HOMEOWNER ASSOCIATION OVERSIGHT, CONSULTING AND EXECUTIVE MANAGEMENT SERVICES AGREEMENT by Diamond Resorts Corp

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Company: Diamond Resorts Corp
SEC CIK: 1514608
SEC Type: EX-10.36
SIC Code: 6531
SIC Industry: REAL ESTATE AGENTS & MANAGERS (FOR OTHERS)
Date Filed: 2013-04-01

Date Filed: 
04/01/2013
SKU: RDWGOG-D-8-6
DR - 12.31.2012 - Ex 10.36


EXHIBIT 10.36

AMENDED AND RESTATED
HOMEOWNER ASSOCIATION OVERSIGHT,
CONSULTING AND EXECUTIVE MANAGEMENT SERVICES AGREEMENT
This Amended and Restated Homeowner Association Oversight, Consulting and Executive Management Services Agreement (the "Agreement") is made and is effective this 31st day of December, 2012 ("Effective Date"), by and between Diamond Resorts Corporation, a Maryland corporation (the "Company"), and Hospitality Management and Consulting Service, L.L.C., a Nevada limited liability company ("Manager").
RECITALS
WHEREAS, Company and Manager entered into that certain Homeowner Association Oversight, Consulting and Executive Management Services Agreement, dated as of December 31, 2010 (the "Original Agreement"); and
WHEREAS, Company is in the business (the "Business") of developing, marketing and operating timeshare vacation ownership resorts in the United States and abroad and, in furtherance thereof, providing management services for the benefit of the trusts, not-for-profit associations and other similar entities formed to represent interests of owners of time share resort intervals relative to such vacation ownership resorts (the "HOAs"); and
WHEREAS, Manager has over 25 years experience in providing management, consulting and oversight services to trusts, not-for-profit associations and other similar entities formed to represent interests of owners of time share resort intervals in the timeshare industry, and possesses capabilities and experience in providing executive management services to timeshare vacation ownership resorts and homeowner associations relative thereto; and
WHEREAS, Manager has employees with experience in performing executive management and consulting services; and
WHEREAS, Company seeks to continue to retain Manager to provide management and oversight services to and for the benefit of the HOAs, as well as to provide certain employees to perform executive management and consulting services directly to Company in furtherance of Company's business and operations; and
WHEREAS, Company and Manager desire to amend and restate the Original Agreement to set forth the obligations of Manager in connection with the provision of executive management, oversight and consulting services to the HOAs and Company.
NOW, THEREFORE, in consideration of the premises and mutual promises and covenants contained herein, the sufficiency of which consideration is hereby acknowledged, Company and Manager do hereby agree as follows:

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1. RELATIONSHIP OF THE PARTIES
1.1     Independent Contractor Status. Except as otherwise expressly set forth herein, for purposes of this Agreement it is acknowledged and agreed that Company and Manager are at all times acting and performing hereunder as independent contractors, retaining control over and responsibility for their own respective operations and personnel. Neither Manager nor its principals, members, directors, officers or employees shall be considered employees or agents of the Company as a result of this Agreement. Each party shall be solely responsible for compliance, and shall indemnify the other party for its noncompliance, with all state and federal laws pertaining to employment taxes, income withholding, unemployment compensation contributions and other employment related statutes regarding their respective employees, agents and servants. Nothing in this Agreement shall at any time be construed so as to create the relationship of employer and employee between the Company and any employee of Manager. The employment of each employee of Manager is at-will, and each such employee of Manager or the Manager may terminate such employee's employment with Manager at any time and for any reason.
1.2     Non-Assumption of Liabilities. Unless otherwise specifically provided for under the terms of this Agreement, all debts and liabilities of a party to this Agreement to third parties, whether existing or future, shall be the debts and liabilities of such party and not of the other party, and neither party shall be liable for any debts or liabilities of the other party. Each party shall, and hereby does agree to, indemnify the other party against any debts, obligations or liabilities of the indemnifying party unless such debts, obligations or liabilities are specifically provided in this Agreement to be borne by such indemnified party.
2. OBLIGATIONS OF MANAGER
2.1     HOA Management Services. To and for the benefit of the Company and the HOAs, Manager shall render executive and strategic oversight of services provided by the Company through its subsidiaries to HOAs ("HOA Management Services"), including but not limited to management, supervision, advice and assistance concerning any and all aspects of the operations, planning and financing of the HOAs, as needed from time to time. The Manager shall perform the HOA Management Services in accord with Good HOA Management Practice, as hereinafter defined. The means and methods by which Manager performs its duties hereunder in accordance with such standard shall be determined solely by Manager. The Manager shall have the authority to engage such professionals, including legal counsel, accountants and financial advisors, on behalf of and at the expense of the Company, subject to the approval of the Company, as Manager may determine necessary in the course of providing any HOA Management Services; provided, that the Company's approval shall not be required to engage professionals for the performance of services that results in fees and expenses that are less than $50,000 per year in the aggregate. Manager may provide, sub-contract for the provision of, or arrange for the employment (by Manager or Company) of all personnel as may be reasonably necessary for the provision of the HOA Management Services, on behalf and at the expense of the Company, subject to the approval of the Company; provided, however, that Manager shall remain primarily responsible for the provision of such HOA Management Services, whether provided through Manager's employees, subcontractors or personnel employed by the Company at Manager's direction. For purposes of this Agreement, the

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phrase "Good HOA Management Practice" shall mean any of the practices, methods and acts engaged in or approved by a significant portion of the homeowner property management industry during the relevant time period, or any of the practices, methods and acts which, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety and expedition. Good HOA Management Practice is not intended to be limited to the optimum practice, method or act to the exclusion of all others, but rather to be acceptable practices, methods or acts generally accepted in the region.
2.2     Corporate Management Services. To and for the benefit of the Company, Manager shall render executive, corporate and strategic oversight of the Company's operations and administrative services ("Corporate Management Services"), subject to the direction of the Company's Board of Directors. The employees of Manager as of the date of this Agreement providing HOA Management Services and Corporate Management Services are set forth on Schedule A attached hereto. The Manager shall have the authority to engage such professionals, including legal counsel, accountants and financial advisors, on behalf of and at the expense of the Company, subject to the approval of the Company, as Manager may determine necessary in the course of providing any Corporate Management Services; provided, that the Company's approval shall not be required to engage professionals for the performance of services that results in fees and expenses that are less than $50,000 per year in the aggregate. Manager may provide, sub-contract for the provision of, or arrange for the employment (by Manager or Company) of all personnel as may be reasonably necessary for the provision of the Corporate Management Services on behalf of and at the expense of the Company, subject to the approval of the Company; provided, however, that Manager shall remain primarily responsible for the provision of such Corporate Management Services, whether provided through Manager's employees, subcontractors or personnel employed by the Company at Manager's direction. Notwithstanding any of the foregoing to the contrary, no executive managerial services to be provided by Stephen J. Cloobeck (or JHJM Nevada I, LLC, as applicable) or David F. Palmer (or Chautauqua Management, LLC, as applicable) may be subcontracted by Manager.
2.3     Full Time and Attention. Manager shall cause Stephen J. Cloobeck (or JHJM Nevada I, LLC, as applicable) to serve and fulfill the duties as the Company's Chairman and, for so long as he is employed by Manager, David F. Palmer (or Chautauqua Management, LLC, as applicable) to serve and fulfill the duties as the Company's President and Chief Executive Officer. Manager shall cause each of Stephen J. Cloobeck (or JHJM Nevada I, LLC, as applicable), David F. Palmer (or Chautauqua Management, LLC, as applicable) and any other employee or contractor of Manager who shall serve as an officer of the Company to devote his full business time and attention to the Company. Notwithstanding any of the foregoing, Stephen J. Cloobeck (or JHJM Nevada I, LLC, as applicable), David F. Palmer (or Chautauqua Management, LLC, as applicable) and any other employee or contractor of Manager who shall serve as an officer of the Company may devote reasonable time and effort to outside non-business activities, such as serving on the boards of directors, engaging in charitable or community activities, or managing his/her personal investments; provided that such activities do not (i) in any way interfere with the regular performance of his duties hereunder, (ii) compete with the Company, or (iii) in the reasonable judgment of the Company's Board of Directors, reflect poorly upon the Company.

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2.4     Amending Services. In the event that Company and Manager desire to (i) have Manager provide services in addition to those enumerated herein, (ii) reduce or eliminate certain services enumerated herein, or (iii) change the personnel or allocation of salary and time provided by personnel providing HOA Management Services and/or Corporate Management Services, the parties shall negotiate in good faith the options available for obtaining or reducing such services or personnel, and the related terms, conditions and costs hereof, and the parties shall amend Schedule A to this Agreement accordingly.
2.5     Provision of Services to Third Parties. Subject to Sections 2.3 and 9.11, Manager may provide HOA Management Services or Corporate Management Services to third parties, including Persons owned and/or controlled by Stephen J. Cloobeck; provided, however, (i) Manager shall not engage in the Business and compete with the Company, (ii) Manager shall not provide any HOA Management Services or Corporate Management Services to any Person engaged in the Business, (iii) Manager shall not share any Company Work Product or Confidential Information (as such terms are hereinafter defined) with any third party, (iv) Manager shall maintain separate accounts to account for the expenses incurred to provide such services (which expenses shall not be borne by the Company), and (v) Manager shall have provided the Board of the Company the details of any such provision of HOA Management Services or Corporate Management Services to third parties, and the Board shall have approved of the same; provided further, that the unanimous approval of the Board shall be required in the event that the provision of such HOA Management Services or Corporate Management Services in a particular transaction (or a group of related transactions) (x) will cost more than $250,000 annually, or (y) will result in revenues and fees to Manager of more than $500,000 annually.
2.6     Compliance with Homeowner Association Agreements. Manager shall comply, in the performance of the HOA Management Services and the Corporate Management Services under this Agreement, with the obligations of the Company and its subsidiaries set forth in their agreements with the HOAs.
3.     OBLIGATIONS OF COMPANY
3.1     General. Company expressly acknowledges and agrees that performance of Manager's obligations hereunder will require the timely cooperation and support of Company, its officers, and agents, and affirm that they will use their commercially reasonable efforts to ensure that Manager is provided in timely fashion the information, including financial data, required by it in the performance of its duties hereunder.
3.2     Insurance. Company shall, at Company's sole cost and expense, obtain and maintain in effect throughout the term of this Agreement, insurance policies providing for the following coverages in respect of the services performed under this Agreement: (a) a commercial general liability policy protecting against any and all claims for injury to persons or property occurring in, on or about any of the Company's properties and protecting against assumed or contractual liability; (b) workers' compensation coverage of the employees of Manager in such amounts as required by law; (c) errors and omissions insurance covering the employees of Manager; (d) business interruption insurance to cover any cessation of operations of Company, and as a result thereof, Manager; and (e) such other insurance as the parties may agree upon, in each and every case naming

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Manager as an additional insured under each such policy, and in such reasonable amounts typically used by businesses of comparable size as Company. All insurance policies to be procured by Company shall: (i) be issued by insurance companies reasonably satisfactory to Manager and authorized to do business in the State of Nevada; (ii) be written as primary policy coverage and non-contributing with respect to any coverage which Company may carry and that any coverage carried by Company shall be excess insurance; and (iii) contain a requirement that Manager be notified by the insurer in the event of any cancellation or termination of such policy or if Company shall be in default of such policy. Upon Manager's request, Company shall deliver a duplicate original or certified copy of each such policy or a certificate of the insurer, certifying that such policy has been issued, providing the coverage required by this Agreement and containing provisions specified herein, together with evidence of payment of all applicable premiums. Each and every insurance policy required to be carried hereunder by or on behalf of Company shall provide (and any certificate evidencing

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