Exhibit 10.3
REDEMPTION AGREEMENT
          This REDEMPTION AGREEMENT (this “Agreement”), dated as of July 21,
2011, is entered into by and between Cloobeck Diamond Parent, LLC, a Nevada
limited liability company (“CDP”), and Diamond Resorts Parent, LLC, a Nevada
limited liability company (the “Company”). Capitalized terms used herein and not
otherwise defined herein have the meanings given to such terms in Article VI
below.
          WHEREAS, contemporaneously herewith, the Company is entering into that
certain Securities Purchase Agreement, dated as of the date hereof (the
“Wellington Agreement”) with The Hartford Growth Opportunities Fund, Hartford
Growth Opportunities HLS Fund, Quissett Investors (Bermuda) L.P., Quissett
Partners, L.P., The Hartford Capital Appreciation Fund, Bay Pond Partners, L.P.
and Bay Pond Investors (Bermuda) L.P. (collectively, “Wellington”), pursuant to
which Wellington is purchasing Common Units of the Company (“Common Units”);
          WHEREAS, in connection with the issuance and sale of the Common Units,
the Company desires to purchase and redeem 34.735 Common Units of the Company
from CDP, and CDP desires to sell such securities to the Company, each on the
terms and conditions set forth herein;
          NOW, THEREFORE, in consideration of the mutual covenants, agreements
and understandings herein contained, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
REDEMPTION OF COMMON UNITS
     1.01. Redemption of Common Units. Subject to the terms and conditions of
this Agreement, including the deliveries set forth in Section 2.02, as of the
date hereof, the Company hereby redeems from CDP, and CDP hereby sells to the
Company, 34.735 Common Units for an aggregate cash purchase price of
$16,353,509.57 (the “Purchase Price”).
ARTICLE II
CLOSING
     2.01. Closing. The consummation of the transactions contemplated by this
Agreement in connection with the redemption of the 34.735 Common Units (the
“Closing”) will take place at the offices of Katten Muchin Rosenman LLP, 525 W.
Monroe Street, Suite 1900, Chicago, Illinois (“Katten Muchin”) or such other
location as mutually agreed upon by the parties, on the date hereof (the
“Closing Date”).

 

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     2.02. Deliveries by the Company to CDP at the Closing. At the Closing:

  (a)   Purchase Price. The Company shall deliver to CDP the Purchase Price, by
wire transfer of immediately available funds to the bank account designated by
CDP in accordance with the wire transfer instructions provided by CDP to the
Company prior to the date hereof.

  (b)   Representations and Covenants. The representations and warranties made
by the Company in Article III shall be true and correct.

     2.03. Deliveries by CDP to the Company at the Closing. At the Closing:

  (a)   Representations and Covenants. The representations and warranties made
by CDP in Article IV shall be true and correct.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
          The Company represents and warrants to CDP as of the date hereof as
follows:
     3.01. Organization and Authority. The Company is a limited liability
company duly organized, validly existing and in good standing under the Laws of
the State of Nevada. The Company has all requisite power and authority to enter
into and perform its obligations under this Agreement and the other agreements
and instruments that the Company is executing and delivering in connection with
the transactions contemplated by this Agreement.
     3.02. Authorization; Binding Effect. The execution, delivery and
performance by the Company of this Agreement, and the consummation and
performance by the Company of the transactions contemplated hereby, have been
duly authorized by all necessary limited liability company action of the
Company. This Agreement has been duly executed and delivered at the Closing,
constitutes a legal, valid and binding obligation of the Company, enforceable in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar Laws relating
to or affecting the rights of creditors generally and by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at Law). All proceedings or actions required to be taken
by the Company relating to the execution and delivery of this Agreement at the
Closing, and to the consummation and performance of the transactions
contemplated hereby have been taken.
     3.03. No Conflicts; No Consents. The execution, delivery or performance of
this Agreement, and the consummation by the Company of the transactions
contemplated hereby, and compliance by the Company with the terms and provisions
hereof, will not (i) conflict with the Organizational Documents, or
(ii) constitute a violation by the Company of any Law applicable to the Company
or its properties or assets. No permit, authorization, consent or approval of or
by, or any notification of or filing with, any Person (governmental or private)
is required by the Company in connection with the execution, delivery and
performance of this Agreement or the consummation by the Company of the
transactions contemplated hereby (other than such notifications or filings
required under applicable federal or state securities Laws, if any).

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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CDP
          CDP represents and warrants to the Company as of the date hereof as
follows:
     4.01. Organization and Authority. CDP is a limited liability company duly
organized, validly existing and in good standing under the Laws of the State of
Nevada. CDP has all requisite power and authority to enter into and perform its
obligations under this Agreement and the other agreements and instruments that
CDP is executing and delivering in connection with the transactions contemplated
by this Agreement.
     4.02. Authorization; Binding Effect. The execution, delivery and
performance by CDP of this Agreement at the Closing, and the consummation and
performance by CDP of the transactions contemplated hereby, have been duly
authorized by all necessary limited liability company action of CDP. This
Agreement has been duly executed and delivered at the Closing, constitutes a
legal, valid and binding obligation of CDP, enforceable in accordance with their
respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or affecting the rights of creditors generally and by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law). All proceedings or actions required to be taken
by CDP relating to the execution and delivery of this Agreement and to the
consummation and performance of the transactions contemplated hereby have been
taken.
     4.03. No Conflicts; No Consents. The execution, delivery or performance of
this Agreement, and the consummation by CDP of the transactions contemplated
hereby, and compliance by CDP with the terms and provisions hereof, will not
(i) conflict with CDP’s articles of organization or operating agreement, or (ii)
constitute a violation by CDP of any Law applicable to CDP. No permit,
authorization, consent or approval of or by, or any notification of or filing
with, any Person (governmental or private) is required by CDP in connection with
the execution, delivery and performance of this Agreement or the consummation by
CDP of the transactions contemplated hereby (other than such notifications or
filings required under applicable federal or state securities laws, if any).
     4.04. Title to Purchased Units. CDP is the beneficial and record owner of
the Common Units that it is selling pursuant to this Agreement, free and clear
of any liens, claims, charges, restrictions, options, preemptive rights,
mortgages, hypothecations, assessments, pledges, encumbrances or security
interests of any kind or nature whatsoever (collectively, “Liens”). Upon
purchase and payment therefore and delivery to the Company in accordance with
the terms of this Agreement, the Company will acquire good and valid title to
such Common Units being redeemed hereunder, free and clear of any Liens
whatsoever.
ARTICLE V
FURTHER AGREEMENTS OF THE PARTIES
     5.01. Transaction Fees and Expenses. The Company agrees to pay the fees and
expenses of CDP or its Affiliates (including without limitation legal fees and
expenses) incurred

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in connection with the negotiation and preparation of this Agreement and the
consummation of the transactions contemplated hereby. Concurrently with the
Closing, within five (5) days after demand by CDP, the Company will reimburse
CDP for the fees and expenses incurred by CDP in connection with such Closing
and the transactions contemplated hereby, which have not been previously paid by
the Company.
     5.02. Survival. All of the provisions of this Agreement shall survive the
Closing. The representations and warranties of the Company shall not be affected
by any knowledge or investigation of CDP.
     5.03. Consent and Waiver. In connection with the execution and delivery of
this Agreement, CDP hereby consents to (i) the transactions consummated at the
Closing and (ii) the transactions contemplated by the Transaction Agreements.
CDP hereby irrevocably waives any and all breaches, violations, conflicts,
defaults, and events of default under the Registration Rights Agreement (prior
to its amendment and restatement in connection with the Closing), the LLC
Agreement (prior to its amendment and restatement in connection with the
Closing), the Securityholders Agreement (prior to its amendment and restatement
in connection with the Closing), and any other agreement between the Company and
CDP which is in effect as of the date hereof, but only as such breaches,
violations, conflicts, defaults, and events of default may occur in connection
with the consummation of the transactions at the Closing under the Transaction
Agreements
ARTICLE VI
DEFINITIONS
          For the purposes of this Agreement, the following terms have the
meanings set forth below:
          “Affiliate” of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where “control” means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, contract or otherwise.
          “Agreement” has the meaning set forth in the Preamble to this
Agreement.
          “Articles of Organization” means the Company’s Articles of
Organization filed with the Nevada Secretary of State on March 28, 2007.
          “CDP” means Cloobeck Diamond Parent, LLC, a Nevada limited liability
company.
          “Closing” has the meaning set forth in Section 2.01.
          “Closing Date” has the meaning set forth in Section 2.01.
          “Company” has the meaning set forth in the Preamble to this Agreement.

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          “Common Units” has the meaning set forth in the Recitals to this
Agreement.
          “Governmental Authority” means federal, state, county, or local
government, political subdivision or governmental, regulatory or administrative
authority, body, agency, board, bureau, commission, department, instrumentality,
official or court.
          “Katten Muchin” has the meaning set forth in Section 2.01.
          “Law” means any statute, law, code, ordinance, regulation, rule,
order, judgment, writ, injunction, act or decree of any Governmental Authority.
          “Lien” has the meaning set forth in Section 4.04.
          “LLC Agreement” means that certain Fourth Amended and Restated
Operating Agreement of the Company, dated as of the date hereof, by and among
CDP, 1818 Partners, LLC, DRP Holdco, LLC, Silver Rock Financial LLC, IN — FP1
LLC, BDIF LLC and CM — NP LLC, The Hartford Growth Opportunities Fund, Hartford
Growth Opportunities HLS Fund, Quissett Investors (Bermuda) L.P., Quissett
Partners, L.P., The Hartford Capital Appreciation Fund, Bay Pond Partners, L.P.
and Bay Pond Investors (Bermuda) L.P.
          “Organizational Documents” means the Articles of Organization and the
LLC Agreement.
          “Purchase Price” has the meaning set forth in Section 1.01.
          “Person” means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
          “Registration Rights Agreement” means that certain Second Amended and
Restated Registration Rights Agreement, dated as of the date hereof, by and
among the Company, CDP, 1818 Partners, LLC, DRP Holdco, LLC, Silver Rock
Financial LLC, IN — FP1 LLC, BDIF LLC and CM — NP LLC, The Hartford Growth
Opportunities Fund, Hartford Growth Opportunities HLS Fund, Quissett Investors
(Bermuda) L.P., Quissett Partners, L.P., The Hartford Capital Appreciation Fund,
Bay Pond Partners, L.P. and Bay Pond Investors (Bermuda) L.P.
          “Securityholders Agreement” means that certain Fourth Amended and
Restated Securityholders Agreement, dated as of the date hereof, by and among
the Company, CDP, 1818 Partners, LLC, DRP Holdco, LLC, Silver Rock Financial
LLC, IN — FP1 LLC, BDIF LLC and CM — NP LLC, The Hartford Growth Opportunities
Fund, Hartford Growth Opportunities HLS Fund, Quissett Investors (Bermuda) L.P.,
Quissett Partners, L.P., The Hartford Capital Appreciation Fund, Bay Pond
Partners, L.P. and Bay Pond Investors (Bermuda) L.P.
          “Transaction Agreements” shall mean the LLC Agreement, the
Securityholders Agreement, the Registration Rights Agreement, and the Wellington
Agreement.

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ARTICLE VII
MISCELLANEOUS
     7.01. Entire Agreement. This Agreement (together with the Schedules hereto
and the documents referred to herein) contains, and is intended as, a complete
statement of all of the terms of the arrangements between the parties with
respect to the matters provided for herein, and supersedes any previous
agreements, understandings, representations and warranties, whether written or
oral, between the parties with respect to those matters.
     7.02. Remedies.

  (a)   In the event of any actual or threatened breach of any of the provisions
of this Agreement, the parties hereto agreement that the non-breaching party may
avail itself of any statutory, equitable, or common law remedy.

  (b)   Each of the parties hereto recognizes and acknowledges that a breach by
it of any covenants or agreements contained in this Agreement will cause the
other party to sustain damages for which it would not have an adequate remedy at
law for money damages, and therefore each of the parties hereto agrees that in
the event of any such breach the aggrieved party shall be entitled to the remedy
of specific performance of such covenants and agreements and injunctive and
other equitable relief in addition to any other remedy to which it may be
entitled, at law or in equity.

  (c)   All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise of any thereof by any party shall not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party.

     7.03. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Nevada, without effect to the
principles of conflicts of law thereof.
     7.04. Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY WAIVES, TO
THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LITIGATION IN ANY
COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT OR
ANY ANCILLARY AGREEMENT OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION
OR ENFORCEMENT THEREOF.
     7.05. Venue; Submission to Jurisdiction. ANY AND ALL SUITS, LEGAL ACTIONS
OR PROCEEDINGS ARISING OUT OF THIS AGREEMENT SHALL BE BROUGHT ONLY IN A STATE OR
FEDERAL COURT IN AND FOR LAS VEGAS, NEVADA AND EACH PARTY TO THIS AGREEMENT
HEREBY SUBMITS TO AND ACCEPTS THE EXCLUSIVE JURISDICTION OF SUCH COURTS FOR THE
PURPOSE OF SUCH SUITS, LEGAL ACTIONS OR PROCEEDINGS. TO THE FULLEST EXTENT

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PERMITTED BY LAW, EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION
WHICH HE OR IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OR ANY SUCH
SUIT, LEGAL ACTION OR PROCEEDING IN SUCH COURT AND HEREBY FURTHER WAIVES ANY
CLAIM THAT ANY SUIT, LEGAL ACTION OR PROCEEDING BROUGHT IN SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
     7.06. Amendment; Waiver. No provision of this Agreement may be amended,
waived or modified except by an instrument or instruments in writing signed by
all the parties hereto. The failure of any party hereto to enforce at any time
any provision hereof shall not be construed to be a waiver of such provision,
nor in any way to affect the validity hereof or any part hereof or the right of
any party thereafter to enforce each and every such provision.
     7.07. Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered personally, mailed
by registered mail, return receipt requested, sent by documented overnight
delivery service or, to the extent receipt is confirmed, by telecopy to the
parties at the following addresses (or to such other address as a party may have
specified by notice given to the other party pursuant to this provision):
To the Company:
Diamond Resorts Parent, LLC
10600 West Charleston Boulevard
Las Vegas, NV 89135
Attention: Stephen J. Cloobeck and David F. Palmer
Facsimile: (702) 798-8840
with a copy, which shall not constitute notice, to:
Katten Muchin Rosenman LLP
525 West Monroe Street
Suite 1900
Chicago, IL 60661
Attention: Howard S. Lanznar
Facsimile: (312) 902-1061
To CDP:
Cloobeck Diamond Parent, LLC
10600 West Charleston Boulevard
Las Vegas, NV 89135
Attention: Stephen J. Cloobeck and David F. Palmer
Facsimile: (702) 798-8840
with a copy, which shall not constitute notice, to:
Katten Muchin Rosenman LLP
525 West Monroe Street
Suite 1900
Chicago, IL 60661
Attention: Howard S. Lanznar
Facsimile: (312) 902-1061

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     7.08. Severability. If any provision of this Agreement is held by any court
of competent jurisdiction to be illegal, invalid or unenforceable, such
provision shall be of no force and effect, but the illegality, invalidity or
unenforceability shall have no effect upon and shall not impair the
enforceability of any other provision of this Agreement.
     7.09. Assignment and Binding Effect. None of the parties hereto may assign
any of its rights or delegate any of its duties under this Agreement without the
prior written consent of the others, except that CDP may assign its rights to
any Person who purchases all or substantially all of the assets of CDP, and such
Person(s) shall assume the obligations of CDP hereunder. All of the terms and
provisions of this Agreement shall be binding on, and shall inure to the benefit
of, the parties hereto and their respective legal successors and permitted
assigns of the parties.
     7.10. No Benefit to Others. The representations, warranties, covenants and
agreements contained in this Agreement are for the sole benefit of the parties
hereto and their respective successors and permitted assigns and they shall not
be construed as conferring and are not intended to confer any rights on any
other Persons.
     7.11. Counterparts. This Agreement may be executed in two (2) or more
original, facsimile or PDF counterparts, each of which shall be deemed an
original, and each party thereto may become a party hereto by executing a
counterpart hereof. This Agreement and any counterpart so executed shall be
deemed to be one and the same instrument. Additionally, to the extent receipt is
confirmed, this Agreement may be executed and sent by telecopy with the original
to follow by documented overnight delivery service.
     7.12. Interpretation. Article titles, headings to sections and the table of
contents are inserted for convenience of reference only and are not intended to
be a part or to affect the meaning or interpretation hereof. The Schedules
referred to herein shall be construed with and as an integral part of this
Agreement to the same extent as if they were set forth verbatim herein. As used
herein, “include”, “includes” and “including” are deemed to be followed by
“without limitation” whether or not they are in fact followed by such words or
words of like import, “writing”, “written” and comparable terms refer to
printing, typing, lithography and other means of reproducing words in a visible
form, references to a Person are also to its successors and permitted assigns,
“hereof”, “herein”, “hereunder” and comparable terms refer to the entirety
hereof and not to any particular article, section or other subdivision hereof or
attachment hereto, references to any gender include references to the plural and
vice versa, references to this Agreement or other documents are as amended or
supplemented from time to time, references to “Article”, “Section” or another
subdivision or to an attachment or “Schedule” are to an article, section or
subdivision hereof or an attachment or “Schedule” hereto, references to
“generally accepted accounting principles” shall mean generally accepted
accounting principles in the United States.

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          The parties hereto have executed this Redemption Agreement as of the
date first written above.

            COMPANY:

DIAMOND RESORTS PARENT, LLC
a Nevada limited liability company
      By:   /s/ David F. Palmer         Name:   David F. Palmer        Title:  
President and Chief Executive Officer        CDP:

CLOOBECK DIAMOND PARENT, LLC
      By:   /s/ Stephen J. Cloobeck         Name:   Stephen J. Cloobeck       
Title:   Sole Manager   

[Signature Page to Redemption Agreement]