Item 1.01 Entry into a Material Definitive Agreement.
On June 13, 2019, Bluegreen Vacations Unlimited, Inc., a wholly owned subsidiary of Bluegreen Vacations Corporation (the “Company”), entered into a Settlement Agreement and Amendment No. 3 to the Amended and Restated Marketing and Promotions Agreement (the “Settlement Agreement and Amendment”) with Bass Pro,
LLC
(“Bass Pro”) and its affiliate, Big Cedar,
LLC (“Big Cedar”)
, and Bluegreen/Big Cedar Vacations, LLC, a joint venture in which the Company owns a 51% controlling interest and
Big Cedar
owns the remaining 49% interest (“Bluegreen/Big Cedar
Vacations”), which settles
the previously disclosed disputes between the parties with respect to their Amended and Restated Marketing and Promotions Agreement, as previously amended (the “
Marketing and Promotions Agreement”).
The Settlement Agreement and Amendment
, among other things, reinstates the Company’s
exclusive
access under the
Marketing and Promotions
Agreement to Bass Pro’s marketing channels, including all marketing activities in Bass Pro’s retail stores, and
provides for
the Company
to also have exclusive
access
to the same marketing channels
with
Cabela’s retail stores
that the Company has
with
Bass Pro’s
.
Pursuant to the Settlement Agreement and Amendment, the Company,
in consideration of the amendment and
as a settlement of all prior claims and without any admission of wrongdoing, will pay Bass Pro $20 million within 15 days after the Settlement Agreement and Amendment and make five annual payments to Bass Pro of $4 million each commencing
in
2020. In addition, Bass Pro will be entitled to keep the remaining
approximately $1.5 million
amount prepaid to Bass Pro earlier in 2019 under the
Marketing and Promotions
Agr
eement in lieu of any other amounts payable for the period prior to entry into the Settlement Agreement and Amendment.
The Settlement Agreement and Amendment also amends the Marketing and Promotions Agreement to provide that, in lieu of the commission payable to Bass Pro as previously contemplated by the Marketing and Promotions Agreement, the Company will now
pay Bass Pro a fixed annual fee of $70,000 for each Bass Pro and Cabela’s store that
the Company
is accessing
at the time (excluding
sales at stores which are designated to provide tours to
Bluegreen/Big Cedar
Vacations
,
referred to herein as “feeder stores”),
plus $32.00 per net vacation p
ackage sold (less cancellations or
refunds
within 45 days of sale
)
, excluding sales at Bluegreen/Big Cedar Vacations feeder stores
. The fixed annual fee will be prorated for 2019.
Subject to the terms and conditions of the Settlement Agreement and Amendment, going forward, the Company will generally be required to pay the fixed annual fee with respect to at least 60 Bass Pro stores and a minimum number of Cabela’s stores that increases over time to a total of at least 60 Cabela’s stores
by
the end of
2021
. Notwithstanding the foregoing, the minimum number of Bass Pro and Cabela’s stores for purposes of the fixed annual fee may be reduced under certain circumstances set forth in the Settlement Agreement and Amendment, including as a result of a reduction of traffic in the stores in excess of 25% year-over-year.
The Company also agreed to contribute to the Wonders of Wildlife Foundation
$5.00 per net vacation package sold
, subject to an annual minimum of $700,000.
In addition, the Settlement Agreement and Amendment amended
certain terms of
the Amended and Restated Operating Agreement of Bluegreen/Big Cedar Vacations
,
as previously amended (the “Bluegreen/Big Cedar Vacations Operating Agreement”),
to provide
the Company with the right to appoint three members to the management committee of Bluegreen/Big Cedar Vacations (initially with Shawn B. Pearson, the Chief Executive Officer and President of the Company, being one of the Company’s designated management committee members) and Bass Pro with the right to appoint two members to the management committee of Bluegreen/Big Cedar Vacations (initially with Jim Hagale, the acting Chief Financial Officer and former President of Bass Pro, being one of Bass Pro’s designated management committee members). The Settlement Agreement and Amendment also addresses development-related activities of Bluegreen/Big Cedar Vacations and its management of Bluegreen/Big Cedar Vacations feeder stores
.
The Settlement Agreement and Amendment also provides for
enhancements to
the Company’s
customer service policies and procedures, as well as an enhanced complaint resolution process
, and for any future disputes to be resolved through
binding arbitration under the Judicial Arbitration and Mediation Services, Inc. (JAMS) process.
In addition, the Settlement Agreement and Amendment includes mutual waivers and releases of the parties and an agreement of the parties to
the dismissal of the litigation
pending in Missouri
.
The Marketing and Promotions Agreement currently provides for a term expiring on
January 1, 2025
.
The
foregoing
description
s
of the
Marketing and Promotions Agreement, the Bluegreen/Big Cedar Vacations Operating Agreement,
and
the Settlement Agreement and Amendment are summaries, do
not purport to be complete
,
are
qualified in
their
entirety by reference to the full text of
such
agreements, which are
filed
as Exhibits 10.1 through 10.
7
hereto
and are incorporated herein by reference.
A copy of the Company’s press release relating to
its entry into
the
Settlement Agreement and Amendment
is
filed
as Exhibit 99.1 hereto.