Document:

DR Exhibit 10.3 Purchase Agreement 5th Amendment

Exhibit 10.3
Execution Copy

FIFTH AMENDED AND RESTATED PURCHASE AGREEMENT
This FIFTH AMENDED AND RESTATED PURCHASE AGREEMENT (this “Agreement”), dated as of January 30, 2015, is by and among DIAMOND RESORTS FINANCE HOLDING COMPANY, a Delaware corporation (the “Seller”), and DIAMOND RESORTS DEPOSITOR 2008 LLC, a Delaware limited liability company (the “Depositor”), and their respective permitted successors and assigns, and hereby amends and restates in its entirety that certain fourth amended and restated purchase agreement, dated as of April 1, 2013 (the “4th A/R Purchase Agreement”) , among the parties hereto, which amended and restated in its entirety that certain third amended and restated purchase agreement, dated as of October 1, 2011 (the “3rd A/R Purchase Agreement”), among the parties thereto, which amended and restated in its entirety that certain second amended and restated purchase agreement, dated as of August 31, 2010 (the “2nd A/R Purchase Agreement”), among the parties hereto, which amended and restated in its entirety that certain purchase agreement, dated as of July 16, 2010 (the “A/R Purchase Agreement”), among the parties thereto, which amended and restated in its entirety that certain purchase agreement, dated as of November 3, 2008 (the “Original Purchase Agreement” and together with the A/R Purchase Agreement, the 2nd A/R Purchase Agreement, the 3rd A/R Purchase Agreement and the 4th A/R Purchase Agreement, the “Original Purchase Agreements”), among the parties thereto.
W I T N E S S E T H:
WHEREAS, the parties hereto desire to amend and restate in its entirety the 4th A/R Purchase Agreement as provided herein, and all actions required to do so under the 4th A/R Purchase Agreement have been taken;
WHEREAS, pursuant to the Original Purchase Agreements, the Seller had sold and Depositor had purchased Timeshare Loans and from time to time, in accordance with the terms hereof;
WHEREAS, pursuant to the terms hereof, the Seller will sell and the Depositor will purchase Timeshare Loans;
WHEREAS, pursuant to the terms hereof, the Seller may, and in certain circumstances, will be required to, provide Qualified Substitute Timeshare Loans for Timeshare Loans previously sold to the Depositor hereunder (including, for the avoidance of doubt, Timeshare Loans sold to the Depositor under the Original Purchase Agreements);
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 Sixth Amended and Restated Standard Definitions (the “Standard Definitions”) attached as Annex A to that certain sixth amended and restated indenture, dated as of January 30, 2015, by and among Diamond Resorts Issuer 2008 LLC as issuer, Diamond Resorts Financial Services, Inc. as servicer, Credit Suisse AG, New York Branch as 

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administrative agent and Wells Fargo Bank, National Association as indenture trustee, custodian and back-up servicer (the “Indenture”).  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 Seller does hereby sell, transfer, assign and grant to the Depositor, without recourse (except as provided in Section 6 and Section 8 hereof), all of the Seller’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 Seller under the distribution and assignment agreements, contribution and assignment agreements and such other assignments, bills of sale and other transfer documents executed and delivered in connection with the sale and transfer of such Timeshare Loans, 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 Depositor, its successors and assigns.  The Seller 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 Depositor hereby directs the Seller and the Seller 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, all related Timeshare Loan Files and to the Servicer all related Timeshare Loan Servicing Files.
(c)    Collections.  The Seller 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 Seller’s representation and warranty in clause (mm) of Schedule I, neither the Depositor nor any subsequent assignee of the Depositor shall have any obligation or liability with respect to any Timeshare Loan nor shall the Depositor 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 

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or liability is being assumed by the Depositor 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 Seller to the Depositor and not a loan secured by such Timeshare Loans.  In the event, however, that a court of competent jurisdiction were to hold that any such transfer constitutes a loan and not a sale, it is the intention of the parties hereto that (i)  the Seller shall be deemed to have Granted and does hereby Grant to the Depositor as of the date hereof a first priority perfected security interest in all of the Seller’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 Seller as “debtor” and the Depositor 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 Depositor of the Seller’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 Depositor 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 Seller 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 

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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 the Closing Date, a Funding Date or a Transfer Date, as the case may be, the Seller shall have delivered or shall have caused the delivery of (i) the related Timeshare Loan Files to the Custodian and the Custodian shall have delivered a Trust Receipt therefor pursuant to the Custodial Agreement, (ii) the Timeshare Loan Servicing Files to the Servicer, and (iii) an updated Schedule of Timeshare Loans to the Custodian, the Servicer, the Depositor, the Indenture Trustee and the Administrative Agent.
(c)    Each transfer, assignment, sale and grant shall be evidenced by a transfer certificate in the form attached hereto as Exhibit B. The Seller shall have delivered or caused to be delivered all other information theretofore required or reasonably requested by the Depositor to be delivered by the Seller or performed or caused to be performed all other obligations required to be performed as of the 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 Depositor to establish and preserve the right, title and interest of the Depositor 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 Seller shall have delivered such other certificates and opinions as shall be reasonably requested by the Depositor or its assignee.
SECTION 5.    Representations and Warranties and Certain Covenants of the Seller.
(a)    The Seller represents and warrants to the Depositor 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 Seller is a corporation duly organized and validly existing in good standing under 

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the laws of the State of Delaware; and is duly qualified to do 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 Seller 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 Seller 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 Seller 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 Seller has all requisite corporate power and authority to acquire, own, transfer and convey the Conveyed Timeshare Property to the Depositor.
(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 Seller have been duly authorized, executed and delivered by the Seller 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 Seller 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 Seller 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 Seller’s interest in the Conveyed Timeshare Property to the Depositor or the valid creation of a first priority perfected security interest in the Conveyed Timeshare Property in favor of the Depositor.

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(v)    No Violation of Law, Rule, Regulation, etc.  The execution, delivery and performance by the Seller of this Agreement and any other Transaction Document to which the Seller is a party do not and will not (A) violate any of the provisions of the certificate of incorporation or by-laws of the Seller, (B) violate any provision of any law, governmental rule or regulation currently in effect applicable to the Seller or its properties or by which the Seller 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 Seller or its properties or by which the Seller 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 Seller 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 Seller is required which has not been obtained in connection with the authorization, execution, delivery or performance by the Seller 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 Depositor therein pursuant to Section 3 hereof.
(vii)    Defaults.  The Seller is not in default under any material agreement, contract, instrument or indenture to which the Seller 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 Seller, 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 Parents’s most recent, audited fiscal year, there has been no Material Adverse Effect with respect to any Diamond Resorts Entity.
(ix)    Insolvency.  The Seller 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 Seller will not engage in any business or transaction for which any property remaining with the Seller would constitute an unreasonably small amount of capital.

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(x)    Pending Litigation or Other Proceedings.  There is no pending or, to the best of the Seller’s knowledge, threatened action, suit, proceeding or investigation before any court, administrative agency, arbitrator or governmental body against or affecting the Seller which, if decided adversely, would materially and adversely affect (A) the condition (financial or otherwise), business or operations of the Seller, (B) the ability of the Seller 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 Seller to any of the Conveyed Timeshare Property, or (D) the Depositor’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 Seller pursuant to this Agreement, in its capacity as the Seller, 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 Seller 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 Seller, or which may impair the ability of the Seller 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 Depositor by or on behalf of the Seller pursuant hereto or thereto specifically for use in connection with the transactions contemplated hereby or thereby.
(xii)    Foreign Tax Liability.  The Seller 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 Seller 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 Plan with respect to any plan year beginning prior to January 1, 2011, and, to the Seller’s knowledge, no event has occurred or circumstance exists that may result in an accumulated funding deficiency as of the last day of any plan year beginning prior to January 1, 2011; (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 

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to any Plan with respect to any plan year beginning after December 31, 2010, and, to the Seller’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, 2010 of any such Plan; (iii) the Seller and each of its ERISA Affiliates has made all contributions required under each Multiemployer Plan to which the Seller or any of its ERISA Affiliates contributes or in which the Seller or any of its ERISA Affiliates participates (a “Seller Multiemployer Plan”); and (iv) neither the Seller nor any of its ERISA Affiliates has withdrawn from any Seller Multiemployer Plan with respect to which there is any outstanding liability and, to the Seller’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 Seller Multiemployer Plan that could result in any liability to the Seller.
(xiv)    Taxes.  The Seller 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 Seller 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 Depositor.  The Seller knows of no basis for any material additional tax assessment for any fiscal year for which adequate reserves have not been established.  The Seller 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 Seller keeps its records concerning the Timeshare Loans will be 10600 West Charleston Boulevard, Las Vegas, Nevada 89135  (or such other place specified by the Seller by written notice to the Depositor and the Indenture Trustee).  The principal place of business and chief executive office of the Seller is located at 10600 West Charleston Boulevard, Las Vegas, Nevada 89135 (or such other place specified by the Seller by written notice to the Depositor and the Indenture Trustee).
(xvi)    Securities Laws.  The Seller 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 Seller 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.
(xvii)    Ownership of the Seller.  One hundred percent (100%) of the outstanding capital stock of the Seller is directly owned (both beneficially and of record) by Diamond Resorts Corporation, a Maryland corporation.  Such capital stock is validly issued, fully paid and nonassessable, and there are no options, warrants or other rights to acquire membership interests from the Seller.

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(b)    The Seller hereby: (i) represents and warrants that immediately prior to the transfer of any Timeshare Loan to the Depositor, the Seller 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 Depositor, the Indenture Trustee for the benefit of the Noteholders and the Administrative Agent with respect to each Timeshare Loan and certain Resorts as of the 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 Depositor and any assignment of such Conveyed Timeshare Property by the Depositor 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 Seller acknowledges that it has been advised that the Depositor 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 Seller agrees that, upon any such assignment, the Indenture Trustee may enforce directly, without joinder of the Depositor (but subject to any defense that the Seller 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 Seller’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 Depositor or any assignee thereof, then notwithstanding the Seller’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 Seller 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 Depositor or any subsequent assignee of the Depositor (including the Indenture Trustee for the benefit of the Noteholders) therein, the Seller 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 

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Amortization Event has occurred and is continuing, the Seller shall use its best efforts to repurchase each Timeshare Loan instead of replacing such Timeshare Loan.
(b)    Deliberately Omitted.
(c)    Deliberately Omitted.
(d)    Payment of Repurchase Prices and Substitution Shortfall Amounts.  The Depositor hereby directs and the Seller hereby agrees 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 Section 6(a) 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 Depositor hereby directs, and the Seller hereby agrees, on each date on which a Timeshare Loan has been repurchased, purchased or substituted, to provide the Depositor 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 Seller shall, on each Transfer Date, certify in writing to the Depositor 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 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 Depositor shall execute and deliver such releases and instruments of transfer or assignment presented to it by the Seller, in each case without recourse, as shall be necessary to vest in the Seller 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 Depositor shall not execute and deliver or cause the execution and delivery of such releases and instruments of transfer or assignment until the Administrative Agent and the Servicer receive a Trust Receipt for such Qualified Substitute Timeshare Loan.  The Depositor shall cause the Custodian to release the related Timeshare Loan Files to the Seller or its designee and the Servicer to release the related Timeshare Loan Servicing Files to the Seller 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 Depositor shall not cause the Custodian and the Servicer to release the related Timeshare Loan File and the Timeshare Loan Servicing File, respectively, until the 

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Administrative Agent and the Servicer receive a Trust Receipt for such Qualified Substitute Timeshare Loan.
(h)    Sole Remedy.  It is understood and agreed that the obligations of the Seller to repurchase or substitute Timeshare Loans contained in Section 6(a) hereof and the obligation of the Seller 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 Seller.  The Seller hereby covenants and agrees with the Depositor as follows:
(a)    The Seller shall comply in all material respects with all applicable laws, rules, regulations and orders applicable to it and its business and properties.
(b)    The Seller 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 Seller shall indicate in its computer files and other records that each Timeshare Loan has been sold to the Depositor and subsequently pledged to the Indenture Trustee for the benefit of the Noteholders.
(d)    The Seller shall respond to any inquiries with respect to ownership of a Timeshare Loan by stating that such Timeshare Loan has been sold to the Depositor and that the Depositor 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 Seller shall file or cause to be filed, at its own expense, financing statements in favor of the Depositor 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 Depositor from the Seller, and shall deliver file-stamped copies of such financing statements to the Depositor and the Indenture Trustee for the benefit of the Noteholders.
(f)    The Seller 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 Depositor may reasonably request, to perfect, protect or more fully evidence the sale of the Timeshare Loans, or to enable the Depositor 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.  The Seller hereby appoints the Depositor as attorney-in-fact, which appointment is coupled with an interest and is therefore 

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irrevocable, to act on behalf and in the name of the Seller to enforce obligations of the Seller hereunder.
(g)    Any change in the legal name of the Seller 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 Depositor 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 Seller shall promptly disclose to the Depositor, in reasonable detail, the nature of such breach.
(i)    The Seller shall immediately transfer to the Depositor or its assignee, as applicable, any payment it receives in respect of the Conveyed Timeshare Property.
(j)    In the event that the Seller or the Depositor or any assignee of the Depositor 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 Depositor, or upon the Seller otherwise being given notice thereof, the Seller shall pay, and otherwise indemnify and hold the Depositor and any of its assignees harmless, on an after-tax basis, from and against any and all such transfer taxes.
(k)    The Seller 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 Seller to perform its obligations under this Agreement and any of the Transaction Documents to which it is a party.
(l)    The Seller 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 Seller listed herein or, upon 30 days’ prior written notice to the Depositor and the Indenture Trustee, at any other location in jurisdictions where all actions reasonably requested by the Depositor to protect and perfect the interest in the Obligor Notes and Right-to-Use Agreements under the applicable Uniform Commercial Code have been taken and completed within 10 days of such notice.  The Seller also will maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing the Obligor Notes and Right-to-Use Agreements 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 and Right-to-Use Agreement) 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.

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(m)    The Seller shall authorize and file such continuation statements and any other documents reasonably requested by the Depositor or which may be required by law to preserve and protect the interest of the Depositor hereunder in and to the Conveyed Timeshare Property.
(n)    The Seller 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 Depositor may reasonably request, to perfect, protect or more fully evidence the Conveyed Timeshare Property, or to enable the Depositor to exercise and enforce its rights and remedies hereunder or under any of the other Transaction Documents to which it is a party.  The Seller 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 Depositor agrees that such Lost Note Affidavit shall be sufficient to satisfy its obligations hereunder.
(o)    The Seller authorizes the Depositor 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 Seller where permitted by law.  A photocopy or other reproduction of this Agreement shall be sufficient as a financing statement where permitted by law.  The Depositor confirms that it is not its present intention to file a photocopy or other reproduction of this 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 Seller shall have received any insurance proceeds and such proceeds are not payable to an Obligor, the Seller shall promptly remit such insurance proceeds to the Indenture Trustee for deposit into the Collection Account.
SECTION 8.    Indemnification.
(a)    The Seller agrees to indemnify the Depositor, the Issuer, the Indenture Trustee, the Noteholders, the Administrative 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 Seller under Section 5 hereof and (y) a failure by the Seller 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 Seller 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 Seller shall: (x) promptly notify the Depositor 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 Seller to perform 

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its duties in accordance with the terms of this Agreement or (ii) a breach of the Seller’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 Seller 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 Seller.
(b)    The Seller agrees to pay, and to indemnify, defend and hold harmless the Depositor, the Issuer, the Indenture Trustee, the Noteholders, the Administrative 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 Depositor hereunder and the further pledge by the Depositor to the Issuer, 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 Depositor 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 Seller under this Agreement or the Servicer under the Indenture or imposed against the Depositor, the Issuer, a Noteholder or otherwise.  Notwithstanding any other provision of this Agreement, the obligation of the Seller 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 Seller 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 Seller hereby agrees that it will not, directly or indirectly, institute, or cause to be instituted, or join any Person in instituting, against the Depositor 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 Administrative 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 

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communications that the Administrative 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 Seller, the Depositor 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 Seller, the Depositor 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 Seller may not assign any of its rights and obligations hereunder or any interest herein without the prior written consent of the Depositor and any of its assignees.  The Depositor may, and intends to, assign all of its rights hereunder to the Issuer and the Seller 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 Seller 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 Depositor.
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 hereto, nor consent to any departure by the Seller 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 Administrative 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 the Notes.  The Depositor shall provide the Administrative 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 Seller in any case shall, in itself, entitle it to any other consent or further notice or demand in similar or other circumstances.  The Seller acknowledges that in connection with the intended assignment by the Depositor of all of its right, title and interest in and to the Conveyed Timeshare Property to the Issuer, the Issuer, as Issuer, intends to issue the Notes, the proceeds of which will be used by the Issuer to purchase the Timeshare Loans from the Depositor.
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 Depositor may not purchase or acquire the Conveyed Timeshare Property, the transactions evidenced hereby 

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shall constitute a loan and not a purchase and sale, notwithstanding the otherwise applicable intent of the parties hereto, and the Seller shall be deemed to have granted to the Depositor as of the date hereof, a first priority perfected security interest in all of the Seller’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 SELLER AND THE DEPOSITOR 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 SELLER AND THE DEPOSITOR 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 SELLER OR THE DEPOSITOR 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.  Delivery of an executed counterpart of this Agreement by facsimile or other electronic transmission (i.e., “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart hereof and deemed an original.
[Signatures on next page]

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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 FINANCE HOLDING 
COMPANY, as Seller 
 
 
 
By:     __/s/ Lillian Luu____________________ 
    Name:    Lillian Luu 
    Title:      Treasurer 
 
    Address:    10600 West Charleston Boulevard 
            Las Vegas, Nevada 89135 
    Attention:      General Counsel 
    Telephone:      702-823-7560 
    Facsimile:      702-765-8610
DIAMOND RESORTS DEPOSITOR 2008 LLC, 
as Depositor 
 
 
 
By:     ____/s/ Lillian Luu____________________ 
    Name:    Lillian Luu 
    Title:      Treasurer 
 
    Address:    10600 West Charleston Boulevard 
            Las Vegas, Nevada 89135 
    Attention:    General Counsel 
    Telephone:      702-823-7560 
    Facsimile:      702-765-8610

KL2 2882246.3

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 for such Timeshare Loan has expired.  The Timeshare Loan was not originated in, or is subject to the laws of, any jurisdiction under which the transfer, conveyance or assignment of such Timeshare Loan would be unlawful, void or voidable.
(b)    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 and/or Right-to-Use Agreement 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.  No instrument has been executed that would effect any such release, satisfaction, cancellation, rescission or subordination.
(d)    The sale of the related 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 Mortgage or Purchase Contract.
(e)    Each Mortgage, Purchase Contract, 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)    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.
(g)    The related Obligor Note is payable in United States Dollars.

Schedule I-1
KL2 2882246.3

(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 Timeshare Loans does not exceed $150,000 in the aggregate.
(k)    The related Obligor Note evidences a fully amortizing debt obligation, which bears a fixed rate of interest, provides for substantially level monthly payments of principal and interest (other than the final payment thereon) and is for a term not exceeding 120 months.
(l)    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 Administrative 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 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 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, 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 related Timeshare Property, subject only to Permitted Liens; and the Seller, 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 

Schedule I-2
KL2 2882246.3

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 Depositor and its assigns to enforce the revocation and termination rights granted in the Right-to-Use Agreement.
(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 Seller pursuant to the Purchase Agreement.  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 this Agreement.
(t)    The related Mortgage, Right-to-Use Agreement and/or Obligor Note, 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 rights and remedies in the related Right-to-Use Agreement 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 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.

Schedule I-3
KL2 2882246.3

(y)    The terms of each Mortgage, Right-to-Use Agreement and Obligor Note have not been modified in any material respect.
(z)    Each Timeshare Loan secured by a Mortgage 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 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 or the Depositor or in connection with the pledge of any Timeshare Loans to the Indenture Trustee.
(cc)    No selection procedures reasonably believed by the Seller 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 or each Right-to-Use Agreement.
(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.
(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.

Schedule I-4
KL2 2882246.3

(ii)    The Local Counsel Opinion Requirement with respect to the related Resort or Collection has been satisfied.
(jj)    With respect to any Right-to-Use Loan (other than Right-to-Use Loans related to the Cabo Azul Collection), all Timeshare Property and other real estate interests supporting the Points available to be sold are (i) titled in the name of the Collection Trustee, Collection Association or third-party trustee and held in trust, free and clear of any lien or ownership interest in favor of any other person, (ii) 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.  With respect to any Right-to-Use related to the Cabo Azul Collection, all Timeshare Property and other real estate interests supporting the Points available to be sold are (i) owned by the Cabo Developer, as evidenced by its beneficial interest in a Mexican land trust subject to the terms of the Cabo Azul Collection documents, (ii) covered by a title insurance policy issued by a title insurer qualified to do business in Mexico and (iii) is related to the Cabo Azul Collection.
(kk)    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.
(ll)    [Reserved].
(mm)    No holder of the Timeshare Loan has any existing or future obligations or liabilities with respect to such Timeshare Loan or the related Obligor.
(nn)    The related Obligor has a FICO score of at least 550.
(oo)    The Timeshare Loan does not, when aggregated with all other Timeshare Loans conveyed on the Funding Date or Transfer Date, as applicable, and the other Borrowing Base Loans, cause any of the following to fail to be true:
(i)    the weighted average FICO score of the related Obligors with a FICO score is at least 700.
(ii)    the Weighted Average Timeshare Loan Coupon of the Borrowing Base Loans is equal to or greater than 13.50%.
(pp)    The Timeshare Loan is not related to an installment sale contract or contract for deed.
(qq)    The Timeshare Loan is not a Mortgage Loan.

Schedule I-5
KL2 2882246.3

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 connection with the sale of Timeshare 

Schedule II-1
KL2 2882246.3

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. (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 $5,000,000 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 easements serving such Resort for its current purposes have been completed and dedicated to public use and accepted by all Governmental Authorities.

Schedule II-2
KL2 2882246.3

(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.
(l)    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.
(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 

Schedule II-3
KL2 2882246.3

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
KL2 2882246.3

Schedule III (II(a)(ii))
Marketing by States and Countries
	
			
	Name of Resort
	Location of Sales1,2,3, 5
	If Points Based, Owner of Real Property Rights

	Bell Rock Inn
	No on-site sales
	Premiere Vacation Collection Owners Association, Inc.

	Bent Creek Golf Village
	Sevier County, TN; DRUSC location
	First American Trust, FSB, as Trustee

	Cabo Azul Resort
The Carriage House
	Baja California Sur, Mexico
No on-site sales; 
PVC Location
	DPM Acquisition Mexico, S. de R.L de C.V.
Premiere Vacation Collection Owners Association, Inc.

	Cedar Breaks Lodge and Spa
Celebrity House
Cypress Pointe I
	Iron County, UT;
DRUSC location
No on-site sales;
PVC location
Orange County, FL; DRUSC location
	First American Trust, FSB, as Trustee
Premiere Vacation Collection Owners Association, Inc.
First American Trust, FSB, as Trustee

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

	Daytona Beach Regency
	Volusia County, FL; 
DRUSC location
	First American Trust, FSB, as Trustee

	Desert Paradise Resort
	Clark County, NV;  
DRUSC location
	First American Trust, FSB, as Trustee

	Desert Isle of Palm Springs
	No on-site sales; 
DRUSC location
	First American Trust, FSB, as Trustee

	Dunes Village Resort
	No on-site sales; 
DRUSC location
	First American Trust, FSB, as Trustee

	Flamingo Beach Resort & Villas
	St. Maarten, 
DRUSC location
	First National Trustee Company (UK) Ltd., as Trustee through its subsidiary, Saint Maarten Title Limited

	Grand Beach I
	Orange County, FL; DRUSC location
	First American Trust, FSB, as Trustee

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

	Greensprings Vacation Resort
	James City County, VA; DRUSC location
	First American Trust, FSB, as Trustee

	The Historic Crag’s Lodge
	No on-site sales; 
PVC Location
	Premiere Vacation Collection Owners Association, Inc.

Schedule III-1
KL2 2882246.3

	
			
	Name of Resort
	Location of Sales1,2,3, 5
	If Points Based, Owner of Real Property Rights

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

	Island Links
	No on-site sales;  
DRUSC location
	First American Trust, FSB, as Trustee

	Ka’anapali Beach
	Maui, HI; DRHC location
	First American Trust, FSB, as Trustee

	Kohl’s Ranch Lodge
	No on-site sales; 
PVC location
	Premiere Vacation Collection Owners Association, Inc.

	Lake Tahoe Vacation Resort
	El Dorado County, CA; DRUSC and DRCC locations
	First American Trust, FSB, as Trustee

	London Bridge Resort
	No on-site sales; 
DRUSC location
	First American Trust, FSB, as Trustee

	Los Abrigados Resort 
and Spa
	Yavapai County, AZ; 
PVC location
	Premiere Vacation Collection Owners Association, Inc.

	Mystic Dunes Resort
	Osceola County, FL; DRUSC location
	First American Trust, FSB, as Trustee

	Palm Canyon Resort and Spa
	Riverside County, CA 
DRUSC location
	First American Trust, FSB, as Trustee

	The Point at Poipu
	Kauai, HI; DRHC location
	First American Trust, FSB, as Trustee

	Polo Towers Suites
	Clark County, Nevada;  DRUSC and DRCC Locations4
	First American Trust, FSB, as Trustee

	Polynesian Isles
	No on-site sales;  
DRUSC Location
	First American Trust, FSB, as Trustee

	Rancho Mañana Resort
	No on-site sales 
PVC location
	Premiere Vacation Collection Owners Association, Inc.

	PVC at The Roundhouse Resort
	No on-site sales; 
PVC location
	Premiere Vacation Collection Owners Association, Inc.

	The Ridge on Sedona Golf
	Yavapai County, AZ; DRUSC location
	First American Trust, FSB, as Trustee

	Ridge Pointe
	No on-site sales;  
DRUSC Location
	First American Trust, FSB, as Trustee

	Riviera Beach Resort and Spa
	Orange County, CA 
DRUSC Location
	First American Trust, FSB, as Trustee

	Riviera Oaks Resort and Racquet Club
	San Diego County, CA 
DRUSC Location
	First American Trust, FSB, as Trustee

	Riviera Shores Resort
	No on-site sales 
DRUSC Location
	First American Trust, FSB, as Trustee

Schedule III-2
KL2 2882246.3

	
			
	Name of Resort
	Location of Sales1,2,3, 5
	If Points Based, Owner of Real Property Rights

	The Roundhouse Resort
	No on-site sales; 
PVC Location
	Premiere Vacation Collection Owners Association, Inc.

	Royal Palm Beach
	No on-site sales; 
DRUSC location
	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
	First American Trust, FSB, as Trustee

	Scottsdale Camelback Resort
	No on-site sales; 
PVC Location
	Premiere Vacation Collection Owners Association, Inc.

	Scottsdale Links Resort
	No on-site sales; DRUSC location
	First American Trust, FSB, as Trustee

	Scottsdale Villa Mirage
	Maricopa County, AZ; DRUSC location
	First American Trust, FSB, as Trustee

	Sea of Cortez Beach Club
	No on-site sales; 
PVC Location
	Premiere Vacation Collection Owners Association, Inc.

	Sedona Springs
	No on-site sales;  
DRUSC location
	First American Trust, FSB, as Trustee

	Sedona Summit
	Yavapai County, AZ; DRUSC, DRHC, & DRCC locations
	First American Trust, FSB, as Trustee

	The Suites at Fall Creek
	Taney County, MO; DRUSC locations
	First American Trust, FSB, as Trustee

	Tahoe Beach & Ski Club
	No on-site sales;  
DRUSC & DRCC Locations
	First American Trust, FSB, as Trustee

	Tahoe Seasons Resort
	No on-site sales 
DRUSC Location
	First American Trust, FSB, as Trustee

	Varsity Clubs of America – South Bend
	No on-site sales; 
PVC Location
	Premiere Vacation Collection Owners Association, Inc.

	Varsity Clubs of America – Tucson
	No on-site sales; 
PVC Location
	Premiere Vacation Collection Owners Association, Inc.

	Villas at Poco Diablo
	No on-site sales; 
DRUSC location
	First American Trust, FSB, as Trustee

	Villas at Polo Towers
	Clark County, NV; 
DRUSC and DRHC locations4
	First American Trust, FSB, as Trustee

	Villas de Santa Fe
	No on-site sales;  
DRUSC locations
	First American Trust, FSB, as Trustee

	Villas of Sedona
	No on-site sales; DRUSC locations
	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, Utah, Virginia, and St. Maarten, N.A. (collectively referred to as “DRUSC 

Schedule III-3
KL2 2882246.3

locations”).  DRUSC is registered, or exempt from registration or other regulations, to market or sell memberships in all 50 United States except: Hawaii, Idaho, Nebraska, and West Virginia.
2    Diamond Resorts Hawaii Collection (“DRHC”) memberships are currently sold at sales centers located in Hawaii (collectively referred to as “DRHC locations”).  DRHC is registered, or exempt from registration or other regulations, to market or sell memberships in the following states:  Alaska, Arizona, California, Delaware, Florida, Georgia, Hawaii, Kansas, Maine, Massachusetts, Michigan, Missouri, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Texas, Vermont, Washington, Wisconsin, and Wyoming.
3    Diamond Resorts California Collection (“DRCC”) memberships are not actively sold, however, are legally able to be sold at sales centers located in the following states:  Arizona, California, and Nevada (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, Arizona, California, Delaware, Georgia, Kansas, Maine, Massachusetts, Missouri, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, 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.
5    Premiere Vacation Collection (“PVC”) memberships are  not actively sold, however are legally able to be sold at sales centers in Arizona. PVC is registered, or exempt from registration or other regulations, to market or sell memberships in the following states:  Alaska, Arizona, Colorado, Delaware, Georgia, Illinois, Indiana, Kansas, Maine, Massachusetts, Michigan, Missouri, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Texas, Utah, Vermont, Wisconsin and Wyoming.

Schedule III-4
KL2 2882246.3

Schedule III (II(j)) 
 
Physical Condition
The Developer was not the developer of the Poipu Point condominium (completed in 1993); the Ka’anapali Beach Vacation Resort (completed in 1988); or The Villas at Polo Towers (completed in 2006).  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.”
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 $2.465 million has been reached with the three defendants and the case has been dismissed.  The rooftop space frame is be replaced beginning in November 2014. This is expected to be approximately $5 million, nine month project, to be completed in the third quarter of 2015.  This estimate is approximate only and could change in the future due to unforeseen events, inclement weather, and other events that are beyond the control of the Developer or the contractor.
The Point at Poipu
The exterior walls of all buildings in The Point at Poipu condominium have experienced damage due to water intrusion.  The Board of Directors of the condominium association for The Point at Poipu (“Poipu Condominium Board”) had a study performed to determine the scope and extent of the damage and the cost of any necessary repair work.  Based on the results of such study, the Poipu Condominium Board initiated a water intrusion assessment to pay for the repair work (“Water Intrusion Assessment”).  The Developer agreed that it would pay for such Water Instrusion Assessments relative to certain Points purchased by owners on and subsequent  to January 30,2011, including any Points purchased on and subsequent to the last Revision Date on page 1 of the Hawaii Disclosure Statement purchasers receive, however, the Developer is not assuming responsibility for the payment of any other assessment made to Collection Members in the future that are unrelated to the repair of such water intrusion damage at The Point at Poipu condominium.  Construction work to repair the damage has commenced in 2012, with an estimated completion date of July, 2017.  These dates and construction timeframe estimates are approximate only and could change in the future due to unforeseen events, inclement weather, and other events that are beyond the control of the Poipu Condominium Board.  In order to conduct the necessary repair work, the Poipu Condominium Board anticipates that only one building at a time will be completely closed off from occupancy. Each building takes on average about six (6) months to complete the repair work.  The Developer will endeavor to work with the Poipu Condominium Board to see that repair work is conducted in manner that will not materially impair the operation of the Project and will minimize the impact of the ability of the owners to obtain a reservation.

Schedule III-5
KL2 2882246.3

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. The repairs are underway at the resort and are anticipated to be completed in 2015.  The use of the affected units may be temporarily interrupted during the course of making the repairs.
All or portions of the Lake Tahoe Vacation Resort are located within a Very High Fire Hazard Severity Zone.  Prospective purchasers are provided with a separate disclosure document required under California Government Code Section 51183.5.
San Luis Bay Inn
All or portions of the San Luis Bay Inn resort are located within a Special Flood Hazard Area, as designated by the Federal Emergency Management Agency.  Prospective purchasers are provided with a separate disclosure document required under California Government Code Section 8589.3.
The resort also lies within an Area of Potential Flooding as shown on an inundation map.  Purchasers are provided with a separate disclosure document required under California Government Code Section 8589.4.
The resort is also located within five (5) miles of the Diablo Canyon nuclear power plant.  It is within the basic emergency planning zone, the area surrounding each of California’s nuclear power plants, in which both state and federal governments require planning to protect the public in the unlikely event of a serious accident at the plant.  Plans for public information and for a full range of protective actions, including evacuation, have been developed by local emergency services offices.
Scottsdale Links
There are currently ten (10) units dedicated to Diamond Resorts U.S. Collection 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 maintain the one-to-one property to points ratio required by law.
Desert Paradise
There are currently four (4) units at Desert Paradise Resort that are dedicated to Diamond Resorts U.S. Collection 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 

Schedule III-6
KL2 2882246.3

meantime, DRUSC has used developer space to accommodate owner requests and maintain the one-to-one property to points ratio required by law.
Cabo Azul Resort
In September 2014, Cabo Azul Resort and the surrounding area in Baja California, Mexico were severely affected by the landfall of Hurricane Odile.  The storm damaged all six (6) buildings at the resort and the related amenities and other facilities at the resort. The resort sustained various levels of structural and cosmetic damage, including to both the interior and exterior of the resort structures.  The Developer continues to evaluate the extent and severity of the damage, including related costs and the timeframe to complete any necessary repairs.  The entire resort is temporarily out of service, pending completion of necessary repairs to both the resort and the infrastructure of the surrounding area.

Schedule III-7
KL2 2882246.3

Exhibit A 
 
Schedule of Timeshare Loans

[Electronic Schedule of Timeshare Loans on file with Indenture Trustee]

A-1
KL2 2882246.3

Exhibit B
Form of Timeshare Loan Transfer Certificate
TRANSFER OF TIMESHARE LOANS
PURSUANT TO
PURCHASE AGREEMENT
DIAMOND RESORTS DEPOSITOR 2008 LLC
This TRANSFER OF TIMESHARE LOANS (this “Subsequent Transfer Certificate”), dated _________________, 201_, is acknowledged by Diamond Resorts Finance Holding Company, a Delaware corporation (the “Seller”) and Diamond Resorts Depositor 2008 LLC, a Delaware limited liability company (the “Depositor”).  Capitalized terms not defined herein shall have the meanings assigned to them in or incorporated by reference in that certain Fourth Amended and Restated Purchase Agreement, dated as of January 30, 2015, by and between the Seller, as seller and the Depositor, as purchaser (the “Purchase Agreement”).
The Seller, concurrently with the execution and delivery hereof, does hereby sell, transfer, assign and grant to the Depositor, pursuant to Section 2(a) of the Purchase Agreement, and the Depositor does hereby purchase and accept such transfer, assignment and grant, all right, title and interest of the Seller in and to (i) the Timeshare Loans listed on the Schedule of Timeshare Loans attached as Exhibit A to the Purchase 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 Purchase Agreement in connection with this transfer of the Timeshare Loans:
Section 1    Definitions
”Transfer Date” means ______________, 201_.
“Cut-Off Date” means the close of business on _______________, 201_.
Section 2    Ratification of Agreement.  As supplemented by this Transfer Certificate, the Purchase 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).

B-1
KL2 2882246.3

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-2
KL2 2882246.3

IN WITNESS WHEREOF, the Seller and the Depositor 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.
SELLER: 
 
DIAMOND RESORTS FINANCE HOLDING COMPANY 
 
 
 
By:    ________________________________________ 
    Name: 
    Title:
Acknowledged and Agreed: 
 
DEPOSITOR: 
 
DIAMOND RESORTS DEPOSITOR 2008 LLC 
 
 
 
By:    ________________________________________ 
    Name: 
    Title:

B-3
KL2 2882246.3

Exhibit C 
 
Form Of Lost Note Affidavit
STATE OF ___________ 
COUNTY OF _________
______________ (“Affiant”), on behalf of and as _________________ of Diamond Resorts Finance Holding Company, a Delaware corporation (the “Seller”), being duly sworn, deposes and says:
1.    This Lost Note Affidavit is being delivered by the Affiant pursuant to Section 7(n) of the Fourth Amended and Restated Purchase Agreement (the “Agreement”), dated as of January 30, 2015 by and between the Seller and Diamond Resorts Depositor 2008 LLC, a Delaware limited liability company, as the purchaser.  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] evidencing a Timeshare Loan dated __________________ in the principal amount of $_________________  [(the “Original Note”)] [(the “Original Agreement”)] to ______________________.
3.    The [Original Note][Original Agreement] has been lost, destroyed, or stolen so that it cannot be found or produced, and the Seller has not endorsed, assigned, sold, pledged, hypothecated, negotiated or otherwise transferred the [Original Note][Original Agreement] or an interest therein.
4.    That the Seller has made a diligent effort to find the [Original Note][Original Agreement].
5.    It is understood by the Seller that if the [Original Note][Original Agreement] is found, that it will surrender said [Original Note][Original Agreement] 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 Finance Holding Company, 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
KL2 2882246.3

C-2
KL2 2882246.3

Exhibit D
Credit Underwriting
EFFECTIVE 9/1/2014 
DIAMOND RESORTS INTERNATIONAL® 
LOYALTY CREDIT UNDERWRITING/SALES PROGRAM
	
									
	 
	 
	 
	*INTEREST RATE % (BASED ON LOYALTY LEVEL OF PURCHASE)

	FICO TIER
	FICO SCORE
	DOWN PAYMENT
	STANDARD
	WELCOME TO DIAMOND (4K)
	SILVER (15K)
	GOLD (30K)
	PLATINUM (50K)
	TERM            (MONTHS)

	Tier 1
	>800
	 
	 
	 
	 
	 
	 
	 

	Tier 2
	700 - 799
	10% - 19.99%
	17.99
	17.99
	15.99
	13.99
	12.99
	120

	Tier 3
	650 - 699
	20%+
	16.99
	15.99
	13.99
	11.99
	11.99
	120

	Tier 4
	600 - 649
	15% - 19.99%
	17.99
	

17.99
	

15.99
	

13.99
	

12.99
	120

	20%+
	16.99
	15.99
	13.99
	12.99
	12.99
	120

	Tier 5
	575 - 599
	30%
	17.99
	17.99
	17.99
	17.99
	17.99
	120

	Tier 6
	525 - 574
	50%
	17.99
	17.99
	17.99
	17.99
	17.99
	120

	Tier 7
	<525
	100%
	n/a
	n/a
	n/a
	n/a
	n/a
	n/a

D-1
KL2 2882246.3EX-10.10

 Exhibit 10.10 

LOCKHEED MARTIN CORPORATION 

2006 MANAGEMENT INCENTIVE COMPENSATION PLAN 

(Performance-Based) 

Approved January 23, 2014 

Amended and Restated Effective January 1, 2014 

ARTICLE I 
 PURPOSE OF
THE PLAN 
 This Plan is established to provide a further incentive to selected Employees to promote the success of Lockheed Martin Corporation by
providing an opportunity to receive additional compensation for performance measured against individual and business unit goals. The Plan is intended to achieve the following: 
  

	 	1.	Link pay of executives to business and individual performance. 

  

	 	2.	Stimulate employees to work individually and as teams to meet objectives and goals consistent with enhancing shareholder value. 

  

	 	3.	Facilitate the Company’s ability to retain qualified employees and to attract top executive talent. 

  

	 	4.	Establish performance goals within the meaning of Section 162(m) of the Internal Revenue Code. 

ARTICLE II 
 STANDARD OF
CONDUCT AND PERFORMANCE EXPECTATION 
  

	 	1.	It is expected that employees will work towards accomplishing the enterprise, business area and individual goals established under this Plan in accordance with the Company’s Code of Ethics and Business Conduct. It
is a prerequisite to any award that a Participant has acted in accordance with the Code of Ethics and Business Conduct and has fostered an atmosphere to encourage all employees acting under the Participant’s supervision to perform their duties
in accordance with the highest ethical standards. Thus, in evaluating performance against commitments, a Participant’s adherence to the Company’s ethical standards will be considered paramount in determining awards under this Plan.

  

	 	2.	Plan Participants whose individual performance is determined to be unacceptable are not eligible to receive Incentive Compensation awards. 

  
 1 

 ARTICLE III 

DEFINITIONS 
  

	 	1.	ANNUAL SALARY – The annual base salary of a Participant on December 1 of the year preceding the year of payment, but excluding any Incentive Compensation, commissions, over-time payments, retention payments,
equity compensation, indirect payments, retroactive payments not affecting the base salary or applicable to the current year, and any other payments of compensation of any kind. 

 

	 	2.	APPLICABLE PERFORMANCE FACTOR – For any Participant, the result obtained by multiplying the Participant’s Individual Performance Factor, applicable Business Area Performance Factor and the Enterprise
Performance Factor. 

  

	 	3.	BOARD OF DIRECTORS – The Board of Directors of the Company. 

  

	 	4.	BUSINESS AREA PERFORMANCE FACTOR – (a) In the case of a Business Area (with Lockheed Martin International being treated as a Business Area), the performance factor determined for a particular Business Area;
and (b) in the case of Enterprise Operations, the average of all Business Area Performance Factors subject to adjustment as provided under Section C of Exhibit A. 

 

	 	5.	BUSINESS UNIT PERFORMANCE FACTOR – The performance factor assigned to a business unit other than a Business Area or the Company overall. 

 

	 	6.	CODE – The Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder. 

  

	 	7.	COMMITTEE – The Management Development & Compensation Committee of the Board of Directors as from time to time appointed or constituted by the Board of Directors. 

 

	 	8.	COMPANY or CORPORATION – Lockheed Martin Corporation and those subsidiaries of which it owns directly or indirectly 50% or more of the voting stock or other equity. 

 

	 	9.	CORPORATE SALARY BOARD – as defined in CPS-504, the corporate Senior Vice President Human Resources and Communications and the Chief Executive Officer. 

 

	 	10.	DISABILITY – Termination of employment as a result of becoming totally disabled as evidenced by commencement of benefits under the Company’s long-term disability plan in which the Participant is enrolled (or,
if not a participant in a Company-sponsored long-term disability plan, under circumstances which would result in the Participant becoming eligible for benefits using the standards set forth in the Company’s plan). 

 

	 	11.	ELECTED OFFICER – An Employee who has been elected as an officer by the Board of Directors. 

  

	 	12.	ENTERPRISE PERFORMANCE FACTOR – The performance factor assigned with respect to the Company’s overall performance as set forth in Section C of Exhibit A. 

 

	 	13.	 EMPLOYEE – Any person who is employed by the Company and who is paid a salary as distinguished from an hourly wage. The term “Employee”
includes only those individuals that 

  
 2 

	 	
the Company classifies on its payroll records as Employees and does not include consultants, independent contractors, leased employees, co-op students, interns, temporary or casual employees,
individuals paid by a third party or other individuals not classified as an Employee by the Company. Notwithstanding the foregoing, the term “Employee” shall not include any employee who, during any part of such year, was represented by a
collective bargaining agent. 

  

	 	14.	INCENTIVE COMPENSATION – A payment made pursuant to this Plan. 

  

	 	15.	INDIVIDUAL PERFORMANCE FACTORS – The performance factor assigned to a Participant as set forth in Section B of Exhibit A or Section A of Exhibit C, as applicable. 

 

	 	16.	ORGANIZATIONAL PERFORMANCE FACTORS – The Business Area Performance Factor and the Enterprise Performance Factor as set forth in Section C of Exhibit A. 

 

	 	17.	PARTICIPANT – Any Employee selected to participate in the Plan in accordance with its terms. 

  

	 	18.	PLAN – This Lockheed Martin Corporation 2006 Management Incentive Compensation Plan (Performance-Based), as amended from time to time. 

 

	 	19.	PLAN YEAR – A calendar year. 

  

	 	20.	REQUIRED APPROVER – (a) the Committee in the case of the Chief Executive Officer; (ii) the Corporate Salary Board in the case of a vice president (whether appointed or elected); (iii) the relevant
business area Executive Vice President in the case of a director level or lower level Employee working in a business area; or (iv) the Elected Officer serving as the head of a corporate function in the case of all director level or lower level
Employees assigned to that corporate function. 

  

	 	21.	RESTRICTED EMPLOYEE – An Employee who is an Elected Officer. 

  

	 	22.	RETIREMENT – Retirement under the terms of a Company-sponsored pension plan or for Employees who do not participate in a pension plan, termination from employment with the Company following the attainment of age 55
and five years of service or attainment of age 65. 

  

	 	23.	SUBCOMMITTEE – A subcommittee of the Committee, composed solely of two or more outside directors of the Company (within the meaning of Section 162(m) (4) (C)) or the entire Committee if all members of the
Committee are outside directors. 

  

	 	24.	TARGET LEVEL – The target levels assigned to a Participant in accordance with Article V. 

ARTICLE IV 
 ELIGIBILITY
FOR PARTICIPATION 
 Participants are selected each Plan Year based on recommendations by the Required Approver, subject to the approval of the Chief
Executive Officer. Those eligible shall include only those Employees considered by the Committee to be key Employees of the Company. No member of the Committee shall be eligible for participation in the Plan. 

  
 3 

 ARTICLE V 

INCENTIVE COMPENSATION PAYMENTS 
  

	 	1.	CALCULATION OF PAYMENTS – Incentive Compensation payments to Participants shall be calculated in accordance with the formula and procedures set forth in Exhibits A, B and C hereto. All such payments shall be in
cash. 

  

	 	2.	TARGETS – Target Levels will be assigned to Participants based upon target levels for comparable positions at companies in the comparator group (for Elected Officers) or other industry surveys used by the Company
to determine executive compensation (for participants other than Elected Officers). Target Levels will generally be set by reference to the 50th percentile of the market. At the beginning of each
Plan Year or in connection with an internal promotion or an employment offer made later in a Plan Year, the Required Approver, subject to review by the Chief Executive Officer, shall identify the Employees eligible to participate in the Plan for
that Plan Year and designate a Target Level for each Employee so designated. Target Levels for appointed Vice Presidents and other Elected Officers (other than the Chief Executive Officer) must be approved by the Corporate Salary Board, subject to
approval by the Committee in the case of an Elected Officer. The Committee shall review and recommend the Target Level for the Chief Executive Officer, subject to approval by the Board of Directors. 

 

	 	3.	INDIVIDUAL PERFORMANCE FACTORS – Each Employee designated as eligible for participation for a particular Plan Year shall identify key commitments that will serve as individual performance goals for that Plan Year
on or before March 30 of that Plan Year (or within 30 days of designation as a Participant by the Required Approver or assumption of a new position with eligibility for participation in the Plan, whichever is later). As soon as practicable
following the end of the Plan Year, the performance of each Participant will be evaluated in the respective Business Area or corporate functional area against the Participant’s commitments and assigned an Individual Performance Factor as
provided for in Exhibit A or Exhibit C, as applicable, subject to approval by the Chief Executive Officer. The Individual Performance Factors for Elected Officers, other than the Chief Executive Officer, shall be assigned initially by the Chief
Executive Officer, as provided in Exhibit A, subject to approval by the Committee. The Individual Performance Factor for the Chief Executive Officer of Lockheed Martin Corporation shall be recommended by the Committee and approved by the Board of
Directors. The Committee may, at the request of any member of the Committee, review the Individual Performance Factors of any other Participant or groups of Participants. The Committee may make adjustments to any such performance factors as it
considers appropriate. 

  

	 	4.	ORGANIZATIONAL PERFORMANCE FACTORS – The Chief Executive Officer (for the Company overall) and each Business Area Executive Vice President (for each Business Area and business unit for which a Business Unit Factor
is required) shall identify key commitments for the Company overall or the Business Area (or business unit), as the case may be for that Plan Year on or before March 30 of that Plan Year. The commitments may be commitments to financial,
strategic or operational goals. The Chief Executive Officer shall review the Enterprise and Business Area commitments with the Committee. At the end of the Plan Year, the Chief Executive Officer shall evaluate the performance of the Company for
purposes of determining the Enterprise Performance Factor and each Business Area for purposes of determining the applicable Business Area Performance Factor in light of their respective organizational commitments and determine the Enterprise
Performance Factor, the Business Area Performance Factors, and the Business Unit Performance Factors, as provided for in Exhibits A and C, as applicable, subject to the approval of the Committee. 

  
 4 

	 	5.	APPROPRIATIONS TO THE PLAN. 

  

	 	A.	The Committee will recommend to the Board of Directors the amount to be appropriated to the Plan by the Company for distribution to Participants and as computed pursuant to the provisions of this Paragraph 5. To the
extent that the aggregate of all proposed payments of Incentive Compensation to all Participants as determined by the application of the formula set forth in Exhibit A or Exhibit C, as applicable (subject to any adjustments made by the Committee
under Paragraph 3 or 4 above or pursuant to Exhibit B) for a particular Plan Year exceeds the amount determined by the Committee to be available for payment, all proposed payments of Incentive Compensation to Participants shall be reduced on a
pro-rata basis. 

  

	 	B.	The Board of Directors will review the recommendations of the Committee as to the amount to appropriate to the Plan for a particular Plan Year. The Board of Directors may, notwithstanding any provision of the Plan, make
adjustments to any proposed Incentive Compensation payment under the Plan, and subject to any such adjustments, the Board of Directors will appropriate to the Plan the amount as recommended by the Committee for distribution to the Participants;
provided that, the Board of Directors may appropriate an amount which is less than the amount recommended by the Committee to be appropriated to all payments of Incentive Compensation, in which event all proposed payments of Incentive Compensation
to Participants shall be reduced on a pro-rata basis. Prior to the determination of the amount to be appropriated under the Plan for any Plan Year, the Board of Directors may authorize the Corporation to earmark funds or allocate funds to a separate
account or trust, in either case for the purpose of making payments under the Plan. 

  

	 	C.	Before the end of each Plan Year, the Board of Directors may set a minimum aggregate bonus amount that must be used to pay Awards under this Plan attributable to service during the Plan Year to any combination of
Participants who are not Elected Officers of the Company. 

  

	 	6.	METHOD OF PAYMENT – The amount determined for each Participant with respect to each Plan Year shall be paid to such Participant in cash not later than March 15 following the Plan Year or deferred at the
direction of the Committee, but only to the extent permitted under Code Section 409A, until the Participant’s termination of employment. Notwithstanding the foregoing, Participants may also elect to defer payments to the extent provided in
the Lockheed Martin Corporation Deferred Management Incentive Compensation Plan. 

  

	 	7.	RIGHTS OF PARTICIPANTS – All payments are subject to the discretion of the Board of Directors. No Participant shall have any right to require the Board of Directors to make any appropriation to the Plan for any
Plan Year, nor shall any Participant have any vested interest or property right in any share in any amounts which may be appropriated to the Plan. 

  

	 	8.	AUTHORITY TO RECOVER PAYMENTS. The Board of Directors retains the authority to make retroactive adjustments to a payment made under the Plan on or after January 1, 2008 under the following circumstances and such
other circumstances as may be specified by final regulation issued by the Securities and Exchange Commission entitling the Company to recapture or claw back amounts paid pursuant to the Plan: 

  
 5 

	 	i.	If the Board of Directors determines, after consideration of all the facts and circumstances that the Board of Directors in its sole discretion considers relevant, that either (i) the intentional misconduct or
gross negligence of a Restricted Employee, or (ii) the failure of a Restricted Employee to report another person’s intentional misconduct or gross negligence of which the Restricted Employee had knowledge, contributed to the Corporation
having to restate all or a portion of its financial statements filed with the Securities and Exchange Commission, then the Board of Directors may require the Restricted Employee repay to the Corporation the value of any payment under this Plan as
determined by the Board of Directors. 

  

	 	ii.	If the Board of Directors, after consideration of all the facts and circumstances that the Board of Directors in its sole discretion considers relevant, determines that a Restricted Employee either (i) engaged in
fraud, bribery or other illegal act, or (ii) the Restricted Employee’s intentional misconduct or gross negligence (including the failure by the Restricted Employee to report the acts of another person of which the Restricted Employee had
knowledge) contributed to another person’s fraud, bribery or other illegal act, which in either case adversely impacted the Corporation’s financial position or reputation, the Board of Directors may require the Restricted Employee to repay
to the Corporation the value of any payment under this Plan as determined by the Board of Directors. 

 The Board of Directors
may delegate its authority to make determinations under this Section 8 to the Committee. 
 ARTICLE VI 

ADMINISTRATION 
 The Plan shall be
administered under the direction of the Committee. The Committee shall have the right to construe the Plan, to interpret any provision thereof, to make rules and regulations relating to the Plan, and to determine any factual question arising in
connection with the Plan’s operation after such investigation or hearing as the Committee may deem appropriate. Any decision made by the Committee under the provisions of this Article shall be conclusive and binding on all parties concerned.
The Committee may delegate to the officers or employees of the Company the authority to execute and deliver those instruments and documents, to do all acts and things, and to take all other steps deemed necessary, advisable or convenient for the
effective administration of this Plan in accordance with its terms and purpose. The rights and obligations of the Committee under this Article VI shall be assumed by the Subcommittee in the case of Participants subject to Exhibit B. 

  
 6 

 ARTICLE VII 

AMENDMENT OR TERMINATION OF PLAN 
 The
Board of Directors shall have the right to terminate or amend this Plan at any time and to discontinue further appropriations thereto, provided that such termination or amendment shall not be made in a manner that would cause a Participant to
include Incentive Compensation in gross income pursuant to Code Section 409A. 
 ARTICLE VIII 

EFFECTIVE DATE 
 The Plan shall first be
effective with respect to the operations of the Company for the Plan Year beginning January 1, 2006, contingent upon approval of Exhibit B by the Company’s stockholders at its 2006 annual meeting. The Plan was amended by the Management
Development and Compensation Committee on January 23, 2014, effective January 1, 2014. The Plan has been further amended by the Company as of the date indicated below, effective January 1, 2014. 

 

	
	 LOCKHEED MARTIN CORPORATION:

	
	 /s/ John T. Lucas

	By:  John T. Lucas
	Senior Vice President, Human Resources and Communications
	
	 Date: 12/3/14

 

  
 7 

 EXHIBIT A 

CALCULATION OF MANAGEMENT INCENTIVE COMPENSATION PAYMENTS 
  

	A.	AWARD FORMULA 

  

	1.	(a) Incentive Compensation payments will be calculated by multiplying the Participant’s Annual Salary by the applicable Target Level of the Participant (determined in accordance with Article V above), and that
result will then be multiplied by the Applicable Performance Factor which is composed of the Individual Performance Factor (as defined in Section B), the Enterprise Performance Factor (as defined in Section C) and the Business Area Performance
Factor (as defined in Section C). 

 Payments to Participants subject to Exhibit B shall be reduced to the extent required by
Exhibit B. 
 (b) Special Award Formula For Designated Business Units: Notwithstanding the foregoing, the Salary Board may designate a
business unit for which Incentive Compensation will be determined solely on the basis of an Individual Performance Factor and a Business Unit Performance Factor so long as no Elected Officer is an employee of that business unit. Incentive
Compensation payments for Participants who are Employees of a designated business unit will be calculated using the performance factors set forth in Exhibit C, and not in Sections B and C of this Exhibit A. 

(c) The maximum amount that may be authorized for any Participant under this Plan is 200% of a Participant’s Target Level and payments
will be reduced on a Participant-by-Participant basis if necessary so that no Participant receives (or is authorized) more than 200% of a Participant’s Target Level. 
  

	2.	Pro-rated awards for Participants who terminate employment during a Plan Year may be recommended for consideration based on the following: 

 

			
	 Termination Method
	  	 Incentive Compensation Award

		
	 Voluntary
	  	May be considered for a pro-rated award if on active status December 1 of the Plan Year with a minimum of six (6) full months as an active Plan Participant during the Plan
Year.
		
	 Lay Off
	  	May be pro-rated based on the conditions of the case at the discretion of the Required Approver if the Participant has a minimum of six (6) full months as an active Plan Participant
during the Plan Year.
		
	 Retirement/Disability/Death
	  	May be considered for a pro-rated award in the event the Participant has (i) a minimum of six (6) full months as an active Participant during the Plan Year; and (ii) the
Participant terminates employment with the Company on account of Retirement, Disability, or death.

  
 i 

	3.	Pro-rated awards may be recommended for 

  

	 	i.	Employees who become Participants subsequent to the beginning of a Plan Year, and have a minimum of six (6) full months as active Participants during the Plan Year; 

 

	 	ii.	Employees who are on unpaid leave of absence for more than three (3) months and have a minimum of six (6) full months as an active Participant during the Plan Year; or 

 

	 	iii.	Employees who are scheduled to work less than full time (less than forty (40) hours per week) and have a minimum of six (6) full-time equivalent months as an active Participant during the Plan Year.

  

	4.	Recommended awards for Participants whose Target Levels change during the Plan Year 

  

	 	i.	may be pro-rated (based on number of months at old versus new Target Level), subject to the Required Approver 

 

	 	ii.	may be effective for the entire year based on the new Target Level if the new Target Level is approved prior to March 30 of the Plan Year; or 

 

	 	iii.	may be effective for the entire year based on the new Target Level if full-Plan Year application is approved by the Committee. 

  

	5.	Any calculation of Incentive Compensation under this Exhibit A (and, if applicable, Exhibit C) shall be subject to the provisions of the Plan and Exhibit B. Deviations from this Exhibit A (and, if applicable, Exhibit C)
are subject to approval by the Required Approver and the Corporate Salary Board. In the event of any conflict between the terms or application of this Exhibit A (and, if applicable, Exhibit C) and the Plan, the Plan shall prevail. In the event of
any conflict between the terms of Exhibit A and Exhibit B, Exhibit B shall prevail. 

  

	B.	INDIVIDUAL PERFORMANCE FACTORS 

 Individual performance factors are normally in
increments of 0.05 for ratings above 0.50 and will have the following definitions beginning with the 2013 Plan Year: 
  

			
	 Factor
	  	 Performance Definition

	1.15 – 1.25	  	Significantly exceeded all or majority of commitments and met or exceeded all behavioral expectations
	1.00 – 1.15	  	Exceeded all or majority of commitments and met or exceeded all behavioral expectations
	0.75 – 1.00	  	Achieved all or majority of commitments and met all or majority of behavioral expectations
	0.50 – 0.75, 0.00	  	Did not achieve majority of commitments and/or did not meet majority of behavioral expectations

  
 ii 

	C.	ORGANIZATIONAL PERFORMANCE FACTORS 

 The Organizational Performance Factors will depend
on the assessment of the performance of the Company overall and each Business Area in accomplishing the strategic, operational or financial commitments identified at the beginning of the Plan Year. Assessments of and weightings among organizational
performance commitments will be determined by the Committee. 
 Intermediate organizational ratings, as recommended by the Chief Executive
Officer and approved by the Committee for results achieved, may be assigned normally in increments of 0.05 for ratings above 0.50. 
  

	 	(a)	Enterprise Performance Factor 

  

			
	 Factor
	  	 Performance Definition

	 1.20 – 1.30
	  	Results significantly exceeded all requirements and expectations
	 1.05 – 1.15
	  	Results exceeded some requirements and expectations
	 1.00
	  	Results achieved requirements and expectations
	 0.50 – 0.95
	  	Results partially achieved some requirements and expectations
	 0.00
	  	Results did not achieve requirements and expectations

  

	 	(b)	Business Area Performance Factor: 

  

			
	 Factor
	  	 Performance Definition

	 1.20 – 1.25
	  	Results significantly exceeded all requirements and expectations
	 1.05 – 1.15
	  	Results exceeded some requirements and expectations
	 1.00
	  	Results achieved requirements and expectations
	 0.50 – 0.95
	  	Results partially achieved some requirements and expectations
	 0.00
	  	Results did not achieve requirements and expectations

 The Business Area Performance Factor for employees of Enterprise Operations shall be the average of the
Business Area Performance Factors determined for the Business Areas. The Compensation Committee may recommend an increase or decrease of 0.05 for an activity which is the responsibility of Enterprise Operations that the Committee determines has an
enterprise-wide impact. 

  
 iii 

 EXHIBIT B 

PERFORMANCE BASED AWARDS 
  

	A.	INCENTIVE COMPENSATION FOR ELECTED OFFICERS. 

 Notwithstanding any provision of the Plan
to the contrary, Incentive Compensation awards made to Elected Officers shall be subject to the terms of this Exhibit B. The terms of Exhibit B were approved by the stockholders of Lockheed Martin Corporation at its 2006 Annual Meeting. 

 

	B.	IDENTIFICATION OF THE ELECTED OFFICERS. 

 The eligible class of Participants subject to
Exhibit B is those Participants who are Elected Officers on the last day of the Plan Year. 
  

	C.	LIMITATION OF INCENTIVE COMPENSATION. 

 Notwithstanding any other provision of this Plan
to the contrary, the Incentive Compensation payable under the Plan to (i) the Elected Officer who is the Chief Executive Officer shall not exceed 0.3% of Cash Flow for the Plan Year; and (ii) each of the Participants who are Elected
Officers on the last day of the Plan Year, other than the Chief Executive Officer, shall not exceed 0.2% of Cash Flow for the Plan Year. The Subcommittee shall have discretion to determine the conditions, restrictions or other limitations, in
accordance with and subject to the terms of this Plan and Code Section 162(m), on the payment of Incentive Compensation to the Elected Officers. The Subcommittee may reserve the right to reduce the amount payable under this paragraph C in
accordance with any standards contained in this Plan (including Exhibit A) or on any other basis (including the Subcommittee’s discretion). Neither the Subcommittee or the Committee, nor the Board of Directors shall have the authority under
this Plan to increase the amount payable under this paragraph C. 
  

	D.	SUBCOMMITTEE CERTIFICATION. 

 Before authorizing any Incentive Compensation payment under
this Plan to a Participant who is an Elected Officer, the Subcommittee must certify in writing (by resolution or otherwise) that the payments are consistent with paragraph C of this Exhibit B and that any other material terms under this Plan for
payment of a bonus were satisfied. 
  

	E.	DEFINITIONS. 

 For purposes of this Exhibit B, 

(i) “Cash Flow” means net cash flow from operations as determined by the Subcommittee at the end of the Plan Year in accordance with
generally accepted accounting principles in the United States. Cash Flow shall be determined by the Subcommittee based upon the comparable numbers reported on the Corporation’s audited consolidated financial statements or, if audited financial
statements are not available for the period for which Cash Flow is being determined, the Subcommittee shall determine Cash Flow in a manner consistent with the historical practices used by the Corporation in determining net cash provided by
operating activities as reported in its audited consolidated statement of cash flows. The Subcommittee shall have the right to specify any other adjustment that should be applied in determining Cash Flow that it deems necessary or appropriate to
take into account any event recognized under any 

  
 i 

 
accounting policy or practice affecting the Corporation, provided the Subcommittee specifies the adjustment at or prior to the time the organizational performance goals for the Corporation are
reviewed with the Subcommittee, but in no event later than March 30 of the Plan Year; 
 (ii) “Subcommittee” means a
subcommittee of the Committee, composed solely of two or more outside directors of the Company (within the meaning of Code Section 162(m) (4) (C)) or the entire Committee if all members of the Committee are outside directors. 

 

	F.	ADMINISTRATION. 

 The provisions of Exhibit B shall be interpreted and administered by
the Subcommittee in a manner consistent with the requirements for “performance-based compensation” under Code Section 162(m). 

  
 ii 

 EXHIBIT C 

PERFORMANCE FACTORS FOR DESIGNATED BUSINESS UNITS 

Incentive Compensation payments for Participants who are Employees of Sandia Corporation or similar designated business unit will be determined on the basis
of an Individual Performance Factor and a Business Unit Performance Factor as set forth in this Exhibit C. 
  

	A.	INDIVIDUAL PERFORMANCE FACTORS 

 Individual performance factors are normally in increments of
0.05 for ratings above 0.50 and will have the following definitions beginning with the 2014 Plan Year: 
  

			
	 Factor
	  	 Performance Definition

	 1.20 – 1.30
	  	Performance significantly exceeded expectations, objectives and the contributions of his/her peers.
	 1.00 – 1.20
	  	Performance exceeded expectations, objectives and the contributions of his/her peers
	 0.75 – 1.00
	  	Performance met (and/or sometimes exceeded) expectations and objectives, and the impact of his/her achievements was comparable to that of peers.
	 0.00

or

0.50 – 0.75
	  	Performance met, or partially met, expectations and objectives, but the impact of his/her achievements resulted in a contribution less than that of most peers.

  

	B.	BUSINESS UNIT PERFORMANCE FACTOR 

 The Business Unit Performance Factor will depend on the
assessment of the performance of the business unit in accomplishing its annual business objectives. Assessment of business unit performance will be determined by the Committee. 

Intermediate business unit performance ratings, as recommended by the Chief Executive Officer and approved by the Committee for results
achieved, may be assigned normally in increments of 0.05 for ratings above 0.50. 
  

			
	 Factor
	  	 Performance Definition

	 1.25 – 1.50
	  	Results significantly exceeded all objectives and expectations
	 1.05 – 1.20
	  	Results exceeded most objectives and expectations
	 1.00
	  	Results achieved objectives and expectations
	 0.50 – 0.95
	  	Results partially achieved objectives and expectations
	 0.00
	  	Results did not achieve any objectives and expectations

  
 i

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