceeding, upon receipt
of an undertaking by or on behalf of the Indemnified Person to repay all amounts
so advanced in the event that it shall ultimately be determined that such person
is not entitled to be  indemnified  by the  Corporation  as  authorized  in this
Article X.  The  Corporation  may,  upon  approval  of the  Indemnified  Person,
authorize the Corporation's  counsel to represent such person in any Proceeding,
whether or not the Corporation is a party to such Proceeding. Such authorization
may be made by the Chairman of the Board of  Directors,  unless he is a party to
such  Proceeding,  or by the Board of  Directors  by  majority  vote,  including
directors who are parties to such Proceeding.

     SECTION 3. Procedure for  Indemnification.  Any  indemnification or advance
under this Article X  shall be made promptly and in any event within  forty-five
(45) days upon the  written  request  of the  Indemnified  Person.  The right to
indemnification or advances as granted by this Article X shall be enforceable by
the  Indemnified  Person  in  any  court  of  competent  jurisdiction,   if  the
Corporation  denies such request under this Article,  in whole or in part, or if
no disposition  thereof is made within  forty-five (45) days.  Such  Indemnified
Person's   costs  and  expenses   incurred  in  connection   with   successfully
establishing his right to indemnification  or advances,  in whole or in part, in
any such action  shall also be  indemnified  by the  Corporation.  It shall be a
defense  to any  such  action  that the  claimant  has not met the  standard  of
conduct,  if any,  required  by current or future  legislation  or by current or
future judicial or  administrative  decisions for  indemnification  (but, in the
case of any such future  legislation  or  decisions,  only to the extent that it
does not impose a more  stringent  standard of conduct than  permitted  prior to
such  legislation or decision),  but the burden of proving such defense shall be
on the Corporation.  Neither the failure of the Corporation (including its Board
of Directors or any committee  thereof,  its independent legal counsel,  and its
shareholders)  to have made a  determination  prior to the  commencement of such
action  that  indemnification  of the  claimant  is proper in the  circumstances
because he has met the applicable standard of conduct, if any, nor the fact that
there has been an actual  determination by the Corporation  (including its Board
of Directors or any committee  thereof,  its independent  legal counsel,  or its
shareholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a  presumption  that the claimant has
not met the applicable standard of conduct.
<PAGE>

     SECTION  4.  Rights  Not   Exclusive;   Contract   Right;   Survival.   The
indemnification  provided by this Article X shall not be deemed exclusive of any
other rights to which those  indemnified  may be entitled  under any  agreement,
vote of shareholders or disinterested directors or otherwise, both as to actions
in such person's  official  capacity and as to actions in another capacity while
holding  such office,  and shall  continue as to an  Indemnified  Person who has
ceased to be a  director,  officer,  employee  or agent  and shall  inure to the
benefit of the heirs, executors,  administrators,  personal  representatives and
estate of such person.  All rights to  indemnification  and advances  under this
Article X  shall be deemed to be a contract  between  the  Corporation  and each
Indemnified  Person who serves or served in such capacity at any time while this
Article X is in effect and, as such, are  enforceable  against the  Corporation.
Any repeal or  modification  of this Article X or any repeal or  modification of
relevant  provisions of Florida's  corporation law or any other  applicable laws
shall not in any way diminish these rights to  indemnification of or advances to
such  Indemnified   Person,  or  the  obligations  of  the  Corporation  arising
hereunder,  for claims  relating to matters  occurring  prior to such repeals or
modification.

     SECTION 5. Insurance.  The Corporation may purchase and maintain  insurance
on behalf of any person who is or was a director,  officer, employee or agent of
the  Corporation,  or is or was serving at the request of the  Corporation  as a
director,   officer,   employee,   trustee  or  agent  of  another  corporation,
partnership,  joint venture,  trust or other enterprise  (including serving as a
fiduciary of an employee benefit plan),  with respect to any liability  asserted
against  him and  incurred  by him in any such  capacity  or arising  out of his
status as such, whether or not the Corporation would have the power to indemnify
him  against  such  liability  under the  provisions  of this  Article X  or the
applicable provisions of Florida law.

     SECTION 6. Savings Clause. If this Article X or any portion hereof shall be
invalidated  on any  ground by any  court of  competent  jurisdiction,  then the
Corporation shall  nevertheless  indemnify and hold harmless,  and make advances
to,  each  Indemnified  Person  as to costs,  charges  and  expenses  (including
attorneys' fees), liabilities,  judgments,  fines and amounts paid in settlement
with respect to any  Proceeding,  including any action by or in the right of the
Corporation,  to the full extent  permitted  by any  applicable  portion of this
Article X  that shall not have been  invalidated  and as otherwise  permitted by
applicable law.

                                   ARTICLE XI
                                      Seal

The Board of Directors shall provide a corporate seal which shall be circular in
form and shall have inscribed thereon the name of the Corporation,  the state of
incorporation, and the words, "Corporate Seal."

<PAGE>

                                   ARTICLE XII
                                Waiver of Notice

     Unless  otherwise  provided by law,  whenever  any notice is required to be
given to any shareholder or director of the Corporation  under the provisions of
these bylaws or under the provisions of its Articles of Incorporation,  a waiver
thereof in writing,  signed by the person or persons  entitled  to such  notice,
whether before or after the time stated therein,  shall be deemed  equivalent to
the giving of such notice. ARTICLE XIII Rules of Order

     Roberts'  Rules of  Order,  Newly  Revised,  shall  prescribe  the rules of
conduct for all meetings of the Corporation so far as not inconsistent  with the
laws of Florida, with the Articles of Incorporation, or with these bylaws.


                                   ARTICLE XIV
                                    Amendments

     These  bylaws may be altered,  amended,  or repealed  and new bylaws may be
adopted by a vote of the Board of Directors.


                                    ARTICLE XV
                                 Corporate Records

     The  Corporation  shall  maintain in written  form or in a form  capable of
conversion into written form (a) permanent records of minutes of all meetings of
its shareholders and Board of Directors,  or any committee thereof;  or a record
of all action taken without a meeting of its shareholders or Board of Directors,
or any committee thereof;  (b) accurate accounting records;  (c) a record of its
shareholders in a form that permits preparation of a list of names and addresses
of all shareholders in alphabetical  order by class of shares showing the number
and series held by each. Additionally,  the Corporation shall keep a copy of (a)
its Articles of Incorporation  and all amendments  currently in effect;  (b) its
Bylaws,  or  restated  Bylaws,  and all  amendments  currently  in  effect;  (c)
resolutions  adopted by its Board of  Directors  creating one or more classes or
series  of  shares  and  affixing  their  relative  rights,   preferences,   and
limitations,  if shares issued pursuant thereto are outstanding;  (d) minutes of
all  shareholders'  meetings  and  records of all action  taken by  shareholders
without a meeting for the past three years;  (e) written  communications  to all
shareholders,  generally,  or all  shareholders  of a class or series within the
past three years,  including  the  financial  statements  furnished for the past
three years  pursuant to the Florida  Business  Corporation  Act;  (f) a list of
names and business street addresses of its current  Directors and officers;  and
(g) its most recent annual report  delivered to the Florida  Department of State
pursuant to the Florida Business Corporation Act.


                                     ARTICLE XVI
                                   Emergency Bylaws

     In the event that a quorum of the  Corporation's  Board of Directors cannot
readily be assembled  because of a catastrophic  event, the following  emergency
bylaws are in effect until termination of the emergency:
<PAGE>

          (a) Notice of a meeting of the Board of  Directors  need only be given
     to those  Directors whom it is practicable to reach and may be given in any
     practicable manner, including by publication and radio;

          (b) One or more officers of the Corporation  present at the meeting of
     the Board of Directors  may be deemed to be Directors  for the meeting,  in
     order of rank and within the same rank in order of seniority,  as necessary
     to achieve a quorum; and

          (c) The  Director  or  Directors  in  attendance  at a  meeting  shall
     constitute a quorum.

     The  Corporation's  bylaws not inconsistent with the emergency bylaws shall
remain in effect during an  emergency.  During an emergency as set forth herein,
the Board of Directors may:

          (a) Modify lines of succession to  accommodate  the  incapacity of any
     director, officer, employee, or agent; and

          (b) Relocate the principal office or designate  alternative  principal
     or regional offices or authorize the officers to do so.


<PAGE>

                                    EXHIBIT C

                           COMPLETE AND FINAL RELEASE

          WHEREAS, Ocean Ranch Development,  Inc., a Florida corporation ("Ocean
     Ranch"),  James E.  Lambert,  James R. Lambert and Daniel  Lambert  (each a
     "Shareholder" and collectively,  the "Shareholders")  have entered into the
     Agreement  and Plan of Merger,  dated as of December  10, 1997 (the "Merger
     Agreement"),  among  Fairfield  Communities,  Inc., a Delaware  corporation
     ("Fairfield"),  Fairfield  Ocean Ranch,  Inc., a Florida  corporation and a
     wholly owned  subsidiary of Fairfield  ("Merger Sub"), the Shareholders and
     Ocean Ranch;

          WHEREAS, pursuant to the Merger Agreement the Shareholders have agreed
     to deliver,  and in consideration of the payment of the PPM Loan Amount (as
     defined in the Merger  Agreement) PPM Brokerage  Service,  Inc. ("PPM") has
     agreed to deliver, a complete and final release of all claims against Ocean
     Ranch,  Ocean Ranch Vacation  Group,  a Florida  general  partnership  (the
     "Partnership") and its partners; and

          WHEREAS,  each of the Shareholders  acknowledges  that he has read and
     understands this Release, that he has conferred with his counsel concerning
     the effect of this  Release,  and he is  executing  this Release of his own
     free will.

          NOW,  THEREFORE,  each  of  the  Shareholders,  for  himself  and  his
     affiliates, legal representatives,  heirs, successors and assigns, and PPM,
     for itself and its  affiliates,  successors and assigns,  does hereby fully
     and forever release, relinquish,  acquit and discharge (a) Ocean Ranch, its
     successors  and  assigns,  and  its  and  their  shareholders,   directors,
     officers, attorneys, employees, agents, representatives and assets, and all
     persons or entities in privity with them or any of them from (i) all debts,
     obligations,  liabilities,  liens and duties  under the PPM Loan,  (ii) all
     claims in respect of loans, advances,  project management or marketing fees
     or other  obligations,  and  (iii) any  and all actions,  causes of action,
     claims,  suits, debts, sums of money,  accounts,  bonds, bills,  covenants,
     contracts,  agreements,  promises,  damages,  judgments, claims and demands
     whatsoever,  in law or equity,  whether  known or unknown  and  whether now
     existing or hereafter arising  including,  without  limitation,  any matter
     described on Schedule 3.2(j) to the Merger Agreement, except claims arising
     under  Sections  5.1,  5.2 and  5.3 of the  Merger  Agreement,  and (b) the
     Partnership,  its  successors,  assigns  and  partners,  and its and  their
     directors,  officers, attorneys,  employees, agents,  representatives,  and
     assets,  and all persons or  entities  in privity  with them or any of them
     from (i) all debt,  obligations,  liabilities,  liens and duties  under the
     Partnership Agreement (as defined in the Merger Agreement), (ii) all claims
     in respect of loans,  advances,  project  management  or marketing  fees or
     other obligations,  and (iii) all actions, causes of action, claims, suits,
     debts,  sums  of  money,  accounts,  bonds,  bills,  covenants,  contracts,
     agreements, promises, damages, judgments, claims and demands whatsoever, in
     law or equity,  whether  known or  unknown  and  whether  now  existing  or
     hereafter arising including,  without  limitation,  any matter described on
     Schedule  3.2(j) to the  Merger  Agreement,  except  claims  arising  under
     Sections 5.1, 5.2 and 5.3 of the Merger Agreement.

<PAGE>

          The  Shareholders  and PPM hereby  covenant and agree with Ocean Ranch
     and the  Partnership  to sign,  seal,  execute and deliver,  or cause to be
     signed, sealed, executed and delivered,  and to make or cause to be done or
     made, upon the reasonable  request of Ocean Ranch or the  Partnership,  any
     and  all  agreements,   instruments,   papers,   deeds,   acts  or  things,
     supplemental,  confirmatory or otherwise,  as may reasonably be required by
     Ocean Ranch or the Partnership  for the purpose of, or in connection  with,
     the releases granted hereunder.

          IN WITNESS WHEREOF,  this Complete and Final Release is executed as of
     the 19th day of December, 1997.


                                           /s/James E. Lambert
                                          ------------------------------ 
                                             James E. Lambert


                                           /s/James R. Lambert
                                          ------------------------------   
                                              James R. Lambert


                                          /s/Daniel Lambert
                                          -----------------------------      
                                             Daniel Lambert

                                            PPM BROKERAGE SERVICE, INC.


                                         By: /s/Linda M. Fenner    
                                         ----------------------------------
                                       Name: Linda M. Fenner                
                                         ----------------------------------
                            
                                      Title: President           
                                          ---------------------------------
<PAGE>

                                    EXHIBIT D

                             AGREEMENT OF ASSUMPTION

          This AGREEMENT OF ASSUMPTION (the "Assumption Agreement"), is made and
     entered into as of December 19, 1997, by and among James E. Lambert ("JL"),
     Ocean Ranch Development, Inc., a Florida corporation ("Ocean Ranch"), Ralph
     P.  Muller  ("RM") and Kevin M.  Sheehan  ("KS" and  together  with RM, the
     "Delegees").  Capitalized  terms  used and not  otherwise  defined  in this
     Agreement have the meanings ascribed to those terms in the Merger Agreement
     referred to below.

          WHEREAS,  pursuant  to  the  terms  and  provisions  of  that  certain
     Agreement and Plan of Merger (the "Merger Agreement"), dated as of December
     10,  1997,  among  Fairfield  Communities,  Inc.,  a  Delaware  corporation
     ("Fairfield"),  Fairfield  Ocean Ranch,  Inc., a Florida  corporation and a
     wholly owned subsidiary of Fairfield ("Merger Sub"), JL, James R.  Lambert,
     Daniel  Lambert and Ocean Ranch,  Merger Sub will merge with and into Ocean
     Ranch, with Ocean Ranch as the surviving corporation (the "Merger") and, as
     a result of the Merger,  Ocean Ranch will become a wholly owned  subsidiary
     of Fairfield;

          WHEREAS, as a condition to the willingness of Fairfield and Merger Sub
     to consummate the transactions contemplated by the Merger Agreement, and in
     order to induce  Fairfield  and Merger Sub to consummate  the  transactions
     contemplated  by the Merger  Agreement,  each of the Delegees is willing to
     assume and agree to pay,  perform and  discharge  the Capital  Contribution
     Loan; and

          WHEREAS, the execution and delivery by the Delegees of this Assumption
     Agreement is a condition precedent to the obligations of the parties to the
     Merger Agreement to consummate the transactions  contemplated by the Merger
     Agreement.

          NOW, THEREFORE,  for good and valuable consideration,  the receipt and
     sufficiency of which are hereby  acknowledged,  and intending to be legally
     bound hereby, the parties hereto hereby agree as follows:

               1. Assumption.  Ocean Ranch hereby delegates to the Delegees, and
          RM, to the extent of 80% of all liabilities and obligations hereunder,
          and  KS,  to the  extent  of 20% of all  liabilities  and  obligations
          hereunder,  severally,  hereby  assume  and agree to pay,  perform  or
          otherwise  discharge  in full  the  principal  amount  of  $1,500,000,
          together with interest thereon at the rate of 6% per annum to the date
          of payment thereof,  as and when the same shall become due and payable
          in   accordance   with  the  terms  and   provisions  of  the  Capital
          Contribution Loan Documents, as modified hereby.

               2.  Modification  of Payment Terms.  JL covenants and agrees with
          the  Delegees  and Ocean  Ranch  that,  notwithstanding  any  contrary
          provision of the Capital Contribution Loan Documents,  JL shall accept
          payment of the principal  amount of $1,500,000  together with interest
          thereon at the rate of 6% per annum to the date of payment thereof, on
          or  before  June 30,  1998 in full  payment  and  satisfaction  of the
          Capital Contribution Loan.
<PAGE>

               3. Consent and Acknowledgment.  JL hereby represents and warrants
          that JL is the sole  obligee of the Capital  Contribution  Loan and no
          other  person  or  entity  has any  other  rights  under  the  Capital
          Contribution  Loan.  JL  hereby   acknowledges  and  consents  to  the
          delegation  to the Delegees and the  assumption by the Delegees of the
          Capital  Contribution  Loan. JL agrees to accept the assumption of the
          Capital Contribution Loan and the agreement by the Delegees to pay the
          Capital  Contribution Loan as modified hereby in full substitution for
          Ocean Ranch under the Capital Contribution Loan Documents.  JL further
          agrees that Ocean Ranch and its  affiliates  (other than the Delegees)
          shall  have  no  further   liability   with  respect  to  the  Capital
          Contribution Loan.

               4. Further  Assurances.  The Delegees  hereby  covenant and agree
          with Ocean Ranch and JL to sign, seal,  execute and deliver,  or cause
          to be signed, sealed, executed and delivered,  and to make or cause to
          be done or made, upon the reasonable request of Ocean Ranch or JL, any
          and all  agreements,  instruments,  papers,  deeds,  acts  or  things,
          supplemental, confirmatory or otherwise, as may reasonably be required
          by Ocean Ranch or JL for the purpose of, or in  connection  with,  the
          assumption by the Delegees of the Capital Contribution Loan.

               5.   Release.   JL,  for  himself  and  his   affiliates,   legal
          representatives,  heirs, successors and assigns, does hereby fully and
          forever  release,  relinquish,   acquit  and  discharge  Ocean  Ranch,
          Fairfield,   and  Ocean  Ranch  Vacation   Group,  a  Florida  general
          partnership,  and their  successors and assigns,  and their respective
          shareholders,  directors,  officers, partners,  attorneys,  employees,
          agents,  representatives  and  assets,  and all persons or entities in
          privity with them or any of them from all claims, debts,  obligations,
          liabilities, liens and duties under the Capital Contribution Loan.

               6. Miscellaneous. This Assumption Agreement is made for and shall
          inure to the benefit of Ocean Ranch and its  successors  and  assigns,
          and this  Assumption  Agreement  shall be  governed  by,  enforced  in
          accordance with, and interpreted  under the internal  substantive laws
          of the State of  Florida,  without  giving  effect  to the  principles
          thereof relating to conflicts of law.




                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>


               IN  WITNESS   WHEREOF,   the  parties  hereto  have  signed  this
          Assumption  Agreement  personally  or  by  their  respective  officers
          thereunto duly authorized this 19th day of December, 1997.



                                              /s/James E. Lambert
                                             --------------------------------- 
                                                 James E. Lambert



                                            OCEAN RANCH DEVELOPMENT, INC.

                                           By: /s/Daniel Lambert
                                             -------------------------------
                                          Name:   Daniel Lambert            
                                              -------------------------------
                                         Title:  President              
                                              -------------------------------
                                                                             
                                            /s/Ralph P. Muller
                                           ---------------------------------
                                              Ralph P. Muller


                                           /s/Alice Muller
                                           ---------------------------------
                                              Alice Muller



                                           /s/Kevin M. Sheehan
                                           ---------------------------------
                                              Kevin M. Sheehan

ACKNOWLEDGED AND AGREED
AS TO SECTION 5 OF
THIS ASSUMPTION AGREEMENT:
FAIRFIELD COMMUNITIES, INC.


  By:/s/ Robert W. Howeth
    ---------------------------    
        Robert W. Howeth
Title:  Senior Vice President and
          Chief Financial Officer

<PAGE>

OCEAN RANCH VACATION GROUP

By:   Ocean Ranch Development, Inc.,
      General Partner


By: /s/ Daniel Lambert                                
   --------------------------------
Name: Daniel Lambert   
     ------------------------------
Title: President                                   
     ------------------------------

<PAGE>
                                Schedule 6.3(h)
                             OPINION OF COUNSEL FOR
                          SHAREHOLDERS AND OCEAN RANCH


     1. Ocean Ranch is a corporation  duly  organized,  validly  existing and in
good standing under the laws of the State of Florida,  has full power to own its
properties and to the knowledge of counsel,  to carry on the business  currently
being  conducted  by it,  and to the  knowledge  of  counsel,  does not  conduct
business in any state other than  Florida.  To the  knowledge of counsel,  Ocean
Ranch  does not now own and has never  owned  any  capital  stock or any  equity
interest in any corporation,  limited  liability  company,  partnership or other
entity except the Interest.

     2. The execution, delivery, and consummation of the Agreement has been duly
authorized  each  of the  Shareholders  and  Ocean  Ranch  and  approved  by all
necessary  action.  The  Agreement  has been duly executed and delivered by each
Shareholder and Ocean Ranch and  constitutes the valid and binding  agreement of
each of them enforceable in accordance with its terms.

     3. To the knowledge of counsel,  neither the execution of the Agreement nor
the  consummation of the  transactions  contemplated  thereby will result in the
breach of any term or  provision  of, or  constitute a default  under,  or be in
violation of any charter provision, bylaw, agreement,  instrument, order, law or
regulation to which any  Shareholder,  Ocean Ranch and/or the  Partnership  is a
party or which is otherwise applicable.

     4. To the knowledge of counsel,  there is not (i) any pending or threatened
actions,  suits,  proceedings or investigations against or affecting Ocean Ranch
or the Interest or (ii) any currently existing order, writ, injunction or decree
to which Ocean Ranch is subject.

     5. To the  knowledge of counsel,  Ocean Ranch and the  Partnership  are and
have at all  times  been,  in  compliance  in all  material  respects  with  all
applicable laws, rules and regulations and orders.

     6. To the knowledge of counsel, there is no fact or circumstance that would
cause any  representation or warranty,  in whole or in part, of Shareholders and
Ocean Ranch contained in the Agreement not to be true.
<PAGE>


                             SCHEDULE 3.2(i)



                                 None
<PAGE>

                            SCHEDULE 3.2(j)



                                None
<PAGE>

                             SCHEDULE 3.2(k)



                                None
<PAGE>

                            SCHEDULE 3.2(l)



                                None
<PAGE>

                            SCHEDULE 3.2(r)



                                None

<PAGE>

                            SCHEDULE 3.2(t)



                                None


<PAGE>

                            SCHEDULE 6.1(c)



                                None


<PAGE>

                            SCHEDULE 6.3(g)



                                 None


<PAGE>

                           SCHEDULE 6.3(h)



                                None