Document:

exv10w7

Exhibit 10.7

FORM OF

REGISTRATION RIGHTS AGREEMENT

BY AND BETWEEN

PROVIDENT MORTGAGE CAPITAL ASSOCIATES, INC.

AND

PMF ADVISORS, LLC

dated as of

                     , 2011

 

 

REGISTRATION RIGHTS AGREEMENT

     This REGISTRATION RIGHTS AGREEMENT, dated as of                     , 2011, is made and entered into
by and between Provident Mortgage Capital Associates, Inc., a Maryland corporation (the
“Company”), and PMF Advisors, LLC, a Delaware limited liability company (the
“Manager”).

RECITALS

     WHEREAS, the Company has prepared a registration statement on Form S-11 (File No. 333-172670)
with respect to the issuance and sale of its common stock, par value $0.01 per share (the
“Common Stock”), with the Securities and Exchange Commission (the “Commission”)
under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to which the
Company intends to conduct an underwritten initial public offering of shares of the Company’s
Common Stock (the “IPO”);

     WHEREAS, pursuant to and in accordance with the terms and provisions of the IPO Management
Agreement, dated as of                     , 2011, by and among the Company, PMCA Asset I, LLC, PMCA
Asset II, LLC and the Manager (the “Management Agreement”), the Company will pay the
Manager a base management fee and an incentive fee, which fees are payable, subject to certain
limited exceptions, in shares of Common Stock (the “Manager Shares”); and

     WHEREAS, in order to induce the Manager to enter into the Management Agreement, the Company
has agreed to provide the Manager with the registration rights set forth in this Agreement.

     NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants
contained in this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

     Section 1. Definitions. As used in this Agreement, the following terms shall have the
following meanings:

     “Agreement” shall mean this Registration Rights Agreement as originally executed and
as amended, supplemented or restated from time to time.

     “Board” shall mean the Board of Directors of the Company.

     “Business Day” shall mean Monday, Tuesday, Wednesday, Thursday, and Friday that is
not a day on which banking institutions in New York or other applicable places where such act is to
occur are authorized or obligated by applicable law, regulation or executive order to close.

     “Common Stock” shall have the meaning set forth in the Recitals hereof.

     “Commission” shall have the meaning set forth in the Recitals hereof.

     “Company” shall have the meaning set forth in the introductory paragraph hereof.

     “Controlling Person” shall have the meaning set forth in Section 5(a) of this
Agreement.

     “Depositary” shall mean The Depository Trust Company, or any other depositary
appointed by the Company, provided, however, that such depositary must have an address in the
Borough of Manhattan, in the City of New York.

     “End of Suspension Notice” shall have the meaning set forth in Section 3(b) of
this Agreement.

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     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended (or any
corresponding provision of succeeding law) and the rules and regulations thereunder.

     “FINRA” shall mean the Financial Industry Regulatory Authority.

     “Holder” shall mean the holder of the Common Stock, listed in Schedule 1
hereto, in its capacity as a holder of Registrable Shares and its direct and indirect transferees
who agree to be bound by the terms and conditions of this Agreement. For purposes of this
Agreement, the Company may deem and treat the registered holder of a Registrable Share as the
Holder and absolute owner thereof, unless notified to the contrary in writing by the registered
Holder thereof.

     “IPO” shall have the meaning set forth in the Recitals hereof.

     “Liabilities” shall have the meaning set forth in Section 5(a)(i) of this
Agreement.

     “Management Agreement” shall have the meaning set forth in the Recitals hereof.

     “Manager” shall have the meaning set forth in the Recitals hereof.

     “Manager Shares” shall have the meaning set forth in the Recitals hereof.

     “Maximum Threshold” shall have the meaning set forth in Section 2(b)(ii) of
this Agreement.

     “Non-Holder Securities” shall have the meaning set forth in Section 2(b)(iii)
of this Agreement.

     “Person” shall mean any individual, partnership, corporation, limited liability
company, joint venture, association, trust, unincorporated organization or other governmental or
legal entity.

     “Piggyback Registration” shall have the meaning set forth in Section 2(b)(i)
of this Agreement.

     “Private Placement Purchase Agreement” shall have the meaning set forth in the
Recitals hereof.

     “Private Placement Shares” means at any time the shares of Common Stock issued and
sold by the Company in the concurrent private placement pursuant to those certain private placement
purchase agreements, each dated                     , 2011, by and between the Company and the persons
named therein, together with any class of equity securities of the Company or of a successor to the
entire business of the Company which are issued in exchange for the Private Placement Shares.

     “Prospectus” means the prospectus or prospectuses included in any Registration
Statement (including without limitation, any prospectus subject to completion and a prospectus that
includes any information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the Securities Act and any term
sheet filed pursuant to Rule 434 under the Securities Act), as amended or supplemented by any
prospectus supplement with respect to the terms of the offering of any portion of the Registrable
Shares covered by such Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by reference or
deemed to be incorporated by reference in such prospectus or prospectuses.

     “Registrable Shares” with respect to any Holder, shall mean at any time the Manager
Shares, together with any class of equity securities of the Company or of a successor to the entire
business of the Company which are issued in exchange for the Manager Shares; provided, however,
that such Registrable

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Shares shall cease to be Registrable Shares with respect to any Holder upon
the earliest to occur of (A) when a Registration Statement with respect to such Holder’s
Registrable Shares shall have been declared effective under the Securities Act and all of such
Holder’s Registrable Shares shall have been disposed of pursuant to such Registration Statement,
(B) when such Holder’s Registrable Shares may be sold without restriction pursuant to Rule 144
under the Securities Act or (C) when such Holder’s Registrable Shares shall have ceased to be
outstanding.

     “Registration Expenses” shall mean (i) the fees and disbursements of counsel and
independent public accountants for the Company incurred in connection with the Company’s
performance of or compliance with this Agreement, including the expenses of any special audits or
“comfort” letters required by or incident to such performance and compliance, and any premiums and
other costs of policies of insurance obtained by the Company against liabilities arising out of the
sale of any securities and (ii) all registration, filing and stock exchange fees, all fees and
expenses of complying with securities or “blue sky” laws, all fees and expenses of custodians,
transfer agents and registrars, all printing expenses, messenger and delivery expenses and any fees
and disbursements of one common counsel retained by a majority of the Registrable Shares; provided,
however, that “Registration Expenses” shall not include any out-of-pocket expenses of the
Holders, transfer taxes, underwriting or brokerage commissions or discounts associated with
effecting any sales of Registrable Shares that may be offered, which expenses shall be borne by
each Holder of Registrable Shares on a pro rata basis with respect to the Registrable Shares so
sold.

     “Registration Statement” means any registration statement of the Company filed with
the Commission under the Securities Act which covers any of the Registrable Shares pursuant to the
provisions of this Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and all materials
incorporated by reference or deemed to be incorporated by reference in such Registration Statement.

     “Securities Act” shall have the meaning set forth in the Recitals hereof.

     “Selling Holders’ Counsel” shall mean counsel for the Holders that is selected by the
Holders holding a majority of the Registrable Shares included in a Registration Statement and that
is reasonably acceptable to the Company.

     “Shelf Registration Statement” shall have the meaning set forth in Section
2(a) of this Agreement.

     “Suspension Event” shall have the meaning set forth in Section 3(b) of this
Agreement.

     “Suspension Notice” shall have the meaning set forth in Section 3(a) of this
Agreement.

     “Underwritten Offering” shall mean a sale of securities of the Company to an
underwriter or underwriters for reoffering to the public.

     Section 2. Shelf Registrations and Piggy Back Registrations.

          (a) Shelf Registration.

          (i) The Company agrees to use commercially reasonable efforts to file with the
Commission, no earlier than 24 months following the closing of the IPO and no later than 26
months following the closing of the IPO, one or more registration statements with respect to
the Registrable Shares under the Securities Act for the offering to be made on a continuous
basis pursuant to Rule 415 under the Securities Act (the “Shelf Registration
Statement”). The

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Company will use commercially reasonable efforts to cause such Shelf
Registration Statement to be declared effective by the Commission as soon as practicable
after the filing thereof. The Shelf Registration Statement shall be on an appropriate form
and the registration statement and any form of prospectus included therein (or prospectus
supplement relating thereto) shall reflect the plan of distribution or method of sale as the
Holders may from time to time notify the Company.

          (ii) Effectiveness. The Company shall use commercially reasonable efforts to
keep the Shelf Registration Statement continuously effective for the period beginning on the
date on which the Shelf Registration Statement is declared effective and ending on the date
that all of the Registrable Shares registered under the Shelf Registration Statement cease
to be Registrable Shares. During the period that the Shelf Registration Statement is
effective, the Company shall supplement or make amendments to the Shelf Registration
Statement if required by the Securities Act or if reasonably requested by the Holders
(whether or not required by the form on which the securities are being registered),
including to reflect any specific plan of distribution or method of sale, and shall use its
commercially reasonable efforts to have such supplements and amendments declared effective,
if required, as soon as practicable after filing; provided that in no event shall the
Company be required to file an amendment to the Shelf Registration Statement to increase the
amount of Registrable Shares included in the Shelf Registration Statement unless the amount
of additional Registrable Shares to be included pursuant to such amendment exceeds $
        .

          (iii) Selection of Underwriters. If any offering pursuant to a Shelf
Registration Statement is an underwritten offering, a majority-in-interest of the Holders
participating in such underwritten offering shall have the right to select the managing
underwriter or underwriters to administer any such offering, which managing underwriter or
underwriters shall be reasonably acceptable to the Company.

          (b) Piggyback Registrations.

          (i) Right to Piggyback. Subject to Section 2(b)(v), from and after the
24-month anniversary of the closing of the IPO, whenever the Company proposes to register
any of its common equity securities under the Securities Act (other than a registration
statement on Form S-8 or on Form S-4 or any similar successor forms thereto), whether for
its own account or for the account of one or more stockholders of the Company, and the
registration form to be used may be used for any registration of Registrable Shares (a
“Piggyback Registration”), the Company shall give prompt written notice to all
Holders of its intention to effect such a registration and, subject to
Sections 2(b)(ii) and 2(b)(iii), shall include in such registration all
Registrable Shares with respect to which the Company has received written requests for
inclusion therein within 20 days after the receipt of the Company’s notice. The Company may
postpone or withdraw the filing or the effectiveness of a Piggyback Registration at any time
in its sole discretion.

          (ii) Priority on Primary Registrations. If a Piggyback Registration is an
underwritten primary registration on behalf of the Company, and the managing underwriters
advise the Company in writing that in their opinion the number of securities requested to be
included in such registration exceeds the number that can be sold in such offering and/or
that the number of Registrable Shares proposed to be included in any such registration would
adversely affect the price per share of the Company’s equity securities to be sold in such
offering (such maximum number of securities or Registrable Shares, as applicable, the
“Maximum Threshold”), the underwriting shall be allocated among the Company and all
Holders as follows (A) first, the shares of Common Stock or other securities that the
Company desires to sell that can be sold

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without exceeding the Maximum Threshold;
(B) second, to the extent that the Maximum Threshold has not been reached under the
foregoing clause (A), the shares of Common Stock or other securities, if any, comprised of
Private Placement Shares, as to which registration has been requested pursuant to the
applicable written contractual piggy-back registration rights of such holders thereof, pro
rata, among the holders of such Private Placement Shares who have elected to participate in
such offering that can be sold without exceeding the Maximum Threshold; (C) third, to the
extent that the Maximum Threshold has not been reached under the foregoing clauses (A) and
(B), the shares of Common Stock or other securities, if any, comprised of Registrable
Shares, as to which registration has been requested pursuant to the applicable written
contractual piggy-back registration rights of the Holders thereof, pro rata, among the
Holders who have elected to participate in such offering that can be sold without exceeding
the Maximum Threshold; (D) fourth, to the extent that the Maximum Threshold has not been
reached under the foregoing clauses (A), (B) and (C), the shares of Common Stock or other
securities for the account of other Persons that the Company is obligated to register
pursuant to written contractual piggy-back registration rights with such Persons and that
can be sold without exceeding the Maximum Threshold.

          (iii) Priority on Secondary Registrations. If a Piggyback Registration is an
underwritten secondary registration on behalf of a holder of the Company’s securities other
than Registrable Shares, including a holder of Private Placement Shares (“Non-Holder
Securities”), and the managing underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in such registration exceeds the
number that can be sold in such offering and/or that the number of Registrable Shares
proposed to be included in any such registration would adversely affect the price per share
of the Company’s equity securities to be sold in such offering, the underwriting shall be
allocated among the holders of Non-Holder Securities and all Holders electing to participate
in such offering pro rata on the basis of the Non-Holder Securities and Registrable Shares
offered for such registration by the holder of Non-Holder Securities and each Holder,
respectively, electing to participate in such registration.

          (iv) Withdrawal. Any Holder may elect to withdraw such Holder’s request for
inclusion of Registrable Shares in any Piggyback Registration by giving written notice to
the Company of such request to withdraw prior to the effectiveness of the Registration
Statement. The Company (whether on its own determination or as the result of a withdrawal
by Persons making a demand pursuant to written contractual obligations) may withdraw a
Registration Statement at any time prior to the effectiveness of the Registration Statement
without thereby incurring any liability to the Holders of Registrable Shares.
Notwithstanding any such withdrawal, the Company shall pay all expenses incurred by the
Holders in connection with such Piggyback Registration as provided in Section 9(c).

          (v) Limitation on Piggy Back Registrations. Notwithstanding anything to the
contrary, no Holder shall be entitled to any rights under this Section 2(b),
including the right to receive notice of a Piggyback Registration, unless such Holder holds
in excess of         Registrable Shares.

     Section 3. Black-Out Periods.

          (a) Subject to the provisions of this Section 3, the Company shall be permitted, in
limited circumstances, to suspend the use, from time to time, of the Prospectus that is part of a
Shelf Registration Statement (and therefore suspend sales of the Registrable Shares under such
Shelf Registration Statement), by providing written notice (a “Suspension Notice”) to the
Selling Holders’ Counsel, if any, and the Holders and by issuing a press release, making a filing
with the Commission or 

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such other means that the Company reasonably believes to be a reliable means
of communication, for such times as the Company reasonably may determine is necessary and advisable
(but in no event for more than an aggregate of 90 days in any rolling 12-month period commencing on
the date of this Agreement or more than 45 consecutive days, except as a result of a refusal by the
Commission to declare any post-effective amendment to the Shelf Registration Statement effective
after the Company has used all commercially reasonable efforts to cause the post-effective
amendment to be declared effective by the Commission, in which case, the Company must terminate the
black-out period immediately following the effective date of the post-effective amendment) if any
of the following events shall occur: a majority of the Board determines in good faith that (i) (A)
the offer or sale of any Registrable Shares would materially impede, delay or interfere with any
proposed financing, offer or sale of securities, acquisition, corporate reorganization or other
material transaction involving the Company, (B) upon the advice of counsel, the sale of Registrable
Shares pursuant to the Shelf Registration Statement would require disclosure of non-public material
information not otherwise required to be disclosed under applicable law, and (C) (x) the Company
has a bona fide business purpose for preserving the confidentiality of such transaction, (y)
disclosure would have a material adverse effect on the Company or the Company’s ability to
consummate such transaction, or (z) such transaction renders the Company unable to comply with
Commission requirements, in each case under circumstances that would make it impractical or
inadvisable to cause the Shelf Registration Statement (or such filings) to become effective or to
promptly amend or supplement the Shelf Registration Statement on a post effective basis, as
applicable; or (ii) upon the advice of counsel, it is in the Company’s best interest or it is
required by law, rule or regulation to supplement the Shelf Registration Statement or file a
post-effective amendment to the Shelf Registration Statement in order to ensure that the prospectus
included in the Shelf Registration Statement (1) contains the information required under Section
10(a)(3) of the Securities Act; (2) discloses any facts or events arising after the effective date
of the Shelf Registration Statement (or of the most recent post-effective amendment) that,
individually or in the aggregate, represents a material change in the information set forth
therein; or (3) discloses any material information with respect to the plan of distribution that
was not disclosed in the Shelf Registration Statement or any material change to such information.
Upon the occurrence of any such suspension, the Company shall use its commercially reasonable
efforts to cause the Shelf Registration Statement to become effective or to promptly amend or
supplement the Shelf Registration Statement on a post effective basis or to take such action as is
necessary to make resumed use of the Shelf Registration Statement as soon as possible.

          (b) In the case of an event that causes the Company to suspend the use of a Shelf Registration
Statement as set forth in paragraph (a) above (a “Suspension Event”), the Company shall
give a Suspension Notice to the Selling Holders’ Counsel, if any, and the Holders to suspend sales
of the Registrable Shares and such notice shall state generally the basis for the notice and that
such suspension shall continue only for so long as the Suspension Event or its effect is continuing
and the Company is using its commercially reasonable efforts and taking all reasonable steps to
terminate suspension of the use of the Shelf Registration Statement as promptly as possible. A
Holder shall not effect any sales of the Registrable Shares pursuant to such Shelf Registration
Statement (or such filings) at any time after it has received a Suspension Notice from the Company
and prior to receipt of an End of Suspension Notice (as defined below). If so directed by the
Company, each Holder will deliver to the Company (at the expense of the Company) all copies other
than permanent file copies then in such Holder’s possession of the prospectus covering the
Registrable Shares at the time of receipt of the Suspension Notice. The Holders may recommence
effecting sales of the Registrable Shares pursuant to the Shelf Registration Statement (or such
filings) following further written notice to such effect (an “End of Suspension Notice”)
from the Company, which End of Suspension Notice shall be given by the Company to the Holders and
to the Selling Holders’ Counsel, if any, promptly following the conclusion of any Suspension Event
and its effect.

     Section 4. Registration Procedures.

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          (a) In connection with the filing of any Registration Statement as provided in this Agreement,
the Company shall use commercially reasonable efforts to, as expeditiously as reasonably
practicable:

          (i) prepare and file with the Commission the Registration Statement, within the
relevant time period specified in Section 2, on the appropriate form under the
Securities Act, which form (1) shall be selected by the Company, (2) shall be available for
the registration and sale of the Registrable Shares by the selling Holders thereof,
(3) shall comply as to form in all material respects with the requirements of the applicable
form and include or incorporate by reference all financial statements required by the
Commission to be filed therewith or incorporated by reference therein, and (4) shall comply
in all respects with the requirements of Regulation S-T under the Securities Act, and
otherwise comply with its obligations under Section 2 hereof;

          (ii) prepare and file with the Commission such amendments and post-effective amendments
to each Registration Statement as may be necessary under applicable law to keep such
Registration Statement effective for the applicable period; and cause each prospectus to be
supplemented by any required prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provision then in force) under the Securities Act and
comply with the provisions of the Securities Act, the Exchange Act and the rules and
regulations thereunder applicable to them with respect to the disposition of all securities
covered by each Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the selling Holders thereof;

          (iii) (1) notify each Holder of Registrable Shares, at least five Business Days after
filing, that a Registration Statement with respect to the Registrable Shares has been filed
and advising such Holders that the distribution of Registrable Shares will be made in
accordance with any method or combination of methods legally available by the Holders of any
and all Registrable Shares; (2) furnish to each Holder of Registrable Shares and to each
underwriter of an Underwritten Offering of Registrable Shares, if any, without charge, as
many copies of each prospectus, including each preliminary prospectus, and any amendment or
supplement thereto and such other documents as such Holder or underwriter may reasonably
request, including financial statements and schedules in order to facilitate the public sale
or other disposition of the Registrable Shares; and (3) hereby consent to the use of the
prospectus or any amendment or supplement thereto by each of the selling Holders of
Registrable Shares in connection with the offering and sale of the Registrable Shares
covered by the prospectus or any amendment or supplement thereto;

          (iv) use its commercially reasonable efforts to register or qualify the Registrable
Shares under all applicable state securities or “blue sky” laws of such jurisdictions as any
Holder of Registrable Shares covered by a Registration Statement and each underwriter of an
Underwritten Offering of Registrable Shares shall reasonably request by the time the
applicable Registration Statement is declared effective by the Commission, and do any and
all other acts and things which may be reasonably necessary or advisable to enable each such
Holder and underwriter to consummate the disposition in each such jurisdiction of such
Registrable Shares owned by such Holder; provided, however, that the Company shall not be
required to (1) qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 4(a)(iv), or (2) take any action which would subject it to general service
of process or taxation in any such jurisdiction where it is not then so subject;

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          (v) notify promptly each Holder of Registrable Shares under a Registration Statement
and, if requested by such Holder, confirm such advice in writing promptly at the address
determined in accordance with Section 8(e) of this Agreement (1) when a Registration
Statement has become effective and when any post-effective amendments and supplements
thereto become effective, (2) of any request by the Commission or any state securities
authority for post-effective amendments and supplements to a Registration Statement and
prospectus or for additional information after the Registration Statement has become
effective, (3) of the issuance by the Commission or any state securities authority of any
stop order suspending the effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose, (4) if, between the effective date of a Registration Statement
and the closing of any sale of Registrable Shares covered thereby, the representations and
warranties of the Company contained in any underwriting agreement, securities sales
agreement or other similar agreement, if any, relating to the offering cease to be true and
correct in all material respects, (5) of the happening of any event or the discovery of any
facts during the period a Registration Statement is effective as a result of which such
Registration Statement or any document incorporated by reference therein contains any untrue
statement of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or, in the case of the
prospectus, contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading (which information shall be
accompanied by an instruction to suspend the use of the Registration Statement and the
prospectus (such instruction to be provided in the same manner as a Suspension Notice) until
the requisite changes have been made, at which time notice of the end of suspension shall be
delivered in the same manner as an End of Suspension Notice), (6) of the receipt by the
Company of any notification with respect to the suspension of the qualification of the
Registrable Shares, for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose and (7) of the filing of a post-effective amendment to such
Registration Statement;

          (vi) furnish Selling Holders’ Counsel, if any, copies of any comment letters relating
to the selling Holders received from the Commission or any other request by the Commission
or any state securities authority for amendments or supplements to a Registration Statement
and prospectus or for additional information relating to the selling Holders;

          (vii) make every reasonable effort to obtain the withdrawal of any order suspending the
effectiveness of a Registration Statement at the earliest possible moment;

          (viii) furnish to each Holder of Registrable Shares, and each underwriter, if any,
without charge, at least one conformed copy of each Registration Statement and any
post-effective amendment thereto, including financial statements and schedules (without
documents incorporated therein by reference and all exhibits thereto, unless requested);

          (ix) cooperate with the selling Holders to facilitate the timely preparation and
delivery of certificates representing Registrable Shares to be sold and not bearing any
restrictive legends; and enable such Registrable Shares to be in such denominations and
registered in such names as the selling Holders or the underwriters, if any, may reasonably
request at least three Business Days prior to the closing of any sale of Registrable Shares;

          (x) upon the occurrence of any event or the discovery of any facts, as contemplated by
Sections 4(a)(v)(5) and 4(a)(v)(6) hereof, as promptly as practicable after
the occurrence of such an event, use its best efforts to prepare a supplement or
post-effective amendment to the Registration Statement or the related prospectus or any
document incorporated

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therein by reference or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable Shares, such prospectus will not
contain at the time of such delivery any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or will remain so qualified, as
applicable. At such time as such public disclosure is otherwise made or the Company
determines that such disclosure is not necessary, in each case to correct any misstatement
of a material fact or to include any omitted material fact, the Company agrees promptly to
notify each Holder of such determination and to furnish each Holder such number of copies of
the prospectus as amended or supplemented, as such Holder may reasonably request;

          (xi) within a reasonable time prior to the filing of any Registration Statement, any
prospectus, any amendment to a Registration Statement or amendment or supplement to a
prospectus, provide copies of such document to the Selling Holders’ Counsel, if any, on
behalf of such Holders, and make representatives of the Company as shall be reasonably
requested by the Holders of Registrable Shares available for discussion of such document;

          (xii) obtain a CUSIP number for the Registrable Shares not later than the effective
date of a Registration Statement, and provide the Company’s transfer agent with printed
certificates for the Registrable Shares, in a form eligible for deposit with the Depositary,
in each case, to the extent necessary or applicable;

          (xiii) enter into agreements (including underwriting agreements) and take all other
customary appropriate actions in order to expedite or facilitate the disposition of such
Registrable Shares whether or not an underwriting agreement is entered into and whether or
not the registration is an underwritten registration:

          (A) make such representations and warranties to the Holders of such Registrable
Shares and the underwriters, if any, in form, substance and scope as are customarily
made by issuers to underwriters in similar Underwritten Offerings as may be
reasonably requested by them;

          (B) obtain opinions of counsel to the Company and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably satisfactory
to any managing underwriter(s) and their counsel) addressed to the underwriters, if
any (and in the case of an underwritten registration, each selling Holder), covering
the matters customarily covered in opinions requested in Underwritten Offerings and
such other matters as may be reasonably requested by the underwriter(s);

          (C) obtain “comfort” letters and updates thereof from the Company’s independent
registered public accounting firm (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company or of any business
acquired by the Company for which financial statements are, or are required to be,
included in the Registration Statement) addressed to the underwriter(s), if any, and
use reasonable efforts to have such letter addressed to the selling Holders in the
case of an underwritten registration (to the extent consistent with Statement on
Auditing Standards No. 72 of the American Institute of Certified Public Accounts),
such letters to be in customary form and covering matters of the type customarily
covered in “comfort” letters to underwriters in connection with similar Underwritten
Offerings;

          (D) enter into a securities sales agreement with the Holders and an agent of
the Holders providing for, among other things, the appointment of such agent for

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the
selling Holders for the purpose of soliciting purchases of Registrable Shares, which
agreement shall be in form, substance and scope customary for similar offerings;

          (E) if an underwriting agreement is entered into, cause the same to set forth
indemnification provisions and procedures substantially equivalent to the
indemnification provisions and procedures set forth in Section 5 hereof with
respect to the underwriters and all other parties to be indemnified pursuant to said
Section or, at the request of any underwriters, in the form customarily provided to
such underwriters in similar types of transactions; and

          (F) deliver such documents and certificates as may be reasonably requested and
as are customarily delivered in similar offerings to the Holders of a majority in
principal amount of the Registrable Shares being sold and the managing underwriters,
if any;

          (xiv) make available for inspection by any underwriter participating in any disposition
pursuant to a Registration Statement, Selling Holders’ Counsel and any accountant retained
by a majority in principal amount of the Registrable Shares being sold, all financial and
other records, pertinent corporate documents and properties or assets of the Company
reasonably requested by any such persons, and cause the respective officers, directors,
employees, and any other agents of the Company to supply all information reasonably
requested by any such representative, underwriter, counsel or accountant in connection with
a Registration Statement, and make such representatives of the Company available for
discussion of such documents as shall be reasonably requested by the Company; provided,
however, that the Selling Holders’ Counsel, if any, and the representatives of any
underwriters will use commercially reasonable efforts, to the extent reasonably practicable,
to coordinate the foregoing inspection and information gathering and to not materially
disrupt the Company’s business operations;

          (xv) a reasonable time prior to filing any Registration Statement, any prospectus
forming a part thereof, any amendment to such Registration Statement, or amendment or
supplement to such prospectus, provide copies of such document to the underwriter(s) of an
Underwritten Offering of Registrable Shares; within five Business Days after the filing of
any Registration Statement, provide copies of such Registration Statement to Selling
Holders’ Counsel; make such changes in any of the foregoing documents prior to the filing
thereof, or in the case of changes received from Selling Holders’ Counsel by filing an
amendment or supplement thereto, as the underwriter or underwriters, or in the case of
changes received from Selling Holders’ Counsel relating to the selling Holders or the plan
of distribution of Registrable Shares, as Selling Holders’ Counsel, reasonably requests; not
file any such document in a form to which any underwriter shall not have previously been
advised and furnished a copy of or to which the Selling Holders’ Counsel, if any, on behalf
of the Holders of Registrable Shares, or any underwriter shall reasonably object; not
include in any amendment or supplement to such documents any information about the selling
Holders or any change to the plan of distribution of Registrable Shares that would limit the
method of distribution of the Registrable Shares unless Selling Holders’ Counsel has been
advised in advance and has approved such information or change; and make the representatives
of the Company available for discussion of such document as shall be reasonably requested by
the Selling Holders’ Counsel, if any, on behalf of such Holders, Selling Holders’ Counsel or
any underwriter;

          (xvi) furnish to each Holder, if it has a due diligence defense under the Securities
Act, and to each underwriter, if any, a signed counterpart, addressed to such Holder or
underwriter, of (i) an opinion or opinions of counsel to the Company and (ii) if eligible
under

- 11 -

 

SAS 72, a comfort letter or comfort letters from the Company’s independent public
accountants, each in customary form and covering such matters of the type customarily
covered by opinions or comfort letters, as the case may be, as the Holders of a majority of
the Registrable Shares included in such offering or the managing underwriter or underwriters
therefor reasonably requests;

          (xvii) use its best efforts to cause all Registrable Shares to be listed on any
national securities exchange;

          (xviii) otherwise comply with all applicable rules and regulations of the Commission
and make available to its security holders, as soon as reasonably practicable, an earnings
statement covering at least 12 months which shall satisfy the provisions of Section 11(a) of
the Securities Act and Rule 158 thereunder;

          (xix) cooperate and assist in any filings required to be made with the FINRA and in the
performance of any due diligence investigation by any underwriter and its counsel (including
any “qualified independent underwriter” that is required to be retained in accordance with
the rules and regulations of the FINRA); and

          (xx) the Company may (as a condition to a Holder’s participation in a Shelf
Registration or Piggyback Registration) require each Holder of Registrable Shares to furnish
to the Company such information regarding the Holder and the proposed distribution by such
Holder of such Registrable Shares as the Company may from time to time reasonably request in
writing.

     Each Holder agrees that, upon receipt of any notice from the Company of the happening of any
event or the discovery of any facts of the type described in Section 4(a)(v) hereof, such
Holder will forthwith discontinue disposition of Registrable Shares pursuant to a Registration
Statement relating to such Registrable Shares until such Holder’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 4(a)(v) hereof, and, if so
directed by the Company, such Holder will deliver to the Company (at the Company’s expense) all
copies in such Holder’s possession, other than permanent file copies then in such Holder’s
possession, of the prospectus covering such Registrable Shares current at the time of receipt of
such notice.

     Section 5. Indemnification.

          (a) Indemnification by the Company. The Company agrees to indemnify and hold harmless
each Holder, and the respective officers, directors, partners, employees, representatives and
agents of any such Person, and each Person (a “Controlling Person”), if any, who controls
(within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) any of
the foregoing Persons, as follows:

          (i) against any and all loss, liability, claim, damage, judgment, actions, other
liabilities and expense whatsoever (the “Liabilities”), as incurred, arising out of
any untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment or supplement thereto) pursuant to which
Registrable Shares were registered under the Securities Act, including all documents
incorporated therein by reference, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements therein not
misleading, or arising out of any untrue statement or alleged untrue statement of a material
fact contained in any prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom at such date of a material fact

- 12 -

 

necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not
misleading;

          (ii) against any and all Liabilities, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue statement or omission;
provided that (subject to Section 5(d) below) any such settlement is effected with
the written consent of the Company; and

          (iii) against any and all expense whatsoever, as incurred (including the fees and
disbursements of counsel chosen by any indemnified party), reasonably incurred in
investigating, preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid under
subparagraph (i) or (ii) above;

provided, however, that this indemnity agreement shall not apply to any Liabilities to the extent
arising out of any untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the Company by the Holder
expressly for use in a Registration Statement (or any amendment thereto) or any prospectus (or any
amendment or supplement thereto).

          (b) Indemnification by the Holders. Each Holder severally, but not jointly, agrees to
indemnify and hold harmless the Company and the other selling Holders, and each of their respective
officers, directors, partners, employees, representatives and agents, and each of their respective
Controlling Persons, against any and all Liabilities described in the indemnity contained in
Section 5(a) hereof, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement (or any amendment
thereto) or any prospectus included therein (or any amendment or supplement thereto) in reliance
upon and in conformity with written information with respect to such Holder furnished to the
Company by such Holder expressly for use in the Registration Statement (or any amendment thereto)
or such prospectus (or any amendment or supplement thereto); provided, however, that no such Holder
shall be liable for any claims hereunder in excess of the amount of net proceeds received by such
Holder from the sale of Registrable Shares pursuant to such Registration Statement.

          (c) Notices of Claims, etc. Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action or proceeding commenced against it
in respect of which indemnity may be sought hereunder, but failure so to notify an indemnifying
party shall not relieve such indemnifying party from any liability hereunder to the extent it is
not materially prejudiced as a result thereof and in any event shall not relieve it from any
liability which it may have otherwise than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of such action; provided, however, that
counsel to the indemnifying party shall not (except with the consent of the indemnified party) also
be counsel to the indemnified party. In no event shall the indemnifying party or parties be liable
for the fees and expenses of more than one counsel (in addition to any local counsel) separate from
their own counsel for all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whosoever in respect of which indemnification or contribution could be
sought 

- 13 -

 

under this Section 5 (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an unconditional
release of each indemnified party from all liability arising out of such litigation, investigation,
proceeding or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.

          (d) Indemnification Payments. If at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature
contemplated by Section 5(a)(ii) effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with such request prior to the
date of such settlement.

          (e) Contribution. If the indemnification provided for in this Section 5 is
for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of
any Liabilities referred to therein, then each indemnifying party shall contribute to the aggregate
amount of such Liabilities incurred by such indemnified party, as incurred, in such proportion as
is appropriate to reflect the relative fault of the Company on the one hand and the Holders on the
other hand in connection with the statements or omissions which resulted in such Liabilities, as
well as any other relevant equitable considerations.

     The relative fault of the Company on the one hand and the Holders on the other hand shall be
determined by reference to, among other things, whether any such untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact relates to information
supplied by the Company or the Holders and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.

     The Company and the Holders agree that it would not be just and equitable if contribution
pursuant to this Section 5 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred to above in this
Section 5. The aggregate amount of Liabilities incurred by an indemnified party and
referred to above in this Section 5 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission.

     No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.

     For purposes of this Section 5, each Person, if any, who controls the a Holder within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the
same rights to contribution as a Holder, and each director of the Company, and each Person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act shall have the same rights to contribution as the Company.

     Section 6. Market Stand-Off Agreement. Each Holder hereby agrees that it shall not,
directly or indirectly sell, offer to sell (including without limitation any short sale), pledge,
contract to sell, sell any option or contract to purchase, purchase any option or contract to sell,
grant any option, right

- 14 -

 

or warrant for the sale of or otherwise dispose of or transfer any
Registrable Shares or other Common Stock or any securities convertible into or exchangeable or
exercisable for Common Stock then owned by such Holder (other than to permitted transferees of the
Holder who agree to be similarly bound) for up to 90 days following the date of an underwriting
agreement with respect to an underwritten public offering of the
Company’s securities or such shorter period as the managing
underwriters shall agree to; provided,
however, that:

          (a) the restrictions above shall not apply to Registrable Shares sold on the Holder’s behalf
to the public in an Underwritten Offering pursuant to such Registration Statement;

          (b) all officers and directors of the Company then holding Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock enter into similar agreements for
not less than the entire time period required of the Holders hereunder; and

          (c) the Holders shall be allowed any concession or proportionate release allowed to any (i)
officer, (ii) director, (iii) other holder of the Company’s Common Stock that entered into similar
agreements (with such proportion being determined by dividing the number of shares being released
with respect to such officer, director or other holder of the Company’s Common Stock by the total
number of issued and outstanding shares held by such officer, director or holder).

     In order to enforce the foregoing covenant, the Company shall have the right to place
restrictive legends on the certificates representing the securities subject to this
Section 6 and to impose stop transfer instructions with respect to the Registrable Shares
and such other securities of each Holder (and the securities of every other Person subject to the
foregoing restriction) until the end of such period.

     Section 7. Termination; Survival. The rights of each Holder under this Agreement
shall terminate upon the date that all of the Registrable Shares cease to be Registrable Shares.
Notwithstanding the foregoing, the obligations of the parties under Sections 5 and
6 of this Agreement shall remain in full force and effect following such time.

     Section 8. Miscellaneous.

          (a) Covenants Relating To Rule 144. For so long as the Company is subject to the
reporting requirements of Section 13 or 15 of the Securities Act, the Company covenants that it
will file the reports required to be filed by it under the Securities Act and Section 13(a) or
15(d) of the Exchange Act and the rules and regulations adopted by the Commission thereunder. If
the Company ceases to be so required to file such reports, the Company covenants that it will upon
the request of any Holder of Registrable Shares (a) make publicly available such information as is
necessary to permit sales pursuant to Rule 144 under the Securities Act, (b) deliver such
information to a prospective purchaser as is necessary to permit sales pursuant to Rule 144A under
the Securities Act and it will take such further action as any Holder of Registrable Shares may
reasonably request, and (c) take such further action that is reasonable in the circumstances, in
each case to the extent required from time to time to enable such Holder to sell its Registrable
Shares without registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such Rule may be amended from time to time,
(ii) Rule 144A under the Securities Act, as such rule may be amended from time to time, or
(iii) any similar rules or regulations hereafter adopted by the Commission. Upon the request of
any Holder of Registrable Shares, the Company will deliver to such Holder a written statement as to
whether it has complied with such requirements (at any time after 90 days after the effective date
of the first Registration Statement filed by the Company for an offering of its Common Stock to the
general public) and of the Securities Act and the Exchange Act (at any time after it has become
subject to the reporting requirements of the Exchange Act), a copy of the most recent annual and
quarterly report(s) of the Company, and such other reports, documents or stockholder communications
of the Company, and take

- 15 -

 

such further actions consistent with this Section 8(a), as a
Holder may reasonably request in availing itself of any rule or regulation of the Commission
allowing a Holder to sell any such Registrable Shares without registration.

          (b) No Inconsistent Agreements. The Company has not entered into and the Company will
not after the date of this Agreement enter into any agreement which is inconsistent with the rights
granted to the Holders of Registrable Shares pursuant to this Agreement or otherwise conflicts with
the provisions of this Agreement. The rights granted to the Holders hereunder do not and will not
for the term of this Agreement in any way conflict with the rights granted to the holders of the
Company’s other issued and outstanding securities under any such agreements.

          (c) Expenses. All Registration Expenses incurred in connection with any Registration
Statement shall be borne by the Company, whether or not any Registration Statement related thereto
becomes effective.

          (d) Amendments and Waivers. The provisions of this Agreement may be amended or waived
at any time only by the written agreement of the Company and the Holders of a majority of the
Registrable Shares; provided, however, that the provisions of this Agreement may not be amended or
waived without the consent of the Holders of all the Registrable Shares adversely affected by such
amendment or waiver if such amendment or waiver adversely affects a portion of the Registrable
Shares but does not so adversely affect all of the Registrable Shares; provided, further, that the
provisions of the preceding provision may not be amended or waived except in accordance with this
sentence. Any waiver, permit, consent or approval of any kind or character on the part of any such
Holders of any provision or condition of this Agreement must be made in writing and shall be
effective only to the extent specifically set forth in writing. Any amendment or waiver effected
in accordance with this paragraph shall be binding upon each Holder of Registrable Shares and the
Company.

          (e) Notices. All notices and other communications provided for or permitted hereunder
shall be made in writing by hand delivery, registered first-class mail, facsimile or any courier
guaranteeing overnight delivery (a) if to a Holder, at the most current address given by such
Holder to the Company by means of a notice given in accordance with the provisions of this
Section 8(e) and (b) if to the Company, to Provident Mortgage Capital Associates, Inc.,
1633 Bayshore Highway, Suite 155, Burlingame, CA 94010, Attention: Mark Lefanowicz (facsimile:
650-652-1350).

     All such notices and communications shall be deemed to have been duly given: at the time
delivered by hand, if personally delivered; two Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt is acknowledged, if sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and kept on file by the
sending party) and on the next Business Day if timely delivered to an air courier guaranteeing
overnight delivery.

          (f) Successor and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors, assigns and transferees of each of the parties, including, without
limitation and without the need for an express assignment, subsequent
Holders; provided, however,, that nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Registrable Securities in violation of the terms of the Management Agreement. If any transferee
of any Holder shall acquire Registrable Shares, in any manner, whether by operation of law or
otherwise, such Registrable Shares shall be held subject to all of the terms of this Agreement, and
by taking and holding such Registrable Shares such person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this Agreement, including
the restrictions on resale set forth in this Agreement, and, if applicable, the Management Agreement, and such person shall be entitled to
receive the benefits hereof.

          (g) Specific Enforcement. Without limiting the remedies available to the Holders, the
Company acknowledges that any failure by the Company to comply with its obligations under

- 16 -

 

Section 2 hereof may result in material irreparable injury to the Holders for which there
is no adequate remedy at law, that it would not be possible to measure damages for such injuries
precisely and that, in the event of any such failure, a Holder may obtain such relief as may be
required to specifically enforce the Company’s obligations under Section 2 hereof.

          (h) Counterparts. This Agreement may be executed in any number of counterparts and by
the parties hereto in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same agreement.

          (i) Headings. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.

          (j) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

          (k) Severability. In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable,
the validity, legality and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired thereby.

[SIGNATURE PAGE FOLLOWS]

- 17 -

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of
the date first written above.

	 	 	 	 	 	 	 

	 	 	PROVIDENT MORTGAGE CAPITAL	 	 
	 	 	ASSOCIATES, INC.,	 	 
	 	 	a Maryland corporation	 	 
	 
	 	 	 	 	 	 
	 
	 	By:	 	 	 	 
	 
	 	 	 
	 
	 	 	 	Name:	 	 	 
	 	 	 	Title:	 	 	 
	 
	 	 	 	 	 	 
	 	 	PMF ADVISORS,
LLC,	 	 
	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 
	 	By:	 	 	 	 
	 
	 	 	 
	 
	 
	 	 	Name:	 	 	 
	 
	 	 	Title:	 	 	 

 

 

SCHEDULE 1

HOLDERS

	 	 	 	 	 
	 	 	Number of Shares of	 	 
	Name of the Holder	 	Common Stock Held	 	Address of the Holder
	PMF Advisors, LLC

	 	 	 	1633 Bayshore Highway
	 

	 	 	 	Suite 155
	 

	 	 	 	Burlingame, California 94010

Sch. 1-1exv10w1

Exhibit 10.1

Execution Copy

SECOND AMENDED AND RESTATED SALE AGREEMENT

          This SECOND AMENDED AND RESTATED SALE AGREEMENT (this “Agreement”), dated as of August 31,
2010, is by and among DIAMOND RESORTS DEPOSITOR 2008 LLC, a Delaware limited liability company (the
“Depositor”), and DIAMOND RESORTS ISSUER 2008 LLC, a Delaware limited liability company (the
“Issuer”), and their respective permitted successors and assigns, and acknowledged and agreed to by
DIAMOND RESORTS FINANCE HOLDING COMPANY, a Delaware corporation (“DFHC”) with respect to its rights
and obligations set forth in Section 6 herein, and hereby amends and restates in its entirety that
certain amended and restated sale agreement, dated as of July 16, 2010 (the “A/R Sale Agreement”),
among the parties hereto, which amended and restated in its entirety that certain sale agreement,
dated as of November 3, 2008 (the “Original Sale Agreement”), among the parties hereto.

W I
T N E S S E T H:

          WHEREAS, the parties hereto desire to amend and restate in its entirety the A/R Sale Agreement
as provided herein, and all actions required to do so under the A/R Sale Agreement have been taken;

          WHEREAS, (i) pursuant to the A/R Sale Agreement, the Depositor had sold and the Issuer had
purchased Timeshare Loans, (ii) pursuant to this Agreement, from time to time, the Depositor will
sell and the Issuer will purchase Timeshare Loans, and (iii) pursuant to that certain third amended
and restated indenture, dated as of August 31, 2010 (the “Indenture”), by and among the Issuer,
Diamond Resorts Financial Services, Inc., a Nevada corporation, as servicer (in such capacity, the
“Servicer”), Wells Fargo Bank, National Association, a national banking association, as indenture
trustee (in such capacity, the “Indenture Trustee”), custodian (in such capacity, the “Custodian”)
and back-up servicer (in such capacity, the “Back-Up Servicer”) and Credit Suisse AG, Cayman
Islands Branch, as agent (the “Agent”), the Issuer intends to pledge, among other things, such
Timeshare Loans to the Indenture Trustee to secure the Issuer’s variable funding notes designated
the Diamond Resorts Issuer 2008 LLC, Variable Funding Notes (the “Notes”);

          WHEREAS, the Depositor may, and in certain circumstances will be required to, provide
Qualified Substitute Timeshare Loans for Timeshare Loans previously sold to the Issuer hereunder
(including, for the avoidance of doubt, Timeshare Loans sold to the Issuer under the Original Sale
Agreement);

          NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and for other
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto covenant and agree as follows:

          SECTION 1. Definitions; Interpretation. Capitalized terms used but not defined herein
shall have the meanings specified in the Third Amended and Restated Standard Definitions (the
“Standard Definitions”) attached to the Indenture as Annex A and to the extent that the Standard
Definitions attached to the Indenture are further amended from time to time in

 

 

accordance with the terms of the Indenture, such amended Standard Definitions shall apply to and be
incorporated in this Agreement by reference as though attached hereto.

          SECTION 2. Acquisition of Timeshare Loans.

          (a) Timeshare Loans. On each Funding Date or Transfer Date, as the case may
be, in return for the Timeshare Loan Acquisition Price for each Timeshare Loan to be sold
on such Funding Date, the Depositor does hereby sell, transfer, assign and grant to the
Issuer, without recourse (except as provided in Section 6 and Section 8 hereof), all of the
Depositor’s right, title and interest in and to: (i) each Timeshare Loan listed on the
related Borrowing Notice, (ii) the Receivables in respect of such Timeshare Loans due after
the related Cut-Off Date, (iii) the related Timeshare Loan Documents, (iv) all Related
Security in respect of each such Timeshare Loan, (v) the rights and remedies of the
Depositor under the Purchase Agreement, and (vi) all income, payments, proceeds and other
benefits and rights related to any of the foregoing (the property described in the
foregoing clauses (i) through (vi) being referred to as the “Conveyed Timeshare Property”).
Upon such sale, the ownership of each such Timeshare Loan and all collections allocable to
principal and interest thereon due after the related Cut-Off Date and all other property
interests or rights conveyed pursuant to and referenced in this Section 2(a) shall
immediately vest in the Issuer, its successors and assigns. The Depositor shall not take
any action inconsistent with such ownership nor claim any ownership interest in any
Timeshare Loan for any purpose whatsoever other than for consolidated financial and federal
and state income tax reporting.

          (b) Delivery of Timeshare Loan Documents. In connection with the sale,
transfer, assignment and conveyance of the Timeshare Loans hereunder, the Issuer hereby
directs the Depositor and the Depositor hereby agrees to deliver or cause to be delivered,
at least five Business Days prior to each Funding Date or Transfer Date, as the case may
be, to the Custodian or the In-Transit Custodian, as the case may be, all related Timeshare
Loan Files and to the Servicer all related Timeshare Loan Servicing Files.

          (c) Collections. The Depositor shall deposit or cause to be deposited all
collections in respect of Timeshare Loans conveyed hereunder that are received by it on or
after the related Cut-Off Date in the Collection Account.

          (d) No Further Obligations. Based on the Depositor’s representation and
warranty in clause (oo) of Schedule I, neither the Issuer nor any subsequent assignee of
the Issuer shall have any obligation or liability with respect to any Timeshare Loan nor
shall the Issuer or any subsequent assignee have any liability to any Obligor in respect of
any Timeshare Loan. It is the intention of the parties hereto that no such obligation or
liability is being assumed by the Issuer or any subsequent assignee herewith and any such
obligation or liability is hereby expressly disclaimed.

          SECTION 3. Intended Characterization; Grant of Security Interest. It is the intention
of the parties hereto that each transfer of Timeshare Loans to be made pursuant to the terms hereof
shall constitute a sale by the Depositor to the Issuer and not a loan secured by such Timeshare
Loans. In the event, however, that a court of competent jurisdiction were to hold that

2

 

any such transfer constitutes a loan and not a sale, it is the intention of the parties hereto
that (i) the Depositor shall be deemed to have Granted and does hereby Grant to the Issuer as of
the date hereof a first priority perfected security interest in all of the Depositor’s right, title
and interest in, to and under, whether now owned or existing or hereafter acquired or arising, the
Conveyed Timeshare Property specified in Section 2 hereof and the proceeds thereof, and (ii) this
Agreement shall constitute a security agreement under applicable law. In the event of the
characterization of any such transfer as a loan, the amount of interest payable or paid with
respect to such loan under the terms of this Agreement shall be limited to an amount which shall
not exceed the maximum non-usurious rate of interest allowed by the applicable state law or any
applicable law of the United States permitting a higher maximum non-usurious rate that preempts
such applicable state law, which could lawfully be contracted for, charged or received (the
“Highest Lawful Rate”). In the event any payment of interest on any such loan exceeds the Highest
Lawful Rate, the parties hereto stipulate that: (a) to the extent possible given the term of such
loan, such excess amount previously paid or to be paid with respect to such loan be applied to
reduce the principal balance of such loan, and the provisions thereof immediately be deemed
reformed and the amounts thereafter collectible thereunder reduced, without the necessity of the
execution of any new document, so as to comply with the then applicable law, but so as to permit
the recovery of the fullest amount otherwise called for thereunder and (b) to the extent that the
reduction of the principal balance of, and the amounts collectible under, such loan and the
reformation of the provisions thereof described in the immediately preceding clause (a) is not
possible given the term of such loan, such excess amount will be deemed to have been paid with
respect to such loan as a result of an error and upon discovery of such error or upon notice
thereof by any party hereto such amount shall be refunded by the
recipient thereof.

          The characterization of the Depositor as “debtor” and the Issuer as “secured party” in any
financing statement required hereunder is solely for protective purposes and shall in no way be
construed as being contrary to the intent of the parties that this transaction be treated as a sale
to the Issuer of the Depositor’s entire right, title and interest in and to the Conveyed Timeshare
Property.

          SECTION 4. Conditions Precedent to Acquisition of Timeshare Loans. The obligations of
the Issuer to purchase any Timeshare Loans hereunder shall be subject to the satisfaction of the
following conditions:

          (a) With respect to each Funding Date and each Transfer Date, all representations and
warranties of the Depositor contained in Section 5(a) hereof shall be true and correct on
the related Funding Date or Transfer Date, as the case may be, as if made on such date, and
all representations and warranties as to the Timeshare Loans contained in Section 5(b) and
all information provided in the Schedule of Timeshare Loans in respect of the Timeshare
Loans (including the Qualified Substitute Timeshare Loans conveyed on such Transfer Date)
shall be true and correct on the related Funding Date or Transfer Date, as the case may be.

          (b) On or prior to a Funding Date or a Transfer Date, as the case may be, the
Depositor shall have delivered or shall have caused the delivery of (i) in the case of
Eligible Timeshare Loans (other than Eligible In-Transit Loans) the related Timeshare Loan
Files to the Custodian, and the Custodian shall have delivered a Trust Receipt

3

 

therefor pursuant to the Custodial Agreement, (ii) in the case of Eligible In-Transit
Loans, the related Timeshare Loan Files to the In-Transit Custodian, and the In-Transit
Custodian shall have delivered an In-Transit Trust Receipt therefor pursuant to the
In-Transit Custodial Agreement, (iii) the Timeshare Loan Servicing Files to the Servicer,
(iv) an updated Schedule of Timeshare Loans to the Custodian, the Servicer, the Issuer, the
Indenture Trustee and the Agent and (v) an updated Schedule of Eligible In-Transit Loans to
the to the In-Transit Custodian, the Servicer, the Issuer, the Indenture Trustee and the
Agent.

          (c) Each transfer, assignment, sale and grant shall be evidenced by a transfer
certificate in the form attached hereto as Exhibit B. The Depositor shall have delivered or
caused to be delivered all other information theretofore required or reasonably requested
by the Issuer to be delivered by the Depositor or performed or caused to be performed all
other obligations required to be performed as of the Amendment Closing Date, Funding Date
or Transfer Date, as the case may be, including all filings, recordings and/or
registrations as may be necessary in the opinion of the Issuer to establish and preserve
the right, title and interest of the Issuer or the Indenture Trustee, as the case may be,
in the related Timeshare Loans.

          (d) On the related Funding Date, the Indenture shall be in full force and effect and
no Funding Termination Event shall have occurred and is continuing.

          (e) Each of the conditions precedent to a Borrowing under the Indenture and the Note
Funding Agreement shall have been satisfied.

          (f) Each Timeshare Loan conveyed on a Funding Date shall be an Eligible Timeshare
Loan.

          (g) Each Qualified Substitute Timeshare Loan replacing a Timeshare Loan shall satisfy
each of the criteria specified in the definition of “Qualified Substitute Timeshare Loan”
and each of the conditions herein and in the Indenture for substitution of Timeshare Loans
shall have been satisfied.

          (h) The Depositor shall have delivered such other certificates and opinions as shall
be reasonably requested by the Issuer or its assignee.

          SECTION 5. Representations and Warranties and Certain Covenants of the Depositor.

          (a) The Depositor represents and warrants to the Issuer and the Indenture Trustee for
the benefit of the Noteholders, as of the Amendment Closing Date and on each Funding Date
and Transfer Date (with respect to any Timeshare Loans or Qualified Substitute Timeshare
Loans transferred on such Funding Date or Transfer Date) as follows:

          (i) Due Incorporation; Valid Existence; Good Standing. The Depositor is a
limited liability company duly organized and validly existing in good standing
under the laws of the State of Delaware; and is duly qualified to do

4

 

business as a foreign company and in good standing under the laws of each
jurisdiction where the character of its property, the nature of its business or the
performance of its obligations under this Agreement makes such qualification necessary,
except where the failure to be so qualified will not have a material adverse effect on
the business of the Depositor or its ability to perform its obligations under this
Agreement or any other Transaction Document to which it is a party or under the
transactions contemplated hereunder or thereunder or the validity or enforceability of
any portion of the Conveyed Timeshare Property.

          (ii) Possession of Licenses, Certificates, Franchises and Permits. The
Depositor holds, and at all times during the term of this Agreement will hold, all
material licenses, certificates, franchises and permits from all governmental authorities
necessary for the conduct of its business, and has received no notice of proceedings
relating to the revocation of any such license, certificate, franchise or permit, which
singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would materially and adversely affect its ability to perform its obligations under this
Agreement or any other Transaction Document to which it is a party or under the
transactions contemplated hereunder or thereunder or the validity or enforceability of
the Conveyed Timeshare Property.

          (iii) Corporate Authority and Power. The Depositor has, and at all times
during the term of this Agreement will have, all requisite corporate power and authority
to own its properties, to conduct its business, to execute and deliver this Agreement and
all documents and transactions contemplated hereunder and to perform all of its
obligations under this Agreement and any other Transaction Document to which it is a
party or under the transactions contemplated hereunder or thereunder. The Depositor has
all requisite corporate power and authority to acquire, own, transfer and convey the
Conveyed Timeshare Property to the Issuer.

          (iv) Authorization, Execution and Delivery; Valid and Binding. This
Agreement and all other Transaction Documents and instruments required or contemplated
hereby to be executed and delivered by the Depositor have been duly authorized, executed
and delivered by the Depositor and, assuming the due execution and delivery by, the other
party or parties hereto and thereto, constitute legal, valid and binding agreements
enforceable against the Depositor in accordance with their respective terms subject, as
to enforceability, to bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting the enforceability of creditors’ rights generally applicable in
the event of the bankruptcy, insolvency, or reorganization of the Depositor and to
general principles of equity, regardless of whether such enforceability shall be
considered in a proceeding in equity or at law. This Agreement constitutes a valid
transfer of the Depositor’s interest in the Conveyed Timeshare Property to the Issuer or
the valid creation of a first priority perfected security interest in the Conveyed
Timeshare Property in favor of the Issuer.

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          (v) No Violation of Law, Rule, Regulation, etc. The execution, delivery and
performance by the Depositor of this Agreement and any other Transaction Document to
which the Depositor is a party do not and will not (A) violate any of the provisions of
the certificate of formation or limited liability company agreement of the Depositor, (B)
violate any provision of any law, governmental rule or regulation currently in effect
applicable to the Depositor or its properties or by which the Depositor or its properties
may be bound or affected, including, without limitation, any bulk transfer laws, (C)
violate any judgment, decree, writ, injunction, award, determination or order currently
in effect applicable to the Depositor or its properties or by which the Depositor or its
properties are bound or affected, (D) conflict with, or result in a breach of, or
constitute a default under, any of the provisions of any indenture, mortgage, deed of
trust, contract or other instrument to which the Depositor is a party or by which it is
bound or (E) result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, mortgage, deed of trust, contract or other
instrument.

          (vi) Governmental Consent. No consent, approval, order or authorization of,
and no filing with or notice to, any court or other Governmental Authority in respect of
the Depositor is required which has not been obtained in connection with the
authorization, execution, delivery or performance by the Depositor of this Agreement or
any of the other Transaction Documents to which it is a party or under the transactions
contemplated hereunder or thereunder, including, without limitation, the transfer of the
Conveyed Timeshare Property and the creation of the security interest of the Issuer
therein pursuant to Section 3 hereof.

          (vii) Defaults. The Depositor is not in default under any material
agreement, contract, instrument or indenture to which the Depositor is a party or by
which it or its properties is or are bound, or with respect to any order of any court,
administrative agency, arbitrator or governmental body, in each case, which would have a
material adverse effect on the transactions contemplated hereunder or on the business,
operations, financial condition or assets of the Depositor, and no event has occurred
which with notice or lapse of time or both would constitute such a default with respect
to any such agreement, contract, instrument or indenture, or with respect to any such
order of any court, administrative agency, arbitrator or governmental body.

          (viii) No Material Adverse Effect. Since the end of Diamond Resorts
Corporation’s most recent, audited fiscal year, there has been no Material Adverse
Effect with respect to any Diamond Resorts Entity.

          (ix) Insolvency. The Depositor will be solvent at all relevant times prior
to, and will not be rendered insolvent by, the transfer of the Conveyed Timeshare
Property hereunder. On the Amendment Closing Date, or a Funding Date or a Transfer Date,
as applicable, the Depositor will not engage in any

6

 

business or transaction for which any property remaining with the Depositor would
constitute an unreasonably small amount of capital.

          (x) Pending Litigation or Other Proceedings. There is no pending or, to the
best of the Depositor’s knowledge, threatened action, suit, proceeding or investigation
before any court, administrative agency, arbitrator or governmental body against or
affecting the Depositor which, if decided adversely, would materially and adversely
affect (A) the condition (financial or otherwise), business or operations of the
Depositor, (B) the ability of the Depositor to perform its obligations under, or the
validity or enforceability of, this Agreement or any other Transaction Document to which
it is a party, (C) any of the Conveyed Timeshare Property or title of the Depositor to
any of the Conveyed Timeshare Property, or (D) the Issuer’s or the Indenture Trustee’s
ability to foreclose or otherwise enforce its rights with respect to any of the Conveyed
Timeshare Property, including without limitation the right to revoke or otherwise
terminate the Right-to-Use Agreements and related Right-to-Use Interests, and the rights
of the Obligors to use and occupy the related Timeshare Interest.

          (xi) Information. No document, certificate or report furnished or required
to be furnished by or on behalf of the Depositor pursuant to this Agreement, in its
capacity as the Depositor, contains or will contain when furnished any untrue statement
of a material fact or fails, or will fail, to state a material fact necessary in order
to make the statements contained therein not misleading. There are no facts known to the
Depositor which, individually or in the aggregate, materially adversely affect, or which
(aside from general economic trends) may reasonably be expected to materially adversely
affect in the future, the financial condition or assets or business of the Depositor, or
which may impair the ability of the Depositor to perform its obligations under this
Agreement and any other Transaction Document to which it is a party, which have not been
disclosed herein or therein or in the certificates and other documents furnished to the
Issuer by or on behalf of the Depositor pursuant hereto or thereto specifically for use
in connection with the transactions contemplated hereby or thereby.

          (xii) Foreign Tax Liability. The Depositor is not aware of any Obligor
under a Timeshare Loan who has withheld any portion of payments due under such Timeshare
Loan because of the requirements of a foreign taxing authority, and no foreign taxing
authority has contacted the Depositor concerning a withholding or other foreign tax
liability.

          (xiii) Employee Benefit Plan Liability. As of the Amendment Closing Date and
each Funding Date and Transfer Date, as applicable, (i) no “accumulated funding
deficiency” (as such term is defined under ERISA and the Code), whether or not waived,
exists with respect to any “employee pension benefit plan” (as such term is defined under
ERISA) sponsored, maintained or contributed to by the Depositor or any of its Affiliates
with respect to any plan year beginning prior to January 1, 2010, and, to the Depositor’s
knowledge, no event has occurred or circumstance exists that may result in an accumulated

7

 

funding deficiency as of the last day of any plan year beginning prior to January 1,
2010; (ii) no unpaid “minimum required contribution” (as such term is defined under ERISA
and the Code), whether or not such funding deficiency is waived, exists with respect to
any employee pension benefit plan sponsored, maintained or contributed to by the
Depositor or any of its Affiliates with respect to any plan year beginning after December
31, 2009, and, to the Depositor’s knowledge, no event has occurred or circumstance exists
that may result in an unpaid minimum required contribution as of the last day of the plan
year beginning after December 31, 2009 of any such plan; (iii) the Depositor and each of
its Affiliates has made all contributions required under each multiemployer plan (as such
term is defined under ERISA) to which the Depositor or any of its Affiliates contributes
or in which the Depositor or any of its Affiliates participates (a “Depositor
Multiemployer Plan”); and (iv) neither the Depositor nor any of its Affiliates has
withdrawn from any Depositor Multiemployer Plan with respect to which there is any
outstanding liability and, to the Depositor’s knowledge, no event has occurred or
circumstance exists that presents a risk of the occurrence of any withdrawal from, or the
partition, termination, reorganization or insolvency of, any Depositor Multiemployer Plan
that could result in any liability to the Depositor.

          (xiv) Taxes. The Depositor has filed all tax returns (federal, state and
local) which it reasonably believes are required to be filed and has paid or made
adequate provision for the payment of all taxes, assessments and other governmental
charges due from the Depositor or is contesting any such tax, assessment or other
governmental charge in good faith through appropriate proceedings or such failure will
not have a material adverse effect on the rights and interests of the Issuer. The
Depositor knows of no basis for any material additional tax assessment for any fiscal
year for which adequate reserves have not been established. The Depositor intends to pay
all such taxes, assessments and governmental charges when due.

          (xv) Place of Business. The place of business where the Servicer on behalf
of the Depositor keeps its records concerning the Timeshare Loans will be 10600 West
Charleston Boulevard, Las Vegas, Nevada 89135 (or such other place specified by the
Depositor by written notice to the Issuer and the Indenture Trustee). The principal
place of business and chief executive office of the Depositor is located at 10600 West
Charleston Boulevard, Las Vegas, Nevada 89135 (or such other place specified by the
Depositor by written notice to the Issuer and the Indenture Trustee).

          (xvi) Securities Laws. The Depositor is not an “investment company” or a
company “controlled” by an “investment company” within the meaning of the Investment
Company Act of 1940, as amended. No portion of the Timeshare Loan Acquisition Price for
each of the Timeshare Loans will be used by the Depositor to acquire any security in any
transaction which is subject to Section 13 or Section 14 of the Securities Exchange Act
of 1934, as amended.

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          (xvii) Ownership of the Depositor. One hundred percent (100%) of the
outstanding sole membership interest of the Depositor is directly owned (both
beneficially and of record) by Diamond Resorts Finance Holding Company, a Delaware
corporation. Such membership interest is validly issued, fully paid and nonassessable,
and there are no options, warrants or other rights to acquire membership interests from
the Depositor.

          (b) The Depositor hereby: (i) represents and warrants that immediately prior to the transfer
of any Timeshare Loan to the Issuer, the Depositor had full legal and equitable title to such
Timeshare Loan, free and clear of any liens and encumbrances, and (ii) makes the representations
and warranties contained in Schedule I hereto with respect to each Timeshare Loan, and certain
limited representations and warranties contained in
Schedule II hereto with respect to the
Resorts, such representations and warranties in both clauses (i) and (ii) for the benefit of the
Issuer, the Indenture Trustee for the benefit of the Noteholders and the Agent with respect to
each Timeshare Loan and certain Resorts as of the Amendment Closing Date, each Funding Date and
each Transfer Date (with respect to the Timeshare Loans and the Qualified Substitute Timeshare
Loans transferred on such Funding Date or Transfer Date), as applicable.

          (c) It is understood and agreed that the representations and warranties set forth in this
Section 5 shall survive the sale of any Conveyed Timeshare Property to the Issuer and any
assignment of such Conveyed Timeshare Property by the Issuer to the Indenture Trustee for the
benefit of the Noteholders and shall continue until the Notes are paid in full or otherwise
released or discharged. The Depositor acknowledges that it has been advised that the Issuer
intends to assign all of its right, title and interest in and to the Conveyed Timeshare Property
and its rights and remedies under this Agreement to the Indenture Trustee for the benefit of the
Noteholders. The Depositor agrees that, upon any such assignment, the Indenture Trustee may
enforce directly, without joinder of the Issuer (but subject to any defense that the Depositor
may have under this Agreement) all rights and remedies hereunder.

          (d) With respect to any representations and warranties contained in Section 5(a) and
Section 5(b) hereof, which are made to the Depositor’s knowledge, if it is discovered that any
representation and warranty is inaccurate and such inaccuracy materially and adversely affects
the value of a Timeshare Loan or the interests of the Issuer or any assignee thereof, then
notwithstanding the Depositor’s lack of knowledge of the accuracy of such representation and
warranty at the time such representation or warranty was made, such inaccuracy shall be deemed a
breach of such representation or warranty for purposes of the repurchase or substitution
obligations described herein.

          SECTION 6. Repurchases and Substitutions.

          (a) Mandatory Repurchase and Substitution for Breaches of Representations and
Warranties. Upon the receipt of notice by the Depositor of a breach of any of the
representations and warranties in Section 5(a) or Section 5(b) hereof which materially and
adversely affects the value of a Timeshare Loan or the interests of the Issuer or any subsequent
assignee of the Issuer (including the Indenture Trustee for the

9

 

benefit of the Noteholders) therein, the Depositor shall within 30 days of such notice, cure
in all material respects the circumstance or condition which has caused such representation or
warranty to be incorrect or either: (i) repurchase such Timeshare Loan at the Repurchase Price,
or (ii) substitute one or more Qualified Substitute Timeshare Loans for such Timeshare Loan and
pay the related Substitution Shortfall Amount, if any; provided, that to the extent an
Amortization Event has occurred and is continuing, the Depositor shall use its best efforts to
repurchase each Timeshare Loan instead of replacing such Timeshare Loan.

          (b) Optional Repurchase and Substitution of 60-Day Plus Delinquent Loans. On
any date, DFHC shall have the option, but not the obligation, to either: (i) repurchase a 60-Day
Plus Delinquent Loan from the Issuer for a price equal to the Repurchase Price therefor, or (ii)
substitute one or more Qualified Substitute Timeshare Loans for such 60-Day Plus Delinquent Loan
and pay the related Substitution Shortfall Amount, if any.

          (c) Limitation on Optional Repurchases and Substitutions of Timeshare Loans. The
aggregate Cut-Off Date Loan Balance of 60-Day Plus Delinquent Loans that may be repurchased and
substituted pursuant to Section 6(b) at the option of DFHC shall be limited on any date to 15%
and 20%, respectively of the highest aggregate Loan Balance of all Timeshare Loans owned by the
Issuer since the Amendment Closing Date, less the aggregate of the Cut-Off Date Loan Balances of
all 60-Day Plus Delinquent Loans previously repurchased or substituted, as applicable, pursuant
to Section 6(b) hereof since the Amendment Closing Date.

          (d) Payment of Repurchase Prices and Substitution Shortfall Amounts. The Issuer
hereby directs and the Depositor and DFHC hereby agree to remit all amounts in respect of
Repurchase Prices and Substitution Shortfall Amounts in immediately available funds to the
Indenture Trustee. In the event that more than one Timeshare Loan is substituted pursuant to
Sections 6(a) or (b) hereof on any Transfer Date, the Substitution Shortfall Amounts and the
Loan Balances of Qualified Substitute Timeshare Loans shall be calculated on an aggregate basis
for all substitutions made on such Transfer Date.

          (e) Schedule of Timeshare Loans. The Issuer hereby directs, and DFHC and the
Depositor hereby agree, on each date on which a Timeshare Loan has been repurchased, purchased or
substituted, to provide the Issuer and the Indenture Trustee with a revised Schedule of Timeshare
Loans reflecting the removal and/or substitution of such Timeshare Loans and subjecting any
Qualified Substitute Timeshare Loans to the provisions of this Agreement.

          (f) Officer’s Certificate for Qualified Substitute Timeshare Loans. The Depositor
and DFHC, as applicable, shall on each Transfer Date, certify in writing to the Issuer and the
Indenture Trustee that each new Timeshare Loan meets all the criteria of the definition of
“Qualified Substitute Timeshare Loan” and that (i) the Timeshare Loan Files for such Qualified
Substitute Timeshare Loans have been delivered to the

10

 

Custodian and (ii) the Timeshare Loan Servicing Files for such Qualified Substitute
Timeshare Loans have been delivered to the Servicer.

          (g) Release. In connection with any repurchase, purchase or substitution of
one or more Timeshare Loans contemplated by this Section 6, upon satisfaction of the
conditions contained in this Section 6, the Issuer shall execute and deliver (or shall
cause the Indenture Trustee to execute and deliver) such releases and instruments of
transfer or assignment presented to it by the Depositor or its designee, in each case
without recourse, as shall be necessary to vest in the Depositor or its designee the legal
and beneficial ownership of such Timeshare Loans, provided, however, that with respect to
any release of a Timeshare Loan that is substituted by a Qualified Substitute Timeshare
Loan, the Issuer shall not execute and deliver or cause the execution and delivery of such
releases and instruments of transfer or assignment until the Agent and the Servicer receive
a Trust Receipt or an In-Transit Trust Receipt, as the case may be, for such Qualified
Substitute Timeshare Loan. The Issuer shall cause the Custodian or the In-Transit
Custodian, as the case may be, to release the related Timeshare Loan Files to the Depositor
or its designee and the Servicer to release the related Timeshare Loan Servicing Files to
the Depositor or its designee; provided, however, that with respect to any Timeshare Loan
File or Timeshare Loan Servicing File related to a Timeshare Loan that has been substituted
by a Qualified Substitute Timeshare Loan, the Issuer shall not cause the Custodian or the
In-Transit Custodian, as the case may be, and the Servicer to release the related Timeshare
Loan File and the Timeshare Loan Servicing File, respectively, until the Agent and the
Servicer receive a Trust Receipt or an In-Transit Trust Receipt, as the case may be, for
such Qualified Substitute Timeshare Loan.

          (h) Sole Remedy. It is understood and agreed that the obligations of the
Depositor to repurchase or substitute Timeshare Loans contained in Section 6(a) hereof and
the obligation of the Depositor to indemnify pursuant to Section 8 hereof shall constitute
the sole remedies for the breaches of any representation or warranty contained in Section
5(a) or Section 5(b) hereof.

          SECTION 7. Additional Covenants of the Depositor. The Depositor hereby covenants and
agrees with the Issuer as follows:

          (a) The Depositor shall comply in all material respects with all applicable laws,
rules, regulations and orders applicable to it and its business and properties.

          (b) The Depositor shall preserve and maintain its existence (corporate or otherwise),
rights, franchises and privileges in the jurisdiction of its organization and, if
applicable, all necessary sales finance company licenses.

          (c) On or prior to each Funding Date or a Transfer Date, as applicable, the Depositor
shall indicate in its computer files and other records that each Timeshare Loan has been
sold to the Issuer and subsequently pledged to the Indenture Trustee for the benefit of the
Noteholders.

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          (d) The Depositor shall respond to any inquiries with respect to ownership of a
Timeshare Loan by stating that such Timeshare Loan has been sold to the Issuer and that the
Issuer is the owner of such Timeshare Loan and that such Timeshare Loan has been pledged to the
Indenture Trustee for the benefit of the Noteholders.

          (e) On or prior to the Amendment Closing Date, the Depositor shall file or cause to be
filed, at its own expense, financing statements in favor of the Issuer and the Indenture Trustee
for the benefit of the Noteholders with respect to the Conveyed Timeshare Property meeting the
requirements of state law in such manner and in such jurisdictions as are necessary or
appropriate to perfect the acquisition of the Conveyed Timeshare Property by the Issuer from the
Depositor, and shall deliver file-stamped copies of such financing statements to the Issuer and
the Indenture Trustee for the benefit of the Noteholders.

          (f) The Depositor agrees from time to time, at its expense, promptly to execute and
deliver all further instruments and documents, and to take all further actions, that may be
necessary, or that the Issuer or the Indenture Trustee may reasonably request, to perfect,
protect or more fully evidence the sale of the Timeshare Loans, or to enable the Issuer or the
Indenture Trustee to exercise and enforce its rights and remedies hereunder or under any
Timeshare Loan including but not limited to powers of attorney, Uniform Commercial Code financing
statements and assignments of Mortgage and Right-to-Use Agreements and Installment Sale
Contracts. The Depositor hereby appoints the Issuer and the Indenture Trustee as
attorney-in-fact, which appointment is coupled with an interest and is therefore irrevocable, to
act on behalf and in the name of the Depositor to enforce obligations of the Depositor hereunder.

          (g) Any change in the legal name of the Depositor and any use by it of any trade name,
fictitious name, assumed name or “doing business as” name occurring after the Closing Date shall
be promptly disclosed to the Issuer and the Indenture Trustee in writing.

          (h) Upon the discovery or receipt of notice of a breach of any of its representations or
warranties and covenants contained herein, the Depositor shall promptly disclose to the Issuer
and the Indenture Trustee, in reasonable detail, the nature of such breach.

          (i) The Depositor shall immediately transfer to the Issuer or its assignee, as applicable,
any payment it receives in respect of the Conveyed Timeshare Property.

          (j) In the event that the Depositor or the Issuer or any assignee of the Issuer should
receive actual notice of any transfer taxes arising out of the transfer, assignment and
conveyance of any Conveyed Timeshare Property, on written demand by the Issuer, or upon the
Depositor otherwise being given notice thereof, the Depositor shall pay, and otherwise indemnify
and hold the Issuer and any of its assignees harmless, on an after-tax basis, from and against
any and all such transfer taxes.

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          (k) The Depositor will comply in all material respects with all applicable laws, rules,
regulations and orders and preserve and maintain its corporate existence, rights, franchises,
qualifications and privileges except to the extent that the failure so to comply with such laws,
rules and regulations or the failure so to preserve and maintain such existence, rights,
franchises, qualifications and privileges could not reasonably be expected to materially
adversely affect the collectibility of the Conveyed Timeshare Property or the ability of the
Depositor to perform its obligations under this Agreement and any of the Transaction Documents to
which it is a party.

          (1) The Depositor will keep its principal place of business and chief executive office and
the office where it keeps its records concerning the Obligor Notes at the address of the
Depositor listed herein or, upon 30 days’ prior written notice to the Issuer and the Indenture
Trustee, at any other location in jurisdictions where all actions reasonably requested by the
Issuer or the Indenture Trustee to protect and perfect the interest in the Obligor Notes,
Right-to-Use Agreements and Installment Sale Contracts under the applicable Uniform Commercial
Code have been taken and completed within 10 days of such notice. The Depositor also will
maintain and implement administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing the Obligor Notes, Right-to-Use Agreements and Installment
Sale Contracts in the event of the destruction of the originals thereof), and keep and maintain
all documents, books, records and other information reasonably necessary or advisable for the
collection of all (including, without limitation, records adequate to permit the daily
identification of each Obligor Note, Right-to-Use Agreement and Installment Sale Contract) and
all payments made with regard to the related Conveyed Timeshare Property prior to and on the
Closing Date, each Funding Date or each Transfer Date, as applicable.

          (m) The Depositor shall authorize and file such continuation statements and any other
documents reasonably requested by the Issuer or which may be required by law to preserve and
protect the interest of the Issuer hereunder in and to the Conveyed Timeshare Property.

          (n) The Depositor agrees from time to time, at its expense, promptly to execute and deliver
all further instruments and documents, and to take all further actions, that may be necessary, or
that the Issuer may reasonably request, to perfect, protect or more fully evidence the Conveyed
Timeshare Property, or to enable the Issuer or the Indenture Trustee to exercise and enforce its
rights and remedies hereunder or under any of the other Transaction Documents to which it is a
party. The Depositor has delivered to the Custodian a Lost Note Affidavit in the form of Exhibit C hereto in each instance where it is unable to provide a signed original Obligor Note, and the
Issuer agrees that such Lost Note Affidavit shall be sufficient to satisfy its obligations
hereunder.

          (o) The Depositor authorizes the Issuer to file continuation statements, and amendments
thereto, relating to the Conveyed Timeshare Property and all payments made with regard to the
Conveyed Timeshare Property without the signature of the Depositor where permitted by law. A
photocopy or other reproduction of this Agreement shall be sufficient as a financing statement
where permitted by law. The Issuer confirms that it is not its present intention to file a
photocopy or other reproduction of this

13

 

Agreement as a financing statement, but reserves the right to do so if, in its good faith
determination, there is at such time no reasonable alternative remaining to it.

          (p) In the event that the Depositor shall have received any insurance proceeds and such
proceeds are not payable to an Obligor, the Depositor shall promptly remit such insurance
proceeds to the Indenture Trustee for deposit into the Collection Account.

          SECTION 8. Indemnification.

          (a) The Depositor agrees to indemnify the Issuer, the Indenture Trustee, the Noteholders,
the Agent and the Purchasers (each an “Indemnified Party”, collectively, the “Indemnified
Parties”) against any and all claims, losses, liabilities, (including legal fees and related
costs) that such Indemnified Parties may sustain directly or indirectly related to (x) any
inaccuracy or breach of the representations and warranties of the Depositor under Section 5
hereof and (y) a failure by the Depositor to perform any of its obligations under the Transaction
Documents (“Indemnified Amounts”) excluding, however: (i) Indemnified Amounts to the extent
resulting from the gross negligence or willful misconduct on the part of such Indemnified Party;
(ii) any recourse for any uncollectible Timeshare Loan not related to a breach of representation
or warranty; (iii) recourse to the Depositor for a 60-Day Plus Delinquent Loan; (iv) Indemnified
Amounts attributable to any violation by an Indemnified Party of any requirement of law related
to an Indemnified Party; or (v) the operation or administration of the Indemnified Party
generally and not related to this Agreement. The Depositor shall: (x) promptly notify the Issuer
and the Indenture Trustee if a claim is made by a third party with respect to this Agreement or
the Timeshare Loans, and relating to (i) the failure by the Depositor to perform its duties in
accordance with the terms of this Agreement or (ii) a breach of the Depositor’s representations,
covenants and warranties contained in this Agreement, and (y) assume (with the consent of the
related Indemnified Party, which consent shall not be unreasonably withheld) the defense of any
such claim and pay all expenses in connection therewith, including counsel fees, and promptly
pay, discharge and satisfy any judgment, order or decree which may be entered against it or the
related Indemnified Party in respect of such claim. If the Depositor shall have made any
indemnity payment pursuant to this Section 8 and the recipient thereafter collects from another
Person any amount relating to the matters covered by the foregoing indemnity, the recipient shall
promptly repay such amount to the Depositor.

          (b) The Depositor agrees to pay, and to indemnify, defend and hold harmless the Issuer, the
Indenture Trustee, the Noteholders, the Agent and the Purchasers from, any taxes which may at any
time be asserted with respect to, and as of the date of, the transfer of the Conveyed Timeshare
Property to the Issuer hereunder and the further pledge by the Issuer to the Indenture Trustee,
including, without limitation, any sales, gross receipts, general corporation, personal property,
privilege or license taxes (but not including any federal, state or other taxes arising out of
the creation of the Issuer and the issuance of the Notes) and costs, expenses and reasonable
counsel fees in defending against the same, whether arising by reason of the acts to be performed
by the Depositor under this Agreement or the Servicer under the Indenture or imposed against the
Issuer, a

14

 

Noteholder or otherwise. Notwithstanding any other provision of this Agreement, the
obligation of the Depositor under this Section 8(b) shall not terminate upon the
resignation or removal of the Servicer pursuant to the Indenture and shall survive any
termination of this Agreement.

          (c) The obligations of the Depositor under this Section 8 to indemnify the Indemnified
Parties shall survive the termination of this Agreement and continue until the Notes are
paid in full or otherwise released or discharged.

          SECTION 9. No Proceedings. The Depositor hereby agrees that it will not, directly or
indirectly, institute, or cause to be instituted, or join any Person in instituting, against the
Issuer or any Resort, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any federal or state bankruptcy or similar law so long as
there shall not have elapsed one year plus one day since the latest maturing Notes issued by the
Issuer.

          SECTION 10. Notices, Etc. All notices and other communications provided for hereunder
shall, unless otherwise stated herein, be in writing and mailed or telecommunicated, or delivered
as to each party hereto, at its address set forth under its name on the signature page hereof or at
such other address as shall be designated by such party in a written notice to the other parties
hereto. All such notices and communications shall not be effective until received by the party to
whom such notice or communication is addressed. To the extent that any Purchaser which the Agent
has confirmed holds at least a 15% interest in the Notes shall give written direction to any of the
parties hereto that it wishes to directly receive copies of any notices and other communications
that the Agent is entitled to receive hereunder, the parties hereto agree to comply with such
direction.

          SECTION 11. No Waiver; Remedies. No failure on the part of the Depositor, the Issuer
or any assignee thereof to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any other remedies provided by law.

          SECTION 12. Binding Effect; Assignability. This Agreement shall be binding upon
and inure to the benefit of the Depositor, the Issuer and their respective successors and permitted
assigns. Any assignee shall be an express third party beneficiary of this Agreement, entitled
directly to enforce this Agreement. The Depositor may not assign any of its rights and obligations
hereunder or any interest herein without the prior written consent of the Issuer and each of its
assignees. The Issuer may, and intends to, assign all of its rights hereunder to the Indenture
Trustee for the benefit of the Noteholders and the Depositor consents to any such assignment. This
Agreement shall create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until its termination;
provided, however, that the rights and remedies with respect to any breach of any representation
and warranty made by the Depositor pursuant to Section 5 hereof and the repurchase or substitution
and indemnification obligations shall be continuing and shall survive any termination of this
Agreement but such rights and remedies may be enforced only by the Issuer or the Indenture Trustee,
as applicable.

15

 

          SECTION 13. Amendments; Consents and Waivers. No modification, amendment or
waiver of, or with respect to, any provision of this Agreement, and all other agreements,
instruments and documents delivered thereto, nor consent to any departure by the Depositor from any
of the terms or conditions thereof shall be effective unless it shall be in writing and signed by
each of the parties hereto and the written consent of the Agent on behalf of the Required
Purchasers is given and, to the extent the Notes are rated, confirmation from the Rating Agencies
that such action will not result in a downgrade, withdrawal or qualification of any rating assigned
to a Class of Notes. The Issuer shall provide the Agent, the Indenture Trustee, the Noteholders
and, to the extent any Notes are rated, the Rating Agencies with such proposed modifications,
amendments or waivers. Any waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No consent to or demand by the Depositor in any case shall, in
itself, entitle it to any other consent or further notice or demand in similar or other
circumstances. The Depositor acknowledges that in connection with the intended assignment by the
Issuer of all of its right, title and interest in and to the Conveyed Timeshare Property to the
Indenture Trustee for the benefit of the Noteholders, the Issuer, as Issuer, intends to issue the
Notes, the proceeds of which will be used by the Issuer to purchase the Timeshare Loans conveyed
hereunder.

          SECTION 14. Severability. In case any provision in or obligation under this Agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision or obligation,
shall not in any way be affected or impaired thereby in any other jurisdiction. Without limiting
the generality of the foregoing, in the event that a Governmental Authority determines that the
Issuer may not purchase or acquire the Conveyed Timeshare Property, the transactions evidenced
hereby shall constitute a loan and not a purchase and sale, notwithstanding the otherwise
applicable intent of the parties hereto, and the Depositor shall be deemed to have granted to the
Issuer as of the date hereof, a first priority perfected security interest in all of the
Depositor’s right, title and interest in, to and under, whether now owned or existing, or hereafter
acquired or arising, the Conveyed Timeshare Property and the related property as described in
Section 2 hereof.

          SECTION 15. GOVERNING LAW; CONSENT TO JURISDICTION.

          (A) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK (INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE GENERAL OBLIGATION LAW OF
THE STATE OF NEW YORK).

          (B) THE DEPOSITOR AND THE ISSUER HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS
OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN
IN NEW YORK CITY AND EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT
ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH ON THE
SIGNATURE PAGE HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER THE SAME
SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. THE DEPOSITOR AND THE

16

 

ISSUER EACH HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY
OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION 15 SHALL AFFECT THE
RIGHT OF THE DEPOSITOR OR THE ISSUER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
AFFECT THE RIGHT OF ANY OF THEM TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER
JURISDICTION.

          SECTION 16. Headings. The headings herein are for purposes of reference only and shall
not otherwise affect the meaning or interpretation of any provision hereof.

          SECTION 17. Execution in Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed shall be deemed to be an original
and both of which when taken together shall constitute one and the same agreement.

[Signatures on next page]

17

 

          IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their
respective officers thereunto duly authorized, as of the date first above written.

	 	 	 	 	 	 	 	 	 

	 	 	DIAMOND RESORTS DEPOSITOR 2008 LLC, as Depositor	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ David F. Palmer	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: David F. Palmer	 	 
	 	 	 	 	Title: President	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	10600 West Charleston Boulevard	 	 
	 

	 	 	 	 	 	Las Vegas, Nevada 89135	 	 
	 

	 	 	 	Attention:
	 	General Counsel	 	 
	 

	 	 	 	Telephone:
	 	702-823-7560	 	 
	 

	 	 	 	Facsimile:
	 	702-765-8610	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	DIAMOND RESORTS ISSUER 2008 LLC, as Issuer
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ David F. Palmer	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: David F. Palmer	 	 
	 	 	 	 	Title: President	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	10600 West Charleston Boulevard	 	 
	 

	 	 	 	 	 	Las Vegas, Nevada 89135	 	 
	 

	 	 	 	Attention:
	 	General Counsel	 	 
	 

	 	 	 	Telephone:
	 	702-823-7560	 	 
	 

	 	 	 	Facsimile:
	 	702-765-8610	 	 

	 	 	 	 	 
	 	Agreed and acknowledged as to

DFHC’s obligations set forth in Section 6.

DIAMOND RESORTS FINANCE HOLDING COMPANY

 	 
	 	By:  	/s/ David F. Palmer
 	 
	 	 	Name:  	David F. Palmer 	 
	 	 	Title:  	Executive Vice President 	 
	 

 

Schedule I 

Representations and Warranties as to Timeshare Loans

     (a) All federal, state or local laws, rules or regulations, including, without limitation,
those relating to usury, truth-in-lending, real estate settlement procedure, land sales, the offer
and sale of securities, consumer credit protection and equal credit opportunity or disclosure,
applicable to the Timeshare Loan or the sale of the Timeshare Interest have been complied with in
all material respects such that any violation of any such law, rule or regulation would not impair
the collectibility of such Timeshare Loan. The applicable rescission period has expired.

     (b) Other than an Eligible In-Transit Loan, the Timeshare Loan has cleared escrow.

     (c) The related Obligor has not been released, in whole or in part, from any of its material
obligations in respect of the Timeshare Loan. The applicable Obligor Note, Right-to-Use Agreement
or Installment Sale Contract has not been satisfied, canceled, rescinded or subordinated, in whole
or in part, and no instrument has been executed that would effect any such satisfaction, release,
cancellation, subordination or rescission.

     (d) The sale of the Timeshare Interest has not been canceled by the applicable Obligor or any
Originator. Any statutory or other applicable cancellation or rescission period related to the sale
of the Timeshare Interest has expired. The Timeshare Interest purchased by the applicable Obligor
has not been surrendered in accordance with the terms of the relevant Purchase Contract.

     (e) Each of the related Mortgage, Purchase Contract, Installment Sale Contract, Installment
Sale Notice, Obligor Note or Right-to-Use Agreement, and each other document in the related
Timeshare Loan File is genuine and the legal, valid and binding obligation of the applicable
Obligor, is enforceable in accordance with its terms (except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, or other similar laws affecting the enforcement of
creditors’ rights generally and by general principles of equity, regardless of whether such
enforceability shall be considered in a proceeding in equity or at law), and is not subject to any
dispute, right of setoff, recoupment, counterclaim, or defense of any kind, whether arising out of
transactions concerning such Timeshare Loan or otherwise, and no such right has been asserted with
respect thereto.

     (f) Other than with respect to an Eligible In-Transit Loan, all of the related Timeshare Loan
Servicing Files for such Timeshare Loan have on or prior to the Funding Date (or the related
Transfer Date) been obtained by the Servicer and all the related Timeshare Loan Files are in the
possession of the Custodian, the Custodian has issued a Trust Receipt (as defined in the Custodial
Agreement) therefor and no Material Exceptions (as defined in the Custodial Agreement) have been
cited by the Custodian. With respect to an Eligible In-Transit Loan, all of the related Timeshare
Loan Servicing Files for such Timeshare Loan have on or prior to the Funding Date (or the related
Transfer Date) been obtained by the Servicer and all the related Timeshare Loan Files are in the
possession of the In-Transit Custodian, the In-Transit Custodian has issued an In-Transit Trust
Receipt (as defined in the In-Transit Custodial Agreement)

Schedule I-1

 

 

therefor and no In-Transit Material Exceptions (as defined in the In-Transit Custodial
Agreement) have been cited by the In-Transit Custodian.

     (g) The
related Obligor Note is payable in United States Dollars.

     (h) The related Obligor has no bona fide claim against any Originator or affiliate thereof,
or any defense, set off or counterclaim.

     (i) Such Timeshare Loan is not more than 30 days delinquent (without giving effect to any
applicable grace period) on any payment of principal or interest as of the related Cut-Off Date.

     (j) The aggregate amount owing from the related Obligor with respect to all Securitized
Timeshare Loans does not exceed $100,000 in the aggregate.

     (k) The related Obligor Note evidences a fully amortizing debt obligation, with fixed monthly
payments for a term not exceeding 180 months.

     (1) The related Obligor Note may be prepaid in full without penalty.

     (m) The related Obligor has been instructed to remit all payments to the Centralized Lockbox
Account or such other lockbox account(s) at Approved Financial Institutions that are subject to a
Deposit Account Control Agreement approved by the Agent.

     (n) The related Obligor is not (i) a Person (other than an individual) that is affiliated
with or employed by Diamond Resorts Corporation or any of its Affiliates, including the Servicer,
or (ii) a Governmental Authority.

     (o) [Reserved]

     (p) The applicable assignment of Mortgage, Installment Sale Contract, Installment Sale
Notice, or Right-to-Use Agreement and the endorsement of the related Obligor Note constitutes a
duly executed, legal, valid, binding and enforceable assignment or endorsement, as the case may
be, of such related Mortgage, related Installment Sale Contract, related Installment Sale Notice,
related Right-to-Use Agreement and related Obligor Note, and all monies due or to become due
thereunder, and all proceeds thereof.

     (q) All of the condominium and apartment units related to the Timeshare Loans in the Resorts
are located in buildings whose construction has been completed and certificate of occupancy has
been issued, in the manner required by applicable state and local laws.

     (r) In the case of an Obligor Note secured by a Mortgage or an Installment Sale Contract, the
related Timeshare Property constitutes a fee interest in real property at one of the Resorts. The
related Mortgage has been duly filed and recorded with all appropriate governmental authorities in
all jurisdictions in which such related Mortgage is required to be filed and recorded to create a
valid, binding and enforceable first Lien on the related Timeshare Property and such related
Mortgage creates a valid, binding and enforceable first Lien on the

Schedule I-2

 

 

related Timeshare Property, subject only to Permitted Liens; and the Depositor, to the
extent applicable, is in compliance with such Permitted Liens respecting the right to the use of
such related Timeshare Property. In the case of a Right-to-Use Agreement related to a Timeshare
Loan, the related Timeshare Property, if any, is an apartment or unit at a Resort and the related
Right-to-Use Agreement grants the related Obligor the right to use and occupy one or more
apartments or units at a Resort. The related Right-to-Use Agreement has been duly filed and
recorded with all appropriate governmental authorities in all jurisdictions in which such related
Right-to-Use Agreement is required to be filed and recorded to enable the Issuer and its assigns
to enforce the revocation and termination rights granted in the Right-to-Use Agreement. In the
case of an Installment Sale Contract, the related Installment Sale Notice has been recorded in the
appropriate jurisdiction to give notice that the holder of such Installment Sale Contract is
obligated to sell the Timeshare Interest upon completion of the Installment Sale Contract.

     (s) Immediately prior to any transfer contemplated pursuant to this Agreement of Timeshare
Loans from the Seller to the Depositor, the Seller will own full legal and equitable title to each
such Timeshare Loan, free and clear of any Lien or ownership interest in favor of any other Person.
All of the Seller’s right, title and interest in and to each such Timeshare Loan has been validly
and effectively transferred to the Depositor pursuant to the Purchase Agreement. Immediately prior
to any transfer contemplated pursuant to this Agreement of Timeshare Loans from the Depositor to
the Issuer, the Depositor will own full legal and equitable title to each such Timeshare Loan, free
and clear of any Lien or ownership interest in favor of any other Person. All of the Depositor’s
right, title and interest in and to each such Timeshare Loan has been validly and effectively
transferred to the Issuer pursuant to this Agreement.

     (t) The related Mortgage, Right-to-Use Agreement, Installment Sale Notice or Installment Sale
Contract, as the case may be, contains customary and enforceable provisions so as to render the
rights and remedies of the holder thereof adequate for the practical realization against the
related Timeshare Interest of the benefits of the security interests or other remedies intended to
be provided thereby, including by judicial foreclosure or other applicable remedies. There is no
exemption available to the related Obligor which would interfere with the mortgagee’s right to
foreclose such related Mortgage, if applicable, or the Transferee’s right to enforce its
revocation and termination rights under the related Right-to-Use Agreement other than that which
may be available under applicable bankruptcy, debt relief, homestead statutes or the
Servicemembers Relief Act or a similar, applicable law of the country in which a Resort is located
if other than the United States.

     (u) The Timeshare Loan is not and has not been secured by any collateral except the Lien of
the related Mortgage or Installment Sale Notice or rights and remedies in the related Right-to-Use
Agreement or Installment Sale Contract and Right-to-Use Interest, as the case may be.

     (v) Such Timeshare Loan, if secured by a Mortgage, is covered by a form of lender’s title
insurance policy or commitment issued by a title insurer qualified to do business in the
jurisdiction where the related Timeshare Property is located, insuring the applicable Originator
and its successors and assigns as to the first priority Lien of the related Mortgage in an amount
equal to the Loan Balance of such Timeshare Loan at origination. Such lender’s title insurance

Schedule I-3

 

 

policy, if actually issued, is in full force and effect. No claims have been made under
such lender’s title insurance policy, if any, and no prior holder of such Timeshare Loan,
including the applicable Originator, has done or omitted to do anything which would impair the
coverage of such lender’s title insurance policy.

     (w) Interest is calculated on each Timeshare Loan on a simple interest basis.

     (x) The proceeds of each Timeshare Loan have been fully disbursed and no Timeshare Loan
requires any additional performance by any Person.

     (y) The terms of each Mortgage, Right-to-Use Agreement, Installment Sale Contract,
Installment Sale Notice and Obligor Note have not been modified in any material respect.

     (z) Each Timeshare Loan secured by a Mortgage or an Installment Sale Contract is principally
and directly secured by an interest in real property.

     (aa) Each Timeshare Loan secured by a Mortgage requires the Obligor to pay all taxes,
insurance premiums and maintenance costs with respect to the related Timeshare Property. Each
Timeshare Loan secured by a Right-to-Use Agreement or Installment Sale Contract requires the
Obligor to pay all maintenance costs with respect to the related
Timeshare Property. There are no
delinquent taxes, ground rents, water charges, sewer rents, or assessments outstanding with
respect to any of the Timeshare Properties, nor any other material outstanding Liens affecting the
Timeshare Properties, other than Permitted Liens.

     (bb) No consent, approval, order or authorization of, and no filing with or notice to, any
court or governmental authority in respect of any Obligor is required which has not been obtained
in connection with the transfer of any Timeshare Loans to the Seller, the Depositor or the Issuer
or in connection with the pledge of any Timeshare Loans to the Indenture Trustee.

     (cc) No selection procedures reasonably believed by the Depositor to be adverse to the
Noteholders were utilized in selecting any Timeshare Loans.

     (dd) Each Obligor Note constitutes an “instrument” under the Uniform Commercial Code of the
jurisdiction in which such Obligor Note will at all times be located. Each Timeshare Loan which is
not evidenced by an Obligor Note constitutes either “tangible chattel paper” or a “payment
intangible” within the meaning of the Uniform Commercial Code in which such tangible chattel paper
is located, in the case of tangible chattel paper, or within the meaning of the Uniform Commercial
Code of the State of Delaware in the case of a payment intangible. There is no more than one
original executed copy of each Obligor Note, each Right-to-Use Agreement or Installment Sale
Contract.

     (ee) A minimum down payment of 10% of the sale price of the Timeshare Interest securing such
Timeshare Loan has been duly paid, in cash (which cash down payment may, in the case of an
Upgraded Timeshare Loan, be represented by the difference between the sale price and principal
payments on such Timeshare Loan since its date of origination), by the related Obligor.

Schedule I-4

 

 

     (ff) The related Obligor has not previously had any portion of a scheduled payment
delinquent for more than 180 days on a Timeshare Loan.

     (gg) The Timeshare Loan was originated in compliance with Underwriting Guidelines attached
hereto as Exhibit D (as such Underwriting Guidelines may be amended from time to time in the
manner provided for by the Transaction Documents).

     (hh) Such Timeshare Loan is not more than 30 or more days’ delinquent in making the first
scheduled payment, unless the applicable Obligor has thereafter made at least six consecutive
monthly payments on a timely basis.

     (ii) Such Timeshare Loan, when aggregated with all other Timeshare Loans transferred on the
same date shall not cause the weighted average FICO score of the Obligors related to such
Timeshare Loans to be less than 700.

     (jj) Such Timeshare Loan, when aggregated with all other Borrowing Base Loans shall not cause
the weighted average FICO score of the related Obligors to be less than 675.

     (kk) The Local Counsel Opinion Requirement with respect to the related Resort or Collection
has been satisfied.

     (ll) With respect to any Right-to-Use Loan, all timeshare property and other real estate
interests which are identified as available for use by owners of Right-to-Use Interests is (i)
titled in the name of the Collection Trustee and is held in trust, free and clear of any Lien or
ownership interest in favor of any Person, (ii) is covered by a title insurance policy issued by a
title insurer qualified to do business in the jurisdiction where such timeshare property or other
real estate interest is located and (iii) is related to a Collection.

     (mm) With respect to any Right-to-Use Loan, none of the related Collection Developer,
Collection Trustee and/or Collection Association is in default under the related Collection Trust
Agreement or has caused the ratio of Points to available intervals or units to fall below required
levels.

     (nn) With respect to an Installment Sale Contract, the related Local Counsel Opinion
Requirement has been satisfied.

     (oo) No holder of the Timeshare Loan has any existing or future obligations or liabilities
with respect to such Timeshare Loan or the related Obligor.

Schedule I-5

 

 

Schedule II 

Representations and Warranties as to Resorts

     (a) Timeshare Interests.

          (i) The sale, offering for sale and financing of Timeshare Interests (A) do not constitute
the sale, or the offering for sale, of securities subject to registration requirements of the
Securities Act or any state or foreign securities laws, (B) except to the extent that any such
violation(s), either individually or in the aggregate, could not reasonably be expected to result
in a Material Adverse Effect, do not violate Timeshare Laws or any other law of any state or
foreign country in which sales or solicitation of Timeshare Interests occur and (C) except to the
extent that any such violation(s), either individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect, do not violate any consumer credit or usury
laws of any state or foreign country in which sales or solicitations of Timeshare Interests occur.
Except to the extent that any such failure(s), either individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, the Diamond Resorts Entities have
not failed to make or cause to be made any registrations or declarations with any Governmental
Authority necessary to the ownership of the Resorts or to the conduct of their business, including
laws and regulations applicable to their business and activities, the operation of the Resorts and
the sale, or offering for sale, of Timeshare Interests. Except to the extent that any such
noncompliance, either individually or in the aggregate, could not reasonably be expected to result
in a Material Adverse Effect, the Diamond Resorts Entities have, to the extent required by their
activities and businesses, complied with all laws and regulations applicable to their businesses
and activities.

          (ii) Schedule III (II(a)(ii)) hereto sets forth, with respect to each Resort, (A) the states
and countries in which Timeshare Interests with respect to such Resort are being sold or marketed,
(B) if such Resort is a Points Based Resort and (C) for each Points Based Resort, the trust or
other entity that is the owner of the real property rights with respect to such Resort. The
applicable Diamond Resorts Entity has filed in each jurisdiction in which such filing is a legal
prerequisite to the marketing of the Timeshare Interests therein all applicable documents with the
appropriate Governmental Authorities required to authorize the sale of Timeshare Interests in such
jurisdictions and has subjected each Resort to certain limitations, restrictions, conditions and
covenants as described in the timeshare declarations and as hereinafter set forth in accordance
with the provisions of any applicable laws, statutes or regulations (such laws, statutes or
regulations and all amendments, modifications or replacements thereof and successors thereto, and
all regulations and guidelines promulgated thereunder or with respect thereto, now or hereafter
enacted, being hereinafter collectively referred to as the “Timeshare Laws”), except for any
failure to make such filings or any failure to subject each Resort to certain limitations,
restrictions, conditions and covenants that could that are not reasonably be expected to have a
Material Adverse Effect. All material documents used in connection with the creation of the
Timeshare Interests, the sale of the Timeshare Interests and the operation of the Resort as a
timeshare resort, including, without limitation, the Declaration (as hereinafter defined), by-laws
and rules and regulations of the homeowner’s association, the management agreement, the form of
contract of sale and deeds, and all other documents used by the Diamond Resorts Entities in

Schedule II-1

 

 

connection with the sale of Timeshare Interests, and the operation of the Resort as a
timeshare resort and the regulation, management and administration thereof comply with all
Timeshare Laws, except for any non-compliance that could not reasonably be expected to result in a
Material Adverse Effect. As used herein, the term “Declaration” means the declaration in
furtherance of a plan for subjecting the Resort to a timeshare form of ownership, which
Declaration contains covenants, restrictions, easements, charges and liens and including, without
limitation, provisions regarding the identification of Timeshare Interests and the common areas
and the regulation and governance of the real property comprising the Resort as a timeshare
regime.

     (b) Timeshare Interest Exchange Network. The exchange system operated by Diamond
Resorts International Club, Inc. (f/k/a Club Sunterra, Inc.) (d/b/a THE Club) is being operated in
compliance with all applicable Timeshare Laws, except for any non-compliance that could not
reasonably be expected to result in a Material Adverse Effect. To the extent Diamond Resorts
Entities have entered into written agreements with Resort Condominiums International, LLC, Interval
International, Inc. or other exchange networks, such Diamond Resorts Entities are members and
participants pursuant to validly executed and enforceable written agreements in Resort Condominiums
International, LLC, and/or Interval International, Inc. and/or other exchange networks, as
applicable. Such Diamond Resorts Entities have paid all fees and other amounts due and owing under
such agreements and are not otherwise in default in any respect thereunder, except to the extent
that could not reasonably be expected to result in a Material Adverse Effect.

     (c) Common Areas. To the extent that Diamond Resorts Entities are obligated to
construct common areas and amenities, the common areas and amenities appurtenant to sold Timeshare
Interests, and the streets and other off-site improvements contained within the projects, have been
completed or a bond insuring the completion thereof has been obtained, except to the extent that
such failure to complete or post a bond is not reasonably likely to have a Material Adverse Effect,
and such interests in such common areas are free and clear of all Liens except Permitted Liens.

     (d) Homeowners’ Association, Maintenance Fees and Developer Subsidies. All homeowners’
association, maintenance fees and/or developer subsidies, as applicable, required to be paid by any
Diamond Resorts Entity and which are past due have been paid, except to the extent that such past
due fees do not exceed $3,000,000 in the aggregate.

     (e) Condemnation. No condemnation or other proceeding in the nature of eminent domain
has been commenced or to any Diamond Resorts Entity’s best knowledge, is threatened or contemplated
with respect to all or any portion of any Resort or for the relocation of roadways providing access
to any Resort.

     (f) Utilities and Public Access. Each Resort has rights of access to public ways and
is served by water, sewer, sanitary sewer and storm drain facilities adequate to service such
Resort for its respective intended uses. All public utilities necessary to the full use and
enjoyment of each Resort for are located either in the public right-of-way abutting such Resort
(which are connected so as to serve such Resort without passing over the property) or in recorded

Schedule II-2

 

 

easements serving such Resort for its current purposes have been completed and dedicated to
public use and accepted by all Governmental Authorities.

     (g) Use of Property. Each Resort is used exclusively as a timeshare resort, hotel
and/or other appurtenant and related uses.

     (h) Certificate of Occupancy; Licenses. All material certifications, permits,
licenses and approvals, including without limitation, certificates of completion and occupancy
permits required for the legal use, occupancy and operation of each Resort as a timeshare resort
or hotel (collectively, the “Licenses"), have been obtained and are in full force and effect. Each
applicable Diamond Resorts Entity shall keep and maintain all Licenses necessary for the operation
of each Resort as a timeshare resort. The use being made of each Resort is in conformity with the
certificate of occupancy issued for such Resort.

     (i) Flood Zone. None of the improvements on any Resort are located in an area as
identified by the Federal Emergency Management Agency as an area having special flood hazards or,
if so located, flood insurance in commercially reasonable amounts is in full force and effect with
respect to each Resort.

     (j) Physical Condition. Except as set forth on Schedule III (II(j)), each Resort,
including, without limitation, all buildings, improvements, parking facilities, sidewalks, storm
drainage systems, roofs, plumbing systems, HVAC systems, fire protection systems, electrical
systems, equipment, elevators, exterior sidings and doors, landscaping, irrigation systems and all
structural components, are in good condition, order and repair in all material respects; there
exists on the Closing Date or any Transfer Date no structural or other material defects or damages
in any Resort, whether latent (to the knowledge of the Diamond Resorts Entities or otherwise; and
no Diamond Resorts Entity has received on the Closing Date or any Transfer Date notice from any
insurance company or bonding company of any defects or inadequacies in any Resort, or any part
hereof, which would materially adversely affect the insurability of the same or cause the
imposition of extraordinary premiums or charges thereon or of any termination or threatened
termination of any policy of insurance or bond.

     (k) Boundaries. All of the improvements which were included in determining the
appraised value of each Resort lie wholly within the boundaries and building restriction lines of
such Resort, and no improvements on adjoining properties encroach upon such Resort, and no
easements or other encumbrances upon the applicable Resort encroach upon any of the improvements,
so as to affect the value or marketability of the applicable Resort except those which are insured
against by a title insurance policy.

     (1) Filing and Recording Taxes. All transfer taxes, deed stamps, intangible taxes or
other amounts in the nature of transfer taxes required to be paid by any Person under applicable
legal requirements currently in effect in connection with the transfer of any Timeshare Property
to the applicable Obligor have been paid.

     (m) Illegal Activity. No portion of any Timeshare Property has been or will be
purchased with proceeds of any illegal activity.

Schedule II-3

 

 

     (n) Embargoed Person. None of the funds or other assets of any Diamond Resorts
Entity constitute property of, or are beneficially owned, directly or indirectly, by any Person
subject to trade restrictions under U.S. law, including, but not limited to, the International
Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50
U.S.C. App. I et seq., and any executive orders or regulations promulgated thereunder with the
result that the investment in any Diamond Resorts Entity (whether directly or indirectly), is
prohibited by law or the Notes issued by the Issuer are in violation
of law (“Embargoed Person”). No Embargoed Person has any interest of any nature whatsoever in any Diamond Resorts Entity with
the result that the investment in any Diamond Resorts Entity (whether directly or indirectly), is
prohibited by law or are in violation of law. None of the funds of any Diamond Resorts Entity have
been derived from any unlawful activity with the result that the investment in any Diamond Resorts
Entity (whether directly or indirectly), is prohibited by law or is
in violation of law.

     (o) Management Agreements. Each Resort Association which a Diamond Resorts Entity or
its Affiliate currently manages was duly organized and is validly existing. Each agreement to
which a Diamond Resorts Entity or an Affiliate thereof is a party, pursuant to which management
services are currently being performed with respect to a Resort (each, a “Management Agreement"),
is in full force and effect. The applicable Diamond Resorts Entity or an Affiliate thereof has
performed in all material respects all of its obligations under each such Management Agreement.

     (p) Insurance. Each Resort which is currently managed by a Diamond Resorts Entity or
an Affiliate thereof is insured through the applicable Resort Association if there is one, and if
not, through a Diamond Resorts Entity, in the event of fire or other casualty for the full
replacement value thereof, and in the event that the Timeshare Properties should suffer any loss
covered by casualty or other insurance, upon receipt of any Insurance Proceeds, the Associations,
or a Diamond Resorts Entity, are required, during the time such Timeshare Properties are covered by
such insurance, under the applicable governing instruments either to repair or rebuild the portions
of the applicable Resorts or to pay such proceeds to the holders of any Mortgages secured by a
timeshare estate in the portions of the applicable Resorts. Each Resort in the United States which
is currently managed by a Diamond Resorts Entity or an Affiliate thereof and which is located in a
designated flood plain maintains flood insurance in an amount not less than the maximum level
available under the National Flood Insurance Program.

     (q) Litigation. No action, suit, proceeding or investigation is pending or, to the
best of the knowledge of any Representing Party, threatened against any Resort Association or any
Resort which is currently managed by a Diamond Resorts Entity or an Affiliate thereof that, if
adversely determined, would have a material adverse impact on the Resorts, the Timeshare Property
or the value of the Notes.

Schedule II-4

 

 

Schedule III (II(a)(ii))

Marketing By States and Countries

	 	 	 	 	 	 	 
	 	 	 	 	Point Based	 	If Points Based, Owner of
	Name of Resort	 	Location of Sales1,2,3	 	Resort?	 	Real Property Rights
	Bent Creek Golf Village

	 	Sevier County, TN;
	 	Yes
	 	First American Trust, FSB, as Trustee
	 
	 

	 	DRUSC locations	 	 	 	 
	 
	 	 	 	 	 	 
	Cypress Pointe I

	 	Orange County, FL; DRUSC locations
	 	Yes
	 	First American Trust, FSB, as Trustee
	 
	 	 	 	 	 	 
	Cypress Pointe II

	 	Orange County, FL; DRUSC locations
	 	Yes
	 	First American Trust, FSB, as Trustee
	 
	 	 	 	 	 	 
	Daytona Beach Regency

	 	Volusia County; DRUSC locations
	 	Yes
	 	First American Trust, FSB, as Trustee
	 
	 	 	 	 	 	 
	Desert Paradise

	 	Clark County, NV; DRUSC locations
	 	Yes
	 	First American Trust, FSB, as Trustee
	 
	 	 	 	 	 	 
	Flamingo Beach Resort

& Villas

	 	No on-site sales; DRUSC locations
	 	Yes
	 	First National Trustee Company (UK)
Ltd., as Trustee through its
subsidiary, Saint Maarten Title
Limited
	 
	 	 	 	 	 	 
	Grand Beach I

	 	Orange County, FL; DRUSC locations
	 	Yes
	 	First American Trust, FSB, as Trustee
	 
	 	 	 	 	 	 
	Grand Beach II

	 	Orange County, FL; DRUSC locations
	 	Yes
	 	First American Trust, FSB, as Trustee
	 
	 	 	 	 	 	 
	Greensprings Vacation 

Resort

	 	James City County, VA; DRUSC
locations
	 	Yes
	 	First American Trust, FSB, as Trustee
	 
	 	 	 	 	 	 
	The Historic Powhatan 

Resort

	 	James City County, VA; DRUSC
locations
	 	Yes
	 	First American Trust, FSB, as Trustee
	 
	 	 	 	 	 	 
	Island Links

	 	No on-site sales; DRUSC locations
	 	Yes
	 	First American Trust, FSB, as Trustee

A-l

 

 

	 	 	 	 	 	 	 
	 	 	 	 	Point Based	 	If Points Based, Owner of
	Name of Resort	 	Location of Sales1,2,3	 	Resort?	 	Real Property Rights
	Ka’anapali Beach

	 	Maui, HI; DRHC locations
	 	Yes
	 	First American Trust, FSB, as Trustee
	 
	 	 	 	 	 	 
	Lake Tahoe

	 	El Dorado County, CA; DRUSC and DRCC locations
	 	Yes
	 	First American Trust, FSB, as Trustee
	 
	 	 	 	 	 	 
	London Bridge Resort

	 	No on-site sales; DRUSC locations
	 	Yes
	 	First American Trust, FSB, as Trustee
	 
	 	 	 	 	 	 
	Marquis Villas Resort

	 	No sales at this time
	 	No
	 	NA
	 
	 	 	 	 	 	 
	The Point at Poipu

	 	Kauai, HI; DRHC locations
	 	Yes
	 	First American Trust, FSB, as Trustee
	 
	 	 	 	 	 	 
	Polo Towers Suites

	 	Clark County, Nevada; DRUSC and DRCC Locations4
	 	Yes
	 	First American Trust, FSB, as Trustee
	 
	 	 	 	 	 	 
	Polynesian Isles

	 	No on-site sales; DRUSC Locations
	 	Yes
	 	First American Trust, FSB, as Trustee
	 
	 	 	 	 	 	 
	The Ridge on Sedona Golf

	 	Yavapai County, AZ; DRUSC locations
	 	Yes
	 	First American Trust, FSB, as Trustee
	 
	 	 	 	 	 	 
	Ridge Pointe

	 	No on-site sales; DRUSC Locations
	 	Yes
	 	First American Trust, FSB, as Trustee
	 
	 	 	 	 	 	 
	Royal Dunes at Port Royal

	 	No sales at this time
	 	No
	 	NA
	 
	 	 	 	 	 	 
	Royal Palm Beach

	 	No on-site sales; DRUSC locations
	 	Yes
	 	First National Trustee Company (UK) Ltd., as Trustee through its subsidiary, Saint Maarten Title Limited
	 
	 	 	 	 	 	 
	San Luis Bay Inn

	 	San Luis Obispo County, CA; DRUSC and DRCC locations
	 	Yes
	 	First American Trust, FSB, as Trustee
	 
	 	 	 	 	 	 
	Scottsdale Links Resort

	 	No on-site sales; DRUSC locations
	 	Yes
	 	First American Trust, FSB, as Trustee

Schedule II-2

 

 

	 	 	 	 	 	 	 
	 	 	 	 	Point Based	 	If Points Based, Owner of
	Name of Resort	 	Location of Sales1,2,3	 	Resort?	 	Real Property Rights
	Scottsdale Villa Mirage

	 	Maricopa County, AZ; DRUSC locations
	 	Yes
	 	First American Trust,
FSB, as Trustee
	 
	 	 	 	 	 	 
	Sedona Springs

	 	No on-site sales; DRUSC locations
	 	Yes
	 	First American Trust,
FSB, as Trustee
	 
	 	 	 	 	 	 
	Sedona Summit

	 	Yavapai County, AZ; DRUSC and DRHC
locations
	 	Yes
	 	First American Trust,
FSB, as Trustee
	 
	 	 	 	 	 	 
	The Suites at Fall Creek

	 	Taney County, MO; DRUSC locations
	 	Yes
	 	First American Trust,
FSB, as Trustee
	 
	 	 	 	 	 	 
	Tahoe Beach & Ski Club

	 	No on-site sales; DRCC Locations
	 	Yes
	 	First American Trust,
FSB, as Trustee
	 
	 	 	 	 	 	 
	Villas at Poco Diablo

	 	No on-site sales; DRUSC locations
	 	Yes
	 	First American Trust,
FSB, as Trustee
	 
	 	 	 	 	 	 
	Villas at Polo Towers

	 	Clark County, NV; DRUSC and DRHC
locations4
	 	Yes
	 	First American Trust,
FSB, as Trustee
	 
	 	 	 	 	 	 
	Villas de Santa Fe

	 	No on-site sales; DRUSC locations
	 	Yes
	 	First American Trust,
FSB, as Trustee
	 
	 	 	 	 	 	 
	Villas of Sedona

	 	No on-site sales; DRUSC locations
	 	Yes
	 	First American Trust,
FSB, as Trustee

 

			
	1	 	Diamond Resorts U.S. Collection (“DRUSC”) memberships are currently sold at
sales centers located in the following states: Arizona, California, Florida, Missouri,
Nevada, Tennessee, and Virginia (collectively referred to as “DRUSC locations”). DRUSC is
registered, or exempt from registration or other regulations, to market or sell memberships
in the following states: Alabama, Alaska, Arkansas, Arizona, California, Colorado, District
of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland,
Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New Mexico, North
Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee,
Texas, Utah, Virginia, Vermont, Washington, Wisconsin, and Wyoming.
	 
	2	 	Diamond Resorts Hawaii Collection (“DRHC”) memberships are currently sold at
sales centers located in the following states: Hawaii (collectively referred to as “DRHC
locations”). DRHC is registered, or exempt from registration or other

Schedule II-3

 

 

 

			
	 	 	regulations, to market or sell memberships in the following states: Alaska, Arizona,
California, Georgia, Hawaii, Kansas, Michigan, Nevada, North Carolina, Texas, Vermont, Wisconsin,
and Wyoming.
	 
	3	 	Diamond Resorts California Collection (“DRCC”) memberships are currently sold at sales
centers located in the following states: California (collectively referred to as “DRCC locations”).
DRCC is registered, or exempt from registration or other regulations, to market or sell memberships
in the following states: Alaska, California, Georgia, Kansas, Michigan, North Carolina, Vermont,
Washington, Wisconsin and Wyoming.
	 
	4	 	This timeshare plan is registered for sale in Nevada, and some intervals are held by
Diamond Resorts Polo Development, LLC

Schedule II-4

 

 

Schedule III (II)(j))

Physical Condition

	1.	 	The Developer was not the developer of the Poipu Point condominium (completed in
1993); the Ka’anapali Beach Vacation Resort (completed in 1988); The Villas at Polo Towers
(completed in 2006) or Sedona Summit Resort (completed in 2007). As a result, the Association
does not hold any warranties, express or implied, on the Collection accommodations or the
component sites. The resort interests were conveyed to the Trustee
“as is.”
	 
	2.	 	Ka’anapali Beach Resort
	 
	 	 	A lawsuit alleging a construction defect by the manufacturer of the rooftop space frame was
filed by the Company or one or more of its affiliates (the “Developer”) in its pursuit to
help the association in the matter of determining whether there are any grounds to seek
relief against the manufacturer of said space frame. Settlement in the amount of $2.465MM
has been reached with the three defendants and the case has been dismissed.
	 
	 	 	Water intrusion issues have also been discovered around the resort, including the sealant
around the entire property, the driveway, porte-cochere and parking structure. The extent
of the damage, recommendations for repair and evaluation of financial responsibility are
currently being considered.
	 
	3.	 	The Point at Poipu
	 
	 	 	It has come to the attention of the Developer that the exterior walls of certain buildings
in the Poipu Point condominium have experienced damage due to water intrusion. Exterior
finishes are experiencing deterioration and distress in the form of delamination, bulging,
and separation of finishes as well as corrosion staining. There has been significant
corrosion of fasteners including screws for sheathing, as well as heavy gage nuts and bolts
for structural connections; corrosion of load path (Simpson) ties; significant deterioration
of underlying gypsum board sheathing due to water saturation; and decay of wood structural
members, primarily glulam members due to water saturation.
	 
	 	 	Investigation indicates all 10 buildings in the Project are affected. The Board of Directors
of the condominium association for Poipu Point is conducting a study to determine the scope
and extent of the damage, and will make additional information available once it is known.
At that time, the condominium Board will also formulate recommendations and determine what
action will be necessary to remedy the damage. Costs will be incurred to repair damage and
to prevent further damage and there may be a

Schedule II-5

 

 

	 	 	special assessment to cover the costs of repair. The amount and nature of any such
assessment will be dependent upon the actual cost to be incurred to repair the damage and
what insurance, if any, may cover this damage. In terms of conducting repair work, it is
contemplated that any required repairs will be staggered so as not to materially impair the
operation of the Project. It is anticipated that repair schedules will occur in such a way
so as to minimize the impact of the ability of the owners to obtain a reservation.
	 
	4.	 	Lake Tahoe Vacation Resort
	 
	 	 	Numerous instances of improper installation or construction techniques by the contractor
have been discovered at Lake Tahoe Vacation Resort. These construction defects have resulted
or may result in some structural defects, including water intrusion in the roof and the
parking garage and in the bathrooms and exterior walls of a significant number of units at
the resort. In order to secure the correction of these defects, the Developer filed an
action against the contractor seeking repairs and in some instances replacement of physical
components of the resort and correction of the effects of any resulting defects and/or water
intrusion. This action settled for $25 million. A plan is currently being developed to make
the necessary repairs to the resort, which will take several years to complete. The use of
the affected units may be temporarily interrupted during the course of making the repairs.
	 
	5.	 	Palm Springs Marquis Villas
	 
	 	 	An unrelated party which is the holder of the master lease and use rights to sixty-three
(63) units at this resort has been in bankruptcy for some time. Diamond Resorts has entered
into a contract to purchase the bankrupt’s interest in this resort and, in the interim has
been managing the resort. The contract gave Diamond Resorts until October 22, 2008 to
receive approval of the Bureau of Indian Affairs for this acquisition. Since the contract
was not timely approved by the BIA, it is possible that either through the lack of funds or
default on the ground lease as a result of the bankruptcy, that Diamond Resorts will not be
able to fulfill reservation requests at the resort.
	 
	6.	 	Daytona Beach Regency Porte Cochere
	 
	 	 	The underside Ceiling of the Porte Cochere fell into the
driveway in August 2008. This
ceiling had been repaired in 2004 after damage sustained during the 2004 Hurricanes. The
contractor has been put on notice, The Porte Cochere was demolished and removed as required
by the Fire Dept, at a cost of approx $150K. The estimated cost to replace is approx.
$450K. A claim has been filed with our insurance carrier.
	 
	7.	 	Scottsdale Links
	 
	 	 	There are currently eleven (11) units dedicated to Diamond Resorts U.S. Collection (f/k/a
Club Sunterra Vacations) that are actually not available for guest use and points being
sold against this inventory are not supported because these units are being utilized for
back office operations. In the meantime, Diamond Resorts U.S. Collection Development, LLC
(the “DRUSC”) has used developer space to accommodate owner requests and

Schedule II-6

 

 

	 	 	maintain the one-to-one property to points ratio required by law. DRUSC is currently
evaluating the situation.
	 
	8.	 	Desert Paradise
	 
	 	 	There are currently eight (8) units at Desert Paradise Resort that are dedicated to
Diamond Resorts U.S. Collection (f/k/a Club Sunterra Vacations) that are actually not
available for guest use and points being sold against this inventory are not supported
because these units are being utilized for back office operations. In the meantime, DRUSC
has used developer space to accommodate owner requests and maintain the one-to-one property
to points ratio required by law. DRUSC is currently evaluating the situation.
	 
	9.	 	Suites at Fall Creek 
	 
	 	 	Bank Erosion:
	 
	 	 	April 9th 2008, Heavy Rains caused Table Rock Lake to swell, forcing the Army Corp of
Engineers to open up all 10 flood gates of Table Rock Dam sending fast moving water down to
Lake Tanney Como. This resulted in high water levels and significant erosion of the banks
behind buildings 7-8.
	 
	 	 	On April 24th, additional storms created more high water and flood gates were opened again.
Extensive damage to the banks were noticed causing concern that there was insufficient
embankment left to properly support several large trees behind buildings 9-12, with these
trees possibly sliding down the embankment and in the process falling on the buildings.
Reservations for Buildings 9-12 were suspended pending the trees being removed. As the area
behind each building was cleared of trees, we inspected the embankment for stress marks,
and were able to reopen buildings 9-12 within 4 days. Buildings 7 and 8 remained offline.
The marina, dock and bait shop sustained heavy damage, and have been removed. The boats
were retrieved from the water prior to sustaining any damage.
	 
	 	 	The insurance carrier was put on notice and a claim filed. Both DRI and the underwriters
retained experts to determine the repair and remediation necessary to secure the buildings,
marina and embankment. To date the underwriters have funded the costs related to the
remediation and reconstruction the damage sustained. Building 8 was placed in service June
30th, 2009. Building 7 will be placed in service in June 2010 upon completion of
a scheduled refurbishment. The marina, dock and bait shop, should be complete by the second
quarter of 2010. While there are a lot of complex issues surrounding this claim, it is
expected that the claim will settle by third quarter 2010.
	 
	 	 	Stair Towers:
	 
	 	 	Building 21: The walkways on each floor of the building constructed with concrete over
wood. The wood is decaying causing the concrete to break down. The stair towers are

Schedule II-7

 

 

	 	 	attached to the wood through the concrete and cannot be supported. Repairs are in
process.
	 
	10.	 	Polo Towers
	 
	 	 	As a result of a recent investigation into a cluster of Legionnaire’s disease cases, the
Southern Nevada Health District (“SNHD”) and the Centers for Disease Control and Prevention
(“CDC”) collected various samples of water and surfaces at Polo Towers. Legionella was found
in samples from 5 rooms. Upon receipt of this information, these rooms were closed until
further notice. SNHD required that a third party engineering firm be retained to survey the
Polo Towers water distribution facility, that an improved plan for control, monitoring and
prevention of Legionella be developed, and that appropriate communication be made to Polo
Towers staff, owners and guests. The 5 rooms have been put back into service. In a letter
dated September 15, 2009 from the SNHD, the SNHD closed its investigation. The Company fully
cooperated with SNHD in this matter.

Exhibit A

Schedule of Timeshare Loans

(as updated from time to time, as required by the Sale Agreement)

Schedule II-8

 

 

Exhibit B

Form of Timeshare Loan Transfer Certificate

TRANSFER OF TIMESHARE LOANS

PURSUANT TO

SALE AGREEMENT

DIAMOND RESORTS ISSUER 2008 LLC

     This
TRANSFER OF TIMESHARE LOANS (this “Subsequent Transfer Certificate”), dated                      , 200     , is acknowledged by Diamond Resorts Depositor 2008 LLC, a Delaware
limited liability company (the “Depositor”) and Diamond Resorts Issuer 2008 LLC, a Delaware
limited liability company (the “Issuer”). Capitalized terms not defined herein shall have the
meanings assigned to them in or incorporated by reference in that certain Second Amended and
Restated Sale Agreement, dated as of August 31, 2010, by and between the Depositor, as seller and
the Issuer, as purchaser (the “Sale Agreement”).

     The Depositor, concurrently with the execution and delivery hereof, does hereby sell,
transfer, assign and grant to the Issuer, pursuant to Section 2(a) of the Sale Agreement, and the
Issuer does hereby purchase and accept such transfer, assignment and grant, all right, title and
interest of the Depositor in and to (i) the Timeshare Loans listed on the Schedule of Timeshare
Loans attached as Exhibit A to the Sale Agreement and amended in regard to the Subsequent Timeshare
Loans on the date hereof and (ii) the other Conveyed Timeshare Property related to such Timeshare
Loans.

     This Transfer Certificate sets forth the following additional terms applicable to the Sale
Agreement in connection with this transfer of the Timeshare Loans:

     Section 1 Definitions

     “Transfer Date” means                , 200     .

     “Cut-Off Date” means the close of business on                     , 200     .

     Section 2
Ratification of Agreement. As supplemented by this Transfer Certificate,
the Sale Agreement is in all respects ratified and confirmed and, as so supplemented by this
Transfer Certificate, shall be read, taken and construed as one and the same instrument.

     Section
3 Governing Law. This Transfer Certificate shall be governed by, and construed
in accordance with, the laws of the State of New York (including, without limitation, Section
5-1401 of the General Obligations Law).

     Section 4 Counterparts. This Transfer Certificate may be executed in two counterpart
copies, which copies taken together shall constitute one instrument.

[Signatures on next page]

B-l

 

 

     IN WITNESS WHEREOF, the Depositor and the Issuer have caused this Transfer Certificate
to be duly executed by their respective officers thereto duly authorized as of the date and year
first above written.

	 	 	 	 	 

	DEPOSITOR:

	 	 
	 
	 	 	 	 
	DIAMOND RESORTS DEPOSITOR 2008 LLC	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	Acknowledged and Agreed:	 	 
	 
	 	 	 	 
	ISSUER:	 	 
	 
	 	 	 	 
	DIAMOND RESORTS ISSUER 2008 LLC	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 

B-2

 

 

Exhibit C 

Form Of Lost Note Affidavit

STATE OF               

COUNTY OF               

                         
(“Affiant”), on behalf of and as                      of Diamond
Resorts Depositor 2008 LLC, a Delaware limited liability company (the
“Depositor”), being duly sworn, deposes and says:

     1. This Lost Note Affidavit is being delivered by the Affiant pursuant to Section
7(n) of the Second Amended and Restated Sale Agreement (the “Agreement”), dated
as of August 31, 2010 by and between the Depositor and Diamond Resorts Issuer 2008 LLC,
a Delaware limited liability company, as the Issuer. Unless otherwise defined herein,
capitalized terms have the meanings ascribed to such terms in the Agreement.

     2. That                                          has issued an
[Obligor Note][Right-to-Use Agreement][Installment Sale Contract] evidencing a Timeshare
Loan dated                 in the principal amount of $                          [(the
“Original Note”)] [(the “Original Agreement”)] [the “Original
Contract”) to
                              .

     3. The [Original Note] [Original Agreement] [Original Contract] has been lost,
destroyed, or stolen so that it cannot be found or produced, and the Depositor has not
endorsed, assigned, sold, pledged, hypothecated, negotiated or otherwise transferred the
[Original Note] [Original Agreement] [Original Contract] or an interest therein.

     4. That the Depositor has made a diligent effort to find the [Original
Note][Original Agreement] [Original Contract].

     5. It is understood by the Depositor that if the [Original Note] [Original
Agreement] [Original Contract] is found, that it will surrender said [Original Note]
[Original Agreement] [Original Contract] to the Custodian or its permitted successors
and assigns for cancellation.

	 	 	 	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 

     The
foregoing affidavit was sworn to and subscribed before me this            day of                    ,           , by                , as                                of Diamond
Resorts Depositor 2008 LLC, who is personally known to me or who has produced                      
 as identification and who did take an Oath.

	 	 	 	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	(AFFIX NOTARIAL SEAL)	 	 	 	Notary Public, State of	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 

	 	 	 	 	 	(Name)	 	 	 	 
	Commission Number:

	 	 	 	 	 	My Commission Expires:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 

C-1

 

 

Exhibit D

Credit Underwriting

D-1

 

 

POLICY
AND PROCEDURE

	 	 	 	 	 	 	 

	Subject:

	 	Credit Underwriting
	 	Procedure No.:
	 	DRFS-00006
	 
	 	 	 	 	 	 
	Scope:

	 	Sales, Contracts, Accounting, Controller, and other resort team members
	 	Revision Date:
	 	May 27, 2009
	 
	 	 	 	 	 	 
	Location:

	 	US Sales Centers / DRI Global 

Headquarters
	 	Effective:
	 	July 31, 2000

PURPOSE:

This policy establishes guidelines for Credit Underwriting. Any changes to this policy must
be approved by the Chief Financial Officer.

POLICY:

	 	1)	 	It is the objective of DRFS’s (“company”) credit underwriting policy is to be fair to
all applicants and to evaluate all loan applications fairly based on the ability of the
applicant to repay the debt in a timely manner.
	 
	 	2)	 	It is the objective of our contracts and underwriting processes to:

	 	a.	 	produce loans that are conservatively underwritten with appropriate down
payments consistent with the underlying credit risk;
	 
	 	b.	 	operate independent of the sales process;
	 
	 	c.	 	efficiently produce loans free of collateral taints and conflicts; and
	 
	 	d.	 	produce loans in compliance with applicable laws and regulations.

	 	3)	 	Such objectives require a system of controls and checks and balances and will
generate assets with appropriate balance of risk and reward that will well serve all of
the Diamond Resorts constituents. The foregoing policy and processes must be applied
completely and consistently.
	 
	 	4)	 	Prohibition Against Discrimination:
	 
	 	 	 	It is the policy of Diamond Resorts to review each loan on a case-by-case basis, to
determine the creditworthiness of the applicant. In evaluating a credit application, DRFS
will review and consider information that has a demonstrable relationship to the credit
decision. The company shall not take into account or discriminate against any applicant on
a prohibited basis, including discrimination:

	 	a.	 	on the basis of race, color, religion, national origin, sex or marital
status, or age (provided the applicant has the capacity to contract);
	 
	 	b.	 	because all or part of the applicant’s income derives from any public assistance
program; or
	 
	 	c.	 	because the applicant has in good faith exercised any right under the
Consumer Credit Protection Act or any state law upon which an exemption has been
granted under said Act.

Page 1 of 6

 

 

	 	5)	 	Underwriting Process:
	 
	 	 	 	Diamond Resorts will review each loan application, taking into account the following guidelines
and requirements.

	 	a.	 	All new financed sales are subject to credit underwriting by DRFS.
	 
	 	b.	 	It is the responsibility of the sales site (Quality Assurance Officer or Sales manager)
to advise the customer that the loan request is subject to underwriting approval.
	 
	 	c.	 	The credit underwriting will be authorized by personnel in the DRFS Contracts
Department. (All persons authorized to make credit decisions on behalf of DRFS shall be
granted this authority by the National Contracts Manager.)
	 
	 	d.	 	DRFS management or their designee will approve every financed sale before a loan is
scheduled for escrow close. Such approval will include:

	 	1.	 	a complete and accurate contract that is in compliance with Diamond Resorts policy,
and
	 
	 	2.	 	a credit bureau report for all financed sales, including any transaction for existing
owners; or
	 
	 	3.	 	when a credit report is not available, a Credit Exception Form as described below

	 	 	 	Note: All exceptions will require documentation on a Credit Exception Form, which must
accompany the document file and require signature approval by the VP Client Services, National
Contracts Manager or the Director, Operations.
	 
	 	6)	 	Pender (sale status)

	 	a.	 	If DRFS denies approval of a financed sale, the Sales Center will be advised and the
contract may be returned for remediation. DRFS may classify the sale as a “pender” (see
separate policy), thus allowing up to 60 days for remediation. Sales will be provided 10
days notice prior to expiration of the 60 day “pender” period. Given expiration of the 60
day “pender” period with no resolution, DRFS will effect cancellation of the sale and
direct return of the escrow deposit to the customer
	 
	 	b.	 	Further, any related sales commissions will either be cancelled (if accrued and not
paid) or netted against future commissions (if already paid.)

	 	7)	 	Underwriting Criteria

	 	a.	 	Credit underwriting is performed by reviewing the completed credit application and the
credit bureau report and/or performance history with the company.
	 
	 	b.	 	All financed sales packages must include a completed credit application, signed by all
borrowing parties.
	 
	 	c.	 	A credit report is required for all financed sales, including existing owners.
	 
	 	d.	 	Existing owners

	 	a.	 	For upgrade or add-on transactions of existing owners, a credit report
will be required, although credit may be granted considering their performance
history with Diamond. In the case of an existing delinquency on an existing Diamond
Resorts loan, applicants will be required to resolve this delinquency by making a
separate payment to bring the loan current, i.e., such payment posted to the
account, before they may proceed with the new transaction.
	 
	 	b.	 	No credit score or lack of history requires a minimum 30% down payment.

	 	e.	 	When a credit report / risk score / credit history is not available, a Credit Exception
Form (see Exhibit 1) must be completed with the reason clearly stated as to why the credit
report / risk score / credit history is not available. Either the VP Client Services,
National Contracts Manager or the Director, Operations must provide signature authorization
for any and all exceptions per the Credit Exception Form. The credit report and/or Credit
Exception Form must be included as part of the credit file. A credit exception will not
delay the close of escrow.
	 
	 	f.	 	A minimum 30% down payment is required when no credit report is available.
	 
	 	g.	 	Minimum down payment (see Exhibit 2) in U.S. funds. Diamond Resorts employees or
independent contractors may not contribute to this down payment in any form. The source of
down payment must be the borrower(s). Should the down payment be contributed in whole or in
part by a third party not participating in the credit transaction, the monies must be
accompanied by a letter signed by that party indicating the money is a gift and is not
expected to be repaid.

Page 2 of 6

 

 

	 	h.	 	No bankruptcy within the previous 12 months period for both deeded inventory
and trust based sales.
More specifically, no approvals for pre-settlement cases; a post-settlement period of 12
months required
unless otherwise approved by the VP Client Services, National Contracts Manager or the
Director,
Operations.
	 
	 	i.	 	Judgments or liens on deeded property sales must be closed or meet the following
criteria:
	 
	 	j.	 	Civil judgments or open public record’s less than 10K will not require exceptions.
	 
	 	k.	 	Tax liens less than 1K will not require exceptions
	 
	 	l.	 	All other civil judgments, open public
records or tax liens that do not meet this criteria must be approved
by the VP Client Services, National Contract Manager, or the Director of Operations.
	 
	 	m.	 	Civil judgments or liens on trust based sales shall not be a factor in extending credit
for applicant(s) that
otherwise qualifies in accordance with the current credit underwriting policy.

	 	8)	 	Exceptions to Policy:
	 
	 	 	 	It is the expectation of DRFS that this policy will address the vast majority of sales
transactions. However, the company recognizes that this policy cannot address every situation
that is likely to arise in the purchase and lending process. Therefore, the company grants
total authority to the VP Client Services, National Contracts Manager or the Director of
Operations to grant exceptions to this policy on a discretionary basis. Each exception granted
shall be documented in 1) the credit file. Notwithstanding such exception authority, all
transactions must comply with applicable federal and state laws and regulations.

Page 3 of 6

 

 

REVISION HISTORY

	 	 	 	 	 	 	 
	Date	 	Revision #	 	Modification
	07/31/00

	 	  1.0	 	 	New document
	01/19/01

	 	  2.0	 	 	Revised
	03/14/01

	 	  3.0	 	 	Revised
	03/29/01

	 	  4.0	 	 	Revised
	03/30/01

	 	  5.0	 	 	Revised
	06/01/01

	 	  6.0	 	 	Revised
	08/27/01

	 	  7.0	 	 	Revised
	06/01/02

	 	  8.0	 	 	Revised
	07/19/02

	 	  9.0	 	 	Revised (distributed August 7, 2002)
	01/27/03

	 	10.0	 	 	Revised
	07/11/03

	 	11.0	 	 	Revised
	01/02/04

	 	11.1	 	 	Revised to correct approval permissions
	07/23/04

	 	11.2	 	 	Revised paragraph for Exceptions to Policy
	04/25/05

	 	12.0	 	 	Revisions to interest rates- effective 5/2/05
	01/09/06

	 	13.0	 	 	Revised (effective 6/30/2006)
	04/17/07

	 	14.0	 	 	Added grey paper, adjusted titles
	06/14/07

	 	14.1	 	 	Revised Underwriting criteria: Item 7: Judgments and/or Liens for Deeded Property Sales
	06/14/07

	 	14.2	 	 	Added Underwriting criteria: Item 8: Judgments and/ or Liens Trust for Based Sales
	06/14/07

	 	14.3	 	 	Added new term — 50% down w/0% interest for 12 month term
	10/26/07

	 	14.5	 	 	Added new term — Tier 1 10% down 180 month term
	11/27/07

	 	14.6	 	 	Revised Tier 1 a/d rate to 14.9% — effective 12/1/07
	06/17/08

	 	14.7	 	 	Update to Diamond Template
	06/18/08

	 	14.8	 	 	Revised — removed 180 month term effective 6/21/08
	09/17/08

	 	14.9	 	 	Revised — Eliminated surepay discount —; Eliminated Grey Paper financing option
	04/08/09

	 	15.0	 	 	Revised — Tier 1 added 15% @ 16.9%; Tier 1-3 Existing Owners 15% @ 14.9%; 25% @ 13.9%;
added 

84, 60 month terms to all options; Effective 4/8/09
	05/27/09

	 	15.1	 	 	Revised — Adjusted FICO limits for Tiers 1 — 7; Added grey paper for FICO <600;
Credit exceptions automatically place loan as grey paper regardless of FICO score.
Effective: 5/27/2009

Page 4 of 6

 

 

Exhibit 1

Diamond Resorts Financial Services, Inc. 

Credit Exception Form

Resort:                                Contract #                               
Sale Date  
                            

	 	 	 	 	 

	Purchaser Name(s):

	 	 
 

	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

Sales Agent:                                Sales Mgr:                               
QAO:      
                        

Credit Information:

Completed
credit app:
          Yes            No FICO Score:                      Down Pmt %:                     

Source of
Down Pmt:
                               Gift letter required?            yes            no

	 	 	 

	Exception Description:

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	Exception Justification:
	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 

	 	 	 
	 

	 	 

	 	 	 	 	 	 	 

	Authorization By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	     Name and Title*	 	 	 	 
	Date:
	 	 	 	 	 	 
	 	 	 

	 	 	 	 

	 	 	(Note: only the VP Client Services, National Contracts Manager or the Director, Operations
may authorize Credit exceptions. No person receiving monetary benefit from the sale may
approve credit exceptions.)

Page 5 of 6

 

 

Exhibit 2

EFFECTIVE 5/27/2009

DIAMOND RESORTS INTERNATIONAL®

CREDIT UNDERWRITING/SALES PROGRAM

	 	 	 	 	 	 	 	 	 
	 	 	 	 	DOWN	 	INTEREST	 	TERM
	FICO TIER	 	FICO SCORE	 	PAYMENT %	 	RATE %	 	(months)
	 
	 	 	 	10.00	 	15.9	 	120, 84, 60
	Tier l
	 	>800	 	>14.99	 	14.9	 	120, 84, 60
	 
	 	 	 	>24.99	 	13.9	 	120, 84, 60
	 
	 	 	 	10.00	 	17.9	 	120, 84, 60
	Tier 2
	 	700 — 799	 	>14.99	 	16.9	 	120, 84, 60
	 
	 	 	 	>24.99	 	15.9	 	120, 84, 60
	Tier 1 - 2
	 	>699	 	>49.99	 	12.9	 	120, 84, 60
	 
	 	 	 	10.00	 	17.9	 	120, 84, 60
	Tier 3
	 	650 - 699	 	>14.99	 	16.9	 	120, 84, 60
	 
	 	 	 	>24.99	 	15.9	 	120, 84, 60
	 
	 	 	 	>14.99	 	17.9	 	120, 84, 60
	Tier 4
	 	600 — 649	 	>24.99	 	15.9	 	120, 84, 60
	Tier 5
	 	575 — 599	 	>29.99	 	17.9	 	120, 84, 60
	Tier 6
	 	525 — 574	 	>49.99	 	17.9	 	120, 84, 60
	Tier 7
	 	<525	 	100	 	n/a	 	n/a
	For existing owners
add-on, upgrade or wrap:	 	 	 	 	 	 
	 
	 	 	 	10.00	 	15.9	 	120, 84, 60
	Tier 1 - 3
	 	>649	 	>14.99	 	14.9	 	120, 84, 60
	 
	 	 	 	>24.99	 	13.9	 	120, 84, 60

 

			
	Notes: 	 	 
	 
	1.	 	Any loan with a FICO score less than 600 will be considered grey paper financing. Commissions
will be paid based on the current grey paper policy of 50% regular commission paid when sale
is made active, 25% of regular commission after 6 timely payments; 25% of regular commission
after 12 timely payments.
	 
	2.	 	Any loan in which a credit exception is granted for any reason will fall into the grey paper
financing category regardless of FICO Score. Commissions will be paid based on the current
grey paper policy of 50% regular commission paid when sale is made active, 25% of regular
commission after 6 timely payments; 25% of regular commission after 12 timely payments.
	 
	3.	 	A minimum 30% down payment is required when no credit report is available. The interest rate
is determined per the actual rate in the above table, utilizing the 575 — 599 FICO SCORE
range, given the level of down payment, i.e., “30.00 —which is currently 17.9%.
	 
	4.	 	For EXISTING OWNERS Tier 1—3 option: Down payments must be full cash to qualify for lower
rate. (Equity cannot be applied to down payment amount).
	 
	5.	 	UPGRADES: Can either be paid-in-full or non-paid-in-full subject to Upgrade Contract Policy:
10% down payment on incremental sale amount for existing owners with a FICO >649; interest
rate determined solely per above matrix (equity plus 10% cash down payment used to determine
interest rate for 50% down payment option.) The “no credit report” minimum down payment
requirement of 30% takes precedent over any and all existing owner down payment requirements.
	 
	6.	 	ADD ONS: Must receive 10% down payment for existing owners with a FICO >649. The rate on
the add-on will be per the above table. The “no credit report” minimum down payment
requirement of 30% takes precedent over any and all “existing-owner” down payment
requirements.
	 
	7.	 	WRAPS: Must receive 10% down payment on the incremental sales amount for existing owners with
a FICO >649. The rate on the wrap will be per the above table. The “no credit report”
minimum down payment requirement of 30% takes precedent over any and all “existing-owner” down
payment requirements.
	 
	8.	 	Civil Judgments and Open Public Record’s (including medical bills) must be closed or be less
than $10,000.00 for deeded sales. Civil judgments or liens on trust based sales shall
not be a factor in extending credit for applicant(s) that otherwise qualifies in accordance
with the current credit underwriting policy.
	 
	9.	 	State and county tax liens must be closed or less than $1,000.
	 
	10.	 	Bankruptcies must be closed for a period of 12 months.
	 
	11.	 	Any financed sale not setup on the ACH, auto debit payment (savings or checking account) plan
at point of sale will result in sales agent(s) commission reduction of 1% point.
	 
	12.	 	Cash-out discount option of 4% off net incremental sales price available at point of sale to
buyers that cash out within 30 days from the sale date

REV. 5-27-09

Page 6 of 6

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