exv10w2






Exhibit 10.2




 






REDEMPTION AGREEMENT



by and among



DIAMOND RESORTS PARENT, LLC,



SILVER ROCK FINANCIAL LLC,



IN — FP1 LLC,



BDIF LLC,



CM — NP LLC,



and



DRP HOLDCO, LLC



 





Dated as of July 21, 2011



 









 





TABLE OF CONTENTS






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	ARTICLE I REDEMPTION OF PREFERRED UNITS	 	 	1	 
	 	1.01.	 	 	Redemption of Preferred Units
	 	 	1	 
	ARTICLE II CLOSING	 	 	2	 
	 	2.01.	 	 	Closing
	 	 	2	 
	 	2.02.	 	 	Deliveries by the Company to Guggenheim and the Silver Rock Entities at the Closing
	 	 	2	 
	 	2.03.	 	 	Deliveries by Guggenheim and the Silver Rock Entities to the Company at the Closing
	 	 	3	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY	 	 	4	 
	 	3.01.	 	 	Organization and Authority
	 	 	4	 
	 	3.02.	 	 	Authorization; Binding Effect
	 	 	4	 
	 	3.03.	 	 	No Conflicts; No Consents
	 	 	4	 
	 	3.04.	 	 	Brokers or Finders
	 	 	4	 
	 	3.05.	 	 	Capitalization of the Company and Title to Units
	 	 	5	 
	 	3.06.	 	 	Form S-4
	 	 	5	 
	 	3.07.	 	 	Registration Rights
	 	 	5	 
	 	3.08.	 	 	Offering Exemption
	 	 	5	 
	 	3.09.	 	 	Real Property Holding Company
	 	 	6	 
	 	3.10.	 	 	Investment Company Act
	 	 	6	 
	 	3.11.	 	 	No Bankruptcy
	 	 	6	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF GUGGENHEIM	 	 	6	 
	 	4.01.	 	 	Organization and Authority
	 	 	6	 
	 	4.02.	 	 	Authorization; Binding Effect
	 	 	6	 
	 	4.03.	 	 	No Conflicts; No Consents
	 	 	6	 
	 	4.04.	 	 	Title to Purchased Units
	 	 	7	 
	 	4.05.	 	 	Disclosure
	 	 	7	 
	 	4.06.	 	 	Brokers or Finders
	 	 	7	 
	 	4.07.	 	 	Accredited Investor; Diligence
	 	 	7	 
	 	4.08.	 	 	Investment
	 	 	7	 
	 	4.09.	 	 	Rule 144
	 	 	8	 
	 	4.10.	 	 	No Public Market
	 	 	8	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE SILVER ROCK ENTITIES	 	 	8	 
	 	5.01.	 	 	Organization and Authority
	 	 	8	 
	 	5.02.	 	 	Authorization; Binding Effect
	 	 	8	 
	 	5.03.	 	 	No Conflicts; No Consents
	 	 	8	 







i









 









	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 	5.04.	 	 	Title to Purchased Units
	 	 	9	 
	 	5.05.	 	 	Disclosure
	 	 	9	 
	 	5.06.	 	 	Brokers or Finders
	 	 	9	 
	 	5.07.	 	 	Accredited Investor; Diligence
	 	 	9	 
	 	5.08.	 	 	Investment
	 	 	9	 
	 	5.09.	 	 	Rule 144
	 	 	9	 
	 	5.10.	 	 	No Public Market
	 	 	10	 
	ARTICLE VI FURTHER AGREEMENTS OF THE PARTIES	 	 	10	 
	 	6.01.	 	 	Transaction Fees and Expenses
	 	 	10	 
	 	6.02.	 	 	Consent and Waiver
	 	 	10	 
	ARTICLE VII POST-CLOSING COVENANTS	 	 	10	 
	 	7.01.	 	 	Expenses
	 	 	10	 
	ARTICLE VIII SURVIVAL	 	 	11	 
	 	8.01.	 	 	Survival
	 	 	11	 
	ARTICLE IX DEFINITIONS	 	 	11	 
	ARTICLE X MISCELLANEOUS	 	 	12	 
	 	10.01.	 	 	Entire Agreement
	 	 	12	 
	 	10.02.	 	 	Remedies
	 	 	13	 
	 	10.03.	 	 	Governing Law
	 	 	13	 
	 	10.04.	 	 	Waiver of Jury Trial
	 	 	13	 
	 	10.05.	 	 	Venue; Submission to Jurisdiction
	 	 	13	 
	 	10.06.	 	 	Amendment; Waiver
	 	 	14	 
	 	10.07.	 	 	Notices
	 	 	14	 
	 	10.08.	 	 	Severability
	 	 	15	 
	 	10.09.	 	 	Assignment and Binding Effect
	 	 	15	 
	 	10.10.	 	 	No Benefit to Others
	 	 	15	 
	 	10.11.	 	 	Counterparts
	 	 	16	 
	 	10.12.	 	 	Interpretation
	 	 	16	 
	 	10.13.	 	 	Public Announcements
	 	 	16	 









ii









 





EXHIBITS



Exhibits




	 	 	 

	Exhibit A

	 	Second Amended and Restated Registration Rights Agreement
	Exhibit B

	 	Fourth Amended and Restated Operating Agreement
	Exhibit C

	 	Fourth Amended and Restated Securityholders Agreement






iii









 





REDEMPTION AGREEMENT




          This REDEMPTION AGREEMENT (this “Agreement”), dated as of July 21, 2011, is entered
into by and among DRP Holdco, LLC, a Delaware limited liability company (“Guggenheim”),
Silver Rock Financial LLC, a Delaware limited liability company, IN — FP1 LLC, a Delaware limited
liability company, BDIF LLC, a Delaware limited liability company, and CM — NP LLC, a Delaware
limited liability company (collectively, the “Silver Rock Entities”), 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 IX
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, immediately following the issuance and sale of the Common Units, the Company desires
to redeem all of the issued and outstanding Preferred Units of the Company (the “Preferred
Units”) as follows: (i) the Company desires to redeem from Guggenheim 1,000 Preferred Units,
and Guggenheim desires to sell or contribute such securities to the Company, and (ii) the Company
desires to redeem from the Silver Rock Entities an aggregate of 133.33 Preferred Units, and the
Silver Rock Entities desire to sell or contribute 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 PREFERRED UNITS




     1.01. Redemption of Preferred Units. Subject to the terms and conditions of this Agreement, including the delivery of the
certificates, agreements and other documents set forth in Section 2.02, as of the date
hereof:




	 	(a)	 	the Company hereby redeems from Guggenheim, and Guggenheim
hereby sells or contributes to the Company, 1,000 Preferred Units for an
aggregate cash purchase price of $96,596,101.59 and 23.746 Common Units of the
Company (the “Guggenheim Consideration”).






	 	(b)	 	the Company hereby redeems from the Silver Rock Entities, and
the Silver Rock Entities, individually and not jointly, hereby sell or
contribute to the
Company, an aggregate of 133.33 Preferred Units for an aggregate cash





 









 





	 	 	 	purchase price of $12,103,528.10 and 2.810 Common Units of the Company (the
“Silver Rock Consideration”). The number of Preferred Units sold or
contributed by each Silver Rock Entity, the allocation of the Silver Rock
Consideration among the Silver Rock Entities and the number of Common Units
issued to each Silver Rock entity are each listed on Schedule
1.01(b).





ARTICLE II

CLOSING




     2.01. Closing . The consummation of the transactions contemplated by this Agreement in connection with the
redemption of the 1,133.33 Preferred 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”).



     2.02. Deliveries by the Company to Guggenheim and the Silver Rock Entities at the
Closing. At the Closing:




	 	(a)	 	Guggenheim Consideration. The Company shall deliver to
Guggenheim the cash portion of the Guggenheim Consideration, by wire transfer
of immediately available funds to the bank account designated by Guggenheim in
accordance with the wire transfer instructions set forth on Schedule
2.02(a). The Common Units portion of the Guggenheim Consideration is
reflected in the LLC Agreement.
	 
	 	(b)	 	Silver Rock Consideration. The Company shall deliver
to the Silver Rock Entities the cash portion of the Silver Rock Consideration,
by wire transfer of immediately available funds to the bank account(s)
designated by each Silver Rock Entity in accordance with the wire transfer
instructions set forth on Schedule 2.02(b). The Common Units portion
of the Silver Rock Consideration is reflected in the LLC Agreement.
	 
	 	(c)	 	Representations and Covenants. The representations and
warranties made by the Company in Article III shall be true and
correct.
	 
	 	(d)	 	Officer’s Certificate. The Company shall have
delivered to Guggenheim and each of the Silver Rock Entities copies of each of
the following, in each case certified by an officer of the Company to be in
full force and effect on the date of the Closing:






	 	(i)	 	the Company’s Articles of Organization,
certified by the Secretary of State of the State of Nevada;




2









 












	 	(ii)	 	a good standing certificate with respect to the
Company certified by the Secretary of State of Nevada as of a date not
more than thirty (30) days prior to the Closing; and






	 	(iii)	 	resolutions of the Board of Managers of the
Company authorizing the execution, delivery and performance of this
Agreement and the Transaction Agreements, and the consummation of the
transactions contemplated hereby and thereby, including the redemption
of the Preferred Units at the Closing.






	 	(e)	 	Registration Rights Agreement. The Company,
Guggenheim, CDP, 1818 Partners, LLC, the Silver Rock Entities and Wellington
shall have executed and delivered the Registration Rights Agreement.






	 	(f)	 	Securityholders Agreement. The Company, Guggenheim,
CDP, 1818 Partners, LLC, the Silver Rock Entities and Wellington shall have
executed and delivered the Securityholders Agreement.






	 	(g)	 	LLC Agreement. The Company, Guggenheim, CDP, 1818
Partners, LLC, the Silver Rock Entities and Wellington shall have executed and
delivered the LLC Agreement reflecting, among other things, the issuance and
sale of the Common Units to Wellington pursuant to the Wellington Agreement,
the redemption of 1,133.33 Preferred Units hereunder and the issuance of the
Common Units of the Company as part of the Guggenheim Consideration and Silver
Rock Consideration hereunder.






	 	(h)	 	Wellington Agreement. The Company and Wellington shall
have executed and delivered the Wellington Agreement, and the Company shall
have issued the Common Units to Wellington pursuant thereto.





     2.03. Deliveries by Guggenheim and the Silver Rock Entities to the Company at the
Closing. At the Closing:




	 	(a)	 	Representations and Covenants. The representations and
warranties made by Guggenheim and each of the Silver Rock Entities in
Article IV and Article V, as applicable, shall be true and
correct.






	 	(b)	 	Registration Rights Agreement. Guggenheim and each
Silver Rock Entity shall have each executed and delivered the Registration
Rights Agreement.






	 	(c)	 	Securityholders Agreement. Guggenheim and each Silver
Rock Entity shall have each executed and delivered the Securityholders
Agreement.
	 
	 	(d)	 	LLC Agreement. Guggenheim and each Silver Rock Entity
shall have each executed and delivered the LLC Agreement reflecting, among
other things, the issuance and sale of the Common Units to Wellington pursuant




3









 






	 	 	 	to the Wellington Agreement, the redemption of 1,133.33 Preferred Units
hereunder and the issuance of the Common Units of the Company as part of the
Guggenheim Consideration and Silver Rock Consideration hereunder.





ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY




          The Company represents and warrants to Guggenheim and each Silver Rock Entity 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, the Transaction Agreements 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
Transaction Agreements, and the consummation and performance by the Company of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary limited liability
company action of the Company. This Agreement and the Transaction Agreements have been duly
executed and delivered at the Closing, constitute legal, valid and binding obligations of the
Company, 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 the Company relating to the execution and delivery
of this Agreement and the Transaction Agreements at the Closing, and to the consummation and
performance of the transactions contemplated hereby and thereby have been taken.



     3.03. No Conflicts; No Consents. The execution, delivery or performance of this Agreement or any of the Transaction
Agreements, and the consummation by the Company of the transactions contemplated hereby or thereby,
and compliance by the Company with the terms and provisions hereof or thereof, 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 and the Transaction Agreements, 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).



     3.04. Brokers or Finders. The Company and its officers and agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders’ fees or agents’ commissions or other similar
payment in connection with this Agreement and will indemnify and



4









 




hold Guggenheim harmless from any
such payment alleged to be due by or through the Company as a result of the action of the Company
or its officers or agents.




     3.05. Capitalization of the Company and Title to Units.




	 	(a)	 	Schedule 3.05 sets forth the equity capitalization of
the Company immediately following the Closing.






	 	(b)	 	Other than as set forth on Schedule 3.05, there are no
other holders of equity securities of the Company and no other instruments,
rights, warrants or options exercisable for or convertible into equity
securities of the Company or containing any profit participation features and
there are no other commitments, whether oral or in writing, of any kind, for
the issuance, purchase or exchange of, or for any other right to acquire equity
securities or options, warrants or other securities of the Company. Other than
as set forth in this Agreement, the LLC Agreement, and the Securityholders
Agreement, there are no (x) outstanding obligations of the Company (contingent
or otherwise) to repurchase or otherwise acquire or retire any equity
securities of the Company or any warrants, options or other rights to acquire
its equity securities or (y) voting trusts, proxies or other agreements among
the unitholders of the Company with respect to the voting or transfer of the
Company’s equity securities.






	 	(c)	 	The Common Units are entitled to the rights, restrictions,
privileges and preferences of such securities set forth in the LLC Agreement.
After giving effect to this Agreement, the Common Units to be issued to
Guggenheim and the Silver Rock Entities hereunder have been duly and validly
authorized and issued, and after the consummation of the transactions
contemplated by this Agreement, will be fully paid, nonassessable and subject
to no preemptive rights or restrictions on transfer other than restrictions on
transfer under this Agreement, the Transaction Agreements and applicable
federal and state securities laws.





     3.06. Form S-4. The Form S-4 Registration Statement of DRC on file with the U.S. Securities and Exchange
Commission (the “Form S-4”), not including the sections of such Form S-4 regarding the 12%
Senior Secured Notes exchange offer described therein, complies with
applicable securities laws and accurately presents the business, operations and financial
condition of the Company in all material respects. Other than the Transaction Agreements, there
are no agreements or understandings between Wellington and the Company or its Affiliates.



     3.07. Registration Rights. Except as set forth in the Registration Rights Agreement, the Company has not granted or
agreed to grant any registration rights, including piggyback rights, to any Person or entity with
respect to any of the Company’s equity securities.



     3.08. Offering Exemption. Based in part on the representations contained in Article IV and Article V
hereof, the issuance of the Common Units of the Company as part of the Guggenheim Consideration and
the Silver Rock Consideration hereunder does not violate any



5









 




federal or state securities laws and
will not require registration under the Securities Act or any applicable state securities laws.
The Company and its agents will not take any action hereafter that would cause the loss of such
exemptions.




     3.09. Real Property Holding Company. The Company does not own any United States real property interest within the meaning of
Section 897 of the Internal Revenue Code of 1986, as amended.



     3.10. Investment Company Act. The Company is not an “investment company” or an “affiliated person” thereof or an
“affiliated person” of any such “affiliated person,” as such terms are defined in the Investment
Company Act of 1940, as amended.



     3.11. No Bankruptcy. No order has been made or petition presented for the winding up, insolvency, liquidation or
bankruptcy of the Company.



ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF GUGGENHEIM




          Guggenheim represents and warrants to the Company as of the date hereof, as follows:




     4.01. Organization and Authority. Guggenheim is a limited liability company duly organized, validly existing and in good
standing under the Laws of the State of Delaware. Guggenheim has all requisite power and authority
to enter into and perform its obligations under this Agreement, the Transaction Agreements to which
it is a party and the other agreements and instruments that Guggenheim is executing and delivering
in connection with the transactions contemplated by this Agreement.



     4.02. Authorization; Binding Effect. The execution, delivery and performance by Guggenheim of this Agreement and the Transaction
Agreements to which it is a party at the Closing, and the consummation and performance by
Guggenheim of the transactions contemplated hereby and thereby, have been duly authorized by all
necessary limited liability company action of Guggenheim. This Agreement and the Transaction
Agreements to which it is a party have been duly executed and delivered at the Closing, constitute
legal, valid and binding obligations of Guggenheim, 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 Guggenheim relating to the execution and delivery of this Agreement and the Transaction
Agreements to which it is a party, and to the consummation and performance of the transactions
contemplated hereby and thereby have been taken.



     4.03. No Conflicts; No Consents. The execution, delivery or performance of this Agreement or any of the Transaction
Agreements to which it is a party, and the consummation by Guggenheim of the transactions
contemplated hereby or thereby, and compliance by



6









 




Guggenheim with the terms and provisions hereof
or thereof, will not (i) conflict with Guggenheim’s certificate of formation or limited liability
company agreement, or (ii) constitute a violation by Guggenheim of any Law applicable to
Guggenheim. No permit, authorization, consent or approval of or by, or any notification of or
filing with, any Person (governmental or private) is required by Guggenheim in connection with the
execution, delivery and performance of this Agreement and the Transaction Agreements to which it is
a party, the consummation by Guggenheim 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. Guggenheim is the beneficial and record owner of the Preferred 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”) except as may be set
forth in the Transaction Agreements. 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 Preferred Units being redeemed hereunder, free and clear of any Liens whatsoever,
subject to any restrictions contained in the Transaction Agreements.



     4.05. Disclosure. Guggenheim has been advised by the Company that the value of the Preferred Units may
increase significantly over time. Guggenheim has such knowledge and experience in business and
financial matters as to be capable of evaluating the merits and risks of the transaction
contemplated to be made hereunder. Guggenheim has had an opportunity to review all documents that
Guggenheim has requested from the Company, including, without limitation,
the Form S-4, and the Company has made available to Guggenheim any additional information
which Guggenheim has requested. Guggenheim has had an opportunity to discuss the Company’s
business, management and financial affairs with the Company’s management and to ask questions of,
and receive answers from, the Company and its representatives concerning the business of the
Company and all such questions have been answered to the full satisfaction of Guggenheim.



     4.06. Brokers or Finders. Guggenheim and its officers or agents have incurred no obligation or liability, contingent
or otherwise, for brokerage or finders fees or agents’ commissions or other similar payment in
connection with this Agreement and will indemnify and hold the Company harmless from any such
payment alleged to be due by or through Guggenheim as a result of the action of Guggenheim or its
officers or agents.



     4.07. Accredited Investor; Diligence. Guggenheim is an accredited investor as defined in Rule 501(a) of Regulation D promulgated
under the Securities Act. Guggenheim has been provided with a copy of the Form S-4 and has had an
opportunity to discuss the Company’s business, management and financial affairs with the Company’s
management.



     4.08. Investment. Guggenheim is acquiring the Common Units hereunder for its own account for investment and
not with a present view to, or for sale in connection with, any distribution thereof, nor with any
present intention of distributing, syndicating or selling the same.



7









 





     4.09. Rule 144. Guggenheim acknowledges that, because they have not been registered under the Securities
Act, the Common Units acquired hereunder must be held indefinitely unless subsequently registered
under the Securities Act or an exemption from such registration is available. Guggenheim is aware
of the provisions of Rule 144 promulgated under the Securities Act which permits limited resale of
shares purchased in a private placement subject to the satisfaction of certain conditions.



     4.10. No Public Market. Guggenheim understands that no public market now exists for any of the equity securities
issued by the Company and that it is uncertain whether a public market will ever exist for the
Common Units.



ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE SILVER ROCK ENTITIES




          Each of the Silver Rock Entities represents and warrants to the Company as of the date hereof,
as follows:




     5.01. Organization and Authority. Such Silver Rock Entity is a limited liability company duly organized, validly existing and
in good standing under the Laws of the State of Delaware. Such Silver Rock Entity has all
requisite power and authority to enter into and perform its obligations under this Agreement,
the Transaction Agreements to which it is a party and the other agreements and instruments that
such Silver Rock Entity is executing and delivering in connection with the transactions
contemplated by this Agreement.



     5.02. Authorization; Binding Effect. The execution, delivery and performance by such Silver Rock Entity of this Agreement and
the Transaction Agreements to which it is a party at the Closing, and the consummation and
performance by such Silver Rock Entity of the transactions contemplated hereby and thereby, have
been duly authorized by all necessary limited liability company action of such Silver Rock Entity.
This Agreement and the Transaction Agreements to which it is a party have been duly executed and
delivered at the Closing, constitute legal, valid and binding obligations of such Silver Rock
Entity, 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 such Silver Rock Entity relating to the execution and delivery of
this Agreement and the Transaction Agreements to which it is a party, and to the consummation and
performance of the transactions contemplated hereby and thereby have been taken.



     5.03. No Conflicts; No Consents. The execution, delivery or performance of this Agreement or any of the Transaction
Agreements to which it is a party, and the consummation by such Silver Rock Entity of the
transactions contemplated hereby or thereby, and compliance by such Silver Rock Entity with the
terms and provisions hereof or thereof, will not (i) conflict with any Silver Rock Entity’s
certificate of formation or limited liability company agreement, or (ii) constitute a violation by
any Silver Rock Entity of any Law applicable to such Silver Rock Entity. No permit, authorization,
consent or approval of or by, or any notification of or filing



8









 




with, any Person (governmental or
private) is required by any Silver Rock Entity in connection with the execution, delivery and
performance of this Agreement and the Transaction Agreements to which it is a party, the
consummation by such Silver Rock Entity of the transactions contemplated hereby (other than such
notifications or filings required under applicable federal or state securities laws, if any).




     5.04. Title to Purchased Units. Such Silver Rock Entity is the beneficial and record owner of the Preferred Units that it
is selling pursuant to this Agreement, free and clear of any Liens except as may be set forth in
the Transaction Agreements. 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
Preferred Units being redeemed hereunder, free and clear of any Liens whatsoever, subject to any
restrictions contained in the Transaction Agreements.



     5.05. Disclosure. Such Silver Rock Entity has been advised by the Company that the value of the Preferred
Units may increase significantly over time. Such Silver Rock Entity has such knowledge and
experience in business and financial matters as to be capable of evaluating the merits and risks of
the transaction contemplated to be made hereunder. Such Silver Rock Entity has had an opportunity
to review all documents that such Silver Rock Entity has requested from the Company, including,
without limitation, the Form S-4, and the Company has made available to such Silver Rock Entity any
additional information which such Silver Rock Entity has requested. Such Silver Rock Entity has
had an opportunity to discuss the Company’s business, management and financial affairs with the
Company’s management and to ask questions of, and receive answers from, the Company and its
representatives concerning the business of the Company and all such questions have been answered to
the full satisfaction of such Silver Rock Entity.



     5.06. Brokers or Finders. Such Silver Rock Entity and its officers or agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders fees or agents’ commissions or other
similar payment in connection with this Agreement and will indemnify and hold the Company harmless
from any such payment alleged to be due by or through such Silver Rock Entity as a result of the
action of such Silver Rock Entity or its officers or agents.



     5.07. Accredited Investor; Diligence. Such Silver Rock Entity is an accredited investor as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act. Such Silver Rock Entity has been provided with a copy of the
Form S-4 and has had an opportunity to discuss the Company’s business, management and financial
affairs with the Company’s management.



     5.08. Investment. Such Silver Rock Entity is acquiring the Common Units hereunder for its own account for
investment and not with a present view to, or for sale in connection with, any distribution
thereof, nor with any present intention of distributing, syndicating or selling the same.



     5.09. Rule 144. Such Silver Rock Entity acknowledges that, because they have not been registered under the
Securities Act, the Common Units acquired hereunder must be held



9









 




indefinitely unless subsequently
registered under the Securities Act or an exemption from such registration is available. Such
Silver Rock Entity is aware of the provisions of Rule 144 promulgated under the Securities Act
which permits limited resale of shares purchased in a private placement subject to the satisfaction
of certain conditions.




     5.10. No Public Market. Such Silver Rock Entity understands that no public market now exists for any of the equity
securities issued by the Company and that it is uncertain whether a public market will ever exist
for the Common Units.



ARTICLE VI

FURTHER AGREEMENTS OF THE PARTIES




     6.01. Transaction Fees and Expenses. The Company agrees to pay the fees and expenses of Guggenheim, each Silver Rock Entity or
their respective Affiliates (including without limitation legal fees and expenses) incurred in
connection with the negotiation and preparation of this Agreement, the Transaction Agreements and
the consummation of the transactions contemplated hereby and thereby.



     6.02. Consent and Waiver. In connection with the execution and delivery of this Agreement, Guggenheim and each Silver
Rock Entity hereby consent to (i) the transactions consummated at the Closing and (ii) the
transactions contemplated by the Transaction Agreements. Guggenheim and each Silver Rock Entity
hereby irrevocably waive 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 Guggenheim or any
Silver Rock Entity 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 VII

POST-CLOSING COVENANTS




     7.01. Expenses. Concurrently with the Closing, within five (5) days after demand by Guggenheim or any
Silver Rock Entity, the Company will reimburse, as contemplated by Section 6.01 hereof,
Guggenheim or such Silver Rock Entity, as applicable, for the fees and expenses incurred by
Guggenheim or such Silver Rock Entity, as applicable, in connection with such Closing and the
transactions contemplated hereby, which have not been previously paid by the Company.



10









 





ARTICLE VIII

SURVIVAL




     8.01. 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 Guggenheim or
any Silver Rock Entity.



ARTICLE IX

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.




          “Board” or “Board of Managers” means the Company’s board of managers.




          “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.




          “Common Units” has the meaning set forth in the Recitals to this Agreement.




          “DRC” means Diamond Resorts Corporation, a Maryland corporation.




          “Form S-4” has the meaning set forth in Section 3.06.




          “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.




          “Guggenheim” has the meaning set forth in the Preamble to this Agreement.




          “Guggenheim Consideration” has the meaning set forth in Section 1.01(a).





11









 








          “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,
dated as of the date hereof, by and among the Company, CDP, 1818 Partners, LLC, Guggenheim, the
Silver Rock Entities and Wellington, in the form attached hereto as Exhibit A.




          “Organizational Documents” means the Articles of Organization and the LLC Agreement.




          “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.




          “Preferred Units” has the meaning set forth in the Recitals to this Agreement.




          “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, Guggenheim, the Silver Rock Entities and Wellington, in the form attached hereto as
Exhibit B.




          “SEC” means the mean the United States Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended.




          “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, Guggenheim, the Silver Rock Entities and Wellington, in the form attached hereto as
Exhibit C.




          “Silver Rock Consideration” has the meaning set forth in Section 1.01(b).




          “Transaction Agreements” shall mean the LLC Agreement, the Securityholders Agreement,
the Registration Rights Agreement, and the Wellington Agreement.




ARTICLE X

MISCELLANEOUS




     10.01. Entire Agreement. This Agreement and the Transaction Agreements (together with the Schedules and Exhibits
hereto and the documents referred to herein and therein) 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



12









 




agreements, understandings, representations and
warranties, whether written or oral, between the parties with respect to those matters.




     10.02. Remedies.




	 	(a)	 	In the event of any actual or threatened breach of any of the
provisions of this Agreement, the parties hereto agree 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.





     10.03. 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.



     10.04. 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.



     10.05. 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 NEW YORK COUNTY, BOROUGH OF MANHATTAN, STATE OF
NEW YORK 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
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 FOR 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.



13









 





     10.06. 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.



     10.07. 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 parties 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 Guggenheim:



DRP Holdco, LLC

135 East 57th Street

6th Floor

New York, NY 10022

Attention: Kaitlin Trinh

Facsimile: (212) 644-8396



with copies, which shall not constitute notice, to:



Guggenheim Partners

100 Wilshire Boulevard — Suite 500

Santa Monica, California 90401

Attention: Zachary D. Warren

Facsimile: (310) 576-1271



and





14









 







Guggenheim Investment Management, LLC

135 East 57th Street

New York, New York 10022

Attention: William Hagner

Facsimile: (212) 644-8396



and



Sidley Austin LLP

One South Dearborn Street — Suite 3000

Chicago, Illinois 60603

Attention: Richard Astle

Facsimile: (312) 853-7036



To any Silver Rock Entity:



Silver Rock Financial LLC

1250 Fourth Street

Santa Monica, CA 90401

Attention: General Counsel

Facsimile: (310) 570-4599



with a copy, which shall not constitute notice, to:



Maron & Sandler

1250 Fourth Street

Santa Monica, CA 90401

Attention: David Kyman

Facsimile: (310) 570-4901




     10.08. 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.



     10.09. 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 Guggenheim and each
Silver Rock Entity may assign its rights to any Person who purchases all or substantially all
of the assets of Guggenheim or such Silver Rock Entity, as applicable, and such Person(s) shall
assume the obligations of Guggenheim or such Silver Rock Entity, as applicable, 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.



     10.10. 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



15









 






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.




     10.11. Counterparts. This Agreement may be executed in two (2) or more 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.



     10.12. 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 Exhibits and 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.



     10.13. Public Announcements. The Company shall not, without the prior written consent and approval of Guggenheim and
each Silver Rock Entity, make, allow or cause to be made any public disclosure, whether by press
release or otherwise, of investment in the Company by Guggenheim and any Silver Rock
Entity, the terms of this Agreement, the Transaction Agreements, or any of the transactions
contemplated hereby or thereby; provided, however, that the Company shall be permitted to make such
disclosures as required by the SEC in connection with the filing of the Form S-4.



16









 





          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 Financial Officer 	 
	 
	 	GUGGENHEIM: 


DRP HOLDCO, LLC

 	 
	 	By:  	/s/ Zachary D. Warren
 	 
	 	 	Name:  	Zachary D. Warren 	 
	 	 	Title:  	Authorized Person 	 



[signature pages continue]




[Signature Page to Redemption Agreement]





 









 





	 	 	 	 	 
	 	SILVER ROCK ENTITIES:


SILVER ROCK FINANCIAL LLC

 	 
	 	By:  	/s/ Jeff Green
 	 
	 	 	Name:  	Jeff Green 	 
	 	 	Its:	Authorized Signatory 	 
	 
	 	IN — FP1 LLC

 	 
	 	By:  	/s/ Jeff Green
 	 
	 	 	Name:  	Jeff Green 	 
	 	 	Its:	      Authorized Signatory 	 
	 
	 	BDIF LLC

 	 
	 	By:  	/s/ Jeff Green
 	 
	 	 	Name:  	Jeff Green 	 
	 	 	Its:	      Authorized Signatory 	 
	 
	 	CM — NP LLC

 	 
	 	By:  	/s/ Jeff Green
 	 
	 	 	Name:  	Jeff Green 	 
	 	 	Its:	     Authorized Signatory 	 



[Signature Page to Redemption Agreement]




 









 





SCHEDULE 1.01(b)




Preferred Units Sold by each Silver Rock Entity,

Allocation of Silver Rock Consideration and

Common Units Issued to each Silver Rock Entity



	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Preferred Units	 	 	 	 	 	Common Units	 
	 	 	Redeemed	 	 	Cash Purchase Price	 	 	Issued	 
	Silver Rock Financial LLC
	 	 	40.00	 	 	$	3,631,149.21	 	 	 	.8430	 
	IN-FP1 LLC
	 	 	33.33	 	 	$	3,025,655.08	 	 	 	.7026	 
	BDIF LLC
	 	 	33.33	 	 	$	3,025,655.08	 	 	 	.7026	 
	CM-NP LLC
	 	 	26.67	 	 	$	2,421,068.73	 	 	 	.5620	 
	TOTAL:
	 	 	133.33	 	 	$	12,103,528.10	 	 	 	2.810	 






 









 





SCHEDULE 2.02(a)




Guggenheim Wire Instructions



[OMITTED]




 









 





SCHEDULE 2.02(b)




Silver Rock Wire Instructions



[OMITTED]




 









 





SCHEDULE 3.05




Equity Capitalization of the Company



	 	 	 	 	 	 	 	 	 
	 	 	Common	 	 	Common Percentage	 
	Name of Member	 	Units	 	 	Interest	 
	Cloobeck Diamond Parent, LLC
	 	 	753.270	 	 	 	54.277	%
	 
	 	 	 	 	 	 	 	 
	1818 Partners, LLC
	 	 	32.711	 	 	 	2.357	%
	 
	 	 	 	 	 	 	 	 
	DRP Holdco, LLC
	 	 	293.050	 	 	 	21.116	%
	 
	 	 	 	 	 	 	 	 
	Silver Rock Financial LLC
	 	 	8.369	 	 	 	0.603	%
	 
	 	 	 	 	 	 	 	 
	IN — FP1 LLC
	 	 	6.978	 	 	 	0.503	%
	 
	 	 	 	 	 	 	 	 
	BDIF LLC
	 	 	6.978	 	 	 	0.503	%
	 
	 	 	 	 	 	 	 	 
	CM — NP LLC
	 	 	5.580	 	 	 	0.402	%
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Subtotal Silver Rock Entities
	 	 	27.905	 	 	 	2.011	%
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	The Hartford Growth Opportunities Fund
	 	 	35.683	 	 	 	2.571	%
	 
	 	 	 	 	 	 	 	 
	Hartford Growth Opportunities HLS Fund
	 	 	20.805	 	 	 	1.499	%
	 
	 	 	 	 	 	 	 	 
	Quissett Investors (Bermuda) L.P.
	 	 	14.240	 	 	 	1.026	%
	 
	 	 	 	 	 	 	 	 
	Quissett Partners, L.P.
	 	 	10.845	 	 	 	0.781	%
	 
	 	 	 	 	 	 	 	 
	The Hartford Capital Appreciation Fund
	 	 	184.937	 	 	 	13.326	%
	 
	 	 	 	 	 	 	 	 
	Bay Pond Partners, L.P.
	 	 	9.466	 	 	 	0.682	%
	 
	 	 	 	 	 	 	 	 
	Bay Pond Investors (Bermuda) L.P.
	 	 	4.918	 	 	 	0.354	%
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Subtotal Wellington Entities
	 	 	280.894	 	 	 	20.240	%
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Total
	 	 	1,387.830	 	 	 	100.000	%