FAIRFIELD COMMUNITIES, INC.
                        8669 COMMODITY CIRCLE, SUITE 200
                             ORLANDO, FLORIDA 32819

                                December 29, 2000

[Employee]
[Employee Address]
[City State]

Re:  Incentive Compensation Payments
     -------------------------------

Dear [Employee]:

     As you are  aware,  we have  signed an  Agreement  and Plan of Merger  with
Cendant  Corporation,  whereby a  subsidiary  of Cendant  will merge into us. We
believe that the merger will close in the first quarter of 2001.

     Under our 2000 Incentive  Compensation Plan ("2000 Plan"), you are eligible
to receive an  incentive  bonus based on certain  criteria  [relating  to, among
other  things,  our earnings for 2000].  Under the 2000 Plan,  you would receive
your incentive bonus after December 31, 2000.  Based on, among other things,  an
estimate of our expected  earnings for the year, we currently  estimate that you
will be entitled to a bonus payment of  $          ,  of which $     (the "Bonus
                                         ----------             ----
Payment") will be paid on or before December 31, 2000.

     Under the terms of your employment  agreement,  you will receive a one time
transition  payment of $        ,  which equals your annual base salary,  if you
                        --------
remain  employed  with us for a period of one year  following  completion of the
merger.  Under your  employment  agreement,  you would  receive your  transition
payment  within five days  following the first  anniversary  date of the merger.
Alternatively,  if you are terminated without cause or constructively discharged
(as defined in your employment  agreement) prior to the first anniversary of the
merger, you will also receive the transition payment. $       of your transition
                                                       ------
payment (the "Transition Payment") will be paid on or before December 31, 2000.

     In  connection  with the merger,  we have approved a one time cash bonus of
$           ("Merger Bonus") payable to you if you remain employed with us for a
 ---------
period of 90 days  following  completion of the merger.  You are to receive your
Merger Bonus after the 90th day following completion of the merger. FOR BERK: In
connection with the merger, we have approved a one time cash bonus of $2,500,000
("Merger  Bonus")  payable to you at the effective  time of the merger.  We have
approved the payment to you of your Merger Bonus on or before December 31, 2000.

     FOR OFFICERS AFFECTED: You currently own vested warrants to purchase shares
of our common stock.  You have recently  exercised  warrants to purchase
                                                                         -------
shares  ("Warrant  Shares")  of our common  stock.  Our Board of  Directors  has
approved a payment ("Warrant  Payment") to you of $     ,  which is equal to the
                                                   -----
product of (i) the  difference  between (a) $15
<PAGE>

and (b) the  closing  price  for a share  of our  common  stock  on the date you
exercised your warrants, multiplied by (ii) the number of Warrant Shares.

     At your request and for your  benefit,  the Board of Directors has approved
each of these payments to be made to you on or before December 31, 2000 based on
your agreement to pay certain amounts as set forth below. You will have complete
and  unrestricted  access to, control over, and use of the cash proceeds of each
payment. Any earnings derived from the payments are solely for your benefit. You
are  under no  obligation  whatsoever  to  deposit  such  proceeds  in escrow or
otherwise  to  segregate  such  amounts to secure  your  obligations  under this
agreement or for any other purpose.  No limit exists on your authority to invest
these proceeds. We do not intend that the payments will be treated as loans from
us to you,  and you will not owe any  interest  with  respect  to such  payments
unless,  and only to the extent that, a repayment  obligation should arise under
the terms of this letter agreement.

     If it is  determined  that the Bonus Payment  exceeds the actual  incentive
bonus you earned in respect of 2000 under the 2000 Plan as determined  under the
terms of 2000 Plan,  such excess will be paid to us by you within 30 days of our
determination of the actual incentive bonus earned for 2000.

     Although  we  have no  reason  to  believe  that  the  merger  will  not be
completed, nevertheless, if the merger is not completed and the merger agreement
is terminated for any reason, you agree to pay us an amount equal to the sum of:
(i) the  Transition  Payment,  (ii) the  Merger  Bonus,  and (iii)  the  Warrant
Payment.  You must pay to us 60% of the  aggregate  amount owed to us under this
paragraph  no later than the  earlier of (x)  December  31,  2001 or (y) 30 days
after the date the merger  agreement is  terminated.  The  remaining 40% will be
payable as follows:  (a) on the first day of each month  following  the month in
which the merger  agreement is  terminated  through  December 1,  200[1][2],  an
amount  equal to 25% of your gross  monthly  compensation  will be due,  payable
through payroll deduction on each pay day during the month, which amount will be
applied  first to accrued  but  unpaid  interest  and any  balance to the unpaid
amount under this  paragraph,  and (b) on December 31,  200[1][2]  all remaining
unpaid  amounts  under  this  paragraph  together  with all  accrued  but unpaid
interest will be due and payable.

     You acknowledge that notwithstanding your receipt of the Transition Payment
and Merger Bonus on or before  December 31, 2000,  you must still satisfy all of
the  conditions to earning those amounts under your  employment  agreement  with
respect to the Transition Payment and the terms of the Merger Bonus with respect
to the Merger  Bonus.  If (a) the merger is  completed,  you fail to satisfy any
condition to earning your  Transition  Payment or Merger Bonus or both,  and you
are not otherwise  entitled to retain the Transition Payment or Merger Bonus, as
applicable,  or (b) your  employment  with us terminates for any reason prior to
the closing of the merger,  you agree to pay to us an amount equal to the sum of
the unearned  Transition Payment, if any, and the unearned Merger Bonus, if any.
Within 30 days after the date you fail to satisfy any  condition  under (i) your
employment agreement in respect of the Transition Payment, you must pay to us an
amount equal to the Transition Payment,  and (ii) the terms of the Merger Bonus,
you must pay to us an amount equal to the Merger Bonus.
<PAGE>

     All amounts due under this letter agreement will bear interest at the short
term Applicable  Federal Rate as prescribed under the Internal Revenue Code from
time to time,  but in no event in excess of the  maximum  legal rate of interest
(the  "Applicable  Federal Rate").  You may pay any or all amounts you owe under
this letter agreement at any time without penalty or premium. If at any time you
fail to make any of the  payments  owed to us under this  letter  agreement  the
interest rate shall increase to the Applicable  Federal Rate,  plus 2.5 percent,
per  annum,  but in no event in excess of the  maximum  legal  rate of  interest
("Default  Rate").  You  authorize us to deduct these  payments from your normal
salary and other  compensation  payments.  If for any reason your  employment is
terminated,  notwithstanding  any  provision  of this  letter  agreement  to the
contrary,  any remaining unpaid amounts owed under this letter agreement will be
due and payable on the date your employment is terminated; provided, however, if
you are entitled to any severance  payment in connection with the termination of
your employment,  we will forebear from pursuing  immediate payment of a portion
of the  aggregate  amounts  owed  by you  under  this  letter  agreement  (after
including an additional  amount for  continuing  interest  accrual) equal to the
aggregate  severance  payments  owed by us to you from  time to time  which  are
available to satisfy such  obligation,  with such severance  payments  remaining
subject to our offset and other  rights.  If at any time you fail to make any of
the  payments  owed to us under this letter  agreement  (even if  Fairfield  has
agreed to forebear from enforcing a "Payment Default", as hereinafter provided),
you hereby  assign to us all proceeds you receive upon the sale of any shares of
(a) any  restricted  stock  awarded  to you by us or (b) our  common  stock  you
receive upon exercise of any of your options or warrants. We will have the right
to offset  any  amounts  owed to us under  this  letter  agreement  against  any
severance or change of control  payments or any other amounts  payable to you by
us or our  affiliates  under your  employment  agreement  or  otherwise  if your
employment  is  terminated  or if you have failed to make any payment under this
letter  agreement  (even if Fairfield  has agreed to forebear  from  enforcing a
"Payment Default"). Except as provided in the second following sentence, failure
to make any payment  owed under this  agreement (a "Payment  Default")  shall be
deemed to constitute "cause" under your employment agreement and under any other
plan or agreement. The foregoing deduction and offset rights shall not limit any
other legal or  equitable  remedy  available  to us. If the reason for a Payment
Default on  December  31,  2002 is solely  due to a  shortfall  of liquid  funds
reasonably  available to you (from whatever source) in an amount no greater than
an amount of refund  being  withheld  by the IRS  relating  to a refund  claimed
(under a reasonable, good faith filing position) on your 2001 federal income tax
return or amended 1999 or 2000 federal  income tax return,  by reason of the IRS
contesting the  deductibility of the repayments you made to Fairfield in 2001 (a
"Refund  Dispute"),  then (a)  Fairfield  will  forebear from claiming a Payment
Default,  so long as no  other  default  or  failure  to make a  payment  exists
hereunder,  (b) such event shall not  constitute  "cause" under your  employment
agreement  and under any other plan or agreement  and (c) the Default Rate shall
not apply to the amount at issue in connection with such Refund Dispute, in each
case, so long as all three of the following  conditions are met, and continue to
be met during the existence of the Refund Dispute:

     1. You promptly provide Fairfield with such documents  (including copies of
all  correspondence,  notices,  filings,  briefs and other  papers  received  or
submitted  by you or the IRS with the IRS,  the Tax  Court or any  other  court,
relating to the Refund  Dispute) as may
<PAGE>

reasonably be requested to substantiate the circumstances  surrounding,  and the
ongoing status of, the Refund Dispute;

     2. You  (joined by your wife,  in the case of a joint  return)  assign,  by
January 10, 2003, your right to receive the amount of the refund relating to the
Refund  Dispute (the  "Refund")  to  Fairfield,  in such form as  Fairfield  may
reasonably require; and

     3. You  diligently  pursue the IRS for payment of the  Refund,  and provide
evidence of your  actions in such  regards to  Fairfield  as your  Refund  claim
progresses.

     If and when the  Refund is  received,  it shall be  applied to your debt to
Fairfield,  in the manner  provided  herein.  Pending  the outcome of the Refund
Dispute,  you will  nevertheless  continue to be obligated to make payments from
and after December 31, 2002, until the remaining unpaid amount, plus interest at
the  Applicable  Federal Rate,  is paid in full,  with an amount equal to 25% of
your gross monthly  compensation  continuing to be due,  payable through payroll
deduction  on each pay day  during  the month,  with  payments  to be applied to
interest and principal in the same manner  provided  earlier in this  agreement.
The existence of the Refund  Dispute shall not postpone your  obligation to make
repayment if your  employment with Fairfield  terminates for any reason.  If you
are  unsuccessful  in your Refund claim,  it shall not effect your obligation to
repay any amounts remaining owed to Fairfield hereunder.

     You  will  reimburse  us  for  any  costs,  including  without  limitation,
reasonable  attorneys' fees and  disbursements,  we incur to enforce this letter
agreement.  If you fail to make any of the payments under this letter agreement,
upon 30 days'  written  notice,  we may demand  full  payment  of all  remaining
amounts due unless  during that 30-day period you cure any payment you failed to
make, together with all accrued interest on that payment at the Default Rate. If
you cure all unpaid  amounts in that 30-day  period,  your  payment  obligations
shall  continue as if no default  had  occurred  and shall bear  interest at the
Applicable  Federal  Rate  (unless you fail to make any other  payment).  In the
event  you  fail to cure any  such  payment  default  after  payment  in full is
demanded, all remaining amounts owed to us and accrued and unpaid interest shall
bear  interest  at the  Default  Rate until paid in full.  You hereby  waive any
demand,  presentment,  or other notice that may otherwise be required  except as
expressly set forth in this letter  agreement.  This agreement shall be governed
by the laws of the State of Florida  without regard to principles of conflict of
laws of that state.


<PAGE>


     Please  confirm  your  acceptance  of these terms by  countersigning  where
indicated below and returning this letter agreement to us.

                                       Sincerely,

                                       FAIRFIELD COMMUNITIES, INC.


                                       By:
                                           --------------------------------
                                               Executive Vice President


ACKNOWLEDGED AND AGREED:


---------------------------
[Employee]