PURCHASE AGREEMENT
Exhibit 10.11
This PURCHASE AGREEMENT (this “Agreement”), dated as of April 30, 2010, is by and among
Diamond Resorts Finance Holding Company, a Delaware corporation (“DRFHC”) and DRI Quorum 2010 LLC,
a Delaware limited liability company (the “Seller”), and their respective permitted successors and
assigns.
W I T N E S S E T H:
WHEREAS, from time to time after the date hereof, DRFHC intends to sell and the Seller intends
to purchase Timeshare Loans from DRFHC (the “DRFHC Timeshare Loans”); and
WHEREAS, DRFHC may, and in certain circumstances will be required to, provide Qualified
Substitute DRFHC Timeshare Loans for DRFHC Timeshare Loans previously sold to the Seller
hereunder;
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 that certain Loan Sale and Servicing Agreement dated as of
the date hereof by and among Seller, Quorum Federal Credit Union, as buyer (“Buyer”), Diamond
Resorts Finance Services, Inc., as servicer and Xxxxx Fargo Bank, National Association, as
custodian and back-up servicer (as the same may be amended from time to time, the “Sale
Agreement”).
SECTION 2. Acquisition of Timeshare Loans.
(a) Initial Timeshare Loans. In return for the Timeshare Loan Acquisition
Price for each Timeshare Loan to be sold by DRFHC on each Sale Date, DRFHC does hereby
sell, transfer, assign and grant to the Seller, without recourse (except as provided in
Section 6 and Section 8 hereof), any and all of DRFHC’s right, title and interest in and to
(i) each Timeshare Loan listed on each applicable Sale Note (the “Initial DRFHC Timeshare
Loans”), (ii) the Receivables in respect of the Initial DRFHC Timeshare Loans due on and
after the Initial Cut-Off Date, (iii) the related Timeshare Loan Files, (iv) all Related
Security in respect of the Initial DRFHC Timeshare Loans, and (v) all income, payments,
proceeds and other benefits and rights related to any of the foregoing (the property
described in the foregoing clauses (i) through (v) being referred to as the
“Initial Conveyed DRFHC Timeshare Property”). Upon such sale, the ownership of each Initial
DRFHC Timeshare Loan and all collections allocable to principal and interest thereon since
the Initial 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 Seller, its successors
and assigns. DRFHC shall not take any action inconsistent with such ownership nor claim any
ownership interest in any Initial
| DRFHC Timeshare Loan for any purpose whatsoever other than for consolidated financial and federal and state income tax reporting. |
(b) Qualified Substitute Timeshare Loans. On each related Transfer Date, DRFHC
does hereby transfer, assign, sell and grant to the Seller, without recourse (except as
provided in Section 6 and Section 8 hereof), any and all of DRFHC’s right, title and
interest in and to (i) each Qualified Substitute Timeshare Loan conveyed by DRFHC to the
Seller on such Transfer Date (the “Qualified Substitute DRFHC Timeshare Loans” and together
with the DRFHC Timeshare Loans, the “DRFHC Timeshare Loans”), (ii) the Receivables in
respect of the Qualified Substitute DRFHC Timeshare Loans due on and after the related
Transfer Cut-Off Date, (iii) the related Timeshare Loan Files, (iv) all Related Security in
respect of such Qualified Substitute DRFHC Timeshare Loans and (v) all income, payments,
proceeds and other benefits and rights related to any of the foregoing (the property
described in the foregoing clauses (i) through (v) being referred to as the
“Substitute Conveyed DRFHC Timeshare Property”, together with the Initial Conveyed DRFHC
Timeshare Property, the “Conveyed DRFHC Timeshare Property”). Upon such sale, the ownership
of each Qualified Substitute DRFHC Timeshare Loan and all collections allocable to principal
and interest thereon since the related Transfer Cut-Off Date and all other property
interests or rights conveyed pursuant to and referenced in this Section 2(b) shall
immediately vest in the Seller, its successors and assigns. DRFHC shall not take any action
inconsistent with such ownership nor claim any ownership interest in any Qualified
Substitute DRFHC Timeshare Loan for any purpose whatsoever other than consolidated financial
and federal and state income tax reporting. DRFHC agrees that such Qualified Substitute
DRFHC Timeshare Loans shall be subject to the provisions of this Agreement.
(c) Delivery of Timeshare Loan Files. In connection with the sale, transfer,
assignment and conveyance of any DRFHC Timeshare Loans hereunder, the Seller hereby directs
DRFHC and DRFHC hereby agrees to deliver or cause to be delivered to the Custodian all
related Timeshare Loan Files and to the Servicer all related Timeshare Loan Servicing
Files.
(d) Collections. DRFHC shall deposit or cause to be deposited all collections
that are received by it in respect of the DRFHC Timeshare Loans conveyed hereunder on and
after the related Cut-Off Date in the Collection Account.
(e) Limitation of Liability. Neither the Seller nor any subsequent assignee of
the Seller shall have any obligation or liability with respect to any DRFHC Timeshare Loan
nor shall the Seller or any subsequent assignee have any liability to any Obligor in
respect of any DRFHC Timeshare Loan. No such obligation or liability is intended to be
assumed by the Seller 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 DRFHC Timeshare Loans to be made pursuant to the terms
hereof shall constitute a sale by DRFHC to the Seller and not a loan
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secured by such DRFHC 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) DRFHC shall be deemed to have Granted to the Seller as of
the date hereof a first priority perfected security interest in all of DRFHC’s right, title and
interest in, to and under the Conveyed DRFHC Timeshare Property 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 DRFHC as “debtor” and the Seller 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
Seller of DRFHC’s entire right, title and interest in and to the Conveyed DRFHC Timeshare
Property.
SECTION 4. Conditions Precedent to Acquisition of Timeshare Loans. The obligations of
the Seller to purchase any DRFHC Timeshare Loans hereunder shall be subject to the satisfaction of
the following conditions:
(a) All representations and warranties of DRFHC contained in Section 5 hereof and all
information provided in the schedule of DRFHC Timeshare Loans attached shall be true and
correct as of the applicable Sale Date, and DRFHC shall have delivered to the Seller an
Officer’s Certificate to such effect.
(b) With respect to each Transfer Date, all representations and warranties of DRFHC
contained in Section 5(a) hereof shall be true and correct on the related Transfer Date, as
if made on such date, and all representations and warranties as to the DRFHC Timeshare
Loans contained in Section 5(b) hereof and all information provided in the schedule of
DRFHC Timeshare Loans attached hereto as Exhibit A in respect of the DRFHC
Timeshare Loans (including the Qualified Substitute DRFHC Timeshare Loans conveyed on such
Substitution Date) shall be true and correct on the related Transfer Date.
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(c) On or prior to any Sale Date or a Substitution Date, DRFHC 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 DRFHC Timeshare Loans to the Custodian, the Servicer, the Seller and the Buyer.
(d) DRFHC shall have delivered or caused to be delivered all other information
theretofore required or reasonably requested by the Seller to be delivered by DRFHC or
performed or caused to be performed all other obligations required to be performed as of
any Sale Date or Substitution Date, as the case may be, including all filings, recordings
and/or registrations as may be necessary in the opinion of the Seller to establish and
preserve the right, title and interest of the Seller in the related DRFHC Timeshare Loans.
Each transfer, assignment, sale and grant made on a Substitution Date shall be evidenced by
a subsequent transfer certificate in the form of Exhibit B hereto.
(e) Each DRFHC Timeshare Loan conveyed on a Substitution Date shall satisfy each of
the criteria specified in the definition of “Qualified Substitute Timeshare Loan” and each
of the conditions herein and in the Sale Agreement for substitution of Timeshare Loans
shall have been satisfied.
(f) DRFHC shall have delivered such other certificates and opinions as shall be
reasonably requested by the Seller or its assignee.
SECTION 5. Representations and Warranties and Certain Covenants of
DRFHC.
(a) DRFHC represents and warrants to the Seller, as of any Sale Date (with respect to
the Initial DRFHC Timeshare Loans and the execution of this Agreement) and on each Transfer
Date (with respect to the Qualified Substitute DRFHC Timeshare Loans transferred on such
Transfer Date) as follows:
(i) Due Incorporation; Valid Existence; Good Standing. DRFHC is a
corporation duly organized and validly existing in good standing under the laws of
the jurisdiction of its formation; and is duly qualified to do business as a
foreign corporation 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 DRFHC 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 DRFHC Timeshare Property.
(ii) Possession of Licenses, Certificates, Franchises and Permits.
DRFHC holds, and at all times during the term of this Agreement will hold, all
material licenses, certificates, franchises and permits from all
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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 DRFHC Timeshare Property.
(iii) Corporate Authority and Power. DRFHC 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. DRFHC has all requisite corporate power and authority to acquire, own, transfer and
convey the Conveyed DRFHC Timeshare Property to the Seller.
(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 DRFHC have been duly authorized, executed and delivered by DRFHC and, assuming the
due execution and delivery by, the other party or parties hereto and thereto, constitute legal,
valid and binding agreements enforceable against DRFHC 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 DRFHC 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 DRFHC’s interest in the Conveyed DRFHC Timeshare
Property to the Seller or the valid creation of a first priority perfected security interest in
the Conveyed DRFHC Timeshare Property in favor of the Seller.
(v) No Violation of Law, Rule, Regulation, etc. The execution, delivery and
performance by DRFHC of this Agreement and any other Transaction Document to which DRFHC is a
party do not and will not (A) violate any of the provisions of the articles of incorporation or
the bylaws of DRFHC, (B) violate any provision of any law, governmental rule or regulation
currently in effect applicable to DRFHC or its properties or by which DRFHC 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 DRFHC or its properties or by which DRFHC 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 DRFHC is a party or by
which it is bound or (E) result in the creation or imposition of any Lien upon any of its
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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 DRFHC is required
which has not been obtained in connection with the authorization, execution, delivery or
performance by DRFHC 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 DRFHC Timeshare Property and the creation of the security
interest of the Seller therein pursuant to Section 3 hereof.
(vii) Defaults. DRFHC is not in default under any material agreement, contract,
instrument or indenture to which DRFHC 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 DRFHC, 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 Adverse Change. Except for such matters, if any, as are disclosed in the
Sale Agreement, since the end of its most recent, audited fiscal year, there has been no change in
the business, operations, financial condition, properties or assets of DRFHC which would have a
material adverse effect on its ability to perform its obligations under this Agreement or any
other Transaction Document to which it is a party or materially adversely affect the transactions
contemplated under this Agreement or any such other Transaction Documents.
(ix) Insolvency. DRFHC will be solvent at all relevant times prior to, and will not
be rendered insolvent by, the transfer of the Conveyed DRFHC Timeshare Property hereunder. On the
Closing Date or a Substitution Date, as applicable, DRFHC will not engage in any business or
transaction for which any property remaining with DRFHC would constitute an unreasonably small
amount of capital.
(x) Pending Litigation or Other Proceedings. There is no pending or, to the best of
DRFHC’s knowledge, threatened action, suit, proceeding or investigation before any court,
administrative agency, arbitrator or governmental body against or affecting DRFHC which, if
decided adversely, would materially and adversely affect (i) the condition (financial or
otherwise), business or operations of DRFHC, (ii) the ability of DRFHC to perform its obligations
under, or the validity or enforceability of, this Agreement or any other Transaction Document to
which it is a party, (iii) any of the Conveyed DRFHC
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Timeshare Property or title of DRFHC to any Conveyed DRFHC Timeshare Property, or (iv) the
Seller’s ability to foreclose or otherwise enforce its rights with respect to any of the Conveyed
DRFHC Timeshare Property, including without limitation the right to revoke or otherwise terminate
Points Purchase Contracts and the rights of the Obligors to use and occupy the related
Points-Based Property.
(xi) Information. No document, certificate or report furnished or required to be
furnished by or on behalf of DRFHC pursuant to this Agreement, in its capacity as 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 DRFHC 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 DRFHC, or which
may impair the ability of DRFHC 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 Seller by or on behalf of DRFHC pursuant
hereto or thereto specifically for use in connection with the transactions contemplated hereby or
thereby.
(xii) Foreign Tax Liability. DRFHC is not aware of any Obligor under a DRFHC
Timeshare Loan who has withheld any portion of payments due under such DRFHC Timeshare Loan
because of the requirements of a foreign taxing authority, and no foreign taxing authority has
contacted DRFHC concerning a withholding or other foreign tax liability.
(xiii) Employee Benefit Plan Liability. As of any Sale Date and each Transfer Date,
as applicable, (i) no “accumulated funding deficiency” (as such term is defined under ERISA and
the Code), whether or not waived, exists with respect to any “employee pension benefit plan” (as
such term is defined under ERISA) sponsored, maintained or contributed to by DRFHC or any of its
Affiliates with respect to any plan year beginning prior to January 1, 2009, and, to DRFHC’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, 2009; (ii) no unpaid
“minimum required contribution” (as such term is defined under ERISA and the Code), whether or not
such funding deficiency is waived, exists with respect to any employee pension benefit plan
sponsored, maintained or contributed to by DRFHC or any of its Affiliates with respect to any plan
year beginning after December 31, 2008, and, to DRFHC’s knowledge, no event has occurred or
circumstance exists that may result in an unpaid minimum required contribution as of the last day
of any plan year beginning after December 31, 2008 of any such plan; (iii) DRFHC and each of its
Affiliates has made all contributions required under each Multiemployer Plan; and (iv) neither
DRFHC nor any of its Affiliates has withdrawn from any Multiemployer Plan with respect to which
there is any outstanding liability and, to
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DRFHC’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 Multiemployer Plan that could result in any liability to DRFHC.
(xiv) Taxes. DRFHC 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 DRFHC 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 Seller. DRFHC knows of no basis for any material additional tax
assessment for any fiscal year for which adequate reserves have not been established. DRFHC
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
DRFHC keeps its records concerning the DRFHC Timeshare Loans will be 00000 Xxxx Xxxxxxxxxx
Xxxxxxxxx, Xxx Xxxxx, Xxxxxx 00000 (or such other place specified by DRFHC by written
notice to the Seller). The principal place of business and chief executive office of DRFHC
is located at 00000 Xxxx Xxxxxxxxxx Xxxxxxxxx, Xxx Xxxxx, Xxxxxx 00000 (or such other
place specified by DRFHC by written notice to the Seller).
(xvi) Securities Laws. DRFHC 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
DRFHC Timeshare Loans will be used by DRFHC 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 DRFHC. One hundred percent (100%) of the outstanding
capital stock of DRFHC 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
capital stock from DRFHC.
(b) DRFHC hereby: (i) represents and warrants that immediately prior to the transfer of any
DRFHC Timeshare Loan to the Seller, DRFHC had full legal and equitable title to such DRFHC
Timeshare Loan, free and clear of any liens and encumbrances, and (ii) makes the representations
and warranties contained in Schedule I to the Sale Agreement with respect to each DRFHC
Timeshare Loan, and the representations and warranties contained in Schedule II to the
Sale Agreement with respect to the Resorts, such representations and warranties in both
clauses (i) and (ii) for the benefit of the Seller with respect to each DRFHC Timeshare
Loan and the Resorts as of any Sale Date (with respect to the Initial DRFHC Timeshare Loans) and
each Transfer Date (with respect to the Qualified Substitute DRFHC Timeshare Loans), as
applicable.
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(c) It is understood and agreed that the representations and warranties set forth in this
Section 5 shall survive the sale of any Conveyed DRFHC Timeshare Property to the Seller and shall
continue (i) so long as any such DRFHC Timeshare Loan shall remain outstanding or (ii) until such
time as such DRFHC Timeshare Loan is repurchased or a Qualified Substitute DRFHC Timeshare Loan is
provided pursuant to Section 6 hereof. DRFHC acknowledges that it has been advised that the Seller
intends to assign all of its right, title and interest in and to the Conveyed DRFHC Timeshare
Property and its rights and remedies under this Agreement to the Buyer. DRFHC agrees that, upon
any such assignment, the Buyer may enforce directly, without joinder of the Seller (but subject to
any defense that DRFHC 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 DRFHC’s knowledge, if it is discovered that any representation and
warranty is inaccurate and such inaccuracy materially and adversely affects the value of a DRFHC
Timeshare Loan or the interests of the Seller or any assignee thereof, then notwithstanding DRFHC’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 Repurchases and Substitutions for Breaches of Representations and
Warranties. Upon the receipt of notice by DRFHC 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 DRFHC Timeshare Loan or the interests of the Seller or any subsequent assignee of the Seller
(including the Indenture Trustee for the benefit of the Noteholders) therein, DRFHC shall within
60 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 DRFHC
Timeshare Loan at the Repurchase Price, or (ii) substitute one or more Qualified Substitute DRFHC
Timeshare Loans for such DRFHC Timeshare Loan and pay the related Substitution Shortfall Amount,
if any.
(b) [Reserved].
(c) [Reserved].
(d) Payment of Repurchase Prices and Substitution Shortfall Amounts. The Seller
hereby directs and DRFHC 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 DRFHC Timeshare Loan is substituted pursuant to Sections 6(a) or (b)
hereof on any Transfer Date, the Substitution Shortfall Amounts and the Loan Balances of Qualified
Substitute DRFHC Timeshare Loans shall be calculated on an aggregate basis for all substitutions
made on such Transfer Date.
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(e) Schedule of Timeshare Loans. The Seller hereby directs, and DRFHC hereby
agrees, on each date on which a DRFHC Timeshare Loan has been repurchased or substituted,
to provide the Seller with a revised Schedule of DRFHC Timeshare Loans reflecting the
removal of such DRFHC Timeshare Loans and subjecting any Qualified Substitute DRFHC
Timeshare Loans to the provisions of this Agreement.
(f) Officer’s Certificate. DRFHC shall, on each Transfer Date, certify in
writing to the Seller that each new DRFHC 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 DRFHC Timeshare Loans have been delivered to the Custodian and
(ii) the Timeshare Loan Servicing Files for such Qualified Substitute DRFHC Timeshare Loans
have been delivered to the Servicer.
(g) Release. In connection with any repurchase or substitution of one or more
DRFHC Timeshare Loans contemplated by this Section 6, upon satisfaction of the conditions
contained in this Section 6, the Seller shall execute and deliver such releases and
instruments of transfer or assignment presented to it by DRFHC, in each case without
recourse, as shall be necessary to vest in DRFHC the legal and beneficial ownership of such
DRFHC Timeshare Loans; provided, however, that with respect to any release of a
DRFHC Timeshare Loan that is substituted by a Qualified Substitute DRFHC Timeshare Loan,
the Seller shall not execute and deliver or cause the execution and delivery of such
releases and instruments of transfer or assignment until the Servicer has received a Trust
Receipt for such Qualified Substitute DRFHC Timeshare Loan. The Seller shall cause the
Custodian to release the related Timeshare Loan Files to DRFHC or its designee and the
Servicer to release the related Timeshare Loan Servicing Files to DRFHC or its designee;
provided, however, that with respect to any Timeshare Loan File or Timeshare Loan
Servicing File related to a DRFHC Timeshare Loan that has been substituted by a Qualified
Substitute DRFHC Timeshare Loan, the Seller shall not cause the Custodian and the Servicer
to release the related Timeshare Loan File and the Timeshare Loan Servicing File,
respectively, until the Servicer has received a Trust Receipt for such Qualified Substitute
DRFHC Timeshare Loan.
(h) Sole Remedy. It is understood and agreed that the obligations of DRFHC to
repurchase or substitute DRFHC Timeshare Loans contained in Section 6(a) hereof and the
obligation of DRFHC 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 DRFHC. DRFHC hereby covenants and agrees with
the Seller as follows:
(a) DRFHC shall comply in all material respects with all applicable laws, rules,
regulations and orders applicable to it and its business and properties.
(b) DRFHC 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.
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(c) On or prior to any Sale Date or a Transfer Date, as applicable, DRFHC shall indicate in
its computer files and other records that each DRFHC Timeshare Loan has been sold to the Seller.
(d) DRFHC shall respond to any inquiries with respect to ownership of a DRFHC Timeshare Loan
by stating that such DRFHC Timeshare Loan has been sold to the Seller and that the Seller is the
owner of such DRFHC Timeshare Loan.
(e) On or prior to any Sale Date or a Substitution Date, as applicable, DRFHC shall file or
cause to be filed, at its own expense, financing statements in favor of the Seller with respect to
the Conveyed DRFHC 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
DRFHC Timeshare Property by the Seller from DRFHC, and shall deliver file-stamped copies of such
financing statements to the Seller.
(f) DRFHC 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 Seller may reasonably request, to perfect, protect or more fully evidence the sale of the
DRFHC Timeshare Loans, or to enable the Seller to exercise and enforce its rights and remedies
hereunder or under any DRFHC Timeshare Loan including but not limited to powers of attorney,
Uniform Commercial Code financing statements and assignments. DRFHC hereby appoints the Seller as
attorney-in-fact, which appointment is coupled with an interest and is therefore irrevocable, to
act on behalf and in the name of DRFHC to enforce obligations of DRFHC hereunder.
(g) Any change in the legal name of DRFHC and any use by it of any trade name, fictitious
name, assumed name or “doing business as” name occurring after the date hereof shall be promptly
disclosed to the Seller in writing.
(h) Upon the discovery or receipt of notice of a breach of any of its representations or
warranties and covenants contained herein, DRFHC shall promptly disclose to the Seller, in
reasonable detail, the nature of such breach.
(i) DRFHC shall immediately transfer to the Seller or its assignee, as applicable, any
payment it receives in respect of the Conveyed DRFHC Timeshare Property.
(j) In the event that DRFHC or the Seller or any assignee of the Seller should receive actual
notice of any transfer taxes arising out of the transfer, assignment and conveyance of any
Conveyed DRFHC Timeshare Property, on written demand by the Seller, or upon DRFHC otherwise being
given notice thereof, DRFHC shall pay, and otherwise indemnify and hold the Seller and any of its
assignees harmless, on an after-tax basis, from and against any and all such transfer taxes.
(k) DRFHC 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
11
| 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 DRFHC Timeshare Property or the ability of DRFHC to perform its obligations under this Agreement and any of the Transaction Documents to which it is a party. |
(l) DRFHC 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 DRFHC listed herein or,
upon 30 days’ prior written notice to the Seller, at any other location in jurisdictions where all
actions reasonably requested by the Seller or the Buyer to protect and perfect the interest in the
Obligor Notes and Purchase Contracts under the applicable Uniform Commercial Code have been taken
and completed within 10 days of such notice. DRFHC also will maintain and implement administrative
and operating procedures (including, without limitation, an ability to recreate records evidencing
the Obligor Notes and Purchase Contracts in the event of the destruction of the originals thereof),
and keep and maintain all documents, books, records and other information reasonably necessary or
advisable for the collection of all Obligor Notes (including, without limitation, records adequate
to permit the daily identification of each Obligor Note and Purchase Contract) and all payments
made with regard to the related Conveyed DRFHC Timeshare Property prior to and on the Closing Date
and each Substitution Date.
(m) DRFHC shall execute and file such continuation statements and any other documents
reasonably requested by the Seller or which may be required by law to preserve and protect the
interest of the Seller hereunder in and to the Conveyed DRFHC Timeshare Property.
(n) DRFHC 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 Seller may reasonably request, to perfect, protect or more fully evidence the Conveyed DRFHC
Timeshare Property, or to enable the Seller to exercise and enforce its rights and remedies
hereunder or under any of the other Transaction Documents to which it is a party. DRFHC 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 or Purchase Contract, and
the Seller agrees that such Lost Note Affidavit shall be sufficient to satisfy DRFHC’s obligations
hereunder.
(o) DRFHC authorizes the Seller to file continuation statements, and amendments thereto,
relating to the Conveyed DRFHC Timeshare Property and all payments made with regard to the related
Conveyed DRFHC Timeshare Property without the signature of DRFHC where permitted by law. A
photocopy or other reproduction of this Agreement shall be sufficient as a financing statement
where permitted by law. The Seller 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.
SECTION 8. Indemnification.
12
(a) DRFHC agrees to indemnify the Seller (the “Indemnified Party”) against (x) any and
all claims, losses, liabilities, (including legal fees and related costs) that the
Indemnified Party may sustain directly or indirectly related to any inaccuracy or breach of
the representations and warranties of DRFHC under Section 5 hereof and (y) a failure by
DRFHC 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 the Indemnified Party; (ii) any recourse for
any uncollectible DRFHC Timeshare Loan not related to a breach of representation or
warranty; (iii) recourse to DRFHC for a Defaulted Timeshare Loan sold by DRFHC hereunder so
long as the same is replaced or repurchased pursuant to Section 6 hereof; (iv) Indemnified
Amounts attributable to any violation by an Indemnified Party of any requirement of law
related to the Indemnified Party; or (v) the operation or administration of the Indemnified
Party generally and not related to this Agreement. DRFHC shall (x) promptly notify the
Seller if a claim is made by a third party with respect to this Agreement or the DRFHC
Timeshare Loans, and relating to (i) the failure by DRFHC to perform its duties in
accordance with the terms of this Agreement or (ii) a breach of DRFHC’s representations,
covenants and warranties contained in this Agreement, and (y) assume (with the consent of
the 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 Indemnified Party in respect of such claim. If DRFHC 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 DRFHC.
(b) The obligations of DRFHC under this Section 8 to indemnify the Indemnified Party
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. DRFHC hereby agrees that it will not, directly or
indirectly, institute, or cause to be instituted, or join any Person in instituting, against the
Seller 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.
SECTION 11. No Waiver; Remedies. No failure on the part of DRFHC, the Seller 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
13
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 DRFHC, the Seller 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. DRFHC may not assign any of its rights and obligations hereunder or any
interest herein without the prior written consent of the Seller and any of its assignees. The
Seller may, and intends to, assign all of its rights hereunder to the Issuer and DRFHC 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 DRFHC 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 Seller.
SECTION 13. Amendments; Consents and Waivers. No modification, amendment or waiver
of, or with respect to, any provision of this Agreement, and all other agreements, instruments and
documents delivered thereto, nor consent to any departure by DRFHC 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. 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 DRFHC in any case shall, in itself, entitle it
to any other consent or further notice or demand in similar or other circumstances. DRFHC
acknowledges that in connection with the intended assignment by the Seller of all of its right,
title and interest in and to the Conveyed DRFHC Timeshare Property to the Issuer, the Issuer
intends to issue the Notes, the proceeds of which will be used by the Issuer to purchase the DRFHC
Timeshare Loans from the Seller.
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
Seller may not purchase or acquire the Conveyed DRFHC Timeshare Property, the transactions
evidenced hereby shall constitute a loan and not a purchase and sale, notwithstanding the
otherwise applicable intent of the parties hereto, and DRFHC shall be deemed to have granted to
the Seller as of the date hereof, a first priority perfected security interest in all of DRFHC’s
right, title and interest in, to and under the Conveyed DRFHC 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, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW OTHER THAN SECTIONS 5-
14
1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK.
(B) DRFHC AND THE SELLER 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. DRFHC AND THE SELLER 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 DRFHC OR THE SELLER 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.
[SIGNATURE PAGES FOLLOW]
15
IN WITNESS WHEREOF, the parties have caused this Purchase Agreement to be executed by their
respective officers thereunto duly authorized, as of the date first above written.
| DIAMOND RESORTS FINANCE HOLDING COMPANY | ||||||||
| By: | /s/ Xxxxx X. Xxxxxx | |||||||
| Name: | Xxxxx X. Xxxxxx | |||||||
| Title: | Executive Vice President | |||||||
| Address: | 00000 Xxxx Xxxxxxxxxx Xxxxxxxxx | |||||||
| Xxx Xxxxx, Xxxxxx 00000 | ||||||||
| Telephone: | 000 000 0000 | |||||||
| Facsimile: | 000 000 0000 | |||||||
| DRI QUORUM 2010 LLC | ||||||||
| By: | /s/ Xxxxx X. Xxxxxx | |||||||
| Name: | Xxxxx X. Xxxxxx | |||||||
| Title: | President | |||||||
| Address: | 00000 Xxxx Xxxxxxxxxx Xxxxxxxxx | |||||||
| Xxx Xxxxx, Xxxxxx 00000 | ||||||||
| Telephone: | 000 000 0000 | |||||||
| Facsimile: | 000 000 0000 | |||||||
Exhibit A
Schedule of DRFHC Timeshare Loans
Electronic Schedule of DRFHC Timeshare Loans on file with the Seller.
A-1
Exhibit B
Form of Subsequent Timeshare Loan Transfer Certificate
TRANSFER OF TIMESHARE LOANS
PURSUANT TO
This TRANSFER OF TIMESHARE LOANS (this “Subsequent Transfer Certificate”),
dated
, 20 , is
acknowledged by DRI Quorum 2010 LLC, a Delaware limited
liability company (the “Seller”) and Diamond Resorts Finance Holding Company, a Delaware
corporation (“DRFHC”). Capitalized terms not defined herein shall have the meanings assigned to
them in or incorporated by reference in that certain Purchase Agreement, dated as of April 30,
2010, by and between DRFHC, as seller and the Seller, as purchaser (the “Purchase Agreement”).
DRFHC, concurrently with the execution and delivery hereof, does hereby sell, transfer,
assign and grant to the Seller, pursuant to Section 2(b) of the Purchase Agreement, and the Seller
does hereby purchase and accept such transfer, assignment and grant, all right, title and interest
of DRFHC in and to (i) the DRFHC Timeshare Loans listed on the Schedule of DRFHC Timeshare Loans
attached as Exhibit A to the Purchase Agreement and amended in regard to the Qualified
Substitute DRFHC Timeshare Loans on the date hereof and (ii) the other Conveyed DRFHC Timeshare
Property related to such DRFHC 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
“Substitution Cut-Off Date” means the close of business on
,
20 .
“Transfer Date” means
,
20 .
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).
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-1
IN WITNESS WHEREOF, DRFHC and the Seller 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.
| DIAMOND RESORTS FINANCE HOLDING COMPANY | ||||
By: |
||||
| Name: | ||||
| Title: | ||||
| Acknowledged and Agreed: | ||||
| DRI QUORUM 2010 LLC | ||||
By: |
||||
| Name: | ||||
| Title: | ||||
B-2
Exhibit C
Form Of Lost Note Affidavit
STATE OF
COUNTY OF
(“Affiant”), on behalf of and as
of Diamond
Resorts Finance Holding Company, a Delaware corporation (“DRFHC”), being duly sworn, deposes
and says:
1. This Lost Note Affidavit is being delivered by the Affiant pursuant to Section 7(n)
of the Purchase Agreement (the “Agreement”), dated as of April 30, 2010, by and between DRFHC
and DRI Quorum 2010 LLC, a Delaware limited liability company. Unless otherwise defined
herein, capitalized terms have the meanings ascribed to such terms in the Agreement.
2.
That
has issued an [Obligor Note] [Purchase Contract]
evidencing a Timeshare Loan dated
in
the principal amount of $
[(the “Original Note”)] [the (“Original Agreement”)] [the
(“Original Contract”)] to
.
3. The [Original Note] [Original Agreement] [Original Contract] has been lost,
destroyed, or stolen so that it cannot be found or produced, and DRFHC has not endorsed,
assigned, sold, pledged, hypothecated, negotiated or otherwise transferred the [Original
Note] [Original Agreement] [Original Contract] or an interest therein.
4. That DRFHC has made a diligent effort to find the [Original Note] [Original
Agreement] [Original Contract].
5. It is understood by DRFHC that if the [Original Note] [Original Agreement] [Original
Contract] is found, that it will surrender said [Original Note] [Original Agreement]
[Original Contract] to the Custodian or its permitted successors and assigns for
cancellation.
The foregoing affidavit was sworn to and subscribed before me this
day of
,
, by
, as
of Diamond
Resorts 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
