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"), XXXXXXXXX FAMILY, LLC, an
Arkansas limited liability company ("LLC"), XXXX XXXXXXXXX, C. XXXXXXX
XXXXXXXXX, XX. and APEX MARKETING, INC., an Arkansas corporation ("Apex").
WHEREAS, Fairfield, Merger Sub, Xxxx Xxxxxxxxx, C. Xxxxxxx Xxxxxxxxx,
Xx., 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,
00000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000, 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. Xxxxxxx Xxxxxxxxx, Xx. 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
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
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.
IN WITNESS WHEREOF, Fairfield, Merger Sub, Apex and LLC have caused
this Amendment to be signed by their respective officers thereunto duly
authorized and Xxxx Xxxxxxxxx and C. Xxxxxxx Xxxxxxxxx, Xx. have signed this
Amendment, all as of the date first written above.
FAIRFIELD COMMUNITIES, INC.
By: /s/ Xxxxxxx X. Xxxxx, Xx.
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Xxxxxxx X. Xxxxx, Xx., Senior Vice President
FA, Inc.
By: /s/ Xxxxxxx X. Xxxxx, Xx.
---------------------------------------------
Xxxxxxx X. Xxxxx, Xx., Senior Vice President
APEX MARKETING, INC.
By: /s/ C. Xxxxxxx Xxxxxxxxx, Xx.
--------------------------------------------
C. Xxxxxxx Xxxxxxxxx, Xx., President
/s/Xxxx X. Xxxxxxxxx
--------------------------------------------
Xxxx X. Xxxxxxxxx
/s/ C. Xxxxxxx Xxxxxxxxx, Xx.
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C. Xxxxxxx Xxxxxxxxx, Xx.
XXXXXXXXX FAMILY, LLC
By: /s/Xxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxxxxx, President
