AMENDMENT NO. 2 TO
                          AGREEMENT AND PLAN OF MERGER


     THIS  AMENDMENT NO. 2 TO AGREEMENT AND PLAN OF MERGER is entered into as of
December  3, 1997 (this  "Amendment"),  among  FAIRFIELD  COMMUNITIES,  INC.,  a
Delaware  corporation  ("Fairfield"),  FA, Inc., an Arkansas  Corporation  and a
wholly owned subsidiary of Fairfield ("Merger Sub"),  FLEMISTER FAMILY, LLC, an
Arkansas  limited  liability  company  ("LLC"),   CARL  FLEMISTER,   C.  WENDELL
FLEMISTER, JR. and APEX MARKETING, INC., an Arkansas corporation ("Apex").

         WHEREAS,  Fairfield,  Merger Sub, Carl Flemister, C. Wendell Flemister,
Jr., Apex and LLC are parties to that certain Agreement and Plan of Merger dated
as of October 22, 1997, as amended by that certain  Amendment No. 1 to Agreement
and Plan of  Merger  dated as of  October  31,  1997 (as  amended,  the  "Merger
Agreement"); and

         WHEREAS,  the  parties  desire to amend  the  Merger  Agreement  to set
November  26,  1997 as the  date  on  which  the  Closing  Price  Per  Share  is
determined, to provide for additional Holdback Shares and to provide for certain
payments to Apex from certain of its shareholders prior to closing.

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

1.  Section 1.2 of the Merger  Agreement  is hereby  amended in its  entirety as
follows:

         The closing of the Merger (the  "Closing") will take place at 1:30 p.m.
         on December 3, 1997 (the "Closing Date"),  at the offices of Fairfield,
         11001  Executive  Center Drive,  Little Rock,  Arkansas  72211,  unless
         another  date,  time or place is  agreed  to in  writing  by all of the
         parties hereto.

2. The second  sentence  of Section  2.1(a) of the  Merger  Agreement  is hereby
amended in its entirety as follows:

         The total  number of shares of Fairfield  Common Stock  included in the
         Exchanged  Shares  will be equal to  $6,750,000  divided by the closing
         sale price per share of  Fairfield  Common Stock as reported in the New
         York Stock  Exchange  Composite  Transaction  Tape on November 26, 1997
         ($46 5/16 per share) (the "Closing Price Per Share"), such number being
         145,749 shares of Fairfield Common Stock.

3. The final  sentence of Section 2.2 of the Merger  Agreement is hereby amended
in its entirety as follows:

         Fairfield  shall  deliver to C. Wendell  Flemister,  Jr. a  certificate
         representing  66,208  shares  of  Fairfield  Common  Stock and to LLC a
         certificate  representing  54,170 shares of Fairfield  Common Stock. Of
         the remainder of the aggregate  shares the Shareholders are 
<PAGE>

          entitled to receive under this Section 2.2;  14,575 share of Fairfield
          Common Stock (the  "General  Holdback  Shares")  and 10,796  shares of
          Fairfield Common Stock (the "Tax Holdback  Shares,"  together with the
          General  Holdback  Shares,  the  "Holdback  Shares")  shall be held in
          escrow and  delivered  in  accordance  with Section 5.3 and the escrow
          agent  (the  "Escrow  Agreement").  The Tax  Holdback  Shares  and the
          General   Holdback  Shares  shall  be  deposited  in  sub-accounts  in
          accordance with the Shareholders'  Apex Stock Percentages  pursuant to
          the terms of the Escrow Agreement.

4. The following is hereby added at the end of Section 4.2:

          At or prior to Closing,  the  shareholders  shall  contribute  to Apex
          $34,313.88 that was expended by Apex in relation to the Wattensaw Land
          Company.

5. Section  5.3(a) of the Merger  Agreement is hereby amended in its entirety as
follows:

         (a) Indemnity.  Shareholders,  severally  (each in proportion to his or
         its Apex Stock  Percentage),  and not jointly,  agree to indemnify  and
         hold Fairfield 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
         Apex) of Fairfield  (collectively,  "Fairfield  Indemnifiable Damages")
         from or arising our of (i) any breach of a  representation  or warranty
         made by any  Shareholder or Apex pursuant to this  Agreement,  (ii) any
         breach of the covenants or agreements  made by any  Shareholder or Apex
         pursuant to this  Agreement,  (iii) any  inaccuracy in any  certificate
         delivered by any Shareholder or Apex pursuant to this  Agreement,  (iv)
         notwithstanding  any disclosure by  Shareholders  to Fairfield prior to
         Closing,  any allocation of contributions  to the Apex Marketing,  Inc.
         Cash or Deferred  Profit  Sharing  Plan (the "Apex Plan") made prior to
         Closing  that  were  not  made in  accordance  with  the  Apex  Plan or
         applicable laws,  rules,  regulations or orders, or any other violation
         or  (v)  Apex's  failure  to  make  any  filing  with  or to  make  any
         remittance,  payment  or  withholding  to the  State of  Missouri  with
         respect  to  Apex's   operations   prior  to  Closing   ("Missouri  Tax
         Liabilities").  If the Closing occurs, (i) the maximum amount for which
         Shareholders may be liable for  indemnification  hereunder,  other than
         the amount for Missouri Tax Liabilities, shall not exceed the aggregate
         amount of the value of the General  Holdback Shares at the Closing Date
         and the maximum amount payable by each Shareholder shall not exceed the
         value of the General  Holdback Shares deposited by that Shareholder and
         (ii) the  maximum  amount  for which  Shareholders  may be  liable  for
         indemnification in respect of Missouri Tax Liabilities shall not exceed
         the  aggregate  amount of the value of the Tax  Holdback  Shares at the
         Closing Date and the maximum amount payable by each  Shareholder  shall
         not  exceed  the value of the Tax  Holdback  Shares  deposited  by that
         Shareholder.  With  respect  to  items  (iv) and (v)  alone,  Fairfield
         Indemnifiable Damages will include without limitation any contributions
         to the Apex Plan or any remittances or withholdings  owned to the State
         of  Missouri  and any  federal,  state or other  taxes and all  related
         interest or  penalties,  together with any and all fees and expenses of
         any tax,  legal  pension,  accounting  or other  advisors  incurred  in
         connection with any 

<PAGE>

          audit,  amendment or any return,  compliance  program or settlement of
          any such  matters and any related  filing,  user or review fees of any
          governmental entity. The shareholders agree that Fairfield and/or Apex
          shall be entitle to submit  matters  relating  to the Apex Plan to the
          Voluntary  Compliance  Resolution  Program  of  the  Internal  Revenue
          Service.

6.       Section 5.3(b)(i) is hereby amended in its entirety as follows:

         Fairfield shall give written notice (the  "Fairfield  Claim Notice") to
         Shareholders  that  Fairfield  believes  that it has the right to apply
         either General Holdback Shares or Tax Holdback Shares,  as appropriate,
         to satisfy a claim for Fairfield  Indemnifiable  Damages. The Fairfield
         Claim  Notice  shall  include  all of the  information  required by the
         Escrow  Agreement and shall specify whether  General  Holdback Share or
         Tax Holdback Shares are to be applied.

7.       Section 5.3(e) is hereby amended in its entirety as follows:

         If no claim by Fairfield  for  indemnification  is  outstanding  on the
         one-year  anniversary of the Closing, all General Holdback Shares shall
         be  released by the Escrow  Agent as provided in the Escrow  Agreement.
         Unless  otherwise  released in accordance  with the terms of the Escrow
         Agreement,  Tax Holdback Shares shall be held by the Escrow Agent until
         the earlier of the  resolution  of all issues  relating to Missouri Tax
         Liabilities or the expiration of all applicable  statute of limitations
         relating to  Missouri  Tax  Liabilities.  In other  circumstances,  the
         release of General  Holdback  Shares or Tax  Holdback  Shares  shall be
         determined in accordance with the terms of the Escrow Agreement.

8.       The following is hereby added at the end of Section 5.3(f):

         Fairfield  shall  have  the sole  right to  negotiate  and  settle  all
         Missouri  Tax  Liabilities  and  apply  the  appropriate  number of Tax
         Holdback  Shares in  satisfaction  of  Fairfield  Indemnifiable  Claims
         related thereto.

9.       This  Amendment  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 signed by each of the
         parties and delivered to the other parties.

10.      Except  as  expressly  amended  by  this  Agreement,  the  Merger
         Agreement continues in full force and effect.

11.      This Amendment shall be governed by, and construed in accordance  with,
         the laws of the State of  Arkansas,  regardless  of the laws that might
         otherwise  govern  under  applicable  principles  of  conflicts of laws
         thereof.
<PAGE>

         IN WITNESS  WHEREOF,  Fairfield,  Merger Sub,  Apex and LLC have caused
this  Amendment  to be  signed  by  their  respective  officers  thereunto  duly
authorized  and Carl  Flemister and C. Wendell  Flemister,  Jr. have signed this
Amendment, all as of the date first written above.

                                 FAIRFIELD COMMUNITIES, INC.

                                By:  /s/ Clayton G. Gring, Sr.
                                --------------------------------------------
                                 Clayton G. Gring, Sr., Senior Vice President


                                 FA, Inc.

                                By:  /s/ Clayton G. Gring, Sr.
                                ---------------------------------------------
                                Clayton G. Gring, Sr., Senior Vice President


                                 APEX MARKETING, INC.

                                By: /s/ C. Wendell Flemister, Jr.
                                --------------------------------------------
                                C. Wendell Flemister, Jr., President

                                 /s/Carl W. Flemister
                                --------------------------------------------
                                      Carl W. Flemister

                                 /s/ C. Wendell Flemister, Jr.
                                -------------------------------------------
                                     C. Wendell Flemister, Jr.


                                    FLEMISTER FAMILY, LLC

                                By: /s/Carl W. Flemister
                                -------------------------------------------
                                Carl W. Flemister, President