Quarterly Report (10-q)

Weighted Average Useful Life in Years

Based on Appraisal

Marketing easement rights

Other intangibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________

FORM 10-Q

______________________________________

(Mark One)



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2015
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-35967

______________________________________

DIAMOND RESORTS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

______________________________________



Delaware		46-1750895
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

10600 West Charleston Boulevard Las Vegas, Nevada		89135
(Address of principal executive offices)		(Zip code)

(702) 684-8000
(Registrant's telephone number including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO o

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). YES x NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer x		Accelerated filer o

Non-accelerated filer o		Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o YES x NO

As of November 3, 2015, there were 71,687,943 outstanding shares of the common stock, par value $0.01 per share, of Diamond Resorts International, Inc.

TABLE OF CONTENTS



PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets as of September 30, 2015 (unaudited) and December 31, 2014	3

Condensed Consolidated Statements of Income and Comprehensive Income (Loss) for the three and nine months ended September 30, 2015 and 2014 (unaudited)	4

Condensed Consolidated Statement of Stockholders' Equity for the nine months ended September 30, 2015 (unaudited)	5

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2014 (unaudited)	6

Notes to the Unaudited Condensed Consolidated Financial Statements	8

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	34

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	58

ITEM 4. CONTROLS AND PROCEDURES	59

PART II - OTHER INFORMATION	59

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	59

ITEM 6. EXHIBITS	60

SIGNATURES

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2015 and December 31, 2014

(In thousands, except share data)



	September 30, 2015
	(Unaudited)			December 31, 2014
Assets:
Cash and cash equivalents	$	326,589		$	242,486
Cash in escrow and restricted cash	87,775			80,914
Mortgages and contracts receivable, net of allowance of $153,373 and $130,639, respectively	571,267			498,662
Due from related parties, net	25,155			51,651
Other receivables, net	29,671			59,821
Income tax receivable	1,033			467
Deferred tax asset	354			423
Prepaid expenses and other assets, net	116,100			86,439
Unsold Vacation Interests, net	323,150			262,172
Property and equipment, net	76,908			70,871
Assets held for sale	1,271			14,452
Goodwill	30,642			30,632
Other intangible assets, net	174,210			178,786
Total assets	$	1,764,125		$	1,577,776
Liabilities and Stockholders' Equity:
Accounts payable	$	22,248		$	14,084
Due to related parties, net	68,804			34,768
Accrued liabilities	175,671			134,680
Income taxes payable	29			108
Deferred income taxes	79,755			47,250
Deferred revenues	83,733			124,997
Senior Credit Facility, net of unamortized original issue discount of $1,839 and $2,055, respectively	422,826			440,720
Securitization notes and Funding Facilities, net of unamortized original issue discount of $115 and $156, respectively	601,127			509,208
Derivative liabilities	284			—
Notes payable	3,004			4,612
Total liabilities	1,457,481			1,310,427

Stockholders' equity:
Common stock $0.01 par value per share; authorized - 250,000,000 shares, issued - 73,108,856 shares and 75,732,088 shares, respectively	731			757
Preferred Stock $0.01 par value per share; authorized - 5,000,000 shares	—			—
Additional paid-in capital	414,148			482,732
Accumulated deficit	(80,760		)	(180,502		)
Accumulated other comprehensive loss	(19,555		)	(19,561		)
Subtotal	314,564			283,426
Less: Treasury stock at cost; 313,763 and 642,900 shares, respectively	(7,920		)	(16,077		)
Total stockholders' equity	306,644			267,349
Total liabilities and stockholders' equity	$	1,764,125		$	1,577,776

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

AND COMPREHENSIVE INCOME (LOSS)

For the three and nine months ended September 30, 2015 and 2014

(In thousands, except per share data)

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Revenues:
Management and member services	$	41,647		$	37,795		$	124,325		$	115,238
Consolidated resort operations	4,004			10,481			11,338			28,825
Vacation Interests sales, net of provision of $21,100, $15,847, $56,007 and $40,123, respectively	165,208			143,180			438,055			379,082
Interest	20,120			17,130			57,721			49,010
Other	20,410			13,379			48,972			40,049
Total revenues	251,389			221,965			680,411			612,204
Costs and Expenses:
Management and member services	8,913			8,549			25,310			23,377
Consolidated resort operations	3,365			9,216			11,114			25,662
Vacation Interests cost of sales	16,946			16,476			25,535			44,840
Advertising, sales and marketing	94,876			82,308			248,267			214,190
Vacation Interests carrying cost, net	7,430			5,162			27,171			19,766
Loan portfolio	1,324			1,400			6,242			6,249
Other operating	7,849			5,847			20,198			16,650
General and administrative	28,372			26,747			84,159			74,203
Depreciation and amortization	8,030			8,271			25,127			24,601
Interest expense	12,072			11,294			35,197			45,292
Loss on extinguishment of debt	—			—			—			46,807
Impairments and other write-offs	—			11			12			53
(Gain) loss on disposal of assets	(95		)	224			(57		)	71
Total costs and expenses	189,082			175,505			508,275			541,761
Income before provision for income taxes	62,307			46,460			172,136			70,443
Provision for income taxes	25,410			20,156			72,394			32,860
Net income	36,897			26,304			99,742			37,583
Other comprehensive income (loss):
Currency translation adjustments, net of tax of $0	(693		)	(2,931		)	(1,861		)	(1,420		)
Post-retirement benefit plan	1,807			43			1,893			128
Other	(20		)	(1		)	(26		)	(6		)
Total other comprehensive income (loss), net of tax	1,094			(2,889		)	6			(1,298		)
Comprehensive income	$	37,991		$	23,415		$	99,748		$	36,285
Net income per share:
Basic	$	0.51		$	0.35		$	1.36		$	0.50
Diluted	$	0.49		$	0.34		$	1.31		$	0.49
Weighted average common shares outstanding:
Basic	72,912			75,542			73,480			75,476
Diluted	75,317			77,418			76,081			76,695

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

For the nine months ended September 30, 2015

(In thousands, except share data)

(Unaudited)



	Common Stock Shares Outstanding		Common Stock Par Value			Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Less: Treasury Stock at Cost			Total Stockholders' Equity
Balance at January 1, 2015	75,089,188		$	757		$	482,732		$	(180,502	)	$	(19,561	)	$	(16,077	)	$	267,349
Exercise of stock options	160,370		1			2,520			—			—			—			2,521
Stock-based compensation	141,490		2			18,695			—			—			—			18,697
Excess tax benefits from stock-based compensation	—		—			375			—			—			—			375
Common stock repurchased under the Stock Repurchase Program	(2,595,955	)	—			—			—			—			(82,046		)	(82,046		)
Retirement of treasury stock	—		(29		)	(90,174		)							90,203			—
Net income for the nine months ended September 30, 2015	—		—						99,742			—			—			99,742
Other comprehensive income (loss):
Currency translation adjustment, net of tax of $0	—		—			—			—			(1,861		)	—			(1,861		)
Deconsolidation of St. Maarten post-retirement benefit plan, net of tax of $0	—		—			—			—			1,893			—			1,893
Other	—		—			—			—			(26		)	—			(26		)
Balance at September 30, 2015	72,795,093		$	731		$	414,148		$	(80,760	)	$	(19,555	)	$	(7,920	)	$	306,644

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the nine months ended September 30, 2015 and 2014 (In thousands) (Unaudited)

	2015			2014
Operating activities:
Net income	$	99,742		$	37,583
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for uncollectible Vacation Interests sales	56,007			40,123
Amortization of capitalized financing costs and original issue discounts	4,461			4,079
Amortization of capitalized loan origination costs and net portfolio discounts	9,517			6,555
Depreciation and amortization	25,127			24,601
Stock-based compensation	12,254			12,198
Loss on extinguishment of debt	—			46,807
Impairments and other write-offs	12			53
(Gain) loss on disposal of assets	(57		)	71
Deferred income taxes	32,391			30,461
Loss on foreign currency exchange	656			98
Gain on mortgage repurchase	(412		)	(519		)
Unrealized loss on derivative instruments	600			181
Unrealized loss on post-retirement benefit plan	—			128
Changes in operating assets and liabilities excluding acquisitions:
Mortgages and contracts receivable	(137,721		)	(105,139		)
Due from related parties, net	33,898			5,661
Other receivables, net	30,222			20,678
Prepaid expenses and other assets, net	(19,994		)	(41,763		)
Unsold Vacation Interests, net	(49,285		)	9,842
Accounts payable	8,312			1,184
Due to related parties, net	35,491			14,623
Accrued liabilities	41,367			(11,144		)
Income taxes receivable/payable	(645		)	136
Deferred revenues	(40,678		)	(19,995		)
Net cash provided by operating activities	141,265			76,502
Investing activities:
Property and equipment capital expenditures	(18,483		)	(13,902		)
Purchase of intangible assets	(8,993		)	—
Investment in joint venture in Asia	(1,500		)	—
Proceeds from sale of assets	239			264
Net cash used in investing activities	$	(28,737	)	$	(13,638	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—Continued For the nine months ended September 30, 2015 and 2014 (In thousands) (Unaudited)

	2015			2014
Financing activities:
Changes in cash in escrow and restricted cash	$	(6,915	)	$	22,461
Proceeds from issuance of Senior Credit Facility	—			442,775
Proceeds from issuance of securitization notes and Funding Facilities	431,201			206,325
Proceeds from issuance of notes payable	—			1,113
Payments on Senior Credit Facility	(18,109		)	(1,112		)
Payments on securitization notes and Funding Facilities	(339,342		)	(146,206		)
Payments on Senior Secured Notes, including redemption premium	—			(404,683		)
Payments on notes payable	(10,100		)	(28,492		)
Payment of debt issuance costs	(5,329		)	(11,048		)
Excess tax benefits from stock-based compensation	375			—
Common stock repurchased under the Stock Repurchase Program	(82,046		)	—
Proceeds from exercise of stock options	2,521			2,309
Payments for derivative instrument	(316		)	—
Net cash (used in) provided by financing activities	(28,060		)	83,442
Net increase in cash and cash equivalents	84,468			146,306
Effect of changes in exchange rates on cash and cash equivalents	(365		)	(328		)
Cash and cash equivalents, beginning of period	242,486			35,945
Cash and cash equivalents, end of period	$	326,589		$	181,923



SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash interest paid on corporate indebtedness	$	18,235	$	48,877
Cash interest paid on securitization notes and Funding Facilities	$	11,957	$	10,814
Cash paid for taxes, net of cash tax refunds	$	1,269	$	2,012

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Insurance premiums financed through issuance of notes payable	$	8,492	$	6,173
Unsold Vacation Interests, net reclassified to property and equipment	$	—	$	6,094
Assets held for sale reclassified to unsold Vacation Interests	$	12,978	$	—
Unsold Vacation Interests, net, reclassified to assets held for sale	$	—	$	4,257
Assets to be disposed but not actively marketed (prepaid expenses and other assets) reclassified to property and equipment	$	—	$	272
Information technology software and support financed through issuance of notes payable	$	—	$	472

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note 1	— Background, Business and Basis of Presentation

Business and Background

Diamond Resorts International, Inc. ("DRII") is a holding company, and its principal asset is the direct and indirect ownership of equity interests in its subsidiaries, including Diamond Resorts Corporation ("DRC"), which is the wholly-owned operating subsidiary that has historically conducted the business described below. Except where the context otherwise requires or where otherwise indicated, references in the condensed consolidated financial statements to "the Company" refer to DRII and its subsidiaries, including DRC.

The Company operates in the hospitality and vacation ownership industry, with a worldwide network of 352 vacation destinations located in 34 countries throughout the world, including the continental United States ("U.S."), Hawaii, Canada, Mexico, the Caribbean, Central America, South America, Europe, Asia, Australia, New Zealand and Africa (as of September 30, 2015). The Company’s resort network includes 93 resort properties with approximately 11,000 units that are managed by the Company and 255 affiliated resorts and hotels and four cruise itineraries, which the Company does not manage and do not carry the Company's brand, but are a part of the Company's network and, through THE Club and other Club offerings (the "Clubs"), are available for its members to use as vacation destinations.

The Company’s operations consist of two interrelated businesses: (i) hospitality and management services, which includes operations related to the management of the homeowners associations (the "HOAs") for resort properties and seven multi-resort trusts and one single-resort trust (collectively, the "Diamond Collections"), operations of the Clubs, food and beverage venues owned and managed by the Company and the provision of other hospitality and management services and (ii) Vacation Interests ("VOIs" or "Vacation Interests") sales and financing, which includes marketing and sales of VOIs and consumer financing for purchasers of the Company’s VOIs.

Through December 31, 2014, hospitality and management services also included operations of two properties located in St. Maarten for which a wholly-owned subsidiary of the Company functioned as the HOA. Effective January 1, 2015, the Company assigned the rights and related obligations associated with assets it previously owned as the HOA for these properties to newly created HOAs (the "St. Maarten HOAs"). The Company has no beneficial interest in the St. Maarten HOAs, except through its ownership of VOIs, but continues to serve as the manager of the St. Maarten HOAs pursuant to customary management services agreements.

As a result of these transactions, the operating results and the assets and liabilities of the St. Maarten properties were deconsolidated from the Company's condensed consolidated financial statements effective January 1, 2015 (with the exception of all employee-related liabilities including the post-retirement benefit plan, which were transferred to the St. Maarten HOAs during the quarter ended September 30, 2015, and cash accounts, which are expected to be transferred to the St. Maarten HOAs during the quarter ending December 31, 2015) (the "St. Maarten Deconsolidation").

Basis of Presentation

The accompanying condensed consolidated financial statements of Diamond Resorts International, Inc. and its subsidiaries have been prepared in accordance with accounting policies described in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 (the "2014 Form 10-K"). Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal and recurring nature. The accompanying condensed consolidated financial statements should be reviewed in conjunction with the Company's annual consolidated financial statements included in the 2014 Form 10-K. Operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results for the full year ending December 31, 2015 or any future period.

Certain balances in the Company's condensed consolidated statement of cash flows for the nine months ended September 30, 2014 have been reclassified for immaterial foreign currency translation adjustments to conform to current year presentation.

Note 2 — Summary of Significant Accounting Policies

Significant accounting policies are those policies that, in management's view, are most important in the portrayal of the Company's financial condition and results of operations. The methods, estimates and judgments that the Company uses in applying its accounting policies have a significant impact on the results that it reports in the financial statements. Some of these

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DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Continued

significant accounting policies require the Company to make subjective and complex judgments regarding matters that are inherently uncertain. See "Note 2—Summary of Significant Accounting Policies" to the audited consolidated financial statements included in the 2014 Form 10-K for a discussion of the Company's significant accounting policies that require significant judgment.

Principles of Consolidation—The accompanying condensed consolidated financial statements include all subsidiaries of the Company. All significant intercompany transactions and balances have been eliminated from the accompanying condensed consolidated financial statements.

Use of Estimates—The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, the Company evaluates its estimates and assumptions, including those related to revenue, bad debts, unsold Vacation Interests, net, Vacation Interests cost of sales, stock-based compensation expense and income taxes. These estimates are based on historical experience and various other assumptions that management believes are reasonable under the circumstances. The results of the Company's analyses form the basis for making assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, and the impact of such differences may be material to the Company's condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers, which supersedes most of the current revenue recognition requirements ("ASU No. 2014-09"). The core principle of this guidance is that an entity is required to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. New disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers are also required. Entities must adopt the new guidance using one of two retrospective application methods. The Company will adopt ASU No. 2014-09 as of its quarter ending March 31, 2018. The Company is currently evaluating the standard to determine the impact of the adoption of this guidance on its financial statements.

In January 2015, the FASB issued ASU No. 2015-01, Income Statement-Extraordinary and Unusual Items ("ASU No. 2015-01"), which eliminates from U.S. GAAP the concept of extraordinary items. Extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. ASU No. 2015-01 simplifies income statement presentation by altogether removing the concept of extraordinary items from consideration. ASU No. 2015-01 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. The Company will adopt ASU No. 2015-01 as of its quarter ending March 31, 2016. The Company believes that the adoption of this update will not have a material impact on its financial statements.

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (“ASU No. 2015-02”), which is intended to respond to stakeholders’ concerns about the current accounting guidance for certain legal entities. The amendments update the analysis of consolidation for limited partnerships, contractual fee arrangements and investment funds, as well as include additional guidance on the effect of related parties. The amendments in ASU No. 2015-02 are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The amendments in ASU No. 2015-02 may be applied retrospectively or using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. The Company will adopt ASU No. 2015-02 as of its quarter ending March 31, 2016. The Company is currently evaluating the standard to determine the impact of its adoption on its financial statements.

In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest ("ASU No. 2015-03"), which is intended to simplify the presentation of debt issuance costs. The amendments in ASU No. 2015-03 require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in ASU No. 2015-03. ASU No. 2015-03 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. The Company will adopt ASU No. 2015-03 as of its quarter ending March 31, 2016. The Company believes that the adoption of this update will result in a reclassification between assets and liabilities but will have no other impact on its financial statements.

In April 2015, the FASB issued ASU No. 2015-05, Intangibles - Goodwill and Other - Internal-Use Software ("ASU No. 2015-05"), which provides guidance to customers about whether a cloud computing arrangement includes a software license and, if so, how the software license element of the arrangement should be accounted for by the customer. ASU No. 2015-05 is

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DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Continued

effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. The Company will adopt ASU No. 2015-05 as of its quarter ending March 31, 2016. The Company believes that the adoption of this update will not have a material impact on its financial statements.

In September 2015, the FASB issued ASU No. 2015-16, Business Combinations - Simplifying the Accounting for Measurement-Period Adjustments ("ASU No. 2015-16"), which requires that an acquirer in a business combination recognize adjustments to estimated amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. ASU No. 2015-16 also requires that the acquirer record, in the current period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the estimated amounts, calculated as if the accounting had been completed at the acquisition date. ASU No. 2015-16 is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments in ASU No. 2015-16 should be applied prospectively to adjustments to provisional amounts that occur after the effective date with earlier application permitted for financial statements that have not been issued. The Company will adopt ASU No. 2015-16 as of its quarter ending March 31, 2016. The Company believes that the adoption of this update will not have a material impact on its financial statements.


Note 3	— Concentrations of Risk

Credit Risk—The Company is exposed to on-balance sheet credit risk related to its mortgages and contracts receivable. The Company offers financing to the buyers of VOIs and bears the risk of defaults on promissory notes delivered to it by buyers of VOIs. If a buyer of VOIs defaults, the Company generally attempts to resell such VOIs by exercise of a power of sale. The associated marketing, selling and administrative costs from the original sale are not recovered and such costs must be incurred again to resell the VOIs. Although in many cases the Company may have recourse against a buyer of VOIs for the unpaid price, certain states have laws that limit the Company’s ability to recover personal judgments against customers who have defaulted on their loans, and the Company has generally not pursued this remedy.

The Company maintains cash, cash equivalents, cash in escrow, and restricted cash with various financial institutions. These financial institutions are located throughout North America, Europe and the Caribbean. A significant portion of the Company's cash is maintained with a select few banks and is, accordingly, subject to credit risk. Periodic evaluations of the relative credit standing of financial institutions maintaining the deposits are performed to evaluate and mitigate, if necessary, any credit risk.

Availability of Funding Sources—The Company has historically funded mortgages and contracts receivable and unsold Vacation Interests with borrowings through its financing facilities and internally generated funds. Borrowings are in turn repaid with the proceeds received by the Company from repayments of such mortgages and contracts receivable. To the extent that the Company is not successful in maintaining or replacing existing financings, it may have to curtail its sales and marketing operations or sell assets, thereby resulting in a material adverse effect on the Company’s results of operations, cash flows and financial condition.

Geographic Concentration—Portions of the Company's consumer loan portfolio are concentrated in certain geographic regions within the U.S. The deterioration of the economic condition and financial well-being of the regions in which the Company has significant loan concentrations could adversely affect the results of operations for its consumer loan portfolio business. The credit risk inherent in such concentrations is dependent upon regional and general economic stability, which affects property values and the financial well-being of the borrowers. As of September 30, 2015, the Company's loans to California residents constituted 33.6% of the consumer loan portfolio. No other state or foreign country concentration accounted for more than 10.0% of the portfolio.

Interest Rate Risk—Since a significant portion of the Company's indebtedness bears interest at variable rates, any increase in interest rates beyond amounts covered under the Company’s derivative financial instruments, particularly if sustained, could have an adverse effect on the Company’s results of operations, cash flows and financial position.

The Company derives net interest income from its financing activities because the interest rates it charges its customers who finance the purchase of their VOIs exceed the interest rates the Company pays to its lenders. Since the Company’s customer receivables generally bear interest at fixed rates, increases in interest rates will erode the spread in interest rates that the Company has historically obtained.

On March 20, 2015, as required by the Company's $200.0 million conduit facility (the "Conduit Facility") that was amended and restated on February 5, 2015 and further amended on June 26, 2015 (the "June 2015 Amendment"), the Company entered into an interest rate swap agreement with a notional amount of $56.9 million (the "March 2015 Swap") that was scheduled to mature on March 20, 2025, to manage its exposure to fluctuations in interest rates. The Company paid interest at a

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fixed rate of 2.46% based on a floating notional amount according to a pre-determined amortization schedule and received interest based on one-month floating LIBOR. The March 2015 Swap did not qualify for hedge accounting. On July 29, 2015, the March 2015 Swap was terminated upon the payoff of the then-outstanding balance under the Conduit Facility using the proceeds from the issuance of $170.0 million of investment-grade securities, consisting of two tranches of vacation ownership loan-backed notes (collectively, the "DROT 2015-1 Notes").

On June 26, 2015, the Company entered into an interest rate cap agreement (the "June 2015 Cap") to further limit its exposure to interest rate increases. The June 2015 Cap was scheduled to terminate on June 20, 2025 and bore an interest rate of 4.64% based on a notional amount of $72.0 million, subject to adjustment in accordance with the terms of the agreement governing the June 2015 Cap. The June 2015 Cap did not qualify for hedge accounting. The Company paid $0.3 million for the June 2015 Cap, which was recorded as a derivative asset. The June 2015 Cap was terminated on July 1, 2015 concurrent with the further amendment of the Conduit Facility on July 1, 2015 (the "July 2015 Amendment"). See "Note 15—Borrowings" for further detail on the Conduit Facility.

On October 1, 2015, as required by the Conduit Facility, the Company entered into an interest rate swap agreement to manage its exposure to fluctuations in interest rates, effective September 30, 2015 (the "September 2015 Swap"). The September 2015 Swap has a notional amount of $97.0 million and is scheduled to mature on September 20, 2025. The Company pays interest at a fixed rate of 2.45% based on a floating notional amount in accordance with a pre-determined amortization schedule, and receives interest based on one-month floating LIBOR. The September 2015 Swap did not qualify for hedge accounting.

As of September 30, 2015, the fair value of the September 2015 Swap was calculated to be $0.3 million based on a valuation report provided by a counterparty. This fair value was recorded as a derivative liability with an offsetting charge to interest expense.


Note 4	— Cash in Escrow and Restricted Cash

Cash in escrow and restricted cash as of the dates presented below consisted of the following (in thousands):



	September 30, 2015		December 31, 2014
Securitization and Funding Facilities collection and reserve cash	$	36,201	$	39,784
Collected on behalf of HOAs	17,728		15,970
Rental trust	13,537		12,556
Escrow	12,423		9,830
Bonds and deposits	886		882
Other	7,000		1,892
Total cash in escrow and restricted cash	$	87,775	$	80,914

The nature of selected balances included in cash in escrow and restricted cash includes:

Securitization and Funding Facilities collection and reserve cash—prefunding and reserve cash held for the benefit of secured note holders and cash collections on certain mortgages receivable that secure collateralized notes. The Conduit Facility and the $100.0 million loan sale facility with Quorum Federal Credit Union (the "Quorum Facility") are collectively referred to as the "Funding Facilities." See "Note 15—Borrowings" for further detail on the Conduit Facility and the Quorum Facility.

As of December 31, 2014, Securitization and Funding Facilities collection and reserve cash included $4.4 million related to the future funding of contracts receivable associated with the $260.0 million securitization transaction completed on November 20, 2014 (the "DROT 2014-1 Notes") that was released to the Company's unrestricted cash account in January 2015. Securitization and Funding Facilities collection and reserve cash as of September 30, 2015 did not include such amount. See "Note 16—Borrowings" to the audited consolidated financial statements included in the 2014 Form 10-K for further detail on the DROT 2014-1 Notes.

Note 5 — Mortgages and Contracts Receivable

The Company provides financing to purchasers of VOIs at its North American and St. Maarten sales centers that are collateralized by their VOIs. Eligibility for this financing is principally dependent upon the customers’ Fair Isaac Corporation ("FICO") credit scores and other factors based on review of the customer’s credit history. As of September 30, 2015, the mortgages and contracts receivable bore interest at fixed rates between 6.0% and 18.0%. The terms of the mortgages and contracts receivable range from two years to 15 years and may be prepaid at any time without penalty. The weighted average

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interest rate of outstanding mortgages and contracts receivable was 14.7% and 14.8% as of September 30, 2015 and December 31, 2014, respectively.

The Company charges off mortgages and contracts receivable upon the earliest of (i) the completion of cancellation or foreclosure proceedings or (ii) the customer's account becoming over 180 days delinquent. Once a delinquent customer has brought the account current following the event leading to the charge-off and makes six timely payments, the charge-off is reversed. A default in a customer's initial payment (after unsuccessful collection efforts) results in a cancellation of the sale. All collection and foreclosure costs related to delinquent loans are expensed as incurred. Mortgages and contracts receivable from 91 to 180 days past due as of September 30, 2015 and December 31, 2014 were 2.1% and 2.0%, respectively, of gross mortgages and contracts receivable.

The mortgages and contracts receivable, net balance includes deferred loan and contract origination costs related to mortgages originated by the Company, net of the related allowance for loan and contract losses. Loan and contract origination costs incurred in connection with providing financing for VOIs are capitalized and amortized over the estimated life of the mortgages or contracts receivable, based on historical prepayments, as a decrease to interest revenue using the effective interest method. Amortization of deferred loan and contract origination costs charged to interest revenue was $3.3 million and $2.4 million for the three months ended September 30, 2015 and 2014, respectively, and $9.5 million and $6.6 million for the nine months ended September 30, 2015 and 2014, respectively.

Mortgages and contracts receivable, net as of the dates presented below consisted of the following (in thousands):



	September 30, 2015			December 31, 2014
Mortgages and contracts receivable, originated	$	680,193		$	567,564
Mortgages and contracts receivable, purchased	28,008			41,213
Mortgages and contracts receivable, gross	708,201			608,777
Allowance for loan losses	(153,373		)	(130,639		)
Deferred profit on Vacation Interests transactions	(1,701		)	(1,625		)
Deferred loan and contract origination costs, net	14,558			12,253
Inventory value of defaulted mortgages that were previously purchased	3,329			9,587
Premium on mortgages and contracts receivable, net	253			309
Mortgages and contracts receivable, net	$	571,267		$	498,662

As of September 30, 2015 and December 31, 2014, $660.3 million and $552.4 million, respectively, of the gross amount of mortgages and contracts receivable were collateralized against the Company’s various borrowings included in "Securitization notes and Funding Facilities" in the accompanying condensed consolidated balance sheets. See "Note 15—Borrowings" elsewhere in this quarterly report.

Deferred profit on Vacation Interests transactions represents revenues less related direct costs (sales commissions, sales incentives, cost of sales and allowance for loan losses) related to sales that do not qualify for revenue recognition under Accounting Standards Codification (“ASC”) 978, “Real Estate-Time-Sharing Activities” ("ASC 978"). See "Note 2—Summary of Significant Accounting Policies" to the audited consolidated financial statements included in the 2014 Form 10-K for a description of revenue recognition criteria.

Inventory value of defaulted mortgages that were previously purchased represents the inventory underlying mortgages that have defaulted. Upon recovery of the inventory, the value is transferred to unsold Vacation Interests, net.

Activity in the allowance for loan and contract losses associated with mortgages and contracts receivable as of the dates presented below consisted of the following (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Balance, beginning of period	$	145,830		$	114,577		$	130,639		$	105,590
Provision for uncollectible Vacation Interests sales (a)	21,159			15,882			55,995			40,175
Write offs, net	(13,616		)	(9,270		)	(33,261		)	(24,576		)
Balance, end of period	$	153,373		$	121,189		$	153,373		$	121,189
(a) The provision for uncollectible Vacation Interests sales shows activity in the allowance for loan and contract losses associated with mortgages and contracts receivable and is exclusive of ASC 978 adjustments related to deferred revenue.

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A summary of the credit quality and aging as of the dates presented below is as follows (in thousands):



As of September 30, 2015
FICO Credit Scores	Current		31-60		61-90		91-120		121-150		151-180		Total
>799	$	65,417	$	278	$	284	$	232	$	128	$	190	$	66,529
700-799	366,534		3,651		3,016		1,852		1,329		1,523		377,905
600-699	206,232		6,619		3,051		2,650		2,070		2,336		222,958
<600	19,798		1,507		716		515		555		507		23,598
No FICO Credit Scores	15,537		720		300		221		312		121		17,211
	$	673,518	$	12,775	$	7,367	$	5,470	$	4,394	$	4,677	$	708,201



As of December 31, 2014
FICO Credit Scores	Current		31-60		61-90		91-120		121-150		151-180		Total
>799	$	56,005	$	487	$	215	$	190	$	143	$	155	$	57,195
700-799	305,636		4,276		1,338		1,396		1,335		1,050		315,031
600-699	178,550		6,313		2,687		2,034		1,891		1,674		193,149
<600	19,992		1,833		895		545		406		450		24,121
No FICO Credit Scores	17,262		817		449		361		230		162		19,281
	$	577,445	$	13,726	$	5,584	$	4,526	$	4,005	$	3,491	$	608,777

The Company captures FICO credit scores when each loan is underwritten. The "No FICO Credit Scores" category in the tables above is primarily comprised of customers who live outside of the U.S.


Note 6	— Transactions with Related Parties

Due from Related Parties, Net and Due to Related Parties, Net

Amounts due from related parties, net and due to related parties, net consist primarily of transactions with HOAs or Diamond Collections for which the Company acts as the management company. Due from related parties, net transactions include (i) management fees for the Company’s role as the management company; (ii) certain expenses reimbursed by HOAs and Diamond Collections; and (iii) the recovery of a portion of the Company’s Vacation Interests carrying costs, management and member services, consolidated resort operations, loan portfolio and general and administrative expenses that are incurred on behalf of the HOAs and the Diamond Collections according to a pre-determined schedule approved by the board of directors of each HOA and Diamond Collection. Due to related parties, net transactions include (i) the amounts due to HOAs and Diamond Collections under inventory recovery agreements that the Company enters into regularly with certain HOAs and similar agreements with the Diamond Collections, pursuant to which the Company recaptures VOIs, either in the form of vacation points or vacation intervals, and brings them into the Company’s inventory for sale to customers; (ii) the maintenance fee and assessment fee liability owed to HOAs and Diamond Collections for VOIs owned by the Company (generally this liability is recorded on January 1 of each year for the entire amount of annual maintenance and assessment fees, and is relieved throughout the year by payments remitted to the HOAs and the Diamond Collections; these maintenance and assessment fees are also recorded as prepaid expenses and other assets in the accompanying condensed consolidated balance sheets and amortized ratably over the year); (iii) cleaning fees owed to the HOAs for room stays paid by the Company’s customers or by a Club on behalf of a member where the frequency of the cleans exceeds those covered by the respective maintenance fees; and (iv) miscellaneous transactions with other non-HOA related parties.

Amounts due from related parties and due to related parties, some of which are due on demand, carry no interest. Due to the fact that the right of offset exists between the Company and the HOAs and the Diamond Collections, the Company evaluates amounts due to and from each HOA and Diamond Collection at each reporting period to reduce the receivables and the payables on each party's books of record. Any remaining balances are then reclassified as either a net due to or a net due from related parties for each HOA and Diamond Collection in accordance with the requirements of ASC 210, "Balance Sheet— Offsetting."

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Due from related parties, net as of the dates presented below consisted of the following (in thousands):



	September 30, 2015		December 31, 2014
Amounts due from HOAs	$	20,650	$	29,924
Amounts due from Diamond Collections	3,763		21,283
Amounts due from other	742		444
Total due from related parties, net	$	25,155	$	51,651

Due to related parties, net as of the dates presented below consisted of the following (in thousands):



	September 30, 2015		December 31, 2014
Amounts due to HOAs	$	31,890	$	14,788
Amounts due to Diamond Collections	36,885		19,944
Amounts due to other	29		36
Total due to related parties, net	$	68,804	$	34,768

Hospitality Management and Consulting Service, LLC ("HM&C") Management Services Agreement (the "HM&C Agreement")

HM&C was beneficially owned and controlled by Stephen J. Cloobeck, the Company's Chairman of the Board, and David F. Palmer, the Company's President and Chief Executive Officer, until the consummation of the HM&C Acquisition (as defined and discussed below), effective as of January 1, 2015. Pursuant to the HM&C Agreement, HM&C has provided two categories of management services to the Company: (i) executive and strategic oversight of the services that the Company provides to HOAs and the Diamond Collections through the Company’s hospitality and management services operations, for the benefit of the Company, the HOAs and the Diamond Collections; and (ii) executive, corporate and strategic oversight of the Company’s operations and certain other administrative services. HM&C provides the Company with the services of four of the Company's executive officers and other employees, each of whom devotes his or her full business time and attention to the Company, and prior to 2015 also provided the Company with the services of Mr. Cloobeck. Prior to the HM&C Acquisition, pursuant to the HM&C Agreement, HM&C was entitled to receive (a) a lump sum annual management fee for providing HOA management services; (b) a lump sum annual management fee for providing corporate management services; (c) a lump sum annual incentive payment based on performance metrics determined by the Compensation Committee of the Company's board of directors, subject to certain minimum amounts set forth in the HM&C Agreement; and (d) reimbursement of HM&C's expenses incurred in connection with its activities under the HM&C Agreement.

HM&C Acquisition

On January 6, 2015, the Company entered into a Membership Interest Purchase Agreement (the "Purchase Agreement"), whereby it acquired from an entity controlled by Mr. Cloobeck and an entity controlled by Mr. Palmer (which entities owned 95% and 5% of the outstanding membership interests of HM&C, respectively) all of the outstanding membership interests in HM&C in exchange for an aggregate purchase price of $10,000 (the "HM&C Acquisition"). As a result of the HM&C Acquisition, effective January 1, 2015, transactions between the Company and HM&C were fully eliminated from the Company's consolidated balance sheet, as HM&C became a wholly-owned subsidiary of the Company.

Master Agreement

Concurrent with the Company's entry into the Purchase Agreement, on January 6, 2015, the Company entered into a Master Agreement (the "Master Agreement") with Mr. Cloobeck, HM&C, JHJM Nevada I, LLC ("JHJM") and other entities controlled by Mr. Cloobeck or his immediate family members. Pursuant to the Master Agreement, the parties made certain covenants to and agreements with the other parties, including: (i) the termination, effective as of January 1, 2015, of the services agreement between JHJM and HM&C (the "JHJM Agreement"); (ii) the conveyance to the Company of exclusive rights to market timeshare and vacation ownership properties from a prime location adjacent to Polo Towers on the “Las Vegas Strip,” pursuant to the terms of an Assignment and Assumption Agreement; (iii) Mr. Cloobeck’s agreement to various restrictive covenants, including non-competition, non-solicitation and non-interference covenants; and (iv) Mr. Cloobeck’s grant to the Company of a license to use Mr. Cloobeck’s persona, including his name, likeness and voice. In connection with the transactions contemplated by the Master Agreement, the Company paid Mr. Cloobeck or his designees $16.5 million and incurred $0.3 million in expenses related to this transaction. Of these amounts, $7.8 million was recorded as general and administrative expense in connection with the JHJM Agreement and $9.0 million was capitalized as marketing easement rights and other intangible assets. See "Note 11—Other Intangible Assets, Net" for further detail on the intangible assets acquired.

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In addition, in light of the termination of the services agreement between JHJM and HM&C and the existence of a director designation agreement dated July 17, 2013, the Company agreed in the Master Agreement that, at least through December 31, 2017, so long as Mr. Cloobeck is serving as a member of the board of directors of the Company, he will continue to be the Chairman of the Board and, in such capacity, will receive annual compensation equal to two times the compensation generally paid to other non-employee directors, and he, his spouse and children will receive medical insurance coverage.

Aircraft Leases

In January 2012, the Company entered into an aircraft lease agreement with N702DR, LLC, a limited liability company of which Mr. Cloobeck is a beneficial owner and a controlling party. Pursuant to this lease agreement, the Company leases an aircraft from N702DR, LLC and paid N702DR, LLC $0.6 million for each of the three months ended September 30, 2015 and 2014, respectively, and $1.8 million for each of the nine months ended September 30, 2015 and 2014, respectively. In addition, pursuant to the Master Agreement described above, the Company agreed not to terminate this aircraft lease agreement until at least December 31, 2017, subject to certain termination provisions in the aircraft lease agreement.

In connection with the Company's lease of an aircraft from Banc of America Leasing & Capital, LLC, Mr. Cloobeck entered into a guarantee in favor of Banc of America Leasing & Capital, LLC. Pursuant to this guarantee, Mr. Cloobeck guarantees the Company's lease payments and any related indebtedness to Banc of America Leasing & Capital, LLC. In connection with this aircraft lease, and pursuant to this lease agreement, the Company paid Banc of America Leasing & Capital, LLC $0.3 million for each of the three months ended September 30, 2015 and 2014, respectively, and $0.9 million for each of the nine months ended September 30, 2015 and 2014, respectively. The Company did not compensate Mr. Cloobeck for providing these guarantees; however, pursuant to the Master Agreement described above, the Company agreed to indemnify and hold harmless Mr. Cloobeck and each of his affiliates from any and all amounts that Mr. Cloobeck is required to pay under the guarantee in favor of Banc of America Leasing & Capital, LLC. In exchange, Mr. Cloobeck agreed to comply with all the covenants and agreements set forth in the guarantee for so long as Mr. Cloobeck or any of his affiliates is subject to the guarantee.

Guggenheim Relationship

Pursuant to an agreement with the Company, DRP Holdco, LLC (the "Guggenheim Investor"), a significant investor in the Company, had the right to nominate two members to the Company's board of directors, subject to certain security ownership thresholds. Zachary Warren, a principal of Guggenheim Partners, LLC ("Guggenheim"), an affiliate of the Guggenheim Investor, serves as a member of the Company's board of directors as a nominee of the Guggenheim Investor. B. Scott Minerd, also a principal of Guggenheim, served as a member of the Company's board of directors until his resignation effective July 28, 2015. Mr. Minerd's resignation did not involve a disagreement on any matter relating to the Company's operations, policies, or practices.

Affiliates of Guggenheim are currently lenders under the Conduit Facility, the $470.0 million senior secured credit facility entered into on May 9, 2014 (the "Senior Credit Facility") and the $64.5 million securitization transaction completed on April 27, 2011 (the "DROT 2011 Notes"). In addition, an affiliate of Guggenheim was an investor in the Company's Senior Secured Notes that were redeemed on June 9, 2014. See "Note 15—Borrowings" elsewhere in this quarterly report and "Note 16—Borrowings" to the audited consolidated financial statements included in the 2014 Form 10-K for further detail on these borrowings.

March 2015 Secondary Offering

On March 10, 2015, Cloobeck Diamond Parent, LLC (an entity beneficially owned and controlled by Mr. Cloobeck), the Guggenheim Investor and Best Amigos Partners, LLC (an entity beneficially owned and controlled by Lowell D. Kraff, the Vice Chairman of the board of directors of the Company) (collectively, the "Selling Stockholders") consummated the sale of an aggregate of 6,700,000 shares of common stock of the Company in an underwritten public offering. On March 20, 2015, the Selling Stockholders sold an additional aggregate of 802,316 shares of the Company's common stock to the underwriter pursuant to the underwriting agreement in connection with the underwriter's exercise of its over-allotment option. These transactions are collectively referred to as the "March 2015 Secondary Offering." The Company did not sell any stock in the March 2015 Secondary Offering and did not receive any proceeds from the offering. The Company purchased from the underwriter 1,515,582 shares sold by the Selling Stockholders in the March 2015 Secondary Offering at $32.99 per share (the same price per share at which the underwriter purchased shares from the Selling Stockholders) for a total purchase price of approximately $50.0 million. The Company incurred approximately $0.9 million in expenses related to the March 2015 Secondary Offering, including registration, filing and listing fees, printing fees and legal and accounting expenses, which are included in general and administrative expense in the condensed consolidated statement of income and comprehensive income (loss).

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Praesumo Agreement

In June 2009, the Company entered into an engagement agreement for individual independent contractor services with Praesumo Partners, LLC, a limited liability company of which Mr. Kraff is a beneficial owner and a controlling party. Pursuant to this engagement agreement, Praesumo provides Mr. Kraff as an independent contractor to the Company to provide, among other things, acquisition, development and finance consulting services. In August 2015, the Company entered into a fourth extension agreement that extends the agreement through August 31, 2016. In consideration of these services provided pursuant to this agreement, the Company paid to Praesumo Partners, LLC, in fees and expense reimbursements, $0.4 million for each of the three months ended September 30, 2015 and 2014, respectively, $1.4 million for the nine months ended September 30, 2015 and $1.3 million for the nine months ended September 30, 2014. These amounts do not include certain travel-related costs paid directly by the Company.

Mackinac Partners

C. Alan Bentley, the Executive Vice President and Chief Financial Officer of the Company, was a partner of Mackinac Partners, LLC, a financial advisory firm that provides consulting services to the Company. Effective December 31, 2014, Mr. Bentley withdrew as a partner of Mackinac Partners, LLC, and no longer has any beneficial ownership of, or economic interest in, Mackinac Partners, LLC. The services provided by Mackinac Partners, LLC to the Company include advisory services relating to mergers and acquisitions, capital formation and corporate finance. In addition to these services, which Mackinac Partners, LLC provided at hourly rates, Mackinac Partners, LLC also provides to the Company strategic advisory services of one of its managing partners at a rate of $0.2 million for each three-month period during the term. For the three and nine months ended September 30, 2014, the Company paid fees and expense reimbursements to Mackinac Partners, LLC of $0.2 million and $1.6 million, respectively.

Katten Muchin Rosenman LLP

Each of Howard S. Lanznar, the Executive Vice President and Chief Administrative Officer of the Company, and Richard M. Daley, a member of the board of directors of the Company, is Of Counsel at Katten Muchin Rosenman LLP ("Katten"). Mr. Lanznar was a partner of that law firm until August 31, 2014. During the three and nine months ended September 30, 2014, the Company paid to Katten fees of $0.8 million and $3.0 million, respectively.


Note 7	— Other Receivables, Net

Other receivables, net as of the dates presented below consisted of the following (in thousands):



	September 30, 2015		December 31, 2014
Sampler program receivables, net	$	13,377	$	17,516
Mortgage and contracts interest receivable	6,717		6,382
Rental receivables and other resort management-related receivables, net	2,968		3,972
Club dues receivable, net	2,320		27,160
Tax refund receivable	1,780		2,070
Other receivables	2,509		2,721
Total other receivables, net of allowances of $7,368 and $10,052, respectively	$	29,671	$	59,821

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Note 8	— Prepaid Expenses and Other Assets, Net

Prepaid expenses and other assets, net as of the dates presented below consisted of the following (in thousands):



	September 30, 2015		December 31, 2014
Unamortized maintenance fees	$	23,281	$	—
Debt issuance costs, net	21,969		20,826
Deferred commissions	16,630		18,492
Vacation Interests purchases in transit	12,497		20,058
Prepaid member benefits and affinity programs	7,561		4,362
Deferred stock-based compensation	6,980		—
Other inventory or consumables	4,150		4,067
Prepaid sales and marketing costs	3,544		2,393
Prepaid insurance	2,798		2,764
Deferred inventory recovery agreements	2,646		—
Deposits and advances	2,645		3,186
Prepaid maintenance fees	2,057		3,317
Other	9,342		6,974
Total prepaid expenses and other assets, net	$	116,100	$	86,439

The nature of selected balances included in prepaid expenses and other assets, net includes:

Unamortized maintenance fees—prepaid annual maintenance fees on unsold Vacation Interests owned by the Company billed by the HOAs and the Diamond Collections for resorts included in the Company's resort network that are managed by the Company, which are charged to expense ratably over the year.

Deferred stock-based compensation—On May 19, 2015, the Company issued restricted stock, restricted stock units ("RSUs") and deferred stock to certain key management personnel and non-employee members of the board of directors of the Company. The values of this stock-based compensation are charged to expense ratably over their respective amortization periods. See "Note 20—Stock-Based Compensation" for further detail on the stock-based compensation issued.

Deferred inventory recovery agreements—represents the unamortized portion of the maintenance fees related to the inventory recoverable pursuant to our inventory recovery agreements that cannot be capitalized. This amount is charged to expense ratably over the year.

With the exception of Vacation Interests purchases in transit, prepaid expenses and other assets are amortized as the underlying assets are utilized. Debt issuance costs incurred in connection with obtaining funding for the Company have been capitalized and are being amortized over the lives of the related funding agreements as a component of interest expense using a method which approximates the effective interest method. Amortization of capitalized debt issuance costs included in interest expense was $1.6 million and $1.0 million for the three months ended September 30, 2015 and 2014, respectively, and $4.2 million and $3.5 million for the nine months ended September 30, 2015 and 2014, respectively.


Note 9	— Unsold Vacation Interests, Net

Unsold Vacation Interests, net as of the dates presented below consisted of the following (in thousands):



	September 30, 2015		December 31, 2014
Completed unsold Vacation Interests, net	$	273,015	$	230,137
Undeveloped land	31,843		24,326
Vacation Interests construction in progress	18,292		7,709
Unsold Vacation Interests, net	$	323,150	$	262,172

Included in completed unsold Vacation Interests, net above is certain property in Cabo, Mexico with a cost basis of $5.7 million, which is subject to an agreement that grants a third-party an option to purchase the property. This property no longer qualified as assets held for sale as of September 30, 2015. In addition, undeveloped land above includes vacant land in Orlando, Florida and Kona, Hawaii that no longer qualified as assets held for sale as of September 30, 2015.

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Activity related to unsold Vacation Interests, net for the periods presented below consisted of the following (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Balance, beginning of period	$	318,003		$	292,248		$	262,172		$	298,110
Transfers (to) from assets held for sale	(4		)	(4,257		)	12,978			(4,257		)
Vacation Interests cost of sales	(16,946		)	(16,476		)	(25,535		)	(44,840		)
Inventory recovery (reinstatement)	1,047			(1,176		)	19,824			21,121
Open market and bulk purchases	1,737			6,306			16,423			9,648
Capitalized legal, title and trust fees	3,640			2,192			11,497			3,689
Transfer of construction in progress to property and equipment, net	—			(478		)	—			(6,094		)
Construction in progress	5,139			104			12,945			596
Loan default recoveries, net	10,343			1,121			12,519			1,970
Effect of foreign currency translation	(1,148		)	(2,770		)	(1,612		)	(1,650		)
Other	1,339			252			1,939			(1,227		)
Balance, end of period	$	323,150		$	277,066		$	323,150		$	277,066

See "Note 2—Summary of Significant Accounting Policies" to the audited consolidated financial statements included in the 2014 Form 10-K for further discussion of unsold Vacation Interests, net.

Note 10 — Property and Equipment, Net

Property and equipment, net as of the dates presented below consisted of the following (in thousands):



	September 30, 2015			December 31, 2014
Land and improvements	$	19,300		$	19,335
Buildings and leasehold improvements	45,417			44,320
Furniture and office equipment	21,570			19,248
Computer software	42,427			33,465
Computer equipment	17,747			15,641
Construction in progress	3,008			271
Property and equipment, gross	149,469			132,280
Less: Accumulated depreciation	(72,561		)	(61,409		)
Property and equipment, net	$	76,908		$	70,871

Depreciation expense related to property and equipment was $4.0 million and $3.5 million for the three months ended September 30, 2015 and 2014, respectively, and $11.8 million and $9.8 million for the nine months ended September 30, 2015 and 2014, respectively.

Note 11 — Other Intangible Assets, Net

Other intangible assets, net consisted of the following as of September 30, 2015 (in thousands):



	Gross Carrying Cost		Accumulated Amortization			Net Book Value
Management contracts	$	201,513	$	(55,160	)	$	146,353
Member relationships and the Clubs	55,605		(38,961		)	16,644
Marketing easement rights	8,717		(327		)	8,390
Distributor relationships and other	5,106		(2,283		)	2,823
Total other intangible assets	$	270,941	$	(96,731	)	$	174,210

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Other intangible assets, net consisted of the following as of December 31, 2014 (in thousands):



	Gross Carrying Cost		Accumulated Amortization			Net Book Value
Management contracts	$	201,997	$	(45,218	)	$	156,779
Member relationships and the Clubs	55,784		(36,789		)	18,995
Distributor relationships and other	4,851		(1,839		)	3,012
Total other intangible assets	$	262,632	$	(83,846	)	$	178,786

Under the terms of the Master Agreement entered into by the Company on January 6, 2015, the Company acquired certain rights from Mr. Cloobeck and entities controlled by Mr. Cloobeck, which were recorded as intangible assets by the Company. These rights included (i) the exclusive rights to market timeshare and vacation ownership properties from a prime location adjacent to Polo Towers on the “Las Vegas Strip”; (ii) Mr. Cloobeck's agreement to various non-competition, non-solicitation and non-interference covenants; and (iii) a license to use Mr. Cloobeck’s persona, including his name, likeness and voice. The intangible assets acquired were recorded at $9.0 million based on an appraisal and are being amortized over three to 20 years. See "Note 6—Transactions with Related Parties" for more detail on the Master Agreement.

Intangible assets purchased under the Master Agreement consisted of the following (dollars in thousands):

Amortization expense for other intangible assets was $4.1 million and $4.8 million for the three months ended September 30, 2015 and 2014, respectively, and $13.3 million and $14.8 million for the nine months ended September 30, 2015 and 2014, respectively.

As of September 30, 2015, the estimated aggregate amortization expense for intangible assets was expected to be $14.9 million, $13.8 million, $13.4 million, $13.3 million and $13.3 million for the successive 12 month periods ending September 30, 2016 through 2020, respectively, and $105.5 million for the remaining lives of these intangible assets.

Note 12 — Assets Held for Sale

Assets held for sale are recorded at the lower of cost or their estimated fair value less cost to sell and are not subject to depreciation. Sale of the assets classified as such is probable, and transfer of the assets is expected to qualify for recognition as a completed sale, generally within one year of the applicable balance sheet date.

Assets held for sale as of the dates presented below consisted of the following (in thousands):



	September 30, 2015		December 31, 2014
Certain units in Cabo, Mexico	$	154	$	5,855
Vacant land in Orlando, Florida	—		4,000
Vacant land in Kona, Hawaii	—		3,600
Points equivalent of unsold units and resorts in Europe	1,117		997
Total assets held for sale	$	1,271	$	14,452

The points equivalent of unsold units and resorts in the Company's European operations as of September 30, 2015 and December 31, 2014 were either held for sale or pending the consummation of sale. The proceeds related to assets pending the consummation of sale will be paid over several years and the Company will retain title to the properties until the full amounts due under the sales contracts are received. According to guidance included in ASC 360, "Property, Plant and Equipment" ("ASC 360"), the sales will not be considered consummated until all consideration has been exchanged. Consequently, the assets pending consummation of sale will continue to be included in assets held for sale until all proceeds are received.

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As of September 30, 2015, a vast majority of the completed units in Cabo, Mexico and vacant land in Orlando, Florida and Kona, Hawaii no longer qualified as assets held for sale and were included in unsold Vacation Interests, net at the same values.

Note 13 — Accrued Liabilities

Accrued liabilities as of the dates presented below consisted of the following (in thousands):



	September 30, 2015		December 31, 2014
Liability for unrecognized tax benefit	$	62,467	$	23,857
Accrued payroll and related	29,006		32,925
Accrued commissions	20,528		17,496
Accrued marketing expenses	17,997		14,953
Accrued other taxes	16,430		15,526
Accrued insurance	6,610		5,703
Accrued escrow liability	3,790		3,005
Accrued operating lease liabilities	3,231		3,503
Accrued professional fees	3,012		2,300
Accrued exchange company fees	2,183		2,169
Accrued liability related to business combinations	—		2,428
Other	10,417		10,815
Total accrued liabilities	$	175,671	$	134,680

Liability for unrecognized tax benefit represents amounts recorded related to uncertainty in income taxes, including potential interest charges, recognized in the Company's financial statements in accordance with ASC 740, “Income Taxes.” See "Note 17—Income Taxes" to the audited consolidated financial statements included in the 2014 Form 10-K for further detail.

Accrued liability related to business combinations represents a contingent liability associated with an earn-out granted in connection with a business combination completed in 2012. This liability was subsequently reduced after a negotiated settlement was reached and the reduced amount was paid in full in June 2015.

Note 14 — Deferred Revenues

Deferred revenues as of the dates presented below consisted of the following (in thousands):



	September 30, 2015		December 31, 2014
Deferred sampler programs revenue	$	61,480	$	64,403
Club deferred revenue	10,979		40,044
Guest deposits	6,491		6,482
Deferred maintenance and reserve fee revenue	—		7,552
Other	4,783		6,516
Total deferred revenues	$	83,733	$	124,997

Deferred maintenance and reserve fee revenue decreased by $7.6 million from December 31, 2014 to September 30, 2015 due to the St. Maarten Deconsolidation. See "Note 1—Background, Business and Basis of Presentation" for further detail on the St. Maarten Deconsolidation.

Note 15 — Borrowings

Conduit Facility

On February 5, 2015, the Company entered into an amended and restated Conduit Facility agreement that extended the maturity date of the facility to April 10, 2017. That amended and restated Conduit Facility provides for a $200.0 million facility that is, upon maturity, renewable for 364-day periods at the election of the lenders. The overall advance rate on loans receivable in the portfolio is limited to 88% of the aggregate face value of the eligible loans. The Conduit Facility originally bore interest at

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LIBOR or the commercial paper rate (having a floor of 0.50%) plus a usage-fee rate of 2.75%, and had a non-usage fee of 0.75%. In connection with the June 2015 Amendment, the usage-fee rate was reduced to 2.25%.

The June 2015 Amendment also provides, among other things, (i) that, at any time the outstanding note balance has been reduced to zero in connection with the delivery of a prepayment notice, the first borrowing thereafter must include a minimum of 250 timeshare loans, and (ii) for the inclusion of timeshare loans that have been executed through the utilization of electronic signature and electronic vaulting and management services.

In accordance with the requirements of the July 2015 Amendment, the Company posted a reserve payment in the amount of $0.4 million against the derivative instruments associated with the Conduit Facility. This reserve payment was refunded to the Company upon the completion of the DROT 2015-1 Notes in which more than 75% of the outstanding balance under the Conduit Facility was repaid using the proceeds from such securitization or other financing.

Securitization Notes

On July 29, 2015, the Company completed a securitization involving the issuance of $170.0 million DROT 2015-1 Notes. The interest rates for the $158.5 million Class A tranche notes and the $11.5 million Class B tranche notes are 2.7% and 3.2%, respectively. The overall weighted average interest rate is 2.8%. The advance rate for this transaction is 96.0%. The proceeds from the DROT 2015-1 Notes were used to repay all of the outstanding balance plus accrued interest under the Conduit Facility, as well as to pay debt issuance cost related to the DROT 2015-1 Notes with the remaining proceeds transferred to the Company for general corporate use, and the reserve payment described above was refunded to the Company.

Quorum Facility

On September 30, 2015, pursuant to a First Amendment to the Amended and Restated Loan Sale and Servicing Agreement, the Company amended the Quorum Facility to increase the aggregate minimum committed amount from $80.0 million to $100.0 million and to extend the term of the agreement to December 31, 2017, provided that Quorum Federal Credit Union may further extend the term for additional periods by written notice. As of September 30, 2015, the weighted average advance rate was 83.6% and the weighted average interest rate was 5.6%.

Notes Payable

During the nine months ended September 30, 2015, the Company issued two unsecured notes to finance premiums on certain insurance policies. Both unsecured notes are scheduled to mature in January 2016 and carry an interest rate of 2.7% per annum.

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The following table presents selected information on the Company’s borrowings as of the dates presented below (dollars in thousands):



	September 30, 2015										December 31, 2014
	Principal Balance			Weighted Average Interest Rate	Maturity	Gross Amount of Mortgages and Contracts as Collateral		Borrowing / Funding Availability			Principal Balance
Senior Credit Facility	$	424,665		5.5%	5/9/2021	$	—	$	25,000		$	442,775
Original issue discount related to Senior Credit Facility	(1,839		)			—		—			(2,055		)
Notes payable-insurance policies	2,841			2.7%	Various	—		—			4,286
Notes payable-other	160			5.0%	Various	—		—			321
Total Corporate Indebtedness	425,827					—		25,000			445,327

Notes payable-other	3			—%	11/18/2015	—		—			5
Total Non-Recourse Indebtedness other than Securitization Notes and Funding Facilities	3					—		—			5
Diamond Resorts Owners Trust Series 2014-1 (1)	160,971			2.6%	5/20/2027	171,812		—			247,992
Diamond Resorts Owners Trust Series 2015-1 (1)	148,628			2.8%	7/20/2027	155,711		—			—
Conduit Facility (1)	107,730			2.8%	4/10/2017	121,351		92,270		(2)	—
Diamond Resorts Owner Trust Series 2013-2 (1)	94,159			2.3%	5/20/2026	104,621		—			131,952
DRI Quorum Facility and Island One Quorum Funding Facility(1)	33,590			5.6%	Various	40,746		66,410		(2)	52,315
Diamond Resorts Owner Trust Series 2013-1 (1)	33,198			2.0%	1/20/2025	36,887		—			42,838
Diamond Resorts Owner Trust Series 2011-1 (1)	13,180			4.0%	3/20/2023	13,874		—			17,124
Original issue discount related to Diamond Resorts Owner Trust Series 2011-1	(115		)			—		—			(156		)
Diamond Resorts Tempus Owner Trust 2013 (1)	9,786			6.0%	12/20/2023	15,255		—			17,143
Total Securitization Notes and Funding Facilities	601,127					660,257		158,680			509,208
Total	$	1,026,957				$	660,257	$	183,680		$	954,540
(1) Non-recourse indebtedness
(2) Borrowing / funding availability is calculated as the difference between the maximum commitment amount and the outstanding principal balance; however, the actual availability is dependent on the amount of eligible loans that serve as the collateral for such borrowings.

Borrowing Restrictions and Limitations

All of the Company’s borrowing under the Senior Credit Facility, securitization notes and the Conduit Facility contain various restrictions and limitations that may affect the Company's business and affairs. These include, but are not limited to, restrictions and limitations relating to its ability to incur indebtedness and other obligations, to make investments and acquisitions and to pay dividends. The Company is also required to maintain certain financial ratios and comply with other financial and performance covenants. The failure of the Company to comply with any of these provisions, or to pay its obligations, could result in foreclosure by the lenders of their security interests in the Company’s assets, and could otherwise have a material adverse effect on the Company. The Company was in compliance with all of the financial covenants as of September 30, 2015.

Liquidity

Historically, the Company has depended on the availability of credit to finance the consumer loans that it provides to its customers for the purchase of their VOIs. Typically, these loans require a minimum cash down payment of 10% of the purchase price at the time of sale. However, selling, marketing and administrative expenses attributable to VOI sales are primarily cash expenses and often exceed the buyer's minimum down payment requirement. Accordingly, the availability of financing facilities for the sale or pledge of these receivables to generate liquidity is a critical factor in the Company's ability to meet its short-term and long-term cash needs. The Company has historically relied upon its ability to sell receivables in the securitization market in order to generate liquidity and create capacity on its Funding Facilities.

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Note 16 — Income Taxes

In accordance with ASC 740-270, "Accounting for Income Taxes in Interim Periods," the income tax provisions for the nine months ended September 30, 2015 and 2014 were determined primarily using estimated annual effective tax rates based on estimated income before provision for income taxes for the full years ending December 31, 2015 and 2014, respectively. For certain foreign jurisdictions, the tax provisions for the three and nine months ended September 30, 2015 and 2014 were determined using year-to-date income before provision for income taxes.

Note 17 — Commitments and Contingencies

Contractual Obligations

The Company has entered into various contractual obligations primarily related to construction of units at the Cabo Azul Resort in Mexico, as well as relating to sales center remodeling, property amenity improvement and corporate office expansion projects. The total remaining commitment was $7.1 million as of September 30, 2015.

Hurricane Odile

In September 2014, Hurricane Odile, a Category 4 hurricane, inflicted widespread damage on the Baja California peninsula, particularly in the state of Baja California Sur, in which the Cabo Azul Resort, one of the Company's managed resorts, is located. Hurricane Odile caused significant damage to the buildings as well as the facilities and amenities at the Cabo Azul Resort, including unsold Vacation Interests and property and equipment owned by the Company. During the nine months ended September 2015, the Company received $5.0 million in proceeds from its insurance carrier for property damage resulting from Hurricane Odile. Management believes the Company has sufficient property insurance to cover the costs incurred by the Company in excess of $5.0 million when the insurance claim is ultimately settled.

In addition, the Company has filed a claim under its business interruption insurance policy for business profits lost during the period that the Cabo Azul Resort remained closed as a result of the damage suffered in Hurricane Odile. During the quarter ended September 30, 2015, the Company received an aggregate of $3.6 million in installments from its insurance carrier related to such claim, which was recognized as other revenue in the condensed consolidated statement of income and comprehensive income (loss). The total claim remains under negotiation with the insurance carrier and any further payments will also be recorded in the periods in which they are received. The Cabo Azul Resort and the on-site sales center reopened on September 1, 2015.

Kona Agreement

On July 28, 2015, the Company entered into an agreement for the purchase and sale of property (the "Kona Agreement") with Hawaii Funding LLC (the "Kona Seller"), an affiliate of Och-Ziff Real Estate. The Kona Agreement relates to the development by the Kona Seller of a new resort, which is expected to consist of 144 units, on property located in Kona, Hawaii to be acquired by the Kona Seller. Pursuant to the Kona Agreement, the Company has agreed to purchase all of the units, subject to the satisfaction of specified conditions. The Kona Seller's delivery of the units to the Company, which is expected to begin in the first quarter of 2017 and continue through mid-2018, is subject to various conditions precedent and rights of the parties.

Litigation Contingencies

From time to time, the Company or its subsidiaries are subject to certain legal proceedings and claims in the ordinary course of business. The Company evaluates these legal proceedings and claims at each balance sheet date to determine the degree of probability of an unfavorable outcome and, when it is probable that a liability has been incurred, the Company’s ability to make a reasonable estimate of loss. The Company records a contingent litigation liability when it determines, after consultation with outside counsel, that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

Note 18 — Fair Value Measurements

ASC 820, "Fair Value Measurements" ("ASC 820"), defines fair value, establishes a framework for measuring fair value in accordance with U.S. GAAP and expands disclosures about fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:


•	Level 1: Quoted prices for identical instruments in active markets.

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•	Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs or significant value drivers are observable.


•	Level 3: Unobservable inputs used when little or no market data is available.

As of September 30, 2015, the only assets and liabilities of the Company measured at fair value on a recurring basis were the September 2015 Swap. As of September 30, 2015, the fair value of the September 2015 Swap was based on valuation reports provided by counterparties and was classified as Level 3, based on the fact that the credit risk data used for the valuations were not directly observable and could not be corroborated by observable market data. The Company’s assessment of the significant inputs to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. See "Note 3—Concentrations of Risk" for further detail on the derivative instruments.

As of December 31, 2014, the Company had no assets or liabilities measured at fair value on a recurring basis.

The following table summarizes the information regarding the Company's derivative instruments as of the dates presented below (in thousands):



	As of September 30, 2015				As of December 31, 2014
	Carrying Value		Total Estimated Fair Value		Carrying Value		Total Estimated Fair Value
Liabilities:
Interest rate swap agreement (a)	$	284	$	284	$	—	$	—
Total Liabilities	$	284	$	284	$	—	$	—

(a) Values associated with the September 2015 Swap are presented under the derivative liabilities category of the accompanying condensed consolidated balance sheet.

As of September 30, 2015 and December 31, 2014, mortgages and contracts receivable had a balance of $571.3 million and $498.7 million, net of allowance, respectively. The allowance for loan and contract losses against the mortgages and contracts receivable is derived using a static pool analysis to develop historical default percentages based on FICO credit scores to apply to the mortgage and contract population. The Company evaluates other factors such as economic conditions, industry trends and past due aging reports in order to determine the adjustments needed to true up the allowance, which adjusts the carrying value of mortgages and contracts receivable to management's best estimate of collectability. As a result of such evaluation, the Company believes that the carrying value of the mortgages and contracts receivable approximated its fair value at September 30, 2015 and December 31, 2014. These financial assets were classified as Level 3, as there is little market data available.

As of September 30, 2015 and December 31, 2014, the borrowings under the Senior Credit Facility were classified as Level 2 and the Company believes the fair value of the Senior Credit Facility approximated its carrying value at such dates due to the fact that the market for similar instruments remained stable since May 2014, when the Company entered into the Senior Credit Facility.

As of September 30, 2015, the Company’s DROT 2011 Notes, the notes issued in the securitization transaction completed on January 23, 2013 (the "DROT 2013-1 Notes"), the notes issued in the securitization transaction completed on November 20, 2013 (the "DROT 2013-2 Notes"), DROT 2014-1 Notes and DROT 2015-1 Notes were classified as Level 2. As of December 31, 2014, the Company’s DROT 2011 Notes, DROT 2013-1 Notes, DROT 2013-2 Notes and DROT 2014-1 were classified as Level 2. The fair value of these borrowings was determined with the assistance of an investment banking firm, which the Company believes approximated similar instruments in active markets. The Company believes the fair value of the Diamond Resorts Tempus Owner Trust 2013 Notes issued on September 20, 2013 (the "Tempus 2013 Notes") approximated their carrying value due to the fact that the market for similar instruments remained stable since September 2013, the issuance date of the Tempus 2013 Notes. Consequently, the Tempus 2013 Notes were classified as Level 2 as of September 30, 2015 and December 31, 2014. See "Note 16—Borrowings" to the audited consolidated financial statements included in the 2014 Form 10-K for further detail on these borrowings.

As of September 30, 2015 and December 31, 2014, the Quorum Facility and a loan sale agreement that the Company assumed in connection with a previous business combination were classified as Level 2 based on an internal analysis performed by the Company utilizing the discounted cash flow model and the quoted prices for identical or similar instruments in markets that are not active.

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As of September 30, 2015 and December 31, 2014, the fair values of all other debt instruments were not calculated, based on the fact that they were either due within one year or were immaterial.

In accordance with ASC 820, the Company also applied the provisions of fair value measurement to various non-recurring measurements for the Company’s financial and non-financial assets and liabilities and recorded the impairment charges. The Company’s non-financial assets consist of property and equipment, which are recorded at cost, net of depreciation, unless impaired, and assets held for sale, which are recorded at the lower of cost or their estimated fair value less costs to sell.

The carrying values and estimated fair values of the Company's financial instruments as of September 30, 2015 were as follows (in thousands):



	Carrying Value		Total Estimated Fair Value		Estimated Fair Value (Level 2)		Estimated Fair Value (Level 3)
Assets:
Mortgages and contracts receivable, net	$	571,267	$	571,267	$	—	$	571,267
Total assets	$	571,267	$	571,267	$	—	$	571,267
Liabilities:
Senior Credit Facility, net	$	422,826	$	422,826	$	422,826	$	—
Securitization notes and Funding Facilities, net	601,127		603,772		603,772		—
Notes payable	3,004		3,004		3,004		—
Total liabilities	$	1,026,957	$	1,029,602	$	1,029,602	$	—

The carrying values and estimated fair values of the Company's financial instruments as of December 31, 2014 were as follows (in thousands):



	Carrying Value		Total Estimated Fair Value		Estimated Fair Value (Level 2)		Estimated Fair Value (Level 3)
Assets:
Mortgages and contracts receivable, net	$	498,662	$	498,662	$	—	$	498,662
Total assets	$	498,662	$	498,662	$	—	$	498,662
Liabilities:
Senior Credit Facility, net	$	440,720	$	440,720	$	440,720	$	—
Securitization notes and Funding Facilities, net	509,208		512,706		512,706		—
Notes payable	4,612		4,612		4,612		—
Total liabilities	$	954,540	$	958,038	$	958,038	$	—

Note 19 — Stock Repurchase Program

On October 28, 2014, the Company's board of directors authorized a stock repurchase program allowing for the expenditure of up to $100.0 million for the repurchase of the Company's common stock (the "Stock Repurchase Program"). On July 28, 2015, the Company's board of directors authorized an additional $100.0 million for expenditures under the Stock Repurchase Program. With the new authorization, approximately $101.9 million was available as of September 30, 2015 under the Stock Repurchase Program. Any repurchases under the expanded program will be made from time to time in accordance with applicable securities laws in the open market and/or in privately negotiated transactions and may include repurchases pursuant to Rule 10b5-1 trading plans. The expanded repurchase program does not obligate the Company to acquire any additional shares of common stock or impose any particular timetable for repurchases, and the program may be suspended or modified at any time at the Company’s discretion. The timing and amount of any stock repurchases will be determined by the Company’s management based on its evaluation of market conditions, the trading price of the stock, potential alternative uses of cash resources, applicable legal requirements, compliance with the provisions of the Company’s credit agreement, and other factors.

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The following table summarizes stock repurchase activity under the Stock Repurchase Program (cost in thousands):



	Shares		Cost		Average Price Per Share
From inception through December 31, 2014	642,900		$	16,077	$	25.01
For the nine months ended September 30, 2015 (a)	2,595,955		82,046		31.61
Total from inception through September 30, 2015 (a)	3,238,855	(b)	$	98,123	$	30.30

(a) Includes the purchase of 1,515,582 shares from the underwriter for $50.0 million in the March 2015 Secondary Offering at the price of $32.99 per share.

(b) Shares of common stock repurchased by the Company pursuant to the Stock Repurchase Program. As of September 30, 2015,

2,925,092 of the repurchased shares held in treasury had been retired.

The Senior Credit Facility limits the Company's ability to make restricted payments, including the payment of dividends or expenditures for stock repurchases. As of September 30, 2015, the available basket for restricted payments, including purchases under the Stock Repurchase Program, was approximately $81.8 million, subject to change based on the Company's future financial performance.

Note 20 — Stock-Based Compensation

On May 19, 2015, the Company held its 2015 annual meeting of stockholders, at which the Company's stockholders approved the Company’s 2015 Equity Incentive Compensation Plan (the “Equity Incentive Plan”). The Equity Incentive Plan had previously been approved by the Company’s board of directors, subject to stockholder approval. The Equity Incentive Plan is a broad-base plan under which 8,500,000 shares of the Company’s common stock are authorized for issuance for awards to officers, employees, consultants, advisors and directors of the Company, including pursuant to awards of restricted stock, RSUs, stock options, deferred stock or stock appreciation rights. As of September 30, 2015, 7,208,940 shares remained available for issuance as new awards under the 2015 Plan. There will be no further equity grants under the Company's previous incentive compensation plan.

Stock Options

On July 18, 2013, the Company granted to the former holders of Diamond Resorts Parent, LLC (DRII's predecessor) Class B common units ("BCUs") non-qualified stock options, which were immediately vested, exercisable for an aggregate of 3,760,215 shares of common stock, at an option price of $14.00 per share, in part to maintain the incentive value intended when the Company originally issued those BCUs to these individuals and to provide an incentive for such individuals to continue providing service to the Company. The grantees of these immediately vested options include Messrs. Cloobeck, Kraff, Palmer, Bentley, Lanznar and two employees of the Company. Through December 31, 2014, Messrs. Cloobeck, Palmer, Bentley and Lanznar were not employed or compensated directly by the Company, but were rather employed or independently contracted and compensated by HM&C. See "Note 6—Transactions with Related Parties" for further detail on the HM&C Agreement.

In addition, between July 18, 2013 and December 31, 2014, the Company issued additional non-qualified stock options, exercisable for an aggregate of 4,408,100 shares of common stock, to Eligible Persons (including employees of HM&C), each at an option price equal to the market price on the applicable grant date. 25% of the shares issuable upon the exercise of such non-qualified stock options vested immediately on the grant date and the remaining 75% vest in equal installments on each of the first three anniversaries of the grant date. All of these options expire ten years from the grant date.

On May 19, 2015, the Company issued additional non-qualified stock options, exercisable for an aggregate of 1,067,000 shares of common stock, to Eligible Persons, each at an option price equal to the market price on the applicable grant date. 25% of the shares issuable upon the exercise of such non-qualified stock options vest in equal installments on each of the first four anniversaries of the grant date. All of these options expire ten years from the grant date.

The Company accounts for its stock-based compensation issued to its employees and non-employee directors (in their capacity as such) in accordance with ASC 718, "Compensation—Stock Compensation" ("ASC 718"). For a stock-based award with service-only vesting conditions, the Company measures compensation expense at fair value on the grant date and recognizes this expense in the statement of income and comprehensive income (loss) over the expected term during which the employees (including, from an accounting perspective, non-employee directors in their capacity as such) of the Company provide service in exchange for the award.

Through December 31, 2014 and prior to the Company's acquisition of HM&C in January 2015, the Company accounted for its stock-based compensation issued to employees and independent contractors of HM&C in accordance with ASC 505-50,

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DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Continued

"Equity-Based Payments to Non-Employees" ("ASC 505"). In addition, the stock-based compensation issued to Mr. Kraff in connection with the Company's initial public offering of common stock (the "IPO") has been accounted for in accordance with ASC 505. Employees and independent contractors of HM&C through December 31, 2014 and Mr. Kraff (with respect to the stock-based compensation issued to him in connection with the IPO) are collectively referred to as the "Non-Employees," and the stock-based compensation issued to the Non-Employees are collectively referred to as the "Non-Employee Grants." Pursuant to ASC 505, the fair value of an equity instrument issued to Non-Employees is initially measured on the grant date by using the stock price and other measurement assumptions and subsequently remeasured at each balance sheet date as (and to the extent) the relevant performance is completed. With respect to the stock-based compensation issued to Mr. Kraff in connection with the IPO, his performance of services was considered completed at the grant date.

Effective January 1, 2015, the Company acquired all of the outstanding membership interests in HM&C, which became a wholly-owned subsidiary of the Company. As employees of HM&C became employees of the Company following the HM&C Acquisition, all unvested stock options issued to employees of HM&C were converted to employee grants from an accounting perspective on January 1, 2015.

As a result of the HM&C Acquisition, compensation cost attributable to unvested options issued to employees of HM&C was remeasured as if the unvested options were newly granted on January 1, 2015, and the portion of the newly measured cost attributable to the remaining vesting period will be recognized as compensation cost prospectively from January 1, 2015.

The Company utilizes the Black-Scholes option-pricing model to estimate the fair value of the stock options granted to its employees (including, from an accounting perspective, non-employee directors in their capacity as such) and Non-Employees. The expected volatility was calculated based on the historical volatility of the stock prices for a group of identified peer companies for the expected term of the stock options on the grant date (which is significantly greater than the volatility of the S&P 500® index as a whole during the same period) due to the lack of historical stock trading prices of the Company. The average expected option life represented the period of time the stock options were expected to be outstanding at the issuance date based on management’s estimate using the simplified method prescribed under the Securities and Exchange Commission (the "SEC") Staff Accounting Bulletin Topic 14: Share-Based Payment ("SAB 14") for employee grants and contractual terms for Non-Employee grants. The risk-free interest rate was calculated based on U.S. Treasury zero-coupon yield with a remaining term that approximated the expected option life assumed at the date of issuance. The expected annual dividend per share was 0% based on the Company’s expected dividend rate.

The fair value per share information, including related assumptions, used to determine compensation cost for the Company’s non-qualified stock options consistent with the requirements of ASC 718 and ASC 505, consisted of the following for the following periods:



	Nine Months Ended September 30, 2015			Nine Months Ended September 30, 2014
	Company Employees			Non-Employees			Company Employees
Weighted average fair value per share	$	10.01		$	12.30		$	8.12
Expected stock price volatility	44.9		%	52.8		%	52.8		%
Expected option life (in years)	5.86			6.00			6.00
Risk-free interest rate	1.71		%	1.70		%	1.71		%
Expected annual dividend yield	—		%	—		%	—		%

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DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Continued

Stock option activity related to stock option grants issued to the employees of the Company during the nine months ended September 30, 2015 was as follows:



	Company Employees
	Options (In thousands)		Weighted-Average Exercise Price (Per Share)		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (In thousands)
Outstanding at January 1, 2015	7,868		$	15.02	8.8	$	101,336
Granted	1,067		32.69
Exercised	(160	)	15.72
Forfeited	(15	)	26.46
Outstanding at September 30, 2015	8,760		$	17.14	8.1	$	54,753
Exercisable at September 30, 2015	6,208		$	14.59	7.8	$	54,611

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value that would have been realized by the option holders had all option holders exercised their options on September 30, 2015. The intrinsic value of a stock option is the excess of the Company’s closing stock price on that date over the exercise price, multiplied by the number of shares subject to the option.

The following table summarizes the Company’s unvested stock option activity for the nine months ended September 30, 2015:



	Company Employees
	Options (In thousands)		Weighted-Average Exercise Price (Per Share)
Unvested at January 1, 2015	2,536		$	16.37
Granted	1,067		32.69
Vested	(1,036	)	17.29
Forfeited or expired	(15	)	26.46
Unvested at September 30, 2015	2,552		$	23.33

Restricted Stock, RSUs and Deferred Stock

Between July 18, 2013 and December 31, 2014, the Company issued restricted stock to certain non-employee members of the board of directors of the Company, which vest equally on each of the first three anniversary dates from the grant date.

On May 19, 2015, the Company issued restricted stock to certain employees of the Company (which vest equally on each of the first four anniversaries of the grant date) and non-employee members of the board of directors of the Company (which vest equally on each of the first 12 quarterly anniversaries of the grant date).

In addition, on May 19, 2015, the Company issued RSUs to certain employees of the Company (which conditionally vest equally on each of the first four anniversaries of the grant date and fully vest on the fourth anniversary date of the grant date when certain conditions are met) and to certain non-employee members of the board of directors of the Company who elected to receive RSUs in lieu of restricted stock for services rendered (which vest equally on each of the first 12 quarterly anniversaries of the grant date).

Furthermore, on May 19, 2015, the Company issued deferred stock to certain non-employee members of the board of directors of the Company who elected to receive deferred stock in lieu of cash for services rendered. The deferred stock vested immediately on the grant date.

All restricted stock, RSUs and deferred stock issued on May 19, 2015 (the "Stock Unit Issuances") were valued at $32.69 per share (the closing stock price of the Company's common stock on such date). The aggregate value of the awards was recorded as common stock and additional paid-in capital in the accompanying condensed consolidated balance sheet, with a corresponding increase to prepaid expense and other assets, and subsequently charged to expense ratably over the respective amortization periods of the Stock Unit Issuances.

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DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Continued

The following table summarizes the activity related to the Stock Unit Issuances during the nine months ended September 30, 2015:



	Restricted Stock				Restricted Stock Units				Deferred Stock
	Shares (In thousands)		Weighted Average Exercise Price (Per share)		Units (In thousands)		Weighted Average Exercise Price (Per share)		Units (In thousands)		Weighted Average Exercise Price (Per share)
Unvested at January 1, 2015	44		$	16.92	—		$	—	—		$	—
Granted	157		32.69		86		32.69		12		32.69
Vested/Converted to common stock	(21	)	19.22		(4	)	32.69		(12	)	32.69
Forfeited or expired	(16	)	28.36		—		—		—		—
Unvested at September 30, 2015	164		$	30.63	82		$	32.69	—		$	32.69

Stock-based Compensation Expense

The following table summarizes the Company’s stock-based compensation expense for the three and nine months ended September 30, 2015 and 2014 (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Non-Employee stock option grants	$	—	$	1,241	$	—	$	5,312
Company employee grants	4,277		1,909		11,279		6,171
Non-employee director grants	260		186		975		715
Total	$	4,537	$	3,336	$	12,254	$	12,198

In accordance with SAB 14, the Company records stock-based compensation to the same line item on the statement of income and comprehensive income (loss) as the grantees' cash compensation. In addition, the Company records stock-based compensation expense to the same business segment as the grantees' cash compensation for segment reporting purposes in accordance with ASC 280, "Segment Reporting."

The following table summarizes the effect of the stock-based compensation for the three months ended September 30, 2015 and 2014 (in thousands):



	Three Months Ended September 30, 2015								Three Months Ended September 30, 2014
	Hospitality and Management Services		Vacation Interest Sales and Financing		Corporate and Other		Total		Hospitality and Management Services		Vacation Interest Sales and Financing		Corporate and Other		Total
Management and member services	$	326	$	—	$	—	$	326	$	350	$	—	$	—	$	350
Advertising, sales and marketing	—		829		—		829		—		537		—		537
Vacation Interests carrying cost, net	—		51		—		51		—		65		—		65
Loan portfolio	—		88		—		88		—		102		—		102
General and administrative	—		—		3,243		3,243		—		—		2,282		2,282
Total	$	326	$	968	$	3,243	$	4,537	$	350	$	704	$	2,282	$	3,336

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DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Continued

The following table summarizes the effect of the stock-based compensation for the nine months ended September 30, 2015 and 2014 (in thousands):



	Nine Months Ended September 30, 2015								Nine Months Ended September 30, 2014
	Hospitality and Management Services		Vacation Interest Sales and Financing		Corporate and Other		Total		Hospitality and Management Services		Vacation Interest Sales and Financing		Corporate and Other		Total
Management and member services	$	951	$	—	$	—	$	951	$	1,314	$	—	$	—	$	1,314
Advertising, sales and marketing	—		1,745		—		1,745		—		1,804		—		1,804
Vacation Interests carrying cost, net	—		166		—		166		—		212		—		212
Loan portfolio	—		269		—		269		—		338		—		338
General and administrative	—		—		9,123		9,123		—		—		8,530		8,530
Total	$	951	$	2,180	$	9,123	$	12,254	$	1,314	$	2,354	$	8,530	$	12,198

The following table summarizes the Company’s unrecognized stock-based compensation expense as of September 30, 2015 (dollars in thousands):



	Options		Restricted Stock		Restricted Stock Units		Deferred Stock		Total
Unrecognized stock-based compensation expense	$	24,879	$	4,282	$	2,451	$	247	$	31,859
Weighted-average remaining amortization period (in years)	1.6		2.9		3.6		0.6		1.9

Note 21 — Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss) are as follows (in thousands):



	Cumulative Translation Adjustment			Post-retirement Benefit Plan			Other			Total
Balance, December 31, 2014	$	(17,716	)	$	(1,893	)	$	48		$	(19,561	)
Period change	(1,861		)	1,893			(26		)	6
Balance, September 30, 2015	$	(19,577	)	$	—		$	22		$	(19,555	)

The balance as of December 31, 2014 related to the post-retirement benefit plan, net of tax, was reduced to zero as of September 30, 2015 due to the St. Maarten Deconsolidation. See "Note 1—Background Business and Basis of Presentation" for further detail on the St. Maarten Deconsolidation.

Note 22 — Net Income Per Share

The Company calculates net income per share in accordance with ASC Topic 260, "Earnings Per Share." Basic net income per share is calculated by dividing net income for common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net income per common share is calculated by dividing net income by weighted-average common shares outstanding during the period plus potentially dilutive common shares, such as stock options and restricted stock.

Dilutive potential common shares are calculated in accordance with the treasury stock method, which assumes that proceeds from the exercise of all options are used to repurchase common stock at market value. The amount of shares remaining after the proceeds are exhausted represents the potentially dilutive effect of the securities.

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DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Continued

Approximately 1.1 million shares and 0.5 million shares underlying stock options for the three and nine months ended September 30, 2015, respectively, were excluded from the net income per share computation, as their effect would be antidilutive under the treasury stock method.

The table below sets forth the computation of basic and diluted net income per share for the periods presented below (in thousands, except per share amounts):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Computation of Basic Net Income Per Share:
Net income	$	36,897	$	26,304	$	99,742	$	37,583
Weighted average shares outstanding	72,912		75,542		73,480		75,476
Basic net income per share	$	0.51	$	0.35	$	1.36	$	0.50

Computation of Diluted Net Income Per Share:
Net income	$	36,897	$	26,304	$	99,742	$	37,583
Weighted average shares outstanding	72,912		75,542		73,480		75,476
Effect of dilutive securities:
Restricted stock, RSUs and deferred stock (a)	140		22		23		13
Options to purchase common stock	2,265		1,854		2,578		1,206
Shares for diluted net income per share	75,317		77,418		76,081		76,695
Diluted net income per share	$	0.49	$	0.34	$	1.31	$	0.49

(a) Includes unvested dilutive restricted stock and RSUs that are subject to future forfeitures.

Note 23 — Segment Reporting

The Company presents its results of operations in two segments: (i) hospitality and management services, which includes operations related to the management of resort properties and the Diamond Collections, operation of the Clubs, operations of the properties located in St. Maarten for which the Company functioned as the HOA through December 31, 2014, food and beverage venues owned and managed by the Company and the provision of other services; and (ii) Vacation Interests sales and financing, which includes operations relating to the marketing and sales of Vacation Interests, as well as the consumer financing activities related to such sales. While certain line items reflected on the statement of income and comprehensive income (loss) fall completely into one of these business segments, other line items relate to revenues or expenses that are applicable to more than one segment. For line items that are applicable to more than one segment, revenues or expenses are allocated by management, which involves significant estimates. Certain expense items (principally corporate interest expense, depreciation and amortization and provision for income taxes) are not, in management’s view, allocable to either of these business segments, as they apply to the entire Company. In addition, general and administrative expenses (which exclude hospitality and management services related overhead that is recovered from the HOAs and the Diamond Collections) are not allocated to either of these business segments because, historically, management has not allocated these expenses for purposes of evaluating the Company’s different operational divisions. Accordingly, these expenses are presented under corporate and other.

Management believes that it is impracticable to allocate specific assets and liabilities related to each business segment. In addition, management does not review balance sheets by business segment as part of their evaluation of operating segment performances. Consequently, no balance sheet segment reports have been presented.

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DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Continued

The following table presents revenues and income before provision for income taxes for the Company's reportable segments (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Revenues:
Hospitality and management services	$	47,455		$	50,294		$	141,772		$	151,415
Vacation Interests sales and financing	203,672			171,324			537,612			459,577
Corporate and other	262			347			1,027			1,212
Total revenues	$	251,389		$	221,965		$	680,411		$	612,204

Income before provision for income taxes:
Hospitality and management services	$	34,806		$	32,144		$	104,317		$	101,481
Vacation Interests sales and financing	71,481			56,650			198,970			147,987
Corporate and other	(43,980		)	(42,334		)	(131,151		)	(179,025		)
Income before provision for income taxes	$	62,307		$	46,460		$	172,136		$	70,443

Note 24 — Loss on Extinguishment of Debt

On May 9, 2014, the Company repaid all outstanding indebtedness under its three inventory loans (previously entered into in connection with various business combinations) using a portion of the proceeds from the term loan portion of the Senior Credit Facility. The unamortized debt issuance costs on these inventory loans were recorded as a loss on extinguishment of debt.

In addition, on May 9, 2014, the Company terminated its previous revolving credit facility in conjunction with its entry into the Senior Credit Facility and recorded the unamortized debt issuance costs as a loss on extinguishment of debt.

On June 9, 2014, the Company redeemed the remaining outstanding principal amount under the Senior Secured Notes using a portion of the proceeds from the term loan portion of the Senior Credit Facility. As a result, $30.2 million of redemption premium, $9.4 million of unamortized debt issuance cost and $6.1 million of unamortized debt discount were recorded as a loss on extinguishment of debt. See "Note 16—Borrowings" to the audited consolidated financial statements included in the 2014 Form 10-K for further detail on these transactions.

Loss on extinguishment of debt consisted of the following for the periods listed below (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Senior Secured Notes	$	—	$	—	$	—	$	45,767
Revolving credit facility	—		—		—		932
Inventory loans	—		—		—		108
Total loss on extinguishment of debt	$	—	$	—	$	—	$	46,807

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DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Continued

Note 25 — Subsequent Events

On October 16, 2015, the Company completed its acquisition of substantially all of the assets of Ocean Beach Club, LLC, Gold Key Resorts, LLC, Professional Hospitality Resources, Inc., Vacation Rentals, LLC and Resort Promotions, Inc. (collectively, the “Gold Key Companies”) relating to their operation of their vacation ownership business in Virginia Beach, Virginia and the Outer Banks, North Carolina. The Company acquired management contracts, real property interests, unsold vacation ownership interests and other assets of the Gold Key Companies, adding six additional managed resorts to the Company’s resort network, in exchange for a cash purchase price of approximately $167.5 million and the assumption of certain non-interest bearing liabilities. An additional $6.2 million was deposited into an escrow account in connection with an agreement between the Company and the Gold Key Companies to service pre-closing Gold Key consumer receivables and is treated as restricted cash.

Between October 1, 2015 and November 2, 2015, the Company used $27.0 million of cash to repurchase shares of its common stock. As of November 2, 2015, approximately $75.0 million was available for expenditure under the Stock Repurchase Program.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

This discussion contains forward-looking statements, which are covered by the "Safe Harbor for Forward-Looking Statements" provided by the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do not relate strictly to historical or current facts. We have tried to identify forward-looking statements in this discussion by using words such as “anticipates,” “estimates,” “expects,” “intends,” “plans” and “believes,” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could.” These forward-looking statements include, among others, statements relating to our future financial performance, our business prospects and strategy, anticipated financial position, liquidity and capital needs and other similar matters. These forward-looking statements are based on management's current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict.

Our actual results may differ materially from those expressed in, or implied by, the forward-looking statements included in this Quarterly Report as a result of various factors, including, among others:


•	adverse trends or disruptions in economic conditions generally or in the vacation ownership, vacation rental and travel industries;


•	adverse changes to, or interruptions in, relationships with our affiliates and other third parties, including termination of our hospitality management contracts;


•	our ability to maintain an optimal inventory of vacation ownership interests ("VOI" or "Vacation Interests") for sale overall, as well as in seven multi-resort trusts and one single-resort trust (collectively, the "Diamond Collections");


•	our ability to sell, securitize or borrow against our consumer loans;


•	decreased demand from prospective purchasers of VOIs;


•	adverse events, including weather-related and other natural disasters and crises, or trends in vacation destinations and regions where the resorts in our network are located;


•	changes in our senior management;


•	our ability to comply with regulations applicable to the vacation ownership industry;


•	the effects of our indebtedness and our compliance with the terms thereof;


•	changes in the interest rate environment and their effects on our outstanding indebtedness;


•	our ability to successfully implement our growth strategy, including our strategy to selectively pursue complementary strategic transactions;


•	risks associated with acquisitions, including difficulty in integrating operations and personnel, disruption of ongoing business and increased expenses;


•	our use of structures for development of new inventory in a manner consistent with our asset-light model, including the risk in these structures that we will not control development activities or the timing of inventory delivery and the risk that the third parties do not fulfill their obligations to us;


•	our ability to compete effectively; and


•	other risks and uncertainties discussed in "Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2014 (the "2014 Form 10-K").

Accordingly, you should read this report completely and with the understanding that our actual future results may be materially different from what we expect.

Forward-looking statements speak only as of the date of this report. Except as expressly required under federal securities laws and the rules and regulations of the Securities and Exchange Commission (the "SEC"), we do not have any obligation, and do not undertake, to update any forward-looking statements to reflect events or circumstances arising after the date of this report, whether as a result of new information or future events or otherwise. You should not place undue reliance on the forward-looking statements included in this Quarterly Report or that may be made elsewhere from time to time by us, or on our behalf. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.

In addition, you should read the following discussion in conjunction with our condensed consolidated financial statements and other financial information included elsewhere in this Quarterly Report and our audited consolidated financial statements and the related notes for the fiscal year ended December 31, 2014, and the related management’s discussion and analysis of financial condition and results of operations, contained in the 2014 Form 10-K.

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Overview

We are a global leader in the hospitality and vacation ownership industry, with a worldwide network of 352 destinations located in 34 countries, throughout the world, including the continental United States ("U.S."), Hawaii, Canada, Mexico, the Caribbean, Central America, South America, Europe, Asia, Australia, New Zealand and Africa (as of September 30, 2015). Our resort network includes 93 resort properties with approximately 11,000 units that we manage and 255 affiliated resorts and hotels and four cruise itineraries, which we do not manage and do not carry our brand, but are a part of our network and are available for our members to use as vacation destinations. For financial reporting purposes, our business consists of two segments: (i) hospitality and management services, which is comprised of our hospitality and management services operations, including our operations related to the management of our resort properties, the Diamond Collections and the Clubs, and (ii) Vacation Interests sales and financing, which is comprised of our marketing and sales of VOIs and the consumer financing of purchases of VOIs. Our Clubs include THE Club, which provides members with access to all resorts in our network and offers the full range of member services, as well as other Clubs that enable members to use their points to stay at specified resorts in our network and provide members with a more limited offering of benefits. We refer to THE Club and other Club offerings as “the Clubs.”

Significant 2015 Developments

HM&C Acquisition

Pursuant to the Homeowner Association Oversight, Consulting and Executive Management Services Agreement that we entered into with Hospitality Management and Consulting Service, LLC ("HM&C"), a Nevada limited liability company (the “HM&C Agreement”), HM&C has provided certain services to us, including the services of certain executive officers, including David F. Palmer, President and Chief Executive Officer, C. Alan Bentley, Executive Vice President and Chief Financial Officer, Howard S. Lanznar, Executive Vice President and Chief Administrative Officer, and other officers and employees and, through December 31, 2014, also provided the services of Stephen J. Cloobeck, our founder and Chairman.

On January 6, 2015, we entered into a Membership Interest Purchase Agreement (the "Purchase Agreement"), whereby we acquired from an entity controlled by Mr. Cloobeck and an entity controlled by Mr. Palmer (which entities owned 95.0% and 5.0% of the outstanding membership interests of HM&C, respectively), all of the outstanding membership interests in HM&C in exchange for an aggregate purchase price of $10,000 (the "HM&C Acquisition").

As a result of the HM&C Acquisition, effective January 1, 2015, transactions between us and HM&C were fully eliminated from our consolidated financial statements, as HM&C became our wholly-owned subsidiary.

Master Agreement

Concurrent with our entry into the Purchase Agreement, on January 6, 2015, we entered into a master agreement (the "Master Agreement") with Mr. Cloobeck, HM&C, JHJM Nevada I, LLC ("JHJM") and other entities controlled by Mr. Cloobeck or his immediate family members. Pursuant to the Master Agreement, the parties made certain covenants to and agreements with the other parties, including: (i) the termination effective as of January 1, 2015, of the services agreement between JHJM and HM&C; (ii) the conveyance to us of exclusive rights to market timeshare and vacation ownership properties from a prime location adjacent to Polo Towers on the "Las Vegas Strip," pursuant to the terms of an Assignment and Assumption Agreement; (iii) Mr. Cloobeck's agreement to various restrictive covenants, including non-competition, non-solicitation and non-interference covenants; and (iv) Mr. Cloobeck's grant to us of a license to use Mr. Cloobeck's persona, including his name, likeness and voice. In connection with the transactions contemplated by the Master Agreement, we paid Mr. Cloobeck or his designees an aggregate of $16.5 million and incurred $0.3 million in expenses related to this transaction.

In addition, in light of the termination of the services agreement between JHJM and HM&C and the existence of a director designation agreement dated July 17, 2013, we agreed in the Master Agreement that, at least through December 31, 2017, so long as Mr. Cloobeck is serving as a member of our board of directors, he will continue to be the Chairman of the Board and, in such capacity, will receive annual compensation equal to two times the compensation generally paid to other non-employee directors, and he, his spouse and children will receive medical insurance coverage.

Deconsolidation of the St. Maarten Resorts

Effective January 1, 2015, we assigned the rights and related obligations associated with assets we previously owned as the HOA of two properties located in St. Maarten to newly-created HOAs (the "St. Maarten HOAs"). We have no beneficial interest in the St. Maarten HOAs, except through our ownership of VOIs, but continue to serve as the manager of the St. Maarten HOAs pursuant to customary management agreements. As a result of these transactions, the operating results and the assets and liabilities of the St. Maarten properties were deconsolidated from our condensed consolidated financial statements effective January 1, 2015 (with the exception of all employee-related liabilities, including a post-retirement benefit plan, which

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were transferred to the St. Maarten HOAs during the quarter ended September 30, 2015, and cash accounts, which are expected to be transferred to the St. Maarten HOAs during the quarter ending December 31, 2015) (the "St. Maarten Deconsolidation").

Gold Key Acquisition

On October 16, 2015, we completed the acquisition of substantially all of the assets of Ocean Beach Club, LLC, Gold Key Resorts, LLC, Professional Hospitality Resources, Inc., Vacation Rentals, LLC and Resort Promotions, Inc. (collectively, the “Gold Key Companies”) relating to their operation of their vacation ownership business in Virginia Beach, Virginia and the Outer Banks, North Carolina (the "Gold Key Acquisition"). We acquired management contracts, real property interests, unsold vacation ownership interests and other assets of the Gold Key Companies, adding six additional managed resorts to our resort network, in exchange for a cash purchase price of approximately $167.5 million and the assumption of certain non-interest bearing liabilities. An additional $6.2 million was deposited into an escrow account in connection with an agreement between us and the Gold Key Companies to service pre-closing Gold Key consumer receivables and is treated as restricted cash.

We used cash and cash equivalents on hand to complete the Gold Key Acquisition. Subject to credit market conditions, we plan to amend our Senior Credit Facility prior to the year ended December 31, 2015 and refinance a substantial portion of the acquisition price under that facility. See "Liquidity and Capital Resources—Indebtedness—Senior Credit Facility" for the definition of and additional detail on the Senior Credit Facility.

Segment Reporting

For financial reporting purposes, we present our results of operations and financial condition in two business segments. The first business segment is hospitality and management services, which includes our operations related to the management of resort properties and the Diamond Collections, our operation of the Clubs, operations of the properties located in St. Maarten for which we functioned as the HOA through December 31, 2014, food and beverage venues owned and managed by us and the provision of other services. The second business segment, Vacation Interests sales and financing, includes our operations relating to the marketing and sales of our VOIs, as well as our consumer financing activities related to such sales. While certain line items reflected on our statement of income and comprehensive income (loss) fall completely into one of these business segments, other line items relate to revenues or expenses which are applicable to both segments. For line items that are applicable to both segments, revenues or expenses are allocated by management as described under "Item 7. Management's Discussion and Analysis of Financial Condition—Key Revenue and Expense Items" in the 2014 Form 10-K, which involves significant estimates. Certain expense items (principally corporate interest expense, depreciation and amortization and provision for income taxes) are not, in management's view, allocable to either of these business segments as they apply to the entire Company. In addition, general and administrative expenses are not allocated to either of our business segments because historically management has not allocated these expenses (which exclude hospitality and management services related overhead that is allocated to the HOAs and Diamond Collections) for purposes of evaluating our different operational divisions. Accordingly, these expenses are presented under corporate and other.

Management believes that it is impracticable to allocate specific assets and liabilities related to each business segment. In addition, management does not review balance sheets by business segment as part of its evaluation of operating segment performances. Consequently, no balance sheet segment reports have been presented.

We also operate our business in two geographic areas: North America (including the Caribbean) and Europe. Our North America operations include our managed resorts in the continental U.S., Hawaii, Mexico and the Caribbean, and our Europe operations include our managed resorts in England, Scotland, Ireland, Italy, Spain, Portugal, Austria, Malta, France and Greece.

Key Revenue and Expense Items

See "Item 7. Management's Discussion and Analysis of Financial Condition—Key Revenue and Expense Items" in the 2014 Form 10-K for further detail on our key revenue and expense items.

Results of Operations

In comparing our results of operations between two periods, we sometimes refer to "same-store" results. When referring to same-store results of our hospitality and management services segment, we are referring to the results relating to management contracts with resorts in effect during the entirety of the two applicable periods. When referring to same-store results of our Vacation Interests sales and financing segment, we are referring to the results relating to sales centers open during the entirety of the two applicable periods.

The following discussion includes (a) certain financial measures not in conformity with U.S. generally accepted accounting principles ("U.S. GAAP”), specifically (i) management and member services expense excluding non-cash stock-based compensation expense and, for the nine months ended September 30, 2014, excluding the non-cash benefit related to the contract renegotiation with Interval International, Inc. ("Interval International"), an exchange company, as discussed below; (ii)

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advertising, sales and marketing expense excluding non-cash stock-based compensation expense; and (iii) general and administrative expense excluding non-cash stock-based compensation expense and, for the nine months ended September 30, 2015, excluding the cash charge related to the termination of the services agreement between JHJM and HMCS; and (b) a reconciliation of each such non-U.S. GAAP financial measure to the most directly comparable financial measure in accordance with U.S. GAAP. We exclude these items because management excludes them from its forecasts and evaluation of our operational performance and because we believe that the U.S. GAAP measures including these items are not indicative of our core operating results. The non-U.S. GAAP financial measures included in this quarterly report should not be considered in isolation of, or as an alternative to, any measure of financial performance calculated and presented in accordance with U.S. GAAP.

Comparison of the Three Months Ended September 30, 2015 to the Three Months Ended September 30, 2014



	Three Months Ended September 30, 2015										Three Months Ended September 30, 2014
	Hospitality and Management Services		Vacation Interest Sales and Financing		Corporate and Other			Total			Hospitality and Management Services		Vacation Interest Sales and Financing		Corporate and Other			Total
	(In thousands)
	(Unaudited)
Revenues:
Management and member services	$	41,647	$	—	$	—		$	41,647		$	37,795	$	—	$	—		$	37,795
Consolidated resort operations	4,004		—		—			4,004			10,481		—		—			10,481
Vacation Interests sales, net of provision $0, $21,100, $0, $21,100, $0, $15,847, $0 and $15,847, respectively	—		165,208		—			165,208			—		143,180		—			143,180
Interest	—		19,858		262			20,120			—		16,783		347			17,130
Other	1,804		18,606		—			20,410			2,018		11,361		—			13,379
Total revenues	47,455		203,672		262			251,389			50,294		171,324		347			221,965
Costs and Expenses:
Management and member services	8,913		—		—			8,913			8,549		—		—			8,549
Consolidated resort operations	3,365		—		—			3,365			9,216		—		—			9,216
Vacation Interests cost of sales	—		16,946		—			16,946			—		16,476		—			16,476
Advertising, sales and marketing	—		94,876		—			94,876			—		82,308		—			82,308
Vacation Interests carrying cost, net	—		7,430		—			7,430			—		5,162		—			5,162
Loan portfolio	371		953		—			1,324			385		1,015		—			1,400
Other operating	—		7,849		—			7,849			—		5,847		—			5,847
General and administrative	—		—		28,372			28,372			—		—		26,747			26,747
Depreciation and amortization	—		—		8,030			8,030			—		—		8,271			8,271
Interest expense	—		4,137		7,935			12,072			—		3,866		7,428			11,294
Impairments and other write-offs	—		—		—			—			—		—		11			11
(Gain) loss on disposal of assets	—		—		(95		)	(95		)	—		—		224			224
Total costs and expenses	12,649		132,191		44,242			189,082			18,150		114,674		42,681			175,505
Income (loss) before provision for income taxes	34,806		71,481		(43,980		)	62,307			32,144		56,650		(42,334		)	46,460
Provision for income taxes	—		—		25,410			25,410			—		—		20,156			20,156
Net income (loss)	$	34,806	$	71,481	$	(69,390	)	$	36,897		$	32,144	$	56,650	$	(62,490	)	$	26,304

Consolidated Results

Total revenues increased $29.4 million, or 13.3%, to $251.4 million for the three months ended September 30, 2015 from $222.0 million for the three months ended September 30, 2014. Total revenues in our hospitality and management services segment decreased by $2.8 million, or 5.6%, to $47.5 million for the three months ended September 30, 2015 from $50.3 million for the three months ended September 30, 2014. Total revenues in our Vacation Interests sales and financing segment increased $32.4 million, or 18.9%, to $203.7 million for the three months ended September 30, 2015 from $171.3 million for the three months ended September 30, 2014. Revenue in our corporate and other segment was $0.3 million for each of the three months ended September 30, 2015 and 2014.

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Total costs and expenses increased $13.6 million, or 7.7%, to $189.1 million for the three months ended September 30, 2015 from $175.5 million for the three months ended September 30, 2014. Total costs and expenses included $4.5 million and $3.3 million of non-cash stock-based compensation charges for the three months ended September 30, 2015 and 2014, respectively.

Hospitality and Management Services Segment

Management and Member Services Revenue. Total management and member services revenue increased $3.8 million, or 10.2%, to $41.6 million for the three months ended September 30, 2015 from $37.8 million for the three months ended September 30, 2014. Management fees increased as a result of increases in operating costs at the resort level, which generated higher management fee revenue on a same-store basis from 107 cost-plus management agreements. In addition, effective January 1, 2015, we completed the St. Maarten Deconsolidation, thus removing the revenues and expenses related to the two resorts in St. Maarten from our consolidated resort operations revenue and expense, respectively, while recognizing the management fee revenue earned under management and member services revenue. Following the St. Maarten Deconsolidation, we recognized management fees with respect to such resorts of approximately $0.8 million for the three months ended September 30, 2015.

Consolidated Resort Operations Revenue. Consolidated resort operations revenue decreased $6.5 million, or 61.8%, to $4.0 million for the three months ended September 30, 2015 from $10.5 million for the three months ended September 30, 2014. This decrease was primarily attributable to the St. Maarten Deconsolidation effective January 1, 2015, which eliminated the consolidated resort operations revenue from these resorts from our condensed consolidated financial statements.

Other Revenue. Other revenue decreased $0.2 million, or 10.6%, to $1.8 million for the three months ended September 30, 2015 from $2.0 million for the three months ended September 30, 2014.

Management and Member Services Expense. For comparison purposes, the following table presents management and member services expense for the three months ended September 30, 2015 and September 30, 2014 (in thousands), both on a U.S. GAAP basis and excluding the non-cash stock-based compensation, and such amounts as a percentage of management member services revenue:



	Three Months Ended September 30,
	2015			2014
Management and member services expense	$	8,913		$	8,549
Less: Non-cash stock-based compensation	(326		)	(350		)
Management and member services expense excluding non-cash stock-based compensation	$	8,587		$	8,199
Management and member services expense as a % of management and member services revenue	21.4		%	22.6		%
Management and member services expense excluding non-cash stock-based compensation as a % of management and member services revenue	20.6		%	21.7		%

The decrease in management and member services expense (excluding the non-cash stock-based compensation charges) as a percentage of management and member services revenue was primarily due to improved leverage of fixed costs over a higher revenue base.

Consolidated Resort Operations Expense. Consolidated resort operations expense decreased $5.8 million, or 63.5%, to $3.4 million for the three months ended September 30, 2015 from $9.2 million for the three months ended September 30, 2014. The decrease was primarily attributable to the St. Maarten Deconsolidation effective January 1, 2015, which eliminated the consolidated resort operations expense from these resorts from our condensed consolidated financial statements.

Vacation Interests Sales and Financing Segment

Vacation Interests Sales, Net. Vacation Interests sales, net increased $22.0 million, or 15.4%, to $165.2 million for the three months ended September 30, 2015 from $143.2 million for the three months ended September 30, 2014. The increase in Vacation Interests sales, net was attributable to a $27.3 million increase in Vacation Interests sales revenue, partially offset by a $5.3 million increase in our provision for uncollectible Vacation Interests sales revenue.

The $27.3 million increase in Vacation Interests sales revenue during the three months ended September 30, 2015 compared to the three months ended September 30, 2014 was generated by sales growth on a same-store basis from 48 sales centers primarily attributable to an increase in our volume per guest ("VPG," which represents Vacation Interests sales revenue divided by the number of tours). VPG increased by $423, or 16.1%, to $3,058 for the three months ended September 30, 2015 from $2,635 for the three months ended September 30, 2014, as a result of a higher average sales price per transaction and a

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higher closing percentage (which represents the percentage of VOI sales transactions closed relative to the total number of tours at our sales centers during the period presented). The number of tours increased by 3,460, or 5.7%, to 64,380 for the three months ended September 30, 2015 from 60,920 for the three months ended September 30, 2014, due primarily to the expansion of our lead-generation and marketing programs. Our closing percentage increased to 14.7% for the three months ended September 30, 2015 from 13.8% for the three months ended September 30, 2014. Our VOI sales transactions increased by 1,054, or 12.5%, to 9,489 during the three months ended September 30, 2015, compared to 8,435 transactions during the three months ended September 30, 2014, and VOI average sales price per transaction increased by $1,722, or 9.0%, to $20,750 for the three months ended September 30, 2015 from $19,028 for the three months ended September 30, 2014. The increase in average sales price per transaction and the higher closing percentage (and as a result, higher VPG) were due principally to the continued focus on selling larger point packages and the success of the hospitality-driven sales and marketing initiatives implemented in association with our belief in the power of vacations for happier and healthier living. Vacation Interests sales revenue generated at our North American and Caribbean sales centers is transacted in U.S. dollars and has historically accounted for more than 90% of our consolidated Vacation Interests sales revenue.

Provision for uncollectible Vacation Interests sales revenue increased $5.3 million, or 33.1%, to $21.1 million during the three months ended September 30, 2015 from $15.8 million during the three months ended September 30, 2014. This increase was primarily due to higher gross Vacation Interest sales and a higher percentage of financed sales for the three months ended September 30, 2015 compared to the three months ended September 30, 2014; further, this increase was related to the change of certain portfolio statistics during the three months ended September 30, 2015. The allowance for uncollectible mortgages and contracts receivable as a percentage of gross mortgages and contracts receivable was 21.7% as of September 30, 2015, as compared to 21.4% as of September 30, 2014. The weighted average Fair Isaac Corporation ("FICO") credit scores of loans written during the three months ended September 30, 2015 and 2014 were 748 and 749, respectively.

Interest Revenue. Interest revenue increased $3.1 million, or 18.3%, to $19.9 million for the three months ended September 30, 2015 from $16.8 million for the three months ended September 30, 2014. This increase was attributable to a $4.2 million increase resulting from a larger average outstanding balance in the mortgages and contracts receivable portfolio during the three months ended September 30, 2015, as compared to the three months ended September 30, 2014. This increase was partially offset by (i) a decrease of $0.2 million attributable to a reduction in the weighted average interest rate on the portfolio; and (ii) an increase of $1.0 million associated with the amortization of deferred loan origination costs, which is recorded as a reduction to interest revenue. Amortization of deferred loan origination costs increased during the three months ended September 30, 2015 due to the increase in deferred loan origination costs during the last several years, primarily as a result of higher gross Vacation Interests sales and a higher percentage of sales financed.

Other Revenue. Other revenue increased $7.2 million, or 63.8%, to $18.6 million for the three months ended September 30, 2015 from $11.4 million for the three months ended September 30, 2014. During the three months ended September 30, 2015, we received an aggregate of $3.6 million in installments from our insurance carrier under our business interruption insurance policy for business profits lost during the period that the Cabo Azul Resort remained closed as a result of the damage suffered in Hurricane Odile. In addition, non-cash incentives increased $2.2 million to $6.7 million for the three months ended September 30, 2015 from $4.5 million for the three months ended September 30, 2014. Non-cash incentives as a percentage of gross Vacation Interests sales were 3.6% for the three months ended September 30, 2015 as compared to 2.8% for the three months ended September 30, 2014. This increase was principally due to a higher utilization of non-cash incentives by Vacation Interests purchasers. Furthermore, closing cost revenue increased as a result of higher Vacations Interests sales revenue.

Vacation Interests Cost of Sales. Vacation Interests cost of sales increased $0.4 million, or 2.9%, to $16.9 million for the three months ended September 30, 2015 from $16.5 million for the three months ended September 30, 2014. This increase consisted of $2.5 million related to the increase in Vacation Interests sales revenue partially offset by a $2.1 million decrease resulting from changes in estimates under the relative sales value method. The changes under the relative sales value method related to the recovery of a larger pool of low cost inventory, an increase in the average retail sales price and a larger pool of inventory becoming eligible for capitalization in accordance with our inventory recovery agreements during the three months ended September 30, 2015 as compared to the three months ended September 30, 2014. Vacation Interests cost of sales as a percentage of Vacation Interests sales, net decreased to 10.3% for the three months ended September 30, 2015 from 11.5% for the three months ended September 30, 2014. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Use of Estimates—Vacation Interest Cost of Sales" in the 2014 Form 10-K for further detail regarding the relative sales value method.

Advertising, Sales and Marketing Expense. For comparison purposes, the following table presents advertising, sales and marketing expense for the three months ended September 30, 2015 and September 30, 2014 (in thousands), both on a U.S. GAAP basis and excluding the non-cash stock-based compensation, and such amounts as a percentage of gross Vacation Interests sales:

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	Three Months Ended September 30,
	2015			2014
Advertising, sales and marketing expense	$	94,876		$	82,308
Less: Non-cash stock-based compensation	(829		)	(537		)
Advertising, sales and marketing expense excluding non-cash stock-based compensation	$	94,047		$	81,771
Advertising, sales and marketing expense as a % of gross Vacation Interests sales	50.9		%	51.8		%
Advertising, sales and marketing expense excluding non-cash stock-based compensation as a % of gross Vacation Interests sales	50.5		%	51.4		%

The decrease in advertising, sales and marketing expense (excluding the non-cash stock-based compensation charges) as a percentage of gross Vacation Interests sales was primarily due to improved leverage of fixed costs through increased sales efficiencies.

Vacation Interests Carrying Cost, Net. Vacation Interests carrying cost, net increased $2.2 million, or 43.9%, to $7.4 million for the three months ended September 30, 2015 from $5.2 million for the three months ended September 30, 2014. This increase was primarily due to (i) higher operating expenses as a result of an increase in rental activity; and (ii) additional maintenance fees related to inventory that we own as well as inventory recovered pursuant to our inventory recovery agreements during the three months ended September 30, 2015 as compared to the three months ended September 30, 2014. This increase was partially offset by an increase in rental revenue due to (a) more occupied room nights; (b) an increase in resort fees generated; and (c) an increase in the revenue recognized in connection with mini-vacation packages.

Loan Portfolio Expense. Loan portfolio expense remained consistent at $1.0 million for the three months ended September 30, 2015, as compared to the three months ended September 30, 2014.

Other Operating Expense. Other operating expense increased $2.0 million, or 34.2%, to $7.8 million for the three months ended September 30, 2015 from $5.8 million for the three months ended September 30, 2014. Non-cash incentives increased $2.2 million to $6.7 million for the three months ended September 30, 2015 from $4.5 million for the three months ended September 30, 2014. Non-cash incentives as a percentage of gross Vacation Interests sales were 3.6% for the three months ended September 30, 2015 as compared to 2.8% for the three months ended September 30, 2014. This increase was principally due to a higher utilization of non-cash incentives by Vacation Interests purchasers.

Interest Expense. Interest expense increased $0.2 million, or 7.0%, to $4.1 million for the three months ended September 30, 2015 from $3.9 million for the three months ended September 30, 2014. The increase was primarily attributable to higher average outstanding balances under securitization notes and Funding Facilities during the three months ended September 30, 2015, as compared to the three months ended September 30, 2014. This increase was partially offset by a lower weighted average interest rate as we paid down securitization notes and Funding Facilities bearing higher interest rates and replaced them with those bearing lower interest rates. See "Liquidity and Capital Resources—Overview” for the definition of Funding Facilities and "Liquidity and Capital Resources—Indebtedness” for further detail on the Funding Facilities.

Corporate and Other

General and Administrative Expense. For comparison purposes, the following table presents general and administrative expense for the three months ended September 30, 2015 and September 30, 2014 (in thousands), both on a U.S. GAAP basis and excluding the non-cash stock-based compensation, and such amounts as a percentage of total revenue:



	Three Months Ended September 30,
	2015			2014
General and administrative expense	$	28,372		$	26,747
Less: Non-cash stock-based compensation	(3,243		)	(2,282		)
General and administrative expense excluding non-cash stock-based compensation	$	25,129		$	24,465
General and administrative expense as a % of total revenue	11.3		%	12.1		%
General and administrative expense excluding non-cash stock-based compensation as a % of total revenue	10.0		%	11.0		%

The decrease in general and administrative expense (excluding the non-cash stock-based compensation charges) as a percentage of total revenue reflected the continued improved leverage of fixed costs over a higher revenue base.

Depreciation and Amortization. Depreciation and amortization decreased $0.3 million, or 2.9%, to $8.0 million for the three months ended September 30, 2015 from $8.3 million for the three months ended September 30, 2014.

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Interest Expense. Interest expense increased $0.5 million, or 6.8%, to $7.9 million for the three months ended September 30, 2015 from $7.4 million for the three months ended September 30, 2014. This increase was mainly attributable to higher debt issuance amortization expense as a result of fees incurred related to new borrowings.

Income Taxes. Provision for income taxes was $25.4 million for the three months ended September 30, 2015, as compared to $20.2 million for the three months ended September 30, 2014. The increase was due to an increase in income before provision for income taxes for the three months ended September 30, 2015 as compared to the three months ended September 30, 2014.

Due to current favorable tax law regarding recognition of income from Vacation Interests sales and use of net operating loss carry-forwards ("NOLs"), we expect our effective cash tax rate to be substantially lower than the statutory tax rate for the year ending December 31, 2015.

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Comparison of the Nine Months Ended September 30, 2015 to the Nine Months Ended September 30, 2014



	Nine Months Ended September 30, 2015										Nine Months Ended September 30, 2014
	Hospitality and Management Services		Vacation Interest Sales and Financing		Corporate and Other			Total			Hospitality and Management Services		Vacation Interest Sales and Financing		Corporate and Other			Total
	(In thousands)
	(Unaudited)
Revenues:
Management and member services	$	124,325	$	—	$	—		$	124,325		$	115,238	$	—	$	—		$	115,238
Consolidated resort operations	11,338		—		—			11,338			28,825		—		—			28,825
Vacation Interests sales, net of provision $0, $56,007, $0, $56,007, $0, $40,123, $0 and $40,123, respectively	—		438,055		—			438,055			—		379,082		—			379,082
Interest	—		56,694		1,027			57,721			—		47,798		1,212			49,010
Other	6,109		42,863		—			48,972			7,352		32,697		—			40,049
Total revenues	141,772		537,612		1,027			680,411			151,415		459,577		1,212			612,204
Costs and Expenses:
Management and member services	25,310		—		—			25,310			23,377		—		—			23,377
Consolidated resort operations	11,114		—		—			11,114			25,662		—		—			25,662
Vacation Interests cost of sales	—		25,535		—			25,535			—		44,840		—			44,840
Advertising, sales and marketing	—		248,267		—			248,267			—		214,190		—			214,190
Vacation Interests carrying cost, net	—		27,171		—			27,171			—		19,766		—			19,766
Loan portfolio	1,031		5,211		—			6,242			895		5,354		—			6,249
Other operating	—		20,198		—			20,198			—		16,650		—			16,650
General and administrative	—		—		84,159			84,159			—		—		74,203			74,203
Depreciation and amortization	—		—		25,127			25,127			—		—		24,601			24,601
Interest expense	—		12,260		22,937			35,197			—		10,790		34,502			45,292
Loss on extinguishment of debt	—		—		—			—			—		—		46,807			46,807
Impairments and other write-offs	—		—		12			12			—		—		53			53
(Gain) loss on disposal of assets	—		—		(57		)	(57		)	—		—		71			71
Total costs and expenses	37,455		338,642		132,178			508,275			49,934		311,590		180,237			541,761
Income (loss) before provision for income taxes	104,317		198,970		(131,151		)	172,136			101,481		147,987		(179,025		)	70,443
Provision for income taxes	—		—		72,394			72,394			—		—		32,860			32,860
Net income (loss)	$	104,317	$	198,970	$	(203,545	)	$	99,742		$	101,481	$	147,987	$	(211,885	)	$	37,583

Consolidated Results

Total revenues increased $68.2 million, or 11.1%, to $680.4 million for the nine months ended September 30, 2015 from $612.2 million for the nine months ended September 30, 2014. Total revenues in our hospitality and management services segment decreased by $9.6 million, or 6.4%, to $141.8 million for the nine months ended September 30, 2015 from $151.4 million for the nine months ended September 30, 2014. Total revenues in our Vacation Interests sales and financing segment increased $78.0 million, or 17.0%, to $537.6 million for the nine months ended September 30, 2015 from $459.6 million for the nine months ended September 30, 2014. Revenue in our corporate and other segment was $1.0 million for the nine months ended September 30, 2015 and $1.2 million for the nine months September 30, 2014.

Total costs and expenses decreased $33.5 million, or 6.2%, to $508.3 million for the nine months ended September 30, 2015 from $541.8 million for the nine months ended September 30, 2014. Total costs and expenses in the nine months ended September 30, 2015 included a $12.3 million non-cash stock based compensation charge and a $7.8 million cash charge in connection with the termination of the services agreement between JHJM and HM&C. Total costs and expenses for the nine

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months ended September 30, 2014 included a $12.2 million non-cash stock-based compensation charge, a $46.8 million loss on extinguishment of debt, of which $16.6 million was non-cash, and a $1.8 million benefit related to the renegotiation of our contract with Interval International. See "Management and Member Services Expense" below for further detail on the contract renegotiation with Interval International.

Hospitality and Management Services Segment

Management and Member Services Revenue. Total management and member services revenue increased $9.1 million, or 7.9%, to $124.3 million for the nine months ended September 30, 2015 from $115.2 million for the nine months ended September 30, 2014. Management fees increased as a result of increases in operating costs at the resort level, which generated higher management fee revenue on a same-store basis from 107 cost-plus management agreements and the St. Maarten Deconsolidation. See "—Comparison of the Three Months Ended September 30, 2015 to the three Months ended September 30, 2014—Management and Member Services Revenue" for further detail on the St. Maarten Deconsolidation. Following the St. Maarten Deconsolidation, we recognized management fees with respect to such resorts of approximately $2.4 million for the nine months ended September 30, 2015.

Consolidated Resort Operations Revenue. Consolidated resort operations revenue decreased $17.5 million, or 60.7%, to $11.3 million for the nine months ended September 30, 2015 from $28.8 million for the nine months ended September 30, 2014. This decrease was primarily attributable to the St. Maarten Deconsolidation effective January 1, 2015, which eliminated the consolidated resort operations revenue from these resorts from our condensed consolidated financial statements. This decrease was partially offset by higher revenue from retail ticket sales operations and higher food and beverage revenues at certain restaurants that we own and manage.

Other Revenue. Other revenue decreased $1.3 million, or 16.9%, to $6.1 million for the nine months ended September 30, 2015 from $7.4 million for the nine months ended September 30, 2014. This decrease was primarily attributable to the reversal of a $1.1 million contingent liability associated with a previous business combination recorded during the nine months ended September 30, 2014.

Management and Member Services Expense. For comparison purposes, the following table presents management and member services expense for the nine months ended September 30, 2015 and September 30, 2014 (in thousands), both on a U.S. GAAP basis and excluding the non-cash stock-based compensation and the non-cash benefit related to the contract renegotiation with Interval International, and such amounts as a percentage of management member services revenue:



	Nine Months Ended September 30,
	2015			2014
Management and member services expense	$	25,310		$	23,377
Less: Non-cash stock-based compensation	(951		)	(1,314		)
Plus: Non-cash benefit related to the contract renegotiation	—			1,780
Management and member services expenses excluding non-cash stock-based compensation and benefit related to the contract renegotiation	$	24,359		$	23,843
Management and member services expense as a % of management and member services revenue	20.4		%	20.3		%
Management and member services expense excluding non-cash stock-based compensation and benefit related to the contract renegotiation as a % of management and member services revenue	19.6		%	20.7		%

In April 2014, we renegotiated our contract with Interval International, which relieved us from our obligation to repay the unearned portion of a marketing allowance to Interval International under the original contract and resulted in the release of this deferred revenue to the statement of income and comprehensive income (loss) of $1.8 million as a reduction of exchange company costs for the three months ended June 30, 2014. The decrease in management and member services expense (excluding the non-cash stock-based compensation charges and the non-cash benefit) as a percentage of management and member services revenue was attributable to the improved leverage of fixed costs over a higher management and member services revenue base and lower call center expenses resulting from improved efficiencies as we continued to transition the call centers from a third-party provider to an in-house operation.

Consolidated Resort Operations Expense. Consolidated resort operations expense decreased $14.6 million, or 56.7%, to $11.1 million for the nine months ended September 30, 2015 from $25.7 million for the nine months ended September 30, 2014. The decrease was primarily attributable to the St. Maarten Deconsolidation effective January 1, 2015, which eliminated the consolidated resort operations expense from these resorts from our condensed consolidated financial statements. This decrease was partially offset by higher retail ticket sales expense as a result of higher ticket sales revenue.

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Vacation Interests Sales and Financing Segment

Vacation Interests Sales, Net. Vacation Interests sales, net increased $59.0 million, or 15.6%, to $438.1 million for the nine months ended September 30, 2015 from $379.1 million for the nine months ended September 30, 2014. The increase in Vacation Interests sales, net was attributable to a $74.9 million increase in Vacation Interests sales revenues, partially offset by a $15.9 million increase in our provision for uncollectible Vacation Interests sales revenue.

The $74.9 million increase in Vacation Interests sales revenue during the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 was generated by sales growth on a same-store basis from 48 sales centers primarily attributable to an increase in our VPG. VPG increased by $523, or 20.3%, to $3,101 for the nine months ended September 30, 2015 from $2,578 for the nine months ended September 30, 2014, as a result of a higher average sales price per transaction and a higher closing percentage. The number of tours remained flat at 165,772 for the nine months ended September 30, 2015, as compared to 165,739 for the nine months ended September 30, 2014. Our closing percentage increased to 15.0% for the nine months ended September 30, 2015 from 14.0% for the nine months ended September 30, 2014. Our VOI sales transactions increased by 1,542, or 6.6%, to 24,809 during the nine months ended September 30, 2015, compared to 23,267 transactions during the nine months ended September 30, 2014, and VOI average sales price per transaction increased by $2,357, or 12.8%, to $20,718 for the nine months ended September 30, 2015 from $18,361 for the nine months ended September 30, 2014. The increase in average sales price per transaction and the higher closing percentage (and as a result, higher VPG) were due principally to the continued focus on selling larger point packages and the success of the hospitality-driven sales and marketing initiatives implemented in association with our belief in the power of vacations for happier and healthier living. Vacation Interests sales revenue generated at our North American and Caribbean sales centers is transacted in U.S. dollars and has historically accounted for more than 90% of our consolidated Vacation Interests sales revenue.

Provision for uncollectible Vacation Interests sales increased $15.9 million, or 39.6%, to $56.0 million during the nine months ended September 30, 2015 from $40.1 million during the nine months ended September 30, 2014. This increase was primarily due to higher gross Vacation Interest sales and a higher percentage of financed sales for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014; further, this increase was related to the change of certain portfolio statistics during the nine months ended September 30, 2015. As of September 30, 2015, the allowance for mortgages and contracts receivable as a percentage of gross mortgages and contracts receivable was 21.7% as compared to 21.4% as of September 30, 2014. The weighted average FICO credit scores of loans written during the nine months ended September 30, 2015 and 2014 were 753 and 756, respectively.

Interest Revenue. Interest revenue increased $8.9 million, or 18.6%, to $56.7 million for the nine months ended September 30, 2015 from $47.8 million for the nine months ended September 30, 2014. The increase was attributable to a $12.9 million increase resulting from a larger average outstanding balance in the mortgages and contracts receivable portfolio during the nine months ended September 30, 2015, as compared to the nine months ended September 30, 2014. This increase was partially offset by (i) a decrease of $1.2 million attributable to a reduction in the weighted average interest rate on the portfolio; and (ii) an increase of $2.9 million associated with the amortization of deferred loan origination costs, which is recorded as a reduction to interest revenue. Amortization of deferred loan origination costs increased during the nine months ended September 30, 2015 due to the increase in deferred loan origination costs during the last several years, primarily as a result of higher gross Vacation Interests sales and a higher percentage of sales financed.

Other Revenue. Other revenue increased $10.2 million, or 31.1%, to $42.9 million for the nine months ended September 30, 2015 from $32.7 million for the nine months ended September 30, 2014. During the nine months ended September 30, 2015, we received an aggregate of $3.6 million in installments from our insurance carrier under our business interruption insurance policy for business profits lost during the period that the Cabo Azul Resort remained closed as a result of the damage suffered in Hurricane Odile. In addition, non-cash incentives increased $3.5 million to $17.2 million for the nine months ended September 30, 2015 from $13.7 million for the nine months ended September 30, 2014. Non-cash incentives as a percentage of gross Vacation Interests sales increased to 3.5% for the nine months ended September 30, 2015, as compared to 3.3% for the nine months ended September 30, 2014. Furthermore, closing cost revenue increased as a result of higher Vacations Interests sales revenue.

Vacation Interests Cost of Sales. Vacation Interests cost of sales decreased $19.3 million, or 43.1%, to $25.5 million for the nine months ended September 30, 2015 from $44.8 million for the nine months ended September 30, 2014. This decrease consisted of a $26.3 million decrease resulting from the cumulative effect of changes in estimates under the relative sales value method, partially offset by a $7.0 million increase related to the increase in gross Vacation Interests sales revenue. The changes under the relative sales value method related to the recovery of a larger pool of low cost inventory, an increase in the average retail sales price and a larger pool of inventory becoming eligible for capitalization in accordance with our inventory recovery agreements during the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014. Vacation Interests cost of sales as a percentage of gross Vacation Interests sales, net decreased to 5.8% for the nine months ended September 30, 2015 from 11.8% for the nine months ended September 30, 2014. See "Item 7. Management's Discussion

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and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Use of Estimates—Vacation Interest Cost of Sales" in the 2014 Form 10-K for further detail regarding the relative sales value method.

Advertising, Sales and Marketing Expense. For comparison purposes, the following table presents advertising, sales and marketing expense for the nine months ended September 30, 2015 and September 30, 2014 (in thousands), both on a U.S. GAAP basis and excluding non-cash stock-based compensation, and such amounts as a percentage of gross Vacation Interests sales:



	Nine Months Ended September 30,
	2015			2014
Advertising, sales and marketing expense	$	248,267		$	214,190
Less: Non-cash stock-based compensation	(1,745		)	(1,804		)
Advertising, sales and marketing expense excluding non-cash stock-based compensation	$	246,522		$	212,386
Advertising, sales and marketing expense as a % of gross Vacation Interests sales	50.3		%	51.1		%
Advertising, sales and marketing expense excluding non-cash stock-based compensation as a % of gross Vacation Interests sales	49.9		%	50.7		%

Vacation Interests Carrying Cost, Net. Vacation Interests carrying cost, net increased $7.4 million, or 37.5%, to $27.2 million for the nine months ended September 30, 2015 from $19.8 million for the nine months ended September 30, 2014. This increase was primarily due to (i) higher operating expenses as a result of a rise in rental activity; and (ii) additional maintenance fee expense related to inventory that we own as well as inventory recovered pursuant to our inventory recovery agreements during the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014. This increase was partially offset by an increase in rental revenue due to (a) more occupied room nights and higher average daily rates; (b) an increase in resort fees generated; and (c) an increase in the average price of sampler packages sold, as a result of our continued focus on selling higher priced sampler packages.

Loan Portfolio Expense. Loan portfolio expense decreased $0.2 million, or 2.7%, to $5.2 million for the nine months ended September 30, 2015 from $5.4 million for the nine months ended September 30, 2014.

Other Operating Expense. Other operating expense increased $3.5 million, or 21.3%, to $20.2 million for the nine months ended September 30, 2015 from $16.7 million for the nine months ended September 30, 2014. Non-cash incentives increased $3.5 million to $17.2 million for the nine months ended September 30, 2015 from $13.7 million for the nine months ended September 30, 2014. Non-cash incentives as a percentage of gross Vacation Interests sales remained consistent at 3.5% for the nine months ended September 30, 2015, as compared to 3.3% for the nine months ended September 30, 2014.

Interest Expense. Interest expense increased $1.5 million, or 13.6%, to $12.3 million for the nine months ended September 30, 2015 from $10.8 million for the nine months ended September 30, 2014. The increase was primarily attributable to higher average outstanding balances under securitization notes and Funding Facilities during the nine months ended September 30, 2015, as compared to the nine months ended September 30, 2014. This increase was partially offset by a lower weighted average interest rate as we paid down securitization notes and Funding Facilities bearing higher interest rates and replaced them with those bearing lower interest rates.

Corporate and Other

General and Administrative Expense. For comparison purposes, the following table presents general and administrative expense for the nine months ended September 30, 2015 and September 30, 2014 (in thousands), both on a U.S. GAAP basis and excluding non-cash stock-based compensation and the cash charge in connection with the termination of the services agreement between JHJM and HM&C, and such amounts as a percentage of total revenue:

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	Nine Months Ended September 30,
	2015			2014
General and administrative expense	$	84,159		$	74,203
Less: Non-cash stock-based compensation	(9,123		)	(8,530		)
Less: Charge related to the termination of the service agreement	(7,830		)	—
General and administrative expense excluding non-cash stock-based compensation and charge related to the termination of the service agreement	$	67,206		$	65,673
General and administrative expense as a % of total revenue	12.4		%	12.1		%
General and administrative expense excluding non-cash stock-based compensation and charge related to the contract termination as a % of total revenue	9.9		%	10.7		%

General and administrative expense for the nine months ended September 30, 2015 also included approximately $0.9 million in expenses related to the secondary offering of shares of our common stock by certain selling stockholders consummated in March 2015 (the "March 2015 Secondary Offering"). See "Liquidity and Capital Resources—Overview” for further detail on the March 2015 Secondary Offering. The decrease in general and administrative expense as a percentage of total revenue (excluding the non-cash stock-based compensation charges and charge relating to the termination of the service agreement) reflected the continued improved leverage of fixed costs over a higher revenue base.

Depreciation and Amortization. Depreciation and amortization increased $0.5 million, or 2.1%, to $25.1 million for the nine months ended September 30, 2015 from $24.6 million for the nine months ended September 30, 2014. This increase was primarily attributable to the addition of depreciable assets such as (i) information technology related projects and equipment; (ii) renovation projects at certain sales centers; and (iii) the acquisition of intangible assets in connection with the Master Agreement that we entered into in January 2015.

Interest Expense. Interest expense decreased $11.6 million, or 33.5%, to $22.9 million for the nine months ended September 30, 2015 from $34.5 million for the nine months ended September 30, 2014. Cash and non-cash interest expense relating to our 12.0% senior secured notes due 2018 (the "Senior Secured Notes") were $21.0 million lower for the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014 due to the redemption of the Senior Secured Notes on June 9, 2014. This decrease was partially offset by $8.8 million increase in cash and non-cash interest expense relating to the $470.0 million senior secured credit facility (the "Senior Credit Facility"), which we closed on May 9, 2014.

Loss on Extinguishment of Debt. Loss on extinguishment of debt was $46.8 million for the nine months ended September 30, 2014. We did not record any loss on extinguishment of debt for the nine months ended September 30, 2015.

On May 9, 2014, we terminated our previous revolving credit facility in conjunction with our entry into the Senior Credit Facility and recorded a $0.9 million loss on extinguishment of debt related to unamortized debt issuance costs.

In addition, on May 9, 2014, we repaid all outstanding indebtedness under three inventory loans (previously entered into in connection with various business combinations) using a portion of the proceeds from the term loan portion of the Senior Credit Facility. Unamortized debt issuance cost on these inventory loans of $0.1 million was recorded as a loss on extinguishment of debt.

On June 9, 2014, we redeemed the remaining outstanding principal amount under the Senior Secured Notes by using proceeds from the term loan portion of the Senior Credit Facility. As a result, $30.2 million of redemption premium, $9.4 million of unamortized debt issuance cost and $6.1 million of unamortized debt discount were recorded as a loss on extinguishment of debt.

Income Taxes. Provision for income taxes was $72.4 million for the nine months ended September 30, 2015, as compared to $32.9 million for the nine months ended September 30, 2014. The increase was due to an increase in income before provision for income taxes for the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014.

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Liquidity and Capital Resources

Overview

We had $326.6 million and $242.5 million in cash and cash equivalents as of September 30, 2015 and December 31, 2014, respectively. Our primary sources of liquidity have historically been cash from operations and the financings discussed below.

Historically, our business has depended on the availability of credit to finance the consumer loans we have provided to our customers for the purchase of their VOIs. Typically, these loans have required a minimum cash down payment of 10% of the purchase price at the time of sale; however, selling, marketing and administrative expenses attributable to VOI sales are primarily cash expenses and often exceed the buyer's minimum down payment requirement. Accordingly, the availability of financing facilities for the sale or pledge of these receivables to generate liquidity is a critical factor in our ability to meet our short-term and long-term cash needs. We have historically relied upon our ability to sell receivables in the securitization market in order to generate liquidity and create capacity on our $200.0 million conduit facility that was most recently amended on July 1, 2015 (the "Conduit Facility") and our $100.0 million loan sale facility with Quorum Federal Credit Union (the "Quorum Facility") (collectively, the “Funding Facilities”). See "—Indebtedness" for further detail on the Conduit Facility and the Quorum Facility.

The terms of the consumer loans we seek to finance are generally longer than the Funding Facilities through which we seek to finance such loans. While the term of our consumer loans is typically ten years, the Funding Facilities typically have a term of less than three years. Although we seek to refinance conduit borrowings in the term securitization markets, we generally access the term securitization markets on at least an annual basis, and rely on the Funding Facilities to provide incremental liquidity between securitization transactions. Thus, we are required to refinance the Funding Facilities every one to two years in order to provide adequate liquidity for our consumer finance business.

Between January 1, 2013 and the filing date of this quarterly report, we completed five securitization transactions with a total face value of $779.6 million. The most recent of these securitization transactions, which we completed on July 29, 2015, involved the issuance of $170.0 million of investment-grade rated securities, consisting of two tranches of vacation ownership loan backed-notes (collectively, the "DROT 2015-1 Notes"). See "—Indebtedness" for further detail on the DROT 2015-1 Notes.

Although we completed these securitization and Funding Facilities transactions, we may not be successful in completing similar transactions in the future. We require access to the capital markets in order to fund our operations and may, in the implementation of our growth strategy, become more reliant on third-party financing. If we are unable to continue to participate in securitization transactions or renew and/or replace our Funding Facilities on acceptable terms, our liquidity and cash flows would be materially and adversely affected. On July 29, 2015, following the payoff of the then-outstanding balance under the Conduit Facility using the proceeds from the issuance of the DROT 2015-1 Notes, the maximum funding availability under the Conduit Facility was $200.0 million. As of September 30, 2015, the maximum funding availability under the Quorum Facility and the Conduit Facility was $66.4 million and $92.3 million, respectively.

During the three months ended September 30, 2015 and 2014, we used cash of $21.9 million and $16.1 million, respectively, for (i) acquisitions of VOI inventory pursuant to inventory recovery agreements and in open market and bulk VOI inventory purchases; (ii) capitalized legal, title and trust fees related to the recovery of inventory; and (iii) construction of VOI inventory. Of these total cash amounts, $5.1 million and $0.1 million during the three months ended September 30, 2015 and 2014, respectively, were used for the construction of VOI inventory, primarily related to construction of units at the Cabo Azul Resort in Mexico.

In addition, we had increases in unsold Vacation Interests, net that did not have an impact on our working capital during the three month periods ended September 30, 2015 and 2014. Specifically, we capitalized $3.2 million and $1.6 million during the three months ended September 30, 2015 and 2014, respectively, related to inventory recovery agreements in the U.S., offset by an equal increase in due to related parties, net. Cash will be used in future periods to settle these amounts. See "Note 6—Transactions with Related Parties" elsewhere in this quarterly report for further detail on inventory recovery agreements. In addition, we transferred $0.3 million and $0.2 million during the three months ended September 30, 2015 and 2014, respectively, from due from related parties, net to unsold Vacation Interests, net, as a result of our recovery of VOI inventory pursuant to inventory recovery arrangements in Europe. Cash was used in prior periods when these amounts were recorded to due from related parties, net. Furthermore, we transferred $10.3 million and $1.1 million from mortgages and contracts receivable, net to unsold Vacation Interests, net during the three months ended September 30, 2015 and 2014, respectively, as a result of our recovery of underlying VOI inventory due to loan defaults.

During the nine months ended September 30, 2015 and 2014, we used cash of $57.4 million and $39.3 million, respectively, for (i) acquisitions of VOI inventory pursuant to inventory recovery agreements and in open market and bulk VOI inventory purchases; (ii) capitalized legal, title and trust fees related to the recovery of inventory; and (iii) construction of VOI

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inventory. Of these total cash amounts, $12.9 million and $0.6 million during the nine months ended September 30, 2015 and 2014, respectively, were used for the construction of VOI inventory, primarily related to construction of units at the Cabo Azul Resort.

In addition, we had increases in unsold Vacation Interests, net that did not have an impact on our working capital during the nine month periods ended September 30, 2015 and 2014. Specifically, we capitalized $21.4 million and $19.7 million during the nine months ended September 30, 2015 and 2014, respectively, related to inventory recovery agreements in the U.S., offset by an equal increase in due to related parties, net. Cash will be used in future periods to settle these amounts. In addition, we transferred $3.4 million and $3.2 million during each of the nine months ended September 30, 2015 and 2014, respectively, from due from related parties, net to unsold Vacation Interests, net, as a result of our recovery of VOI inventory pursuant to inventory recovery arrangements in Europe. Cash was used in prior periods when these amounts were recorded to due from related parties, net. Furthermore, we transferred $12.5 million and $2.0 million from mortgages and contracts receivable, net to unsold Vacation Interests, net during the nine months ended September 30, 2015 and 2014, respectively, as a result of our recovery of underlying VOI inventory due to loan defaults.

On October 28, 2014, our board of directors authorized a stock repurchase program allowing for the expenditure of up to $100.0 million for the repurchase of our common stock (the "Stock Repurchase Program"). Under the Stock Repurchase Program, repurchases may be made from time to time in accordance with applicable securities laws in the open market and/or in privately negotiated transactions, including repurchases pursuant to trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the "Exchange Act").

On July 28, 2015, our board of directors authorized the expenditure of up to an additional $100.0 million for the repurchase of our common stock under the Stock Repurchase Program. With the new authorization, approximately $101.9 million was available as of September 30, 2015 under the Stock Repurchase Program. The expanded repurchase program does not obligate us to acquire any additional shares of common stock or impose any particular timetable for repurchases, and the program may be suspended or modified at any time at our discretion. The timing and amount of any stock repurchases will be determined by management based on its evaluation of market conditions, the trading price of the stock, potential alternative uses of cash resources, applicable legal requirements, compliance with the provisions of our credit agreement, and other factors.

In March 2015, in connection with the March 2015 Secondary Offering, certain selling stockholders sold an aggregate of 7,502,316 shares of our common stock. We did not sell any stock in the March 2015 Secondary Offering and did not receive any proceeds from it. We purchased from the underwriter 1,515,582 of the shares sold by the selling stockholders in the offering at $32.99 per share (the same price per share at which the underwriter purchased shares from the selling stockholders), for a total purchase price of $50.0 million.

The following table summarizes stock repurchase activity under the Stock Repurchase Program (cost in thousands):



	Shares		Cost		Average Price Per Share
From inception through December 31, 2014	642,900		$	16,077	$	25.01
For the nine months ended September 30, 2015(a)	2,595,955		82,046		31.61
Total from inception through September 30, 2015(a)	3,238,855	(b)	$	98,123	$	30.30

(a) Includes the purchase of 1,515,582 shares from the underwriter for $50.0 million in the March 2015 Secondary Offering at a price of $32.99 per share.

(b) Shares of our common stock repurchased by us pursuant to the Stock Repurchase Program. As of September 30, 2015, 2,925,092 of the repurchased shares previously held in treasury have been retired.

The Senior Credit Facility limits our ability to make restricted payments, including the payment of dividends or expenditures for stock repurchases. As of September 30, 2015, the available basket for restricted payments, including purchases under our Stock Repurchase Program, was approximately $81.8 million, subject to change based on our future financial performance.

Between October 1, 2015 and November 2, 2015, we used $27.0 million of cash to repurchase shares of our common stock. As of November 2, 2015, approximately $75.0 million was available for expenditure under the Stock Repurchase Program.

In September 2014, Hurricane Odile, a category 4 hurricane, inflicted widespread damage on the Baja California peninsula, particularly in the state of Baja California Sur, in which the Cabo Azul Resort, one of our managed resorts, is located. Hurricane Odile caused significant damage to the buildings as well as the facilities and amenities at the Cabo Azul Resort, including unsold Vacation Interests and property and equipment owned by us; however, we believe we have sufficient

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property insurance coverage so that damage caused by Hurricane Odile on our unsold Vacation Interests, net and property and equipment, net will not have a material impact on our financial condition or results of operations related to these assets.

During the nine months ended September 2015, we received $5.0 million in proceeds from our insurance carrier for property damage resulting from Hurricane Odile. These proceeds are classified as cash flow from operating activities in our condensed consolidated statement of cash flows for the nine months ended September 30, 2015 due to the fact that these proceeds covered damage caused to our unsold Vacation Interests, which is an income-generating operating activity.

In addition, we have filed a claim under our business interruption insurance policy for business profits lost during the period that the Cabo Azul Resort remained closed as a result of the damage suffered in Hurricane Odile. During the quarter ended September 30, 2015, we received an aggregate of $3.6 million in installments from our insurance carrier related to such claim, which was recognized as other revenue in the condensed consolidated statement of income and comprehensive income (loss) and classified as cash flow from operating activities in our condensed consolidated statement of cash flows for the nine months ended September 30, 2015. In addition, in October 2015, we received an aggregate of $2.1 million in installments related to such claim. The total claim remains under negotiation with the insurance carrier and any further payments will also be recorded in the periods in which they are received. The Cabo Azul Resort and the on-site sales center reopened on September 1, 2015.

Cash Flow From Operating Activities. During the nine months ended September 30, 2015, net cash provided by operating activities was $141.3 million and was the result of net income of $99.7 million and non-cash items totaling $140.6 million, partially offset by other changes in operating assets and liabilities that resulted in a net credit of $99.0 million. The significant non-cash items included (i) $56.0 million in the provision for uncollectible Vacation Interests sales revenue; (ii) $32.4 million in deferred income taxes, primarily as a result of the provision for income taxes recorded for the nine months ended September 30, 2015; (iii) $25.1 million in depreciation and amortization; (iv) $12.3 million in stock-based compensation expense; (v) $9.5 million in amortization of loan origination costs and net portfolio premiums; (vi) $4.5 million in amortization of capitalized financing costs and original issue discounts; (vii) $0.7 million in loss of foreign currency exchange; and (viii) $0.6 million in unrealized loss on derivative instruments; partially offset by $0.4 million in gain on mortgage repurchases.

During the nine months ended September 30, 2014, net cash provided by operating activities was $76.5 million and was the result of net income of $37.6 million and non-cash items and non-cash and cash loss on extinguishment of debt totaling $164.8 million, partially offset by other changes in operating assets and liabilities that resulted in a net credit of $126.0 million. The significant non-cash items and non-cash and cash loss on extinguishment of debt included (i) $46.8 million of loss on extinguishment of debt (which includes $30.2 million of redemption premium paid in cash and $16.6 million of non-cash write-off of unamortized debt issuance costs and debt discount); (ii) $40.1 million in the provision for uncollectible Vacation Interests sales revenue; (iii) $24.6 million in depreciation and amortization; (iv) $30.5 million in deferred income taxes, primarily as a result of provision for income taxes recorded during the nine months ended September 30, 2014; (v) $12.2 million in stock-based compensation expense; (vi) $6.6 million in amortization of net portfolio discounts; (vii) $4.1 million in amortization of capitalized financing costs and original issue discounts; and (viii) $0.1 million in loss of foreign currency exchange; partially offset by $0.5 million in gain on mortgage repurchases.

Cash Flow From Investing Activities. During the nine months ended September 30, 2015, net cash used in investing activities was $28.7 million, consisting of (i) $18.5 million used to purchase property and equipment, primarily associated with information technology related projects and equipment and renovation projects at certain sales centers; (ii) $9.0 million used to purchase intangible assets, primarily associated with the acquisition of intangible assets pursuant to the Master Agreement; and (iii) $1.5 million used in connection with our investment in our joint venture in Asia; partially offset by $0.2 million in proceeds from the sale of assets in our European operations.

During the nine months ended September 30, 2014, net cash used in investing activities was $13.6 million, consisting of $13.9 million used to purchase property and equipment, primarily associated with information technology related projects and equipment and renovation projects at certain sales centers, partially offset by $0.3 million in proceeds from the sale of assets in our European operations.

Cash Flow From Financing Activities. During the nine months ended September 30, 2015, net cash used in financing activities was $28.1 million. Cash used in financing activities consisted of (i) $339.3 million in repayments on our securitization notes and Funding Facilities; (ii) $82.0 million for the repurchase of common stock in accordance with the Stock Repurchase Program; (iii) $18.1 million in repayments on the term loan portion of the Senior Credit Facility; (iv) $10.1 million in repayments on notes payable; (v) a $6.9 million increase in cash in escrow and restricted cash; (vi) $5.3 million in debt issuance costs; and (vii) $0.3 million in payments for derivative instruments. These amounts were partially offset by cash provided by financing activities consisting of (a) $431.2 million from the issuance of debt under our securitization notes and Funding Facilities; (b) $2.5 million in proceeds from the exercise of stock options; and (c) $0.4 million in excess tax benefits from stock-based compensation.

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During the nine months ended September 30, 2014, net cash provided by financing activities was $83.4 million. Cash provided by financing activities consisted of (i) $442.8 million in proceeds of the term loan portion of the Senior Credit Facility; (ii) $206.3 million from the issuance of debt under our securitization notes and Funding Facilities; (iii) a $22.5 million decrease in cash in escrow and restricted cash; (iv) $2.3 million in proceeds from the exercise of stock options; and (v) $1.1 million from the issuance of notes payable. These amounts were partially offset by cash used in financing activities consisting of (a) $404.7 million in connection with the redemption of our Senior Secured Notes; (b) $146.2 million in repayments on our securitization notes and Funding Facilities; (c) $28.5 million in repayments on notes payable; (d) $11.0 million in debt issuance costs and (e) $1.1 million in repayments on our Senior Credit Facility.

Indebtedness

The following table presents selected information on our borrowings as of the dates presented below (dollars in thousands):



	September 30, 2015										December 31, 2014
	Principal Balance			Weighted Average Interest Rate	Maturity	Gross Amount of Mortgages and Contracts as Collateral		Borrowing / Funding Availability			Principal Balance
Senior Credit Facility	$	424,665		5.5%	5/9/2021	$	—	$	25,000		$	442,775
Original issue discount related to Senior Credit Facility	(1,839		)			—		—			(2,055		)
Notes payable-insurance policies	2,841			2.7%	Various	—		—			4,286
Notes payable-other	160			5.0%	Various	—		—			321
Total Corporate Indebtedness	425,827					—		25,000			445,327

Notes payable-other	3			—%	11/18/2015	—		—			5
Total Non-Recourse Indebtedness other than Securitization Notes and Funding Facilities	3					—		—			5

Diamond Resorts Owners Trust Series 2014-1 (1)	160,971			2.6%	5/20/2027	171,812		—			247,992
Diamond Resorts Owners Trust Series 2015-1 (1)	148,628			2.8%	7/20/2027	155,711		—			—
Conduit Facility (1)	107,730			2.8%	4/10/2017	121,351		92,270		(2)	—
Diamond Resorts Owner Trust Series 2013-2 (1)	94,159			2.3%	5/20/2026	104,621		—			131,952
DRI Quorum Facility and Island One Quorum Funding Facility (1)	33,590			5.6%	Various	40,746		66,410		(2)	52,315
Diamond Resorts Owner Trust Series 2013-1 (1)	33,198			2.0%	1/20/2025	36,887		—			42,838
Diamond Resorts Owner Trust Series 2011-1 (1)	13,180			4.0%	3/20/2023	13,874		—			17,124
Original issue discount related to Diamond Resorts Owner Trust Series 2011-1	(115		)			—		—			(156		)
Diamond Resorts Tempus Owner Trust 2013 (1)	9,786			6.0%	12/20/2023	15,255		—			17,143
Total Securitization Notes and Funding Facilities	601,127					660,257		158,680			509,208
Total	$	1,026,957				$	660,257	$	183,680		$	954,540

(1) Non-recourse indebtedness
(2) Borrowing / funding availability is calculated as the difference between the maximum commitment amount and the outstanding principal balance; however, the actual availability is dependent on the amount of eligible loans that serve as the collateral for such borrowings.

Senior Credit Facility. On May 9, 2014, we and Diamond Resorts Corporation ("DRC") entered into a credit agreement (the "Senior Credit Facility Agreement") with Credit Suisse AG, acting as the administrative agent and the collateral agent for various lenders. The Senior Credit Facility Agreement provides for a $470.0 million Senior Credit Facility (including a $445.0 million term loan, issued with 0.50% of original issue discount and having a term of seven years and a $25.0 million revolving line of credit having a term of five years). Borrowings under the Senior Credit Facility bear interest, at our option, at a variable rate equal to LIBOR plus 450 basis points, with a one percent LIBOR floor applicable only to the term loan portion of the Senior Credit Facility, or an alternate base rate plus 350 basis points. Other significant terms of the Senior Credit Facility include: (i) one percent minimum annual amortization due in quarterly payments of $1.1 million; (ii) an excess cash flow sweep (as defined in the Senior Credit Facility Agreement) that varies depending on our secured leverage ratio (which represents the ratio of (1) secured total debt to (2) Adjusted EBITDA for the most recent four consecutive fiscal quarters for which financial statements have been delivered); (iii) a soft call provision of 1.01 for the first 15 months of the Senior Credit Facility, which expired on August 9, 2015; (iv) no ongoing maintenance financial covenants for the term loan, and a financial covenant calculation required on the revolving line of credit if outstanding loans under the revolving line of credit exceed 25%

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of the commitment amount as of the last day of any fiscal quarter; (v) a non-committed incremental $150.0 million facility available for borrowing, plus additional amounts greater than $150.0 million, subject in the case of such additional amount subject to meeting a required secured leverage ratio; and (vi) our ability to make restricted payments, including the payment of dividends or share repurchases, up to an aggregate of $25.0 million over the term of the loan (less certain investment and other debt amounts specified under the Senior Credit Facility Agreement), plus the remaining portion of the cash flow that is not used to amortize debt pursuant to the excess cash flow provision described above.

For the year ended December 31, 2014, the excess cash flow sweep (as defined in the Senior Credit Facility Agreement) was $30.3 million; however, certain lenders declined this repayment, which resulted in an $18.1 million principal reduction on the Senior Credit Facility on March 5, 2015. Commensurate with this principal reduction payment, the minimum quarterly payment of $1.1 million described above will not be required until the quarter ending March 31, 2017 in accordance with the Senior Credit Facility Agreement; however, this date is subject to change depending upon future excess cash flow sweeps.

The Senior Credit Facility Agreement contains customary negative covenants, including covenants that limit our ability to: (i) incur additional indebtedness; (ii) create liens; (iii) enter into certain sale and lease-back transactions; (iv) make certain investments; (v) merge or consolidate or sell or otherwise dispose of all or substantially all of the assets of DRII, DRC and their restricted subsidiaries; (vi) engage in transactions with affiliates; and (vii) pay dividends or make other equity distributions and purchase or redeem capital stock, subject to specified exceptions, including as described above. The restrictions on our incurrence of indebtedness and our ability to pay dividends and repurchase stock are based upon our compliance with the then-applicable secured leverage ratio and total leverage ratio. The Senior Credit Facility Agreement also contains customary default provisions. The borrowings under the Senior Credit Facility are secured on a senior basis by substantially all of our assets.

As indicated above, covenants in the Senior Credit Facility Agreement requiring us to prepay outstanding amounts under the term loan using a portion of our excess cash flow, and covenants limiting our ability to incur indebtedness, to make certain investments and to pay dividends or make other equity distributions and purchase or redeem capital stock and the financial covenant compliance that is triggered by having more than 25% of the revolving credit commitment outstanding at the end of any quarter, are determined by reference to Adjusted EBITDA for us and our restricted subsidiaries. Covenants included in the Notes Indenture that governed the Senior Secured Notes were similarly determined by reference to Adjusted EBITDA for us and our restricted subsidiaries. As of September 30, 2015, all of our subsidiaries were designated as restricted subsidiaries, as defined in the Senior Credit Facility Agreement.

Adjusted EBITDA for us and our restricted subsidiaries is derived from our Adjusted EBITDA, which we calculate in accordance with the Senior Credit Facility Agreement as our net income (loss), plus: (i) corporate interest expense; (ii) provision (benefit) for income taxes; (iii) depreciation and amortization; (iv) Vacation Interests cost of sales; (v) loss on extinguishment of debt; (vi) impairments and other non-cash write-offs; (vii) loss on the disposal of assets; (viii) amortization of loan origination costs; (ix) amortization of net portfolio premiums; and (x) stock-based compensation expense; less (a) gain on the disposal of assets; (b) gain on bargain purchase from business combination; and (c) amortization of net portfolio discounts. Adjusted EBITDA is a non-U.S. GAAP financial measure and should not be considered in isolation, or as an alternative to net cash provided by (used in) operating activities or any other measure of liquidity, or as an alternative to net income (loss), operating income (loss) or any other measure of financial performance, in any such case calculated and presented in accordance with U.S. GAAP. Provided below is additional information regarding the calculation of Adjusted EBITDA for purposes of the Senior Credit Facility Agreement.

Corporate interest expense is added back because interest expense is a function of outstanding indebtedness, not operations, and can be dependent on a company’s capital structure, debt levels and credit ratings. Accordingly, corporate interest expense can vary greatly from company to company and across periods for the same company; however, in calculating Adjusted EBITDA, interest expense related to lines of credit secured by the mortgages and contracts receivable generated in the normal course of selling Vacation Interests is not added back to net income (loss) because this borrowing is necessary to support our Vacation Interests sales and finance business.

Loss on extinguishment of debt includes the effect of write-offs of capitalized debt issuance costs and original issue discounts due to payoff or substantial modifications of the terms of our indebtedness. While the amounts booked by us with respect to these events include both cash and non-cash items, the entire amounts are related to financing events, and not our ongoing operations. Accordingly, these amounts are treated similarly to corporate interest expense and are added back to net income in our Adjusted EBITDA calculation.

Vacation Interests cost of sales is excluded from our Adjusted EBITDA calculation because the method by which we are required to record Vacation Interests cost of sales pursuant to ASC 978, “Real Estate-Time-Sharing Activities" ("ASC 978") (a method designed for companies that, unlike us, engage in significant timeshare development activity) includes various projections and estimates, which are subject to significant uncertainty. Because of the cumulative “true-up” adjustment required by this method, as discussed below, this method can cause major swings in our reported operating income.

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Pursuant to ASC 978, if we review our projections and determine that our estimated Vacation Interests cost of sales was higher (or lower) than our actual Vacation Interests cost of sales for the prior life of the project (which, for us, goes back to our acquisition of Sunterra Corporation in 2007), we apply the higher (or lower) Vacation Interests cost of sales retroactively. In such a case, our Vacation Interests cost of sales for the current period will be increased (or reduced) by the entire aggregate amount by which we underestimated (or overestimated) Vacation Interests cost of sales over such period (reflecting a cumulative adjustment extending back to the beginning of the project recorded in the current period). For additional information regarding how we record Vacation Interests cost of sales, see “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Use of Estimates—Vacation Interest Cost of Sales” in the 2014 Form 10-K.

Vacation Interests sales do not accrue until collectability is reasonably assured, and is not subject to cumulative adjustments similar to those required in determining Vacation Interests cost of sales pursuant to ASC 978. As a result, Vacation Interests sales is included in the calculation of Adjusted EBITDA, even though Vacation Interests cost of sales is excluded from such calculation.

Stock-based compensation expense is excluded from our Adjusted EBITDA calculation because it represents a non-cash item. We calculate our stock-based compensation expense utilizing the Black-Scholes option pricing model that is dependent on management's estimate on the expected volatility, the average expected option life, the risk-free interest rate, the expected annual dividend per share and the annual forfeiture rate. A small change in any of the estimates could have a material impact on the stock-based compensation expense. Accordingly, stock-based compensation can vary greatly from company to company and across periods for the same company.

In addition to covenants contained in the Senior Credit Facility Agreement, financial covenants governing the Conduit Facility and the $31.0 million Diamond Resorts Tempus Owner Trust 2013 Notes issued on September 20, 2013 are determined by reference to measures calculated in a manner similar to the calculation of Adjusted EBITDA.

Adjusted EBITDA is not only used for purposes of determining compliance with covenants in our debt-related agreements, but our management also uses our consolidated Adjusted EBITDA: (i) for planning purposes, including the preparation of our annual operating budget; (ii) to allocate resources to enhance the financial performance of our business; (iii) to evaluate the effectiveness of our business strategies; and (iv) as a factor for determining compensation for certain personnel.

However, Adjusted EBITDA has limitations as an analytical tool because, among other things:


•	Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures;


•	Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;


•	Adjusted EBITDA does not reflect cash requirements for income taxes;


•	Adjusted EBITDA does not reflect interest expense for our corporate indebtedness;


•	although depreciation and amortization are non-cash charges, the assets being depreciated or amortized will often have to be replaced, and Adjusted EBITDA does not reflect any cash requirements for these replacements;


•	we make expenditures to replenish VOI inventory (principally pursuant to our inventory recovery agreements), and Adjusted EBITDA does not reflect our cash requirements for these expenditures or certain costs of carrying such inventory (which are capitalized); and


•	other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

We encourage investors and securities analysts to review our U.S. GAAP condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, and investors and securities analysts should not rely solely or primarily on Adjusted EBITDA or any other single financial measure to evaluate our liquidity or financial performance.

The following tables present Adjusted EBITDA, as calculated in accordance with, and for purposes of covenants contained in, the Senior Credit Facility Agreement, reconciled to each of (1) our net cash provided by operating activities and (2) our net income. The tables below present this reconciliation on an actual basis for the three and nine months ended September 30, 2015 and 2014 and for the 12 months ended September 30, 2015 ("LTM"). LTM is calculated by adding the applicable financial data for the nine months ended September 30, 2015 to the corresponding amount for the year ended December 31, 2014, and then subtracting the corresponding amount for the nine months ended September 30, 2014. LTM Adjusted EBITDA is presented because, as discussed above, certain covenants in the Senior Credit Facility Agreement are

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based upon Adjusted EBITDA for us and our restricted subsidiaries for the four most recently ended fiscal quarters.



	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014			LTM
	(In thousands)
Net cash provided by operating activities	$	49,870		$	23,597		$	141,265		$	76,502		$	182,821
Provision for income taxes	25,410			20,156			72,394			32,860			89,768
Provision for uncollectible Vacation Interests sales(a)	(21,100		)	(15,847		)	(56,007		)	(40,123		)	(73,086		)
Amortization of capitalized financing costs and original issue discounts(a)	(1,660		)	(1,125		)	(4,461		)	(4,079		)	(5,719		)
Deferred income taxes(b)	(9,125		)	(19,679		)	(32,391		)	(30,461		)	(26,354		)
Loss on foreign currency(c)	(458		)	(14		)	(656		)	(98		)	(920		)
Gain on mortgage purchase(a)	133			136			412			519			514
Unrealized (loss) gain on derivative instruments(d)	(495		)	15			(600		)	(181		)	(419		)
Unrealized gain (loss) on post-retirement benefit plan(e)	86			(43		)	—			(128		)	(43		)
Corporate interest expense(f)	7,935			7,429			22,937			34,502			30,306
Change in operating assets and liabilities excluding acquisitions(g)	35,474			53,543			99,033			125,917			105,821
Vacation Interests cost of sales(h)	16,946			16,476			25,535			44,840			44,194
Adjusted EBITDA - Consolidated	$	103,016		$	84,644		$	267,461		$	240,070		$	346,883


(a)	Represents non-cash charge or gain.


(b)	Represents the deferred income tax (liability) asset as a result of the provision for income taxes recorded for each period.


(c)	Represents net realized loss on foreign exchange transactions settled at unfavorable exchange rates and unrealized net loss resulting from the devaluation of foreign currency-denominated assets and liabilities.


(d)	Represents the effects of the changes in mark-to-market valuations of derivative assets and liabilities.


(e)	Represents unrealized gain (loss) on our post-retirement benefit plan related to a collective labor agreement entered into with the employees of our two resorts in St. Maarten; this plan was transferred to the St. Maarten HOAs during the quarter ended September 30, 2015.


(f)	Represents corporate interest expense; does not include interest expense related to non-recourse indebtedness incurred by our special-purpose subsidiaries that is secured by our VOI consumer loans.


(g)	Represents the net change in operating assets and liabilities excluding acquisitions, as computed directly from the statements of cash flows. Vacation Interests cost of sales is included in the net changes in unsold Vacation Interests, net, as presented in the statements of cash flows.

(h)

We record Vacation Interests cost of sales using the relative sales value method in accordance with ASC 978, which requires us to make significant estimates which are subject to significant uncertainty. In determining the appropriate amount of costs using the relative sales value method, we rely on complex, multi-year financial models that incorporate a variety of estimated inputs. These models are reviewed on a regular basis, and the relevant estimates used in the models are revised based upon historical results and management's new estimates.

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	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015			2014			LTM
	(In thousands)
Net income	$	36,897		$	26,304	$	99,742		$	37,583		$	121,616
Plus: Corporate interest expense(a)	7,935			7,429		22,937			34,502			30,306
Provision for income taxes	25,410			20,156		72,394			32,860			89,768
Depreciation and amortization(b)	8,030			8,271		25,127			24,601			33,055
Vacation Interests cost of sales(c)	16,946			16,476		25,535			44,840			44,194
Loss on extinguishment of debt(d)	—					—			46,807			—
Impairments and other non-cash write-offs(b)	—			11		12			53			199
(Gain) loss on disposal of assets(b)	(95		)	224		(57		)	71			(393		)
Amortization of loan origination costs(b)	3,332			2,380		9,461			6,591			11,799
Amortization of net portfolio premium (discounts)(b)	24			57		56			(36		)	81
Stock-based compensation(e)	4,537			3,336		12,254			12,198			16,258
Adjusted EBITDA - Consolidated	$	103,016		$	84,644	$	267,461		$	240,070		$	346,883


(a)	Corporate interest expense does not include interest expense related to non-recourse indebtedness incurred by our special-purpose vehicles that is secured by our VOI consumer loans.


(b)	These items represent non-cash charges/gains.

(c)

(d)

For the nine months ended September 30, 2014, represents (i) $30.2 million of redemption premium paid on June 9, 2014 in connection with the redemption of the outstanding Senior Secured Notes using proceeds from the term loan portion of the Senior Credit Facility; and (ii) $16.6 million of unamortized debt issuance costs and debt discount written off upon the extinguishment of the Senior Secured Notes and certain other indebtedness.


(e)	Represents the non-cash charge related to stock-based compensation expense.

Conduit Facility. Our amended and restated Conduit Facility agreement provides for a $200.0 million facility with a maturity date of April 10, 2017. Upon maturity, the Conduit Facility is renewable for 364-day periods at the election of the lenders. The overall advance rate on loans receivable in the portfolio is limited to 88% of the aggregate face value of the eligible loans. The Conduit Facility originally bore interest at either LIBOR or the commercial paper rate (having a floor of 0.50%) plus a usage-fee rate of 2.75%, and had a non-usage fee of 0.75%. In connection with the amendment to the Conduit Facility agreement that was entered into on June 26, 2015 (the "June 2015 Amendment"), the usage-fee rate was reduced to 2.25%. The June 2015 Amendment also provides, among other things, (i) that, at any time the outstanding note balance has been reduced to zero in connection with the delivery of a prepayment notice, the first borrowing thereafter must include a minimum of 250 timeshare loans; and (ii) for the inclusion of timeshare loans that have been executed through the utilization of electronic signature and electronic vaulting and management services.

On July 1, 2015, the Conduit Facility agreement was further amended (the "July 2015 Amendment") to require a $0.4 million reserve payment against the derivative instruments associated with the Conduit Facility. This reserve payment was to be released upon the completion of a securitization or other financing of the assets in which at least 75% of the outstanding note balance under the Conduit Facility was repaid using the proceeds from such securitization or other financing. On July 29, 2015, we completed a securitization involving the issuance of the DROT 2015-1 Notes. The proceeds from the DROT 2015-1 Notes were used to repay in full the then-outstanding balance and accrued interest under the Conduit Facility with the remaining proceeds transferred to us for general corporate use, and the reserve payment was released and refunded to us. See “—Indebtedness—Securitization Notes" for further detail on the DROT 2015-1 Notes.

On October 1, 2015, as required by the Conduit Facility, we entered into an interest rate swap agreement effective September 30, 2015, with a notional amount of $97.0 million (the "September 2015 Swap") that is scheduled to mature on September 20, 2025, to manage our exposure to fluctuations in interest rates. We pay interest at a fixed rate of 2.45% based on a floating notional amount according to a pre-determined amortization schedule and receive interest based on one-month floating LIBOR. The September 2015 Swap did not qualify for hedge accounting. See "Note 3—Concentrations of Risk" of our

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condensed consolidated financial statements included elsewhere in this quarterly report and "Item 3. Quantitative and Qualitative Disclosures about Market Risk" below for further detail on our derivative instruments.

The Conduit Facility is subject to covenants, including as to the maintenance of specific financial ratios. The financial ratio covenants consist of a minimum consolidated interest coverage ratio of at least 1.5 to 1.0 as of the measurement date and a maximum consolidated leverage ratio not to exceed 5.0 to 1.0 on each measurement date. The consolidated interest coverage ratio is calculated by dividing Consolidated EBITDA (as defined in the credit agreement) by Consolidated Interest Expense (as defined in the credit agreement); both are measured on a trailing 12-month basis preceding the measurement date. As of September 30, 2015, our interest coverage ratio was 15.89x. The consolidated leverage ratio is calculated by dividing Total Funded Debt (as defined in the credit agreement) minus unrestricted cash and cash equivalents as of the measurement date by Consolidated EBITDA as measured on a trailing 12-month basis preceding the measurement date. As of September 30, 2015, our consolidated leverage ratio was 0.29x. Covenants in the Conduit Facility also include a minimum liquidity requirement. The total liquidity covenant stipulates that our aggregate unrestricted cash and cash equivalents as of the measurement date must exceed $10.0 million through April 10, 2017. As of September 30, 2015, our aggregate unrestricted cash and cash equivalents of the restricted subsidiaries was $326.6 million, which was $316.6 million higher than the minimum requirement. As of September 30, 2015, we were in compliance with all of these covenants.

Securitization Notes. On July 29, 2015, we completed a securitization involving the issuance of the DROT 2015-1 Notes. The interest rates for the $158.5 million Class A tranche notes and the $11.5 million Class B tranche notes are 2.7% and 3.2%, respectively. The overall weighted average interest rate is 2.8%. The advance rate for this transaction is 96.0%. The proceeds from the DROT 2015-1 Notes were used to repay all of the then-outstanding balance plus accrued interest under the Conduit Facility, as well as to pay debt issuance cost related to the DROT 2015-1 Notes with the remaining proceeds transferred to us for general corporate use.

Quorum Facility. On September 30, 2015, pursuant to a First Amendment to the Amended and Restated Loan Sale and Servicing Agreement, we amended the Quorum Facility to increase the aggregate minimum committed amount from $80.0 million to $100.0 million and to extend the term of the agreement to December 31, 2017, provided that Quorum Federal Credit Union may further extend the term for additional periods by written notice. As of September 30, 2015, the weighted average advance rate under the Quorum Facility was 83.6% and the weighted average program purchase fee was 5.6%.

Notes Payable. During the nine months ended September 30, 2015, we issued two unsecured notes to finance premiums on certain insurance policies. Both unsecured notes are scheduled to mature in January 2016 and carry an interest rate of 2.7% per annum.

Future Capital Requirements. Over the next 12 months, we expect that our cash and cash equivalents, cash flows from operations and the borrowings under the Funding Facilities and the Senior Credit Facility will be sufficient to cover the interest payments due under our indebtedness and fund our operating expenses and other obligations, including any purchases of common stock under the Stock Repurchase Program. See "—Overview" for further detail on the Stock Repurchase Program.

Our future capital requirements will depend on many factors, including the growth of our consumer financing activities, the expansion of our hospitality management operations and potential acquisitions. On July 28, 2015, we entered into an agreement for the purchase and sale of property (the “Kona Agreement”) with Hawaii Funding LLC (the “Kona Seller”), an affiliate of Och-Ziff Real Estate. The Kona Agreement relates to the development by the Kona Seller of a new resort, which is expected to consist of 144 units, on property located in Kona, Hawaii to be acquired by the Kona Seller. Pursuant to the Kona Agreement, we have agreed to purchase all of the units, subject to the satisfaction of specified conditions. The Kona Seller’s delivery of the units to us, which is expected to begin in the first quarter of 2017 and continue through mid-2018, is subject to various conditions precedent and rights of the parties. We do not anticipate any significant cash outlays related to the Agreement until 2017.

Our ability to secure short-term and long-term financing in the future will depend on a variety of factors, including our future profitability, the performance of our consumer loan receivable portfolio, our relative levels of debt and equity and the overall condition of the credit and securitization markets. There can be no assurances that any such financing will be available to us. If we are unable to secure short-term and long-term financing in the future or if cash flows from operations are less than expected, our liquidity and cash flows would be materially and adversely affected, we may be required to curtail our sales and marketing operations and we may not be able to implement our growth strategy.

Deferred Taxes. As of December 31, 2014, we had available approximately $274.3 million of unused federal NOLs, $270.4 million of unused state NOLs, and $102.0 million of foreign NOLs with expiration dates from 2026 through 2033 (except for certain foreign NOLs that do not expire) that may be applied against future taxable income, subject to certain limitations.

As a result of our initial public offering completed in July 2013 (the "IPO") and the resulting change in ownership, our federal NOLs are limited under Internal Revenue Code Section 382 and state NOLs are subject to similar limitations in many

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cases. Due to current favorable tax law regarding recognition of income from Vacation Interests sales and use of NOLs, we expect our effective cash tax rate to be substantially lower than the statutory tax rate for the year ending December 31, 2015.

Commitments and Contingencies. From time to time, we or our subsidiaries are subject to certain legal proceedings and claims in the ordinary course of business. See also “Part I. Item 3. Legal Proceedings” in the 2014 Form 10-K for further detail.

Off-Balance Sheet Arrangements. As of September 30, 2015, we did not have any off-balance sheet arrangements (as defined in Item 303(a)(4) of Regulation S-K).

Contractual Obligations. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations" in the 2014 Form 10-K for a summary of our contractual obligations as of December 31, 2014. There were no material changes outside the ordinary course of our business in contractual obligations from December 31, 2014 through September 30, 2015.

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Critical Accounting Policies and Use of Estimates

The discussion of our financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, we evaluate our estimates and assumptions, including those related to revenue, bad debts and income taxes. These estimates are based on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The results of our analysis form the basis for making assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, and the impact of such differences may be material to our condensed consolidated financial statements.

Critical accounting policies are those policies that, in management's view, are most important in the portrayal of our financial condition and results of operations. The methods, estimates and judgments that we use in applying our accounting policies have a significant impact on the results that we report in our financial statements. These critical accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain. For further detail of those Critical Accounting Policies and Use of Estimates that require significant judgment, see "Item 7. Management's Discussion and Analysis of Financial Condition—Critical Accounting Policies and Use of Estimates" in the 2014 Form 10-K.

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers, which supersedes most of the current revenue recognition requirements ("ASU No. 2014-09"). The core principle of the new guidance is that an entity is required to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. New disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers are also required. Entities must adopt the new guidance using one of two retrospective application methods. We will adopt ASU No. 2014-09 as of our quarter ending March 31, 2018. We are currently evaluating the standard to determine the impact of the adoption of this guidance on our financial statements.

In January 2015, the FASB issued ASU No. 2015-01, Income Statement—Extraordinary and Unusual Items ("ASU No. 2015-01"), which eliminates from U.S. GAAP the concept of extraordinary items. Extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. ASU No. 2015-01 simplifies income statement presentation by altogether removing the concept of extraordinary items from consideration. ASU No. 2015-01 is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. We will adopt ASU No. 2015-01 as of our quarter ending March 31, 2016. We believe that the adoption of this update will not have a material impact on our financial statements.

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (“ASU No. 2015-02”), which is intended to respond to stakeholders’ concerns about the current accounting guidance for certain legal entities. The amendments update the analysis of consolidation for limited partnerships, contractual fee arrangements and investment funds, as well as include additional guidance on the effect of related parties. The amendments in ASU No. 2015-02 are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The amendments in ASU No. 2015-02 may be applied retrospectively or using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. We will adopt ASU No. 2015-02 as of our quarter ending March 31, 2016. We are currently evaluating the standard to determine the impact of its adoption on our financial statements.

In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest ("ASU No. 2015-03"), which is intended to simplify the presentation of debt issuance costs. The amendments in ASU No. 2015-03 require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in ASU No. 2015-03. ASU No. 2015-03 is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. We will adopt ASU No. 2015-03 as of our quarter ending March 31, 2016. We believe that the adoption of this update will result in a reclassification between assets and liabilities but will have no other impact on our financial statements.

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ASU No. 2015-05 as of our quarter ending March 31, 2016. We believe that the adoption of this update will not have a material impact on our financial statements.

In September 2015, the FASB issued ASU No. 2015-16, Business Combinations - Simplifying the Accounting for Measurement-Period Adjustments ("ASU No. 2015-16"), which requires that an acquirer in a business combination recognize adjustments to estimated amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. It requires that the acquirer record, in the current period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the estimated amounts, calculated as if the accounting had been completed at the acquisition date. ASU No. 2015-16 is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments in ASU No. 2015-16 should be applied prospectively to adjustments to provisional amounts that occur after the effective date with earlier application permitted for financial statements that have not been issued. We will adopt ASU No. 2015-16 as of our quarter ending March 31, 2016. We believe that the adoption of this update will not have a material impact on our financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Inflation. Inflation and changing prices have not had a material impact on our revenues, income (loss) from operations, and net income (loss) during any of our three most recent fiscal years; however, to the extent inflationary trends affect short-term interest rates, a portion of our debt service costs, as well as the rates we charge on our consumer loans, may be affected.

Interest Rate Risk. We are exposed to interest rate risk through our variable rate indebtedness, including the Conduit Facility and the Senior Credit Facility. We have attempted to manage our interest rate risk through the use of derivative financial instruments. For example, we are generally required to hedge 90% of the outstanding note balance under the Conduit Facility. We do not hold or issue financial instruments for trading purposes and do not enter into derivative transactions that would be considered speculative positions. To manage exposure to counterparty credit risk in interest rate swap and cap agreements, we enter into agreements with highly rated institutions that can be expected to fully perform under the terms of such agreements. At September 30, 2015, our derivative financial instruments consisted of an interest rate swap agreement, which did not qualify for hedge accounting. Interest differentials resulting from these agreements are recorded on an accrual basis as an adjustment to interest expense.

To the extent we assume variable rate indebtedness in the future, any increase in interest rates beyond amounts covered under any corresponding derivative financial instruments, particularly if sustained, could have an adverse effect on our results of operations, cash flows and financial position. We cannot assure that any hedging transactions we enter into will adequately mitigate the adverse effects of interest rate increases or that counterparties in those transactions will honor their obligations.

Additionally, we derive net interest income from our consumer financing activities to the extent the interest rates we charge our customers who finance their purchases of VOIs exceed the variable interest rates we pay to our lenders. Because our mortgages and contracts receivable generally bear interest at fixed rates, future increases in interest rates may result in a decline in our net interest income.

As of September 30, 2015, 51.8% of our borrowings, or $532.4 million, bore interest at variable rates. However, all of our variable-rate borrowings require a minimum interest rate floor when LIBOR is below certain levels. Assuming the level of variable-rate borrowings outstanding at September 30, 2015, and assuming a one percentage point increase in the 2015 average interest rate payable on these borrowings, we estimate that our interest expense would have increased and pre-tax income would have decreased by approximately $0.8 million for the nine months ended September 30, 2015.

Foreign Currency Translation Risk. In addition to our operations throughout the U.S., we conduct operations in international markets from which we receive, at least in part, revenues in foreign currencies. For example, we receive Euros and British Pounds Sterling in connection with operations in our European managed resorts and European VOI sales and Mexican Pesos in connection with our operations in Mexico. Because our financial results are reported in U.S. dollars, fluctuations in the value of the Euro, British Pound Sterling and Mexican Peso against the U.S. dollar have had, and will continue to have, an effect, which may be significant, on our reported financial results. A decline in the value of any of the foreign currencies in which we receive revenues, including the Euro, British Pound Sterling or Mexican Peso, against the U.S. dollar will tend to reduce our reported revenues and expenses, while an increase in the value of any such foreign currencies against the U.S. dollar will tend to increase our reported revenues and expenses. Variations in exchange rates could affect the comparability of our financial results between financial periods; however, since sales of Vacation Interests in our North American and Caribbean resorts, virtually all of which are to customers in the U.S. and Canada and are transacted in U.S. dollars, have historically accounted for more than 90% of our consolidated Vacation Interests sales revenue, and management and member services revenue is similarly concentrated, we do not expect the variations in exchange rates to have a material impact on financial results.

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For additional information on the potential impact of exchange rate fluctuations on our financial results, see "Part I Item 1A. Risk Factors—Fluctuations in foreign currency exchange rates may affect our reported results of operations" in the 2014 Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported accurately and within the time frames specified in the SEC's rules and forms and accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on the Effectiveness of Controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a cost-effective control system, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our company have been detected.

These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies and procedures.

PART II—OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On October 28, 2014, our board of directors authorized the Stock Repurchase Program allowing for the expenditure of up to $100.0 million for the repurchase of our common stock, subject to the terms, conditions and limitations in the Senior Credit Facility. The Stock Repurchase Program was announced on October 29, 2014 and has no scheduled expiration date.

On July 28, 2015, our board of directors authorized the expenditure of up to an additional $100.0 million for the repurchase of our common stock under the Stock Repurchase Program.

For further detail regarding the Stock Repurchase Program and the terms of the Senior Credit Facility, including the limitations under the Senior Credit Facility on our ability to make restricted payments, see “Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources."

The following is a summary of common stock repurchased by us by month during the third quarter of 2015 under the Stock Repurchase Program:

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Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced program	Approximate dollar value of shares that may yet be purchased under the program
July 1 to 31	—	$	—	—	$	—
August 1 to 31	—	$	—	—	$	—
September 1 to 30	313,763	$	25.24	313,763	$	101,937,000
Total	313,763			313,763

ITEM 6. EXHIBITS



Exhibit	Description
2.1	Asset Purchase Agreement, dated as of August 14, 2015, by and among Diamond Resorts Corporation, Ocean Beach Club, LLC, Gold Key Resorts, LLC, Professional Hospitality Resources, Inc., Vacation Rentals, LLC and Resort Promotions, Inc.*
10.1	Agreement for the Purchase and Sale of Property, dated as of July 28, 2015, by and between Hawaii Funding LLC, Diamond Resorts Kona Development, LLC and Diamond Resorts International, Inc.
10.2	Sale Agreement, dated as of July 29, 2015, by and between Diamond Resorts Seller 2015-1, LLC and Diamond Resorts Owner Trust 2015-1 (incorporated by reference to Exhibit 10.1 to Diamond Resorts International, Inc.'s Current Report on Form 8-K filed on August 3, 2015).
10.3	Indenture, dated as of July 29, 2015, by and among Diamond Resorts Owner Trust 2015-1, Diamond Resorts Financial Services, Inc. and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.2 to Diamond Resorts International, Inc.'s Current Report on Form 8-K filed on August 3, 2015).
10.4	Fourth Extension Agreement, dated August 5, 2015, among Diamond Resorts Centralized Services Company and Praesumo Partners, LLC (incorporated by reference to Exhibit 10.1 to Diamond Resorts International, Inc.'s Current Report on Form 8-K filed on August 11, 2015).
10.5	First Amendment to Amended and Restated Loan Sale and Servicing Agreement, dated as of September 30, 2015, among DRI Quorum 2010 LLC, as seller, Diamond Resorts Financial Services, Inc., as servicer, Wells Fargo Bank, National Association, as back-up servicer, and Quorum Federal Credit Union, a federally chartered credit union, as Buyer (incorporated by reference to Exhibit 10.1 to Diamond Resorts International, Inc.'s Current Report on Form 8-K filed on October 5, 2015).
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act as of 1934, as amended.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from Diamond Resorts International, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Income and Comprehensive Income (Loss); (iii) the Condensed Consolidated Statement of Stockholders' Equity; (iv) the Condensed Consolidated Statements of Cash Flows; and (v) Notes to the Condensed Consolidated Financial Statements, filed herewith.

	* Exhibits and schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant will furnish the omitted exhibits and schedules to the Securities and Exchange Commission upon request by the Commission.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



			DIAMOND RESORTS INTERNATIONAL, INC.

Date:	November 4, 2015	By:	/s/ DAVID F. PALMER
			David F. Palmer
			President and Chief Executive Officer (principal executive officer)

Date	November 4, 2015	By:	/s/ C. ALAN BENTLEY
			C. Alan Bentley
			Executive Vice President and Chief Financial Officer (principal financial officer)

Exhibit 2.1

ASSET PURCHASE AGREEMENT

by and among

OCEAN BEACH CLUB, LLC,

GOLD KEY RESORTS, LLC,

PROFESSIONAL HOSPITALITY RESOURCES, INC.,

VACATION RENTALS, LLC,

RESORT PROMOTIONS, INC.

and

DIAMOND RESORTS CORPORATION

Dated: August 14, 2015



	TABLE OF CONTENTS
ARTICLE I	PURCHASE AND SALE OF ASSETS	2
Section 1.1	Asset Purchase	2
Section 1.2	Excluded Assets	3
Section 1.3	Assumption of Liabilities	4
ARTICLE II	PURCHASE PRICE	4
Section 2.1	Purchase Price	4
Section 2.2	Closing Consideration	4
Section 2.3	Purchase Price Adjustments.	5
Section 2.4	Withholding Rights	6
Section 2.5	Purchase Price Allocation	6
ARTICLE III	REPRESENTATIONS AND WARRANTIES OF THE SELLERS	7
Section 3.1	Organization, Qualification and Authority and Company Records	7
Section 3.2	Capitalization and Equity Ownership	8
Section 3.3	Subsidiaries and Associations	8
Section 3.4	Absence of Default	8
Section 3.5	Financial Statements.	9
Section 3.6	Absence of Certain Changes	10
Section 3.7	Absence of Liabilities	11
Section 3.8	Licenses and Permits	11
Section 3.9	Properties	11
Section 3.10	Material Contracts.	13
Section 3.11	Environmental Matters	15
Section 3.12	Litigation	16
Section 3.13	Compliance with Laws	16
Section 3.14	Employees and Benefits.	17
Section 3.15	Labor Relations	19
Section 3.16	Insurance	19
Section 3.17	Brokers’ or Finders’ Fees	19
Section 3.18	Conflicts of Interest	19
Section 3.19	Intellectual Property	20
Section 3.20	WARN Act	21
Section 3.21	Tax Returns; Taxes	21
Section 3.22	Timeshare Matters.	22
Section 3.23	Bank Accounts.	23
Section 3.24	Corporate Names; Business Locations.	23
ARTICLE IV	REPRESENTATIONS AND WARRANTIES OF THE BUYER AND DIAMOND	23
Section 4.1	Organization, Qualification and Authority	23
Section 4.2	Absence of Default	23
Section 4.3	Brokers’ or Finders’ Fees	24
Section 4.4	Sufficiency of Funds.	24



ARTICLE V	PRE-CLOSING COVENANTS OF PARTIES	24
Section 5.1	Conduct of Business.	24
Section 5.2	No Solicitation	26
Section 5.3	Reasonable Best Efforts.	26
Section 5.4	Access to Confidential Information.	27
Section 5.5	Notice of Events.	27
Section 5.6	Financial Statements and Reports.	27
Section 5.7	Supplements to Schedules.	27
Section 5.8	Unsold Timeshare Interest Reporting.	28
Section 5.9	WARN Act Notice	28
Section 5.10	Commercial Time-Share Units.	28
ARTICLE VI	POST‑CLOSING COVENANTS OF PARTIES	28
Section 6.1	Tax Matters	28
Section 6.2	Further Cooperation	29
Section 6.3	Accounts Receivable	29
Section 6.4	Payment of Liabilities	30
Section 6.5	Post-Closing Operations	30
Section 6.6	Non-Assignable Rights	30
Section 6.7	Employee Matters	31
Section 6.8	Completion of Beachwoods Renovation.	31
Section 6.9	Non-Interference with Resort-Related Agreements.	31
ARTICLE VII	CLOSING; CLOSING DELIVERIES; CLOSING CONDITIONS	31
Section 7.1	Closing	31
Section 7.2	Sellers’ Closing Deliveries	32
Section 7.3	Buyer Closing Deliveries.	34
Section 7.4	Conditions to the Parties’ Obligations	34
Section 7.5	Conditions to the Obligations of the Sellers.	35
Section 7.6	Conditions to the Buyer’s Obligations	35
ARTICLE VIII	TERMINATION	36
Section 8.1	Termination	36
Section 8.2	Procedure and Effect of Termination	37
ARTICLE IX	SURVIVAL OF PROVISIONS AND INDEMNIFICATION	37
Section 9.1	Indemnification by the Sellers	37
Section 9.2	Indemnification by the Buyer and Diamond	38
Section 9.3	Limits on Indemnification.	38
Section 9.4	Rules Regarding Indemnification	39
Section 9.5	Payment	40
Section 9.6	Materiality Qualifiers	40
Section 9.7	Purchase Price Adjustment	41
ARTICLE X	DEFINITIONS	41
Section 10.1	Definitions	41
ARTICLE XI	MISCELLANEOUS	50
Section 11.1	Assignment; Successors; No Third Party Beneficiaries	50



Section 11.2	Expenses	51
Section 11.3	Notices	51
Section 11.4	Confidentiality; No Publicity	51
Section 11.5	Controlling Law	52
Section 11.6	WAIVER OF JURY TRIAL	52
Section 11.7	Venue; Submission to Jurisdiction	52
Section 11.8	Headings	53
Section 11.9	Partial Invalidity	53
Section 11.10	Waiver	53
Section 11.11	Counterparts; Electronic Delivery	53
Section 11.12	Interpretation	53
Section 11.13	Entire Agreement; Amendment	54
Section 11.14	Specific Performance	54
Section 11.15	Waiver of Bulk Sales Laws	54

iii

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is dated as of August 14, 2015, by and among Ocean Beach Club, LLC, a Virginia limited liability company (“OBC”), Gold Key Resorts, LLC, a Virginia limited liability company (“Gold Key”), Professional Hospitality Resources, Inc., a Virginia corporation (“PHR”), Vacation Rentals, LLC, a Virginia limited liability company (“Vacation Rentals”), and Resort Promotions, Inc., a Virginia corporation (“RPI”) (“RPI” and, together with OBC, Gold Key, PHR and Vacation Rentals, the “Sellers”), Diamond Resorts Corporation, a Maryland corporation (the “Buyer”). OBC, Gold Key and Vacation Rentals are referred to herein as the “Business Sellers.”

RECITALS:

A. OBC and Gold Key are engaged in the business of owning, developing, marketing, selling and operating timeshare resorts in Virginia and North Carolina (the “Business”). PHR is engaged in the business of providing property management services in connection with timeshare resorts and other hotels and resorts, and Vacation Rentals is engaged in the business of providing rental management services in connection with timeshare resorts and other hotels and resorts.

B. On the terms and subject to the conditions set forth in this Agreement, the Buyer desires to acquire from the Sellers, and the Sellers desire to transfer to the Buyer, certain assets and liabilities of the Sellers as set forth herein.

AGREEMENTS:

In consideration of the promises, representations and warranties and mutual covenants contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

ARTICLE I

PURCHASE AND SALE OF ASSETS

Section 1.1 Asset Purchase. At the Closing and upon the terms and subject to the conditions contained herein, each of the Business Sellers shall sell, transfer, assign, convey and deliver to the Buyer, and the Buyer shall purchase, acquire and accept from each Business Seller, all right, title and interest in and to all property and assets (other than the Excluded Assets) of such Business Seller that are used or held for use in the conduct of the Business (collectively, the “Business Assets”), free and clear of all Liens (other than Permitted Liens), wherever located and whether or not said Business Assets appear or are reflected upon the books and records of such Business Seller, which Business Assets shall include the following:

(a)all work in process, processed or finished goods, raw material and other items of inventory or goods held for sale;

(b)all machinery, equipment, vehicles, furniture, fixtures, leasehold improvements, computer and computer-related equipment (including servers), tools, parts, supplies and other personal property;

(c)all rights that the Business Sellers may have under any and all Contracts, including any Property Management Agreements, Declarations and Rental Agency Appointment Agreements to which any Business Seller is a party (the “Assumed Business Contracts”);

(d)all Intellectual Property, including all goodwill associated therewith and the right to prosecute and recover damages for any past, present or future violations of the foregoing;

(e)all computer and information technology systems (including any Software or hardware used in connection therewith);

(f)all telephone numbers, fax numbers, email addresses, directory listings, advertising, business forms, files, documents and books and records, in each case, relating to the other Business Assets, including, customer lists, customer prospect lists, customer addresses, delivery schedules, supplier lists, mailing lists, promotional materials and purchasing materials;

(g)all rights of the Business Sellers in and to all internet domain names (whether in use or not) and social media account registrations, and any and all goodwill associated therewith and all of the Business Sellers’ rights in the content at the websites and social media sites located at or associated with of such domain names or social media account registrations;

(h)forms, advertising material, and sales and marketing files, including current promotion copy and promotion copy data bases, web images, web copy and marketing materials;

(i)all rights of any Business Seller in and to the Licenses and Permits relating to the Business;

(j)all causes of action, claims, warranties, guarantees, refunds, rights of recovery and set off of every kind and character, including rights and claims against suppliers and customers and insurance claims (other than those relating solely to Excluded Assets or Excluded Liabilities);

(k)all rights under warranties, indemnities and similar rights against third parties (other than those relating to Excluded Assets);

(l)the amount of, and any and all rights to, any insurance proceeds received by any Business Seller after the date hereof in respect of any loss, destruction or condemnation of any Business Assets occurring prior to or after the Closing or relating to any Assumed Liabilities;

(m)all interests in any real property, including the Resorts, any Timeshare Interests owned by any Business Seller, the Ground Lease Property and the 25^th Street Project; provided, however, that, upon the written request of the Buyer prior to Closing, the Business Sellers shall terminate the 25^th Street Project and Contracts related thereto and any Liabilities resulting from the 25^th Street Project or the termination thereof shall be Excluded Liabilities;

(n)all current assets of the Business Sellers set forth on Schedule 1.1(n) (the “Current Assets”); and

(o)the Business as a going concern and all goodwill associated with the Business (including elements of goodwill, such as the workforce in place, covenants not to compete, patents and trademarks).

At the Closing and upon the terms and subject to the conditions contained herein, PHR shall sell, transfer, assign, convey and deliver to the Buyer, and the Buyer shall purchase, acquire and accept from PHR, all right, title and interest in and to all Property Management Agreements that PHR is a party (the “PHR Management Contracts”), free and clear of all Liens (other than Permitted Liens).

Section 1.2 Excluded Assets. Notwithstanding anything to the contrary herein, the following properties and assets of the Sellers, and any rights incidental or related thereto, shall be retained by the Sellers following the Closing and are expressly excluded from the purchase and sale contemplated by this Agreement (collectively, the “Excluded Assets”):

(a)all of the properties and assets, and any rights incidental or related thereto, of (i) PHR other than the PHR Management Contracts, and (ii) GKR-A;

(b)the formal limited liability company and corporate records, including organizational documents, qualifications to conduct business as a foreign entity, minute books and other records having exclusively to do with the organization of the Sellers and taxpayer and other identification numbers, along with any books and records that are solely related to the Excluded Assets and the Excluded Liabilities;

(c)the Sellers’ rights pursuant to or under this Agreement and the Transaction Documents and the consideration delivered to the Sellers pursuant to this Agreement;

(d)all Cash and bank deposits;

(e)any Contract listed or described on Schedule 1.2(e) (the “Excluded Contracts”);

(f)all Employee Benefit Plans (including any pension plans and multiemployer plans) and any assets and Liabilities related thereto;

(g)all equity securities of the Sellers and of GKR-A;

(h)all Tax refunds to which the Sellers may become entitled for Seller Taxes;

(i)all bank accounts;

(j)all notes receivable held by the Sellers resulting from any promissory note or other Contract relating to the financing of the acquisition of a Timeshare Interest (the “Notes Receivable”);

(k)all assets of the Sellers not used or held for use in the conduct of the Business; and

(l)the properties and assets listed on Schedule 1.2(m).

Section 1.3 Assumption of Liabilities. At the Closing, upon the terms and subject to the conditions contained herein, the Buyer will assume, become liable for and thereafter pay and fully satisfy when due (a) the obligations of the Sellers under the Assumed Business Contracts and PHR Management Contracts (collectively, the “Assumed Contracts”) to be performed after the Closing (other than obligations relating to any pre-Closing breach of such Assumed Contracts), (b) all current liabilities of the Business Sellers set forth on Schedule 1.3 (the “Current Liabilities”) and (c) accrued and unused vacation of all Transferred Employees as of the day prior to the Closing Date (the “Assumed Vacation Liabilities” and, together with the liabilities referred to in clauses (a) and (b), the “Assumed Liabilities”). Notwithstanding anything to the contrary contained in this Agreement, any Transaction Document or any exhibit or schedule hereto or thereto, and regardless of whether such Liability is disclosed herein or therein, the Buyer will not assume, agree to pay, perform or discharge or in any way be responsible for any Excluded Liabilities.

ARTICLE II

PURCHASE PRICE

Section 2.1 Purchase Price. In consideration of the sale, transfer, assignment, conveyance and delivery of the Assets, the aggregate purchase price payable by the Buyer at the Closing shall be an amount (the “Closing Cash Amount”) equal to: $167,500,000, plus (i) the amount, if any, by which the purchase price for the acquisition of the Ground Lease Property by the Sellers from the owners thereof, plus all reasonable out-of-pocket costs incurred by the Sellers in connection therewith, exceeds $4,000,000, subject to Section 8.1(g) below (the “Ground Lease Purchase Price Excess”), plus (ii) an amount equal to (x) all unrefunded deposits and reasonable out-of-pocket expenses and costs incurred by the Sellers in connection with the preparation and development of the 25^th Street Project and (y) all other reasonable out-of-pocket expenses and costs incurred by the Sellers in connection with the 25^th Street Project that are approved in writing by the Buyer in advance, in each case, through the earlier of (A) the Closing Date or (B) the date on which the 25^th Street Project is terminated pursuant to Section 1.1(o) (the “25^th Street Project Expenses”). The Closing Cash Amount minus (i) the Final Post‑Closing Reduction, if any, plus (ii) the Final Post-Closing Addition, if any, is referred to in this Agreement as the “Purchase Price”.

Section 2.2 Closing Consideration. At the Closing, the Closing Cash Amount shall be paid by the Buyer as follows:

(a)the Buyer shall deposit an amount equal to $5,000,000 (the “Escrow Amount”) with the Escrow Agent. Such funds plus all income accrued thereon (the “Escrow Funds”) shall be maintained by the Escrow Agent to secure the Sellers’ obligations under this Agreement and shall be administered and payable in accordance with the terms of the Escrow Agreement;

(b)the Buyer shall pay to the applicable obligees of the Sellers, on behalf of the Sellers and for the Sellers’ account, the Debt Amount and Seller Transaction Expenses outstanding as of the Closing; and

(c)the Buyer shall pay to the Sellers, by wire transfer of immediately available funds to the account or accounts designated by the Sellers an amount in cash equal to the Closing Cash Amount minus the sum of (i) the Escrow Amount, (ii) the Debt Amount and (iii) the Seller Transaction Expenses outstanding as of the Closing.

Section 2.3 Purchase Price Adjustments.

(a)As soon as practicable after the Closing Date but no later than the 60th day after the Closing Date, the Buyer shall deliver to the Sellers a schedule (the “Closing Schedule”) of its calculation of (A) the book value of the Current Assets as of the Effective Time (the “Closing Current Assets”), (B) the book value of the Current Liabilities as of the Effective Time (the “Closing Current Liabilities”) and (C) the amount by which (i) the Closing Current Liabilities exceed the Closing Current Assets (the “Post‑Closing Reduction”), or (ii) the amount by which the Closing Current Assets exceed the Closing Current Liabilities (the “Post-Closing Addition”).

(b)Within 20 days after the Sellers’ receipt of the Closing Schedule, the Sellers may deliver written notice (the “Protest Notice”) of their objections to the Buyer’s calculation of the Closing Current Assets, the Closing Current Liabilities and the resulting Post-Closing Reduction or Post-Closing Addition, as applicable, and the proposed modification of the Closing Schedule, together with a written statement explaining in reasonable detail the reasons for the objections and the basis for the proposed modification. Sellers shall have the right to reasonable review and approve of the Closing Schedule and may object on any basis made in good faith. If the Sellers do not deliver such notice of objection within such 20-day period, then the Closing Schedule, and the Buyer’s calculation of the Closing Current Assets, Closing Current Liabilities and the Post-Closing Reduction or Post-Closing Addition, as applicable, as shown thereon, shall be final, conclusive and binding on the parties hereto. Any amounts not disputed in the Protest Notice (if one is delivered) shall be deemed to be accepted by the Sellers as final. Upon receipt of the Closing Schedule, the Sellers and their respective accountants will be given reasonable access to the relevant books, records, workpapers and personnel during reasonable business hours for the purpose of verifying the Closing Schedule.

(c)If the Buyer disagrees with all or any portion of the Sellers’ proposed modifications of the Closing Schedule, then the Buyer shall notify the Sellers and the Buyer and the Sellers shall negotiate in good faith to reach an agreement during the 20-day period immediately following delivery by the Sellers of the Protest Notice. If the Buyer and the Sellers reach such an agreement, such agreement shall be final, conclusive and binding on the parties hereto.

(d)If, within the 20-day negotiation period described in Section 2.3(c), the Buyer and the Sellers are unable to reach an agreement on the Closing Schedule, they shall promptly thereafter cause the Independent Accountant to review this Agreement and the disputed items or amounts for the purpose of calculating the Closing Current Assets, Closing Current Liabilities and the Post-Closing Reduction or Post-Closing Addition, as applicable. In making such calculation,

the Independent Accountant shall consider only those items or amounts in the Closing Schedule as to which the Buyer and the Sellers have disagreed within the allowable periods set forth herein. The determination by the Independent Accountant of the disagreed amounts shall be based solely on presentations by the Buyer and the Sellers, and shall not involve the Independent Accountant’s independent review. The Independent Accountant shall deliver to the Sellers and the Buyer, as promptly as practicable, a report setting forth its calculations. Any determination by the Independent Accountant shall not be outside the range defined by the respective amounts in the Closing Schedule proposed by the Buyer and the Sellers’ proposed adjustments thereto (after giving effect to any disputed items that were resolved by the Buyer and the Sellers prior to submission to the Independent Accountant), and such determination shall be final, conclusive, binding and non-appealable upon the parties hereto. Each of the Buyer, on the one hand, and the Sellers, on the other hand, shall bear that percentage of the fees and expenses of the Independent Accountant equal to the proportion (expressed as a percentage) of the dollar value of the disputed amounts determined in favor of the other party by the Independent Accountant. For purposes of this Agreement, “Final Post-Closing Reduction” means the amount by which (i) the Closing Current Liabilities exceed the Closing Current Assets as finally determined pursuant to this Section 2.3, and “Final Post-Closing Addition” means the amount by which the Closing Current Assets exceed the Closing Current Liabilities, as finally determined pursuant to this Section 2.3.

(e)Within five (5) Business Days following the determination of the Final Post-Closing Reduction or the Final Post-Closing Addition, as applicable pursuant to this Section 2.3:

(i) if the Purchase Price exceeds the Closing Cash Amount, the Buyer shall pay to the Sellers, by wire transfer of immediately available funds to the account or accounts designated by the Sellers, an amount in cash equal to the amount of such excess; and

(ii) if the Purchase Price is less than the Closing Cash Amount, the Sellers shall jointly and severally be responsible for and pay to the Buyer, by wire transfer of immediately available funds to an account or accounts designated by the Buyer, an amount in cash equal to the amount of such deficit. If any amount is paid from the Escrow Amount to the Buyer with respect to any obligations of the Sellers under this Section 2.3, the Sellers shall be jointly and severally obligated to replenish the Escrow Amount by promptly depositing additional funds in the amount of any such payment into the account to be held and administered in accordance with the Escrow Agreement.

Section 2.4 Withholding Rights. The Buyer shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to the Sellers such amounts as it is required to deduct and withhold with respect to such payment under the Code, or any provision of any applicable Law. To the extent that amounts are so withheld by the Buyer, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Sellers in respect of which such deduction and withholding was made by the Buyer.

Section 2.5 Purchase Price Allocation. The parties hereto agree to allocate the Purchase Price (along with all other items of consideration for tax purposes and including any adjustment thereto) among the Business Sellers and PHR and among the Assets (i) that constitute Class IV assets and Class V assets (each as defined in Section 1060 of the Code) in accordance with the Independent Valuation and (ii) that constitute Class VI assets and Class VII assets (each as defined in Section 1060 of the Code), if applicable, all in accordance with the methodology set forth on Schedule 2.5. The foregoing

clauses (i) and (ii) are referred to as the “Allocation Methodology”. The parties acknowledge and agree that none of the Assets shall constitute Class I Assets, Class II Assets or Class III Assets (each as defined in Section 1060 of the Code). No later than 60 days following the completion of the Buyer’s purchase accounting valuation, the Buyer shall prepare an allocation of the Purchase Price in accordance with the Allocation Methodology, which allocation (as finally determined pursuant to this Section 2.5) shall be binding upon the parties hereto. Any amendment to such allocation shall be prepared in accordance with the procedures set forth in this Section 2.5 for the initial allocation. The parties hereto shall report for Tax and other relevant purposes (and shall defend in any Tax Proceeding) the Transactions in a manner consistent with such allocation and any amendment thereto (including the preparation of Internal Revenue Service Form 8594) and not take any position inconsistent therewith. The Sellers shall timely deliver all such documents and other information as the Buyer may reasonably request in order to prepare such allocation or any amendment thereto. If the Sellers dispute an amount on the allocation prepared by the Buyer (the only permissible basis for which being that the allocation was not prepared in accordance with Schedule 2.5), the Sellers shall deliver written notice to the Buyer specifying in reasonable detail the amount in dispute and the basis for such dispute within 30 days following the delivery of the allocation prepared by the Buyer to the Sellers. Any dispute not resolved within 30 days following the Buyer’s receipt of a protest notice from the Sellers regarding the allocation prepared by the Buyer pursuant to this Section 2.5 shall be resolved in accordance with the dispute resolution procedures set forth in Section 2.3.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

The Sellers hereby jointly and severally represent and warrant to the Buyer that:

Section 3.1 Organization, Qualification and Authority and Company Records.

(a)Each Seller is duly organized, validly existing and in good standing under the Laws of its jurisdiction of formation, and is in good standing and duly qualified to do business as a foreign company in all jurisdictions where the nature of the property owned or leased by it or its use, or the nature or conduct of its business, makes such qualification necessary, except those jurisdictions in which the failure to be so qualified would not be reasonably expected to have a Material Adverse Effect. Schedule 3.1 sets forth all jurisdictions in which each Seller is qualified or licensed to do business as a foreign company. Each Seller has full right, power and authority to own, lease and operate its facilities and assets as presently owned, leased and operated and to carry on its business as it is now being conducted. Each Seller has the full right, power and authority to execute, deliver and perform this Agreement and the Transaction Documents to which such Seller is or will be a party, to consummate the Transactions and to comply with the terms, conditions and provisions of this Agreement and the Transaction Documents to which such Seller is or will be a party. The execution, delivery and performance by such Seller of this Agreement and the Transaction Documents to which such Seller is or will be a party and the consummation of the Transactions by such Seller have been duly authorized by all necessary action and, when executed and delivered, will constitute the legal, valid and binding obligation of such Seller enforceable against such Seller in accordance with their terms, subject to the Enforceability Exceptions. The name of each director and officer of each Seller is set forth opposite the position held by same on Schedule 3.1.

(b)Each Business Seller has heretofore delivered to the Buyer correct and complete copies of the organizational documents of such Business Seller as in effect on the date hereof.

Section 3.2 Capitalization and Equity Ownership. Schedule 3.2 sets forth the entire authorized equity securities and the total number of issued and outstanding membership interests and other equity securities of each Seller. Except for Persons identified on Schedule 3.2, no Person owns or holds, has any interest in, whether legal, equitable or beneficial, or has the right to purchase, any equity securities of any Seller.

Section 3.3 Subsidiaries and Associations.

(a)Except for another Seller or GKR-A, none of the Sellers (i) has any Subsidiaries, (ii) owns, directly or indirectly, any shares of capital stock of any corporation or any equity securities in any other Person and (iii) has any obligation to acquire any such shares or to make any such investment.

(b)Each Timeshare Owners’ Association is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization, and is in good standing and duly qualified to do business as a foreign company in all jurisdictions where the nature of the property owned or leased by it or its use, or the nature or conduct of its business, makes such qualification necessary, except those jurisdictions in which the failure to be so qualified would not be reasonably expected to have a Material Adverse Effect. Schedule 3.3(b) sets forth all jurisdictions in which each Timeshare Owners’ Association is qualified or licensed to do business as a foreign company. Each Timeshare Owners’ Association has full right, power and authority to own, lease and operate its facilities and assets as presently owned, leased and operated and to carry on its business as it is now being conducted.

Section 3.4 Absence of Default. Except as set forth on Schedule 3.4, none of the execution, delivery or performance by any Seller of this Agreement or the Transaction Documents to which such Seller is or will be a party, the consummation of the Transactions by such Seller or the operation of the Business by the Buyer immediately following the Closing in substantially the same manner in which it is operated as of the Closing will:

(a)result in the creation or imposition of any Lien upon any material Asset;

(b)violate or conflict with, or result in any breach of any term, condition or provision of, the articles of formation or operating agreement of such Seller;

(c)violate, conflict with, result in a breach of, or constitute (with or without notice or lapse of time or both) a default under, or an event which would give rise to any right of notice, modification, acceleration, payment, cancellation or termination under, or in any manner release any party thereto from any obligation under any material Contract, License or Permit, Debt, approval or other commitment or instrument to which such Seller is a party or by which such Seller or the Business are bound;

(d)violate, conflict with, result in a breach of, or constitute (with or without notice or lapse of time or both) a default under, any judgment, decree, order, regulation or rule of

any court or regulatory authority or any other Governmental Entity applicable to such Seller or the Business; or

(e)violate or conflict with or result in a breach of any Law.

Section 3.5 Financial Statements.

(a)Attached hereto as Schedule 3.5(a) are correct and complete copies of the following financial statements (the “Financial Statements”):

(i) the audited consolidated balance sheets of OBC and its Subsidiaries as of December 28, 2014 and December 29, 2013 and the related consolidated statements of income, changes in equity, and cash flows for the years then ended;

(ii) the unaudited consolidated balance sheet of OBC and its Subsidiaries as of June 30, 2015 and the related statements of income for the six month period then ended;

(iii) the unaudited balance sheet of Vacation Rentals as of December 31, 2014 and December 31, 2013 and the related statements of income for the years then ended;

(iv) the unaudited balance sheet of Vacation Rentals as of June 30, 2015 and the related statements of income for the six month period then ended;

(v) the audited balance sheet of each of the Timeshare Owners’ Associations as of December 28, 2014 and December 29, 2013 and the related statements of income, changes in equity, and cash flows for the years then ended; and

(vi) the unaudited balance sheet of each of the Timeshare Owners’ Associations as of June 30, 2015 and the related statements of income for the four month period then ended.

(b)Except as set forth on Schedule 3.5(b), the Financial Statements present fairly in all material respects, in accordance with GAAP, the financial position and results of operations of the applicable Business Seller or Timeshare Owners’ Associations as of, and the results of its operations and cash flows for, the periods specified, except for the absence of footnotes with respect to the interim financial statements which will be subject to year-end adjustments consistent with those adjustments, none of which will be material individually or in the aggregate. Except as set forth on Schedule 3.5(b), since December 28, 2014, there has been no change in any Business Seller’s or Timeshare Owners’ Association’s reserve on accrual amounts or policies.

(c)To the knowledge of the Sellers, each Business Seller, except for Vacation Rentals, maintains a system of internal accounting controls sufficient to provide reasonable assurance in all material respects that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles (except as described in Schedule 3.5(b)) and to maintain asset and liability accountability, (iii) access to assets or incurrence of liability is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any differences.

Section 3.6 Absence of Certain Changes. Except as set forth on Schedule 3.6, since December 28, 2014, PHR has not amended, cancelled, or terminated any PHR Management Contract or subjected any PHR Management Contract to any Lien or other restriction (other than Permitted Liens). Except as set forth on Schedule 3.6, since December 28, 2014, each Seller has conducted its business in the Ordinary Course of Business. Without limiting the generality of the foregoing, except as set forth on Schedule 3.6, since December 28, 2014, no Seller has:

(a)experienced any event, circumstance or change (financial or otherwise) which has, or could reasonably be expected to have, a Material Adverse Effect;

(b)experienced any material loss, damage or destruction of or to any of the Assets;

(c)(i) increased the compensation payable by such Seller to any of such Seller’s employees, directors, independent contractors or agents, except for increases in compensation in the Ordinary Course of Business, (ii) paid or agreed to pay any severance or termination pay granted to, or entered into any employment or severance agreement entered into with, any employee or officer of such Seller or (iii) increased the benefits under, amended, terminated or instituted, any Employee Benefit Plan;

(d)adjusted or written off any accounts receivable or reduced reserves for accounts receivable outside of the Ordinary Course of Business;

(e)changed any financial reporting, Tax or accounting methods or practices employed by such Seller or changed the adopted depreciation or amortization policies, except as required by GAAP;

(f)sold, transferred, pledged, mortgaged, abandoned or otherwise disposed of any of the assets of such Seller (except, to the extent consistent with the Sellers’ past practice, inventory sold in the Ordinary Course of Business) or mortgaged, pledged or subjected any Asset to any Lien or other restriction (other than Permitted Liens);

(g)consummated a merger, consolidation, liquidation, dissolution or similar transaction or acquired the assets (other than acquisitions of Inventory, replacement parts and other operating assets in the Ordinary Course of Business) or business of any Person;

(h)sold, assigned, transferred, disposed of, or abandoned or permitted to lapse any material Licenses and Permits, Intellectual Property or other material intangible assets, or disclosed any material proprietary confidential information to any Person, or granted any license or sublicense of any rights under or with respect to any Intellectual Property;

(i)made any loans or advances to, or guarantees for the benefit of, or entered into any transaction or Contract with, any employees of such Seller or any Affiliate of such Seller;

(j)amended, cancelled, or terminated any Material Contract, or entered into any Material Contract;

(k)made or committed to make any capital expenditures that are, in the aggregate, in excess of such Seller’s capital expenditure budget as in effect on the date hereof, a complete and correct copy of which has been delivered to the Buyer;

(l)incurred any Debt other than Debt incurred in the Ordinary Course of Business under a Contract required to be set forth on Schedule 3.10(a);

(m)entered into any closing agreement or similar arrangement with respect to Taxes or any settlement of any material Proceeding for Taxes;

(n)filed any Tax Return in a manner inconsistent with past practice, amended any Tax Return, made, changed or revoked any Tax elections (other than an initial Tax election filed in the Ordinary Course of Business) or filed any claim for a material Tax refund; or

(o)entered into any Contract to do or engage in any of the foregoing.

Section 3.7 Absence of Liabilities. Except (i) as set forth on Schedule 3.7(a), (ii) Liabilities reflected on the Financial Statements and (iii) Liabilities which have arisen after June 30, 2015 in the Ordinary Course of Business (none of which result from, arise out of, relate to, is in the nature of, or was caused by any breach of contract, breach of warranty, tort, infringement, violation of Law or Proceeding), no Business Seller has any material Liabilities. Except (i) as set forth on Schedule 3.7(b) and (ii) executory obligations to be performed after the Closing in the Ordinary Course of Business arising under any PHR Management Contract (none of which result from, arise out of, relate to, is in the nature of, or was caused by any breach of contract, breach of warranty, tort, infringement, violation of Law or Proceeding), PHR has no Liabilities in respect of any of the PHR Management Contracts.

Section 3.8 Licenses and Permits. Each Seller has all material Licenses and Permits necessary for such Seller to occupy, own, use, operate and conduct its business and to occupy, own, use and operate the Assets as presently occupied, owned, used, operated or conducted, as the case may be, all of which (along with the owner, the function and the expiration and renewal date of each) are listed on Schedule 3.8, and correct and complete copies of which have previously been furnished or delivered to the Buyer. All such Licenses and Permits are valid, in force and in good standing. There is not, and since January 1, 2012, Seller has not received written or, to the knowledge of the Sellers, oral notice of, any default on the part of such Seller under any such Licenses and Permits. No written or, to the knowledge of the Sellers, oral notices have been received by such Seller with respect to (i) any actual or alleged violation of, or failure to comply with, any term or requirement of any License or Permit or (ii) any threatened, pending or possible sanction, revocation, withdrawal, termination, rescission, suspension, cancellation, modification, corrective action or limitation of, or with respect to, any License or Permit. All applications required to be filed for renewal of any such Licenses and Permits have been timely filed and all other filings required to have been made with respect to such Licenses and Permits have been duly made on a timely basis.

Section 3.9 Properties.

(a)Except as set forth on Schedule 3.9(a), each Business Seller owns good and marketable title to (or holds pursuant to valid and enforceable leases), and immediately following the consummation of the Transactions, the Buyer will own good and marketable title (or hold pursuant to valid and enforceable leases) to, all of the Business Assets, free and clear of all Liens (other than Permitted Liens). Except as set forth on Schedule 3.9(a), the Business Assets that constitute tangible property are in all material respects in good operating condition and repair (normal wear and tear excepted), are suitable for the purposes for which they are used, are not subject to any condition that materially interferes with the economic value or use thereof, and constitute all tangible property

necessary to permit the Buyer to conduct the Business as generally conducted as of the date of this Agreement.

(b)Schedule 3.9(b) sets forth a list of all real property, other than Timeshare Interests, owned by any Business Seller (the “Owned Real Property”), including the street address for each Owned Real Property.

(c)Schedule 3.9(c) sets forth a list of all real property leased or subleased by any Business Seller (the “Leased Real Property” and, together with the Owned Real Property, the “Real Property”), including the street address for each Leased Real Property. The applicable Business Seller is a tenant or possessor in good standing thereunder and all rents currently due under such leases have been paid.

(d)Except as set forth on Schedule 3.9(d), no Business Seller (a) has leased or licensed any of its interests in any Real Property or (b) has any obligation under any brokerage or similar arrangement with respect to any Real Property.

(e)Correct and complete copies of (a) all deeds, existing title insurance policies and surveys of or pertaining to the Real Property and (b) all instruments, agreements and other documents evidencing, creating or constituting any Liens on any Real Property have been made available to the Buyer to the extent they are in the possession of the Sellers.

(f)The Sellers presently enjoy peaceful and undisturbed possession of the Real Property sufficient for the continued conduct of the Business as presently conducted. Without limiting the foregoing, there are no pending or, to the knowledge of the Sellers, threatened eminent domain, condemnation or other similar proceedings against the Sellers or with respect to any Real Property.

(g)To the knowledge of Sellers, no Seller is in violation of any covenant, condition, restriction, easement or Governmental Order to which any Real Property is bound or subject and there are no pending or, to the knowledge of the Sellers, threatened Proceedings with respect thereto.

(h)No Seller has received written or, to the knowledge of the Sellers, oral notice of any special, general or other assessments pending against any Seller or affecting any Real Property.

(i)The Real Property (including 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 current uses. All public utilities necessary to the full use and enjoyment of the Real Property are located either in the public right-of-way abutting such Real Property (which are connected so as to serve such Real Property 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 Entities.

(j)Each Resort is used exclusively as a timeshare resort, hotel, whole-ownership condominium and/or other uses appurtenant and/or related thereto.

(k)The improvements on any Real Property located in an area as identified by the Federal Emergency Management Agency as an area having special flood hazards , each of which

as set forth on Schedule 3.9(k), has flood insurance in the amounts set forth on Schedule 3.9(k), which amounts are commercially reasonable.

(l)All improvements on any Real Property have reserves (which reserves constitute Business Assets) that are adequate, in the Sellers’ good faith judgment based on the Sellers’ past practices in managing and operating the Assets, for foreseeable repairs and maintenance of such improvements; all information about such reserves and any reserve studies in Sellers’ possession, custody, or control have been delivered to Buyer prior to the date of this Agreement; and no Seller has received notice from any insurance company or bonding company of any defects or inadequacies in any Real Property, 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.

(m)Except as set forth on the surveys listed on Schedule 3.9(m), all of the improvements which were included in determining the appraised value of each Real Property lie wholly within the boundaries and building restriction lines of such Real Property, and no improvements on adjoining properties encroach upon such Real Property, and no easements or other encumbrances upon the applicable Real Property encroach upon any of the improvements, so as to affect the value or marketability of the applicable Real Property except those which are insured against by a title insurance policy.

(n)To the extent that the Sellers 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, and such interests in such common areas are free and clear of all Liens (other than Permitted Liens).

(o)Schedule 3.9(o) sets forth the Timeshare Interests owned by the Sellers and the book value of such Timeshare Interests (as determined in a manner consistent with the methodologies and practices historically applied by the Sellers), in each case, as of June 30, 2015.

Section 3.10 Material Contracts.

(a)Schedule 3.10(a) contains a correct and complete list, as of the date of this Agreement, of the PHR Management Contracts and the following Contracts (other than Excluded Contracts) to which any Business Seller is a party or by which the Business or any of the Business Assets is otherwise bound or subject to:

(i) all plans and Contracts providing for bonuses, pensions, options, equity purchases, deferred compensation, retirement payments, profit sharing, collective bargaining or the like, or any Contract or agreement with any labor union;

(ii) all (A) employment Contracts, (B) other Contracts for services that require the payment of more than $100,000 annually by or to any Business Seller and (C) Contracts relating to loans by such Business Seller to any officers or employees of such Business Seller;

(iii) all Contracts (A) that provide for any severance obligation of such Business Seller to any current or former employee or (B) that contain any change of control or similar provisions in respect of any employee, officer or director of such Business Seller;

(iv) all Contracts for the purchase of any fixed asset, inventory or materials that involve future obligations in excess of $100,000 (other than purchase orders and sales orders entered into in the Ordinary Course of Business);

(v) all guaranties of any obligation of any Person other than such Business Seller;

(vi) all Contracts with respect to Debt owed to or by such Business Seller;

(vii) all Contracts with respect to Real Property;

(viii) all Contracts under which such Business Seller is the lessee of or holds or operates any personal property owned by any other party in excess of $100,000;

(ix) all Contracts under which such Business Seller is the lessor of or permits any other Person to hold or operate any property, real or personal, owned or controlled by such Business Seller;

(x) all Property Management Agreements;

(xi) all Contracts that contain any fixed or indexed pricing, “most-favored nation” pricing or similar pricing terms or provisions regarding minimum volumes, volume discounts;

(xii) all Contracts containing covenants limiting the freedom of such Seller to compete in any line of business or with any other Person anywhere in the world, including any Contracts granting exclusive rights to another Person;

(xiii) all Contracts for acquisitions or dispositions (by merger, purchase or sale of assets or equity securities or otherwise) of material assets, as to which any Seller has continuing material obligations or material rights;

(xiv) all Contracts with any Governmental Entity;

(xv) all Contracts pursuant to which any Business Seller leases, licenses or otherwise authorizes another Person to use, distribute, sell, resell or incorporate any Seller Intellectual Property;

(xvi) all Contracts pursuant to which any Business Seller leases or licenses from another Person the right, or is otherwise authorized by another Person to use, distribute, sell, resell or incorporate any Seller Intellectual Property other than licenses of Commercial Software (“Third Party Licenses”);

(xvii) all Contracts containing “key man” or “key personnel” provisions;

(xviii) all Rental Agency Appointment Agreements;

(xix) all material Contracts with respect to the Resorts;

(xx) all Contracts with respect to the Timeshare Owners’ Associations, the Timeshare Documents and the Timeshare Interests;

(xxi) all partnership, operating, joint venture or other similar Contracts that concern the sharing of profits; and

(xxii) all other Contracts that require payment by or to any Business Seller in excess of $100,000 (the PHR Management Contracts and the Contracts described in clauses (i) through (xxii), collectively, the “Material Contracts”).

(b)None of the Material Contracts has been assigned or transferred by the applicable Seller and each is in full force and effect. Subject to the Enforceability Exceptions, each Material Contract is valid, binding and enforceable by or against such Seller, in accordance with its respective terms.

(c)No event or condition has happened or exists with respect to such Seller that constitutes a default or breach or, after notice or lapse of time or both, would constitute a default or breach by such Seller under any of the Material Contracts. To the knowledge of the Sellers, no event or condition has happened or exists with respect to any Person that constitutes a default or breach or, after a notice or lapse of time, or both, would constitute a default or breach by any Person under any of the Material Contracts. No counterparty to a Material Contract has sought to terminate or amend the terms of a Material Contract.

(d)Correct and complete copies of the Material Contracts, together with all modifications and amendments thereto, have previously been delivered to the Buyer.

Section 3.11 Environmental Matters.

(a)Except as set forth in Schedule 3.11(a), to the knowledge of the Sellers, each Business Seller is, and since January 1, 2012 has been, in compliance in all material respects with any and all Laws with respect to Hazardous Substances, pollution or protection of human health and safety (collectively, “Environmental Laws”). As used in this Section 3.11 the term “Hazardous Substances” means any hazardous or toxic substances, materials or wastes, including, without limitation, those substances, materials and wastes defined in Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”) listed in the United States Department of Transportation Table (49 CFR 172.101) or by the United States Environmental Protection Agency as hazardous substances pursuant to 40 CFR Part 302, or which are regulated under any other Environmental Law.

(b)Except as set forth in Schedule 3.11(b), there is no Proceeding, written notice or demand letter or request for information pending or, to the knowledge of the Sellers, threatened, against any Business Seller under any Environmental Law. No Business Seller has received any written or, to the knowledge of the Sellers, oral notice from any Governmental Entity or other Person that alleges that any Business Seller is in material violation of any Environmental Law or has any material Liability arising under Environmental Laws relating to either the Business Sellers or any Real Property. No Business Seller is subject to any Governmental Order relating to Environmental Laws.

(c)No Business Seller has received any written or, to the knowledge of the Sellers, oral notice that it has been identified as a potentially responsible party under CERCLA or

any comparable state law or that any property or facility of the Business Seller is listed or proposed for listing on the National Priorities List under CERCLA or in the Comprehensive Environmental Response, Compensation and Liability Information Systems List promulgated pursuant to CERCLA, or on any comparable list maintained by any Governmental Entity.

(d)The Business Sellers have made available to the Buyer correct and complete copies of all environmental investigations, studies, audits, tests, reviews, or other analyses by or on behalf of the Business Sellers or that are available to the Business Sellers.

Section 3.12 Litigation. Except as set forth on Schedule 3.12(a), there are no (i) Proceedings pending or, to the knowledge of the Sellers, threatened against any Seller or any current or former director or officer of any Seller in his or her capacity as such at law or in equity, or before or by any Governmental Entity or (ii) Governmental Orders applicable to or binding upon any Seller, the Assets or the Business. Schedule 3.12(b) sets forth a correct and complete list and description of all Proceedings made, filed or otherwise initiated and resolved within the past three years relating to the Sellers or the Business and the resolution thereof.

Section 3.13 Compliance with Laws.

(a)Except as set forth on Schedule 3.13(a), (i) the Sellers and the Business are, and since January 1, 2012 have been, in compliance, in all material respects, with all applicable Laws and (ii) no Seller has received any written or, to the knowledge of the Sellers, oral notice from any Governmental Entity of any ongoing, pending, active or threatened Proceedings involving any Seller or the Business with respect to any Laws.

(b)No Seller has made, and, to the knowledge of the Sellers, no director, officer, agent or employee of any Seller (or other Person acting on such Seller’s behalf) has (i) made any contribution, bribe, rebate, payoff, kickback, or other similar payment to any Person in violation of a Law, (ii) made any payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any campaign contribution made by the Seller (or made by any Person acting on the Seller’s behalf) in violation of any Law, or (iv) otherwise violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

(c)To the knowledge of the Sellers, no portion of any Resort has been purchased with proceeds of any illegal activity. None of the funds or other assets of any Seller constitutes property of, or are beneficially owned, directly or indirectly, by any Person subject to trade restrictions under U.S. law, including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. I et seq., and any executive orders or regulations promulgated thereunder with the result that any investment in the Sellers (whether directly or indirectly), is prohibited by Law (“Embargoed Person”). No Embargoed Person has any interest of any nature whatsoever in any Seller with the result that the investment in any Seller is prohibited by law. None of the funds of any Seller have been derived from any unlawful activity with the result that any investment in the Sellers is prohibited by Law.

(d)Schedule 3.13(d) sets forth the states and countries in which, for the preceding three (3) years, (i) Timeshare Interests with respect to any Resort are being sold or marketed; (ii) any Seller has any registrations or filings related in any way to the Timeshare Interests, including, without limitation, the selling and/or marketing of any Timeshare Interests; (iii) any Seller

operates any off-premises contact, or OPC, booth; (iv) any Seller directs any mail campaigns; (v) any Seller directs any e-mail campaigns; and (vi) any Seller engages in internet sales. Sellers have not within the past three (3) years engaged in any telesales or telemarketing activities with respect to the marketing and sale of Timeshare Interests. All 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 bylaws and rules and regulations of the applicable Timeshare Owners’ Association, the applicable Property Management Agreement, the forms of purchase contract, and all other documents used in connection with the sale of Timeshare Interests, and the operation of the Resort as a timeshare resort and the regulation, management and administration thereof comply in all material respects with all applicable Timeshare Laws. Any public offering statements and any other documents filed in relation to any registration for any Resorts or Timeshare Interests are accurate and comply in all material respects with all applicable Timeshare Laws. All Timeshare Interests were properly formed. The Sellers are the owners of the use and occupancy rights associated with such Timeshare Interests and have the right to convey such Timeshare Interest to third-party purchasers pursuant to the Timeshare Documents. The Business Sellers have made available to the Buyer correct and complete copies of the Timeshare Documents placed on file with any Governmental Entity.

(e)In the Commonwealth of Virginia and the State of North Carolina, none of the Sellers or any principals, owners, or officers thereof (“Representing Parties”) have been: (1) convicted of or pled nolo contendere to a felony or other crime involving moral turpitude, fraud or misrepresentation, land sales or investments, securities sales, campgrounds, or timeshares; (2) convicted of or pled nolo contendere to selling real estate, investments, securities, timeshares or campgrounds without a license; or (3) had a permit to sell timeshares, securities, real estate or campgrounds revoked.

Section 3.14 Employees and Benefits.

(a)The Sellers have provided (i) a correct and complete list of all of the employees of each Seller, giving name, job title, employer, current compensation paid or payable, and sick and vacation leave that is accrued but unused, (ii) correct and complete copies of any and all fringe benefits and personnel policies applicable to each Seller’s employees, (iii) the employment dates and job titles of each such person and (iv) categorization of each such person as a full-time or part-time employee of any Seller. For purposes of this paragraph, “part-time employee” means an employee who is employed for an average of fewer than 40 hours per week or who has been employed for fewer than six of the 12 months preceding the date on which notice is required pursuant to the “Worker Adjustment and Retraining Notification Act” and the regulations promulgated thereunder (collectively, “WARN”), 29 U.S.C. §2102 et seq. Except as provided in Schedule 3.14(a), no Seller is a party to any employment Contract and all of the Sellers’ employees are employed on an “at will” basis.

(b)Schedule 3.14(b)(i) lists each Employee Benefit Plan. Except as set forth on Schedule 3.14(b)(ii), each Employee Benefit Plan has been maintained, funded and administered in accordance with the terms of such Employee Benefit Plan and complies in form and operation with the applicable requirements of ERISA, the Code and other applicable Laws. Except as set forth on Schedule 3.14(b)(iii), no Seller has engaged, directly or indirectly, in an non-exempt prohibited transaction (as defined in Section 4975 of the Code or Section 406 of ERISA) in connection with any Employee Benefit Plan. There are no pending or, to the knowledge of the Sellers, threatened Proceedings (other than routine claims for benefits in the Ordinary Course of Business) asserted or

instituted against (i) any Employee Benefit Plan or its assets, (ii) any Seller or any ERISA Affiliate with respect to any Employee Benefit Plan or (iii) any fiduciary with respect to any Employee Benefit Plan and, in each case, there are no facts upon which such a Proceeding would reasonably be expected to be brought against any of the foregoing.

(c)The Sellers have made available to the Buyer copies of (i) each written Employee Benefit Plan, as amended to the date hereof, together with audited financial statements and actuarial reports for the three most recent plan years, if any, (ii) each funding vehicle with respect to each such plan, (iii) the most recent and any other determination letter, ruling or notice issued by or filed with any Governmental Entity with respect to such plan, (iv) the Form 5500 Annual Report for the three most recent plan years, (v) the most recent summary plan description or summary of modifications and (vi) each other document, explanation or communication which describes any relevant aspect of any such plan that is not disclosed in previously delivered materials. A description of any unwritten Employee Benefit Plans, including a description of any material terms of such plan, is set forth in Schedule 3.14(c). Each Employee Benefit Plan that is intended to be a “qualified plan” under Section 401(a) of the Code has received a favorable determination letter from the IRS on which it can rely and the Sellers have no knowledge of any facts or circumstances that would jeopardize such qualification.

(d)Except as set forth on Schedule 3.14(d), no Seller nor any ERISA Affiliate maintains, sponsors, contributes to, provides or has any Liability with respect to post-retirement medical benefits, post-retirement death benefits or other post-retirement welfare benefits to its current or former employees, except as required by Section 4980B of the Code and at the sole expense of the participant or the beneficiary of the participant. No Seller maintains any Employee Benefits Plan that is an “employee welfare benefit plan”, as defined in Section 1 of ERISA, that has provided any “disqualified benefit”, as defined in Section 4976 of the Code, with respect to which an excise Tax could be imposed under Section 4976 of the Code. Except as set forth on Schedule 3.14(d), no Seller nor any predecessor that operated the Business of any Seller or any ERISA Affiliate has at any time participated in or made contributions to or had any other liability with respect to, a plan which is a “multiemployer plan” as defined in Section 4001 of ERISA, a “multiemployer plan” within the meaning of Section 3(37) of ERISA, a “multiple employer plan” within the meaning of Code Section 413(c), a “multiple employer welfare arrangement” within the meaning of Section 3(40) of ERISA, or, except as disclosed on Schedule 5.15(d), a plan which is subject to Section 302 or Title IV of ERISA or is otherwise a defined benefit pension plan.

(e)No Employee Benefit Plan or other Contract by or to which any Seller or any ERISA Affiliate is bound or otherwise has any Liability under could reasonably be expected to require any payment or transfer of money, property or other consideration on account of or in connection with the Transactions. No payment or transfer due in connection with the consummation of the Transactions could constitute an “excess parachute payment” within the meaning of Section 280G of the Code.

(f)Each Employee Benefit Plan which is a “non-qualified deferred compensation plan”, as defined in Section 409A(d)(1) of the Code, and has been in a written form that complies with Section 409A of the Code such that it could not reasonably be expected that, in the event of an audit by the Internal Revenue Service of any Seller, any ERISA Affiliate or any individual participating in such Employee Benefit Plan, the additional Tax described in Section 409A(a)(1)(B) would be assessed against any such participant with respect to benefits due or accruing under such Employee Benefit Plan.

Section 3.15 Labor Relations.

(a)Schedule 3.15(a) contains a correct and complete list as of the date hereof setting forth (i) the names, hire dates, current compensation rates and job titles of all individuals presently employed by each Seller on a salaried basis, (ii) the names, hire dates, current compensation rates and job titles of all individuals presently employed by each Seller on an hourly or piecework basis and (iii) the names and total annual compensation for all independent contractors who render services on a regular basis to each Seller whose current annual compensation is in excess of $100,000. Except as set forth in Schedule 3.15(a), no person listed thereon has received any bonus or increase in compensation since December 28, 2014 and there has been no “general increase” in the compensation or rate of compensation payable to any employees of any Seller since December 28, 2014, nor since that date has there been any promise to the employees listed on Schedule 3.15(a) orally or in writing of any bonus or increase in compensation, whether or not legally binding, except for increases in the Ordinary Course of Business, and obligations incurred under existing Employee Benefit Plans. The Sellers have no knowledge that any employee of any Seller as of the date hereof will or may cease to be an employee because of the consummation of the Transactions.

(b)No Seller is a party to any labor Contract or collective bargaining Contact with any labor union or organization, nor are any of its employees represented by any labor union or organization. There is no pending or, to the knowledge of the Sellers, threatened, labor dispute, work stoppage, unfair labor practice complaint, grievance strike, administrative or court Proceeding or order between any Seller and any present or former employee(s) of such Seller. Except as set forth on Schedule 3.15(b), there is no pending or, to the knowledge of the Sellers, threatened, Proceeding between any Seller and any present or former employee(s) of any Seller. Except as set forth on Schedule 3.15(b), no Seller has any Liability to any labor union or organization under any collective bargaining Contract.

Section 3.16 Insurance. A correct and complete list and description, including policy numbers, carriers, risks insured, amounts of coverage, deductibles and expiration dates, of all insurance policies maintained by each Business Seller, or of any Person (other than the Sellers), including any insurance policy procured by any Timeshare Owners’ Association, for the benefit of any Seller, is set forth in Schedule 3.16, correct and complete copies of which policies, together with all amendments and modifications thereto, have previously been delivered to the Buyer. Each Resort which is currently managed by a Seller or an Affiliate thereof and which is located in a designated flood plain maintains flood insurance in an amount set forth on Schedule 3.16. Premiums due for such policies have been paid in full and no Seller is in default or breach with respect to any provision contained in any such insurance policies, nor has any Seller failed to give any notice or to present any claim thereunder in due and timely manner.

Section 3.17 Brokers’ or Finders’ Fees. No Seller has employed, or is liable for the payment of any fee to, any agent, finder, broker, consultant or similar Person in connection with the Transactions.

Section 3.18 Conflicts of Interest. Except as set forth on Schedule 3.18(a), none of the following is either a customer of any Business Seller, a supplier of goods or services to any Business Seller, or directly or indirectly controls or is an owner, director, officer, employee or agent of any corporation, firm, association, partnership or other business entity that is a competitor to the Business or a supplier of goods or services to any Business Seller: (a) any direct or indirect equityholder of any Business Seller, (b) any other director or officer of any Business Seller or any immediate family member

of any such director or officer, (c) any immediate family member of any direct or indirect equityholder of any Business Seller, (d) any Person under common control with any Business Seller or controlled by or related to any direct or indirect equityholder of any Business Seller or any immediate family member of any direct or indirect equityholder of any Business Seller or (e) any Affiliate of any of the foregoing. Except as set forth on Schedule 3.18(b), no direct or indirect equityholder of any Business Seller, any Affiliate thereof or any other Affiliate of any Business Seller (i) is a party to any Contract with such Business Seller or has any material interest in any property (whether real, personal, or mixed and whether tangible or intangible) used by such Business Seller or (ii) owns (of record or as a beneficial owner), an equity interest or any other financial or profit interest in, any entity that has a material financial interest in any transaction with such Business Seller. No Business Seller is a party to any Affiliate Transaction. Except as set forth on Schedule 3.18(c), there are no accounts payable owed by any Business Seller to any Affiliate of such Business Seller or any accounts receivable owed by any Affiliate of such Business Seller to such Business Seller.

Section 3.19 Intellectual Property.

(a)Schedule 3.19(a) sets forth, for the Intellectual Property owned by each Business Seller, a correct and complete list of all U.S., state and foreign: (i) Patents issued or pending, (ii) Trademark registrations and applications for registration (including Internet domain name registrations) and material unregistered Trademarks and (iii) Copyright registrations and applications for registration, including, where applicable (i.e., not including items not subject to registration or an application for registration), the name of the registered owner, date of registration or application and name of registration body where the registration or application was made (collectively, “Registered Intellectual Property”). Each item of such Registered Intellectual Property is valid, subsisting and enforceable. All renewal and maintenance fees in respect of the Registered Intellectual Property have been duly paid and all registrations therefor are in full force and are not subject to any challenge, opposition, nullity Proceeding or interference or, to the knowledge of the Sellers, threat to commence same.

(b)Schedule 3.19(b) sets forth all material Software that is used by the Business Sellers in the conduct of the Business, other than Commercial Software.

(c)Each Business Seller has used without interruption or adverse claim during the course of operating the Business all Seller Intellectual Property, free and clear of all Liens. To Business Seller’s knowledge, no Business Seller is infringing upon or misappropriating any Intellectual Property rights of any Person and there are no pending or, to the knowledge of the Sellers, threatened Proceedings asserting that the use of Seller Intellectual Property by any of the Business Sellers infringes upon or misappropriates any Intellectual Property rights of any Person. No Business Seller has received any written or, to the knowledge of the Sellers, oral notice or allegation of invalidity, infringement, or misappropriation from any Person or Governmental Entity with respect to any Seller Intellectual Property. To the knowledge of the Sellers, no Person is infringing upon or misappropriating any Seller Intellectual Property.

(d)Except for Commercial Software and Intellectual Property that is the subject of Third Party Licenses, no Business seller is obligated to pay any continuing fees, royalties or other compensation to any Person with respect to any Seller Intellectual Property.

(e)All officers, managers, employees, consultants and contractors of each Business Seller have had such Business Seller’s employee handbook made available to them, and

such employee handbook provides that all Intellectual Property arising from the services performed by such Persons constitute the property of such Seller. To the knowledge of the Sellers, no current or prior officer, manager, employee or consultant of such Business Seller claims, and such Seller is not aware of any grounds to assert a claim to, or any ownership interest in, any such Intellectual Property as a result of having been involved in the development, creation or design of such property while employed or engaged by or consulting to the Business Sellers, or otherwise.

(f)The computer software, hardware, systems, databases and information technology services used in the operation of the Business (the “Computer System”) adequately meets the needs of the Business and operations of the Business Sellers as presently conducted. Each Business Seller has arranged for disaster recovery and/or back-up data processing services adequate to meet its data processing needs and has provided a copy of the same to the Buyer. No Business Seller has suffered (i) any material failures or breakdowns in the Computer System within the past 12 months which have caused any substantial disruption or interruption in its business or (ii) to Seller’s knowledge, any unauthorized breaches of the security thereof.

Section 3.20 WARN Act. No Business Seller has incurred any Liability under WARN or any similar state or local Law, including any obligation to provide notice of a “mass layoff”, as such terms are used in WARN and such Business Seller has not taken any action that could reasonably be expected to result in any Liability under WARN or any similar state or local Law. Schedule 3.20 sets forth a correct and complete list of all employees whose employment has been terminated by each Business Seller since December 31, 2014 and the reason for the termination of each such employee’s employment with such Business Seller.

Section 3.21 Tax Returns; Taxes.

(a)Each Business Seller has duly filed in a timely manner all Tax Returns required to be filed by such Business Seller on or prior to the Closing Date. All such Tax Returns were correct and complete in all material respects. All Taxes due and owing by such Business Seller as shown on any Tax Return have been timely paid to the appropriate Governmental Entity. No Business Seller is currently the beneficiary of any extension of time within which to file any Tax Return.

(b)Each Business Seller has timely withheld and, if due, has remitted with respect to its employees, creditors, independent contractors or other third Persons all federal, state, provincial and foreign Taxes, FICA, FUTA, and other Taxes required to be withheld and/or, if due, remitted.

(c)There is no Tax deficiency or adjustment outstanding, proposed, assessed, or, to the knowledge of the Sellers, threatened, by any Governmental Entity against any Business Seller, nor has any Business Seller been notified in writing of any such deficiency or adjustment. No Business Seller has executed or requested any waiver of any statute of limitations on or extending the period for the assessment or collection of any Tax.

(d)There are no rulings, subpoenas or requests for information pending with respect to any Business Seller with any Governmental Entity. No Business Seller has waived any statute of limitations in respect of Taxes of such Seller or agreed to any extension of time with respect to a Tax assessment or deficiency.

(e)No Business Seller has any Liability for the Taxes of any person under Treas. Reg. Section 1.1502‑6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise.

(f)No Business Seller is a party to any income Tax allocation or sharing agreement. No Business Seller is or has been a member of an Affiliated Group filing a consolidated federal income Tax Return.

(g)There are no Liens for Taxes (other than Permitted Liens for Taxes not yet due and payable) upon any of the Assets.

(h)No written claim has been made during the last three (3) years by a Governmental Entity in a jurisdiction where any Business Seller does not file Tax Returns that any Business Seller is or may be subject to taxation by that jurisdiction.

(i)None of the Assets directly or indirectly secures any debt the interest on which is tax-exempt under Section 103(a) of the Code.

(j)No Business Seller is or has ever been a party to any “listed transaction” or “reportable transaction” as defined in Section 6707A(c)(1) of the Code and Treasury Regulation Section 1.6011-4.

(k)The Buyer has been provided with a copy of all Tax Returns of each Business Seller for the last three tax years.

Section 3.22 Timeshare Matters.

(a)Maintenance Fees and Developer Subsidies. All homeowners’ association fees, maintenance fees and/or developer subsidies, as applicable, required to be paid by any Business Seller and which are currently due pursuant to the Timeshare Documents have been paid.

(b)Timeshare Exchange Network. To the extent the Business Sellers have entered into written agreements with Resort Condominiums International, Inc., Interval International, Inc. or other exchange networks, such Business Sellers are members and participants pursuant to validly executed and enforceable (subject to the Enforceability Exceptions) written agreements in Resort Condominiums International, Inc., Interval International, Inc. and/or other exchange networks, as applicable. The Business Sellers have paid all fees and other amounts due and owing under such agreements and are not otherwise in default in any respect thereunder.

(c)Declarant Rights. The Sellers, as applicable, have not assigned or expressly waived any rights that the Sellers may hold as declarants, developer, and/or sellers as described in the Timeshare Documents.

(d)Marketing and Sales. There are no pending or, to the knowledge of the Sellers, threatened claims of material violations of orders against the Business Sellers or any Resort by any Governmental Entity relating to the marketing or sale of Timeshare Interests.

(e)Authority to Assign and Amend. Sellers have proper authority (i) to assign the developer rights under the Timeshare Documents, (ii) to assign the Property Management Agreements, (iii) to assign the Rental Agency Appointment Agreements, and (iv) to assign the Resort

Affiliation Agreements, and No Seller has taken any action that would preclude, prevent, or prohibit Buyer from amending the Timeshare Documents to convert each Resort to a perpetual timeshare regime and remove any prohibitions on further timeshare programs.

(f)Control Period.

i.(i) The Initial Board Terms (as defined in the Timeshare Documents) for the Resorts located in Virginia are through (A) March 1, 2050 for Ocean Beach Club and Oceanaire, (B) January 1, 2050 for Boardwalk, (C) January 1, 2050 for Turtle Cay, and (D) January 1, 2025 for Beach Quarters and Sellers have done nothing to cause an earlier termination of such Initial Board Terms;

ii.For each of the Resorts located in Virginia, the Developer (as defined in the Timeshare Documents) (A) as of the date of this Agreement owns at least ten percent (10%) of the Timeshare Interests at the Resort or is the beneficiary on deeds of trust secured on at least twenty percent (20%) of the Timeshare Interests at the Resort, (B) has not affirmatively taken any action to relinquish or transfer Developer Control (as defined in the Timeshare Documents) at any of such Resorts, and (C) has not received written, or to the knowledge of the Sellers, oral notice from any Person claiming that the Developer is not entitled to Developer Control of any of such Resorts.

iii.For the Resort located in North Carolina, the Declarant (as defined in the Timeshare Documents) (A) has not conveyed seventy-five percent (75%) of the units to unit owners other than the Declarant, (B) has not failed to offer units for sale in the ordinary course of business for a period of two (2) years, and (C) has not failed to exercise a development right to add new units within two (2) years after the right last was exercised.

Section 3.23 Bank Accounts. Schedule 3.23 is a complete and correct list of each bank or financial institution in which any Business Seller has an account, safe deposit box or lockbox, or maintains a banking, custodial, trading or similar relationship, the number of each such account or box, and the names of all persons authorized to draw thereon or to having signatory power or access thereto.

Section 3.24 Corporate Names; Business Locations. Since January 1, 2012, (a) except as set forth on Schedule 3.24, no Business Seller has been known as or used any fictitious or trade names, and (b) no Business Seller has had an office or place of business other than as set forth on Schedule 3.24. No Business Seller has been the surviving corporation of a merger or consolidation other than as set forth on Schedule 3.24.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE BUYER AND DIAMOND

The Buyer hereby represents and warrants to the Sellers that:

Section 4.1 Organization, Qualification and Authority. The Buyer is a corporation duly organized, validly existing and in good standing under the Laws of the State of Maryland. The Buyer has the full power and authority to own, lease and operate its properties and assets as presently owned, leased and operated and to carry on its business as it is now being conducted. The Buyer has the full right, power and authority to execute, deliver and perform this Agreement and each of the Transaction Documents to which it is or will be a party and to take all actions necessary to permit or approve the

actions of it taken in connection with this Agreement and the Transaction Documents to which it is or will be a party. The execution, delivery and performance by the Buyer of this Agreement and each of the Transaction Documents to which it is or will be a party and the consummation of the Transactions have been duly authorized by all necessary limited liability company action and constitute the legal, valid and binding obligation of the Buyer enforceable against the Buyer in accordance with their terms, subject to the Enforceability Exceptions.

Section 4.2 Absence of Default. Except as set forth on Schedule 4.2, none of the execution, delivery and performance by the Buyer of this Agreement or the Transaction Documents to which the Buyer is or will be a party or the consummation of the Transactions by the Buyer will:

(a)violate or conflict with, or result in any breach of any term, condition or provision of, the certificate of formation of the Buyer or the organizational documents of the Buyer;

(b)violate, conflict with, result in a breach or, or constitute (with or without notice or lapse of time or both) a default under, any Governmental Order applicable to the Buyer; or

(c)violate or conflict with or result in a breach of any Law.

Section 4.3 Brokers’ or Finders’ Fees. Neither the Buyer nor any of its Affiliates has employed or is liable for the payment of any fee to, any finder, broker, government official, consultant or similar person in connection with the transactions described in this Agreement.

Section 4.4 Sufficiency of Funds. At the Closing, the Buyer will have sufficient funds to pay the Purchase Price, consummate the Transactions and perform its obligations under this Agreement and the other Transaction Documents.

ARTICLE V

PRE-CLOSING COVENANTS OF PARTIES

Section 5.1 Conduct of Business. Except as expressly provided by this Agreement or as set forth in Schedule 5.1, during the period from the date hereof to the earlier of the Closing Date or the date of the termination of this Agreement in accordance with Article VIII (the “Interim Period”), each Business Seller shall (i) conduct its business in the Ordinary Course of Business and use commercially reasonable efforts to maintain and preserve intact its business organization, goodwill and significant business relationships, (ii) cause the renovation of the Beachwoods Resort to proceed in accordance with the renovation plans and budget provided to the Buyer (the “Beachwoods Plans and Budget”), and (iii) without limiting the generality of the foregoing, not do any of the following without the prior written consent of the Buyer, which consent shall not be unreasonably withheld or delayed:

(a)declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property or any combination of the foregoing) in respect of, any of its capital stock or other equity securities of the Business Sellers;

(b)issue, deliver, sell, grant, pledge or otherwise encumber or subject to any Lien, any Assets, except (A) for sales, licenses or dispositions of properties or other assets or interests therein in the Ordinary Course of Business, (B) existing Liens securing existing Debt, (C) pursuant

to Contracts in force as of the date hereof, or (D) dispositions of obsolete or worthless assets that are no longer useful in the conduct of the Business in the Ordinary Course of Business;

(c)amend any organizational documents of the Business Sellers;

(d)make any acquisition (including by merger, consolidation, stock acquisition or otherwise) of the capital stock or assets of any other Person (other than acquisitions of inventory in the Ordinary Course of Business);

(e)adopt a plan or agreement of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Business Sellers;

(f)except in the Ordinary Course of Business or pursuant to credit facilities or other arrangements (including intercompany arrangements) in existence as of the date hereof, incur any material amount of Debt, guarantee any material amount of Debt of any Person or issue or sell Debt securities;

(g)make or authorize capital expenditures except (A) as budgeted in the of the Business Sellers’ fiscal year 2015 plans that were made available to the Buyer prior to the date hereof, or (B) in the Ordinary Course of Business;

(h)amend, waive or modify in any material respect or terminate or fail to renew any Material Contract or enter into any Contract that would constitute a Material Contract if in effect on the date of this Agreement;

(i)amend, waive or modify in any manner materially adverse to any Business Seller any Affiliate Transaction or enter into any Contract or transaction that would constitute an Affiliate Transaction if in effect on the date of this Agreement;

(j)with respect employees to be hired by Buyer or any Affiliate of Buyer, except as required to comply with applicable Law or to comply with any Contract, including any agreement to pay stay bonuses, entered into prior to the date hereof (A) adopt, enter into, terminate or materially amend (1) any Employee Benefit Plan or (2) any other Contract or policy involving the Business Sellers and one or more of their respective current or former employees or directors that is not terminable at will, (B) increase the compensation, bonus, change of control, severance or fringe or other benefits offered by the Business Sellers other than increases in the Ordinary Course of Business, or (C) take any action to accelerate the vesting or payment of any compensation or benefit under any Employee Benefit Plan;

(k)enter into any collective bargaining Contract or other Contract with a labor union, works council or similar organization;

(l)enter into any Contract with respect to the voting or transfer of its capital stock, voting securities or other equity interests;

(m)change any Business Seller’s registered public accounting firm or implement or adopt and change in its tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;

(n)cancel any Debt or other receivables owed to any Business Seller or waive any other rights or claims of material value, in each case, that would constitute an Asset;

(o)other than in the Ordinary Course of Business, change, in any material respect, any credit policies or policies or practices relating to the collection of receivables or payment of payables;

(p)make any changes to the underwriting standards or other credit criteria for the sale and/or financing of the sale of Timeshare Interests;

(q)change the pricing for any Timeshare Interests held for sale by any Business Seller as of the date of this Agreement or any additional Timeshare Interests held for sale by any Business Seller prior to the Closing Date; or

(r)authorize or agree or commit to take any of the foregoing actions.

PHR shall not amend, waive or modify in any material respect or terminate or fail to renew any PHR Management Contract without the prior written consent of the Buyer, which consent shall not be unreasonably withheld or delayed. In addition, prior to Closing, the Business Sellers shall pay all outstanding special assessments in respect of the 535 unit weeks at the Beachwoods Resort that were in default as of the date that the Business Sellers acquired the Beachwoods Resort.

Section 5.2 No Solicitation. During the Interim Period, the Sellers will not, and will not permit any of their respective equityholders, officers, employees or representatives to, directly or indirectly, (a) entertain, solicit, initiate, or encourage any Acquisition Proposals, (b) engage in negotiations or discussions concerning, or provide any non-public information to any Person in connection with, any Acquisition Proposal or (c) agree to or approve any Acquisition Proposal. As used herein, the term “Acquisition Proposal” shall mean any proposal relating to a possible (i) merger, consolidation or similar transaction involving any Seller, (ii) sale, lease or other disposition, directly or indirectly, by merger, consolidation, share exchange or otherwise, of the Business or any of the Assets, (iii) issuance, sale or other disposition of (including by way of merger, consolidation, securities exchange or any similar transaction) securities (or options, rights or warrants to purchase or securities convertible into, such securities) representing 50% or more of the votes attached to the outstanding securities of any Seller, (iv) liquidation, dissolution, or other similar type of transaction with respect to any Seller or (v) any transaction which is similar in form, substance or purpose to any of the foregoing transactions. Each Seller will (x) immediately cease any and all existing activities, discussions or negotiations with any parties conducted heretofore with respect to any of the foregoing and (y) disclose promptly to the Buyer any Acquisition Proposal received by any Seller or any of its equityholders, officers, employees or representatives (including reasonable detail regarding the terms of such Acquisition Proposal and the identity of the Person that submitted such Acquisition Proposal) and such Seller’s response thereto (which response shall not be made in violation of this Section 5.2).

Section 5.3 Reasonable Best Efforts. Upon the terms and subject to the conditions set forth in this Agreement, each of the parties agrees to use its respective reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Transaction, including using its respective reasonable best efforts to accomplish the following: (i) the taking of all acts necessary to cause the conditions to Closing to be satisfied as promptly as practicable, (ii) the obtaining of all necessary actions or nonactions, waivers, consents and approvals from

Governmental Entities and the making of all necessary registrations and filings (including filings with Governmental Entities) and the taking of all steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any Governmental Entity; and (iii) the delivery of required notices to and the obtaining of all necessary consents, approvals or waivers from third parties under any Contracts or otherwise to the extent related to the Transaction. Without limiting the generality of the foregoing, the Sellers shall use reasonable best efforts to take, and cause to be taken, all actions necessary to obtain any consents, approvals or notices with respect to the Transactions as are required to ensure that all Assumed Business Contracts will continue in full force and effect without any change or modification after the consummation of the Transactions and all Assets will be transferred to the Buyer, in each case, as may be requested by the Buyer prior to Closing.

Section 5.4 Access to Confidential Information. During the Interim Period, each Seller will give the Buyer and its agents and authorized representatives reasonable access to all offices, facilities, books and records, officers, employees and advisors (including audit and tax working papers prepared by its independent accountants, provided that the Buyer will execute releases in customary form reasonably requested by the independent accountants if requested to do so) of the Sellers as the Buyer may reasonably request upon reasonable notice during normal business hours. Any information provided to or obtained by the Buyer pursuant to Section 5.4 shall be “Confidential Information” as defined in that certain Confidentiality Agreement dated February 24, 2015 by and between OBC and Diamond Resorts International, Inc. and shall be held by the Buyer in accordance with and be subject to the terms thereof.

Section 5.5 Notice of Events.

(a) During the Interim Period, the Sellers shall promptly notify the Buyer in writing if there shall be (i) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a breach of any of the representations or warranties of the Sellers contained herein had such representation or warranty been made as of the time of such event, fact or condition and (ii) any material failure on its part to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder.

(b) During the Interim Period, the Buyer shall promptly notify the Sellers in writing if there shall be (i) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a breach of any of the representations or warranties of the Buyer contained herein had such representation or warranty been made as of the time of such event, fact or condition and (ii) any material failure on its part to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder.

Section 5.6 Financial Statements and Reports. As promptly as practicable and in any event no later than 20 days after the end of each calendar month during the Interim Period or 45 days after the end of each fiscal quarter ending during the Interim Period, the Business Sellers will deliver to Purchaser true and complete copies of (in the case of any such fiscal year) the audited and (in the case of any such calendar month) the unaudited consolidated balance sheet, and the related audited or unaudited consolidated statements of operations, member equity and cash flows, of each Business Seller as of and for each such calendar month and the portion of the fiscal year then ended, as the case may be, together with the notes, if any, relating thereto, which financial statements shall be prepared on a basis consistent with the principles used in the preparation of the Financial Statements.

Section 5.7 Supplements to Schedules. From time to time up to the second Business Day prior to the Closing Date, the Sellers will promptly supplement or amend the schedules referred to herein

and delivered pursuant to and attached to this Agreement (collectively, “Disclosure Schedules”) with respect to any matter first existing or occurring after the date of this Agreement that, if existing or occurring at or prior to the date of this Agreement, would have been required to be set forth or described in such Disclosure Schedule or that is necessary to correct any information in such Disclosure Schedule that has been rendered inaccurate thereby. No supplement or amendment to any Disclosure Schedule will have any effect for the purpose of determining satisfaction of the conditions set forth in Article VII; provided, however, to the extent a Closing occurs, the Buyer hereby waives its right to seek a claim of a breach of representation or warranty with respect to the matters set forth or described in such supplement(s) and/or amendment(s) (the “New Matter”). Notwithstanding such waiver, unless the New Matter is specifically assumed by the Buyer in writing, such New Matter shall not be an Assumed Liability hereunder and their right to seek indemnification with respect to any Losses any Buyer Indemnified Party may incur as a result of the New Matter shall continue in full force and effect.

Section 5.8 Unsold Timeshare Interest Reporting. Within 15 days following the end of each calendar month prior to the Closing Date, the Business Sellers shall deliver to the Buyer a schedule setting forth (i) the Timeshare Interests owned by the Business Sellers as of the last day of such month and (ii) the book value of such Timeshare Interests (as determined in a manner consistent with the methodologies and practices historically applied by the Sellers).

Section 5.9 WARN Act Notice. Prior to Closing, the Business Sellers shall deliver any notices required to be provided to any employees of the Business Sellers under WARN and any similar state or local Law. The form and substance of such notices shall be mutually agreed upon by the Buyer and the Business Sellers.

Section 5.10 Commercial Time-Share Units. Prior to Closing, the Business Sellers shall deliver to the Buyer for review and approval amendments to the time-share instruments of Ocean Beach Club, Boardwalk, and Turtle Cay, and any related documents, to create and provide for commercial timeshare units comprising the current premises of the Tortugas, Ultra, and Rockfish food and beverage outlets and the current premises of the Turtle Cay retail unit. The parties will work together to complete the process for amendment of the time-share instruments prior to Closing; provided, however that such amendments shall include customary covenants regarding limitations on the use of such premises and shall otherwise be on terms and conditions reasonably satisfactory to the Buyer.

ARTICLE VI

POST‑CLOSING COVENANTS OF PARTIES

Section 6.1 Tax Matters. The following provisions shall govern the allocation of responsibility as between the Buyer and the Sellers for certain Tax matters following Closing:

(a)After the Closing, the Sellers, on the one hand, and the Buyer, on the other hand, (i) will promptly inform the other party in writing of any notice that it or he receives of any Proceeding, request for documents or information related to Taxes that could affect the Tax liability of the other party, (ii) will each provide the other party, at the other party’s reasonable expense, with such assistance as may reasonably be requested in connection with the preparation of any Tax Return, Proceeding or determination by any taxing authority or judicial or administrative Proceeding relating to liability for Taxes, (iii) will each retain and, at the other party’s reasonable expense, provide to the other party all records and other information that may be relevant to any such Tax Return, Proceeding or determination and (iv) will each provide the other party with any final determination

of any such Tax Return, Proceeding or determination that affects any amount required to be shown on any Tax Return of the other party for any period. Without limiting the generality of the foregoing, each of the Sellers will retain, until the expiration of the applicable statutes of limitation (including any extensions thereof), copies of all Tax Returns, supporting work schedules and other records relating to tax periods or portions thereof of such Seller ending on or prior to the close of the Closing Date.

(b)For all purposes under this Agreement involving the determination of Taxes (including the determination of Taxes that constitute Excluded Liabilities), in the case of Taxes that are payable with respect to any period that includes but does not end on the Closing Date, the portion of any such Tax that is allocable to the portion of the period ending on the close of the Closing Date shall be (i) in the case of Taxes that are (x) based upon or related to income or receipts, (y) imposed in connection with the sale or other transfer or assignment of property (real or personal, tangible or intangible) or (z) employment, social security or other similar Taxes, deemed equal to the amount which would be payable if the taxable year ended at the close of business on the Closing Date; and (ii) in the case of Taxes imposed on a periodic basis with respect to any assets or otherwise measured by the level of any item, deemed to be the amount of such Taxes for the entire period (or, in the case of such Taxes determined on an arrears basis, the amount of such Taxes for the immediately preceding period) multiplied by a fraction the numerator of which is the number of calendar days in the period ending at the close of business on the Closing Date and the denominator of which is the number of calendar days in the entire period. The Buyer and the Sellers agree to utilize the alternate procedure set forth in Revenue Procedure 2004-53 with respect to wage reporting.

(c)Any documentary, stamp, transfer, sales, use, registration and other such Taxes and any conveyance fees, recording charges and other fees and charges (collectively, “Transfer Taxes”) shall be equally borne by the Sellers and Buyer. The Sellers shall pay all Transfer Taxes to the applicable Governmental Entity when due, and the Sellers shall file all necessary Tax Returns and other documentation with respect to all such transfer, documentary, sales, use, stamp, registration and other Taxes and fees, and if required by applicable Law, the Buyer shall, and shall cause its Affiliates to, join in the execution of any such Tax Returns and other documentation.

Section 6.2 Further Cooperation. The Buyer and the Sellers shall cooperate with each other (i) in determining whether (x) any action must be taken by or in respect of, or any filing must be made with, any Governmental Entity or (y) any actions, consents, approvals or waivers are required to be obtained under any Contracts or Licenses and Permits, in each case in connection with the consummation of the Transactions; and (ii) in taking such actions or making any such filings, in furnishing information required in connection therewith and in seeking timely to obtain any such actions, consents, approvals or waivers. Each of the parties hereto agrees that from and after the Closing Date, upon the reasonable request of any other party hereto from time to time, it or he shall execute and deliver, or cause to be executed and delivered, such further instruments and take such other actions as may be necessary or desirable to carry out the Transactions or to vest, perfect or confirm ownership of the Assets in the Buyer.

Section 6.3 Accounts Receivable.

(a)All payments and reimbursements made by any Person in the name of or to any Seller in connection with or arising out of the Assets and Assumed Liabilities after the Closing Date, shall be held by such Seller in trust for the benefit of the Buyer and, promptly, and in any event within two Business Days, after receipt by such Seller of any such payment or reimbursement, the

Sellers shall pay over to the Buyer the amount of such payment or reimbursement without right of set off, together with all corresponding notes, documentation and information received in connection therewith. After the Closing, each Seller hereby irrevocably constitutes and appoints the Buyer as its true and lawful attorney-in-fact and agent with full power of substitution to cash and collect any checks or other instruments issued in the name of or to such Seller with respect to any such payments or reimbursements.

(b)All payments and reimbursements made by any Person in the name of or to the Buyer in connection with or arising out of the Excluded Assets and Excluded Liabilities after the Closing Date, shall be held by the Buyer in trust for the benefit of the applicable Seller and, promptly, and in any event within two Business Days, after receipt by the Buyer of any such payment or reimbursement, the Buyer shall pay over to the applicable Seller the amount of such payment or reimbursement without right of set off, together with all corresponding notes, documentation and information received in connection therewith.

Section 6.4 Payment of Liabilities.

(a)After the Closing, the Sellers agree to pay in full and discharge all of the Excluded Liabilities (other than those Excluded Liabilities contested by Seller in good faith) in accordance with their stated terms, as applicable, and in a manner that is not detrimental to any relationships of the Buyer or the Business with employees, customers, suppliers, lessors or others.

(b)After the Closing, the Buyer agrees to pay in full and discharge all of the Assumed Liabilities in accordance with their stated terms (other than those Assumed Liabilities contested by the Buyer in good faith). To the extent payment of 25^th Street Project Expenses are not made at Closing (due to lack of current invoices at Closing or otherwise), the Buyer agrees to promptly, and in any event within two Business Days, after receipt by the Buyer of evidence of such unpaid 25^th Street Project Expenses, pay over to the applicable Seller the amount of 25^th Street Project Expenses.

Section 6.5 Post-Closing Operations. From and after the Closing Date, (a) each Business Seller agrees to not, and will cause any of its or his Affiliates to not, directly or indirectly, adopt any name that is confusingly similar to, or a derivation of, its current legal name and (b) each Business Seller agrees that it will as promptly as practicable, but in any event not more than 10 days after the Closing Date, amend its organizational documents to change its name to a name that is not confusingly similar to, or a derivation of, its current legal name and file such amendments with the Secretary of State of the state of its formation and terminate or withdraw its qualification to do business, in each jurisdiction where it is currently qualified to business. The Sellers will refer to the Buyer all inquiries relating to the Business or the Assets.

Section 6.6 Non-Assignable Rights. This Agreement shall not be deemed to constitute an assignment, an attempted assignment or an undertaking to assign any Assumed Contract or any claim, right or benefit arising thereunder or resulting therefrom if consent to such assignment is not obtained and without such consent such an assignment, attempted assignment or undertaking otherwise would constitute a breach thereof or cause a loss of benefits thereunder. In the event that any such consent is not obtained on or prior to the Closing Date and the Buyer waives its right to delivery thereof under Section 7.2, each Seller shall continue to use commercially reasonable efforts to obtain such consents, shall hold such rights in trust for the benefit of the Buyer or otherwise for the exclusive use and benefit of the Buyer and shall cooperate with the Buyer in any arrangement designed to provide

the Buyer with the rights and benefits (subject to the obligations) under any such rights, including exercising such rights upon the Buyer’s request and promptly remitting any amounts received pursuant thereto to the Buyer.

Section 6.7 Employee Matters. As of the Closing, each Seller shall terminate the employment of all employees of such Seller (the “Pre-Closing Employees”) and shall be solely responsible for satisfying any Liabilities that such Seller may have to the Pre-Closing Employees (other than those included as Current Liabilities) (the “Non Assumed Pre-Closing Employee Liabilities”). The Buyer shall, subject to the Buyer’s receipt of background checks satisfactory to the Buyer using the standard practices for the employees of the Buyer, offer employment as of the Closing to certain Pre-Closing Employees and such offers of employment shall be on terms and conditions and with such benefits as the Buyer shall determine (the “Transferred Employees”), and the Sellers shall assist the Buyer in its efforts to hire such employees, including by providing the Buyer with access to such employees and the personnel records of such employees, encouraging such employees to accept offers of employment from the Buyer and not taking any action which would reasonably be expected to impede, hinder, interfere or otherwise compete with the Buyer’s efforts to hire such employees. The Buyer shall deliver to the Sellers a list of those Pre-Closing Employees on or prior to the date of this Agreement. The Sellers shall be responsible for providing notices and continuation of coverage that is or may be required to be provided to each individual who is or becomes an “M&A Qualified Beneficiary”, as defined in Treasury Regulation Section 54.4980B-9, in connection with the consummation of the Transactions. Nothing herein express or implied shall be deemed to require the Buyer to employ any such person for any period of time or on any particular terms and conditions. The Buyer and the Sellers hereby acknowledge and agree that all provisions contained in this Section 6.7 are included for the sole benefit of the Buyer and the Sellers and that nothing in this Section 6.7, whether express or implied, shall create any third party beneficiary or other rights in any other Person.

Section 6.8 Completion of Beachwoods Renovation. The currently pending renovation of the 84 units and amenities at the Beachwoods Resort shall be completed in accordance with the Beachwoods Plans and Budget; provided, however, if the pending renovation is not completed at or prior to Closing, the Sellers shall be jointly and severally responsible for all costs related to such pending renovation following the Closing; provided, however, that the Sellers shall not be responsible for any such costs incurred after the Closing that are not set forth in the Beachwoods Plans and Budget.

Section 6.9 Non-Interference with Resort-Related Agreements. The Buyer shall (and shall cause its Affiliates and their employees to, and use their commercially reasonable efforts to cause the Timeshare Owners’ Associations to)(a) comply with their respective obligations under the Resort-Related Agreements, and (b) not take any action, whether in their capacity as owner, manager, or otherwise, which would reasonably be expected to impede, hinder or otherwise interfere or with the Sellers’ contractual relationships pursuant to the Resort-Related Agreements. Notwithstanding the foregoing, in no event shall the Buyer have any obligation to fund, satisfy or discharge any obligation of any Timeshare Owners’ Associations to the Sellers under any Resort-Related Agreement.

ARTICLE VII

CLOSING; CLOSING deliveries; closing conditions

Section 7.1 Closing. The Closing of the Transactions (the “Closing”) shall occur on the third Business Day following the satisfaction or waiver of the conditions set forth in this Article

VII at the offices of Katten Muchin Rosenman LLP at 525 West Monroe Street, Chicago, Illinois 60661 (the “Closing Date”) or remotely via the exchange of executed documents and other closing deliverables. The effective time of the Closing shall be deemed to be 12:01 a.m. (Eastern time) on the Closing Date (the “Effective Time”).

Section 7.2 Sellers’ Closing Deliveries. At Closing, the Sellers shall deliver, or cause to be delivered, to the Buyer the following in form and substance reasonably satisfactory to the Buyer:

(a)Assignment Documentation. Bills of sale, assignments, endorsements and other documents of title (including titles for all vehicles endorsed for transfer) and other good and sufficient instruments of conveyance and transfer, as are effective to vest Buyer with full, complete and marketable right, title and interest in and to the Assets, free and clear of all Liens (other than Permitted Liens), including assignments of all rights of declarants, developers, and/or sellers as described in the Timeshare Documents and assignments of Intellectual Property (such as a domain name assignment agreement).

(b)Deeds and Related Items. Special warranty deeds in the form of Exhibit D, in recordable form in each applicable jurisdiction pursuant to which fee simple title to all unsold Timeshare Interests, the Ground Lease Property and other acquired Real Property, free and clear of any Liens except for the Permitted Liens and the rights and obligations of an owner or member under any applicable ownership or membership plan, is conveyed from Sellers to the Buyer or its designee, and all keys to all locks related to any of the unsold Timeshare Interests and the other acquired Real Property, together with an accounting of all such keys in the possession, custody, or control of any other Person.

(c)Assignments and Assumptions of Property Management Agreements. An Assignment and Assumption of Management Agreements in the form of Exhibit E, pursuant to which all of the Sellers’ rights, title, and interest in and to each Property Management Agreement are transferred and assigned to the Buyer or its designee, and the Buyer or its designee assumes the duties and obligations thereunder.

(d)Secretary’s Certificate. A certificate of the secretary of each Seller attaching (i) certificates of good standing of such Seller, dated not more than 10 calendar days prior to the Closing Date, from the Secretary of State of the state of such Seller’s formation and from each jurisdiction in which such Seller is qualified to do business; (ii) a copy of the articles of organization of such Seller, certified by the Secretary of State of the state of its formation as of a date not more than 10 calendar days prior to the Closing Date; (iii) a correct and complete copy of the current organizational documents of such Seller; (iv) a correct and complete copy of the resolutions of the board of directors (or similar governing body) of such Seller authorizing the execution and delivery of this Agreement and the Transaction Documents to which such Seller is a party and the consummation of the Transactions; (v) a correct and complete copy of the resolutions of the equityholders of such Seller authorizing the execution and delivery of this Agreement; and (vi) incumbency and specimen signature certificates with respect to the officers of such Seller.

(e)Debt; Transaction Expenses. Customary documentation setting forth the amount of and procedure for paying off in full any Debt or Seller Transaction Expenses outstanding as of the Closing, including (i) the amount of and the procedures for paying in full any Debt or Seller Transaction Expenses outstanding as of the Closing and (ii) the agreement of each holder of such Debt that, upon receipt of a specified amount, its Debt shall be paid in full and the agreement of

each applicable creditor to release all of its Liens upon the Assets and terminate all U.C.C. financing statements filed in connection therewith.

(f)Tax Certificate. A certification, dated as of the Closing Date, duly executed by each Seller certifying in accordance with Section 1445 of the Code that such Seller is not a “foreign person” as defined in Section 1445(f)(3) of the Code and such Seller is therefore exempt from the withholding requirements of said section.

(g)Escrow Agreement. The Escrow Agreement, duly executed by the Sellers.

(h)Articles of Amendment. A form of Article of Amendment to each Business Seller’s articles of organization changing its name to a name which is not similar to its current legal name and other such documents as are necessary to reflect such change in the other jurisdictions where it is qualified to do business (including the revocation of any assumed names containing such names) to be filed in accordance with Section 6.5.

(i)Restrictive Covenant Agreements. The Restrictive Covenant Agreements, duly executed by each of the Restricted Persons.

(j)Transition Services Agreement. The Transition Services Agreement, duly executed by the Sellers.

(k)Notice of Resignation. A notice of resignation from each respective Seller representative board member of the Timeshare Owners’ Associations in the form of Exhibit F, duly executed by such board members.

(l)Sub-Servicing and Collections Agreement. Sub-Servicing and Collections Agreement by and between GKR-A and Diamond Resorts Financial Services, Inc. (the “Diamond Servicer”) regarding the servicing and collection of the Notes Receivable held by GKR-A in the form of Exhibit G (the “Securitized Portfolio Servicing Agreement”), duly executed by GKR-A.

(m)Operating Leases. Lease Agreements between the Buyer and the applicable Sellers in the form of Exhibit H (the “Operating Leases”), duly executed by the applicable Sellers, for the following premises (1) 19^th Street Marketing Center, (2) 25^th Street OPC Marketing Office and Training Center, (3) Concierge Office at 25^th Street and (4) 34^th Street Discovery Center.

(n)Portfolio Agreements. The Agreements set forth on Exhibit I (the “Portfolio Agreements”), duly executed by OBC, Gold Key and GKR-A.

(o)Servicing and Collections Agreement. Servicing and Collections Agreement by and among the Business Sellers and Diamond Resorts Financial Services, Inc. regarding the servicing and collection of the Notes Receivable held by the Business Sellers in form and substance reasonably acceptable to the Business Sellers and the Buyer (the “Non-Securitized Portfolio Servicing Agreement”), duly executed by the Business Sellers.

(p)Resort-Related Agreements. The documents and instruments listed on Schedule 7.2(p) (the “Resort-Related Agreements”), duly executed by the applicable Business Seller.

(q)Other Documents. Such other documents and instruments as the Buyer shall reasonably request in order to consummate the Transactions.

Section 7.3 Buyer Closing Deliveries. At Closing, the Buyer shall deliver or cause to be delivered to the Sellers the following in a form and substance reasonably satisfactory to the Sellers:

(a)Closing Payments. The payments set forth in, and in accordance with, Section 2.2.

(b)Secretary’s Certificate. A certificate of the secretary of the Buyer attaching (i) a certificate of good standing of the Buyer, dated not more than 10 calendar days prior to the Closing Date, from the Secretary of State of the State of Maryland; (ii) a copy of the certificate of incorporation of the Buyer; and (iii) a correct and complete copy of the resolutions of the board of directors or similar governing body of the Buyer authorizing the execution and delivery of this Agreement and the Transaction Documents to which the Buyer is a party and the consummation of the Transactions.

(c)Escrow Agreement. The Escrow Agreement, duly executed by the Buyer and the Escrow Agent.

(d)Assumption Agreement. An agreement pursuant to which the Buyer assumes the Assumed Liabilities.

(e)Transition Services Agreement. The Transition Services Agreement, duly executed by the Buyer.

(f)Operating Leases. The Operating Leases, duly executed by the Buyer.

(g)Portfolio Agreements. The Portfolio Agreements, duly executed by the Buyer.

(h)Sub-Servicing and Collections Agreement. The Securitized Portfolio Servicing Agreement, duly executed by the Diamond Servicer.

(i)Servicing and Collections Agreement. The Non-Securitized Portfolio Servicing Agreement, duly executed by the Diamond Servicer.

(j)Resort-Related Agreements. The Resort-Related Agreements, duly executed by the Buyer or other Affiliate of the Buyer that is a party thereto.

(k)Other Documents. Such other documents and instruments as the Sellers shall reasonably request in order to consummate the transactions described in this Agreement and the Transaction Documents.

Section 7.4 Conditions to the Parties’ Obligations. The respective obligations of each party hereto to effect the Transactions shall be subject to the satisfaction (or waiver, if permissible under applicable Law) on or prior to the Closing Date of the following conditions:

(a)No Restraints. No Law or Governmental Order enacted, promulgated, issued, entered, amended or enforced by any Governmental Entity shall be in effect enjoining, restraining, preventing or prohibiting consummation of the Agreement or making the consummation of the Transactions illegal (a “Restraint”).

(b)No Proceedings. There shall be no pending or threatened Proceeding against the Buyer or any Seller or any of their respective Affiliates involving any challenge to, or seeking relief (monetary or otherwise) in connection with, the Transactions that could have the effect of preventing, delaying, making illegal, imposing limitations or conditions on, or otherwise interfering with, the Transactions.

Section 7.5 Conditions to the Obligations of the Sellers. The obligation of the Sellers to consummate the Transactions are subject to the fulfillment at or prior to the Closing of each of the following conditions (any or all of which may be waived in whole or in part by the Sellers):

(a)Representations and Warranties. The representations and warranties of the Buyer contained in Article IV shall be true and correct in all respects (disregarding any “material”, “Material Adverse Effect” or “Material Adverse Change” qualifiers contained therein) as of the Closing with the same force and effect as though made on and as of the Closing, except where the failure of such representations and warranties to be so true and correct would not have a material adverse effect on the ability of the Buyer to consummate the Transactions.

(b)Performance. The Buyer shall have performed and complied, in all material respects, with all agreements, obligations, covenants and conditions required by this Agreement and the Transaction Documents to be so performed or complied with by the Buyer at or prior to the Closing.

(c)Officer’s Certificate. The Buyer shall have delivered to the Sellers a certificate, dated as of the Closing Date, executed by an officer of the Buyer, certifying the fulfillment of the conditions specified in Sections 7.5(a) and (b) hereof.

(d)Independent Valuation. The Sellers shall have received the Independent Valuation that provides for an aggregate value of the Class IV assets and Class V assets of the Sellers of no more than the Asset Value Threshold.

(e)Closing Deliverables. The Buyer shall have delivered the items set forth in Section 7.3.

Section 7.6 Conditions to the Buyer’s Obligations. The obligation of the Buyer to consummate the Transactions are subject to the fulfillment at or prior to the Closing of each of the following conditions (any or all of which may be waived in whole or in part by the Buyer):

(a)Representations and Warranties. The representations and warranties of the Sellers contained in Article III shall be true and correct in all material respects (disregarding any “material”, “Material Adverse Effect” or “Material Adverse Change” qualifiers contained therein) as of the Closing with the same force and effect as though made on and as of the Closing (other than those representations and warranties that address matters only as of a particular date or only with respect to a specific period of time, which need only be accurate as of such date or with respect to such period), except for the Special Representations, which shall be true and correct in all respects.

(b)Performance. Each Seller shall have performed and complied, in all material respects, with all agreements, obligations, covenants and conditions required by this Agreement and the Transaction Documents to be so performed or complied with by such Seller at

or prior to the Closing; provided, however that the covenants set forth in Section 6.8 shall be complied with in the manner in which they are drafted.

(c)Officer’s Certificate. Each Seller shall have delivered to the Buyer a certificate, dated as of the Closing Date, executed by an officer of such Seller, certifying the fulfillment of the conditions specified in Sections 7.6(a) and (b).

(d)No Material Adverse Effect. Since the date of this Agreement, there shall not have occurred, and no circumstance shall exist, that would reasonably be expected to result in a Material Adverse Effect.

(e)Closing Deliverables. The Sellers shall have delivered the items set forth in Section 7.2.

ARTICLE VIII

TERMINATION

Section 8.1 Termination. This Agreement may be terminated and the Transactions may be abandoned at any time prior to the Closing Date:

(a)at any time, by mutual written agreement of the Sellers and the Buyer;

(b)by the Buyer or the Sellers, upon notice to the other parties, if the Transactions have not been consummated on or prior to March 31, 2016, or such later date, if any, as the Buyer and the Sellers may agree upon in writing (the “Outside Date”); provided, however, that the right to terminate this Agreement pursuant to this Section ý8.1(b) shall not be available to any party whose breach of any provision of this Agreement results in or causes the failure of the Transactions to be consummated by the Outside Date;

(c)by either the Buyer or the Sellers if any Restraint shall be in effect; provided, however, that the right to terminate this Agreement under this Section 8.1(c) shall not be available to a party if such Restraint was primarily due to the failure of such party to perform any of its obligations under this Agreement;

(d)by the Sellers, if (i) the Buyer has breached or failed to perform any of its covenants or other agreements contained in this Agreement or any Transaction Document to be complied with by it such that the closing conditions set forth in Sections 7.5(b) would not be satisfied or (ii) there exists a breach of any representation or warranty of the Buyer contained in this Agreement or any Transaction Document such that the closing condition set forth in Section 7.5(a) would not be satisfied, and in the case of both (i) and (ii) above, such failure to perform or breach is not cured within 30 days after receipt of written notice thereof from the Sellers or is incapable of being cured by the Buyer by the Outside Date; provided, however, that the right to terminate this Agreement under this Section 8.1(d) shall not be available to any Seller if any Seller is in breach of any representation or warranty or has failed to perform any of its covenants or other agreements contained in this Agreement or any Transaction Document;

(e)by the Buyer, if (i) any Seller has breached or failed to perform any of its covenants or other agreements contained in this Agreement or any Transaction Document to be

complied with by it such that the closing condition set forth in Section ý7.6(b) would not be satisfied or (ii) there exists a breach of any representation or warranty of any Seller contained in this Agreement or any Transaction Document such that the closing condition set forth in Section ý7.6(a) would not be satisfied, and in the case of both (i) and (ii) above, such failure to perform or breach is not cured within 30 days after receipt of written notice thereof from the Buyer or is incapable of being cured by such Seller by the Outside Date; provided, however, that the right to terminate this Agreement under this Section 8.1(e) shall not be available to the Buyer if the Buyer is in breach of any representation or warranty or has failed to perform any of its covenants or other agreements or contained in this Agreement or any Transaction Document;

(f)by the Sellers no later than the tenth (10^th) Business Day following the delivery of the Independent Valuation to the Sellers if the appraisal of the Class IV assets and Class V assets of the Sellers set forth therein exceeds the Asset Value Threshold; or

(g)by the Buyer if (i) the purchase price for the acquisition of the Ground Lease Property by the Sellers from the owners thereof, as agreed to by the Sellers, plus all costs incurred in connection therewith, exceeds $4,000,000, and (ii) the Sellers have not agreed to waive their right to the Ground Lease Purchase Price Excess within five days after receipt of a written request from the Buyer to so waive such right.

Section 8.2 Procedure and Effect of Termination. In the event of the termination of this Agreement and the abandonment of the Transactions pursuant to Section 8.1, this Agreement shall become void and there shall be no liability on the part of any Party, other than the provisions of this Section ý8.2 and Article XI (to the extent applicable) which will each survive any termination of this Agreement; provided, however, that nothing herein will relieve any party from any liability for any breach by such party of its covenants or agreements set forth in this Agreement occurring prior to such termination. A party’s right to terminate this Agreement is in addition to, and not in lieu of, such party’s rights under Section 11.14 and any other legal or equitable rights or remedies which such party may have under this Agreement, at law or in equity.

ARTICLE IX

SURVIVAL OF PROVISIONS AND INDEMNIFICATION

Section 9.1 Indemnification by the Sellers. The Business Sellers shall, jointly and severally, promptly indemnify, defend, and hold harmless the Buyer, its Affiliates and each of their respective directors, managers, members, officers, equity holders, successors and permitted assigns (the “Buyer Indemnified Parties”) from and against any and all losses, costs, expenses, liabilities, obligations, demands, claims, actions, causes of action, assessments, damages, deficiencies, judgments, fines or expenses, including, without limitation, interest, penalties, reasonable fees and expenses of attorneys, accountants and other consultants and experts and all reasonable amounts paid in investigation, defense or settlement of any of the foregoing (collectively, “Losses”), which any Buyer Indemnified Party may suffer, sustain or become subject to, in connection with, incident to, arising out of or resulting from, directly or indirectly:

(a)any breach of any representation or warranty contained in Article III of this Agreement;

(b)any nonfulfillment or breach of any covenant or agreement on the part of any Seller under this Agreement or any Transaction Document; or

(c)any Excluded Liability.

Section 9.2 Indemnification by the Buyer and Diamond. The Buyer shall promptly indemnify, defend, and hold harmless each Seller, its Affiliates and each of their respective directors, managers, members, officers, equity holders, successors and permitted assigns (the “Seller Indemnified Parties”) from and against any and all Losses which any Seller Indemnified Party may suffer, sustain or become subject to, in connection with, incident to, resulting from or arising out of, directly or indirectly:

(a)any breach of any representation or warranty of the Buyer contained in Article IV of this Agreement;

(b)any nonfulfillment or breach of any covenant or agreement on the part of the Buyer under this Agreement or any Transaction Document; or

(c)any Assumed Liability.

Section 9.3 Limits on Indemnification.

(a)Survival of Provisions. The representations and warranties of the parties hereto contained in this Agreement shall survive the Closing and continue in full force and effect (i) in the case of the representations and warranties set forth in Sections 3.1 (Organization, Qualification and Authority and Company Records), 3.9(o) (Unsold Timeshare Interests), 3.17 (Brokers’ or Finders’ Fees), , 4.1 (Organization, Qualification and Authority) and 4.3 (Brokers’ or Finders’ Fees), indefinitely; (ii) in the case of the representations and warranties set forth in Sections 3.14 (Employees and Benefits) and 3.21 (Tax Returns; Taxes), until 30 days following the expiration of the statute of limitations with respect to the matter of such representations and warranties; and (iii) in the case of all other representations and warranties, until 18 months following the Closing Date. The representations and warranties identified in clauses (i) and (ii) of the immediately preceding sentence are referred to herein as the “Special Representations”. Notwithstanding any implication to the contrary contained in this Agreement, so long as any party delivers written notice of a claim to another party hereunder no later than the applicable limitation date, the Indemnifying Party shall be required to indemnify the Indemnified Party as provided in this Article IX for all Losses (subject to the limitations in this Section 9.3) that the Indemnified Party may incur in respect of the matters that are the subject of such claim, regardless of when incurred, and such claim may be pursued, until the final resolution of such claim in accordance with the provisions of this Article IX.

(b)The Sellers’ indemnification obligations to the Buyer Indemnified Parties under Section 9.1(a) will not commence unless and until the Losses incurred by all the Buyer Indemnified Parties as a result thereof equal or exceed, in the aggregate, an amount equal to $837,500 (the “Deductible”), at which time the Sellers shall be obligated to indemnify the Buyer Indemnified Parties for all Losses incurred by all the Buyer Indemnified Parties in excess of the Deductible.

(c)The Buyer’s indemnification obligations to the Seller Indemnified Parties under Section 9.2(a) will not commence unless and until the Losses incurred by all Seller Indemnified Parties as a result thereof equal or exceed, in the aggregate, the Deductible, at which time the Buyer

shall be obligated to indemnify the Seller Indemnified Parties for all Losses incurred by all Seller Indemnified Parties in excess of the Deductible.

(d)The aggregate amount required to be paid by the Sellers under Section 9.1(a) shall not exceed $15,000,000 (the “Cap”).

(e)The aggregate amount required to be paid by the Buyer under Section 9.2(a) shall not exceed the Cap.

(f)Notwithstanding anything to the contrary contained herein, Section 9.3(b), Section 9.3(c), Section 9.3(d) and Section 9.3(e) shall not apply to Losses in connection with, incident to, resulting from or arising out of, directly or indirectly, any fraud or any breach of a Special Representation, and such Losses shall not be counted for purposes of determining whether the Cap has been met or exceeded.

(g)All Losses shall be net of any actual recovery from any third party, and the failure to pursue recovery from a third party may be a defense of Sellers against Losses, including any insurance recovery or payment from a third party for indemnity, contribution, or other similar payment, after giving effect to any applicable deductible or retention, net of any premium increase resulting from any such claims, and net of any costs, fees or other expenses incurred in connection with the collection of such amounts; provided, however, that no Indemnified Party shall be required, as a condition to recovery from an Indemnifying Party under this Agreement, to pursue any recovery for Losses from any third party.

(h)Each Indemnified Party shall (and shall cause its Affiliates to) use such efforts to mitigate Losses for which indemnification is provided under this Article IX as may be required under applicable Law.

(i)No Seller Indemnifying Party shall be responsible for any Losses suffered by a Buyer Indemnified Party to the extent that such Losses are a financial obligation of any Timeshare Owners’ Association in the ordinary course of business.

(j)Except as set forth in Section 11.14, the indemnification provisions set forth in this Article IX are the exclusive remedy of the parties hereto for breaches of the representations and warranties and covenants contained in this Agreement; provided, however, nothing in this Agreement (including this Section 9.3) shall limit or restrict any Indemnified Party’s right (x) to maintain or recover any amounts in connection with any action or claim based upon fraud or (y) obtain equitable relief.

Section 9.4 Rules Regarding Indemnification. The obligations and liabilities of each party which may be subject to indemnification liability hereunder (the “Indemnifying Party”) to the other party (the “Indemnified Party”) shall be subject to the following terms and conditions:

(a)Third-Party Claims. The Indemnified Party shall give prompt written notice to the Indemnifying Party of any claim by a third party (a “Third Party Claim”) which, if adversely determined, would entitle the Indemnified Party to indemnity pursuant to this Article IX, stating the nature of said claim and the amount thereof, to the extent known; provided, however, that the failure to provide such prompt written notice shall in no event impair the rights of the Indemnified Party or limit the obligations of the Indemnifying Party except to the extent that such failure prejudices the Indemnifying Party’s ability to defend the claim. The Indemnified Party shall give notice

(including copies of any writings received) to the Indemnifying Party that pursuant to the indemnity, the Indemnified Party is asserting against the Indemnifying Party a claim with respect to a potential Loss from the third party claim, and such notice shall constitute the assertion of a claim for indemnity by the Indemnified Party. So long as the Indemnifying Party provides notice to the Indemnified Party within 30 days after receiving notice of such Third Party Claim, the Indemnifying Party shall have the right to assume the defense at its expense so long as a condition precedent to the Indemnifying Party’s right to assume control of such defense, the Indemnifying Party must first furnish the Indemnified Party with reasonable evidence that the Indemnifying Party is and will be able to satisfy any such Liability; and provided, however, that the Indemnifying Party shall not have the right to assume control of such defense or to select counsel if the Third Party Claim which the Indemnifying Party seeks to assume control of (A) seeks non-monetary relief; (B) involves criminal allegations; or (C) involves matters that the Buyer reasonably believes, if determined adversely, would have a material adverse effect on the business of the Buyer or any of its Affiliates or the assets of the Buyer or any of its Affiliates. An Indemnifying Party’s delivery of a notice assuming the defense of a Third Party Claim shall constitute an acceptance of its obligation hereunder to indemnify the Indemnified Party with respect to any Losses, if any, resulting from the subject Third Party Claim. So long as such defense is being conducted, the Indemnified Party shall not settle or admit liability with respect to the claim and shall afford to the Indemnifying Party and defending counsel reasonable assistance in defending against the claim. If the Indemnifying Party assumes the defense as permitted hereby, counsel shall be selected by such party and if the Indemnified Party then retains its own counsel (which shall be reasonably acceptable to the Indemnifying Party), it shall do so at its own expense. If the Indemnifying Party does not assume the defense as permitted hereby or is not permitted to assume the defense, the Indemnifying Party may participate in (but not control) the defense of such Third Party Claim at its own expense.

(b)The Indemnifying Party agrees that it will not, without the prior written consent of the Indemnified Party, settle, compromise or consent to the entry of any judgment in any pending or threatened Third Party Claim relating to the matters contemplated hereby unless such settlement, compromise or consent includes an unconditional release of each Indemnified Party from all liability arising or that may arise out of such Third Party Claim, the Indemnifying Party admits in writing its liability to hold the Indemnified Party harmless from and against any Losses arising out of such settlement and concurrently with such settlement the Indemnifying Party pays the full amount of all Losses to be paid by the Indemnifying Party in connection with such settlement.

Section 9.5 Payment. Payments of all amounts owing by an Indemnifying Party under this Article IX shall be made promptly upon a final settlement among the Indemnifying Party and the Indemnified Party or upon a final adjudication determined by a court of competent jurisdiction in accordance with this Article IX that an obligation is owing by the Indemnifying Party to the Indemnified Party. Any payment that is not made within 10 days of the determination that such obligation is owing shall bear interest at a rate of eight percent (8%) per annum, or, if less, the maximum rate permitted by applicable Laws. In addition, the Indemnifying Party shall reimburse the Indemnified Party for any and all actual and reasonable costs or expenses of any nature or kind whatsoever (including reasonable attorneys’ fees) incurred as the prevailing party in seeking to collect payment under this Article IX, and no limitation in Section 9.3(b)-(e) of this Article IX shall apply to such reimbursement or to any interest paid or to be paid pursuant to this Section 9.5.

Section 9.6 Materiality Qualifiers. For purposes of determining the amount of Losses arising from such a breach for which the Buyer Indemnified Parties or Seller Indemnified Parties are entitled to indemnification under Section 9.1(a) or Section 9.2(a), the representations and warranties

made by the parties hereto in this Agreement or any other Transaction Document shall be construed as if any qualification or limitation that is based on materiality (including, without limitation, all usages of “material”, “Material Adverse Effect” or similar qualifiers) were omitted from the text of such representation, warranty or covenant.

Section 9.7 Purchase Price Adjustment. Any indemnification received under this Article IX shall be treated by the Buyer, the Sellers and their respective Affiliates, to the extent permitted by Laws, as an adjustment to the Purchase Price unless a Final Determination (defined below) causes any such amount not to constitute an adjustment to the Purchase Price for federal tax purposes. The term “Final Determination” shall mean (i) any final determination of liability in respect of a Tax that, under applicable Laws, is not subject to further appeal, review or modification through Proceedings or otherwise (including the expiration of a statute of limitations or a period for the filing of claims for refunds, amended returns or appeals from adverse determinations) or (ii) the payment of Tax by the Buyer or the Sellers, whichever is responsible for payment of such Tax under applicable Law, with respect to any item disallowed or adjusted by a taxing authority, provided that such responsible party or parties determine(s) that no action is required to be taken to recoup such payment and the other party agrees in writing.

ARTICLE X

DEFINITIONS

Section 10.1 Definitions.

(a) For purposes hereof, the following terms when used herein shall have the respective meaning set forth below:

“25^th Street Project” means the proposed acquisition and development by the Sellers of the project located at 25^th Street and Atlantic Avenue in Virginia Beach, Virginia.

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with such Person. As used herein, the term “control” means: (i) the power to vote at least 50% of the voting power of a Person, or (ii) the possession, directly or indirectly, of any other power to direct or cause the direction of the management and policies of such a Person, whether through ownership of voting securities, by contract or otherwise.

“Affiliate Transaction” means a Contract or transaction between any Business Seller, on the one hand, and any officer or director of such Business Seller, any direct or indirect equityholder of such Business Seller or any Affiliate of such officer, director or such equityholder, on the other hand (other than salary or other compensation or benefits under Employee Benefit Plans of such Business Seller paid or payable in the Ordinary Course of Business to employees of such Business Seller, in each case, in consideration for bona fide services performed by such employees).

“Affiliated Group” means an affiliated group as defined in Section 1504(a) of the Code (or analogous combined, consolidated or unitary group defined under state, local or foreign income Tax Law).

“Asset Value Threshold” means $43,684,000, based upon the aggregate values set forth in (i) the report by Duff & Phelps Corp. as of July 15, 2015 and (ii) the Buyer’s internal model (based upon the projected inventory levels provided by the Sellers) dated as of August 13, 2015.

“Assets” means, collectively, the Business Assets and the PHR Management Contracts.

“Business Day” means a day other than Saturday, Sunday or a public holiday on which banks are authorized or required to be closed under the laws of the State of Virginia.

“Cash” means (a) cash and cash equivalents held by the Sellers determined in accordance with GAAP, minus (b) any outstanding checks, debts, wire transfers and debit transactions made, issued, written or drawn on any account of the Sellers outstanding as of Closing that have not been deducted from cash.

“Code” means the Internal Revenue Code of 1986, together with the rules and regulations promulgated thereunder, in each case, as amended.

“Commercial Software” means commercially available software programs generally available to the public which have been licensed to any Seller pursuant to non-negotiable “click-wrap,” “click to download,” “browsewrap” or “shrink-wrap” end-user licenses.

“Contracts” means, with respect to any Person, any contracts, commitments, purchase orders, mortgages, instruments, indentures, sales orders, licenses, leases and other agreements or arrangements, whether written or oral, to which such Person is a party or by which such Person or any of its assets are bound.

“Debt” means, with respect to any Person, all Liabilities (i) for borrowed money, whether current or funded, short-term or long-term, secured or unsecured, (ii) for the deferred purchase price of any property or services (other than, with respect to any Business Seller, trade accounts payable included as Current Liabilities), (iii) created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person, (iv) secured by a purchase money mortgage or other Lien to secure all or part of the purchase price of property subject to such mortgage or Lien, (v) under leases which shall have been or are required to be, in accordance with GAAP, recorded as capital leases in respect of which such Person is liable as lessee, (vi) in respect of bankers’ acceptances or letters of credit, (vii) secured by Liens on property acquired by such Person, whether or not such obligations were assumed by such Person at the time of acquisition of such property, (viii) with respect to interest rate swaps, collars, caps and similar hedging obligations, (ix) in respect of all present, future or contingent obligations of such Person existing as of the Closing under deferred pay-out, earn-out or other similar arrangements in connection with the purchase of any business or entity, (x) with respect to any Business Seller, for any indebtedness or any other obligations of such Business Seller owed to any equityholder of such Business Seller or any of such equityholder’s Affiliates or to any other Affiliate of any Business Seller, (xi) with respect to any Business Seller, for any indebtedness or any obligation of such Business Seller incurred for the personal benefit of any equityholder of any Business Seller or any of such equityholder’s Affiliates or any other Affiliate of such Business Seller, (xii) all obligations which are directly or indirectly guaranteed by such Person or which such Person has agreed (contingently or otherwise) to purchase or otherwise acquire or in respect of which it has otherwise assured a credit against loss, (xiii) interest, principal, prepayment penalty, Tax, premiums, fees, or expenses, to the extent due or owing in respect of those items listed in clauses (i) through (xii) above, whether resulting from their payment or discharge or otherwise and (xiv) all refinancings of any of the foregoing obligations.

“Debt Amount” means the aggregate amount necessary to pay off and discharge in full all Debt of the Business Sellers as of the Closing, whether or not such Debt is actually paid off or discharged.

“Declaration” means the declaration in furtherance of a plan for subjecting a Resort to a condominium and/or timeshare form of ownership, as applicable and as amended and supplemented from time to time, which declaration contains covenants, restrictions, easements, charges, 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 such Resort as a timeshare regime, each as itemized on Schedule 10.1(a).

“Employee Benefit Plan” means any of the following (whether written, unwritten or terminated) which any Seller or any ERISA Affiliate has at any time sponsored or maintained, or to which any Seller or any ERISA Affiliate has at any time made contributions, or with respect to which any Seller or any ERISA Affiliate has had any other Liability (contingent or otherwise) at any time: (a) any “employee welfare benefit plan,” as defined in Section 3(1) of ERISA, including, without limitation, any medical plan, life insurance plan, short-term or long-term disability plan, dental plan, and sick leave; (b) any “employee pension benefit plan,” as defined in Section 3(2) of ERISA, including, without limitation, any excess benefit, top hat or deferred compensation plan or any nonqualified deferred compensation or retirement plan or arrangement or any qualified defined contribution or defined benefit plan; or (c) any other plan, policy, program, arrangement or agreement which provides employee benefits or benefits to any current or former employee, dependent, beneficiary, director, independent contractor or like person, including, without limitation, any severance agreement or plan, personnel policy, vacation time, holiday pay, service award, moving expense reimbursement programs, tool allowance, safety equipment allowance, material fringe benefit plan or program, bonus or incentive plan, option, restricted security, bonus or deferred bonus plan, salary reduction, change-of-control or employment agreement (or consulting agreement with a former employee).

“Enforceability Exceptions” means, with respect to enforcement of the terms and provisions of this Agreement or any Transaction Document, (i) the effect of any applicable Law of general application relating to bankruptcy, reorganization, insolvency, moratorium or similar Laws affecting creditors’ rights and relief of debtors generally and (ii) the effect of general principles of equity, including general principles of equity governing specific performance, injunctive relief and other equitable remedies (regardless of whether such enforceability is considered in a Proceeding in equity or at law).

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

“ERISA Affiliate” means all Persons which are treated as being a single employer or under common control with any Seller or any ERISA Affiliate under Section 414(b), (c), (m) or (o) of the Code.

“Escrow Agent” means U.S. Bank N.A.

“Escrow Agreement” means that certain Escrow Agreement, by and between the Buyer, the Sellers and the Escrow Agent in the form attached hereto as Exhibit A.

“Excluded Liabilities” means any Liability of any Seller (other than the Assumed Liabilities), including, without limitation, any Liabilities for, or directly or indirectly, arising out of or relating to (including any costs and expenses incurred in connection with any claim arising out of or relating to any such Liability): (i) Debt or Seller Transaction Expenses; (ii) any Seller Taxes; (iii) any claims of any equityholder of any Seller or any Affiliate, heir, beneficiary, successor or assign of such equityholder or any former equityholder of any Seller or any of its Affiliates, against any Seller or the Buyer as successor or transferee to such Seller; (iv) the Excluded Assets; (v) any matters that are or should be set forth on Schedule 3.12(a) or (b); (vi) any violations of or obligations under any Laws relating to acts, omissions, circumstances or conditions to the extent existing or arising (whether then known or unknown) on or prior to the Closing Date, whether or not such acts, omissions, circumstances or conditions constituted a violation of any Laws as then in effect; (vii) any claims of any current or former employee or contractor of any Seller including (a) compensation, bonus, commission, severance, termination, vacation, pension and other payments and benefits (including post-retirement benefits, payroll expenses and any Liability for termination of, any collective bargaining Contract or pension plan), whether owing under any severance policy, and employment Contract, collective bargaining

Contract, any Employee Benefit Plan or otherwise (other than the Assumed Vacation Liabilities), (b) personal injury, worker’s compensation or disability claims allegedly arising during employment or engagement by any Seller or any of its Affiliates (regardless of when such claim is made or asserted), (c) equity-based awards or any profit sharing, equity appreciation right or phantom equity awards or (d) under WARN or any similar state or local Law; (viii) obligations under any Excluded Contract; (ix) any Liability of any Seller in respect of any pension fund or any Employee Benefit Plan maintained by or contributed to by any Seller or any ERISA Affiliate (whether a single employer plan or multiemployer plan); and (x) all costs, fees, expenses and other Liabilities incurred in connection with the renovation of the Beachwoods Resort (other than costs, fees and expenses incurred in connection with the renovation of the Beachwoods Resort after the Closing that are not set forth in the Beachwoods Plans and Budget).

“GAAP” means United States generally accepted accounting principles in effect from time to time, consistently applied consistent with the past practices of the Business Sellers.

“GKR-A” means Gold Key Resorts 2014-A, LLC, a Delaware limited liability company.

“Governmental Entity” means any foreign, federal, state, municipal or local government court, tribunal, department, authority, program, plan, agency, office, bureau, board, directorate, commission, official, division, political subdivision, tribunal or other instrumentality of any government, whether foreign, domestic, federal, state, municipal or local or any other similar body or organization exercising governmental power or authority.

“Governmental Order” means any order, judgment, ruling, injunction, decree, writ, stipulation, determination, directive, assessment or award entered or issued by any Governmental Entity.

“Ground Lease Property” means the property described in that certain Ground Lease, among J. Randolph Cannon, Aralanta Ayres Cannon and OBC (as successor in interest to Beach Motel Corporation), dated November 13, 1957, as amended, modified and extended.

“Independent Accountant” means the New York City office of Ernst &Young LLP, or such other recognized accounting firm mutually agreed upon by the Buyer and the Sellers, or, failing such agreement, selected by JAMS; provided, however, that the Independent Accountant may not have, or have had in the three years prior to the date of this Agreement, been engaged by any of the Sellers or the Buyer. If such office of Ernst & Young LLP is unable to serve as the Independent Accountant and the Buyer and the Sellers fail to reach agreement on another recognized accounting firm to serve as the Independent Accountant within 10 days following the determination that such office of Ernst & Young LLP is unable to serve as the Independent Accountant, then the parties will jointly engage the JAMS to select the Independent Accountant, in accordance with the JAMS Comprehensive Arbitration Rules to make such election.

“Independent Valuation” means one or more reports prepared by Duff & Phelps Corp. containing an appraisal of the Class IV assets and Class V assets of the Sellers.

“Intellectual Property” means intellectual property, confidential information and proprietary information, in any and all medium, including digital, and in any jurisdiction, including, without limitation, all U.S. and foreign (a) trademarks, service marks, trade names, designs, logos, slogans and other distinctive indicia of origin, together with goodwill, registrations and applications relating to the foregoing (“Trademarks”); (b) patents and pending patent applications, invention disclosure statements, and any and all divisions, continuations, continuations-in-part, reissues, reexaminations, and any extensions thereof, any counterparts claiming priority therefrom and like statutory rights (“Patents”); (c) registered and unregistered copyrights (including those in Software or in the content and information contained on any web site or social

media site), rights of publicity, and all registrations and applications to register the same (“Copyrights”); (d) trade secrets, technology, technical information, know-how, inventions, data processes, formulae, algorithms, models, specifications, standard operating procedures and methodologies (“Trade Secrets”); (e) internet domain names, web sites, mobile applications, uniform resource locators and interfaces; and (f) Software.

“Knowledge” or “knowledge”, means (a) with respect to the Sellers, the actual knowledge of Bruce Thompson, Bob Howard, Brian Carson, Bucky Houser, and Lee Westnedge, and (b) with respect to the Buyer, Howard Lanznar, Jared Finkelstein, and Haseeb Ashraf.

“Law” means any international, multinational, foreign, federal, state, local or municipal law, rule, statute, constitution, treaty, regulation, judgment, injunction, principle of common law, order, directive, ordinance, code, decree, opinion having the force of law or other restriction of any Governmental Entity or any Governmental Order.

“Liabilities” means any indebtedness (including, without limitation, any Debt), liabilities or obligations of any nature (whether accrued, absolute, contingent, direct, indirect, known, unknown, perfected, inchoate, unliquidated or otherwise, due or to become due).

“Licenses and Permits” means all permits, licenses, accreditations, certifications, certificates of need, approvals, consents, notices, waivers, qualifications, filings, accreditations, orders, concessions, franchises, exemptions and authorizations by or of, or registrations with, any Governmental Entity or accreditation body, including, without limitation, vehicle and business licenses and registrations required under Timeshare Laws.

“Liens” means any claims, liens, charges, options, preemptive rights, mortgages, deeds of trust, hypothecations, assessments, pledges, encumbrances, claims of equitable interest or security interests of any kind or nature whatsoever.

“Material Adverse Effect” means any event, change, development, or effect that individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on (a) the Business, the Assets, or the financial condition or results of operations of the Business, taken as a whole, or (b) the ability of the Sellers to perform their respective obligations under this Agreement or the Transaction Documents or to consummate the Transactions; provided, however, that none of the following events, circumstances, conditions, facts, changes, effects, developments or other matters shall be deemed, either alone or in combination, to constitute a Material Adverse Effect: (i) any change or effect resulting from or arising out of the announcement of this Agreement or the pendency of the Transactions; (ii) any change or effect resulting from or arising out of actions required to be taken or required not to be taken by the Sellers under this Agreement; (iii) any change or effect resulting from or arising out of general economic conditions in the United States or globally, including changes in the credit, debt, capital or financial markets, or out of any acts of war, terrorism, military actions or the escalation thereof; (iv) any change or effect affecting generally the industries or markets in which the Sellers conduct business, or (v) any changes in applicable Laws, including Tax laws, or accounting rules or principles, including changes in GAAP, in each case, after the date of this Agreement; provided, however, that the events, changes, developments or effects described in clauses (ii) through (iv) shall be considered in determining whether a “Material Adverse Effect” has occurred to the extent any such event, change, development or effect disproportionately affects the Business or Assets, taken as a whole, relative to other participants in the industry in which Business is conducted.

“Ordinary Course of Business” means the ordinary course of business consistent with past practice.

“Permitted Liens” means any Liens for (i) Taxes not yet due and payable or for Taxes being contested in good faith by appropriate proceedings, in each case, for which adequate reserves have been made on the

Financial Statements, (ii) statutory or contractual encumbrances of landlords, carriers, warehousemen, mechanics and materialmen and other similar encumbrances imposed by applicable Law in the Ordinary Course of Business that are not material to the business, operations and condition of the property (real or personal) of the Sellers so encumbered and that are not resulting from a breach, default or violation by the Sellers of any Contract or Law, for sums not yet due and payable; (iii) amounts consistent with past experience on personal property leased under operating leases; (iv) amounts consistent with past experience incurred or made in connection with workmen's compensation, unemployment insurance and other social security benefits; and (v) easements, rights of way, declarations of covenants, and other similar title documents and restrictions (if any) affecting any Seller’s interests in any real property to be conveyed pursuant to this Agreement which are recorded in the public land records as of the date of this Agreement.

“Person” means an individual, sole proprietorship, general partnership, limited partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or Governmental Entity.

“Proceedings” means any action, suit, claim, arbitration, audit, assessment, hearing, investigation, civil investigative demand, inquiry, litigation or suit by or before any Governmental Entity or arbitrator.

“Property Management Agreements” means the management agreements entered into by and between a Timeshare Owners’ Association and PHR, pursuant to which the Timeshare Owners’ Association has appointed PHR as property managing agent for the applicable property and PHR provides managerial, maintenance and administrative functions on the terms and conditions set forth therein.

“Rental Agency Appointment Agreements” means the management agreements entered into by and between one or more Timeshare Owners’ Associations and Vacation Rentals, pursuant to which the Owners’ Association has appointed Vacation Rentals as rental managing agent for the applicable property and Vacation Rentals provides managerial, maintenance and administrative functions on the terms and conditions set forth therein.

“Resort” means, individually and collectively, as applicable, each or all of the condominium, Timeshare Interest ownership and/or time-share projects consisting of: (i) Beach Quarters Resort, located on the oceanfront at 5^th Street and Atlantic Avenue in Virginia Beach, Virginia, as set forth in the Condominium Instrument for Beach Quarters dated January 2, 1984 and recorded in the Clerk’s Office of the Circuit Court of the City of Virginia Beach, Virginia in Deed Book 2334, at page 1316, as amended and supplemented from time to time, the initial Time-Share Instrument for Beach Quarters dated February 21, 1990 and recorded in the Clerk’s Office of the Circuit Court of Virginia Beach, Virginia in Deed Book 2891, at page 2023, as amended and supplemented from time to time, and the First Amended and Restated Time-Share Instrument for Beach Quarters dated May 30, 1997 and recorded in the Clerk’s Office of the Circuit Court of Virginia Beach, Virginia in Deed Book 3753, at page 8136, as amended and supplemented from time to time; (ii) Boardwalk Resort Hotel and Villas, located on the oceanfront at 16^th Street and Atlantic Avenue in Virginia Beach, Virginia, as set forth in the Time-Share Instrument for Boardwalk dated May 18, 2001 and recorded in the Clerk’s Office of the Circuit Court of Virginia Beach, Virginia in Deed Book 4437, at page 821, as amended and supplemented from time to time; (iii) Turtle Cay Time-Share Project, located on the oceanfront at 6^th Street and Atlantic Avenue in Virginia Beach, Virginia, as set forth in the Time-Share Instrument for Turtle Cay dated June 11, 1997 and recorded in the Clerk’s Office of the Circuit Court of Virginia Beach, Virginia in Deed Book 3758, at page 1636, as amended and supplemented from time to time; (iv) Ocean Beach Club, located at 3401 Atlantic Avenue in Virginia Beach, Virginia, as set forth in the Time-Share Instrument for Ocean Beach Club dated May 14, 2004 and recorded in the Clerk’s Office of the Circuit Court of Virginia Beach, Virginia as Instrument Number 2004070800104883, as amended and supplemented

from time to time; (v) Oceanaire Resort Tower, located on the oceanfront at 34^th Street and Atlantic Avenue in Virginia Beach, Virginia, as set forth in the Time-Share Instrument for Ocean Beach Club dated July 1, 1997 and recorded in the Clerk’s Office of the Circuit Court of Virginia Beach, Virginia in Deed Book 3758, Page 1636, and (vi) Beachwoods Resort, located at 1 Cypress Knee Trail, Kitty Hawk, North Carolina 27949. The term “Resort” or “Resorts” includes, among other things, the Timeshare Interests in the respective Resorts, and the appurtenant exclusive rights to use Resort Units in one or more buildings or phases and all appurtenant or related properties, amenities, facilities, equipment, appliances, fixtures, easements, licenses, rights and interests.

“Resort Unit” means, with respect to each Resort, one living unit in a building incorporated into the Resort pursuant to the Declaration, if applicable, together with all related or appurtenant interests in services, easements and other rights or benefits, as described and provided for in the Timeshare Documents.

“Restrictive Covenant Agreements” means, collectively, the Restrictive Covenant Agreements between the Buyer, on the one hand, and each of the Restricted Persons, on the other hand, in the form attached hereto as Exhibit B.

“Restricted Persons” means Bruce L. Thompson and Edmund C. Ruffin and each Seller.

“Seller Intellectual Property” means the Intellectual Property held for use, used, sold, distributed or licensed in or by the Business.

“Seller Taxes” means any Taxes (a) imposed on any Business Seller, (b) arising in connection with the Transactions; or (c) relating to the Business or the Assets for all periods (or portions of periods) ending on or before the Closing Date.

“Seller Transaction Expenses” means (i) all fees, costs, expenses and obligations of the Sellers incurred in connection with the negotiation, documentation and consummation of the Transactions, including all fees, expenses, disbursements and other similar amounts paid to attorneys, financial advisors, accountants or other advisors; (ii) all payments required to obtain third party consents in connection with the consummation of the Transactions; and (iii) all change of control, severance, bonus or similar payments due by any Seller to any Person under any plan, agreement or arrangement of any Seller, which obligation, in each case, is payable or becomes due as a result of the consummation of the Transactions, including all Taxes that are payable by such Seller in connection with the payment of such obligation.

“Software” means all computer programs, including any and all software implementations of algorithms, models and methodologies whether in source code or object code form, databases and compilations, including any and all electronic data and electronic collections of data, all documentation, including user manuals and training materials, related to any of the foregoing.

“Subsidiary” or “Subsidiaries” means, with respect to any Person of which (i) if a corporation, 50% or more of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof or (ii) if a limited liability company, partnership, association or other business entity (other than a corporation), a fifty percent (50%) or more of partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof and for this purpose, a Person or Persons owns a fifty percent (50%) or more ownership interest in such a business entity (other than a corporation) if such Person or Persons shall be allocated fifty percent (50%) of such business entity’s gains or losses or shall be or control any

managing director or general partner of such business entity (other than a corporation). For the purposes hereof, the term Subsidiary shall include all Subsidiaries of such Subsidiary.

“Tax” (and, with correlative meaning, “Taxes”) means any U.S. or foreign, federal, state, provincial, municipal or local income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, registration, value added, excise, natural resources, severance, stamp, occupation, occupancy, ad valorem, premium, goods and services, windfall profit, environmental, customs, duties, real property, personal property, escheat or unclaimed property, capital stock, social security, unemployment, disability, payroll, license, employee or other withholding, or other tax, of any kind whatsoever, including any interest, penalties or additions to tax or additional amounts (whether disputed or not) in respect of the foregoing; the foregoing shall include any transferee, successor or secondary liability for a Tax and any liability assumed by agreement or arising as a result of being (or ceasing to be) a member of any Affiliated Group (or being included or required to be included) in any Tax Returns relating thereto.

“Tax Return” means any return, report or similar statement required to be filed with respect to any Tax (including any attached schedules), including, without limitation, any information return, claim for refund, amended return or declaration of estimated Tax and any affiliated, consolidated, combined, unitary or similar return.

“Timeshare Owners’ Associations” means, collectively, Beach Quarters Unit Owners Association, a non-incorporated association, Beach Quarters Time-Share Owners Association, a Virginia nonstock corporation, Boardwalk Villas Owners Association, a Virginia nonstock corporation, Turtle Cay Time-Share Owners Association, a Virginia nonstock corporation, Ocean Beach Club Owners Association, a Virginia nonstock corporation, and Beachwoods Condominium Association, Inc., a North Carolina statutory condominium association.

“Timeshare Documents” means the Declaration governing a Resort, the articles of incorporation and bylaws, rules and regulations for a Timeshare Owners’ Association, and any registration statement required under any Timeshare Laws approving the establishment and operation of the Resorts and the sales of Timeshare Interests.

“Timeshare Interest” means a timeshare interest however denominated or defined in the applicable Timeshare Documents, pursuant to which timeshare use rights are created, together with all rights, benefits, privileges and interests appurtenant thereto, including an ownership interest or use right in the appurtenant common elements.

“Timeshare Laws” means the provisions of any applicable Laws now or hereafter enacted, applicable to the establishment and operation of the Resorts and the sales, marketing, and financing of Timeshare Interests.

“Transaction Documents” means the agreements, documents, certificates and instruments to be delivered pursuant to or in connection with this Agreement, including, without limitation, the Restrictive Covenant Agreements, the Escrow Agreement, the Portfolio Agreements, the Securitized Portfolio Servicing Agreement and the Non-Portfolio Servicing Agreement.

“Transactions” means the transactions contemplated by this Agreement and the Transaction Documents.

“Transition Services Agreement” means the Transition Services Agreement among the Sellers and the Buyer, in the form attached hereto as Exhibit C.

(b) Cross Reference Table. The following terms are defined elsewhere in this Agreement in the Sections set forth below:



Term:	Section:
25th Street Project Expenses	2
Accounts Receivable	1.1(a)
Agreement	Preamble
Allocation Methodology	3
Asset Value Threshold	7.5(d)
Assumed Business Contracts	1.1(d)
Assumed Contracts	1
Assumed Liabilities	1
Assumed Vacation Liabilities	1
Beachwoods Plans and Budget	5
Business	Recitals
Business Assets	1
Business Seller	Preamble
Buyer	Preamble
Buyer Indemnified Parties	9.1(a)
Cap	9.3(d)
CERCLA	3.11(a)
Closing	7
Closing Cash Amount	2
Closing Schedule	2.3(a)
Computer System	3.19(f)
Current Assets	1.1(p)
Current Liabilities	1
Deductible	9.3(b)
Diamond Servicer	7.2(l)
Disclosure Schedule	6
Effective Time	7
Embargoed Person	3.13(c)
Environmental Laws	3.11(a)
Excluded Assets	1
Excluded Contracts	1.2(e)
Final Determination	10
Final Post-Closing Addition	2.3(d)
Final Post-Closing Reduction	2.3(d)
Financial Statements	3.5(a)
Gold Key	Preamble
Ground Lease Purchase Price Excess	2
Hazardous Substances	3.11(a)
Indemnified Party	9



Indemnifying Party	9
Interim Period	5
Leased Real Property	3.9(c)
Losses	9
Material Contracts	3.10(a)
New Matter	6
Non-Assumed Pre-Closing Employee Liabilities	7
Non-Securitized Portfolio Servicing Agreement	7.2(o)
Notes Receivable	1.2(j)
OBC	Preamble
Operating Leases	7.2(m)
Outside Date	8.1(b)
Owned Real Property	3.9(b)
Part-time employee	3.14(a)
PHR	Preamble
PHR Management Contracts	1
Portfolio Agreements	7.2(n)
Post-Closing Employees	7
Post-Closing Addition	2.3(a)
Post-Closing Reduction	2.3(a)
Protest Notice	2.3(b)
Purchase Price	2
Real Property	3.9(c)
Registered Intellectual Property	3.19(a)
Resort-Related Agreements	7.2(p)
Restraint	7.4(a)
RPI	Preamble
Securitized Portfolio Servicing Agreement	7.2(l)
Seller Indemnified Parties	9
Sellers	Preamble
Special Representations	9.3(a)
Third Party Claim	9.4(a)
Third Party Licenses	3.10(a)
Transfer Taxes	6.1(c)
Transferred Employees	7
Vacation Rentals	Preamble
WARN	3.14(a)

ARTICLE XI

MISCELLANEOUS

Section 11.1 Assignment; Successors; No Third Party Beneficiaries. No party hereto may assign any rights or delegate any obligations under this Agreement without the prior written consent of

the other parties, and any prohibited assignment or delegation will be null and void; provided, however, that nothing in this Agreement shall, or is intended to limit, the ability of the Buyer to assign its rights or delegate its responsibilities, liabilities and obligations under this Agreement, in whole or in part, without the consent of the other parties hereto to (i) any Affiliate of the Buyer; (ii) any purchaser of all or substantially all of the assets or equity securities of the Buyer or any Subsidiary thereof; or (iii) lenders to any of the Buyer or any Subsidiary thereof as security for borrowings, at any time whether prior to or following the Closing Date. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the exclusive benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns and any Person entitled to indemnification under Article IX. This Agreement is not intended to, nor shall it, create any rights, remedies, obligations or liabilities in any Person other than the parties hereto and their respective successors and assigns and any Person entitled to indemnification under Article IX.

Section 11.2 Expenses. The Sellers, on the one hand, and the Buyer, on the other hand, will each bear their own costs and expenses incurred in connection with this Agreement and the Transaction Documents and to consummate the Transactions. All costs and expenses incurred by the Sellers in connection with this Agreement and the Transaction Documents and to consummate the Transactions shall be Seller Transaction Expenses and shall be paid by the Sellers in accordance with this Agreement.

Section 11.3 Notices. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given: (i) if delivered personally, upon receipt; (ii) if sent by email, on day of transmission by email; and (iii) if delivered by overnight courier, on the Business Day after mailing. Any such notice shall be sent as follows:



If to the Sellers, to:	with a copy to:
c/o Gold Key Resorts 300 32^nd Street, Suite 400 Virginia Beach, Virginia 23451 Attention: Email:	Baker & Hostetler LLP 200 South Orange Avenue, Suite 2300 Orlando, Florida 32801 Attention: Robert H. Gebaide Email: rgebaide@bakerlaw.com

If to the Buyer, to:	with a copy to:
10600 West Charleston Blvd. Las Vegas, Nevada 89135 Attention: General Counsel Email: notices@diamondresorts.com	Katten Muchin Rosenman LLP 525 West Monroe Street, Suite 1900 Chicago, Illinois 60661 Attention: Peter A. Siddiqui Email: peter.siddiqui@kattenlaw.com

Section 11.4 Confidentiality; No Publicity. No publicity release or announcement concerning this Agreement or the Transactions shall be made without advance written approval thereof by the parties hereto. Notwithstanding the foregoing, (i) each party hereto may release such information that

is required of them pursuant to any Law; provided that such releasing party shall, prior to such release, promptly inform the other parties in writing regarding the requirement and content of such release; (ii) the Buyer and its Affiliates shall be permitted to disclose this Agreement and the Transaction Documents to the Securities and Exchange Commission, the New York Stock Exchange and any other Governmental Entity or self-regulatory organization; provided that the Buyer shall, prior to such disclosure, promptly inform the Sellers in writing regarding the content of such disclosure, and (iii) the Buyer can disclose this Agreement and information related to the Transactions to its Affiliates and their respective investors and financing sources.

Section 11.5 Controlling Law. This Agreement shall be construed, interpreted and enforced in accordance with the laws of the State of Delaware, without reference to its choice of law provisions which would apply to the laws of another state.

Section 11.6 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO. THE PARTIES HERETO EACH AGREE THAT ANY AND ALL SUCH CLAIMS AND CAUSES OF ACTION SHALL BE TRIED BY THE COURT WITHOUT A JURY. EACH OF THE PARTIES HERETO FURTHER WAIVES ANY RIGHT TO SEEK TO CONSOLIDATE ANY SUCH LEGAL PROCEEDING IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER LEGAL PROCEEDING IN WHICH A JURY TRIAL CANNOT OR HAS NOT BEEN WAIVED.

Section 11.7 Venue; Submission to Jurisdiction.

(a) Except as for all disputes, claims, or controversies arising out of Section 2.3 or Section 2.5 (which disputes, claims, or controversies shall be resolved exclusively as set forth in Section 2.3 and Section 2.5), all disputes, claims, or controversies arising out of or relating to this Agreement or any of the other Transaction Documents or the Transactions or the negotiation, validity or performance hereof or thereof that are not resolved by mutual agreement shall only be brought exclusively in the Court of Chancery of the State of Delaware (including the appropriate appellate courts therefrom), or in the event (but only in the event) that such court has no jurisdiction over such disputes, claims, or controversies, any federal court of the United States located in the State of Delaware (including the appropriate appellate courts therefrom). Each of the parties hereto irrevocably and unconditionally consents to the exclusive jurisdiction of such courts to resolve all such disputes, claims or controversies and further consents to the jurisdiction of such courts for the purposes of enforcing the provisions of Sections 2.3 and 2.5. The parties hereto agree that a judgment in any such dispute may be enforced in other jurisdictions by Proceedings on the judgment or in any other manner provided by Law.

(b) Each party hereto further irrevocably waives any objection to any proceeding before such courts based upon lack of personal jurisdiction or to the laying of venue in such courts and further irrevocably and unconditionally waives and agrees not to make a claim in any court that any proceeding before such courts has been brought in an inconvenient forum. Each of the parties hereto hereby consents to service of process by registered mail at the address to which notices are to be given hereunder. Each of the parties hereto hereby agrees that its submission to jurisdiction and its consent to service of process by mail are made for the express benefit of the other parties hereto. The parties agree and intend that the pendency of a proceeding pursuant to Sections

2.3 or 2.5 of this Agreement shall not preclude the ability of any party to bring an action under this Section 11.7 with respect to any dispute or controversy to which this Section 11.7 applies.

Section 11.8 Headings. Any table of contents and paragraph headings in this Agreement are for convenience of reference only and shall not be considered or referred to in resolving questions of interpretation.

Section 11.9 Partial Invalidity. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and if the rights or obligations of any party hereto under this Agreement will not be materially and adversely affected thereby, (a) this Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted, (b) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by such invalid or unenforceable provision and (c) there shall be automatically substituted for such invalid or unenforceable provision a provision as similar as possible which is valid and enforceable.

Section 11.10 Waiver. Neither the failure nor any delay on the part of any party hereto in exercising any rights, power or remedy hereunder shall operate as a waiver thereof, or of any other right, power or remedy; nor shall any single or partial exercise of any right, power or remedy preclude any further or other exercise thereof, or the exercise of any other right, power or remedy. No waiver of any of the provisions of this Agreement shall be void unless it is in writing and signed by the party against which it is sought to be enforced.

Section 11.11 Counterparts; Electronic Delivery. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute but one and the same instrument. This Agreement and any amendments hereto, to the extent signed and delivered by means of a facsimile machine or other electronic transmission (including .pdf files), shall be treated in all manner and respects and for all purposes as an original agreement or instrument.

Section 11.12 Interpretation. (a) All references to “dollars” or “$” shall be to U.S. dollars. Unless the context otherwise requires, (b) all references to Articles, Sections, Schedules or Exhibits are to Articles, Sections, Schedules or Exhibits contained in or attached to this Agreement, (c) each accounting term not otherwise defined in this Agreement has the meaning assigned to it in accordance with GAAP, (d) words in the singular or plural include the singular and plural and pronouns stated in either the masculine, the feminine or neuter gender shall include the masculine, feminine and neuter, (e) the use of the word “including” in this Agreement shall be by way of example rather than limitation and (f) the word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not simply mean “if”. The Disclosure Schedules are integral parts of this Agreement and are incorporated herein and expressly made a part of this Agreement as though completely set forth herein. Nothing in a Disclosure Schedule shall be deemed adequate to disclose an exception to a representation or warranty made herein, unless such Disclosure Schedule identifies the exception with reasonable particularity and describes the relevant facts in reasonable detail, including by express cross-reference to another Disclosure Schedule. Without limiting the generality of the foregoing, the mere listing, or inclusion of a copy, of a document or other item shall not be deemed adequate to disclose an exception to a representation or warranty made herein, unless the representation or warranty is being made as to the existence of the document or other item itself. Further, it is acknowledged by the parties that this Agreement has undergone several drafts with the negotiated suggestions of both; and, therefore, no presumptions shall arise favoring either party by virtue of the authorship of any of its provisions or the changes made through revisions. The use of the phrases

“furnished”, “made available” or “provided to” when referring to information and materials provided to the Buyer shall be deemed satisfied solely to the extent such information and materials were uploaded to (and made accessible to the Buyer and its representatives) the Gold Key Dataroom on or before the second Business Day immediately preceding the date of this Agreement.

Section 11.3 Entire Agreement; Amendment. This Agreement, including the Exhibits and Schedules hereto, constitutes the entire agreement between the parties hereto with regard to the matters contained herein and it is understood and agreed that all previous undertakings, negotiations, letter of intent and agreements between the parties are merged herein. The Buyer acknowledges that they have relied on no representation or warranty, written or oral, other than as explicitly set forth in this Agreement, and the schedules attached hereto. This Agreement may only be modified or amended by an agreement in writing signed by the Buyer and the Sellers.

Section 11.14 Specific Performance. The parties hereto hereby agree that irreparable damage would occur in the event that any provision of this Agreement were not performed in accordance with its specific terms or was otherwise breached, and that money damages or other legal remedies would not be an adequate remedy for any such damages. Accordingly, the parties hereto acknowledge and hereby agree that in the event of any breach or threatened breach by the Buyer, on the one hand, or any Seller, on the other hand, of any of the their respective covenants or obligations set forth in this Agreement, the Buyer, on the one hand, and the Sellers, on the other hand, shall be entitled to an injunction or injunctions to prevent or restrain breaches or threatened breaches of this Agreement, by the other(s) (as applicable), and to specifically enforce the terms and provisions of this Agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of the other under this Agreement (without posting any bond or other security). Notwithstanding the foregoing, it is explicitly agreed that the right of the Sellers to seek an injunction, specific performance or other equitable remedies in connection with enforcing the Buyer’s obligation to pay the Purchase Price and to consummate the Closing shall be subject to the requirements that (i) the conditions to the Closing set forth in Section 7.4 and Section 7.6 have been satisfied, (ii) the Buyer fails to pay, on the third Business Day following the satisfaction or waiver of such conditions, the amounts required to be paid by the Buyer pursuant to Section 2.2 and (iii) the Sellers have irrevocably confirmed to the Buyer in writing that, if the amounts required to be paid pursuant to Section 2.2 are paid in accordance therewith, the Sellers are ready, willing and able to consummate the Closing. The Buyer and each Seller hereby expressly waive any objections to the availability of specific performance as a remedy available to any party. Any and all remedies herein expressly conferred hereby upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party (including the right to sue for damages), and the exercise by a party of any one remedy will not preclude the exercise of any other remedy in accordance with this Agreement. Each party hereby waives any provision of Law to the extent that such provision would limit or restrict the agreement contained in this Section 11.14.

Section 11.15 Waiver of Bulk Sales Laws. The parties hereto hereby waive compliance in connection with the Transactions with the provisions of Article 6 of the Uniform Commercial Code as adopted in states where any of the Assets are located, and any other applicable bulk sales laws, in effect as of the date of the Closing.

[Signature page follows]

IN WITNESS WHEREOF, the parties hereto have executed this Asset Purchase Agreement as of the date first above written.

OCEAN BEACH CLUB, LLC

By: BQTS Associates, Inc.,

its manager

By: /s/ Robert M. Howard

Name: Robert M .Howard

Title: Chief Investment Officer

GOLD KEY RESORTS, LLC

By: Ocean Beach Club, LLC, its sole member

By: BQTS Associates, Inc.,

its manager

By: /s/ Robert M. Howard

Name: Robert M. Howard

Title: Chief Investment Officer

PROFESSIONAL HOSPITALITY RESOURCES, INC.

By: /s/ Robert M. Howard

Name: Robert M. Howard

Title: Chief Investment Officer

VACATION RENTALS, LLC

By: Professional Hospitality Resources, Inc., its sole member

By: /s/ Robert M. Howard

Name: Robert M. Howard

Title: Chief Investment Officer

RESORT PROMOTIONS, INC.

By: OCEAN BEACH CLUB, LLC, its sole member

By: BQTS Associates, Inc.,

its manager

By: /s/ Robert M. Howard

Name: Robert M. Howard

Title: Chief Financial Officer

DIAMOND RESORTS CORPORATION

By: /s/ Howard Lanznar

Name: Howard Lanznar

Title: Executive Vice President and Chief Administrative Officer

Exhibit 10.1

AGREEMENT FOR THE PURCHASE AND SALE OF PROPERTY

THIS AGREEMENT FOR THE PURCHASE AND SALE OF PROPERTY (the “Agreement”), is made and entered into as of the 28th day of July, 2015 (the “Effective Date”), by and between HAWAII FUNDING LLC, a Delaware limited liability company (the “Seller”), DIAMOND RESORTS KONA DEVELOPMENT, LLC, a Delaware limited liability company (the “Buyer”), and DIAMOND RESORTS INTERNATIONAL, INC., a Delaware corporation (the “Co-Acquirer”).

BACKGROUND TO THE AGREEMENT: Seller is the contract purchaser from the fee simple owner, SunStone Kona LLC (the “Owner”), of land in Hawaii County, State of Hawaii more particularly described on Exhibit A attached hereto and made a part hereof by this reference (the “Property”), on which the Seller contemplates constructing approximately sixteen (16) multi-unit condominium buildings, including a reception center, containing a total of one hundred forty-four (144) residential units therein. Seller intends to have the property developed into the separate condominium buildings containing the one hundred forty-four (144) residential units and a reception center, including an entry feature and a pool amenity. The residential condominium units will be designed and constructed for timeshare use.

Buyer, markets, and sells resort timeshare interests, and other vacation ownership products. Buyer desires to purchase the Property including all one hundred forty-four (144) residential condominium units (and all related amenities with respect thereto) for timeshare use when constructed by Seller on the Property as provided herein.

AGREEMENT:

In consideration of the mutual agreements contained in this Agreement and the sum of Ten and No/100 Dollars ($10.00) in hand paid by Buyer to Seller and for other good and valuable consideration, the receipt, adequacy, and sufficiency of which are hereby expressly acknowledged by the parties, subject to Section 5 hereof, Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the Project, in multiple closings as set forth in this Agreement, subject to the following terms and conditions:

1.Definitions. As used herein, the following terms shall have definitions as follows:

Applicable Law means (i) all statutes, laws, common law, rules, regulations, ordinances, codes or other legal requirements of any governmental authority, stock exchange, board of fire underwriters and similar quasi-governmental authority, and (ii) any judgment, injunction, order or other similar requirement of any court or other adjudicatory authority, in effect at the time in question and in each case to the extent the Person or property in question is subject to the same.

Architect means, subject to Section 3.11 hereof, the architect or replacement architect (as the case may be) selected by Seller to prepare the Final Plans and to act as the project architect for the construction of the Project.

Assigned Warranties has the meaning ascribed to it in Section 13.4 of this Agreement.

Assignment and Assumption of Condominium Management Agreement has the meaning ascribed to it in Section 8.3.2 of this Agreement.

Building means a residential building containing Units.

Business Day means a day other than a day which is a Saturday or Sunday or a day on which banks are closed in Kona, Hawaii; New York City or Orlando, Florida.

Buyer Indemnified Parties has the meaning ascribed to it in Section 18.1 of this Agreement.

Buyer’s Approval/Disapproval Notice has the meaning ascribed to it in Section 3.2.2 of this Agreement.

Buyer’s Damages has the meaning ascribed to it in Section 12 of this Agreement.

Buyer’s Predevelopment Costs has the meaning ascribed to it in Section 3.12 of this Agreement.

Buyer Required Changes has the meaning ascribed to it in Section 3.2.2 of this Agreement.

Closing has the meaning ascribed to it in Section 12 of this Agreement.

Closing Date has the meaning ascribed to it in Section 12 of this Agreement.

Commence Construction means the undertaking of any on-site or off-site work related to completion of the Project, including, without limitation, any mobilization of materials, equipment or manpower, grubbing, clearing, excavation, demolition, environmental remediation, mitigation or clean-up, or any other site preparation work, or construction of any Improvement.

Competing Offer has the meaning ascribed to it in Section 5 of this Agreement

Condominium means a condominium as defined in the Condominium Act.

Condominium Act means Chapter 514-B, Hawaii Revised Statutes, or any successor statute thereto, and all regulations thereunder.

Condominium Association means the unit owners’ association created and governed by the Condominium Documents.

Condominium Documents means all of the documents validly establishing a Condominium for the Project under Hawaii law.

Condominium Management Agreement has the meaning ascribed to it in Section 8.3.1 of this Agreement.

Condominium Manager has the meaning ascribed to it in Section 8.3.1 of this Agreement.

Construction Contract means, subject to Section 3.11 hereof, the guaranteed maximum price construction contract to be entered into between Seller and General Contractor for the construction of the Project, as amended from time to time.

Construction Milestones has the meaning ascribed to it in Section 3.3.2 of this Agreement.

Contractor has the meaning ascribed to it in Section 13.4 of this Agreement.

Deed means a warranty deed that conveys marketable fee title, clear of all liens, easements, restrictions and encumbrances whatsoever, except the Permitted Exceptions in the form acceptable to Buyer and Seller.

DD Documents means design drawings and documents for the Project which are consistent with the definition of “design development documents,” as such term has been adopted by the American Institute of Architects (AIA), and which contain sufficient specificity to allow the Contractor to produce an updated and accurate development budget for the Project, which design drawings and documents shall include, without limitation, (i) diagrammatic layouts of building systems required to describe the size and character of the Project as to architectural, structural, mechanical and electrical systems, and (ii) outline specifications that identify major materials and systems and establish in general their quality levels, including any applicable warranties.

DD Comments has the meaning ascribed to it in Section 3.2.1 of this Agreement.

Due Diligence Materials has the meaning ascribed to it in Section 4 of this Agreement.

Eligibility Requirements means, with respect to any Person, that such Person has total assets (in name or under management or advisement) in excess of $100,000,000.

Engineer means, subject to Section 3.11 hereof, the project engineer (or replacement project engineer) for the Project.

Environmental Law means any Applicable Law regarding health, safety, radioactive materials, or the environment, including, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. § 9601, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. § 6901, et seq.; the Toxic Substances Control Act, 15 U.S.C. § 2601, et seq., the Occupational, Safety and Health Act, 29 U.S.C. § 651, et seq., the Clean Air Act, 42 U.S.C. § 7401, et seq., the Federal Water Pollution Control Act, 33 U.S.C. § 1251, et seq., the Safe Drinking Water Act, 42 U.S.C. § 3001, et seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 1802, et seq., the Emergency Planning and Community Right to Know Act, 42 U.S.C. § 11001, et seq., the Endangered Species Act of 1973, 16 U.S.C. § 1531 et seq., the Federal

Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. § 136 et seq. and other comparable federal, state or local laws, each as amended, and all rules, regulations and guidance documents promulgated pursuant thereto or published thereunder.

Escrow Agent means Title Guaranty Escrow Services, Inc., a Hawaii corporation, or such other person or entity as the parties may designate in writing during the term of this Agreement.

Escrow Instructions has the meaning ascribed to it in Section 12 of this Agreement.

Feasibility Period has the meaning ascribed to it in Section 4 of this Agreement.

Fee has the meaning ascribed to it in Section 6 of this Agreement

Final Assignment of Declarant’s Rights has the meaning ascribed to it in Section 13.20 of this Agreement.

Final Construction Schedule has the meaning ascribed to it in Section 3.5 of this Agreement.

Final Plans means the final version of the construction documents containing the plans and specifications for the Project, including any applicable warranties, and, upon delivery of Seller’s Approval Notice, certified in favor of Buyer and Seller and sealed by the Architect.

Force Majeure means an event arising from or on account of an act of God or natural disaster or such other similar circumstances beyond Seller’s or Buyer’s, as applicable, reasonable control and expectation which materially and adversely impacts the ability of such party to perform its obligations under this Agreement despite such party’s reasonable diligent efforts including, but not limited to: (i) earthquake, storm, hurricane, tornado, tsunami, tidal wave, flood, fire, casualty, or other acts of God; (ii) acts of war or act by an enemy or other hostile governmental action; (iii) acts of terror; insurrection, rebellion or riots; (iv) general labor strikes not solely involving the Project; and (v) any other material event that is beyond the reasonable control of a party and not due to the actions, omissions or fault of such party. In no event shall the provisions of this paragraph include situations whereby such party’s performance is delayed or prevented due to its or its agents’, representatives’, contractors’ or consultants’ financial condition or due to a change in global, national, local or other economic conditions. Any reference to Force Majeure in this Agreement shall be subject to the terms of Section 24.15 of this Agreement.

Front Desk Unit means that certain front desk located within the Reception Center that shall constitute a separate private commercial unit within the Condominium, together with the exclusive right to use, occupy and enjoy all limited common elements appurtenant thereto as further described in the Condominium Documents.

General Contractor means, subject to Section 3.11 hereof, the contractor or replacement contractor (as the case may be) selected by Seller to act as the general contractor, enter into the Construction Contract and to construct the Project.

Hazardous Materials means each and every element, compound, chemical mixture, contaminant, pollutant, material, waste or other substance which is defined, determined or identified as hazardous or toxic under Environmental Laws or the Release of which is regulated under Environmental Laws. Without limiting the generality of the foregoing, the term “Hazardous Materials” will include: crude oil, used oil, petroleum and petroleum products or any fraction thereof; radioactive materials including source, by-product or special nuclear materials; asbestos or asbestos-containing materials (whether or not friable); lead paint; polychlorinated biphenyls, urea formaldehyde in any of its forms; radon; mold; and any substance defined as “hazardous substances,” “extremely hazardous substances,” “hazardous waste,” “hazardous materials,” “chemical substance or mixture,” “solid waste,” “hazardous chemicals,” “toxic substances,” “hazardous air pollutants,” “pollutants,” contaminants,” or “toxic chemicals” under any of Environmental Law.

Holdback Account has the meaning ascribed to it in Section 12 of this Agreement.

Holdback Amount has the meaning ascribed to it in Section 12 of this Agreement.

Holdback Escrow Agreement has the meaning ascribed to it in Section 12 of this Agreement.

Improvements means all the improvements to be located on the Property, including the Buildings and the Recreation Facilities, as more fully described in the Final Plans referenced in Section 3 below.

Initial Closing has the meaning ascribed to it in Section 12 of this Agreement.

Institutional Lender means one or more of the following:

(A) a real estate investment trust, bank, saving and loan association, investment bank, insurance company, trust company, commercial credit corporation, pension plan, pension fund or pension advisory firm, mutual fund, government entity or plan, provided that any such Person referred to in this clause (A) satisfies the Eligibility Requirements;

(B) an investment company, money management firm or “qualified institutional buyer” within the meaning of Rule 144A under Securities Act of 1933, as amended, or an institutional “accredited investor” within the meaning of Regulation D under Securities Act of 1933, as amended, provided that any such Person referred to in this clause (B) satisfies the Eligibility Requirements; or

(C) an institution substantially similar to any of the foregoing entities described in clauses (A) or (B) that satisfies the Eligibility Requirements.

Key Construction Documents means (i) the Construction Contract, (ii) the contract(s) with the Architect, (iii) the contract(s) with the Engineer, (iv) any document or instrument entered into or obtained by Seller evidencing or granting the Permitting Requirements, (v) any other contract, subcontract or other agreement (or series of related contracts, subcontracts or agreements) entered into by Seller relating to the design, planning, engineering, construction or development of the

Project with expected payments in excess of Five Hundred Thousand and No/100 Dollars ($500,000.00), and (vi) any amendment or modification to, or termination of, any of the foregoing.

License Agreement has the meaning ascribed to it in Section 2 of this Agreement.

License Fee has the meaning ascribed to it in Section 2 of this Agreement

Nonmaterial Modifications means modifications to the Final Plans which (i) do not result in any material reduction (whether in quality or quantity) of Project amenities or any material change in Project appearance, (ii) do not materially reduce or increase specifications or performance standards (or change any specified model or brand) of any equipment system or other item to be incorporated in the Property, and (iii) in general, do not cause a material change in the overall quality, useful life, design or marketability of the Project, or the structural integrity or safety thereof.

Occupants means all persons who are in occupancy of a Unit, including VOI Units, at the Project, including Unit owners, participants of any exchange program, purchasers and potential purchasers of timeshare related products from Buyer, exchangers, renters, guests, tenants, licensees and invitees and their respective family members in residence in a Unit.

Owner shall have meaning ascribed to it in the recitals above.

Partial Assignment of Declarant’s Rights has the meaning ascribed to it in Section 13.16 of this Agreement.

Permitted Exceptions means (i) all matters set forth on the Title Commitment, unless Buyer notifies Seller of an objection as to any such matter which is not timely cured by Seller pursuant to Section 10 hereof, (ii) all matters which are deemed to be Permitted Exceptions pursuant to Section 10 hereof, (iii) any and all Condominium Documents and (iv) any and all Timeshare Documents; provided, however, that in no event shall monetary liens or encumbrances or real property taxes due and payable be or be deemed to be Permitted Exceptions. A list of Permitted Exceptions shall be agreed upon by the parties prior to the expiration of the Feasibility Period.

Permitting Requirements means all required permitting necessary to complete the Project consistent with the terms of this Agreement, including, without limitation, the permitting listed on Exhibit B attached hereto.

Person means an individual, partnership, joint venture, corporation, limited liability company, real estate investment trust, any other form of business association or organization, and/or any government or governmental authority.

Project means the Property and the Improvements, consisting of the Buildings, the Units, the Recreation Facilities and all of the other improvements made or to be built on the Property. The Project shall be constructed and developed in compliance with the Final Plans and all Applicable Law, including all applicable building codes, permitting requirements, the Condominium Act,

zoning laws, all Public Accommodations Laws and all other state, county and/or municipal laws, codes and ordinances applicable in Hawaii County, Hawaii.

Property shall have meaning ascribed to it in the recitals above.

Public Accommodations Laws means all Applicable Laws of all duly constituted authorities relating to access by disabled persons, including, without limitation, the Americans with Disabilities Act of 1990 (the “ADA”), 42 U.S.C. §§ 12181-12183, 12186(b)-12189, the ADA Accessibility Guidelines promulgated by the Architectural and Transportation Barriers Compliance Board, the public accommodations title of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000a et. seq., the Architectural Barriers Act of 1968, 42, U.S.C. 4151 et seq., as amended, Title V of the Rehabilitation Act of 1973, 29 U.S.C. §§ 790 et seq., the Minimum Guidelines and Requirements for Accessible Design, 36 C.F.R. Part 1190, and the Uniform Federal Accessibility Standards, as the same are in effect on the Effective Date, and may be hereafter modified, amended or supplemented.

Purchase Price means Six Hundred Twenty-Nine Thousand Three Hundred Sixty-One and 11/100 Dollars ($629,361.11) per residential timeshare Unit (144 Units total), subject to adjustment as provided in this Agreement.

Reception Center means the reception center building to be constructed in accordance with the Final Plans, which will contain a fitness center, restrooms and other guest services facilities which shall constitute common elements of the Condominium as described in the Condominium Documents. The Reception Center shall also contain the Front Desk Unit and certain concierge and/or back-office facilities space that shall constitute limited common elements appurtenant to the Front Desk Unit as further described in the Condominium Documents.

Recreation Facilities means all common areas, roads, parking, amenities and other common support and recreation facilities now or hereafter serving the Project, including an entry feature, resort style pool, whirlpool spa, the Reception Center, lanais, enhanced amenities (if any) and roadways which will provide access, utility and other services and constitute the recreational amenities for the Project which shall constitute common elements of the Condominium as further described in the Condominium Documents, except for the Front Desk Unit located within the Reception Center which shall constitute a private commercial unit within the Condominium.

Release shall mean the discharge, disposal, deposit, injection, dumping, spilling, leaking, leaching, placing, presence, pumping, pouring, emitting, emptying, escaping, or other release of any Hazardous Material.

ROFR has the meaning ascribed to it in Section 5 of this Agreement

Seller’s Approval Notice has the meaning ascribed to it in Section 3.2.2 of this Agreement.

Seller’s Indemnified Parties has the meaning ascribed to it in Section 18.2 of this Agreement.

Sub-Management Agreement has the meaning ascribed to it in Section 8.3.3 of this Agreement.

SunStone Kona PSA has the meaning ascribed to it in Section 4.1 of this Agreement.

Survey means, collectively, the preliminary ALTA survey and the “as built” surveys described in Section 10.2 of this Agreement.

Survey Exceptions has the meaning ascribed to it in Section 10.2 of this Agreement.

Third Party Purchaser has the meaning ascribed to it in Section 5 of this Agreement

Timeshare Act means Chapter 514E, Hawaii Revised Statutes, or any successor statute thereto, and all regulations thereunder.

Timeshare Association means the unit owners’ association created and governed by the Timeshare Documents.

Timeshare Documents means all of the documents validly establishing a Timeshare Plan for the Project under Hawaii law.

Timeshare Management Agreement has the meaning ascribed to it in Section 8.3.2 of this Agreement.

Timeshare Plan means a time share use plan as defined in the Timeshare Act.

Timeshare Plan Manager has the meaning ascribed to it in Section 8.3.2 of this Agreement.

Timely Manner means, as applicable and except as otherwise provided in this Agreement, for items under this Agreement requiring Buyer’s approval, such approval or disapproval shall be given within ten (10) Business Days of written notice from Seller to Buyer requesting such approval; provided that, if, after the expiration of the Feasibility Period, Seller requests Buyer’s approval with respect to any amendment or modification of a document, agreement or other instrument previously approved by Buyer (in accordance with the aforementioned ten (10) Business Day approval period or such other approval period provided in this Agreement), Buyer’s approval or disapproval of such amendment or modification shall be given within five (5) Business Days of Seller’s written request therefor; provided further, that if Buyer does not timely provide its approval or disapproval of any item during such periods, then any such item shall be deemed approved so long as such request for approval or disapproval conspicuously states: THIS IS A REQUEST FOR APPROVAL FROM HAWAII FUNDING LLC PURSUANT TO THE AGREEMENT FOR THE PURCHASE AND SALE OF PROPERTY DATED ____, 2015 – YOUR FAILURE TO RESPOND TO THIS NOTICE WITHIN [__] BUSINESS DAYS SHALL BE DEEMED TO BE YOUR APPROVAL OF THE MATTERS SET FORTH HEREIN.

Title Agent means Title Guaranty of Hawaii, Inc., a Hawaii corporation, as agent for the Title Company.

Title Commitment has the meaning ascribed to it in Section 10.1 of this Agreement.

Title Company means First American Title Insurance Company.

Title Policy has the meaning ascribed to it in Section 10.1 of this Agreement.

Title Review Period shall mean the period commencing on the date that Seller or the Title Agent have delivered to Buyer the initial Title Commitment and ending sixty (60) days after such date.

Title Update has the meaning ascribed to it in Section 10.1 of this Agreement.

Unit means a physical or spatial portion of a Building designated for separate ownership or occupancy, the boundaries of which are described in the Condominium Documents, together with the undivided interest in the common elements appurtenant to such Unit, including without limitation the VOI Units and the Front Desk Unit.

Vacation Ownership Interest, or VOI, means a time share interest as defined by the Timeshare Act, which may include a fractional undivided tenant in common interest in a VOI Unit or a group of VOI Units, a nondeeded beneficial interest in a trust or any other form of timeshare ownership created pursuant to the Timeshare Plan as described in the Timeshare Documents.

Vacation Ownership Interest Unit, or VOI Unit, means a Unit in which Vacation Ownership Interests have been created or submitted to a Timeshare Plan pursuant to the Timeshare Documents. The VOI Units include all appurtenances to such units, as more fully described in the Timeshare Documents and the Condominium Documents, together with rights to use the common areas and the Recreation Facilities for the Project.

2.Purchase and Sale. Subject to and in accordance with the terms and provisions of this Agreement, including, without limitation, the rights and obligations set forth in Section 5 of this Agreement, Seller hereby agrees to sell to Buyer and Buyer hereby agrees to purchase all of the Units within the Project from Seller for the Purchase Price, including, without limitation, the undivided interests in the common areas appurtenant to the Units as described in the Condominium Documents, and any applicable easements, including easements for utilities and ingress and egress for the Project. Buyer and Seller also acknowledge that, subject to Section 5 hereof, unless Buyer is in default of any term, condition or covenant contained in this Agreement beyond any applicable notice and cure period set forth herein, (a) Buyer shall retain and have the exclusive right to market and sell Vacation Ownership Interests and related products and services in the Project, and Seller shall retain no rights with respect thereto, and (b) Buyer shall have an exclusive license to the Front Desk Unit and all limited common elements appurtenant thereto and to certain other portions of the common elements as the parties shall agree (e.g., location of signage) to conduct tours, check-in activities, association management, guest services and other marketing and sales activities of the

Timeshare Plan at the Project, pursuant to a license agreement to be agreed upon by the parties during the Feasibility Period (the “License Agreement”) and to be entered into between the parties at the Initial Closing. The License Agreement shall be cross-defaulted with this Agreement, so that the occurrence and continuance (beyond any applicable cure or grace period) of an event of default by Buyer under this Agreement shall constitute a default under both agreements. Following the occurrence and continuance of any such event of default, Seller shall have the right to terminate the License Agreement pursuant to the provisions thereof. In the event that the License Agreement is cancelled or terminated, Buyer or its designee shall retain and shall be granted with the vested rights, subject to Buyer or its designee paying to Seller or its designee Buyer’s pro rata share of all taxes, costs and expenses associated with the Front Desk Unit (including, without limitation, any assessments levied by the Condominium Association on the Front Desk Unit), pursuant to the terms of the Condominium Documents to (i) access and utilize the Front Desk Unit for check-in services for its guests, occupants and owners of the VOI Units; and (ii) conduct tours, check-in activities, association management, guest services and other marketing and sales activities of the Timeshare Plan in the Units Buyer has acquired. Seller shall deliver the specific Timeshare Plan check-in materials to Buyer’s guests, occupants and owners of the VOI Units in the form and manner as Buyer shall require and supply to Seller or its agent at Buyer’s sole expense. At the Initial Closing, in consideration for the rights granted to Buyer under the License Agreement, Buyer shall pay Seller a nonrefundable $4,000,000 fee (the “License Fee”).

2.1 Sprinkler Purchase Price Adjustment. The parties acknowledge and agree that the Purchase Price currently does not account for costs associated with a sprinkler system for the Buildings requested by Buyer. During the Feasibility Period, Seller will propose an adjustment to the Purchase Price due to such sprinkler system (“Sprinkler Purchase Price Adjustment”), and Buyer will, in its reasonable discretion and in a Timely Manner, approve or disapprove such Sprinkler Purchase Price Adjustment; provided, however, that (i) upon request, Seller will provide reasonable back-up documentation to support such Sprinkler Purchase Price Adjustment, and (ii) it shall be unreasonable for Buyer to disapprove the Sprinkler Purchase Price Adjustment solely because the Sprinkler Purchase Price Adjustment includes markups for the Contractor and Seller in amounts not to exceed 15% and 20%, respectively, of the costs associated with a sprinkler system for the Buildings; provided, that the up to 15% markup for the Contractor shall include both the Contractor’s fees and general conditions. Upon Buyer’s approval of a Sprinkler Purchase Price Adjustment, the sprinkler system shall be added to the scope of the Project as described on Exhibit C of this Agreement.

3.Seller’s Development and Construction.

3.1 Description of Improvements. Seller shall design and construct the entire Project as a single timeshare Condominium development. Each Building will contain varying square feet of gross usable area for the Units; provided, however, the Project shall contain the Units and amenities as set forth on Exhibit C. The Improvements will include no less than the number of parking spaces on the Property required by Applicable Law. Notwithstanding the foregoing, the Improvements, including exterior and interior design of the Buildings, the materials to be used, all fits and finishes, including, but not limited to, floor tile, carpeting, and all major appliances, the internal configuration of the Units, and the location and design of the parking structures and other

common elements, and all other related common areas shall be constructed by Seller in accordance with the Final Plans. Notwithstanding anything in this Agreement to the contrary, Buyer shall be solely responsible for the items listed on Exhibit D (the “Furnishings”) and Seller shall have no obligation to provide any of the Furnishings or any other personal property for the Improvements other than those items that are identified in the Final Plans.

3.2 Buyer’s Approval Rights of Final Plans.

3.2.1 During the Feasibility Period, Seller shall prepare and deliver to Buyer the DD Documents for the Project substantially in accordance with the specifications described on Exhibit C to this Agreement. Prior to Seller’s submission of the DD Documents to Buyer, Seller shall, not less frequently than monthly (and during reasonable business hours), make its representatives available to Buyer via teleconference in order to provide Buyer with updates as to the status of Seller’s preparation of the DD Documents, and the approximate, anticipated timing for delivery thereof to Buyer. Within twenty (20) Business Days after the DD Documents are submitted to Buyer, Buyer shall provide written comments (the “DD Comments”) to Seller describing specific changes to be incorporated into the proposed Final Plans for the Project, and each of Buyer and Seller shall promptly thereafter make their representatives available for a meeting in person or via teleconference to discuss such DD Comments with the Architect. If either (i) such DD Comments are not provided to Seller during such twenty (20) Business Day period, (ii) such DD Comments materially alter the scope of the Project as described on Exhibit C to this Agreement, or (iii) such DD Comments result in a material net increase in the estimated, overall costs to complete the Project, Seller notifies Buyer that the DD Comments result in a material net increase in the estimated, overall costs to complete the Project and five (5) Business Days expire following such notice from Seller during which period Seller shall make available its representatives to Buyer at reasonable times to discuss the cost increases, then Seller, in Seller’s sole and absolute discretion, may terminate this Agreement. If (x) such DD Comments are provided to Seller during such twenty (20) Business Day period, (y) such DD Comments do not materially alter the scope of the Project described on Exhibit C to this Agreement, and (z) either such DD Comments do not result in a material net increase in the estimated, overall costs to complete the Project or Seller elects not to terminate this Agreement following the five (5) Business Day period required by this Section 3.2.1 following any notice to Seller that the DD Comments result in a material net increase in the estimated, overall costs to complete the Project, then Seller shall cause the Architect to prepare the Final Plans substantially in accordance with the DD Documents as modified by the DD Comments.

3.2.2 Following Seller’s receipt of the DD Comments, Seller shall, not less frequently than biweekly (and during reasonable business hours), make its representatives available to Buyer via teleconference in order to provide Buyer with updates as to the status of Seller’s preparation of the DD Documents, and the approximate, anticipated timing for delivery thereof to Buyer. Within ten (10) Business Days after the proposed Final Plans and a description of any inconsistencies or deviations between the proposed Final Plans and the DD Documents (as modified by the DD Comments), are submitted to Buyer, Buyer shall either approve or disapprove the proposed Final Plans by notice in writing to Seller (the “Buyer’s Approval/Disapproval Notice”); provided, however, that if the proposed Final Plans are disapproved by Buyer, then Buyer shall specify, in the Buyer’s Approval/Disapproval Notice, the reasons for its disapproval and the required

modifications to make the proposed Final Plans acceptable to Buyer (“Buyer Required Changes”), which Buyer Required Changes shall not be inconsistent with the DD Documents as modified by the DD Comments. If either (i) the Buyer’s Approval/Disapproval Notice is not provided to Seller during such ten (10) Business Day period, (ii) such Buyer Required Changes are inconsistent with the DD Documents as modified by the DD Comments, or (iii) such Buyer Required Changes result in a material net increase in the estimated, overall costs to complete the Project, Seller notifies Buyer that the Buyer Required Changes result in a material net increase in the estimated, overall costs to complete the Project and five (5) Business Days expire following such notice from Seller during which period Seller shall make available its representatives to Buyer at reasonable times to discuss the cost increases, then Seller, in Seller’s sole and absolute discretion, may terminate this Agreement. If (a) the proposed Final Plans are disapproved by Buyer through the timely delivery of a Buyer’s Approval/Disapproval Notice, (b) the Buyer Required Changes are not inconsistent with the DD Documents as modified by the DD Comments, and (c) either such Buyer Required Changes do not result in a material net increase in the estimated, overall costs to complete the Project or Seller elects not to terminate this Agreement following the five (5) Business Day period required by this Section 3.2.2 following any notice to Seller that the Buyer Required Changes result in a material net increase in the estimated, overall costs to complete the Project, then Seller shall cause the Architect to modify the proposed Final Plans, which shall be re-submitted to Buyer, together with a description of any inconsistencies or deviations between the modified proposed Final Plans and the DD Documents (as modified by the DD Comments), for Buyer’s approval as provided in this Section 3.2.2. If Buyer approves the Final Plans through delivery of an Approval/Disapproval Notice, then, unless Seller chooses to terminate this Agreement pursuant to Section 4.2, Seller shall deliver written notice to Buyer of its approval of the Final Plans (the “Seller’s Approval Notice”). Upon delivery of the Seller’s Approval Notice, the Final Plans shall be certified and sealed by the Architect in favor of Buyer and Seller, and the Final Plans shall be attached hereto as Exhibit E by an amendment to this Agreement executed by the parties. At any time after Seller’s delivery of Seller’s Approval Notice, (x) Seller shall be permitted to make Nonmaterial Modifications to the Final Plans in Seller’s sole and absolute discretion, and (y) Seller shall be permitted to make any other modifications to the Final Plans subject to the prior written approval of Buyer, which approval shall be given or withheld in Buyer’s sole and absolute discretion in a Timely Manner.

3.2.3 Notwithstanding anything in this Agreement to the contrary, in the event (a) Seller does not deliver Seller’s Approval Notice prior to the end of the Feasibility Period and either party elects to terminate this Agreement in accordance with Section 4.2 or (b) Seller elects to terminate this Agreement in accordance with Section 4.3, then, within five (5) Business Days after any such termination, Buyer may elect, in its sole and absolute discretion, to assume the SunStone Kona PSA by providing written notice to Seller of such election and paying to Seller an amount (the “Expense Reimbursement Amount”) equal to the positive difference, if any, between (i) the amount of all third-party costs and expenses incurred by Seller with respect to the Property and (i.e., minus) (ii) the amount of the Fee paid through such date. Upon such election by Buyer and, if applicable, payment to Seller of the Expense Reimbursement Amount, Seller shall deliver to Buyer an executed assignment of the SunStone Kona PSA, as well as assignments of all work product relating to the permitting, design, development and construction of the Project. The provisions of this Section 3.2.3 shall expressly survive the termination of this Agreement.

3.3 Responsibility for Design and Construction.

3.3.1 All design and construction of the Improvements shall be done in a good and workmanlike manner and in compliance, at the time of completion, with all Applicable Laws, including, without limitation, all building, life safety and health care codes and all Public Accommodations Laws, and in accordance with the Final Plans. Any provision contained in this Agreement to the contrary notwithstanding, and despite any requirements for Buyer’s approvals set forth in this Agreement, the parties acknowledge and agree that Seller shall be responsible and liable for the proper design and construction of all Improvements and other related work.

3.3.2 In addition to inspection rights provided in Section 3.6, Buyer and its agents or employees shall have access to the Property and, upon written request from Seller, which may be made by Seller in its sole and absolute discretion, Buyer shall in good faith inspect the construction work upon Seller’s completion of a Construction Milestone to determine that the Construction Milestone is acceptable to Buyer and consistent with the Final Plans (such inspection, at Buyer’s request, to be conducted in the presence of Seller or its representative, the Architect and the Contractor); provided, (i) such written request from Seller shall include written sign-off of the completion of such Construction Milestone from a third-party such as a construction consultant, the Architect, or the Contractor and (ii) if the work completed associated with a Construction Milestone is not consistent with the Final Plans, Buyer shall in good faith deliver, no later than ten (10) Business Days after the Buyer’s receipt of the applicable written notice from Seller, a written notice to Seller specifying the reasons such work is not acceptable to Buyer, the manner in which such work is not consistent with the Final Plans, and a punch list relating to the Construction Milestone; provided, however that the failure of Buyer to provide such written notice to Seller shall not relieve Seller of Seller’s obligation to cause the Project to be constructed and delivered in accordance with the Final Plans. Notwithstanding the foregoing, during any inspection of the Project, Buyer shall use commercially reasonable efforts not to interfere unreasonably with or delay work in progress. The “Construction Milestones” are described on Exhibit F attached hereto and made a part hereof by this reference.

3.4 Permitting. Seller shall use commercially reasonable efforts to diligently pursue and achieve all Permitting Requirements. Seller will update Buyer in writing, not less often than monthly, as to the status of the permitting process. Seller shall use commercially reasonable efforts to provide Buyer and its counsel the opportunity to participate in any material meetings, discussions, or correspondence with governmental authorities with respect to the permitting process, and Seller shall use commercially reasonable efforts to provide reasonable notice to Buyer of any such material meetings, discussions, or correspondence so to ensure an opportunity for the Buyer to participate.

3.5 Construction Schedule.

3.5.1 Within thirty (30) days after the Effective Date, Seller will submit to Buyer a non-binding construction schedule. Seller will advise Buyer in writing, not less often than monthly, as to the status of the construction of the Improvements. No later than ten (10) days prior to the expiration of the Feasibility Period, Seller shall deliver a final construction schedule for the Improvements to Buyer (the “Final Construction Schedule”). To the extent possible and

commercially reasonable, the Final Construction Schedule shall contemplate, and Seller shall construct the Project in accordance with such Final Construction Schedule in order to allow for, the completion and delivery of successive Buildings in a contiguous manner.

3.5.2 Seller shall (i) Commence Construction no later than thirty (30) days after the later of (a) the final day of the Feasibility Period, (b) the delivery of the Seller’s Approval Notice, and (c) the satisfaction of any Permitting Requirements and other required construction permits necessary to Commence Construction, and (ii) subject to the following sentence, substantially complete construction of (w) the first Building and the Reception Center no later than ten (10) months after the commencement thereof by Seller (the “First Building Deadline”), (x) the Recreation Facilities no later than sixty (60) days after the Initial Closing, (y) 30% of the Units no later than nine (9) months after the First Building Deadline (the “Intermediate Building Deadline”), and (z) the entire Project no later than eighteen (18) months after the Initial Closing (the “Final Building Deadline”).

3.5.2.1 Notwithstanding anything in this Agreement to the contrary, if, following the expiration of the Feasibility Period, (A) Buyer fails to approve or disapprove any new Key Construction Document within five (5) Business Days of written notice from Seller to Buyer requesting such approval, the construction deadlines set forth in Section 3.5 shall be extended one day for each additional day or portion thereof beyond such five (5) Business Day period until Buyer approves (including deemed approval, as applicable) or disapproves such new Key Construction Document, or (B) Buyer fails to approve or disapprove any amendment or modification to a Key Construction Document within three (3) Business Days of written notice from Seller to Buyer requesting such approval, then the construction deadlines set forth in Section 3.5.2 shall be extended one day for each additional day or portion thereof beyond such three (3) Business Day period until Buyer approves (including deemed approval, as applicable) or disapproves such amendment or modification to a Key Construction Document; provided, however, that this Section 3.5.2.1 shall not relieve Buyer of Buyer’s obligation to respond in a Timely Manner to any written notice from Seller requesting approval of a Key Construction Document.

3.5.2.2 In the event Seller fails to complete construction of the first Building and the Reception Center by the First Building Deadline, Seller shall be entitled to a ninety (90) day period beyond the First Building Deadline to complete construction of the first Building and the Reception Center; provided, however, that the total Purchase Price due for all Units to be acquired at the Initial Closing shall be reduced by an amount equal to $5,500.00 for each day of delay, except to the extent that such delay is the result of a Force Majeure event as described in Section 24.15 below or a delay caused by Buyer.

3.5.2.3 In the event Seller fails to complete construction of 30% of the Units by the Intermediate Building Deadline, Seller shall be entitled to a ninety (90) day period beyond the Intermediate Building Deadline to complete construction of 30% of the Units; provided, however, that the total Purchase Price due for all Units to be acquired at the next Closing following the Intermediate Building Deadline shall be reduced by an amount equal to $5,500.00 for each day of delay, except to the extent that such delay is the result of a Force Majeure event as described in Section 24.15 below or a delay caused by Buyer.

3.5.2.4 In the event Seller fails to complete construction of the entire Project by the Final Building Deadline, Seller shall be entitled to a ninety (90) day period beyond the Final Building Deadline to complete construction of the Project; provided, however, that the total Purchase Price due for all Units to be acquired at the final Closing shall be reduced by an amount equal to $5,500.00 for each day of delay, except to the extent that such delay is the result of a Force Majeure event as described in Section 24.15 below or a delay caused by Buyer.

3.5.2.5 Seller shall not be considered in breach or default of this Agreement for a failure to complete construction of the first Building and the Reception Center or the entire Project until the ninety (90) day periods set forth in Sections 3.5.2.2, 3.5.2.3 and 3.5.2.4 have expired and, thereafter, Seller shall be entitled to the cure rights, and Buyer shall be entitled to all remedies available to Buyer, as set forth in Section 17.1 in the event Seller fails to complete construction of the applicable Improvements within the ninety (90) day periods set forth in Sections 3.5.2.2, 3.5.2.3 and 3.5.2.4.

3.6 Buyer Construction Inspection and Punch List. Buyer and its agents or employees shall have access to the Property during reasonable business hours and the right to inspect the construction of the Improvements during the course of construction and after construction of each Building is substantially complete, including the right to conduct inspections of the Improvements together with the Seller, the Architect and the Contractor. Buyer shall give Seller reasonable advance notice of such inspections and such inspections shall not unreasonably interfere with Seller’s construction of the Improvements. Seller shall cause the Architect to deliver a certification to Buyer certifying that the Improvements comply with all Applicable Laws, including, without limitation, all building, life safety and health care codes and all Public Accommodations Laws, and have been constructed in accordance with the Final Plans.

Buyer shall conduct a walk-through inspection with Seller or its representative, the Architect and the Contractor in order to develop and deliver to Seller a punch list as soon as reasonably practical after Seller notifies Buyer in writing that construction of a Building is substantially complete. Buyer’s final inspection of the construction of any such Building shall be accomplished by Buyer (together with Seller, the Architect and the Contractor) promptly after Seller notifies Buyer that the construction of such Building is substantially complete, but no later than ten (10) Business Days after Seller notifies Buyer that the final and unconditional certificate of occupancy for the Building has been issued. After reasonable consultation with the Architect and the Contractor, Buyer will develop and deliver to Seller a final punch list within five (5) Business Days after the final inspection of such Building, including a good faith estimate of the cost to complete the items on the punch list. Seller shall use its best efforts to complete all punch list items prior to the Closing for such Building but if any such items have not been completed prior to the applicable Closing, then Seller and Buyer shall jointly authorize and instruct the Escrow Agent to hold back from the Closing proceeds an amount equal to one hundred fifty percent (150%) of the estimated cost of completion of all remaining punch list items for such Building. If Seller completes all punch list items to Buyer’s reasonable satisfaction within the thirty (30) day period following Closing, Buyer shall so notify Escrow Agent and Seller and Escrow Agent shall pay the amounts attributable to such punch list items out of the escrowed funds to Seller on the thirtieth (30th) day following the applicable Closing. If Seller fails to complete all punch list items to Buyer’s reasonable

satisfaction within such thirty (30) day period, Buyer shall notify Escrow Agent and Seller of all incomplete punch list items and Escrow Agent shall pay all such escrow funds to Buyer, less the cost listed on the punch list for each of the items actually completed by Seller. Seller shall be deemed to have completed the punch list items to Buyer’s reasonable satisfaction unless Buyer notifies Escrow Agent and Seller of any incomplete punch list items prior to the expiration of the thirty (30) day period following Closing. Notwithstanding the foregoing, if the punch list item is of such a character as to require more than thirty (30) days to cure, and provided that Seller has commenced efforts to complete such punch list items within such thirty (30) day period and Seller is diligently pursuing such efforts to completion, then Seller shall have an additional thirty (30) days to complete such punch list items before Escrow Agent shall pay all such escrow funds to Buyer in accordance with the preceding sentence. The portion of the retained amount paid to Buyer shall be free and clear of any claims of Seller or any third parties and may be used by Buyer to complete the punch list items not completed by Seller at the time of disbursement to Buyer of the escrowed funds if the escrowed funds are so disbursed to Buyer.

3.7 Purchase Price. Buyer agrees to close on a Building by Building basis as Seller completes each Building. After the Initial Closing, all subsequent Closings shall be scheduled not less than thirty days apart. The Purchase Price set forth herein shall not increase unless otherwise agreed to in writing by both parties prior to the close of the Feasibility Period or as otherwise specifically set forth herein.

3.8 [RESERVED]

3.9 Easements. Seller may provide Owner reasonable access and utility easements and rights over and across the Property to enable Owner to develop Owner’s adjacent land and Buyer will cooperate with Seller’s efforts to establish such easements; provided, however, such easements shall not materially adversely affect Buyer’s intended use of the Property as Buyer shall determine in its reasonable discretion and Buyer shall not incur any expense in connection with such easements. Any documents granting or imposing such easements on the Property are subject to the prior written approval of Buyer, which approval shall not be unreasonably withheld, conditioned or delayed.

3.10 Seller’s Debt Financing. In connection with Seller procuring third-party debt financing in connection with the Property (if any), (i) Buyer shall execute any documents in connection therewith reasonably requested by Seller, including, without limitation, a consent and/or acknowledgment to Seller’s collateral assignment of this Agreement to Seller’s lender, so long as such documents shall not adversely affect Buyer’s rights under this Agreement, and (ii) such financing shall (a) not prohibit Buyer from performing its obligations under this Agreement and (b) provide that this Agreement shall not be divested by foreclosure or other default proceedings related to such financing so long as Buyer shall not be in default under the terms of this Agreement beyond any applicable notice and/or cure period set forth herein. Buyer shall continue its obligations under this Agreement in full force and effect notwithstanding any such default proceedings related to any such financing and shall attorn to Seller’s lender, and their successors or assigns, and to the transferee under any foreclosure or default proceedings, so long as such lender or transferee (x) assumes all of Seller’s obligations under this Agreement, and (y) is an Institutional Lender or has demonstrated to the reasonable satisfaction of Buyer that it is

creditworthy and has the financial wherewithal to cause the Project to be completed in accordance with the Final Plans as provided in this Agreement.

3.11 Approval of Contractor, Architect and Key Construction Documents; Payment and Performance Bonds. Buyer shall have the right to approve, in its reasonable discretion and in a Timely Manner, the General Contractor, the Architect, the Engineer and any replacements of any of them prior to Seller engaging any of them, and to review and approve, in its reasonable discretion and in a Timely Manner, the Construction Contract and any other Key Construction Documents, including any applicable warranties which Buyer may require with respect thereto, prior to Seller’s execution of the Construction Contract or any other Key Construction Documents. Notwithstanding anything in this Agreement to the contrary, Buyer shall have no right to approve any amendment or modification to any Key Construction Document which Seller enters into (or intends to enter into) solely for the purposes of (i) modifying or altering the cost of the work to be performed under such Key Construction Document, or (ii) making conforming changes to such Key Construction Document which become necessary or advisable as a result of any Nonmaterial Modification to the Final Plans made by Seller. Seller shall provide in the applicable engagement contracts for the General Contractor, the Architect, the Engineer, the other Key Construction Documents, and any other contractors, subcontractors, architects, engineers and other design professionals for the Project entered into by Seller, that Buyer and its affiliates may also have reliance rights on all work product without additional charge. Without limiting the foregoing, in connection with any approval by Buyer of the Construction Contract, Seller shall be required to deliver to Buyer one or more payment and performance bonds in form and substance approved by Buyer, with General Contractor as principal, with a surety company reasonably acceptable to Buyer and licensed to do business in the State of Hawaii, as surety, which bonds shall guaranty all of the obligations of the General Contractor under the Construction Contract. Seller shall use commercially reasonable efforts to name any acquirer or acquirers of any or all of the Units, whether Buyer, a Third Party Purchaser, or otherwise, to be named as co-obligee of any such payment and performance bonds.

3.12 Buyer Predevelopment Costs; Credit Against Initial Closing and Subsequent Closings; Reimbursement Upon Certain Terminations. Prior to the Effective Date, Buyer has incurred certain third-party costs and expenses totaling $7,188.40 in connection with predevelopment activities for the Project (“Buyer’s Predevelopment Costs”), which the Parties acknowledge and agree is comprised of $4,188.40 to Pacific Atelier International, LLC for site plan revisions and $3,000 to Bills Engineering Inc. for hydraulic analysis. Notwithstanding anything to the contrary contained herein, Buyer’s Predevelopment Costs shall be credited against the Purchase Price due from Buyer at the Initial Closing and, if necessary, against the Purchase Price due from Buyer at each successive Closing until Buyer has received credits for the full amount of Buyer’s Predevelopment Costs.

4.SunStone Kona PSA; Feasibility Period; Termination.

4.1 Seller represents that it has (i) executed a purchase and sale agreement with Owner (the “SunStone Kona PSA”) on or prior to the Effective Date to purchase the Property upon which the Project shall be constructed, and (ii) furnished to Buyer a redacted copy of the SunStone Kona

PSA. Buyer acknowledges that Seller does not own the Property as of the Effective Date. Buyer’s and Seller’s obligations under this Agreement are contingent and conditioned upon Seller acquiring good and marketable title to the Property. If Seller fails to acquire good and marketable title to the Property in accordance with the terms of the SunStone Kona PSA and/or the SunStone Kona PSA terminates, then this Agreement automatically terminates unless otherwise agreed in writing by both Buyer and Seller.

4.2 During the period commencing on the Effective Date and ending upon February 29, 2016 (the “Feasibility Period”), Buyer shall conduct its due diligence regarding the suitability and feasibility of the Property for its intended use including without limitation, physical and environmental investigation, zoning and land use issues review, and title and document review. Seller agrees to cooperate by causing the Property and personnel with knowledge of the Property to be available to Buyer. Seller shall deliver to Buyer (a) the documents and materials identified on Exhibit G attached hereto as soon as practicable, but in no event later than five (5) Business Days after the Effective Date and (b) any other documents, materials and information in Seller’s possession, under Seller’s control or reasonably available to Seller relating to the Property that are reasonably requested by Buyer from time to time within five (5) Business Days after Buyer’s written request (collectively, the “Due Diligence Materials”). With permission from Owner, which Seller shall request upon notice from Buyer, Buyer shall be permitted to enter the Property during the Feasibility Period for the purpose of performing customary tests, surveys, inspections and other matters as required by Buyer to complete its due diligence. If (a) Seller’s Approval Notice has not been delivered prior to the final day of the Feasibility Period, (b) Seller fails to satisfy the Permitting Requirements and obtain all other required construction permits prior to the final day of the Feasibility Period (other than those Permitting Requirements that may be obtained after the Feasibility Period as set forth on Exhibit B), (c) Seller does not submit a Final Construction Schedule prior to the final day of the Feasibility Period, (d) the Condominium Documents are not duly executed and recorded prior to the final day of the Feasibility Period, or (e) Seller and Buyer fail to agree on the forms of the Condominium Management Agreement, the Sub-Management Agreement, the Assignment and Assumption of Condominium Management Agreement, the License Agreement, the Deed, the Partial Assignment of Declarant’s Rights, and the Final Assignment of Declarant’s Rights prior to the expiration of the Feasibility Period, then at any time after the final day of the Feasibility Period and prior to 5:00 p.m. (Eastern Time) on March 7, 2016 (the “Termination Outside Date”), either party may, in its sole discretion, terminate this Agreement upon written notice to the other party. If neither party elects to terminate this Agreement prior to the Termination Outside Date, then neither party shall thereafter have the right to terminate this Agreement pursuant to this Section 4. If (a) Seller’s Approval Notice has been delivered prior to the final day of the Feasibility Period, (b) Seller satisfies the Permitting Requirements and obtains all other required construction permits prior to the final day of the Feasibility Period (other than those Permitting Requirements that may be obtained after the Feasibility Period as set forth on Exhibit B), (c) Seller submits a Final Construction Schedule prior to the final day of the Feasibility Period, (d) the Condominium Documents have been duly executed and recorded prior to the final day of the Feasibility Period, and (e) Seller and Buyer agree on the forms of the Condominium Management Agreement, the Sub-Management Agreement, the Assignment and Assumption of Condominium Management Agreement, the License Agreement, the Deed, the Partial Assignment of Declarant’s Rights, and the Final Assignment of Declarant’s Rights prior to

the expiration of the Feasibility Period, then neither party shall thereafter have the right to terminate this Agreement pursuant to this Section 4. Notwithstanding anything in this Agreement to the contrary, the Feasibility Period and the Termination Outside Date shall be deemed to have expired upon the first date when all of (a) through (e) of the preceding sentence has occurred. Notwithstanding anything in this Section 4 to the contrary, any other right to terminate extant under any other section of this Agreement shall be expressly preserved and governed by the terms of such other sections of this Agreement. Upon termination pursuant to this Section 4.2, the Agreement shall be deemed to be terminated, this Agreement shall be of no further force and effect and Buyer and Seller shall have no further rights, obligations or liabilities hereunder, except for the obligations which expressly survive termination.

4.3 Notwithstanding anything in this Agreement to the contrary, Seller may, in its sole discretion, terminate this Agreement by written notice to Buyer on or before the expiration of the Feasibility Period. Upon termination pursuant to this Section 4.3, the Agreement shall be deemed to be terminated, this Agreement shall be of no further force and effect and Buyer and Seller shall have no further rights, obligations or liabilities hereunder, except for the obligations which expressly survive termination.

5.Marketing; Right of First Refusal.

5.1 Marketing. Notwithstanding anything to the contrary in this Agreement, Seller shall be permitted to market and offer for sale to any third party (any such third party other than Buyer, a “Third Party Purchaser”), except for third parties principally engaged in the vacation ownership business, the Project or, if any Units have been delivered to Buyer, the entire remaining portion of the Project other than the Units previously delivered to Buyer (the “Remaining Portion”).

5.2 Right of First Refusal. Prior to the acceptance of any offer from a Third Party Purchaser with respect to the Project or the Remaining Portion (the “Competing Offer”), Seller shall first make such identical offer available to Buyer. Buyer shall have fifteen (15) Business Days from receipt of the Competing Offer to indicate Buyer’s agreement to acquire the Project or the Remaining Portion on the identical terms of the Competing Offer or to permit the Project or the Remaining Portion to be sold free and clear of any interest of Buyer (the “ROFR”). Buyer shall be deemed to have approved the sale of the Project or the Remaining Portion to a Third Party Purchaser if Buyer fails to indicate Buyer’s agreement to acquire the Project or the Remaining Portion on the identical terms of the Competing Offer or to indicate Buyer’s approval of the sale of the Project or the Remaining Portion to the Third Party Purchaser within such fifteen (15) Business Day period. The ROFR shall be in effect from the Effective Date through the earlier of (i) the delivery of the final Units to Buyer, (ii) the termination of this Agreement, and (iii) the occurrence and continuance of a Buyer default of any term, condition or covenant contained in this Agreement beyond any applicable notice and cure period set forth herein.

6.Fee. In consideration for the rights granted to Buyer under this Agreement, Buyer shall pay Seller (a) an $800,000 fee within five (5) Business Days after the Effective Date, and (b) a $200,000 fee within five (5) Business Days after the Termination Outside Date if neither party elects to terminate this Agreement prior to the Termination Outside Date in accordance with Section 4

(collectively, the “Fee”). The Fee shall be nonrefundable unless (i) Seller (directly or indirectly) sells more than seventy-two (72) Units to one or more Third Party Purchasers (whether in a single transaction or a series of transactions), and (ii) Buyer is not in default of any term, condition or covenant contained in this Agreement beyond any applicable notice and cure period set forth herein, in which case, Seller shall be required to refund the Fee to Buyer within five (5) Business Days following the closing of the sale that results in more than seventy-two (72) Units having being sold to one or more Third Party Purchasers.

7.[RESERVED].

8.Buyer’s Use of the Project.

8.1 Condominium and Timeshare Documents; Condominium Management. Buyer shall prepare and complete the Condominium Documents and the Timeshare Documents at its sole cost and expense. The Condominium Documents and the Timeshare Documents shall be prepared as separate sets of documents governing the Project; provided, however, the Timeshare Documents shall be subordinate to the Condominium Documents in all respects. The Condominium Documents shall include, without limitation, the provisions set forth on Exhibit H attached hereto. Buyer shall provide copies of all proposed Condominium Documents to Seller for its review on or before ninety (90) days after the Effective Date, and Seller shall have the right to approve the Condominium Documents, which approval shall be in Seller’s sole and absolute discretion. Seller and its lender shall be required to cooperate (and shall use commercially reasonable efforts to cause Owner and its lender to cooperate) with Buyer, at Buyer’s sole cost and expense, in connection with the preparation and recordation of the Condominium Documents and Buyer’s efforts to timely obtain all required governmental approvals of the Condominium Documents and the Timeshare Documents. At Buyer’s request, Seller shall sign any necessary documents, joinders or subordinations reasonably required to evidence its approval of the Condominium Documents and to obtain all required governmental approvals of the Condominium Documents and the Timeshare Documents. Seller shall use commercially reasonable efforts to obtain all necessary consents to such Condominium Documents at Closing, as required.

8.2 Alternative Purchase of Project. If, prior to the end of the Feasibility Period, the Condominium Documents are unable to be recorded for whatever reason, Buyer and Seller agree that, notwithstanding any other provision of this Agreement, so long as neither Buyer nor Seller terminate this Agreement pursuant to Sections 4.2 or 4.3 hereof, Buyer shall, at its option and upon the Seller’s completion of the Project, purchase the Project for an amount equal to the total Purchase Price due for all Units plus the License Fee. For the purposes of this Section 8.2, “completion” means that all conditions to closing set forth in Section 9.1 shall have been met or waived by Buyer.

8.3 Management of the Project.

8.3.1 Condominium Management Agreement. The parties shall negotiate an agreement for the management of the Condominium Association and the common elements of the Condominium on commercially reasonable terms as agreed to by the parties during the Feasibility

Period (the “Condominium Management Agreement”). At the Initial Closing, Seller shall cause the Association to execute the Condominium Management Agreement with an affiliate of the Seller or its designee licensed in Hawaii as a real estate broker (the “Condominium Manager”). The Condominium Association shall approve an initial budget and subsequent budgets which shall include a management fee in an amount similar to other condominium projects managed by Buyer or its affiliates. The Condominium Management Agreement shall vest responsibility for management of the Condominium, the Condominium Association and common elements of the Condominium in the Condominium Manager. The Condominium Manager shall perform all of its obligations in the manner consistent with the provisions of the Condominium Management Agreement, the Condominium Documents, the provisions of the Condominium Act and Chapter 16-107, Hawaii Administrative Rules (collectively the “Condominium Law”) and such other laws and regulations as may apply, and in accordance with good practices and standards prevailing in the condominium property management industry for projects of comparable size and character, and subject to the terms and conditions set forth therein.

8.3.2 Timeshare Management Agreement. The Condominium Manager shall have no right or responsibility to manage the Timeshare Plan, the Timeshare Association or the interior of the VOI Units or their furnishings, and the Condominium Manager shall have no other liability, responsibility or obligation with respect to the Timeshare Plan or the Timeshare Association. Buyer or its designee (the “Timeshare Plan Manager”) shall have all responsibilities and obligations of day-to-day management of the Timeshare Plan and the Timeshare Association, including without limitation billing, collections, exchange company contracts and occupancy, management of the VOI Units, rental, reservation systems, foreclosure, lockout and all Timeshare Association governance matters and meetings as further described in the management agreement between the Timeshare Association and the Timeshare Plan Manager (the “Timeshare Management Agreement”). At the Final Closing, Seller shall cause the Condominium Manager to assign the Condominium Management Agreement to Buyer or its designee and Buyer shall assume or cause its designee to assume the Condominium Management Agreement pursuant to an Assignment and Assumption of Condominium Management Agreement (the “Assignment and Assumption of Condominium Management Agreement”). Subject to Buyer’s discretion and at its election, Seller covenants and agrees that it shall cause the Condominium Manager to terminate the Condominium Management Agreement in the event Seller defaults under this Agreement after expiration of any applicable notice and cure period.

8.3.3 Condominium Sub-Management Agreement. Concurrently with the execution of the Condominium Management Agreement, Seller shall cause the Condominium Manager to enter into a subcontract on commercially reasonable terms as agreed to by the parties during the Feasibility Period (the “Sub-Management Agreement”) with Buyer or with an affiliate of Buyer licensed in Hawaii as a real estate broker (the “Sub-Manager”). The parties intend that, unless Buyer is in default of any term, condition or covenant contained in this Agreement beyond any applicable notice and cure period set forth herein, the Sub-Manager shall provide or cause to be provided all services and personnel required to perform all obligations of the Condominium Manager under the Condominium Management Agreement, at all times in the manner consistent with the provisions of the Condominium Law and such other laws and regulations as may apply, and in accordance with good practices and standards prevailing in the condominium property

management industry for projects of comparable size and character, and subject to the terms and conditions set forth therein. Seller shall guaranty the performance of Condominium Manager under the Condominium Management Agreement pursuant to the terms of the Sub-Management Agreement. Sub-Manager shall have the power and authority to manage the Condominium Association and the common elements of the Condominium on the same terms and conditions as set forth in the Condominium Management Agreement. The Sub-Management Agreement shall be cross-defaulted with this Agreement, so that the occurrence and continuance (beyond any applicable cure or grace period) of an event of default by Seller or Buyer under this Agreement shall constitute a default under both agreements. Following the occurrence and continuance of any such event of default, the non-defaulting party shall have the right to terminate the Sub-Management Agreement and, if Seller is in default, Seller shall also terminate the Condominium Management Agreement pursuant to the provisions described in the Sub-Management Agreement. The Sub-Management Agreement shall also contain a covenant of non-compete applicable to Buyer, Sub-Manager and their respective affiliates barring Buyer, Sub-Manager and their respective affiliates from entering into any management contract or subcontract with the Condominium Association (other than the Sub-Management Agreement) for a period of two (2) years from the later of (i) the termination of the period of developer control of the Condominium Association in accordance with Section 514B-106, Hawaii Revised Statutes, and (ii) the date of termination of the Sub-Management Agreement; provided that such covenant of non-compete shall no longer be effective upon (A) the consummation of the final Closing contemplated under this Agreement, or (B) the occurrence and continuance of a Seller default under this Agreement or the Sub-Management Agreement beyond any applicable notice and cure period. The Sub-Management Agreement shall require that Buyer, Sub-Manager and Co-Acquirer indemnify and hold Seller and Condominium Manager harmless from any and all claims, liabilities, losses and damages suffered or incurred by Seller or Condominium Manager arising from or related to the acts or omissions of Sub-Manager in the performance, failure of performance, or non-performance of Sub-Manager’s duties under the Sub-Management Agreement. The Sub-Management Agreement shall also require that Seller and Condominium Manager indemnify and hold Buyer, Sub-Manager and Co-Acquirer harmless from any and all claims, liabilities, losses and damages suffered or incurred by Buyer, Sub-Manager or Co-Acquirer arising from or related to the acts or omissions of Condominium Manager in the performance, failure of performance, or non-performance of Condominium Manager’s duties under the Condominium Management Agreement to the extent not otherwise performed by Sub-Manager.

8.3.4 Appointment of Board. Seller shall appoint and remove officers and the members of the board of directors of the Condominium Association during the term of this Agreement in the ordinary course exercise of Seller’s developer’s or owner’s rights under Applicable Law and the Condominium Documents. Seller may, but shall not be required to, appoint employees of Buyer or any of Buyer’s affiliates as officers and/or members of the board of directors of the Condominium Association. If Seller elects to appoint employees of Buyer or any of Buyer’s affiliates as officers and/or members of the board of directors of the Condominium Association, Buyer and Co-Acquirer shall indemnify and hold Seller and Condominium Manager harmless from any and all claims, liabilities, losses and damages suffered or incurred by Seller or Condominium Manager arising out of or related to the acts or omissions of directors and officers appointed by Seller in accordance with this Section 8 except to the extent Seller or Condominium Manager actually recovers insurance proceeds with respect to any such claims, liabilities, losses, and damages.

Notwithstanding the foregoing to the contrary, (a) Seller and Condominium Manager have no obligation to obtain or maintain any insurance with regard to the acts or omissions of directors and officers appointed by Seller in accordance with this Section 8, and (b) collection by judicial or legal process of such insurance proceeds shall not be a condition precedent to asserting or collecting such indemnification claim under this Agreement. If Seller or Condominium Manager subsequently receives insurance proceeds for any such claims, liabilities, losses, and damages, then Seller or Condominium Manager (as applicable) shall refund such indemnity payments to the Buyer or Co-Acquirer (as applicable) from such insurance proceeds to the extent that Seller or Condominium Manager (as applicable) has received benefits from both sources (i.e., payments of indemnity damages from the Buyer or Co-Acquirer and such insurance proceeds) in excess of the amount of indemnity damages incurred by or asserted against Seller or Condominium Manager.

9.Conditions Precedent to Closing. The following matters shall constitute conditions precedent to closing:

9.1 Conditions Precedent to Buyer’s Obligations to Close. The obligations and liabilities of Buyer to consummate each Closing hereunder shall in all respects be conditioned upon the satisfaction of each of the following conditions prior to each Closing (or the date hereafter specified and continuing through such Closing), any of which may be waived by written notice from Buyer to Seller:

9.1.1 Seller shall have complied with and otherwise performed in all material respects each of the covenants and obligations of Seller set forth in this Agreement through the applicable Closing.

9.1.2 All representations and warranties of Seller set forth in this Agreement, including without limitation the representations and warranties contained in Section 11.2 of this Agreement shall be true and correct in all material respects as of the date of the applicable Closing.

9.1.3 Seller shall have provided Buyer with evidence that Seller has fee simple title to the Property.

9.1.4 Seller shall have obtained (i) a certificate from the Architect certifying to Buyer that the Improvements that are part of the scheduled Closing have been completed in accordance with the Final Plans, and (ii) a final and unconditional certificate of occupancy for all Improvements that are part of the scheduled Closing.

9.1.5 Seller shall have obtained (i) a certificate from the Architect certifying to Buyer that the Recreation Facilities and the Front Desk Unit have been completed in accordance with the Final Plans, and (ii) a final and unconditional certificate of occupancy for the Recreation Facilities and the Front Desk Unit, and Buyer and its designee, successors and assigns, including all of its Occupants, shall have the rights to use the Recreation Facilities which constitute common elements of the Condominium as described in the Condominium Documents and the Front Desk Unit in accordance with the License Agreement.

9.1.6 Seller shall have satisfied all Permitting Requirements.

9.1.7 Seller, at Seller’s expense, shall have obtained all applicable zoning and land use consents, permits, licenses, and approvals and any other governmental action required for timeshare to be a permitted use of the Property.

9.1.8 Each of the agreements or documents noted in Section 8 of this Agreement which require approvals by Seller or third parties shall be executed, delivered, and recorded by Seller or such third party in accordance with the requirements of Section 8.

9.1.9 The Title Agent shall be irrevocably committed and authorized to issue the Title Policy on the Building and on each Unit in the respective Building that is part of the scheduled Closing and on the Recreation Facilities for the final Closing in accordance with the requirements of Section 10 below.

9.1.10 Seller shall cause to have delivered to Buyer the “as-built” Survey in accordance with the requirements of Section 10 below.

9.1.11 Seller shall have received written confirmation that the Property need not be further subdivided into a separate legal lot or parcel in accordance with all applicable subdivision laws to permit the conveyancing of the Property on a Building by Building basis in accordance with this Agreement.

9.1.12 Seller shall have delivered, or cause to be delivered (i) all of Seller’s Closing Documents described in Section 13 of this Agreement; and (ii) any other documents contemplated to be executed by Seller at the times set forth herein.

9.1.13 Seller shall have delivered, or cause to be delivered, an agreement from construction lender and/or General Contractor pursuant to which any of their interests in the property are subordinated to the Condominium Documents.

9.1.14 Seller and Escrow Agent shall have executed the Holdback Escrow Agreement.

9.2 Conditions Precedent to Seller’s Obligations to Close. The obligations and liabilities of Seller to consummate each Closing hereunder shall in all respects be conditioned upon the satisfaction of each of the following conditions prior to each Closing (or the date hereafter specified and continuing through such Closing), any of which may be waived by written notice from Seller to Buyer:

9.2.1 Seller shall have achieved all Permitting Requirements.

9.2.2 Buyer shall pay the Purchase Price for each Unit to be acquired by Buyer at the applicable Closing and other charges required to be paid by Buyer at the applicable Closing, subject to adjustments, prorations and other credits described in Section 16 of this Agreement or elsewhere in this Agreement.

9.2.3 All representations and warranties of Buyer set forth in Section 11.1 of this Agreement shall be true and correct in all material respects as of the date of the applicable Closing.

9.2.4 Buyer shall have delivered, or cause to be delivered, (i) all of Buyer’s Closing Documents described in Section 14 of this Agreement; and (ii) any other documents contemplated to be executed by Buyer at the times set forth herein.

9.2.5 Buyer shall have paid the Fee.

9.2.6 Buyer shall pay the License Fee at the Initial Closing.

10.Title to the Property, Survey, and UCC Searches. Seller shall convey to Buyer (or Buyer’s designee) good and marketable fee simple title free and clear of all liens other than and subject only to the Permitted Exceptions, to the Units, including, without limitation, the undivided ownership interest in the common elements appurtenant thereto, by multiple deeds. Seller shall convey to Buyer (or Buyer’s designee) good and marketable fee simple title free and clear of all liens other than and subject only to the Permitted Exceptions, to the Front Desk Unit at the final Closing, including, without limitation, the undivided ownership interest in the common elements appurtenant thereto and the exclusive right to use, occupy and enjoy the limited common elements appurtenant to the Front Desk Unit. Seller shall be responsible for all actions necessary to comply with subdivision laws, regulations and statutes, if further subdivision of the Property is necessary in light of the separate Building conveyancing.

10.1 Title Commitment and Title Policy.

10.1.1 On or before the thirtieth (30^th) day after the Effective Date of this Agreement, Seller shall cause the Title Agent to deliver to Buyer the Title Company’s pro-forma commitment (the “Title Commitment”) to issue to Buyer (or Buyer’s designee), upon (a) the recording of the Deed(s) conveying title to the Property containing the Buildings (and the Units contained therein) and the Recreation Facilities (as to those certain portions of the Recreation Facilities which constitute Units) from Seller to Buyer, (b) the payment of the Purchase Price for each respective timeshare residential Unit that is part of the scheduled Closing, and (c) the payment to the Title Company of the policy premium therefor, an ALTA owner’s policy of title insurance, insuring good and marketable fee simple record title to the portion of the Property containing each Building (and each Unit contained therein) that is part of a scheduled Closing and on the Recreation Facilities (as to those certain portions of the Recreation Facilities which constitute Units) for the final Closing with all endorsements required by Buyer (provided that obtaining such endorsements shall not be a condition to Buyer’s obligation to close hereunder), in the amount of the Purchase Price for the timeshare residential Units in the Building that is part of the scheduled Closing and subject only to the Permitted Exceptions (the “Title Policy”). An actual Title Commitment shall be issued thirty

(30) days prior to each scheduled Closing for the portion of the Property containing each Building (and each Unit contained therein) that is part of the scheduled Closing in the amount of the Purchase Price for the timeshare residential Units in such Buildings (each, a “Title Update”) and shall not expire or shall be extended from time to time until the applicable Closing Date. The Title Commitment and Title Policy shall be issued in compliance with Hawaii law.

10.1.2 If Buyer determines that there are matters identified in the Title Commitment that are unacceptable to Buyer, Buyer shall notify Seller, in writing, of such objections prior to the expiration of the Title Review Period and Seller shall have the right, within five (5) Business Days from receiving such notice (“Seller Response Period”), to elect: (i) to cure the title defect at Seller’s cost and expense, or (ii) not to cure such defect. Seller’s failure to notify Buyer in writing within the stated time frame shall be deemed Seller’s election not to cure. If Seller elects to cure, Seller shall do so prior to the applicable Closing for the portion of the Property affected by any such title defect. If Seller elects or is deemed to have elected not to cure, then Buyer shall be entitled to terminate this Agreement by delivering written notice to Seller of such election within five (5) Business Days of the expiration of the Seller Response Period, and this Agreement shall be of no further force and effect and Buyer and Seller shall have no further rights, obligations or liabilities hereunder, except for the obligations which expressly survive termination. If Buyer fails to timely notify Seller of any title objection or defect pursuant to this Section 10.1, or Seller elects or is deemed to have elected not to cure any such objection or defect and Buyer does not terminate this Agreement and elects to proceed with the applicable Closing, then such title objection or defect shall be deemed a Permitted Exception. Notwithstanding the foregoing, Buyer shall not be required to object to monetary liens or encumbrances or real property taxes due and payable, and the parties agree that (i) such items shall not be or be deemed to be Permitted Exceptions and (ii) Seller shall be required to satisfy or otherwise procure the release of such items applicable to the portion of the Property that is part of a scheduled Closing at or before each Closing. If any Title Update identifies any matters which do not appear in the pro-forma Title Commitment or any previous Title Update and were placed on such Property after the date of the Title Commitment or previous Title Update, Buyer shall have the right to object to such new or different matters in writing prior to any Closing and Seller shall cure such matters if caused by Seller prior to such Closing.

10.2 Survey. Seller, at Seller’s sole cost and expense, shall deliver to Buyer and the Title Company a Survey of the Property prepared by a Hawaii licensed surveyor and certified no later than ninety (90) days prior to the effective date of the Title Commitment (the “Initial Survey”). The Initial Survey shall be certified to the Title Agent, the Title Company, Owner, Buyer (or Buyer’s designee) and Buyer’s lender, if applicable, in accordance with the then-current minimum standard detail requirements for ALTA/ASCM land title surveys or such other form as the Buyer and/or the Title Company may reasonably require or approve. The Initial Survey shall show the location of all Improvements, all encroachments of any improvements onto adjoining properties, easements, set‑back lines or rights-of‑way, all encroachments of adjacent improvements on to Property, and any other matters reasonably requested by Buyer, the Title Agent or Title Company. Seller shall pay the cost of the Initial Survey and all updates thereto required by the Title Company; provided that Buyer shall pay the cost of any Survey updates or re-certifications strictly related to Buyer’s condominium or timeshare filings for the Property (if any). Seller acknowledges that updated or new “as-built” Surveys shall be required following Seller’s completion of construction of the

Improvements prior to each Closing in order to enable the Title Company to insure the title to the Property in the manner required by Section 10.1 and Seller agrees to furnish as-built Surveys as required by the Title Company or the Seller’s construction lender, at Seller’s expense, to Buyer and the Title Company no later than thirty (30) days prior to each Closing. If the Initial Survey indicates any matter to which Buyer objects, Buyer shall notify the Seller in writing of any such objections or exceptions (the “Survey Exceptions”) prior to the expiration of the Title Review Period. If any updated Survey indicates any new matter not shown on the Initial Survey to which Buyer objects, Buyer shall have until the later of (i) the expiration of the Feasibility Period, or (ii) ten (10) Business Days following Buyer’s actual receipt of such Survey in which to notify the Seller in writing of any such objections or exceptions (the “New Survey Exceptions”). Survey Exceptions and New Survey Exceptions shall be considered as defects in title and the Seller shall have the same rights and duties relating to the remedy of such Survey Exceptions and New Survey Exceptions as are provided in Section 10.1.2 above pertaining to the remedy of title defects. The procedures relating to the raising and curing of Survey Exceptions and New Survey Exceptions shall be the same procedures as are provided in Section 10.1.2 above pertaining to title defects.

10.3 UCC Searches. Seller, at its sole cost and expense, shall obtain and deliver to Buyer, or cause the Title Company to deliver to Buyer, at least ten (10) days prior to each Closing, current searches of all Uniform Commercial Code financing statements and federal tax liens filed with the Secretary of State of Hawaii and in the official records of the State of Hawaii or elsewhere with respect to Seller or the portion of the Property that is part of the scheduled Closing. If any of such searches reveals claims or liens encumbering the portion of the Property that is part of a scheduled Closing, then it shall be a condition precedent to such Closing in favor of the Buyer that such financing statement(s) or tax liens be terminated, released or discharged by Seller at or prior to such Closing.

11.Representations and Warranties of the Parties.

11.1 Buyer’s Representations to Seller. Buyer hereby makes the following representations and warranties to Seller, each of which shall be true and correct as of the date hereof and through and as of the date of each Closing:

11.1.1 Authorization. Buyer is a duly organized and validly existing entity in good standing and Buyer or its designee has or will register for authorization to do business in Hawaii, if required by applicable state, county or municipal law.

11.1.2 Valid and Binding Agreement. This Agreement has been duly authorized and executed on behalf of Buyer and all necessary action on the part of Buyer to authorize the transactions herein contemplated has been taken, and no further action will be necessary for such purpose. This Agreement constitutes the valid and binding agreement of Buyer, enforceable in accordance with its terms, subject to bankruptcy, insolvency and similar laws affecting generally the enforcement of creditor’s rights.

11.1.3 Conflicts. Neither the execution and delivery of this Agreement nor the consummation of the transaction contemplated hereby will (i) be in violation of any other agreements

to which Buyer is bound, (ii) conflict with or result in the breach or violation of any law, regulation, writ, injunction or decree of any court or governmental instrumentality applicable to Buyer, or (iii) constitute a breach of any evidence of indebtedness or agreement of which Buyer is a party or by which Buyer is bound.

11.1.4 No Litigation. There are no actions, suits, or proceedings pending or, to the best of Buyer’s knowledge, threatened by any organization, person, individual, or governmental agency against Buyer which would prevent or impair Buyer’s ability to perform its obligations under this Agreement.

11.1.5 OFAC Compliance. None of Buyer or its members or principals is: (A) currently listed on the Specially Designated Nationals List (“SDN List”) or any similar list maintained by the Office of Foreign Assets Control (“OFAC”) at the United States Department of the Treasury; (B) owned or controlled, directly or indirectly, by a Person who is listed on the SDN List or any similar list maintained by OFAC; (C) a Person with whom a citizen of the United States is prohibited from engaging in transactions by any trade embargo, economic sanction, or other prohibition of U.S. law, regulation, or executive order; or (D) incorporated in any country subject to U.S. country-based economic sanctions whereby conducting transactions with that Person would be in violation of any applicable law, rule, or regulation. Buyer has implemented procedures, and will consistently apply those procedures, to ensure the foregoing representations and warranties remain true and correct at all times.

11.1.6 Anti-Corruption Laws. In connection with the acquisition of the Project, Buyer shall comply with all requirements of law relating to money laundering, anti-terrorism, bribery, corrupt practices, trade embargos and economic sanctions, now or hereafter in effect (including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act of 2010) and shall immediately notify Seller in writing if it becomes aware that any of the foregoing representations, warranties, or covenants are no longer true or have been breached or if the Buyer has a reasonable basis to believe that they may no longer be true or have been breached.

11.2 Representations and Warranties of Seller. Seller hereby makes the following representations and warranties to Buyer, each of which shall be true and correct as of the date hereof and through and as of the date of each Closing; provided, however, that any representations and warranties which relate to the Project or a portion thereof shall only be deemed made or re-made by Seller with respect to the portions of the Project that are owned by Seller as of the date of each Closing:

11.2.1 Authorization. Seller is a duly organized and validly existing limited liability company in good standing in its state of origin, and has registered for authorization to do business in Hawaii, if required by applicable state, county or municipal law.

11.2.2 Valid and Binding Agreement. This Agreement has been duly authorized and executed on behalf of Seller and all necessary action on the part of Seller to authorize the transactions herein contemplated has been taken, and no further action is necessary for such purpose. This Agreement constitutes the valid and binding agreement of Seller, enforceable in accordance

with its terms, subject to bankruptcy, insolvency and similar laws affecting generally the enforcement of creditor’s rights.

11.2.3 Conflicts. Neither the execution and delivery of this Agreement nor the consummation of the transaction contemplated hereby will (i) be in violation of any agreements to which Seller is bound, (ii) conflict with or result in the breach or violation of any law, regulation, writ, injunction or decree of any court or governmental instrumentality applicable to Seller, or (iii) constitute a breach of any evidence of indebtedness or agreement of which Seller is a party or by which Seller is bound.

11.2.4 No Litigation. To the best of Seller’s knowledge, there are no actions, suits, or proceedings pending or, to Seller’s knowledge, threatened by any organization, person, individual, or governmental agency against, relating to or involving Seller and/or the Property. Seller is not aware, to the best of Seller’s knowledge, of any basis for any such action that would materially and adversely affect title to the Property or Buyer’s intended use of the Property.

11.2.5 Sunstone Kona PSA. Nothing in the Sunstone Kona PSA, including any obligations and undertakings of Seller thereunder, conflict with, affect, impair, or otherwise derogate any obligation and undertaking of the Seller hereunder.

11.2.6 [RESERVED].

11.2.7 Disclosures. To the best of Seller’s knowledge, as of the date of disclosure, all records, reports, and other documents prepared by Seller or under Seller’s supervision which have been or are to be delivered by Seller under this Agreement (including the Due Diligence Materials) are, or in the case of future deliveries, will be true, accurate, and complete in all material respects, and will fairly present the information to be provided in a non‑misleading manner, and to Seller’s best knowledge and belief, all records, reports, and other documents prepared by third parties which have been or are to be delivered by Seller under this Agreement (including the Due Diligence Materials) are, or in the case of future deliveries will be true, accurate and complete in all material respects, and will fairly present the information to be provided in a non-misleading manner.

11.2.8 Condemnation. To the best of Seller’s knowledge, no condemnation or other taking by eminent domain of the Property or any portion thereof has been instituted and there are no pending or threatened condemnation or eminent domain proceedings or proceedings in the nature or in lieu thereof affecting the Property that would materially adversely affect Buyer’s intended use of the Property.

11.2.9 Taxes. All taxes and assessments that accrue under ad valorem taxes, or special assessments, and are due prior to the date of any Closing will be paid by Seller at or prior to delinquency but in any event no later than such Closing.

11.2.10 Utilities and Services. All necessary utilities and adequate capacities are or will be available to service the Project, and Buyer, its designee, successors and assigns, including

all Occupants, will have use of the Recreation Facilities, and access to public rights of way serving the Project.

11.2.11 Compliance with Building Codes and Public Accommodations Laws. All Improvements have been or shall be constructed in accordance with the Final Plans and all Applicable Law, including, without limitation, all local, state, and federal zoning and building codes and regulations and the Public Accommodations Laws, and Seller shall assign any and all warranties of any contractors, subcontractors and suppliers with respect to the Improvements that are part of any Closing to the benefit of Buyer (or Buyer’s designee).

11.2.12 Seller Not a Foreign Person. Seller is not a “foreign person” which would subject Buyer to the withholding tax provisions of Section 1445 of the Internal Revenue Code of 1986, as amended.

11.2.13 Preservation of Rights. During the term of this Agreement, Seller will take such actions and expend such funds as may be necessary to preserve development agreements, concurrency rights, and other rights, licenses, and permits which are necessary to develop and use the Project in the manner contemplated by this Agreement, and shall not modify any agreements or permits which materially and adversely affect or materially and adversely limit Buyer’s rights under this Agreement without first obtaining Buyer’s written consent thereto, such consent not to be unreasonably withheld, conditioned or delayed. Additionally, during the term of this Agreement, Seller will not take any action or fail to take any action which materially and adversely affects Buyer’s proposed use of the Buildings for timeshare and the specified ancillary support purposes without the prior written consent of the Buyer, such consent not to be unreasonably withheld, conditioned or delayed.

11.2.14 Cooperation with Buyer. Seller shall assist Buyer or cause Owner to assist Buyer, at Buyer’s expense, in the approval process to timely obtain regulatory approval of the Condominium Documents and the Timeshare Documents and shall provide all information in Seller’s possession needed for and shall execute or cause to be executed the Condominium Documents and, if necessary, all applications for permits, licenses and approvals therefor; provided, however, Buyer shall have no obligation to pay for expenses incurred in connection with Seller’s review of such documents. Buyer shall be solely responsible for the proper and lawful organization, registration and sale of the VOIs and shall in all of its materials clarify that Buyer and not Seller nor Owner, is the organizer, register and sales entity for the VOIs. Buyer will indemnify and hold Seller harmless from any and all liabilities, claims, damages and costs arising out of Buyer’s sales organization, marketing, sales, service or management of the VOI Units and violations or claims of violations of any local, state or federal ordinance, law or regulations pertaining to the initial and future organization, marketing, sales service of management of the VOI Units.

11.2.15 Entitlements; Zoning, Etc.

11.2.15.1 There is no pending or proposed change in the zoning classification of the Property that would materially and adversely affect the Buyer’s intended use of the Property.

11.2.15.2 The parcel constituting the Property is a separate and distinct legal parcel.

11.2.16 Environmental Representations. To the best of Seller’s knowledge: (i) no Hazardous Materials, nor any other pollutants, toxic materials, or contaminants have been or prior to Closing shall be Released, stored, treated, generated, or allowed to escape on the Property; (ii) no asbestos or asbestos‑containing materials will be installed, used, incorporated into the Improvements; (iii) no polychlorinated biphenyls will be placed on or in the Property, in the form of electrical transformers, florescent light fixtures with ballasts, cooling oils, or any other device or form; (iv) no on-site containment, storage, treatment, or disposal facilities for Hazardous Materials, including, without limitation, underground storage tanks, sumps, fill and disposal areas, impoundments and subsurface structures has been or will be placed on the Property; (v) no investigation, administrative order, consent order and agreement, litigation, or settlement with respect to Hazardous Materials is proposed, threatened, anticipated or in existence with respect to the Property; and (vi) no permits are held or are required to be held nor are any registrations or notices required to be made with respect to the Property in its current condition under Environmental Laws. Seller hereby indemnifies Buyer and agrees to hold Buyer harmless from and against any loss, cost, damage, liability or expense due to or arising out of the breach of any representation or warranty contained in this Section.

11.2.17 Compliance with Labor Laws. In connection with the Project, Seller shall have complied with all Applicable Laws relating to labor and employment matters.

11.2.18 No Nuisance. Seller shall make no use of any portion of the Property that has not been conveyed to Buyer by way of a Closing, nor permit any activities to be conducted on any such portion of the Property, that is likely calculated to create or cause any unreasonable noise, dust, vibration, increased traffic or other nuisance. Notwithstanding the foregoing, Seller shall have the right to create and cause noise, dust, vibration, increased traffic and other nuisances created by and resulting from any work connected with or incidental to the development and construction of the Improvements, provided (i) such nuisance is reasonable in scope and a normal incidental part of construction and development activity and does not present health or safety hazards to Occupants, and (ii) Seller shall not have the right vis-à-vis Buyer to violate noise statutes, ordinances or regulations, either as to time or decibels, or to violate other construction-related laws, ordinances or regulations.

At each Closing, Seller shall reaffirm to Buyer that all such representations and warranties of Seller remain true and correct as of the date of such Closing, except for any changes in any such representations or warranties that occur and are disclosed by Seller to Buyer expressly and in writing at any time and from time to time prior to any such Closing upon their occurrence, which disclosures shall thereafter be updated by Seller to the date of the applicable Closing; provided, however, that any representations and warranties which relate to the Project or a portion thereof shall only be deemed made or re-made by Seller with respect to the portions of the Project that are owed by Seller as of the date of each Closing.

Notwithstanding the preceding paragraph, if there is any material change in any representations or warranties and Seller does not cure or correct such change prior to a Closing, Buyer may, at Buyer’s option, (i) close and consummate the transactions contemplated by this Agreement, or (ii) terminate this Agreement by written notice to Seller, whereupon and thereafter the parties hereto shall have no further rights or obligations except those that, by the express terms hereof, survive any termination of this Agreement; provided, however, regardless whether Buyer elects option (i) or (ii) above, Buyer shall, subject to the following provisions, have the right to seek monetary damages from Seller for any material changes in such representations and warranties caused by Seller or any such representations and warranties breached by Seller, and any defenses to such claims that are available to Seller are expressly reserved. In the event (x) there is a material change in any representations or warranties that is disclosed by Seller to Buyer expressly and in writing at any time and from time to time prior to any such Closing, and (y) Buyer elects to close and consummate the transactions contemplated by this Agreement, Seller shall have a reasonable amount of time, not to exceed the cure period set forth in Section 17.1.1 of this Agreement, to attempt to cure such change following such Closing, and Seller and its agents or employees shall have access to any portion of the Property conveyed to Buyer at any Closing as reasonably required by Seller to cure such change. If Seller elects not to undertake such cure efforts or is not successful in curing such change in a reasonable amount of time, then Buyer shall have the right to seek monetary damages from Seller for such material change in any representations or warranties.

Wherever the phrase “to the best of Seller’s knowledge” or any similar phrase stating or implying a limitation on the basis of knowledge appears in this Agreement, unless specifically otherwise qualified, such phrase shall mean only the actual knowledge of Mark Schwartz and, in the event Mark Schwartz is no longer associated with Seller and/or its affiliates, the individual(s) succeeding Mr. Schwartz on his duties with respect to the Project without any duty of inquiry, any imputation of the knowledge of another to such individuals, or independent investigation of the relevant matter by such individuals, and without any personal liability. Seller hereby represents that such individuals would have the knowledge of the applicable information.

12.Closing. Buyer and Seller acknowledge that there will be multiple Closings under this Agreement on a Building by Building basis as Seller completes each Building, and Seller shall execute and deliver a Deed for each such Closing to Buyer or its designee. Provided all of the conditions set forth in Sections 9.1 and 9.2 of this Agreement are fully satisfied or performed, or waived in writing, the consummation of the sale by Seller and purchase by Buyer of the Units and the rights described in Section 2 contained within any portion of the Project (each, a “Closing”) shall be held on or before (i) the twentieth (20th) day after final and unconditional certificates of occupancy have been issued for the initial Building and the Reception Center identified in the Construction Schedule and satisfaction of all conditions precedent specified herein (the “Initial Closing”); and (ii) the twentieth (20th) day after issuance of a final and unconditional certificate of occupancy for each additional Building and satisfaction of all conditions precedent specified herein. The Closings shall be held at the offices of the Title Agent or by mail or overnight courier service if Buyer so elects. The Title Agent and Seller shall give Buyer not less than twenty (20) days’ notice prior to any Closing. On or prior to the date of a Closing (each, a “Closing Date”), Buyer will deliver Buyer’s Closing Documents described in Section 14 (provided that all closing

documents prepared by Seller are timely delivered to Buyer for execution at least five (5) Business Days prior to a Closing Date) and Seller will deliver Seller’s Closing Documents described in Section 13. The Purchase Price for each timeshare residential Unit within a Building at the Closing of each such Building plus the License Fee due at the Initial Closing shall each be paid by Buyer to Seller by cashier’s check or by wire transfer of immediately available United States funds, subject to prorations, adjustments, and credits as otherwise specified in this Agreement. The Title Agent shall record documents where appropriate and disburse funds on each Closing Date, and deliver the documents to the respective parties within five (5) days following a Closing and in accordance with the terms of this Agreement and separate joint escrow instructions prepared by Seller and Buyer (the “Escrow Instructions”). When the term “Closing” or other terms are used in this Agreement, such terms shall be interpreted to mean and refer to the applicable Closing and transfer of that portion of the Property to be carried out and consummated.

Notwithstanding anything to the contrary contained herein, with the exception of the final Closing, at each Closing Seller agrees to hold back from the Closing proceeds an amount (the “Holdback Amount”) equal to ten percent (10%) of the Purchase Price to be paid by Buyer at such Closing (such Holdback Amount being exclusive of any amount held back from such Closing proceeds pursuant to Section 3.6 hereof), which amounts shall be held by Escrow Agent in an interest bearing account (the “Holdback Account”) pursuant to a holdback escrow agreement to be negotiated and reasonably agreed to by Seller, Buyer and Escrow Agent prior to the initial closing (the “Holdback Escrow Agreement”); provided, however, that (i) when the amount in the Holdback Account reaches Six Million One Hundred Thousand and No/100 Dollars ($6,100,000.00), then no further amounts shall be held back from Closings, and (ii) Seller may, in its sole discretion, elect to receive one hundred percent (100%) of the Purchase Price to be paid by Buyer at any Closing and deposit a letter of credit with Buyer in the applicable Holdback Amount (or to increase a letter of credit previously deposited with Buyer by such Holdback Amount), provided that the issuing bank, and the form and substance, of any such letter(s) of credit (or any instruments increasing the amount of any such letter(s) of credit), are acceptable to Buyer, in Buyer’s reasonable discretion. Subject to and in accordance with the terms and conditions of this Agreement and the Holdback Escrow Agreement, concurrent with the final Closing, all amounts held in the Holdback Account shall be disbursed to Seller and any letters of credit deposited with Buyer pursuant to this Section 12 shall be released to Seller. Notwithstanding the foregoing (but subject to Section 17.1.1.2 hereof), if Buyer exercises its right to terminate this Agreement pursuant to Section 17.1.1.1 hereof, an amount equal to the lesser of (a) the sum of (1) the amount held in the Holdback Account plus (2) the aggregate amount of any letters of credit deposited with Buyer pursuant to this Section 12, and (b) the sum of the amount of Buyer’s actual damages as determined by a court of competent jurisdiction (“Buyer’s Damages”) resulting from Seller’s material default which gave rise to Buyer’s right to terminate this Agreement pursuant to Section 17.1 hereof, shall be disbursed to Buyer out of the Holdback Account and/or may be drawn down by Buyer against any letter of credit(s) deposited with Buyer, which amount shall be applied towards reimbursing Buyer for Buyer’s Damages, and no amounts shall be disbursed to Seller from the Holdback Account nor any letter of credit deposited with Buyer released to Seller, unless and until Buyer is fully reimbursed for Buyer’s Damages.

13.Seller’s Closing Documents. For and in consideration of, and as a condition precedent to Buyer’s payment of the Purchase Price, Seller shall obtain or execute, at Seller’s expense, and deliver to Title Agent no later than two (2) Business Days prior to each Closing Date, for delivery to Buyer at each Closing, the following documents all of which shall be duly executed, acknowledged, and notarized where required:

13.1 Deed(s). Two (2) originals of the Deed, duly executed by the then titled owner and in recordable form, conveying to Buyer (or Buyer’s designee or assignee) marketable fee simple title to each of the Units to be conveyed by such Deed, including the undivided common interests appurtenant to each Unit in the common elements of the Project, including the underlying land, to be conveyed to Buyer pursuant to the terms of this Agreement, together with all rights, memberships, easements, and appurtenances thereof, subject only to the Permitted Exceptions. The Deed for the final Building Closing shall also convey to Buyer (or Buyer’s designee or assignee) marketable fee simple title to all remaining Units, including the undivided common interests appurtenant to such Units in the common elements of the Project, including the under lying land (including, without limitation, the Recreation Facilities and any other common element areas) together with all rights, memberships, easements, and appurtenances thereof, subject only to the Permitted Exceptions.

13.2 Assignment of Licenses and Permits. Two (2) originals of an Assignment of Licenses and Permits, duly executed by Seller, assigning to Buyer all licenses, permits, authorizations and approvals required by law and issued by all governmental authorities having jurisdiction over the Project which relate to the Improvements and copies of all certificates issued by the local board of fire underwriters or other body exercising similar functions, if any, and a copy of each bill for current real estate taxes and condominium assessments, together with proof of payment thereof if any of the same have been paid.

13.3 Affidavit. One (1) original affidavit, duly executed by Seller, in form sufficient to cause the Title Company to remove the “standard exceptions” in a title insurance policy, including, but not limited to any lien, or right to lien, for services, labor, or materials heretofore or hereafter furnished, imposed by law and not shown among the public records, parties in possession and gap standard exceptions from the title commitment, and an updated certification of the survey to allow deletion of the standard survey and unrecorded easements exceptions.

13.4 Assignment of Warranties and Bonds. Two (2) originals of an Assignment of Warranties, duly executed by Seller, assigning to Buyer all warranties (the “Assigned Warranties”) from any contractors, subcontractors, suppliers and other third parties (collectively, the “Contractors”) affecting or relating to the Improvements, and documents sufficient to the Buyer, in its reasonable discretion, to show that Buyer, if applicable, is named co-obligee under any and all construction bonds or similar bonds obtained in connection with the Project.

13.5 Bill of Sale. Two (2) originals of a Bill of Sale, duly executed by Seller, containing full warranties of title conveying to Buyer marketable title to the personal property in the Improvements and/or on the Property in the form and substance reasonably acceptable to Buyer and Seller.

13.6 Seller’s Resolutions. A certified copy of resolutions and such other incumbency and other certificates and documents reasonably requested by Buyer, Title Agent and/or Escrow Agent to establish Seller’s authority to enter into this Agreement and the documents referenced herein and the transactions contemplated herein and therein, all certified as true and correct by an authorized signatory of Seller.

13.7 Seller’s Certificate. One (1) original of a certificate, duly executed by Seller, evidencing the reaffirmation of the truth and accuracy of Seller’s representations and warranties set forth herein, which representations and warranties will be updated as of the date of the applicable Closing with any changes that occur prior to such Closing.

13.8 FIRPTA Certificate. One (1) original of an executed affidavit that Seller is not a foreign entity in accordance with the provisions of Section 1445 of the Internal Revenue Code of 1986, as amended.

13.9 HARPTA Certificate. One (1) original of an executed affidavit that Seller is a “resident person” as described in Section 235-68, Hawaii Revised Statutes.

13.10 Certificates of Occupancy. Original final and unconditional certificates of occupancy for the Buildings that are part of the applicable Closing.

13.11 Keys. All of the keys to any and all doors or locks to the Improvements that are part of the applicable Closing.

13.12 Settlement Statement. An executed counterpart to a settlement statement mutually agreed upon by Buyer and Seller setting forth the amounts paid by or on behalf of and/or credited to each of Buyer and Seller pursuant to this Agreement.

13.13 Conveyance Tax Certificate. One or more Conveyance Tax Certificates for the Building, or the Units contained in the Building, duly executed by Seller.

13.14 Architect’s Certificate. One (1) original of an executed certificate of Seller’s architect to Buyer certifying that the Improvements that are part of the scheduled Closing comply with all Applicable Laws, including, without limitation, all building, life safety and health care codes and all Public Accommodations Laws.

13.15 Lien Releases. Lien releases, affidavits and other documents satisfactory to counsel for Buyer, indemnifying Buyer from all liability and expense, including attorneys’ fees, that Buyer may incur in connection with unfiled mechanics’ liens for any work completed or materials furnished at or about the Property prior to Closing. Without limiting the generality of the forgoing, the Seller shall also provide to Title Agent any and all lien waivers, indemnitees, and other assurances that Title Agent may require in order to permit it to issue a Title Policy to Buyer as to the Units conveyed insuring that title thereto is free and clear of all liens whatsoever, including, without limitation, any mechanic’s or materialmen’s liens.

13.16 Partial Assignment of Declarant’s Rights. One (1) original of an executed Partial Assignment of Declarant’s Rights assigning those certain declarant rights under the Condominium Documents as noted on Exhibit H relating to the Units conveyed to Buyer at each Closing to be recorded with the Deed (the “Partial Assignment of Declarant’s Rights”).

13.17 License Agreement. At the Initial Closing, two (2) originals of an executed License Agreement.

13.18 Condominium Management Agreement. At the Initial Closing, two (2) originals of an executed Condominium Management Agreement.

13.19 Sub-Management Agreement. At the Initial Closing, two (2) originals of an executed Sub-Management Agreement.

13.20 Final Assignment of Declarant’s Rights. At the final Closing, one (1) original of an executed Assignment of Declarant’s Rights assigning all declarant rights under the Condominium Documents to be recorded with the Deed for the Final Closing (the “Final Assignment of Declarant’s Rights”).

13.21 Assignment and Assumption of Condominium Management Agreement. At the final Closing, two (2) originals of an executed Assignment and Assumption of Condominium Management Agreement assigning all Condominium Manager’s rights under the Condominium Management Agreement.

13.22 Termination of Sub-Management Agreement. At the final Closing, two (2) originals of an executed Termination of Sub-Management Agreement.

13.23 Other Documents. Such other documents as may be reasonably requested by Buyer, Title Agent and/or Escrow Agent to effectuate any Closing of the Property hereunder.

14.Buyer’s Closing Documents. Buyer shall obtain or execute, at Buyer’s expense, and deliver to the Title Agent no later than two (2) Business Days prior to the Closing Date, for delivery to Seller at Closing, the following documents, all of which shall be duly executed and acknowledged where required:

14.1 Settlement Statement. An executed counterpart to a settlement statement mutually agreed upon by Buyer and Seller setting forth the amounts paid by or on behalf of and/or credited to each of Buyer and Seller pursuant to this Agreement.

14.2 Buyer’s Resolutions. A certified copy of resolutions and such other incumbency and other certificates and documents reasonably requested by Seller, Title Agent and/or Escrow Agent to establish Buyer’s authority to enter into this Agreement and the documents referenced herein and the transactions contemplated herein and therein, all certified as true and correct by an authorized signatory of Buyer.

14.3 Buyer’s Certificate. One (1) original of a certificate, duly executed by Buyer, evidencing the reaffirmation of the truth and accuracy of Buyer’s representations and warranties set forth in Section 11.1 hereof, which representations and warranties will be updated as of the date of the applicable Closing with any changes that occur prior to such Closing.

14.4 Conveyance Tax Certificate. One or more Conveyance Tax Certificates for the Units contained in the Building, duly executed by Buyer.

14.5 Partial Assignment of Declarant’s Rights. One (1) original of an executed Partial Assignment of Declarant’s Rights for the Units conveyed to Buyer at each Closing to be recorded with the Deed.

14.6 License Agreement. At the Initial Closing, two (2) originals of an executed License Agreement.

14.7 Sub-Management Agreement. At the Initial Closing, two (2) originals of an executed Sub-Management Agreement.

14.8 Final Assignment of Declarant’s Rights. At the final Closing, one (1) original of an executed Final Assignment of Declarant’s Rights to be recorded with the Deed for the Final Closing.

14.9 Assignment and Assumption of Condominium Management Agreement. At the final Closing, two (2) originals of an executed Assignment and Assumption of Condominium Management Agreement assigning all Condominium Manager’s rights under the Condominium Management Agreement.

14.10 Termination of Sub-Management Agreement. At the final Closing, two (2) original of an executed Termination of Sub-Management Agreement.

14.11 Other Documents. Such other documents as may be reasonably requested by Seller, Title Agent and/or Escrow Agent to effectuate any Closing of the Property hereunder.

15.Closing Costs. The costs of each Closing shall be allocated as follows:

15.1 Seller and Buyer shall each pay fifty percent (50%) of the conveyance tax imposed by the State of Hawaii upon the conveyance of the Property pursuant to this Agreement based upon the aggregate Purchase Price applicable to the portion of the Property being conveyed, and closing and recording fees.

15.2 Seller shall pay a portion of the premium for the owner title policy up to an amount equal to the cost of a Hawaii standard coverage title insurance policy all title search and examination expenses, and the cost of the Survey and all updates thereto required by the Title Company or the Seller’s construction lender in accordance with Section 10.2 of this Agreement.

15.3 Buyer shall pay the balance of the premium for the Title Policy, the fees for any endorsements to the Title Policy, recording fees associated with the Condominium Documents and the Timeshare Documents, and any costs associated with any Buyer financing. Buyer shall pay the cost of any Survey updates or re-certifications strictly related to Buyer’s condominium or timeshare filings for the Property (if any) in accordance with Section 10.2 of this Agreement.

15.4 Each party shall pay the cost of its own attorneys’ fees.

16.Pro-rations. The following items shall be prorated and/or credited between Seller and Buyer as of 12:01 a.m. on each Closing Date:

16.1 Property Taxes.

16.1.1 Real estate taxes and other taxes applicable to the portion of the Property that is part of a scheduled Closing for the year of the Closing shall be prorated based upon the official tax bill(s) for such year, if available. If tax bills for the year of Closing are not available on the Closing Date, an estimated proration shall be made at Closing based upon the last obtainable tax bills, taking into account known changes in value or millage, and taxes shall be reprorated upon the issuance of final bills therefor. Any amounts due from either party to the other shall be paid within ten (10) days of either party’s demand for adjustment or reimbursement. At each Closing, if not previously paid, Seller shall pay or provide for payment of all real estate taxes and assessments for all years prior to the year of Closing, and the Title Policy shall certify that all such taxes have been paid. If the Units or the Property are part of a larger tax parcel, each party’s estimated share of taxes for the year of Closing will be held in escrow by Escrow Agent in an interest bearing account with interest accruing to each party on the sums deposited by such party until bills for the Units are available, at which time the sums so held will be applied to the payment of such taxes.

16.1.2 All general and special governmental assessments applicable to the portion of the Property that is part of a scheduled Closing through the applicable Closing Date shall be paid by the Seller prior to or at such closing. Buyer shall pay all such assessments imposed after the Closing Date.

16.2 Utility Charges. Prior to any Closing, and with respect to any period prior to such Closing, Seller shall pay or cause to be paid all utility bills pertaining to the portion of the Property that is a part of such Closing and any other portions of the Property not previously acquired by Buyer. Subsequent to any Closing, Buyer shall be responsible for the payment of all bills for utilities furnished to all portions of the Property acquired by Buyer in connection with, or prior to, any such Closing. Notwithstanding the foregoing, (i) Seller shall pay or cause to be paid all utility bills pertaining to the Recreation Facilities with respect to any period prior to the Initial Closing, and (ii) Buyer shall pay or cause to be paid all utility bills pertaining to the Recreation Facilities with respect to any period from and after the Initial Closing. Seller and Buyer hereby agree to prorate as of midnight preceding the date of each Closing and pay their respective shares of all utility bills received subsequent to each Closing if they include a service period prior to the date

of each such Closing. Seller shall be entitled to all deposits made by Seller to the utility providers prior to Closing, if any.

16.3 Other Prorated Items. Such other items constituting pro-rations as are normally made in connection with the sale of similar properties in the State of Hawaii shall be prorated at each Closing.

17.Default, Opportunity to Cure. In the event that Buyer has actual awareness and understanding that (a) certain facts and circumstances exist, and (b) that such facts and circumstances give rise to a material default or breach of representations, warranties, or other obligations under this Agreement, Buyer shall not deliberately fail to provide prompt written notice to Seller of such material default or breach and the facts and circumstances underlying such material default or breach.

17.1 Seller’s Default.

17.1.1 In the event of a material default by Seller under the terms of this Agreement which is not cured within thirty (30) days following Buyer’s written notice to Seller specifying the nature of the default, or in the event any condition precedent to Buyer’s obligations hereunder cannot be fulfilled or satisfied because Seller negligently or intentionally frustrated such fulfillment by some affirmative act or negligent or intentional omission, then Buyer shall have the option to exercise any of the remedies below. Notwithstanding the foregoing, if the default is of such a character as to require more than thirty (30) days to cure, and provided that Seller has commenced efforts to cure such default within such thirty (30) day period and Seller is diligently pursuing such efforts to completion, then Seller shall have an additional thirty (30) days to cure such default before Buyer may exercise any of the remedies below.

17.1.1.1 Buyer may terminate this Agreement by written notice to Seller, whereupon the Agreement shall be of no further force and effect, and Buyer and Seller shall have no further rights, obligations or liabilities hereunder, except for any obligations which expressly survive the termination of this Agreement.

17.1.1.2 Buyer may exercise all rights and remedies provided at law and in equity; provided, however, in no event shall Seller be liable to Buyer for any special, indirect, consequential, punitive or incidental damages, including loss of future revenue or income, loss of business reputation or opportunity relating to the breach or alleged breach by Seller of this Agreement, or diminution of value or any damages based on any type of multiple.

17.2 Buyer’s Default.

17.2.1 Each of the following events shall constitute a default of this Agreement by Buyer (a “Buyer Default”):

17.2.1.1 A material default by Buyer under the terms of this Agreement which is not cured within, (i) in the case of a default in payment, three (3) Business Days, and (ii)

for any other default, ten (10) Business Days, following Seller’s written notice to Buyer specifying the nature of the default, or in the event any condition precedent to Seller’s obligations hereunder cannot be fulfilled or satisfied because Buyer negligently or intentionally frustrated such fulfillment by some affirmative act or negligent or intentional omission. Notwithstanding the foregoing, if the default is of such a character as to require more than ten (10) Business Days to cure (which for avoidance of doubt, a default in payment shall not be considered to require), and provided that Buyer has commenced efforts to cure such default within such ten (10) Business Days and Buyer is diligently pursuing such efforts to completion, then Buyer shall have an additional thirty (30) days to cure such default before Seller may exercise any of the remedies below. Notwithstanding anything in this Agreement to the contrary, Buyer shall not be entitled to any additional period of time to cure a failure to deliver an approval or disapproval notice within any timeframe specified in this Agreement.

17.2.1.2 Co-Acquirer or Buyer files a voluntary petition for relief under title 11 of the United States Code.

17.2.1.3 Any subsidiary, successor, or assign of Co-Acquirer or Buyer files a voluntary petition for relief under title 11 of the United States Code and such voluntary petition materially and adversely affects Co-Acquirer’s or Buyer’s ability to perform its obligations under this Agreement.

17.2.1.4 Co-Acquirer, Buyer, or any of their respective subsidiaries, successors, or assigns (i) is subject to an event of default (beyond applicable notice and/or cure periods) under any indebtedness in an amount greater than Two Hundred Million and No/100 Dollars ($200,000,000.00) with one or more of such party’s lenders secured by one or more blanket liens over all of such party’s assets, which event of default results in the enforcement of remedies against such party pursuant to such liens, or (ii) is subject to litigation which, if adversely determined, would materially and adversely affect Co-Acquirer’s or Buyer’s ability to perform its obligations of this Agreement; provided, that if Buyer or Co-Acquirer becomes aware of any foregoing, Buyer or Co-Acquirer, as the case may be, shall promptly notify Seller of same.

17.2.2 In the event of a Buyer Default, Seller may

17.2.2.1 Suspend all construction activities related to the Project and the Improvements and the timeframe for completion of the Improvements and the Closings shall be extended by the time period that such Buyer Default exists;

17.2.2.2 Seek any remedy available to it at law or in equity, including the right to seek damages on account of such Buyer Default; provided, however, in no event shall Buyer be liable to Seller for any special, indirect, consequential, punitive or incidental damages, including loss of future revenue or income, loss of business reputation or opportunity relating to the breach or alleged breach by Buyer of this Agreement, or diminution of value or any damages based on any type of multiple; and

17.2.2.3 Terminate this Agreement, and, upon such termination, the Agreement shall be of no further force and effect, and Buyer and Seller shall have no further rights, obligations or liabilities hereunder, except for any obligations which expressly survive the termination of this Agreement.

17.3 Mutuality of Remedies. Each of the parties acknowledges that the remedies stated above have been negotiated and provide mutual, satisfactory and adequate and proper compensation and consideration to each of the parties and that such remedies take into account the peculiar risks of each of the parties.

17.4 Co-Acquirer’s Obligations. The undersigned Co-Acquirer is the indirect corporate parent of Buyer and, as such, will receive a benefit from this Agreement. Co-Acquirer shall be jointly and severally liable for any obligations or liabilities of Buyer resulting from any default of Buyer under this Agreement.

18.Indemnification; Limitation of Liability.

18.1 Indemnification by Seller. Subsequent to the Initial Closing, Seller hereby agrees to indemnify and hold Buyer and its members, managers, officers, directors, partners, employees, agents, subsidiaries, affiliates and representatives (collectively, the “Buyer Indemnified Parties,” and each, a “Buyer Indemnified Party”) harmless from and against any and all loss, damage, liability, cost and expense (including reasonable attorneys’ fees) which the Buyer Indemnified Parties may suffer, sustain or incur as a result of (i) any violation of any Environmental Law with respect to the Property by Seller, (ii) the placement of any Hazardous Materials on, in or under the Property by Seller, (iii) any breach of any representation, warranty, covenant, agreement or undertaking made by Seller in this Agreement or in any document delivered pursuant hereto or in connection with the transactions contemplated hereby, (iv) events or circumstances occurring or existing with respect to the ownership and/or the operation of any business at the Property by Seller, (v) any breach by Seller under any Key Construction Document entered into by Seller, or (vi) any fraud, willful misconduct or bad faith of Seller in connection with this Agreement or the transactions contemplated hereby.

18.2 Indemnification by Buyer. Subsequent to the Initial Closing, Buyer hereby agrees to indemnify and hold Seller and its members, managers, officers, directors, partners, employees, agents, subsidiaries, affiliates and representatives (collectively, the “Seller Indemnified Parties,” and each, a “Seller Indemnified Party”) harmless from and against any and all loss, damage, liability, cost and expense (including reasonable attorneys’ fees) which the Seller Indemnified Parties may suffer, sustain or incur as a result of (i) any breach of any representation, warranty, covenant, agreement or undertaking made by Buyer in this Agreement or in any document delivered pursuant hereto or in connection with the transactions contemplated hereby, or (ii) any fraud, willful misconduct or bad faith of Buyer in connection with this Agreement or the transactions contemplated hereby.

18.3 Limitation of Liability. Except as may otherwise be provided in this Agreement, from and after the Closing of any portion of the Project, Buyer shall look solely to the Contractors, the Architect, the Assigned Warranties, and any bonds for which Buyer has been named co-obligee, with respect to any claim for defects in materials and workmanship with respect to the Improvements. Seller shall cooperate fully in pursuing any claims against the Contractors, the Architect or covered by the Assigned Warranties.

19.Condemnation. If, prior to the final Closing, action is initiated to take by eminent domain proceedings or by deed in lieu thereof any of the Property or the Improvements for which a Closing has not yet occurred, or which materially impedes contemplated access to the Project, so as to substantially or materially interfere with the operation of the Project, Buyer may either (i) terminate this Agreement, in which event this Agreement shall be of no further force and effect and Buyer and Seller shall have no further rights, obligations or liabilities hereunder, except for the obligations which expressly survive termination, or (ii) consummate the transactions contemplated herein, in which event the award of the condemning authority attributable to the portion of the Property or the Improvements so taken shall be assigned to Buyer at the applicable Closing. At Buyer’s option, any portion of the award attributable to the Property or the Improvements which has been paid or agreed to be paid by the condemning authority may be credited against the Purchase Price at the applicable Closing and the remainder of the award attributable to the Property or the Improvements shall be paid or assigned to Buyer. If Buyer does not elect to terminate this Agreement pursuant to this Section 19, then Buyer shall have the right to contest any such taking or compensation and Seller hereby assigns Buyer all of Seller’s rights relating to settlement or contest of any such taking of the Property or the Improvements.

20.Damage or Destruction. If a material part of the Improvements or the Buildings shall be destroyed or materially damaged prior to the applicable Closing for such Improvements or Buildings, the Improvements shall be restored and repaired, at Seller’s sole cost and expense, in accordance with the Final Plans; provided, however, if such damage or destruction results in the delay of the Closing for such Improvements or Buildings by six (6) months or longer, Buyer may elect to terminate this Agreement by written notice delivered to Seller within five (5) Business Days of Buyer’s notice of such delay of such Closing. Unless Buyer elects to terminate the Agreement, Closing shall be delayed until the date that is thirty (30) days after the damaged areas are restored and construction is complete in accordance with the Final Plans or such later date as is agreed to in writing by Buyer and Seller. Upon any such termination of this Agreement, the rights, duties, obligations, and liabilities of all parties hereunder shall immediately terminate and be of no further force or effect, except as expressly provided to the contrary in this Agreement. Seller shall bear all risk of loss or damage or destruction of the Buildings or Improvements by casualty prior to the Closing for such Improvements or Buildings.

21.Notices. All notices hereunder shall be in writing and sent to the recipients thereof through the use of any one of (i) a recognized national courier providing regular overnight delivery service, (ii) hand delivery, (iii) certified United States mail, return receipt requested, or (iv) email and shall be deemed properly delivered when and if delivered to the recipient’s office by any such service, as evidenced by the delivery receipt obtained by such service from the recipient’s office, or evidence

of the recipient’s refusal of such notice, or in the case of a notice sent via email, the notice shall be deemed received at the time sent by email; provided, if any notice is sent via method (i) or (iii), the sending party shall also email the receiving party that a notice by method (i) or (iii) has been sent, such notices to be delivered to the parties at the addresses set forth below:

If to the Seller: Hawaii Funding, LLC

c/o Och-Ziff Real Estate

9 West 57^th Street, 40^th Floor,

New York, N.Y. 10019

Attn: Ronald Tellez

Email: ronald.tellez@ozcap.com

With a required copy also delivered to the Seller’s counsel:

K&L Gates LLP

134 Meeting Street, Suite 200

Charleston, SC 29401

Attn: Matthew Norton / Joshua Reeves

Email: matt.norton@klgates.com

joshua.reeves@klgates.com

If to the Buyer: c/o Diamond Resorts International Inc.

10600 W. Charleston Blvd.,

Las Vegas Nevada, 89135

Attn: General Counsel

Email: kona1notices@diamondresorts.com

notices@diamondresorts.com

jared.finkelstein@diamondresorts.com haseeb.ashraf@diamondresorts.com

With a required copy also delivered to the Buyer’s counsel:

Katten Muchin Rosenman LLP

525 W. Monroe Street, Suite 1900

Chicago, IL 60661

Attn: Peter A. Siddiqui

Email: peter.siddiqui@kattenlaw.com

Either party may change the person and/or address required for proper notice by giving the other party written notice of such modification in the manner described in this Section. The parties agree that the attorney for a party shall have the authority to deliver notices on such party’s behalf to the other parties hereto.

A duplicate notice may be also sent by facsimile (fax) as an accommodation, but notice shall be effective only if delivered by method (i), (ii), (iii) or (iv) listed above.

22.Survival of Provisions. All covenants, representations, warranties, and agreements set forth in this Agreement shall survive the execution or delivery of any and all Deeds and other documents at any time executed or delivered under, pursuant to, or by reason of this Agreement, for a period of five (5) years after each Closing for the portion of the Property conveyed at such Closing and shall survive the payment of all monies made under, pursuant to, or by reason of this Agreement for a period of five (5) years after each Closing for the portion of the Property conveyed at such Closing.

23.Binding Effect. The provisions of this Agreement shall inure to the benefit of and be binding upon the parties hereto and their permitted designees and legal representatives, successors, and assigns. Time is of the essence of this Agreement.

24.Miscellaneous.

24.1 Applicable Law. This Agreement and all questions of interpretation, construction and enforcement hereof, and all controversies hereunder, shall be governed by the applicable statutory and common law of the State of Hawaii without regard to conflict of law principles.

24.2 Claims and Disputes. The parties acknowledge and agree that mediation and arbitration shall be the exclusive dispute resolution mechanism for this Agreement in accordance with the following:

24.2.1 The parties shall endeavor to resolve their disputes by mediation which, unless the parties mutually agree otherwise, shall be administered by the American Arbitration Association in accordance with their Construction Industry Mediation Procedures in effect on the date of the Agreement. A request for mediation shall be made in writing, delivered to the other party to this Agreement, and filed with the person or entity administering the mediation within a reasonable time after the dispute has arisen. The request may be made concurrently with the binding dispute resolution but, in such event, mediation shall proceed in advance of binding dispute resolution proceedings, which shall be stayed pending mediation for a period of 30 days from the date of filing, unless stayed for a longer period by agreement of the parties or court order. If an arbitration is stayed pursuant to this Section, the parties may nonetheless proceed to the selection of the arbitrator(s) and agree upon a schedule for later proceedings.

24.2.2 Any claim, subject to, but not resolved by, mediation shall be subject to arbitration which, unless the parties mutually agree otherwise, shall be administered by the American Arbitration Association, in accordance with the Construction Industry Arbitration Rules in effect on the date of this Agreement. Demand for arbitration shall be made in writing, delivered to the other party to the Agreement, and filed with the person or entity administering the arbitration. The award rendered by the arbitrator or arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof.

24.2.3 Either party, at its sole discretion, may consolidate an arbitration conducted under this Agreement with any other arbitration to which it is a party provided that (1) the arbitration

agreement governing the other arbitration permits consolidation; (2) the arbitrations to be consolidated substantially involve common questions of law or fact; and (3) the arbitrations employ materially similar procedural rules and methods for selecting arbitrator(s).

24.2.4 Any party to an arbitration may include by joinder persons or entities substantially involved in a common question of law or fact whose presence is required if complete relief is to be accorded in arbitration provided that the party sought to be joined consents in writing to such joinder. Consent to arbitration involving an additional person or entity shall not constitute consent to arbitration of a claim not described in the written consent.

24.2.5 The foregoing agreement to arbitrate and other agreements to arbitrate with an additional person or entity duly consented to by parties to the Agreement shall be specifically enforceable under applicable law in any court having jurisdiction thereof.

24.2.6 The discovery allowed under this Section 24.2 may pertain to any matter, not privileged, which is involved in the dispute and shall be available for use as evidence in the same manner and for the same reasons as provided by law in suits or proceedings conducted under the laws of the State of Hawaii, except that such discovery shall be limited to only the exchange of documents and depositions and no other discovery shall be permitted. Admissibility of evidence at such arbitration shall be governed by the Federal Rules of Evidence. The agreement to arbitrate contained herein shall be specifically enforceable under applicable law.

24.3 Partial Invalidity. In the event any term or provision of this Agreement shall be held illegal, unenforceable or inoperative as a matter of law, the remaining terms and provisions of this Agreement shall not be affected thereby, but each such term and provision shall be valid and shall remain in full force and effect if the deletion of the invalid provision shall not destroy the clear intent and purpose of this Agreement or deprive Buyer of a material benefit contemplated by this Agreement. The parties acknowledge that a court of competent jurisdiction shall have the authority to reform this Agreement to conform to the parties’ clear intent.

24.4 Assignment. This Agreement and Seller’s rights hereunder and to the Property shall not be transferred or assigned by Seller (except as expressly contemplated by this Agreement in connection with the Closings) without the prior written consent of Buyer. This Agreement and Buyer’s rights hereunder and to the Property shall not be transferred or assigned by Buyer without the prior written consent of Seller, except to an affiliated company; provided, however, that no assignment by Buyer shall affect the Co-Acquirer’s obligations hereunder.

24.5 Non‑Merger. The provisions of all sections of this Agreement that from their sense and context are intended to survive the closing shall survive and shall not be merged into the documents of conveyance from Seller to Buyer at closing.

24.6 Entire Agreement. This Agreement embodies the entire understanding between the parties, and supersedes any and all prior agreements and understandings, written or oral, formal or informal.

24.7 Pronouns. All pronouns and nouns and variations thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the parties may require.

24.8 Construction of Agreement. This Agreement shall not be construed more strictly against one party than the other merely by virtue of the fact that it may have been prepared by counsel for one of the parties. The headings of various Sections in this Agreement are for convenience only and are not to be utilized in construing the content or meaning of the substantive provisions hereof. Each party acknowledges and waives any claim contesting the existence and the adequacy of the consideration given by the other in entering into this Agreement.

24.9 Waivers and Extensions. No waiver or any breach of any agreement or provisions herein contained shall be deemed a waiver of any preceding or succeeding breach thereof or of any other agreement or provisions herein contained. No extension of time for performance of any obligations or acts shall be deemed an extension of the time for performance of any other obligations or acts.

24.10 Time. Time is of the essence with respect to this Agreement. Whenever the time for performance of any act hereunder falls on a Saturday or Sunday or a legal holiday in Orlando, Florida; New York City, or Kona, Hawaii such time shall be ipso facto extended to the next Business Day.

24.11 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original. Facsimile copies or PDF copies sent by email of this Agreement and any amendments hereto and any signatures thereon shall be considered for all purposes as originals.

24.12 Modifications. This Agreement may only be modified or amended in writing signed by both Seller and Buyer. After the Effective Date, Seller shall reasonably cooperate with Buyer to make any amendment to this Agreement which is requested by Buyer and which, in Seller’s reasonable discretion, would not have a material adverse effect on Seller.

24.13 Attorney Fees, Expenses, and Costs. Should either party institute arbitration or other legal proceedings founded upon a breach of this Agreement, except as any party’s remedies or recoveries may be otherwise expressly limited hereunder, the prevailing party may request from arbitrator or other judicial officer the recovery from the other party the reasonable attorneys’ and paralegal fees, arbitration costs and other expenses incurred by the prevailing party in connection with such proceedings, on appeal and in bankruptcy or administrative proceedings which interpret or enforce such party’s rights under this Agreement, and such arbitrator or other judicial officer shall award such recovery in their judgment.

24.14 Further Assurances. Seller shall either deliver or cause to be delivered to Buyer following the Closings, at any time, and from time to time, such additional and other conveyance documents, assignments and other agreements, as the Buyer may reasonably request, without incurring any material cost or expense to the Seller, to fully effect the purposes of this Agreement and the conveyance of the Property.

24.15 Force Majeure. If a cause of delay is not due to the willful act or neglect of a party, and as a result of any matter of Force Majeure, either party is prevented from performing its obligations hereunder, and if the party so delayed or prevented provides written notice of such occurrence to the other party not later than ten (10) days following the initial occurrence thereof, then except where the provisions of this Agreement clearly provide to the contrary, neither Seller nor Buyer shall be deemed in default with respect to the performance of any of the terms, covenants and conditions of this Agreement if such failure shall be due to Force Majeure. In any such event, except where expressly noted in this Agreement to the contrary, the time for performance of such obligations shall be extended one day for each day (but not exceeding 180 days) such party is prevented from performing its obligations under this Agreement by such Force Majeure causes.

24.16 No Recording of this Agreement. This Agreement shall not be recorded; provided, however, Seller and Buyer agree that the Buyer may upon request ask that a short form memorandum of this Agreement in form reasonably satisfactory to Seller and Buyer be recorded in the public records of the State of Hawaii. Buyer covenants and agrees that if such short form agreement is consented to by Seller and recorded, then, at the expiration or earlier termination of this Agreement for any reason, Buyer shall execute an instrument confirming cancellation of this Agreement in recordable form. If a short form agreement is recorded, Buyer shall deposit with the Escrow Agent a recordable termination agreement that may be recorded following termination of this Agreement prior to the final Closing or, in the alternative, such agreement shall be returned to Buyer at the final Closing.

24.17 Escrow Duties.

24.17.1 Escrow Agent agrees by acceptance thereof, to hold and disburse all monies paid and documents delivered in escrow in accordance with the terms and conditions of this Agreement, the Holdback Escrow Agreement and the Escrow Instructions. Any escrowed funds paid by Buyer shall be invested in an interest bearing account approved by Buyer in writing.

24.17.2 Escrow Agent agrees to hold in escrow and disburse funds in accordance with terms and conditions of this Agreement, the Holdback Escrow Agreement and the Escrow Instructions. Failure of clearance of funds shall not excuse performance by the Buyer.

24.18 Conflict of Interest. Seller, Buyer and their respective members, managers, officers, directors, partners, employees, agents, subsidiaries, affiliates and representatives may engage in or possess any interest in other business ventures of every nature and description independently or with others, including, but not limited to, the ownership, financing, leasing, syndication, brokerage, sale, development and/or management of real property, whether competing with, similar to or within close proximity of the Property. Each party acknowledges the foregoing and waives any claim relating to any existing or future conflicts of interest or other claims of any nature with respect to any activities described in this Section 24.18.

24.19 Brokers. Seller and Buyer each represent to the other that it has not enlisted the services of a broker or agent in connection with the transactions contemplated hereby, other than CFL Partners, Inc., which has been engaged by Seller and whose fees shall be paid by Seller, nor has it taken any other actions which could give rise to a claim for a commission in connection with transactions contemplated hereby. Each party agrees to indemnify the other party against, and to hold the other party harmless from, any and all losses, costs, damages, liabilities and expenses resulting from a breach by the indemnifying party of the foregoing representation. Such indemnifications shall survive the Closings.

24.20 Buyer’s Representatives. Buyer shall designate by written notice to Seller any person, or persons, who may bind the Buyer as to any approvals or authorizations required under this Agreement the (“Buyer’s Representatives”). Buyer may change Buyer’s Representatives from time to time by giving Seller written notice of such change. The designation of the Buyer’s Representatives shall not relieve Seller of its obligation to deliver any notices required under this Agreement in the manner described in Section 21.

24.21 Confidentiality. From and after the Effective Date, the parties to this Agreement shall, and shall cause their respective Representatives (as hereinafter defined) that receive Confidential Information to, hold in confidence this Agreement and any and all confidential information about the Project (such information, “Confidential Information”), whether written or oral, concerning the Agreement, except to the extent that such party can show that such information (a) is generally or becomes available to and known by the public other than as a result of a breach of this agreement by such party or any of its affiliates; or (b) is lawfully acquired by such party or any of its affiliates from sources which are not prohibited from disclosing such information by a legal, contractual, or fiduciary obligation. Notwithstanding the foregoing, either party shall be permitted to disclose Confidential Information to its and its affiliate’s directors, officers, employees, partners, financing sources, investors, agents, advisors and representatives (“Representatives”) to the extent that such persons are subject to an obligation of confidentiality that is substantially consistent with this provision. If any party or any party’s Representatives are compelled to disclose any information by judicial or administrative process or by other requirements of Applicable Law, such party shall promptly notify the other parties to this Agreement (to the extent practicable and permitted by law) in writing and shall disclose only that portion of such information which such party is advised by its counsel is legally required to be disclosed, provided that such party shall use reasonable best efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information. No publicity release or announcement concerning this Agreement or the Project shall be made without advance written approval thereof by the parties hereto. Notwithstanding the foregoing, (i) each party hereto may release such information that is required of them pursuant to any Applicable Law; provided that such releasing party shall, prior to such release (to the extent practicable and permitted by law), promptly inform the other parties in writing regarding the requirement and content of such release; and (ii) Buyer can disclose this Agreement and information related to the Project to its affiliates and their respective investors and financing sources. Notwithstanding the foregoing, Buyer and Co-Obligor shall be permitted to disclose this Agreement to the Securities and Exchange Commission, the New York Stock Exchange, and any other governmental entity or self-regulatory organization without the consent of any party.

[Remainder of page intentionally left blank; signatures follow.]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed in duplicate and their respective seals to be affixed hereunto as of the day, month and year first above written.

BUYER:

DIAMOND RESORTS KONA DEVELOPMENT, LLC, a Delaware limited liability company

By: /s/ Howard S. Lanznar

Name: Howard S. Lanznar

Title: EVP and Chief Administrative Officer

CO-ACQUIRER:

DIAMOND RESORTS INTERNATIONAL, INC., a Delaware corporation

By: /s/ Howard S. Lanznar

Name: Howard S. Lanznar

Title: EVP and Chief Administrative Officer

SELLER:

HAWAII FUNDING LLC,

a Delaware limited liability company

By: /s/ Steven E. Orbuch

Name: Steven E. Orbuch

Title: Authorized Person

EXHIBIT A

Legal Description of Property

-PARCEL FIRST:-

All of that certain parcel of land (being portion(s) of the land(s) described in and covered by Royal Patent 1669, Land Commission Award 8516-B, Apana 3 to Kamaikui) situate, lying and being at Kahului 2nd, District of North Kona, Island and County of Hawaii, State of Hawaii, being LOT 6-C of the “KONA SEA CREST SUBDIVISION” and thus bounded and described:

Beginning at the northeasterly corner of this parcel of land, being also the northwesterly corner of 6-G (Proposed Kahului to Keauhou Parkway) of this subdivision and being a point on the southerly boundary of Lot 5, the coordinates of said point of beginning referred to Government Survey Triangulation Station “KAHELO” being 1,439.40 feet north and 1,207.69 feet east and running by azimuths measured clockwise from true South:



Thence, from a tangent azimuth of 25° 01’ 16” following along Lot 6-G (Proposed Kahului to Keauhou Parkway) of this subdivision and along the remainders of Lot 6 and Royal Patent 1669, Land Commission Award 8516-B, Apana 3 to Kamaikui on a curve to the left with a radius of 2,050.00 feet, the chord azimuth and distance being:
1.	19°	14’	08”	413.30	feet to a point;
2.	103°	27’		161.53	feet along Lot 4-A-1 and along the remainder of Royal Patent 1669, Land Commission Award 8516-B, Apana 3 to Kamaikui to a point;
3.	72°	30’		921.82	feet along Lot 4-A-1 and along the remainder of Royal Patent 1669, Land Commission Award 8516-B, Apana 3 to Kamaikui to a point;
4.	168°	06’		390.67	feet along Lot 6-E (Road Widening Lot) of this subdivision and along the remainders of Lot 6 and Royal Patent 1669, Land Commission Award 8516-B, Apana 3 to Kamaikui to a point;
Thence, following along Lot 6-E (Road Widening Lot) of this subdivision and along the remainders of Lot 6 and Royal Patent 1669, Land Commission Award 8516-B, Apana 3 to Kamaikui on a curve to the left with a radius of 746.80 feet, the chord azimuth and distance being:
5.	166°	21’	45”	45.29	feet to a point;
6.	253°	22’		55.87	feet along the remainder of Royal Patent 1669, Land Commission Award 8516-B, Apana 3 to Kamaikui to a point;



7.	170°	26’	64.65	feet along the remainder of Royal Patent 1669, Land Commission Award 8516-B, Apana 3 to Kamaikui to a point;
8.	266°	20’	153.00	feet along Royal Patent 8060, Land Commission Award 10373 to Neniha to a point;
9.	171°	30’	105.00	feet along the remainder of Royal Patent 1669, Land Commission Award 8516-B, Apana 3 to Kamaikui to a point;
Thence, for the next three (3) courses following along Lot 3 and along Grant 1868 to Kaupena:
10.	252°	27’	24.80	feet to a point;
11.	264°	10’	95.20	feet to a point;
12.	265°	19’	50.35	feet to a point;
Thence, for the next six (6) courses following along stonewall, Lot 3 and Grant 1868 to Kaupena:
13.	269°	07’	23.38	feet to a point;
14.	269°	38’	26.44	feet to a point;
15.	279°	48’	15.17	feet to a point;
16.	270°	56’	20.74	feet to a point;
17.	262°	38’	28.60	feet to a point;
18.	257°	39’	59.11	feet to a point;
Thence, for the next seventeen (17) courses following along Lot 5 and along Grant 1868 to Kaupena:
19.	263°	01’	21.84	feet to a point;
20.	264°	43’	62.91	feet to a point;
21.	270°	58’	55.69	feet to a point;
22.	276°	38’	19.36	feet to a point;
23.	269°	48’	34.46	feet to a point;
24.	272°	57’	11.96	feet to a point;
25.	279°	00’	15.93	feet to a point;



26.	269°	46’	25.24	feet to a point;
27.	275°	23’	79.79	feet to a point;
28.	220°	00’	12.86	feet to a point;
29.	271°	14’	51.42	feet to a point;
30.	269°	31’	99.15	feet to a point;
31.	274°	02’	56.09	feet to a point;
32.	277°	38’	39.10	feet to a point;
33.	277°	36’	82.53	feet to a point;
34.	277°	00’	67.70	feet to a point;
35.	274°	28’	15.02	feet to the point of beginning and containing an area of 12.544 acres, more or less.

-PARCEL SECOND:-

All of that certain parcel of land (being portion(s) of the land(s) described in and covered by Royal Patent 1669, Land Commission Award 8516-B, Apana 3 to Kamaikui) situate, lying and being at Kahului 2nd, District of North Kona, Island and County of Hawaii, State of Hawaii, being LOT 6-E (ROAD WIDENING LOT) of the "KONA SEA CREST SUBDIVISION", same being a portion of Lot 6, and thus bounded and described:

Beginning at the southwesterly corner of this parcel of land, being also the northwesterly corner of Lot 4-A-1 and being a point on the easterly side of Alii Drive, the coordinates of said point of beginning referred to Government Survey Triangulation Station "KAHELO" being 808.04 feet north and 30.49 feet east and running by azimuths measured clockwise from true South:

1. 168° 06' 391.16 feet along the easterly side of Alii Drive to a point;

Thence, following along the easterly side of Alii Drive, on a curve to the left with a radius of 741.80 feet, the chord azimuth and distance being:

2. 166° 22' 44.88 feet to a point;

3. 253° 22' 5.00 feet along the remainder of Royal Patent 1669, Land Commission Award 8516-B, Apana 3 to Kamaikui to a point;

Thence, from a tangent azimuth of 344° 37' 30" following along Lot 6-C of this subdivision and along the remainders of Lot 6 and Royal Patent 1669, Land Commission Award 8516-B, Apana 3

to Kamaikui on a curve to the right with a radius of 746.80 feet, the chord azimuth and distance being:

4. 346° 21' 45" 45.29 feet to a point;

5. 348° 06' 390.67 feet along Lot 6-C of this subdivision and along the remainders of Lot 6 and Royal Patent 1669, Land Commission Award 8516-B, Apana 3 to Kamaikui to a point;

6. 72° 30' 5.02 feet along Lot 4-A-1 and along the remainder of Royal Patent 1669, Land Commission Award 8516-B, Apana 3 to Kamaikui to the point of beginning and containing an area of 2,179 square feet, more or less.

BEING THE PREMISES ACQUIRED BY WARRANTY DEED


GRANTOR	: DAVID B. THOMPSON, Trustee, and KAREN R. THOMPSON, Trustee, of the David B. Thompson and Karen R. Thompson Revocable Trust Agreement dated December 4, 1990, as amended and restated October 11, 1993


GRANTEE	: SUNSTONE KONA LLC, a Hawaii limited liability company


DATED	: April 15, 2003


RECORDED	: Document No. 2003-073189

EXHIBIT B

Permitting Requirements



Permit / Approval / Submittal	Issuer	Notes
Special Management Area (SMA)	• County of Hawaii (“County”)	• n/a
Historic preservation	• State of Hawaii (“State”)	• Related to on-site archeological features
Site plan	• County	• n/a
Conditional Letter of Map Revision	• County, Federal (FEMA)	• n/a
Water units	• County	• Project needs additional water units
Building permit	• County	• n/a
Utility review	• Relevant entities (e.g., electric company, etc.)	• Need utility companies to review and approve plans
Grub and clear grading permit	• County, State	• For all civil construction
Underground Injection Control *	• State	• For drywell drainage
National Pollution Discharge Elimination System*	• State	• n/a
Roadway Right of Way*	• County	• Required for construction work in County right of way
OSHA*	• State, Federal	• Related to on-site job safety
Signage*	• County	• Permit required for Project signage
Solid waste management plan*	• County	• Addresses how solid waste will be handled
Emergency response plan*	• County	• Addresses plans for evacuation, etc.

* The parties acknowledge and agree that these permits/approvals may be obtained after the Feasibility Period.

EXHIBIT C

Project Specifications

[Pictures Attached]

EXHIBIT D

FURNISHINGS

Buyer shall be responsible for purchasing and delivering to the Property the following Furnishings. Where noted, Seller shall be responsible for installing the Furnishings below (“Seller Installed Furnishings”), and for such Seller Installed Furnishings, Seller will also be responsible for providing insurance, care, and security for such Furnishings after they have been delivered by Buyer to the Property; provided, that (i) Buyer shall deliver the Seller Installed Furnishings to the Property in good condition; (ii) Buyer shall coordinate the delivery of the Seller Installed Furnishings with Seller to avoid any interference with Seller’s construction of the Improvements; and (iii) any delay in Buyer’s delivery of the Seller Installed Furnishings to the Property in good condition, which delay was caused solely by Buyer and which actually results in a delay in meeting any construction deadline (the “Buyer Caused Delay”), shall extend the construction deadlines set forth in Section 3.5 one day for each day of the Buyer Caused Delay.

Wall coverings – Buyer Furnish; Buyer Install

Flooring


•	Carpet - Buyer Furnish; Seller Install


•	Carpet pad – Buyer Furnish; Seller Install


•	Area rug – Buyer Furnish; Buyer Install (Unless inset rug, in which case, Seller Install)


•	Tile flooring (other than standard kitchen and bath areas in Units) – Buyer Furnish, Buyer Install

Drapes – Buyer Furnish; Buyer Install (All Below)


•	Drapery -


•	Sheer


•	Shower curtain

Seating – Buyer Furnish; Buyer Install (All Below)


•	Sofa


•	Pillow


•	Chair


•	Ottoman


•	Bench

Bedding – Buyer Furnish; Buyer Install (All Below)


•	Duvet cover


•	Duvet insert


•	Bedskirt


•	Pillow


•	Mattress & boxspring


•	Bed frame


•	Sheets

Casegoods – Buyer Furnish; Buyer Install (All Below)


•	Headboard


•	Nightstand


•	Desk


•	Television console


•	Table

Lighting


•	Lamp (Portable, non-Architectural Only) – Buyer Furnish; Buyer Install


•	Sconce – Buyer Furnish; Seller Install


•	Pendant – Buyer Furnish; Seller Install


•	Ceiling fixture / fans – Buyer Furnish; Seller Install

Operating supplies


•	Uniforms –Buyer Furnish; Buyer Install


•	Inventory (food, office, cleaning, rooms, etc.) Buyer Furnish; Buyer Install


•	Tools – Buyer Furnish; Buyer Install

Equipment


•	Weight room equipment –Buyer Furnish, Buyer Install


•	Umbrella (Portable, Non-Structural Shade Only) – Buyer Furnish; Buyer Install.


•	Umbrella base (Portable, Non-In Ground Only) – Buyer Furnish; Buyer Install.


•	Kitchen equipment (Smallwares Only; i.e. not in-room large appliances) – Buyer Furnish; Buyer Install.


•	Vacuum Cleaners – Buyer Furnish; Buyer Install.


•	Business center / office Furniture, Fixtures and Equipment – Buyer Furnish; Buyer Install.

Other


•	Artwork - Buyer Furnish; Buyer Install.


•	Decorative, Small Scale Mirrors – Buyer Furnish; Buyer Install.


•	Pool deck furniture / ADA equipment including sling chairs – Buyer Furnish; Buyer Install.


•	Interior and Portable Landscaping planters – Buyer Furnish; Buyer Install.


•	Recreation games – Buyer Furnish; Buyer Install.


•	Technology equipment (computers, network, etc.) - Buyer Furnish; Buyer Install.


•	Reception counters / desks (Portable, Non-Millwork Only) – Buyer Furnish; Buyer Install.


•	Bookcases (Portable, Non-Millwork Only) –Buyer Furnish; Buyer Install.


•	File cabinets (Portable, Non-Millwork Only) – Buyer Furnish; Buyer Install.


•	Security cameras – Buyer Furnish; Buyer Install.


•	Radios - Buyer Furnish; Buyer Install.


•	Bell carts - Buyer Furnish; Buyer Install.

EXHIBIT E

Final Plans

Final Plans to be attached by an amendment to this Agreement executed by the parties.

EXHIBIT F

CONSTRUCTION MILESTONES

1. Clearing and grubbing of the site;

2. Start of dirt work placement;

3. Completion of dirt work placement;

4. Start of building pads and pad certifications;

5. Completion of building pads and pad certifications;

6. Start of foundation and slab work, as well as parking lots and drive lanes;

7. 50% completion of foundation and slab work, as well as parking lots and drive lanes;

8. Substantial completion of foundation and slab work, as well as parking lots and drive lanes;

9. Start of framing of all structures including exterior walls and roofs;

10. 50% completion of framing of all structures including exterior walls and roofs

11. Substantial completion of framing of all structures including exterior walls and roofs

12. Start electrical, HVAC, plumbing;

13. 50% completion of electrical, HVAC, plumbing;

14. Substantial completion of electrical, HVAC, plumbing;

15. Attend a pre-roofing exterior waterproofing envelope meeting, with the beginning of roofing and exterior envelope moisture systems with mockups of waterproofing systems, and sign off with Seller’s waterproofing consultant

16. Attend meetings prior to the beginning of installation of finishes such as floor tile, wall coverings, cabinets, finish doors frames, and hardware;

17. Mock up of completed room types with finishes such as drywall taping floating and painting;

18. Punch list of final product rooms , exterior envelope;

19. Beginning of landscaping and irrigation systems;

20. Completion of landscaping and irrigation;

21. Beginning of graphics and monumentation;

22. Completion of graphics and monumentation.

EXHIBIT G

Due Diligence Materials

Seller shall deliver to Buyer the documents and materials identified below as soon as practicable, but in no event later than five (5) Business Days after the Effective Date:

[Picture Attached]

EXHIBIT H

CONDOMINIUM DOCUMENTS

A. Condominium Documents. The Condominium Documents shall include, without limitation, the following:

1.Reasonable access and utility easements over the common elements for the benefit of Seller as “Declarant” and Buyer as “Successor Declarant” customarily reserved to developers to facilitate development, construction and operations of condominium and timeshare projects.

2.Disclaimers and releases relating to any liability of Seller and/or of Buyer as “Successor Declarant” for warranties, construction defects, volcanic emissions, and other conditions related to the Property as reasonably required by Seller. As between Declarant and Successor Declarant, a provision in the Deed acknowledging that in the event of any conflict between the disclaimers and releases set forth in the Declaration and those contained in the Agreement, the terms and provisions of the Agreement shall control and survive Closing and delivery of the Deed(s).

3.All rights, powers and privileges for Seller as “Declarant” (and Buyer as “Successor Declarant” solely concerning the rights transferred in each Partial Assignment of Declarant’s Rights) as are typically set forth in condominium documents for similar resort and timeshare properties in the State of Hawaii, including, but not limited to, all Declarant Development and Special Declarant Rights whether by statute or otherwise including the option to convert space, unilateral amendment rights for the Declarant as permitted by law and the right to create the Timeshare Plan and market, sell, manage, operate, lease and offer timeshare interests within the Project. The Condominium Documents shall also provide that no amendment to the Condominium Documents shall alter, change or modify any of the rights, powers and privileges of Seller as “Declarant” without the written approval of Seller.

4.Seller’s exclusive right as “Declarant” to appoint and remove members of the board of directors of the Condominium Association.

5.Provisions granting the Condominium Association the power and authority to contract for the management and maintenance of the Condominium and to authorize a managing agent (who may be an affiliate of the “Declarant” or “Successor Declarant”) to assist the Condominium Association in carrying out its powers and duties including, without limitation, performing such functions as reviewing and evaluating the submission of proposals, collection of assessments, preparation of records, enforcement of rules and regulations and maintenance, repair and replacement of common elements with such funds as shall be made available by the Condominium Association for such purposes.

B. Partial Assignment of Declarant’s Rights. Each Partial Assignment of Declarant’s Rights shall assign to Buyer certain declarant rights under the Condominium Documents applicable solely

to the Units acquired by Buyer at each Closing related to the sales and marketing of timeshare interests within such Units; the operation, repair and maintenance of the Building containing such Units, including without limitation options to convert space; easements for interior and exterior Building maintenance, communication and Wi-Fi systems, marketing activities and sales and leasing activities within the Building containing such Units; and ownership of the PBX switch which may be located within the Building containing such Units. Each Partial Assignment of Declarant’s Rights shall also provide that Buyer may not exercise any declarant rights with respect to any portion of the common elements or limited common elements of the Project (1) located outside of the Building containing the Units acquired by Buyer at a Closing or (2) located within the Building containing the Units acquired by Buyer at a Closing and which do not exclusively serve such Building as the parties shall determine and describe in the Partial Assignment of Declarant’s Rights. All other declarant rights under the Condominium Documents shall be retained by Seller and assigned to Buyer at the final Closing pursuant to the Final Assignment of Declarant’s Rights.

C. Condominium Association. Seller may require in the Partial Assignment of Declarant’s Rights recorded at the Initial Closing that for the duration of the Agreement certain specified actions of the Condominium Association or board of directors of the Condominium Association which materially and adversely affect the rights, powers and privileges of Seller as “Declarant” shall be approved by Seller in writing before they become effective.

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, David F. Palmer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Diamond Resorts International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 4, 2015




	By:	/s/ David F. Palmer
		David F. Palmer
		President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, C. Alan Bentley, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Diamond Resorts International, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 4, 2015




	By:	/s/ C. Alan Bentley
		C. Alan Bentley
		Executive Vice President and Chief Financial Officer

Exhibit 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Diamond Resorts International, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David F. Palmer, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 4, 2015





	By:	/s/ David F. Palmer
		David F. Palmer
		President and Chief Executive Officer

Exhibit 32.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Diamond Resorts International, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, C. Alan Bentley, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 4, 2015