Item 1.02 Termination of a Material Definitive Agreement.
On May 24, 2019, Bluegreen Vacations Corporation
and its wholly owned subsidiary, Bluegreen Vacations Unlimited, Inc. (
collectively, the “Company
”),
received notice from Bass Pro
,
Inc.
(“Bass Pro”)
and its affiliates that
, effective immediately,
Bass Pro was terminating the Amended and Restated Marketing and Promotions Agreement
, dated December 31, 20
0
7,
as amended on June 26, 2010 and October 1, 2010 (the “Marketing Agreement”),
by and among
Bluegreen Vacations Unlimited, Inc.
, Bluegreen/Big Cedar Vacations, LLC, a joint venture in which the Company owns a 51% controlling interest and an affiliate of Bass Pro owns the remaining 49%
interest
(“Bluegreen/Big Cedar”),
Bass Pro and
the following
affiliates
of Bass Pro:
Big Cedar, L.L.C., Bass Pro Outdoor World, L.L.C., Bass Pro Outdoors Online, L.L.C., BPS Catalog, L.P., Bass Pro Trademarks, L.L.C., World Wide Sportsman, Inc., Bass Pro Shops Canada, Inc., Bass Pro Shops Canada (Calgary), Inc.,
B
PIP, LLC,
and
Tracker Marine, L.L.C.
Bass Pro terminated the Marketing Agreement based on
certain previously disclosed
alleged breaches of the Marketing Agreement by the Company
,
including
Bass Pro’s belief that amounts paid to it as
vacation ownership interest (“
VOI
”)
sales commissions should not have been adjusted for certain purchaser defaults,
alleged
breaches regarding the calculation of commissions and other amounts payable under the
Marketing
Agreement
,
alleged issues with our customer service
and
matters regarding the operations at Bluegreen/Big Cedar.
The Marketing Agreement provided the Company
with the right to market and sell vacation packages at kiosks in each of Bass Pro’s retail locations. Under the
Marketing Agreement, the Company
a
lso had the right to
market
VOIs
in Bass Pro catalogs and on its website.
As a result of
the termination of the Marketing Agreement
, the Company is no longer being given access to the Bass Pro marketing channels or advertising materials.
As of December 31, 2018, Bluegreen sold vacation packages in 69 of Bass Pro’s stores.
F
or the year ended December 31, 2018
, the Company’s VOI
sales to new customers from leads generated in Bass
Pro stores constituted 14% of the Company’
s total system-wide VOI sales, 29% of
the Company’s
system-wide VOI sales to new customers and 9% of
the Company’s
total revenues.
As previously
disclosed
, Bass Pro filed an action in federal court related to the outstanding issues between the parties.
Th
e Company
, which has not yet been served with the lawsuit, believes that even if Bass Pro’s claims were established - which
the Company
believes to be unlikely - the amount of
the Company’s
exposure relating to the monetary issues raised by Bass Pro pursuant to the
Marketing Agreement
would be less than $20 million.
The Company
intends to pursue all legal and equitable remedies available to it, including the filing of a counterclaim in the pending litigation, for wrongful termination by Bass Pro of
the
Marketing Agreement.
As described above, the Company owns
a 51% interest in Bluegreen/Big Cedar
, and t
he remaining 49% i
nterest in Bluegreen/Big Cedar
is held by an affiliate of Bass Pro.
Bluegreen/Big Cedar
develops, markets and sells VOIs at three premier wilderness-themed resorts adjacent to Table Rock Lake near Branson, Missouri: The Bluegreen Wilderness Club at Big Cedar, The Cliffs at Long Creek and Paradise Point.
As a result of
the Company’s
controlling interest in Bluegreen/Big Cedar,
the Company’s
consolidated financial statements include the results of operations and financial c
ondition of Bluegreen/Big Cedar
.
The Company’s and Bass Pro’s affiliate’s respective interests in Bluegreen/Big Cedar and their agreements and arrangements with respect thereto remain in place.
A copy of the Company’s press release relating to the termination of the Marketing Agreement is filed as Exhibit 99.1 hereto.
In addition,
the Company is providing additional information in the form of answers to Frequently Asked
Questions as Exhibit 99.2.