Document:

exv10w105

Exhibit 10.105

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO
THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO
RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED
IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.

EMISPHERE TECHNOLOGIES, INC.

WARRANT

	 	 	 

	Warrant No. A-73

	 	Original Issue Date: July 6, 2011

     EMISPHERE TECHNOLOGIES, INC., a Delaware corporation (the “Company”), hereby certifies
that, for value received, MHR Institutional Partners IIA LP or its permitted registered assigns
(the “Holder”), is entitled to purchase from the Company up to a total of 385,640 shares of
Common Stock (as defined below) of the Company (each such share, a “Warrant Share” and all
such shares, the “Warrant Shares”) at an exercise price equal to $1.09 per share (as
adjusted from time to time as provided herein, the “Exercise Price”), at any time and from
time to time on or after the Original Issue Date and through and including the Expiration Date (as
defined below), and subject to the following terms and conditions:

     This Warrant is one of a series of warrants issued pursuant to that certain Securities
Purchase Agreement dated June 30, 2011 (the
“Subscription Date”), by and between the
Company and each of the purchasers identified therein (the “Purchase Agreement”). All such
warrants are referred to herein, collectively, as the “Warrants.”

     1. Definitions. In addition to the terms defined elsewhere in this Warrant,
capitalized terms that are not otherwise defined herein have the meanings given to such terms in
Section 18.

     2. List of Warrant Holders. The Company shall register this Warrant, upon records to
be maintained by the Company for that purpose (the “Warrant Register”), in the name of the
record Holder (which shall include the initial Holder or, as the case may be, any registered
assignee to which this Warrant is permissibly assigned hereunder from time to time). The

 

 

Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof
for the purpose of any exercise hereof or any distribution to the Holder, and for all other
purposes, absent actual notice to the contrary.

     3. List of Transfers; Restrictions on Transfer.

     (a) This Warrant may be offered for sale, sold, transferred or assigned without the consent of
the Company, except as may otherwise be required by Section 2(g) of the Purchase Agreement.

     (b) The Company shall register any such transfer of all or any portion of this Warrant in the
Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto duly
completed and signed, to the Company at its address specified herein. Upon any such registration
or transfer, a new Warrant to purchase Common Stock, in substantially the form of this Warrant (in
accordance with Section 3(e)), evidencing the portion of this Warrant so transferred shall be
issued to the transferee and a new Warrant evidencing the remaining portion of this Warrant not so
transferred, if any, shall be issued to the transferring Holder. The acceptance of the new Warrant
by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights
and obligations in respect of the new Warrant that the Holder has in respect of this Warrant.

     (c) This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal
office of the Company, for a new Warrant or Warrants (in accordance with Section 3(e)) representing
in the aggregate the right to purchase the number of Warrant Shares then underlying this Warrant,
and each such new Warrant will represent the right to purchase such portion of such Warrant Shares
as is designated by the Holder at the time of such surrender; provided, however, no warrants for
fractional shares of Common Stock shall be given.

     (d) If, at the time of the surrender of this Warrant in connection with any transfer of this
Warrant, transfer of this Warrant shall not be registered pursuant to an effective registration
statement under the Securities Act and under applicable state securities or blue sky laws, the
Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of
this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which
opinion shall be in form, substance and scope customary for opinions of counsel in comparable
transactions) to the effect that such transfer may be made without registration under the
Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or
transferee execute and deliver to the Company an investment letter in form and substance acceptable
to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a)
promulgated under the Securities Act.

     (e) Whenever the Company is required to issue a new Warrant pursuant to the terms of this
Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as
indicated on the face of such new Warrant, the right to purchase the Warrant Shares then underlying
this Warrant (or in the case of a new Warrant being issued pursuant to this Section 3 or Section 7,
the Warrant Shares designated by the Holder which, when added to the number of shares of Common
Stock underlying the other new Warrants issued in connection with such issuance, does not exceed
the number of Warrant Shares then underlying this Warrant), (iii) shall

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have an issuance date, as indicated on the face of such new Warrant which is the same as the
Original Issue Date, and (iv) shall have the same rights and conditions as this Warrant.

     4. Exercise and Duration of Warrants.

     (a) All or any part of this Warrant shall be exercisable by the registered Holder in any
manner permitted by Section 4 of this Warrant at any time and from time to time on or after the
Original Issue Date and through and including the Expiration Date. At 5:00 p.m., New York City
time, on the Expiration Date, the portion of this Warrant not exercised prior thereto shall be and
become void and of no value and this Warrant shall be terminated and no longer outstanding. In
addition, if cashless exercise would be permitted under Section 4(c) of this Warrant, then all or
part of this Warrant may be exercised by the registered Holder utilizing such cashless exercise
provisions at any time, or from time to time, on or after the Original Issue Date and through and
including the Expiration Date.

     (b) The Holder may exercise this Warrant by delivering to the Company an exercise notice, in
the form attached hereto (the “Exercise Notice”), completed and duly signed. If such
Holder is not utilizing the cashless exercise provisions set forth in this Warrant, within one (1)
Trading Day following an exercise of this Warrant as aforesaid, the Holder shall deliver payment to
the Company of an amount equal to the Exercise Price for the number of Warrant Shares as to which
this Warrant is being exercised (the “Aggregate Exercise Price”). The date the Exercise
Notice is delivered to the Company (as determined in accordance with the notice provisions hereof)
is an “Exercise Date.” The Holder shall not be required to deliver the original Warrant in
order to effect an exercise hereunder. Execution and delivery of the Exercise Notice shall have
the same effect as cancellation of the original Warrant and issuance of a New Warrant evidencing
the right to purchase the remaining number of Warrant Shares. Additionally, at the request of the
Holder, if this Warrant shall have been exercised in part and the Holder shall have surrendered
this Warrant certificate, the Company shall, at the time of delivery of the certificate or
certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of
Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant
shall in all other respects be identical with this Warrant.

     (c) Notwithstanding anything contained herein to the contrary, if at the time of exercise
hereof, a Registration Statement (as defined in the Registration Rights Agreement (as defined in
the Purchase Agreement)) is not effective (or the prospectus contained therein is not available for
use) for the resale by the Holder of all of the Warrant Shares, then the Holder may, in its sole
discretion, exercise this Warrant in whole or in part and, in lieu of making the cash payment
otherwise contemplated to be made to the Company upon such exercise in payment of the Aggregate
Exercise Price, elect instead to receive upon such exercise the “Net Number” of shares of Common
Stock determined according to the following formula (a “Cashless Exercise”):

Net
Number = (A x B) - (A x C)

B

For purposes of the foregoing formula:

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	 	A=	 	 the total number of shares with respect to which this Warrant
is then being exercised.
	 
	 	B=	 	 as applicable: (i) the Closing Sale Price of the Common Stock
on the Trading Day immediately preceding the date of the applicable Exercise
Notice if such Exercise Notice is (1) both executed and delivered pursuant to
Section 4 hereof on a day that is not a Trading Day or (2) both executed and
delivered pursuant to Section 4 hereof on a Trading Day prior to the opening of
“regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS
promulgated under the federal securities laws) on such Trading Day, (ii) the
Bid Price of the Common Stock as of the time of the Holder’s execution of the
applicable Exercise Notice if such Exercise Notice is executed during “regular
trading hours” on a Trading Day and is delivered within two (2) hours
thereafter pursuant to Section 4 hereof and (iii) the Closing Sale Price of the
Common Stock on the date of the applicable Exercise Notice if the date of such
Exercise Notice is a Trading Day and such Exercise Notice is both executed and
delivered pursuant to Section 4 hereof after the close of “regular trading
hours” on such Trading Day.
	 
	 	C= 	 	the Exercise Price then in effect for the applicable Warrant
Shares at the time of such exercise.

     (d) In the case of a dispute as to the determination of the Exercise Price or the arithmetic
calculation of the number of Warrant Shares to be issued pursuant to the terms hereof, the Company
shall promptly issue to the Holder the number of Warrant Shares that are not disputed and resolve
such dispute in accordance with Section 15.

     5. Delivery of Warrant Shares.

     (a) On or before the first (1st) Trading Day following the date on which the
Company has received an Exercise Notice, the Company shall transmit by facsimile or electronic mail
an acknowledgment of confirmation of receipt of such Exercise Notice, to the Holder and the
Company’s transfer agent (the “Transfer Agent”). On or before the third (3rd)
Trading Day following the date on which the Company has received such Exercise Notice, the Company
shall (X) provided that the Transfer Agent is participating in The Depository Trust Company
(“DTC”) Fast Automated Securities Transfer Program and the Warrant Shares can be issued
without restrictive legends, upon the request of the Holder, credit such aggregate number of shares
of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s or its
designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system, or (Y) if
the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program or
the Warrant Shares cannot be issued without restrictive legends, issue and deliver to the Holder
or, at the Holder’s instruction pursuant to the Exercise Notice, the Holder’s agent or designee, in
each case, sent by reputable overnight courier to the address as specified in the applicable
Exercise Notice, a certificate, registered in the Company’s share register in the name of the
Holder or its designee (as indicated in the applicable Exercise Notice), for the number of shares
of Common Stock to which the Holder is entitled pursuant to such exercise. Upon

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delivery of an Exercise Notice, the Holder shall be deemed for all corporate purposes to have
become the holder of record of the Warrant Shares with respect to which this Warrant has been
exercised, irrespective of the date such Warrant Shares are credited to the Holder’s DTC account or
the date of delivery of the certificates evidencing such Warrant Shares (as the case may be). The
Holder, or any Person permissibly so designated by the Holder to receive Warrant Shares, shall be
deemed to have become the holder of record of such Warrant Shares as of the Exercise Date.
Notwithstanding the foregoing, except in the case where an exercise of this Warrant is validly made
pursuant to a cashless exercise, the Company’s failure to deliver Warrant Shares to the Holder on
or prior to the later of (x) the close of the third Trading Day after delivery of an Exercise
Notice and (y) the Trading Day in which the Company’s receives the Aggregate Exercise Price (such
later date, the “Share Delivery Deadline”) shall not be deemed to be a breach of this
Warrant.

     (b) If by the Share Delivery Deadline, the Company fails to deliver to the Holder a
certificate representing the required number of Warrant Shares in the manner required pursuant to
Section 5(a), and if after such third Trading Day and prior to the receipt of such Warrant Shares,
the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated
receiving upon such exercise (a “Buy-In”), then the Company shall, within three Trading
Days after the Holder’s request and in the Holder’s sole discretion, either (i) pay in cash to the
Holder an amount equal to the Holder’s total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the
Company’s obligation to deliver such certificate (and to issue such Warrant Shares) shall terminate
or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates
representing such shares of Common Stock or credit the Holder’s balance account with DTC for the
number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise
hereunder (as the case may be) and pay cash to the Holder in an amount equal to the excess (if any)
of the Buy-In Price over the product of (A) such number of shares of Common Stock times (B) the
Closing Sale Price of the Common Stock on the Trading Day immediately preceding the date of the
applicable Exercise Notice.

     (c) To the extent permitted by law, the Company’s obligations to issue and deliver Warrant
Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any
action or inaction by the Holder to enforce the same, any waiver or consent with respect to any
provision hereof, the recovery of any judgment against any Person or any action to enforce the
same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other Person of any obligation to the Company or any violation or
alleged violation of law by the Holder or any other Person, and irrespective of any other
circumstance that might otherwise limit such obligation of the Company to the Holder in connection
with the issuance of Warrant Shares. Nothing herein shall limit a Holder’s right to pursue any
other remedies available to it hereunder, at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief with respect to the Company’s failure to
timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.

     6. Charges, Taxes and Expenses. Issuance and delivery of certificates for shares of
Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any

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issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense
in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by
the Company; provided, however, that the Company shall not be required to pay any tax that may be
payable in respect of any transfer involved in the registration of any certificates for Warrant
Shares or Warrants in a name other than that of the Holder. The Holder shall be responsible for
all other tax liability that may arise as a result of holding or transferring this Warrant or
receiving Warrant Shares upon exercise hereof.

     7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for and upon
cancellation hereof, or in lieu of and substitution for this Warrant, a new Warrant (in accordance
with Section 3(e)), but only upon receipt of evidence reasonably satisfactory to the Company of
such loss, theft or destruction and customary and reasonable indemnity (which shall not include a
surety bond), if requested. Applicants for a new Warrant under such circumstances shall also
comply with such other reasonable regulations and procedures and pay such other reasonable
third-party costs as the Company may prescribe. If a new Warrant is requested as a result of a
mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant to the Company as
a condition precedent to the Company’s obligation to issue the new Warrant.

     8. Reservation of Warrant Shares. The Company covenants that it will at all times
reserve and keep available out of the aggregate of its authorized but unissued and otherwise
unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon
exercise of this Warrant as herein provided, the number of Warrant Shares that are then issuable
and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other
contingent purchase rights of persons other than the Holder (taking into account the adjustments
and restrictions of Section 9). The Company covenants that all Warrant Shares so issuable and
deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable. If,
notwithstanding the foregoing, and not in limitation thereof, at any time while any of the Warrants
remain outstanding the Company does not have a sufficient number of authorized and unreserved
shares of Common Stock to satisfy its obligation to reserve for issuance upon exercise of the
Warrants at least a number of shares of Common Stock equal to the number of shares of Common Stock
as shall from time to time be necessary to effect the exercise of all of the Warrants then
outstanding (the “Required Reserve Amount”, and such reservation failure, an
“Authorized Share Failure”), then the Company shall promptly take all action necessary to
increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the
Company to reserve the Required Reserve Amount for all the Warrants then outstanding. Without
limiting the generality of the foregoing sentence, as soon as practicable after the date of the
occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the
occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders
for the approval of an increase in the number of authorized shares of Common Stock. In connection
with such meeting, the Company shall provide each stockholder with a proxy statement and shall use
its best efforts to solicit its stockholders’ approval of such increase in authorized shares of
Common Stock and to cause its board of directors to recommend to the stockholders that they approve
such proposal.

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     9. Certain Adjustments. The Exercise Price and number of Warrant Shares issuable
upon exercise of this Warrant are subject to adjustment from time to time as set forth in this
Section 9.

     (a) Stock Dividends and Splits. If the Company, at any time while this Warrant is
outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any
class of capital stock that is payable in shares of Common Stock, (ii) subdivides (by any stock
split, stock dividend, recapitalization or otherwise) outstanding shares of Common Stock into a
larger number of shares, or (iii) combines (by combination, reverse stock split or otherwise)
outstanding shares of Common Stock into a smaller number of shares, then in each such case the
Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding immediately before such event and of which the denominator shall
be the number of shares of Common Stock outstanding immediately after such event. Any adjustment
made pursuant to clause (i) of this paragraph shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or distribution, and
any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective
immediately after the effective date of such subdivision or combination. If any event requiring an
adjustment under this paragraph occurs during the period that an Exercise Price is calculated
hereunder, then the calculation of such Exercise Price shall be adjusted appropriately to reflect
such event.

     (b) Pro Rata Distributions. If the Company, at any time while this Warrant is
outstanding, distributes to all holders of Common Stock for no consideration (i) evidences of its
indebtedness, (ii) any security (other than a distribution of Common Stock covered by Section
9(a)), (iii) rights or warrants to subscribe for or purchase any security, or (iv) any other asset
(in each case, “Distributed Property”), then, upon any exercise of this Warrant that occurs
after the record date fixed for determination of stockholders entitled to receive such
distribution, the Holder shall be entitled to receive, in addition to the Warrant Shares otherwise
issuable upon such exercise (if applicable) (without regard to any limitations on exercise hereof),
the Distributed Property that such Holder would have been entitled to receive in respect of such
number of Warrant Shares had the Holder been the record holder of such Warrant Shares immediately
prior to such record date.

     (c) Fundamental Transactions. If, at any time while this Warrant is outstanding (i)
the Company effects any merger or consolidation of the Company with or into another Person, in
which the shareholders of the Company as of immediately prior to the transaction own less than a
majority of the outstanding stock of the surviving entity, (ii) the Company effects any sale of all
or substantially all of its assets in one or a series of related transactions, (iii) any tender
offer or exchange offer (whether by the Company or another Person) is completed pursuant to which
holders of Common Stock are permitted to tender or exchange their shares for other securities, cash
or property, or (iv) the Company effects any reclassification of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively converted into or exchanged for
other securities, cash or property (each, a “Fundamental Transaction”), then the Holder
shall have the right thereafter to receive, upon exercise of this Warrant, the same amount and kind
of securities, cash or property as it would have been entitled to receive upon the occurrence of
such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the
holder of the number of Warrant Shares then issuable upon exercise in full of this Warrant (the
“Alternate Consideration”). The Company shall not effect

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any such Fundamental Transaction unless prior to or simultaneously with the consummation
thereof, any successor to the Company, surviving entity or the corporation purchasing or otherwise
acquiring such assets or other appropriate corporation or entity shall assume the obligation to
deliver to the Holder, such Alternate Consideration as, in accordance with the foregoing
provisions, the Holder may be entitled to purchase, and the other obligations under this Warrant.
The provisions of this paragraph (c) shall similarly apply to subsequent transactions analogous to
a Fundamental Transaction.

     (d) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise
Price pursuant to paragraphs (a) and (b) of this Section 9, the number of Warrant Shares that may
be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that
after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of
Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately prior to
such adjustment.

     (e) Calculations. All calculations under this Section 9 shall be made to the nearest
cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for the account of the
Company, and the disposition of any such shares shall be considered an issue or sale of Common
Stock.

     (f) Notice of Adjustments. Upon the occurrence of each adjustment pursuant to this
Section 9, the Company at its expense will, at the written request of the Holder, promptly compute
such adjustment in accordance with the terms of this Warrant and prepare a certificate setting
forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or
type of Warrant Shares or other securities issuable upon exercise of this Warrant (as applicable),
describing the transactions giving rise to such adjustments and showing in detail the facts upon
which such adjustment is based. Upon written request, the Company will promptly deliver a copy of
each such certificate to the Holder and to the Company’s Transfer Agent.

     (g) Notice of Events. The Company will give written notice to the Holder at least two
(2) days prior to the date on which the Company closes its books or takes a record (A) with respect
to any dividend or distribution upon the shares of Common Stock, or (B) for determining rights to
vote with respect to any Fundamental Transaction, dissolution or liquidation. Notwithstanding the
foregoing, the failure deliver such notice or any defect therein shall not affect the validity of
the corporate action required to be described in such notice. To the extent that any notice
provided hereunder constitutes, or contains, material, non-public information regarding the Company
(including its subsidiaries), the Company shall simultaneously file such notice with the SEC (as
defined in the Purchase Agreement) pursuant to a Current Report on Form 8-K. It is expressly
understood and agreed that the time of execution specified by the Holder in each Exercise Notice
shall be definitive and may not be disputed or challenged by the Company.

     10. Payment of Exercise Price. The Holder shall pay the Exercise Price by delivering
immediately available funds to the Company unless the Holder has specified a “Cashless Exercise” in
the applicable Exercise Notice.

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     11. No Fractional Shares. No fractional Warrant Shares will be issued in connection
with any exercise of this Warrant. In lieu of any fractional shares that would otherwise be
issuable, the Company shall pay cash equal to the product of such fraction multiplied by the
Closing Bid Price of one Warrant Share on the applicable Exercise Date.

     12. Notices. Any and all notices or other communications or deliveries hereunder
(including, without limitation, any Exercise Notice) shall be in writing and shall be deemed given
and effective on the earliest of (i) upon confirmation of receipt, if such notice or communication
is delivered via facsimile or electronic mail at the facsimile number or e-mail address specified
in this Section at or prior to 5:00 p.m. (New York City time) on a Trading Day (provided
confirmation of transmission is mechanically or electronically generated and kept on file by the
sending party), (ii) the next Trading Day after the date of confirmation of receipt, if such notice
or communication is delivered via facsimile or electronic mail at the facsimile number or e-mail
address specified in this Section on a day that is not a Trading Day or later than 5:00 p.m. (New
York City time) on any Trading Day (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party), (iii) the Trading Day following
the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon
actual receipt by the party to whom such notice is required to be given. The addresses for such
notices or communications shall be: if to the Company, to Emisphere Technologies, Inc., 240 Cedar
Knolls Road, Suite 200, Cedar Knolls, New Jersey 07927. Attention: Chief Financial Officer,
Facsimile No.: (973) 532-8121, e-mail address: mgarone@emisphere.com (or such other address as the
Company shall indicate in writing in accordance with this Section) or (ii) if to the Holder, to the
address, facsimile number or e-mail address appearing on the Warrant Register (or such other
address as the Company shall indicate in writing in accordance with this Section).

     13. Warrant Agent. The Company shall serve as warrant agent under this Warrant. Upon
30 days’ notice to the Holder, the Company may appoint a new warrant agent. Any corporation into
which the Company or any new warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a party or any corporation to
which the Company or any new warrant agent transfers substantially all of its corporate trust or
shareholders services business shall be a successor warrant agent under this Warrant without any
further act. Any such successor warrant agent shall promptly cause notice of its succession as
warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s
last address as shown on the Warrant Register.

     14. Noncircumvention. The Company hereby covenants and agrees that the Company will
not, by amendment of its Articles of Incorporation, as amended, its Bylaws as amended or through
any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution,
issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, and will at all times in good faith carry out
all the provisions of this Warrant and take all action as may be required to protect the rights of
the Holder. Without limiting the generality of the foregoing, the Company (i) shall not increase
the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the
Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant, and (iii) shall, so long

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as any of the Warrants are outstanding, take all action necessary to reserve and keep
available out of its authorized and unissued shares of Common Stock, solely for the purpose of
effecting the exercise of the Warrants, the maximum number of shares of Common Stock as shall from
time to time be necessary to effect the exercise of the Warrants then outstanding (without regard
to any limitations on exercise).

     15. Dispute Resolution. In the case of a dispute as to the determination of the
Exercise Price, the Closing Bid Price, the Closing Sale Price, the Bid Price or fair market value
or the arithmetic calculation of the number of Warrant Shares (as the case may be), the Company or
the Holder (as the case may be) shall submit the disputed determinations or arithmetic calculations
(as the case may be) via facsimile (i) within two (2) Business Days after receipt of the applicable
notice giving rise to such dispute to the Company or the Holder (as the case may be) or (ii) if no
notice gave rise to such dispute, at any time after the Holder learned of the circumstances giving
rise to such dispute. If the Holder and the Company are unable to agree upon such determination or
calculation (as the case may be) of the Exercise Price, the Closing Bid Price, the Closing Sale
Price, the Bid Price or fair market value or the number of Warrant Shares (as the case may be)
within three (3) Business Days of such disputed determination or arithmetic calculation being
submitted to the Company or the Holder (as the case may be), then the Company shall, within two (2)
Business Days submit via facsimile (a) the disputed determination of the Exercise Price, the
Closing Bid Price, the Closing Sale Price, the Bid Price or fair market value (as the case may be)
to an independent, reputable investment bank selected by the Company and approved by the Holder or
(b) the disputed arithmetic calculation of the number of Warrant Shares to the Company’s
independent, outside accountant. The Company shall cause the investment bank or the accountant (as
the case may be) to perform the determinations or calculations (as the case may be) and notify the
Company and the Holder of the results no later than ten (10) Business Days from the time it
receives such disputed determinations or calculations (as the case may be). Such investment bank’s
or accountant’s determination or calculation (as the case may be) shall be binding upon all parties
absent demonstrable error. If a disputed determination or arithmetic calculation is submitted to
the investment bank or the accountant (as the case may be) pursuant to this Section 16, then the
prevailing party in such determination or calculation shall be reimbursed by the other party for
its costs and expenses (including any and all fees and expenses charged by the investment back or
accountant) incurred in connection with the determination or calculation (as the case may be).

     16. Remedies, Characterization, Other Obligations, Breaches and Injunctive Relief. The
remedies provided in this Warrant shall be cumulative and in addition to all other remedies
available under this Warrant and the other Transaction Documents, at law or in equity (including a
decree of specific performance and/or other injunctive relief), and nothing herein shall limit the
right of the Holder to pursue actual damages for any failure by the Company to comply with the
terms of this Warrant. The Company covenants to the Holder that there shall be no characterization
concerning this instrument other than as expressly provided herein. Amounts set forth or provided
for herein with respect to payments, exercises and the like (and the computation thereof) shall be
the amounts to be received by the Holder and shall not, except as expressly provided herein, be
subject to any other obligation of the Company (or the performance thereof). The Company
acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the
Holder and that the remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach

10

 

or threatened breach, the holder of this Warrant shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach, without the necessity of showing
economic loss and without any bond or other security being required. The Company shall provide all
information and documentation to the Holder that is requested by the Holder that is reasonably
necessary to enable the Holder to confirm the Company’s compliance with the terms and conditions of
this Warrant. The issuance of shares and certificates for shares as contemplated hereby upon the
exercise of this Warrant shall be made without charge to the Holder or such shares for any issuance
tax or other costs in respect thereof, provided that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the Holder or its agent on its behalf.

     17. Miscellaneous.

     (a) This Warrant shall be binding on and inure to the benefit of the parties hereto and their
respective successors and assigns. Subject to the preceding sentence, nothing in this Warrant
shall be construed to give to any Person other than the Company and the Holder any legal or
equitable right, remedy or cause of action under this Warrant. This Warrant may be amended only in
writing signed by the Company and the Holder, or their successors and assigns. No waiver shall be
effective unless it is in writing and signed by an authorized representative of the waiving party.

     (b) This Warrant shall be governed by and construed and enforced in accordance with, and all
questions concerning the construction, validity, interpretation and performance of this Warrant
shall be governed by, the internal laws of the State of New York, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any jurisdictions other than the
State of New York. The parties hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law. THE PARTIES HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

     (c) If any provision of this Warrant is prohibited by law or otherwise determined to be
invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise
be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent
that it would be valid and enforceable, and the invalidity or unenforceability of such provision
shall not affect the validity of the remaining provisions of this Warrant so long as this Warrant
as so modified continues to express, without material change, the original intentions of the
parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability
of the provision(s) in question does not substantially impair the respective

11

 

expectations or reciprocal obligations of the parties or the practical realization of the
benefits that would otherwise be conferred upon the parties. The parties will endeavor in good
faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid
provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).

     (d) The headings herein are for convenience only, do not constitute a part of this Warrant and
shall not be deemed to limit or affect any of the provisions hereof.

     (e) In case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining terms and provisions
of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt
in good faith to agree upon a valid and enforceable provision which shall be a commercially
reasonable substitute therefore, and upon so agreeing, shall incorporate such substitute provision
in this Warrant.

     (f) Prior to exercise of this Warrant, the Holder hereof shall not, by reason of by being a
Holder, be entitled to any rights of a stockholder with respect to the Warrant Shares.

     18. Certain Definitions. For purposes of this Warrant, the following terms shall have
the following meanings:

     (a) “Bid Price” means, for any security as of the particular time of determination, the bid
price for such security on the Principal Market as reported by Bloomberg as of such time of
determination, or, if the Principal Market is not the principal securities exchange or trading
market for such security, the bid price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg as of such time of
determination, or if the foregoing does not apply, the bid price of such security in the
over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg
as of such time of determination, or, if no bid price is reported for such security by Bloomberg as
of such time of determination, the average of the bid prices of any market makers for such security
as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.)
as of such time of determination. If the Bid Price cannot be calculated for a security as of the
particular time of determination on any of the foregoing bases, the Bid Price of such security as
of such time of determination shall be the fair market value as mutually determined by the Company
and the Holder. If the Company and the Holder are unable to agree upon the fair market value of
such security, then such dispute shall be resolved in accordance with the procedures in Section 15.
All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during such period.

     (b) “Bloomberg” means Bloomberg, L.P.

     (c) “Business Day” means any day other than Saturday, Sunday or other day on which commercial
banks in The City of New York are authorized or required by law to remain closed.

     (d) “Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the
last closing bid price and last closing trade price, respectively, for such security on the

12

 

Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on
an extended hours basis and does not designate the closing bid price or the closing trade price (as
the case may be) then the last bid price or last trade price, respectively, of such security prior
to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the
principal securities exchange or trading market for such security, the last closing bid price or
last trade price, respectively, of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not
apply, the last closing bid price or last trade price, respectively, of such security in the
over-the-counter market on the electronic bulletin board for such security as reported by
Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any
market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the
National Quotation Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price cannot be
calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price
or the Closing Sale Price (as the case may be) of such security on such date shall be the fair
market value as mutually determined by the Company and the Holder. If the Company and the Holder
are unable to agree upon the fair market value of such security, then such dispute shall be
resolved in accordance with the procedures in Section 15. All such determinations shall be
appropriately adjusted for any stock dividend, stock split, stock combination or other similar
transaction during such period.

     (e) “Common Stock” means (i) the Company’s shares of common stock, $0.01 par value per share,
and (ii) any capital stock into which such common stock shall have been changed or any share
capital resulting from a reclassification of such common stock.

     (f) “Eligible Market” means The New York Stock Exchange, the NYSE Amex, the Nasdaq Global
Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, the Principal Market.

     (g) “Expiration Date” means the date that is the fifth (5th) anniversary of the
Original Issue Date or, if such date falls on a day other than a Business Day or on which trading
does not take place on the Principal Market (a “Holiday”), the next date that is not a Holiday.

     (h) “Parent Entity” of a Person means an entity that, directly or indirectly, controls the
applicable Person and whose common stock or equivalent equity security is quoted or listed on an
Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent
Entity with the largest public market capitalization as of the date of consummation of the
Fundamental Transaction.

     (i) “Person” means an individual, a limited liability company, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization, any other entity or a government or any
department or agency thereof.

     (j) “Principal Market” means the OTC Bulletin Board.

     (k) “Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity)
formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if

13

 

so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall
have been entered into.

     (l) “Trading Day” means any day on which the Common Stock is traded on the Principal Market,
or, if the Principal Market is not the principal trading market for the Common Stock, then on the
principal securities exchange or securities market on which the Common Stock is then traded,
provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to
trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is
suspended from trading during the final hour of trading on such exchange or market (or if such
exchange or market does not designate in advance the closing time of trading on such exchange or
market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise
designated as a Trading Day in writing by the Holder and the Company.

     (m) “Voting Stock” of a Person means capital stock of such Person of the class or classes
pursuant to which the holders thereof have the general voting power to elect, or the general power
to appoint, at least a majority of the board of directors, managers or trustees of such Person
(irrespective of whether or not at the time capital stock of any other class or classes shall have
or might have voting power by reason of the happening of any contingency).

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,

SIGNATURE PAGE FOLLOWS]

14

 

     IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized
officer as of the date first indicated above.

	 	 	 	 	 	 	 

	 	 	EMISPHERE TECHNOLOGIES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/  Michael R. Garone 
 

	 	 
	 

	 	Name:
	 	Michael R. Garone	 	 
	 

	 	Title:
	 	Interim Chief Executive Officer and	 	 
	 

	 	 	 	Chief Financial Officer	 	 

15

 

EXERCISE NOTICE

EMISPHERE TECHNOLOGIES, INC.

WARRANT NO. A-73 DATED JULY 6, 2011

Ladies and Gentlemen:

     (1) Form of Exercise Price. The Holder intends that payment of the Exercise Price
shall be made as:

	 	 	 	 	 

	 

	 	                    
	 	a “Cash Exercise” with respect to                       Warrant
Shares; and/or
	 
	 	 	 	 
	 

	 	                    
	 	a “Cashless Exercise” with respect to                      Warrant
Shares.

     In the event that the Holder has elected a Cashless Exercise with respect to some or all of
the Warrant Shares to be issued pursuant hereto, the Holder hereby represents and warrants that (i)
this Exercise Notice was executed by the Holder at __________ [a.m.][p.m.] on the date set forth
below and (ii) if applicable, the Bid Price as of such time of execution of this Exercise Notice
was $_______.

     (2) Payment of Exercise Price. In the event that the Holder has elected a Cash
Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the Holder
shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in
accordance with the terms of the Warrant.

     (3) Delivery of Warrant Shares. The Company shall deliver to Holder, or its designee
or agent as specified below, __________ Warrant Shares in accordance with the terms of the Warrant.
Delivery shall be made to Holder, or for its benefit, to the following address:

_______________________

_______________________

_______________________

_______________________

	 	 	 	 	 	 	 

	 	 	HOLDER	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	(Print name)	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 

16

 

WARRANT ORIGINALLY ISSUED JULY 6, 2011

WARRANT NO. A-73

FORM OF ASSIGNMENT

To be completed and signed only upon transfer of Warrant

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ________________
the right represented by the within Warrant to purchase ______________________ shares of Common
Stock to which the within Warrant relates and appoints __________________ attorney to transfer said
right on the books of the Company with full power of substitution in the premises.

	 	 	 	 	 	 	 	 	 	 	 

	Dated:	 	 	 	 	 	TRANSFEROR:	 	 
	 

	 	 

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	(Print name)	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

	 	 
	 

	 	 	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	TRANSFEREE:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	(Print name)	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	(Address of Transferee)	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 

In the presence of:

____________________________

# 1840512

17exv10w1

Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

by and among

DIAMOND RESORTS PARENT, LLC

and

THE PERSONS SET FORTH ON SCHEDULE 1 HERETO

 

Dated as of July 21, 2011

 

 

Table of Contents

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	ARTICLE I PURCHASE AND SALE OF COMMON UNITS	 	 	1	 
	1.01.
	 	Sale and Issuance of Common Units	 	 	1	 
	ARTICLE II CLOSING	 	 	1	 
	2.01.
	 	Time and Place of the Closing	 	 	1	 
	2.02.
	 	Deliveries by the Company to the Purchasers at the Closing	 	 	1	 
	2.03.
	 	Deliveries by the Purchasers to the Company at the Closing	 	 	3	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY	 	 	3	 
	3.01.
	 	Organization and Authority	 	 	3	 
	3.02.
	 	Authorization; Binding Effect	 	 	4	 
	3.03.
	 	Capitalization of the Company and Title to Units	 	 	5	 
	3.04.
	 	No Conflicts; No Consents; No Defaults	 	 	5	 
	3.05.
	 	Financial Statements	 	 	6	 
	3.06.
	 	Business Operations	 	 	6	 
	3.07.
	 	S-4	 	 	7	 
	3.08.
	 	No Brokers	 	 	7	 
	3.09.
	 	No Material Adverse Change	 	 	7	 
	3.10.
	 	Compliance with Laws	 	 	7	 
	3.11.
	 	Registration Rights	 	 	7	 
	3.12.
	 	Offering Exemption	 	 	7	 
	3.13.
	 	Real Property Holding Company	 	 	8	 
	3.14.
	 	Taxes	 	 	8	 
	3.15.
	 	Litigation	 	 	8	 
	3.16.
	 	Employee Benefit Plans	 	 	8	 
	3.17.
	 	Contracts	 	 	9	 
	3.18.
	 	Investment Company Act	 	 	10	 
	3.19.
	 	No Bankruptcy	 	 	10	 
	3.20.
	 	Assets	 	 	10	 
	3.21.
	 	Intellectual Property	 	 	11	 
	3.22.
	 	Shell Company Status	 	 	12	 
	3.23.
	 	Labor Matters	 	 	12	 
	3.24.
	 	Related-Party Transactions	 	 	12	 
	3.25.
	 	Gaming Licenses	 	 	12	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS	 	 	13	 

ii

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	4.01.
	 	Authorization	 	 	13	 
	4.02.
	 	No Conflicts; No Consents	 	 	13	 
	4.03.
	 	Accredited Investor; Diligence	 	 	13	 
	4.04.
	 	Investment	 	 	13	 
	4.05.
	 	Rule 144	 	 	13	 
	4.06.
	 	No Public Market	 	 	14	 
	ARTICLE V CONDITIONS TO CLOSING	 	 	14	 
	5.01.
	 	Conditions to Obligation of the Purchasers	 	 	14	 
	5.02.
	 	Conditions to Obligation of the Company	 	 	15	 
	ARTICLE VI INDEMNIFICATION	 	 	15	 
	6.01.
	 	Survival	 	 	15	 
	6.02.
	 	Indemnification	 	 	15	 
	ARTICLE VII DEFINITIONS	 	 	16	 
	ARTICLE VIII MISCELLANEOUS	 	 	19	 
	8.01.
	 	Entire Agreement	 	 	19	 
	8.02.
	 	Remedies	 	 	20	 
	8.03.
	 	Governing Law	 	 	20	 
	8.04.
	 	Waiver of Jury Trial	 	 	20	 
	8.05.
	 	Venue; Submission to Jurisdiction	 	 	20	 
	8.06.
	 	Amendment; Waiver	 	 	20	 
	8.07.
	 	Notices	 	 	20	 
	8.08.
	 	Severability	 	 	21	 
	8.09.
	 	Assignment and Binding Effect	 	 	22	 
	8.10.
	 	No Benefit to Others	 	 	22	 
	8.11.
	 	Counterparts	 	 	22	 
	8.12.
	 	Interpretation	 	 	22	 
	8.13.
	 	Fees and Expenses	 	 	22	 
	8.14.
	 	Termination	 	 	23	 
	8.15.
	 	Use of Purchasers’ Names	 	 	23	 

EXHIBITS

Exhibits

	 	 	 

	Exhibit A

	 	Legal Opinion of Ballard Spahr LLP
	Exhibit B

	 	Fourth Amended and Restated Operating Agreement
	Exhibit C

	 	Second Amended and Restated Registration Rights Agreement
	Exhibit D

	 	Fourth Amended and Restated Securityholders Agreement

iii

 

SECURITIES PURCHASE AGREEMENT

     This SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of July 21, 2011, is
entered into by and among the Persons set forth on Schedule 1 hereto (each, a
“Purchaser” and collectively, the “Purchasers”), 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 VIII below.

     WHEREAS, contemporaneously herewith, the Company in entering into that certain Redemption
Agreement, dated as of the date hereof (the “Redemption Agreement”) with DRP Holdco, LLC,
Silver Rock Financial LLC, IN — FP1 LLC, BDIF LLC and CM — NP LLC (collectively, the
“Preferred Holders”), pursuant to which the Company is purchasing from the Preferred
Holders 1,133.33 Preferred Units of the Company representing all of the issued and outstanding
Preferred Units of the Company (the “Preferred Units”) at the Closing.

     WHEREAS, in connection with the redemption of the Preferred Units, the Company desires to sell
to the Purchasers 280.894 Common Units, and the Purchasers desire to purchase such securities from
the Company, for an aggregate purchase price of $136,500,000 (the “Purchase Price”) with a
per-unit purchase price of $485,948.44 per Common Unit, 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

PURCHASE AND SALE OF COMMON UNITS

     1.01. Sale and Issuance of Common Units. Subject to the terms and conditions of this Agreement, including the delivery of the
certificates, agreements and other documents set forth in Section 2.01, as of the date hereof, each
Purchaser hereby purchases from the Company, and the Company hereby sells to each such Purchaser,
such number of Common Units for the cash purchase price set forth opposite each such Purchaser’s
name on Schedule 1 hereto.

ARTICLE II

CLOSING

     2.01. Time and Place of the Closing. The consummation of the transactions contemplated by this Agreement (the “Closing”)
will take place at the offices of Katten Muchin Rosenman LLP, 525 W. Monroe Street, Suite 1900,
Chicago, Illinois 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 the Purchasers at the Closing. At the Closing:

 

 

	 	(a)	 	Officer’s Certificate. The Company shall have
delivered to the Purchasers 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;
	 
	 	(ii)	 	good standing certificates (i) with respect to
the Company, certified by the Secretary of State of Nevada, (ii) with
respect to Polo Holdings, certified by the Secretary of State of Nevada
and (iii) with respect to DRC, certified by the Secretary of State of
Maryland, in each case 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, and, as necessary, the Members 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.

	 	(b)	 	Registration Rights Agreement. The Company, the
Preferred Holders, CDP and 1818 Partners, LLC shall have executed and delivered
the Registration Rights Agreement.
	 
	 	(c)	 	Securityholders Agreement. The Company, the Preferred
Holders, CDP and 1818 Partners, LLC shall have executed and delivered the
Securityholders Agreement.
	 
	 	(d)	 	Redemption Agreement. The Company and the Preferred
Holders shall have executed and delivered the Redemption Agreement.
	 
	 	(e)	 	LLC Agreement. The Company, the Preferred Holders, CDP
and 1818 Partners, LLC shall have executed and delivered the LLC Agreement
reflecting, among other things, the redemption of the Preferred Units pursuant
to the Redemption Agreement and the issuance and sale of the Common Units to
the Purchasers hereunder.
	 
	 	(f)	 	Legal Opinion. The Company shall have delivered to the
Purchasers the opinion of Ballard Spahr LLP, dated the date of the Closing, in
the form attached hereto as Exhibit C.
	 
	 	(g)	 	Bring-down Certificate. The Company shall have
delivered to the Purchasers a certificate of the Chief Executive Officer or
Chief Financial Officer of the Company, dated as of the date of Closing,
certifying as to the
fulfillment of the conditions specified in Sections 5.01(a), 5.01(d) and 5.01(e).

2

 

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

	 	(a)	 	Purchase Price. Each Purchaser shall deliver to the
Company the cash purchase price set forth opposite each such Purchaser’s name
on Schedule 1 hereto, by wire transfer of immediately available funds
to the bank account designated by the Company in accordance with the wire
transfer instructions set forth on Schedule 2.03.
	 
	 	(b)	 	Registration Rights Agreement. Each Purchaser shall
have executed and delivered the Registration Rights Agreement.
	 
	 	(c)	 	Securityholders Agreement. Each Purchaser shall have
executed and delivered the Securityholders Agreement.
	 
	 	(d)	 	LLC Agreement. Each Purchaser shall have executed and
delivered the LLC Agreement reflecting, among other things, the redemption of
the Preferred Units pursuant to the Redemption Agreement and the issuance and
sale of the Common Units to the Purchasers hereunder.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     As a material inducement to the Purchasers to enter into this Agreement and to consummate the
transactions contemplated hereby, the Company represents and warrants to the Purchasers (except as
provided in the Disclosure Schedules attached hereto; provided, that in order for an item appearing
in the Disclosure Schedules to modify or qualify a representation or warranty contained in any
section hereof, such item must reference such section) as of the date hereof and as of the Closing
as follows:

     3.01. Organization and Authority.

	 	(a)	 	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: (i) 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;
(ii) to own, lease or operate its properties and assets and carry on the
business of the Company as presently conducted; (iii) to redeem the Preferred
Units in accordance with the Redemption Agreement; and (iv) to issue the Common
Units to the Purchasers at the Closing as contemplated
herein. The Company has at all times been qualified or licensed to do
business and is in good standing in Nevada, which is the only jurisdiction
in which the ownership or leasing of property by it or the conduct of its
business requires such licensing or qualification.

3

 

	 	(b)	 	Other than as set forth on Schedule 3.01, (i) each of
the Company’s Subsidiaries is an entity duly formed or incorporated, validly
existing and in good standing under the Laws of its jurisdiction of formation
or incorporation, has all requisite corporate power and authority necessary to
own its properties and to carry on its businesses as now conducted, and is in
good standing and is duly qualified to do business as a foreign corporation or
other entity in each jurisdiction in which its ownership of its property or the
conduct of its businesses as now conducted requires it to qualify, except where
the failure to be so qualified as a foreign corporation or other entity would
not be materially adverse to the conduct of the Company’s business or its
operation, (ii) all outstanding capital stock and other equity or ownership
interests of each Company Subsidiary are owned, directly or indirectly, by the
Company free and clear of any Liens and are validly issued, fully paid and
nonassessable, (iii) the Company has the right to elect or appoint at least a
majority of directors to the boards of directors (or similar governing body),
or to otherwise control the operation, of each Company Subsidiary and (iv)
there are no instruments, rights, warrants or options exercisable for or
convertible into equity securities of any Company Subsidiary 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 such Subsidiary.

	 	(c)	 	Other than as set forth on Schedule 3.01, neither the
Company nor any of its Subsidiaries owns or holds the right to acquire any
stock, partnership interest, joint venture interest or other equity ownership
interest in any other Person other than Company Subsidiaries.

	 	(d)	 	The Company has made available to the Purchasers true, correct
and complete copies of the charter, bylaws and similar organizational
documents, including any amendments thereto, for each of the Company, DRC and
Polo Holdings (all of which were filed as exhibits to the Form S-4 (as defined
below)).

     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 each of the Transaction Agreements executed and
delivered by the Company have been duly executed and delivered and 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

4

 

delivery of this
Agreement and the Transaction Agreements to be executed and delivered at the Closing and to the
consummation and performance of the transactions contemplated hereby and thereby at the Closing
have been taken. The issuance and/or sale of the Common Units to the Purchasers is not and will
not be subject to any preemptive rights or rights of first refusal that have not been properly
waived or complied with.

     3.03. Capitalization of the Company and Title to Units.

	 	(a)	 	Schedule 3.03 sets forth the equity capitalization of
the Company immediately following the Closing.
	 
	 	(b)	 	Other than as set forth on Schedule 3.03, 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 the LLC Agreement, the Redemption 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 the
Purchasers hereunder have been duly and validly authorized and issued, and upon
payment of the Purchase Price specified herein, 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. None of the
Common Units were issued at the Closing in violation of the Securities Act, or
the securities laws of any state or other jurisdiction.

     3.04. No Conflicts; No Consents; No Defaults. The execution, delivery or performance by the Company of this Agreement and 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; (ii) conflict with, or result in the breach or termination
of, or constitute a default (with or without notice or lapse of time, or both) under or result in
the termination or suspension of, or accelerate the performance required by any of the terms,
conditions or provisions of, any note, bond, mortgage, indenture, license, lease, agreement,
commitment or other instrument to which the Company or any of its Subsidiaries is a party or by
which any of its properties or assets is bound; (iii) constitute a violation by the Company of any

5

 

Law applicable to the Company, its Subsidiaries or their respective properties or assets; (iv)
result in the creation of any mortgage, claim, lien, pledge, security interest, option, charge,
restriction, voting trust agreement, encumbrance and legal and/or equitable claim of any kind
(each, a “Lien”) upon any of the properties or assets of the Company or its Subsidiaries;
or (v) result in the creation of any Lien upon the Common Units. 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 or its Subsidiaries 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 and thereby, or the issuance, sale or delivery of the Common
Units (other than such notifications or filings required under applicable federal or state
securities laws, if any). Except as would not reasonably be expected to have a Material Adverse
Change, neither the Company nor any of its Subsidiaries are in default under or in breach of, or in
receipt of any written notice of any default or breach under, any note, bond, mortgage, indenture,
license, lease, agreement, commitment or other instrument to which the Company or any of its
Subsidiaries is a party or by which any of its properties or assets is bound.

     3.05. Financial Statements. The financial statements of the Company included in the Form S-4 (the “Financial
Statements”) comply in all material respects with applicable accounting requirements and the
rules and regulations of the SEC with respect thereto as in effect at the time of filing and
effectiveness. The Financial Statements have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods indicated, except that the interim Financial Statements may
not contain all footnotes required by GAAP. Each of the Financial Statements fairly presents in
all material respects the financial position and results of operations of the Company and each of
its Subsidiaries as of the date thereof, or for the period related thereto, as applicable (but in
the case of the interim unaudited Financial Statements subject to normal year-end audit
adjustments, none of which is reasonably expected to be material). The Company and its
Subsidiaries do not have any Liability (and, to the Knowledge of the Company, there is no basis for
any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim,
or demand against any of them giving rise to any Liability), except for (w) Liabilities set forth
on the balance sheet dated as of March 31, 2011 (the “Balance Sheet”), (x) Liabilities
which have arisen after the date of the Balance Sheet in the ordinary course of business (none of
which results from, arises out of, relates to, is in the nature of, or was caused by any breach of
contract, breach of warranty, tort, infringement, or violation of Law), (y) Liabilities under any
contracts, leases or Employee Benefit Plans pursuant to which the Company has any executory
obligations (excluding Liabilities resulting from breach or default thereof), and (z) Liabilities
set forth on Schedule 3.05 (none of which, to the Knowledge of the Company, is expected to have a
Material Adverse Effect)

     3.06. Business Operations. The Company is a holding company and has no business operations other than in its capacity
as an indirect parent company of DRC. The Company owns
100% of the equity interests in Polo Holdings. Polo Holdings is a holding company and has no
business operations other than in its capacity as the direct parent company of DRC. Polo Holdings
owns 100% of the outstanding common stock of DRC.

     3.07. S-4. The Form S-4 Registration Statement, as amended, of DRC (the “Form S-4”) on file
with the U.S. Securities and Exchange Commission (the “SEC”) complies with

6

 

applicable
securities laws and accurately presents the business, operations and financial condition of the
Company in all material respects. At the time the Form S-4 became effective, at the date of this
Agreement and at the date of Closing, the Form S-4 complied and will comply in all material
respects to the requirements of the Securities Act and did not and will not contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.

     3.08. No Brokers. Except as set forth on Schedule 3.08, there are no brokers fees, finders fees or
similar compensation in connection with this transaction, and no commissions to third parties are
being paid out of the proceeds of this investment in relation to this investment. Neither the
Company nor any Person acting on its behalf has offered Common Units or any similar securities of
the Company for sale to, solicited any offers to buy such securities or any similar securities of
the Company from or otherwise approached or negotiated with respect to the Company with any Person
other than the Purchasers.

     3.09. No Material Adverse Change. Since March 31, 2011, there has not been any event, occurrence, development or state of
circumstances or facts which has had or would reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Change.

     3.10. Compliance with Laws. Except, with respect to clauses (ii), (iii) and (iv) only, as would not reasonably be
expected to have a Material Adverse Effect, the Company: (i) is not in violation of its
Organizational Documents, (ii) is not in violation of any Law to which it is subject, (iii) is not
in violation or default of any existing agreement entered into by the Company, and (iv) has not
failed to obtain, or to adhere to the requirements of, any Authorization necessary for the
ownership of its assets or the operation of its business. Without limiting the generality of the
foregoing provisions of this Section 3.10, the Company and each of its Subsidiaries is in
compliance with all limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in the Environmental Laws, except for such failures
in compliance as would not reasonably be expected to have a Material Adverse Effect. There is no
Litigation nor any demand, claim, hearing, notice of violation or demand letter pending or, to the
Knowledge of the Company, threatened against the Company or any of its Subsidiaries relating to the
Environmental Laws. Without limiting the generality of the foregoing provisions of this Section
3.10, the Company and each of its Subsidiaries is in compliance with all Laws applicable to its
business of financing consumers’ purchases of Timeshare Interests, except for such failures in
compliance as would not reasonably be expected to have a Material Adverse Effect.

     3.11. 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.

     3.12. Offering Exemption. Based in part on the Purchasers’ representations contained in Article IV hereof,
the offer, sale and issuance of the Common Units do not violate any federal or state securities
laws and will not require registration under the Securities Act or

7

 

any applicable state securities
laws. The Company and its agents will not take any action hereafter that would cause the loss of
such exemptions.

     3.13. Real Property Holding Company. Neither the Company nor DRC is a United States real property interest within the meaning of
Section 897 of the Code. If the Company becomes aware that either it or DRC has become a United
States real property interest, the Company will promptly notify Purchasers of any such change in
tax status.

     3.14. Taxes. Except as set forth on Schedule 3.14, the Company and its Subsidiaries have filed
all federal, state and local Tax reports and returns required by any law or regulation to be filed
by them (when such reports or returns became due, taking into account any extension of time to file
properly granted or obtained), and such returns are true and correct in all material respects. The
Company and its Subsidiaries have paid all Taxes, interest and penalties, if any, reflected on such
Tax returns or otherwise due and payable by them. The reserves for taxes reflected on the Balance
Sheet included in the Financial Statements are adequate in amount for the payment of all known
Liabilities for all Taxes (whether or not disputed) of the Company and its Subsidiaries accrued
through the dates of such Balance Sheet. Any deficiencies proposed as a result of any governmental
audits of such Tax returns have been paid or settled, and there are no present audits of Tax
returns or disputes as to Taxes payable by the Company or its Subsidiaries.

     3.15. Litigation. Except as set forth on Schedule 3.15 or as would not reasonably be expected to have
a Material Adverse Change, there are no actions, suits, inquiries, proceedings or investigations
pending or threatened before any Governmental Authority against the Company or its Subsidiaries (or
threatened against or affecting any of the officers, directors or employees of the Company or its
Subsidiaries with respect to their business or proposed business activities), nor are there any
facts that would provide a basis for any such action, suit, inquiry, proceeding or investigation.
Except as set forth on Schedule 3.15 or as would not reasonably be expected to have a
Material Adverse Change, the Company and its Subsidiaries (i) are not subject to any arbitration
proceeding or material grievance under collective bargaining agreements or otherwise or any
governmental investigations or inquiries, and, to the Knowledge of the Company, there is no basis
for any of the foregoing, (ii) are not subject to any judgment, order or decree of any court or
other Governmental Authority and (iii) have not received any opinion or memorandum or legal advice
from legal counsel to the effect that it is exposed, from a legal standpoint, to any liability or
disadvantage which may be material to its business. There is no action, suit, proceeding or
investigation by the Company or any of its Subsidiaries currently pending or that the Company
or any of its Subsidiaries intends to initiate.

     3.16. Employee Benefit Plans.

          (a) Schedule 3.16 is a true and complete list of all employment, severance, change in
control or similar agreements, equity or equity-based plans or agreements, severance pay, vacation,
sick leave, fringe benefit, medical, dental, life insurance, disability or other welfare plans,
programs or agreements, savings, profit sharing, pension or other retirement plans, programs or
agreements and all bonus or other incentive plans, contracts, agreements, arrangements, policies,
programs, practices or other employee benefits or remuneration of any kind, whether formal or
informal, funded or unfunded, including each “employee benefit plan”, within the meaning of Section
3(3) of ERISA (collectively, the “Employee Benefit Plans”)

8

 

sponsored, maintained or
contributed to by the Company or any of its Subsidiaries or with respect to any Employee Benefit
Plan subject to Title IV of ERISA, by any trade or business, whether or not incorporated, that
together with the Company would be deemed a “single employer” within the meaning of Section 4001(b)
of ERISA (an “ERISA Affiliate”) and in which any one or more of the current or former
employees or directors of the Company or any of its Subsidiaries, as the case may be (including
beneficiaries of employees or former employees), participates or is eligible to participate.

          (b) No liability under Title IV or Section 302 of ERISA has been incurred by the Company or
any ERISA Affiliate that has not been satisfied in full, and no condition exists that presents a
material risk to the Company or any ERISA Affiliate of incurring any such liability, other than
liability for premiums due the Pension Benefit Guaranty Corporation (which premiums have been paid
when due).

          (c) Each Employee Benefit Plan has been maintained, in form and operation, in compliance in
all material respects with its terms and all applicable Laws, including, without limitation, ERISA
and the Code. There has been no material failure of a Employee Benefit Plan that is a group health
plan (as defined in Section 5000(b)(1) of the Code) to meet the requirements of Section 4980B(f) of
the Code with respect to a qualified beneficiary (as defined in Section 4980B(g) of the Code).
None of the Company or any of its Subsidiaries has contributed to a nonconforming group health plan
(as defined in Section 5000(c) of the Code).

          (d) There are no pending, or to the Knowledge of the Company, threatened or anticipated claims
by or on behalf of any Employee Benefit Plan, by any employee or beneficiary covered under any such
Employee Benefit Plan, or otherwise involving any such Employee Benefit Plan (other than routine
claims for benefits).

          (e) None of the Company or any of its Subsidiaries has any obligation to provide
post-employment welfare benefits other than as required under Section 4980B of the Code.

     3.17. Contracts.

          (a) Except as set forth in Schedule 3.17(a), neither the Company nor any of its
Subsidiaries is a party to:

     (i) Any collective bargaining contract with any unions, guilds, shop committees
or other collective bargaining groups;

     (ii) Any contract requiring the Company or any of its Subsidiaries to purchase
any goods or services exclusively from a third party entity;

     (iii) Any contract prohibiting or restricting the Company or any of its
Subsidiary from competing in any business or geographical area, or soliciting
customers or employees, or otherwise restricting it from carrying on any business
anywhere in the world;

9

 

     (iv) Any contract or binding commitment not made in the ordinary course of
business that is material to the Company; or

     (v) Any contract reasonably expected to have a Material Adverse Change.

          (b) Except as set forth on Schedule 3.17(b), neither the Company nor any of its
Subsidiaries is in default in any material respect under any material contract (including the
contracts identified or referred to in the foregoing subsections of this Section 3.17) to
which it is a party or by which it is bound and, to the Knowledge of the Company, no event or
omission has occurred that, through the passage of time or the giving of notice, or both, would
constitute a default in any material respect thereunder or cause the acceleration of any of the
Company’s or any of its Subsidiaries’ obligations thereunder or result in the creation of any Lien
on any of the Company’s or any of its Subsidiaries’ assets except as would not reasonably be
expected to have a Material Adverse Change. To the Knowledge of the Company, no third party is in
default in any material respect under any material contract to which the Company or any of its
Subsidiaries is a party, nor, to the Knowledge of the Company, has any event or omission occurred
that, through the passage of time or the giving of notice, or both, would constitute a default in
any material respect thereunder, or give rise to an automatic termination. All material contracts
of the Company and its Subsidiaries have been filed as exhibits to the Form S-4.

     3.18. Investment Company Act. The Company (i) is not an “investment company” within the meaning of Section 3(a)(1) of the
Investment Company Act of 1940, as amended (the “Investment Company Act”), or an
“affiliated person” thereof or an “affiliated person” of any such “affiliated person,” as such
terms are defined in the Investment Company Act and (ii) its status as a Person that is not an
“investment company” is not dependent on the exceptions provided in Section 3(c)(1) or Section
3(c)(7) of the Investment Company Act.

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

     3.20. Assets. The Balance Sheet reflects all of the assets of the Company and its consolidated
subsidiaries as of the date thereof. Except as described in the Form S-4, the Company and its
consolidated Subsidiaries have good and marketable title to all of the assets reflected in the
Balance Sheet (except as disposed of in the ordinary course of business since the date of the
Balance Sheet), free and clear of any Liens except immaterial Liens which individually or in the
aggregate would not reasonably be expected to adversely affect the use or value of such assets.
Except as described in the Form S-4, the Company and each of its Subsidiaries has good and
marketable title to all of the assets necessary to conduct its business as presently conducted,
free and clear of any Liens except immaterial Liens which individually or in the aggregate would
not reasonably be expected to adversely affect the use or value of such assets.

     3.21. Intellectual Property.

          (a) Except as described in the Form S-4, the Company and each of its Subsidiaries owns, or is
licensed pursuant to a contract, all Intellectual Property Rights used in

10

 

their respective
businesses (collectively, “Company Intellectual Property Rights”), free and clear of any
Liens except immaterial Liens which individually or in the aggregate would not reasonably be
expected to adversely affect the use or value of such Company Intellectual Property Rights. None of
the Company Intellectual Property Rights have been licensed on an exclusive basis. The transactions
contemplated by this Agreement shall not impair the right, title or interest of the Company or any
Subsidiary in or to any of the Company Intellectual Property Rights.

          (b) (i) To the Knowledge of the Company, the operation of the business of the Company and its
Subsidiaries, and the use of any Company Intellectual Property Rights by the Company or its
Subsidiaries, does not infringe upon, misappropriate or violate, or constitute an appropriation of
any right, title, or interest of, any Intellectual Property Right of any other Person, (ii) there
are no claims pending or, to the Knowledge of the Company, reasonably foreseeable related to the
same, and (iii) neither the Company nor any of its Subsidiaries has received written notice of any
such claim (including any offer to license) and, to the Knowledge of the Company, there have been
no threats of the same. The Company and its Subsidiaries have not agreed to indemnify any Person
from or against any infringement, misappropriation or violation with respect to any Intellectual
Property Rights of other Persons, other than in connection with customary intellectual property
licensing or other agreements entered into in the ordinary course of business.

          (c) The Company has taken all actions reasonably necessary, consistent with industry
standards, to maintain and protect all of the Company Intellectual Property Rights, including the
secrecy, confidentiality and value of trade secrets and other confidential information. To the
Knowledge of the Company, each current and former employee and independent contractor of, and
consultant to, the Company or any Subsidiary and/or who has been directly involved in, or who has
contributed to, the creation or development of Company Intellectual Property Rights has entered
into a written agreement pursuant to which such employee,
independent contractor or consultant agrees to protect the confidential information of the
Company and assign to the Company all Intellectual Property Rights authored, developed or otherwise
created by such employee, independent contractor or consultant in the course of his, her, or its
employment or other relationship with the Company, without further consideration or any
restrictions or obligations on the use or ownership of such Intellectual Property Rights
whatsoever, and such agreements are valid and enforceable in accordance with their terms. To the
Company’s knowledge, no employee and no independent contractor or consultant to any such
confidentiality agreement is in breach thereof.

          (d) The Company and its Subsidiaries have not disclosed any confidential Company Intellectual
Property Rights to any third party other than pursuant to a written confidentiality agreement
pursuant to which such third party agrees to protect and not to disclose such confidential
information.

          (e) To the Knowledge of the Company, the Company and each of its Subsidiaries are and have
been in compliance (and use reasonable commercial efforts to oversee the compliance of applicable
third parties) with all applicable Laws concerning the collection, use, storage, transfer and
dissemination of personal information.

11

 

          (f) The Company maintains commercially reasonable security, disaster recovery and business
continuity plans, procedures and facilities. In the last twelve (12) months, there has not been any
material failure with respect to any of the computer systems, including software, used by the
Company and its Subsidiaries in the conduct of their business (collectively, the “Business
Systems”) that has not been remedied or replaced in all material respects. The Company has
taken reasonable actions to protect the security and integrity of the Business Systems and the data
stored or contained therein or transmitted thereby including, without limitation, procedures
designed to prevent unauthorized access and the introduction of a virus and the taking and storing
on-site and off-site of back-up copies of critical data. To the Knowledge of the Company, there
have been no unauthorized intrusions or breaches of the security of the Business Systems.

     3.22. Shell Company Status. The Company is not, and has never been, an issuer identified in Rule 144(i)(1).

     3.23. Labor Matters. Except as set forth on Schedule 3.23, within the last two years, neither the
Company nor any of its Subsidiaries has experienced any material labor disputes, any material union
organization attempts or any material work stoppages due to labor disagreements. Except for past
violations described on Schedule 3.23 or which would not be reasonably expected to have
been a Material Adverse Effect, the Company and each of its Subsidiaries is in material compliance
with all Laws relating to employment and employment practices, terms and conditions of employment
and wages and hours, and neither the Company nor, to the Knowledge of the Company, any of its
Subsidiaries is subject to any asserted claims or proceedings alleging noncompliance except as
would not be reasonably expected to have a Material Adverse Effect.

     3.24. Related-Party Transactions. Except as described in the Form S-4 or as set forth on Schedule 3.24, no Affiliate,
stockholder, executive officer or director of the Company or their
respective Affiliates or members of their respective immediate families (i) is party to any
agreement, commitment or transaction with the Company, (ii) has or had any direct or indirect
ownership interest in any Person with which the Company has a business relationship, or any Person
that competes with the Company, provided, that employees, stockholders, officers or directors of
the Company and members of their immediate families may own less than 5% of the outstanding stock
in publicly traded companies that have a business relationship with the Company or may compete with
the Company to the extent permitted by the provisions of the LLC Agreement, or (iii) has any direct
or indirect interest in any asset of the Company.

     3.25. Gaming Licenses. Neither the Company nor any of its Subsidiaries has, or is required under Gaming Laws to
have, any Gaming Licenses.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

     Each Purchaser, for itself and for no other Purchaser, represents and warrants to the Company
as follows:

12

 

     4.01. Authorization. Such Purchaser has full power and authority to enter into and perform the transactions
contemplated by this Agreement and the Transaction Agreements to which it is a party. Such
Purchaser has duly authorized, executed and delivered this Agreement and the Transaction Agreements
to which it is a party. This Agreement and the Transaction Agreements to which such Purchaser is a
party, when executed and delivered by such Purchaser, will constitute valid and legally binding
obligations of such Purchaser, enforceable against such Purchaser in accordance with their 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).

     4.02. No Conflicts; No Consents. The execution, delivery or performance by such Purchaser of this Agreement and the
Transaction Agreements to which such Purchaser is a party, and the consummation by such Purchaser
of the transactions contemplated hereby or thereby, and compliance by such Purchaser with the terms
and provisions hereof or thereof, will not (i) conflict with such Purchaser’s organizational
documents, or (ii) constitute a violation by such Purchaser of any Law applicable to such
Purchaser. No permit, authorization, consent or approval of or by, or any notification of or
filing with, any Person (governmental or private) is required by such Purchaser in connection with
the execution, delivery and performance by such Purchaser of this Agreement and the Transaction
Agreements to which such Purchaser is a party, the consummation by such Purchaser of the
transactions contemplated hereby and thereby.

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

     4.04. Investment. Such Purchaser is acquiring the Common Units 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.

     4.05. Rule 144. Such Purchaser 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. Such
Purchaser 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.

     4.06. No Public Market. Such Purchaser 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.

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ARTICLE V

CONDITIONS TO CLOSING

     5.01. Conditions to Obligation of the Purchasers. The obligation of each Purchaser to acquire Common Units at the Closing is subject to the
fulfillment to such Purchaser’s satisfaction, on or prior to the date of the Closing, of each of
the following conditions, any of which may be waived by such Purchaser (as to itself only):

          (a) The representations and warranties made by the Company in Article III shall be
true and correct as of the date when made and as of the date of the Closing, as though made on and
as of such date.

          (b) All authorizations, approvals or permits of, or filings with, any governmental authority
that are required by law in connection with (i) the redemption of the Preferred Units and (ii) the
lawful sale and issuance of the Common Units by the Company to the Purchasers shall have been duly
obtained by the Company and shall be effective on and as of the Closing, except where such filings
may be made subsequent to the Closing without causing a Material Adverse Change on the Company.

          (c) The Company shall have obtained any and all consents, permits and waivers including, but
not limited to, all governmental or regulatory consents, approvals, or authorizations required in
connection with the valid execution and delivery of this Agreement and the Transaction Agreements
and the consummation of the transactions contemplated by this Agreement and the Transaction
Agreements, and the same shall be effective as of the date of the Closing.

          (d) The Company shall have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be performed, satisfied or
complied with by it at or prior to the Closing, including having delivered to
the Purchasers all agreements and other documents required to be delivered by the Company to
the Purchasers pursuant to Section 2.02.

          (e) All conditions specified in the Redemption Agreement to the purchase by the Company, and
the sale by the Preferred Holders, of the Preferred Units shall have been satisfied or waived
(other than the disbursement by the Company of the purchase price for such Preferred Units).

          (f) No Material Adverse Effect shall have occurred since the date of this Agreement.

          (g) No Law, judgment, injunction or order shall be enacted, promulgated, entered or enforced
by any Governmental Authority that would prohibit consummation of the transactions contemplated by
this Agreement.

          (h) The Company shall have fully satisfied (including with respect to rights of timely
notification) or obtained enforceable waivers in respect of any preemptive or similar rights with
respect to the issuance of Common Units hereunder.

14

 

     5.02. Conditions to Obligation of the Company. At the Closing:

          (a) The representations and warranties made by each Purchaser in Article IV shall be
true and correct as of the Closing.

          (b) Each Purchaser shall have delivered to the Company all agreements and other documents
required to be delivered by such Purchaser to the Company pursuant to Section 2.03.

ARTICLE VI

INDEMNIFICATION

     6.01. 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 any Purchaser.

     6.02. Indemnification. The Company shall promptly indemnify and hold each Purchaser and each Purchaser’s
Subsidiaries and other Affiliates and their respective officers, directors, employees, agents and
equityholders (the “Purchaser Indemnitees”) harmless against and in respect of any and all
damages, losses, claims, penalties, liabilities, costs and expenses (including all fines, interest,
legal fees and expenses and amounts paid in settlement) that arise from or relate or are
attributable to
(i) any transaction financed or to be financed in whole or in part, directly or indirectly,
with the proceeds of the issuance of the Common Units, including, without limitation, the
redemption of the Preferred Units, (ii) the Company’s execution, delivery or performance of this
Agreement and the Transaction Agreements or any Purchaser Indemnitee’s enforcement of this
Agreement or of any of the Transaction Agreements, (iii) any misrepresentation by the Company or
breach of a warranty made by the Company in this Agreement or in the Transaction Agreements and
(iv) any breach of any covenant or agreement on the part of the Company set forth herein or in any
of the Transaction Agreements. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Liabilities indemnified hereunder which is permissible under applicable
Law. In the event any Purchaser Indemnitee is entitled to indemnification hereunder for any
Liabilities indemnified hereunder incurred by such Purchaser Indemnitee, the Company and the
Purchasers hereby agree that no Purchaser will bear any portion of any such Liability that is
subject to indemnification by the Company by virtue of such Purchaser’s ownership of securities of
the Company or otherwise. All indemnification payments hereunder shall be treated as a purchase
price adjustment for federal income tax purposes.

ARTICLE VII

DEFINITIONS

     For the purposes of this Agreement, the following terms have the meanings set forth below:

15

 

     “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.

     “Authorization” means any material authorization, approval, consent, certificate,
license, permit or franchise of or from any Governmental Authority.

     “Bankruptcy Code” has the meaning set forth in Section 3.19.

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

     “Business Day” means a day other than a Saturday, a Sunday, or a state or federally
recognized holiday on which banks in Nevada are permitted to close.

     “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.

	 	 	“Code” means the Internal Revenue Code of 1986, as amended.

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

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

     “DRC” means Diamond Resorts Corporation, a Maryland corporation and a wholly-owned
indirect subsidiary of the Company.

     “Employee Benefit Plans” has the meaning set forth in Section 3.16(a).

     “Environmental Laws” means shall mean any Laws relating to regulation of pollution or
the protection of human health or the environment, including the following federal statutes and
their state counterparts, as each may be amended from time to time, and any regulations promulgated
thereunder: the Clean Air Act, the Clean Water Act, the Comprehensive Environmental Response,
Compensation, and Liability Act, the Federal Insecticide, Fungicide, and Rodenticide Act, the
Hazardous Materials Transportation Act, the Occupational Safety and Health Act, the Resource
Conservation and Recovery Act and the Safe Drinking Water Act.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

     “ERISA Affiliate” has the meaning set forth in Section 3.16(a).

16

 

     “Financial Statements” has the meaning set forth in Section 3.05.

     “GAAP” means United States generally accepted accounting principles.

     “Gaming Authority” means those national, state, local and other governmental,
regulatory and administrative authorities, agencies, boards and officials responsible for or
regulating gaming or gaming activities in any jurisdiction.

     “Gaming Laws” means those federal, state and local laws, rules, regulations and
ordinances pursuant to which any Gaming Authority possesses regulatory, licensing or permit
authority over the conduct of gaming or the ownership of an interest in a gaming entity within any
jurisdiction.

     “Gaming Licenses” means all licenses, permits, approvals, authorizations,
registrations, findings of suitability, franchises, entitlements, waivers and exemptions issued by
any Gaming Authority that are necessary for or relate to the conduct of gaming activities or the
ownership of an interest in an entity that conducts such activities under the Gaming Laws.

     “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.

     “Intellectual Property Rights” means any and all of the following in any jurisdiction
throughout the world: (a) all inventions (whether or not patentable or reduced to practice), all
improvements thereto, and all patents and industrial designs, patent and industrial design
applications, and patent disclosures, together with all reissues, continuations,
continuations-in-part, revisions, divisionals, extensions, and reexaminations in connection
therewith; (b) all trademarks, service marks, designs, trade dress, logos, slogans, trade names,
business names, corporate names, Internet domain names, rights in telephone numbers, and all other
indicia of source, all applications, registrations, and renewals in connection therewith, and all
goodwill associated with any of the foregoing; (c) all works of authorship (whether or not
copyrightable), copyrights, database rights and moral rights, and all applications, registrations,
and renewals in connection therewith; (d) all trade secrets, know-how, technologies, processes,
techniques, protocols, methods, formulae, data, algorithms, compositions, industrial models,
architectures, layouts, designs, drawings, plans, specifications, methodologies, ideas, research
and development, and confidential information (including technical data, customer and supplier
lists, pricing and cost information, and business and marketing plans and proposals); (e) all
software (including source code, executable code, systems, networks tools, data, databases,
firmware, and related documentation); (f) all rights of privacy and publicity, including rights to
the use of names, likenesses, images, voices, signatures and biographical information of real
persons; (g) all other proprietary and intellectual property rights; and (h) all copies and
tangible embodiments of any of the foregoing (in whatever form or medium).

     “Knowledge of the Company” (and any similar expression) means, as to a particular
matter, the knowledge after due inquiry and reasonable investigation of Stephen Cloobeck or David
Palmer.

17

 

     “Law” means any statute, law, code, ordinance, regulation, rule, order, judgment,
writ, injunction, act or decree of any Governmental Authority.

     “Liability” means any obligation or liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due), including any liability for Taxes.

     “Lien” has the meaning set forth in Section 3.04.

     “LLC Agreement” means the Fourth Amended and Restated Operating Agreement dated as of
the date hereof among the Preferred Holders, CDP, 1818 Partners, LLC, and the Purchasers, in the
form attached hereto as Exhibit B.

     “Material Adverse Change” or “Material Adverse Effect” means a material
adverse effect upon the assets, liabilities, operations or business of the Company and its
Subsidiaries, taken as a whole.

     “Organizational Documents” means the Articles of Organization and, on and after the
Closing, the LLC Agreement.

     “Outside Date” means the thirtieth (30th) day following the date of this Agreement;
provided that if such day is not a Business Day, the first day following such day that is a
Business Day.

     “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.

     “Polo Holdings” means Diamond Resorts Holdings, LLC, a Nevada limited liability
company and a wholly-owned direct subsidiary of the Company.

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

     “Purchase Price” has the meaning set forth in the Recitals to this Agreement.

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

     “Redemption Agreement” 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 and the Preferred Holders, in the form attached hereto as Exhibit C.

     “Securities Act” means the Securities Act of 1933, as amended, or any similar federal
Law then in force, and the rules and regulations promulgated thereunder.

     “Securityholders Agreement” means that certain Fourth Amended and Restated
Securityholders Agreement, dated as of the date hereof, by and among the Company, CDP, 1818

18

 

Partners, LLC, the Preferred Holders and the Purchasers, in the form attached hereto as Exhibit
D.

     “Subsidiary” means, with respect to any Person, any corporation, limited liability
company, partnership, association or other business entity of which (i) if a corporation, a
majority of the total voting power of shares of stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company,
partnership, association or other business entity, a majority of the partnership or other similar
ownership interest thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more Subsidiaries of that Person or a combination thereof.

     “Tax” or “Taxes” means federal, state, county, local, foreign or other income,
gross receipts, ad valorem, franchise, profits, sales or use, transfer, registration, excise,
utility, environmental, communications, real or personal property, capital stock, license, payroll,
wage or other withholding, employment, social security, severance, stamp, occupation, alternative
or add-on minimum, estimated and other taxes of any kind whatsoever (including deficiencies,
penalties, additions to tax, and interest attributable thereto) whether disputed or not.

     “Timeshare Interest” means an interval or fractional timeshare interest, whether
conveyed via license, right to use, fee simple title or points.

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

ARTICLE VIII

MISCELLANEOUS

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

     8.02. Remedies. 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, including, without limitation, specific performance.

     8.03. Governing Law. This Agreement and the transactions contemplated by this Agreement, and all disputes
between the parties under or related to this Agreement or the facts and circumstances leading to
its execution, whether in contract, tort or otherwise, shall be governed by and construed in
accordance with the Laws of the State of Nevada, applicable to

19

 

contracts executed in and to be
performed entirely within that State and without reference to conflict of Laws principles.

     8.04. 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.

     8.05. 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 CLARK COUNTY, 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 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.

     8.06. 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.

     8.07. 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 facsimile or
e-mail 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

20

 

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

Katten Muchin Rosenman LLP

525 West Monroe Street

Suite 1900

Chicago, IL 60661-3693

Attention: Howard S. Lanznar

Facsimile: (312) 902-1061

To Purchasers:

c/o Wellington Management Company, LLP

280 Congress Street

Boston, MA 02210

Attention: Legal and Compliance Department

Facsimile: (617) 289-5699

E-Mail: seclaw@wellington.com

; provided that any notices or communications to any Purchaser shall be sent only to
the Legal and Compliance Department at Wellington Management Company, LLP, and the
Company shall not send notices or communications to any other Person on behalf of
any Purchaser without the prior written consent of a member of the Legal and
Compliance Department at Wellington Management Company, LLP.

with copies, which shall not constitute notice, to:

Greenberg Traurig

One International Place

Boston, MA 02210

Attention: Bradley A. Jacobson

Facsimile: (617) 279-8402

     8.08. 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.

     8.09. 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 each Purchaser may
assign its rights (i) to one or more of its Affiliates, (ii) to any Person that shares a common
investment adviser with such Purchaser and (iii) to any Person who purchases all or substantially
all of the assets of such Purchaser, and such Person(s) shall assume such Purchaser’s obligations
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.

21

 

     8.10. 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, other than Purchaser Indemnitees.

     8.11. 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.

     8.12. 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.

     8.13. Fees and Expenses. The Company shall pay the reasonable legal fees and expenses of Greenberg Traurig, LLP,
counsel to the Purchasers, incurred by the Purchasers in connection with the transactions
contemplated by this Agreement and the Transaction Agreements, up to a maximum amount of $200,000,
which amount shall be paid directly by the Company to Greenberg Traurig, LLP at the Closing or paid
by the Company to Greenberg Traurig, LLP upon termination of this Agreement so long as such
termination did not occur as a result of a material breach by such Purchasers of any of their
obligations hereunder (as the case may be).

     8.14. Termination. This Agreement may be terminated and the sale and purchase of the Common Units abandoned at
any time prior to the Closing by either the Company or any Purchaser (with respect to itself only)
upon written notice to the other, if the Closing has not been consummated on or prior to 5:00 p.m.,
New York City time, on the Outside Date; provided, however, that the right to terminate this
Agreement under this Section 8.14 shall not be available to any Person whose failure to comply with
its obligations under this Agreement has been the cause of or resulted in the failure of the
Closing to occur on or before such time. Nothing in this Section 8.14 shall be deemed to release
any party from any liability for any breach by such party

22

 

of the terms and provisions of this
Agreement or the Transaction Agreements or to impair the right of any party to compel specific
performance by any other party of its obligations under this Agreement or the Transaction
Agreements. Upon a termination in accordance with this Section, the Company and the terminating
Purchaser(s) shall not have any further obligation or liability (including arising from such
termination) to the other.

     8.15. Use of Purchasers’ Names. The Company agrees that neither it nor any of its employees, directors, officers, agents or
representatives will directly or indirectly use or refer in writing to the name of any Purchaser or
its investment adviser, if applicable, or any derivation thereof, for any purpose whatsoever
(including, without limitation, in any filing with any governmental authority, any press release,
any public announcement or statement or in any interview or other discussion with any reporter or
other member of the media), without the prior written consent of such Purchaser or investment
adviser, if applicable, with respect to each such use or reference, except as required by Law (in
which case the Company shall provide such Purchaser with prior written notice of such disclosure).

*     *     *     *     *

23

 

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

	 	 	 	 	 	 	 

	 	 	COMPANY:	 	 
	 
	 	 	 	 	 	 
	 	 	DIAMOND RESORTS PARENT, LLC	 	 
	 	 	a Nevada limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ David F. Palmer
 

David F. Palmer
	 	 
	 

	 	Title:
	 	President and Chief Financial Officer	 	 

[signature pages continue]

[Signature Page to Securities Purchase Agreement]

 

 

	 	 	 	 	 	 	 

	 	 	PURCHASERS:	 	 
	 
	 	 	 	 	 	 
	 	 	THE HARTFORD GROWTH OPPORTUNITIES FUND	 	 
	 
	 	 	 	 	 	 
	 	 	By: Wellington Management Company, LLP	 	 
	 	 	As investment adviser	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Steven M. Hoffman
 

Name: Steven M. Hoffman
	 	 
	 

	 	 	 	Title: Vice President & Counsel	 	 
	 
	 	 	 	 	 	 
	 	 	HARTFORD GROWTH OPPORTUNITIES HLS FUND	 	 
	 
	 	 	 	 	 	 
	 	 	By: Wellington Management Company, LLP	 	 
	 	 	As investment adviser	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Steven M. Hoffman
 

Name: Steven M. Hoffman
	 	 
	 

	 	 	 	Title: Vice President & Counsel	 	 
	 
	 	 	 	 	 	 
	 	 	QUISSETT INVESTORS (BERMUDA) L.P.	 	 
	 
	 	 	 	 	 	 
	 	 	By: Wellington Management Company, LLP	 	 
	 	 	As investment adviser	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Steven M. Hoffman
 

Name: Steven M. Hoffman
	 	 
	 

	 	 	 	Title: Vice President & Counsel	 	 
	 
	 	 	 	 	 	 
	 	 	QUISSETT PARTNERS, L.P.	 	 
	 
	 	 	 	 	 	 
	 	 	By: Wellington Management Company, LLP	 	 
	 	 	As investment adviser	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Steven M. Hoffman
 

Name: Steven M. Hoffman
	 	 
	 

	 	 	 	Title: Vice President & Counsel	 	 

[signature pages continue]

[Signature Page to Securities Purchase Agreement]

 

 

	 	 	 	 	 	 	 

	 	 	THE HARTFORD CAPITAL APPRECIATION FUND	 	 
	 
	 	 	 	 	 	 
	 	 	By: Wellington Management Company, LLP	 	 
	 	 	As investment adviser	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Steven M. Hoffman
 

Name: Steven M. Hoffman
	 	 
	 

	 	 	 	Title: Vice President & Counsel	 	 
	 
	 	 	 	 	 	 
	 	 	BAY POND PARTNERS, L.P.	 	 
	 
	 	 	 	 	 	 
	 	 	By: Wellington Management Company, LLP	 	 
	 	 	As investment adviser	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Steven M. Hoffman
 

Name: Steven M. Hoffman
	 	 
	 

	 	 	 	Title: Vice President & Counsel	 	 
	 
	 	 	 	 	 	 
	 	 	BAY POND INVESTORS (BERMUDA) L.P.	 	 
	 
	 	 	 	 	 	 
	 	 	By: Wellington Management Company, LLP	 	 
	 	 	As investment adviser	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Steven M. Hoffman
 

Name: Steven M. Hoffman
	 	 
	 

	 	 	 	Title: Vice President & Counsel	 	 

[Signature Page to Securities Purchase Agreement]

 

 

EXHIBIT A

Legal Opinion of Ballard Spahr LLP

 

100 North City Parkway, Suite 1750

Las Vegas, NV 89106-4617

tel 702.471.7000

fax 702.471.7070

www.ballardspahr.com

July 21, 2011

To: The Parties on the Attached Exhibit A

			
	Re:	 	Diamond Resorts Parent, LLC 

Ladies and Gentlemen:

We have acted as Nevada counsel to Diamond Resorts Parent, LLC, a Nevada limited liability
company (the “Company”), in connection with that certain Securities Purchase Agreement (the
“Securities Purchase Agreement”) dated July 21, 2011 between the Company and the parties set
forth on the attached Exhibit A (the “Wellington Purchasers”). This opinion is being
delivered at the request of the Company pursuant to Section 2.02(f) of the Securities
Purchase Agreement. Except as otherwise indicated, capitalized terms used herein are defined
as set forth in the Securities Purchase Agreement.

In so acting, we have examined copies of executed originals or of counterparts of the
following documents, each dated as of July 21, 2011, unless otherwise noted
(collectively, the “Documents”):

	 	1.	 	the Articles of Organization of the Company dated March 28, 2007 (the “Articles”);
	 
	 	2.	 	the Fourth Amended and Restated Operating Agreement of the
Company (the “Amended and Restated Operating Agreement”);
	 
	 	3.	 	the Fourth Amended and Restated Securityholders Agreement
(the “Securityholders Agreement”), among the Company, Cloobeck Diamond
Parent, LLC (“CDP”),DRP Holdco, LLC (“Guggenheim”), the Silver Rock Entities
(as defined in the Securityholders Agreement), and the Wellington
Purchasers;
	 
	 	4.	 	the Second Amended and Restated Registration Rights Agreement
(the “Registration Rights Agreement”), among the Company, CDP, Guggenheim, the
Silver Rock Entities and the Wellington Purchasers;
	 
	 	5.	 	the Securities Purchase Agreement;
	 
	 	6.	 	the Redemption Agreement among the Company, Guggenheim and the
Silver Rock Entities;
	 
	 	7.	 	the Certificate of Existence with Status in Good Standing
attached hereto as Exhibit B (“Certificate of Good Standing”), issued by the
Nevada Secretary of State dated July 7, 201l, with respect to the Company; and
	 
	 	8.	 	the Manager’s Certificate of the Company.

Atlanta | Baltimore | Bethesda | Denver | Las Vegas | Los Angeles | New Jersey | Philadelphia | Phoenix | Salt Lake City | Washington, DC | Wilmington

 

 

The Parties on Attached Exhibit A

July 21, 2011

Page 2

For the purposes of this opinion letter, Documents 2 through 6 shall be referred to as the “Transaction Documents”.

We have reviewed such documents and made such examination of law as we have deemed appropriate to
give the opinions set forth below. We have relied, without independent verification, on
certificates of public officials, and, as to matters of fact material to our opinions also without
independent verification, on representations made in the Transaction Documents and certificates and
other inquiries of the duly authorized representatives of the Company.

We have assumed the accuracy and completeness of all documents and records that we have reviewed,
the genuineness of all signatures (other than on behalf of the Company), the authenticity of the
documents
submitted to us as originals and the conformity to authentic original documents of all documents
submitted to us as facsimiles, or as certified, conformed or reproduced copies. We have further
assumed
that:

	 	1.	 	Each party to the transactions contemplated by the Transaction Documents
(collectively, the “Transactions”) other than the Company (collectively, the “Other
Parties”) has valid legal existence.
	 
	 	2.	 	All natural persons involved in the Transactions have sufficient legal capacity
to enter into and perform their respective obligations under the Transaction Documents
or to carry out their roles in the Transactions.
	 
	 	3.	 	Each of the Other Parties has complied with all legal requirements that are
applicable to it that affect the Transactions or are necessary to make the Transaction
Documents enforceable against it.
	 
	 	4.	 	Each of the Other Parties has complied with all legal requirements pertaining
to its status as such status relates to its rights to enforce the Transaction Documents
against the Company.
	 
	 	5.	 	The Company holds the requisite title and rights to any
property involved in the Transactions.
	 
	 	6.	 	The Transaction Documents are valid, binding and enforceable against the Other Parties.
	 
	 	7.	 	The conduct of the parties to the Transactions complies with any test of good
faith, fair dealing and conscionability required by law.
	 
	 	8.	 	There has not been any mutual mistake of fact or misunderstanding, fraud,
duress or undue influence.
	 
	 	9.	 	The statements of fact and all representations and warranties set forth in the
Transaction Documents are true and correct as to all factual matters.
	 
	 	10.	 	The Transaction Documents accurately describe and contain the parties’
understanding of the Transactions, respectively, and there are no oral or written
statements or agreements by the parties that modify, amend or vary, or purport to
modify, amend or vary the terms

 

 

The Parties on Attached Exhibit A

July 21, 2011

Page 3

	 	 	 	of the Transaction Documents, nor has there been any waiver of the material
provisions thereof.
	 
	 	11.	 	The conduct of the parties to the Transactions complies with all
applicable fiduciary duties.
	 
	 	12.	 	The Company is not engaged in the business of gaming, liquor, financial
institutions, public utilities, or cemeteries.
	 
	 	13.	 	The parties (excluding the Company) to the prior amended and restated versions
of the Amended and Restated Operating Agreement, the Securityholders Agreement, and the
Registration Rights Agreement (collectively, the “Prior Transaction Documents”),
have consented to the Transactions and the Transaction Documents.
	 
	 	14.	 	Immediately prior to the execution of the Transaction Documents, the Prior
Transaction Documents were valid, binding, and enforceable obligations of all the
parties thereto.

Based solely upon the foregoing and subject to the assumptions, exceptions, limitations and
qualifications set forth herein, we are of the opinion that:

	 	1.	 	Based solely upon the Certificate of Good Standing, the Company is a limited
liability company existing and in good standing under the laws of the State of Nevada.
	 
	 	2.	 	The Company has all limited liability company power and authority to enter
into and perform its obligations under the Transaction Documents to which it is a
party.
	 
	 	3.	 	The Transaction Documents and the execution and delivery thereof have been duly
authorized by the Company and, assuming due authorization, execution and delivery by
the Other Parties thereto and also assuming due execution and delivery by the Company,
each of the Transaction Documents constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with its terms.
	 
	 	4.	 	No consent, approval, order or authorization of, or registration, declaration of
filing with, any governmental authority of the State of Nevada is required for the
execution and delivery by the Company of the Transaction Documents and for the
consummation by the Company of the Transactions.
	 
	 	5.	 	The Common Units being purchased under the Securities Purchase Agreement
are duly authorized and, when paid for in accordance with the Securities Purchase
Agreement, will be validly issued and fully paid and, under the terms of the Amended
and Restated Operating Agreement, are not subject to assessment for additional capital
contributions except as may be required under Chapter 86 of the Nevada Revised
Statutes, as amended from time to time.

The foregoing opinions are subject to the following exceptions, limitations and qualifications:

	 	1.	 	We express no opinion as to the law of any jurisdiction other than the laws of the State
of Nevada and the laws of the United States of America.

 

 

The Parties on Attached Exhibit A

July 21, 2011

Page 4

	 	2.	 	We express no opinion as to the validity or enforceability of any provision of
the Transaction Documents which: (i) purports to require that waivers must be in
writing to the extent that an oral agreement or implied agreement by trade practice or
course of conduct modifying provisions of the Transaction Documents has been made; (ii)
purports to be a waiver of the right to a jury trial, a waiver of any right to object
to jurisdiction or venue, a waiver of any right to claim damages or to service of
process, or a waiver of any other rights or benefits bestowed by operation of law or
the waiver of which is limited by applicable law; (iii) purports to be a waiver of the
obligations of good faith, fair dealing, diligence, mitigation of damages or commercial
reasonableness; or (iv) purports to require the payment of attorneys’ fees to the
extent such fees exceed reasonable attorneys’ fees.
	 
	 	3.	 	We express no opinion as to the enforceability of forum selection clauses upon
the courts in the forum selected.
	 
	 	4.	 	We express no opinion as to matters relating to the title to or
encumbrances on any collateral, including without limitation the priority of any
lien or encumbrance or the existence of or ownership or title to any of the
Transaction Documents.
	 
	 	5.	 	Opinion paragraph 5 is qualified by the ability of all Members to agree to be
obligated for additional capital contributions pursuant to
Section 4.2 of the Amended
and Restated Operating Agreement.
	 
	 	6.	 	Our opinion is subject to the effect of applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, fraudulent transfer, marshalling or
similar laws affecting creditors’ rights and remedies generally; general principles of
equity, including without limitation, concepts of materiality, reasonableness, good
faith and fair dealing (regardless of whether such enforceability is considered in a
proceeding in equity or at law); and limitations on enforceability of rights to
indemnification or contribution by federal or state securities laws or regulations or
by public policy.
	 
	 	7.	 	We express no opinion as to the application or requirements of federal or state
securities, patent, trademark, copyright, antitrust and unfair competition, pension or
employee benefit, labor, environmental, health and safety or tax laws.
	 
	 	8.	 	This opinion may be relied upon by the addressees hereto only in connection
with the consummation of the transactions described herein and may not be used or
relied upon by you or any other person for any other purpose, without in each instance
our prior written consent.

 

 

The Parties on Attached Exhibit A

July 21, 2011

Page 5

This
opinion is limited to the matters expressly stated herein. No implied
opinion may be inferred
to extend this opinion beyond the matters expressly stated herein. We do not undertake to advise
you or anyone else of any changes in the opinions expressed herein resulting from changes in law,
changes in facts or any other matters that hereafter might occur or be brought to our attention.

Very truly yours,

 

 

The Parties on Attached Exhibit A

July 21, 2011

Page 6

EXHIBIT A

Addressees of the Opinion

(attached)

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.

Bay Pond Investors (Bermuda) L.P.

 

 

The Parties on Attached Exhibit A

July 21, 2011

Page 7

EXHIBIT B

Good Standing Certificate

(attached)

 

 

 

 

EXHIBIT B

Fourth Amended and Restated Operating Agreement

 

 

EXHIBIT C

Second Amended and Restated Registration Rights Agreement

 

 

EXHIBIT D

Fourth Amended and Restated Securityholders Agreement

 

 

SCHEDULE 1

	 	 	 	 	 	 	 	 	 
	 	 	Common	 	 
	Name	 	Units	 	Purchase Price
	The Hartford Growth Opportunities Fund
	 	 	35.683	 	 	$	17,340,000	 
	Hartford Growth Opportunities HLS Fund
	 	 	20.805	 	 	$	10,110,000	 
	Quissett Investors (Bermuda) L.P.
	 	 	14.240	 	 	$	6,920,000	 
	Quissett Partners, L.P.
	 	 	10.845	 	 	$	5,270,000	 
	The Hartford Capital Appreciation Fund
	 	 	184.937	 	 	$	89,870,000	 
	Bay Pond Partners, L.P.
	 	 	9.466	 	 	$	4,600,000	 
	Bay Pond Investors (Bermuda) L.P.
	 	 	4.918	 	 	$	2,390,000	 
	Total:
	 	 	280.894	 	 	$	136,500,000	 

 

 

SCHEDULE 2.03

[OMITTED]

 

 

SCHEDULE 3.01

	1.	 	Substantially all of the outstanding equity of the Company’s Subsidiaries is pledged to
the Diamond Resorts Corporation 12% Senior Secured Notes due 2018.
	 
	2.	 	Warrants are issued to the Second Lien Lenders pursuant to the Warrantholder Rights
Agreement dated as of March 27, 2009 among Diamond Resorts Corporation and the
Second Lien Lenders (and their successors and assigns) representing 10% of the fully
diluted outstanding equity of Diamond Resorts Corporation.
	 
	3.	 	Substantially all of the assets of ILX Acquisition, Inc., an indirect subsidiary of the
Company are pledged to Textron Financial Corporation.
	 
	4.	 	Substantially all of the assets of Tempus Acquisition, LLC and its subsidiaries
indirect subsidiaries of the Company are pledged to Guggenheim Corporate Funding, LLC,
Resort Finance America, LLC and Textron Financial Corporation.
	 
	5.	 	A small number of current or former employees in Spain (less
than 5) have less than a .02% ownership interest in certain indirect Subsidiaries of the Company, including
dormant subsidiaries. Further, certain European indirect subsidiaries, including
dormant or non-operating subsidiaries, reflect an ownership interest attributable to
whole-unit third party owners (such third party owners possess complete ownership
to their own units through an entity similar to a co-op, but have no interest in the
units the Company indirectly possesses through the same entity), FNTC (the
European Trustee) or other entities in which we have a minority interest.

 

 

SCHEDULE 3.03

Members, Units and Percentage Interests as of July 21, 2011

	 	 	 	 	 	 	 	 	 
	 	 	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	%
	 
	 	 	 	 	 	 	 	 

 

 

SCHEDULE 3.05

None.

 

 

SCHEDULE 3.08

Upon the Closing, the Company will pay Praesumo Partners, LLC a closing fee equal to 3.00% of the
Purchase Price.

 

 

SCHEDULE 3.14

Filing of Tax Returns

The Company has filed all federal, state, and local Tax reports and returns required by any law or
regulation to be filed by them except the 2007 and 2008 Mexican tax returns for Torres Vallarta SA,
a member of the consolidated group and wholly-owned subsidiary of a subsidiary of the Company.
This entity has no current activity and the return has not been filed pending resolution of a legal
case involving Vacation Internationale (included on Schedule 3.09). Upon resolution of the
litigation, tax that may be due with the filing of the return, if any, will not have a Material
Adverse Effect on the financial position or the results of operations of the Company.

Tax Notices

The Company and its Subsidiaries in the ordinary course of business receive notices and
correspondences from various local, state and federal taxing authorities regarding additional tax
payments required or refund of overpayments. We do not expect any payment that may be required
pursuant to any notice that we have received to have a Material Adverse Effect on the financial
position or results of operations of the Company.

 

 

SCHEDULE 3.15

Open US/St. Maarten Contract Litigation Matters as of 6-28-2011 (Diamond Entity in Bold)

	 	 	 	 	 	 	 	 	 	 	 
	Contract	 	 	 	 	 	 	 	Nature of	 	 
	Litigation:	 	Plaintiff	 	Defendant	 	Court:	 	Action	 	Status
	1.

	 	Courtwell Management NV (Aqua Mania)
	 	AKGI St. Maarten NV
	 	St. Maarten
	 	Eviction of Activities Vendor
	 	Lower Court ruled in favor of AKGI. Case on Appeal. Eviction
stayed pending Appeal.
	 
	 	 	 	 	 	 	 	 	 	 
	2.

	 	Diamond Resorts Management, Inc.
	 	Scottsdale Luxury Suites
	 	Phoenix, AZ
	 	Breach of Contract
	 	In discovery.
	 
	 	 	 	 	 	 	 	 	 	 
	3.

	 	Diamond Resorts Royal Palm Management N.V.
	 	Briella
	 	St. Maarten
	 	Eviction of Restaurant Operator
	 	Injunction dismissed; Case on Appeal
	 
	 	 	 	 	 	 	 	 	 	 
	4.

	 	Donegan, William
	 	Diamond Resorts Cypress Point II Development, LLC
	 	Florida
	 	Market value for timeshare interest
	 	In discovery.
	 
	 	 	 	 	 	 	 	 	 	 
	5.

	 	Fabisiak, Danuta
	 	Club Sunterra Development, LLC; Diamond Resorts
Developer & Sales Holding Company
	 	Florida
	 	Breach of Contract
	 	Motion to dismiss/transfer venue pending with the court. Also in
settlement negotiations.
	 
	 	 	 	 	 	 	 	 	 	 
	6.

	 	Plessie
	 	AKGI St. Maarten N.V.
	 	St. Maarten
	 	Breach of Contract
	 	Plaintiff’s claim denied. Currently on appeal.
	 
	 	 	 	 	 	 	 	 	 	 
	7.

	 	Pugmire, John
	 	Diamond Resorts Financial Services, Inc.
	 	New York
	 	Breach of Contract
	 	Lower Court granted Defendant’s Motion to Dismiss. Plaintiff
appealed. Case briefed and pending with Court of Appeal.
	 
	 	 	 	 	 	 	 	 	 	 
	8.

	 	Riley, Marion
	 	Diamond Resorts Holdings, Diamond Resorts US

Collection Members Assocition, Diamond Resorts

Financial Services
	 	South Carolina
	 	Breach of Contract, Negligence,
Unfair Trade Practices, Conversion
	 	Complaint just recently re-filed by plaintiff after plaintiff
previously dismissed it without prejudice. Currently in the
process of answering and discovery.

 

 

Open US/St. Maarten Contract Litigation Matters as of 6-28-2011 (Diamond Entity in Bold)

	 	 	 	 	 	 	 	 	 	 	 
	Contract	 	 	 	 	 	 	 	Nature of	 	 
	Litigation:	 	Plaintiff	 	Defendant	 	Court:	 	Action	 	Status
	9.

	 	Royal Dunes Beach Villas at
Port Royal Resort Owners
Association, Inc.
	 	Diamond Resorts Port Royal Development, LLC
	 	South Carolina
	 	Unjust Enrichment, Quantum Meruit, Breach of Good Faith, Declaratory
Judgment
	 	In discovery.
	 
	 	 	 	 	 	 	 	 	 	 
	10.

	 	Royal Palm Beach & Flamingo
Resort Lessees Association
(Class Action)
	 	AKGI St. Maarten NV
	 	St. Maarten
	 	Dispute over increase in Maintenance Fees
	 	Lower Court ruled in favor of AKGI approving
the increase in maintenance fees. Case is
currently on Appeal.
	 
	 	 	 	 	 	 	 	 	 	 
	11.

	 	Royal Palm Whole Owner’s
Association (Threatened Class
Action)
	 	Diamond Resorts Palm Management NV
	 	St. Maarten
	 	Dispute over assessment of Maintenance Fees to 23 Whole Owners at
Royal Palm
	 	This action is threatened and likely to be
filed within the first week of July, 2011.
	 
	 	 	 	 	 	 	 	 	 	 
	12.

	 	Thompson, Thomas
	 	Diamond Resorts US Collection Development, LLC
	 	Kentucky
	 	Breach of Contract, Deceptive Trade Practices
	 	Pending Motion to Compel Arbitration.
	 
	 	 	 	 	 	 	 	 	 	 
	13.

	 	Torres Mazatlan Remainder, LLC;
Vallarta Torre Remainder, LLC;
Vacation Timeshare Remainder,
LLC; and Immuebles NBR,
Sociedad de Responsabilidad
Limitada de Capital Variable
	 	FLRX, Inc.
	 	Seattle, WA
	 	Breach of Contract
	 	The trial occurred in October 2009. A jury
found in favor of the plaintiff and awarded
damages of approximately $30.0 million, plus
attorney fees of approximately $1.5 million,
and ordered specific performance for the
transfer of any remaining real estate
interest. Judgment in the

 

 

Open US/St. Maarten Contract Litigation Matters as of 6-28-2011 (Diamond Entity in Bold)

	 	 	 	 	 	 	 	 	 	 	 
	Contract	 	 	 	 	 	 	 	Nature of	 	 
	Litigation:	 	Plaintiff	 	Defendant	 	Court:	 	Action	 	Status
	 

	 	 	 	 	 	 	 	 	 	amount of $31.124
million currently
on appeal without
stay of execution.
Judgment debtor
discovery in
process.
	 
	 	 	 	 	 	 	 	 	 	 
	14.

	 	Torres Vallarta S.A. de C.V. Et
Al
	 	Vacation Internationale, Inc.
	 	Seattle, WA
	 	Breach of Contract
	 	Settlement agreed
on in principal to
dismiss all claims
with prejudice.
Case currently
stayed.
	 
	 	 	 	 	 	 	 	 	 	 
	15.

	 	Vacation Internationale, Inc.
	 	Diamond Resorts Corporation
	 	Seattle, WA
	 	Compel Arbitration
	 	Settlement agreed
on in principal to
dismiss all claims
with prejudice.
Case currently
stayed.
	 
	 	 	 	 	 	 	 	 	 	 
	16.

	 	Wayfarer Aviation, Inc.
	 	Diamond Resorts Corporation
	 	Las Vegas, NV
	 	Account Receivable
	 	In discovery.
	 
	 	 	 	 	 	 	 	 	 	 
	Poly	 	 	 	 	 	 	 	 	 	 
	Litigation:	 	Plaintiff	 	Defendant	 	Court:	 	Nature of Action	 	Status
	17.

	 	MMG
Development Corp.,
Diamond Resorts
Management, Inc.,
Linda Riddle,
Marilyn Windsor,
and Troy
Magdos
	 	Polynesian Isles
Resort Master Association,
Inc., Phyllis Skora, Carlos
Costa, and Gary Emken
	 	Florida
	 	Injunction and
Declaratory Relief re: board
elections/management
agreement
	 	12/16/09 Summary
Judgment granted on all
issues in favor of Plaintiff.
Defendants appealed. Case
pending before Court of
Appeal.
	 
	 	 	 	 	 	 	 	 	 	 
	18.

	 	Diamond
Resorts Management,
Inc.
	 	SPM Resorts, Inc.
	 	Florida
	 	Tortious interference,
Defamation, Violation of
Unfair Trade Practices
	 	Discovery ongoing.
	 
	 	 	 	 	 	 	 	 	 	 
	19.

	 	Polynesian

Isles Resort
	 	Diamond Resorts
Management, Inc.
	 	Florida
	 	Breach of Contract
	 	Discovery ongoing.

 

 

Open US/St. Maarten Contract Litigation Matters as of 6-28-2011 (Diamond Entity in Bold)

	 	 	 	 	 	 	 	 	 	 	 
	Poly	 	 	 	 	 	 	 	 	 	 
	Litigation:	 	Plaintiff	 	Defendant	 	Court:	 	Nature of Action	 	Status
	 

	 	Condominium
Association IV,
Inc.	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	20.

	 	Polynesian
Isles Resort
Condominium
Association, Inc.
and Polynesian
Isles Resort
Condominium
Association IV,
Inc.
	 	Diamond
Resorts Management,
Inc., MMG
Development Corp.,
Polynesian Isles
Resort Master
Association
	 	Florida
	 	Declaratory
and Injunctive
Relief
	 	Discovery ongoing.

 

 

SCHEDULE 3.16

NORTH AMERICA

U.S.

	 	1.	 	Employment Agreements

	 	a.	 	Brian Garavuso
	 
	 	b.	 	Steve Bell

	 	2.	 	Severance Agreements

	 	a.	 	Steve Bell
	 
	 	b.	 	Brian Garavuso
	 
	 	c.	 	Dennis Nau
	 
	 	d.	 	Frank Goeckel
	 
	 	e.	 	Michael Flaskey

	 	3.	 	Time Off:

	 	a.	 	Paid Vacation Time
	 
	 	b.	 	Paid Sick Time
	 
	 	c.	 	Paid Holidays

	 	4.	 	Fringe Benefits:

	 	a.	 	Relocation

	 	5.	 	Health & Welfare Plans:

	 	a.	 	Medical Plan Options:

	 	i.	 	PPO & EPO Plan — U.S. Mainland Self Funded Medical
Plans
	 
	 	ii.	 	UHC HMO Plan — Nevada Fully Insured Medical Plan
	 
	 	iii.	 	HMSA PPP/HPH Plans — Hawaii Fully Insured Medical Plans
	 
	 	iv.	 	Kaiser Permanente — Hawaii Fully Insured HMO Plan

	 	b.	 	Dental Plans:

	 	i.	 	Delta Dental of Nevada — U.S. Mainland Self Funded
Dental Plan
	 
	 	ii.	 	Hawaii Dental Services — Hawaii Fully Insured
Dental Plan

	 	c.	 	Vision Plans:

 

 

	 	i.	 	EyeMed Vision Service — U.S. Mainland Self Funded
Vision Plan
	 
	 	ii.	 	VSP — Hawaii Self Funded Vision Plan

	 	d.	 	Basic Life Benefits — Liberty Mutual:

	 	i.	 	1 times Base Salary + Commissions

	 	e.	 	AD&D Benefits — Liberty Mutual
	 
	 	f.	 	Voluntary Life Benefits — Liberty Mutual

	 	i.	 	Employee Life
	 
	 	ii.	 	Spouse Life
	 
	 	iii.	 	Child(ren) Life

	 	g.	 	Voluntary Disability Benefits — Liberty Mutual:

	 	i.	 	STD
	 
	 	ii.	 	LTD

	 	h.	 	Hawaii Temporary Disability Insurance — Liberty Mutual
	 
	 	i.	 	Voluntary Flexible Spending Accounts — Ceridian

	 	i.	 	Health FSA
	 
	 	ii.	 	Dependent FSA

	 	j.	 	Employee Assistance Program
	 
	 	k.	 	Telephonic Consultation Services

	 	6.	 	Profit Sharing Plan

	 	a.	 	Diamond Resorts International® Profit Sharing & Savings Plan

	 	7.	 	Incentive Plans

	 	a.	 	Discretionary management bonus plan
	 
	 	b.	 	Sales commission plans

St. Maarten

 

 

	 	1.	 	Employment Agreements

	 	a.	 	Two executive employment agreements

	 	i.	 	Aloysius Roelofsen, GM Flamingo Beach Resort
	 
	 	ii.	 	Simone Kellowan, GM Royal Palms Resort

	 	2.	 	Dismissal Plans: Per country labor law.
	 
	 	3.	 	Time Off:

	 	a.	 	Holiday per country labor law
	 
	 	b.	 	Sick leave per country labor law

	 	4.	 	Fringe Benefits: N/A
	 
	 	5.	 	Health & Welfare Plans

	 	a.	 	Medical/Dental/Life Insurance: As covered by country national plan
	 
	 	b.	 	Disability: Per country labor law

	 	6.	 	Pension Plan

	 	a.	 	Provided by the government. No private plans by the company.

	 	7.	 	Incentive Plans

	 	a.	 	Discretionary management bonus plan
	 
	 	b.	 	Sales commission plans

EUROPE

Spain

	 	1.	 	Employment Agreements

	 	a.	 	All team members have a contract of employment (standard governmental
form).
	 
	 	b.	 	Executive agreements for Suzana Gomercic, Neil Cunliffe and Francisca
Molero-Dominguez.

	 	2.	 	Dismissal Plans

	 	a.	 	Per Spanish labor law

	 	3.	 	Time Off:

	 	a.	 	Holiday per Spanish labor law
	 
	 	b.	 	Sick leave per Spanish labor law

 

 

	 	4.	 	Fringe Benefits: N/A
	 
	 	5.	 	Health & Welfare Plans

	 	a.	 	Medical/Dental/Life Insurance: As covered by Spanish Social Security.
(No team members on special plans)
	 
	 	b.	 	Disability: N/A

	 	6.	 	Pension Plan

	 	a.	 	As regulated by Spanish law. No team members on special plan.

	 	7.	 	Incentive Plans

	 	a.	 	Discretionary management bonus plan
	 
	 	b.	 	Sales commission plans

U.K.

	 	1.	 	Employment Agreements

	 	a.	 	All team members have a contract of employment (standard form).

	 	b.	 	No Executive employment agreements.

	 	2.	 	Dismissal Plans

	 	a.	 	Per UK labor law

	 	3.	 	Time Off:

	 	a.	 	Holiday per UK labor law

	 	b.	 	Sick leave per UK labor law

	 	4.	 	Fringe Benefits: N/A
	 
	 	5.	 	Health & Welfare Plans

	 	a.	 	Medical/Dental/Life Insurance: As covered by UK National Health
Service plus Bupa Plan for select individuals
	 
	 	b.	 	Disability: State Social Security

	 	6.	 	Pension Plan

	 	a.	 	Stakeholder pension scheme as required by the government.

	 	7.	 	Incentive Plans

 

 

	 	a.	 	Discretionary management bonus plan
	 
	 	b.	 	Sales commission plans

France / Germany / Austria / Italy

	 	1.	 	Employment Agreements

	 	a.	 	All team members have a contract of employment (standard form).
	 
	 	b.	 	No Executive employment agreements.

	 	2.	 	Dismissal Plans: N/A
	 
	 	3.	 	Time Off:

	 	a.	 	Holiday per country labor law
	 
	 	b.	 	Sick leave per country labor law

	 	4.	 	Fringe Benefits: N/A
	 
	 	5.	 	Health & Welfare Plans

	 	a.	 	Medical/Dental/Life Insurance: As covered by country national plans

	 	i.	 	Private medical insurance in France covering 25
employees

	 	b.	 	Disability: Per country labor laws.

	 	6.	 	Pension Plan

	 	a.	 	Provided by the government. No private plans by the company.

	 	7.	 	Incentive Plans

	 	a.	 	Discretionary management bonus plan
	 
	 	b.	 	Sales commission plans

 

 

SCHEDULE 3.17(a)

3.17(a)(i) — The Company has collective bargaining agreements with the following entities:

	 	a.	 	UNITE HERE! Local 5 covering Ka’anapali Beach Club Resort, U.S.
	 
	 	b.	 	ILWU Local 142 covering The Pointe at Poipu Resort, U.S. (draft
agreement)
	 
	 	c.	 	Two unions in the Canary Islands (CCOO and UGT), Spain
	 
	 	d.	 	National labor agreements (France/Germany/Austria/Italy)
	 
	 	e.	 	Two collective labor agreements covering each of the two properties in
St. Maarten

3.17(a)(ii) — Contracts requiring the Company or any of its subsidiaries to purchase any goods or
services exclusively from a third party entity include:

	 	a.	 	A subsidiary of the Company has an exclusive contractual arrangement
with Interval International (“II”) to: (i) serve as the exclusive member exchange
company for all points members in each of the four Collections; (ii) provide call
center services for reservations and other services in the United States and
Europe; and (iii) provide travel related products to the extent such services are
provided as benefits to members of any of the four Collections. The II agreement
is for a period of 10 years and expires December 31, 2017.

3.17(a)(iii) — Any contract prohibiting or restricting the Company or any of its Subsidiaries from
competing in any business or geographical area, soliciting customers or employees, or otherwise
restricting it from carrying on any business anywhere in the world include:

	 	a.	 	The II agreement referred to immediately above, prohibits the
Company and its Subsidiaries from using any other exchange company in the
United States or Europe during the term of the contract. Further, this contract
prohibits the Company from entering into inventory exchange agreements that
include properties that are currently available for member exchanges through
II.
	 
	 	b.	 	The Company routinely enters into agreements with professional
services firms to provide services to the Company including but not limited to
IT consulting, sales training, tax advisory, accounting and audit services,
temporary services, and other consulting services. These contracts often
include limitations and/or prohibitions on the ability of the Company to
solicit
or otherwise employ personnel who are providing services to the Company pursuant
to such contracts.

 

 

SCHEDULE 3.17(b)

None.

 

 

SCHEDULE 3.23

None.

 

 

SCHEDULE 3.24

None.

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