UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 2017
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File Number
001-09071
BBX Capital Corporation
(Exact name of registrant as specified in its charter)
Florida
(State or other jurisdiction of
incorporation or organization)
401 East Las Olas Boulevard,
Suite 800
Fort Lauderdale, Florida
(Address of principal executive
office)
59‑2022148
(I.R.S Employer Identification
No.)
33301
(Zip Code)
(954) 940-4900
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None.
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, $.01 par Value
Class B Common Stock, $.01 par Value
Preferred Share Purchase Rights
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.
YES [ ] NO [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. YES [ ] NO [X]
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 [ ]
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this
chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form
10-K. [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer,
or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,”
“accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange
Act.
Large accelerated filer [ ]
reporting company [ ]
Emerging growth company [ ]
Accelerated filer [X]
Non-accelerated filer [ ]
Smaller
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial accounting standards provided pursuant to Section
13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act).
YES [ ] NO [X]
On June 30, 2017, the aggregate market value of the registrant’s voting common equity held by non-affiliates was
$389.6 million computed by reference to the closing price of the registrant’s Class A Common Stock and Class B
Common Stock on such date. The registrant does not have any non-voting common equity.
The number of shares outstanding of each of the registrant’s classes of common stock as of March 5, 2018 is as
follows:
Class A Common Stock of $.01 par value, 85,709,163 shares outstanding.
Class B Common Stock of $.01 par value, 17,984,221 shares outstanding.
Documents Incorporated by Reference
Portions of the registrant’s Definitive Proxy Statement on Schedule 14A relating to the registrant’s 2018 Annual
Meeting of Shareholders are incorporated by reference into Part III of this Form 10-K.
BBX Capital Corporation
Annual Report on Form 10-K for the Year Ended December 31, 2017
TABLE OF CONTENTS
PART I
Page
Item 1.
Business
Item 1A
Risk Factors
Item 1B
Unresolved Staff Comments
Item 2
Item 3
Item 4
Item 5
Properties
Legal Proceedings
Mine Safety Disclosure
PART II
Market for Registrant’s Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
Item 6
Selected Financial Data
Item 7
Management’s Discussion and Analysis of Financial Condition and
Results of Operations
Item 7A
Quantitative and Qualitative Disclosures About Market Risk
1
30
49
49
50
52
52
57
59
90
Item 8
Financial Statements and Supplementary Data
F-1 to F-71
Item 9
Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
Item 9A
Controls and Procedures
Item 9B
Other Information
PART III
Item 10
Directors, Executive Officers and Corporate Governance
Item 11
Executive Compensation
Item 12
Item 13
Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director
Independence
Item 14
Principal Accounting Fees and Services
PART IV
Item 15
Exhibits, Financial Statement Schedules
SIGNATURES
91
91
95
96
96
96
96
96
97
106
PART I
Item 1. BUSINESS
Overview
History
BBX Capital Corporation (referred to in this report together with its subsidiaries as the “Company,” “we,”
“us,” or “our,” and without its subsidiaries as “BBX Capital”) is a Florida-based diversified holding
company with investments in Bluegreen Vacations Corporation (“Bluegreen Vacations” or “Bluegreen”),
real estate and real estate joint ventures, and middle market operating businesses.
In July 2017, the Company’s Class A Common Stock began trading on the New York Stock Exchange
(“NYSE”) under the ticker symbol “BBX.” Upon commencement of trading on the NYSE, the Company’s
Class A Common Stock ceased trading on the OTCQX Best Market. The Company’s Class B Common
Stock continues to trade on the OTCQX under the ticker symbol “BBXTB.”
On December 15, 2016, the Company completed the acquisition of all the outstanding shares of the
former BBX Capital Corporation (“BCC”) not previously owned by the Company, and following the
transaction, the Company changed its name from BFC Financial Corporation to BBX Capital
Corporation. The acquisition was consummated by the merger of BCC into a wholly-owned subsidiary of
the Company, BBX Merger Sub, LLC. As a consequence of the merger, BCC is now a wholly-owned
subsidiary of BBX Capital. The merger is described in further detail in Item 8 – Note 3 of this report.
Prior to the acquisition of all the outstanding shares of BCC, the Company had an 82% equity interest in
BCC and a direct 54% equity interest in Woodbridge Holdings, LLC (“Woodbridge”), the parent company
of Bluegreen, and BCC held the remaining 46% interest in Woodbridge. As a result of the acquisition of
all the outstanding shares of BCC in December 2016, Woodbridge and Bluegreen became wholly-owned
subsidiaries of the Company. On November 17, 2017, Bluegreen completed an initial public offering
(“IPO”) of its common stock by selling to the public 3,736,723 of Bluegreen shares and Woodbridge
selling 2,761,925 of Bluegreen shares as a selling shareholder. In connection with the offering,
Woodbridge granted the underwriters a 30-day option to purchase up to an additional 974,797 shares from
Woodbridge, and on December 5, 2017, the underwriters purchased all of the additional 974,797 option
shares from Woodbridge. As a result of Bluegreen’s IPO, BBX Capital currently owns approximately 90%
of Bluegreen through Woodbridge.
BCC’s principal asset until July 31, 2012 was its ownership of BankAtlantic and its subsidiaries
(“BankAtlantic”). BankAtlantic was a federal savings bank headquartered in Fort Lauderdale,
Florida. On July 31, 2012, BCC completed the sale to BB&T Corporation (“BB&T”) of all of the issued
and outstanding shares of capital stock of BankAtlantic (the stock sale and related transactions described
herein are collectively referred to as the “BankAtlantic Sale”). Prior to the closing of the BankAtlantic
Sale, BankAtlantic formed two subsidiaries, BBX Capital Asset Management, LLC (“CAM”) and Florida
Asset Resolution Group, LLC (“FAR”) and transferred certain non-performing commercial loans,
commercial real estate and previously written-off assets to these subsidiaries. The subsidiaries were
transferred to BCC prior to the closing of the BankAtlantic Sale.
Operating Divisions
BBX Capital currently operates through the following divisions:
·
Bluegreen Vacations: Founded in 1966 and headquartered in Boca Raton, Florida, Bluegreen is
a leading vacation ownership company that markets and sells vacation ownership interests
(“VOIs”) and manages resorts in top leisure and urban destinations. Bluegreen’s resort network
includes 43 Club Resorts (resorts in which owners in its Vacation Club have the right to use
most of the units in connection with their VOI ownership) and 24 Club Associate Resorts
(resorts in which owners in its Vacation Club have the right to use a limited number of units in
connection with their VOI ownership). Bluegreen’s Club Resorts and Club Associate Resorts are
primarily located in popular, high-volume, “drive-to” vacation locations, including Orlando, Las
Vegas,
1
Myrtle Beach and Charleston, among others. Through its points-based system, the approximately
213,000 owners in its Vacation Club have the flexibility to stay at units available at any of its
resorts and have access to almost 11,000 other hotels and resorts through partnerships and
exchange networks. Bluegreen has a robust sales and marketing platform supported by exclusive
marketing relationships with nationally-recognized consumer brands, such as Bass Pro and
Choice Hotels. These marketing relationships drive sales within its core demographic.
Bluegreen also offers a portfolio of fee-based resort management, financial services, and sales
and marketing on behalf of third parties. Bluegreen had total assets of $1.2 billion as of
December 31, 2017.
·
BBX Capital Real Estate: BBX Capital Real Estate’s activities include the acquisition,
development, ownership, and management of real estate and investments in real estate joint
ventures. BBX Capital Real Estate had approximately $162 million of assets as of December 31,
2017, including investments, directly and indirectly through joint ventures, in rental apartment
communities, single-family housing communities, and commercial properties located primarily
in Florida.
· Middle Market: The Middle Market Division’s activities include investments in operating
companies and businesses in diverse industries with revenues between $5 million and $100
million. The Middle Market Division had total assets of approximately $144.6 million as of
December 31, 2017. The Middle Market Division is currently comprised of the following
portfolio companies:
o Renin Holdings LLC (“Renin”) is engaged in the design, manufacture, and distribution
of products for the home improvement industry, including specialty doors, systems and
hardware, and home décor products, and operates through its headquarters in Canada
and two manufacturing and distribution facilities in the United States and Canada.
the confectionery
o BBX Sweet Holdings, LLC (“BBX Sweet Holdings”) is engaged in the acquisition and
management of operating businesses
including
in
manufacturers, wholesalers, and retailers of chocolate, hard candy, and other
include IT’SUGAR, LLC
confectionery products. These operating businesses
(“IT’SUGAR”), a specialty candy retailer with 95 retail locations in 26 states and
Washington, DC, that BBX Sweet Holdings acquired in June 2017 for a purchase price
of $58.4 million, net of cash acquired. BBX Sweet Holdings’ investments also include
businesses that manufacture confectionery products for wholesalers, big box chains,
retailers, and corporate customers. Additionally, BBX Sweet Holdings sells fine
chocolates directly to consumers at eight Hoffman’s Chocolates retail locations in
South Florida.
industry,
o
Food for Thought Restaurant Group, LLC (“FFTRG”), has entered into area
development agreements with a subsidiary of MOD Super Fast Pizza LLC (“MOD”),
one of the largest fast-casual pizza brands in the United States. Pursuant to the
agreements, FFTRG has a goal of developing up to 60 MOD franchised pizza restaurant
locations throughout Florida over the next six years. The Company opened two
restaurant locations during the fourth quarter of 2017 and expects to open eight to
twelve additional locations in 2018.
Our Strategies and Objectives
Our objective is to increase shareholder value through investments in diverse industries. The Company is
largely focused on providing strategic support to its existing investments with a view to the improved
performance of the organization as a whole. Additionally, we have and may in the future invest in
operating businesses and in real estate developments and joint ventures for the development of residential
and commercial real estate projects, including those in which our affiliates may participate. The
Company’s investments or acquisitions, and the business and investment strategies of the Company’s
subsidiaries, may not prove to be successful or, even if successful, may not initially generate income or
may generate income on an irregular basis, and may involve a long term investment. The Company
expects to continue to experience losses in certain of the businesses in its Middle Market Division. As a
consequence, the Company’s results of operations may vary significantly on a quarterly basis.
The Company’s goal is to build long-term value. Since many of the Company’s assets do not generate
income on a regular or predictable basis, our objective continues to be long-term growth as measured by
increases in book value and intrinsic value over time.
The Company regularly reviews the performance of its investments and operating businesses and based
upon economic, market and other relevant factors may consider transactions involving the sale of all or a
portion of its assets, investments or subsidiaries, including transactions involving Bluegreen or its Middle
Market operating companies. These include, among other alternatives, a sale or spin-off or transactions
involving public or private issuances of debt or equity
2
securities which decrease or dilute the Company’s ownership interest. Additionally, the Company is
continuing to evaluate the operations of certain of the acquired wholesale operating businesses in BBX
Sweet Holdings and may decide to exit some of those businesses, which may result in the recognition of
losses.
Additional Information
The Company’s corporate website is www.bbxcapital.com. The Company’s annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports, are
available free of charge through its website, as soon as reasonably practicable after such material is
electronically filed with, or furnished to, the SEC. The Company’s website and the information contained
on or connected to it are not incorporated into this Annual Report on Form 10-K.
Cautionary Note Regarding Forward-Looking Statements
This document contains forward-looking statements based largely on current expectations of the Company
that involve a number of risks and uncertainties. All opinions, forecasts, projections, future plans or other
statements, other than statements of historical fact, are forward-looking statements and can be identified
by the use of words or phrases such as “plans,” “believes,” “will,” “expects,” “anticipates,” “intends,”
“estimates,” “our view,” “we see,” “would” and words and phrases of similar import. The forward looking
statements in this document are also forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), and involve substantial risks and uncertainties. We can give
no assurance that such expectations will prove to have been correct. Actual results, performance, or
achievements could differ materially from those contemplated, expressed, or implied by the forward-
looking statements contained herein. Forward-looking statements are based largely on our expectations
and are subject to a number of risks and uncertainties that are subject to change based on factors which
are, in many instances, beyond our control. When considering forward-looking statements, the reader
should keep in mind the risks, uncertainties and other cautionary statements made in this report. The
reader should not place undue reliance on any forward-looking statement, which speaks only as of the date
made. This document also contains information regarding the past performance of the Company, its
subsidiaries and their respective investments and operations, and the reader should note that prior or
current performance is not a guarantee or indication of future performance. Future results could differ
materially as a result of a variety of risks and uncertainties.
Some factors which may affect the accuracy of the forward-looking statements apply generally to the
industries in which the Company operates, including the resort development and vacation ownership
industries in which Bluegreen operates, the real estate development and construction industry in which
BBX Capital Real Estate operates, the home improvement industry in which Renin operates, and the
confectionery industry in which BBX Sweet Holdings operates.
These risks and uncertainties include, but are not limited to:
·
·
·
·
BBX Capital has limited sources of cash and is dependent upon dividends from Bluegreen to
fund its operations; Bluegreen may not be in a position to pay dividends or its board of directors
may determine not to pay dividends; and dividend payments may be subject to restrictions,
including restrictions contained in debt instruments;
Risks associated with the Company’s indebtedness, including that the Company will be required
to utilize cash flow to service its indebtedness, that indebtedness may make the Company more
vulnerable to economic downturns, that indebtedness may subject the Company to covenants or
restrictions on its operations and activities or on its ability to pay dividends, and, with respect to
the $80 million loan that BBX Capital received from a subsidiary of Bluegreen during April
2015, that BBX Capital may be required to prepay the loan to the extent necessary for
Bluegreen or its subsidiaries to remain in compliance with covenants under their outstanding
indebtedness;
Risks associated with the Company’s current business strategy, including the risk that the
Company will not be in a position to provide strategic support to or make additional investments
in its subsidiaries or in joint ventures, or that the Company may not achieve or maintain in the
future the benefits anticipated to be realized from such support or additional investments, and
the risk that the Company will not be in a position to make new investments or that any
investments made will not be advantageous;
The risks and uncertainties affecting the Company and its subsidiaries, and their respective
results, operations, markets, products, services and business strategies, and the risks and
uncertainties associated with its ability to successfully implement its currently anticipated plans,
and its ability to generate earnings under the current business strategy;
3
·
·
Risks associated with acquisitions, asset or subsidiary dispositions or debt or equity financings
which the Company may consider or pursue from time to time;
The risk that creditors of the Company’s subsidiaries or other third-parties may seek to recover
distributions or dividends made by such subsidiaries to the Company or other amounts owed by
such subsidiaries to such creditors or third-parties;
· Adverse conditions in the stock market, the public debt market and other capital markets and the
·
·
·
·
·
·
impact of such conditions on the activities of the Company and its subsidiaries;
BBX Capital’s shareholders’ interests will be diluted if additional shares of its common stock
are issued;
The risk that BBX Capital may not pay dividends on its Class A Common Stock or Class B
Common Stock in the amount anticipated, when anticipated, or at all;
The impact of economic conditions on the Company, the price and liquidity of BBX Capital’s
Class A Common Stock and Class B Common Stock and the Company’s ability to obtain
additional capital, including the risk that if the Company needs or otherwise believes it is
advisable to issue debt or equity securities or to incur indebtedness in order to fund its operations
or investments, it may not be possible to issue any such securities or obtain such indebtedness on
favorable terms, if at all;
The impact on liquidity of BBX Capital’s Class A Common Stock of not maintaining
compliance with the listing requirements of the NYSE, which includes, among other things, a
minimum average closing price, share volume and market capitalization;
The performance of entities in which the Company has made investments may not be profitable
or achieve anticipated results; and
The preparation of financial statements in accordance with U.S. generally accepted accounting
principles (“GAAP”) involves making estimates, judgments and assumptions, and any changes
in estimates, judgments and assumptions used could have a material adverse impact on the
financial condition and operating results of the Company or its subsidiaries.
With respect to Bluegreen, the risks and uncertainties include, but are not limited to:
·
·
·
·
·
·
·
·
·
·
·
Bluegreen’s business and operations, including its ability to market VOIs, may be adversely
affected by general economic conditions and the availability of financing;
Bluegreen may not be able to develop or acquire VOI inventory or enter into and maintain fee-
based service agreements or other arrangements to source VOI inventory, which may cause its
business and results to be adversely impacted;
Bluegreen’s business and properties are subject to extensive federal, state and local laws,
regulations and policies. Changes in these laws, regulations and policies, as well as the cost of
maintaining compliance with new or existing laws, regulations and policies and the imposition of
additional taxes on operations, could adversely affect Bluegreen’s business. In addition, results
of audits of its tax returns or those of its subsidiaries may have a material adverse impact on
Bluegreen’s financial condition;
The vacation ownership and hospitality industries are highly competitive, and Bluegreen may
not be able to compete successfully;
Bluegreen’s business and profitability may be impacted if financing is not available or on
favorable terms, or at all;
Bluegreen would suffer substantial losses and Bluegreen’s liquidity position could be adversely
impacted if an increasing number of customers to whom Bluegreen provides financing default on
their obligations;
Bluegreen's current indebtedness, or indebtedness it may incur in the future, could adversely
impact its financial condition and results of operations, and the terms of Bluegreen's
indebtedness may limit its activities;
The ratings of third-party rating agencies could adversely impact Bluegreen’s ability to obtain,
renew or extend credit facilities, or otherwise raise funds;
Bluegreen’s future success depends on its ability to market its products and services successfully
and efficiently and Bluegreen’s marketing expenses have increased, and may continue to
increase in the future;
Bluegreen may not be successful in maintaining or expanding its capital-light business
relationships or capital-light activities, including fee based sales and marketing activities, and
just-in-time and secondary market sales activities, and such activities may not be profitable,
which would have an adverse impact on Bluegreen’s results of operations and financial
condition;
Bluegreen’s results of operations and financial condition may be materially and adversely
impacted if Bluegreen does not continue to participate in exchange networks and other strategic
alliances with third parties or if Bluegreen’s customers are not satisfied with the networks in
which Bluegreen participates or Bluegreen’s strategic alliances;
Bluegreen is subject to certain risks associated with its management of resort properties;
·
· Maintenance fees at Bluegreen’s resorts and/or Vacation Club dues may be required to be
increased, which could cause its product to become less attractive and could harm business;
4
·
·
·
·
·
·
·
Bluegreen’s strategic transactions may not be successful and may divert its management’s
attention and consume significant resources;
Bluegreen is dependent on managers of its affiliated resorts to ensure that those properties meet
its customers’ expectations;
The resale market for VOIs could adversely affect Bluegreen’s business;
Bluegreen is subject to the risks of the real estate market and the risks associated with real estate
development, including a decline in real estate values and a deterioration of other conditions
relating to the real estate market and real estate development;
Environmental liabilities, including claims with respect to mold or hazardous or toxic
substances, could have a material adverse impact on Bluegreen’s financial condition and
operating results;
Bluegreen’s insurance policies may not cover all potential losses;
Bluegreen’s operations may be disrupted by a natural disaster, severe weather or terrorist
activities;
· Adverse outcomes in legal or other regulatory proceedings, including claims of noncompliance
with applicable regulations or for development related defects, and cease and desist letters
associated with the VOI note receivable collections, could adversely affect Bluegreen’s financial
condition and operating results;
· A failure to maintain the integrity of internal or customer data could result in damage to
·
·
·
Bluegreen's reputation and/or subject Bluegreen to costs, fines, or lawsuits;
Bluegreen’s technology requires updating, the cost involved in updating the technology may be
significant and the failure to keep pace with developments in technology could impair
Bluegreen's operations or competitive position;
Bluegreen’s intellectual property rights, and intellectual property rights of its business partners,
are valuable, and the failure to protect those rights could adversely affect its business; and
The loss of the services of Bluegreen’s key management and personnel could adversely affect its
business.
With respect to BBX Capital Real Estate, the risks and uncertainties include, but are not limited to:
·
·
·
·
The impact of economic, competitive and other factors affecting BBX Capital Real Estate and
its assets, including the impact of a decline in real estate values on BBX Capital Real Estate’s
business, the value of BBX Capital Real Estate’s assets, the ability of BBX Capital Real
Estate’s borrowers to service their obligations and the value of collateral securing BBX Capital
Real Estate’s loans;
The risk of loan losses and the risks of additional charge-offs, impairments and required
increases in the allowance for loan losses;
The risk that the assumptions and expectations and the forward looking information provided in
the Project Portfolio table will not prove correct;
The risks associated with investments in real estate developments and joint ventures include:
o
o
o
o
o
o
o
exposure to downturns in the real estate and housing markets;
exposure to risks associated with real estate development activities, including severe
weather conditions increasing costs, delaying construction, causing uninsured losses or
reducing demand for homes;
risks associated with obtaining necessary zoning and entitlements;
risks that joint venture partners may not fulfill their obligations and concentration risks
associated with entering into numerous joint ventures with the same joint venture
partner;
risks relating to reliance on third-party developers or joint venture partners to complete
real estate projects;
risk that the projects will not be developed as anticipated or be profitable; and
risk associated with customers not performing on their contractual obligations.
With respect to the Company’s investment activities in middle market operating businesses, the risks and
uncertainties include, but are not limited to:
·
·
·
Risks that the business plans will not be successful and that investments in operating businesses
and franchises may not achieve the returns anticipated or may not be profitable, including the
risks associated with the operations and activities of Renin, BBX Sweet Holdings, and the
Company’s MOD franchise operations;
Risks that the integration of BBX Sweet Holdings’ recent acquisition of IT’SUGAR, LLC may
not be completed on a timely basis, or as anticipated and that the IT’SUGAR acquisition may
not be advantageous and the Company may not realize the anticipated benefits of the
acquisition;
Risks that the recent reorganization of certain BBX Sweet Holdings’ business entities and
operations may not achieve anticipated operating efficiencies and that the implementation of
strategic alternatives, including the sale of certain subsidiaries, will result in losses;
5
·
·
·
·
·
·
·
risk of impairment losses associated with declines in the value of the Company’s
The amount and terms of indebtedness associated with acquisitions and operations may impact
the Company’s financial condition and results of operations and limit the Company’s activities;
Continued operating losses and the failure of the acquired businesses to meet financial covenants
may result in the Company making further capital contributions or advances to the acquired
businesses;
The
investments in operating businesses or the Company’s inability to recover its investments;
The risk of losses associated with excess and obsolete inventory and the risks of additional
required reserves for lower of cost or market value losses in inventory;
The risk of trade receivable losses and the risks of charge-offs and required increases in the
allowance for bad debts;
Risk associated with commodity price volatility; and
Renin’s operations expose the Company to foreign currency exchange risk of the U.S. dollar
compared to the Canadian dollar.
In addition to the risks and factors identified above, reference is also made to the other risks and factors
detailed in this report and the other reports filed by the Company with the SEC. The Company cautions
that the foregoing factors are not exclusive.
Divisions
The Company currently operates through three divisions: Bluegreen, BBX Capital Real Estate and Middle
Market.
Bluegreen
Strategies
The Company’s strategy to grow Bluegreen’s profitability and long-term value is focused on:
·
·
·
·
·
Increasing vacation ownership sales by expanding existing and identifying new tour sources and
sales locations;
Increasing sales and operating efficiencies across all customer touch-points;
Continuing to efficiently procure vacation ownership interests through a mix of capital light
sources and strategic resort development;
Continuing to grow its resort management, title, loan servicing and other high profit, cash
generating businesses; and
Providing an industry leading level of customer service.
Market and Industry Data
Market and industry data used in this Annual Report on Form 10-K have been obtained from Bluegreen’s
internal surveys, industry publications, unpublished industry data and estimates, discussions with industry
sources and other currently available information. The sources for this data include, without limitation, the
American Resort Development Association. Industry publications generally state that the information
contained therein has been obtained from sources believed to be reliable, but there can be no assurance as
to the accuracy or completeness of such information. Bluegreen has not independently verified such data.
Similarly, Bluegreen’s internal surveys, while believed to be reliable, have not been verified by any
independent sources. Accordingly, such data may not prove to be accurate. Forecasts and other forward-
looking information obtained from these sources are subject to the same qualifications and uncertainties as
the other forward-looking statements contained in this Annual Report on Form 10-K, as described above.
Trademarks, Service Marks and Trade Names
Bluegreen owns or has rights to use a number of registered and common law trademarks, trade names and
service marks in connection with its business, including, but not limited to, Bluegreen, Bluegreen Resorts,
Bluegreen Vacations, Bluegreen Traveler Plus, Bluegreen Vacation Club, Bluegreen Wilderness Club at
Big Cedar and the Bluegreen Logo. This Annual Report on Form 10-K also refers to trademarks, trade
names and service marks of other organizations. Without limiting the generality of the preceding sentence,
World Golf Village is registered by World Golf Foundation, Inc.; Big Cedar and Bass Pro Shops are
registered by Bass Pro Trademarks, LP; Ascend, Ascend Hotel Collection, Ascend Resort Collection,
Choice Privileges, Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria, MainStay Suites,
Econo Lodge and Rodeway Inn are registered by Choice Hotels International, Inc.; and Suburban
6
Extended Stay Hotel is registered by Suburban Franchise Systems, Inc. All trademarks, service marks or
trade names referred to in this Annual Report on Form 10-K are the property of their respective holders.
Solely for convenience, the trademarks, trade names and service marks referred to in this Annual Report
on Form 10-K appear without the ® and ™ symbols, but such references are not intended to indicate in
any way that Bluegreen or the owner will not assert, to the fullest extent under applicable law, all rights to
such trademarks, trade names and service marks.
Bluegreen’s Business
Bluegreen is a leading vacation ownership company that markets and sells VOIs and manages resorts in
top leisure and urban destinations. Bluegreen’s resort network includes 43 Club Resorts (resorts in which
owners in the Bluegreen Vacation Club (“Vacation Club”) have the right to use most of the units in
connection with their VOI ownership) and 24 Club Associate Resorts (resorts in which owners in
Bluegreen’s Vacation Club have the right to use a limited number of units in connection with their VOI
ownership). Bluegreen’s Club Resorts and Club Associate Resorts are primarily located in popular, high-
volume, “drive-to” vacation locations, including Orlando, Las Vegas, Myrtle Beach and Charleston,
among others. Through Bluegreen’s points-based system, the approximately 213,000 owners in
Bluegreen’s Vacation Club have the flexibility to stay at units available at any of its resorts and have
access to almost 11,000 other hotels and resorts through partnerships and exchange networks. Bluegreen
has a robust sales and marketing platform supported by exclusive marketing relationships with nationally-
recognized consumer brands, such as Bass Pro and Choice Hotels. These marketing relationships drive
sales within its core demographic, which is described below.
Prior to 2009, Bluegreen’s vacation ownership business consisted solely of the sale of VOIs in resorts that
it developed or acquired (“developed VOI sales”). While Bluegreen continues to conduct such sales and
development activities, Bluegreen now also derives a significant portion of its revenue from its capital-
light business model, which utilizes Bluegreen’s expertise and infrastructure to generate both VOI sales
and recurring revenue from third parties without the significant capital investment generally associated
with the development and acquisition of resorts. Bluegreen’s capital-light business activities include sales
of VOIs owned by third-party developers pursuant to which Bluegreen is paid a commission (“fee-based
sales”) and sales of VOIs that Bluegreen purchases under just-in-time (“JIT”) arrangements with third-
party developers or from secondary market sources. In addition, Bluegreen provides resorts and resort
developers with other fee-based services, including resort management, mortgage servicing, title services
and construction management. Bluegreen also offers financing to qualified VOI purchasers, which
generates significant interest income.
(1) Excludes “Other Income, Net.”
Bluegreen’s Vacation Club has grown from approximately 170,000 owners as of December 31, 2012 to
approximately 213,000 owners as of December 31, 2017. Bluegreen primarily serves a demographic
underpenetrated within the vacation ownership industry, as the typical Vacation Club owner has an
average annual household income of approximately $77,000 as compared to an industry average of
$90,000. According to U.S. census data, households with an annual income of $50,000 to $100,000
represent the largest percentage of the total population (approximately 29%). Bluegreen believes that its
ability to effectively scale the transaction size to suit its customer, as well as high-quality, conveniently-
located, “drive-to” resorts are attractive to its core target demographic.
7
Products and Services
Vacation Ownership Interests
Since entering the vacation ownership industry in 1994, Bluegreen has generated over 627,000 VOI sales
transactions, including over 124,000 fee-based sales transactions. Bluegreen Vacation Club owners receive
an annual or biennial allotment of “points” in perpetuity (supported by an underlying deeded VOI held in
trust for the owner) that may be used to stay at any of Bluegreen’s 43 Club Resorts and 24 Club Associate
Resorts. Vacation Club owners can use their points to stay in resorts for varying lengths of time, starting at
a minimum of two nights. The number of points required for a stay at a resort varies depending on a
variety of factors, including resort location, size of the unit, vacation season and the days of the week.
Under this system, Vacation Club owners can select vacations according to their schedules, space needs
and available points. Subject to certain restrictions and fees, Vacation Club owners are typically allowed to
carry over any unused points for one year and to “borrow” points from the next year. Vacation Club
owners may also take advantage of various other lodging and vacation opportunities available to them as
described under “Value Proposition” below.
Each of Bluegreen’s Club Resorts and Club Associate Resorts is managed by a homeowners association
(“HOA”), which is governed by a board of directors or trustees. This board hires a management company
to which it delegates many of the rights and responsibilities of the HOA, including landscaping, security,
housekeeping, garbage collection, utilities, insurance procurement, laundry and repairs and maintenance.
Vacation Club owners pay annual maintenance fees which cover the costs of operating all the resorts in
the Vacation Club system, including fees for real estate taxes and reserves for capital improvements. If a
Vacation Club owner does not pay such charges, his or her use rights may be suspended and ultimately
terminated, subject to the applicable lender’s first mortgage lien, if any, on such owner’s VOI. Bluegreen
provides management services to 48 resorts and the Vacation Club through contractual arrangements with
HOAs. Bluegreen has a 100% renewal rate on management contracts from Bluegreen’s Club Resorts.
“Value Proposition”
Bluegreen Vacation Club’s points-based platform offers owners significant flexibility. As reflected in the
chart below, basic Vacation Club ownership entitles owners to use their points to stay at any of
Bluegreen’s 43 Club Resorts and 24 Club Associate Resorts, as well as to access more than 4,300 resorts
available through the Resort Condominiums International, LLC (“RCI”) exchange network. For a nominal
annual fee and transaction fees, Vacation Club owners can join and utilize Bluegreen’s Traveler Plus
program, which enables them to use their points to access an additional 44 direct exchange resorts, for
other vacation experiences, such as cruises. Vacation Club owners can convert their Vacation Club points
into Choice Privileges points. Choice Privileges points can be used for stays in Choice Hotels. In addition,
Traveler Plus members can directly use their Vacation Club points for stays in Choice Hotels’ Ascend
Hotel Collection properties, a network of historic and boutique hotels in the United States, Canada,
Scandinavia and Latin America. Overall, there are approximately 6,800 hotels in the Choice Hotels
network, located in more than 44 countries and territories, and Choice Hotels’ brands include the Ascend
Hotel Collection, Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Hotels and Suites,
MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge and Rodeway Inn. Bluegreen continuously
seeks new ways to add value for Bluegreen’s Vacation Club owners, including enhanced product
offerings, new resort locations, broader vacation experiences and further technological innovation, all of
which are designed to increase guest satisfaction.
8
Approximately 65% of Vacation Club owners are enrolled in Traveler Plus. During the year ended
December 31, 2017, approximately 8% of Vacation Club owners utilized the RCI exchange network.
Vacation Club Resort Locations and Amenities
As shown in the map below, Bluegreen’s Vacation Club resorts are primarily located on the U.S. East
Coast and Midwest. The 44 direct-exchange resorts available to Traveler Plus members are concentrated
along the West Coast and Hawaii. Together, this provides a broad offering across the United States and
the Caribbean.
Vacation Club resorts are primarily “drive-to” resort destinations and approximately 85% of Bluegreen’s
Vacation Club owners live within a four-hour drive of at least one of Bluegreen’s resorts. Bluegreen
resorts are located in popular vacation destinations, such as Florida, South Carolina, North Carolina,
Tennessee, Virginia and Nevada, and represent
9
a diverse mix of resort and urban destinations, allowing Vacation Club owners the ability to customize
their vacation experience. In addition, Bluegreen offers its Vacation Club owners access to Caribbean
locations, including Aruba.
Bluegreen’s resort network offers a diverse mix of experiences and accommodations. Unlike some of
Bluegreen’s competitors that maintain static brand design standards across resorts and geographies,
Bluegreen seeks to design resorts that capture the uniqueness of a particular location. Bluegreen’s
distinctive resorts are designed to create an authentic experience and connection to their unique and varied
locations.
Bluegreen’s resorts typically feature condominium-style accommodations with amenities such as fully
equipped kitchens, entertainment centers and in-room laundry facilities. Many resorts feature a clubhouse
(including a pool, game room, lounge), hotel-type staff and concierge services.
Bluegreen also owns a 51% interest in Bluegreen/Big Cedar Vacations, which 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. The
remaining 49% interest in Bluegreen/Big Cedar Vacations is held by Big Cedar, LLC, (“BC LLC”), an
affiliate of Bass Pro. As a result of Bluegreen’s controlling interest in Bluegreen/Big Cedar Vacations, our
consolidated financial statements include the results of operations and financial condition of
Bluegreen/Big Cedar Vacations.
Located next to the luxury Big Cedar Lodge, The Bluegreen Wilderness Club is a 40-acre resort
overlooking Table Rock Lake with sprawling views of the surrounding Ozarks. Vacation Club owners
enjoy a variety of amenities, including a 9,000 square foot clubhouse, lazy river and rock-climbing wall, in
addition to full access to the amenities and activities of Big Cedar Lodge. The Cliffs at Long Creek offers
fully furnished homes that can accommodate up to 13 people while providing access to a clubhouse and
amenities at The Bluegreen Wilderness Club. Paradise Point offers spacious vacation villas with direct
access to Table Rock Lake and the Bass Pro Long Creek Marina.
10
Vacation Club Resorts
Club Resorts
1 Cibola Vista Resort and Spa
2 La Cabana Beach Resort & Casino (4)
3 The Club at Big Bear Village
4 The Innsbruck Aspen
5 Via Roma Beach Resort
6 Daytona SeaBreeze
7 Resort Sixty-Six
8 The Hammocks at Marathon
9 The Fountains
10 Orlando’s Sunshine Resort I & II
11 Casa del Mar Beach Resort
Location
Peoria, Arizona
Oranjestad, Aruba
Big Bear Lake, California
Aspen, Colorado
Bradenton Beach, Florida
Daytona Beach Shores, Florida
Holmes Beach, Florida
Marathon, Florida
Orlando, Florida
Orlando, Florida
Ormond Beach, Florida
Total
units (1)
288
449
38
17
28
78
28
58
745
84
118
Managed
by
Bluegreen (2)
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
St. Augustine, Florida
Grande Villas at World Golf Village &
The Resort at World Golf Village
St. Pete Beach, Florida
Surfside, Florida
Savannah, Georgia
Chicago, Illinois
New Orleans, Louisiana
Dennis Port, Massachusetts
Boyne Falls, Michigan
Branson, Missouri
Hollister, Missouri
12
13 Bluegreen at Tradewinds
14 Solara Surfside
15 Studio Homes at Ellis Square
16 The Hotel Blake
17 Bluegreen Club La Pension
18 The Soundings Seaside Resort
19 Mountain Run at Boyne
20 The Falls Village
21 Paradise Point Resort (5)
22 Bluegreen Wilderness Club at Big Cedar (5) Ridgedale, Missouri
23 The Cliffs at Long Creek (5)
Ridgedale, Missouri
Las Vegas, Nevada
24 Bluegreen Club 36
Lincoln, New Hampshire
25 South Mountain Resort
Banner Elk, North Carolina
26 Blue Ridge Village
Cashiers, North Carolina
27 Club Lodges at Trillium
Hershey, Pennsylvania
28 The Suites at Hershey
Charleston, South Carolina
29 The Lodge Alley Inn
Charleston, South Carolina
30 King 583
Myrtle Beach, South Carolina
31 Carolina Grande
Myrtle Beach, South Carolina
32 Harbour Lights
33 Horizon at 77 th
Myrtle Beach, South Carolina
Myrtle Beach, South Carolina
34 SeaGlass Tower
North Myrtle Beach, South
Carolina
Gatlinburg, Tennessee
Pigeon Forge, Tennessee
Gordonsville, Virginia
35
36 MountainLoft I & II
37 Laurel Crest
38 Shenandoah Crossing
Shore Crest Vacation Villas I & II
Bluegreen Wilderness Traveler at
Shenandoah
39
40 BG Patrick Henry Square
41 Parkside Williamsburg Resort
42 Bluegreen Odyssey Dells
43 Christmas Mountain Village
Gordonsville, Virginia
Williamsburg, Virginia
Williamsburg, Virginia
Wisconsin Dells, Wisconsin
Wisconsin Dells, Wisconsin
Total Units
11
214
162
60
28
162
64
69
204
293
150
427
62
478
110
132
30
78
90
50
118
324
88
136
240
394
298
128
145
91
89
92
381
7,318
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
Fee-Based
or JIT
sales (3)
✓
Sales
center (7)
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
Club Associate Resorts
1 Paradise Isle Resort
2 Shoreline Towers Resort
3 Dolphin Beach Club
4 Fantasy Island Resort II
5 Mariner’s Boathouse and Beach Resort
6 Tropical Sands Resort
7 Windward Passage Resort
8 Gulfstream Manor
9 Outrigger Beach Club
10 Landmark Holiday Beach Resort
11 Ocean Towers Beach Club
12 Panama City Resort & Club
13 Surfrider Beach Club
14 Petit Crest Villas and Golf Club Villas at Big Canoe
15 Pono Kai Resort
16 The Breakers Resort
17 Lake Condominiums at Big Sky
18 Foxrun Townhouses
19 Sandcastle Village II
20 Waterwood Townhouses
21 Bluegreen at Atlantic Palace
22 The Manhattan Club
23 Players Club
24 Blue Water Resort at Cable Beach (6)
Location
Gulf Shores, Alabama
Gulf Shores, Alabama
Daytona Beach Shores, Florida
Daytona Beach Shores, Florida
Fort Myers Beach, Florida
Fort Myers Beach, Florida
Fort Myers Beach, Florida
Gulfstream, Florida
Ormond Beach, Florida
Panama City Beach, Florida
Panama City Beach, Florida
Panama City Beach, Florida
Sanibel Island, Florida
Marble Hill, Georgia
Kapaa (Kauai), Hawaii
Dennis Port, Massachusetts
Big Sky, Montana
Lake Lure, North Carolina
New Bern, North Carolina
New Bern, North Carolina
Atlantic City, New Jersey
New York, New York
Hilton Head Island, South Carolina
Nassau, Bahamas
Managed
by
Bluegreen
(2)
Fee-Based
or JIT
sales (3)
✓
✓
✓
✓
✓
✓
✓
✓
(1) Represents the total number of units at the Club Resort. Owners in the Vacation Club have the right
to use most of the units at each Club Resort in connection with their VOI ownership.
(2) This resort is managed by Bluegreen Resorts Management, Inc., Bluegreen’s wholly-owned
subsidiary (“Bluegreen Resorts Management”).
(3) This resort, or a portion thereof, was developed by third-parties, and Bluegreen has sold VOIs on
their behalf or have arrangements to acquire such VOIs as part of Bluegreen’s capital-light business
strategy.
(4) This resort is managed by Casa Grande Cooperative Association I, which has contracted with
Bluegreen Resorts Management to provide management consulting services to the resort. The
services provided by Bluegreen Resorts Management to this resort pursuant to such agreement are
similar in nature to, but less extensive than, the services provided by Bluegreen or its subsidiaries to
the other resorts listed in the table as “Managed by Bluegreen.”
(5) This resort is developed, marketed and sold by Bluegreen/Big Cedar Vacations.
(6) This resort is currently closed for renovation in order to repair hurricane damage.
(7)
In addition to the sales centers listed in the table, Bluegreen also operates additional sales centers in
Myrtle Beach, South Carolina; Memphis, Tennessee and Sevierville, Tennessee, each of which is in
close proximity to several of Bluegreen’s resorts.
Marketing and Sale of Inventory
VOI sales are typically generated by attracting prospective customers to tour a resort and attend a sales
presentation. Bluegreen’s sales and marketing platform utilizes a variety of methods to generate new
owner prospects, drive tour flow and sell VOIs in its Vacation Club. Bluegreen utilizes marketing
alliances with nationally-recognized brands, which provide exclusive access to venues which target
consumers generally matching Bluegreen’s core demographic. In addition, Bluegreen sources sales
prospects through programs which generate leads at high-traffic venues and in high-density tourist
locations and events, as well as from telemarketing and referrals from existing owners and exchangers and
renters staying at Bluegreen’s properties.
Many of Bluegreen’s programs involve the sale of a discounted vacation package that typically includes a
two to three night stay in close proximity to one of Bluegreen’s resort sales offices and requires
participation in a sales presentation (a sales tour). Vacation packages are typically sold either in retail
establishments, such as Bass Pro stores and outlet malls, or via telemarketing. During the year ended
December 31, 2017, Bluegreen sold over 245,000 vacation packages and 48% of Bluegreen’s VOI sales
were derived from vacation packages. As of December 31, 2017, Bluegreen had a pipeline of over 199,000
vacation packages sold, which typically convert to tours at a rate of 54%.
Bluegreen has an exclusive marketing agreement with Bass Pro, a nationally-recognized retailer of
fishing, marine, hunting, camping and sports gear, that provides Bluegreen with the right to market and
sell vacation packages at kiosks
12
in each of Bass Pro’s retail locations. As of December 31, 2017, Bluegreen sold vacation packages in 68
of Bass Pro’s stores. Bass Pro has a loyal customer base that strongly matches Bluegreen’s core
demographic. Under the agreement, Bluegreen also has the right to market VOIs in Bass Pro catalogs and
on its website, and to access Bass Pro’s customer database. In exchange, Bluegreen compensates Bass Pro
based on VOI sales generated through the program. No compensation is paid to Bass Pro under the
agreement on sales made at Bluegreen/Big Cedar Vacations’ resorts. During the years ended
December 31, 2017, 2016 and 2015, VOI sales to prospects and leads generated by the agreement with
Bass Pro accounted for approximately 15%, 16% and 20%, respectively, of Bluegreen’s VOI sales
volume. Bluegreen’s marketing alliance with Bass Pro originated in 2000, has been renewed twice and
currently runs through 2025.
Bluegreen has an exclusive strategic relationship with Choice Hotels that covers several areas of its
business, including a sales and marketing alliance that enables it to leverage Choice Hotels’ brands,
customer relationships and marketing channels to sell vacation packages. Vacation packages are sold
through customer reservation calls transferred to Bluegreen from Choice and through outbound
telemarketing methods utilizing Choice’s customer database. In addition, 36 of Bluegreen’s resorts are
part of Choice’s Ascend Hotel Collection, which provides Bluegreen with the opportunity to market to
Choice Hotel guests staying at its resorts. Bluegreen’s strategic relationship with Choice Hotels originated
in 2013 and was extended in August 2017 for a term of 15 years, with an additional 15-year renewal term
thereafter unless either party elects not to renew the arrangement.
In addition, Bluegreen generates leads and sells vacation packages through its relationships with various
other retail operators and entertainment providers. As of December 31, 2017, Bluegreen had kiosks in 19
outlet malls, strategically selected based on proximity to major vacation destinations and strong foot traffic
of consumers matching its core target demographic. Bluegreen generates vacation package sales from
these kiosks. Bluegreen also generates leads at malls, outlets and high-density locations or events, where
contact information for sales prospects is obtained through raffles, giveaways and other attractions.
Bluegreen then seeks to sell vacation packages to such prospects, including through telemarketing efforts
or third-party vendors. As of December 31, 2017, Bluegreen had lead generation operations in over 500
locations.
Bluegreen believes that its diverse strategic marketing alliances (including those with Bass Pro, Choice
Hotels and other retail operators and entertainment providers) deliver a strategic advantage over certain
competitors that rely primarily on relationships with their affiliated hotel brands to drive lead generation
and new owner growth. Bluegreen has experience in identifying marketing partners with brands that
attract Bluegreen’s targeted owner demographic and building successful marketing relationships with
those partners. Bluegreen also attempts to structure these marketing alliances to compensate its partners
with success-based payments, rather than flat fees for the use of their brand or facilities for lead
generation. Bluegreen believes that the variety in its marketing relationships has facilitated a healthy mix
of new owner sales vs. existing owner sales that compare favorably to its competitors. During the year
ended December 31, 2017, 51% of Bluegreen’s VOI sales were to new owners.
In addition to attracting new customers, Bluegreen also seeks to sell additional VOI points to its existing
Vacation Club owners. These sales generally have lower marketing costs and result in higher operating
margins than sales generated through other marketing channels. During the years ended December 31,
2017, 2016 and 2015, sales to existing Vacation Club owners accounted for 49%, 46% and 48%,
respectively, of Bluegreen’s system-wide sales of VOIs, net. Bluegreen targets a balanced mix of new
customer and existing Vacation Club owner sales to drive sustainable long-term growth. The number of
owners in Bluegreen’s Vacation Club has increased at a 5% compound annual growth rate between 2012
and 2017, from approximately 170,000 owners as of December 31, 2012 to approximately 213,000 owners
as of December 31, 2017.
Bluegreen operates 23 sales offices, typically located adjacent to its resorts and staffed with sales
representatives and sales managers. As of December 31, 2017, Bluegreen had over 3,000 employees
dedicated to VOI sales and marketing. Bluegreen utilizes a uniform sales process, offers ongoing training
for its sales personnel and maintains strict quality control policies. During the year ended December 31,
2017, 91% of Bluegreen’s sales were generated from 16 of its sales offices, which focus on both new
customer and existing Vacation Club owner sales. Bluegreen’s remaining 7 sales offices are primarily
focused on sales to existing Vacation Club owners staying at the respective resort. In addition, Bluegreen
utilizes its telesales operations to sell VOIs to Vacation Club owners.
Flexible Business Model
Bluegreen’s business model is designed to give it flexibility to capitalize on opportunities and adapt to
changing market environments. Bluegreen has the ability to adjust its targeted mix of capital-light vs.
developed VOI sales, sales to new customers vs. existing Vacation Club owners, and cash vs. financed
sales. While Bluegreen may pursue opportunities that impact its short-term results, Bluegreen’s long-term
goal is to achieve sustained growth while maximizing earnings and cash flow.
13
Note: Cash sales represent the portion of Bluegreen’s system-wide sales of VOIs, net that is received from
the customer in cash within 30 days of purchase.
VOI Sales Mix
Bluegreen’s VOI sales include:
·
·
Fee-based sales of VOIs owned by third-party developers pursuant to which Bluegreen is paid a
commission;
JIT sales of VOIs Bluegreen acquires from third-party developers in close proximity to when
Bluegreen intends to sell such VOIs;
Secondary market sales of VOIs Bluegreen acquires from HOAs or other owners; and
·
· Developed VOI sales, or sales of VOIs in resorts that Bluegreen develops or acquires (excluding
inventory acquired pursuant to JIT and secondary market arrangements).
Fee-Based Sales
Bluegreen offers sales and marketing services to third-party developers for a commission. Under these
fee-based sales arrangements, which are typically entered into on a non-committed basis, Bluegreen sells
the third-party developers’ VOIs as Vacation Club interests through its sales and marketing platform.
Bluegreen also provides third-party developers with administrative services, periodic reporting and
analytics through its proprietary software platform. Bluegreen seeks to structure the fee for these services
to cover selling and marketing costs, plus an operating profit. Historically Bluegreen has targeted a
commission rate of 65% to 75% of the VOI sales price. Notes receivable originated in connection with
fee-based sales are held by the third-party developer and, in certain cases, are serviced by Bluegreen for
an additional fee. In connection with fee-based sales, Bluegreen is not at risk for development financing
and has no capital requirements, thereby increasing return on invested capital. Bluegreen also typically
obtains the HOA management contract associated with these resorts.
14
Just-In-Time (JIT) Sales
Bluegreen enters into JIT inventory acquisition agreements with third-party developers that allow
Bluegreen to buy VOI inventory in close proximity to when Bluegreen intends to sell such VOIs. While
Bluegreen typically enters into such arrangements on a non-committed basis, Bluegreen may engage in
committed arrangements under certain circumstances. Similar to fee-based sales, JIT sales do not expose
Bluegreen to risks for development financing. However, unlike fee-based sales, Bluegreen holds the
consumer finance receivables originated in connection with JIT sales. While JIT sales accounted for only
4% of system-wide sales of VOIs, net for the year ended December 31, 2017, JIT arrangements are often
entered into in connection with fee-based sales arrangements.
Secondary Market Sales
Bluegreen acquires VOI inventory from HOAs and other owners generally on a non-committed basis.
These VOIs are typically obtained by the applicable HOA through foreclosure or termination in
connection with HOA maintenance fee defaults. Accordingly, Bluegreen generally purchases VOIs from
secondary market sources at a greater discount to retail price compared to developed VOI sales and JIT
sales. During the year ended December 31, 2017, secondary market sales accounted for 16% of
Bluegreen’s system-wide sales of VOIs, net.
Developed VOI Sales
Developed VOI sales are sales of VOIs in resorts that Bluegreen has developed or acquired (excluding
inventory acquired pursuant to JIT and secondary market arrangements). During the year ended
December 31, 2017, developed VOI sales accounted for 26% of Bluegreen’s system-wide sales of VOIs,
net. Bluegreen holds the notes receivable originated in connection with developed VOI sales. Bluegreen
also typically obtains the HOA management contract associated with these resorts.
Future VOI Sales
Completed VOI inventory increases or decreases from period to period due to the acquisition of inventory
through JIT and secondary market arrangements, development of new VOI units, reacquisition of VOIs
through notes receivable defaults and changes to sales prices and completed sales. As of December 31,
2017 and 2016, Bluegreen owned completed VOI inventory (excluding units not currently being marketed
as VOIs, including model units) and had access to additional completed VOI inventory through fee-based
and JIT arrangements as follows (dollars are in thousands and represent the then-estimated retail sales
value):
Inventory Source
Owned completed VOI inventory
Inventory accessible through fee-
based
and JIT arrangements
Total
$
$
As of December 31,
2017
2016
754,961
$
548,076
401,906
1,156,867
$
503,820
1,051,896
Based on current estimates and expectations, Bluegreen believes this inventory, combined with inventory
being developed by Bluegreen or its third-party developer clients, and inventory that Bluegreen may
reacquire in connection with mortgage and maintenance fee defaults, can support Bluegreen’s VOI sales
at its current levels for over three years. Bluegreen maintains relationships with numerous third-party
developers and expect additional fee-based and JIT relationships to continue to provide high-quality VOI
inventory to support its sales efforts. In addition, Bluegreen is focused on strategically expanding its
inventory through development at five of its resorts over the next several years. Bluegreen intends to
continue to strategically evaluate opportunities to develop or acquire VOI inventory in key strategic
markets where Bluegreen identifies growing demand and has already established marketing and sales
networks.
During the years ended December 31, 2017 and 2016, the estimated retail sales value and cash purchase
price of the VOIs Bluegreen acquired through secondary market arrangements were as follows (dollars in
thousands):
Estimated retail sales
value
Cash purchase price
Years Ended December
31,
2017
2016
$
$
243,084
12,721
$
$
169,848
7,555
15
In addition to inventory acquired through secondary market arrangements and in connection with notes
receivable defaults, Bluegreen expects to acquire inventory through six JIT arrangements during 2018,
four of which provide for committed purchases for 2018, and development activities. Development
activities currently consist primarily of additional VOI units being developed at The Cliffs at Long Creek
in Ridgedale, Missouri, and at the Fountains in Orlando, Florida.
Management and Other Fee-Based Services
Bluegreen earns recurring management fees for providing services to HOAs. These management services
include oversight of housekeeping services, maintenance and certain accounting and administrative
functions. Bluegreen believes its management contracts yield highly predictable cash flows that do not
have the traditional risks associated with hotel management contracts that are linked to daily rate or
occupancy. Bluegreen’s management contracts are typically structured as “cost-plus” management fees,
which means Bluegreen generally earns fees equal to 10% to 12% of the costs to operate the applicable
resort and have an initial term of three years with automatic one-year renewals. As of December 31, 2017,
Bluegreen provided management services to 48 resorts. Bluegreen also earns recurring management fees
for providing services to the Vacation Club. These services include managing the reservation system and
providing owner billing and collection services. Bluegreen’s management contract with the Vacation Club
provides for reimbursement of its costs plus a fee equal to $10 per VOI owner. Bluegreen may seek to
expand its management services business, including to provide hospitality management services to hotels
for third parties.
In addition to HOA and club management services, which provide a recurring stream of revenue,
Bluegreen provides other fee-based services that produce revenues without the significant capital
investment generally associated with the development and acquisition of resorts. These services include,
but are not limited to, title and escrow services for fees in connection with the closing of VOI sales,
servicing notes receivable held by third parties, typically for a fee equal to 1.5% to 2.5% of the principal
balance of the serviced portfolio, and construction management services for third-party developers,
typically for fees equal to 3% of the cost of construction of the project. Bluegreen also receives revenues
from retail and food and beverage outlets at certain resorts.
Customer Financing
Bluegreen generally offers qualified purchasers financing for up to 90% of the purchase price of VOIs.
The typical financing provides for a term of ten years and a fixed interest rate that is determined by the
FICO score of the borrower, and the amount of the down payment and existing ownership. Purchasers
may receive an additional 1% discount in the interest rate by participating in Bluegreen’s pre-authorized
payment plan. As of December 31, 2017, 95% of Bluegreen’s serviced VOI notes receivable participated
in Bluegreen’s pre-authorized payment plan. During the year ended December 31, 2017, the weighted-
average interest rate on Bluegreen’s VOI notes receivable was 15.3%. Bluegreen’s typical VOI note
receivable has a term of ten years, has a fixed interest rate, is fully amortizing in equal installments, and
may be prepaid without penalty.
VOI purchasers are generally required to make a down payment of at least 10% of the sales price. As part
of Bluegreen’s continued efforts to manage operating cash flows, Bluegreen incentivize its sales associates
to encourage cash sales and higher down payments on financed sales, with a target of 40-45% of the VOI
sales price collected in cash. Bluegreen also promotes a point-of-sale credit card program sponsored by a
third-party financial institution. As a result of these efforts, Bluegreen has increased both the percentage
of sales that are fully paid in cash and the average down payment on financed sales. Including down
payments received on financed sales, approximately 39% of Bluegreen’s system-wide sales of VOIs, net
during the year ended December 31, 2017 were paid in cash within approximately 30 days from the
contract date.
See “Sales/Financing of Receivables” below for additional information regarding Bluegreen’s receivable
financing activities.
16
Loan Underwriting
Bluegreen generally does not originate financing to customers with FICO scores below 575. Bluegreen
may provide financing to customers with no FICO score if the customer makes a minimum required down
payment of 20%. For loans made during 2017, the borrowers’ weighted-average FICO score after a 30-
day, “same as cash” period from the point of sale was 724. Further information is set forth in the
following table:
FICO Score
<600
600 - 699
700+
Percentage of originated and
serviced VOI receivables (1)
2.0%
33.0%
65.0%
(1) Excludes loans for which the obligor did not have a FICO score. For 2017, approximately 1% of
Bluegreen’s VOI notes receivable related to financing provided to borrowers with no FICO score.
Collection Policies
Financed VOI sales originated by Bluegreen typically utilize a note and mortgage. Collection efforts
related to these VOI loans are managed by Bluegreen. Bluegreen’s collectors are incentivized through a
performance-based compensation program.
Bluegreen generally makes collection efforts with respect to Vacation Club owners with outstanding loans
secured by their VOI by mail, telephone and in certain cases, email (as early as 15 days past due).
Telephone contact generally commences when an account is as few as approximately ten days past due.
At 30 days past due, Bluegreen mails a collection letter to the owner, if a U.S. resident, advising that if the
loan is not brought current, the delinquency will be reported to a credit reporting agency. At 60 days past
due, Bluegreen mails a letter to the owner advising that he or she may be prohibited from making future
reservations for lodging at a resort. At 90 days past due, Bluegreen stops the accrual of, and reverse
previously accrued but unpaid, interest on the note receivable and mails a notice informing the owner that
unless the delinquency is cured within 30 days, Bluegreen will terminate the underlying VOI ownership.
If an owner fails to bring the account current within the given timeframe, the loan is defaulted and the
owner’s VOI is terminated. In that case, Bluegreen mails a final letter, typically at approximately 120 days
past due, notifying the owner of the loan default and the termination of his or her beneficial interest in the
VOI property. Thereafter, Bluegreen seeks to resell the VOI to a new purchaser.
Allowance for Credit Losses
Under vacation ownership accounting rules, Bluegreen estimates uncollectible VOI notes receivable based
on historical amounts for similar VOI notes receivable and do not consider the value of the underlying
collateral. Bluegreen holds large pools of homogeneous VOI notes receivable and assess uncollectibility
based on pools of receivables. In estimating future credit losses, Bluegreen evaluates a combination of
factors, including a static pool analysis, the aging of the respective receivables, current default trends,
prepayment rates by origination year and the borrowers’ FICO scores.
Substantially all defaulted VOI notes receivable result in the holder of such receivable acquiring the
related VOI that secured such receivable, typically soon after default and at little or no cost. The
reacquired VOI is then available for resale in the normal course of business.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for
additional information about the performance of Bluegreen’s notes receivable portfolio.
Sales/Financing of Receivables
Bluegreen’s ability to sell or borrow against its VOI notes receivable has historically been an important
factor in meeting its liquidity requirements. The vacation ownership business generally involves sales
where a buyer is only required to pay 10% of the purchase price up front, while at the same time selling
and marketing expenses related to such sales are primarily cash expenses that exceed the down payment
amount. For the year ended December 31, 2017, Bluegreen’s sales and marketing expenses totaled
approximately 52% of system-wide sales of VOIs, net. Accordingly, having facilities for the sale or
hypothecation of VOI notes receivable, along with periodic term securitization transactions, has been a
critical factor in meeting Bluegreen’s short and long-term cash needs. See “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” for additional information about Bluegreen’s
VOI notes receivable purchase facilities and term securitizations.
17
Receivables Servicing
Receivables servicing includes collecting payments from borrowers and remitting the funds to the owners,
lenders or investors in such receivables, accounting for principal and interest on such receivables, making
advances when required, contacting delinquent borrowers, terminating a Vacation Club ownership in the
event that defaults are not timely remedied and performing other administrative duties.
Bluegreen receives fees for servicing its securitized notes receivable and these fees are included as a
component of interest income. Additionally, Bluegreen earns servicing fee income from third-party
developers in connection with its servicing of their loan portfolios under certain fee-based services
arrangements, which is netted against the cost of Bluegreen’s mortgage servicing operations.
Bluegreen’s Core Operating and Growth Strategies
Grow VOI sales
Bluegreen’s goal is to utilize its sales and marketing platform to continue its strong history of VOI sales
growth through the expansion of existing alliances, continued development of new marketing programs
and additional VOI sales to its existing Vacation Club owners. Bluegreen believes there are a number of
opportunities within its existing marketing alliances to drive future growth, including the expansion of its
marketing efforts with Bass Pro to include programs focused on Bass Pro’s e-commerce platform. In
addition, through Bluegreen’s agreement with Choice Hotels, Bluegreen plans to enhance its marketing
program through further penetration of Choice Hotels’ digital and call-transfer programs. In addition to
existing programs, Bluegreen plans to utilize its sales and marketing expertise to continue to identify
unique marketing relationships with nationally-recognized brands that resonate with its core demographic.
In addition, Bluegreen actively seeks to sell additional VOI points to its existing Vacation Club owners,
which typically involve significantly lower marketing costs and have higher conversion rates compared to
sales to new customers. Bluegreen is also committed to continually expanding and updating its sales
offices to more effectively convert tours generated from its marketing programs into sales. In addition,
Bluegreen seeks to identify high traffic resorts where it believes increased investment in sales office
infrastructure will yield strong sales results.
Continue to enhance Bluegreen’s Vacation Club experience
Bluegreen believes its Vacation Club offers owners exceptional value. Bluegreen’s Vacation Club offers
owners access to its 43 Club Resorts and 24 Club Associate Resorts in premier vacation destinations, as
well as access to approximately 11,000 other hotels and resorts and other vacation experiences, such as
cruises, through partnerships and exchange networks. Bluegreen continuously seeks new ways to add
value and flexibility to its Vacation Club membership and enhance the vacation experience of its Vacation
Club owners, including the addition of new destinations, the expansion of its exchange programs and the
addition of new partnerships to offer increased vacation options. Bluegreen also continuously seeks to
improve its technology, including websites and applications, to enhance its Vacation Club owners’
experiences. Bluegreen believes this focus, combined with its high-quality customer service, will continue
to enhance the Vacation Club experience, driving sales to new owners and additional sales to existing
Vacation Club owners.
Grow high-margin, cash generating businesses
Bluegreen seeks to continue to grow its ancillary businesses, including resort management, title services
and loan servicing. Bluegreen believes these businesses can grow with little additional investment in
infrastructure and potentially produce high-margin revenues.
Increase sales and operating efficiencies across all customer touch-points
Bluegreen actively seeks to improve its operational execution across all aspects of its business. In
Bluegreen’s sales and marketing platform, Bluegreen utilizes a variety of screening methods and data-
driven analyses to attract high-quality prospects to its sales offices in an effort to increase Volume Per
Guest (“VPG”), an important measure of sales efficiency. Bluegreen also continues to test new and
innovative methods to generate sales prospects with a focus on increasing cost efficiency. In connection
with its management services and consumer financing activities, Bluegreen will continue to leverage its
size, infrastructure and expertise to increase operating efficiency and profitability. In addition, as
Bluegreen expands, Bluegreen expect to gain further operational efficiencies by streamlining its support
operations, such as call centers, customer service, administration and information technology.
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Maintain operational flexibility while growing the business
Bluegreen believes it has built a flexible business model that allows it to capitalize on opportunities and
adapt to changing market environments. Bluegreen intends to continue to pursue growth through a
balanced mix of capital-light sales vs. developed VOI sales, sales to new customers vs. sales to existing
Vacation Club owners and cash sales vs. financed sales. While Bluegreen may from time to time pursue
opportunities that impact its short-term results, Bluegreen’s long-term goal is to achieve sustained growth
while maximizing earnings and cash flow.
Pursue strategic transactions
As part of a growth strategy, Bluegreen may seek acquisitions of other VOI companies, resort assets, sales
and marketing platforms, management companies and contracts, and other assets, properties and
businesses, including where Bluegreen believes significant synergies and cost savings may be available.
Bluegreen may choose to pursue acquisitions directly or in partnership with third-party developers or
others, including pursuant to arrangements where third-party developers purchase the resort assets and
Bluegreen sell the VOIs in the acquired resort on a commission basis. Bluegreen has a long history of
successfully identifying, acquiring and integrating complementary businesses, and believes its flexible
sales and marketing platform enables Bluegreen to complete these transactions in a variety of economic
conditions.
Industry Overview
The vacation ownership, or timeshare, industry is one of the fastest growing segments of the global travel
and tourism sector. By purchasing a VOI, the purchaser typically acquires either (i) a fee simple interest in
a property (or collection of properties) providing annual usage rights at the owner’s home resort (where
the owner’s VOI is deeded), or (ii) an annual or biennial allotment of points that can be redeemed for
stays at properties included in the vacation ownership company’s resort network or for other vacation
options available through exchange programs. Compared to hotel rooms, vacation ownership units
typically offer more spacious floor plans and residential features, such as living rooms, fully equipped
kitchens and dining areas. Compared to owning a vacation home in its entirety, the key advantages of
vacation ownership products typically include a lower up-front acquisition cost and annual expenses,
resort-style features and services and, often, an established infrastructure to exchange usage rights for
stays across multiple locations.
The vacation ownership industry was historically highly fragmented, with a large number of local and
regional resort developers and operators having small resort portfolios of varying quality. Bluegreen
believes that growth in the vacation ownership industry has been driven by increased interest from resort
developers and globally-recognized lodging and entertainment brands, increased interest from consumers
seeking flexible vacation options, continued product evolution and geographic expansion. In 2016, more
than 9.2 million families (approximately 6.9% of U.S. households) owned at least one VOI and VOI sales
have grown 800% over the last 30 years.
While the majority of VOI owners are over the age of 45, new owners are, on average, approximately
5 years younger. VOI owners have an average annual household income of $81,000 and 84% of VOI
owners own their own home.
BBX Capital Real Estate
Overview
BBX Capital Real Estate’s primary activities include the acquisition, development, ownership, and
management of real estate and investments in real estate joint ventures. BBX Capital Real Estate also
manages the legacy assets acquired by BCC in connection with the BankAtlantic Sale. The legacy assets
include portfolios of loans receivable, real estate properties, and loans previously charged-off by
BankAtlantic.
Strategy
BBX Capital Real Estate’s strategy is focused on:
·
·
·
Identifying and acquiring or developing real estate, including rental apartment communities,
housing communities, and commercial properties;
Identifying and investing in opportunistic real estate joint ventures with third party developers;
and
Continuing to monetize the remaining legacy asset portfolio through loan repayments,
collections, sales, development, or joint venture projects.
19
Project Portfolio
BBX Capital Real Estate’s portfolio currently includes investments in the following real estate
development projects and operating properties either through joint ventures or wholly-owned
developments. A more detailed description of each investment follows this table:
Asset Name
Project
Size
Status
Start
Date
Expected
Exit/Sales
Date(3)
Carrying
Amount of
Investment(2)
(in millions)
Remaining
Investment(3)
(in millions)
2013
2018
2015
2018
2014
2018
$0.1
$5.5
$4.2
Completed – Pending rent
stabilization
2015
2019
$16.9
Multifamily Apartment Developments
Altis at Kendall Square
(1)
Retail Parcel
Pending sale of retail parcel
(Completed – 321
Apartments sold in 2016)
Addison on Millenia (1)
Altis at Lakeline (1)
Altis at Bonterra (1)
292
Apartments
Completed – Pending rent
stabilization
354
Apartments
Completed – Pending rent
stabilization
314
Apartments
356
Apartments
Apartments
338
Apartments
Altis at Shingle (1)
Altis at Grand Central (1) 314
Altis at Promenade (1)
Under Development
2016
2019
Under Development
2017
2021
Under Development
2017
2021
Single Family Developments
Bonterra CC Homes (1)
394 Homes Completed
Village at Victoria Park
(1)
30 Homes
Under Development – 11
units under contract
2014
2018
2013
2018
Centra Falls (1)
89
Townhomes
Under Development – 6 units
under contract
2015
2018
Centra Falls West (1)
61
Townhomes
Under Development – 48
units under contract
Chapel Grove
Townhomes (1)
125
Townhomes
Under Development
Beacon Lake (1)(5)
1,476 Lots Under Development
2016
2017
2016
2018 -
2019
2018 -
2019
2018 -
2025
-
-
-
-
-
-
-
-
-
-
-
-
$0.4
$1.9
$1.0
$0.5
$1.6
$0.2
$0.6
$4.9
$26.8
TBD
Estimated
Future
Proceeds(3)
(in
millions)
$1.4 - $1.6
$10.7 - $11.9
$6.7 - $7.4
$33.7 - $37.3
$1.2 - $1.4
$2.8 - $3.1
$1.9 - $2.1
$0.5 - $0.6
$3.1 - $3.4
$0.2 - $0.3
$0.7 - $0.8
$6.2 - $6.5
TBD
TBD
Miramar CC Homes (1)
193 Homes Predevelopment
2015
TBD
$1.2
TBD
Retail Developments
Gardens on Millenia
Retail JV (1)
Gardens on Millenia
Land
142,000 SF
2 Outparcels
Completed – Anchor space
sold in 2017 / Pending sale of
additional retail space
Completed – Pending sale of
final outparcel
2015
2018
2013
TBD
$5.2
$1.2
-
-
$5.2 - $5.5
$2.4 - $2.6
Mixed Use Developments
PGA Pod B (1)
145,000 SF
PGA Pods A&C
18 Acres
Completed – two office
buildings available for sale -
one office building under
contract
Under Development –
Pending sale of developed
land
2013
2018
$1.9
-
$5.6 - $6.2
2014
2020
$5.7 $1.8 - $2.2
$7.1 - $7.9
Bayview Site (1)
Operating Properties
Villa San Michele
RoboVault (4)
3 Acres
Predevelopment
2014
TBD
$1.5
TBD
TBD
272 Beds (82
Units)
90,000 SF
Storage
Facility
Sold January 2018
2014
2018
Completed – Pending rent
stabilization
2013
2021
$6.2
$7.0
-
-
9.3
$13.4 - $14.8
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(1) These assets represent investments in real estate ventures that are not consolidated into our financial
statements. See Note 10 – Investments in Unconsolidated Real Estate Joint Ventures under Item 8
included in this report for additional information regarding these investments.
(2) For our consolidated investments, the carrying amount of our investment represents the carrying
amount of the real asset associated with the applicable project and for our other investments, which are
unconsolidated real estate joint ventures, the carrying amount of our investment represents our
investment in the applicable joint venture recognized under the equity method of accounting.
(3) The above information under the headings “Expected Sales Date,” “Remaining Investment,” and
“Estimated Future Proceeds” is forward looking and inherently uncertain. The information is based on
our current assumptions and expectations which are largely based on factors not within our control.
These factors include, but are not limited to, economic conditions generally and conditions that affect
the project in particular, the performance of our joint venture partners in managing the projects,
potential overruns in development and operating costs, tenant demand for retail, storage and
multifamily rental units, buyer demand for single family housing, and the values of the underlying real
estate upon sale or exit. Accordingly, there is no assurance that we will achieve results consistent with
this forward looking information, and our actual results could differ materially from the information
provided. For a discussion of other factors that may impact our actual results, and additional risks and
uncertainty related to BBX Capital Real Estate’s projects, see the risks, uncertainties and cautionary
factors discussed elsewhere in this Annual Report on Form 10-K.
(4) RoboVault generated revenue of $1.2 million during the year ended December 31, 2017.
(5) A portion of the carrying amount of the Beacon Lake investment was funded by Community
Development Bonds. A pro rata portion of the Community Development Bond obligations attaches to
each parcel in the development and BBX Capital will be responsible for making payments from time
to time subject to future sale of the parcels.
Multifamily Apartment Developments
Altis at Kendall Square, LLC (“Altis at Kendall Square”)
In March 2013, the Company invested $1.3 million as one of a number of investors in a joint venture with
The Altman Companies (“Altman”) to develop Altis at Kendall Square, a 321 unit multifamily apartment
development comprised of twelve three-story apartment buildings, a retail parcel, and a clubhouse located
in Kendall, Florida. During the year ended December 31, 2016, the joint venture sold the apartment
buildings and clubhouse, and the Company recognized $3.1 million of equity earnings and received $3.7
million of distributions from the joint venture. The Company anticipates that the retail land will be sold in
2018.
The Addison on Millenia Investment, LLC (“The Addison on Millenia”)
In December 2015, the Company invested as one of a number of investors in a joint venture with
ContraVest to develop The Addison on Millenia, a 292 unit multifamily apartment development
comprised of nine apartment buildings located in Orlando, Florida. At the inception of the venture, the
Company transferred land with an agreed upon value of $5.8 million and cash of $0.3 million to the joint
venture in return for its membership interest. The Company is entitled to receive 48% of the joint venture
distributions until it receives its aggregate capital contributions plus a specified return on its capital. After
all investors receive a specified return and the return of their contributed capital, any distributions
thereafter are shared based on earnings, with the managing member receiving an increasing percentage of
distributions. Construction commenced in the first quarter of 2016 and was completed during 2017. The
292 apartment units were 96% leased as of December 31, 2017.
Altis at Lakeline – Austin Investor, LLC (“Altis at Lakeline”)
In December 2014, the Company invested $5.0 million as one of a number of investors in a joint venture
with Altman to develop Altis at Lakeline, a 354 unit multifamily apartment development comprised of
nineteen two- and three-story apartment buildings, 38 enclosed garages, and a private resort-style 5,500
square foot clubhouse located in Cedar Park, Texas. The Company is entitled to receive 34% of the joint
venture distributions until it receives its aggregate capital contributions plus a specified return on its
capital. After all investors receive a specified return and the return of their contributed capital, any
distributions thereafter are shared based on earnings, with the managing member receiving an increasing
percentage of distributions. Construction commenced in the first quarter of 2015 and was completed
during 2017. The 354 apartment units were 87% leased as of December 31, 2017.
Altis at Bonterra – Hialeah, LLC (“Altis at Bonterra”)
In December 2015, the Company invested in a joint venture with Altman to develop Altis at Bonterra, a
314 unit multifamily apartment development located in Hialeah, Florida. At the inception of the venture,
the Company transferred property with an agreed upon value of $9.4 million and cash of $7.5 million to
the joint venture in return for its membership interest. The Company is entitled to receive 95% of the joint
venture distributions until it receives its aggregate capital contributions plus a specified return on its
capital, and any distributions thereafter are shared based on earnings, with the managing member
receiving an increased percentage of the distributions. Construction commenced
21
in the first quarter of 2016 and was completed during 2017. The 314 apartment units were 87% leased as
of December 31, 2017.
Altis at Shingle Creek Manager, LLC (“Altis at Shingle Creek”)
In April 2016, the Company invested $332,000 as one of a number of investors in a joint venture with
Altman to develop Altis at Shingle Creek, a 356 unit multifamily apartment development located in
Orlando, Florida. The Company is entitled to receive 2.5% of the joint venture distributions until it
receives its aggregate capital contribution plus a specified return on its capital. After all investors receive a
specified return and the return of their contributed capital, any distributions thereafter are shared based on
earnings, with the managing member receiving an increasing percentage of distributions. Construction
commenced during the fourth quarter of 2016 and is anticipated to be substantially complete in the third
quarter of 2018. The leasing of apartment units began during the third quarter of 2017.
Altis at Grand Central, LLC (“Altis at Grand Central”)
In September 2017, the Company invested $1.9 million as one of a number of investors in a joint venture
with Altman to develop Altis at Grand Central, a 314 unit multifamily apartment development located in
Tampa, Florida. The Company is entitled to receive 11% of the joint venture distributions until it receives
its aggregate capital contribution plus a specified return on its capital. After all investors receive a
specified return and the return of their contributed capital, any distributions thereafter are shared based on
earnings, with the managing member receiving an increasing percentage of distributions. Construction
commenced during the fourth quarter of 2017 and is anticipated to be substantially completed during the
second quarter of 2019.
Atlis at Promenade, LLC (“Altis at Promenade”)
In December 2017, the Company invested $962,000 as one of a number of investors in a joint venture with
Altman to develop Altis at Promenade, a 338 unit multifamily apartment development located in Tampa,
Florida. The Company is entitled to receive 5% of the joint venture distributions until it receives its
aggregate capital contribution plus a specified return on its capital. After all investors receive a specified
return and the return of their contributed capital, any distributions thereafter are shared based on earnings,
with the managing member receiving an increasing percentage of distributions. Construction is
anticipated to be substantially complete during the third quarter of 2019.
Single Family Developments
Hialeah Communities, LLC (“Bonterra – CC Homes”)
In July 2014, the Company invested in a joint venture with CC Homes to develop Bonterra – CC Homes, a
residential community comprised of 394 homes located in Hialeah, Florida. At the inception of the
venture, the Company transferred property at an agreed upon value of $15.6 million to the joint venture in
exchange for cash of $2.2 million, membership interests with an agreed upon value of $4.9 million, and
the venture’s assumption of an $8.3 million mortgage loan on the property. The Company is entitled to
receive 57% of the joint venture distributions until it receives its aggregate capital contributions plus a
specified return on capital, and any distributions thereafter are shared, with the managing member
receiving an increased percentage of distributions. During the year ended December 31, 2017, the joint
venture closed on the sale of 192 homes, and the Company recognized $12.1 million of equity earnings
and received $14.4 million of cash distributions from the joint venture. During the year ended December
31, 2016, the joint venture closed on the sale of 201 homes, and the Company recognized $9.5 million of
equity earnings and received $11.5 million of cash distributions from the joint venture. As of December
31, 2017, the joint venture had closed on the sale of 393 homes, with the final home closing in January
2018.
New Urban/BBX Development, LLC (“Village at Victoria Park”)
In December 2013, the Company invested $750,000 in a joint venture with New Urban Communities to
develop Village at Victoria Park, a residential community comprised of 30 single-family homes located in
Fort Lauderdale, Florida. The Company is entitled to receive 50% of the joint venture distributions. The
project commenced construction and sales during the third quarter of 2014. During the year ended
December 31, 2017, the joint venture closed on 9 homes, and the Company recognized $940,000 of equity
earnings from the joint venture. As of December 31, 2017, the joint venture had closed on the sale of 18
single-family homes and has sales contracts on eleven additional homes.
Centra Falls, LLC (“Centra Falls”)
In August 2015, the Company invested $750,000 as one of a number of investors in a joint venture with
Label & Co. to develop Centra Falls, a residential community comprised of 89 townhomes located in
Pembroke Pines, Florida. The
22
Company is entitled to receive 7.143% of the joint venture distributions until it receives its aggregate
capital contributions plus a specified return on its capital. After all investors receive a specified return and
the return of their contributed capital, any distributions thereafter are shared based on earnings, with the
managing member receiving an increasing percentage of distributions. During the year ended December
31, 2017, the joint venture closed on 61 townhomes, and the Company recognized $286,000 of equity
earnings from the joint venture. The project commenced construction during the third quarter of 2015, and
as of December 31, 2017, the joint venture had closed on 79 townhomes and had executed contracts on an
additional 9 townhomes.
Centra Falls II, LLC (“Centra Falls West”)
In November 2016, the Company invested $571,000 as one of a number of investors in a joint venture
with Label & Co. to develop Centra Falls West, a residential community comprised of 61 townhomes
located in Pembroke Pines, Florida. The Company is entitled to receive 7.143% of the joint venture
distributions until it receives its aggregate capital contributions plus a specified return on its capital. After
all investors receive a specified return and the return of their contributed capital, any distributions
thereafter are shared based on earnings, with the managing member receiving an increasing percentage of
distributions. The project commenced construction during the first quarter of 2017, and as of December
31, 2017, the joint venture had sold 48 townhomes and closings are anticipated to begin in April 2018.
Chapel Grove Townhomes (“Chapel Grove”)
In October 2017, the Company invested $4.9 million as one of a number of investors in a joint venture
with Label & Co. to develop Chapel Grove, a residential community comprised of 125 town homes
located in Pembroke Pines, Florida. The Company is entitled to receive 46.75% of the joint venture
distributions until it receives its aggregate capital contribution plus a specified return on its capital. After
all investors receive a specified return and the return of their contributed capital, any distributions
thereafter are shared based on earnings, with the managing member receiving an increasing percentage of
distributions. The project commenced construction during the fourth quarter of 2017, and townhome
closings are anticipated to commence during the fourth quarter of 2018.
Beacon Lake Master Planned Development
The Company has obtained entitlements to develop raw land in St. Johns County, Florida into 1,476
finished lots which will comprise the Beacon Lake Community. As part of the development, the Company
is developing the land and common areas and expects to sell the finished lots to third-party homebuilders
that will construct single-family homes and townhomes that are planned to range from 1,800 square feet to
4,000 square feet and priced from the high $200,000’s to the $500,000’s. Land development began in
January 2017. The Company has entered into purchase agreements with homebuilders for approximately
302 finished lots in which 240 finished lots are anticipated to close during 2018, with the first finished lots
closing in January 2018. The remaining 62 lots are anticipated to close during 2019. Pursuant to the asset
purchase agreements with the homebuilders, upon closing of the lots by the homebuilders. a portion of the
Community Development Bond is required to be repaid through lot sales proceeds and a portion of the
Community Development Bond is transferred to the homebuilder.
CCB Miramar, LLC (“Miramar – CC Homes”)
In May 2015, the Company invested in a joint venture with two separate developers relating to the
acquisition of real estate in Miramar, Florida for the construction of single-family homes. The Company
contributed $875,000 for an approximate 35% interest in the joint venture, and one of the developers
contributed to the joint venture a contract to purchase the real estate. The City of Miramar approved the
site plan in June 2017, and the Company contributed an additional $350,000 to the joint venture. The joint
venture is seeking to obtain entitlements for the project and anticipates closing on the acquisition of the
real estate in March 2019. However, the entitlements are subject to government approval, and these
approvals may not be obtained.
Retail Developments
BBX/S Millenia Blvd Investments, LLC (“Gardens on Millenia Retail JV”)
In October 2015, the Company invested in a joint venture with Stiles Development to develop a retail
center on the Gardens of Millenia site in Orlando, Florida. At the inception of the venture, the Company
transferred property with an agreed upon value of $7.0 million to the joint venture in return for $0.7
million in cash and its membership interest. The Company is entitled to receive 90% of the joint venture
distributions until it receives its aggregate capital contributions plus a specified return on its capital, and
any distributions thereafter are shared based on earnings, with the managing member receiving an
increased percentage of the distributions. During the year ended December 31, 2017, the joint venture
closed on a portion of the retail center, and the Company recognized $3.5 million of equity earnings and
received
23
$3.4 million of distributions from the joint venture. The Company anticipates that the remaining retail
space will be sold in March 2018.
Gardens on Millenia – Land
Gardens on Millenia consisted of 37 acres of land acquired through foreclosure located near the Mall at
Millenia in a commercial center of Orlando, Florida. During 2015, the Company obtained governmental
approvals for a 300,000 square foot retail shopping center designed for multiple big-box and in-line
tenants as well as two outparcel retail pads and nine rental apartment buildings totaling approximately 292
units. The Company contributed the portion of the land entitled for rental apartments to the Addison on
Millenia Investment, LLC joint venture and contributed the portion of the land entitled for the retail
center to the BBX/S Millenia Blvd Investments, LLC joint venture as initial capital contributions to the
joint ventures. The Company developed the two outparcel retail pads and has sold one of the pads to a
retailer and executed a long-term land lease on the other pad.
Mixed Use Developments
PGA Design Center Holdings, LLC (“PGA Pod B”)
In December 2013, the Company purchased for $6.1 million a commercial property located in PGA
Station in Palm Beach Gardens, Florida, with three existing buildings consisting of 145,000 square feet of
mainly furniture retail space. Subsequent to the acquisition of the property, the Company entered into the
PGA Design Center Holdings, LLC joint venture with Stiles Development, which acquired a 60% interest
in the joint venture for $2.9 million in cash. The Company contributed the property (excluding certain
residential development entitlements having an estimated value of $1.2 million) to the joint venture in
exchange for $2.9 million in cash and the remaining 40% interest in the joint venture. The Company
transferred the retained residential development entitlements to adjacent parcels owned by it in PGA
Station (see below for a discussion of PGA PODS A&C, the other parcels owned by the Company in PGA
Station). During the year ended December 31, 2016, governmental approvals were obtained to change the
use of a portion of the property from retail to office. The joint venture sold one of the buildings in
February 2018 and intends to sell or lease the remaining two buildings.
PGA Pods A&C
The Company acquired land through foreclosure located in PGA Station, in the city of Palm Beach
Gardens, Florida in 2014. During the year ended December 31, 2016, the Company obtained
governmental approvals to construct a 122 room limited-service suite hotel, a medical office building, and
three 60,000 square foot office buildings on vacant tracts of land in PGA Station. The Company is the
master developer of PGA station and intends to sell the developed land to third party developers. During
the year ended December 31, 2017, the Company closed on the sale of the land on which the hotel and
medical office buildings will be constructed by third party developers.
Bayview (Sunrise and Bayview Partners, LLC)
In June 2014, the Company invested in a joint venture with an affiliate of Procacci Development
Corporation (“PDC”) with the Company and PDC each contributing $1.8 million to the Sunrise and
Bayview Partners joint venture. The joint venture acquired for $8.0 million approximately three acres of
real estate located in Fort Lauderdale, Florida. The Company and PDC each have a 50% interest in the
joint venture. There is currently an approximate 84,000 square foot office building along with a
convenience store and gas station on the property. The office building has low occupancy with short term
leases. The convenience store's lease ends in March 2022. The Company anticipates that the property will
be redeveloped into a mixed-use project in the future.
Operating Properties
Villa San Michele
In January 2014, the Company acquired an 82-unit, 272 bed student housing project located in
Tallahassee, Florida, through a contractual settlement with the borrower. Built in 2008, Villa San Michele
is located in southwest Tallahassee near Tallahassee Community College. The project includes a mix of 3
bedroom and 4 bedroom 2-story townhomes, as well as a 10.6 acre parcel of vacant land. Villa San
Michele met the criteria to be classified as held-for-sale as of December 31, 2017 and was ultimately sold
in January 2018 for $9.5 million.
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RoboVault
In April 2013, the Company acquired through foreclosure, RoboVault, a 155,000 square foot high-tech,
robotic self-storage facility, featuring climate controlled, and high security storage. Located in Fort
Lauderdale, Florida, RoboVault offers its clients museum quality storage for business, forensic property,
and personal prized possessions, including art, wine collections, cars, gems, antiques, important
documents and files, and other collectibles. Built in 2009, the facility is wind resistant up to 200 mph (a
category 5 hurricane), stores items 30 feet above sea level, uses a biometric robotic transfer system, and
offers 24 hour - 7 day access.
Legacy Assets
Legacy assets in the Company’s Consolidated Statement of Financial Condition as of December 31, 2017
consisted primarily of $19.5 million of loans receivable, $13.9 million of real estate held-for-investment,
$27.8 million of real estate held-for-sale, and $7.0 million in property and equipment. PGA Pods A&C,
Villa San Michele, Gardens on Millenia land, and RoboVault discussed above are included in real estate
held-for-sale, real estate held-for-investment and property and equipment with a carrying value of $11.9
million, $1.2 million, and $7.0 million, respectively, as of December 31, 2017.
The majority of the legacy assets do not generate income on a regular or predictable basis. As a
consequence, BBX Capital Real Estate does not expect to generate significant revenue from the legacy
assets until the assets are monetized through repayments or transactions involving the sale, joint venture
or development of the underlying real estate. The cash flow from the monetization of legacy assets are
generally invested in income producing real estate, real estate developments and real estate joint ventures,
as well as in the Company’s middle market operating businesses. As a result of the substantial decline in
real estate values during the recession which began in 2007 - 2008, the majority of legacy non-performing
commercial real estate loans and foreclosed real estate were written down in prior periods to the then
prevailing estimated fair values of the collateral less costs to sell. The Company believes there has been
continued improvements generally in real estate markets over the prior 3 to 4 years and believes that the
prior estimated fair values of the underlying collateral securing certain of its commercial real estate loans
and its real estate carrying values may be below current market values. Additionally, this recovery in the
real estate market has favorably affected the financial condition of borrowers, and the Company is
aggressively pursuing its borrowers and/or guarantors in order to maximize recoveries through cash
settlements, loan workout arrangements or participation interests in the development or performance of
the collateral. If the Company is successful in its efforts, the Company expects to recognize gains to the
extent that the amounts it collects exceed the carrying value of its commercial loans and foreclosed real
estate as well as recoveries from the portfolio of BankAtlantic charged-off loans.
Middle Market Division
Overview
The Middle Market Division invests in operating companies and businesses in diverse industries with
revenues between $5 million and $100 million, currently including companies in the home improvement,
confectionery, and retail restaurant industries.
Strategy
The business and operating strategy for the portfolio of companies in the Middle Market Division focuses
on:
Recruiting and retaining talented managers to operate its businesses;
·
· Monitoring financial and operational performance, while supporting management
in
implementation of their strategic plans and goals; and
· Making opportunistic acquisitions in diverse industries.
Portfolio Companies
Renin
Renin is engaged in the design, manufacture, and distribution of products for the home improvement
industry, including specialty doors, systems and hardware, and home décor products, and operates through
its headquarters in Canada and two manufacturing and distribution facilities in the United States and
Canada. Following the Company’s acquisition of
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Renin in 2013, Renin, which historically generated operating losses, has become profitable, generating
trade sales of $69.6 million and income before taxes of $2.2 million for the year ended December 31,
2017.
Renin’s products include sliding bipass and bifold closet doors, room dividers, including
barn-style doors and hardware, fabricated glass and home décor products. While the
majority of Renin’s products are manufactured at its facilities located in the United States
and Canada, a portion of its products are sourced from suppliers in China. Renin products
are sold through three distinct channels in North America: retail, commercial, and direct in
the metropolitan Toronto area (the “Toronto Area”). Retail currently comprises over 60%
of Renin’s gross sales and includes big box retail customers such as Lowes and Home
Depot. Commercial, which includes original equipment manufacturers and fabricators
across North America, comprises approximately 25% of Renin’s sales, while the Toronto
Area, where Renin operates an installation business, generates the remaining sales.
BBX Sweet Holdings
BBX Sweet Holdings is engaged in the acquisition and management of operating businesses in the
confectionery industry, including manufacturers, wholesalers, and retailers of chocolate, hard candy, and
other confectionery products. Many of these operating businesses are in early development stages and
currently generate operating losses.
In June 2017, BBX Sweet Holdings acquired IT’SUGAR, a specialty candy retailer with 95 retail
locations in 26 states and Washington, DC, for a purchase price of $58.4 million, net of cash acquired.
IT’SUGAR’s products include bulk candy, giant candy packaging, and novelty items that are purchased
and sold at its retail locations, which include a mix of high-traffic resort and entertainment, lifestyle,
mall/outlet, and urban locations across the United States. As a result of BBX Sweet Holdings’ plans to
further expand IT’SUGAR by opening new retail locations, including six to seven locations during 2018.
IT’SUGAR is not expected to generate net income in 2018 due to the expected costs of opening new
stores and related ongoing depreciation expenses. However, the acquisition of IT’SUGAR is expected to
be cash flow accretive to the Company and has significantly expanded BBX Sweet Holdings’ retail
footprint in the confectionery industry.
BBX Sweet Holdings’ other existing operations include businesses that manufacture confectionery
products for wholesalers, big box chains, retailers, and corporate customers. These confectionery products
include fine chocolates, chocolate drenched candies, tropical snacks, and hard candies, all of which are
made at facilities located in Utah and Florida. While a majority of BBX Sweet Holdings’ products are sold
to retailers or distributors, its fine chocolates are also sold directly to consumers at its eight Hoffman’s
Chocolates retail locations in South Florida.
Subsequent to December 31, 2017, the Company commenced the process of exiting its manufacturing
facility in Utah, and it is anticipated that BBX Sweet Holdings will incur various costs in connection with
this initiative, including severance costs for various employees and the recognition of lease obligations.
The Company is continuing to evaluate the operations of certain other acquired operating businesses in
the BBX Sweet Holdings segment, and to the extent that it decides to exit these operations, BBX Sweet
Holdings may recognize impairment charges and incur additional costs in future periods.
MOD Franchise Operations
In 2016, the Company entered into an exclusive Florida area development agreement with a subsidiary of
MOD with a goal of developing up to 60 MOD franchised pizza restaurant locations throughout Florida
over the next six years. The Company opened two restaurant locations during the fourth quarter of 2017
and expects to open eight to twelve additional locations in 2018. The Company’s MOD franchised pizza
restaurants operate in the fast casual dining industry and sell custom artisan style pizzas, salads and
beverages. These restaurants charge a set price per pizza or salad, which allows customers to choose any
toppings for their pizza or salad, and the product is made-to-order through an assembly-line process in the
restaurant.
Employees
Management believes that its relations with its employees are satisfactory. The Company currently
maintains employee benefit programs that are considered by management to be generally competitive with
programs provided by other major employers in its markets.
As of December 31, 2017, approximately 29 of Bluegreen Vacations employees were covered by
collective bargaining agreements which address the terms and conditions of their employment, including
pay rates, working hours, certain employee benefits and procedures for settlement of labor
disputes. Further, approximately 36 installers of a Canadian
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division of Renin are unionized and are currently negotiating a collective bargaining agreement.
Employees at Renin’s Brampton Plant voted against unionization; however, the union filed an Unfair
Labour Practice with the Ontario Labour Board which remains pending.
As of December 31, 2017, the Company and its subsidiaries had approximately 6,914 employees,
including 5,412 employees at Bluegreen.
Competition
The industries in which the Company conducts business are very competitive, and we also face substantial
competition with respect to our investment activities from real estate developers and building construction
companies, and from private equity funds, hedge funds and other institutional investors. The Company
competes with institutions and entities that are larger and have greater resources than the resources
available to the Company. Four unaffiliated companies in the candy and confectionery industry currently
account for approximately 70% of the industry’s revenues reflecting significant concentration in the
industry in which Sweet Holdings operates. Renin’s products are sold mainly to large retailers as well as to
housing and building construction companies. The industry in which Renin operates experiences intense
competition from foreign importers and producers. MOD competes with established pizza brands, new
entrants into the fast casual pizza category, especially in Florida, and for prime locations, with other
operators.
Bluegreen competes with various high profile and well-established firms, many of which have greater
liquidity and financial resources than Bluegreen. Many of the world’s most recognized lodging,
hospitality and entertainment companies develop and sell VOIs in resort properties. Major companies that
now operate, or are developing or planning to develop, vacation ownership resorts directly or through
subsidiaries include Marriott Vacations Worldwide Corporation, the Walt Disney Company, Hilton Grand
Vacations, Wyndham Vacation Ownership, ILG and Diamond Resorts International. Bluegreen also
competes with numerous smaller owners and operators of vacation ownership resorts. In Bluegreen’s fee-
based services business, Bluegreen typically competes with Hilton Grand Vacations and Wyndham
Vacation Ownership. In addition to competing for sales leads, prospects and fee-based service clients,
Bluegreen competes with other VOI developers for marketing, sales and resort management personnel.
Regulation
As a public company, we are subject to federal securities laws, including the Securities Exchange Act of
1934. In addition, the companies in which we hold investments are subject to federal, state and local laws
and regulations generally applicable to their respective businesses.
Bluegreen
The vacation ownership and real estate industries are subject to extensive and complex governmental
regulation. Bluegreen is subject to various federal, state, local and foreign environmental, zoning,
consumer protection and other laws, rules and regulations, including those regarding the acquisition,
marketing and sale of real estate and VOIs, as well as various aspects of our financing operations. At the
federal level, the Federal Trade Commission has taken an active regulatory role through the Federal Trade
Commission Act, which prohibits unfair or deceptive acts or unfair competition in interstate commerce. In
addition, many states have what are known as “Little FTC Acts” that apply to intrastate activity.
In addition to the laws applicable to Bluegreen’s customer financing and other operations discussed below,
Bluegreen is or may be subject to the Fair Housing Act and various other federal laws, rules and
regulations. Bluegreen is also subject to various foreign laws with respect to La Cabana Beach Resort and
Casino in Oranjestad, Aruba and Blue Water Resort at Cable Beach in Nassau, Bahamas. Additionally, in
the future, VOIs may be deemed to be securities subject to regulation as such, which could have a material
adverse effect on its business. The cost of complying with applicable laws and regulations may be
significant, and Bluegreen may not maintain compliance at all times with all applicable laws, including
those discussed below. Any failure to comply with current or future applicable laws or regulations could
have a material adverse effect on Bluegreen.
Bluegreen’s vacation ownership resorts are subject to various regulatory requirements, including state and
local approvals. The laws of most states require Bluegreen to file a detailed offering statement describing
its business and all material aspects of the project and sale of VOIs with a designated state authority. In
addition, when required by state law, Bluegreen provides its VOI purchasers with a public disclosure
statement that contains, among other items, detailed information about the applicable resort, the
surrounding vicinity and the purchaser’s rights and obligations as a VOI
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owner. Laws in each state where Bluegreen sells VOIs generally grant the purchaser of a VOI the right to
cancel a purchase contract at any time within a specified rescission period following the earlier of the date
the contract was signed or the date the purchaser received the last of the documents required to be
provided by Bluegreen. Most states have other laws that regulate Bluegreen’s activities, including real
estate licensure requirements, sellers of travel licensure requirements, anti-fraud laws, telemarketing laws,
prize, gift and sweepstakes laws, and labor laws.
Under various federal, state and local laws, ordinances and regulations, the owner of real property is
generally liable for the costs of removal or remediation of certain hazardous or toxic substances located
on or in, or emanating from, the property, as well as related costs of investigation and property damage.
These laws often impose liability without regard to whether the property owner knew of the presence of
such hazardous or toxic substances. The presence of these substances, or the failure to properly remediate
these substances, may adversely affect a property owner’s ability to sell or lease a property or to borrow
using the real property as collateral. Other federal and state laws require the removal or encapsulation of
asbestos-containing material when such material is in poor condition or in the event of construction,
demolition, remodeling or renovation. Other statutes may require the removal of underground storage
tanks. Noncompliance with any of these and other environmental, health or safety requirements may result
in the need to cease or alter operations or development at a property. In addition, certain state and local
laws may impose liability on property developers with respect to construction defects discovered on the
property or repairs made by future owners of such property. Under these laws, Bluegreen may be required
to pay for repairs to the developed property. The development, management and operation of its resorts
are also subject to the Americans with Disabilities Act.
Bluegreen’s marketing, sales and customer financing activities are also subject to extensive regulation,
which can include, but is not limited to: the Truth-in-Lending Act and Regulation Z; the Fair Housing Act;
the Fair Debt Collection Practices Act; the Equal Credit Opportunity Act and Regulation B; the Electronic
Funds Transfer Act and Regulation E; the Home Mortgage Disclosure Act and Regulation C; the Dodd-
Frank Wall Street Reform and Consumer Protection Act of 2010 (“the Dodd-Frank Act”); Unfair or
Deceptive Acts or Practices and Regulation AA; the Patriot Act; the Right to Financial Privacy Act; the
Gramm-Leach-Bliley Act; the Fair and Accurate Credit Transactions Act; and anti-money laundering
laws. The Dodd-Frank Act contains significant changes to the regulation of financial institutions and
related entities, including the creation of new federal regulatory agencies, and the granting of additional
authorities and responsibilities to existing regulatory agencies to identify and address emerging systemic
risks posed by the activities of financial services firms. The Consumer Financial Protection Bureau (the
“CFPB”) is one such regulatory agency created pursuant to the Dodd-Frank Act. The CFPB’s mandate is
to protect consumers by carrying out federal consumer financial laws and to publish rules and forms that
facilitate understanding of the financial implications of the transactions consumers enter into. Consistent
with this mission, the CFPB amended Regulations X and Z to establish new disclosure requirements and
forms pursuant to Regulation Z for most closed-end consumer credit transactions secured by real property.
The practical impact upon Bluegreen is the requirement to use a new Integrated Mortgage Disclosure
Statement in lieu of the separate Good Faith Estimate and Closing Statement. No assurance can be given
that Bluegreen will be in compliance with the Dodd-Frank Act or other applicable laws or that compliance
with these rules or the promulgation of additional standards by the CFPB will not have an adverse impact
on its business. In addition, Bluegreen’s term securitization transactions must comply with certain
requirements of the Dodd-Frank Act, including risk retention rules.
Bluegreen’s management of, and dealings with, HOAs, including the purchase of defaulted inventory
from HOAs in connection with secondary market arrangements, is subject to state laws and resort rules
and regulations, including those with respect to the establishment of budgets and expenditures, rule-
making and the imposition of maintenance assessments.
During the year ended December 31, 2017, approximately 6% of Bluegreen’s VOI sales were generated
by marketing to prospective purchasers obtained through internal and third-party vendors’ outbound
telemarketing efforts. Bluegreen attempts to monitor the actions and legal and regulatory compliance of
these third parties, but there are risks associated with Bluegreen’s and such third parties’ telemarketing
efforts. In recent years, state and federal regulators have increased regulations and enforcement actions
related to telemarketing operations, including requiring the adherence to state “do not call” laws. In
addition, the Federal Trade Commission and Federal Communications Commission have implemented
national “do not call” legislation. These measures have significantly increased the costs associated with
telemarketing. While Bluegreen continues to be subject to telemarketing risks and potential liability,
Bluegreen believes its exposure to adverse impacts from this heightened telemarketing legislation and
enforcement may be partially mitigated by the use of “permission marketing,” whereby Bluegreen obtains
the permission of prospective purchasers to contact them in the future, thereby exempting such calls from
the various “do not call” laws. Bluegreen has also implemented policies and procedures that it believes
will help reduce the possibility that individuals who have requested to be placed on a “do not call” list are
not contacted, but such policies and procedures may not be effective in ensuring strict regulatory
compliance.
To date, no material fines or penalties have been imposed on Bluegreen as a result of telemarketing
operations. However, from time to time, Bluegreen has been the subject of proceedings for violation of the
“do not call” laws and other state
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laws applicable to the marketing and sale of VOIs. Bluegreen may not successfully be able to effectively
market to prospective purchasers through telemarketing operations or to successfully develop alternative
sources of identifying and marketing to prospective purchasers of its VOI products at acceptable costs. In
addition, Bluegreen may increasingly face non-compliance issues or additional costs of compliance, which
may adversely impact its results and operations in the future.
See also “Item 1A – Risk Factors” for a description of risks with respect to regulatory compliance.
See also “Item 3 - Legal Proceedings” for a description of litigation that was brought against Bluegreen
and Choice Hotels in January 2018 relating to telemarketing sales activities and a description of cease and
desist letters received by Bluegreen from attorney’s purporting to represent certain VOI owners.
Seasonality
Bluegreen has historically experienced, and expect to continue to experience, seasonal fluctuations in its
revenues and results of operations. This seasonality has resulted, and may continue to result, in
fluctuations in Bluegreen’s quarterly operating results. Although more potential customers typically visit
Bluegreen’s sales offices during the quarters ending in June and September, Bluegreen’s ultimate
recognition of the resulting sales during these periods may be delayed due to down payment requirements
for recognition of real estate sales under GAAP or due to the timing of development and required use of
the percentage-of-completion method of accounting.
BBX Sweet Holdings is subject to seasonal fluctuations in trade sales, which cause fluctuations in
quarterly results of operations. Historically, the strongest wholesale and retail trade sales have occurred
during the fourth quarter, which includes the Christmas holiday, and during the third quarter when
families travel on vacation.
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ITEM 1A. RISK FACTORS
We are subject to various risks and uncertainties relating to or arising out of the nature of our
businesses, operations and investments, and general business, economic, financing, legal, regulatory,
and other factors and conditions. New risk factors emerge from time to time, and it is not possible for
management to either predict all risk factors or assess all potential impacts of any factor, or
combination of factors, on BBX Capital Corporation or its subsidiaries, including with respect to their
operations, results and financial condition.
BBX Capital relies on dividends from Bluegreen to fund operations.
BBX Capital has relied and continues to rely primarily on dividends from Bluegreen in order to fund its
operations and investments. Dividends from Bluegreen may not be paid to BBX Capital in the amounts
previously paid or when anticipated or at all. Bluegreen paid dividends totaling $40.0 million during
2017 and $70.0 million during 2016. The payment of dividends by Bluegreen is subject to compliance
with financial covenants under its credit facilities and certain of Bluegreen's credit facilities contain
terms which may limit the payment of cash dividends without the lender's consent or waiver.
Additionally, the payment of dividends by Bluegreen will be at the discretion of Bluegreen’s board of
directors. Decisions with respect to dividends by Bluegreen are generally based on, among other things,
Bluegreen's operating results, financial condition, cash flow, and liquidity needs. Dividend payments to
BBX Capital by any of its subsidiaries, including Bluegreen, could, in certain circumstances, be subject
to claims made by creditors of such subsidiary.
If cash flow is not sufficient to fund BBX Capital's liquidity needs or BBX Capital otherwise
determines it is advisable to do so, BBX Capital might seek to liquidate some of its investments or seek
to fund its operations with the proceeds of additional equity or debt financing. Such financing may not
be available on commercially reasonable terms, if at all, and if BBX Capital chooses to liquidate its
investments, it may be forced to do so at depressed prices.
BBX Capital’s acquisitions may reduce earnings, require it to obtain additional financing and expose
it to additional risks.
BBX Capital’s business strategy includes investments in or acquisitions of operating companies, such as
its acquisition of Renin and the acquisitions of businesses by BBX Sweet Holdings in the confectionery
industry. BBX Capital may also seek to make opportunistic investments outside of its existing
portfolio. Some of these investments and acquisitions may be material. While BBX Capital is seeking
investments and acquisitions primarily in companies that provide opportunities for growth, it may not be
successful in identifying these opportunities. Investments or acquisitions that it completes may not
prove to be successful or, even if successful, may not initially generate income, or may generate income
on an irregular basis or over a long time period. Accordingly, our results of operations may vary
significantly on a quarterly basis and from year to year as a result of acquisitions. Acquisitions and
investments will also expose BBX Capital, or increase BBX Capital’s exposure in the case of
acquisitions of or additional investments in its portfolio companies, to the risks of any business acquired
or invested in. Acquisitions entail numerous risks, including:
· Difficulties in integrating and assimilating acquired management, acquired company founders,
and operations;
Risks associated with achieving profitability;
The incurrence of significant due diligence expenses relating to acquisitions, including with
respect to those that are not completed;
Unforeseen expenses and losses;
Risks associated with entering new markets in which it has no or limited prior experience;
The potential loss of key employees or founders of acquired organizations; and
Risks associated with transferred assets and liabilities.
·
·
·
·
·
·
BBX Capital may not be able to acquire or profitably manage additional businesses, or to integrate
successfully any acquired businesses, including Renin, MOD restaurants and the BBX Sweet Holdings’
operating businesses, without substantial costs, delays or other operational or financial difficulties,
including difficulties in integrating information systems and personnel and establishing control
environment processes across acquired businesses. The failure to do so could have a material adverse
effect on its business, financial condition and results of operations. In addition, to
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the extent that operating businesses are acquired outside the United States or the State of Florida, there
will be additional risks related to compliance with foreign regulations and laws including tax laws, labor
laws, currency fluctuations and geographic economic conditions.
In addition, there is significant competition for investments and acquisitions, which could increase the
costs associated with the investment or acquisition. Substantial costs are incurred in connection with the
evaluation of potential acquisition and investment opportunities whether or not the acquisition or
investment is ultimately consummated. Further, funding such investments or acquisitions may rely on
additional debt or equity financing, which will subject BBX Capital to the risks and uncertainties
described in these risk factors with respect to those activities in the immediately following risk factors.
If BBX Capital requires additional financing in the future, the financing may not be available when
needed or on favorable terms, if at all. Additionally, BBX Capital does not intend to seek shareholder
approval of any investments or acquisitions unless required by law or regulation, or by BBX Capital’s
Amended and Restated Articles of Incorporation or Bylaws.
In addition, BBX Capital from time to time may consider transactions involving the sale of its
subsidiaries or investments or other transactions which would result in a decrease in BBX Capital’s
ownership interest in its subsidiaries, and there is no assurance that any such transactions, if pursued and
consummated, will generate a profit or otherwise be advantageous to BBX Capital.
We may issue additional securities and incur additional indebtedness at BBX Capital or its
subsidiaries.
BBX Capital may in the future seek to raise funds through the issuance of debt or equity securities.
There is generally no restriction on BBX Capital’s ability to issue debt or equity securities which are
pari passu or have a preference over its Class A Common Stock and Class B Common Stock.
Authorized but unissued shares of BBX Capital’s capital stock are available for issuance from time to
time at the discretion of BBX Capital’s board of directors, and any such issuance may be dilutive to
BBX Capital’s shareholders.
Further, BBX Capital and its subsidiaries have in the past and may in the future incur significant
amounts of debt, including at Bluegreen. Any indebtedness, including indebtedness incurred in the
future could have several important effects on BBX Capital or its subsidiaries, including, without
limitation, that BBX Capital or its subsidiaries may be required to use available cash for the payment of
principal and interest due on its debt and that the outstanding indebtedness and leverage at BBX Capital
or its subsidiaries will impact liquidity, and any negative changes in general economic and industry
conditions will increase such impact.
Bluegreen is subject to the business, financial and operating risks inherent to the vacation ownership
industry, any of which could adversely impact its business, prospects and results.
Bluegreen is subject to a number of business, financial and operating risks inherent to the vacation
ownership industry, including, without limitation:
·
Significant competition from other vacation ownership businesses and hospitality providers;
· Market and/or consumer perception of vacation ownership companies and the industry in
general;
Increases in operating and other costs (as a result of inflation or otherwise), including
marketing costs, employee compensation and benefits, interest expense and insurance, which
may not be offset by price or fee increases in Bluegreen’s business;
Changes in taxes and governmental regulations, including those that influence or set wages,
prices, interest rates or construction and maintenance procedures and costs;
The costs and efforts associated with complying with applicable laws and regulations;
Risks related to the development or acquisition of resorts, including delays in, or cancellations
of, planned or future resort development or acquisition activities;
Shortages of labor or labor disruptions;
The availability and cost of capital necessary for Bluegreen and third-party developers with
whom Bluegreen does business to fund investments, capital expenditures and service debt
obligations;
Bluegreen’s ability to securitize the receivables that it originates in connection with VOI
sales;
The financial condition of third-party developers with whom Bluegreen does business;
Relationships with third-party developers, Bluegreen’s Vacation Club members and HOAs;
Changes in the supply and demand for products and services;
Private resales of VOIs and the sale of VOIs in the secondary market; and
·
·
·
·
·
·
·
·
·
·
·
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· Unlawful or deceptive third-party VOI resale, cease and desist, or vacation package sales
schemes, and reputational risk associated therewith.
Any of these factors could increase costs, limit or reduce the prices Bluegreen is able to charge for its
products and services or Bluegreen’s ability to develop or acquire new resorts or source VOI supply
from third parties, or otherwise adversely impact Bluegreen’s business, prospects or results.
Bluegreen’s business and operations, including its ability to market VOIs, may be adversely affected
by general economic conditions and the availability of financing.
Bluegreen’s business is subject to risks related to general economic and industry conditions and
trends. Bluegreen’s results, operations and financial condition may be adversely affected by
unfavorable general economic and industry conditions, such as high unemployment rates and job
insecurity, declines in discretionary spending, declines in real estate values and the occurrence of
geopolitical conflicts, including if these or other factors adversely impact the availability of financing
for Bluegreen or Bluegreen’s customers or the ability of Bluegreen’s customers’ to otherwise pay
amounts owed under notes receivable. Further, adverse changes affecting the vacation ownership
industry, such as an oversupply of vacation ownership units, a reduction in demand for such units,
changes in travel and other consumer preferences, demographic and vacation patterns, changes in
governmental regulation of the industry, imposition of increased taxes by governmental authorities, the
declaration of bankruptcy and/or credit defaults by other vacation ownership companies and negative
publicity for the industry, could also have a material adverse effect on Bluegreen’s business. In
addition, Bluegreen's operations and results may be negatively impacted if Bluegreen is unable to update
its business strategy over time and from time to time in response to changing economic and industry
conditions.
Bluegreen may not be able to develop or acquire VOI inventory or enter into and maintain fee-based
service agreements or other arrangements to source VOI inventory, which may cause its business
and results to be adversely impacted.
In addition to developed VOI sales, Bluegreen sources VOIs as part of its capital-light business strategy
through fee-based service agreements with third-party developers and through JIT and secondary
market arrangements. If Bluegreen is unable to develop or acquire resorts at the levels or in the time
frame anticipated, or is unsuccessful in entering into agreements with third-party developers or others to
source VOI inventory in connection with its capital-light business strategy, Bluegreen may experience a
decline in VOI supply, which could result in a decrease in its revenues. In addition, a decline in VOI
supply could result in a decrease of financing revenues that are generated when VOIs are sold and fee
and rental revenues that are generated by Bluegreen’s management services.
Bluegreen’s business and properties are subject to extensive federal, state and local laws, regulations
and policies. Changes in these laws, regulations and policies, as well as the cost of maintaining
compliance with new or existing laws, regulations and policies and the imposition of additional taxes
on operations, could adversely affect Bluegreen’s business. In addition, results of audits of its tax
returns or those of its subsidiaries may have a material adverse impact on Bluegreen’s financial
condition.
The federal government and the state and local jurisdictions in which Bluegreen operates have enacted
extensive regulations that affect the manner in which Bluegreen markets and sells VOIs and conducts its
other business operations. In addition, many states have adopted specific laws and regulations
regarding the sale of VOIs. Many states, including Florida and South Carolina, where certain of
Bluegreen’s resorts are located, extensively regulate the creation and management of timeshare resorts,
the marketing and sale of timeshare properties, the escrow of purchaser funds prior to the completion of
construction and closing, the content and use of advertising materials and promotional offers, the
delivery of an offering memorandum and the creation and operation of exchange programs and multi-
site timeshare plan reservation systems. Moreover, with regard to sales conducted in South Carolina, the
closing of real estate and mortgage loan transactions must be conducted under the supervision of an
attorney licensed in South Carolina and otherwise in accordance with South Carolina’s Time Sharing
Transaction Procedures Act. Most states also have other laws that are applicable to Bluegreen’s
activities, such as timeshare project registration laws, real estate licensure laws, mortgage licensure
laws, sellers of travel licensure laws, anti-fraud laws, consumer protection laws, telemarketing laws,
prize, gift and sweepstakes laws, and consumer credit laws. Bluegreen's management of, and dealings
with, HOAs, including Bluegreen's purchase of defaulted inventory from HOAs in connection with its
secondary market sales, is also subject to state laws and resort rules and regulations, including those with
respect to the establishment of budgets and expenditures, rule-making, and the imposition of
maintenance assessments.
32
Bluegreen currently is authorized to market and sell VOIs in all locations at which its marketing and
sales are conducted. If Bluegreen’s agents or employees violate applicable regulations or licensing
requirements, their acts or omissions could cause the states where the violations occurred to revoke or
refuse to renew Bluegreen’s licenses, render Bluegreen’s sales contracts void or voidable, or impose
fines on Bluegreen based on past activities.
In addition, the federal government and the state and local jurisdictions in which Bluegreen conducts
business have generally enacted extensive regulations relating to direct marketing and telemarketing,
including the federal government’s national “do not call” list, the making of marketing and related calls
to cell phone users, a significant development in light of cell phone usage rapidly becoming the primary
method of communication, the Telemarketing Sales Rule, the Telephone Consumer Protection Act and
the CAN-SPAM Act of 2003. These regulations, as well as international data protection laws, have
impacted Bluegreen’s marketing of VOIs. While Bluegreen has taken steps designed to ensure
compliance with these new applicable regulations, these steps have increased and are expected to
continue to increase Bluegreen’s marketing costs and may not prevent failures in compliance.
Additionally, adoption of new state or federal laws regulating marketing and solicitation, and changes to
existing laws, could adversely affect current or planned marketing activities and cause Bluegreen to
change its marketing strategy. If this occurs, Bluegreen may not be able to develop adequate alternative
marketing strategies, which could affect the amount and timing of its VOI sales. Bluegreen cannot
predict the impact that these legislative initiatives or any other legislative measures that may be
proposed or enacted in the future may have on Bluegreen’s marketing strategies and results. Further,
from time to time, complaints are filed against Bluegreen by individuals claiming that they received
calls in violation of applicable regulations. See “Item 3 – Legal Proceedings” for a description of
litigation brought against Bluegreen and Choice Hotels in January 2018 related to Bluegreen’s
telemarketing sales activities.
Most states have taxed VOIs as real estate, imposing property taxes that are billed to the respective
HOAs that maintain the related resorts and have not sought to impose sales tax upon the sale of the VOI
or accommodations tax upon the use of the VOI. From time to time, however, various states have
attempted to promulgate new laws or apply existing laws impacting the taxation of VOIs to require that
sales or accommodations taxes be collected. Should new state or local laws be implemented or
interpreted to impose sales or accommodations taxes on VOIs, Bluegreen’s business could be materially
adversely affected.
From time to time, consumers file complaints against Bluegreen in the ordinary course of Bluegreen’s
business. Bluegreen could be required to incur significant costs to resolve these complaints or enter
into consents with regulators regarding its activities, including that it may be required to refund all or a
portion of the purchase price paid by the customer for the VOI. Bluegreen may not remain in
compliance with all applicable federal, state and local laws and regulations, and violations of applicable
laws may have adverse implications on Bluegreen, including negative publicity, potential litigation and
regulatory sanctions. The expense, negative publicity and potential sanctions associated with any failure
to comply with applicable laws or regulations could have a material adverse effect on Bluegreen’s
results of operations or financial position.
Under the Americans with Disabilities Act of 1990 and the Accessibility Guidelines promulgated
thereunder (collectively, the “ADA”), all public accommodations, including properties, must meet
various federal requirements related to access and use by disabled persons. Compliance with the ADA’s
requirements could require removal of access barriers or other renovations, and non-compliance could
result in the imposition of fines or penalties, or awards of damages, against Bluegreen. Bluegreen’s
properties are also subject to various federal, state and local regulatory requirements, such as state and
local fire and life safety requirements. Further, various laws govern resort management activities,
including laws and regulations regarding community association management, public lodging, food and
beverage services, liquor licensing, labor, employment, health care, health and safety, accessibility,
discrimination, immigration, and the environment (including climate change).
Bluegreen’s lending activities are also subject to a number of laws and regulations, including laws and
regulations related to consumer loans, retail installment contracts, mortgage lending, fair debt collection
and credit reporting practices, consumer collection practices, contacting debtors by telephone, mortgage
disclosure, lender licenses and money laundering. The Consumer Finance Protection Bureau, created
under the Dodd-Frank Act, has emphasized new regulatory focus on areas of business such as consumer
mortgage servicing and debt collection, credit reporting and consumer financial disclosures, all of which
affect the manner in which Bluegreen may provide financing to the purchasers of VOIs and conduct
lending and loan servicing operations.
In addition, VOIs may in the future be deemed to be securities under federal or state law and therefore
subject to applicable securities regulation, which could have a material adverse effect on Bluegreen due
to, among other things, the cost of compliance with such regulations.
33
The vacation ownership and hospitality industries are highly competitive, and Bluegreen may not be
able to compete successfully.
Bluegreen competes with various high profile and well-established operators, many of which have
greater liquidity and financial resources than Bluegreen. Many of the world’s most recognized lodging,
hospitality and entertainment companies develop and sell timeshare units or VOIs in resort
properties. Bluegreen also competes with numerous smaller owners and operators of vacation
ownership resorts and also faces competition from alternative lodging options available to consumers
through both traditional methods of delivery as well as new web portals and applications, including
private rentals of homes or apartments or condominium units, which have increased in popularity in
recent years. Bluegreen's ability to remain competitive and to attract and retain customers depends on its
customers' satisfaction with its products and services as well as on distinguishing the quality, value, and
efficiency of its products and services from those offered by its competitors. Customer dissatisfaction
with experiences at its resorts or otherwise as a member of the Bluegreen Vacation Club owner,
including due to an inability to use points for desired stays, could result in negative publicity and/or a
decrease in sales, or otherwise adversely impact Bluegreen's ability to successfully compete in the
vacation ownership and hospitality industries. Bluegreen may not be able to timely and sufficiently
identify and remediate the cause of customer dissatisfaction. Any of these events could materially and
adversely impact Bluegreen's operating results and financial condition.
Bluegreen’s business and profitability may be impacted if financing is not available on favorable
terms, or at all.
In connection with sales of VOIs, Bluegreen generally offers financing to the purchaser of up to 90% of
the purchase price of the VOI. However, Bluegreen incurs selling, marketing and administrative cash
expenses prior to and concurrent with the sale. These costs, along with the cost of the underlying VOI,
generally exceed the down payment Bluegreen receives at the time of the sale. Accordingly,
Bluegreen’s ability to borrow against or sell its notes receivable has historically been a critical factor in
Bluegreen’s continued liquidity, and Bluegreen therefore has depended on funds from its credit facilities
and securitization transactions to finance its operations. If Bluegreen’s pledged receivables facilities
terminate or expire and Bluegreen is unable to extend them or replace them with comparable facilities,
or if Bluegreen is unable to continue to participate in securitization-type transactions and “warehouse”
facilities on acceptable terms, Bluegreen’s liquidity, cash flow and profitability would be materially and
adversely affected. Credit market disruptions have in the past adversely impacted the willingness of
banks and other finance companies to provide “warehouse” lines of credit for VOI notes receivable and
resulted from time to time in the term securitization market being unavailable. Future credit market
disruptions may have similar effects or otherwise make obtaining additional and replacement external
sources of liquidity more difficult and costly.
In addition, financing for real estate acquisition and development and the capital markets for corporate
debt is cyclical. While Bluegreen has increased its focus on expanding its fee-based service business
and encouraging higher down payments in connection with sales, there is no assurance that these
initiatives will enhance Bluegreen’s financial position or otherwise be successful in the long term.
Bluegreen anticipates that it will continue to seek and use external sources of liquidity, including funds
that Bluegreen obtains pursuant to additional borrowings under its existing credit facilities, under credit
facilities that Bluegreen may obtain in the future, under securitizations in which Bluegreen may
participate in the future or pursuant to other borrowing arrangements, to:
·
·
·
·
Support Bluegreen’s operations and, subject to declaration by its board of directors and
contractual limitations, including limitations contained in its credit facilities, pay dividends;
Finance the acquisition and development of VOI inventory or property and equipment;
Finance a substantial percentage of Bluegreen’s sales; and
Satisfy Bluegreen’s debt and other obligations.
Bluegreen’s ability to service or refinance its indebtedness or to obtain additional financing (including
its ability to consummate future term securitizations) depends on the credit markets and on Bluegreen’s
future performance, which is subject to a number of factors, including the success of Bluegreen’s
business, results of operations, leverage, financial condition and business prospects, prevailing interest
rates, general economic conditions, the performance of Bluegreen’s receivables portfolio, and
perceptions about the vacation ownership and real estate industries.
As of December 31, 2017, Bluegreen had $19.9 million of indebtedness scheduled to become due during
2018. Historically, much of Bluegreen’s debt has been renewed or refinanced in the ordinary course of
business. However, there is no assurance that Bluegreen will in the future be able to obtain sufficient
external sources of liquidity on
34
attractive terms, or at all, or otherwise renew, extend or refinance all or any portion of its outstanding
debt. Any of these occurrences may have a material adverse impact on Bluegreen’s liquidity and
financial condition.
In addition, Bluegreen has and intends to continue to enter into arrangements with third-party
developers pursuant to which it will sell their VOI inventory for a fee. These arrangements enable
Bluegreen to generate fees from the marketing and sales services provided, and in certain cases from
provisions of management services, without requiring it to fund development and acquisition costs. If
these third-party developers are not able to obtain or maintain financing necessary for their
development activities or other operations, Bluegreen may not be able to enter into these fee-based
arrangements or have access to their VOI inventory when anticipated, which would adversely impact
results.
Bluegreen would suffer substantial losses and its liquidity position could be adversely impacted if an
increasing number of customers to whom Bluegreen provides financing default on their obligations.
interest
Adverse conditions in the mortgage industry, including credit availability, borrowers’ financial profiles,
prepayment rates and other factors, including those outside Bluegreen’s control, may increase the
default rates Bluegreen experiences or otherwise negatively impact the performance of its notes
receivable. In addition, in recent years, external parties have been discouraging certain borrowers from
staying current on their note payments. Although in many cases Bluegreen may have recourse against a
buyer for the unpaid purchase price, certain states have laws that limit Bluegreen’s ability to recover
personal judgments against customers who have defaulted on their loans or Bluegreen may determine
that the cost of doing so may not be justified. Historically, Bluegreen has generally not pursued such
recourse against its customers. In the case of Bluegreen’s notes receivable secured by VOIs, if
Bluegreen is unable to collect the defaulted amount due, Bluegreen traditionally has terminated the
customer’s
recovered
VOI. Irrespective of Bluegreen’s remedy in the event of a default, Bluegreen cannot recover the
marketing, selling and administrative costs associated with the original sale, and such costs generally
exceed the cash received by Bluegreen from the buyer at the time of the sale. In addition, Bluegreen
will need to incur such costs again in order to resell the VOI. Bluegreen updates its estimate of such
future losses each quarter, and consequently, the charge against sales in a particular period may be
impacted, favorably or unfavorably, by a change in expected losses related to notes originated in prior
periods. In addition, defaults may cause buyers of, or lenders whose loans are secured by, Bluegreen’s
VOI notes receivable to reduce the amount of availability or advance rates under receivables purchase
and credit facilities, or to result in an increase the interest costs associated with such facilities. In such
an event, the cost of financing may increase, and Bluegreen may not be able to secure replacement or
alternative financing on terms acceptable to Bluegreen, if at all, which would adversely affect
Bluegreen’s earnings, financial position and liquidity.
the Bluegreen Vacation Club and
remarketed
then
the
in
As described above, Bluegreen’s VOI notes receivable financing facilities could be adversely affected if
a particular VOI note receivable pool fails to meet certain performance ratios, which could occur if the
default rate or other credit metrics of the underlying VOI notes receivable deteriorate. In addition, if
Bluegreen offers financing to purchasers of VOIs with terms longer than those generally offered in the
industry, Bluegreen may not be able to securitize those VOI financing receivables. Bluegreen’s ability to
sell securities backed by Bluegreen’s VOI notes receivable depends on the continued ability and
willingness of capital market participants to invest in such securities. Asset-backed securities issued in
Bluegreen’s term securitization transactions could be downgraded by credit agencies in the future. If a
downgrade occurs, Bluegreen’s ability to complete other securitization transactions on acceptable terms
or at all could be jeopardized, and Bluegreen could be forced to rely on other potentially more
expensive and less attractive funding sources, to the extent available. Similarly, if other operators of
vacation ownership products were to experience significant financial difficulties, or if the vacation
ownership industry as a whole were to contract, Bluegreen could experience difficulty in securing
funding on acceptable terms. The occurrence of any of the foregoing could adversely impact
Bluegreen’s business and results, including, without limitation, by reducing the amount of financing
Bluegreen is able to provide to VOI purchasers, which in turn may result in a reduction in VOI sales.
In addition, under the terms of Bluegreen’s pledge and receivable sale facilities, Bluegreen may be
required, under certain circumstances, to replace receivables or to pay down the loan to within
permitted loan-to-value ratios. Additionally, the terms of Bluegreen’s securitization transactions
require Bluegreen to repurchase or replace loans if Bluegreen breached any of the representations and
warranties Bluegreen made at the time Bluegreen sold the receivables. These agreements also often
include terms providing that, in the event of defaults or delinquencies by customers in excess of stated
thresholds, or if other performance thresholds are not met, substantially all of Bluegreen’s cash flow
from its retained interest in the receivable portfolios sold will be required to be paid to the parties who
purchased the receivables from Bluegreen.
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Bluegreen's existing indebtedness, or indebtedness that it may incur in the future, could adversely
impact its financial condition and results of operations, and the terms of Bluegreen's indebtedness
may limit its activities.
Bluegreen's level of debt and debt service requirements have several important effects on Bluegreen's
operations. Significant debt service cash requirements reduce the funds available for operations and
future business opportunities and increase Bluegreen's vulnerability to adverse economic and industry
conditions, as well as conditions in the credit markets generally. In addition, Bluegreen's leverage
position increases its vulnerability to economic and competitive pressures and may limit funds available
for acquisitions, working capital, capital expenditures, dividends, and other general corporate purposes.
Further, the financial covenants and other restrictions contained in indentures, credit agreements and
other agreements relating to Bluegreen's indebtedness require Bluegreen to meet certain financial tests
and restrict its ability to, among other things, pay dividends, borrow additional funds, dispose of assets
or make investments. If Bluegreen fails to comply with the terms of its debt instruments, such debt may
become due and payable immediately, which would have a material adverse impact on Bluegreen's cash
position and financial condition. Significant resources may be required to monitor Bluegreen's
compliance with its debt instruments (from a quantitative and qualitative perspective), and such
monitoring efforts may not be effective in all cases. Bluegreen may also incur substantial additional
indebtedness in the future. If new debt or other liabilities are added to its current debt levels, the related
risks that it now faces, as described above, could intensify.
To the extent inflationary trends, tightened credit markets or other factors affect interest rates,
Bluegreen’s debt service costs may increase. If interest rates increased one percentage point, the effect
on interest expense related to Bluegreen’s variable-rate debt would be an annual increase of $2.1
million, based on balances as of December 31, 2017.
The ratings of third-party rating agencies could adversely impact Bluegreen’s ability to obtain, renew
or extend credit facilities, or otherwise raise funds.
Rating agencies from time to time review prior corporate and specific transaction ratings in light of
tightened ratings criteria. In December 2017, Standard & Poor’s Rating Services affirmed Bluegreen’s
‘B+’ credit rating. Bluegreen’s corporate credit rating is also based, in part, on rating agencies’
speculation about Bluegreen’s potential future debt and dividend levels. If rating agencies were to
downgrade Bluegreen’s corporate credit ratings, Bluegreen’s ability to raise funds on favorable terms,
or at all, and Bluegreen’s liquidity, financial condition and results of operations could be adversely
impacted. See “Bluegreen would suffer substantial losses and Bluegreen’s liquidity position could be
adversely impacted if an increasing number of customers to whom Bluegreen provides financing default
on their obligations” above. In addition, if rating agencies downgraded their original ratings on certain
bond classes in Bluegreen’s securitizations, holders of such bonds may be required to sell bonds in the
marketplace, and such sales could occur at a discount, which could impact the perceived value of the
bonds and Bluegreen’s ability to sell future bonds on favorable terms or at all. While Bluegreen is not
aware of any reasonably likely downgrades to its corporate credit rating or the ratings of bond classes in
its securitizations, such ratings changes can occur without advance notice.
Bluegreen’s future success depends on its ability to market its products and services successfully and
efficiently, and Bluegreen’s marketing expenses have increased and may continue to increase in the
future.
As previously described, Bluegreen competes for customers with hotel and resort properties, other
vacation ownership resorts and alternative lodging options, including private rentals of homes and
apartments or condominium units. The identification of sales prospects and leads and the marketing of
Bluegreen’s products and services to them are essential to Bluegreen’s success. Bluegreen incurs
expenses associated with marketing programs in advance of the closing of sales. If Bluegreen’s lead
identification and marketing efforts do not yield enough leads or Bluegreen is unable to successfully
convert sales leads to sales, Bluegreen may be unable to recover the expense of its marketing programs
and systems and its business, operating results and financial condition would be adversely affected. In
addition, Bluegreen is currently focusing and has increased its marketing efforts on selling to new
customers, which typically involves a relatively higher marketing cost compared to sales to existing
owners and therefore has increased and is expected to continue to increase Bluegreen’s sales and
marketing expenses. If Bluegreen is not successful in offsetting the cost increase with greater sales
revenue, Bluegreen’s operating results and financial condition would be adversely impacted. In
addition, Bluegreen's marketing efforts are subject to the risk of changing consumer behavior. Changes
in consumer behavior may adversely impact the effectiveness of marketing efforts and strategies which
Bluegreen has in place, and Bluegreen may not be able to timely and effectively respond to such
changes.
Bluegreen generates a significant portion of its new sales prospects and leads through its arrangements
with various third parties, including Bass Pro and Choice Hotels. VOI sales to prospects and leads
generated by Bluegreen’s marketing arrangement with Bass Pro accounted for approximately 15% and
16% of its VOI sales volume during the years ended December 31, 2017 and 2016, respectively. If this
arrangement with BassPro, or any other significant
36
marketing arrangement, does not generate a sufficient number of prospects and leads or is terminated or
limited and not replaced by another source of sales prospects and leads, Bluegreen may not be able to
successfully market and sell its products and services at current sales levels, at anticipated levels or at
levels required in order to offset the costs associated with its marketing efforts. On October 9, 2017,
Bass Pro raised an issue regarding the computation of the sales commissions paid to it on the sale of
VOIs. While Bluegreen believes that the amount paid was consistent with the terms and intent of the
parties’ agreements, the resolution of that issue could in the future result in an increase in its marketing
costs and adversely impact the Company’s operating results and financial condition. The Company
recognized approximately $4.8 million in selling, general and administrative expense related to this
matter during the fourth quarter of 2017.
Bluegreen may not be successful in maintaining or expanding its capital-light business relationships,
or its capital-light activities, including fee-based sales and marketing arrangements, and JIT and
secondary market sales activities, and such activities may not be profitable, which may have an
adverse impact on Bluegreen’s results of operations and financial condition.
Bluegreen offers fee-based marketing, sales, resort management and other services to third-party
developers. Bluegreen has over the last several years continued to expand its capital-light business
strategy, which Bluegreen believes enables it to leverage its expertise in sales and marketing, resort
management, mortgage servicing, construction management and title services. Bluegreen currently
intends to continue its focus on its capital-light business activities as such activities generally produce
positive cash flow and typically require less capital investment than Bluegreen’s traditional vacation
ownership business. Bluegreen has attempted to structure these activities to cover its costs and generate
a profit. Sales of third party developers’ VOIs must generate sufficient cash to comply with the terms
of their financing obligations as well as to pay the fees or commissions due to Bluegreen. The third
party developers may not be able to obtain or maintain financing necessary to meet the developer’s
requirements, which could impact Bluegreen's ability to sell the developers’ inventory. While
Bluegreen could attempt to utilize other arrangements, including JIT arrangements, where Bluegreen
would utilize its receivable credit facilities in order to provide fee-based marketing and sales services,
this would reduce the credit otherwise available to Bluegreen and impact profitability. Bluegreen
commenced its capital-light activities largely during the recession in response to poor economic
conditions, and Bluegreen’s fee-based and other capital-light business activities in the future may be
adversely impacted by changes in economic conditions. While Bluegreen performs fee-based sales and
marketing services, Bluegreen sells VOIs in a resort developed by a third party as an interest in the
Bluegreen Vacation Club. This subjects Bluegreen to a number of risks typically associated with selling
products developed by others under its own brand name, including litigation risks. Further, these
arrangements may expose Bluegreen to additional risk as it will not control development activities or
timing of development completion. If third parties with whom Bluegreen enters into agreements are not
able to fulfill their obligations to Bluegreen, the inventory expected to be acquired or marketed and sold
on their behalf may not be available when expected or at all, or may not otherwise be within agreed-
upon specifications. Further, if these third parties do not perform as expected and Bluegreen does not
have access to the expected inventory or ability to obtain access to inventory from alternative sources
on a timely basis, its ability to maintain or increase sales levels would be adversely impacted.
Bluegreen also sells VOI inventory through secondary market arrangements which require low levels of
capital deployment. In connection with secondary market sales, Bluegreen acquires VOI inventory
from its resorts’ HOAs on a non-committed basis in close proximity to the timing of when Bluegreen
intends to sell such VOIs. VOIs purchased from HOAs are typically obtained by the HOAs through
foreclosure in connection with maintenance fee defaults and are generally acquired by Bluegreen at a
discount. While Bluegreen intends to increase its secondary market sales efforts in the future, Bluegreen
may not be successful in doing so, and these efforts may not result in Bluegreen achieving anticipated
results. Further, Bluegreen’s secondary market sale activities may subject Bluegreen to negative
publicity, which could adversely impact its reputation and business.
Bluegreen’s results of operations and financial condition may be materially and adversely impacted
if Bluegreen does not continue to participate in exchange networks and other strategic alliances with
third parties or if Bluegreen’s customers are not satisfied with the networks in which Bluegreen
participates or Bluegreen’s strategic alliances.
Bluegreen believes that its participation in exchange networks and other strategic alliances and its
Traveler Plus™ program make ownership of Bluegreen VOIs more attractive by providing owners with
the ability to take advantage of vacation experiences in addition to stays at Bluegreen’s resorts. A VOI
owner’s participation in the RCI exchange network allows Vacation Club owners to use their points to
stay at over 4,300 participating resorts, based upon availability and the payment of a variable exchange
fee. During the year ended December 31, 2017, approximately 8% of Vacation Club owners utilized
the RCI exchange network for a stay of two or more nights. Bluegreen also has
37
an exclusive strategic arrangement with Choice Hotels pursuant to which, subject to payments and
conditions, certain of Bluegreen’s resorts have been branded as part of Choice Hotels’ Ascend Hotel
Collection. For a nominal annual fee and transactional fee, Vacation Club owners may also participate
in Bluegreen’s Traveler Plus program, which enables them to use their points to access an additional 44
direct exchange resorts, for other vacation experiences such as cruises. Vacation Club owners can
convert their Vacation Club points into Choice Privileges points. Choice Privileges points can be used
for stays at Choice Hotels. In addition, Traveler Plus members can directly use their Vacation Club
points for stays at Choice Hotels’ Ascend Hotel Collection properties, a network of historic and
boutique hotels in the United States, Canada, Scandinavia and Latin America. Bluegreen may not be
able to or desire to continue to participate in the RCI or direct exchange networks in the future or
maintain or extend its other marketing and strategic networks, alliances and relationships. In addition,
these networks, alliances and relationships, and Bluegreen’s Traveler Plus program, may not continue to
operate effectively, and its customers may not be satisfied with them. In addition, Bluegreen may not be
successful in identifying or entering into new strategic relationships in the future. If any of these events
should occur, Bluegreen’s results of operations and financial condition may be materially and adversely
impacted.
Bluegreen is subject to certain risks associated with its management of resort properties.
Through management of resorts and ownership of VOIs, Bluegreen is subject to certain risks related to
the physical condition and operation of the managed resort properties in its network, including:
·
The presence of construction or repair defects or other structural or building damage at any of
these resorts, including resorts Bluegreen may develop in the future;
· Any noncompliance with or liabilities under applicable environmental, health or safety
regulations or requirements or building permit requirements relating to these resorts;
· Any damage resulting from natural disasters, such as hurricanes, earthquakes, fires, floods and
windstorms, which may increase in frequency or severity due to climate change or other
factors; and
Claims by employees, members and their guests for injuries sustained on these resort
properties.
·
Some of these risks may be more significant in connection with the properties for which Bluegreen
recently acquired management agreements, particularly those management agreements which were
acquired from operators in financial distress. If an uninsured loss or a loss in excess of insured limits
occurs as a result of any of the foregoing, Bluegreen may be subject to significant costs.
Additionally, a number of U.S. federal, state and local laws, including the Fair Housing Amendments
Act of 1988 and the ADA, impose requirements related to access to and use by disabled persons of a
variety of public accommodations and facilities. A determination that managed resorts are subject to,
and that they are not in compliance with, these accessibility laws could result in a judicial order
requiring compliance, imposition of fines or an award of damages to private litigants. If one of
Bluegreen’s managed resorts was required to make significant improvements as a result of non-
compliance with these accessibility laws, assessments might be needed to fund such improvements,
which additional costs may cause its VOI owners to default on their consumer loans from Bluegreen or
cease making required maintenance fee or assessment payments. Also, to the extent that Bluegreen
holds interests in a particular resort, it would be responsible for the pro rata share of the costs of such
improvements. In addition, any new legislation may impose further burdens or restrictions on property
owners with respect to access by disabled persons.
The resort properties that Bluegreen manages are subject to federal, state and local laws and regulations
relating to the protection of the environment, natural resources and worker health and safety, including
laws and regulations governing and creating liability relating to the management, storage and disposal
of hazardous substances and other regulated materials and the cleanup of contaminated sites. The
resorts are also subject to various environmental laws and regulations that govern certain aspects of their
ongoing operations. These laws and regulations control such things as the nature and volume of
wastewater discharges, quality of water supply and waste management practices. To the extent that
Bluegreen holds interests in a particular resort, it would be responsible for the pro rata share of losses
sustained by such resort as a result of a violation of any such laws and regulations.
In addition, Bluegreen may from time to time have disagreements with VOI owners and HOAs resulting
from its provision of management services. Failure to resolve such disagreements may result in
litigation. Further, disagreements with HOAs could also result in the loss of management contracts,
which would negatively affect Bluegreen’s revenues and results and may also have an adverse impact
on its ability to generate sales from existing VOI owners.
38
Bluegreen’s management contracts are typically structured as “cost-plus,” with an initial term of three
years and automatic one-year renewals. If a management contract is terminated or not renewed on
favorable terms or is renegotiated in a manner adverse to Bluegreen, its revenues and cash flows would
be adversely affected.
Maintenance fees at Bluegreen’s resorts and/or Vacation Club dues may be required to be increased,
which could cause its product to become less attractive and could harm business.
The maintenance fees, special assessments and Vacation Club dues that are levied by HOAs and the
Vacation Club on VOI owners may increase as the costs to maintain and refurbish properties, and to
keep properties in compliance with Bluegreen’s standards, increase. Increases in such fees, assessments
or dues could negatively affect customer satisfaction with Bluegreen’s Vacation Club or otherwise
adversely impact VOI sales to both new customers and existing VOI owners.
Bluegreen’s strategic transactions may not be successful and may divert its management’s attention
and consume significant resources.
Bluegreen intends to continue its strategy of selectively pursuing complementary strategic transactions.
Bluegreen may also purchase management contracts, including from resort operators facing financial
distress, and purchase VOI inventory at resorts that it does not manage, with the goal of acquiring
sufficient VOI ownership at such a resort to become the manager of that resort. The successful
execution of this strategy will depend on Bluegreen’s ability to identify and enter into the agreements
necessary to take advantage of these potential opportunities, and to obtain any necessary financing.
Bluegreen may not be able to do so successfully. In addition, Bluegreen’s management may be required
to devote substantial time and resources to pursue these opportunities, which may impact their ability to
manage its operations effectively.
Acquisitions involve numerous additional risks, including: (i) difficulty in integrating the operations
and personnel of the acquired business or assets; (ii) potential disruption of ongoing business and the
distraction of management from day-to-day operations; (iii) difficulty entering markets in which
Bluegreen has limited or no prior experience and in which competitors have a stronger market position;
(iv) difficulty maintaining the quality of services that Bluegreen has historically provided across new
acquisitions; (v) potential legal and financial responsibility for liabilities of the acquired business or
assets; (vi) potential overpayment for the acquired business or assets; (vii) increased expenses
associated with completing an acquisition and amortizing any acquired intangible assets; (viii) risks
associated with any debt incurred in connection with the financing of the transaction; and (ix)
challenges in implementing uniform standards, controls, procedures and policies throughout an acquired
business.
Bluegreen is dependent on the managers of its affiliated resorts to ensure that those properties meet
its customers’ expectations.
In addition to stays at Bluegreen resorts, Vacation Club owners have access to other resorts and hotels
as a result of participation in exchange programs and other strategic alliances. Accordingly, Vacation
Club owners have access to resorts that Bluegreen does not manage, own or operate. If the managers of
a significant number of those properties were to fail to maintain them in a manner consistent with
Bluegreen’s standards of quality, Bluegreen may be subject to customer complaints and its reputation
and brand could be damaged. In addition, Bluegreen’s agreements with these resorts or their owners
may expire, be terminated or not be renewed, or may be renegotiated in a manner adverse to Bluegreen,
and Bluegreen may be unable to enter into new agreements that provide Vacation Club owners with
equivalent access to additional resorts, any or all of which could materially adversely impact
Bluegreen’s business, operating results and financial condition.
The resale market for VOIs could adversely affect Bluegreen’s business.
Based on Bluegreen’s experience at its resorts and at resorts owned by third parties, Bluegreen believes
that resales of VOIs in the secondary market generally are made at net sales prices below the original
customer purchase prices. The relatively lower sales prices are partly attributable to the high marketing
and sales costs associated with the initial sales of such VOIs. Accordingly, the initial purchase price of
a VOI may be less attractive to prospective buyers, and Bluegreen competes with buyers who seek to
resell their VOIs. While VOI resale clearing houses or brokers currently do not have a material impact
on Bluegreen’s business, the availability of resale VOIs at lower prices, particularly if an organized and
liquid secondary market develops, could adversely affect Bluegreen’s level of sales and sales prices,
which in turn would adversely affect Bluegreen’s business, financial condition and results of operations.
39
Bluegreen is subject to the risks of the real estate market and the risks associated with real estate
development, including a decline in real estate values and a deterioration of other conditions relating
to the real estate market and real estate development.
Real estate markets are cyclical in nature and highly sensitive to changes in national and regional
economic conditions, including:
Levels of unemployment;
Levels of discretionary disposable income;
Levels of consumer confidence;
The availability of financing;
·
·
·
·
· Overbuilding or decreases in demand;
·
·
Interest rates; and
Federal, state and local taxation methods.
A deterioration in general economic conditions or in the real estate market would have a material
adverse effect on Bluegreen’s business.
Bluegreen expects to seek to acquire more real estate inventory in the future, and the availability of land
for development of resort properties at favorable prices will be critical to Bluegreen’s profitability and
the ability to cover its significant selling, general and administrative expenses, cost of capital and other
expenses. If Bluegreen is unable to acquire such land or resort properties at a favorable cost,
Bluegreen’s results of operations may be materially, adversely impacted. The profitability of
Bluegreen’s real estate development activities is also impacted by the cost of construction, including the
costs of materials and labor and other services. Should the cost of construction materials and services
rise, the ultimate cost of Bluegreen’s future resorts inventory when developed could increase and have a
material, adverse impact on Bluegreen’s results of operations. Bluegreen is also exposed to other risks
associated with development activities, including, without limitation:
· Adverse conditions in the capital markets may limit Bluegreen’s ability to raise capital for
·
completion of projects or for development of future properties;
Construction delays, zoning and other local, state or federal governmental approvals, cost
overruns, lender financial defaults, or natural disasters, such as earthquakes, hurricanes,
floods, fires, volcanic eruptions and oil spills, increasing overall construction costs, affecting
timing of project completion or resulting in project cancellations;
· Any liability or alleged liability or resulting delays associated with latent defects in design or
construction of projects Bluegreen has developed or that Bluegreen constructs in the future
adversely affecting Bluegreen’s business, financial condition and reputation;
Failure by third-party contractors to perform for any reason, exposing Bluegreen to
operational, reputational and financial harm; and
The existence of any title defects in properties Bluegreen acquires.
·
·
In addition, the third-party developers from whom Bluegreen sources VOI inventory as part of its
capital-light business strategy are exposed to such development-related risks and, therefore, the
occurrence of such risks may adversely impact its ability to acquire VOI inventory from them when
expected or at all.
Environmental liabilities, including claims with respect to mold or hazardous or toxic substances,
could have a material adverse impact on Bluegreen’s financial condition and operating results.
Under various federal, state and local laws, ordinances and regulations, as well as common law,
Bluegreen may be liable for the costs of removal or remediation of certain hazardous or toxic
substances, including mold, located on, in or emanating from property that Bluegreen owns, leases or
operates, as well as related costs of investigation and property damage at such property. These laws
often impose liability without regard to whether Bluegreen knew of, or was responsible for, the
presence of the hazardous or toxic substances. The presence of such substances, or the failure to
properly remediate such substances, may adversely affect Bluegreen’s ability to sell or lease its property
or to borrow money using such property or receivables generated from the sale of such property as
collateral. Noncompliance with environmental, health or safety requirements may require Bluegreen to
cease or alter operations at one or more of its properties. Further, Bluegreen may be subject to common
law claims by third parties based on damages and costs resulting from violations of environmental
regulations or from contamination associated with one or more of Bluegreen’s properties.
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Bluegreen’s insurance policies may not cover all potential losses.
Bluegreen maintains insurance coverage for liability, property and other risks with respect to its
operations and activities. While Bluegreen has comprehensive property and liability insurance policies
with coverage features and insured limits that it believes are customary, market forces beyond
Bluegreen’s control may limit the scope of the insurance coverage it can obtain or ability to obtain
coverage at reasonable rates. The cost of insurance may increase and coverage levels may decrease,
which may affect Bluegreen’s ability to maintain customary insurance coverage and deductibles at
acceptable costs. There is a limit as well as various sub-limits on the amount of insurance proceeds
Bluegreen will receive in excess of applicable deductibles. If an insurable event occurs that affects more
than one of its properties, the claims from each affected property may be considered together per policy
provisions to determine whether the per occurrence limit, annual aggregate limit or sub-limits,
depending on the type of claim, have been reached. If the limits or sub-limits are exceeded, each
affected property may only receive a proportional share of the amount of insurance proceeds provided
for under the policy. Further, certain types of losses, generally of a catastrophic nature, such as
earthquakes, hurricanes and floods, terrorist acts, and certain environmental matters, may be outside the
general coverage limits of Bluegreen’s policies, subject to large deductibles, deemed uninsurable or too
cost-prohibitive to justify insuring against. In addition, in the event of a substantial loss, the insurance
coverage Bluegreen carries may not be sufficient to pay the full market value or replacement cost of the
affected resort or in some cases may not provide a recovery for any part of a loss. As a result, Bluegreen
could lose some or all of the capital it has invested in a property, as well as the anticipated future
marketing, sales or revenue opportunities from the property. Further, Bluegreen could remain obligated
under guarantees or other financial obligations related to the property despite the loss of product
inventory, and its VOI owners could be required to contribute toward deductibles to help cover losses.
Adverse outcomes in legal or other regulatory proceedings, including claims of non-compliance with
applicable regulations or development-related defects could adversely affect Bluegreen’s financial
condition and operating results.
In the ordinary course of business, Bluegreen is subject to litigation and other legal and regulatory
proceedings, which result in significant expenses and devotion of time. In addition, litigation is
inherently uncertain, and adverse outcomes in the litigation and other proceedings to which Bluegreen is
or may be subject could adversely affect its financial condition and operating results. In addition,
liabilities related to Bluegreen’s former Bluegreen Communities business that were not assumed by
Southstar Development Partners, Inc. (“Southstar”) in connection with Southstar’s purchase of
substantially all of the assets which comprised Bluegreen Communities during May 2012, including
those relating to Bluegreen Communities’ operations prior to the closing of the transaction, remain
Bluegreen’s responsibility.
Bluegreen engages third-party contractors to construct its resorts. Bluegreen also historically engaged
third-party contractors to develop the communities within its former Bluegreen Communities
business. However, Bluegreen’s customers may assert claims against Bluegreen for construction
defects or other perceived development defects, including, without limitation, structural integrity, the
presence of mold as a result of leaks or other defects, water intrusion, asbestos, electrical issues,
plumbing issues, road construction, water and sewer defects and defects in the engineering of amenities.
In addition, certain state and local laws may impose liability on property developers with respect to
development defects discovered in the future. Bluegreen could have to accrue a significant portion of
the cost to repair such defects in the quarter when such defects arise or when the repair costs are
reasonably estimable.
Costs associated with litigation, including claims for development-related defects, and the outcomes
thereof could adversely affect Bluegreen’s liquidity, financial condition and operating results.
Failure to maintain the integrity of Bluegreen’s internal or customer data could result in faulty
business decisions or operational inefficiencies, damage Bluegreen's reputation and/or subject
Bluegreen to costs, fines, or lawsuits.
Bluegreen collects and retains large volumes of internal and customer data, including social security
numbers, credit card numbers and other personally identifiable information of its customers in various
internal information systems and information systems of its service providers. Bluegreen also maintains
personally identifiable information about its employees. The integrity and protection of that customer,
employee and company data is critical to Bluegreen and faulty decisions could be made if that data is
inaccurate or incomplete. Bluegreen’s customers and employees also have a high expectation that
Bluegreen and its service providers will adequately protect their personal information. The regulatory
environment as well as the requirements imposed on Bluegreen by the payment card industry
surrounding information, security and privacy is also increasingly demanding, in both the United States
and other jurisdictions in which Bluegreen operates. Bluegreen’s systems may be unable to satisfy
changing regulatory and
41
payment card industry requirements and employee and customer expectations, or may require
significant additional investments or time in order to do so.
Bluegreen’s information systems and records, including those it maintains with its service providers,
may be subject to security breaches, cyber attacks, system failures, viruses, operator error or inadvertent
releases of data. A significant theft, loss, or fraudulent use of customer, employee or company data
maintained by Bluegreen or by a service provider could adversely impact Bluegreen’s reputation and
could result in remedial and other expenses, fines or litigation. A breach in the security of Bluegreen’s
information systems or those of its service providers could lead to an interruption in the operation of
Bluegreen’s systems, resulting in operational inefficiencies and a loss of profits.
The proliferation and global reach of social media continues to expand rapidly and could cause
Bluegreen to suffer reputational harm. The continuing evolution of social media presents new
challenges and requires it to keep pace with new developments, technology and trends. Negative posts
or comments about Bluegreen, the properties it manages or its brands on any social networking or user-
generated review website, including travel and vacation property websites, could affect consumer
opinions of Bluegreen and its products, and Bluegreen cannot guarantee that it will timely or adequately
redress such instances. Inadequate or failed technologies could lead to interruptions in Bluegreen’s
operations, which may materially adversely affect its business, financial position, results of operations
or cash flows.
In addition, conversions to new information technology systems require effective change management
processes and may result in cost overruns, delays or business interruptions. If Bluegreen’s information
technology systems are disrupted, become obsolete or do not adequately support its strategic,
operational or compliance needs, its business, financial position, results of operations or cash flows may
be adversely affected.
Bluegreen’s technology requires updating, the cost involved in updating the technology may be
significant, and the failure to keep pace with developments in technology could impair Bluegreen's
operations or competitive position.
The vacation ownership and hospitality industries require the utilization of technology and systems,
including technology utilized for sales and marketing, mortgage servicing, property management, brand
assurance and compliance, and reservation systems. This technology requires continuous updating and
refinements, including technology required to remain competitive and to comply with the legal
requirements such as privacy regulations and requirements established by third parties. Bluegreen is
taking steps to update its information technology platform, which has required, and is likely to continue
to require, significant capital expenditures. Older systems which have not yet been updated may
increase the risk of operational inefficiencies, financial loss and non-compliance with applicable legal
and regulatory requirements, and Bluegreen may not be successful in updating such systems in the time
frame or at the cost anticipated. Further, as a result of the rapidly changing technological environment,
systems which Bluegreen has put in place or expects to put in place in the near term may become
outdated, requiring new technology, and Bluegreen may not be able to replace those systems as quickly
as its competition or within budgeted costs and time frames. Further, Bluegreen may not achieve the
benefits that may have been anticipated from any new technology or system.
Bluegreen’s intellectual property rights, and the intellectual property rights of its business partners,
are valuable, and the failure to protect those rights could adversely affect its business.
Bluegreen’s intellectual property rights, including existing and future trademarks, trade secrets and
copyrights, are and will continue to be valuable and important assets of its business. Bluegreen believes
that its proprietary technology, as well as its other technologies and business practices, are competitive
advantages and that any duplication by competitors would harm Bluegreen’s business. Measures taken
to protect Bluegreen’s intellectual property may not be sufficient or effective. Additionally, intellectual
property laws and contractual restrictions may not prevent misappropriation of Bluegreen’s intellectual
property. Finally, even if Bluegreen is able to successfully protect its intellectual property, others may
develop technologies that are similar or superior to Bluegreen’s technology. Bluegreen also generates a
significant portion of new sales prospects and leads through arrangements with third parties, including
Bass Pro. The failure by these third parties to protect their intellectual property rights could also harm
Bluegreen’s business.
The loss of the services of Bluegreen’s key management and personnel could adversely affect its
business.
Bluegreen’s ability to successfully implement its business strategy will depend on its ability to attract
and retain experienced and knowledgeable management and other professional staff, and Bluegreen may
not be successful in doing so. If efforts to retain and attract key management and other personnel are
unsuccessful, Bluegreen’s business, prospects, results of operations and financial condition may be
materially and adversely impacted.
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BBX Capital and its subsidiaries are subject to environmental laws related to their real estate
activities and the cost of compliance could adversely affect our businesses.
As current or previous owners or operators of real property, BBX Capital and its subsidiaries, including
Bluegreen, may be liable under federal, state and local environmental laws, ordinances and regulations
for the costs of removal or remediation of hazardous or toxic substances on, under or in the property.
These laws often impose liability whether or not we knew of, or were responsible for, the presence of
such hazardous or toxic substances. The cost of investigating, remediating or removing such hazardous
or toxic substances may be substantial.
In connection with the sale of BankAtlantic to BB&T during July 2012, we acquired nonperforming
loans and foreclosed real estate, and our results of operations and financial condition may be
adversely affected if these criticized assets are monetized below their current book values.
As a result of the BankAtlantic S ale, we maintain and manage a portfolio of foreclosed real estate and
non-performing loans. As a consequence, our financial condition and results of operations will be
dependent on our ability to successfully manage and monetize these legacy assets. Further, our loan
portfolio and real estate may not be easily salable in the event we decide to liquidate an asset through a
sale transaction. If the legacy assets are not monetized at or near the current book values ascribed to
them, or if these assets are liquidated for amounts less than book value, our financial condition and
results of operations would be adversely affected. Because a majority of these legacy assets do not
generate income on a regular basis, we do not expect to generate significant revenue or income with
respect to these assets until such time as an asset is monetized through repayments or we consummate
transactions involving the sale, joint venture or development of the underlying real estate or
investments.
Some of our operations are through unconsolidated joint ventures with unaffiliated third parties, and
we may be adversely impacted by a joint venture partner’s failure to fulfill its obligations.
By entering into joint ventures, we may be successful in reducing the amount we invest in the
ownership and development of real estate properties. However, joint venture partners may become
financially unable or unwilling to fulfill their obligations under the joint venture agreements. Most joint
ventures borrow money to help finance their activities, and although recourse on the loans is generally
limited to the managing members, joint ventures and their properties, we have in some cases and may in
the future provide ongoing financial support or guarantees. If joint venture partners do not meet their
obligations to the joint venture, we may be required to make significant expenditures, which may have
an adverse effect on our operating results or financial condition. We have in the past and may in the
future hold investments in a number of different joint ventures with the same or related developers,
which could increase the adverse effects of any failures by such developer to fulfil its obligations.
Investments by BBX Capital’s real estate division in real estate developments directly or through
joint ventures expose us to market and economic risks inherent in the real estate construction and
development industry.
The real estate construction and development industry is highly competitive and subject to numerous
risks which in many cases are beyond management’s control. The success of our investments in real
estate developments is dependent on many factors, including:
· Demand for or oversupply of new homes, finished lots, rental apartments and commercial real
estate;
Real estate market values;
Changes in capitalization rates impacting real estate values;
Inventory of foreclosed homes negatively impacting selling prices;
· Demand for commercial real estate tenants;
·
·
·
· Availability and reasonable pricing of skilled labor;
· Availability and reasonable pricing of construction materials, such as lumber, framing,
·
concrete and other building materials;
Changes in laws and regulations for new construction and land entitlements, including
environmental and zoning laws and regulations;
· Natural disasters and severe weather conditions increasing costs, delaying construction,
causing uninsured losses or reducing demand for new homes;
· Availability and cost of mortgage financing for potential purchasers;
· Mortgage loan interest rates;
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· Availability, delays and costs associated with obtaining permits, approvals or licenses
necessary to develop property;
Construction defects and product liability claims; and
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· General economic conditions.
Any of these factors could give rise to delays in the start or completion of a project, increase the cost of
developing a project, or could result in reduced prices and values for BBX Capital’s developments,
including developments underlying its joint venture investments.
A significant portion of our loans and real estate assets are located in Florida, and economic
conditions in the Florida real estate market could adversely affect our earnings and financial
condition.
The legacy assets retained by us in the BankAtlantic Sale and the real estate investments made by us are
primarily in Florida, and adverse changes to the Florida economy or the real estate market may
negatively impact our earnings and financial condition. Our real estate investment business is primarily
concentrated in Florida. As a result, we are exposed to geographic risks of high unemployment rates,
declines in the housing industry and declines in the real estate market in Florida. Adverse changes in
laws and regulations ‘in Florida would have a negative impact on our revenues, financial condition and
business. Declines in the Florida housing markets may negatively impact the credit performance of our
loans and result in significant asset impairments. Further, the State of Florida is subject to the risks of
natural disasters, such as tropical storms and hurricanes, which may disrupt our operations, adversely
impact the ability of our borrowers to timely repay their loans, adversely impact the value of any
collateral securing loans and our portfolio of real estate, or otherwise have an adverse effect on our
results of operations. The severity and impact of tropical storms, hurricanes and other weather related
events are unpredictable.
Renin’s sales are concentrated with two significant customers, and there is significant competition in
the industry.
A significant amount of Renin’s sales are to big-box home centers. These home centers in many
instances have significant negotiating leverage with their vendors, including Renin, and are able to
affect the prices of the products sold and the terms and conditions of conducting business with
them. These home centers may also reduce the number of vendors they purchase from or make
significant changes in their volume of purchases. Although homebuilders, dealers and other retailers
represent other channels of distribution for Renin’s products, the loss of a home center customer or
reduced sales volume at any of these home centers would have a material adverse effect on Renin’s
business. Further, Renin has substantial competition from overseas manufacturers of products similar to
those sold by Renin.
A significant portion of Renin’s business relies on home improvement and new home construction
activity, both of which are cyclical and outside of management’s control.
A significant portion of Renin’s business is dependent on the levels of home improvement activity,
including spending on repair and remodeling projects, and new home construction activity.
Macroeconomic conditions, including consumer confidence levels, fluctuations in home prices,
unemployment and underemployment levels, interest rates, regulatory initiatives, and the availability of
home equity loans and mortgage financing affect both discretionary spending on home improvement
projects as well as new home construction activity. Adverse changes in these factors or uncertainty
regarding these macroeconomic conditions could result in a decline in spending on home improvement
projects and a decline in demand for new home construction, both of which could adversely affect
Renin’s results of operations.
The operating results of Renin and BBX Sweet Holdings would be negatively impacted if they
experience increased commodity costs or a limited availability of commodities.
Our middle market operating businesses purchase various commodities to manufacture products,
including steel, aluminum, glass and mirror in the case of Renin, and sugar and cocoa in the case of
BBX Sweet Holdings. Fluctuations in the availability and prices of these commodities could increase
the cost to manufacture products. Further, increases in energy costs could increase production costs as
well as transportation costs, each of which could negatively affect their operating results. Renin’s and
BBX Sweet Holdings’ existing arrangements with customers, competitive considerations and the
relative negotiating power and resistance of home center customers and big-box retailers to price
increases make it difficult to increase selling prices to absorb increased production costs. If Renin and
BBX Sweet Holdings are not able to increase the prices of its products or achieve other cost savings or
productivity improvements to offset any increased commodity and production costs, our operating
results could be negatively impacted. Many of the raw materials purchased by Renin and BBX Sweet
Holdings are sourced from China, Mexico
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and other countries. Changes in United States trade practices, or taxes levied on these imports, could
significantly impact the results of these operating companies.
Market demand for chocolate and candy products could decline.
BBX Sweet Holdings and its acquired businesses operate in highly competitive markets and compete
with larger companies that have greater resources. The success of these businesses is impacted by many
factors, including the following:
Effective retail execution;
Effective and cost efficient advertising campaigns and marketing programs;
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· Adequate supply of commodities at a reasonable cost;
· Oversight of product safety;
· Ability to sell manufactured products at competitive prices;
Response to changes in consumer preferences and tastes;
·
Changes in consumer health concerns, including obesity and the consumption of certain
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ingredients and;
Concerns related to effects of sugar or other ingredients which may be used to make its
products.
·
A decline in market demand for chocolate and candy products could negatively affect operating results.
BBX Sweet Holdings may experience product recalls or product liability claims.
Selling products for human consumption involves inherent legal and other risks, including product
contamination, spoilage, product tampering, allergens, or other adulteration. BBX Sweet Holdings
could decide or be required to destroy inventory, recall products or lose sales in connection with
contamination, tampering, adulteration or other deficiencies. These events could result in significant
losses and may damage BBX Sweet Holdings’ reputation, and discourage consumers from buying
products, or cause production and delivery disruptions which would adversely affect BBX Sweet
Holdings’ financial condition and results of operations. BBX Sweet Holdings may also incur losses if
products cause injury, illness or death. A significant product liability claim may adversely affect both
reputation and profitability, even if the claim is unsuccessful.
FFTRG operations require ongoing compliance with its area development and franchise agreements
with MOD.
The Company’s area development agreement with MOD provides the Company with the exclusive right
to open MOD franchised pizza restaurant locations in the state of Florida. The agreement requires the
Company to open its restaurant locations based on a predetermined development schedule, and failure to
comply with the schedule gives MOD the right to terminate the agreement. In connection with such a
termination, the Company will have no right to open additional MOD franchised pizza restaurant
locations, and MOD may grant franchise rights to competitors in the state of Florida. As a result, to
remain compliant with the development schedule, the Company may decide to develop restaurants in
less desirable locations. Furthermore, if the Company lost its exclusive development rights, our inability
to open additional locations could prevent us from scaling our infrastructure and operations, and our
existing locations may face increased competition from additional MOD locations.
In addition, the Company’s franchise agreements with MOD require the Company to comply with
various operating programs designed and established by MOD. These programs include the adoption of
price discounts and promotions, the implementation of menu changes, and the funding of various
ongoing operating expenses and capital expenditures, including the requirement to periodically remodel
restaurant locations.
These requirements and the related risks of compliance could ultimately have an adverse effect on the
operating results of the Company’s MOD franchise operations.
Information technology failures and data security breaches could harm our business.
The Company relies on information technology (IT) systems, including Internet sites, data hosting
facilities and other hardware and platforms, some of which are hosted by third parties. These IT
systems, like those of most companies, may be vulnerable to a variety of interruptions, including, but not
limited to, natural disasters, telecommunications failures, hackers, and other security issues. Moreover,
the Company’s computer systems, like those of most companies, may become subject to computer
viruses or other malicious codes, and to cyber or phishing-attacks. Although administrative and
technical controls have been implemented which attempt to minimize the risk of cyber
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incidents, computer intrusion efforts are becoming increasingly sophisticated, and any enhanced
controls installed might be breached. If the IT systems cease to function properly, the Company could
suffer interruptions in its operations. If the cyber-security is breached, unauthorized persons may gain
access to our proprietary or confidential information, including information about borrowers, employees
or investments. This could require the Company to incur significant costs to comply with legally
required protocols and to repair or restore the security of its systems.
Substantial sales of BBX Capital’s Class A Common Stock or Class B Common Stock could
adversely affect the market prices of such securities.
Substantial sales of BBX Capital’s Class A Common Stock or Class B Common Stock, including sales
of shares by controlling shareholders and management, could adversely affect the market prices of such
securities. Management has in the past and may in the future enter into Rule 10b5-1 plans pursuant to
which a significant number of shares are sold into the open market.
Alan B. Levan and John E. Abdo's control position may adversely affect the market price of BBX
Capital's Class A Common Stock and Class B Common Stock.
Alan B. Levan, the Chairman and Chief Executive Officer of BBX Capital, and John E. Abdo, the Vice
Chairman of BBX Capital, collectively beneficially own shares of BBX Capital’s Class A Common
Stock and Class B Common Stock representing approximately 77% of the general voting power of BBX
Capital. In addition, each of Mr. Alan Levan and Mr. Abdo has been granted restricted securities of
BBX Capital which are scheduled to vest over time. Further, Mr. Alan Levan and Mr. Abdo are parties
to an agreement pursuant to which Mr. Alan Levan has agreed to vote his shares of BBX Capital’s Class
B Common Stock in favor of the election of Mr. Abdo to BBX Capital’s board of directors for so long
as he is willing and able to serve as a director of BBX Capital, and Mr. Abdo has agreed to vote the
shares of BBX Capital’s Class B Common Stock he owns in the same manner that Mr. Alan Levan
votes his shares of BBX Capital’s Class B Common Stock. Mr. Abdo has also agreed, subject to certain
exceptions, not to transfer certain of his shares of BBX Capital’s Class B Common Stock and to obtain
the consent of Mr. Alan Levan prior to the conversion of certain of his shares of BBX Capital’s Class B
Common Stock into shares of BBX Capital’s Class A Common Stock. Because BBX Capital’s Class A
Common Stock and Class B Common Stock vote as a single class on most matters, Mr. Alan Levan and
Mr. Abdo effectively have the voting power to elect the members of BBX Capital’s board of directors
and to control the outcome of any other vote of BBX Capital’s shareholders, except in those limited
circumstances where Florida law mandates that the holders of BBX Capital’s Class A Common Stock
vote as a separate class. Mr. Alan Levan’s and Mr. Abdo’s control position may have an adverse effect
on the market price of BBX Capital’s Class A Common Stock and Class B Common Stock. In addition,
their interests may conflict with the interests of BBX Capital’s other shareholders.
Provisions in BBX Capital's Amended and Restated Articles of Incorporation and Bylaws, as well
as BBX Capital's shareholder rights plan, may make it difficult for a third party to acquire BBX
Capital and could impact the price of BBX Capital's Class A Common Stock and Class B Common
Stock.
BBX Capital's Amended and Restated Articles of Incorporation and Bylaws contain provisions that
could delay, defer or prevent a change of control of BBX Capital or its management. These provisions
could make it more difficult for shareholders to elect directors and take other corporate actions. As a
result, these provisions could limit the price that investors are willing to pay in the future for shares of
BBX Capital's Class A Common Stock or Class B Common Stock. These provisions include:
·
·
The provisions in BBX Capital's Amended and Restated Articles of Incorporation
regarding the special voting rights of BBX Capital 's Class B Common Stock;
Subject to the special class voting rights of holders of BBX Capital’s Class B Common
Stock under certain circumstances, the authority of BBX Capital's board of directors to
issue additional shares of common or preferred stock and to fix the relative rights and
preferences of the preferred stock without additional shareholder approval; and
· Advance notice procedures to be complied with by shareholders in order to make
shareholder proposals or nominate directors.
In addition, BBX Capital’s rights agreement, which was adopted and is designed to preserve certain tax
benefits available to BBX Capital, may have an anti-takeover effect because the rights agreement
provides a deterrent to investors from acquiring a 5% or greater ownership interest in BBX Capital’s
Class A Common Stock and Class B Common Stock.
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Holders of BBX Capital’s Class A Common Stock and Class B Common Stock may not receive
dividends in the amounts anticipated, when anticipated, or at all.
During each of March 2017, June 2017, September 2017 and December 2017, BBX Capital’s board of
directors declared a cash dividend of $0.0075 per share on BBX Capital’s Class A Common Stock and
Class B Common Stock. BBX Capital has indicated its intention to declare regular quarterly dividends
on its Class A Common Stock and Class B Common Stock. However, future dividends are subject to
approval and declaration by BBX Capital’s board of directors and, accordingly, BBX Capital may not
make dividend payments in the future, whether in the amount anticipated, on a regular basis or as
anticipated, or at all. The payment of dividends, if any, by BBX Capital will depend on many factors
considered by its board of directors, including, without limitation, our financial condition and results of
operations, liquidity requirements, market opportunities, and contractual constraints. Further, over time,
the Company’s cash needs may change significantly from its current needs, which could affect whether
BBX Capital pays dividends and the amount of any dividends it may pay in the future. The terms of
BBX Capital’s indebtedness may also restrict it from paying cash dividends on its stock under certain
circumstances. In addition, BBX Capital pays regular quarterly cash dividends of $187,500 with respect
to its outstanding 5% Cumulative Preferred Stock. BBX Capital may not pay or set apart for payment
any dividend or other distribution (other than a dividend or distribution payable solely in common
stock) on its Class A Common Stock or Class B Common Stock until such time as all accrued and
unpaid dividends on BBX Capital’s 5% Cumulative Preferred Stock have been or contemporaneously
are declared or paid and a sum is set apart sufficient for payment of such accrued and unpaid dividends.
The provisional tax impacts resulting from the Tax Cuts and Jobs Act are based on interpretations
and assumptions the Company has made. Any changes in interpretations and assumptions or the
issuance of additional regulatory guidance may have a material adverse impact on our tax rate in
fiscal years 2018 and beyond.
On December 22, 2017, U.S. federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act
(the “Tax Reform Act”), was signed into law, significantly changing the U.S. Internal Revenue Code.
These changes include, among other things, lowering the corporate income tax rate, subjecting certain
future foreign subsidiary earnings, whether or not distributed, to U.S. tax under a Global Intangible
Low-Taxed Income provision, imposing a new alternative “Base Erosion and Anti-Abuse Tax” on U.S.
corporations that limits deductions for certain amounts payable to foreign affiliates, imposing
significant additional limitations on the deductibility of interest payable to related and unrelated lenders,
further limiting deductible executive compensation, and imposing a one-time repatriation tax on deemed
repatriated earnings of foreign subsidiaries through the end of 2017. We continue to analyze how the
Tax Reform Act may impact our results of operations. The SEC staff issued Staff Accounting Bulletin
No. 118 (“SAB 118”) to address the application of GAAP in situations when a registrant does not have
the necessary information available, prepared, or analyzed in reasonable detail to complete the
accounting for certain income tax effects of the Tax Reform Act. The Company has recognized the
provisional tax impacts related to the revaluation of deferred tax assets and liabilities and included these
amounts in its consolidated financial statements for the year ended December 31, 2017. The ultimate
impact may differ from these provisional amounts, possibly materially, due to, among other things,
additional analysis, changes in interpretations and assumptions the Company has made, additional
regulatory guidance that may be issued, and actions the Company may take as a result of the Tax
Reform Act. This continued analysis and resulting uncertainty, along with many of the changes effected
pursuant to the Tax Reform Act, may have an adverse or volatile effect on our tax rate in fiscal years
2018 and beyond, thereby affecting our results of operations.
There are inherent uncertainties involved in estimates, judgments and assumptions used in the
preparation of financial statements in accordance with accounting principles generally accepted in
the United States of America (“GAAP”). Any changes in estimates, judgments and assumptions used
could have a material adverse effect on our financial position and operating results.
The consolidated financial statements included in the periodic reports we file with the SEC, including
this Annual Report on Form 10-K, are prepared in accordance with GAAP. The preparation of financial
statements in accordance with GAAP involves making estimates, judgments and assumptions that affect
reported amounts of assets (including goodwill and other intangible assets), liabilities and related
reserves, revenues, expenses and income. This includes estimates, judgments and assumptions for
assessing the amortization/accretion of purchase accounting fair value differences and the impairment
of goodwill and other intangible assets pursuant to applicable accounting guidance. We base our
estimates on historical experience and on various other assumptions that we believe to be reasonable
under the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are often not readily apparent from other sources. However,
estimates, judgments and assumptions can be highly uncertain and are subject to change in the future,
and our estimates, judgments and assumptions may prove to be incorrect and our actual results may
differ from these estimates under different assumptions or conditions.
47
If any estimates, judgments or assumptions change in the future, or our actual results differ from our
estimates or assumptions, we may be required to record additional expenses or impairment charges,
which would be recorded as a charge against our earnings and could have a material adverse impact on
our financial condition and operating results. Our goodwill was tested for impairment on December 31,
2017 (annual testing date) and the goodwill assigned to one of BBX Sweet Holdings reporting units was
determined to be impaired. The goodwill assigned to another BBX Sweet Holdings reporting unit was
determined not to be impaired. If BBX Sweet Holdings’ reporting units do not meet expectations or if
there is a downturn in the confectionery industry, we may recognize goodwill impairment charges in
future periods.
Unexpected events, such as natural disasters, severe weather and terrorist activities, may disrupt the
Company’s operations and increase our costs.
The occurrence of one or more unexpected events, including tsunamis, hurricanes, earthquakes, floods
and other forms of severe weather or terrorist activities in countries or regions in which our assets,
suppliers or our operating businesses are located could adversely affect our operations and financial
performance.
Natural disasters, acts or threats of war or terrorism, or other unexpected events could result in
temporary or long-term disruption in the delivery or supply of necessary raw materials and component
products from suppliers, which would disrupt production capabilities and likely increase our cost of
doing business.
Legal proceedings and the impact of any finding of liability or damages could adversely impact us
and our financial condition and operating results.
BBX Capital and its subsidiaries have in the past and may in the future be subject to legal proceedings,
including numerous legal proceedings against Bluegreen with respect to its operations. The impact of
any finding of liability or damages could adversely impact the Company’s financial condition and
operating results and the costs of defending pending or threatened legal proceedings could be
significant.
The loss of the services of key management and personnel could adversely affect the Company’s
business.
The Company’s ability to successfully implement its business strategy will depend on the ability to
attract and retain experienced and knowledgeable management and other professional staff. If the
Company is unable to retain and motivate its existing employees and efforts to retain and attract key
management and other personnel are unsuccessful, the Company’s results of operations and financial
condition may be materially and adversely impacted.
48
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
The principal executive office of the Company is located at 401 East Las Olas Boulevard, Suite 800, Fort
Lauderdale, Florida, 33301, and is occupied under a lease with an expiration date of June 30, 2021. The
Company has the right to renew the terms of the lease for two additional terms of five years commencing
as of the expiration date.
Bluegreen’s principal executive office is located at 4960 Conference Way North, Suite 100, Boca Raton,
Florida 33431, and consists of approximately 120,838 square feet of leased space with an expiration date
of December 31, 2023. At December 31, 2017, Bluegreen also maintained sales offices at or near 23 of its
resorts as well as regional administrative offices in Orlando, Florida and Indianapolis, Indiana. For
information regarding Bluegreen’s resort properties, that are part of the Bluegreen Vacation Club, please
see Item 1 Business —Products – Vacation Club Resorts.
IT’SUGAR’s principal executive office is located at 3155 Southwest 10 th Street, Deerfield, Florida and is
occupied under a lease with an expiration date of October 31, 2019. IT’SUGAR leases 95 retail locations
in 26 states and Washington DC, with lease expirations from 2018 to 2030. The retail leases typically
have a 10 year original term.
Renin’s principal executive office is located at 110 Walker Drive, Brampton, Ontario and is occupied
under a lease with an expiration date of December 31, 2024. Renin leases its manufacturing facilities in
the United States and Canada which have lease expiration dates of December 31, 2019 and December 31,
2024, respectively.
BBX Sweet Holdings leases the following manufacturing facilities in Utah and Florida and retail locations
in Florida:
·
·
·
·
·
50,000 square foot manufacturing, storage and distribution facility located at 680 South 500
East, American Fork, Utah, with a lease expiration date of May 31, 2023;
30,000 square feet of office, manufacturing, warehousing and food storage areas located at 2045
High Ridge Road, Boynton Beach, Florida with a lease expiration date of January 31, 2020;
80,000 square feet of office, manufacturing, warehousing and food storage areas located at 1815
Cypress Lake Drive, Orlando, Florida with a lease expiration date of September 30, 2019 with
three additional option terms of five years each commencing as of the expiration date;
Three retail locations in Palm Beach County, Florida with lease expiration dates ranging from
February 28, 2018 to November 30, 2026; and
Four retail locations in Broward County, Florida with lease expiration dates ranging from June
30, 2019 to May 31, 2026.
BBX Sweet Holdings also owns a chocolate manufacturing facility located at 5190 Lake Worth Road,
Greenacres, Florida. The facility is comprised of a 4,000 square foot office and store front area and an
11,526 square foot manufacturing area.
FFTRG has executed the following retail leases to operate MOD Super-Fast Pizza restaurants in Florida:
Two retail restaurant locations in Broward County each expiring in 2027;
·
· One retail restaurant location in Dade County expiring in 2027; and
· One retail restaurant location in Duval County expiring in 2027.
These retail leases typically have a 10 year term with the right to renew the terms of the lease for two
additional terms of five years commencing as of the expiration date.
49
ITEM 3. LEGAL PROCEEDINGS
In the ordinary course of business, BBX Capital and its subsidiaries are parties to lawsuits as plaintiff or
defendant involving its operations and activities. Although BBX Capital and its subsidiaries believe that
they have meritorious defenses in all current legal actions, the outcome of litigation and regulatory matters
and timing of ultimate resolution are inherently difficult to predict and uncertain. Set forth below are
descriptions of material pending legal proceedings.
In the ordinary course of business, Bluegreen becomes subject to claims or proceedings from time to time
relating to the purchase, sale, marketing, or financing of VOIs or Bluegreen’s other business
activities. Bluegreen is also subject to certain matters relating to the Bluegreen Communities’ business,
substantially all of the assets of which were sold by Bluegreen on May 4, 2012. Additionally, from time to
time in the ordinary course of business, Bluegreen becomes involved in disputes with existing and former
employees, vendors, taxing jurisdictions and various other parties and Bluegreen receives individual
consumer complaints, as well as complaints received through regulatory and consumer agencies,
including Offices of State Attorneys General. Bluegreen takes these matters seriously and attempts to
resolve any such issues as they arise.
BBX Capital Litigation
Shiva Stein, on behalf of herself and all others similarly situated, v. BBX Capital Corp., John E. Abdo,
Norman H. Becker, Steven M. Coldren, Willis N. Holcombe, Jarett S. Levan, Anthony P. Segreto,
Charlie C. Winningham, II, BFC Financial Corporation and BBX Merger Subsidiary LLC, Case No.
CACE16014713, Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida.
On August 10, 2016, Shiva Stein filed a lawsuit against the Company, BBX Merger Sub, LLC (“Merger
Sub”), BCC and the members of BCC’s board of directors, which seeks to establish a class of BCC’s
shareholders and challenges the Merger between BCC and BBX Capital (“the Merger”). The plaintiff
asserts that the Merger consideration undervalues BCC and is unfair to BCC’s public shareholders, that
the sales process was unfair and that BCC’s directors breached their fiduciary duties of care, loyalty and
candor owed to the public shareholders of BCC because, among other reasons, they failed to take steps to
maximize the value of BCC to its public shareholders and instead diverted consideration to themselves.
The lawsuit also alleges that BBX Capital, as the controlling shareholder of BCC, breached its fiduciary
duties of care, loyalty and candor owed to the public shareholders of BCC by utilizing confidential, non-
public information to formulate the Merger consideration and not acting in the best interests of BCC’s
public shareholders. In addition, the lawsuit includes a cause of action against BCC, the Company and
Merger Sub for aiding and abetting the alleged breaches of fiduciary duties. The lawsuit requested that the
court grant an injunction blocking the proposed Merger or, if the proposed Merger is completed, rescind
the transaction or award damages as determined by the court. On September 15, 2016, the Defendants
filed a Motion to Dismiss the amended complaint. On November 21, 2016, the Court issued an order
granting the Motion to Dismiss with prejudice. Plaintiff appealed the Court’s order dismissing the
amended complaint to the Fourth District Court of Appeals, and on January 9, 2018, the Fourth District of
Appeals held oral argument on the appeal. The Company believes that the appeal is without merit and
intends to continue vigorously defending the action.
Bluegreen Litigation
“Cease and Desist” Letters
Commencing in 2015, it came to Bluegreen’s attention that its collection efforts with respect to its VOI
notes receivable were being impacted by a then emerging, industry-wide trend involving the receipt of
“cease and desist” letters from attorneys purporting to represent certain VOI owners. Following receipt of
these letters, Bluegreen is unable to contact the owners unless allowed by law. Bluegreen believes these
attorneys have encouraged such owners to become delinquent and ultimately default on their obligations
and that such actions and Bluegreen’s inability to contact the owners are a primary contributor to the
increase in its annual default rates. Bluegreen’s average annual default rates have increased from 6.9% in
2015 to 8.5% in 2017. Bluegreen also estimates that approximately 9.3% of the total delinquencies on its
VOI notes receivable as of December 31, 2017 related to VOI notes receivable subject to these
letters. Bluegreen has in a number of cases pursued, and may in the future pursue, legal action against the
VOI owners.
50
Whitney Paxton and Jeff Reeser, on behalf of themselves and all others similarly situated, v. Bluegreen
Vacations Unlimited, Inc., Phillip Hicks and Todd Smith, Case No. 3:16-CV-523-HSM-HBG, United
States District Court, Eastern District of Tennessee at Knoxville
On August 24, 2016, Whitney Paxton and Jeff Reeser filed a lawsuit against Bluegreen Vacations
Unlimited, Inc. (“BVU”), a wholly-owned subsidiary of Bluegreen, and certain employees of BVU
(collectively, the “Defendants”), seeking to establish a class action of former and current employees of
BVU and alleging violations of plaintiffs’ rights under the Fair Labor Standards Act of 1938 (the “FLSA”)
and breach of contract. The lawsuit also claims that the Defendants terminated plaintiff Whitney Paxton as
retaliation for her complaints about alleged violations of the FLSA. The lawsuit seeks damages in the
amount of the unpaid compensation owed to the plaintiffs. During July 2017, a magistrate judge entered a
report and recommendation that the plaintiffs’ motion to conditionally certify collective action and
facilitate notice to potential class members be granted with respect to certain employees and denied as to
others. During September 2017, the judge accepted the recommendation and granted preliminary approval
of class certification. Management believes that the lawsuit is without merit and intends to vigorously
defend the action.
Stephen Potje, Tamela Potje, Sharon Davis, Beafus Davis, Matthew Baldwin, Tammy Baldwin, Arnor
Lee, Angela Lee, Gretchen Brown, Paul Brown, Jeremy Estrada, Emily Estrada, Guillermo Astorga
Jr., Michael Oliver, Carrie Oliver, Russell Walters, Elaine Walters, and Mike Ericson, individually and
on behalf of all other similarly situated, v Bluegreen Corporation, Case No.: 9:17-cv-81055, United
States District Court, Southern District of Florida
On September 22, 2017, the plaintiffs named in the caption above filed a lawsuit against Bluegreen which
asserts claims for alleged violations of the Florida Deceptive and Unfair Trade Practices Act and the
Florida False Advertising Law. In the complaint, the plaintiffs allege the making of false representations
in connection with Bluegreen’s sales of VOIs, including representations regarding the ability to use points
for stays or other experiences with other vacation providers, the ability to cancel VOI purchases and
receive a refund of the purchase price, the ability to roll over unused points and that annual maintenance
fees would not increase. The complaint seeks to establish a class of consumers who, since the beginning of
the applicable statute of limitations, have purchased VOIs from Bluegreen, had their annual maintenance
fees relating to Bluegreen VOIs increased, or were unable to roll over their unused points to the next
calendar year. The lawsuit alleges damages in excess of $5,000,000 and seeks damages in the amount
alleged to have been improperly obtained by Bluegreen, as well as any statutory enhanced damages,
attorneys’ fees and costs, and equitable and injunctive relief. On November 20, 2017, Bluegreen moved to
dismiss the complaint and, in response, the plaintiffs filed an amended complaint dropping the claims
relating to the Florida Deceptive and Unfair Trade Practices Act and adding claims for fraud in the
inducement and violation of the Florida Vacation Plan and Timesharing Act. Bluegreen filed a motion to
dismiss the amended complaint which is currently pending before the court. Bluegreen’s management
believes that the lawsuit is without merit and intends to vigorously defend the action.
Gordon Siu, individually and on behalf of all others similarly situated, v. Bluegreen Vacations
Unlimited, Inc., Choice Hotels International, Inc., et al., Case No. 3:18-CV-00022, U.S. District Court
for the Southern District of California
On January 4, 2018, the plaintiff named in the caption above filed a lawsuit alleging that Bluegreen
Vacations and Choice Hotels violated California state privacy laws by recording and/or monitoring a
telemarketing call to the plaintiff without his consent. The plaintiff claims the individual making the call
requested that the plaintiff provide personal and private information and did not disclose that the call was
being recorded until after making such request. The plaintiff seeks certification of a class of persons in
California whose telephone conversations were monitored, recorded and/or eavesdropped upon without
their consent by Bluegreen and/or Choice Hotels and damages of $5,000 per violation. Bluegreen believes
that the lawsuit is without merit and intends to vigorously defend the action.
51
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
The Company’s Class A Common Stock and Class B Common Stock have substantially identical terms,
except as follows:
· Under Florida law and our Articles of Incorporation and Bylaws, holders of our Class A
Common Stock and Class B Common Stock vote together as a single class on most matters
presented for a shareholder vote. On such matters, holders of our Class A Common Stock are
entitled to one vote for each share held, with all holders of Class A Common Stock possessing in
the aggregate 22% of the total voting power. Holders of Class B Common Stock have the
remaining 78% of the total voting power. If the number of shares of Class B Common Stock
outstanding decreases to 1,800,000 shares, the Class A Common Stock’s aggregate voting
power will increase to 40%, and the Class B Common Stock will have the remaining 60%. If the
number of shares of Class B Common Stock outstanding decreases to 1,400,000 shares, the
Class A Common Stock’s aggregate voting power will increase to 53%, and the Class B
Common Stock will have the remaining 47%. If the number of shares of Class B Common
Stock outstanding decreases to 500,000 shares, the fixed voting percentages will be eliminated,
and holders of our Class A Common Stock and holders of our Class B Common Stock will each
be entitled to one vote per share.
Each share of Class B Common Stock is convertible at the option of the holder thereof into one
share of Class A Common Stock.
·
In addition to any other approval required by Florida law, the voting structure described in the first bullet
point above may not be amended without the approval of holders of a majority of the outstanding shares
of our Class B Common Stock, voting as a separate class. Holders of our Class B Common Stock also
have certain other special voting rights with respect to matters affecting our capital structure and the Class
B Common Stock.
Market Information
On July 13, 2017, the Company’s Class A Common Stock began trading on the New York Stock
Exchange (“NYSE”) under the ticker symbol “BBX.” Upon commencement of trading on the NYSE, the
Company’s Class A Common Stock ceased trading on the OTCQX Best Market. On February 3, 2017, the
Company’s Class B Common Stock began trading on the OTCQX Best Market under the ticker symbol
“BBXTB”.
From February 3, 2017 through July 12, 2017, our Class A Common Stock were quoted on the OTCQX
Best Market under the ticker symbol “BBXT”. Prior to February 3, 2017, our Class A and Class B
Common Stock were quoted on the OTCQB market tier of the OTC Markets (“OTCQB”) under the ticker
symbol names “BFCF” and “BFCFB,” respectively.
On March 6, 2018, there were approximately 371 record holders of our Class A Common Stock and
approximately 135 record holders of our Class B Common Stock.
52
The following table sets forth, for the indicated periods, the high and low trading prices for our Class A
Common Stock and Class B Common Stock as quoted on the applicable exchange.
Class A Common Stock
Class B Common Stock
High
Low
High
Low
3.44 $
3.10
3.95
5.04
5.04
7.00 $
7.50
7.77
8.92
8.92
$
$
2.50
2.51
2.73
3.65
2.50
4.81
6.03
5.87
6.32
4.81
3.30 $
2.96
3.70
4.40
4.40
7.35 $
7.40
7.75
8.89
8.89
2.57
2.50
2.60
3.65
2.50
4.90
6.35
6.10
7.05
4.90
Calendar Year 2016
First quarter
Second quarter
Third quarter
Fourth quarter
For the year ended December 31, 2016
Calendar Year 2017
First quarter
Second quarter
Third quarter
Fourth quarter
For the year ended December 31, 2017
$
$
Dividends
Prior to June 2016, no cash dividends were paid on the Company’s common stock. Since June 2016, the
Company’s board of directors has declared quarterly cash dividends on the Company’s Class A and Class
B Common Stock as follows:
March 2018
March
June
September
December
Total for 2017
June
September
December
Total for 2016
Record
Date
3/26/2018
Payment
Date
4/20/2018
3/20/2017
6/26/2017
9/29/2017
12/20/2017
4/20/2017
7/20/2017
10/20/2017
1/22/2018
6/20/2016
9/23/2016
12/19/2016
7/20/2016
10/20/2016
1/20/2017
$
$
$
$
$
Per
Common
Share
Distribution
Amount
0.01
0.0075
0.0075
0.0075
0.0075
0.0300
0.005
0.005
0.005
0.015
Future declaration and payment of cash dividends with respect to the Company’s common stock, if any,
will be determined in light of the then-current financial condition of the Company and other factors
deemed relevant by the board of directors.
See the “Liquidity and Capital Resources” section of “Item 7 - Management’s Discussion and Analysis of
Financial Condition and Results of Operations” for a discussion regarding the dependence of BBX Capital
on dividends from Bluegreen and the ability of Bluegreen to pay dividends to the Company, as well as
restrictions pertaining thereto.
Issuer Purchases of Equity Securities
On September 21, 2009, our board of directors approved a share repurchase program which authorized the
repurchase of up to 20,000,000 shares of the Company’s Class A Common Stock and Class B Common
Stock at an aggregate cost
53
of up to $10 million. On June 13, 2017, our board of directors approved a share repurchase program which
replaced the September 2009 share repurchase program and authorizes the repurchase of up to 5,000,000
shares of the Company’s Class A Common Stock and Class B Common Stock at an aggregate cost of up
to $35 million. The June 2017 repurchase program authorizes management, at its discretion, to repurchase
shares from time to time subject to market conditions and other factors. During April 2017, the Company
repurchased 1.0 million shares of its Class A Common Stock under the September 2009 share repurchase
program for approximately $6.2 million. During April 2016, the Company repurchased 1.0 million shares
of its Class A Common Stock under the September 2009 share repurchase program for approximately $3.0
million.
As of December 31, 2017, 321,593 shares of the Company’s Class A Common Stock have been
repurchased for approximately $2.4 million under the June 2017 share repurchase program.
From September 30, 2017 through October 8, 2017, a total of 2,394,492 shares of the Company’s Class A
Common Stock and 176,132 shares of the Company’ Class B Common Stock previously owned by
certain executive officers were surrendered to the Company by the executive officers as payment in
satisfaction of tax withholding obligations relating to the vesting of certain previously reported restricted
stock awards and units granted to the executive officers. Further information regarding these repurchases
during the quarter ended December 31, 2017, is set forth in the table below:
Period
(a) Total
Number of
Shares
Purchased
(b) Average Price
Paid per Share
(c) Total
Number of
Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs
(d) Maximum Number
(or Approximate
Dollar Value) of Shares
that May Yet Be
Purchased Under the
Plans or Programs
October 1 –
October 31, 2017 (1)
November 1 –
November 30, 2017 (2)
December 1 –
December 31, 2017
2,570,624
$7.38
-
321,593
$7.56
321,593
-
$ -
Total
2,892,217
$7.40
5,000,000 shares
(or approximately
$35,000,000)
4,678,407 shares
(or approximately
$32,567,000)
4,678,407 shares
(or approximately
$32,567,000)
4,678,407 shares
(or approximately
$32,567,000)
-
-
(1) These shares were surrendered to the Company by certain executive officers in satisfaction of tax
withholding obligations and were not repurchased under a share repurchase program.
(2) The shares repurchased in November 2017 were made under the June 2017 share repurchase
program.
54
Equity Compensation Plan Information
The following table lists awards previously granted and outstanding, and securities authorized for
issuance, under the Company’s equity compensation plans at December 31, 2017:
Number of Securities
to be Issued
Upon Exercise
of Outstanding
Options,
Warrants
or Rights
Weighted-
Average
Exercise
Price of
Outstanding
Options,
Warrants
or Rights
Number of
Securities
Remaining
Available for
Future Issuance
Under Equity
Compensation
Plans
(Excluding
Outstanding
Options,
Warrants,
or Rights)(1)
27,346
$8.98
2,228,802
-
27,346
-
$8.98
-
2,228,802
Plan category
Equity compensation plans
approved by security
holders
Equity compensation plans
not approved by security
holders
Total
(1)
In January 2018, the Company’s Compensation Committee of the board of directors granted
1,487,051 restricted shares of the Company’s Class B Common Stock to the Company’s executive
officers under the BBX Capital Corporation 2014 Incentive Plan reducing the number of securities
remaining available for future issuance under equity compensation plans to 741,751.
The Company assumed BCC’s equity compensation plans upon consummation of the acquisition of all
the outstanding shares of BCC not owned by the Company pursuant to a merger agreement on December
15, 2016. Pursuant to the merger agreement for this transaction, awards outstanding under the BCC Equity
Compensation Plan at December 15, 2016 continue to be outstanding and governed by the BBX Capital
2005 Restricted Stock and Option Plan, and the BBX Capital 2014 Stock Incentive Plan, except that such
awards were converted into awards that are eligible to be settled in shares of the Company’s Class A
Common Stock resulting in the issuance of 5,090,354 restricted shares of the Company’s Class A
Common Stock and non-qualifying stock options to acquire 35,716 shares of the Company’s Class A
Common Stock at December 15, 2016. No further awards will be granted under the BCC equity
compensation plans.
Shareholder Return Performance Graph
Set forth below is a graph comparing the cumulative total returns (assuming reinvestment of dividends) for
the Company’s Class A Common Stock, the Standard and Poor’s 500 Stock Index and Standard and
Poor’s Small-Cap Stock Index and assumes $100 was invested on December 31, 2012.
BBX Capital Corporation
Standard and Poor's Small-Cap
Stock Index
Standard and Poor's 500 Stock
Index
$
12/31/201212/31/201312/31/201412/31/201512/31/201612/31/2017
632.54
100.00
229.37
250.00
387.30
269.05
100.00
139.73
146.04
140.99
176.08
196.70
100.00
129.60
144.36
143.31
156.98
187.47
55
The Company is not able to identify a group of peer companies or industry or line of business index which
it believes is comparable to the Company and its current activities. Accordingly, the Company selected
the Standard and Poor’s Small-Cap Stock Index based on the Company’s market capitalization.
The performance graph should not be deemed “filed” for purposes of Section 18 of the Exchange Act, or
incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act,
except as expressly set forth by specific reference in such filing.
56
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected historical consolidated financial data as of and for the periods
indicated below. The selected historical consolidated statements of operations for fiscal years 2017, 2016
and 2015 and the selected consolidated statements of financial conditions as of December 31, 2017 and
2016 are derived from our audited consolidated financial statements included in Item 8 of this report. The
selected historical consolidated statements of operations for fiscal years 2014 and 2013 and the selected
consolidated statements of financial condition as of December 31, 2015, 2014 and 2013 set forth below
are derived from our previously filed audited consolidated financial statements not included in this report
and have been updated to conform to the current presentation.
For the Years Ended December 31,
2017
2013
2015
(Dollars in thousands, except for per share data)
2016
2014
Statements of Operations Data:
Total revenues
$ 815,782
767,295
744,257
676,966
563,991
Total cost and expenses
736,698
703,108
676,971
611,300
466,706
Equity in earnings (loss) from unconsolidated
real estate joint ventures
Foreign exchange (loss) gain
Income before income taxes
Benefit (provision)for income taxes (1)
Net income
Less: Net income attributable to noncontrolling
interests
Net income attributable to shareholders
Common Share Data (2)
Basic earnings per share of common stock:
Diluted earnings per share of common
stock:
Basic weighted average number of
common shares outstanding
Diluted weighted average number of
common shares outstanding
Cash dividends declared per common share
(3):
Book value per share (4):
Fully diluted book value per share (5):
$
$
$
$
$
14,483
(193)
93,374
7,223
100,597
13,630
219
78,036
(36,379)
41,657
(1,565)
(1,038)
64,683
76,596
141,279
(573)
(715)
64,378
(37,073)
27,305
(30)
(357)
96,898
(26,141)
70,757
18,402
82,195
13,295
28,362
18,805
122,474
13,455
13,850
41,694
29,063
0.83
0.79
0.33
0.32
1.41
1.40
0.16
0.35
0.16
0.35
98,745
86,902
87,022
84,502
83,202
103,916
87,492
87,208
84,761
84,624
0.030
0.015
5.75
5.52
4.64
4.22
-
4.46
4.21
-
3.03
2.84
-
3.05
2.77
57
Statements of Financial Condition Data:
2017
2016
As of December 31,
2015
(Dollars in thousands)
2014
2013
$
Loans, loans held-for-sale
and notes receivable, net
VOI Inventory
Total assets
Borrowings (6)
Shareholders' equity
Noncontrolling interests
Total equity
456,001
238,534
451,255
281,291
486,534
194,713
581,641
470,987
204,256
220,211
1,606,665 1,436,068 1,340,960 1,402,453 1,430,128
682,729
675,391
239,421
376,826
182,975
106,080
422,396
482,906
700,646
573,230
80,271
653,501
661,583
252,906
193,800
446,706
701,146
454,604
40,850
495,454
(1) The benefit for income taxes for the year ended December 31, 2017 was the result of the
reduction in the Company’s net deferred income tax liability associated with the enactment of
the Tax Cuts and Jobs Act which permanently lowered the corporate income tax rate from 35%
to 21%. The benefit for income taxes for the year ended December 31, 2015 was the result of a
$127.8 million reversal of a portion of the Company’s deferred tax asset valuation allowance on
May 1, 2015 when the Company became eligible to file a consolidated group federal income
tax return with BCC, Woodbridge, and Bluegreen as a result of the Company’s purchase of
additional shares of BCC’s Class A Common Stock on April 30, 2015 and related increase in
its ownership in BCC to 81%.
(2) While the Company has two classes of common stock outstanding, the two-class method is not
presented because the Company’s capital structure does not provide for different dividend rates
or other preferences, other than voting rights, between the two classes.
(3) During the year ended December 31, 2017, the Company declared quarterly cash dividends of
$0.0075 per share on its Class A and Class B Common Stock. During the year ended
December 31, 2016, the Company declared quarterly cash dividends of $0.005 per share on its
Class A and Class B Common Stock beginning in June 2016.
(4) The numerator of book value per share for all periods is shareholders’ equity. The denominator
of book value per share for all periods was computed by adding the number of Class A and
Class B common shares outstanding at year-end.
(5) The numerator of fully diluted book value per share for all periods is shareholders’ equity. The
denominator of fully diluted book value per share for all periods was computed by adding the
number of Class A and Class B shares outstanding at year end and the number of non-vested
restricted stock awards and exercisable stock options.
(6) Borrowings consist of notes payable and other borrowings, receivable-backed notes payable
and junior subordinated debentures.
58
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
BBX Capital Corporation (referred to together with its subsidiaries as the “Company,” “we,” “us,” or
“our,” and without its subsidiaries as “BBX Capital”) is a Florida-based diversified holding company with
investments in Bluegreen Vacations Corporation (“Bluegreen”), real estate and real estate joint ventures,
and middle market operating businesses. Bluegreen is a sales, marketing and management company
focused on the vacation ownership industry. The Company’s real estate investments include real estate
joint ventures and the acquisition, development, ownership, financing, and management of real estate. The
Company’s investments in middle market operating businesses include Renin Holdings, LLC (“Renin”), a
company that manufactures products for the home improvement industry, investments in confectionery
businesses through its wholly-owned subsidiary, BBX Sweet Holdings, LLC (“BBX Sweet Holdings”),
and more recently, its activities as a franchisee of MOD Super Fast Pizza, LLC (“MOD”).
As of December 31, 2017, the Company had total consolidated assets of approximately $1.6 billion and
shareholders’ equity of approximately $573.2 million. Net income attributable to shareholders for the
years ended December 31, 2017, 2016 and 2015 was approximately $82.2 million, $28.4 million and
$122.5 million, respectively.
Summary of Consolidated Results of Operations
Consolidated Results
The following summarizes key financial highlights for the year ended December 31, 2017:
Total consolidated revenues were $815.8 million, a 6.3% increase compared to 2016.
Income before income taxes was $93.4 million, a 19.7% increase compared to 2016.
·
·
· Net income attributable to common shareholders was $82.2 million, a 189.8% increase
compared to 2016.
· Diluted earnings per share was $0.79 per diluted share, a $0.46 per share increase compared to
2016.
The Company’s consolidated results for 2017 were significantly impacted by the following events:
·
In June 2017, BBX Sweet Holdings acquired IT’SUGAR, a specialty candy retailer with 95
locations in 26 states and Washington, DC, for a purchase price of $58.4 million, net of cash
acquired. The acquisition of IT’SUGAR contributed revenues of $ 46.8 million and income
before taxes of $2.6 million during 2017.
· On November 17, 2017, Bluegreen completed an initial public offering (“IPO”) of its common
stock by selling to the public 3,736,723 of Bluegreen shares and Woodbridge selling 2,761,925
of Bluegreen shares as a selling shareholder. In connection with the offering, Woodbridge
granted the underwriters a 30-day option to purchase up to an additional 974,797 shares from
Woodbridge, and on December 5, 2017, the underwriters purchased all of the additional 974,797
option shares from Woodbridge. As a result, the Company currently owns approximately 90% of
Bluegreen, which resulted in the allocation of $5.6 million of Bluegreen’s net income to the
noncontrolling interests during 2017.
In December 2017, the enactment of the Tax Cuts and Jobs Act, which reduced the federal
corporate tax rate from 35% to 21%, resulted in a $43.1 million reduction in the Company’s
deferred tax liability.
·
· During the fourth quarter of 2017, BBX Sweet Holdings recorded non-cash goodwill, intangible
assets and property and equipment impairments aggregating $5.2 million associated with
declining profits in its Orlando manufacturing operations, the elimination of unprofitable brands,
and the exploration of strategic alternatives for its manufacturing facility in Utah.
Segment Results
We currently report the results of our business activities through the following reportable segments:
Bluegreen, BBX Capital Real Estate, Renin and BBX Sweet Holdings.
59
Information regarding income before income taxes by reportable segment for the years ended December
31, 2017, 2016 and 2015 is set forth in the table below (in thousands):
For the Years Ended December 31,
2015
2016
2017
Bluegreen
BBX Capital Real Estate
Renin
BBX Sweet Holdings
Corporate Expenses & Other
Income before income taxes
Benefit (provision) for income taxes
Net income
Less: Net income attributable to noncontrolling interests
Net income attributable to shareholders
$
$
135,336
18,533
2,180
(16,783)
(45,892)
93,374
7,223
100,597
18,402
82,195
124,948
34,719
857
(14,945)
(67,543)
78,036
(36,379)
41,657
13,295
28,362
124,320
45,474
(2,058)
(8,768)
(94,285)
64,683
76,596
141,279
18,805
122,474
60
Bluegreen Reportable Segment
Executive Overview
Bluegreen is a leading vacation ownership company that markets and sells VOIs and manages resorts in
top leisure and urban destinations. Bluegreen’s resort network includes 43 Club Resorts (resorts in which
owners in its Vacation Club have the right to use most of the units in connection with their VOI
ownership) and 24 Club Associate Resorts (resorts in which owners in its Vacation Club have the right to
use a limited number of units in connection with their VOI ownership). Bluegreen’s Club Resorts and
Club Associate Resorts are primarily located in popular, high-volume, “drive-to” vacation locations,
including Orlando, Las Vegas, Myrtle Beach and Charleston, among others. Through its points-based
system, the approximately 213,000 owners in its Vacation Club have the flexibility to stay at units
available at any of its resorts and have access to almost 11,000 other hotels and resorts through
partnerships and exchange networks. Bluegreen has a robust sales and marketing platform supported by
exclusive marketing relationships with nationally-recognized consumer brands, such as Bass Pro and
Choice Hotels. These marketing relationships drive sales within its core demographic.
VOI Sales and Financing
Bluegreen’s primary business is the marketing and selling of deeded VOIs, developed either by Bluegreen
or third parties. Customers who purchase these VOIs receive an annual allotment of points, which can be
redeemed for stays at one of its resorts or at 11,000 other hotels and resorts available through partnerships
and exchange networks. Historically, VOI companies have funded the majority of the capital investment
in connection with resort development with internal resources and acquisition and development funding.
In 2009, Bluegreen began selling VOIs on behalf of third-party developers and has successfully
diversified from a business focused on capital-intensive resort development to a flexible model with a
balanced mix of developed and capital-light inventory. Bluegreen relationships with third-party
developers enable it to generate fees from the sales and marketing of their VOIs without incurring the
significant upfront capital investment generally associated with resort acquisition or development. While
sales of acquired or developed inventory typically result in greater Adjusted EBITDA contribution, fee-
based sales require no initial investment or development financing risk. Both acquired or developed VOI
sales and fee-based VOI sales drive recurring, incremental and long-term fee streams by adding owners to
its Vacation Club and new resort management contracts. In conjunction with its VOI sales, Bluegreen also
generates interest income by originating loans for qualified purchasing owners. Collateralized by the
underlying VOIs, Bluegreen’s loans are generally structured as 10-year, fully-amortizing loans with a
fixed interest rate ranging from approximately 12% to approximately 18% per annum. As of December 31,
2017, the weighted-average interest rate on its VOI notes receivable was 15.3%. In addition, Bluegreen
earns fees for various other services that produce recurring, predictable and long-term revenue. For
example, Bluegreen provides title and escrow services for fees in connection with the closing of VOI
sales, and generates fees for mortgage servicing and construction management services.
Resort Operations and Club Management
Bluegreen enters into management agreements with the HOAs that maintain most of the resorts and earn
fees for providing management services to those HOAs and Bluegreen’s approximately 213,000 Vacation
Club owners. These resort management services include oversight of housekeeping services, maintenance,
and certain accounting and administration functions. Bluegreen’s management contracts yield highly
predictable, recurring cash flows and do not have the traditional risks associated with hotel management
contracts that are linked to daily rate or occupancy. Bluegreen’s management contracts are typically
structured as “cost-plus,” with an initial term of three years and automatic one-year renewals. In
connection with the management services provided to the Vacation Club, Bluegreen manages the
reservation system and provide owner, billing and collection services. Bluegreen has not lost any of the 43
Club Resort management contracts. In addition to resort and club management services, Bluegreen earns
fees for various other services that produce recurring, predictable and long term-revenue including
construction management services to third-party developers.
Principal Components Affecting Bluegreen’s Results of Operations
Principal Components of Revenues
Fee-Based Sales. Represent sales of third-party VOIs where Bluegreen is paid a commission.
61
JIT Sales. Represent sales of VOIs acquired from third parties in close proximity to when Bluegreen
intends to sell such VOIs.
Secondary Market Sales. Represent sales of VOIs acquired from HOAs or other owners, typically in
connection with maintenance fee defaults. This inventory is generally purchased at a greater discount to
retail price compared to developed VOI sales and JIT sales.
Developed VOI Sales. Represent sales of VOIs in resorts that Bluegreen has developed or acquired (not
including inventory acquired through JIT and secondary market arrangements).
Financing Revenue. Represents interest income from the financing of VOI sales, which includes interest
income and loan servicing fees. Bluegreen also earns fees from providing mortgage servicing to certain
third-party developers to purchasers of their VOIs.
Other Fee-Based Services. Represents resort operation and club management recurring fees from
managing the Vacation Club and transaction fees for certain resort amenities and certain member
exchanges. Bluegreen also earns recurring management fees under its management agreements with HOAs
for day-to-day management services, including oversight of housekeeping services, maintenance, and
certain accounting and administrative functions.
Bluegreen also includes in other fee-based services revenue earned from various other services that
produce recurring, predictable and long-term revenue, such as title services.
Principal Components of Expenses
Cost of VOIs Sold. Represents the cost at which Bluegreen’s owned VOIs sold during the period were
relieved from inventory. In addition to inventory from Bluegreen’s VOI business, Bluegreen’s owned
VOIs also include those that were acquired by Bluegreen under JIT and secondary market arrangements.
Compared to the cost of Bluegreen’s developed VOI inventory, VOIs acquired in connection with JIT
arrangements typically have a relatively higher associated cost of sales as a percentage of sales while those
acquired in connection with secondary market arrangements typically have a lower cost of sales as a
percentage of sales as secondary market inventory is generally obtained from HOAs at a significant
discount to retail price. Cost of VOIs sold as a percentage of sales of VOIs varies between periods based
on the relative costs of the specific VOIs sold in each period and the size of the point packages of the
VOIs sold (primarily due to offered volume discounts, and taking into account consideration of
cumulative sales to existing owners). Additionally, the effect of changes in estimates under the relative
sales value method, including estimates of projected sales, future defaults, upgrades and incremental
revenue from the resale of repossessed VOI inventory, are reflected on a retrospective basis in the period
the change occurs. Cost of sales will typically be favorably impacted in periods where a significant
amount of secondary market VOI inventory is acquired and the resulting change in estimate is recognized.
While Bluegreen believes that there is additional inventory that can be obtained through the secondary
market at favorable prices in the future, there can be no assurance that such inventory will be available as
expected.
Net Carrying Cost of VOI Inventory. Represents the maintenance fees and developer subsidies for unsold
VOI inventory paid or accrued to the HOAs that maintain the resorts. Bluegreen attempts to offset this
expense, to the extent possible, by generating revenue from renting VOIs and through utilizing them in
sampler programs. Bluegreen nets such revenue from this expense item.
Selling and Marketing Expense. Represents costs incurred to sell and market VOIs, including costs
relating to marketing and incentive programs, tours, and related wages and sales commissions. Revenues
from vacation package sales are netted against selling and marketing expenses.
Financing Expense. Represents financing interest expense related to Bluegreen’s receivable-backed debt
and amortization of the related debt issuance costs and other expenses incurred in providing financing and
servicing loans. Additionally, financing expense includes the administrative costs associated with payment
processing of costs of Bluegreen’s loans and the loans of certain third-party developers.
Cost of Other Fee-Based Services. Represents costs incurred to manage resorts and the Vacation Club,
including payroll and related costs and other administrative costs to the extent not reimbursed by the
Vacation Club or HOAs. Bluegreen also includes in costs of other fee-based services expense from
various other services that produce recurring, predictable and long-term revenue, such as cost associated
with title services.
General and Administrative Expense. Primarily represents compensation expense for personnel
supporting Bluegreen’s business and operations, professional fees (including consulting, audit and legal
fees), and administrative and related expenses.
62
Key Business and Financial Metrics and Terms Used by Management
Sales of VOIs. Represent sales of Bluegreen’s owned VOIs, including developed VOIs, and those
acquired through JIT and secondary market arrangements, reduced by equity trade allowances and an
estimate of uncollectible VOI notes receivable. In addition to the factors impacting system-wide sales of
VOIs, net, sales of VOIs are impacted by the proportion of system-wide sales of VOIs, net sold on behalf
of third-parties on a commission basis, which are not included in sales of VOIs.
System-wide Sales of VOIs, net. Represents all sales of VOIs, whether owned by Bluegreen or a third
party immediately prior to the sale. Sales of VOIs owned by third parties are transacted as sales of VOIs
in Bluegreen’s Vacation Club through the same selling and marketing process used to sell Bluegreen’s
VOI inventory. Bluegreen considers system-wide sales of VOIs, net to be an important operating measure
because it reflects all sales of VOIs by Bluegreen’s sales and marketing operations without regard to
whether Bluegreen or a third party owned such VOI inventory at the time of sale. System-wide sales of
VOIs, net is not a recognized term under GAAP and should not be considered as an alternative to sales of
VOIs or any other measure of financial performance derived in accordance with GAAP or to any other
method of analyzing our results as reported under GAAP.
Guest Tours. Represents the number of sales presentations given at Bluegreen’s sales centers during the
period.
Sale to Tour Conversion Ratio. Represents the rate at which guest tours are converted to sales of VOIs
and is calculated by dividing guest tours by number of VOI sales transactions.
Average Sales Volume Per Guest (“VPG”). Represents the sales attributable to tours at Bluegreen’s sales
locations and is calculated by dividing VOI sales by guest tours. Bluegreen considers VPG to be an
important operating measure because it measures the effectiveness of Bluegreen’s sales process,
combining the average transaction price with the sale-to-tour conversion ratio.
EBITDA. Bluegreen defines EBITDA as earnings, or net income, before taking into account interest
income (excluding interest earned on VOI notes receivable), interest expense (excluding interest expense
incurred on debt secured by Bluegreen’s VOI notes receivable), income and franchise taxes, and
depreciation and amortization. For the purposes of the EBITDA calculation, no adjustments were made
for interest income earned on Bluegreen’s VOI notes receivable or the interest expense incurred on debt
that is secured by such notes receivable because they are both considered to be part of the operations of
Bluegreen’s business.
Adjusted EBITDA. Bluegreen defines Adjusted EBITDA as EBITDA adjusted for amounts attributable to
the non-controlling interest in Bluegreen/Big Cedar Vacations (in which Bluegreen owns a 51% interest)
and items that Bluegreen believes are not representative of ongoing operating results.
Bluegreen considers EBITDA and Adjusted EBITDA to be an indicator of its operating performance, and
it is used by Bluegreen to measure its ability to service debt, fund capital expenditures and expand its
business. EBITDA is also used by companies, lenders, investors and others because it excludes certain
items that can vary widely across different industries or among companies within the same industry. For
example, interest expense can be dependent on a company’s capital structure, debt levels and credit
ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies.
The tax positions of companies can also vary because of their differing abilities to take advantage of tax
benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax
rates and provision for income taxes can vary considerably among companies. EBITDA also excludes
depreciation and amortization because companies utilize productive assets of different ages and use
different methods of both acquiring and depreciating productive assets. These differences can result in
considerable variability in the relative costs of productive assets and the depreciation and amortization
expense among companies.
Bluegreen considers Adjusted EBITDA to be a useful supplemental measure of Bluegreen’s operating
performance that facilitates the comparability of historical financial periods.
EBITDA and Adjusted EBITDA are not recognized terms under GAAP and should not be considered as
an alternative to net income (loss) or any other measure of financial performance or liquidity, including
cash flow, derived in accordance with GAAP, or to any other method or analyzing Bluegreen’s results as
reported under GAAP. The limitations of using EBITDA or Adjusted EBITDA as an analytical tool
include, without limitation, that EBITDA or Adjusted EBITDA does not reflect (i) changes in, or cash
requirements for, working capital needs; (ii) interest expense, or the cash requirements necessary to
service interest or principal payments on indebtedness (other than as noted above); (iii) tax expense or the
cash requirements to pay taxes; (iv) historical cash expenditures or future requirements for capital
expenditures or contractual commitments; or (v) the effect on earnings or changes resulting from matters
that Bluegreen
63
considers not to be indicative of its future operations or performance. Further, although depreciation and
amortization are non-cash charges, the assets being depreciated and amortized will often have to be
replaced in the future, and EBITDA or Adjusted EBITDA does not reflect any cash requirements for such
replacements. In addition, Bluegreen’s definition of Adjusted EBITDA may not be comparable to
definitions of Adjusted EBITDA or other similarly titled measures used by other companies.
64
Results of Operations
For the years ended December 31, 2017, 2016 and 2015
Information regarding the results of operations for Bluegreen for the years ended December 31, 2017,
2016 and 2015 are set forth below (dollars in thousands):
2017
For the Years Ended December 31,
2016
2015
% of
System-
wide sales
of VOIs,
net(5)
48%
30%
54%
7%
-39%
100%
-54%
46%
Amount
$ 394,745
164,991
294,822
39,626
(288,792)
605,392
(294,822)
310,570
% of
System-
wide sales
of VOIs,
net(5)
65%
27%
49%
7%
-48%
100%
-49%
51%
Amount
$ 424,304
138,487
251,399
27,593
(289,060)
552,723
(251,399)
301,324
% of
System-
wide sales
of VOIs,
net(5)
77%
25%
45%
5%
-52%
100%
-45%
55%
Amount
$ 296,486
182,108
330,854
45,982
(238,780)
616,650
(330,854)
285,796
(46,134)
239,662
(17,439)
222,223
-16%
39%
-7%
93%
(44,428)
266,142
(27,346)
238,796
-14%
44%
-10%
90%
(42,088)
259,236
(22,884)
236,352
-14%
47%
-9%
91%
229,389
69%
201,829
68%
173,659
69%
56,899
111,819
(64,116)
(4,220)
(319,211)
(97,759)
135,024
312
9%
18%
-10%
-1%
-52%
-16%
22%
58,657
103,448
(57,632)
(6,847)
(314,039)
(100,988)
123,224
1,724
10%
17%
-10%
-1%
-52%
-17%
20%
48,633
97,539
(53,896)
(7,046)
(284,351)
(89,453)
121,437
2,883
9%
18%
-10%
-1%
-51%
-16%
22%
2,974
$ 138,310
(40,172)
84,776
$
(42,311)
82,009
$
(2,974)
135,336
9,632
178
12,168
(6,874)
150,440
5,836
4,781
46
-
40,172
124,948
9,536
186
12,505
(8,167)
139,008
-
-
(1,423)
10,000
42,311
124,320
9,181
130
15,390
(5,652)
143,369
-
-
56
-
Developed Sales (1)
Secondary Market sales
Fee-Based sales
JIT sales
Less: Equity trade allowances (6)
System-wide sales of VOIs, net
Less: Fee-Based sales
Gross sales of VOIs
Estimated uncollectible VOI
notes receivable (2)
Sales of VOIs
Cost of VOIs sold (3)
Gross profit (3)
Fee-based sales commission
revenue (4)
Financing revenue, net of
financing expense
Other fee-based services revenue
Cost of other fee-based services
Net carrying cost of VOI inventory
Selling and marketing expenses
General and administrative
expenses
Operating profit
Other income
Benefit (provision) for income
taxes
Net income
Adjustments for EBITDA:
Benefit (provision) for income
taxes
Income before taxes
Depreciation
Franchise taxes
Interest expense (other than interest
incurred on debt that is secured by
VOI notes receivable)
Interest income (other than interest
earned on VOI notes receivable)
EBITDA
Adjustments for Adjusted EBITDA:
Corporate realignment costs
One-time payment to Bass Pro
Loss(gain) on assets held for sale
One-time special bonus
EBITDA attributable to
non-controlling interest in
Bluegreen/Big Cedar Vacations
Adjusted EBITDA
(12,509)
$ 148,594
(9,705)
$ 137,880
(11,197)
$ 132,228
65
(1) Developed VOI sales represent sales of VOIs acquired or developed by Bluegreen under its developed VOI
business. Developed VOI sales do not include Secondary Market sales, Fee-Based sales or JIT sales.
(2) Percentages for estimated uncollectible VOI notes receivable are calculated as a percentage of gross sales of
VOIs, which excludes Fee-Based sales (and not of system-wide sales of VOIs, net).
(3) Percentages for costs of VOIs sold and gross profit are calculated as a percentage of sales of VOIs (and not of
system-wide sales of VOIs, net).
(4) Percentages for Fee-Based sales commission revenue are calculated as a percentage of Fee-Based sales (and
not of system-wide sales of VOIs, net).
(5) Represents the applicable line item, calculated as a percentage of system-wide sales of VOIs, net, unless
otherwise indicated in the above footnotes.
(6) Equity trade allowances are amounts granted to customers upon trading in their existing VOIs in connection
with the purchase of additional VOIs.
Bluegreen - For the year ended December 31, 2017 compared to the year ended December 31, 2016
Sales of VOIs. Sales of VOIs were $239.7 million and $266.1 million during the years ended
December 31, 2017 and 2016, respectively. Gross sales of VOIs were reduced by $46.1 million and
$44.4 million during the years ended December 31, 2017, and 2016, respectively, for estimated future
uncollectible notes receivable. Estimated losses for uncollectible VOI notes receivable vary with the
amount of financed, non-fee based sales during the period and changes in Bluegreen’s estimates of future
notes receivable performance for existing and newly originated loans. Bluegreen’s estimated uncollectible
VOI notes receivable as a percentage of gross sales of VOIs were 16% and 14%, during the years ended
December 31, 2017 and 2016, respectively. The percentage of Bluegreen’s sales which were realized in
cash within 30 days from the sale of VOIs decreased to 39% during the year ended December 31, 2017
from 41% during the year ended December 31, 2016. This resulted in an increase in the portion of such
sales requiring an estimate of losses for uncollectible VOI notes receivable. Bluegreen has in recent years
experienced an increase in its default rates. Bluegreen believes that a significant portion of the default
increase in recent years is due in part to the receipt of letters from attorneys who purport to represent
certain VOI owners and who have encouraged such owners to become delinquent and ultimately default
on their obligations. See “Item 3. Legal Proceedings” for additional information regarding such letters and
actions taken by Bluegreen in connection therewith. While Bluegreen believes its notes receivable are
adequately reserved at this time, actual defaults may differ from the estimates and the reserve may not be
adequate. In addition to the factors described below impacting system-wide sales of VOIs, net, sales of
VOIs are impacted by the proportion of system-wide sales of VOIs, net sold on behalf of third parties on a
commission basis, which are not included in sales of VOIs.
The average default rates and delinquency rates (more than 30 days past due) on Bluegreen’s VOI notes
receivable were as follows:
Average annual default rates
Delinquency rates
For the Years Ended December 31,
2017
8.50%
2016
7.50%
As of December 31,
2017
3.04%
2016
3.30%
System-wide sales of VOIs, net. System-wide sales of VOIs, net were $616.7 million and $605.4 million
during the years ended December 31, 2017 and 2016, respectively. This growth reflected an increase in the
average sales price (per transaction), partially offset by a decrease in the number of guest tours and the
sale-to-tour conversion ratio. The average sales price per transaction increased by 12% for the year ended
December 31, 2017 compared to the year ended December 31, 2016. During 2017, Bluegreen began
screening the credit qualifications of potential marketing guests, resulting in a higher average transaction
price, higher VPG, and a lower number of tours in the year ended December 31, 2017. Bluegreen believes
its screening of marketing guests will ultimately result in improved efficiencies in its sales process,
however this has not yet occurred and there is no assurance that efficiencies will be achieved.
Included in system-wide sales are Fee-Based Sales, JIT Sales, Secondary Market Sales and developed VOI
sales. Sales by category are tracked based on which deeded VOI is conveyed in each transaction.
Bluegreen manages which VOIs are sold based on several factors, including the needs of fee-based clients,
Bluegreen’s debt service requirements and default resale requirements under term securitization and
similar transactions. These factors contribute to fluctuations in the amount of sales by category from
period to period.
66
The following table sets forth certain information for system-wide sales of VOIs, net for 2017 and
2016. The information is provided before giving effect to the deferral of VOI sales in accordance with
GAAP:
Number of sales offices at period-end
Number of active sales arrangements with
third-party clients at period-end
Total number of VOI sales transactions
Average sales price per transaction
Number of total guest tours
Sale-to-tour conversion ratio– total marketing guests
Number of new guest tours
Sale-to-tour conversion ratio– new marketing guests
Percentage of sales to existing owners
Average sales volume per guest
For the Years Ended December 31,
2017
2016
% Change
23
23
-
16
40,705
15,365 $
252,257
16.1%
162,083
13.4%
49.4%
2,479 $
18
45,340
13,727
274,987
16.5%
190,235
13.5%
46.0%
2,263
$
$
-11%
-10%
12%
-8%
-2%
-15%
-1%
7%
10%
Cost of VOIs Sold. During the years ended December 31, 2017 and 2016, cost of VOIs sold was
$17.4 million and $27.3 million, respectively, and represented 7% and 10%, respectively, of sales of
VOIs. During 2017, Bluegreen increased the average selling price of VOIs by approximately 4%. As a
result of this pricing change, Bluegreen also increased its estimate of total gross margin that will be
generated on the sale of its VOI inventory under the relative sales value method. Under the relative sales
value method prescribed for timeshare developers to relieve the cost of VOI inventory, changes to the
estimate of gross margin expected to be generated on the sale of VOI inventory are recognized on a
retrospective basis in earnings. Accordingly, during the second quarter of 2017, Bluegreen recognized a
benefit to cost of VOIs sold of $5.1 million. Further, in September 2016, Bluegreen increased the selling
price of its VOIs by 5%. Accordingly, during the third quarter of 2016, Bluegreen recognized a benefit to
cost of VOIs sold of $5.6 million.
Fee-Based Sales Commission Revenue. During the years ended December 31, 2017 and 2016, Bluegreen
sold $330.9 million and $294.8 million, respectively, of third-party VOI inventory under commission
arrangements and earned sales and marketing commissions of $229.4 million and $201.8 million,
respectively, in connection with those sales. This increase was due primarily to an increase in commission
rates with certain commission based clients, as well as the factors described above related to the increase
in system-wide sales of VOIs, net. Bluegreen earned an average sales and marketing commission of 69%
and 68% during the years ended December 31, 2017 and 2016, respectively. Additionally, the increase in
2017 included an incentive commission of $4.5 million related to the achievement of certain sales
thresholds pursuant to the terms and conditions of the applicable contractual arrangement, as compared to
a $3.0 million incentive commission earned in 2016.
Financing Revenue, Net of Financing Expense. During the years ended December 31, 2017 and 2016,
financing revenue, net of financing expense were $56.9 million and $58.7 million, respectively. The
increase is a result of Bluegreen’s lower cost of borrowing and an increase in its VOI notes receivable
portfolio, in connection with the introduction of “risk-based pricing” pursuant to which, buyer’s interest
rates are determined based on their FICO score at the point of sale. As a result, Bluegreen has realized
2017 loan originations (after 30-day payoffs same as cash), with a weighted average FICO score of 724
compared to 716 for 2016.
Other Fee-Based Services Revenue. During the years ended December 31, 2017 and 2016, revenue from
Bluegreen’s resort operations, club management and title operations was $111.8 million and $103.4
million, respectively, which was partially offset by expenses directly related to these operations of $64.1
million and $57.6 million, respectively.
Other fee-based services revenue increased 8% during the year ended December 31, 2017 as compared to
the year ended December 31, 2016. Bluegreen provides management services to the Vacation Club and to
a majority of the HOAs of the resorts within the Vacation Club. In connection with its management
services, Bluegreen also manages the Vacation Club reservation system, provides services to owners and
performs billing and collections services to the Vacation Club and certain HOAs. The resort properties
Bluegreen manages increased from 46 as of December 31, 2016 to 48 as of December 31, 2017 due to new
resorts under management in Charleston, South Carolina and Banner Elk, North Carolina. Resort
operations and club management revenues increased during 2017 compared to 2016 primarily as a result
of such increase in the number of managed resorts and an increase in the number of owners in the
Vacation Club. Additionally, Bluegreen generates revenues from its Traveler Plus program, and food and
beverage and other retail operations. Bluegreen also earns commissions from providing rental services to
third parties and fees from managing the construction activities of certain of its fee based third-party
developer clients.
67
During 2017, cost of other fee-based services increased 11% compared to 2016. This increase is primarily
due to the higher costs associated with programs provided to VOI owners and increased costs of providing
management services as a result of the higher service volumes described above.
Net Carrying Cost of VOI Inventory. The carrying cost of Bluegreen’s inventory was $16.2 million and
$16.8 million during the years ended December 31, 2017 and 2016, respectively, which was partly offset
by rental and sampler revenues of $12.0 million and $9.9 million, respectively. The decrease in net
carrying costs is a result of Bluegreen’s capital-light business activities and an increase in sampler
revenues.
Selling and Marketing Expenses. Selling and marketing expenses were $319.2 million and $314.0 million
during the years ended December 31, 2017 and 2016, respectively. The increase in selling and marketing
expense was primarily due to increased costs from the implementation of screening the credit
qualifications of potential marketing guests, including the expense of fulfillment costs associated with
those guests, offset by an increase in the average sales volume per guest. As a percentage of system-wide
sales of VOIs, net, selling and marketing expenses were 52% during each of the years ended
December 31, 2017 and 2016. Selling and marketing expenses vary as a percentage of sales from period
to period based in part on the relative proportion of marketing methods utilized during such periods, most
notably the percentage of sales to Bluegreen’s existing owners, which has a relatively lower cost compared
to other methods.
General and Administrative Expenses. General and administrative expenses were $97.8 million and
$101.0 million during the years ended December 31, 2017 and 2016, respectively. As a percentage of
system-wide sales of VOIs, net, general and administrative expenses were 16% and 17% during the years
ended December 31, 2017 and 2016. The decrease in 2017 was primarily due to special bonuses totaling
$10.0 million, which were paid to certain of Bluegreen’s employees in June 2016, with no comparable
2017 special bonuses. The decreases in general administrative expenses were partly offset by a
$4.8 million commission payment to Bass Pro as well as additional accrued severance of $2.9 million
payable by Bluegreen pursuant to an agreement Bluegreen entered into with an executive during
September 2017 in connection with his retirement. The $2.9 million amount is included in the corporate
realignment costs in the above table. See “Commitments” for additional information.
On October 9, 2017, Bass Pro raised an issue regarding the computation of the sales commissions paid to
it on the sale of VOIs. In response to the request from Bass Pro, Bluegreen made a payment of
approximately $4.8 million to Bass Pro during the fourth quarter of 2017 in connection with this matter.
While Bluegreen believes that the amount previously paid was consistent with the terms and intent of the
parties’ agreements, the resolution of that issue could result in a future increase in Bluegreen’s marketing
costs.
Bluegreen - For the year ended December 31, 2016 compared to the year ended December 31, 2015
Sales of VOIs. Sales of VOIs were $266.1 million and $259.2 million during the years ended
December 31, 2016 and 2015, respectively. In addition to the factors described below impacting system-
wide sales of VOIs, net, sales of VOIs are impacted by the proportion of system-wide sales of VOIs, net
sold on behalf of third parties on a commission basis, which are not included in sales of VOIs. Gross sales
of VOIs were reduced by $44.4 million and $42.1 million during the years ended December 31, 2016, and
2015, respectively, for estimated future uncollectible notes receivable. Bluegreen’s estimated uncollectible
VOI notes receivable as a percentage of gross sales of VOIs were 14% during each of the years ended
December 31, 2016 and 2015.
The average default rates and delinquency rates (more than 30 days past due) on Bluegreen’s VOI notes
receivable were as follows:
Average annual default rates
Delinquency rates
For the Years Ended December 31,
2016
7.50%
2015
6.90%
As of December 31,
2016
3.30%
2015
3.30%
System-wide sales of VOIs, net. System-wide sales of VOIs, net were $605.4 million and $552.7 million
during the years ended December 31, 2016 and 2015, respectively. This growth reflected an increase in the
number of tours and the average price per transaction partially offset by a decrease in the sale-to-tour
conversion ratio. During the year ended December 31, 2016, the number of tours increased 16% and the
number of new prospect tours increased 22% compared to the year ended December 31, 2015. This
increase reflects efforts to expand marketing to new sales prospects. The average sales price per
transaction increased by 6% for the year ended December 31, 2016 compared to the year ended
68
December 31, 2015. Bluegreen estimates that system-wide sales were adversely impacted by
approximately $6.3 million as a result of Hurricane Matthew and the Tennessee wildfires in 2016.
The following table sets forth certain information for system-wide sales of VOIs, net for 2016 and
2015. The information is provided before giving effect to the deferral of VOI sales in accordance with
GAAP:
Number of sales offices at period-end
Number of active sales arrangements with
third-party clients at period-end
Total number of VOI sales transactions
Average sales price per transaction
Number of total guest tours
Sale-to-tour conversion ratio– total marketing guests
Number of new guest tours
Sale-to-tour conversion ratio– new marketing guests
Percentage of sales to existing owners
Average sales volume per guest
$
$
For the Years Ended December 31,
2015
2016
% Change
23
23
-
18
45,340
13,727 $
274,987
16.5%
190,235
13.5%
46.0%
2,263 $
15
43,576
12,962
237,208
18.4%
156,554
14.9%
48.2%
2,381
20%
4%
6%
16%
-10%
22%
-9%
-5%
-5%
Cost of VOIs Sold. During the years ended December 31, 2016 and 2015, cost of VOIs sold was
$27.3 million, and $22.9 million, respectively, and represented 10% and 9%, respectively, of sales of
VOIs. In September 2016, Bluegreen increased the selling price of its VOIs by 5%. As a result of this
pricing change, Bluegreen management also increased its estimate of total gross margin generated on the
sale of its VOI inventory. Under the relative sales value method prescribed for timeshare developers to
relieve the cost of VOI inventory, changes to the estimate of gross margin expected to be generated on the
sale of VOI inventory are recognized on a retrospective basis in earnings. Accordingly, during the year
ended December 31, 2016, Bluegreen recognized a benefit to cost of VOIs sold of $5.6 million.
Fee-Based Sales Commission Revenue. During the years ended December 31, 2016 and 2015, Bluegreen
sold $294.8 million and $251.4 million, respectively, of third-party VOI inventory under commission
arrangements within its capital-light business strategy and earned sales and marketing commissions of
$201.8 million and $173.7 million, respectively, in connection with those sales. This increase was due
primarily to an increase in the number of commission based clients, as well as the factors described above
related to the increase in system-wide sales of VOIs, net. Bluegreen earned an average sales and marketing
commission of 68% and 69% during the years ended December 31, 2016, and 2015, respectively. The
higher percentage in 2015 included an incentive commission of $1.1 million related to the achievement of
certain sales thresholds pursuant to the terms and conditions of the applicable contractual arrangement.
Financing Revenue, Net of Financing Expense. During the years ended December 31, 2016 and 2015,
financing revenue, net of financing expense were $58.7 million and $48.6 million, respectively. The
increase is a result of Bluegreen’s lower cost of borrowing and an increase in Bluegreen’s VOI notes
receivable portfolio.
Other Fee-Based Services Revenue. During the years ended December 31, 2016 and 2015, revenue from
Bluegreen’s resort operations, club management and title operations was $103.4 million and $97.5
million, respectively, which was partially offset by expenses directly related to these operations of $57.6
million and $53.9 million, respectively.
Other fee-based services revenue increased 6% during the year ended December 31, 2016 as compared to
the year ended December 31, 2015. As of December 31, 2016, and 2015, Bluegreen managed 46 and 45
resort properties and hotels, respectively. Resort operations and club management revenue increased
primarily as a result of increases in the number of owners in the Vacation Club. In January 2015,
Bluegreen sold the Atlantic Palace Resort management contract and recognized a $0.3 million gain, which
is included in other income for the year ended December 31, 2015. Additionally, Bluegreen generated
revenues from its Traveler Plus program, and food and beverage and other retail operations. Bluegreen
also earn commissions from providing rental services to third parties and fees from managing the
construction activities of certain fee-based clients.
Net Carrying Cost of VOI Inventory. The carrying cost of Bluegreen’s inventory was $16.8 million and
$15.3 million during the years ended December 31, 2016 and 2015, respectively, which was partly offset
by rental and sampler revenues of $9.9 million and $8.3 million, respectively. The increase during 2016 as
compared to 2015 was primarily due to an increase in maintenance fees related to a newly constructed
building at Bluegreen/Big Cedar Vacation’s Paradise Point resort that began sales in November 2015,
partially offset by an increase in rental revenues and an increased emphasis on Bluegreen’s capital-light
strategy.
69
Selling and Marketing Expenses. Selling and marketing expenses were $314.0 million and $284.4 million
during the years ended December 31, 2016 and 2015, respectively. As a percentage of system-wide sales
of VOIs, net, selling and marketing expenses were 52% and 51% during the years ended December 31,
2016 and 2015, respectively. This increase was a result of the focus on increasing Bluegreen’s marketing
efforts to new prospects as opposed to existing owners, which resulted in higher costs per tour from new
and expanding marketing channels. Sales to existing owners generally involve lower marketing expenses
than sales to new prospects.
General and Administrative Expenses. General and administrative expenses were $101.0 million and
$89.5 million during the years ended December 31, 2016 and 2015, respectively. As a percentage of
system-wide sales of VOIs, net, general and administrative expenses were 17% and 16% during the years
ended December 31, 2016 and 2015, respectively. The increase in 2016 was primarily due to special
bonuses totaling $10.0 million, which were paid to certain employees in June 2016, with no comparable
2015 bonuses.
70
BBX Capital Real Estate Reportable Segment
Segment Description
BBX Capital Real Estate’s primary activities include the acquisition, development, ownership, and
management of real estate and investments in real estate joint ventures. BBX Capital Real Estate also
manages the legacy assets acquired by BCC in connection with the sale of its BankAtlantic subsidiary in
July 2012. The legacy assets include portfolios of loans receivable, real estate properties, and loans
previously charged-off by BankAtlantic.
Current Trends and Developments
During 2017, BBX Capital Real Estate continued to focus on expanding its investments in real estate
primarily through new investments in real estate joint ventures, including three new investments in
unconsolidated joint ventures for an aggregate investment of $7.7 million, and continued progress in our
development of the Beacon Lake Community in St. Johns County, Florida. In addition, while revenues
and recoveries from loan losses associated with various legacy assets have decreased as a result of an
overall decline in the outstanding balance of legacy assets, BBX Capital Real Estate has generated income
in connection with the completion of various development projects by its unconsolidated joint ventures,
including the CC Homes Bonterra joint venture, which sold the remaining homes in a 394 single-family
home development in the fourth quarter of 2017, and the Gardens on Millenia retail joint venture, which
sold a portion of its newly-developed retail center in December 2017.
Results of Operations
Information regarding the results of operations for BBX Capital Real Estate for the years ended December
31, 2017, 2016 and 2015 is set forth below (dollars in thousands):
Total revenues
Recoveries from loan losses, net
Asset impairments, net
Selling, general and
administrative expenses
Total costs and expenses
Equity in net earnings (losses) of
unconsolidated
joint ventures
Income before income taxes
For the Years Ended
December 31,
$
2017
9,314
(7,495)
1,646
2016
14,749
(20,508)
2,304
2015
46,642
(13,457)
287
Change
2017 vs
2016
(5,435)
13,013
(658)
Change
2016 vs
2015
(31,893)
(7,051)
2,017
11,113
5,264
11,864
(6,340)
12,773
(397)
(751)
11,604
(909)
(5,943)
14,483
18,533
13,630
34,719
(1,565)
45,474
853
(16,186)
15,195
(10,755)
$
BBX Capital Real Estate’s income before income taxes for the year ended December 31, 2017 compared
to 2016 decreased by $16.2 million, or 46.6%, primarily due to the following:
· A decrease in revenues, including net gains on sales of assets and interest income, primarily due
to lower gains on sales of commercial land parcels and deferred gains associated with properties
contributed to unconsolidated joint ventures and the overall decline in the loan portfolio balance
as a result of loan sales and the continued payoff of nonaccrual loans; and
· A decrease in recoveries from loan losses as loans in the legacy asset portfolio are collected and
the overall balance of the loan portfolio declines; partially offset by
· A decrease in asset impairments on commercial land parcels and residential loans;
· A decrease in selling, general and administrative expenses primarily due to lower legal fees
incurred in connection with loan portfolio recoveries and foreclosures and real estate and joint
venture transactions; and
· A net increase in equity in earnings of unconsolidated joint ventures primarily due to a $2.6
million increase in equity in earnings from the CC Homes Bonterra joint venture due to the sale
of the remaining homes in the development in 2017 and $3.4 million in equity in earnings from
the Gardens on Millenia retail development joint venture due to the sale of a portion of the retail
development in 2017, partially offset by a $3.1 million decrease in equity in earnings from the
Altis at Kendall Square joint venture due to the sale of the project in
71
2016 and a $850,000 decrease in earnings from the Altis at Bonterra joint venture due to the
commencement of depreciation expenses associated with the project in 2017 and an increase in
ongoing marketing and operating costs while the project is being stabilized.
BBX Capital Real Estate’s income before income taxes for the year ended December 31, 2016 compared
to 2015 decreased by $10.8 million, or 23.7%, primarily due to the following:
· A decrease in revenues primarily due to lower gains on sales of land parcels, including the
impact of the sale of four parcels in 2015 that generated net gains of $31.4 million for the year
ended December 31, 2015, and lower interest income primarily resulting from the payoff of two
nonaccrual commercial loans in 2015 that generated $5.8 million of interest income for the year
ended December 31, 2015; and
· An increase in asset impairments on commercial land parcels and residential loans; partially
offset by
· An increase in recoveries from loan losses due to various significant recoveries on loans in the
legacy asset portfolio in 2016;
· A decrease in selling, general and administrative expenses primarily due to lower operating
expenses, including real estate taxes and insurance, associated with real estate acquired through
foreclosure as a result of the sale of properties and the contribution of real estate to joint
ventures, partially offset by an increase in legal fees incurred in connection with loan portfolio
recoveries and foreclosures; and
· A net increase in equity in earnings of unconsolidated joint ventures primarily due to a $10.3
million increase in equity earnings from the CC Homes Bonterra joint venture due to the sale of
212 single-family homes in the 394 single-family home development in 2016, a $3.6 million
increase in equity earnings from the Altis at Kendall Square joint venture due to the sale of the
project in 2016, and a $1.2 million increase in equity earnings from the Village at Victoria Park
joint venture due to the sale of 9 single-family homes in the 30 single-family home development
in 2016.
72
Renin Reportable Segment
Segment Description
Renin is engaged in the design, manufacture, and distribution of specialty doors, systems and hardware,
and home décor products in the United States and Canada and operates through its headquarters in Canada
and two manufacturing and distribution facilities in the United States and Canada.
Current Trends and Developments
Following its achievement of profitability in 2016, Renin has continued to improve its operating
performance through an increase in sales, gross margin, and income before income taxes for the year
ended December 31, 2017 as compared to 2016. While this performance was primarily driven by
increased sales of its barn door product and product development, Renin has also continued to increase
operating efficiencies through the integration of its manufacturing facilities. In addition, Renin
successfully obtained a new credit facility which lowers its borrowing costs and contains less restrictive
financial covenants than its prior facility.
Results of Operations
Information regarding the results of operations for Renin for the years ended December 31, 2017, 2016
and 2015 are set forth below (dollars in thousands):
Trade sales
Cost of goods sold
Gross margin
Interest expense
Selling, general and
administrative expenses
Foreign exchange loss (gain)
Total costs and expenses
Income (loss) before income taxes
Gross margin percentage
SG&A as a percent of trade sales
For the Years Ended
December 31,
$
2017
69,648
(49,358)
20,290
509
17,408
193
18,110
$
2,180
% 29.13
% 24.99
2016
65,225
(47,088)
18,137
313
17,186
(219)
17,280
857
27.81
26.35
2015
56,461
(42,123)
14,338
309
15,049
1,038
16,396
(2,058)
25.39
26.65
Change Change
2016 vs
2017 vs
2015
2016
8,764
4,423
(4,965)
(2,270)
3,799
2,153
4
196
222
412
830
1,323
1.33
(1.35)
2,137
(1,257)
884
2,915
2.41
(0.31)
Renin’s income before income taxes for the year ended December 31, 2017 compared to 2016 increased
by $1.3 million, or 154%, primarily due to the following:
· An increase in trade sales reflecting higher sales volume from Renin’s retail channel customers,
including higher sales of Renin’s barn door product, as well as growth in e-commerce sales; and
Continued improvement in gross margins resulting primarily from an increasing proportion of
sales of higher margin door and hardware products; partially offset by
·
· An increase in total costs and expenses resulting primarily from foreign currency exchange
losses, an increase in selling, general and administration expenses primarily associated with the
hiring of marketing personnel and legal expenses, and an increase in interest expense associated
with a higher outstanding balance on Renin’s credit facilities as a result of higher working
capital requirements associated with increased sales volume.
Renin’s income before income taxes for the year ended December 31, 2016 compared to 2015 increased
by $2.9 million primarily due to the following:
· An increase in trade sales associated with increased sales volume from Renin’s retail channel
customers; and
73
· An improvement in gross margins resulting primarily from an increasing proportion of sales of
higher margin door and hardware products; partially offset by
· A net increase in total costs and expenses resulting primarily from selling, general and
administration expenses associated with the transition to a new executive management team,
which resulted in increased compensation and benefits associated with new hires and incentive
bonuses, higher distribution costs from increased sales volume, higher depreciation expense in
connection with technology expenditures, and increased marketing expenses from product
promotions, partially offset by foreign current exchange gains in 2016.
BBX Sweet Holdings Reportable Segment
Segment Description
BBX Sweet Holdings is engaged in the acquisition and management of operating businesses in the
confectionery industry, including manufacturers, wholesalers, and retailers of chocolate, hard candy, and
confectionery products.
Current Trends and Developments
In June 2017, BBX Sweet Holdings acquired IT’SUGAR through the purchase of all of its Class A
Preferred Units and 90.4% of its Class B Common Units for cash consideration of approximately $58.4
million, net of cash acquired. The remaining 9.6% of IT’SUGAR’s Class B Common Units are owned by
founder and CEO of
(“JR Sugar”), an entity owned by
JR Sugar Holdings, LLC
IT’SUGAR. IT’SUGAR is a specialty candy retailer with 95 retail locations in 26 states and Washington,
DC, and its products include bulk candy, giant candy packaging, and novelty items that are purchased and
sold at its retail locations, which include a mix of high-traffic resort and entertainment, lifestyle,
mall/outlet, and urban locations across the United States. IT’SUGAR’s retail locations generally utilize a
store model that requires a relatively low initial investment, with a goal of shorter payback periods and
increased investment returns and cash flows. In addition, while a portion of IT’SUGAR’s locations are in
lifestyle and mall/outlet locations where traffic may be impacted by the increase in online retail sales, we
believe IT’SUGAR’s business is generally less directly impacted by online sales due to the nature of
IT’SUGAR’s products and its emphasis on creating an entertainment experience for customers in high-
traffic locations.
the
As a result of BBX Sweet Holdings’ plans to further expand IT’SUGAR by opening new retail locations,
including six to seven locations during 2018. IT’SUGAR is not expected to generate net income in 2018
due to the expected costs of opening new stores and related ongoing depreciation expenses. However, the
acquisition of IT’SUGAR is expected to be cash flow accretive to the Company and has significantly
expanded BBX Sweet Holdings’ retail footprint in the confectionery industry.
Although the operating results of IT’SUGAR are not reflected in the Company’s consolidated financial
statements prior to its acquisition on June 16, 2017, IT’SUGAR generated sales growth during the year
ended December 31, 2017, with an approximately 2% increase in overall sales as compared to 2016 as a
result of new store openings and an increase in sales at its existing stores. The increase in sales in its
existing stores was largely driven by an increase in average dollars per transaction and increased
conversion in spite of an overall decrease in traffic count as compared to 2016.
BBX Sweet Holdings’ other operations have continued to generate operating losses and the Company is
continuing the process of integrating and consolidating the manufacturing facilities and operations of
various acquired businesses and eliminating certain unprofitable brands, including the exploration of
strategic alternatives for its manufacturing facility in Utah. As a result of these initiatives and declining
profits in its Orlando manufacturing operations, BBX Sweet Holdings recorded non-cash goodwill,
intangible assets and property and equipment impairments aggregating $5.2 million during the fourth
quarter of 2017. Subsequent to December 31, 2017, the Company commenced the process of exiting its
manufacturing facility in Utah, and it is anticipated that BBX Sweet Holdings will incur various costs in
connection with this initiative, including severance costs for certain employees. In addition, BBX Sweet
Holdings remains obligated under its lease agreement for the manufacturing facility, which has estimated
future minimum rental payments of $2.5 million, and expects that it will be required to recognize a lease
liability when it ceases operations in the facility or will otherwise incur costs to terminate the lease
agreement. The Company is a l s o continuing to evaluate the operations of BBX Sweet Holdings’
wholesale business, including the potential divestiture of certain operations or acquired businesses. To the
extent that the Company decides to divest of or otherwise exit certain of these operations, BBX Sweet
Holdings may recognize additional impairment charges and incur additional costs in the first quarter of
2018 or in future periods. As of December 31, 2017, the net book value of the operations under evaluation
was $9.3 million, and the total estimated future minimum rental payments for operating leases (excluding
the $2.5 million above) was $1.1 million.
74
Results of Operations
Information regarding the results of operations for BBX Sweet Holdings for the years ended December
31, 2017, 2016 and 2015 are set forth below (dollars in thousands):
$
Trade sales
Interest income
Other revenue
Total revenues
Cost of trade sales
Interest expense
Assets impairments, net
Selling, general and
For the Years Ended
December 31,
2016
30,771
10
8
30,789
27,253
409
2,352
2017
72,905
38
74
73,017
48,306
335
5,785
2015
27,823
-
14
27,837
20,584
950
-
administrative expenses
Total costs and expenses
Loss before income taxes
Gross margin percentage
SG&A as a percent of trade sales
35,374
89,800
(16,783)
33.74
48.52
$
%
%
15,720
45,734
(14,945)
11.43
51.09
15,071
36,605
(8,768)
26.02
54.17
Change
2017 vs
2016
Change
2016 vs
2015
42,134
28
66
42,228
21,053
(74)
3,433
19,654
44,066
(1,838)
50.03
46.65
2,948
10
(6)
2,952
6,669
(541)
2,352
649
9,129
(6,177)
(126.22)
22.01
As a result of the acquisition of IT’SUGAR, BBX Sweet Holdings’ results of operations for the year
ended December 31, 2017 include the results of IT’SUGAR’s operations from June 16, 2017 to December
31, 2017, which are included in the table below (dollars in thousands):
Trade sales
Other revenue
Total revenues
Cost of trade sales
Selling, general and
administrative expenses
Total costs and expenses
Income before income taxes
Gross margin percentage
SG&A as a percent of trade sales
June 16, 2017
to
December 31,
2017
46,772
59
46,831
24,528
19,705
44,233
2,598
47.56
42.13
$
$
%
%
BBX Sweet Holdings’ loss before income taxes for the year ended December 31, 2017 compared to the
same 2016 period increased by $1.9 million, or 12%, primarily due to the following:
· An increase in impairments resulting from a decline in the fair value of certain of BBX Sweet
Holdings’ operating businesses and the implementation of various strategic initiatives, including
the consolidation of manufacturing facilities and elimination of unprofitable brands; partially
offset by
Income before taxes from IT’SUGAR’s operations.
·
The profitability of IT’SUGAR from June 16, 2017 through December 31, 2017 reflects the seasonal
nature of IT’SUGAR’s trade sales and the timing of costs to open new stores, and it is anticipated that
IT’SUGAR will not generate net income in the short term due to the expected costs of the new store
expansion.
75
BBX Sweet Holdings’ loss before income taxes for the year ended December 31, 2016 compared to the
same 2015 period increased by $6.2 million primarily due to the following:
· A decrease in gross margin primarily resulting from inventory markdowns associated with
excess and obsolete inventory and excess manufacturing capacity associated with an operating
business acquired in 2015;
· Asset impairments recognized during the year ended December 31, 2016 in connection with a
decrease in the fair value of one of the operating businesses of BBX Sweet Holdings and the
relocation of certain manufacturing and operating facilities from California to Utah; and
· An increase in selling, general and administrative expenses related to costs associated with the
above described consolidation of manufacturing and operating facilities and higher marketing,
advertising, and compensation associated with the expansion of Hoffman’s Chocolates retail
stores.
We anticipate that BBX Sweet Holdings will continue to generate losses during the year ended December
31, 2018. Additionally, if BBX Sweet Holdings’ operations do not meet expectations or if there is a
downturn in the confectionery industry, BBX Sweet Holdings may recognize additional goodwill and
other intangible assets impairment charges in future periods.
Corporate Expenses & Other
Corporate Expenses & Other in the Company’s segment information consists of the following:
BBX Capital’s corporate selling, general and administrative expenses;
·
· Woodbridge’s interest expense associated with its junior subordinated debentures;
·
·
BBX Capital’s interest expense associated with its $80.0 million note payable to Bluegreen; and
The Company’s activities related to its MOD franchise operations.
In addition, Corporate Expenses & Other for the year ended December 31, 2017 included $6.9 million of
net gains on the cancellation of Woodbridge’s junior subordinated debentures, $8.6 million of insurance
carrier reimbursements from litigation costs, and the reimbursement of a $4.6 million fine previously paid
in connection with the SEC civil litigation against BCC, while Corporate Expenses & Other for year
ended December 31, 2015 included $36.5 million in litigation costs incurred in connection with the
settlement of litigation brought by Bluegreen’s former shareholders related to the April 2013 acquisition
of Bluegreen.
Corporate Selling, General, and Administrative Expenses
BBX Capital’s corporate selling, general and administrative expenses consist primarily of expenses
associated with administering the various support functions at its corporate headquarters, including
executive compensation, accounting, legal, human resources, risk management, investor relations and
executive offices. BBX Capital’s corporate selling, general, and administrative expenses were $57.8
million, $57.9 million, and $51.1 million for the years ended December 31, 2017, 2016, and 2015,
respectively.
BBX Capital’s corporate selling, general, and administrative expenses for the year ended December 31,
2017 compared to the same 2016 period remained flat, which primarily reflects the impact of the
following:
·
·
·
$3.0 million of consulting and diligence-related costs incurred in 2017 in connection with the
acquisition of IT’SUGAR; and
$2.3 million of increased costs incurred in 2017 associated with the Company’s MOD franchise
operations; partially offset by
$3.8 million of lower costs associated with executive compensation.
BBX Capital’s corporate selling, general, and administrative expenses for the year ended December 31,
2016 compared to the same 2015 period increased by $6.8 million primarily resulting from higher
compensation expense and increased professional fees.
Interest Expense
Woodbridge’s interest expense on its junior subordinated debentures was $3.4 million, $4.0 million, and
$3.6 million for the years ended December 31, 2017, 2016 and 2015, respectively.
76
BBX Capital’s interest expense on the $80 million note payable to Bluegreen was $6.4 million, $8.0
million and $5.6 million for the years ended December 31, 2017, 2016 and 2015, respectively, and is
eliminated in the Company’s consolidated statements of operations. Effective July 1, 2017, the interest
rate on the note payable was reduced from 10% per annum to 6% per annum.
MOD Franchise Operations
In 2016, the Company entered into area development agreements with MOD with a goal of developing
approximately 60 MOD franchised pizza restaurant locations throughout Florida over six years. In 2017,
the Company hired personnel to establish its initial restaurant operations and opened two restaurant
locations during the fourth quarter of 2017. In addition, the Company continued to establish its pipeline of
restaurant locations and anticipates opening eight to twelve locations during the year ended December 31,
2018.
During the year ended December 31, 2017, the Company’s MOD franchise operations generated a net
loss before taxes of $2.5 million, which was primarily attributable to $2.6 million in selling, general, and
administrative expenses, partially offset by sales generated from the two restaurant locations that were
opened during the fourth quarter of 2017. The selling, general, and administrative expenses for the year
ended December 31, 2017 included compensation costs associated with operations, human resource,
marketing, and finance personnel that were hired to establish initial restaurant operations, as well as costs
associated with store openings and the review of potential restaurant sites. On average, the Company
incurred approximately $725,000 in capital expenditures, net of anticipated tenant improvement
allowances, and $150,000 in store opening costs for each of the two restaurant locations that were opened
in the fourth quarter of 2017.
The Company expects to continue to incur net losses and capital expenditures due to the expected costs of
opening new locations in 2018 and future years.
Benefit (Provision) for Income Taxes
The benefit for income taxes for the year ended December 31, 2017 resulted from the enactment of the
Tax Cuts and Jobs Act on December 22, 2017, which reduced the federal corporate tax rate from 35% to
21% commencing on January 1, 2018 and resulted in a $43.1 million reduction in the Company’s deferred
tax liability. The Company is currently evaluating the impact the Tax Cuts and Jobs Act will have on our
consolidated financial statements in future periods.
The Company’s effective tax rate excluding the rate change benefit was 38.4% for the year ended
December 31, 2017. The Company’s effective tax rate was higher than the expected federal income tax
rate of 35% due to state income taxes and nondeductible executive compensation and was lower than the
effective tax rate for the year ended December 31, 2016 as a result of an increase in the deferred tax asset
valuation allowance during 2016 based on an updated evaluation of the future deductibility of net
operating loss carryforwards.
The provision for income taxes for the year ended December 31, 2016 reflected the Company’s effective
tax rate of 46.6% on income before income taxes. The effective tax rate was higher than the expected
federal income tax rate of 35% due to state income taxes, nondeductible executive compensation, and
increases in deferred tax asset valuation allowance.
The benefit for income taxes for the year ended December 31, 2015 resulted from the release of a portion
of BBX Capital’s deferred tax asset valuation allowance on May 1, 2015 as BBX Capital became eligible
to file a consolidated group federal income tax return with BCC and Bluegreen as described in further
detail in Item 8 – Note 14 of this report.
Net Income Attributable to Noncontrolling Interests
BBX Capital includes in its consolidated financial statements the results of operations and financial
position of various partially-owned subsidiaries in which it holds a controlling financial interest, including
Bluegreen, Bluegreen/Big Cedar Vacations, and IT’SUGAR. As a result, the Company is required to
attribute net income to the noncontrolling interests in these subsidiaries.
Net income attributable to noncontrolling interests was $18.4 million, $13.3 million, and $18.8 million
during the years ended December 31, 2017, 2016 and 2015, respectively. The increase in net income
attributable to noncontrolling interests for the year ended December 31, 2017 compared to the same 2016
period was primarily due to Bluegreen’s IPO, which resulted in a decrease of BBX Capital’s ownership in
Bluegreen from 100% to 90%, and an increase in net
77
income for Bluegreen/Big Cedar Vacations, partially offset by the impact of BBX Capital’s acquisition of
the outstanding noncontrolling interests in BCC on December 15, 2016.
The decrease in net income attributable to noncontrolling interests for the year ended December 31, 2016
compared to the same 2015 period was primarily due to a decrease in net income associated with
Bluegreen/Big Cedar Vacations and the recognition of a gain on sale of assets by the JRG/BBX
Development joint venture, a consolidated real estate joint venture, during the year ended December 31,
2015.
Consolidated Financial Condition
Consolidated Assets and Liabilities
Total assets at December 31, 2017 and 2016 were $1.6 billion and $1.4 billion, respectively. The primary
changes in the components of total assets are summarized below:
·
·
·
·
·
·
·
·
·
Increase in cash was primarily from $65.6 million of cash generated from operating activities
and $95.9 million of cash received in the Bluegreen IPO partially offset by $58.4 million of cash
paid to acquire IT’SUGAR, $27.6 million of cash paid to repurchase common stock, and $11.4
million of cash distributions to noncontrolling interests;
Increase in VOI inventory was primarily from increased spending by Bluegreen on the
acquisition of JIT and secondary market inventory purchases and development expenditures
associated with expanding the capacity of existing resorts;
Increase in trade inventory was primarily attributable to the acquisition of IT’SUGAR;
Increase in real estate was primarily related to $11.5 million of construction costs associated
with real estate inventory and the transfer of a $6.2 million student housing facility from
property and equipment to real estate held for sale, partially offset by $11.5 million of real estate
sales and impairment losses of $1.7 million;
Increase in investment in unconsolidated real estate joint ventures reflects $14.5 million of
equity in earnings and $8.7 million of additional investments, partially offset by $19.3 million of
distributions received;
Increase in property and equipment reflects $18.7 million of property and equipment acquired in
connection with the IT’SUGAR acquisition and $22.0 million of property and equipment
purchases, primarily at Bluegreen, partially offset by $6.2 million of property transferred to real
estate held for sale and depreciation of $15.8 million;
Increase in goodwill reflects $35.2 million of goodwill recognized in the IT’SUGAR
acquisition, partially offset by a $2.4 million impairment loss associated with a reporting unit of
BBX Sweet Holdings;
Increase in intangible assets reflects $4.5 million of intangible assets recognized in the
IT’SUGAR acquisition, partially offset by impairment losses and intangible asset amortization;
and
Increase in other assets resulting primarily from higher prepaid expenses and receivables from
commissions associated with the fee-based services provided by Bluegreen.
Total liabilities at December 31, 2017 and 2016 were $950.4 million and $940.6 million, respectively. The
primary changes in components of total liabilities are summarized below:
·
Increase in receivable-backed notes payable – non-recourse was primarily a result of
Bluegreen’s completion of a private offering and sale of approximately $120.2 million of
investment-grade, VOI receivable-backed notes (the “2017 Term Securitization”). This increase
was partially offset by repayments of notes payable with proceeds from the 2017 Term
Securitization and payments received from the obligors of notes receivables;
· Decrease in receivable-backed notes payable – recourse was due to Bluegreen’s repayment of
notes payable with a portion of the proceeds it received in connection with its 2017 Term
Securitization;
Increase in notes payable and other borrowings reflects $3.8 million of BBX Sweet Holdings
line of credit borrowings, the issuance of a $3.4 million promissory note in connection with an
investment in an unconsolidated real estate joint venture, and $3.2 million of additional
borrowings by Renin to fund increases in working capital;
·
· Decrease in deferred income tax liability was primarily a result of a decrease in the federal
corporate income tax rate partially offset by a reduction in deferred tax assets associated with the
utilization of NOL carryforwards;
· Decrease in junior subordinated debentures was due to the redemption and cancellation of
$18.75 million of junior subordinated debentures; and
Increase in other liabilities resulting primarily as a result of accrued severance expenses.
·
78
Consolidated Cash Flows
A summary of our consolidated cash flows is set forth below (in thousands):
$
Cash flows provided by (used in) operating activities
Cash flows (used in) provided by investing activities
Cash flows provided by (used in) financing activities
Net increase (decrease) in cash, cash equivalents, and restricted
cash
Cash, cash equivalents and restricted cash at beginning of
period
Cash, cash equivalents and restricted cash at end of period $
$
For the Years Ended
December 31,
2016
81,163
49,198
(42,314)
2017
65,599
(54,765)
52,096
2015
(1,651)
49,962
(124,098)
62,930
88,047
(75,787)
346,317
409,247
258,270
346,317
334,057
258,270
Cash Flows provided by/used in Operating Activities
The Company’s operating cash flows decreased $15.6 million during the year ended December 31, 2017
compared to the same period in 2016. The decrease was primarily due to increased spending by Bluegreen
on the acquisition and development of VOI inventory. During the year ended December 31, 2017,
Bluegreen paid $30.8 million for development expenditures, primarily related to Bluegreen/Big Cedar
Vacations, as compared to $17.4 million of development expenditures in 2016 and a $6.1 million payment
in 2016 for the purchase of a parcel of land adjacent to our Club 36 Resort in Las Vegas for the future
development of VOI inventory. Additionally, Bluegreen paid $29.8 million for JIT and secondary market
inventory purchases in the 2017 period, as compared to $17.7 million for such purchases in 2016.
The Company’s operating cash flows increased $82.8 million during the year ended December 31, 2016
compared to the same period in 2015. The increase was primarily due to positive changes in components
of working capital mainly associated with Bluegreen’s operations and a $13.3 million increase in cash
distributions from unconsolidated real estate joint ventures. Bluegreen’s operating cash flows increased
due to growth in VOI sales and decreased VOI inventory development expenditures.
Cash Flows provided by/used in Investing Activities
The Company’s investing cash flows decreased by $104.0 million during the year ended December 31,
2017 compared to the same period in 2016. The decrease reflects the $58.4 million of cash paid for the
acquisition of IT’SUGAR in June 2017, increased purchases of property and equipment, and lower
repayments of loans receivable.
The Company’s investing cash flows decreased by $0.8 million during the year ended December 31, 2016
compared to the same period in 2015. The decrease reflects lower proceeds from sales of real estate partly
offset by higher cash collections on loans receivable and lower additions to real estate.
Cash Flows provided by/used in Financing Activities
The Company’s cash provided by financing activities increased by $94.4 million during the year ended
December 31, 2017 compared to the same period in 2016. The increase was primarily the result of $95.9
million in net proceeds received from Bluegreen’s IPO and cash consideration of $16.9 million paid
during the year ended December 31, 2016 for all the outstanding shares of BCC not previously owned by
the Company (the “BCC Merger”) partially offset by an increase in the cash paid to repurchase and retire
common stock during the year ended December 31, 2017.
The Company’s cash used for financing activities decreased by $81.8 million during the year ended
December 31, 2016 compared to the same period in 2015. The decrease in cash used in financing
activities was primarily due to the April 2015 tender offer in which the Company paid cash consideration
of $95.4 million to BCC’s shareholders in connection with the purchase of shares of BCC’s Class A
Common Stock partially offset by the $16.9 million of cash consideration paid in the BCC Merger.
79
Commitments
The Company’s material commitments as of December 31, 2017 included the required payments due on
its receivable-backed debt, lines-of-credit and other notes payable, junior subordinated debentures,
commitments to complete certain projects based on its sales contracts with customers, subsidy advances to
certain HOAs, inventory purchase commitments under JIT arrangements and commitments under non-
cancelable operating leases.
The following table summarizes the contractual minimum principal and interest payments, net of
unamortized discount, required on all of the Company’s outstanding debt, non-cancelable operating leases
and inventory purchase commitments by period due date, as of December 31, 2017 (in thousands):
Contractual Obligations
Less
than
1 year
1 — 3
Years
4 — 5
Years
After 5
Years
Issuance
Costs
Total
Payments Due by Period
Unamortized
Debt
Receivable-backed
payable
Lines-of-credit
payable
and notes
Jr. subordinated debentures
Inventory
commitment
Noncancelable
leases
operating
purchase
notes
$
-
24,989
49,425
352,852
(6,148)
421,118
36,796
37,704
50,365
21,829
(2,580)
144,114
-
5,749
-
-
-
-
-
177,129
(41,715)
135,414
-
-
5,749
159,330
26,736
46,088
39,329
47,177
Total contractual obligations
69,281
108,781
139,119
598,987
(50,443)
865,725
Interest Obligations (1)
Receivable-backed
payable
Lines-of-credit
payable
notes
and notes
Jr. subordinated debentures
Total contractual interest
15,334
30,544
26,198
89,397
6,754
10,480
32,568
8,429
3,815
12,678
20,958
20,958
138,794
59,931
50,971
240,869
-
-
-
-
161,473
31,676
191,190
384,339
Total contractual obligations $ 101,849
168,712
190,090
839,856
(50,443) 1,250,064
(1) Assumes that the scheduled minimum principal payments are made in accordance with the table above
and the interest rate on variable rate debt remains the same as the rate at December 31, 2017.
In lieu of paying maintenance fees for unsold VOI inventory, Bluegreen provides subsidies to certain
homeowners’ associations to provide for funds necessary to operate and maintain vacation ownership
properties in excess of assessments collected from owners of the VOIs. During the years ended December
31, 2017, 2016 and 2015, Bluegreen made subsidy payments, included within cost of other fee-based
services, of $12.6 million, $13.9 million and $15.8 million, respectively. As of December 31, 2017 and
2016, Bluegreen had no accrued liability for such subsidies.
In September 2017, Bluegreen entered into an agreement with an executive in connection with his
retirement. Pursuant to the terms of the agreement, Bluegreen agreed to make payments totaling
approximately $2.9 million through March 2019 (all of which was accrued as of December 31, 2017).
Also, during the second half of 2017, Bluegreen implemented an initiative designed to streamline its
operations in certain areas to facilitate future growth. Such initiative resulted in $5.8 million of severance
for the year ended December 31, 2017, $1.9 million which will be paid in 2018. The Bluegreen 2017
Corporate Realignment Initiative resulted in an estimated reduction in their annual salaries and benefits
expenses of $19.5 million. Bluegreen expects to apply a portion of these savings toward additional
associates and expenditures for growth-driving initiatives this year, particularly various digital projects
including website enhancement, online vacation package booking, virtual reality kiosks, and
improvements to their customer relationship management.
During 2016, the Company entered into a severance arrangement with an executive. Under the terms of
the arrangement, the executive will receive $3.7 million over a three year period ending in August 2019.
As of December 31, 2017, $1.9 million was left to be paid under this agreement.
80
A wholly-owned subsidiary of BBX Capital has entered into area development agreements with MOD
Super Fast Pizza Franchising, LLC which will involve entering into lease agreements for MOD restaurant
locations. BBX Capital may be required to guarantee performance on these lease agreements.
The Company believes that its existing cash, anticipated cash generated from operations, anticipated
future permitted borrowings under existing or future credit facilities, and anticipated future sales of
Bluegreen’s notes receivable under existing, future or replacement purchase facilities will be sufficient to
meet the Company’s anticipated working capital, capital expenditure and debt service requirements,
including the contractual payment of the obligations set forth above, for the foreseeable future, subject to
the success of the Company’s ongoing business strategy and the ongoing availability of credit. The
Company will continue its efforts to renew, extend, or replace any credit and receivables purchase
facilities that have expired or that will expire in the near term. The Company may, in the future, also
obtain additional credit facilities and may issue corporate debt or equity securities. Any debt incurred or
issued by the Company may be secured or unsecured, bear interest at fixed or variable rates and may be
subject to such terms as the lender may require. In addition, the Company’s efforts to renew or replace
credit facilities or receivables purchase facilities which have expired or which are scheduled to expire in
the near term may not be successful, and sufficient funds may not be available from operations or under
existing, proposed or future revolving credit or other borrowing arrangements or receivables purchase
facilities to meet its cash needs, including debt service obligations. To the extent the Company is not able
to sell notes receivable or borrow under such facilities, its ability to satisfy its obligations would be
materially adversely affected.
Bluegreen’s receivables purchase facilities and its credit facilities, indentures and other outstanding debt
instruments include what Bluegreen believes to be customary conditions to funding, eligibility
requirements for collateral, cross-default and other acceleration provisions and certain financial and other
affirmative and negative covenants, including, among others, limits on the incurrence of indebtedness,
payment of dividends, investments in joint ventures and other restricted payments, the incurrence of liens,
and transactions with affiliates, as well as covenants concerning net worth, fixed charge coverage
requirements, debt-to-equity ratios, portfolio performance requirements and cash balances, and events of
default or termination. In the future, Bluegreen may be required to seek waivers of such covenants, but
may not be successful in obtaining waivers, and such covenants may limit Bluegreen’s ability to raise
funds, sell receivables, or satisfy or refinance its obligations, or otherwise adversely affect Bluegreen’s
ability to pay dividends and the Company’s financial condition and results of operations. In addition,
Bluegreen’s future operating performance and ability to meet its financial obligations will be subject to
future economic conditions and to financial, business and other factors, many of which may be beyond the
Company’s control.
Bluegreen has an exclusive marketing agreement with Bass Pro, a nationally-recognized retailer of
fishing, marine, hunting, camping and sports gear, that provides Bluegreen with the right to market and
sell vacation packages at kiosks in each of Bass Pro’s retail locations and through other means. As of
December 31, 2017, Bluegreen sold vacation packages in 68 of Bass Pro’s stores. In exchange, Bluegreen
compensates Bass Pro based on VOI sales generated through the program. No compensation is paid to
Bass Pro under the agreement on sales made at Bluegreen/Big Cedar Vacations’ resorts. During the years
ended December 31, 2017, 2016 and 2015, VOI sales to prospects and leads generated by the agreement
with Bass Pro accounted for approximately 15%, 16% and 20%, respectively, of Bluegreen’s VOI sales
volume. On October 9, 2017, Bass Pro advised Bluegreen that it believes the amounts paid to it as VOI
sales commissions should not have been adjusted for certain purchaser defaults. Bluegreen previously
informed Bass Pro that the aggregate amount of such adjustments for defaults charged back to Bass Pro
between January 2008 and June 2017 totaled approximately $4.8 million. Bluegreen believes these
chargebacks were appropriate and consistent with the terms and intent of the agreements with Bass Pro,
and Bluegreen is continuing to discuss the matter with Bass Pro. On October 20, 2017, in order to
demonstrate good faith, Bluegreen paid this amount to Bass Pro pending a resolution of the matter in the
ordinary course. Bluegreen recognized the $4.8 million payment as general and administrative expense
during the fourth quarter of 2017. In addition, the resolution of the matter may adversely impact
Bluegreen’s future marketing expenses.
Off-balance-sheet Arrangements
BBX Capital guarantees certain obligations of its wholly-owned subsidiaries and unconsolidated real
estate joint ventures, which are not included in the contractual obligations table above, and also guarantees
certain of the obligations in the above table as described in further detail in Item 8 – Note 15 of this
Annual Report.
81
Liquidity and Capital Resources
BBX Capital
As of December 31, 2017 and 2016, the Company, excluding Bluegreen, had cash, cash equivalents and
short-term investments of approximately $165.2 million and $155.7 million, respectively. Management
believes that BBX Capital has sufficient liquidity to fund operations for the foreseeable future.
BBX Capital’s principal sources of liquidity are its available cash and short-term investments,
distributions received from Bluegreen, distributions from unconsolidated real estate joint ventures, funds
obtained from loan recoveries and payoffs, sales of real estate, and income from income producing real
estate. BBX Capital expects to use its available funds for general corporate purposes, to make additional
investments in real estate based opportunities, middle market operating businesses, or other opportunities,
or to repurchase shares of its common stock pursuant to the share repurchase program.
In June 2017, the Company acquired IT’SUGAR, a specialty candy retailer with 95 retail locations in 26
states and Washington, DC, for a purchase price of $58.4 million, net of cash acquired and plans to further
expand IT’SUGAR by opening new retail locations, including six to seven locations during 2018. In
addition, the Company anticipates opening up to 60 MOD franchised pizza restaurant locations throughout
Florida over the next six years, including eight to twelve locations during 2018. During 2018, the
Company expects to incur $5.4 million to $8.0 million of capital expenditures, net of tenant allowance
reimbursements, to open new MOD franchised pizza restaurant locations and $7 million to $10 million of
capital expenditures, net of tenant allowance reimbursements, to open additional IT’SUGAR store
locations, and to renovate existing stores.
BBX Capital believes that its current financial condition and credit relationships, together with anticipated
cash flows from other sources of funds, including potential dividends from Bluegreen (which, as described
below, are subject to certain limitations), and, to the extent determined to be advisable, proceeds from the
disposition of properties or investments, will allow it to meet its anticipated near-term liquidity needs.
BBX Capital may also seek additional liquidity from outside sources, including traditional bank financing,
secured or unsecured indebtedness, or the issuance of equity and/or debt securities. However, these
alternatives may not be available to us on attractive terms, or at all. The inability to raise funds through
the sources discussed above would have a material adverse effect on the Company’s business, results of
operations and financial condition.
BBX Capital expects that it will receive dividends from time to time from Bluegreen. During 2017, 2016
and 2015, Bluegreen paid dividends totaling $40.0 million, $70.0 million and $54.4 million, respectively.
In November 2017, Bluegreen completed an IPO, and as a consequence, subsequent dividend decisions
will be at the discretion of Bluegreen’s board of directors, and will be based upon such factors as the
Bluegreen board deems to be appropriate, including, Bluegreen’s operating results, financial condition,
cash position, and operating and capital needs. Dividends from Bluegreen are also dependent on
restrictions contained in Bluegreen’s debt facilities. Except as otherwise noted, the debts and obligations
of Bluegreen are not direct obligations of the Company and generally are non-recourse to the Company.
Similarly, the assets of Bluegreen are not available to BBX Capital, absent a dividend or distribution.
Furthermore, certain of Bluegreen’s credit facilities contain terms which could limit the payment of cash
dividends without the lender’s consent or waiver and Bluegreen may only pay dividends subject to such
restrictions as well as the declaration of dividends by its board of directors. As a consequence, BBX
Capital may not receive dividends from Bluegreen consistent with prior periods, in the time frames or
amounts anticipated, or at all.
BBX Capital may also receive funds from Bluegreen in connection with its tax sharing agreement to the
extent Bluegreen utilizes BBX Capital’s tax benefits in BBX Capital’s consolidated tax return. During the
years ended December 31, 2017 and 2016, BBX Capital received $39.4 million and $26.2 million,
respectively, of tax sharing payments from Bluegreen.
In March 2017, June 2017, September 2017 and December 2017, the Company’s Board of Directors
declared quarterly cash dividends on the Company’s Class A and Class B Common Stock of $0.0075 per
share. In June 2016, September 2016 and December 2016, the Company’s Board of Directors declared a
quarterly cash dividend on the Company’s Class A and Class B Common Stock at $0.005 per share. Prior
to June 2016, no cash dividends were paid on the Company’s common stock. On March 6, 2018, the
Company’s board of directors declared a quarterly cash dividend on the Company’s Class A and Class B
Common Stock of $0.01 per share payable on April 20, 2018 to shareholders of record as of March 26,
2018. Future declaration and payment of cash dividends with respect to the Company’s common stock, if
any, will be determined in light of the then-current financial condition of the Company and other factors
deemed relevant by the board of directors.
In April 2015, BBX Capital borrowed $80.0 million from a wholly-owned subsidiary of Bluegreen to
finance in part the purchase of 4,771,221 shares of BCC’s Class A Common Stock. Payments of interest
are required on a quarterly basis,
82
with the entire $80.0 million principal balance and accrued interest being due and payable in April
2020. This debt currently accrues interest at a per annum rate of 6% with quarterly interest payments to
Bluegreen of $1.2 million, and BBX Capital may be required to repay all or a portion of the $80.0 million
borrowed from Bluegreen if Bluegreen is not in compliance with debt covenants under its debt
instruments.
The Company’s indebtedness, including any future debt incurred by the Company, may make us more
vulnerable to downturns in the economy and may subject the Company to covenants or restrictions on its
operations and activities.
On September 21, 2009, the Company’s board of directors approved a share repurchase program which
authorized the repurchase of up to 20,000,000 shares of Class A Common Stock and Class B Common
Stock at an aggregate cost of up to $10.0 million. The share repurchase program authorized management,
at its discretion, to repurchase shares from time to time subject to market conditions and other factors.
During April 2017, the Company repurchased 1.0 million shares of its Class A Common Stock under this
share repurchase program for approximately $6.2 million.
On June 13, 2017, the Company’s board of directors approved a share repurchase program which
authorizes the repurchase of a total of up to 5,000,000 shares of the Company’ Class A Common Stock
and Class B Common Stock at an aggregate cost of no more than $35.0 million. This program replaces the
Company’s repurchase program that the board approved in September 2009 discussed above. The current
program, like the prior program, authorizes management, at its discretion, to repurchase shares from time
to time subject to market conditions and other factors. During November 2017, the Company repurchased
321,593 shares of its Class A Common Stock under this share repurchase program for approximately $2.4
million.
The Company has outstanding 15,000 shares of 5% Cumulative Preferred Stock at a stated value of
$1,000 per share. The shares of 5% Cumulative Preferred Stock are redeemable at the option of the
Company, from time to time, at a redemption price of $1,000 per share. Shares of the 5% Cumulative
Preferred Stock are also subject to mandatory redemption as described below. The 5% Cumulative
Preferred Stock’s liquidation preference is equal to its stated value of $1,000 per share plus any
accumulated and unpaid dividends or an amount equal to the applicable redemption price in a voluntary
liquidation or winding up of the Company. Holders of the 5% Cumulative Preferred Stock have no voting
rights, except as provided by Florida law, and are entitled to receive, when and as declared by the
Company’s board of directors, cumulative quarterly cash dividends on each such share at a rate per annum
of 5% of the stated value from the date of issuance. The Company pays regular quarterly cash dividends
of $187,500 on its 5% Cumulative Preferred Stock. The terms of the 5% Cumulative Preferred Stock
requires a mandatory redemption of the stock and accordingly is classified as a liability in the Company’s
Consolidated Statements of Financial Condition. The Company is required to redeem the preferred shares
in $5.0 million annual payments in each of the years ending December 31, 2018, 2019 and 2020. During
December 2013, the Company made a $5.0 million loan to the holders of 5% Cumulative Preferred Stock.
The loan is secured by 5,000 shares of 5% Cumulative Preferred Stock, has a term of five years, accrues
interest at a rate of 5% per annum and provides for payments of interest only on a quarterly basis during
the term of the loan, with all outstanding amounts being due and payable at maturity.
Additionally, in October 2017, BBX Capital borrowed $3.4 million from the holders of 5% Cumulative
Preferred Stock in connection with its initial capital contribution to the Chapel Grove real estate joint
venture. See Note 13 included under Item 8 of this report for a discussion of the unsecured promissory
note and investment in the real estate joint venture.
On March 6, 2018, BBX Capital, BBX Sweet Holdings, Food for Thought Restaurant Group-Florida,
LLC, BCC and Woodbridge, entered into a Loan and Security Agreement and related agreements with
Iberiabank, as administrative agent and lender, and City National Bank of Florida, as lender, which
provide for a $50 million revolving line of credit. Amounts borrowed under the facility will accrue interest
at a floating rate of 30-day LIBOR plus a margin of 3.0% to 3.75% or the Prime Rate plus a margin of
1.50% to 2.25%. The applicable margin is based on BBX Capital’s debt to EBITDA ratio. Payments of
interest only will be payable monthly. The facility matures, and all outstanding principal and interest will
be payable, on March 6, 2020, with twelve month renewal options at BBX Capital’s request, subject to
satisfaction of certain conditions. The facility is secured by a pledge of a percentage of BBX Capital’s
membership interests in Woodbridge having a value of not less than $100 million. Borrowings under the
facility may be used for business acquisitions, real estate investments, stock repurchases, letters of credit
and general corporate purposes. Under the terms and conditions of the Loan and Security Agreement, we
are required to comply with certain financial covenants, including maintaining minimum unencumbered
liquidity and complying with financial ratios related to fixed charge coverage and debt to EBITDA. The
Loan and Security Agreement also contains customary affirmative and negative covenants, including those
that, among other things, limit the ability of BBX Capital and the other borrowers to incur additional
indebtedness and to make certain loans and investments.
83
Bluegreen
Bluegreen’s primary sources of funds from internal operations are: (i) cash sales, (ii) down payments on
VOI sales which are financed; (iii) proceeds from the sale of, or borrowings collateralized by, notes
receivable, (iv) cash from finance operations, including mortgage servicing fees and principal and interest
payments received on the purchase money mortgage loans arising from sales of VOIs, and (v) net cash
generated from sales and marketing fee-based services and other fee-based services, including resorts
management operations.
While the vacation ownership business has historically been capital intensive, and Bluegreen may from
time to time pursue transactions or activities which may require significant capital investment and
adversely impact cash flows, Bluegreen generally has sought to focus on the generation of “free cash
flow” (defined as cash flow from operating activities, less capital expenditures) by (i) incentivizing its
sales associates and creating programs with third-party credit card companies to generate a higher
percentage of sales in cash; (ii) maintaining sales volumes that focus on its more efficient marketing
channels; (iii) limiting its capital and inventory expenditures; (iv) utilizing sales and marketing, mortgage
servicing, resort management services, title and construction expertise to pursue fee-based-service
business relationships that generally require minimal up-front capital investment and have the potential to
produce incremental cash flows, and (v) more recently by selling VOIs obtained through secondary
markets or JIT arrangements.
VOI sales are generally dependent upon providing financing to buyers. The ability to sell and/or borrow
against notes receivable from VOI buyers has been a critical factor in Bluegreen’s continued liquidity. A
financed VOI buyer is generally only required to pay a minimum of 10% to 20% of the purchase price in
cash at the time of sale; however, selling, marketing, and administrative expenses attributable to the sale
are primarily cash expenses that generally exceed a buyer’s minimum required down payment.
Accordingly, having financing facilities available for the hypothecation, sale, or transfer of these VOI
notes receivable has been a critical factor in Bluegreen’s ability to meet its short and long-term cash needs.
Bluegreen has attempted to maintain a number of diverse financing facilities. Historically, Bluegreen has
relied on its ability to sell receivables in the term securitization market in order to generate liquidity and
create capacity in its receivable facilities. In addition, maintaining adequate VOI inventory to sell and
pursue growth into new markets has historically required Bluegreen to incur debt for the acquisition,
construction, and development of new resorts. Development expenditures during 2018 are expected to be
in a range of $55.0 million to $65.0 million, which primarily relate to Bluegreen/Big Cedar Vacations
resort and development at Bluegreen’s Fountains resort in Orlando, Florida. Bluegreen expects to seek to
acquire or develop additional VOI inventory, which may increase acquisition and development
expenditures as compared to prior periods and may involve or require the incurrence of additional debt.
In connection with Bluegreen’s capital-light business strategy activities, Bluegreen has entered into
agreements with third party developers that allow Bluegreen to buy VOI inventory typically on a non-
committed basis prior to when Bluegreen intends to sell such VOI. Bluegreen’s capital-light business
strategy also includes secondary market sales, pursuant to which Bluegreen enters into secondary market
arrangements with certain HOAs and others on a non-committed basis, which allows Bluegreen to acquire
VOIs generally at a significant discount as such VOIs are typically obtained by the HOAs through
foreclosure in connection with maintenance fee defaults. Acquisition of JIT and secondary market
inventory in 2018 is expected to range from $25.0 million to $30.0 million.
In addition, capital expenditures in connection with sales and marketing facilities as well as information
technology capital expenditures are expected to be in a range of $25.0 million to $35.0 million during
2018.
Available funds may also be used to acquire other businesses or assets, invest in other real estate based
opportunities, or loan to affiliates or others.
Bluegreen’s level of debt and debt service requirements have several important effects on Bluegreen’s
operations, including the following: (i) significant debt service cash requirements reduce the funds
available for operations and future business opportunities and increases Bluegreen’s vulnerability to
adverse economic and industry conditions, as well as conditions in the credit markets, generally; (ii)
Bluegreen’s leverage position increases its vulnerability to economic and competitive pressures; (iii) the
financial covenants and other restrictions contained in indentures, credit agreements and other agreements
relating to Bluegreen’s indebtedness require Bluegreen to meet certain financial tests and may restrict
Bluegreen’s ability to, among other things, pay dividends, borrow additional funds, dispose of assets or
make investments; and (iv) Bluegreen’s leverage position may limit funds available for acquisitions,
working capital, capital expenditures, dividends, and other general corporate purposes. Certain of
Bluegreen’s competitors operate on a less leveraged basis and have greater operating and financial
flexibility than Bluegreen does.
2017 Term Securitization
On June 6, 2017, Bluegreen completed a private offering and sale of approximately $120.2 million of
investment-grade, VOI receivable-backed notes. The 2017 Term Securitization consisted of the issuance
of two tranches of VOI receivable-
84
backed notes (the “Notes”): approximately $88.8 million of Class A notes and approximately
$31.4 million of Class B notes with interest rates of 2.95% and 3.59%, respectively, which blended to an
overall weighted average interest rate of approximately 3.12%. The gross advance rate for this transaction
was 88%. The Notes mature in October 2032.
The amount of the VOI notes receivable sold to BXG Receivables Note Trust 2017 (the “2017 Trust”) was
approximately $136.5 million, approximately $117.0 million of which was sold to the 2017 Trust at
closing, and approximately $19.6 million of which was subsequently sold to the 2017 Trust. The gross
proceeds of such sales to the 2017 Trust were $120.2 million. A portion of the proceeds received were
used to: repay KeyBank and DZ $32.3 million, representing all amounts outstanding (including accrued
interest) under the KeyBank/DZ Purchase Facility; repay Liberty Bank approximately $26.8 million
(including accrued interest) under Bluegreen’s existing facility with Liberty Bank; capitalize a reserve
fund; and pay fees and expenses associated with the transaction. In April 2017, Bluegreen, as servicer,
redeemed the notes related to BXG Receivables Note Trust 2010-A for approximately $10.0 million, and
certain of the VOI notes receivable in such trust were sold to the 2017 Trust in connection with the 2017
Term Securitization. The remainder of the proceeds from the 2017 Term Securitization were used for or
are expected to be used for general corporate purposes. As a result of the facility repayments described
above, immediately after the closing of the 2017 Term Securitization, (i) there were no amounts
outstanding under the KeyBank/DZ Purchase Facility, which allows for maximum outstanding receivable-
backed borrowings of $80.0 million on a revolving basis through December 31, 2019 and (ii) there was
approximately $10.0 million outstanding under the Liberty Bank Facility, which permits maximum
outstanding receivable-backed borrowings of $50.0 million on a revolving basis through March 31, 2018,
in each case, subject to eligible collateral and the other terms and conditions of the facility. Thus,
additional availability of approximately $58.9 million in the aggregate was created under the
KeyBank/DZ Purchase Facility and Liberty Bank Facility as a result of the repayments.
While ownership of the VOI notes receivable included in the 2017 Term Securitization is transferred and
sold for legal purposes, the transfer of these VOI notes receivable is accounted for as a secured borrowing
for financial accounting purposes. Accordingly, no gain or loss was recognized as a result of this
transaction. Subject to the performance of the collateral, Bluegreen will receive any excess cash flows
generated by the receivables transferred under the 2017 Term Securitization (excess meaning after
payments of customary fees, interest, and principal under the 2017 Term Securitization) on a pro-rata
basis as borrowers make payments on their notes.
See Note 13 – Debt under Item 8 included in this report for additional information with respect to
Bluegreen’s receivable-backed notes payable facilities.
Credit Facilities for Bluegreen Receivables with Future Availability
Bluegreen maintains various credit facilities with financial institutions which allow Bluegreen to borrow
against or sell its VOI notes receivable. Bluegreen had the following credit facilities with future
availability as of December 31, 2017, all of which are subject to revolving availability terms during the
advance period and therefore provide for additional availability as the facility is paid down, subject to
compliance with relevant covenants, eligible collateral and applicable terms and conditions during the
advance period (dollars in thousands):
Borrowing
Limit as of
December
31, 2017
Outstanding
Balance as of
December
31, 2017
Availability
as of
December
31, 2017
Liberty Bank Facility
$
50,000 $
24,990 $
25,010
NBA Receivable Facility (1)
50,000
44,414
5,586
Pacific Western Bank
Facility
KeyBank/DZ
Facility
Purchase
40,000
18,008 (2)
21,992 (2)
80,000
16,144
63,856
Quorum Purchase Facility
50,000
270,000 $
16,771
120,327 $
$
33,229
149,673
Advance Period
Expiration;
Borrowing
Maturity as of
December 31,
2017
March
2018; November
2020
September 2020;
March 2025
September 2018;
September 2021
December 2019;
December 2022
June 2018;
December 2030
Borrowing Rate; Rate
as of December 31,
2017
Prime Rate +0.50%;
floor of 4.00%; 5.00%
30 day LIBOR +
2.75%; floor of
3.50%; 4.10%
30 day
LIBOR+3.50% to
4.50%; 6.00%
30 day
LIBOR+2.75%;
4.31%(3)
(4)
(1) The borrowing limit excludes the $20.0 million borrowing limit under the NBA Line of Credit.
(2) The outstanding balance includes $2.7 million outstanding as of December 31, 2017 under the
Pacific Western Term Loan.
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(3) Borrowings accrue interest at a rate equal to either LIBOR, a “Cost of Funds” rate or commercial
paper rates plus 2.75%. The interest rate will increase to the applicable rate plus 4.75% upon the
expiration of the advance period.
(4) Of the amounts outstanding as of December 31, 2017, $3.3 million bears interest at a fixed rate of
6.9%, $3.0 million bears interest at a fixed rate of 5.5%, $3.6 million bears interest at a fixed rate of
5.0%, and $6.8 million bears interest at a fixed rate of 4.75%. The interest rate on future borrowings
will be set at the time of funding based on rates mutually agreed upon by all parties.
Other Credit Facilities and Outstanding Notes Payable
Fifth Third Syndicated Line-of-Credit and Fifth Third Syndicated Term Loan. In December 2016,
Bluegreen entered into a $100.0 million syndicated credit facility with Fifth Third Bank, as administrative
agent and lead arranger, and certain other bank participants as lenders. The facility includes a
$25.0 million term loan (the “Fifth Third Syndicated Term Loan”) with quarterly amortization
requirements and a $75.0 million revolving line of credit (the “Fifth Third Syndicated Line-of-Credit”).
Amounts borrowed under the facility generally bear interest at LIBOR plus 2.75% - 3.75% depending on
Bluegreen’s leverage ratio, are collateralized by certain of its VOI inventory, sales center buildings,
management fees and short-term receivables, and will mature in December 2021. As of December 31,
2017, outstanding borrowings under the facility totaled $43.8 million, including $23.8 million under the
Fifth Third Syndicated Term Loan with an interest rate of 4.32%, and $20.0 million under the Fifth Third
Syndicated Line of Credit with an interest rate of 4.27%.
Bluegreen also has outstanding obligations under various credit facilities and securitizations that have no
remaining future availability as the advance periods have expired.
See Note 13 – Debt under Item 8 included in this report for additional information with respect to
Bluegreen’s credit facilities terms and covenants.
Critical Accounting Policies
Management views critical accounting policies as accounting policies that are important to the
understanding of our financial statements and also involve estimates and judgments about inherently
uncertain matters. In preparing the financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities as of the date of the consolidated statements of financial condition and assumptions that
affect the recognition of income and expenses on the consolidated statements of operations and
comprehensive income for the periods presented. On an ongoing basis, management evaluates its
estimates, including those that relate to the determination of:
·
·
·
·
·
The allowance for credit losses;
The estimated future sales value of inventory;
The recognition of revenue, including revenue recognition under the percentage-of-
completion method of accounting;
The recovery of the carrying value of real estate inventories;
The fair value of assets measured at, or compared to, fair value on a non-recurring
basis such as assets held for sale, intangible assets, other long-lived assets and
goodwill;
The valuation of assets and liabilities assumed in the acquisition of a business;
The amount of deferred tax valuation allowance;
Accounting for uncertain tax positions; and
The estimate of contingent liabilities related to litigation and other claims and
·
·
·
·
assessments.
The accounting policies that we have identified as critical accounting policies are:
·
·
·
·
·
·
Revenue recognition and inventory cost allocation;
The carrying value of completed VOI inventory;
The carrying value of VOIs held for future VOI development and VOI properties under
development or held for development;
Evaluating long-lived assets and definite lived intangible assets for impairment;
Evaluating goodwill and indefinite lived intangible assets for impairment; and
Allowance for credit losses on VOI Notes Receivable.
Management bases its estimates on historical experience and on various other assumptions that it believes
to be reasonable under the circumstances, the results of which form the basis for making judgments about
the carrying values
86
of assets and liabilities that are not readily apparent from other sources. Actual results may differ
materially from these estimates under different assumptions and conditions. If actual results significantly
differ from management’s estimates, our results of operations and financial condition could be materially
and adversely impacted.
Revenue Recognition and Inventory Cost Allocation
Sales of Real Estate
In accordance with the requirements of Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) 970-605, Real Estate-Revenue Recognition, Bluegreen recognizes
revenue on VOI sales when a minimum of 10% of the sales price has been received in cash (buyer’s
commitment), the legal rescission period has expired, collectibility of the receivable representing the
remainder of the sales price is reasonably assured and Bluegreen has completed substantially all of its
obligations with respect to any development related to the real estate sold.
Bluegreen believes that it uses a reasonably reliable methodology to estimate the collectibility of the
receivables representing the remainder of the sales price of VOIs sold. See the further discussion of
Bluegreen’s policies regarding the estimation of credit losses on Bluegreen’s notes receivable below.
Should Bluegreen become unable to reasonably estimate the collectibility of its receivables, Bluegreen
may have to defer the recognition of sales and its results of operations could be negatively impacted.
Under timeshare accounting rules, the buyer’s minimum cash down payment towards the purchase of
Bluegreen’s VOIs is met only if the cash down payment received, reduced by the value of certain
incentives provided to the buyer at the time of sale, is at least 10% of the sales price. If, after
consideration of the value of the incentive, the total down payment received from the buyer is less than
10% of the sales price, the VOI sale, and the related cost of sales and direct selling expenses, are deferred
until such time that sufficient cash is received from the customer, generally through receipt of mortgage
payments, to meet the 10% threshold. Changes to the quantity, type or value of sales incentives that
Bluegreen provides to buyers of its VOIs may increase the number of VOI sales being deferred or extend
the period during which a sale is deferred, which could materially adversely impact Bluegreen’s results of
operations.
In cases where construction and development on Bluegreen-owned resorts has not been substantially
completed, Bluegreen recognizes revenue in accordance with the percentage-of-completion method of
accounting. Should Bluegreen’s estimates of the total anticipated cost of completing any of its projects
increase, Bluegreen may be required to defer a greater amount of revenue or may be required to defer
revenue for a longer period of time, which could materially adversely impact its results of operations.
Timeshare accounting rules require the use of an industry-specific relative sales value method for
relieving VOI inventory and recording cost of sales. Under the relative sales value method, cost of sales is
calculated as a percentage of net sales using a cost-of-sales percentage — the ratio of total estimated
development cost to total estimated VOI revenue, including the estimated incremental revenue from the
resale of repossessed VOI inventory, as a result of the default of the related receivable.
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Fee-Based Sales Commissions and Other Revenue
In addition to sales of VOIs, Bluegreen also generates revenue from the activities listed below. The table
provides a brief description of the applicable revenue recognition policy:
Activity
Fee-based sales commissions
Revenue is recognized when:
The sale
is
transaction with
consummated in accordance with the terms of the
agreement with the third-party developer and the
related consumer rescission period has expired.
the VOI purchaser
Resort management and service fees
Management services are rendered. (1)
Resort title fees
Rental and sampler program
Escrow amounts are released and title documents are
completed.
Guests complete stays at the resorts. Rental and
sampler program proceeds are classified as a reduction
to “Cost of other fee-based services” in the consolidated
statements of operations and comprehensive income.
(1)
In connection with Bluegreen’s management of the HOAs, among other things, Bluegreen
acts as agent for the HOAs to operate the resort as provided under the management
agreements. In certain cases, personnel at the resorts are Bluegreen employees. The HOAs
bear the costs of such personnel and generally pay Bluegreen in advance of, or
simultaneously with, the payment of payroll. In accordance with ASC 605-45, Overall
Considerations of Reporting Revenues Gross as a Principal versus Net as an Agent,
reimbursements from the HOAs relating to direct pass-through costs are recorded net of
the related expenses.
Carrying Value of Completed VOI Inventory
Bluegreen carries its completed VOIs at the lower of (i) cost, including costs of improvements and
amenities incurred subsequent to acquisition, capitalized interest, real estate taxes and other costs incurred
during construction, or (ii) estimated fair market value, less costs to sell. The outstanding balance of
completed VOI inventory was $194.5 million as of December 31, 2017.
Bluegreen capitalizes interest expense, real estate taxes and other costs when activities that are necessary
to prepare the VOI inventory for its intended use are underway. Bluegreen ceases capitalization of costs
during prolonged gaps in development when substantially all activities are suspended or when projects are
considered substantially complete.
Carrying Value of Real Estate Held for Future VOI Development and VOI Properties Under Development
or Held for Development,
The Company evaluates the recoverability of its real estate properties under development or held for
development, if certain trigger events occur. If the estimated undiscounted future cash flows are less than
the carrying amount of the asset, the asset is written down to its estimated fair value. The outstanding
balance of construction in progress and real estate held for future VOI development was $22.3 million and
$64.5 million, respectively, as of December 31, 2017.
Evaluating Long-lived Assets and Definite-lived Intangible Assets for Impairment
The Company evaluates its long-lived assets and definite-lived intangible assets when events and
circumstances indicate that assets may be impaired and when the undiscounted cash flows estimated to be
generated by those assets are less than their carrying amounts. The carrying value of these assets is
dependent upon estimates of future earnings that they are expected to generate. If cash flows decrease
significantly, these assets may be impaired, in which case they would be written down to their fair value.
The estimates of useful lives and expected cash flows require us to make significant judgments regarding
future periods that are subject to a number of factors, many of which may be beyond our control. The
outstanding balance of long-lived assets and definite lived intangible assets was $112.9 million and $9.2
million, respectively, as of December 31, 2017. During the year ended December 31, 2017, the Company
recognized a $1.9 million intangible asset impairment loss associated with certain BBX Sweet Holding’s
acquisitions in 2014 and 2015. The impairment loss was measured as the amount by which the carrying
amount of the intangible assets exceeded their fair value.
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Evaluating Goodwill and Indefinite Lived Intangible Assets for Impairment
The process of evaluating goodwill for impairment involves the determination of the fair value of the
Company’s reporting units. Inherent in such fair value determinations are certain judgments and estimates
relating to future cash flows, including the Company’s interpretation of current economic indicators and
market valuations, and assumptions about the Company’s strategic plans with regard to its operations. Due
to the uncertainties associated with such evaluations, actual results could differ materially from such
estimates. The Company’s goodwill as of December 31, 2017 was $39.5 million and was recorded in
association with BBX Sweet Holding’s acquisitions during 2017, 2015 and 2014. The goodwill was tested
for impairment on December 31, 2017 (annual testing date) and was determined to be impaired, and an
impairment loss of $2.4 million was recorded.
The Company’s indefinite lived intangible assets as of December 31, 2017 consisted of $62.0 million of
management contracts, which were originated in connection with the November 16, 2009 acquisition of a
controlling interest in Bluegreen. Such management contracts are not amortized, but instead are reviewed
for impairment at least annually, or if events or changes in circumstances indicate that it is more likely
than not that the related carrying amounts may be impaired. Due to the uncertainties associated with such
evaluations, actual results could differ materially from such estimates.
Allowance for Credit Losses on VOI Notes Receivable
The allowance for credit losses is related to the notes receivable generated in connection with Bluegreen’s
financing of VOI sales. Bluegreen uses a static pool analysis as a basis for determining an estimated
reserve requirement on its VOI notes receivable. The adequacy of the related allowance is determined by
Bluegreen’s management through analyses of several qualitative and quantitative factors requiring
judgment, such as economic factors, default trends by origination year and FICO scores of borrowers.
Changes in estimates used could result in a material change to Bluegreen’s allowance.
Impact of Inflation
The financial statements and related financial data and notes presented herein have been prepared in
accordance with GAAP, which requires the measurement of financial position and operating results in
terms of historical dollars without considering changes in the relative purchasing power of money over
time due to inflation.
The Company is subject to significant interest rate risk on Bluegreen’s notes receivables as well as other
outstanding debt. As a result, interest rates have a more significant impact on our performance than the
effects of general price levels. Although interest rates generally move in the same direction as inflation,
the magnitude of such changes varies.
The Company believes that inflation and changing prices have had and may in the future have a material
impact on its revenues and results of operations. Bluegreen has increased the sales prices of its VOIs
periodically, including in September 2016 and June 2017, and has from time to time experienced increases
in construction and development costs. Bluegreen may not be able to increase or maintain the current
level of its sales prices, and increased construction costs may have a material adverse impact on its gross
margin. In addition, to the extent that inflation in general or increased prices for VOIs adversely impacts
consumer demand, Bluegreen’s results of operations could be adversely impacted. Furthermore, while
increases in real estate construction and development costs may result in increases in real estate sales
prices, sales prices may not increase commensurate with the increase in costs or they may decrease, and
increased construction costs may have a material adverse impact on gross margin. In addition, inflation is
often accompanied by higher interest rates which could have a negative impact on consumer demand and
the costs of financing activities. Rising interest rates as well as increased materials and labor costs may
reduce margins.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Market Risk
Market risk is defined as the risk of loss arising from adverse changes in market valuations resulting from
interest rate risk, foreign currency exchange rate risk, commodity price risk and equity price risk. BBX
Capital’s primary market risk is equity price risk and interest rate risk.
The Company’s real estate assets market risk consists primarily of equity pricing risk and secondarily
interest rate risk. The Company’s real estate assets are investments in unconsolidated real estate
companies, real estate held-for-investment or held-for-sale, real estate inventory and loans secured by real
estate. The Company’s financial condition and earnings are affected by changes in real estate values in the
markets where the real estate or real estate collateral is located and changes in interest rates which affects
the affordability of real estate. As a result, there is exposure to equity pricing and interest rate risk in the
real estate market.
The Company’s results of operations are subject to foreign currency exchange risk of the U.S. dollar
compared to the Canadian dollar though its ownership of Renin. Renin’s assets, liabilities, revenue and
expenses that are denominated in foreign currencies will be affected by changes in the exchange rates
between the U.S. dollar and the Canadian dollar. As of December 31, 2017, the Company has not entered
into any foreign exchange forward contracts as hedges against foreign currency exchange risk.
The market price of BBX Capital’s Class A Common Stock and Class B Common Stock are important to
the valuation and financing capability of BBX Capital.
The Company, particularly with respect to Bluegreen, is affected by interest rates, which are subject to the
influence of economic conditions generally, both domestic and foreign, and also to the monetary and fiscal
policies of the United States and its agencies, particularly the Federal Reserve. The nature and timing of
any changes in such policies or general economic conditions and their effect on the Company and its
subsidiaries are unpredictable.
As of December 31, 2017, Bluegreen had fixed interest rate debt of approximately $381.4 million and
floating interest rate debt of approximately $210.3 million. In addition, Bluegreen’s notes receivables as
of December 31, 2017 were comprised of approximately $549.4 million of notes bearing interest at fixed
rates and approximately $1.3 million of notes bearing interest at floating rates. The floating interest rates
are subject to floors and are generally based either upon the prevailing prime or LIBOR rates. For floating
rate financial instruments, interest rate changes generally do not affect the market value of the debt, but do
impact earnings and cash flows relating to the debt, assuming other factors are held constant. Conversely,
for fixed rate financial instruments, interest rate changes affect the market value of the debt but do not
impact earnings or cash flows relating to the debt, assuming other factors are held constant.
The Company is subject to interest rate risk on Woodbridge’s junior subordinated debentures. The interest
rates for Woodbridge’s $66.3 million of junior subordinated debentures are variable rates based upon the
prevailing 3-month LIBOR rates. For variable rate financial instruments, interest rate changes do not
generally affect the market value of the debt, but they do impact future earnings and cash flows, assuming
other factors are held constant. If interest rates were to increase one percentage point, the effect on interest
expense related to Woodbridge’s variable-rate debt would be an annual increase of approximately
$663,000, based on December 31, 2017 balances.
To the extent inflationary trends, tightened credit markets or other factors affect interest rates, Bluegreen’s
debt service costs may increase. If interest rates increased one percentage point, the effect on interest
expense related to Bluegreen’s floating-rate debt would be an annual increase of approximately $2.1
million based on December 31, 2017 balances and interest rates. Due to the interest rate floors on
Bluegreen’s floating rate debt, if interest rates decreased one percentage point, the effect on interest
expense related to its floating rate debt would be an annual decrease of approximately $1.4 million based
on December 31, 2017 balances and interest rates. In addition, a one percentage point increase or decrease
in interest rates would affect the total fair value of Bluegreen’s fixed rate debt by an immaterial amount.
This analysis does not consider the effects of changes in the level of overall economic activity that could
result due to interest rate changes. Further, in the event of a significant change in interest rates, Bluegreen
may pursue actions in order to mitigate any exposure to the change. However, due to the uncertainty of
the specific actions that may be taken and their possible effects, the foregoing sensitivity analysis assumes
no changes in Bluegreen’s financial structure.
90
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
BBX CAPITAL CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm …………….……………………………..
…….....
Consolidated Statements of Financial Condition as of December 31, 2017 and 2016 ………………….
………
Consolidated Statements of Operations and Comprehensive Income for each of the years
in the three year period ended December 31, 2017 ……………………………………………….
………
Consolidated Statements of Changes in Equity for each of the years in the three year period
ended December 31, 2017 ………………………………………………………………………...
………
Consolidated Statements of Cash Flows for each of the years in the three year period
ended December 31, 2017 ……………………………………………………………………...
…………
Notes to Consolidated Financial Statements ………………………………………………………...
…………
F-2
F-3
F-4
F-5
F-7
F-10
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
BBX Capital Corporation
Opinion on the financial statements
We have audited the accompanying consolidated statements of financial condition of BBX
Capital Corporation (a Florida corporation) and subsidiaries (the “Company”) as of December 31,
2017 and 2016, the related consolidated statements of operations and comprehensive income,
changes in equity, and cash flows for each of the three years in the period ended December 31,
2017, and the related notes and schedules (collectively referred to as the “financial statements”).
In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2017 and 2016, and the results of its operations and
its cash flows for each of the three years in the period ended December 31, 2017, in conformity
with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial
reporting as of December 31, 2017, based on criteria established in the 2013 Internal Control—
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”), and our report dated March 9, 2018 expressed an unqualified opinion.
Basis for opinion
These financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on the Company’s financial statements based on our audits.
We are a public accounting firm registered with the PCAOB and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. Our audits included
performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ GRANT THORNTON LLP
We have served as the Company’s auditor since 2015.
Fort Lauderdale, Florida
March 9, 2018
F-2
BBX Capital Corporation
Consolidated Statements of Financial Condition
(In thousands, except share data)
ASSETS
Cash and cash equivalents
Restricted cash ( $19,488 in 2017 and $21,894 in 2016 in variable
interest entities ("VIEs"))
Loans receivable, net
Notes receivable, net ( $282,599 in 2017 and $287,012 in 2016 in VIEs)
Trade inventory
Vacation ownership interest ("VOI") inventory
Real estate ($27,828 in 2017 and $33,345 in 2016 held for sale)
Investments in unconsolidated real estate joint ventures
Property and equipment, net
Goodwill
Intangible assets, net
Other assets
Total assets
LIABILITIES AND EQUITY
Liabilities:
Accounts payable
Deferred income
Escrow deposits
Other liabilities
Receivable-backed notes payable - recourse
Receivable-backed notes payable - non-recourse (in VIEs)
Notes payable and other borrowings
Junior subordinated debentures
Deferred income taxes
Redeemable 5% cumulative preferred stock of $.01 par value; authorized
15,000 shares;
December 31,
2017
2016
$
362,526
299,861
46,721
19,454
431,801
23,902
281,291
68,536
47,275
112,858
39,482
70,449
102,370
1,606,665
31,370
36,311
21,079
103,926
84,697
336,421
144,114
135,414
43,093
$
$
46,456
25,521
430,480
14,726
238,534
61,003
43,491
95,998
6,731
68,455
104,812
1,436,068
28,855
37,015
20,152
95,611
87,631
327,358
133,790
152,367
44,318
issued and outstanding 15,000 shares with a stated value of $1,000 per share
Total liabilities
13,974
950,399
13,517
940,614
Commitments and contingencies (See Note 15)
Redeemable noncontrolling interest
Equity:
Preferred stock of $.01 par value; authorized 10,000,000 shares
Class A Common Stock of $.01 par value; authorized 150,000,000 shares;
issued and outstanding 85,689,163 in 2017 and 84,844,439 in 2016
Class B Common Stock of $.01 par value; authorized 20,000,000 shares;
issued and outstanding 13,963,200 in 2017 and 13,184,789 in 2016
Additional paid-in capital
Accumulated earnings
Accumulated other comprehensive income
Total shareholders' equity
Noncontrolling interests
Total equity
Total liabilities and equity
2,765
-
857
140
229,379
341,146
1,708
573,230
80,271
653,501
1,606,665
$
-
-
848
132
193,347
259,110
1,167
454,604
40,850
495,454
1,436,068
See Notes to Consolidated Financial Statements
F-3
BBX Capital Corporation
Consolidated Statements of Operations and Comprehensive Income
(In thousands, except per share data)
For the Years Ended December 31,
2016
2017
2015
$
$
$
$
$
$
$
Revenues
Sales of VOIs
Fee-based sales commission revenue
Other fee-based services revenue
Trade sales
Interest income
Net gains on sales of assets
Other revenue
Total revenues
Costs and Expenses
Cost of sales of VOIs
Cost of other fee-based services
Cost of trade sales
Interest expense
Recoveries from loan losses, net
Asset impairments, net
Net gains on cancellation of junior subordinated
debentures
Litigation settlement
Reimbursements of litigation costs and penalty
Selling, general and administrative expenses
Total costs and expenses
Equity in net earnings (losses) of unconsolidated
real estate joint ventures
Foreign exchange (loss) gain
Income before income taxes
Benefit (provision) for income taxes
Net income
Less: Net income attributable to noncontrolling interests
Net income attributable to shareholders
Basic earnings per share
Diluted earnings per share
Basic weighted average number of common
shares outstanding
Diluted weighted average number of common and
common equivalent shares outstanding
Cash dividends declared per Class A common share
Cash dividends declared per Class B common share
Net income
Other comprehensive income, net of tax:
Unrealized gains (losses) on securities available for sale
net of taxes: $20 provision for 2017, $131 provision
for 2016 and $(16) benefit for 2015
Foreign currency translation adjustments
Other comprehensive income, net
Comprehensive income, net of tax
Less: Comprehensive income attributable
to noncontrolling interests
Comprehensive income attributable to shareholders
$
239,662
229,389
111,819
142,798
83,708
2,442
5,964
815,782
17,439
68,336
97,755
35,205
(7,495)
7,431
(6,929)
-
(13,169)
538,125
736,698
14,483
(193)
93,374
7,223
100,597
18,402
82,195
0.83
0.79
266,142
201,829
103,448
95,996
85,746
6,076
8,058
767,295
27,346
64,479
74,341
36,037
(20,508)
4,656
-
-
-
516,757
703,108
13,630
219
78,036
(36,379)
41,657
13,295
28,362
0.33
0.32
259,236
173,659
97,539
84,284
89,071
31,092
9,376
744,257
22,884
60,942
62,707
40,408
(13,457)
287
-
36,500
-
466,700
676,971
(1,565)
(1,038)
64,683
76,596
141,279
18,805
122,474
1.41
1.40
98,745
86,902
87,022
103,916
0.030
0.030
87,492
0.015
0.015
87,208
0.000
0.000
100,597
41,657
141,279
135
406
541
101,138
18,402
82,736
(33)
584
551
42,208
13,295
28,913
(10)
353
343
141,622
18,885
122,737
See Notes to Consolidated Financial Statements
F-4
BBX Capital Corporation
Consolidated Statements of Changes in Equity
For Each of the Years in the Three Year Period Ended December 31, 2017
(In thousands)
Shares of
Common
Stock
Outstanding
Class
Common
Stock Additional
Class
Paid-in Accumulated
Accumulated
Other
Comprehen-
sive
Total
Non-
Shareholders'controlling Total
A
B
A B Capital
Earnings
Income
Equity
Interests Equity
73,307 10,168 $ 733 102
-
-
-
-
142,058
-
109,660
122,474
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,904
-
-
92,763
-
(95,424)
- 1,218
- 11
811
(1,549)
-
(15)
-
(4,439)
40
(40)
-
-
-
1,389
-
14
-
(14)
25
-
-
-
-
-
-
-
10
5,562
-
-
-
-
-
-
-
-
-
-
-
353
-
263
-
-
-
-
-
-
-
-
-
-
252,906
122,474
193,800
18,805
446,706
141,279
263
80
343
1,904
1,039
2,943
-
(14,059)
(14,059)
92,763
(92,763)
-
(95,424)
-
(95,424)
822
(822)
-
(4,454)
-
-
10
5,562
-
-
-
-
-
(4,454)
-
-
10
5,562
73,212 11,346 $ 732 113
143,231
232,134
616
376,826
106,080
482,906
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,608
- 1,531
- 15
1,101
12,038
- 121
-
48,366
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,880)
(247)
(19)
(2)
(7,299)
38
(38)
-
-
-
28,362
-
28,362
13,295
41,657
-
-
-
-
-
(1,174)
(212)
-
-
360
360
-
360
-
-
1,608
413
2,021
1,116
(1,116)
-
191
48,678
(65,572)
(16,894)
-
-
-
-
-
-
(12,250)
(12,250)
(1,174)
(212)
(7,320)
-
-
-
-
-
(1,174)
(212)
(7,320)
-
Balance,
December 31,
2014
Net income
Other comprehensive
income
Subsidiaries' capital
transactions
Distributions to
noncontrolling
interest
Net effect of tender
offer for BCC
attributable to non-
controlling interest
Consideration paid in
connection with the
tender offer for BCC
Increase in
investment in BCC
from share exchange
agreements
Repurchase and
retirement of
Common Stock
Conversion of
Common Stock from
Class B to Class A
Issuance of Common
Stock from vesting of
restricted stock
awards
Issuance of Common
Stock from exercise
of options
Share-based
compensation
Balance,
December 31,
2015
Net income
Other comprehensive
income
Subsidiaries' capital
transactions
Increase in
investment in BCC
from share exchange
agreements
Issuance of Class A
common stock and
consideration paid to
acquire BCC
noncontrolling
interest
Distributions to
noncontrolling
interest
Class A common
stock cash dividends
declared
Class B common
stock cash dividends
declared
Repurchase and
retirement of
Common Stock
Conversion of
Common Stock from
Class B to Class A
Issuance of Common
Stock from vesting of
restricted stock
awards
Issuance of Common
Stock from exercise
of options
Share-based
compensation
Balance,
December 31,
2016
1,389
593
14
6
(20)
48
-
-
-
-
-
-
-
10
6,350
-
-
-
-
-
-
-
10
6,350
-
-
-
-
10
6,350
84,845 13,185 $ 848 132
193,347
259,110
1,167
454,604
40,850
495,454
Continued
F-5
BBX Capital Corporation
Consolidated Statements of Changes in Equity
For Each of the Years in the Three Year Period Ended December 31, 2017
(In thousands)
Balance, December
31, 2016
Cumulative effect from
excess tax benefits on
share based
compensation
associated with the
adoption of ASU 2016-
09
Net income excluding
$175 of earnings
attributable to
redeemable
noncontrolling interest
Other comprehensive
income
Bluegreen initial public
offering, net of income
taxes
Distributions to
noncontrolling interests
Class A Common
Stock cash dividends
declared
Class B Common Stock
cash dividends declared
Repurchase and
retirement of common
stock
Conversion of common
stock from Class B to
Class A
Issuance of Common
Stock from vesting of
restricted stock awards
Issuance of Common
Stock from exercise of
options
Share-based
compensation
Balance, December
31, 2017
Shares of
Common
Stock
Outstanding
Class
Common
Stock Additional
Class
Paid-in Accumulated
Accumulated
Other
Comprehen-
sive
Total
Non-
Shareholders'controlling Total
A
B
A B Capital
Earnings
Income
Equity
Interests Equity
84,845 13,185 $ 848 132
193,347
259,110
1,167
454,604
40,850 495,454
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
51,351
-
-
-
(3,716)
(176)
(37)
(2)
(27,585)
95
(95)
-
-
-
4,315 1,049
43 10
(53)
150
-
-
-
3
-
-
-
60
12,259
3,054
82,195
-
-
-
(2,712)
(501)
-
-
-
-
-
-
-
3,054
-
3,054
82,195
18,227 100,422
541
541
-
541
-
-
-
-
-
-
-
-
-
51,351
32,584 83,935
-
(11,390) (11,390)
(2,712)
-
(2,712)
(501)
-
(501)
(27,624)
- (27,624)
-
-
63
-
-
-
-
-
63
12,259
- 12,259
85,689 13,963 $ 857 140
229,379
341,146
1,708
573,230
80,271 653,501
See Notes to Consolidated Financial Statements
F-6
BBX Capital Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
For the Years Ended December 31,
2016
2017
2015
Operating activities:
Net income
$
100,597
41,657
141,279
Adjustment to reconcile net income to net cash
provided by operating activities:
Recoveries from loan losses and asset impairments, net
Provision for notes receivable allowances
Depreciation, amortization and accretion, net
Share-based compensation expense
Share-based compensation expense of subsidiaries
Net gains on sales of real estate, loans held-for-sale,
and properties and equipment
Equity in (earnings) losses of unconsolidated real estate
(3,131)
46,149
21,444
12,259
-
(15,300)
44,337
17,827
6,350
6,099
(13,233)
42,063
18,433
5,562
5,472
(2,471)
(5,139)
(31,211)
joint ventures
(14,483)
(13,630)
1,565
Return on investment in unconsolidated real estate joint
ventures
(Decrease) increase in deferred income tax
Impairment of goodwill
Net gains realized on cancellation of junior subordinated
debentures
Interest accretion on shares subject to mandatory redemption
Increase in notes receivable
Increase in vacation ownership interest inventory
Increase in trade inventory
Increase in real estate inventory
(Increase) decrease in other assets
Increase (decrease) in other liabilities
Net cash provided by (used in) operating activities
12,852
(10,201)
2,413
(6,929)
1,207
(47,470)
(42,757)
(2,261)
(273)
(6,941)
5,595
65,599
13,267
35,704
870
-
1,169
(59,219)
(18,323)
(2,704)
-
5,035
23,163
81,163
-
(84,329)
-
-
1,134
(33,394)
(25,498)
(559)
-
(12,462)
(16,473)
(1,651)
Continued
F-7
BBX Capital Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
For the Years Ended December 31,
2016
2017
2015
Investing activities:
Return of investment in unconsolidated real estate joint
ventures
Investments in unconsolidated real estate joint ventures
Repayment of loans receivable
Proceeds from sales of loans and real estate
Proceeds from contribution of real estate to
unconsolidated real estate joint ventures
Additions to real estate
Purchases of property and equipment
Proceeds from the sale of property and equipment
Cash paid for acquisition, net of cash received
Decrease in cash from other investing activities
Net cash (used in) provided by investing activities
Financing activities:
Repayment of BB&T preferred interest in Florida Asset
Resolution Group, LLC ("FAR")
Repayments of notes payable and other borrowings
Proceeds from notes payable and other borrowings
Redemption of junior subordinated debentures
Payments for debt issuance costs
Payments of interest on shares subject to mandatory
redemption
Proceeds from the exercise of stock options
Dividends paid on common stock
Repurchase and retirement of common stock
Repurchase and retirement of subsidiary's common stock
Purchase of BCC noncontrolling interest
Bluegreen initial public offering, net of offering costs
Distributions to noncontrolling interest
Net cash provided by (used in) financing activities
Increase (decrease) in cash, cash equivalents and
restricted cash
Cash, cash equivalents and restricted cash at beginning of
period
Cash, cash equivalents and restricted cash at end of
period
6,440
(5,310)
11,168
15,081
-
(1,642)
(22,045)
341
(58,418)
(380)
(54,765)
3,321
(3,370)
46,454
23,606
-
(8,176)
(12,939)
2,321
-
(2,019)
49,198
510
(9,687)
30,170
72,154
701
(30,699)
(12,810)
372
(10)
(739)
49,962
-
(233,132)
246,771
-
(281,177)
285,682
(12,348)
(253,615)
262,900
(11,438)
(3,390)
(750)
63
(2,937)
(27,624)
-
-
95,923
(11,390)
52,096
-
(4,608)
-
(3,830)
(750)
10
(856)
(7,320)
(4,151)
(16,894)
-
(12,250)
(42,314)
(750)
10
-
(4,453)
(2,529)
(95,424)
-
(14,059)
(124,098)
62,930
88,047
(75,787)
346,317
258,270
334,057
$
409,247
346,317
258,270
Continued
F-8
BBX Capital Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
Supplemental cash flow information:
Interest paid on borrowings
Income taxes paid
Income taxes refunded
Supplementary disclosure of non-cash investing and
financing activities:
Construction funds receivable transferred to real estate
Loans receivable transferred to real estate
Loans held-for-sale transferred to loans receivable
Loans receivable increase from sale of real estate
Real estate transferred to property and equipment
Real estate transferred to investments in unconsolidated real
estate
joint ventures
Property and equipment transferred to real estate
Decrease in deferred tax liabilities due to cumulative effect of
excess
tax benefits
Increase in other assets upon issuance of Community
Development District Bonds
Issuance of common stock to acquire BCC noncontrolling
interest
Reconciliation of cash, cash equivalents and restricted
cash
Cash and cash equivalents
Restricted cash
Total cash, cash equivalents, and restricted cash
For the Years Ended December
31,
2017
2016
2015
$
(29,980)
(4,015)
-
(32,139)
(2,203)
2,695
(35,111)
(26,092)
309
11,276
1,365
-
-
-
-
6,181
3,054
-
4,807
16,078
-
6,557
-
-
-
-
-
20,743
48,487
-
3,215
7,365
10,000
-
19,448
-
-
-
-
362,526
46,721
409,247
299,861
46,456
346,317
198,905
59,365
258,270
$
See Notes to Consolidated Financial Statements
F-9
BBX Capital Corporation
Notes to Consolidated Financial Statements
1. Basis of Financial Statement Presentation
BBX Capital Corporation and its subsidiaries (the “Company” or, unless otherwise indicated or the
context otherwise requires, “we,” “us,” or “our,”) is a Florida-based diversified holding company. BBX
Capital Corporation as a standalone entity without its subsidiaries is referred to as “BBX Capital”. The
Company’s core investments include Bluegreen Vacations Corporation (“Bluegreen” or “Bluegreen
Vacations”), real estate and real estate joint ventures, and middle market operating businesses.
Bluegreen is a leading vacation ownership company that markets and sells VOIs and manages resorts in
top leisure and urban destinations. Bluegreen’s resort network includes 43 Club Resorts (resorts in
which owners in the Bluegreen Vacation Club (“Vacation Club”) have the right to use most of the units
in connection with their VOI ownership) and 24 Club Associate Resorts (resorts in which owners in
Bluegreen’s Vacation Club have the right to use a limited number of units in connection with their VOI
ownership). Bluegreen is a sales, marketing, and management company focused on the vacation
ownership industry. Bluegreen markets, sells and manages vacation ownership interests (“VOIs”) in
resorts, which are generally located in popular, high-volume, “drive-to” vacation destinations. The
resorts in which Bluegreen markets, sells or manages VOIs were either developed or acquired by
Bluegreen, or were developed and are owned by third parties. Bluegreen earn fees for providing sales
and marketing services to third party developers. Bluegreen also earns fees by providing management
services to the Bluegreen Vacation Club (the “Vacation Club”) and home owners’ associations
(“HOAs”), mortgage servicing, VOI title services, reservation services, and construction design and
development services. In addition, Bluegreen provides financing to FICO score-qualified individual
purchasers of VOIs, which generates significant interest income.
Prior to November 2017, Bluegreen Vacations’ parent, Woodbridge Holdings, LLC (“Woodbridge”), a
wholly-owned subsidiary of BBX Capital, owned 100% of Bluegreen. On November 17, 2017,
Bluegreen completed an initial public offering (“IPO”) of its common stock by selling to the public
3,736,723 of Bluegreen shares and Woodbridge selling 2,761,925 of Bluegreen shares as a selling
shareholder. In connection with the offering, Woodbridge granted the underwriters a 30-day option to
purchase up to an additional 974,797 shares from Woodbridge, and on December 5, 2017, the
underwriters purchased all of the additional 974,797 option shares from Woodbridge. As a result of
Bluegreen’s IPO, BBX Capital currently owns 90% of Bluegreen through Woodbridge.
The Company’s real estate investments include real estate joint ventures and the acquisition,
development ownership, financing, and management of real estate. The Company’s investments in
middle market operating businesses include Renin Holdings, LLC (“Renin”), a company that
manufactures products for the home improvement industry, and investments in confectionery businesses
through its wholly-owned subsidiary, BBX Sweet Holdings, LLC (“BBX Sweet Holdings”). The
Company’s investment in confectionery businesses includes BBX Sweet Holdings’ acquisition of
IT’SUGAR, LLC (“IT’SUGAR”) in June 2017. See Note 3 for additional information regarding the
acquisition of IT’SUGAR.
On December 15, 2016, BBX Capital completed the acquisition of all the outstanding shares of the
former BBX Capital Corporation (“BCC”) not previously owned by the Company. Prior to the
acquisition, the Company had an 82% equity interest in BCC and a direct 54% equity interest in
Woodbridge. As a result of the acquisition, BCC and Woodbridge are wholly-owned subsidiaries of
BBX Capital, and on January 30, 2017, the Company changed its name from BFC Financial
Corporation to BBX Capital Corporation. See Note 3 for additional information regarding the
acquisition of BCC.
On April 30, 2015, the Company completed a cash tender offer pursuant to which it purchased from the
shareholders of BCC a total of 4,771,221 shares of BCC’s Class A Common Stock at a purchase price
of $20.00 per share, for an aggregate purchase price of approximately $95.4 million. Prior to the tender
offer, the Company owned approximately 51% of the issued and outstanding shares of BCC’s Class A
Common Stock and all of the issued and outstanding shares of BCC’s Class B Common Stock . The
purchase of BCC’s Class A Common Stock in the tender offer increased the Company’s ownership
interest to approximately 81% of the issued and outstanding shares of BCC’s Class A Common Stock .
As a result of the increase in the Company’s ownership interest in BCC in excess of 80%, the
F-10
Company began filing a consolidated group tax return which includes the operations of BCC,
Woodbridge and Bluegreen. See Note 14 for additional information regarding the Company’s income
taxes.
2. Summary of Significant Accounting Policies
The accounting policies applied by the Company conform to accounting principles generally accepted
in the United States of America (“GAAP”).
Consolidation Policy - The consolidated financial statements include the accounts of all the Company’s
wholly-owned subsidiaries, and other entities in which the Company and its subsidiaries hold
controlling financial interests, as well as accounts of any variable interest entities (“VIEs”) in which the
Company or one of its consolidated subsidiaries is deemed the primary beneficiary of the VIE. All
significant inter-company accounts and transactions have been eliminated among consolidated entities.
Use of Estimates – The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates. On an ongoing basis, management evaluates its estimates, including those that relate to the
estimated future sales value of inventory; the recognition of revenue, including revenue recognition
under the percentage-of-completion method of accounting; allowance for credit losses; the recovery of
the carrying value of VOI inventories; the measurement of assets and liabilities at fair value including
business combinations and measuring the fair value on a non-recurring basis of intangible assets,
goodwill, real estate held-for-sale and real estate held-for-investment; the amount of the deferred tax
valuation allowance, accounting for uncertain tax positions and the estimate of contingent liabilities
related to litigation and other claims and assessments. Management bases its estimates on historical
experience and on various other assumptions that it believes to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may differ materially from
these estimates under different assumptions and conditions.
Reclassifications - Certain amounts for prior years have been reclassified to conform to the revised
financial statement presentation for 2017.
Cash, Cash Equivalents and Restricted Cash - Cash equivalents consist of demand deposits at financial
institutions, money market funds and other short-term investments with original maturities at the time of
purchase of 90 days or less. Management generally invests cash in excess of its immediate operating
requirements in short-term time deposits and money market instruments, typically with original
maturities at the date of purchase of three months or less. Restricted cash consists primarily of
customer deposits held in escrow accounts and cash collected on pledged/secured notes receivable not
yet remitted to lenders. Management maintains cash and cash equivalents with various financial
institutions located throughout the United States, Canada and Aruba in amounts exceeding the
$250,000 federally insured limit. Accordingly, the Company is subject to credit risk.
Revenue Recognition – Revenue is recorded for the sale of VOIs, net of a provision for credit losses, in
accordance with timeshare accounting guidance. In accordance with the requirements of Accounting
Standards Codification (“ASC”) 970, Real Estate (“ASC 970”), Bluegreen recognizes revenue on VOI
sales when a minimum of 10% of the sales price has been received in cash (demonstrating the buyer’s
commitment), the legal rescission period has expired, collectibility of the receivable representing the
remainder of the sales price is reasonably assured and Bluegreen has completed substantially all of its
obligations with respect to any development related to the real estate sold.
Bluegreen believes that it uses a reasonably reliable methodology to estimate the collectibility of the
receivables representing the remainder of the sales price of real estate sold. Bluegreen’s policies
regarding the estimation of credit losses on its notes receivable are discussed in further detail under
“Notes Receivable”.
Under timeshare accounting rules, the calculation of the adequacy of a buyer’s commitment for the sale
of VOIs requires that cash received towards the purchase of Bluegreen VOIs be reduced by the value of
certain incentives provided to the buyer at the time of sale. If after considering the value of the
incentives provided, the 10% requirement is not met, the VOI sale, and the related cost and direct
selling expenses, are deferred until such time that sufficient cash is received from the customer,
generally through receipt of mortgage payments, to meet the 10% threshold. Changes to the quantity,
type, or value of sales incentives that Bluegreen provides to buyers of its VOIs may result in additional
VOI sales being deferred or extend the period during which a sale is deferred.
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In cases where construction and development on Bluegreen-owned resorts has not been substantially
completed, Bluegreen recognizes revenue in accordance with the percentage-of-completion method of
accounting. To the extent that Bluegreen’s estimates of the total anticipated cost of completing any of
its projects increase, Bluegreen may be required to defer a greater amount of revenue or may be required
to defer revenue for a longer period of time.
Under timeshare accounting rules, rental operations, including accommodations provided through the
use of Bluegreen’s sampler program, are accounted for as incidental operations whereby incremental
carrying costs in excess of incremental revenues are expensed as incurred. Conversely, incremental
revenues in excess of incremental carrying costs are recorded as a reduction to the carrying cost of VOI
inventory. Incremental carrying costs include costs that have been incurred by Bluegreen during the
holding period of unsold VOIs, such as developer subsidies and maintenance fees on unsold VOI
inventory. During each of the years presented, all of Bluegreen’s rental revenue and sampler revenue
earned was recorded as an offset to cost of other fee-based services as such amounts were less than the
incremental carrying costs.
In addition to sales of VOIs, Bluegreen also generates revenue from the activities listed below. The
table provides a brief description of the applicable revenue recognition policy:
Activity
Fee-based sales commissions
Revenue is recognized when:
The sale transaction with the VOI purchaser is
consummated in accordance with the terms of the
agreement with the third-party developer and the
related consumer rescission period has expired.
Resort management and service fees
Management services are rendered. (1)
Resort title fees
Rental and sampler program
Escrow amounts are released and title documents are
completed.
Guests complete stays at the resorts. Rental and
sampler program proceeds are classified as a
reduction to “Cost of other fee-based services” in the
consolidated
and
comprehensive income.
statements
operations
of
(1)
In connection with Bluegreen’s management of homeowners’ associations (“HOA”), Bluegreen acts as agent for
the HOA to operate the resort as provided under the management agreements. In certain cases, the personnel at
the resorts are Bluegreen employees. The HOA bears the costs of such personnel and generally pay Bluegreen
in advance of, or simultaneously with, the payment of payroll. In accordance with ASC 605-45, Overall
Considerations of Reporting Revenues Gross as a Principal versus Net as an Agent, reimbursements from the
HOAs relating to direct pass-through costs are recorded net of the related expenses.
Bluegreen’s cost of other fee-based services consists of the costs associated with the various activities
described above, as well as developer subsidies and maintenance fees on Bluegreen’s unsold VOIs.
Revenue is recognized from sales of real estate and the transfer of real estate to joint ventures when the
sales are closed and title passes to the buyer, the buyer’s initial and continuing investment is adequate to
demonstrate a commitment to pay for the property, the buyer’s receivable, if applicable, is not subject to
future subordination and the Company does not have substantial continuing involvement with the
property.
Revenues are recognized on wholesale trade sales when products are shipped and the customer takes
title and assumes the risk of loss. Revenues are recognized on retail trade sales at the point of sale,
which occurs when products are sold at the Company’s retail locations.
Revenues from interest income are recognized on accruing loans when management determines that it is
probable that all of the principal and interest will be collected in accordance with the loan’s contractual
terms. Interest income is recognized on non-accrual loans on a cash basis.
F-12
Revenues from real estate operations are generally rental income from properties under operating leases.
Rental income is recognized as rents become due and rental payments received in advance are deferred
until earned.
Loans Receivable - Loans that the Company has the intent and ability to hold for the foreseeable future,
or until maturity or payoff, are reported at their outstanding principal balances net of any discounts and
allowance for loan losses. Loans that management has the intent to sell are classified as loans held-for-
sale and are reported at the lower of aggregate cost or estimated fair value. Discounts on loans held-for-
sale are deferred until the related loan is sold and included in gains and losses upon sale. Loans are
classified as loans held-for-sale when management decides to sell loans that were not originated or
purchased for sale. Transfers of loans between classifications are recorded at the lower of aggregate
cost or estimated fair value at the transfer date.
An allowance for loan losses is recorded to reflect management’s reasonable estimate of probable credit
losses inherent in the loan portfolio based on its evaluation of credit risk as of period end. Loans are
charged off against the allowance when management believes the loan is not collectible. Recoveries are
credited to the allowance.
Management segregates loans into segments with certain common characteristics to form a basis for
estimating losses for each segment. The loan portfolio has the following loan segments: residential,
consumer, commercial non-real estate, commercial real estate, and small business loans. Impaired
loans are measured based on the fair value of the collateral less costs to sell. Consumer and residential
loans past due 120 days or more are evaluated individually for impairment and measured based on the
lower of the estimated fair value of the loan’s collateral less cost to sell or the carrying value of the
loan.
Loans are generally placed on non-accrual status at the earlier of the loan becoming past due 90 days as
to either principal or interest or when the borrower has entered bankruptcy proceedings and the loan is
delinquent. When a loan is placed on non-accrual, all accrued interest is reversed against interest
income. Loans may be restored to accrual status when there has been a satisfactory period of
performance and the loan is expected to perform in the future according to its contractual terms.
Notes Receivable - Bluegreen’s notes receivable are carried at amortized cost less an allowance for
credit losses. Interest income is suspended, and previously accrued but unpaid interest income is
reversed, on all delinquent Bluegreen notes receivable when principal or interest payments are more
than 90 days contractually past due, and not resumed until such notes receivable are less than 90 days
past due. As of December 31, 2017 and 2016, $12.9 million and $11.4 million, respectively, of
Bluegreen’s VOI notes receivable were more than 90 days past due, and accordingly, consistent with
Bluegreen’s policy, were not accruing interest income. After 120 days, Bluegreen’s VOI notes
receivable are generally written off against the allowance for credit loss.
Bluegreen records an estimate of expected uncollectible VOI notes receivable as a reduction of revenue
at the time Bluegreen recognizes a VOI sale. Bluegreen estimates uncollectible VOI notes receivable in
accordance with timeshare accounting rules. Under these rules, Bluegreen estimates of uncollectible
VOI notes receivable is based on historical uncollectibles for similar VOI notes receivable. Bluegreen
uses a static pool analysis, which tracks uncollectibles for each year’s sales over the entire life of the
notes. Bluegreen also considers whether the historical economic conditions are comparable to current
economic conditions, as well as variations in underwriting standards. Additionally, under timeshare
accounting rules, no consideration is given for future recoveries of defaulted inventory in the estimate
of uncollectible VOI notes receivable. Bluegreen reviews its allowance for credit losses on at least a
quarterly basis. Bluegreen’s loan origination costs are deferred and recognized over the life of the
related notes receivable.
VOI Inventory - Bluegreen’s VOI inventory is primarily comprised of completed VOIs, VOIs under
construction, and land held for future VOI development. VOI completed inventory is carried at the
lower of (i) cost, including costs of improvements and amenities incurred subsequent to acquisition,
capitalized interest, real estate taxes and other costs incurred during construction, or (ii) estimated fair
market value, less costs to sell. VOI inventory and cost of sales are accounted for under timeshare
accounting rules, which require the use of a specific method of the relative sales value method for
relieving VOI inventory and recording cost of sales. Under the relative sales value method required by
timeshare accounting rules, cost of sales is calculated as a percentage of net sales using a cost-of-sales
percentage - the ratio of total estimated development costs to total estimated VOI revenue, including the
estimated incremental revenue from the resale of VOI inventory repossessed, generally as a result of the
default of the related receivable. Also, pursuant to timeshare accounting rules, we do not relieve
inventory for VOI cost of sales related to anticipated credit losses. Accordingly, no adjustment is made
when inventory is reacquired upon default of the related receivable.
F-13
Bluegreen also periodically evaluates the recoverability of the carrying amount of its undeveloped or
under development resort properties in accordance with ASC 360, Property, Plant and Equipment
(“ASC 360”), which provides guidance relating to the accounting for the impairment or disposal of
long-lived assets. No impairment charges were recorded with respect to VOI inventory during any of the
periods presented.
Trade Inventory – Trade inventory is measured at the lower of cost or market. Cost includes all costs of
conversions, including materials, direct labor, production overhead, depreciation of equipment and
shipping costs. Raw materials are stated at the lower of approximate cost, on a first-in, first-out or
average cost basis, and market is determined by reference to replacement cost. Raw materials are not
written down unless the goods in which they are incorporated are expected to be sold for less than cost,
in which case, they are written down by reference to replacement cost of the raw materials. Finished
goods and work in progress are stated at the lower of cost or market determined on a first-in, first-out or
average cost basis. Shipping and handling fees billed to customers are recorded as trade sales and
shipping and handling fees paid by the Company are recorded as selling, general, and administrative
expenses. Included in the Company’s Consolidated Statements of Operations and Comprehensive
Income as selling, general, and administrative expenses for the years ended December 31, 2017, 2016
and 2015 were $8.2 million, $6.0 million and $5.5 million, respectively, of costs associated with
shipping goods to customers.
In valuing inventory, the Company makes assumptions regarding the write-downs required for excess
and obsolete inventory based on judgments and estimates formulated from available information.
Estimates for excess and obsolete inventory are based on historical and forecasted usage. Inventory is
also examined for upcoming expiration and write-downs are recorded where appropriate.
Real Estate – From time to time, the Company purchases or takes possession or ownership of real
estate through foreclosure of the underlying loan collateral. Real estate acquired through foreclosure is
measured at the fair value of the collateral and classified as real estate held-for-sale, real estate held-for-
investment or real estate inventory. When real estate is classified as held-for-sale, it is initially recorded
at fair value less estimated selling costs (cost basis) and subsequently measured at the lower of cost or
estimated fair value. When real estate is classified as held-for-investment, it is recorded at fair value
and in subsequent periods depreciated over its useful life using the straight line method, if applicable.
Real estate is classified as real estate inventory when the property is under development for sale to
customers and is measured at cost, including improvements, real estate taxes and interest capitalized
during the construction period. Impairments required at the time of foreclosure are charged to the
allowance for loan losses. Expenditures for capital improvements are generally capitalized. Valuation
allowance adjustments are made to reflect any subsequent declines in fair values for real estate held-for-
sale. The costs of holding real estate are charged to real estate operating expenses as incurred. Changes
in the real estate valuation allowance are recorded as asset impairments, net in the Company’s
Consolidated Statement of Operations and Comprehensive Income.
Investments in Unconsolidated Real Estate Joint Ventures - The Company uses the equity method of
accounting to record its interests in entities in which it has significant influence but does not hold a
controlling financial interest and to record its investment in VIEs in which it is not the primary
beneficiary. Under the equity method, an investment is shown on the Statement of Financial Condition
of an investor as a single amount and an investor’s share of earnings or losses from its investment is
shown in the Statement of Operations as a single amount. The investment is initially measured at cost
and adjusted for the investor’s share of the earnings or losses of the investee and dividends received
from the investee. The investor recognizes its share of the earnings or losses of the investee in the
periods for which they are reported by the investee in its financial statements rather than in the period in
which an investee declares a dividend.
The Company recognizes earnings or losses on certain equity method investments based on the
hypothetical liquidation at book value (“HLBV”) method. Under the HLBV method, earnings or losses
are recognized based on how an entity would allocate and distribute its cash if it were to sell all of its
assets and settle its liabilities for their carrying amounts and liquidate at the reporting date. The HLBV
method is used to calculate earnings or losses for equity method investments when the contractual cash
disbursements are different than the investors’ equity interest.
Interest expense is capitalized by the Company on investments, advances , or loans to real estate equity
method companies that began qualifying activities. Total capitalized interest expense cannot exceed
interest expense incurred. Interest expense capitalization ceases when the investee completes its
qualifying activities.
The Company reviews its equity and cost method investments on an ongoing basis for indicators of
other-than-temporary impairment. This determination requires significant judgment in which the
Company evaluates, among other factors, the fair market value of the investments, general market
conditions, the duration and extent to which the fair value of the investment is less than cost, and the
Company’s intent and ability to hold the investment until it
F-14
recovers. The Company also considers specific adverse conditions related to the financial health of and
business outlook for the investee, including industry and sector performance, rating agency actions,
changes in operations and financing cash flow factors. If a decline in the fair value of the investment is
determined to be other-than-temporary, an impairment charge is recorded to reduce the investment to its
fair value, and a new cost basis in the investment is established.
Property and Equipment - Land is carried at cost. Property and equipment are carried at cost less
accumulated depreciation. Depreciation is primarily computed on the straight-line method over the
estimated useful lives of the assets which generally range up to 40 years for buildings and building
improvements, from 3
to 14 years for office furniture and fixtures, a n d equipment, 5 years for
transportation and equipment and from 3 to 14 years for leasehold improvements. The cost of leasehold
improvements is amortized using the straight-line method over the shorter of the terms of the related
leases or the useful lives of the assets.
Expenditures for new property, leasehold improvements and equipment and major renewals and
betterments are capitalized. Expenditures for maintenance and repairs are expensed as incurred, and
gains or losses on disposal of assets are reflected in current operations.
The cost of software development for internal use is capitalized in accordance with the accounting
guidance for costs of computer software developed or obtained for internal use. Capitalization of
software developed for internal use commences during the development phase of the project and ends
when the asset is ready for its intended use. Software developed or obtained for internal use is generally
amortized on a straight-line basis over 3 to 5 years.
Goodwill and Intangible Assets – The Company recognizes goodwill upon the acquisition of a
business when the fair values of the consideration transferred and any noncontrolling interests in the
acquiree are in excess of the fair value of the acquiree’s identifiable net assets. The Company tests
goodwill for potential impairment on an annual basis as of December 31 or during interim periods if
impairment indicators exist. The Company first assesses qualitatively whether it is necessary to perform
goodwill impairment testing. Impairment testing is performed when it is more-likely-than-not that the
reporting unit’s goodwill fair value is less than its carrying amount. The Company evaluates the
following factors in its qualitative assessment: macroeconomic conditions, market considerations, cost
factors, financial performance and events affecting the reporting unit.
If the Company concluded from the qualitative assessment that further testing was required, as was the
case for certain of the Company’s reporting units during the years ended December 31, 2016 and 2015,
the Company performed the two-step goodwill impairment test. The first step of the goodwill
impairment test was used to identify potential impairment and consisted of comparing the fair value of a
reporting unit with its carrying value. If the fair value of the reporting unit exceeded its carrying value,
goodwill was considered not impaired, and the second step of the impairment test was not performed. If
the fair value of the reporting unit was less than the carrying value, the second step of the test was used
to measure the amount of goodwill impairment, if any, in the reporting unit. This step compared the
current implied goodwill in the reporting unit to its carrying amount. If the carrying amount of the
goodwill exceeded the implied goodwill, an impairment was recorded for the excess. The implied
goodwill was determined in the same manner as the amount of goodwill recognized in a business
combination.
During the year ended December 31, 2017, the Company early adopted Accounting Standards Update
(“ASU”) No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for
Goodwill Impairment. The new guidance removes the second step of the two-step goodwill impairment
test described above. Instead, if a reporting unit’s carrying amount exceeds its fair value, the Company
will record an impairment charge based on that difference. The impairment charge is limited to the
amount of goodwill allocated to that reporting unit.
Intangible assets consist primarily of indefinite lived management contracts recognized upon the
consolidation of Bluegreen during November 2009. The remaining balance in intangible assets
consisted of trade names, customer relationships, non-competition agreements, area development
contracts and lease premiums that were initially recorded at fair value at the acquisition date of a
business and are amortized on a straight-line basis over their respective estimated useful lives.
Indefinite lived intangible assets are not amortized and are tested for impairment on at least an annual
basis, or more frequently if events and circumstances indicate that it is more likely than not that the
related carrying amounts may be impaired . The Company evaluates indefinite lived intangible assets
for impairment by first qualitatively considering relevant events and circumstances to determine
whether it is more-likely-than-not that the fair value of an indefinite-lived intangible asset is less than
its carrying value. If it is more-likely-than-not that the fair value of the indefinite-lived intangible asset
is greater than its carrying value, the indefinite-lived intangible asset is not impaired. If the
F-15
Company concludes that further testing is required, the Company calculates the fair value of the
indefinite-lived intangible asset and compares the fair value to the carrying value. If the fair value of
the indefinite-lived intangible asset is less than the carrying value, an impairment is recognized for the
difference.
Amortizable intangible assets are tested for recoverability whenever events or changes in circumstances
indicate that the carrying amount of the intangible asset may not be recoverable. The carrying amount
of an intangible asset is not considered recoverable when the carrying amount exceeds the sum of the
undiscounted cash flows expected to result from the use of the intangible asset. The impairment is
measured as the amount by which the carrying amount of the intangible asset exceeds its fair value.
Trade Receivables – Trade receivables are recorded at the invoiced amount and do not bear interest.
The Company maintains an allowance for doubtful accounts for estimated losses inherent in its trade
receivable portfolio. In establishing the required allowance, management considers historical losses
adjusted to take into account current market conditions and the customers' financial condition, the
amount of receivables in dispute, and the current receivables aging and current payment patterns. The
Company reviews its allowance for doubtful accounts on a quarterly basis. Past due balances over 90
days and over a specified amount are reviewed individually for collectibility. Account balances are
charged off against the allowance after all standard means of collection have been exhausted and the
potential for recovery is considered remote. Trade receivables are included in other assets in the
Company’s Consolidated Statements of Financial Condition with an outstanding balance of $16.0
million as of December 31, 2017 and 2016.
Deferred Financing – Deferred financing costs are comprised of costs incurred in connection with
obtaining financing from third-party lenders and are presented in the Company’s Consolidated
Statement of Financial Condition as other assets or as a direct deduction from the carrying value of the
associated debt liability. These costs are capitalized and amortized to interest expense over the terms of
the related financing arrangements.
Deferred Income - Bluegreen defers the recognition of sales of VOIs, net of direct incremental selling
expenses, for sales for which the legal rescission period has expired but the required revenue
recognition criteria described above has not been met. Additionally, in connection with Bluegreen’s
sampler program, Bluegreen defers revenue, net of direct incremental selling expenses, for guest stays
not yet completed. As of December 31, 2017 and 2016, Bluegreen’s deferred income consisted of the
following (in thousands):
Deferred sampler program income
Deferred VOI sales revenue
Other deferred income
Total
As of December 31,
2016
2017
$
$
10,056 $
22,461
3,794
36,311 $
11,821
21,126
4,068
37,015
Advertising – The Company expenses advertising costs, which are primarily marketing costs, as
incurred. Advertising expense totaled $148.6 million, $146.0 million and $123.8 million for the years
ended December 31, 2017, 2016 and 2015, respectively, and are included in selling, general and
administrative expenses
the accompanying Consolidated Statements of Operations and
Comprehensive Income.
in
Bluegreen has entered into marketing arrangements with various third parties. For the year s ended
December 31, 2017, 2016 and 2015, sales of VOIs to prospects and leads generated by Bass Pro
accounted for approximately 15%, 16% and 20%, respectively, of total VOI sales volume. There can be
no guarantee that Bluegreen will be able to maintain this agreement in accordance with its terms or
extend or renew these agreements on similar terms, or at all.
its
subsidiaries
Income Taxes – The Company and its subsidiaries in which it owns 80% or more of the subsidiary’s
outstanding equity file a consolidated U.S. Federal and Florida income tax return. Other than Florida,
for each
the Company and
jurisdiction. Subsidiaries in which the Company owns less than 80% of the outstanding equity are not
included in the Company’s consolidated U.S. Federal or Florida state income tax return. For years prior
to December 31, 2015, BCC and Bluegreen filed separate tax returns with the Internal Revenue Service
as the Company owned less than 80% of the outstanding equity of these subsidiaries. As a result of the
Company’s purchase of additional shares of BCC’s Class A Common Stock in the above-described
April 2015 cash tender offer and the related increase in the Company’s ownership interest in BCC, the
Company files a
separate
income
returns
state
file
tax
F-16
consolidated group tax return which includes the operations of BCC, Woodbridge and Bluegreen for the
years ended December 31, 2017, 2016 and 2015.
The provision for income taxes is based on income before taxes reported for financial statement
purposes after adjustment for transactions that do not have tax consequences. Deferred tax assets and
liabilities are realized according to the estimated future tax consequences attributable to differences
between the carrying value of existing assets and liabilities and their respective tax basis. Deferred tax
assets and liabilities are measured using the enacted tax rates as of the date of the Statement of
Financial Condition. The effect of a change in tax rates on deferred tax assets and liabilities is reflected
in the period that includes the statutory enactment date. A deferred tax asset valuation allowance is
recorded when it has been determined that it is more likely than not that deferred tax assets will not be
realized. If a valuation allowance is recorded, a subsequent change in circumstances that causes a
change in judgment about the realization of the related deferred tax amount could result in the reversal
of the deferred tax valuation allowance.
An uncertain tax position is defined as a position taken or expected to be taken in a tax return that is not
based on clear and unambiguous tax law and which is reflected in measuring current or deferred income
tax assets and liabilities for interim or annual periods. The Company may recognize the tax benefit
from an uncertain tax position only if it believes that it is more likely than not that the tax position will
be sustained on examination by the taxing authorities, based on the technical merits of the position. The
Company measures the tax benefits recognized based on the largest benefit that has a greater than 50%
likelihood of being realized upon ultimate resolution. The Company recognizes interest and penalties
related to unrecognized tax benefits in its provision for income taxes.
Noncontrolling Interests – Noncontrolling interests reflect third parties’ ownership interests in entities
that are consolidated in the Company’s financial statements, but less than 100% owned by the
Company. A noncontrolling interest is recognized as equity in the Statement of Financial Condition and
itemized separately from the equity attributable to BBX Capital’s shareholders, while a noncontrolling
interest that is redeemable for cash at the holder’s option or upon a contingent event outside of the
Company’s control is classified as redeemable noncontrolling interests and presented in the mezzanine
section between total liabilities and equity in the Statement of Financial Condition. A change in the
ownership interests in a subsidiary is accounted for as an equity transaction if the Company retains its
controlling financial interest in the subsidiary.
The amounts of consolidated net income and comprehensive income attributable to BBX Capital’s
shareholders and to noncontrolling interests are presented in the Company’s Consolidated Statement of
Operations and Comprehensive Income.
Accounting for Loss Contingencies – Loss contingencies, including those arising from legal actions,
are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be
reasonably estimated.
Earnings Per Share - Basic earnings per share is computed by dividing net income attributable to
shareholders by the weighted average number of common shares outstanding for the period. Diluted
earnings per share is computed in the same manner as basic earnings per share but also reflects potential
dilution that could occur if options to acquire common shares or restricted stock awards of the Company
were exercised or vest. Common stock options and restricted stock awards, if dilutive, are considered in
the weighted average number of dilutive common shares outstanding based on the treasury stock
method. Diluted earnings per share also takes into consideration the potential dilution from securities
issued by subsidiaries that enable their holders to obtain the subsidiary’s common stock. The resulting
net income amount is divided by the weighted average number of dilutive common shares outstanding.
Stock-Based Compensation – Compensation cost for non-vested restricted stock awards is based on the
fair value of the award on the measurement date, which is generally the grant date. The Company
recognizes these compensation costs on a straight-line basis over the requisite service period of the
award, which is generally four years for non-vested restricted stock awards. The fair value of non-
vested restricted stock awards is generally the market price of the Company’s common stock on the
grant date.
Recently Adopted Accounting Pronouncements
The Financial Accounting Standards Board (“FASB”) has
the following accounting
pronouncements and guidance relevant to the Company’s operations which have been adopted as of
December 31, 2017:
issued
ASU No. 2016-18, Statement of Cash Flows, Restricted Cash (Topic 230). This update requires that the
statement of cash flows explain the change during the period in the total of cash, cash equivalents and
restricted cash. The amount of restricted cash should be included with cash and cash equivalents when
reconciling the beginning of the period and
F-17
the end of period cash as shown on the statement of cash flows. The guidance is effective for fiscal
years beginning after December 15, 2017 with early adoption permitted. The Company elected to early
adopt
the standard using the retrospective transition method to each period presented in the
accompanying consolidated financial statements. The Company’s adoption of ASU 2016-18 did not
have a material impact on the Company’s consolidated financial statements.
ASU No. 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and
Cash Payments. (Topic 230) - This update provides guidance on the classification of certain cash
receipts and payments with the objective of reducing the existing diversity in current practice. The
Company elected to early adopt the standard using the retrospective transition method to each period
presented in the accompanying consolidated financial statements. The Company’s adoption of ASU
2016-15 did not have a material impact on the Company’s consolidated financial statements.
ASU No. 2017-04, Intangibles- Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill
Impairment. This update eliminates the second step of the goodwill impairment test under current
guidance. As a result, the annual or interim goodwill impairment test is performed by comparing the
fair value of a reporting unit with its carrying amount, and an impairment charge is recognized for the
amount by which the carrying amount exceeds the fair value of the reporting unit. The guidance is
effective for fiscal years beginning after December 15, 2019 with early adoption permitted. The
Company elected to early adopt the standard effective for the Company’s goodwill impairment tests
performed on December 31, 2017. This statement was adopted on a prospective basis.
ASU No. 2016-09, Compensation – Stock Compensation (Topic 718), Improvements to Employee Share-
based Payment Accounting. This update requires the recognition of excess tax benefits (“windfall”) and
tax deficiencies in the income statement when the stock awards vest or are settled, thus eliminating
additional paid in capital pools. The new standard also removes the requirement to delay recognition of
windfall tax benefits until it reduces current taxes payable. The new standard instead requires the
recognition of windfall tax benefits at the time of settlement, subject to valuation allowance
considerations. The new standard clarifies that all cash payments made on an employee’s behalf for
withheld shares should be presented as a financing activity on the Company’s statement of cash flows
and cash flows related to windfall tax benefits will no longer be separately classified as a financing
activity apart from other income tax cash flows which are classified as operating activities. The new
standard provides an accounting policy election to account for forfeitures as they occur instead of on an
estimated basis and allows for the employer to repurchase more of an employee’s shares for tax
withholding purposes up to the maximum statutory rate in the employee’s applicable jurisdictions
without triggering liability accounting. The new standard changes the computation of diluted earnings
per share as windfall tax benefits will not be included in the calculation of assumed proceeds when
applying the treasury stock method.
The Company adopted the standard on January 1, 2017. The primary impact of the adoption of this
standard on the Company’s consolidated financial statements was the recognition of a $3.1 million
windfall tax benefit as a cumulative effect to accumulated earnings associated with windfall tax benefits
that were not previously recognized because the related tax deduction had not reduced current taxes
payable.
Upon adoption of the new standard, the Company made an accounting policy election to recognize
forfeitures as they occur. The presentation requirement for cash flows related to employee taxes paid
for withheld shares had no impact to operating cash flows on any of the periods presented in the
Company’s consolidated cash flows statements since these cash flows have historically been presented
as a financing activity.
Future Adoption of Recently Issued Accounting Pronouncements
The FASB has issued the following accounting pronouncements and guidance relevant to the
Company’s operations which have not been adopted as of December 31, 2017:
ASU No. 2014-09 – Revenue Recognition (Topic 606): In May 2014, the FASB issued a new standard
related to revenue recognition (as subsequently clarified and amended by various ASUs). Under the
new standard, revenue is recognized when a customer obtains control of promised goods or services
and is recognized in an amount that reflects the consideration which the entity expects to receive in
exchange for those goods or services. In addition, the standard requires disclosure of the nature,
amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.
The standard permits two methods of adoption: retrospectively to each prior reporting period presented
(full retrospective method), or retrospectively with the cumulative effect of initially applying the
guidance recognized at
F-18
the date of initial application (modified retrospective method). The Company adopted the standard on
January 1, 2018 under the full retrospective method and accordingly will retrospectively adjust each
prior reporting period presented in subsequent filings to the new standard.
In preparation for adoption of the standard, the Company analyzed the potential impact that adopting
this standard will have on its consolidated financial statements and related disclosures and its business
processes, accounting policies and controls and reached conclusions on key accounting assessments
related to the standard in subsequent filings.
The adoption of the standard will impact Bluegreen in the following areas: (i) gross versus net
presentation for payroll and insurance premium reimbursements related to resorts managed by
Bluegreen and on behalf of third parties and (ii) the timing of the recognition of VOI revenue related to
the removal of certain bright line tests regarding the determination of the adequacy of the buyer’s
commitment under existing industry-specific guidance. In addition, Bluegreen concluded that the
recognition of fee-based sales commission revenue, ancillary revenues, and rental revenues will remain
materially unchanged.
The adoption of the standard will impact the Company’s real estate activities as revenue will be
recognized sooner for contingent consideration on sales of real estate inventory.
The adoption of the standard will not materially affect revenue recognition associated with the
Company’s trade sales. Retail trade sales performance obligations are generally satisfied at the time of
the sales transaction as customers of the retail business typically pay in cash at the time of transfer of
the promised goods, while wholesale trade sales performance obligations are generally satisfied when
the promised goods are shipped by the Company or received by the customer. However, the adoption
of the standard will impact the classification of certain marketing concessions provided to customers of
Renin and BBX Sweet Holdings as the marketing concessions are required to be reflected as a reduction
of revenue instead of a selling, general and administrative expense. Additionally, the Company has
historically recognized shipping and handling costs in selling, general and administration expenses, and
upon the adoption of the standard, the Company will account for such costs as a fulfillment cost and
include such costs in cost of trade sales.
See Expected Impacts to Reported Results below for the impact of adoption of the standard on the
Company’s consolidated financial statements.
ASU No. 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets
(Subtopic 610-20). This update provides guidance on the recognition of revenues for the transfer of
nonfinancial assets to non-customers. The standard indicates that an entity should identify each distinct
nonfinancial asset or in substance nonfinancial asset promised to a non-customer or counterparty and
derecognize each asset when the counterparty obtains control of the asset. This update supersedes the
guidance in Topic 845 and eliminates partial sale accounting for the transfer of real estate to joint
ventures.
The Company adopted the standard on January 1, 2018 under the full retrospective method and
accordingly will retrospectively adjust each prior reporting period presented in subsequent filings to the
new standard.
The standard significantly changes the guidance on the transfer of real estate to unconsolidated joint
ventures. Under prior guidance, the transfer of real estate to a joint venture was accounted for as a
partial sale, resulting in the recognition of a partial gain, and the noncontrolling interest retained was
measured at historical cost, resulting in a basis adjustment to the seller’s investment in the joint venture.
In addition, the partial gain could be deferred if the sale did not satisfy certain criteria for gain
recognition. Under the new statement, the full gain is recognized upon the transfer of control in the real
estate to the unconsolidated joint venture, and any noncontrolling interest retained is measured at fair
value.
In certain unconsolidated real estate joint ventures, the Company accounted for the transfer of land to
such ventures for initial capital contributions as partial sales, resulting in deferred gains and joint
venture basis adjustments. The adoption of the standard will result in the recognition of deferred gains
and joint venture basis adjustments of $3.2 million and $7.4 million, respectively, in accumulated
earnings as a cumulative effect as of January 1, 2016 upon adoption of the standard. As a result of the
cumulative effect adjustment, net gains on sales of assets will be reduced by $0.5 million and $2.3
million, respectively, for the years ended December 31, 2017 and 2016, and equity in earnings from
unconsolidated joint ventures will be reduced by $1.9 million and $1.5 million, respectively, for the
years ended December 31, 2017 and 2016.
F-19
Expected Impacts to Reported Results
The retrospective adjustments to the Company’s Statement of Financial Condition as of December 31,
2017 and 2016 and the Company’s Statements of Operations for the years ended December 31, 2017
and 2016 due to the adoption of these new accounting standards are as follows (dollars in thousands,
except per share data):
Statement of Financial Condition
Notes receivable, net
Investment in unconsolidated real
estate joint ventures
Property and equipment, net
Other assets
Other liabilities
Deferred income
Deferred income taxes
Total equity
Statement of Operations
Sales of VOIs
Reimbursement revenue
Cost of reimbursement
Cost of VOIs sold
Trade sales
Net gains on sales of assets
Cost of trade sales
Selling, general and administrative
expenses
Equity in earnings of unconsolidated
real estate joint ventures
Income before income taxes
Benefit (provision) for income taxes
Net income
Less: Net income attributable to
non-controlling interest
Net income attributable
to Shareholders
Basic earnings per share
Diluted earnings per share
As of and for the Year ended December 31, 2017
As Reported
Herein
ASU 2014-
09
Adjustments
ASU 2017-
05
Adjustments
As
Adjusted
$
431,801
(4,507)
—
427,294
$
$
$
$
$
47,275
112,858
102,370
103,926
36,311
43,093
653,501
239,662
—
—
17,439
142,798
2,442
97,755
—
(929)
929
—
(19,418)
3,647
11,264
12,633
52,639
52,639
240
(713)
—
8,163
3,959
—
—
(462)
—
1,120
3,301
—
—
—
—
—
(493)
—
51,234
111,929
103,299
103,464
16,893
47,860
668,066
252,295
52,639
52,639
17,679
142,085
1,949
105,918
538,125
(8,423)
—
529,702
—
11,940
(2,464)
9,476
463
9,013
(1,942)
(2,435)
1,525
(910)
12,541
102,879
6,284
109,163
—
18,865
(910)
90,298
0.91
0.87
14,483
93,374
7,223
100,597
18,402
82,195
0.83
0.79
F-20
Statement of Financial Condition
Notes receivable, net
Investment in unconsolidated real
estate joint ventures
Property and equipment, net
Other assets
Other liabilities
Deferred income
Deferred income taxes
Total equity
Statement of Operations
Sales of VOIs
Reimbursement revenue
Cost of reimbursement
Cost of VOIs sold
Trade sales
Net gains on sales of assets
Cost of trade sales
Selling, general and administrative
expenses
Equity in earnings of unconsolidated
real estate joint ventures
Income before income taxes
Provision for income taxes
Net income
Less: Net income attributable to
non-controlling interest
Net income attributable to
Shareholders
Basic earnings per share
Diluted earnings per share
As of and for the Year ended December 31, 2016
As Reported
Herein
ASU 2014-
09
Adjustments
ASU 2017-
05
Adjustments
As
Adjusted
$
430,480
(4,600)
—
425,880
43,491
95,998
104,812
95,611
37,015
44,318
495,454
266,142
—
—
27,346
95,996
6,076
74,341
—
(590)
590
—
(17,493)
4,734
8,160
14,781
49,557
49,557
1,483
(157)
—
6,022
5,901
—
—
(956)
—
2,645
4,212
—
—
—
—
—
(2,274)
—
49,392
95,408
105,402
94,655
19,522
51,697
507,826
280,923
49,557
49,557
28,829
95,839
3,802
80,363
516,757
(4,607)
—
512,150
13,630
78,036
(36,379)
41,657
13,295
28,362
0.33
0.32
—
11,726
4,276
7,450
(1,452)
(3,726)
1,437
(2,289)
12,178
86,036
(30,666)
46,818
401
(429)
13,267
7,049
(1,860)
33,551
0.39
0.38
$
$
$
$
$
The cumulative effect impact of adopting the new revenue standard and ASU 2017-05 was to increase
accumulated earnings from the amount originally reported as of January 1, 2016 of $232.1 million to
$243.9 million, an adjustment of $11.8 million.
The adoption of the new standards had no impact to each prior period statement of cash flows.
ASU No. 2016-02 – Leases (Topic 842). This standard will require assets and liabilities to be
recognized on the balance sheet of a lessee for the rights and obligations created by leases of assets with
terms of more than 12 months. For income statement purposes, the update retained a dual model,
requiring leases to be classified as either operating or finance based on largely similar criteria to those
applied in current lease accounting, but without explicit bright lines. This standard also requires
extensive quantitative and qualitative disclosures,
judgments made by
management, to provide greater insight into the extent of revenue and expense recognized and expected
to be recognized from existing leases. This standard will be effective for the Company on January 1,
2019. Early adoption is permitted. The Company expects that the implementation of this new standard
will have a material impact on its consolidated financial statements and related disclosures as the
Company has aggregate future minimum lease payments of $159.3 million at December 31, 2017
under its current non-cancelable lease agreements with various expirations dates between 2018 and
2030. The Company anticipates the recognition of additional assets and corresponding liabilities related
to these leases on its consolidated statement of financial condition.
including significant
F-21
The Company is currently compiling a listing of contracts that meet the statement’s definition of a lease
and is reviewing the functionality of its systems to prepare for the adoption of this statement.
The Company will be required to recognize and measure leases at the beginning of the earliest period
presented using the modified retrospective approach. The Company is currently evaluating the impact
that ASU 2016-02 will have on its consolidated financial statements.
ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on
Financial Instruments. This standard introduces an approach of estimating credit losses on certain types
of financial instruments based on expected losses. The standard also expands the disclosure
requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for
loan and credit losses. In addition, the standard requires entities to disclose the amortized cost balance
for each class of financial asset by credit quality indicator, disaggregated by the year of origination (i.e.,
by vintage year). This standard will be effective for the Company on January 1, 2020. Early adoption is
permitted beginning on January 1, 2019. The Company is currently evaluating the impact that ASU
2016-13 may have on its consolidated financial statements.
ASU No. 2017-09, Compensation – Stock Compensation (Topic 718). This update was issued to provide
guidance on determining which changes to the terms and conditions of share-based compensation
awards require an entity to apply modification accounting under Topic 718. An entity should apply
modification accounting to changes to terms or conditions of a share-based compensation award unless
there is no change in the fair value, vesting or classification of the modified award as compared to the
original award. The standard is effective for annual periods, and interim periods within those annual
periods, beginning after December 15, 2017. The Company adopted this standard on January 1, 2018.
The adoption of this statement did not have a material impact on the Company’s consolidated financial
statements.
ASU No. 2017-01, Business Combinations - Clarifying the Definition of a Business. This update affects
the determination of whether a company has acquired or sold a business. The definition of a business
affects many areas of accounting, including acquisitions, disposals, goodwill and consolidations, and
the standard will help entities determine whether transactions should be accounted for as acquisitions or
disposals of assets or businesses. The standard is expected to result in more acquisitions being
accounted for as asset purchases instead of business combinations. The guidance will be effective for
fiscal years beginning after December 15, 2017. The Company adopted this standard on January 1,
2018 using the prospective transition method. The adoption of this standard did not have a material
impact on the Company’s consolidated financial statements.
investments
ASU No. 2016-01 –– Financial Instruments – Overall (Topic 825) – Recognition and Measurement of
Financial Assets and Financial Liabilities. This update requires all equity
in
unconsolidated entities (other than those accounted for using the equity method of accounting) to
generally be measured at fair value through earnings. The update eliminates the available-for-sale
classification for equity securities with readily determinable fair values and the cost method for equity
investments without readily determinable fair values. However, entities will be able to elect to record
equity investments without readily determinable fair values at cost, less impairment. This update also
simplifies the impairment assessment for equity investments and requires the use of an exit price when
measuring the fair value of financial instruments for disclosure purposes. The amendments in this
statement are effective for fiscal years beginning after December 15, 2017. The Company adopted this
statement on January 1, 2018 and recognized a cumulative effect adjustment of $0.4 million to
accumulated earnings as of January 1, 2018 for equity securities with readily determinable fair values.
The statement was adopted prospectively for $2.4 million of equity securities without readily
determinable fair values. The adoption of this statement did not have a material impact on the
Company’s consolidated financial statements.
3. Acquisitions and Mergers
Acquisition of IT’SUGAR
On June 16, 2017, a wholly-owned subsidiary of BBX Sweet Holdings acquired IT’SUGAR, a specialty
candy retailer with 95 retail locations in 26 states and Washington, DC, through the acquisition of all of
its Class A Preferred Units and 90.4% of its Class B Common Units for cash consideration of
approximately $58.4 million, net of cash acquired. The remaining 9.6% of IT’SUGAR’s Class B
Common Units are owned by JR Sugar Holdings, LLC (“JR Sugar”), an entity owned by the founder
and CEO of IT’SUGAR.
F-22
The consolidated net assets and results of operations of IT’SUGAR are included in the Company’s
consolidated financial statements commencing on June 16, 2017 and resulted in the following impact to
trade sales and net income attributable to shareholders from the acquisition date to December 31, 2017
(in thousands):
Trade sales
Income before income taxes
$
$
46,772
2,598
June 16, 2017
to December 31, 2017
Purchase Price Allocation
The Company accounted for the acquisition of IT’SUGAR using the acquisition method of accounting,
which requires, among other things, that the assets acquired and liabilities assumed be recognized at
their fair values at the acquisition date. The following table summarizes the purchase price allocation
based on the Company’s valuation, including the fair values of the assets acquired, liabilities assumed,
and the redeemable noncontrolling interest in IT’SUGAR at the acquisition date (in thousands):
Property and equipment
Cash, inventory and other assets
Identifiable intangible assets (1)
Total assets acquired
Accounts payable and other liabilities
Identifiable intangible liabilities (2)
Total liabilities assumed
Fair value of identifiable net assets
Redeemable noncontrolling interest
Goodwill
Purchase consideration
Less: cash acquired
Cash paid for acquisition less cash acquired
Acquisition-related costs included in selling, general and administrative expenses
$ 18,747
12,212
4,512
35,471
(5,370)
(716)
(6,086)
29,385
(2,490)
35,164
62,059
(3,641)
$ 58,418
$ 2,963
(1)
(2)
Identifiable intangible assets were comprised of $4.2 million, $0.2 million and $0.1 million
associated with IT’SUGAR’s
lease agreements, and a
noncompetition agreement, respectively.
Identifiable intangible liabilities were comprised of unfavorable operating lease agreements.
trademark, favorable operating
The fair values reported in the above table have been estimated by the Company using available market
information and appropriate valuation methods. As considerable judgment is involved in estimates of
fair value, the fair values presented above are not necessarily indicative of the amounts that the
Company could realize in a current market exchange. The use of different market assumptions and/or
estimation methods could have a material effect on the estimated fair value amounts.
The following summarizes the Company’s methodologies for estimating the fair values of certain assets
and liabilities associated with IT’SUGAR:
Property and Equipment
Property and equipment acquired consisted primarily of leasehold improvements at IT’SUGAR’s retail
stores. The fair value of the leasehold improvements and other equipment was estimated based on the
replacement cost approach.
Identifiable Intangible Assets and Liabilities
The identifiable intangible assets acquired primarily consisted of the fair value of IT’SUGAR’s
trademark, which was estimated using the relief-from-royalty method, a form of the income approach.
Under this approach, the fair value was estimated by calculating the present value using a risk-adjusted
discount rate of the expected future royalty payments that would have to be paid if the IT’SUGAR
trademark was not owned.
F-23
The identifiable intangible assets and liabilities also included the fair value of IT’SUGAR’s operating
lease agreements associated with its retail stores. The fair value of these assets and liabilities were
estimated by calculating the present value using a risk-adjusted discount rate of the difference between
the contractual amounts to be paid pursuant to the lease agreements and the estimate of market lease
rates at the acquisition date.
T h e $4.2 million trademark intangible asset is amortized over 15 years, and the $0.2 million of
favorable lease agreements and the $0.7 million of unfavorable lease agreements are amortized over a
weighted average period of 6.5 years. The noncompetition agreement is amortized over five years.
Goodwill
The goodwill recognized in connection with the acquisition reflects the difference between the
estimated fair value of the net assets acquired and the Company’s consideration paid to acquire
IT’SUGAR. The goodwill recognized in the acquisition is deductible for income tax purposes.
Pro Forma Information (unaudited)
The following unaudited pro forma financial data presents the Company’s revenues and earnings for the
years ended December 31, 2017 and 2016 as if the acquisition was completed on January 1, 2016 (in
thousands):
Trade sales
Income before income taxes
Net income (1)
Net income attributable to shareholders (1)
$
$
$
$
Pro Forma
For the Years Ended
December 31,
Actual
For the Years Ended
December 31,
2017
179,356
94,046
100,997
82,626
2016
172,769
73,644
38,965
26,068
2017
142,798
93,374
100,597
82,195
2016
95,996
78,036
41,657
28,362
(1) The pro forma net income and net income attributable to shareholders for the year ended December 31,
2017 were adjusted to exclude $3.0 million of acquisition-related costs .
The unaudited pro forma financial data reported in the above table does not purport to represent what
the actual results of the Company’s operations would have been assuming that the acquisition date was
January 1, 2016, nor does it purport to predict the Company’s results of operations for future periods.
Noncontrolling Interest
Under the terms of IT’SUGAR’s operating agreement, JR Sugar may require the Company to purchase
for cash its IT’SUGAR Class B Common Units upon the occurrence of certain events, including events
relating to the employment agreement between BBX Sweet Holdings and the CEO of IT’SUGAR, as
described below. The purchase price payable by the Company for such Class B Common Units will be
determined based on the circumstance giving rise to such purchase obligation in accordance with
prescribed formulas set forth in IT’SUGAR’s operating agreement. In addition, commencing on the
seventh anniversary of the acquisition date, the Company shall have the right, but not the obligation, to
require JR Sugar to sell its Class B Common Units to the Company in accordance with a prescribed
formula set forth in IT’SUGAR’s operating agreement.
As a result of the redemption features, JR Sugar’s Class B Common Units are considered redeemable
noncontrolling interests and reflected in the mezzanine section as a separate line item in the Company’s
Consolidated Statement of Financial Condition as of December 31, 2017. As the noncontrolling
interests are not currently subject to redemption but are probable of becoming redeemable in a future
period, the Company will measure the noncontrolling interests by accreting changes in the estimated
purchase price from the acquisition date to the earliest redemption date and may adjust the carrying
amount of such interests to equal the calculated value in the event it is in excess of the carrying amount
at such time.
F-24
Employment and Loan Agreements
In connection with the acquisition of IT’SUGAR, BBX Sweet Holdings entered into an employment
agreement with the founder and CEO of IT’SUGAR for his continued services as CEO of IT’SUGAR.
Upon the occurrence of certain events constituting a breach of the employment agreement by the CEO
resulting in his termination, the Company may exercise its ability to purchase JR Sugar’s Class B
Common Units for cash for an amount equal to the lesser of the fair market value of such units
determined in accordance with the prescribed formula set forth in IT’SUGAR’s operating agreement
and the initial value ascribed to such units at the acquisition date. Similarly, upon the occurrence of
certain “not for cause” termination events associated with the termination of the CEO’s employment,
JR Sugar may require the Company to purchase its Class B Common Units for cash for an amount
equal to the greater of the fair market value of such units determined in accordance with the prescribed
formula set forth in IT’SUGAR’s operating agreement and the initial value ascribed to such units at the
acquisition date.
Concurrent with the acquisition, JR Sugar borrowed $2.0 million from BBX Sweet Holdings in the
form of two promissory notes, as partial consideration for the purchase of its 9.6% ownership of
IT’SUGAR’s Class B Common Units. The notes mature on June 16, 2024, and a portion of the
aggregate principal balance and accrued interest of such notes may be forgiven on an annual basis
provided that IT’SUGAR’s CEO continues to remain employed with BBX Sweet Holdings pursuant to
his employment agreement. The notes receivable are presented as a deduction from the balance of the
related Class B Common Units included in redeemable noncontrolling interests in the Consolidated
Statement of Financial Condition as of December 31, 2017.
Merger of BCC
On December 15, 2016, the Company acquired all of the outstanding shares of BCC not previously
owned by the Company. Pursuant to the terms of the Agreement and Plan of Merger, dated as of
July 27, 2016, as amended on October 20, 2016, between BBX Capital, a wholly-owned subsidiary of
BBX Capital (“Merger Sub”) , and BCC (the “Merger Agreement”) , BCC merged with and into Merger
Sub and BCC is now a wholly owned subsidiary of BBX Capital.
Pursuant to the terms of the Merger Agreement, each share of BCC’s Class A Common Stock
outstanding immediately prior to December 15, 2016 (other than shares held by the Company and
shares as to which appraisal rights were exercised in accordance with Florida law) was converted into
the right to receive, at the election of the holder thereof, either (i) $20.00 in cash, without interest (the
“Cash Consideration”), or (ii) 5.4 shares of the Company’s Class A Common Stock (the “Stock
Consideration” and, collectively with the Cash Consideration, the “Merger Consideration”). Shares of
BCC’s Class A Common Stock which were converted into the right to receive Merger Consideration
but as to which no election was made were converted into the right to receive Cash Consideration.
Based on
the foregoing, the Company paid to BCC’s shareholders a total of approximately
$16.9 million of Cash Consideration and issued to BCC’s shareholders a total of approximately
12.0 million shares of the Company’s Class A Common Stock as Stock Consideration.
The merger was accounted for as an equity transaction as the Company increased its ownership interest
in BCC and retained its controlling financial interest. The Company held an approximately 82% equity
interest in BCC prior to the Merger and, as a result of the Merger, the Company owns 100% of BCC.
Accounting for the merger as an equity transaction resulted in no gain or loss being recognized in the
Company’s Consolidated Statements of Operations and Comprehensive Income and the difference
between the consideration paid and the amount of noncontrolling interest was recognized in additional
paid-in capital.
Pursuant to the terms of the Merger Agreement, effective upon consummation of the Merger on
December 15, 2016, the Company adopted and assumed BCC’s 2014 Stock Incentive Plan, as
amended, and BCC’s 2005 Restricted Stock and Option Plan, as amended (collectively, the “B CC
Capital Equity Plans”). Options and restricted stock awards granted under the BCC Equity Plans and
outstanding at December 15, 2016, including those held by the Company’s executive officers, other
employees, and directors, were converted into BBX Capital’s options or restricted stock awards, as the
case may be. As a result, 5,090,354 restricted shares of BBX Capital’s Class A Common Stock awards
were issued in exchange for 942,657 restricted shares of BCC’s Class A Common Stock awards
outstanding as of December 15, 2016 and BCC options to acquire 6,614 of BCC Class A Common
Stock were exchanged for options to acquire 35,716 shares of the Company's Class A Common Stock
pursuant to the terms of the Merger Agreement as of December 31, 2016.
F-25
4. Consolidated Variable Interest Entities
Bluegreen sells VOI notes receivable through special purpose finance entities. These transactions are
generally structured as non-recourse to Bluegreen and are designed to provide liquidity for Bluegreen
and to transfer the economic risks and benefits of the notes receivable to third parties. In a
securitization, various classes of debt securities are issued by the special purpose finance entities that
are generally collateralized by a single tranche of transferred assets, which consist of VOI notes
receivable. Bluegreen services the securitized notes receivable for a fee pursuant to servicing
agreements negotiated with third parties based on market conditions at the time of the securitization.
In these securitizations, Bluegreen generally retains a portion of the securities and continues to service
the securitized notes receivable. Under these arrangements, the cash payments received from obligors
on the receivables sold are generally applied monthly to pay fees to service providers, make interest and
principal payments to investors, and fund required reserves, if any, with the remaining balance of such
cash retained by Bluegreen; however, to the extent the portfolio of receivables fails to satisfy specified
performance criteria (as may occur due to, among other things, an increase in default rates or credit loss
severity) or other trigger events occur, the funds received from obligors are required to be distributed on
an accelerated basis to investors. Depending on the circumstances and the transaction, the application of
the accelerated payment formula may be permanent or temporary until the trigger event is cured. As of
December 31, 2017, Bluegreen was in compliance with all applicable terms under its securitization
transactions, and no trigger events had occurred.
In accordance with applicable accounting guidance for the consolidation of VIEs, Bluegreen analyzes
its variable interests, which may consist of loans, servicing rights, guarantees, and equity investments, to
determine if an entity in which Bluegreen has a variable interest is a VIE. The analysis includes a review
of both quantitative and qualitative factors. Bluegreen bases its quantitative analysis on the forecasted
cash flows of the entity, and bases its qualitative analysis on the structure of the entity, including its
decision-making ability and authority with respect to the entity, and relevant financial agreements.
Bluegreen also uses its qualitative analysis to determine if Bluegreen must consolidate a VIE as the
primary beneficiary. In accordance with applicable accounting guidance, Bluegreen has determined
these securitization entities to be VIEs of which Bluegreen is primary beneficiary and, therefore,
Bluegreen consolidates the entities into its financial statements.
Under the terms of certain VOI note sales, Bluegreen has the right to repurchase or substitute a limited
amount of defaulted notes for new notes at the outstanding principal balance plus accrued
interest. Voluntary repurchases and substitutions by Bluegreen of defaulted notes during 2017, 2016
and 2015 were $9.5 million, $6.5 million and $3.3 million, respectively. Bluegreen’s maximum
exposure to loss relating to its non-recourse securitization entities is the difference between the
outstanding VOI notes receivable and the notes payable, plus cash reserves and any additional residual
interest in future cash flows from collateral.
Information related to the assets and liabilities of Bluegreen’s consolidated VIEs included in the
Company’s Consolidated Statements of Financial Condition is set forth below (in thousands):
Restricted cash
Securitized notes receivable, net
Receivable backed notes payable - non-recourse
$
December 31,
2017
2016
19,488
282,599
336,421
21,894
287,012
327,358
The restricted cash and securitized notes receivable balances disclosed in the table above are restricted
to satisfy obligations of the VIEs.
F-26
5. Loans Receivable
Loans receivable consisted of the following components (in thousands):
Commercial non-real estate
Commercial real estate
Small business
Consumer
Residential
Total loans receivable
December 31,
2017
2016
789
4,615
1,585
787
11,678
19,454
1,169
5,880
2,506
1,799
14,167
25,521
$
$
The underlying collateral for the real estate loan portfolio, except residential loans, was located
primarily in Florida at December 31, 2017. As of December 31, 2017, 27%, 33% and 13% of the
residential loan portfolio underlying collateral was located in California, New York and Florida,
respectively.
As of December 31, 2017, foreclosure proceedings were in process on $8.0 million of residential loans
and $0.1 million of consumer loans.
The total discount on loans receivable was $2.3 million and $3.3 million as of December 31, 2017 and
2016, respectively.
The loan portfolio is segregated into five segments: commercial non-real estate loans, commercial real
estate loans, small business loans, consumer loans, and residential loans described below:
Commercial non-real estate - represents loans secured by general corporate assets of the borrowers’
business.
Commercial real estate - represents loans for acquisition, development and construction of various
types of properties.
Small business – consists of loans originated to businesses in principal amounts that do not generally
exceed $2.0 million. The principal source of repayment for these loans is generally from the cash flow
of a business.
Consumer - consists of loans to individuals originated through BankAtlantic’s branch network.
Consumer loans are generally home equity lines of credit secured by a second mortgage on the primary
residence of the borrower.
Residential – represents loans secured by one to four dwelling units.
Credit Quality Information
The Company assesses loan credit quality by monitoring delinquencies and current loan to value ratios.
The recorded investment (unpaid principal balance less charge-offs and discounts) in non-accrual loans
receivable was as follows (in thousands):
Loan Class
Commercial non-real estate
Commercial real estate
Small business
Consumer
Residential
Total nonaccrual loans
December 31,
2017
2016
789
4,615
1,585
715
10,355
18,059
1,169
5,880
2,506
1,701
12,762
24,018
$
$
F-27
An age analysis of the past due recorded investment in loans receivable as of December 31, 2017 and
2016 was as follows (in thousands):
December 31, 2017
Past Due
Past Due
or More (1)
Past Due
Current
Receivable
31-59 Days
60-89 Days
90 Days
Total
Total
Loans
Commercial non-real estate
Commercial real estate
Small business
Consumer
Residential
Total
December 31, 2016
Commercial non-real estate
Commercial real estate
Small business
Consumer
Residential
Total
$
$
$
$
-
-
-
25
297
322
-
-
-
168
21
189
789
2,996
-
291
7,995
12,071
789
2,996
-
484
8,313
12,582
-
1,619
1,585
303
3,365
6,872
789
4,615
1,585
787
11,678
19,454
31-59 Days
60-89 Days
90 Days
Total
Total
Loans
Past Due
Past Due
or More (1)
Past Due
Current
Receivable
-
-
-
23
609
632
-
-
-
-
231
231
330
3,986
-
467
9,541
14,324
330
3,986
-
490
10,381
15,187
839
1,894
2,506
1,309
3,786
10,334
1,169
5,880
2,506
1,799
14,167
25,521
1) There were no loans that were 90 days or more past due and still accruing interest as of December
31, 2017 or 2016.
The activity in the allowance for loan losses for the years ended December 31, 2017, 2016 and 2015
was as follows (in thousands):
For the Years Ended December 31,
2016
2015
2017
Allowance for Loan Losses:
Beginning balance
Charge-offs
Recoveries
Provision
Ending balance
Ending balance individually evaluated for impairment
Ending balance collectively evaluated for impairment
Total
Loans receivable:
Ending balance individually evaluated for impairment
Ending balance collectively evaluated for impairment
Total
Proceeds from loan sales
Transfer to loans held-for-sale
Transfer from loans held-for-sale
Impaired Loans
$
$
$
$
$
$
$
$
$
-
(137)
7,632
(7,495)
-
-
-
-
16,728
2,726
19,454
1,666
1,029
-
-
(156)
20,664
(20,508)
-
-
-
-
21,363
4,158
25,521
-
-
16,078
977
(1,037)
13,517
(13,457)
-
-
-
-
12,849
21,186
34,035
68
-
7,365
Loans are considered impaired when, based on current information and events, management believes it
is probable that it will be unable to collect all amounts due according to the contractual terms of the
loan agreement. Impairment is evaluated based on past due status for consumer and residential loans.
Impairment is evaluated for commercial and small business loans based on payment history and cash
flow associated with the collateral or business. Collateral
F-28
dependent impaired loans are charged down to the fair value of collateral less cost to sell. Inter est
payments on impaired loans are recognized on a cash basis as interest income. Impaired loans, or
portions thereof, are charged off when deemed uncollectible.
Individually impaired loans as of December 31, 2017 and 2016 were as follows (in thousands):
As of December 31, 2017
Unpaid
As of December 31, 2016
Unpaid
Total with allowance recorded $
Total with no allowance
recorded
Total
$
Recorded Principal Related
Investment Balance Allowance Investment Balance Allowance
-
Recorded Principal Related
-
-
-
-
-
18,667
18,667
30,321
30,321
-
-
24,188
24,188
39,901
39,901
-
-
Average recorded investment and interest income recognized on impaired loans for the years ended
December 31, 2017 and 2016 were as follows (in thousands):
For the Years Ended December 31,
2017
2016
Average
Recorded
Investment
Interest
Income
Recognized
Average
Recorded
Investment
Interest
Income
Recognized
Total with allowance recorded
Total with no allowance
recorded
Total
$
$
-
20,686
20,686
-
647
647
-
24,573
24,573
-
657
657
Individually impaired loans and the average recorded investment and interest income recognized on
impaired loans as of December 31, 2015 were as follows (in thousands):
As of
December 31, 2015
Unpaid
Recorded Principal
Investment Balance Allowance
-
-
-
-
30,212
30,212
-
17,380
17,380
Related
Total with allowance recorded
Total with no allowance recorded
Total
$
$
For the Year Ended
December 31, 2015
Average
Recorded
Investment
-
22,186
22,186
Interest
Income
-
1,299
1,299
Impaired loans without allowances represent loans that were written-down to the fair value of the
collateral less cost to sell, loans in which the collateral value less cost to sell was greater than the
carrying value of the loan, loans in which the present value of the cash flows discounted at the loans’
effective interest rate was equal to or greater than the carrying value of the loans, or loans that were
collectively measured for impairment.
There were no commitments to lend additional funds on impaired loans as of December 31, 2017.
F-29
6. Notes Receivable
The table below provides information relating to Bluegreen’s notes receivable and related allowance for
credit losses as of December 31, 2017 and 2016 (in thousands):
Notes receivable:
VOI notes receivable - non-securitized
VOI notes receivable - securitized
Notes receivable secured by homesites(1)
Gross notes receivable
Allowance for credit losses - non-securitized
Allowance for credit losses - securitized
Notes receivable, net
Allowance as a % of gross notes receivable
December 31,
2017
2016
$
$
184,971
364,349
1,329
550,649
(37,098)
(81,750)
431,801
22%
175,123
369,259
1,688
546,070
(33,343)
(82,247)
430,480
21%
(1) Notes receivable secured by homesites were originated through a business, substantially all of the
assets of which were sold by Bluegreen in 2012.
The weighted-average interest rate on Bluegreen’s notes receivable was 15.3% and 15.7% at December
31, 2017 and 2016, respectively. Bluegreen’s notes receivable secured by VOI notes receivable bear
interest at fixed rates. Bluegreen’s VOI notes receivable are generally secured by property located in
Florida, Missouri, Nevada, South Carolina, Tennessee and Wisconsin.
Future principal payments due on Bluegreen’s notes receivable (including notes receivable secured by
homesites) during each of the five years subsequent to December 31, 2017 and thereafter are set forth
below (in thousands):
2018
2019
2020
2021
2022
Thereafter
December 31, 2017
62,360
56,879
59,500
63,061
66,246
242,603
550,649
$
$
Credit Quality of Notes Receivable and the Allowance for Credit Losses
Bluegreen holds large amounts of homogeneous VOI notes receivable and assesses uncollectibility
based on pools of receivables. In estimating future credit losses, Bluegreen’s management does not use
a single primary indicator of credit quality but instead evaluates its VOI notes receivable based upon a
static pool analysis that incorporates the aging of the respective receivables, default trends and
prepayment rates by origination year, as well as the FICO scores of the borrowers.
The activity in Bluegreen’s allowance for credit losses (including notes receivable secured by
homesites) was as follows (in thousands):
For the Years Ended December 31,
2016
2017
2015
Balance, beginning of period
Provision for credit losses
Write-offs of uncollectible receivables
Balance, end of period
$
$
115,590
46,149
(42,891)
118,848
110,714
44,337
(39,461)
115,590
102,566
42,062
(33,914)
110,714
F-30
The following table shows the delinquency status of Bluegreen’s VOI notes receivable as of December
31, 2017 and 2016 (in thousands):
Current
31-60 days
61-90 days
> 90 days (1)
Total
December 31,
2017
525,482
6,088
4,897
12,853
549,320
$
$
2016
521,536
6,378
5,082
11,386
544,382
(1)
Includes $7.6 million and $5.3 million as of December 31, 2017 and 2016, respectively, related to
VOI notes receivable that, as of such date, had defaulted but the related VOI note receivable
balance had not yet been charged off in accordance with the provisions of certain of Bluegreen's
receivable-backed notes payable transactions. These VOI notes receivable have been reflected in
the allowance for credit losses.
7. Trade Inventory
The Company’s trade inventory consists of the following as of December 31, 2017 and 2016 (in
thousands):
Raw materials
Paper goods and packaging materials
Finished goods
Total
December 31,
2017
2016
$
$
3,320
865
19,717
23,902
5,059
2,090
7,577
14,726
Included in cost of trade sales for the years ended December 31, 2017, 2016 and 2015 was $1.7 million,
$4.7 million and $1.7 million, respectively, of inventory write-downs.
8. VOI Inventory
Bluegreen’s VOI inventory consisted of the following (in thousands):
Completed VOI units
Construction-in-progress
Real estate held for future VOI development
Total VOI Inventory
December 31,
2017
2016
$
$
194,503
22,334
64,454
281,291
156,401
10,427
71,706
238,534
In September 2016, Bluegreen increased the average selling price of its VOIs by 5% and in June 2017,
Bluegreen increased the average selling price of its VOIs by 4%. As a result of these pricing changes,
Bluegreen’s management increased its estimate of total gross margin generated on the sale of its VOI
inventory. Under the relative sales value method prescribed for timeshare developers to relieve the cost
of VOI inventory, changes to the estimate of gross margin expected to be generated on the sale of VOI
inventory are recognized on a retrospective basis in earnings. Accordingly, during 2017 and 2016,
Bluegreen recognized a benefit to cost of VOIs sold of $5.1 million and $5.6 million, respectively.
The interest expense reflected in the Company’s Consolidated Statements of Operations and
Comprehensive Income is net of capitalized interest. Interest capitalized to VOI inventory was $1.1
million, $0.4 million and $0.7 million for the years ended December 31, 2017, 2016 and 2015,
respectively.
F-31
9. Real Estate
Real estate consisted of the following (in thousands):
Real estate held-for-sale
Land
Rental properties
Residential single-family
Total real estate held-for-sale
Real estate held-for-investment
Land
Other
Total real estate held-for-investment
Real estate inventory
Total real estate
$
$
December 31,
2017
2016
20,528
6,181
1,119
27,828
13,066
839
13,905
26,803
68,536
28,701
1,748
2,896
33,345
11,524
880
12,404
15,254
61,003
The amount of interest capitalized to real estate inventory for the years ended December 31, 2017 and
2016 was $1.4 million and $0, respectively.
The following table presents real estate held-for-sale valuation allowance activity for the years ended
December 31, 2017, 2016 and 2015 (in thousands):
For the Years Ended December 31,
2016
2017
2015
Beginning of period
Transfer to held-for-investment
Impairments, net (1)
Sales
End of period
$
$
5,240
-
1,696
(3,837)
3,099
4,400
-
3,563
(2,723)
5,240
2,940
(93)
3,089
(1,536)
4,400
(1) Tax certificate impairments are not included.
0
10. Investments in Unconsolidated Real Estate Joint Ventures
As of December 31, 2017, the Company had equity interests in 16 unconsolidated real estate joint
ventures involved in the development of single-family master planned communities, multifamily
apartment facilities and retail centers. Investments in unconsolidated real estate joint ventures are
accounted for as unconsolidated variable interest entities. See Note 4 for information regarding the
Company’s investments in consolidated variable interest entities.
F-32
The Company had the following investments in unconsolidated real estate joint ventures (in thousands):
Investment in unconsolidated real estate joint
ventures
Altis at Kendall Square, LLC
Altis at Lakeline - Austin Investors LLC
New Urban/BBX Development, LLC
Sunrise and Bayview Partners, LLC
Hialeah Communities, LLC
PGA Design Center Holdings, LLC
CCB Miramar, LLC
Centra Falls, LLC
The Addison on Millenia Investment, LLC
BBX/S Millenia Blvd Investments, LLC
Altis at Bonterra - Hialeah, LLC
Altis at Shingle Creek Manager, LLC
Altis at Grand Central Capital, LLC
Centra Falls II, LLC
BBX/Label Chapel Trail Development, LLC
Altis Promenade Capital, LLC
Investments in unconsolidated real estate joint
ventures
$
December 31,
2017
2016
78
4,156
1,556
1,499
467
1,862
1,225
159
5,525
5,218
16,922
338
1,872
551
4,885
962
154
5,165
907
1,574
2,758
1,904
875
595
5,935
5,095
17,626
332
-
571
-
-
%
BBX Capital
%
Ownership
20.24
33.74
50.00
50.00
57.00
40.00
35.00
7.14
48.00
90.00
95.00
2.50
10.54
7.14
46.75
5.00
$
47,275
43,491
its
the respective operating agreements governing
The Company analyzed
in
unconsolidated real estate joint ventures and determined that it is not the primary beneficiary and
therefore the investments in the real estate joint ventures are accounted for under the equity method of
accounting. The conclusions were based primarily on the determination that the Company does not
have the power to direct activities of the joint ventures that most significantly affect the joint ventures’
economic performance as the Company only has limited protective rights under the operating
agreements, is not the manager of the joint ventures and does not have day-to-day decision making
authority. Additionally, in the majority of the joint ventures the managing member guarantees the
indebtedness of the joint venture and in certain joint ventures the managing member is responsible for
construction cost overruns. The Company’s maximum loss exposure in unconsolidated real estate joint
ventures was $49.8 million as of December 31, 2017.
investments
In certain joint ventures, the Company transferred land to the joint venture as an initial capital
contribution resulting in deferred gains and joint venture basis adjustments. The Company accounted
for the contribution of land to the joint ventures on the cost recovery method. Included in other
liabilities in the Company’s Consolidated Statements of Financial Condition as of December 31, 2017
and 2016 was $0.4 million and $0.9 million, respectively, of deferred gains associated with these land
transfers. During the years ended December 31, 2017, 2016 and 2015 the Company recognized $0.5
million, $2.3 million and $0 of deferred gains in net gains on sales of assets in the Company’s
Statements of Operations, respectively, upon sales by joint ventures of single-family homes and a
multifamily apartment facility.
Differences between the net investments in unconsolidated real estate joint ventures and the underlying
equity in the net assets of the joint ventures result from basis adjustments and the capitalization of
interest.
The aggregate amount of interest capitalized associated with land development activities of the real
estate joint ventures for the years ended December 31, 2017, 2016 and 2015 was $0.3 million, $0.9
million and $0.5 million, respectively.
The aggregate amount of real estate joint venture basis adjustments as of December 31, 2017 and 2016
was $5.5 million and $7.6 million, respectively. Included in the Company’s Consolidated Statement of
Operations and Comprehensive Income for the years ended December 31, 2017 and 2016 was $2.0
million and $1.5 million, respectively, of equity earnings associated with basis adjustments from joint
ventures arising from sales by joint
F-33
ventures of single-family homes. There were no real estate joint venture basis adjustments in equity
earnings for the year ended December 31, 2015.
For the years ended December 31, 2017 and 2016, the equity earnings of unconsolidated real estate
joint ventures was $14.5 million and $13.6 million, respectively, of which $12.1 million and $9.5
million, respectively, was equity earnings from the Hialeah Communities real estate joint venture. The
condensed Statements of Financial Condition as of December 31, 2017 and 2016, and the condensed
Statements of Operations for the years ended December 31, 2017, 2016 and 2015 for the Hialeah
Communities joint venture are as follows (in thousands):
Assets
Cash
Real estate inventory
Properties and equipment
Other assets
Total assets
Liabilities and Equity
Notes payable
Other liabilities
Total liabilities
Total equity
Total liabilities and equity
Total revenues
Costs of sales
Other expenses
Net earnings (losses)
Equity in net earnings (losses) of unconsolidated real
estate joint venture - Hialeah Communities, LLC
$
$
$
11. Property and Equipment
Property and equipment was comprised of (in thousands):
Land, building and building improvements
Leasehold improvements
Office equipment, furniture and fixtures
Transportation
Accumulated depreciation
Property and equipment, net
$
$
F-34
December 31,
2017
2016
$
$
$
$
1,750
221
-
137
2,108
161
1,347
1,508
600
2,108
2,719
28,246
439
1,387
32,791
16,278
8,628
24,906
7,885
32,791
For the Years Ended December 31,
2017
2016
2015
80,407
(51,072)
(5,134)
24,201
84,860
(62,315)
(4,562)
17,983
17
-
(1,340)
(1,323)
12,067
9,547
(747)
December 31,
2017
2016
67,538
32,419
76,186
670
176,813
(63,955)
112,858
73,883
11,912
65,284
453
151,532
(55,534)
95,998
Included in selling, general and administrative expenses and cost of trade sales in the Company’s
Consolidated Statements of Operations and Comprehensive Income for the years ended December 31,
2017, 2016 and 2015 was approximately $15.8 million, $12.4 million and $11.4 million, respectively,
of depreciation expense. During the year ended December 31, 2017, the Company recognized $0.7
million of impairments losses associated with its manufacturing facility in Utah.
12. Goodwill and Intangible Assets
Goodwill
The following table presents goodwill activity for the years ended December 31, 2017, 2016 and 2015
(in thousands):
Balance, beginning of period
Acquisitions
Impairment losses
Balance, end of period
For the Years Ended December 31,
2017
2016
2015
$
$
6,731
35,164
(2,413)
39,482
7,601
-
(870)
6,731
7,377
224
-
7,601
The Company’s goodwill was recognized in connection with BBX Sweet Holdings’ acquisition of
various operating businesses during the years ended December 31, 2017, 2015, and 2014, including the
acquisition of IT’SUGAR in June 2017.
The Company tests goodwill for impairment on an annual basis as of December 31st or during interim
periods if impairment indicators exist. During the years ended December 31, 2017 and 2016, the
Company determined that the fair values of certain of BBX Sweet Holdings’ reporting units were below
their respective carrying values as of the applicable testing dates and recognized goodwill impairment
losses of $2.4 million and $0.9 million, respectively. As a result of the adoption of ASU No. 2017-04,
the goodwill impairment loss recognized during the year ended December 31, 2017 was measured
based on the excess of the applicable reporting unit’s carrying value over its fair value, while the loss
recognized during the year ended December 31, 2016 was measured based on the excess of the carrying
amount of the reporting unit’s goodwill over its implied goodwill as of the testing date.
The decline in the fair value of certain of BBX Sweet Holdings’ reporting units and related recognition
of goodwill impairment losses primarily resulted from declining profits in its Orlando manufacturing
operations and various ongoing strategic initiatives, including the consolidation of BBX Sweet
Holdings’ manufacturing facilities and the elimination of unprofitable brands. To the extent that BBX
Sweet Holdings’ reporting units do not meet expectations, there is a downturn in the confectionery
industry, or the Company otherwise decides to divest of or exit certain of these operations, the
Company may recognize additional goodwill impairment losses in future periods.
The process of evaluating goodwill for impairment involves the determination of the fair value of the
Company’s reporting units. Inherent in such fair value determinations are certain judgments and
estimates relating to future cash flows, including the Company’s interpretation of current economic
indicators and market valuations, and assumptions about the Company’s strategic plans with regard to
its operations. Due to the uncertainties associated with such evaluations, actual results could differ
materially from such estimates.
F-35
Intangible Assets
Intangible assets are as follows (in thousands):
Class
Intangible assets:
Management contracts
Trademarks
Customer relationships
Lease premium
Area development agreements
Other
Accumulated amortization
Total intangible assets
December 31,
2017
2016
$
$
61,293
8,471
70
2,313
640
777
73,564
(3,115)
70,449
61,293
5,215
1,620
2,411
660
126
71,325
(2,870)
68,455
Management contracts are indefinite lived intangible assets and are not amortized.
Trademarks and customer relationships are amortized using the straight-line method over their expected
useful lives of 20 years and 12 years, respectively.
During the year ended December 31, 2016, the Company entered into area development agreements
with a franchisor, and the costs related to these agreements are amortized using the straight-line method
over their expected lives of 7 years.
The lease premiums are amortized using the straight-line method over the remaining lease term
following the acquisition date which is 5 to 7 years.
Amortization expense of intangible assets included in selling general and administrative expenses
during each of the three years ended December 31, 2017 was approximately $0.9 million.
The Company tests intangible assets for recoverability whenever events or changes in circumstances
indicate the carrying value of an intangible asset, or an asset group which includes an intangible asset,
may not be recoverable. Due to declining profits in BBX Sweet Holdings’ Orlando manufacturing
operations and various ongoing strategic initiatives, including the consolidation of BBX Sweet
Holdings’ manufacturing facilities, the elimination of unprofitable brands, and changes in management,
the Company tested BBX Sweet Holdings’ asset groups for recoverability during the years ended
December 31, 2017 and 2016 and determined that the carrying amounts of certain of BBX Sweet
Holdings’ asset groups were below the estimated undiscounted future cash flows expected to result
from the use of such assets. As a result, the Company recognized intangible asset impairment losses of
$1.9 million and $1.5 million during the years ended December 31, 2017 and 2016, respectively. The
impairment losses were measured as the amount by which the carrying amount of the intangible assets
exceeded their respective fair values. There were no intangible asset impairment losses recognized
during the year ended December 31, 2015.
The Company utilizes discounted cash flow methodology as well as the guideline public company
market approach method to determine the fair value of its goodwill and indefinite lived intangible
assets. The discounted cash flow methodology establishes fair value by estimating the present value of
the projected future cash flows to be generated from reporting units or asset groups. The discount rate
applied to the projected future cash flows to arrive at the present value is intended to reflect all risks of
ownership and the associated risks of realizing the stream of projected future cash flows. The Company
generally used a five to nine-year period in computing discounted cash flow values. The most
significant assumptions used in the discounted cash flow methodology are the discount rate, the
terminal value and the forecast of future cash flows. The guideline public company method determines
fair value based upon the consideration of trading prices of publicly held stocks of comparable
companies. The significant inputs are market value of invested capital (“MVIC”) to revenue and MVIC
to earnings before interest, taxes, depreciation and amortization (“EBITDA”). Based on the inputs,
multiples of MVIC and EBITDA are derived to approximate the fair value of the reporting unit.
F-36
The relief from royalty valuation method, a form of the income approach, was used to estimate the fair
value of the trademarks. The fair value of trademarks was determined by present valuing the expected
future estimated royalty payments that would have to be paid if the trademarks were not owned. The
fair value of the net royalties saved was estimated based on discounted cash flows at a risk adjusted
discount rate. The multi-period excess earnings method, a form of the income approach, was used to
estimate the fair value of the customer relationships. The multi-period excess earnings method isolates
the expected cash flows attributable to the customer relationship intangible asset and discounts these
cash flows at a risk adjusted discount rate.
The estimated aggregate amortization expense of intangible assets for each of the five succeeding years
is as follows (in thousands):
Years Ending December 31,
2018
2019
2020
2021
2022
Total
838
789
782
768
740
Subsequent to December 31, 2017, the Company commenced the process of exiting BBX Sweet
Holdings’ manufacturing facility in Utah, and it is anticipated that BBX Sweet Holdings will incur
various costs in connection with this initiative, including severance costs for certain employees. In
addition, BBX Sweet Holdings remains liable under its lease agreement for the manufacturing facility,
which has estimated future minimum rental payments of $2.5 million, and expects that it will be
required to recognize a lease liability when it ceases operations in the facility or will otherwise incur
costs to terminate the lease agreement. The Company is also continuing to evaluate the operations of
BBX Sweet Holdings’ wholesale business, including the potential divestiture of certain operations or
acquired businesses. To the extent that the Company decides to divest of or otherwise exit certain of
these operations, BBX Sweet Holdings may recognize additional impairment charges and incur
additional costs in the first quarter of 2018 or in future periods. As of December 31, 2017, the net book
value of the operations under evaluation was $9.3 million, and the total estimated future minimum
rental payments for operating leases (excluding the $2.5 million above) was $1.1 million.
13. Debt
Contractual minimum principal payments of debt outstanding for each of the five years subsequent
to December 31, 2017 and thereafter are shown below (in thousands):
Notes
Payable and
Lines of
Credit
Recourse
Receivable
Backed
Notes
Payable
Non-
recourse
Receivable
Backed
Notes
Payable
$
$
36,796
27,521
10,183
45,477
4,888
21,829
146,694
(2,580)
-
144,114
-
-
24,989
21,955
11,326
26,427
84,697
-
-
84,697
-
-
-
-
16,144
326,425
342,569
(6,148)
-
336,421
Junior
Subordinated
Debentures
-
-
-
-
-
177,129
177,129
Total
36,796
27,521
35,172
67,432
32,358
551,810
751,089
(1,272)
(40,443)
135,414
(10,000)
(40,443)
700,646
2018
2019
2020
2021
2022
Thereafter
Unamortized debt issuance
costs
Discount
Total Debt
The minimum contractual payments set forth in the table above may differ from actual payments due to
the timing of principal payments required upon (1) the sale of real estate assets that serve as collateral
on certain debt (release payments) and (2) cash collections of pledged or transferred notes receivable.
F-37
Notes Payable and Other Borrowings
The table below sets forth information regarding the lines-of-credit and notes payable facilities (other
than receivable-backed notes payable) of the Company as of December 31, 2017 and 2016 (dollars in
thousands):
December 31, 2017
December 31, 2016
Debt
Balance
Interest
Rate
Carrying
Amount of
Pledged
Assets
Debt
Balance
Interest
Rate
Carrying
Amount of
Pledged
Assets
$
46,500
5.50% $
29,403 $
52,500
5.50% $
29,349
2,715
4,080
5,089
6.72%
4.36%
4.75%
9,884
8,071
15,260
1,727
4,326
2,006
6.02%
3.62%
5.00%
8,963
9,157
8,230
20,000
4.27%
75,662
15,000
3.46%
60,343
23,750
4.32%
23,960
25,000
3.46%
20,114
(1,940)
$ 100,194
-
$ 162,240 $
(2,177)
98,382
-
136,156
$
Bluegreen:
2013 Notes Payable
Pacific Western Term
Loan
Fifth Third Bank Note
NBA Line of Credit
Fifth Third Syndicated
Line of Credit
Fifth Third Syndicated
Term Loan
Unamortized debt
issuance costs
Total Bluegreen
Other:
Community Development
District Obligations
$
21,435
TD Bank Term Loan and
4.50-
6.00% $
26,803 $
21,435 4.50-6.00% $
20,744
12,890
4.02%
(2)
-
-
-
1,471
3,820
3,400
1,544
-
5.00%
4.12%
6.00%
5.25% $
-
(2)
(2)
(3)
1,993
9,692
3,417
-
-
1,579
(1)
5.00%
3.37%
-
5.25% $
-
(2)
(2)
(2)
-
2,044
(640)
43,920
$
(715)
35,408
$
Line of Credit
Wells Fargo Capital
Finance
Seller Note
Iberia Line of Credit
Unsecured Note
Other
Unamortized debt
issuance costs
Total Other
Total Notes Payable
and
Other Borrowings
$ 144,114
$ 133,790
(1) The term loan and revolving advance facility bear interest at the Bank Prime Interest Rate or the
daily three month LIBOR interest rate plus a margin specified in the credit agreement ranging
from 0.5% to 3.25% per annum.
(2) The collateral is a blanket lien on the respective company’s assets.
(3) BBX Capital is guarantor on the promissory note.
Bluegreen
2013 Notes Payable – In March 2013, Bluegreen issued $75.0 million of senior secured notes (the
“2013 Notes Payable”) in a private financing transaction. The 2013 Notes Payable are secured by
certain of Bluegreen’s assets, including primarily the cash flows from the residual interests relating to
certain term securitizations and the VOI inventory in the BG Club 36 resort in Las Vegas,
Nevada. Pursuant to the terms of the 2013 Notes Payable, Bluegreen is required to periodically pledge
reacquired VOI inventory in the BG Club 36 resort. Bluegreen may also pledge additional residual
interests from other term securitizations. In September 2016, the 2013 Notes Payable were amended to
reduce the interest rate from 8.05% to 5.50%. The 2013 Notes Payable mature in March 2020. The
terms of the 2013 Notes Payable include certain covenants and events of default, which Bluegreen’s
management considers to be customary for transactions of this type. The proceeds from the 2013 Notes
Payable were used to fund a portion of the
F-38
consideration paid to Bluegreen’s former shareholders in connection with BBX Capital’s acquisition of
all of Bluegreen’s then-outstanding shares in April 2013.
Pacific Western Term Loan - Bluegreen has a non-revolving $2.7 million term loan (the “Pacific
Western Term Loan”) with Pacific Western Bank, as successor by merger to CapitalSource Bank,
secured by unsold inventory and undeveloped land at the Bluegreen Odyssey Dells Resort. The Pacific
Western Term Loan matures in June 2019 and bears interest at 30-day LIBOR plus 5.25%. Interest
payments are paid monthly. Principal payments are effected through release payments upon sales of
VOIs in the Bluegreen Odyssey Dells Resort that serve as collateral for the Pacific Western Term Loan,
subject to mandatory principal reductions pursuant to the terms of the loan agreement. The Pacific
Western Term Loan is cross-collateralized and is subject to cross-default with the Pacific Western
Facility described below.
Fifth Third Bank Note Payable - In April 2008, Bluegreen entered into a note payable with Fifth Third
Bank to finance an acquisition of real estate. The Fifth Third Bank Note Payable matures in August
2021. Principal and interest on amounts outstanding under the Fifth Third Bank Note Payable are
payable monthly through maturity. The interest rate under the note equals the 30-day LIBOR plus
3.00%.
NBA Line of Credit. Bluegreen/Big Cedar Vacations has a revolving line of credit (the “NBA Line of
Credit”) with National Bank of Arizona (“NBA”). The NBA Line of Credit allows for a maximum
borrowing limit of $20 million (subject to decrease as described below in connection with any increase
in the borrowing limit under the NBA Receivables Facility). The NBA Line of Credit provides for a
revolving advance period expiring in September 2020 and maturity in September 2022, and is secured
by unsold inventory and a building under construction at Bluegreen/Big Cedar Vacations’ the Cliffs at
Long Creek Resort. Borrowings under the NBA Line of Credit accrue interest at a rate equal to the one
month LIBOR plus 3.25% (with an interest rate floor of 4.75%). Interest payments are paid monthly.
Principal payments are effected through release payments upon sales of VOIs in The Cliffs at Long
Creek Resort that serve as collateral for the NBA Line of Credit, subject to mandatory principal
reductions. The NBA Line of Credit is cross-collateralized and is subject to cross-default with the NBA
Receivables Facility described below.
Fifth Third Syndicated Line-of-Credit and Fifth Third Syndicated Term Loan - In November 2014,
Bluegreen entered into a $25.0 million revolving credit facility with Fifth Third Bank as administrative
agent and lead arranger and certain other bank participants as lenders. In December 2016, Bluegreen
amended and restated the credit and security agreement. The amended and restated facility is a $100.0
million syndicated credit facility with Fifth Third, as administrative agent and lead arranger and certain
other bank participants. The amended and restated facility includes a $25.0 million term loan (the “Fifth
Third Syndicated Term Loan”) with quarterly amortization requirements and a $75.0 million revolving
line of credit (the “Fifth Third Syndicated Line-of-Credit”). Amounts borrowed under the facility
generally bear interest at LIBOR plus 2.75% - 3.75% depending on Bluegreen’s leverage ratio, are
collateralized by certain of Bluegreen’s VOI inventory, sales center buildings and short-term
receivables, and will mature in December 2021. The facility contains covenants and conditions which
Bluegreen considers to be customary for transactions of this type. Borrowings are used by Bluegreen
for general corporate purposes. As of December 31, 2017, outstanding borrowings under the facility
totaled $43.8 million, including $23.8 million outstanding under the Fifth Third Syndicated Term Loan
and $20.0 million of borrowings under the Fifth Third Syndicated Line-of-Credit.
Other Notes Payable
- A community development district or similar
Community Development District Obligations
development authority (“CDD”) is a unit of local government created under various state and/or local
statutes to encourage planned community development and allow for the construction of infrastructure
improvements through alternative financing sources, including the tax-exempt bond markets. A CDD is
generally created through the approval of the local city or county in which the CDD is located and is
controlled by a Board of Supervisors representing the landowners within the CDD. In connection with
the development of the Beacon Lakes Community, The Meadow View at Twin Creeks CDD was
formed by St. Johns County, Florida to use bond financing to fund construction of infrastructure
improvements at the Beacon Lakes C ommunity. The CDD assesses the property owners benefiting
from the improvements financed by the bond offerings.
The obligation to pay principal and interest on the bonds issued by the CDD is assigned to each parcel
within the CDD and the CDD has a lien on each parcel. If the owner of the parcel does not pay this
obligation, the CDD can foreclose
F-39
on the lien. The CDD bond obligations, including interest and the associated lien on the property are
typically payable, secured and satisfied by revenues, fees or assessments levied on the property
benefited.
The total amount of CDD bond obligations outstanding with respect to the Beacon Lakes Community
was $21.4 million as of December 31, 2017. The assessments to be levied by the CDD are fixed or
determinable amounts. The CDD bond obligations outstanding as of December 31, 2017 have fixed
interest rates ranging from 4.5% to 6.00% and mature at various times during the years 2026 through
2047. The Company at its option has the ability to repay a specified portion of the bonds at the time of
each lot closing.
The Company records an obligation for the CDD bond upon issuance with a corresponding increase in
other assets. The CDD bonds are secured by a lien on the Beacon Lakes property which is included in
“Real Estate” in the Company’s Consolidated Statement of Financial Condition with a carrying amount
of $26.8 million as of December 31, 2017. The Company relieves the CDD bond obligation associated
with a particular parcel when the purchaser of the property assumes the obligation which occurs
automatically upon such purchaser’s acquisition of the property or upon repayment by the
Company. Included in “Other Assets” in the Company’s Consolidated Statement of Financial
Condition as of December 31, 2017 and 2016 was $9.5 million and $20.7 million, respectively, of funds
that
the Company’s CDD bond
obligations. Construction funds receivable associated with the CDD bond obligations is reduced with a
corresponding increase in real estate inventory when the CDD disburses the funds to contractors for the
construction of infrastructure improvements.
the Company does not have
right of setoff on
the
Toronto-Dominion Commercial Bank (“TD Bank”) Term Loan and Line of Credit In May 2017,
Renin entered into a credit facility with TD Bank and in September 2017 the facility was amended.
Under the terms and conditions of the amended credit facility, TD Bank agreed to provide term loans
for up to $1.7 million and loans under a revolving credit facility for up to approximately $16.3 million
based on available collateral as defined in the facility and subject to Renin’s compliance with the terms
and conditions of the facility, including certain specific financial covenants. The proceeds from the TD
Bank credit facility were used to repay the Wells Fargo credit facility described below and for working
capital.
Amounts outstanding under the revolving credit facility bear interest at the Canadian or United States
Prime Rate plus a margin of 1.00% per annum or the three-month LIBOR rate plus a margin of 2.75%
per annum. Outstanding principal on the revolving credit facility is payable one-year from the date of
the advance. As of December 31, 2017, the amount outstanding under the revolving credit facility was
$11.3 million.
The term loans were funded in three tranches aggregating $1.6 million through July 2017 with $0.1
million of additional draws permitted. Amounts outstanding under the term loans bear interest at fixed
interest rates ranging from 3.85% to 4.35% for one-year from the date of the applicable drawdown for
each loan. Annually, the fixed interest rates adjust to a variable rate based on Canadian or United States
Prime Rate plus a margin of 1.00% per annum or the three-month LIBOR rate plus a margin of 2.75%
per annum. The amounts outstanding under the term loans mature between June 2020 and June 2022.
Amounts outstanding under the term loans and borrowings under the revolving credit facility require
monthly interest payments.
Under the terms and conditions of the TD Bank credit facility, Renin is required to comply with certain
financial covenants including a quarterly Debt Service Coverage Ratio and a quarterly Total Debt to
Tangible Net Worth Ratio. The facility also contains customary affirmative and negative covenants,
including those that, among other things, limit the ability of Renin to incur liens or engage in certain
asset dispositions, mergers or consolidations, dissolutions, liquidations or winding up of its businesses.
The credit facility is collateralized by all of Renin’s assets.
Wells Fargo Capital Finance - In May 2017, Renin entered into a credit facility with TD Bank
described above, with a portion of the proceeds from the TD Bank credit facility used to repay all
amounts then outstanding under the Wells Fargo Credit Agreement (including accrued interest).
Seller Note - In October 2014, BBX Sweet Holdings acquired the outstanding common shares of
Anastasia Confections, LLC (“Anastasia”). A portion of the purchase consideration was a $7.5 million
promissory note. The promissory note bears interest at 5% per annum, and the Company has made three
annual principal payments of $2.0 million each on the promissory note plus accrued interest on October
1, 2017, 2016 and 2015. The remaining $1.5 million balance of the promissory note plus accrued
interest is payable on October 1, 2018. The repayment of the promissory note is guaranteed by the
Company and secured by the common stock of Anastasia. The Anastasia note payable was recorded at
a $0.3 million discount to reflect the fair value of the note payable at the acquisition date.
F-40
Unsecured Note – In October 2017, a wholly-owned subsidiary of the Company issued a $3.4 million
unsecured note to the seller of real estate to the Chapel Trail joint venture, in which the subsidiary has a
46.75% equity interest. The unsecured note was part of the subsidiar y’s initial capital contribution to
the BBX/Label Chapel Trail Development real estate joint venture. The note is not secured by the joint
venture property and BBX Capital guarantees the repayment of the unsecured note. The unsecured
note accrues interest at a fixed rate of 6.0% per annum with monthly interest only payments and the
entire outstanding principal maturing on October 12, 2022.
Iberia Line of Credit - On August 7, 2015, BBX Sweet Holdings entered into a Loan and Security
Agreement and related agreements with Iberiabank, which provides for borrowings by BBX Sweet
Holdings of up to $5.0 million on a revolving basis. Amounts borrowed under this facility accrue
interest at a floating rate of 30-day LIBOR plus 2.75%. Payments of interest only are payable
monthly. The facility matured on August 4, 2017 and BBX Sweet Holdings exercised its twelve month
renewal option and the maturity date was extended from August 4, 2017 to August 4, 2018. The loan
documents include a number of covenants, including financial covenants relating to BBX Sweet
Holdings’ debt service coverage ratio. The facility is secured by the assets of BBX Sweet Holdings and
its subsidiaries and is guaranteed by the Company.
Other – Other notes payable includes a term loan to BBX Sweet Holdings with an outstanding balance
of $1.5 million and $1.6 million as of December 31, 2017 and 2016, respectively, collateralized by land
and buildings with a carrying value o f $2.0 million on each of December 31, 2017 and 2016. The
Company is the guarantor on this note payable.
On March 6, 2018, BBX Capital, BBX Sweet Holdings, Food for Thought Restaurant Group-Florida,
LLC, BBX Capital Florida LLC and Woodbridge, entered into a Loan and Security Agreement and
related agreements with Iberiabank, as administrative agent and lender, and City National Bank of
Florida, as lender, which provide for a $50 million revolving line of credit. Amounts borrowed under
the facility will accrue interest at a floating rate of 30-day LIBOR plus a margin of 3.0% to 3.75% or the
Prime Rate plus a margin of 1.50% to 2.25%. The applicable margin is based on BBX Capital’s debt to
EBITDA ratio. Payments of interest only will be payable monthly. The facility matures, and all
outstanding principal and interest will be payable, on March 6, 2020, with twelve month renewal
options at BBX Capital’s request, subject to satisfaction of certain conditions. The facility is secured
by a pledge of a percentage of BBX Capital’s membership interests in Woodbridge having a value of
not less than $100 million. Borrowings under the facility may be used for business acquisitions, real
estate investments, stock repurchases, letters of credit and general corporate purposes. Under the terms
and conditions of the Loan and Security Agreement, we are required to comply with certain financial
covenants, including maintaining minimum unencumbered liquidity and complying with financial ratios
related to fixed charge coverage and debt to EBITDA. The Loan and Security Agreement also contains
customary affirmative and negative covenants, including those that, among other things, limit the ability
of BBX Capital and the other borrowers to incur additional indebtedness and to make certain loans and
investments.
F-41
Receivable-Backed Notes Payable
The table below sets forth information regarding Bluegreen’s receivable-backed notes payable facilities
(dollars in thousands):
December 31, 2017
December 31, 2016
Principal
Balance of
Pledged/
Secured
Receivables
Debt
Balance
Interest
Rate
Debt
Balance
Interest
Rate
Recourse receivable-
backed
notes payable:
Liberty Bank Facility
$
24,990
5.00% $
30,472 $
32,674
NBA Receivables Facility
Pacific Western Facility
Total
44,414
15,293
84,697
$
4.10%
6.00%
$
53,730
19,516
103,718 $
34,164
20,793
87,631
4.25% $
3.50 -
4.00%
5.14%
Principal
Balance of
Pledged/
Secured
Receivables
41,357
40,763
27,712
$ 109,832
Non-recourse receivable-
backed
notes payable:
KeyBank/DZ Purchase
Facility
Quorum Purchase Facility
2010 Term Securitization
2012 Term Securitization
2013 Term Securitization
2015 Term Securitization
2016 Term Securitization
2017 Term Securitization
Unamortized debt issuance
costs
Total
$
16,144
16,771
-
23,227
37,163
58,498
83,142
107,624
(6,148)
$ 336,421
Total receivable-backed
debt
$ 421,118
4.31% $
4.75-
6.90%
-
2.94%
3.20%
3.02%
3.35%
3.12%
$
$
19,866 $
31,417
3.67% $
41,388
18,659
-
25,986
39,510
61,705
91,348
119,582
23,981 4.75-6.90%
13,163
32,929
48,514
75,011
107,533
-
5.54%
2.94%
3.20%
3.02%
3.35%
-
26,855
16,191
36,174
51,157
78,980
117,249
-
-
(5,190)
376,656 $ 327,358
-
$ 367,994
480,374 $ 414,989
$ 477,826
Liberty Bank Facility - Since 2008, Bluegreen has maintained a revolving VOI notes receivable
hypothecation facility (the “Liberty Bank Facility”) with Liberty Bank which provides for advances on
eligible receivables pledged under the Liberty Bank Facility, subject to specified terms and conditions,
during a revolving credit period. Pursuant to the terms of the facility, the aggregate maximum
outstanding borrowings are $50.0 million and the revolving credit period was due to expire on January
30, 2018; however, in January 2018 an amendment to the agreement extended the expiration to March
31, 2018. Bluegreen has signed a non-binding term sheet for a renewal of the Liberty Bank Facility and
is negotiating the definitive legal documentation. There can be no assurance that this renewal will be
closed on acceptable terms, if at all. The Liberty Bank Facility allows future advances of (i) 85% of the
unpaid principal balance of Qualified Timeshare Loans assigned to agent, and (ii) 60% of the unpaid
principal balance of Non-Conforming Qualified Timeshare Loans assigned to agent, all of which bear
interest at the WSJ Prime Rate plus 0.50% per annum subject to a 4.00% floor. Principal and interest
are required to be paid as cash is collected on the pledged receivables, with all outstanding amounts
being due in November 2020.
NBA Receivables Facility. Bluegreen/Big Cedar Vacations has a revolving VOI hypothecation facility
(the “NBA Receivables Facility”) with NBA. The NBA Receivables Facility provides for advances at a
rate of 85% on eligible receivables pledged under the facility, subject to eligible collateral and specified
terms and conditions, during a revolving credit period expiring in 2020 and allows for maximum
borrowings of up to $50.0 million (inclusive of outstanding borrowings under the NBA Line of
Credit). The maximum borrowings may increase by up to an additional $20.0 million (to a total of
$70.0 million, at our option); provided, however, that any such increase will result in a corresponding
decrease in the maximum borrowings under the NBA Line of Credit. The maturity date for the facility
is March 2025. The interest rate applicable to future borrowings under the NBA Receivables Facility is
equal to the 30-day LIBOR plus 2.75% (with an interest rate floor of 3.50%). All principal and interest
payments
F-42
received on pledged receivables are applied to principal and interest due under the facility. The NBA
Receivables Facility is cross-collateralized and is subject to cross-default with the NBA Line of Credit.
Pacific Western Facility - Bluegreen has a revolving VOI notes receivable hypothecation facility (the
“Pacific Western Facility”) with Pacific Western Bank, which provides for advances on eligible VOI
notes receivable pledged under the facility, subject to specified terms and conditions, during a revolving
credit period. Maximum outstanding borrowings under the Pacific Western Facility are $40.0 million
(inclusive of outstanding borrowings under the Pacific Western Term Loan), subject to eligible
collateral and customary terms and conditions. The revolving advance period expiration date is
September 2018, subject to an additional 12-month extension at the option of Pacific Western
Bank. Eligible “A” VOI notes receivable that meet certain eligibility and FICO® score requirements,
which Bluegreen’s management believes are typically consistent with loans originated under
Bluegreen’s current credit underwriting standards, are subject to an 85% advance rate. The Pacific
Western Facility also allows for certain eligible “B” VOI notes receivable (which have less stringent
FICO score requirements) to be funded at a 53% advance rate. Borrowings under the facility bear
interest at 30-day LIBOR plus 4.50%. However, on October 19, 2017 the Pacific Western Facility was
amended to decrease the interest rate on a portion of future borrowings, to the extent such borrowings
are in excess of established debt minimums, to 30-day LIBOR plus 3.50% to 4.00%. Principal
repayments and interest on borrowings under the Pacific Western Facility are paid as cash is collected
on the pledged VOI notes receivable, subject to future required decreases in the advance rates after the
end of the revolving advance period, with the remaining outstanding balance maturing in September
2021, subject to an additional 12-month extension at the option of Pacific Western Bank. The Pacific
Western Facility is cross-collateralized and is subject to cross-default with the Pacific Western Term
Loan described above.
KeyBank/DZ Purchase Facility. Bluegreen has a VOI notes receivable purchase facility (the
“KeyBank/DZ Purchase Facility”) with DZ Bank AG Deutsche Zentral-Genossenschaftsbank, Frankfurt
AM Main (“DZ”), and KeyBank National Association (“KeyBank”) which permits maximum
outstanding financings of $80.0 million, with an advance period expiring in December 2019 and an
advance rate of 80%. The KeyBank/DZ Purchase Facility will mature and all outstanding amounts will
become due thirty-six months after the revolving advance period has expired, or earlier under certain
circumstances set forth in the facility. Interest on amounts outstanding under the facility is tied to an
applicable index rate of the LIBOR rate, in the case of amounts funded by KeyBank, and a cost of funds
rate or commercial paper rates, in the case of amounts funded by or through DZ. The interest rate
payable under the facility is the applicable index rate plus 2.75% until the expiration of the revolving
advance period and thereafter will be the applicable index rate plus 4.75%. Subject to the terms of the
facility, Bluegreen will receive the excess cash flows generated by the VOI notes receivable sold
(excess meaning after payments of customary fees, interest and principal under the facility) until the
expiration of the VOI notes receivable advance period, at which point all of the excess cash flow will be
paid to the note holders until the outstanding balance is reduced to zero. While ownership of the VOI
notes receivable included in the facility is transferred and sold for legal purposes, the transfer of these
VOI notes receivable is accounted for as a secured borrowing for financial reporting purposes. The
facility is nonrecourse.
Quorum Purchase Facility - Bluegreen and Bluegreen/Big Cedar Vacations have a timeshare notes
receivable purchase facility (the “Quorum Purchase Facility”) with Quorum Federal Credit Union
(“Quorum”). Pursuant to which Quorum agreed to purchase, on a revolving basis through June 30,
2018, eligible timeshare receivables in an amount of up to an aggregate $50.0 million purchase price,
subject to certain conditions precedent and other terms of the facility. Amounts currently outstanding
under the Quorum Purchase Facility accrue interest at interest rates ranging from 4.75% to 6.90% per
annum. The interest rate on future advances made under the Quorum Purchase Facility will be set at the
time of funding based on rates mutually agreed upon by all parties. The Quorum Purchase Facility
provides for an 85% advance rate on eligible receivables sold under the facility. Future advances are
also subject to a loan purchase fee of 0.50%. The Quorum Purchase Facility becomes due in December
2030. Eligibility requirements for receivables sold include, among others, that the obligors under the
timeshare notes receivable sold be members of Quorum at the time of the note sale. Subject to
performance of the collateral, Bluegreen or Bluegreen/Big Cedar Vacations, as applicable, will receive
any excess cash flows generated by the receivables transferred to Quorum under the facility (excess
meaning after payments of customary fees, interest, and principal under the facility) on a pro-rata basis
as borrowers make payments on their timeshare loans. While ownership of the timeshare receivables
included in the Quorum Purchase Facility is transferred and sold for legal purposes, the transfer of these
timeshare receivables is accounted for as a secured borrowing for financial reporting purposes. The
facility is nonrecourse and is not guaranteed by Bluegreen. As of December 31, 2017, $16.8 million was
outstanding under the Quorum Purchase Facility, all of which relates to Bluegreen/Big Cedar Vacations.
2016 Term Securitization –On March 17, 2016, Bluegreen completed a private offering and sale of
$130.5 million of
(the “2016 Term
Securitization”). The 2016 Term Securitization consisted of the issuance of two tranches of timeshare
receivable-backed notes (the “Notes”): $95.7 million of Class
receivable-backed notes
investment-grade,
timeshare
F-43
A and $34.8 million of Class B notes with note interest rates of 3.17% and 3.86%, respectively, which
blended to an overall weighted-average note interest rate of 3.35%. The gross advance rate for this
transaction was 90%. The Notes mature in July 2031.
The amount of the timeshare receivables sold to BXG Receivable Note Trust 2016 (the “2016 Trust”)
was $145.0 million, $122.3 million of which was sold to the 2016 Trust at closing and $22.7 million of
which was subsequently sold to the 2016 Trust. The gross proceeds of such sales to the 2016 Trust
were $130.5 million. A portion of the proceeds were used to: repay the KeyBank/DZ Purchase Facility
a total of $49.0 million, representing all amounts then outstanding under the facility (including accrued
interest); repay $24.2 million under the Liberty Bank Facility, which includes accrued interest;
capitalize a reserve fund; and pay fees and expenses associated with the transaction. Prior to the closing
of the 2016 Term Securitization, Bluegreen, as a servicer, funded $11.3 million in connection with the
servicer redemption of the notes related to BXG Receivables Note Trust 2007-A, and certain of the
timeshare loans in such trust were sold to the 2016 Trust in connection with the 2016 Term
Securitization. In April 2016, Bluegreen, as a servicer, funded $6.1 million in connection with the
servicer redemption of the notes related to BXG Receivables Note Trust 2008-A, and certain of the
timeshare loans in such trust were sold to the 2016 Trust in connection with the 2016 Term
Securitization. The remainder of the net proceeds from the 2016 Term Securitization of $36.0 million
were used by Bluegreen for general corporate purposes.
While ownership of the timeshare receivables included in the 2016 Term Securitization was transferred
and sold for legal purposes, the transfer of these timeshare receivables was accounted for as a secured
borrowing for financial accounting purposes. Accordingly, no gain or loss was recognized as a result of
this transaction. Subject to the performance of the collateral, Bluegreen will receive any excess cash
flows generated by the receivables transferred under the 2016 Term Securitization (excess meaning
after payments of customary fees, interest, and principal under the 2016 Term Securitization) on a pro-
rata basis as borrowers make payments on their timeshare loans.
2017 Term Securitization – On June 6, 2017, Bluegreen completed a private offering and sale of
approximately $120.2 million of investment grade, VOI receivable-backed notes (the “2017 Term
Securitization”). The 2017 Term Securitization consisted of the issuance of two tranches of VOI
receivable-backed notes (the “Notes”): approximately $88.8 million of Class A notes and approximately
$31.4 million of Class B notes with note interest rates of 2.95% and 3.59%, respectively, which blended
to an overall weighted average note interest rate of approximately 3.12%. The gross advance rate for
this transaction was 88%. The Notes mature in October 2032.
The amount of the VOI notes receivable sold to BXG Receivables Note Trust 2017 (the “2017 Trust”)
was approximately $136.5 million, approximately $117.0 million of which was sold to the 2017 Trust at
closing, and approximately $19.6 million of which was subsequently sold to the 2017 Trust. The gross
proceeds of such sales to the 2017 Trust were $120.2 million. A portion of the proceeds was used to
repay KeyBank and DZ $32.3 million, representing all amounts outstanding (including accrued interest)
under the KeyBank/DZ Purchase Facility, repay Liberty Bank approximately $26.8 million (including
accrued interest) under Bluegreen’s existing facility with Liberty Bank, capitalize a reserve fund, and
pay fees and expenses associated with the transaction. In April 2017, Bluegreen, as servicer, redeemed
the notes related to BXG Receivables Note Trust 2010-A for approximately $10.0 million, and certain
of the VOI notes receivable in such trust were sold to the 2017 Trust in connection with the 2017 Term
Securitization. The remainder of the proceeds from the 2017 Term Securitization were used by
Bluegreen for general corporate purposes.
While ownership of the VOI notes receivable included in the 2017 Term Securitization is transferred
and sold for legal purposes, the transfer of these VOI notes receivables are accounted for as a secured
borrowing for financial accounting purposes. Accordingly, no gain or loss was recognized as a result
of this transaction. Subject to the performance of the collateral, Bluegreen will receive any excess cash
flows generated by the VOI notes receivable transferred under the 2017 Term Securitization (excess
meaning after payments of customary fees, interest, and principal under the 2017 Term Securitization)
on a pro-rata basis as borrowers make payments on their VOI notes receivable.
Other Non-Recourse Receivable-Backed Notes Payable – In addition to the above described facilities,
Bluegreen has a number of other nonrecourse receivable-backed notes payable facilities, as set forth in
the table above. During 2017, Bluegreen repaid $62.0 million under these additional receivable-backed
notes payable facilities, including the payment in full of the notes payable issued in connection with the
2010 Term Securitization. During 2017, Bluegreen wrote off the related unamortized debt issuance cost
of $0.3 million. During 2016, Bluegreen repaid $82.6 million under these additional receivable-backed
notes payable facilities, including the payment in full of the notes payable issued in connection with the
2007 and 2008 Term Securitizations. During 2016, Bluegreen wrote off the related unamortized 2007
and 2008 Term Securitization debt issuance costs, totaling approximately $0.5 million.
F-44
Junior Subordinated Debentures
Junior subordinated debentures outstanding at December 31, 2017 and 2016 were as follows (in
thousands):
December 31,
2017
2016
Effective
Effective
Carrying Interest Carrying Interest
Interest
Initial
Equity
in
Issue Maturity
Amount
(1)
Rate
Amount
(1)
Rate
Rate (2)
LIBOR +
Trust (3)
Date
Date (4)
$
23,196 5.19% $
23,196 4.85%
3.85% $
696 03/15/200503/01/2035
19,878 5.18%
30,928 4.69%
7,764 5.14%
15,464 4.80%
15,464 5.14%
66,302
$
15,464 4.80%
85,052
LIBOR +
3.80%
LIBOR +
3.80%
LIBOR +
3.80%
928 05/04/200506/30/2035
464 06/01/200606/30/2036
464 07/18/200609/30/2036
$ 2,552
Junior Subordinated
Debentures
Levitt Capital Trust I
("LCT I")
Levitt Capital Trust II
("LCT II")
Levitt Capital Trust III
("LCT III")
Levitt Capital Trust IV
("LCTIV")
Total Woodbridge
$
Bluegreen Statutory Trust I
$
14,703 6.59% $
14,422 5.90%
Bluegreen Statutory Trust II
16,472 6.23%
16,164 5.74%
Bluegreen Statutory Trust III
6,670 6.23%
6,550 5.74%
Bluegreen Statutory Trust IV
9,802 6.54%
9,614 5.85%
Bluegreen Statutory Trust V
9,802 6.54%
9,614 5.85%
Bluegreen Statutory Trust VI
Total Bluegreen
12,935 6.18%
70,384
$
12,680 5.69%
69,044
$
LIBOR
+4.90% $
LIBOR
+4.85%
LIBOR
+4.85%
LIBOR
+4.85%
LIBOR
+4.85%
LIBOR
+4.80%
696 03/15/2005 3/30/2035
774 05/04/2005 7/30/2035
310 05/10/2005 7/30/2035
464 04/24/2006 6/30/2036
464 07/21/2006 9/30/2036
619 02/26/2007 4/30/2037
$ 3,327
Unamortized debt
issuance costs
Total Junior
Subordinated Debentures $ 135,414
(1,272)
$
$
(1,729)
$ 152,367
(1) Amounts as of December 31, 2017 and 2016 include purchase accounting adjustments which reduced the
carrying value by $40.4 million and $41.8 million, respectively.
(2) LIBOR interest rates are indexed to three-month LIBOR and adjust quarterly.
(3)
(4) All of the junior subordinated debentures are eligible for redemption as of December 31, 2017 and 2016.
Initial equity in the trust is recorded as part of other assets in the Consolidated Statements of Financial Condition.
Woodbridge and Bluegreen have each formed statutory business trusts (collectively, the “Trusts”) each
of which issued trust preferred securities and invested the proceeds thereof in junior subordinated
debentures of Woodbridge and Bluegreen, respectively. The Trusts are variable interest entities in
which Woodbridge and Bluegreen, as applicable, are not the primary beneficiaries as defined by the
accounting guidance for the consolidation of variable interest entities. Accordingly, the Company and
its subsidiaries do not consolidate the operations of these Trusts; instead, the beneficial interests in the
Trusts are accounted for under the equity method of accounting. Interest on the junior subordinated
debentures and distributions on the trust preferred securities are payable quarterly in arrears at the same
interest rate.
During January 2017, Woodbridge purchased approximately $11.1 million of LCTII trust preferred
securities for $6.7 million and purchased approximately $7.7 million of LCTIII trust preferred securities
for $4.7 million and in February 2017, Woodbridge delivered such securities to the respective trusts in
exchange for the cancellation of $11.1 million of Woodbridge’s junior subordinated debentures held by
LCTII and $7.7 million of Woodbridge’s junior subordinated debentures held by LCTIII. As a result,
in February 2017, Woodbridge recognized a $6.9 million gain associated with
F-45
the cancellation of the notes, which is included in “Net gains on cancellation of junior subordinated
debentures” in the Company’s Consolidated Statements of Operations for the year ended December 31,
2017.
As of December 31, 2017 and 2016, BBX Capital and its subsidiaries are in compliance with all
financial debt covenants under its debt instruments. Bluegreen had availability of approximately $219.6
million under their receivable-backed purchase and credit facilities, inventory lines of credit and
corporate credit line, subject to eligible collateral and the terms of the facilities, as applicable, as of
December 31, 2017.
14. Income Taxes
The Company’s United States and foreign components of income before income taxes are as follows (in
thousands):
For the Years Ended December 31,
2016
2017
2015
U.S.
Foreign
Total
$
$
92,888
486
93,374
77,629
407
78,036
67,272
(2,589)
64,683
The provision for income taxes consisted of (in thousands):
For the Years Ended December 31,
2016
2017
2015
Current:
Federal
State
Deferred:
Federal
State
(Benefit) provision for income taxes
$
1,211
1,767
2,978
(12,072)
1,871
(10,201)
(7,223)
F-46
(339)
1,014
675
36,393
(689)
35,704
36,379
5,288
2,445
7,733
(74,189)
(10,140)
(84,329)
(76,596)
The Company's actual provision for income taxes differs from the expected Federal income tax
provision as follows (dollars in thousands):
Income tax provision at expected
federal income tax rate of 35% $
32,681 35.00 % $
27,313 35.00 % $
22,639
35.00 %
2017(1)
For the Years Ended December 31,
2016(1)
2015(1)
Increase (decrease) resulting
from:
Provision for state taxes,
net of federal effect
Effect of federal rate change-2017
tax reform
Taxes related to subsidiaries not
consolidated for income tax
purposes
Nondeductible executive
compensation
Bluegreen settlement
Bluegreen initial public offering
SEC penalty
Increase/(decrease) in valuation
allowance
Other – net
(Benefit) provision for income
taxes
3,637
3.90
527
0.68
9,029
13.96
(43,089) (46.15)
-
-
-
-
(4,467)
(4.78)
(3,432)
(4.40)
(4,842)
(7.49)
4,309
-
1,467
(1,593)
4.61
-
1.57
(1.71)
25
(193)
0.03
(0.21)
7,301
-
-
-
3,807
863
7.47
-
-
-
6.76
1.11
5,636
12,820
-
1,243
8.54
19.82
-
1.92
(127,947)(197.63)
7.46
4,826
$
(7,223)
(7.74)% $
36,379 46.62 % $
(76,596) (118.42)%
(1) Expected tax is computed based upon income before income taxes.
F-47
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets
and tax liabilities were (in thousands):
Deferred tax assets:
Allowance for loan losses, tax certificate losses and
write-downs for financial statement purposes
$
Federal and State NOL and tax credit carryforward
Real estate valuation
Share based compensation
Property and equipment
Other
Total gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Installment sales treatment of notes
Intangible assets
Junior subordinated debentures
Deferral of VOI sales and costs under timeshare accounting
Other
Total gross deferred tax liabilities
Net deferred tax liability
Less net deferred tax liability at beginning of period
Net deferred tax liabilities from acquisitions
Bluegreen initial public offering
Cumulative effect for excess tax benefits recognized in
accumulated earnings associated with share based
compensation
Less change in net deferred tax liability for amounts
included
in other comprehensive income
Benefit (provision) for deferred income taxes
$
December 31,
2016
2015
2017
26,825
148,665
9,117
24
1,642
7,363
193,636
(102,282)
91,354
100,717
14,322
9,144
7,535
2,729
134,447
(43,093)
44,318
-
11,988
42,008
218,609
16,828
232
3,015
11,183
291,875
(131,727)
160,148
152,074
24,501
16,349
8,718
2,824
204,466
(44,318)
8,594
-
-
41,832
237,820
33,505
1,171
588
6,631
321,547
(127,920)
193,627
150,237
25,368
17,205
9,222
189
202,221
(8,594)
92,609
329
-
(3,054)
-
-
42
10,201
20
(35,704)
(15)
84,329
On December 22, 2017, the “Tax Cuts and Jobs Act,” was signed into law. In addition to changes or
limitations to certain tax deductions, including limitations on the deductibility of interest payable to
related and unrelated lenders and further limiting deductible executive compensation, the Tax Cuts and
Jobs Act permanently lowered the corporate tax rate to 21% from the existing maximum rate of 35%,
effective for tax years commencing January 1, 2018. The SEC staff issued Staff Accounting Bulletin
No. 118 (“SAB 118”) to address the application of GAAP in situations when a registrant does not have
the necessary information available, prepared, or analyzed in reasonable detail to complete the
accounting for certain income tax effects of the Tax Cuts and Jobs Act. SAB 118 allows registrants to
record provisional amounts during a one year “measurement period” similar to that used when
accounting for business combinations. The Company recorded a provisional tax benefit for the impact
of the Tax Cuts and Jobs Act of approximately $43.1 million in its Consolidated Statement of
Operations for the year ended December 31, 2017. The $43.1 million tax benefit is net of a decrease in
the valuation allowance of $34.2 million. This tax benefit is comprised of the remeasurement of our
federal net deferred tax liabilities resulting from the permanent reduction in the corporate tax rate from
35% to 21%.
The impact of the Tax Cuts and Jobs Act may differ , possible materially, from the provisional amounts
due to among other things, additional analysis, changes in interpretations and assumptions made by the
Company and additional regulatory guidance that may be issued. Any such revisions will be treated in
accordance with the measurement period guidance outlined in SAB 118. As such, the Company expects
to complete its analysis no later than December 22, 2018.
F-48
The Company evaluates its deferred tax assets to determine if valuation allowances are required. In the
evaluation, management considers net operating loss (“NOL”) carry-back availability, expectations of
sufficient future taxable income, trends in earnings, existence of taxable income in recent years, the
future reversal of temporary differences, and available tax planning strategies that could be
implemented, if required. Valuation allowances are established based on the consideration of all
available evidence using a more likely than not standard. Based on the Company’s evaluations, which
are discussed in further detail below, the deferred tax valuation allowances increased by $25,000 and
$3.8 million for the years ended December 31, 2017 and 2016, respectively, and decreased by $127.8
million for the years ended December 31, 2015.
At December 31, 2014, the Company had maintained a valuation allowance against deferred tax assets
of $255.9 million as the Company, BCC and Bluegreen filed separate group federal and state tax
returns. A substantial portion of these deferred tax assets were attributable to federal and state net
operating loss carry forwards. As a separate tax return filer, the Company maintained a full valuation
allowance against certain deferred tax assets based on the Company’s determination that it was more
likely than not that these deferred tax assets would not be realized. As a result of the increase in the
company’s ownership interest in BCC completed on April 30, 2015, the Company currently files a
consolidated group tax return with all of its U.S. subsidiaries from May 1, 2015 forward. As a
consequence, a substantial portion of the Company’s net operating losses and other deductible
temporary differences were utilized in the Company’s consolidated t a x returns without limitation
subsequent to May 1, 2015.
The Company will continue to evaluate the positive and negative evidence available in subsequent
periods and adjust its remaining valuation allowance to reflect the amount of net deferred tax assets it
determines are more likely than not to be realized.
The Company has established a valuation allowance of $102.2 million relating to the deferred tax asset
of $148.7 million for federal and state NOL and tax credit carryforwards. The Company’s ability to
utilize a portion of these carryforwards to reduce future tax liability income is subject to significant
limitations. The following table summarizes the federal and State NOL and tax credit carryforwards and
the applicable 2017 valuation allowance (in thousands):
Federal and
State
NOL and
Credit
Carryforward
18,470
73,504
$
Gross
Deferred
Tax
Asset
3,879
3,194
Net
Deferred
Valuation
Allowance
-
-
Tax
Asset
3,879
3,194
Year Expires
2032-2034
2030-2034
240,000
11,001
2,442
8,559
2018-2037
28,611
28,611
-
28,611 Refundable
227,595
749,212
47,795
32,554
47,795
32,554
2,372
2,372
2,372
-
-
-
2026-2034
2026-2034
2025-2031
74,471
15,473
13,486
1,987
2023-2029
64,866
2,900
2,220
2,796
713
277
148,665
2,529
713
277
102,168
2024-2029
267
-
2033-2037
- Do not expire
46,497
Federal NOL
Florida NOL-BBX
Non-Florida State NOLs-
Bluegreen
Alternative minimum tax
credit
Federal NOL SRLY
Limitation
Florida NOL SRLY Limitation
Other Federal tax credits-
SRLY Limitation
Federal NOL Section 382
Limitation
Florida NOL Section 382
Limitation
Canadian NOL
Canadian capital losses
Total
$
The Company evaluated all positive and negative evidence available as of the reporting date, including
tax planning strategies, the ability to file a consolidated return with its subsidiaries, the expected future
reversal of existing taxable temporary differences, and expected future taxable income (primarily from
Bluegreen) exclusive of reversing temporary differences and carry forwards. Based on this evaluation,
the Company has determined that it is more likely than not that it will be able to realize $46.5 million of
the deferred tax asset that is attributed to the Company’s federal and state NOL and credit
carryforwards.
F-49
As of December 31, 2017, the Company had estimated federal and Florida NOL carryforwards of
approximately $18.5 million and $73.5 million, respectively (which expire from 2030 through 2034)
that are not subject to any limitation and can be applied to the taxable income of any subsidiary of the
Company. No valuation allowance is needed for these NOLs.
As of December 31, 2017, Bluegreen had non-Florida state NOL carryforwards of $240.0 million, which expire
from 2018 through 2037. These NOLs can only be utilized against Bluegreen’s (or a subsidiary of Bluegreen)
income allocable to the state that the NOL was generated from. A valuation allowance is maintained for those
state NOLs where the NOL is not more likely than not realizable.
The Company had alternative minimum tax credit carryforwards of $28.6 million. The Tax Cuts and
Jobs Act repealed the alternative minimum tax effective in 2018 and allows the credit to be applied to
fully offset regular income taxes. Any credits that are not used to reduce regular income tax is
refundable at 50% for the years 2018 through 2020 and 100% refundable in 2021. No valuation
allowance is needed for these credits.
The Company’s deferred tax asset at December 31, 2017 includes federal and Florida NOL
carryforwards and federal tax credit carryforwards that can only be utilized if the separate entity that
generated them has separate company taxable income (“SRLY NOL Limitation”). These carryforwards
cannot be utilized against most of the Company’s subsidiaries’ taxable income, including Bluegreen. As
such, a full valuation allowance has been established for these carryforwards.
In addition, as a result of the Company’s merger with Woodbridge in September 2009, the Company
experienced a “change of ownership” as that term is defined in the Internal Revenue Code. This change
of ownership resulted in a significant limitation of the amount of the Company’s pre-merger net
operating losses that can be utilized by the Company annually (the “Section 382 limitation”). The
federal and Florida annual limit is approximately $788,000 and $513,000, respectively. As a result, a
valuation allowance has been established for these NOLs to the extent that they may expire before they
can be utilized.
As of December 31, 2017, BBX Capital’s Canadian subsidiaries had NOL carryforwards. As the
Canadian operation have had cumulative taxable losses in recent years, a full valuation allowance has
been applied to these NOL carryforwards. In addition, one of the Canadian subsidiaries has a capital
loss carryforward that can only be used to reduce capital gains and the tax on Canadian capital gains is
50% of the Canadian tax rate. Canadian capital loss carryforwards do not expire. A full valuation
allowance is maintained for the Canadian capital loss carryforward as it is unlikely that the Canadian
subsidiary will generate capital gains in the future.
On September 21, 2009, the Company adopted a shareholder rights agreement aimed at protecting its
ability to use available NOLs to offset future taxable income. See Note 19 for additional information
regarding the Company’s rights agreement.
The Company evaluates its tax positions based upon guidelines of ASC 740-10, Income Tax, which
clarifies the accounting for uncertainty in tax positions. Based on an evaluation of uncertain tax
provisions, the Company is required to measure tax benefits based on the largest amount of benefit that
is greater than 50% likely of being realized upon settlement. There were no unrecognized tax benefits
at December 31, 2017, 2016 or 2015.
The Company is no longer subject to federal or Florida income tax examinations by tax authorities for
tax years before 2014. Several of the Company’s subsidiaries are no longer subject to income tax
examinations in certain state, local and non-U.S. jurisdictions for tax years before 2012.
Certain of the Company’s state income tax filings are under routine examination. While there is no
assurance as to the results of these audits, the Company does not currently anticipate any material
adjustments in connection with these examinations.
F-50
15. Commitments and Contingencies
The Company and its subsidiaries are lessees under various operating leases for real estate and
equipment. At December 31, 2017, the approximate minimum future rental payments under such leases
for the periods shown are (in thousands):
Years Ending December 31,
Amount
2018 $
2019
2020
2021
2022
Thereafter
Total $
26,736
23,992
22,096
21,122
18,207
47,177
159,330
Certain of the Company’s leases give the Company options to renew the lease at a stipulated rental
amount for additional five to seven year periods.
The Company incurred rent expense as follows (in thousands):
Rental expense for premises and equipment
$
30,832
18,706
16,645
For the Years Ended December 31,
2016
2017
2015
In the ordinary course of business, BBX Capital and its subsidiaries are parties to lawsuits as plaintiff or
defendant involving its operations and activities. Bluegreen is subject to claims or proceedings from
time to time relating to the purchase, sale, marketing, or financing of VOIs. Bluegreen is also subject to
certain matters relating to the Bluegreen Communities’ business, substantially all of the assets of which
were sold by us on May 4, 2012. Additionally, from time to time in the ordinary course of business,
Bluegreen is involved in disputes with existing and former employees, vendors, taxing jurisdictions and
various other parties, and Bluegreen receives individual consumer complaints, as well as complaints
received through regulatory and consumer agencies, including Offices of State Attorneys General.
Bluegreen takes these matters seriously and attempts to resolve any such issues as they arise.
Reserves are accrued for matters in which management believes it is probable that a loss will be
incurred and the amount of such loss can be reasonably estimated. Management does not believe that
the aggregate liability relating to known contingencies in excess of the aggregate amounts accrued will
have a material impact on the Company’s results of operations or financial condition. However,
litigation is inherently uncertain and the actual costs of resolving legal claims, including awards of
damages, may be substantially higher than the amounts accrued for these claims and may have a
material adverse impact on the Company’s results of operations or financial condition.
Adverse judgements and the costs of defending or resolving legal claims may be substantial and may
have a material adverse impact on the Company’ financial statements. Management is not at this time
able to estimate a range of reasonably possible losses with respect to matters in which it is reasonably
possible that a loss will occur. In certain matters, management is unable to estimate the loss or
reasonable range of loss until additional developments provide information sufficient to support an
assessment of the loss or reasonable range of loss. Frequently in these matters, the claims are broad,
and the plaintiffs have not quantified or factually supported their claim.
The following is a description of certain ongoing litigation matters:
BBX Capital Litigation
Securities and Exchange Commission Complaint
In 2012, the SEC brought an action in the United States District Court for the Southern District of
Florida against BCC and Alan B. Levan, BCC’s Chairman and Chief Executive Officer. Following an
initial trial in 2014 and the reversal on appeal of certain judgments of the district court by the Eleventh
Circuit Court of Appeals, a second trial
F-51
was held in 2017, and on May 8, 2017, the jury rendered a verdict in favor of BCC and Mr. Levan and
against the SEC on all counts.
In connection with the Eleventh Circuit Court of Appeals’ reversal of certain judgments in the first trial,
which became final on January 31, 2017, and the resolution of the matter in favor of BCC and Mr.
Levan in the second trial, BBX Capital received legal fees and costs reimbursements from its insurance
carrier of approximately $8.6 million as well as the release of the $4.6 million penalty assessed against
BCC in the first trial. The legal fees and costs reimbursements and the release of the penalty are
reflected in the Company’s Statement of Operations in “Litigation Costs and penalty reimbursements”
for the year ended December 31, 2017.
In Re BCC Merger Shareholder Litigation
On August 10, 2016, Shiva Stein filed a lawsuit against the Company, BBX Merger Sub, LLC, BCC
and the members of BCC’s board of directors, which seeks to establish a class of BCC’s shareholders
and challenges the Merger. The plaintiff asserts that the Merger consideration undervalues BCC and is
unfair to BCC’s public shareholders, that the sales process was unfair and that BCC’s directors
breached their fiduciary duties of care, loyalty and candor owed to the public shareholders of BCC
because, among other reasons, they failed to take steps to maximize the value of BCC to its public
shareholders and instead diverted consideration to themselves. The lawsuit also alleges that BBX
Capital, as the controlling shareholder of BCC, breached its fiduciary duties of care, loyalty and candor
owed to the public shareholders of BCC by utilizing confidential, non-public information to formulate
the Merger consideration and not acting in the best interests of BCC’s public shareholders. In addition,
the lawsuit includes a cause of action against BCC, the Company and Merger Sub for aiding and
abetting the alleged breaches of fiduciary duties. The lawsuit requested that the court grant an
injunction blocking the proposed Merger or, if the proposed Merger is completed, rescind the
transaction or award damages as determined by the court. On September 15, 2016, Defendants filed a
Motion to Dismiss the amended complaint. On November 21, 2016, the Court issued an order granting
the Motion to Dismiss with prejudice. Plaintiff appealed the Court’s order dismissing the amended
complaint to the Fourth District Court of Appeals and on January 9, 2018, the Fourth District Court of
Appeals held oral argument on the appeal. The Company believes that the appeal is without merit and
intends to continue vigorously defending the action.
Bluegreen Litigation
Commencing in 2015, it came to Bluegreen’s attention that its collection efforts with respect to its VOI
notes receivable were being impacted by a then emerging industry-wide trend involving the receipt of
“cease and desist” letters from attorneys purporting to represent certain VOI owners. Following receipt
of these letters, Bluegreen is unable to contact the owners unless allowed by law. Bluegreen believes
these attorneys have encouraged such owners to become delinquent and ultimately default on their
obligations and that such actions and Bluegreen’s inability to contact the owners are a primary
contributor to the increase in its annual default rates. Bluegreen’s average annual default rates have
increased from 6.9% in 2015 to 8.5% in 2017. Bluegreen also estimates that approximately 9.3% of the
total delinquencies on its VOI notes receivable as of December 31, 2017 related to VOI notes receivable
subject to these letters. Bluegreen has in a number of cases pursued, and may in the future pursue, legal
action against the VOI owners.
On August 24, 2016, Whitney Paxton and Jeff Reeser filed a lawsuit against Bluegreen Vacations
Unlimited, Inc. (“BVU”), a wholly-owned subsidiary of Bluegreen, and certain of its employees
(collectively, the “Defendants”), seeking to establish a class action of former and current employees of
BVU and alleging violations of plaintiffs’ rights under the Fair Labor Standards Act of 1938 (the
“FLSA”) and breach of contract. The lawsuit also claims that the Defendants terminated plaintiff
Whitney Paxton as retaliation for her complaints about alleged violations of the FLSA. The lawsuit
seeks damages in the amount of the unpaid compensation owed to the plaintiffs. During July 2017, a
magistrate judge entered a report and recommendation that the plaintiffs’ motion to conditionally certify
collective action and facilitate notice to potential class members be granted with respect to certain
employees and denied as to others. During September 2017, the judge accepted the recommendation
and granted preliminary approval of class certification. Bluegreen believes that the lawsuit is without
merit and intend to vigorously defend the action.
On September 22, 2017, Stephen Potje, Tamela Potje, Sharon Davis, Beafus Davis, Matthew Baldwin,
Tammy Baldwin, Arnor Lee, Angela Lee, Gretchen Brown, Paul Brown, Jeremy Estrada, Emily
Estrada, Guillermo Astorga Jr., Michael Oliver, Carrie Oliver, Russell Walters, Elaine Walters, and
Mike Ericson, individually and on behalf of all other similarly situated, filed a lawsuit against
Bluegreen which asserts claims for alleged violations of the Florida Deceptive and Unfair Trade
Practices Act and the Florida False Advertising Law. In the complaint, the plaintiffs allege the making
of false representations in connection with Bluegreen’s sales of VOIs, including representations
regarding the ability to use points for stays or other experiences with other vacation providers, the
ability to cancel VOI purchases
F-52
and receive a refund of the purchase price, the ability to roll over unused points and that annual
maintenance fees would not increase. The complaint seeks to establish a class of consumers who, since
the beginning of the applicable statute of limitations, have purchased VOIs from Bluegreen, had their
annual maintenance fees relating to Bluegreen VOIs increased, or were unable to roll over their unused
points to the next calendar year. The lawsuit alleges damages in excess of $5.0 million and seeks
damages in the amount alleged to have been improperly obtained by Bluegreen, as well as any statutory
enhanced damages, attorneys’ fees and costs, and equitable and injunctive relief. On November 20,
2017, Bluegreen moved to dismiss the complaint and, in response, the plaintiffs filed an amended
complaint dropping the claims relating to the Florida Deceptive and Unfair Trade Practices Act and
adding claims for fraud in the inducement and violation of the Florida Vacation Plan and Timesharing
Act. Bluegreen filed a motion to dismiss the amended complaint which is currently pending before the
court. Bluegreen’s management believes that the lawsuit is without merit and intends to vigorously
defend the action.
On January 4, 2018, Gordon Siu, individually and on behalf of all others similarly situated, filed a
lawsuit alleging that Bluegreen Vacations and Choice Hotels violated California state privacy laws by
recording and/or monitoring a telemarketing call to the plaintiff without his consent. The plaintiff
claims the individual making the call requested that the plaintiff provide personal and private
information and did not disclose that the call was being recorded until after making such request. The
plaintiff seeks certification of a class of persons in California whose telephone conversations were
monitored, recorded and/or eavesdropped upon without their consent by Bluegreen and/or Choice
Hotels and damages of $5,000 per violation. Bluegreen believes that the lawsuit is without merit and
intends to vigorously defend the action.
Bluegreen has an exclusive marketing agreement with Bass Pro, a nationally-recognized retailer of
fishing, marine, hunting, camping and sports gear, that provides Bluegreen with the right to market and
sell vacation packages at kiosks in each of Bass Pro’s retail locations and through other means. As of
December 31, 2017, Bluegreen sold vacation packages in 68 of Bass Pro’s stores. In exchange,
Bluegreen compensates Bass Pro based on VOI sales generated through the program. No compensation
is paid to Bass Pro under the agreement on sales made at Bluegreen/Big Cedar Vacations’ resorts.
During the years ended December 31, 2017, 2016 and 2015, VOI sales to prospects and leads generated
by the agreement with Bass Pro accounted for approximately 15%, 16% and 20%, respectively, of
Bluegreen’s VOI sales volume. On October 9, 2017, Bass Pro advised Bluegreen that it believes the
amounts paid to it as VOI sales commissions should not have been adjusted for certain purchaser
defaults. Bluegreen previously informed Bass Pro that the aggregate amount of such adjustments for
defaults charged back to Bass Pro between January 2008 and June 2017 totaled approximately
$4.8 million. Bluegreen believes these chargebacks were appropriate and consistent with the terms and
intent of the agreements with Bass Pro, and Bluegreen is continuing to discuss the matter with Bass Pro.
On October 20, 2017, in order to demonstrate good faith, Bluegreen paid this amount to Bass Pro
pending a resolution of the matter in the ordinary course. Bluegreen recognized the $4.8 million
payment as general and administrative expense during the fourth quarter of 2017. In addition, the
resolution of the matter may adversely impact our future marketing expenses.
The following is a description of certain commitments and guarantees:
In lieu of paying maintenance fees for unsold VOI inventory, Bluegreen provides subsidies to certain
homeowners’ associations to provide for funds necessary to operate and maintain vacation ownership
properties in excess of assessments collected from owners of the VOIs. During the years ended
December 31, 2017, 2016 and 2015, Bluegreen made subsidy payments, included within cost of other
fee-based services, in connection with these arrangements of $12.6 million, $13.9 million and $15.8
million, respectively. As of December 31, 2017 and 2016, Bluegreen had no accrued liabilities for such
subsidies. As of December 31, 2017 and 2016, Bluegreen was providing subsidies to nine homeowners’
associations.
In October 2013, Bluegreen entered into an agreement to purchase from an unaffiliated third party
completed VOI inventory at the Lake Eve Resort in Orlando, Florida over a five-year period. The total
purchase commitment was $35.1 million, of which $8.9 million and $5.4 million of inventory was
purchased in 2017 and 2016, respectively. As of December 31, 2017, $4.6 million of the Lake Eve
Resort purchase commitment remained.
During August 2016, the Company entered into a severance arrangement with an executive. Under the
terms of the arrangement, the executive will receive $3.7 million over a three year period ending in
August 2019. As of December 31, 2017, $1.9 million was left to be paid under this agreement.
In September 2017, Bluegreen entered into an agreement with an executive in connection with his
retirement. Pursuant to the terms of the agreement, Bluegreen agreed to make payments totaling
approximately $2.9 million through March 2019. The amount payable under the agreement was accrued
as of December 31, 2017 and is included in selling,
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general and administrative expenses for the year ended December 31, 2017. As of December 31, 2017,
Bluegreen had a $2.6 million liability remaining under this agreement. Also, during the second half of
2017, Bluegreen implemented an initiative designed to streamline their operations in certain areas to
facilitate future growth. Such initiative resulted in $5.8 million of severance expense for the year ended
December 31, 2017, $1.9 million of which will be paid in 2018.
The Company guarantees certain obligations of its wholly-owned subsidiaries and unconsolidated real
estate joint ventures as follows:
·
· During the year ended December 31, 2014, the Sunrise and Bayview Partners, LLC joint
venture owned 50% by Procacci Bayview, LLC and 50% by a subsidiary of the Company
refinanced its land acquisition loan with a financial institution. BBX Capital provided the
financial institution with a guarantee of 50% of the outstanding balance of the joint venture’s
loan which had an outstanding balance of $5.0 million as of December 31, 2017.
BBX Capital is a guarantor on a $1.5 million note payable of Anastasia , a wholly-owned
subsidiary of BBX Sweet Holdings, owed to the former owner of Anastasia. The Anastasia
note payable is collateralized by the common stock of Anastasia.
BBX Sweet Holdings and BBX Capital are guarantors of a $1.5 million note payable of
Hoffman’s Chocolates, a wholly-owned subsidiary of BBX Sweet Holdings, owed to
Centennial Bank. This note payable is collateralized by approximately $2.0 million of
properties and equipment.
In October 2017, a wholly-owned subsidiary of the Company issued a $3.4 million unsecured
note to the seller of real estate to the Chapel Grove joint venture in which the subsidiary has a
46.75% equity interest. The unsecured note was part of the subsidiar y’s initial capital
contribution to the Chapel Trail real estate joint venture. The note is not secured by the joint
venture property and BBX Capital guarantees the repayment of the unsecured note.
·
·
· On August 7, 2015, BBX Sweet Holdings entered into a Loan and Security Agreement and
related agreements with Iberiabank, which provides for borrowings by BBX Sweet Holdings
of up to $5.0 million on a revolving basis. The facility is secured by the assets of BBX Sweet
Holdings and its subsidiaries and is guaranteed by BBX Capital.
The Company’s wholly-owned subsidiary, Food for Thought Restaurant Group, LLC enters
into lease agreements for MOD restaurant locations. As of December 31, 2017, the Company
is a guarantor on two of the lease agreements with an aggregate lease obligation of $1.3
million.
·
16. Stock Incentive Plans
Restricted Stock and Stock Options Plans
The Company has three share-based compensation plans as of December 31, 2017: the BBX Capital
Corporation 2014 Incentive Plan (the “2014 Plan”), the BBX Capital 2005 Restricted Stock and Option
Plan, and the BBX Capital 2014 Stock Incentive Plan. The BBX Capital 2005 Restricted Stock and
Option Plan and the BBX Capital 2014 Stock Incentive Plan are collectively referred to as the “BCC
Equity Compensation Plans”.
The Company assumed the BCC Equity Compensation Plans upon consummation of the Merger with
BCC on December 15, 2016 (see Note 3 – Acquisitions and Merger). Pursuant to the Merger
Agreement, awards outstanding under the BCC Equity Compensation Plan at December 15, 2016
continue to be outstanding and governed by the BCC Equity Compensation Plans, except that such
awards were converted into awards that are eligible to be settled in shares of the Company’s Class A
Common Stock resulting in the issuance of 5,090,354 of restricted shares of the Company’s Class A
Common Stock and non-qualifying stock options to acquire 35,716 shares of the Company’s Class A
Common Stock at December 15, 2016. No further awards will be granted under the BCC Equity
Compensation Plans.
The maximum term of incentive and non-qualifying stock options issuable under the 2014 Plan is ten
years. Vesting is established by the Compensation Committee of the board of directors in connection
with each grant of options or restricted stock awards. There were no options issued or outstanding
under the 2014 Plan as of December 31, 2017.
Compensation expense for stock options and restricted common stock awards is based on the fair value
of the award on the measurement date, which is generally the grant date. The fair value of the
Company’s stock options is estimated using the Black-Scholes option-pricing model. The Company
recognizes compensation costs on a straight-line basis over the requisite service period of the awards.
Forfeitures are recognized when they occur.
F-54
There were no options granted to employees or non-employee directors during the three year period
ended December 31, 2017. As described below, the Company issued restricted stock awards to certain
officers for each of the years in the two year period ended December 31, 2016. There were no restricted
stock awards issued during the year ended December 31, 2017. However, on January 9, 2018, the
Company’s Compensation Committee of the board of directors granted awards of 1,487,051 restricted
shares of the Company’s Class B Common Stock to the Company’s executive officers under the 2014
Plan. The aggregate grant date fair value of the January 2018 awards was $12.9 million and the shares
vest ratably in annual installments of approximately 372,000 shares over four years beginning on
October 1, 2018
The following table sets forth information on outstanding options:
Weighted
Average
Weighted
Average
Remaining
Outstanding
Options
Exercise
Price
Contractual
Term
Outstanding at December 31, 2016
Exercised
Forfeited
Expired
Outstanding at December 31, 2017
Exercisable at December 31, 2017
Available for grant at December 31, 2017
186,791 $
(151,075)
(8,370)
-
27,346 $
27,346 $
2,228,802
3.59
0.41
43.43
0.00
8.98
8.98
1.24 $
0.43
0.43
Aggregate
Intrinsic
Value
($000)
675
881
The 2014 Plan permits the issuance of awards for up to 500,000 shares of the Company’s Class A
Common Stock and up to 9,500,000 shares of the Company’s Class B Common Stock. Awards for up
to 17,776 shares of Class A Common Stock and 2,211,026 shares of Class B Common Stock remain ed
available for grant under the 2014 Plan as of December 31, 2017, although on January 9, 2018, awards
of 1,481,051 restricted shares of the Company’s Class B Common Stock were granted to the
Company’s executive officers under the 2014 Plan.
There was no unearned compensation cost related to the Company’s stock options as all options were
vested as of December 31, 2017.
During the years ended December 31, 2017, 2016 and 2015, the Company received net proceeds of
approximately $63,000, $10,000 and $10,000, respectively, upon the exercise of stock options. The total
intrinsic value of options exercised during the years ended December 31, 2017, 2016 and 2015 was
$881,000, $143,000 and $85,000, respectively.
The following is a summary of the Company’s non-vested restricted stock and restricted stock units
activity:
Non-vested
Restricted
Stock
11,131,996 $
-
(6,137,481)
-
4,994,515 $
Weighted
Average
Grant Date
Fair Value
2.74
-
2.22
-
3.39
Outstanding at December 31, 2016
Granted
Vested
Forfeited
Outstanding at December 31, 2017
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The following table indicates the grant date, the number of restricted stock awards granted, the per
share weighted average grant date fair value and the requisite service period for restricted stock awards
granted during the years ended December 31, 2016 and 2015:
Grant Date
9/1/2015
12/15/2016
12/22/2016
(1)
(2)
(1)
Number of
Awards Granted
2,372,592 $
5,090,354
1,823,565
Per Share
Weighted Average
Grant Date
Fair Value
3.16
2.74
4.3
Requisite
Service Period (3)
4 years
1.63 Years
4 years
(1) The awards are issuable in shares of Class B Common Stock.
(2) Pursuant to the Merger Agreement the Company assumed and adopted the BCC Equity
Compensation Plans as of December 15, 2016 and 942,657 shares of BCC’s restricted stock units
were retired in exchange for restricted stock units with respect to approximately 5.1 million shares
of the Company's Class A Common Stock with a weighted average requisite service period of
1.63 years.
(3) The awards vest ratable in annual installments over the requisite service period.
Between September 30, 2017 through October 8, 2017, award recipients surrendered a total of
2,394,492 shares of Class A Common Stock and 176,132 shares of Class B Common Stock to the
Company to satisfy the $19.0 million tax withholding obligation associated with the vesting of
6,137,481 restricted shares. The Company retired the surrendered shares.
The fair value of shares of BBX Capital’s restricted stock awards which vested during the years ended
December 31, 2017, 2016 and 2015 was $45.2 million, $10.3 million and $10.7 million, respectively.
BBX Capital recognized restricted stock compensation expense of approximately $12.3 million,
$6.4 million and $5.6 million and recognized tax benefits of $0.4 million, $0.8 million and $0.6 million
for the years ended December 31, 2017, 2016 and 2015, respectively.
The fair value of restricted shares of BCC’s stock when vested during the years ended December 31,
2016 and 2015 was $10.0 million and $6.0 million, respectively.
Included in the Company’s Consolidated Statements of Operations and Comprehensive Income is
$6.1 million and $5.5 million of share-based compensation expense related to BCC for the years ended
December 31, 2016 and 2015, respectively. BCC recognized tax benefits of $0.7 million and $0.4 for
the years ended December 31, 2016 and 2015, respectively.
As of December 31, 2017, the total unrecognized compensation cost related to the Company’s non-
vested restricted stock compensation was approximately $14.8 million. The cost is expected to be
recognized over a weighted-average period of approximately 1.88 years.
17. Employee Benefit Plans and Incentive Compensation Program
Defined Contribution 401(k) Plan
BBX Capital and its subsidiaries sponsor three Employee Retirement Plans under Internal Revenue
Code Section 401(k). Generally, employees who have completed 90 days of service and have reached
the age of 21 are eligible to participate in the 401(k) plans. For the year ending December 31, 2017, an
eligible employee under the plan was entitled to contribute up to $18,000, while an eligible employee
over 50 years of age was entitled to contribute up to $24,000. During the years ended December 31,
2017, 2016 and 2015, the Company generally matches 100% of the first 3% of employee contributions
the next 2% of employee contributions. In general, the match amounts vest
a n d 50% of
immediately. Further, Bluegreen may make additional discretionary matching contributions to its
401(k) retirement plan not to exceed 4% of each participant’s compensation. For the years ended
December 31, 2017, 2016 and 2015, the Company recorded expense for contributions to the 401(k)
plans totaling approximately $5.7 million, $5.5 million and $5.3 million, respectively.
F-56
18. Redeemable 5% Cumulative Preferred Stock
The Company has outstanding 15,000 shares of 5% Cumulative Preferred Stock at a stated value of
$1,000 per share. The shares of 5% Cumulative Preferred Stock are redeemable at the option of the
Company, from time to time, at a redemption price of $1,000 per share. Shares of the 5% Cumulative
Preferred Stock are also subject to mandatory redemption as described below. The 5% Cumulative
Preferred Stock’s liquidation preference is equal to its stated value of $1,000 per share plus any
accumulated and unpaid dividends or an amount equal to the applicable redemption price in a voluntary
liquidation or winding up of the Company. Holders of the 5% Cumulative Preferred Stock have no
voting rights, except as provided by Florida law, and are entitled to receive, when and as declared by
the Company’s board of directors, cumulative quarterly cash dividends on each such share at a rate per
annum of 5% of the stated value from the date of issuance. The Company pays regular quarterly cash
dividends of $187,500 on its 5% Cumulative Preferred Stock. The 5% Cumulative Preferred Stock is
subject to mandatory redemption and accordingly is classified as a liability in the Company’s
Consolidated Statements of Financial Condition. The Company is required to redeem the preferred
shares in $5.0 million annual payments in each of the years ending December 31, 2018, 2019 and
2020. During December 2013, the Company made a $5.0 million loan to the holders of the 5%
Cumulative Preferred Stock. The loan is secured by 5,000 shares of the 5% Cumulative Preferred
Stock, has a term of five years, accrues interest at a rate of 5% per annum and provides for payments of
interest only on a quarterly basis during the term of the loan, with all outstanding amounts being due
and payable at maturity in December 2018.
For the years ended December 31, 2017, 2016 and 2015, the Company recorded interest expense in its
Consolidated Statements of Operations and Comprehensive Income of $1.2 million, $1.2 million and
$1.1 million, respectively, of which $750,000 was paid during each of these three years as dividends on
the 5% Cumulative Preferred Stock.
19. Common Stock
The Company’s Articles of Incorporation authorize the Company to issue both Class A Common Stock,
par value $.01 per share, and Class B Common Stock, par value $.01 per share. Under Florida law and
the Company’s Articles of Incorporation, holders of the Company’s Class A Common Stock and Class
B Common Stock vote together as a single class on most matters presented to a vote of the Company’s
shareholders. On such matters, holders of the Company’s Class A Common Stock are entitled to one
vote for each share held, with all holders of Class A Common Stock possessing in the aggregate 22% of
the total voting power. Holders of Class B Common Stock possess the remaining 78% of the total
voting power. If the number of shares of Class B Common Stock outstanding decreases to 1,800,000
shares, the Class A Common Stock’s aggregate voting power will increase to 40% and the Class B
Common Stock will have the remaining 60%. If the number of shares of Class B Common Stock
outstanding decreases to 1,400,000 shares, the Class A Common Stock’s aggregate voting power will
increase to 53% and the Class B Common Stock will have the remaining 47%. These relative voting
percentages will remain fixed unless the number of shares of Class B Common Stock outstanding
decreases to 500,000 shares or less, at which time the fixed voting percentages will be eliminated, and
holders of Class A Common Stock and holders of Class B Common Stock would then each be entitled
to one vote per share held. Each share of Class B Common Stock is convertible at the option of the
holder thereof into one share of Class A Common Stock.
On September 21, 2009, the Company adopted a rights agreement (“Rights Agreement”) designed to
preserve shareholder value and protect our ability to use available net operating loss carryforwards to
offset future taxable income. The Rights Agreement provides a deterrent to shareholders from acquiring
a 5% or greater ownership interest in the Company’s Class A Common Stock and Class B Common
Stock, taken as a whole, without the prior approval of the board of directors. Shareholders of the
Company at September 21, 2009 were not required to divest any shares.
On September 21, 2009, the board of directors approved a share repurchase program which authorizes
the repurchase of up to 20,000,000 shares of the Company’s Class A and Class B Common Stock at an
aggregate cost of no more than $10.0 million.
During April 2017, the Company purchased 1.0 million shares of its Class A Common Stock for
approximately $6.2 million. During April 2016, the Company repurchased 1.0 million shares of its
Class A Common Stock for approximately $3.0 million.
On June 13, 2017, the board of directors approved a share repurchase program which replaced the
September 2009 share repurchase program and authorizes the repurchase of up to 5,000,000 shares of
the Company’s Class A Common Stock and Class B Common Stock at an aggregate cost of up to $35.0
million. As of December 31, 2017, 321,593
F-57
shares of the Company’s Class A Common Stock have been repurchased for approximately $2.4
million under the June 2017 share repurchase program.
On September 4, 2015, the Company entered into Share Exchange Agreements with Alan B. Levan,
John E. Abdo, Jarett S. Levan and Seth M. Wise as holders of restricted stock units of Class A Common
Stock of BCC. See Note 23 for information regarding the options exercised by the Company and the
share exchanges consummated under the Share Exchange Agreements during 2016. Upon the
Company’s adoption of the BCC Equity Compensation Plans in connection with the Merger Agreement
on December 15, 2016, the Share Exchange Agreements were terminated.
20. Noncontrolling Interests and Redeemable Noncontrolling Interest
The following table summarizes the noncontrolling interests in the Company’s subsidiaries at
December 31, 2017 and 2016 (in thousands):
Bluegreen Vacations (1)
Bluegreen / Big Cedar Vacations (2)
Joint ventures and other
Total noncontrolling interests
December 31,
2017
2016
$
$
38,223
42,286
(238)
80,271
-
40,773
77
40,850
Included in the Company’s Consolidated Statement of Financial Condition as of December 31, 2017
was a $2.8 million redeemable noncontrolling interest associated with the IT’SUGAR acquisition. The
Company owns 90.4% of IT’SUGAR’s Class B Units and the remaining 9.6% of IT’SUGAR’s Class B
Units represent a redeemable noncontrolling interest.
The following table summarizes the income recognized with respect to the Company’s subsidiaries
attributable to noncontrolling interests for the years ended December 31, 2017, 2016 and 2015 (in
thousands):
For the Years Ended December 31,
2016
2017
2015
Bluegreen Vacations (1)
Bluegreen / Big Cedar Vacations (2)
BCC
Joint ventures and other
Net income attributable to noncontrolling
interests
$
$
5,639
12,784
-
(21)
18,402
-
9,826
3,489
(20)
13,295
-
11,705
4,964
2,136
18,805
(1) Subsequent
to Bluegreen’s
the Company owns 90% of
Bluegreen. Bluegreen was a wholly-owned subsidiary of the Company prior to the Bluegreen
IPO.
in November 2017,
IPO
(2) Bluegreen Vacations has a joint venture arrangement pursuant to which, Bluegreen owns 51% of
Bluegreen/Big Cedar Vacations.
F-58
21. Earnings Per Common Share
The following table presents the computation of basic and diluted earnings per common share
attributable to shareholders for the years ended December 31, 2017, 2016 and 2015 (in thousands,
except per share data):
Basic earnings per common share
Numerator:
Net income
Less: Net income attributable to noncontrolling
interests
Net income available to shareholders
Denominator:
Basic weighted average number of
of common shares outstanding
Basic earnings per common share
Diluted earnings per common share
Numerator:
For the Years Ended December 31,
2015
2016
2017
100,597
41,657
141,279
18,402
82,195
13,295
28,362
18,805
122,474
98,745
0.83
86,902
0.33
87,022
1.41
$
$
$
Net income available to shareholders
$
82,195
28,362
122,474
Denominator:
Basic weighted average number of
common shares outstanding
Effect of dilutive stock-based compensation
Diluted weighted average number of
common shares outstanding
98,745
5,171
86,902
590
87,022
186
103,916
87,492
87,208
Diluted earnings per common share
$
0.79
0.32
1.40
During the year ended December 31, 2017, there were no restricted stock awards that were anti-dilutive
and options to acquire 27,346 shares of Class A common stock were anti-dilutive. During the year
ended December 31, 2016, approximately 55,000 restricted stock awards and options to acquire 35,716
shares of Class A common stock were anti-dilutive. During the year ended December 31, 2015, there
were no restricted stock awards or options to acquire shares of common stock that were anti-dilutive.
22. Fair Value Measurement
Fair value is defined as the price that would be received on the sale of an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. There are three
main valuation techniques to measure the fair value of assets and liabilities: the market approach, the
income approach and the cost approach. The accounting literature defines an input fair value hierarchy
that has three broad levels and gives the highest priority to quoted prices (unadjusted) in active markets
for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
The valuation techniques are summarized below:
The market approach uses prices and other relevant information generated by market transactions
involving identical or comparable assets or liabilities.
The income approach uses financial models to convert future amounts to a single present amount.
These valuation techniques include present value and option-pricing models.
The cost approach is based on the amount that currently would be required to replace the service
capacity of an asset. This technique is often referred to as current replacement cost.
F-59
The input fair value hierarchy is summarized below:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2: Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted
quoted prices for identical or similar assets or liabilities in markets that are not active, or
inputs other than quoted prices that are observable for the asset or liability
Level 3: Unobservable inputs for the asset or liability
Assets and liabilities on a recurring basis
There were no assets or liabilities measured at fair value on a recurring basis in the Company’s
consolidated financial statements as of December 31, 2017 or 2016.
Assets on a non-recurring basis
The following table presents major categories of assets measured at fair value on a non-recurring basis
as of December 31, 2017 (in thousands):
Fair Value Measurements Using
Carrying Quoted prices in
Active Markets
Amount
for Identical
As of
Assets
December 31,
(Level 1)
2017
Significant
Other
Significant
Observable Unobservable
Inputs
(Level 2)
Inputs
(Level 3)
6,346
-
-
6,346
Total
Impairments(1)
For the
Year Ended
December 31, 2017
1,638
Description
Impaired real estate held-for-sale $
(1) Total impairments represent the amount of losses recognized during the year ended December 31,
2017 on assets that were held and measured at fair value as of December 31, 201 7.
Quantitative information about significant unobservable inputs within Level 3 on major categories of
assets measured at fair-value on a non-recurring basis is as follows (Fair Value in thousands):
As of December 31, 2017
Description
Fair
Value
Valuation
Technique
Real estate held-for-sale
$
6,346 Fair Value of Property
Unobservable
Inputs
Asset Purchase Agreements or
Appraisals
Range (Average)(1)(2)
$0.2 - $4.3 million
($1.2 million)
(1) Range and average appraised values were reduced by estimated costs to sell.
(2) Average was computed by dividing the aggregate appraisal amounts by the number of appraisals.
F-60
The following table presents major categories of assets measured at fair value on a non-recurring basis
as of December 31, 2016 (in thousands):
Fair Value Measurements Using
Quoted prices
in
Carrying
Amount Active Markets
Significant
Other
for Identical Observable Unobservable
Significant
Assets
Inputs
Inputs
2016
(Level 1)
(Level 2)
(Level 3)
As of
December
31,
Total
Impairments(1)
For the
Year Ended
December 31,
2016
$
$
5,759
5,456
11,215
-
-
-
-
-
-
5,759
101
5,456
11,215
3,271
3,372
Description
Loans measured for
impairment using the fair
value
of the underlying collateral
Impaired real estate held-for-
sale
Total
(1) Total impairments represent the amount of losses recognized during the year ended December 31,
2016 on assets that were held and measured at fair value as of December 31, 201 6.
Quantitative information about significant unobservable inputs within Level 3 on major categories of
assets measured at fair value on a non-recurring basis was as follows (Fair Value in thousands):
As of December 31, 2016
Description
Loans measured for impairment
Fair
Value
Valuation
Technique
using the fair value of the
underlying collateral
$
5,759
Fair Value of
Collateral
Unobservable
Inputs
Discount Rates and
Appraised Value
less Cost to Sell
Impaired real estate held-for-sale
Total
$
5,456
11,215
Fair Value of
Property
Asset Purchase Agreements
or Appraised Value less Cost to
Sell
Range (Average)(1)(2)
$0.1 - $0.7 million
($0.3 million)
$0.1 - $1.4 million
($0.5 million)
(1) Range and average appraised values were reduced by costs to sell.
(2) Average was computed by dividing the aggregate appraisal amounts by the number of appraisals.
Liabilities on a non-recurring basis
There were no liabilities measured at fair value on a non-recurring basis in the Company’s consolidated
financial statements as of December 31, 2017 or 2016.
Loans Measured For Impairment
Impaired loans are generally valued based on the fair value of the underlying collateral less cost to sell
as the majority of the Company’s loans are collateral dependent. The fair value of the Company’s loans
may significantly increase or decrease based on changes in property values as its loans are primarily
secured by real estate. The Company primarily uses third party appraisals to assist in measuring non-
homogenous impaired loans and broker price opinions to assist in measuring homogeneous impaired
loans. The appraisals generally use the market or income approach valuation technique and use market
observable data to formulate an estimate of the fair value of the loan’s collateral. However, the
appraiser uses professional judgment in determining the fair value of the collateral. As a consequence,
the calculation of the fair value of the collateral is considered a Level 3 input. The Company generally
recognizes impairment losses based on third party broker price opinions when impaired homogeneous
loans become 120 days delinquent. These third party valuations from real estate professionals also use
Level 3 inputs in determining fair values. The observable market inputs used to fair value loans include
comparable property sales, rent rolls, market capitalization rates on income producing properties, risk
adjusted discount rates and foreclosure time frames and exposure periods.
F-61
Real Estate
Real estate is generally valued using third party appraisals or broker price opinions. These appraisals
generally use the market approach valuation technique and use market observable data to formulate an
estimate of the fair value of the properties. The market observable data typically consists of comparable
property sales, rent rolls, market capitalization rates on income producing properties and risk adjusted
discount rates. The above inputs are considered Level 3 inputs as the appraiser uses professional
judgement in the calculation of the fair value of the properties.
Financial Disclosures about Fair Value of Financial Instruments
The following tables present information for consolidated financial instruments at December 31, 2017
and 2016 (in thousands):
Financial assets:
Cash and cash equivalents
Restricted cash
Loans receivable
Notes receivable, net
Notes receivable from preferred
shareholders (1)
Financial liabilities:
Receivable-backed notes payable
Notes payable and other borrowings
Junior subordinated debentures
Mandatorily redeemable cumulative
preferred stock
Financial assets:
Cash and cash equivalents
Restricted cash
Loans receivable
Notes receivable, net
Notes receivable from preferred
shareholders (1)
Financial liabilities:
Fair Value Measurements Using
Quoted
prices
in Active Significant
Fair Value Markets
Other
Significant
As of
December
31,
2017
for
Identical ObservableUnobservable
Assets
(Level 1)
Inputs
(Level 2)
Inputs
(Level 3)
Carrying
Amount
As of
December
31,
2017
$
$
362,526
46,721
19,454
431,801
362,526
46,721
21,125
525,000
362,526
46,721
-
-
5,000
5,000
421,118
144,114
135,414
425,900
149,438
132,000
13,974
13,977
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21,125
525,000
5,000
425,900
149,438
132,000
13,977
Fair Value Measurements Using
Quoted
prices
in Active Significant
Fair Value Markets
Other
Significant
As of
December
31,
2016
for
Identical Observable Unobservable
Assets
(Level 1)
Inputs
(Level 2)
Inputs
(Level 3)
Carrying
Amount
As of
December
31,
2016
$
299,861
46,456
25,521
430,480
299,861
46,456
27,904
545,000
299,861
46,456
-
-
5,063
4,900
-
-
-
-
-
-
-
-
-
-
-
27,904
545,000
4,900
420,400
135,404
149,200
13,600
-
-
-
-
-
Receivable-backed notes payable
$
414,989
420,400
Notes payable and other borrowings
Junior subordinated debentures
Shares subject to mandatory redemption
133,790
152,367
13,517
135,404
149,200
13,600
(1) Notes
receivable
the
Company’s Consolidated Statements of Financial Condition as of December 31, 2017 and 2016 .
from preferred shareholders
in other assets in
included
is
F-62
Management has made estimates of fair value that it believes to be reasonable. However, because there
is no active market for many of these financial instruments, the fair value of these financial instruments
has been derived using the income approach technique with Level 3 unobservable inputs. Estimates
used in net present value financial models rely on assumptions and judgments regarding issues where
the outcome is unknown and actual results or values may differ significantly from these estimates.
These fair value estimates do not consider the tax effect that would be associated with the disposition of
the assets or liabilities at their fair value estimates. As such, the estimated value upon sale or
disposition of the asset may not be received and the estimated value upon disposition of the liability in
advance of its scheduled maturity may not be paid.
The amounts reported in the consolidated statements of financial condition, for cash and cash
equivalents and restricted cash approximate fair value.
The fair value of the Company’s accruing loans is calculated using an income approach with Level 3
inputs by discounting forecasted cash flows using estimated market discount rates. The fair value of
non-accruing collateral dependent loans is estimated using an income approach with Level 3 inputs
utilizing the fair value of the collateral adjusted for operating and selling expenses and discounted over
the estimated holding period based on the market risk inherent in the property.
The fair value of notes receivable and note receivable from preferred shareholders are estimated using
Level 3 inputs and is based on estimated future cash flows considering contractual payments and
estimates of prepayments and defaults, discounted at a market rate.
The fair value of the 5% Cumulative Preferred Stock, which is subject to mandatory redemption, is
calculated using the income approach with Level 3 inputs by discounting the estimated cash flows at a
market discount rate.
The amounts reported in the consolidated statements of financial condition relating to Bluegreen’s notes
payable and other borrowings, including receivable-backed notes payable, approximate fair value for
indebtedness that provides for variable interest rates. The fair value of Bluegreen’s fixed rate ,
receivable-backed notes payable was determined using Level 3 inputs by discounting the net cash
outflows estimated to be used to repay the debt. These obligations are to be satisfied using the proceeds
from the consumer loans that secure the obligations.
The fair value of Community Development Bonds is measured using the market approach with level 3
inputs obtained based on estimated market prices of similar financial instruments. Community
Development Bonds are included in notes payable and other borrowings in the above table.
The fair value of other borrowings (other than Bluegreen’s notes payable and other borrowings and
Community Development Bonds above) is measured using the income approach with Level 3 inputs
obtained by discounting the forecasted cash flows based on estimated market rates.
The fair value of junior subordinated debentures is estimated using Level 3 inputs based on the
contractual cash flows discounted at a market rate or based on market price quotes from the over-the-
counter bond market.
23. Certain Relationships and Related Party Transactions
The Company may be deemed to be controlled by Alan B. Levan, the Company’s Chairman and Chief
Executive Officer, and John E. Abdo, Vice Chairman of the Company. Together, Mr. Alan Levan and
Mr. Abdo may be deemed to beneficially own shares of the Company’s Class A Common Stock and
Class B Common Stock representing approximately 77% of the Company’s total voting power. Mr.
Alan B. Levan serves as Chairman of the Board and Mr. John E. Abdo serves as Vice-Chairman of the
Board for Bluegreen. Jarett S. Levan is President of the Company, a Director of Bluegreen and son of
Alan B. Levan. Further, Seth M. Wise is Executive Vice President and director of the Company and
Bluegreen and Raymond S. Lopez is Chief Financial Officer of the Company.
Currently, Woodbridge is a wholly-owned subsidiary of the Company and Woodbridge owns
approximately 90% of Bluegreen as of December 31, 2017.
Bluegreen paid or reimbursed the Company $1.5 million, $1.3 million and $1.4 million during 2017,
2016, and 2015, respectively, for management advisory, risk management, administrative and other
services.
F-63
The Company received $40.0 million, $70.0 million and $54.4 million of dividends from Bluegreen
during the years ended December 31, 2017, 2016 and 2015, respectively. Additionally, on January 23,
2018, Bluegreen paid the Company $10.1 million of dividends.
In April 2015, pursuant to a Loan Agreement and Promissory Note, a wholly owned subsidiary of
Bluegreen provided an $80.0 million loan to BBX Capital. Amounts outstanding on the loan bore
interest at a rate of 10% per annum until July 2017 when the interest rate was reduced to 6% per annum.
Payments of interest are required on a quarterly basis, with the entire $80.0 million principal balance
and accrued interest being due and payable in April 2020. BBX Capital is permitted to prepay the loan
in whole or in part at any time, and prepayments will be required, to the extent necessary, in order for
Bluegreen or its subsidiaries to remain in compliance with covenants under outstanding indebtedness.
During the years ended December 31, 2017, 2016 and 2015, BBX Capital paid $6.4 million ,
$8.0 million and $5.6 million, respectively, of interest expense on the loan to Bluegreen. The interest
expense was eliminated in consolidation in the Company’s consolidated financial statements.
On May 8, 2015, the Company, BCC, Woodbridge, Bluegreen and their respective subsidiaries entered
into an Agreement to Allocate Consolidated Income Tax Liability and Benefits pursuant to which,
among other customary terms and conditions, the parties agreed to file consolidated federal tax returns.
The parties calculate their respective income tax liabilities and attributes as if each of them were a
separate filer. If any tax attributes are used by another party to the agreement to offset its tax liability,
the party providing the benefit will receive an amount for the tax benefits realized. Bluegreen paid the
Company $39.4 million, $26.2 million and $19.2 million during the years ended December 31, 2017,
2016 and 2015, respectively, pursuant to this agreement.
On September 4, 2015, the Company entered into Share Exchange Agreements with Alan B. Levan,
John E. Abdo, Jarett S. Levan and Seth M. Wise (collectively, the “ BCC RSU Holders”) as holders of
restricted stock units of Class A Common Stock of BCC (“ BCC RSUs”). Pursuant to the Share
Exchange Agreements, (a) each BCC RSU Holder granted the Company the option to acquire,
simultaneously with the vesting of each BCC RSU, some or all of the shares of BCC’s Class A
Common Stock which, absent the Share Exchange Agreement, would (after withholding) have been
received by the BCC RSU Holder upon the vesting of the BCC RSUs and (b) the Company agreed to
issue to the BCC RSU Holder shares of the Company’s Class A Common Stock or Class B Common
Stock having an aggregate market value equal to the aggregate market value of the shares of BCC’s
Class A Common Stock acquired by the Company upon the option exercise. Pursuant to the Share
Exchange Agreements, the market value of the shares of the Company’s Class A Common Stock and
Class B Common Stock and of BCC’s Class A Common Stock was calculated as the closing price of
the applicable company’s class of stock on the trading day immediately preceding the date of closing of
the share exchange.
On September 12, 2016, the board of directors approved (a) the exercise in full of the Company’s
options with respect to all of the BCC RSUs held by the BCC RSU Holders which were scheduled to
vest between September 30, 2016 and October 4, 2016 and (b) the issuance of shares of the Company’s
Class B Common Stock in exchange therefor. In addition, during September 2016, each BCC RSU
Holder agreed, as a result of the Company’s entry into the Merger Agreement on July 27, 2016 and the
5.4 exchange ratio contemplated thereby, to receive no more than 5.4 shares of the Company’s Class A
Common Stock or Class B Common Stock for each share of BCC’s Class A Common Stock subject to
vested BCC RSUs with respect to any share exchanges effected during the pendency of the Merger
Agreement. Between September 30, 2016 and October 4, 2016, the Company issued a total of 1,530,822
shares of its Class B Common Stock to the BCC RSU Holders and received a total of 283,486 shares of
BCC’s Class A Common Stock in exchange therefor. Because the exchange ratio calculated by dividing
the closing price of BCC’s Class A Common Stock on each relevant date by the closing price of the
Company’s Class B Common Stock on each such date exceeded 5.4, the Company issued 5.4 shares of
its Class B Common Stock for each share of BCC’s Class A Common Stock received by it between
September 30, 2016 and October 4, 2016. Upon the Company’s adoption of the BCC Equity
Compensation Plans on December 15, 2016, the share exchange agreements were terminated. See Note
3 – Acquisitions and Mergers for a description of the BCC Merger in which BCC merged with and into
a wholly owned subsidiary of the Company.
F-64
The following table sets forth the number of shares of the Company’s Class B Common Stock issued to
the BCC RSU Holders and the number of shares of BCC’s Class A Common Stock received by the
Company in exchange therefor during 2016 pursuant to the share exchange transaction described above.
Individual
Reporting Person
Alan B. Levan
John E. Abdo
Jarett S. Levan
Seth M. Wise
Total
Date of Share
Exchange
9/30/2016
10/1/2016
9/30/2016
10/2/2016
9/30/2016
10/3/2016
9/30/2016
10/4/2016
Number of Shares
of the Company’s
Class B Common
Stock Issued to the
BCC RSU Holder
398,752
107,800
398,752
107,800
204,962
53,897
204,962
53,897
1,530,822
Number of Shares
of BCC’s Class A
Common Stock
Received by the
Company
73,843
19,963
73,843
19,963
37,956
9,981
37,956
9,981
283,486
During each of the years ended December 31, 2017, 2016 and 2015, the Company paid Abdo
Companies, Inc. approximately $306,000 in exchange for certain management services. John E. Abdo,
the Company’s Vice Chairman, is the principal shareholder and Chief Executive Officer of Abdo
Companies, Inc.
Certain of the Company’s affiliates, including its executive officers, have independently made
investments with their own funds in investments that the Company has sponsored or in which the
Company holds investments.
24. Segment Reporting
Operating segments are defined as components of an enterprise about which separate financial
information is available that is regularly reviewed by the chief operating decision maker (“CODM”) in
assessing performance and deciding how to allocate resources. Reportable segments consist of one or
more operating segments with similar economic characteristics, products and services, production
processes, type of customer, distribution system or regulatory environment.
The information provided for segment reporting is obtained from internal reports utilized by
management of the Company. The presentation and allocation of assets and results of operations may
not reflect the actual economic costs of the segments as standalone businesses. If a different basis of
allocation were utilized, the relative contributions of the segments might differ, but the relative trends in
the segments’ operating results would, in management’s view, likely not be impacted.
In June 2017, BBX Sweet Holdings acquired IT’SUGAR, for cash consideration of approximately
$58.4 million. Additionally, in 2017, the Company commenced a reorganization of BBX Sweet
Holdings’ businesses including the consolidation of manufacturing facilities and integration of
operating entities. As a result of these activities, internal management reports were modified, and the
CODM began utilizing the new reporting structure to manage operations and allocate resources. As a
consequence, the Company determined that it was appropriate to report the operations of BBX Sweet
Holdings as a separate reportable segment together with the Company’s three other reportable segments
as follows: Bluegreen, BBX Capital Real Estate, Renin, and BBX Sweet Holdings. Segment
information for the years ended December 31, 2016 and 2015 has been updated retrospectively to
conform to 2017 presentation.
In the table for the years ended December 31, 2017, 2016 and 2015, amounts set forth in the column
entitled “Corporate Expenses & Other” include interest expense associated with Woodbridge’s trust
preferred securities (“TruPs”), corporate overhead and, for the 2016 and 2017 periods, start-up expenses
for the Company’s MOD Super-Fast Pizza franchise restaurants. The Company opened two MOD
Super-Fast Pizza franchise restaurants during the fourth quarter of 2017 and a third location during the
first quarter of 2018. As of December 31, 2017, management determined that the operations of MOD
did not warrant separate presentation as a reportable segment.
F-65
The Company evaluates segment performance based on segment income before income taxes.
Set forth below is summary information regarding the Company’s reportable segments:
Bluegreen
Bluegreen markets, sells and manages real estate-based VOIs in resorts generally located in popular,
high-volume, “drive-to” vacation destinations, which were developed or acquired by Bluegreen or are
owned by others in which case Bluegreen earns fees for providing these services. Bluegreen earns fees
by providing VOI title services, club and homeowners’ association management services, mortgage
servicing, reservation services, services related to the Traveler-Plus program, food and beverage and
other retail operations, and construction design and development services. In addition, Bluegreen
provides financing to qualified individual purchasers of VOIs, which provides significant interest
income.
BBX Capital Real Estate
BBX Capital Real Estate activities include the acquisition, ownership and management of real estate,
real estate development projects, and investments in real estate joint ventures. BBX Capital Real Estate
also manages the legacy assets acquired in connection with the sale of BankAtlantic to BB&T
Corporation in July 2012. The legacy assets include portfolios of loans receivable, real estate properties
and previously charged-off BankAtlantic loans.
Renin
Renin manufactures interior closet doors, wall décor, hardware and fabricated glass products and
operates through its headquarters in Canada and two manufacturing, assembly and distribution facilities
in Canada and the United States. During 2017, total revenues for the Renin reportable segment include
$34.0 million of trade sales to two major customers and their affiliates. Renin’s revenues generated
outside the United States totaled $10.6 million for the year ended December 31, 2017. Renin’s
properties and equipment located outside the United States totaled $3.1 million as of December 31,
2017.
BBX Sweet Holdings
BBX Sweet Holdings consists of IT’SUGAR, Hoffman’s Chocolates, and manufacturing facilities in the
chocolate and confection industries serving wholesalers such as boutique retailers, big box chains,
department stores, national resort properties, corporate customers, and private label brands. IT’SUGAR
is a specialty candy retailer with 95 retail locations in 26 states and Washington, DC. Hoffman’s
Chocolates is a manufacturer of gourmet chocolates with retail locations in South Florida.
F-66
The table below sets forth the Company’s segment information as of and for the year ended December
31, 2017 (in thousands):
Bluegreen
$ 239,662
229,389
111,819
-
86,876
-
312
668,058
17,439
68,336
-
29,977
Reportable Segments
BBX
Capital
Real
Estate
BBX
Sweet
Renin Holdings
Corporate
Expenses
&
Other
Eliminations
Segment
Total
-
-
-
-
-
-
- 69,648
-
2,225
-
2,442
4,647
-
9,314 69,648
-
-
-
72,905
38
-
74
73,017
-
-
-
245
969
-
1,480
2,694
-
-
-
-
(6,400)
-
(549)
(6,949)
239,662
229,389
111,819
142,798
83,708
2,442
5,964
815,782
-
-
-
-
-
17,439
-
-
- 49,358
509
0
-
-
-
-
(7,495)
1,646
-
-
-
-
-
-
-
48,306
335
-
5,785
-
91
10,784
-
-
-
-
(6,929)
(13,169)
-
-
(6,400)
-
-
-
-
68,336
97,755
35,205
(7,495)
7,431
(6,929)
(13,169)
416,970
532,722
11,113 17,408
5,264 67,275
35,374
89,800
57,809
48,586
(549)
(6,949)
538,125
736,698
Revenues:
Sales of VOIs
Fee-based sales
commission revenue
Other fee-based services
revenue
Trade sales
Interest income
Net gains on sales of assets
Other revenue
Total revenues
Costs and Expenses:
Cost of sales of VOIs
Cost of other fee-based
services
Cost of trade sales
Interest expense
Recoveries from loan losses,
net
Asset impairments, net
Net gains on cancellation of
junior subordinated
debentures
Litigation costs and
penalty reimbursements
Selling, general and
administrative expenses
Total costs and expenses
Equity in net earnings of
unconsolidated real
estate joint ventures
Foreign exchange loss
Income (loss) before income
taxes
$ 135,336
18,533
2,180
(16,783)
(45,892)
-
-
14,483
-
-
(193)
-
-
-
-
Total assets
$ 1,236,424
162,214 36,134
92,588
161,340
(82,035) 1,606,665
Expenditures for property
14,115
9,632
308
581
2,786
1,713
2,246
4,080
2,590
756
4,478
$
$ 197,337
-
8,636
-
863
55
10,160
149
145,530
$
$
-
-
47,275
-
-
-
-
39,482
-
-
and equipment
$
Depreciation and amortization $
Debt accretion and
amortization
Cash and cash equivalents
Equity method investments
included in total assets
Goodwill
Notes payable and
other borrowings
Junior subordinated
debentures
$ 521,312
24,215 12,890
6,815
80,000
(80,000)
565,232
$
70,384
-
-
-
65,030
-
135,414
F-67
-
-
-
14,483
(193)
93,374
-
-
-
-
-
-
22,045
16,762
4,682
362,526
47,275
39,482
The table below sets forth the Company’s segment information as of and for the year ended December
31, 2016 (in thousands):
Reportable Segments
BBX
Capital
Real
Estate
BBX
Sweet
Renin Holdings Other
Corporate
Expenses
&
Eliminations
Segment
Total
-
-
-
-
-
-
-
-
3,606
6,076
5,067
14,749
-
65,225
-
-
-
65,225
-
30,771
10
-
8
30,789
-
-
-
-
620
-
2,230
2,850
-
-
-
-
(8,000)
-
(971)
(8,971)
266,142
201,829
103,448
95,996
85,746
6,076
8,058
767,295
-
-
-
-
-
-
-
-
27,346
-
47,088
313
-
27,253
409
-
-
12,462
-
-
(8,000)
64,479
74,341
36,037
(20,508)
2,304
-
-
-
2,352
-
-
-
-
(20,508)
4,656
Bluegreen
$ 266,142
201,829
103,448
-
89,510
-
1,724
662,653
27,346
64,479
-
30,853
-
415,027
537,705
11,864
(6,340)
17,186
64,587
15,720
45,734
57,931
70,393
(971)
(8,971)
516,757
703,108
-
-
13,630
-
-
219
-
-
-
-
$ 124,948
34,719
857
(14,945)
(67,543)
-
-
-
13,630
219
78,036
Revenues:
Sales of VOIs
Fee-based sales
commission revenue
Other fee-based services
revenue
Trade sales
Interest income
Net gains on sales of assets
Other revenue
Total revenues
Costs and Expenses:
Cost of sales of VOIs
Cost of other fee-based
services
Cost of trade sales
Interest expense
Recoveries from loan losses,
net
Asset impairments, net
Selling, general and
administrative expenses
Total costs and expenses
Equity in net earnings of
unconsolidated real
estate joint ventures
Foreign exchange gain
Income (loss) before income
taxes
Total assets
$ 1,128,630
179,856
28,913
34,356
146,702
(82,389) 1,436,068
Expenditures for property
and equipment
$
Depreciation and amortization $
Debt accretion and
amortization
Cash and cash equivalents
Equity method investments
included in total assets
9,605
9,536
266
603
1,718
818
4,736
$
$ 144,120
$
$
-
-
-
13,628
43,491
-
83
(288)
-
-
834
1,437
102
8,627
-
6,731
516
512
-
133,774
-
-
-
-
-
-
-
-
12,939
12,906
4,921
299,861
43,491
6,731
Goodwill
Notes payable and
other borrowings
Junior subordinated
debentures
$ 513,371
20,743
9,692
4,973
80,000
(80,000)
548,779
$
69,044
-
-
-
83,323
-
152,367
F-68
The table below sets forth the Company’s segment information as of and for the year ended December
31, 2015 (in thousands):
Bluegreen
$ 259,236
173,659
97,539
-
84,331
-
2,883
617,648
22,884
60,942
-
35,698
Reportable Segments
BBX
Capital
Real
Estate
BBX
Sweet
Renin Holdings Other
Corporate
Expenses
&
Eliminations
Segment
Total
-
-
-
-
-
-
-
-
- 56,461
-
9,921
-
31,181
5,540
-
46,642 56,461
-
27,823
-
-
14
27,837
-
-
-
-
859
(89)
1,999
2,769
-
-
259,236
173,659
-
-
(6,040)
-
(1,060)
(7,100)
97,539
84,284
89,071
31,092
9,376
744,257
-
-
-
-
-
22,884
-
-
- 42,123
309
-
-
20,584
950
-
-
-
(13,457)
287
-
-
-
-
-
-
-
-
-
9,491
-
-
36,500
-
-
(6,040)
60,942
62,707
40,408
-
-
-
(13,457)
287
36,500
373,804
493,328
12,773 15,049
(397) 57,481
15,071
36,605
51,063
97,054
(1,060)
(7,100)
466,700
676,971
-
-
(1,565)
-
-
(1,038)
-
-
-
$ 124,320
45,474
(2,058)
(8,768)
(94,285)
-
-
-
(1,565)
(1,038)
64,683
Revenues:
Sales of VOIs
Fee-based sales
commission revenue
Other fee-based services
revenue
Trade sales
Interest income
Net gains (losses) on sales of
assets
Other revenue
Total revenues
Costs and Expenses:
Cost of sales of VOIs
Cost of other fee-based
services
Cost of trade sales
Interest expense
Recoveries from loan losses,
net
Asset impairments, net
Litigation settlement
Selling, general and
administrative expenses
Total costs and expenses
Equity in net earnings of
unconsolidated real
estate joint ventures
Foreign exchange loss
Income (loss) before income
taxes
Total assets
$ 1,083,151
204,787 22,778
33,836
78,839
(82,431) 1,340,960
Expenditures for property
and equipment
$
Depreciation and amortization $
Debt accretion and
amortization
Cash and cash equivalents
Equity method investments
included in total assets
Goodwill
Notes payable and
other borrowings
Junior subordinated
debentures
9,176
9,181
5,681
$
$ 115,524
$
$
-
-
$ 503,521
$
67,255
92
546
97
632
2,003
1,628
135
1,069
1,535
263
92
63,550
-
-
-
7,601
-
-
-
-
-
-
-
-
12,810
12,428
6,005
198,905
42,962
7,601
8,071
13,314
80,000
(80,000)
524,906
-
-
83,230
-
150,485
4
810
-
18,130
42,962
-
-
-
F-69
25. Selected Quarterly Results (Unaudited)
The following tables summarize the results of operations for each fiscal quarter during the years ended December
31, 2017 and 2016 (in thousands except for per share data):
2017
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Total
Revenues
Costs and expenses
Equity in net earnings of
unconsolidated
real estate joint ventures
Foreign exchange gains (losses)
Income before income taxes
(Provision) benefit for income taxes
Net income
Less: Net income attributable to
noncontrolling interests
Net income to common shareholders
Basic earnings per common share
Diluted earnings per common share
Basic weighted average number of
common shares outstanding
$
$
Diluted weighted average number of
common and common equivalent shares
outstanding
$ 171,651
141,831
29,820
203,192
181,974
21,218
226,192 214,747
208,852 204,041
10,706
17,340
815,782
736,698
79,084
3,714
191
33,725
(13,054)
20,671
2,796
17,875
3,455
(398)
24,275
(8,779)
15,496
3,415
12,081
2,451
(105)
19,686
(8,195)
11,491
4,863
119
15,688
37,251
52,939
14,483
(193)
93,374
7,223
100,597
3,256
8,235
8,935
44,004
18,402
82,195
0.18
0.12
0.08
0.44
0.17
0.11
0.08
0.43
0.83
0.79
98,921
98,240
98,073
99,744
98,745
105,866
106,173
106,021 102,440
103,916
F-70
2016
Revenues
Costs and expenses
Equity in net (losses) earnings of
unconsolidated real estate joint
ventures
Foreign exchange gains (losses)
Income before income taxes
(Provision) benefit for income taxes
Net income
Less: Net income attributable to
noncontrolling interests
Net income to common shareholders
Basic earnings per common share
Diluted earnings per common share
$
$
Basic weighted average number of
common shares outstanding
Diluted weighted average number of
common and common equivalent shares
outstanding
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$ 165,902
153,310
12,592
193,154
192,616
538
209,695
171,685
38,010
198,544
185,497
13,047
Total
767,295
703,108
64,187
13,630
219
78,036
(36,379)
41,657
(342)
210
12,460
(5,107)
7,353
1,871
5,482
0.06
0.06
1,655
110
2,303
368
2,671
2,427
244
0.00
0.00
4,480
5
42,495
(19,118)
23,377
7,837
(106)
20,778
(12,522)
8,256
5,602
17,775
3,395
4,861
13,295
28,362
0.21
0.05
0.21
0.05
0.33
0.32
86,839
85,946
85,864
88,949
86,902
87,013
86,145
86,573
89,961
87,492
F-71
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) to make known material information concerning the Company, including its
subsidiaries, to those officers who certify our financial reports and to other members of our senior
management. As of December 31, 2017, our management evaluated, with the participation of our Chief
Executive Officer and Chief Financial Officer, our disclosure controls and procedures. Based on that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31,
2017, our disclosure controls and procedures were effective to ensure that information required to be
disclosed in the reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the rules and forms of the Securities and
Exchange Commission and is accumulated and communicated to our management, including our Chief
Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding
required disclosure.
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect
that our disclosure controls and procedures and internal control over financial reporting will prevent all
errors and all improper conduct. 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
all control systems, no evaluation of controls can provide absolute assurance that all control issues and
instances of improper conduct, if any, 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. Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the control. Further, the
design of any control system is based in part upon assumptions about the likelihood of future events,
and there can be no assurance that any such design will succeed in achieving its stated goals under all
potential future conditions.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting, as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial
reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with
accounting principles generally accepted in the United States of America. As of December 31, 2017,
our management, with the participation of our Chief Executive Officer and Chief Financial Officer,
evaluated the effectiveness of our internal control over financial reporting based on the framework in
Internal Control – Integrated Framework – 2013 issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO). Based on such evaluation, our management concluded that our
internal control over financial reporting was effective as of December 31, 2017.
Management has excluded IT’SUGAR, LLC from its assessment of internal control over financial
reporting as of December 31, 2017. We acquired this business during the second quarter of 2017 and
our management has not conducted an assessment of the acquired business’ internal control over
financial reporting. Total assets and revenues
91
of IT’SUGAR, LLC represent 4% and 6%, respectively, of the related consolidated financial statement
amounts as of and for the year ended December 31, 2017.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
92
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
93
Board of Directors and Shareholders
BBX Capital Corporation
Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of BBX Capital Corporation (a
Florida corporation) and subsidiaries (the “Company”) as of December 31, 2017, based on
criteria established in the 2013 Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our
opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2017, based on criteria established in the 2013 Internal
Control—Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the
Company as of and for the year ended December 31, 2017, and our report dated March 9, 2018
expressed an unqualified opinion on those financial statements.
Basis for opinion
The Company’s management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Management’s Report on Internal Control Over
Financial Reporting (“Management’s Report”). Our responsibility is to express an opinion on
the Company’s internal control over financial reporting based on our audit. We are a public
accounting firm registered with the PCAOB and are required to be independent with respect to
the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all material respects. Our
audit included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk, and performing such
other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Our audit of, and opinion on, the Company’s internal control over financial reporting does not
include the internal control over financial reporting of the Company’s subsidiary, IT’SUGAR,
LLC, whose financial statements reflect total assets and revenues constituting 4 and 6 percent,
respectively, of the related consolidated financial statement amounts as of and for the year
ended December 31, 2017. As indicated in Management’s Report, IT’SUGAR, LLC was
acquired during 2017. Management’s assertion on the effectiveness of the Company’s internal
control over financial reporting excluded internal control over financial reporting of
IT’SUGAR, LLC.
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
94
/s/ GRANT THORNTON LLP
Fort Lauderdale, Florida
March 9, 2018
95
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the quarter
ended December 31, 2017 that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
On March 6, 2018, BBX Capital, BBX Sweet Holdings, Food for Thought Restaurant Group-Florida,
LLC, BBX Capital Florida LLC and Woodbridge, entered into a Loan and Security Agreement and
related agreements with Iberiabank, as administrative agent and lender, and City National Bank of
Florida, as lender, which provide for a $50 million revolving line of credit. Amounts borrowed under
the facility will accrue interest at a floating rate of 30-day LIBOR plus a margin of 3.0% to 3.75% or the
Prime Rate plus a margin of 1.50% to 2.25%. The applicable margin is based on BBX Capital’s debt to
EBITDA ratio. Payments of interest only will be payable monthly. The facility matures, and all
outstanding principal and interest will be payable, on March 6, 2020, with twelve month renewal
options at BBX Capital’s request, subject to satisfaction of certain conditions. The facility is secured
by a pledge of a percentage of BBX Capital’s membership interests in Woodbridge having a value of
not less than $100 million. Borrowings under the facility may be used for business acquisitions, real
estate investments, stock repurchases, letters of credit and general corporate purposes. Under the terms
and conditions of the Loan and Security Agreement, we are required to comply with certain financial
covenants, including maintaining minimum unencumbered liquidity and complying with financial ratios
related to fixed charge coverage and debt to EBITDA. The Loan and Security Agreement also contains
customary affirmative and negative covenants, including those that, among other things, limit the ability
of BBX Capital and the other borrowers to incur additional indebtedness and to make certain loans and
investments.
The foregoing description of the Loan and Security Agreement is only a summary and is qualified in its
entirety by reference to the full text of the agreements, which are filed as Exhibits 10.66 in Item 15 to
this Annual Report.
96
PART III
The remaining information required by Items 10 through 14 of Part III of Form 10-K will be provided
by incorporating such information by reference to our Definitive Proxy Statement on Schedule 14A
relating to our 2018 Annual Meeting of Shareholders in the event it is filed with the Securities and
Exchange Commission by no later than 120 days after December 31, 2017. Alternatively, we may
provide the information required by Items 10 through 14 of Part III of Form 10-K in an amendment to
this Annual Report on Form 10-K under cover of Form 10-K/A, in which case such amendment will be
filed with the Securities and Exchange Commission by the end of such 120 day period.
97
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
a) Documents Filed as Part of this Report:
1) Financial Statements
The following consolidated financial statements of BBX Capital Corporation and
its subsidiaries are included herein under Part II, Item 8 of this Report.
Reports of Independent Registered Public Accounting Firm.
Consolidated Statements of Financial Condition as of December 31,
2017 and 2016.
Consolidated Statements of Operations and Comprehensive Income
for each of the years in the three year period ended December 31,
2017.
Consolidated Statements of Changes in Equity for each of the years
in the three year period ended December 31, 2017.
Consolidated Statements of Cash Flows for each of the years in the
three year period ended December 31, 2017.
Notes to Consolidated Financial Statements.
2) Financial Statement Schedules
Schedule III – Real estate and accumulated depreciation for BBX Capital
Corporation
Schedule IV – Mortgage loans on real estate for BBX Capital Corporation
All other schedules are omitted as the required information is either not applicable
or presented in the financial statements or related notes.
3) Exhibits
The following exhibits are either filed as a part of or furnished with this report or are incorporated herein by
reference to documents previously filed as indicated below:
Exhibit
Number
2.1
2.2
3.1
3.2
Description
Reference
Agreement and Plan of Merger, dated July 27,
2016, by and among the Company, BBX Merger
Subsidiary LLC and BBX Capital Corporation
Letter Agreement, dated October 20, 2016,
amending the Agreement and Plan of the Merger,
dated as of July 27, 2016 by and among the
Company, BBX Merger Subsidiary LLC and BBX
Capital Corporation
Exhibit 2.1 to Registrant's Current Report on
Form 8-K filed on July 28, 2016
Exhibit 2.1 to Registrant's Current Report on
Form 8-K filed on October 20, 2016
Amended and Restated Articles of Incorporation,
effective October 8, 1997
Exhibit 3.1 of Registrant’s Registration
Statement on Form 8-A filed October 16, 1997
Amendment to the Amended and Restated Articles
of Incorporation, effective June 18, 2002
Exhibit 4 of Registrant’s Current Report on Form
8-K filed June 27, 2002
98
3.3
3.4
3.5
3.6
3.7
3.8
3.9
4.3
10.1
10.2
10.3
10.4
Amendment to the Amended and Restated Articles
of Incorporation, effective April 15, 2003
Appendix B of Registrant’s Definitive Proxy
Statement on Schedule 14A filed April 18, 2003
Amendment to the Amended and Restated Articles
of Incorporation, effective February 7, 2005
Amendment to the Amended and Restated Articles
of Incorporation, effective June 22, 2004, as
amended on December 17, 2008
Appendix A of Registrant’s Definitive
Information Statement on Schedule 14C filed
January 18, 2005
Exhibit 3.1 of Registrant’s Current Report on
Form 8-K filed December 18, 2008
Amendment to the Amended and Restated Articles
of Incorporation, effective May 19, 2009
Appendix A of Registrant’s Definitive Proxy
Statement on Schedule 14A filed April 29, 2009
Amendment to the Amended and Restated Articles
of Incorporation, effective September 21, 2009
Amendment to the Amended and Restated Articles
of Incorporation, effective September 21, 2009
Amendment to the Amended and Restated Articles
of Incorporation, effective December 19, 2013
3.10
Amendment to the Amended and Restated Articles
of Incorporation, effective January 30, 2017
3.11
Bylaws, as amended
4.1
Specimen Class A Common Stock Certificate
4.2
Specimen Class B Common Stock Certificate
Rights Agreement dated as of September 21, 2009
by and between BFC Financial Corporation and
American Stock Transfer and Trust Company,
LLC as Rights Agent.
Annex D of the Joint Proxy Statement/Prospectus
that forms a part of Amendment No. 1 to
Registrant’s Registration Statement on Form S-4
filed August 14, 2009
Exhibit 3.8 of Registrant’s Current Report on
Form 8-K filed September 25, 2009
Exhibit 3.1 of Registrant’s Current Report on
Form 8-K filed December 23, 2013
Exhibit A of the Registrant’s Definitive
Information Statement on Schedule 14C filed
January 9, 2017
Exhibit 3.1 of Registrant’s Current Report on
Form 8-K filed February 12, 2015
Exhibit 4.1 of Registrant's Annual Report on
Form 10-K for the year ended December 31,
2016 filed on March 15, 2017
Exhibit 4.2 of Registrant's Annual Report on
Form 10-K for the year ended December 31,
2016 filed on March 15, 2017
Exhibit 4.1 of Registrant’s Current Report on
Form 8-K, filed September 25, 2009
BFC Financial Corporation 2014 Stock Incentive
Plan, as amended
Appendix A to the Registrant’s Definitive Proxy
Statement on Schedule 14A filed April 24, 2015
BFC Financial Corporation 2005 Stock Incentive
Plan, as amended
BBX Capital 2005 Restricted Stock and Option
Plan, as amended
BBX Capital 2014 Stock Incentive Plan, as
amended
10.5
BBX Capital 2014 Incentive Plan, as amended
10.6
Employment agreement between Alan B. Levan
and BFC Financial Corporation
10.7
Employment agreement between John E. Abdo and
BFC Financial Corporation
10.8
10.9
Employment agreement between Seth M. Wise and
BFC Financial Corporation
Employment agreement between Jarett S. Levan
and BFC Financial Corporation
99
Appendix A to the Registrant’s Definitive Proxy
Statement on Schedule 14A filed November 21,
2012
Exhibit 10.3 of Registrant's Annual Report on
Form 10-K for the year ended December 31,
2016 filed on March 15, 2017
Exhibit 10.4 of Registrant's Annual Report on
Form 10-K for the year ended December 31,
2016 filed on March 15, 2017
Appendix A to the Registrant’s Definitive Proxy
Statement on Schedule 14A filed April 21, 2017
Exhibit 10.1 of Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 30,
2012 filed on November 14, 2012
Exhibit 10.2 of Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 30,
2012 filed on November 14, 2012
Exhibit 10.3 of Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 30,
2012 filed on November 15, 2012
Exhibit 10.5 of Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 30,
2012 filed on November 15, 2012
10.10
Employment agreement between Ray S. Lopez and
BFC Financial Corporation
10.11
Employment agreement between Alan B. Levan
and BBX Capital Corporation
10.12
Employment agreement between John E. Abdo and
BBX Capital Corporation
10.13
Employment agreement between Jarett S. Levan
and BBX Capital Corporation
10.14
Employment agreement between Seth M. Wise and
BBX Capital Corporation
10.15
Employment agreement between Ray S. Lopez and
BBX Capital Corporation
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
Tax Sharing Agreement dated as of May 8, 2015,
by and among BFC Financial Corporation, BBX
Capital and Bluegreen
Loan Agreement and Promissory Note, dated April
17, 2015, between BFC Financial Corporation and
Bluegreen Specialty Finance, LLC
Underwriting Agreement, dated November 16,
2017, by and between Bluegreen Vacations
Corporation, Woodbridge Holdings, LLC, and
Stifel, Nicolaus & Company, Incorporated and
Credit Suisse Securities (USA) LLC, as
representatives of the several underwriters named
in Schedule I thereto
Indenture between BXG Receivables Note Trust
2012-A as Issuer, Bluegreen Corporation as
Servicer, Vacation Trust, Inc. as Club Trustee,
Concord Servicing Corporation as Backup Servicer
and U.S. Bank National Association, as Indenture
Trustee, Paying Agent and Custodian, dated as of
August 15, 2012.
Sale Agreement by and among BRFC 2012-A
LLC as Depositor and BXG Receivables Note
Trust 2012-A as Issuer dated as of August 15,
2012
Transfer Agreement by and among Bluegreen
Corporation, BXG Timeshare Trust I as Seller and
BRFC 2012-A LLC as Depositor, dated as of
August 15, 2012
Purchase and Contribution Agreement by and
among Bluegreen Corporation, as Seller and BRFC
2012-A LLC as Depositor, dated as of August 15,
2012
Note Purchase and Collateral Trust and Security
Agreement by and among Bluegreen Corporation,
Bluegreen Vacations Unlimited, Inc., Bluegreen
Resorts Managements, Inc., and TFRI 2013-1 LLC
as Obligors, Bluegreen Nevada, LLC as Guarantor,
and US National Bank as Collateral Agent, Note
Registrar and Paying Agent, and AIG Asset
Management (U.S.) LLC as Designated
Representative, dated March 26, 2013
BXG Receivables Note Trust 2013-A, Standard
Definitions
100
Exhibit 10.1 of Registrants Quarterly Report on
Form 10-Q for the quarter ended March 31, 2015
filed on May 8, 2015
Exhibit 10.10 of Registrant's Annual Report on
Form 10-K for the year ended December 31,
2016 filed on March 15, 2017
Exhibit 10.11 of Registrant's Annual Report on
Form 10-K for the year ended December 31,
2016 filed on March 15, 2017
Exhibit 10.12 of Registrant's Annual Report on
Form 10-K for the year ended December 31,
2016 filed on March 15, 2017
Exhibit 10.13 of Registrant's Annual Report on
Form 10-K for the year ended December 31,
2016 filed on March 15, 2017
Exhibit 10.14 of Registrant's Annual Report on
Form 10-K for the year ended December 31,
2016 filed on March 15, 2017
Exhibit 10.2 of Registrant's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2015
filed on May 8, 2015
Exhibit (b)(1) to Amendment No. 2 of the
Schedule TO-T filed by Registrant with the
Securities and Exchange Commission on April
17, 2015
Exhibit 1.1 of Registrant's Current Report on
Form 8-K filed with the SEC on November 21,
2017
Exhibit 10.101 of Bluegreen Corporation's Form
8-K filed with the SEC on September 14, 2012
Exhibit 10.102 of Bluegreen Corporation's Form
8-K filed with the SEC on September 14, 2012
Exhibit 10.103 of Bluegreen Corporation's Form
8-K filed with the SEC on September 14, 2012
Exhibit 10.104 of Bluegreen Corporation's Form
8-K filed with the SEC on September 14, 2012
Exhibit 10.1 of Registrant's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2013
filed on May 15, 2013
Exhibit 10.1 of Registrant's Current Report on
Form 8-K filed on October 2, 2013
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
10.33
10.34
10.35
10.36
10.37
10.38
Indenture between BXG Receivables Note Trust
2013-A, as Issuer, Bluegreen Corporation, as
Servicer, Vacation Trust, Inc. as Club Trustee,
Concord Servicing Corporation, as Backup
Servicer, and U.S. Bank National Association, as
Indenture Trustee, Paying Agent and Custodian,
dated as of September 15, 2013
Sale Agreement by and among BRFC 2013-A
LLC, as Depositor, and BXG Receivables Note
Trust 2013-A, as Issuer, dated as of September 15,
2013
Transfer Agreement by and among Bluegreen
Corporation, BXG Timeshare Trust I, as Seller,
and BRFC 2013-A LLC, as Depositor, dated as of
September 15, 2013
Purchase and Contribution Agreement by and
among Bluegreen Corporation, as Seller and BRFC
2013-A LLC as Depositor, dated as of September
15, 2013
Second Amended and Restated Purchase and
Contribution Agreement, dated as of May 1, 2017,
between Bluegreen Corporation and Bluegreen
Timeshare Finance I
Second Amended and Restated Sale Agreement,
dated as of May 1, 2017, between Bluegreen
Timeshare Finance I and BXG Timeshare Trust I
Sixth Amended and Restated Indenture, dated as of
May 1, 2017, among BXG Timeshare Trust I,
Bluegreen Corporation, Vacation Trust, Inc.,
Concord Servicing Corporation, U.S. Bank
National Association, KeyBank National
Association and DZ Bank AG Deutsche Zentral-
Genossenschaftsbank, Frankfurt AM Main
Sixth Amended and Restated Note Funding
Agreement, dated as of May 1, 2017, by and
among Bluegreen Corporation, BXG Timeshare
Trust I, Bluegreen Timeshare Finance Corporation
I, the purchasers from time to time parties thereto
and KeyBank National Association and DZ Bank
AG Deutsche Zentral-Genossenschaftsbank,
Frankfurt AM Main
Second Amended and Restated Trust Agreement,
dated as of May 19, 2017, by and among
Bluegreen Timeshare Finance I, GSS Holdings,
Inc. and Wilmington Trust Company
Seventh Amended and Restated Standard
Definitions to the Transaction Documents filed as
Exhibit 10.1 through 10.5 to Registrant's Current
Report on Form 8-K filed May 19, 2017
Credit Agreement dated November 5, 2014, among
Bluegreen Corporation, as Borrower, Fifth Third
Bank, as Administrative Agent and L/C Issuer, and
Guarantors and Lenders party thereto
Indenture, dated as of January 15, 2015, between
BXG Receivables Note Trust 2015-A, as Issuer,
Bluegreen Corporation, as Servicer, Vacation
Trust, Inc. as Club Trustee, Concord Servicing
Corporation, as Backup Servicer, and U.S. Bank
National Association, as Indenture Trustee, Paying
Agent and Custodian
Sale Agreement, dated as of January 15, 2015, by
and among BRFC 2015-A LLC, as Depositor, and
BXG Receivables Note Trust 2015-A, as Issuer
Transfer Agreement, dated as of January 15, 2015,
by and among Bluegreen Corporation, BXG
Timeshare Trust I, as Seller, and BRFC 2015-A
LLC, as Depositor
101
Exhibit 10.2 of Registrant's Current Report on
Form 8-K filed on October 2, 2013
Exhibit 10.3 of Registrant's Current Report on
Form 8-K filed on October 2, 2013
Exhibit 10.4 of Registrant's Current Report on
Form 8-K filed on October 2, 2013
Exhibit 10.5 of Registrant's Current Report on
Form 8-K filed on October 2, 2013
Exhibit 10.1 to Registrant's Current Report on
Form 8-K filed on May 24, 2017
Exhibit 10.2 to Registrant's Current Report on
Form 8-K filed on May 24, 2017
Exhibit 10.3 to Registrant's Current Report on
Form 8-K filed on May 24, 2017
Exhibit 10.4 to Registrant's Current Report on
Form 8-K filed on May 24, 2017
Exhibit 10.5 to Registrant's Current Report on
Form 8-K filed on May 24, 2017
Exhibit 10.6 to Registrant's Current Report on
Form 8-K filed on May 24, 2017
Exhibit 10.1 of Registrant's Quarterly Report on
Form 10-Q filed on November 10, 2014
Exhibit 10.1 of Registrant's Current Report on
Form 8-K filed on February 3, 2015
Exhibit 10.2 of Registrant's Current Report on
Form 8-K filed on February 3, 2015
Exhibit 10.3 of Registrant's Current Report on
Form 8-K filed on February 3, 2015
10.39
10.40
10.41
10.42
10.43
10.44
10.51
10.45
10.46
10.47
10.48
10.49
10.50
10.51
Purchase and Contribution Agreement, dated as of
January 15, 2015, by and among Bluegreen
Corporation, as Seller, and BRFC 2015-A LLC, as
Depositor
BXG Receivables Note Trust 2015-A, Standard
Definitions
Second Amended and Restated Secured
Promissory Note dated June 25, 2015, by and
among Bluegreen Vacations Unlimited, Inc., as
Borrower, and Pacific Western Bank, as Lender
Second Amendment to Amended and Restated
Loan and Security Agreement dated June 25,
2015, by and among Bluegreen Corporation, as
Borrower, and Pacific Western Bank, as Lender
Third Amended and Restated Revolving
Promissory Note (Hypothecation Facility) dated
June 30, 2015, by and among Bluegreen / Big
Cedar Vacations, LLC, as Borrower, and National
Bank of Arizona, as Lender
First Amended and Restated Loan and Security
Agreement (Hypothecation Facility) dated June 30,
2015, by and among Bluegreen / Big Cedar
Vacations, LLC, as Borrower and National Bank
of Arizona, as Lender
First Amended and Restated Promissory Note
(Inventory Loan) dated June 30, 2015, by and
among Bluegreen / Big Cedar Vacations, LLC, as
Borrower, and National Bank of Arizona, as
Lender
First Amended and Restated Loan Agreement
(Inventory Loan) dated June 30, 2015, by and
among Bluegreen / Big Cedar Vacations, LLC, as
Borrower, and National Bank of Arizona, as
Lender
Fourth Amended and Restated Revolving
Promissory Note (Hypothecation Facility) dated
September 28, 2017, by and among Bluegreen /
Big Cedar Vacations, LLC, as Borrower, and ZB,
N.A. dba National Bank of Arizona, as Lender
Second Amended and Restated Loan and Security
Agreement (Hypothecation Facility) dated
September 28, 2017, by and among Bluegreen /
Big Cedar Vacations, LLC, as Borrower, and ZB,
N.A. dba National Bank of Arizona, as Lender
Second Amended and Restated Promissory Note
(Inventory Loan) dated September 28, 2017, by
and among Bluegreen / Big Cedar Vacations, LLC,
as Borrower, and ZB, N.A. dba National Bank of
Arizona, as Lender
Second Amended and Restated Loan Agreement
(Inventory Loan) dated September 28, 2017, by
and among Bluegreen / Big Cedar Vacations, LLC,
as Borrower, and ZB, N.A. dba National Bank of
Arizona, as Lender
Full Guaranty (Hypothecation Facility) dated
September 30, 2010, by Bluegreen Corporation, as
Guarantor, in favor of National Bank of Arizona,
as Lender (incorporated by reference to Exhibit
10.102 to Bluegreen’s Quarterly Report on Form
10-Q for the quarter ended September 30, 2010,
filed with the SEC on November 10, 2010)
Guarantor Consent and Ratification and
Confirmation of and Amendment to Full Guaranty
(Hypothecation Facility) dated September 28,
2017, by Bluegreen Vacations Corporation, as
Guarantor, in favor of Z.B., National Bank of
Arizona, as Lender
102
Exhibit 10.4 of Registrant's Current Report on
Form 8-K filed on February 3, 2015
Exhibit 10.5 of Registrant's Current Report on
Form 8-K filed on February 3, 2015
Exhibit 10.1 of Registrant's Current Report on
Form 8-K filed on June 30, 2015
Exhibit 10.2 of Registrant's Current Report on
Form 8-K filed on June 30, 2015
Exhibit 10.1 of Registrant's Current Report on
Form 8-K filed on July 7, 2015
Exhibit 10.2 of Registrant's Current Report on
Form 8-K filed on July 7, 2015
Exhibit 10.3 of Registrant's Current Report on
Form 8-K filed on July 7, 2015
Exhibit 10.4 of Registrant's Current Report on
Form 8-K filed on July 7, 2015
Exhibit 10.1 of Registrant's Current Report on
Form 8-K filed on October 4, 2017
Exhibit 10.2 of Registrant's Current Report on
Form 8-K filed on October 4, 2017
Exhibit 10.3 of Registrant's Current Report on
Form 8-K filed on October 4, 2017
Exhibit 10.4 of Registrant's Current Report on
Form 8-K filed on October 4, 2017
Exhibit 10.6 of Registrant's Current Report on
Form 8-K filed on October 4, 2017
Exhibit 10.6 of Registrant's Current Report on
Form 8-K filed on October 4, 2017
10.59
Full Guaranty (Inventory Loan) dated December
13, 2013, by Bluegreen Corporation, as Guarantor,
in favor of National Bank of Arizona, as Lender
Exhibit 10.7 of Registrant's Current Report on
Form 8-K filed on October 4, 2017
Guarantor Consent and Ratification and
Confirmation of and Amendment to Full Guaranty
(Inventory Loan) dated September 28, 2017, by
Bluegreen Vacations Corporation, as Guarantor, in
favor of Z.B., National Bank of Arizona, as Lender
Indenture dated as of March 17, 2016, between
BXG Receivables Note Trust 2016-A, as Issuer,
Bluegreen Corporation, as Servicer, Vacation
Trust, Inc., as Club Trustee, Concord Servicing
Corporation, as Backup Servicer, and U.S. Bank
National Association, as Indenture Trustee, Paying
Agent and Custodian
Sale Agreement, dated as of March 17, 2016, by
and among BRFC 2016-A LLC, as Depositor, and
BXG Receivables Note Trust 2016-A, as Issuer
Transfer Agreement, dated as of March 17, 2016,
by and among Bluegreen Corporation, BXG
Timeshare Trust I, as Seller, and BRFC 2016-A
LLC, as Depositor
Purchase and Contribution Agreement, dated as of
March 17, 2016, by and among Bluegreen
Corporation, as Seller, and BRFC 2016-A LLC, as
Depositor
BXG Receivables Note Trust 2016-A, Standard
Definitions
Amended and Restated Credit Agreement dated as
of December 16, 2016, by and among Bluegreen
Corporation, as Borrower and Fifth Third Bank, as
Administrative Agent and L/C Issuer
Amended and Restated Security Agreement, dated
as of December 16, 2016, by and among
Bluegreen Corporation, as Borrower, Bluegreen
Vacations Unlimited, Inc. and Bluegreen Resorts
Management, Inc. as Grantors, and Fifth Third
Bank, as Administrative Agent
Indenture, dated as of June 6, 2017, between BXG
Receivables Note Trust 2017-A, as Issuer,
Bluegreen Corporation, as Servicer, Vacation
Trust, Inc. as Club Trustee, Concord Servicing
Corporation, as Backup Servicer, and U.S. Bank
National Association, as Indenture Trustee, Paying
Agent and Custodian
Sale Agreement, dated as of June 6, 2017, by and
among BRFC 2017-A LLC, as Depositor, and
BXG Receivables Note Trust 2017-A, as Issuer
Transfer Agreement, dated as of June 6, 2017, by
and among Bluegreen Corporation, BXG
Timeshare Trust I, as Seller, and BRFC 2017-A
LLC, as Depositor
Purchase and Contribution Agreement, dated as of
June 6, 2017, by and among Bluegreen
Corporation, as Seller, and BRFC 2017-A LLC, as
Depositor
BXG Receivables Note Trust 2017-A, Standard
Definitions
10.53
10.54
10.55
10.56
10.57
10.58
10.59
10.60
10.61
10.62
10.63
10.64
10.65
Exhibit 10.8 of Registrant's Current Report on
Form 8-K filed on October 4, 2017
Exhibit 10.1 to Registrant's Current Report on
Form 8-K filed on March 23, 2016
Exhibit 10.2 to Registrant's Current Report on
Form 8-K filed on March 23, 2016
Exhibit 10.3 to Registrant's Current Report on
Form 8-K filed on March 23, 2016
Exhibit 10.4 to Registrant's Current Report on
Form 8-K filed on March 23, 2016
Exhibit 10.5 to Registrant's Current Report on
Form 8-K filed on March 23, 2016
Exhibit 10.1 to Registrant's Current Report on
Form 8-K filed on December 22, 2016
Exhibit 10.2 to Registrant's Current Report on
Form 8-K filed on December 22, 2016
Exhibit 10.1 to Registrant's Current Report on
Form 8-K filed on June 9, 2017
Exhibit 10.2 to Registrant's Current Report on
Form 8-K filed on June 9, 2017
Exhibit 10.3 to Registrant's Current Report on
Form 8-K filed on June 9, 2017
Exhibit 10.4 to Registrant's Current Report on
Form 8-K filed on June 9, 2017
Exhibit 10.5 to Registrant's Current Report on
Form 8-K filed on June 9, 2017
103
Loan and Security Agreement, dated March 6,
2018, by and among BBX Capital, BBX Sweet
Holdings, Food for Thought Restaurant Group-
Florida, LLC, BBX Capital Florida, LLC and
Woodbridge, collectively, as borrowers, and
Iberiabank, as administrative agent and lender
Ratio of Earnings to Fixed Charges
Subsidiaries of the Registrant
Consent of Grant Thornton LLP
Certification of Chief Executive Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
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
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
10.66
12.1
21.1
23.1
31.1
31.2
32.1
32.2
Filed with this report
Filed with this Report
Filed with this Report
Filed with this Report
Filed with this Report
Filed with this Report
Furnished with this Report
Furnished with this Report
101.INS XBRL Instance Document
Filed with this Report
101.SCH XBRL Taxonomy Extension Schema Document
Filed with this Report
101.CAL
XBRL Taxonomy Extension Calculation Linkbase
Document
Filed with this Report
101.DEF
101.LAB
101.PRE
XBRL Taxonomy Extension Definition Linkbase
Document
XBRL Taxonomy Extension Labels Linkbase
Document
XBRL Taxonomy Extension Presentation Linkbase
Document
Filed with this Report
Filed with this Report
Filed with this Report
104
Schedule III – Real Estate Investments and Accumulated Depreciation
BBX Capital Corporation
As of December 31, 2017
(Dollars in thousands)
Initial Costs
Building and
Capitalized
Costs
Subsequent
to
Property
Land Improvements Acquisition Other
Depreciable
Year of
Foreclosure
Lives
Total Accumulated
Cost
(1)
Depreciation Construction Month/Year
(Years)
RoboVault $ 1,590
6,310
581
- 8,481
1,546
2009
4/2013
40
(1) The aggregate cost for federal income tax purposes is $7.4 million.
The following table presents the changes in BBX Capital’s real estate investments for the year ended
December 31, 2017 (in thousands):
Total
Costs
Accumulated
Depreciation
Balance at December 31, 2016
Depreciation
Subsequent additions
$
Transfer to real estate held-for-sale
Balance at December 31, 2017
$
14,040
-
581
(6,140)
8,481
1,322
465
-
(241)
1,546
105
Schedule IV – Mortgage Loans on Real Estate
BBX Capital Corporation
As of December 31, 2017
(Dollars in thousands)
Final
Periodic
Face Carrying
Principal
Amount of
Loans
Subject
to
Delinquent
Interest Maturity Payment Prior AmountAmount of Principal
of
Number
of
Loans
Description
Rate(1) Date(2)
Terms
Liens
Loans Loans(3) or Interest
53 First-lien 1-4 Family (4)
5.76% 10/31/2033 Monthly $
- 18,219
11,678
13,627
19 Second lien -Consumer
4.08% 7/2/2018 Monthly
4,441
2,224
787
9 Small Business Real Estate
6.66% 8/22/2023 Monthly
-
1,775
1,425
566
-
Large Balance Commercial
Real Estate Loans
1 Marina
1 Land
Total Mortgage Loans
3.23% 1/1/2018 Monthly
4.00% 12/31/2017 Maturity
-
-
3,913
2,995
$ 4,441 29,126
1,619
2,995
-
2,995
18,504
17,188
(1) Represents weighted average interest rates for mortgage loans grouped by category when there is
more than one loan in the category.
(2) Represents weighted average maturity dates for mortgage loans grouped by category when there
is more than one loan in the category.
(3) The aggregate cost for federal income tax purposes was $20.3 million.
(4) The Company does not own the servicing on these loans.
The following table presents the changes in the Company’s mortgage loans for the year ended
December 31, 2017 (in thousands):
$
Balance at December 31, 2016
Advances on existing mortgages
Collections of principal
Foreclosures
Costs of mortgages sold
Balance at December 31, 2017
$
24,130
-
(3,232)
(1,365)
(1,029)
18,504
106
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
BBX CAPITAL CORPORATION
March
Levan
Board
9,
2018
By:
/s/
Alan
B.
Alan B. Levan, Chairman of the
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
/s/ Alan B. Levan
Alan B. Levan
/s/ John E. Abdo
John E. Abdo
/s/ Jarett S. Levan
Jarett S. Levan
/s/ Seth M. Wise
Seth M. Wise
/s/ Raymond S. Lopez
Raymond S. Lopez
/s/Norman H. Becker
Norman H. Becker
/s/Steven M. Coldren
Steven M. Coldren
/s/ Darwin Dornbush
Darwin Dornbush
/s/Willis N. Holcombe
Willis N. Holcombe
/s/ Oscar J. Holzmann
Oscar J. Holzmann
Chairman of the Board and Chief Executive Officer
Vice Chairman of the Board
President and Director
Executive Vice President and Director
Executive Vice President, Chief Financial Officer, Chief
Accounting Officer and Risk Officer
Director
Director
Director
Director
Director
107
Date
March 9, 2018
March 9, 2018
March 9, 2018
March 9, 2018
March 9, 2018
March 9, 2018
March 9, 2018
March 9, 2018
March 9, 2018
March 9, 2018
/s/ Alan Levy
Alan Levy
/s/ Joel Levy
Joel Levy
/s/ William Nicholson
William Nicholson
/s/Tony P. Segreto
Tony P. Segreto
/s/ Neil A. Sterling
Neil A. Sterling
Director
Director
Director
Director
Director
/s/Charlie C. Winningham, II
Charlie C. Winningham, II
Director
108
March 9, 2018
March 9, 2018
March 9, 2018
March 9, 2018
March 9, 2018
March 9, 2018
EXHIBIT 10.66
LOAN AND SECURITY AGREEMENT
by and among
BBX CAPITAL CORPORATION, a Florida corporation, FOOD FOR THOUGHT RESTAURANT
GROUP-FLORIDA, LLC, a Florida limited liability company, BBX CAPITAL FLORIDA LLC, a
Florida limited liability company, WOODBRIDGE HOLDINGS, LLC, a Florida limited liability
company and BBX SWEET HOLDINGS, LLC, a Florida limited liability company,
collectively, as Borrowers
and
IBERIABANK, a Louisiana state-chartered bank,
as Administrative Agent
and
THE LENDERS FROM TIME TO TIME PARTY HERETO
as Lenders
Dated: As of March 6, 2018
4833-7494-6387.12
45083/0017
03/02/2018
TABLE OF CONTENTS
SECTION 1. DEFINITIONS
SECTION 2. CREDIT FACILITIES
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
Loans
Loans for General Purposes
Loans for Letter of Credit Purposes
Loans for Business Acquisition Purposes
Loans for Real Estate Investment Purposes
Loans for Stock Buy Back Purposes
Commitments
Draw Requests
SECTION 3. REPAYMENT, INTEREST AND FEES AND PREPAYMENT
3.1
3.2
3.3
3.4
3.5
3.6
Repayment of Loans
Prepayments
Interest
Fees, Late Fee and Default Rate
Changes in Laws and Increased Costs of Loans
Mitigation
SECTION 4. CONDITIONS PRECEDENT
4.1
4.2
Conditions Precedent to Initial Loans and Letters of Credit
Conditions Precedent to All Loans and Letters of Credit
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
5.1
5.2
Grant of Security Interest
Perfection of Security Interests
SECTION 6. COLLECTION AND ADMINISTRATION
6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.8
6.9
6.10
6.11
6.12
Borrowers' Loan Accounts
Statements
Payments
Authorization to Make Loans
Use of Proceeds
Appointment of Borrower Agent as Agent for Requesting Loans and Receipts of
Loans and Statements
Pro Rata Treatment
Sharing of Payments, Etc.
Settlement Procedures
Obligations Several; Independent Nature of Lenders' Rights
Bank Products
Taxes
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1
Existence, Power and Authority
IBERIABANK/BBX CAPITAL
SYNDICATED LOAN AND SECURITY AGREEMENT
4833-7494-6387.12
45083/0017
03/02/2018
i
Page
1
17
17
17
18
20
21
22
22
22
23
23
23
24
25
25
27
28
28
29
29
29
30
30
30
31
31
32
32
32
33
33
34
36
36
37
39
39
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9
7.10
7.11
7.12
7.13
7.14
7.15
7.16
7.17
7.18
7.19
Name: State of Organization; Chief Executive Office
Financial Statements; No Material Adverse Change
Priority of Liens; Collateral
Tax Returns
Litigation
Compliance with Other Agreements and Applicable Laws
Environmental Compliance
Employee Benefits
Bank Accounts
SEC Reporting Compliance
Subsidiaries; Capitalization; Solvency
Labor Disputes
Material Contracts
Accuracy and Completeness of Information
Survival of Warranties; Cumulative
Patriot Act
OFAC
Anti-Terrorism Laws
SECTION 8. AFFIRMATIVE AND NEGATIVE COVENANTS
8.1
8.2
8.3
8.4
8.5
8.6
8.7
8.8
8.9
8.10
8.11
8.12
8.13
8.14
8.15
8.16
8.17
8.18
8.19
Maintenance of Existence
Compliance, with Laws, Regulations, Etc.
Payment of Taxes and Claims
SEC Reporting; NYSE Listing
Financial Statements and Other Information
Consolidation, Merger, Dissolution, Etc
Encumbrances/Negative Pledge
Indebtedness
Loans, Investments, Etc.
Dividends and Redemptions
Compliance with ERISA
End of Fiscal Years; Fiscal Quarters
Change in Business
Fixed Charge Coverage Ratio
Senior Funded Debt to EBITDA
Unencumbered Minimum Liquidity
Costs and Expenses
Employment of Key Personnel
Control of Certain Subsidiaries
SECTION 9. EVENTS OF DEFAULT AND REMEDIES
9.1
9.2
Events of Default
Remedies
SECTION 10. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING
LAW
10.1
10.2
10.3
10.4
Governing Law; Choice of Form; Service of Process; Jury Trial Waiver
Waiver of Notices
Amendments and Waivers
Waiver of Counterclaims
IBERIABANK/BBX CAPITAL
SYNDICATED LOAN AND SECURITY AGREEMENT
4833-7494-6387.12
45083/0017
03/02/2018
ii
39
40
40
40
40
41
41
42
42
42
42
43
43
43
44
44
44
44
44
44
45
46
46
46
48
48
48
49
50
51
51
51
51
51
51
51
52
52
52
52
54
56
56
57
57
58
10.5
10.6
Indemnification
Currency Indemnity
SECTION 11. THE ADMINISTRATIVE AGENT
11.1
11.2
11.3
11.4
11.5
11.6
11.7
11.8
11.9
11.10
11.11
11.12
11.13
Appointment, Powers and Immunities
Reliance by Administrative Agent
Events of Default
IBERIABANK in its Individual Capacity
Indemnification
Non-Reliance on Administrative Agent and Other Lenders
Failure to Act
Concerning the Collateral and the Related Loan Documents
Collateral Matters
Agency for Perfection
Successor Administrative Agent
Other Administrative Agent Designations
Credit Bids
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1
12.2
12.3
12.4
12.5
12.6
12.7
12.8
12.9
Term
Interpretative Provisions
Notices
Partial Invalidity
Confidentiality
Successors
Assignments; Participations
Entire Agreement
Counterparts, Etc
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59
59
60
60
60
60
61
61
61
62
62
62
63
64
64
64
65
65
65
67
68
68
69
69
71
71
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A
Exhibit B
Exhibit C
Exhibit D
Schedule 7.2
Schedule 7.6
Schedule 7.8
Schedule 7.10
Schedule 7.12
Schedule 7.13
Schedule 8.8
Schedule 8.9(e)
Form of Assignment and Acceptance
Form of Compliance Certificate
Form of Draw Request
Form of Membership Interest Certificate
Name, State of Organization; Chief Executive Office
Litigation
Environmental Compliance
Bank Accounts
Significant Subsidiaries; Capitalization; Solvency
Labor Disputes
Indebtedness
Loans and Advances
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") is dated March 6, 2018 is entered
into by and among BBX CAPITAL CORPORATION , a Florida corporation, FOOD FOR THOUGHT
RESTAURANT GROUP-FLORIDA, LLC, a Florida limited liability company, BBX CAPITAL FLORIDA
LLC, a Florida limited liability company, WOODBRIDGE HOLDINGS, LLC, a Florida limited liability
company and BBX SWEET HOLDINGS, LLC, a Florida limited liability company (each a "Borrower" and
collectively, "Borrowers"), and IBERIABANK, a Louisiana state-chartered bank, in its capacity as agent acting
for and on behalf of the parties to this Agreement as lenders (in such capacity, " Administrative Agent"), the
parties to this Agreement as lenders (individually a "Lender" and collectively, "Lenders").
W I T N E S S E T H:
WHEREAS, Borrowers have requested that the Lenders make a revolving line of credit loan in a principal
amount equal to $50,000,000.00 to Borrowers (the "Loan").
WHEREAS, subject to the terms and conditions of this Agreement, the Lenders, to the extent of their
respective Commitments as defined herein, are willing severally to make the Loan to Borrowers.
NOW, THEREFORE , in consideration of the premises and the mutual covenants herein contained,
Borrowers, the Lenders and Administrative Agent agree as follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the respective meanings given to them,
below:
1.1 "Affiliate" shall mean, with respect to a specified Person, any other Person which directly
or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with
such Person, and without limiting the generality of the foregoing, includes: (a) any Person which beneficially
owns or holds ten percent (10%) or more of any class of Voting Stock of such Person or other equity interests in
such Person; (b) any Person of which such Person beneficially owns or holds ten percent (10%) or more of any
class of Voting Stock or in which such Person beneficially owns or holds ten percent (10%) or more of the
equity interests and (c) any director or executive officer of such Person. For the purposes of this definition, the
term "control" (including with correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies or such Person, whether through the ownership of Voting
Stock, by agreement or otherwise.
1.2 "Administrative Agent" shall mean IBERIABANK, in its capacity as administrative
agent on behalf of Lenders pursuant to the terms hereof and any replacement or successor agent hereunder.
1.3 "Applicable Margin" means, at any time, as to the Interest Rate for Prime Rate Loans and
the Interest Rate for Floating LIBOR Rate Loans the applicable percentage (on a per annum basis) set forth
below as either the "Revolver LIBOR Margin" or the "Revolver Prime Margin" (as the case may be) based upon
Borrowers' Maximum Senior Funded Debt to EBITDA as determined by Administrative Agent's review of
Borrowers' quarterly financial statements required to be delivered in accordance with Section 8.5(a)(iii) of this
Agreement:
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Pricing Level
Level 1
Level 2
Level 3
Level 4
Maximum Senior
Funded Debt/EBITDA
Ratio
≥ 2.00x
≥ 1.50x but < 2.00x
≥ 1.00x but < 1.50x
< 1.00x
Revolver LIBOR
Margin
Revolver Prime
Margin
3.75%
3.50%
3.25%
3.00%
2.25%
2.00%
1.75%
1.50%
1.4 "Assignment and Acceptance" shall mean an Assignment and Acceptance substantially
in the form of Exhibit A attached hereto (with blanks appropriately completed) delivered to Administrative
Agent in connection with an assignment of a Lender's interest hereunder in accordance with the provisions of
Section 12.7 hereof.
1.5 "Availability" shall mean, as the context may require, the Letter of Credit Sublimit, the
Business Acquisition Availability, the Real Estate Investments Availability and/or the Stock Buy Back
Availability (as the case may be). Regarding any funding for General Purposes, such funding does not have a
specific availability other than the Maximum Credit and the effect of Section 2.2(b) and Section 2.3(b)(vi).
1.6 "Bank Product Provider" shall mean any Lender, Affiliate of Lender or other financial
institution (in each case as to any such Lender, Affiliate or other financial institution to the extent approved by
Administrative Agent) that provides any Bank Products to Borrowers.
1.7 "Bank Products" shall mean any one or more of the following types or services or
facilities provided to a Borrower by a Bank Product Provider: (a) credit cards, debit cards or stored value cards
or the processing of credit card, debit card or stored value card sales or receipts; (b) cash management or related
services, including: (i) the automated clearinghouse transfer of funds for the account of a Borrower pursuant to
agreement or overdraft for any accounts of Borrowers maintained at Administrative Agent or any Bank Product
Provider that are subject to the control of Administrative Agent pursuant to any Deposit Account Control
Agreement to which Administrative Agent or such Bank Product Provider is a party, as applicable; and (ii)
controlled disbursement services; and (c) Hedge Agreements if and to the extent permitted hereunder. Any of
the foregoing shall only be included in the definition of the term "Bank Products" to the extent that the Bank
Product Provider has been approved by Administrative Agent.
1.8 "Bluegreen Corporation" shall mean BLUEGREEN VACATIONS CORPORATION ,
a Florida corporation.
1.9 "Bluegreen Dividends" shall mean any dividend declared and/or paid by Bluegreen
Corporation to its shareholders, including, but not limited to, Woodbridge Holdings, if, as and when declared by
Bluegreen Corporation's Board of Directors.
1.10 "Borrower Agent" shall mean the Parent in its capacity as Borrower Agent on behalf of
itself and the other Borrowers pursuant to Section 6.6 hereof and it successors and assigns in such capacity.
"Borrowers" shall mean, collectively,
CORPORATION, a Florida corporation; (b) FOOD FOR THOUGHT RESTAURANT GROUP-
the following: (a) BBX CAPITAL
1.11
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FLORIDA, LLC, a Florida limited liability company; (c) BBX CAPITAL FLORIDA LLC , a Florida limited
liability company; (d) WOODBRIDGE HOLDINGS, LLC, a Florida limited liability company; (e) BBX
SWEET HOLDINGS, LLC, a Florida limited liability company; and (f) any other Person that at any time alter
the date hereof becomes a Borrower hereunder; each sometimes being referred to herein individually as a
"Borrower".
1.12 "Business Acquisition Availability " shall mean an amount up to but not exceeding
$20,000,000.00.
1.13 "Business Acquisition Purposes " shall mean Loans made hereunder for the acquisition
of operating companies by any Borrower or its Subsidiaries.
1.14 "Business Day" shall mean any day other than a Saturday, Sunday, or other day on
which commercial banks are authorized or required to close under the laws of the State of Florida and a day on
which Administrative Agent is open for the transaction of business; except, that, if a determination of a Business
Day shall relate to any Floating LIBOR Rate Loans, the term Business Day shall also exclude any day on which
banks are closed for dealings in dollar deposits in the London interbank market or other applicable Floating
LIBOR Rate market.
1.15 "Capital Leases" shall mean, as applied to any Person, any lease of (or any agreement
conveying the right to use) any property (whether real, personal or mixed) by such Person as lessee which in
accordance with GAAP, is required to be reflected as a liability on the balance sheet of such Person; provided
that Capital Leases shall not include any lease, which would be classified and accounted for as an operating
lease under GAAP as in effect on the Closing Date.
1.16 "Capital Stock" shall mean, with respect to any Person, any and all shares, interests,
participations or other equivalents (however designated) of such Person's capital stock or partnership, limited
liability company or other equity interests at any time outstanding, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock, or other interests (but excluding any debt security that is
exchangeable for or convertible into such capital stock).
1.17 "Change in Law" shall mean the occurrence, after the Closing Date, of: (a) the adoption,
taking effect or phasing in of any law, rule, regulation or treaty; (b) any change in any law, rule, regulation or
treaty or in the administration, interpretation or application thereof; or (c) the making, issuance or application of
any request, guideline, requirement or directive (whether or not having the force of law) by any Governmental
Authority.
1.18 "Change of Control " shall mean: (a) the acquisition by any Person or group (as
such term is used in Section 13(d)(3) of the Exchange Act), except for one or more Permitted Holders,
of beneficial ownership, directly or indirectly, of more than fifty percent (50%) of the voting power or of
the total issued and outstanding capital stock of Parent; (b) if at any time, individuals who on the
Closing Date constituted the Board of Directors of the Parent (together with any new directors whose
election by such Board of Directors or whose nomination for election by the shareholders of the Parent,
as the case may be, was approved by a vote of the majority of the directors then still in office who were
either directors on the Closing Date or whose election or a nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of Directors of the Parent; or (c)
the failure of Parent to own, directly or indirectly, one hundred percent (100%) of the voting power of
the total outstanding Voting Stock of any other Borrower or Obligor, other than as permitted in Section
8.6.
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1.19 "City National" shall mean CITY NATIONAL BANK OF FLORIDA, a national
banking association and its successors and assigns.
1.20 "Closing Date" shall mean March 6, 2018.
1.21 "Code" shall mean the Internal Revenue Code of 1986, as the same now exists or may
from time to time hereafter be amended, modified, recodified, or supplemented, together with all rules,
regulations and official interpretations thereunder or related thereto.
1.22 "Collateral" shall have the meaning set forth in Section 5 hereof.
1.23 "Commitment" shall mean, at any time, as to each Lender, the principal amount set
forth below such Lender's signature on the signatures pages hereto designated as the Commitment or on
Schedule 1 to the Assignment and Acceptance Agreement pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 12.7 hereof, as the same maybe adjusted from time to
time in accordance with the terms hereof; sometimes being collectively referred to herein as "Commitments".
1.24 "Compliance Certificate" shall mean a compliance certificate in the form of Exhibit B
attached hereto.
1.25 "Conditions for Advances" shall mean: (i) no Event of Default is then occurring; (ii)
Availability exists under the requested Loan; and (iii) Administrative Agent shall have received such due
diligence documents, certificates, or information, as it shall reasonably request with respect to requested Loan.
1.26 "Connection Income Taxes" shall mean Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
1.27 "Credit Facility " shall mean the Loans provided to or for the benefit of any Borrower
pursuant to Sections 2.1, 2.2, 2.3, 2.4, 2.5 and 2.6 hereof.
1.28 "Default" shall mean an act, condition or event which with notice or passage of time or
both would constitute an Event of Default.
1.29 "Default Interest" shall have the meaning set forth in Section 3.4(e).
1.30 "Default Rate" shall mean an interest rate equal to the lower of: (i) the then applicable
Prime Rate plus six percent (6%); or (ii) the highest non-usurious rate permitted under applicable law.
1.31 "Defaulting Lender" shall have the meaning set forth in Section 6.9(e) hereof.
1.32 "EBITDA" shall mean, on any measurement date, with respect to the most recent four
(4) calendar quarters, the Parent's Consolidated Net Income (Loss) plus, the sum of: (a) Interest Expense on
Funded Debt; (b) Provision (Benefit) for Income Taxes; (c) Depreciation and Amortization; (d) Stock
Compensation Expense; (e) Non-Cash Legacy Asset Impairment Charges; (f) Long-Term Incentive Plan
Expenses; (g) One-Time Restructuring Charges and Severance Expenses; and (h) One-Time Expenses as
approved by the Administrative Agent in its Permitted Discretion; less, for the same accounting
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period, the sum of: (x) Other Interest Income (not including income on Vacation Ownership Interest notes
receivable), in each case measured on a consolidated basis.
1.33 "Eligible Transferee" shall mean: (a) any Lender; (b) the parent company of any Lender
and/or any Affiliate of such Lender which is at least fifty percent (50%) owned by such Lender or its parent
company; (c) any person (whether a corporation, partnership, trust or otherwise) that is engaged in the business
of making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the
ordinary course of its business and is administered or managed by a Lender or with respect to any Lender that is
a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and
similar extensions of credit and is managed by the same investment advisor as such Lender or by an Affiliate of
such investment advisor, and in each case is approved by Administrative Agent; (d) any other commercial bank,
financial institution approved by Administrative Agent and Borrower Agent (which approval by Borrower Agent
shall not be unreasonably withheld, conditioned or delayed, and shall be deemed given if no objection is made
within five (5) Business Days after notice of the proposed assignment), that is organized under the laws of the
United States or any state or district thereof, has total assets in excess of $5,000,000,000 and extends asset-based
lending facilities in its ordinary course of business; and (e) notwithstanding anything to the contrary set forth in
this Agreement, including, without limitation, the proviso set forth in this definition, during any Event of
Default, any Person acceptable to Administrative Agent in its sole discretion; provided, that: (i) no Person shall
be an Eligible Transferee of the assignment to such Person that would constitute a prohibited transaction under
Section 4975 of the Code or any other applicable law, or would, immediately following any such assignment,
result in increased costs or Taxes payable by the Borrowers pursuant to Section 8.3; provided, that; (ii) neither
any Borrower nor or any Affiliate of any Borrower shall qualify as an Eligible Transferee; and (iii) no Person to
whom any Indebtedness which is in any way subordinated in right of payment to any other Indebtedness of any
Borrower shall qualify as an Eligible Transferee, except as Administrative Agent may otherwise specifically
agree.
1.34 "Environmental Laws" shall mean all foreign, Federal, State and local laws (including
common law), legislation, rules, codes, licenses, permits (including any conditions imposed therein),
authorizations, judicial or administrative decisions, injunctions or agreements between any Borrower and any
Governmental Authority: (a) relating to pollution and the protection, preservation or restoration of the
environment (including air, water vapor, surface water, ground water, drinking water, drinking water supply,
surface land, subsurface land, plant and animal life or any other natural resource), or to human health or safety;
(b) relating to the exposure to, or the use, storage, recycling, treatment, generation, manufacture, processing,
distribution, transportation, handling, labeling, production, release or disposal, or threatened release, of
Hazardous Materials, or (c) relating to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Materials. The term "Environmental Laws" includes: (i) the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Federal Superfund Amendments and
Reauthorization Act, the Federal Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal
Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and
Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic Substances Control
Act, the Federal Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water Act of 1974;
(ii) applicable state counterparts to such laws; and (iii) any common law or equitable doctrine that may impose
liability or obligations for injuries or damages due to, or threatened as a result of; the presence of or exposure to
any Hazardous Materials.
1.35 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, together
with all rules, regulations and interpretations thereunder or related thereto.
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1.36 "ERISA Affiliate" shall mean any person required to be aggregated with any Borrower
or any of its or their respective Subsidiaries under Sections 414(b), 414(c), 414(m) or 414(o) of the Code.
1.37 "ERISA Event" shall mean: (a) any "reportable event", as defined in Section 4043(c) of
ERISA or the regulations issued thereunder, with respect to a Plan other than reportable events for which the 30-
day notice period has been waived; (b) the adoption of any amendment to a Plan that would cause the Plan to be
subject to the limits of Code Section 436; (c) the failure to meet the minimum funding standards of Sections 412
or 430 of the Code or Sections 302 or 303 of ERISA); (d) the filing pursuant to Section 412 of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any
Plan; (e) the occurrence of a "prohibited transaction" with respect to which any Borrower or any of its or their
respective Subsidiaries is a "disqualified person" (within the meaning of Section 4975 of the Code) or with
respect to which any Borrower or any of its respective Subsidiaries could otherwise be liable other than a
prohibited transaction that qualifies for an exemption from liability or tax under ERISA or the Code; (f) a
complete or partial withdrawal by any Borrower or any ERISA Affiliate from a Multiemployer Plan or a
cessation of operations which is treated as such a withdrawal or notification that a Multiemployer Plan is in
reorganization; (g) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a
termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the Pension
Benefit Guaranty Corporation to terminate a Plan; (h) an event or condition which might reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; (i) the imposition of any liability under Title IV of ERISA, other than the Pension Benefit
Guaranty Corporation premiums due but not delinquent under Section 4007 of ERISA, upon any Borrower or
any ERISA Affiliate in excess of $5,000,000.00 and (j) any other event or condition with respect to a Plan
including any Plan subject to Title TV of ERISA maintained, or contributed to, by any ERISA Affiliate that
could reasonably be expected to result in liability of any Borrower in excess of $5,000,000.00.
1.38 "EST" shall mean Eastern Standard Time.
1.39 "Event of Default" shall mean the occurrence or existence of any event or condition
described in Section 9.1 hereof.
1.40 "Exchange Act" shall mean the Securities Exchange Act of 1934, together with all rules,
regulations and interpretations thereunder or related thereto.
1.41 "Excluded Taxes" shall mean any of the following Taxes imposed on or with respect to
Administrative Agent, any Lender or any Issuing Bank or required to be withheld or deducted from a payment
to Administrative Agent, any Lender or any Issuing Bank: (a) any Tax imposed on or determined by reference to
the net income or net profits of Administrative Agent, any Lender or any Issuing Bank (and any franchise Taxes
imposed in lieu thereof), and any branch profits Taxes, in each case: (i) imposed as a result of Administrative
Agent, such Lender or such Issuing Bank being organized under the laws of, or having its principal office, or in
the case of such Lender, its Lending Office, located in the jurisdiction (or any political subdivision or taxing
authority thereof or therein) imposing such Tax; or (ii) that are Other Connection Taxes; (b) any Tax resulting
from an Administrative Agent's, a Lender's or an Issuing Bank's failure to comply with the requirements of
Section 6.12(d) (except to the extent such failure is attributable to a Change in Law with respect to taxation by
any Governmental Authority after the time it becomes a party to this Agreement, or designates a new Lending
Office, as the case may be); (c) in the case of any Lender or any Issuing Bank, any United States withholding
Taxes imposed on amounts payable to or for the account of such Lender or such Issuing Bank with respect to an
applicable interest in a Loan or Commitment pursuant to the applicable withholding rate in effect at the time it
becomes a party to this
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Agreement (other than pursuant to an assignment of a Non-Consenting Lender under Section 10.3(c)) or
designates a new Lending Office, except that Taxes described in this clause (c) shall not include any amount
with respect to United States withholding Taxes that such Lender or such Issuing Bank (or its assignor, if any)
was previously entitled to receive pursuant to Section 6.12, if any, with respect to such United States
withholding Taxes at the time it designates a new Lending Office or at the time of the assignment, and additional
United States withholding Taxes that may be imposed after the time such Lender becomes a party to the
Agreement or designates a new Lending Office, as a result of a Change in Law with respect to taxation by any
Governmental Authority; and (d) any United States withholding taxes imposed under FATCA.
1.42 "Extension Fee" shall mean an amount equal to twelve and one-half basis points (12.5
bps or .125%) of the Maximum Credit.
1.43 "Extension Option" shall mean annual twelve (12) month extensions of the Maturity
Date, which extensions shall be subject to the satisfaction of the Extension Option Conditions and
Administrative Agent's approval in its sole and absolute discretion.
1.44 "Extension Option Conditions" shall mean the following:
(a) Borrowers shall request an Extension Option by written notice to Administrative
Agent not earlier than fifteen (15) months nor later than twelve (12) months prior to the then applicable
Maturity Date;
(b) At the time of the request, and at the time of the commencement of the applicable
Extension Option, there shall not exist any Event of Default nor any condition or state of facts which after notice
and/or lapse of time would constitute an Event of Default;
later than the commencement date of the applicable Extension Option; and
(c) Borrowers shall have paid Lender the Extension Fee to Administrative Agent no
(d) At the time of the request, and at the time of the commencement of the applicable
Extension Option, no Material Adverse Effect shall exist with respect to the financial condition of the Parent or
the value of the Collateral;
(e) Administrative Agent shall provide written notice to the Borrower Agent of its
approval or disapproval of the Extension Option, no later than sixty (60) days after receipt of Borrower's request
for such Extension Option. Whether or not the extension becomes effective, Borrowers shall pay all out-of-
pocket costs and expenses incurred by Administrative Agent and Lenders in connection with the proposed
extension (pre- and post-closing), including (as may be applicable) valuation fees and reasonable attorneys' fees
actually incurred by Administrative Agent and Lenders; all such costs and expenses incurred up to the time of
Administrative Agent and Lenders written agreement to the extension shall be due and payable prior to
Administrative Agent and Lenders of that agreement (or if the proposed extension does not become effective,
then upon demand by Administrative Agent and Lenders), and any future failure to pay such amounts shall
constitute an Event of Default under the Loan Documents (subject to any applicable notice and cure periods);
and
shall not be or become effective.
(f) If all of the foregoing conditions are not satisfied, the applicable Extension Option
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1.45 "FATCA" shall mean Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that, is substantively comparable), and any current or future
regulations or official interpretations thereof.
1.46 "Fee Letter" shall mean the Fee Letter, dated of even date herewith, by and among
Borrowers and Administrative Agent setting forth certain fees payable by Borrowers to Administrative Agent
for the benefit of itself and Lenders, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.47 Intentionally Deleted.
1.48 "Fixed Charge Coverage Ratio" shall mean, with respect to any date of determination,
the ratio of: (a) EBITDA, less cash dividends, stock repurchases and other restricted payments, less cash taxes;
divided by (b) the sum of: (i) the scheduled principal payments on Loans; plus (ii) interest expense on the Loans.
1.49 "Floating LIBOR Rate Loans" shall mean any Loans or portion thereof on which
interest is payable based on the Floating LIBOR Rate in accordance with the terms hereof.
1.50 "Floating LIBOR Rate" shall mean when determined, the rate per annum offered for
U.S. Dollar deposits in an amount comparable to the applicable Floating LIBOR Loan for a period of thirty (30)
days as of 11:00 a.m. City of London, England time two (2) Business Days prior to the first day of the month in
which such determination occurs equal to the "London Interbank Offered Rate" from ICE Benchmark
Administrative Settlement (ICE) as shown on the Bloomberg System ("Bloomberg"); provided that: (a) for the
period from the date of such Loan until the last day of the month in which such Loan is made, such rate shall be
determined as of two (2) Business Days prior to the date of such Loan; and (b) if the Floating LIBOR Rate as
determined pursuant to this definition shall be less than zero percent (0%), then the Floating LIBOR Rate shall
be deemed to be zero percent (0%) for purposes of this Agreement; provided, however, in the event any
Borrower shall have entered into a Hedge Agreement with Administrative Agent or any Bank Product
Provider, the foregoing floor rate of zero percent (0%) shall not be applicable during such time as such
Hedge Agreement is in effect. If such rate is not available on Bloomberg, then such offered rate shall be
otherwise
independently determined by Administrative Agent from an alternate, substantially similar
independent source available to Administrative Agent or shall be calculated by Administrative Agent by a
substantially similar methodology as that previously used to determine such rate, or it shall be calculated by any
of Administrative Agent's successors and assigns. The Floating LIBOR Rate is not necessarily the lowest rate
charged by Administrative Agent or any Lender on its loans.
1.51 "Funded Debt" shall mean, as of any date of determination, the principal portion of all
Indebtedness (without duplication) of the Borrowers on a consolidated basis: (a) in respect of any borrowed
money (including the Obligations); (b) evidenced by any loan or credit agreement, promissory note, debenture,
bond, or other similar written obligation to pay money (including the Loan Documents); (c) under any
Capitalized Lease; (d) for the deferred and unpaid purchase price of any property or business or any services
(other than (without duplication) for purposes of this clause (d), and (e) any guaranty or endorsement of, or
responsibility for any Indebtedness of the types described in this definition; provided, that Funded Debt shall not
include any Indebtedness: (i) relating to the sale of Bluegreen Corporation notes receivables; (ii) of Renin
Holdings LLC, a Florida limited liability company; and (iii) any other Indebtedness that is not guaranteed by
Parent or whose repayment does not adversely impact Parent's ability to obtain dividends from Bluegreen
Corporation or other Subsidiaries.
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1.52 "GAAP" shall mean generally accepted accounting principles in the United States of
America as set forth from time to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board which are applicable to the circumstances as of the date of determination
consistently applied. In the event that any "Accounting Change(s)" (as defined below) shall occur and such
change results in a change in the method of calculation of financial covenants, standards or terms in this
Agreement, then the Borrowers and the Administrative Agent agree to enter into negotiations to amend such
provisions of this Agreement so as to reflect equitably such Accounting Change(s) with the desired result that
the criteria for evaluating the Borrowers' financial condition shall be substantially the same after such
Accounting Change(s) as if such Accounting Change(s) had not been made. Until such time as such an
amendment shall have been executed and delivered by the Borrowers, the Administrative Agent and the
Required Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated
or construed as if such Accounting Change(s) had not occurred. "Accounting Change(s)" refers to any changes
in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the
Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if
applicable, the SEC, or the adoption of the International Financial Reporting Standards (IFRS).
1.53 "General Purposes" shall mean, Loans made hereunder for general working capital
purposes of the Parent and its Affiliates.
1.54 "Governmental Authority" shall mean any nation or government, any state, province,
or other political subdivision thereof; any central bank (or similar monetary or regulatory authority) thereof, and
any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to
government.
1.55
"Hazardous Materials" shall mean any hazardous, toxic or dangerous substances,
materials and wastes, including hydrocarbons (including naturally occurring or man-made petroleum and
hydrocarbons), flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind and/or type of pollutants or
contaminants (including materials which include hazardous constituents), sewage, sludge, industrial slag,
solvents and/or any other similar substances, materials, or wastes and including any other substances, materials
or wastes that are or become regulated under any Environmental Law (including any that are or become
classified as hazardous or toxic under any Environmental Law).
1.56
"Hedge Agreement" shall mean an agreement between any Borrower and
Administrative Agent or any Bank Product Provider that is a swap agreement as such term is defined in
11 U.S.C. Section 101, and including any rate swap agreement, basis swap, forward rate agreement, commodity
swap, interest rate option, forward foreign exchange agreement, spot foreign exchange agreement, rate cap
agreement rate, floor agreement, rate collar agreement, currency swap agreement, cross-currency rate swap
agreement, currency option, any other similar agreement (including any option to enter into any of the foregoing
or a master agreement for any the foregoing together with all supplements thereto) for the purpose of protecting
against or managing exposure to fluctuations in interest or exchange rates, currency valuations or commodity
prices; sometimes being collectively referred to herein as "Hedge Agreements".
1.57
"IBERIABANK" means IBERIABANK, a Louisiana state-chartered bank, in its
individual capacity, and its successors and assigns.
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1.58 "Indebtedness" shall mean, with respect to any Person, any liability, whether or not
contingent: (a) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof) or evidenced by bonds, notes, debentures or similar
instruments; (b) representing the balance deferred and unpaid of the purchase price of any property or services
(except any such balance that constitutes an account payable to a trade creditor (whether or not an Affiliate)
created, incurred, assumed or guaranteed by such Person in the ordinary course of business of such Person in
connection with obtaining goods, materials or services that is not overdue by more than ninety (90) days, unless
the trade payable is being contested in good faith); (c) all obligations as lessee under leases which have been, or
should be, in accordance with GAAP recorded as Capital Leases; (d) any contractual obligation, contingent or
otherwise, of such Person to pay or be liable for the payment of any indebtedness described in this definition of
another Person, including, without limitation, any such indebtedness, directly or indirectly guaranteed, or any
agreement to purchase, repurchase, or otherwise acquire such indebtedness, obligation or liability or any security
therefor, or to provide funds for the payment or discharge thereof, or to maintain solvency, assets, level of
income, or other financial condition; (e) all obligations with respect to redeemable stock or redemption or
repurchase obligations under any Capital Stock or other equity securities issued by such Person; (f) all
reimbursement obligations and other liabilities of such Person with respect to surety bonds (whether bid,
performance or otherwise), letters of credit, banker's acceptances, drafts or similar documents or instruments
issued for such Person's account; (g) all indebtedness of such Person in respect of indebtedness of another Person
for borrowed money or indebtedness of another Person otherwise described in this definition which is secured
by any consensual lien, security interest, collateral assignment, conditional sale, mortgage, deed of trust, or
other encumbrance on any asset of such Person, whether or not such obligations, liabilities or indebtedness are
assumed by or are a personal liability of such Person, all as of such time; and (h) obligations, liabilities and
indebtedness, net of any asset value of such Person (marked to market) arising under Hedge Agreements and
other agreements or arrangements designed to protect such person against fluctuations in interest rates or
currency or commodity values; provided, that, Indebtedness shall not include: (i) trade payables and accrued
expenses, in each case payable directly or through a bank clearing arrangement and arising in the ordinary
course of business; and (ii) purchase price holdbacks in respect of a portion of the purchase price of an asset to
satisfy warranty or other unperformed obligations of the respective seller.
1.59 "Indemnified Taxes" shall mean Taxes other than Excluded Taxes and Other Taxes.
1.60 "Initial Maturity Date" shall mean March 6, 2020.
1.61 "Interest Expense" shall mean, for any period, as to any Person, as determined in
accordance with GAAP, the total interest expense of such Person.
1.62 "Interest Period" shall mean for any Floating LIBOR Rate Loan, a period of one (1)
month, provided that: (i) the initial Interest Period may be less than one (1) month, if the initial funding date of
the Loan is a day other than the first Business Day of a calendar month; and (ii) no Interest Period shall extend
beyond the Maturity Date.
1.63 "Interest Rate" shall mean, as the context may require: (i) as to Prime Rate Loans, the
Prime Rate plus the Applicable Margin; and (ii) as to Floating LIBOR Rate Loans, the Floating LIBOR Rate
plus the Applicable Margin.
1.64
"Issuing Bank" shall mean IBERIABANK or any Lender that is approved by
Administrative Agent that shall issue a Letter of Credit for the account of a Borrower and have agreed in a
manner reasonably satisfactory to Administrative Agent to be subject to the terns hereof as an Issuing Bank.
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1.65 "Lenders" shall mean the financial institutions who are signatories hereto as Lenders and
other persons made a party to this Agreement as a Lender in accordance with Section 12.7 hereof, and their
respective successors and assigns; each sometimes being referred to herein individually as a "Lender".
1.66 "Lending Office" shall mean the office designated as such by the applicable Lender at
the time it becomes party to this Agreement or thereafter by notice to Administrative Agent and Borrower Agent.
1.67 "Letter of Credit"/"Letters of Credit" shall mean, individually and collectively (as the
context may require), any letter of credit or letters of credit which is or are from time to time either issued or
opened by Administrative Agent or any Lender for the account of any Borrower.
1.68 "Letter of Credit Fee" shall mean an amount equal to the applicable Revolver LIBOR
Margin per annum payable on the average outstanding Letters of Credit, payable quarterly in arrears.
1.69 "Letter of Credit Issuer Fee" shall mean a fee shall be payable to the Issuing Bank for
its own account with respect to each Letter of Credit equal to twelve and one-half basis points (12.5 bps or
.125%) per annum.
1.70 "Letter of Credit Purposes" shall mean, the issuance of any Letters of Credit which are
from time to time either issued or opened by Administrative Agent or any Lender for the account of any
Borrower.
1.71
"Letter of Credit Sublimit" shall mean an amount up to but not exceeding
$10,000,000.00; provided, however, that a Lender may not issue a Letter of Credit in excess of the amount of the
Lender's Pro Rata Share.
1.72 "Loan"/"Loans" shall mean individually and collectively (as the context may require)
the loans now or hereafter made by or on behalf of any Lender or by Administrative Agent for the account of
any Lender on a revolving basis pursuant to the Credit Facility (involving advances, repayments and readvances)
as set forth in Section 2.1 hereof.
1.73 "Loan Documents" shall mean, collectively, this Agreement, the Notes, the Security
Agreement, any deposit account control agreements, investment property control agreements, intercreditor
agreements and any and all other instruments, agreements, documents and writings executed in connection with
the Loans and any of the foregoing.
1.74
"Material Adverse Effect" shall mean a material adverse effect (as determined by
Administrative Agent in the exercise of its Permitted Discretion) on: (a) the financial condition, business,
performance or operations of Borrowers (taken as a whole) or the legality, validity or enforceability of this
Agreement or any of the other Loan Documents; (b) the legality, validity, enforceability, perfection or priority of
the security interests and liens of Administrative Agent upon the Collateral; (c) the Collateral or its value; (d) the
ability of the Borrowers (taken as a whole) to repay the Obligations or perform their obligations under this
Agreement or any of the other Loan Documents as and when to be performed; or (e) the ability of
Administrative Agent or any Lender to enforce the Obligations or realize upon the Collateral or otherwise with
respect to the rights and remedies of Administrative Agent and Lenders under this Agreement or any of the other
Loan Documents; provided, that: (i) events, circumstances, changes, effects or conditions with respect to the
Borrowers disclosed in any Form 10-K, Form 10-Q or Form 8-K filed by
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any of the Borrowers with the SEC prior to the date hereof shall not constitute a "Material Adverse Effect"; and
(ii) changes after the closing date in global, national or regional political conditions (including the outbreak or
war or terrorism) or in economic or market affecting the business generally in the same industry as the
Borrowers shall not constitute a "Material Adverse Effect" except to the extent that any such changes have
materially disproportionate adverse effects on the Borrowers (taken as a whole).
1.75 "Material Contract" shall mean any contract, other agreement (other than the Loan
Documents) or amendment thereto, written or oral, which a Borrower is required to file under SEC rules as an
exhibit to any filing required or permitted to be made by it pursuant to the Exchange Act.
1.76 "Maturity Date" shall mean the Initial Maturity Date, unless the Initial Maturity Date
shall have been extended for an Extension Option, in which case the term "Maturity Date" shall mean the date of
the expiration of the applicable Extension Option.
1.77 "Maximum Credit" shall mean $50,000,000.00.
1.78
"Note"/"Notes" shall mean, individually or collectively as the context permits or
requires, the promissory note or promissory notes made by Borrowers in favor of any Lender and evidencing
that portion of the Loan owing to such Lender, which collectively equal the aggregate principal amount of the
Loan, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time
with the written consent of Administrative Agent.
1.79 "Multiemployer Plan" shall mean a "multi-employer plan" as defined in Section 4001(a)
(3) of ER1SA which is or was at any time during the current year or the immediately preceding six (6) years
contributed to by any Borrower or any ERISA Affiliate.
1.80 "Obligations" shall mean: (a) any and all Loans, and all other obligations, liabilities and
indebtedness of every kind, nature and description owing by any or all of Borrowers to Administrative Agent or
any Lender or any Issuing Bank, including principal, interest, charges, fees, costs and expenses, however
evidenced, whether as principal, surety, endorser, guarantor or otherwise, arising under this Agreement or any of
the other Loan Documents, whether now existing or hereafter arising, whether arising before, during or after the
initial or any renewal term of this Agreement or after the commencement of any case with respect to such
Borrower under the United States Bankruptcy Code or any similar statute (including the payment of interest and
other amounts which would accrue and become due but for the commencement of such case, whether or not
such amounts are allowed or allowable in whole or in part in such case), whether direct or indirect, absolute or
contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, or secured or
unsecured and (b) for purposes only of Section 5.1 hereof and subject to the priority in right of payment set forth
in Section 6.3 hereof, all obligations, liabilities and indebtedness of every kind, nature and description owing by
any or all Borrowers to Administrative Agent or any Bank Product Provider arising under or pursuant to any
Bank Products, whether now existing or hereafter arising, provided, that: (i) as to any such obligations, liabilities
and indebtedness arising under or pursuant to a Hedge Agreement, the same shall only be included within the
Obligations if, upon Administrative Agent's request, Administrative Agent shall have entered into an agreement,
in form and substance satisfactory to Administrative Agent, with the Bank Product Provider that is a
counterparty to such Hedge Agreement, as acknowledged and agreed to by Borrowers, providing for the delivery
to Administrative Agent by such counterparty of information with respect to the amount of such obligations and
providing for the other rights of Administrative Agent and such Bank Product Provider in connection with such
arrangements; (ii) as to any such obligations, liabilities and indebtedness arising under or pursuant to a Bank
Product (other than a Hedge Agreement if Administrative Agent has requested the agreement referred to in
clause (i) above), the same shall only be included within the Obligations if the
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Bank Product Provider with respect thereto shall have delivered written notice to Administrative Agent that: (A)
such Bank Product Provider has entered into a transaction to provide Bank Products to a Borrower; and (B) the
obligations arising, pursuant to such Bank Products provided to Borrowers constitute Obligations entitled to the
benefits of the security interest of Administrative Agent granted hereunder, and Administrative Agent shall have
accepted such notice in writing (provided, that, no such notice or acceptance shall be required as to such
obligations, liabilities and indebtedness arising under or pursuant to a Bank Product provided by or owing to
IBERIABANK or any of its Affiliates); and (iii) in no event shall any Bank Product Provider acting in such
capacity to whom such obligations, liabilities or indebtedness are owing be deemed a Lender for purposes hereof
to the extent of and as to such obligations, liabilities or indebtedness except that each reference to the term
"Lender" in Sections 11.1, 11.2, 11.3(b), 11.5, 11.6, 11.7, 11.8, 11.10 and 12.6 hereof shall be deemed to
include such Bank Product Provider and in no event shall the approval of any such person in its capacity as
Bank Product Provider be required in connection with the release or termination of any security interest or lien
of Administrative Agent.
1.81 "Obligor" shall mean any guarantor, endorser, acceptor, surety or other person liable on
or with respect to the Obligations or who is the owner of any property which is security for the Obligations,
other than Borrowers.
1.82 "OFAC" shall mean The Office of Foreign Assets Control of the U.S. Department of the
Treasury.
1.83 "Other Connection Taxes" shall mean, with respect to Administrative Agent, any
Lender or any Issuing Bank, Taxes imposed as a result of a present or former connection between
Administrative Agent, such Lender or such Issuing Bank and the jurisdiction imposing such Tax (other than
connections arising from Administrative Agent, such Lender or such Issuing Bank having executed, delivered,
become a party to, performed its obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned
an interest in any Loan or Loan Document pursuant to Section 12.7(h) hereof).
1.84 "Other Taxes" shall mean any present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this Agreement or any of the other Loan
Documents.
1.85 "Parent" shall mean BBX CAPITAL CORPORATION , a Florida corporation, and its
successors and assigns.
1.86 "Participant" shall mean any financial institution that acquires and holds a participation
in the interest of any Lender in any of the Loans in conformity with the provisions of Section 12.7 of this
Agreement governing participations.
1.87 "Payment Office" shall mean the office of Administrative Agent located at 11 East
Greenway Plaza, Suite 2700, Houston, Texas 77046; Attention Commercial Loan Operations , or such other
location as to which Administrative Agent shall have given written notice to Borrowers and the other Lenders.
1.88
"Permitted Discretion" shall mean as used in this Agreement with reference to
Administrative Agent, a determination made in good faith in the exercise of its reasonable business judgment
based on how a lender with similar rights providing a credit facility of the type set forth herein
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would act, in the circumstances then applicable to Borrowers at the time with the information then available to
it.
1.89 "Permitted Holders" shall mean, as of the date of determination: (a) Alan B. Levan,
Jarrett S. Levan and/or Mr. John E. Abdo , their spouses, their respective lineal descendants and the spouses of
such lineal descendants; (b) any Person controlled by any of the Persons included in clause (a) of this definition
(as the term "controlled" is defined in the definition of the term "Affiliate" herein); and (c) trusts for the benefit
of any of the persons included in clause (a) of this definition.
1.90
"Person" or "person" shall mean any individual, sole proprietorship, partnership,
corporation (including any corporation that elects subchapter S status under the Code), limited liability
company, limited liability partnership, business trust, unincorporated association, joint stock corporation, trust,
joint venture or other entity or any government or any agency or instrumentality or political subdivision thereof.
1.91 "Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA) which any
Borrower sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the
case of a Multiemployer Plan has made contributions at any time during the immediately preceding six (6) plan
years.
1.92 "Prime Rate" shall mean at any time, the rate of interest per annum then most recently
published in The Wall Street Journal (or any successor publication if The Wall Street Journal is no longer
published) in the "Money Rates" section (or such successor section) as the "Prime Rate." If a range of prime
interest rates per annum is so published, "Prime Rate" shall mean the highest rate per annum in such published
range. If the definition of "Prime Rate" is no longer published in The Wall Street Journal (or any successor
thereto), "Prime Rate" shall mean, at any time, the rate of interest per annum then most recently established by
Administrative Agent as its prime rate. The Prime Rate is not necessarily the lowest rate charged by
Administrative Agent or any Lender on their loans. Notwithstanding the foregoing, in no event shall the
Prime Rate be less than a floor rate equal to three percent (3%) per annum; provided, however, in the
event any Borrower shall have entered into a Hedge Agreement with Administrative Agent or any Bank
Product Provider, the foregoing floor rate of three percent (3%) per annum shall not be applicable during
such time as such Hedge Agreement is in effect.
1.93 "Prime Rate Loans" shall mean any Loans or portion thereof on which interest is
payable based on the Prime Rate in accordance with the terms thereof.
1.94 "Pro Rata Share" shall mean as to any Lender, the fraction (expressed as a percentage)
the numerator of which is such Lender's Commitment and the denominator of which is the aggregate amount of
all of the Commitments of Lenders, as adjusted from time to time in accordance with the provisions of Section
12.7 hereof provided, that, if the Commitments have been terminated, the numerator shall be the unpaid amount
of such Lender's Loans and the denominator shall be the aggregate amount of all unpaid Loans.
1.95 "Provision for Taxes" shall mean an amount equal to all taxes imposed on or measured
by net income, whether Federal, State, Provincial, county or local, and whether foreign or domestic, that are paid
or payable by any Person in respect of any period in accordance with GAAP.
1.96 "Real Estate Investment Availability " shall mean an amount up to but not exceeding
$20,000,000.00.
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1.97
"Real Estate Investment Purposes" shall mean, Loans made hereunder for the
acquisition or investment in real estate by any Borrower or its Subsidiaries.
1.98 "Reference Bank" shall mean IBERIABANK, or such other bank as Administrative
Agent may from time to time designate.
1.99 "Register" shall have the, meaning set forth in Section 12.7 hereof.
1.100 "Required Lenders" shall mean: (i) if, at any time there are only two (2) Lenders, then
one hundred percent (100%) of such Lenders; and (ii) if there are three (3) or more Lenders, then, those Lenders
whose Pro Rata Shares aggregate more than sixty-six and 67/100 percent (66.67%) of the aggregate of the
Commitments of all Lenders, or if the Commitments shall have been terminated, Lenders to whom at least sixty-
six and 67/100 percent (66.67%) of the then outstanding Obligations are owing; provided, that, at any time that
there are two (2) or more Lenders outstanding, the "Required Lenders" shall consist of at least two (2) Lenders
that are not Affiliates of one another.
1.101 "Sanctioned Entity" shall mean: (a) a country or a government of a country; (b) an
agency of the government of a country; (c) an organization directly or indirectly controlled by a country or its
government; (d) a Person resident in or determined to be resident in a country, in each case, that is subject to a
country sanctions program administered and enforced by OFAC.
1.102 "Sanctioned Person" shall mean a person named on the list of Specially Designated
Nationals maintained by OFAC.
1.103 "SEC" shall mean the United States Securities and Exchange Commission and any
successor thereto.
1.104 "Secured Parties" shall mean, collectively: (a) Administrative Agent; (b) Lenders; (c)
the Issuing Bank and (d) any Bank Product Provider; provided, that: (i) as to any Bank Product Provider, only to
the extent of the Obligations owing to such Bank Product Provider and (ii) such parties are sometimes referred
to herein individually as a "Secured Party".
1.105 "Security Agreement" shall mean that certain Pledge and Security Agreement dated of
even date herewith made by Parent in favor of Administrative Agent for the benefit of itself and the Lenders,
with respect to Parent's pledging of a security interest in and to the "Membership Interests" described in Section
5.
1.106 "Senior Funded Debt" shall mean Funded Debt other than Subordinated Debt.
1.107
"Significant Subsidiary" shall mean any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X of the Exchange Act, as in effect from time to
time.
1.108 "Solvent" shall mean, at any time with respect to any Person, that at such time such
Person: (a) is able to pay its debts as they mature and has (and has a reasonable basis to believe it will continue
to have) sufficient capital (and not unreasonably small capital) to carry on its business consistent with its
practices as of the date hereof; and (b) the assets and properties of such Person at a fair valuation (and including
as assets for this purpose at a fair valuation all rights of subrogation, contribution or indemnification arising
pursuant to any guarantees given by such Person) are greater than the Indebtedness of such Person, and
including subordinated and contingent liabilities computed at the amount which, such
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person has a reasonable basis to believe, represents an amount which can reasonably be expected to become an
actual or matured liability (and including as to contingent liabilities arising pursuant to any guarantee the face
amount of such liability as reduced to reflect the probability of it becoming a matured liability).
1.109 "Special Agent Advances" shall have the meaning set forth in Section 11.9 hereof.
1.110
"Stock Buy Back Availability" shall mean an amount up to but not exceeding
$10,000,000.00.
1.111 "Stock Buy Back Purposes" shall mean Loans made hereunder for stock repurchases.
1.112 "Subordinated Debt" shall mean Borrowers' Indebtedness that is subordinated to the
repayment of the Obligations to Lender pursuant to a written subordination agreement in form and substance
satisfactory to Administrative Agent in its sole discretion.
1.113 "Subsidiary" or "subsidiary" shall mean, with respect to any Person, any corporation,
limited liability company, limited liability partnership or other limited or general partnership, trust, association
or other business entity of which an aggregate of at least a majority of the outstanding Capital Stock or other
interests entitled to vote in the election of the board of directors of such corporation (irrespective of whether, at
the time, Capital Stock of any other class or classes of such corporation shall have or might have voting power
by reason of the happening of any contingency), managers, trustees or other controlling persons, or an equivalent
controlling interest therein, of such Person is, at the time, directly or indirectly, owned by such Person and/or
one or more subsidiaries of such Person.
1.114 "Taxes" shall mean all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable thereto.
1.115 "UCC" shall mean the Uniform Commercial Code as in effect in the State of Florida,
and any successor statute, as in effect from time to time (except, that, terms used herein which are defined in the
Uniform Commercial Code as in effect in the State of Florida on the date hereof shall continue to have the same
meaning notwithstanding any replacement or amendment of such statute except as Administrative Agent may
otherwise reasonably determine).
1.116
"Unencumbered Liquidity" shall mean the sum of, without duplication, the
Unencumbered Liquid Assets.
1.117 "Unencumbered Liquid Assets" shall mean cash or cash equivalents of Borrowers on a
consolidated basis (i.e., bank deposits, funds in money market accounts and certificates of deposit) held in the
United States and denominated in United States Dollars (excluding assets of any retirement plan) which: (i) are
not the subject of any lien, pledge, security interest or other arrangement with any creditor to have its claim
satisfied out of the asset (or proceeds thereof) prior to the general creditors of the owner of the asset; and (ii) may
be converted to cash within five (5) days.
1.118 "Voting Stock" shall mean with respect to any Person: (a) one (1) or more classes of
Capital Stock of such Person having general voting powers to elect directors, managers or trustees of such
Person, irrespective of whether at the time Capital Stock of any other class or classes have or might have voting
power by reason of the happening of any contingency; and (b) any Capital Stock of such Person
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convertible or exchangeable without restriction at the option of the holder thereof into Capital Stock of such
Person described in clause (a) of this definition.
1.119 "Wholly-Owned" shall mean with respect to any Person at any time, any Subsidiary,
one hundred percent (100%) of whose Capital Stock is at such time owned, directly or indirectly, by such
Person.
1.120 "Woodbridge Holdings" shall mean WOODBRIDGE HOLDINGS, LLC, a Florida
limited liability company.
1.121
"Woodbridge Holdings Operating Agreement" shall mean that certain Second
Amended and Restated Operating Agreement of Woodbridge Holdings, LLC dated January 1, 2017, as amended
by that certain First Amendment to Second Amended and Restated Operating Agreement of Woodbridge
Holdings, LLC dated March 6, 2018, as amended.
SECTION 2. CREDIT FACILITIES
2.1 Loans.
(a) Subject to and upon the terms and conditions contained herein, each Lender
severally (and not jointly) agrees to make its Pro Rata Share of Loans to Borrowers from time to time in amounts
requested by a Borrower (or Borrower Agent on behalf of Borrowers) up to the amount outstanding at any time
equal to the lesser of: (i) the applicable Availability at such time; or (ii) the Maximum Credit for the following:
( a ) General Purposes; (b) Letter of Credit Purposes; (c) Business Acquisition Purposes; (d) Real Estate
Investment Purposes; and (e) Stock Buy-Back Purposes.
(b) Except in Administrative Agent's discretion, with the consent of all Lenders, or as
otherwise provided herein the aggregate amount of the Loans outstanding at any time shall not exceed the
Maximum Credit.
(c) In the event that the aggregate principal amount of the Loans exceed the Maximum
Credit, such event shall not limit, waive or otherwise affect any rights of Administrative Agent or Lenders in
such circumstances or on any future occasions, Borrowers shall, upon demand by Administrative Agent, which
may be made at any time or from time to time, immediately repay to Administrative Agent the entire amount of
any such excess(es) for which payment is demanded.
(d) In connection with the foregoing, as of the Closing Date, the Lenders shall consist
of Administrative Agent and City National. The Pro Rata Share of the Loans shall be as follows: (i)
Administrative Agent's Pro Rata Share of the Loans shall be $35,000,000.00 (or 70%); and (ii) City National's
Pro Rata Share of the Loans shall be $15,000,000.00 (or 30%).
2.2 Loans for General Purposes.
(a) Subject to Availability, satisfaction of the Conditions for Advances, the terms and
conditions of Section 2.1 and compliance with the other terms and conditions set forth elsewhere in this
Agreement, each Lender severally (and not jointly) agrees to make its Pro Rata Share of Loans to Borrowers for
General Purposes.
dollar basis) funding for any General Purposes.
(b) Any funding under the Letter of Credit Sublimit shall decrease (on a dollar for
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2.3 Loans for Letter of Credit Purposes.
(a) Subject to Availability, the Letter of Credit Sublimit, satisfaction of the Conditions
for Advances, the terms and conditions of Section 2.1 and compliance with the other terms and conditions set
forth elsewhere in this Agreement, each Lender severally (and not jointly) agrees to make its Pro Rata Share of
Loans to Borrowers for Letter of Credit Purposes.
(b) In addition, the issuance of any Letters of Credit shall be subject to the following:
(i)
the expiration date of any Letter of Credit shall not extend beyond the
Maturity Date;
(ii) any outstanding Letters of Credit with maturities beyond the Maturity Date
shall, no later than such Maturity Date, be promptly cash collateralized in an amount of not less
than one hundred ten percent (110%) of the amount of the outstanding Letters of Credit plus the
amount of any fees and expenses payable in connection therewith through the end of the latest
expiration date of such outstanding Letters of Credit;
(iii) the aggregate number of issued and outstanding Letters of Credit shall not
exceed fifteen (15) at any one time;
(iv) drawings under any Letter of Credit shall be reimbursed by the applicable
Borrower (whether with its own funds or with the proceeds of the Loans) on the same business
day as such drawings shall occur; provided, however, that to the extent that such Borrower does
not so reimburse the Issuing Lender, the Lenders shall be irrevocably and unconditionally
obligated to reimburse the Issuing Lender based upon each Lender's Pro Rata Share;
(v)
except in Administrative Agent's discretion, with the consent of all
Lenders, the amount of all outstanding Letters of Credit made or incurred by one or more Issuing
Banks in connection therewith shall not at any one time exceed the Letter of Credit Sublimit; and
(vi) the issuance of any Letters of Credit under the Letter of Credit Sublimit
shall decrease (on a dollar for dollar basis) funding for any General Purposes.
(c) In addition to the Letter of Credit Issuer Fee and any charges, fees or expenses
charged by any Issuing Bank in connection with the issuance of any Letters of Credit, Borrowers shall pay to
Administrative Agent, for the benefit of Lenders, the Letter of Credit Fee.
(d) The Borrower requesting the issuance of any Letters of Credit (or Borrower Agent
on behalf of such Borrower) shall give Administrative Agent seven (7) Business Days' prior written notice of
such Borrower's request for the issuance of such Letters of Credit. Such notice shall be irrevocable and shall
specify the original face amount of the requested Letters of Credit, the effective date (which date shall be a
Business Day) of issuance of such requested Letters of Credit, whether such Letter of Credit may be drawn in a
single or partial draws, subject to Section 2.3(b), the date on which such requested Letters of Credit is to expire,
the purpose for which such Letter of Credit is to be issued, and the beneficiary of the requested Letter of
Credit. The Borrower requesting the Letter of Credit (or Borrower Agent on behalf of such Borrower) shall
attach to such notice the proposed terms of the Letter of Credit.
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(e) In addition to the terms and conditions set for in this Section 2, and the other terms
and conditions contained herein, no Letters of Credit shall be available for issuance unless each of the following
conditions precedent have been satisfied in a manner satisfactory to Administrative Agent: (i) the Borrower
requesting such Letter of Credit (or Borrower Agent on behalf of such Borrower) shall have delivered to the
proposed Issuing Bank of such Letter of Credit at such times and in such manner as such proposed Issuing Bank
may require, an application, in form and substance satisfactory to such proposed Issuing Bank and
Administrative Agent, for the issuance of the Letter of Credit and such other documents as may be required
pursuant to the terms thereof, and the form and terms of the proposed Letter of Credit shall be satisfactory to
Administrative Agent and such proposed Issuing Bank; and (ii) as of the date of issuance, no order of any court,
arbitrator or other Governmental Authority shall purport by its terms to enjoin or restrain money center banks
generally from issuing letters of credit of the type and in the amount of the proposed Letter of Credit, and no
law, rule or regulation applicable to money center banks generally and no request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction over money center banks generally
shall prohibit, or request that the proposed Issuing Bank of such Letter of Credit refrain from, the issuance of
letters of credit generally or the issuance of such Letter of Credit.
(f) Borrowers shall indemnify and hold Administrative Agent and Lenders harmless
from and against any and all losses, claims, damages, liabilities, costs and expenses which Administrative Agent
or any Lender may suffer or incur in connection with any Letter of Credit and any documents, drafts or
acceptances relating thereto, including any losses, claims, damages, liabilities, costs and expenses due to any
action lawfully taken by any Issuing Bank or correspondent with respect to any Letter of Credit, except for such
losses, claims, damages, liabilities, costs or expenses that are a direct result of the gross negligence or willful
misconduct of Administrative Agent or any Lender as determined pursuant to a final non-appealable order of a
court of competent jurisdiction. Each Borrower assumes all risks with respect to the acts or omissions of the
drawer under or beneficiary of any Letter of Credit. Each Borrower assumes all risks for, and agrees to pay, all
foreign, Federal, State and local taxes, duties and levies relating to any goods subject to any Letter of Credits or
any documents, drafts or acceptances thereunder. Each Borrower hereby releases and holds Administrative
Agent and Lenders harmless from and against any acts, waivers, errors, delays or omissions, whether caused by
any Borrower, by any Issuing Bank or correspondent or otherwise with respect to or relating to any Letter of
Credit, except for the gross negligence or willful misconduct of Administrative Agent or any Lender as
determined pursuant to a final, non-appealable order of a court of competent jurisdiction. The provisions of this
Section 2.3(f) shall survive the payment of Obligations and the termination of this Agreement. This Section
2.3(f) shall not apply with respect to Taxes other than any Taxes that represent claims, costs, losses, liabilities,
damages or expenses arising from any non-Tax claim.
(g) Each Borrower hereby irrevocably authorizes and directs any Issuing Bank of a
Letter of Credit to name such Borrower as the account party therein and to deliver to Administrative Agent all
instruments, documents and other writings and property received by Issuing Bank pursuant to such Letter of
Credit and to accept and rely upon Administrative Agent's instructions and agreements with respect to all matters
arising in connection with such Letter of Credit or the applications therefore. Nothing contained herein shall be
deemed or construed to grant any Borrower any right or authority to pledge the credit of Administrative Agent or
any Lender in any manner. Administrative Agent and Lenders shall have no liability of any kind with respect to
any Letter of Credit provided by an Issuing Bank other than Administrative Agent or any Lender unless
Administrative Agent has duly executed and delivered to such Issuing Bank the application or a guarantee or
indemnification in writing with respect to such Letter of Credit. Borrowers shall be bound by any reasonable
interpretation made in good faith by Administrative Agent, or any other Issuing Bank or correspondent under or
in connection with any Letter of Credit or any documents, drafts or acceptances thereunder, notwithstanding that
such interpretation may
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be inconsistent with any instructions of any Borrower; provided, that, the foregoing shall not be deemed to
release Administrative Agent or any Issuing Bank from any liability as a result of the failure of such Issuing
Bank to follow any reasonable instructions of any Borrower given in accordance with the terms hereof in
connection with any application for a Letter of Credit or a guarantee or indemnification provided by the
Administrative Agent constituting a Letter of Credit at the request of such Borrower or to the extent such
instructions are consistent with the interpretation made by Administrative Agent o r Issuing Bank or
correspondent.
(h) Any rights, remedies, duties or obligations granted or undertaken by any Borrower
to any Issuing Bank or correspondent in any application for any Letter of Credit, or any other agreement in favor
of any Issuing Bank or correspondent relating to any Letter of Credit, shall be deemed to have been granted or
undertaken by such Borrower to Administrative Agent for the ratable benefit of Lenders
(i) Any duties or obligations undertaken by Administrative Agent to any Issuing Bank
or correspondent in any application for any Letter of Credit, or any other agreement by Administrative Agent in
favor of any Issuing Bank or correspondent to the extent relating to any Letter of Credit, shall be deemed to have
been undertaken by Borrowers to Administrative Agent for the ratable benefit of Lenders and to apply in all
respects to Borrowers.
(j) Immediately upon the issuance or amendment of any Letter of Credit, each Lender
shall be deemed to have irrevocably and unconditionally purchased and received, without recourse or warranty,
an undivided interest and participation to the extent of such Lender's Pro Rata Share of the liability with respect
to such Letter of Credit (including, without limitation, all Obligations with respect thereto).
2.4 Loans for Business Acquisition Purposes
(a) Subject to Availability, satisfaction of the Conditions for Advances, the terms and
conditions of Section 2.1 and compliance with the other terms and conditions set forth
elsewhere in this Agreement, each Lender severally (and not jointly) agrees to make its Pro
Rata Share of Loans to Borrowers for Business Acquisition Purposes.
(b) Funding of Loans for Business Acquisition Purposes shall further be subject to the
foregoing:
(i) the business acquisition for which funding is requested must be within the
scope of the Borrower and Subsidiary making the acquisition or a direct complement to the line
of business, as determined by Administrative Agent in its Permitted Discretion;
(ii) the Borrower requesting the Loan for Business Acquisition Purposes (or
Borrower Agent on behalf of such Borrower) shall give Administrative Agent not less than thirty
(30) day prior written notice of such Borrower's request for the Loan for Business Acquisition
Purposes;
(iii) any funding in excess of $5,000,000.00 will need Administrative Agent
approval prior to funding (which it may withhold in its Permitted Discretion);
(iv) no funding for any business acquisition in any operating company having
a debt to cash flow ratio at the closing of such acquisition of greater than 5.5:1 (as determined by
Administrative Agent in its Permitted Discretion) shall be permitted without Administrative
Agent's approval which it may withhold in its Permitted Discretion;
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(v) no funding for any business acquisition in any operating company having
EBITDA losses in the four (4) preceding quarters (as determined by Administrative Agent in its
Permitted Discretion) shall be permitted without Administrative Agent's approval which it may
withhold in its Permitted Discretion;
(vi) no funding for any business acquisition in any operating company which is
headquartered, or has a material portion of its assets or operations located, outside the U.S. (as
determined by Administrative Agent in its Permitted Discretion) shall be permitted without
Administrative Agent's approval which it may withhold in its Permitted Discretion;
(vii) no funding for any business acquisition in any operating company shall be
permitted whereby any Borrower shall assume any debt of such operating company other than
the purchase money debt of such operating company in such amount and of such type as shall be
acceptable to Administrative Agent in its Permitted Discretion;
(viii) a minimum of eighty percent (80%) of the funding for such Business
Acquisition Purposes must be paid back on the earlier to occur of the following dates: (x) that
date which is one hundred eighty (180) days from the date of closing of the acquisition; or (y) the
Maturity Date; and
(ix)
except in Administrative Agent's discretion, with the consent of all
Lenders, Loans for Business Acquisition Purposes shall not at any one time exceed the Business
Acquisition Availability.
2.5 Loans for Real Estate Investment Purposes.
(a) Subject to Availability, satisfaction of the Conditions for Advances, the terms and
conditions of Section 2.1 and compliance with the other terms and conditions set forth elsewhere in this
Agreement, each Lender severally (and not jointly) agrees to make its Pro Rata Share of Loans to Borrowers for
Real Estate Investment Purposes.
the foregoing:
(b) Funding of Loans for Real Estate Investment Purposes shall further be subject to
(i) the acquisition or investment in real estate for which funding is requested
must be within the scope of the Subsidiary making the acquisition or investment, as determined
by Administrative Agent in its Permitted Discretion;
(ii) the Borrower requesting the Loan for Real Estate Investment Purposes (or
Borrower Agent on behalf of such Borrower) shall give Administrative Agent not less than thirty
(30) day prior written notice of such Borrower's request for the Loan for Real Estate Investment
Purposes;
(iii) no funding in excess of $5,000,000.00 shall be permitted within one
hundred eighty (180) days of the Maturity Date;
(iv) any funding in excess of $5,000,000.00 will need Administrative Agent
approval prior to funding (which it may withhold in its Permitted Discretion);
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(v) Administrative Agent (and any Lender so requesting) shall have received
such standard due diligence based on the nature of the real estate transaction as shall be
requested by Administrative Agent; and
(vi)
except in Administrative Agent's discretion, with the consent of all
Lenders, Loans for Real Estate Investment Purposes made or incurred by Administrative Agent
or any Lender in connection therewith shall not at any one time exceed the Real Estate
Investment Availability.
2.6 Loans for Stock Buy Back Purposes.
(a) Subject to Availability, satisfaction of the Conditions for Advances, the terms and
conditions of Section 2.1 and compliance with the other terms and conditions set forth elsewhere in this
Agreement, each Lender severally (and not jointly) agrees to make its Pro Rata Share of Loans to Borrowers for
Stock Buy Back Purposes.
(b) Except in Administrative Agent's discretion, with the consent of all Lenders,
Loans for Stock Buy Back Purposes made or incurred by Administrative Agent or any Lender in connection
therewith shall not at any one time exceed the Stock Buy Back Availability and shall decrease (on a dollar for
dollar basis) the Business Acquisition Availability and the Real Estate Investment Availability.
(c) In addition to the foregoing and provided that no Event of Default shall then be
occurring, subject to the approval of the Required Lenders, Parent shall have a one-time right to increase the
Stock Buy Back Availability to $30,000,000 .00 for the sole purpose of funding Parent's buy back of its Capital
Stock; provided, however, that one hundred percent (100%) of the funding used for funding Parent's buy back of
its Capital Stock must be paid back on the earlier to occur of the following dates: (x) that date which is twelve
(12) months from the date of closing of the funding; or (y) the Maturity Date.
2.7 Commitments. The aggregate amount of each Lender's Pro Rata Share of the Loans shall
not exceed the amount of such Lender's Commitment, as the same may from time to time be amended in
accordance with the provisions hereof.
2.8 Draw Requests.
(a) In order to request any funding of the Loans, Borrower Agent shall deliver to
Administrative Agent a properly completed and executed written application in the form of Exhibit C attached
hereto ("Draw Request"), together with such other information as shall be requested by Administrative Agent
(and any other Lender) based upon the specifics of the purpose for which the Loan is requested.
Requests on behalf of the Borrower Agent:
(b) The following individuals are authorized by Borrower Agent to sign Draw
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Authorized Individual
Title
Jarett S. Levan
President, BBX Capital Corporation
Raymond S. Lopez
Chief Financial Officer, BBX Capital Corporation
Each of the foregoing individuals referred to herein is an "Authorized Representative." Borrower Agent may
designate additional individuals as Authorized Representatives, or relieve individuals of their status as
Authorized Representatives, by delivering a duly authorized and executed written notice thereof to
Administrative Agent, such written notice to be in form and substance satisfactory to Administrative Agent in its
discretion and accompanied by such evidence of due authorization thereof as Administrative Agent may require
(any such written notice an "Authorized Representative Change Notice" ) . An Authorized Representative
Change Notice will be effective only with respect to Draw Requests and approvals from and after the date of
Administrative Agent's written acknowledgement of receipt thereof.
(c) Administrative Agent shall, subject to Availability, satisfaction of the Conditions
for Advances, the terms and conditions of Section 2.1 and compliance with the other terms and conditions set
forth elsewhere in this Agreement, be required to make the requested advance to such Borrower on a Business
Day within five (5) Business Days after Administrative Agent 's determination that all conditions precedent to
such funding shall have been satisfied. Each Draw Request, and such Borrower's acceptance of any advance of
the Loan under such Draw Request, shall be deemed to ratify and confirm, as of the date of the requisition and
the advance, respectively, that: (i) all representations and warranties in Section 7 (Representations and
Warranties), elsewhere herein and in the other Loan Documents remain true and correct in all material respects,
and all covenants and agreements in the Loan Documents remain satisfied in all material respects; (ii) there is no
uncured Default or Event of Default existing under the Loan Documents; (iii) all Conditions for Advances are
satisfied; and (iv) the proceeds of the advance requested in the Draw Request will be disbursed, for the purposes
specified in the Draw Request and for no other purpose.
SECTION 3. REPAYMENT, INTEREST AND FEES AND PREPAYMENT
3.1 Repayment of Loans. The Loans shall be repaid in monthly payments of accrued interest
only based upon the applicable Interest Rate with the entire principal balance of the Notes then unpaid, together
with all accrued and unpaid interest and all other amounts payable thereunder and under the other Loan
Documents being due and payable in full on the Maturity Date. Borrowers shall make each payment required to
be made by it hereunder (whether of principal, interest, fees, or of amounts payable under Section 3.5 or
otherwise) prior to 12:00 p.m. EST, on the date when due, in immediately available funds, without set-off or
counterclaim. Any amounts received after such time on any date may, in the discretion of Administrative Agent,
be deemed to have been received on the next succeeding Business Day for purposes of calculating interest
thereon. All such payments shall be made to Administrative Agent at its Payment Office (except that payments
made pursuant to Section 3.5 shall be made directly to the Persons entitled thereto), or by such other means,
such as wire or other electronic means of transfer as agreed to by and between Borrowers and Administrative
Agent. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be
extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon
shall be made payable for the period of such extension. All payments hereunder shall be made in United States
Dollars.
3.2 Prepayments. Borrowers shall have the right at any time and from time to time to prepay
the Loans, in whole or in part, without premium or penalty, by giving irrevocable written notice
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(or telephonic notice promptly confirmed in writing) of its intention to prepay to Administrative Agent no later
than three (3) Business Days prior to the date of such prepayment. Each such notice shall be irrevocable and
shall specify the proposed date of such prepayment and the principal amount of the Loan or portion thereof to be
prepaid. Upon receipt of any prepayment notice, Administrative Agent shall promptly notify each affected
Lender of the contents thereof and of such Lender's Pro Rata Share of any such prepayment. Such amount shall
be due and payable on the date designated in such notice, together with accrued interest to such date on the
amount so prepaid based upon the Interest Rate; provided that if all or any portion of the Loans is prepaid on a
date other than the last day of an Interest Period applicable thereto, Borrowers shall also pay all amounts
required pursuant to Section 3.5(e). Each prepayment of the Loan shall be applied to principal installments in
inverse order of maturity.
3.3 Interest.
(a) Borrowers shall pay to Administrative Agent, for the benefit of Lenders, interest
on the outstanding principal amount of the Loans at the applicable Interest Rate. All interest accruing hereunder
on and after the date of any Event of Default or termination hereof shall be payable on demand.
(b) Subject to the terms and conditions contained herein, any Borrower (or Borrower
Agent on behalf of such Borrower) may from time to time request Loans, which request shall be made to
Administrative Agent; provided, that, any such request from a Borrower (or Borrower Agent on behalf of such
Borrower) shall specify whether such Loan shall be a Floating LIBOR Rate Loan or a Prime Rate Loan.
(c) Interest shall be payable by Borrowers to Administrative Agent, for the account of
Lenders, monthly in arrears not later than the first day of each calendar month and shall be calculated on the
basis of a three hundred sixty (360) day year and actual days elapsed. The interest rate on non-contingent
Obligations (other than Floating LIBOR Rate Loans) shall increase or decrease by an amount equal to each
increase or decrease in the Prime Rate, effective on the first day of the month after any change in the Prime Rate
is announced based on the Prime Rate in effect on the last day of the month in which any such change occurs. In
no event shall charges constituting interest payable by Borrowers to Administrative Agent and Lenders exceed
the maximum amount or the rate permitted under any applicable law or regulation, and if any such part or
provision of this Agreement is in contravention of any such law or regulation, such part or provision shall be
deemed amended to conform thereto.
(d) Notwithstanding anything to the contrary contained in the Loan Agreement, for
each day hereafter, all Loans made by Lenders to any Borrower shall be Floating LIBOR Rate Loans, except to
the extent that: (i) any Borrower (or Borrower Agent on behalf of such Borrower) requests a Prime Rate Loan;
(ii) Floating LIBOR Rate Loans are no longer available hereunder; or (iii) Floating LIBOR Rate Loans are
converted into Prime Rate Loans, in each case in accordance with the terms of the Loan Agreement.
(e) Each Borrower (or Borrower Agent on behalf of such Borrower) may from time to
time request that Floating LIBOR Rate Loans be converted to Prime Rate Loans effective as of the first day of
the following month. Such request shall be effective only for the month specified and shall be delivered to
Administrative Agent no later than three (3) Business Days prior to the beginning of such month. Any notice
delivered by a Borrower (or Borrower Agent on behalf of such Borrower) to convert Floating LIBOR Rate
Loans to Prime Rate Loans or to continue any existing Prime Rate Loans shall be irrevocable. Notwithstanding
anything to the contrary contained herein, Administrative Agent and Lenders shall not be required to purchase
United States dollar deposits in the London interbank market or other
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applicable Floating LIBOR Rate market to fund any Floating LIBOR Rate Loans, but the provisions hereof shall
be deemed to apply as if Administrative Agent and Lenders had purchased such deposits to fund the Floating
LIBOR Rate Loans.
3.4 Fees, Late Fee and Default Rate.
(a) If the aggregate outstanding principal balance of all Loans is equal to or greater
than fifty percent (50%) of the Maximum Credit, a fee equal to twenty-five basis points (25 bps or .25%) of the
daily average amount of the Maximum Credit which is unused during the immediately preceding quarter, shall
be paid quarterly in arrears to Administrative Agent (on each Lender's behalf) within ten (10) days after the end
of the subject quarter.
(b)
If the aggregate outstanding principal balance of all Loans is less than fifty
percent (50%) of the Maximum Credit but equal to or greater than twenty-five percent (25%) of the Maximum
Credit, a fee equal to thirty-seven and one-half basis points (37.5 bps or .375%) of the daily average amount of
the Maximum Credit which is unused during the immediately preceding quarter, shall be paid quarterly in
arrears to Administrative Agent (on each Lender's behalf) within ten (10) days after the end of the subject
quarter.
(c) If the aggregate outstanding principal balance of all Loans is less than twenty-five
percent (25%) of the Maximum Credit, a fee equal to fifty basis points (50 bps or .50%) of the daily average
amount of the Maximum Credit which is unused during the immediately preceding quarter, shall be paid
quarterly in arrears to Administrative Agent (on each Lender's behalf) within ten (10) days after the end of the
subject quarter.
(d) In the event that any payment due under the terms hereunder is not received by
Administrative Agent within ten (10) days of the date such payment is due (inclusive of the date when due),
Borrowers shall pay to Administrative Agent a late charge equal to five percent (5%) of such payment. Such fee
shall be payable on the earlier of: (i) the date of demand by Administrative Agent; or (ii) the date that Borrowers
make the late payment.
(e) While an Event of Default exists or after acceleration, at the option of the
Required Lenders, Borrowers shall pay interest ("Default Interest") on the Loans at the Default Rate. All
Default Interest shall be payable on demand.
forth in the Fee Letter in the amounts and at the times specified therein.
(f) Borrowers agree to pay to Administrative Agent the other fees and amounts set
3.5 Changes in Laws and Increased Costs of Loans.
(a) If, after the date hereof, in connection with any Change in Law, any Lender,
Issuing Bank, or any banking or financial institution from whom any Lender borrows funds or obtains credit
("Funding Bank") determines that such Change in Law has or would have the direct or indirect effect of
reducing the rate of return on any Lender's or Issuing Bank's capital as a consequence of its obligations
hereunder to a level below that which such Lender or Issuing Bank could have achieved but for such Change in
Law (taking into consideration such Funding Bank's or Lender's or Issuing Bank's policies with respect to capital
adequacy) by an amount deemed by such Lender or Issuing Bank to be material, and the result of the foregoing
is or results in an increase in the cost to any Lender or issuing Bank of funding or maintaining the Loans, the
Letters of Credit or its Commitment, then Borrowers shall from time to time upon demand by Administrative
Agent pay to Administrative Agent additional amounts
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sufficient to indemnify such Lender or Issuing Bank, as the case may be, against such increased cost. A
certificate as to the amount of such increased cost shall be submitted to the Borrower Agent by Administrative
Agent or the applicable Lender and shall be conclusive, absent manifest error.
(b) If prior to the first day of any Interest Period: (i) Administrative Agent shall have
determined, in good faith (which determination shall be conclusive and binding upon Borrowers) that, by reason
of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the
Floating LIBOR Rate for such Interest Period; (ii) Administrative Agent has received notice from the Required
Lenders that the Floating LIBOR Rate determined or to be determined for such Interest Period will not
adequately and fairly reflect the cost to Lenders of making or maintaining Floating LIBOR Rate Loans during
such Interest Period; or (iii) Dollar deposits in the principal amounts of the Floating LIBOR Rate Loans to which
such Interest Period is to be applicable are not generally available in the London interbank market,
Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower Agent as soon as
practicable thereafter, and will also give prompt written notice to the Borrower Agent when such conditions no
longer exist. If such notice is given: (A) any Floating LIBOR Rate Loans requested to be made on the first day
of such Interest Period shall be made as Prime Rate Loans; (B) any Loans that were to have been converted on
the first day of such Interest Period to or continued as Floating LIBOR Rate Loans shall be converted to or
continued as Prime Rate Loans; and (C) each outstanding Floating LIBOR Rate Loan shall be converted, on the
last day of the then-current Interest Period thereof, to Prime Rate Loans. Until such notice has been withdrawn
by Administrative Agent, no further Floating LIBOR Rate Loans shall be made or continued as such, nor shall
any Borrower (or the Borrower Agent on behalf of any Borrower) have the right to convert Prime Rate Loans to
Floating LIBOR Rate Loans.
(c) Notwithstanding any other provision herein, if any Change in Law shall make it
unlawful for Administrative Agent or any Lender to make or maintain Floating LIBOR Rate Loans as
contemplated by this Agreement: (i) Administrative Agent or such Lender shall promptly give written notice of
such circumstances to the Borrower Agent (which notice shall be withdrawn whenever such circumstances no
longer exist); (ii) the commitment of such Lender hereunder to make Floating LIBOR Rate Loans, continue
Floating LIBOR Rate Loans as such and convert Prime Rate Loans to Floating LIBOR Rate Loans shall
forthwith be suspended and, until such time as it shall no longer be unlawful for such Lender to make or maintain
Floating LIBOR Rate Loans, such Lender shall then have a commitment only to make a Prime Rate Loan when a
Floating LIBOR Rate Loan is requested; and (iii) such Lender's Loans then outstanding as Floating LIBOR Rate
Loans, if any, shall be converted automatically to Prime Rate Loans on the respective last days of the then
current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such
conversion of a Floating LIBOR Rate Loan occurs on a day which is not the last day of the then current Interest
Period with respect thereto, Borrowers shall pay to such Lender such amounts, if any, as may be required
pursuant to Section 3.5(e) below.
(d) Notwithstanding anything to the contrary contained herein: (i) the Dodd-Frank
Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder,
issued in connection therewith or in implementation thereof; and (ii) all requests, rules, guidelines and directives
promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any
successor or similar authority) or by any United States or foreign regulatory authorities, in each case pursuant to
Basel III, shall in each case be deemed to be a change in a law or regulation, regardless of the date enacted,
adopted, issued or implemented.
(e) Borrowers shall indemnify Administrative Agent and each Lender and to hold
Administrative Agent and each Lender harmless from any loss or expense which Administrative Agent or such
Lender may sustain or incur as a consequence of: (i) default by any Borrower in making a borrowing of,
conversion into or extension of Floating LIBOR Rate Loans after such Borrower (or the Borrower Agent
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on behalf of such Borrower) has given a notice requesting the same in accordance with the provisions of this
Agreement; (ii) default by any Borrower in making any prepayment of a Floating LIBOR Rate Loan after such
Borrower has given a notice thereof in accordance with the provisions of this Agreement; and (iii) the making of
a prepayment of Floating LIBOR Rate Loans on a day which is not the last day of an Interest Period with respect
thereto. In connection with any Floating LIBOR Rate Loans, such indemnification may include an amount
equal to the excess, if any, of: (A) the amount of interest which would have accrued on the amount so prepaid, or
not so borrowed, converted or extended, for the period from the date of such prepayment or of such failure to
borrow, convert or extend to the last day of the applicable Interest Period (or, in the case of a failure to borrow,
convert or extend, the Interest Period that would have commenced on the date of such failure) in each case at the
applicable rate of interest for such Floating LIBOR Rate Loans provided for herein; over (B) the amount of
interest (as determined by such Administrative Agent or such Lender) which would have accrued to
Administrative Agent or such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank Floating LIBOR market. This covenant shall survive the termination
or non-renewal of this Agreement and the payment of the Obligations. This Section 3.5(e) shall not apply with
respect to Taxes other than any Taxes that represent claims, costs, losses, damages or expenses arising from any
non-Tax claim. A certificate as to the amount of such losses and expenses shall be submitted to the Borrower
Agent by Administrative Agent or the applicable Lender and shall be conclusive, absent manifest error.
(f) If any Change in Law shall subject Administrative Agent, any Lender, Funding
Bank or Issuing Bank to any Taxes (other than: (i) Indemnified Taxes; (ii) Excluded Taxes; and (iii) Connection
Income Taxes) on its Loans, Letters of Credit, Commitment or other obligations, or its deposits, reserves, other
liabilities or capital attributable thereto, and the result of any of the foregoing shall be to increase the cost to
Administrative Agent, such Lender or such Issuing Bank, of making, converting to, continuing or maintaining
any Loan or of maintaining its obligation to make any such Loan, or to increase the cost to Administrative
Agent, such Lender or such Issuing Bank, of participating in, issuing or maintaining any Letters of Credit (or of
maintaining its obligation to participate in or to issue any Letters of Credit), or to reduce the amount of any sum
received or receivable by Administrative Agent, such Lender or such Issuing Bank hereunder (whether of
principal, interest or any other amount) then Borrowers shall from time to time upon written demand by
Administrative Agent pay to Administrative Agent additional amounts sufficient to indemnify Administrative
Agent, such Lender or such Issuing Bank, as the case may be, against such increased costs or reduction
suffered. A certificate setting forth the amounts necessary to compensate Administrative Agent, the applicable
Lender or the applicable Issuing Bank for such increased costs or reduction suffered shall be submitted to the
Borrower Agent by Administrative Agent, or the applicable Lender or Issuing Bank, and shall be conclusive,
absent manifest error.
3.6 Mitigation. If Administrative Agent, any Lender, any Funding Bank or any Issuing Bank
gives a notice under Section 3.5(c) or requests compensation under Sections 3.5(a) or 3.5(f), or if any Borrower
is required to pay additional amounts or indemnity payments with respect to Administrative Agent, any Lender,
any Funding Bank or any Issuing Bank under Section 6.12, then Administrative Agent, such Lender, such
Funding Bank or such Issuing Bank (as applicable) shall (at the request of the applicable Borrower) use
reasonable efforts to designate a different Lending Office or to assign its rights and obligations hereunder to
another of its offices, branches or Affiliates, if, in the judgment of Administrative Agent, such Lender, such
Funding Bank or such Issuing Bank (as applicable), such designation or assignment: (a) would eliminate the
need for such notice or reduce amounts payable or to be withheld in the future, as applicable; and (b) in each
case, would not subject, such Lender, such Funding Bank or such Issuing Bank (as applicable) to any
unreimbursed cost or expense and would not otherwise be materially disadvantageous to Administrative Agent,
such Lender, such Funding Bank or such Issuing Bank (as applicable). The Borrowers shall pay all reasonable
costs and expenses incurred by
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Administrative Agent, any Lender, any Funding Bank or any Issuing Bank that has issued a Commitment to
such Borrower in connection with any such designation or assignment.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans and Letters of Credit. Each of the following is a
condition precedent to Administrative Agent and Lenders making the initial Loans and providing the
initial Letters of Credit hereunder:
(a) all requisite corporate and limited liability company action and proceedings (as the
case may be) in connection with this Agreement and the other Loan Documents shall be satisfactory in form and
substance to Administrative Agent, and Administrative Agent shall have received all information and copies of
all documents, including records of requisite corporate or company action and proceedings which Administrative
Agent may have requested in connection therewith, such documents where requested by Administrative Agent
or its counsel to be certified by appropriate officers, managers, members or any Governmental Authority (and
including a copy of the certificate of incorporation or articles of organization as applicable, of each Borrower
certified by the Secretary of State (or equivalent Governmental Authority) which shall set forth the same
complete corporate or limited liability company name of such Borrower as is set forth herein and such document
as shall set forth the organizational identification number of each Borrower, if one is issued in its jurisdiction of
incorporation);
(b) Administrative Agent shall have determined that no material adverse change shall
have occurred in the assets or business of Borrowers since the date of Administrative Agent's latest examination
and no change or event shall have occurred which would impair in any material respect the ability of the
Borrowers (taken as a whole) or the Obligors to perform their obligations hereunder or under any of the other
Loan Documents to which they are parties or of Administrative Agent or any Lender to enforce the Obligations
or realize upon the Collateral;
(c) Administrative Agent shall have received, in form and substance satisfactory to
Administrative Agent, all consents, waivers, acknowledgments and other agreements from third persons which
Administrative Agent may deem necessary or desirable in order to permit, protect and perfect its security
interests in and liens upon the Collateral or to effectuate the provisions or purposes of this Agreement and the
other Loan Documents;
(d) Administrative Agent shall have received evidence, in form and substance
satisfactory to Administrative Agent, that Administrative Agent has or will have a valid perfected first priority
security interest in all of the Collateral, subject only to liens permitted under this Agreement;
(e) Administrative Agent shall have received and reviewed lien and judgment search
results for the jurisdiction of incorporation and organization of each Borrower (as the case may be), the
jurisdiction of the chief executive office of each Borrower and all jurisdictions in which assets of Borrowers are
located, which search results shall be in form and substance satisfactory to Administrative Agent;
Certificates" representing the "Required Value" (as defined in and required under Section 5.1);
(f) Administrative Agent shall have received original "Membership Interests
(g) Administrative Agent shall have received, in form and substance reasonably
satisfactory to Administrative Agent, such opinion letters of counsel to Borrowers with respect to the Loan
Documents and such other matters as Administrative Agent may request; and.
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the other Loan Documents and all instruments and documents hereunder and
thereunder shall have been duly executed and delivered to Administrative Agent, in form and substance
satisfactory to Administrative Agent.
(h)
4.2 Conditions Precedent to All Loans and Letters of Credit. Each of the following is an
additional condition precedent to the Loans and/or providing Letters of Credit to Borrowers, including the initial
Loans and Letters of Credit and any future Loans and Letters of Credit:
(a)
all representations and warranties contained herein and in the other Loan
Documents shall be true and correct in all material respects with the same effect as though such representations
and warranties had been made on and as of the date of the making of each such Loan or providing each such
Letter of Credit and after giving effect thereto, except to the extent that such representations and warranties
expressly relate solely to an earlier date (in which case such representations and warranties shall have been true
and accurate in all material respects on and as of such earlier date);
(b) no law, regulation, order, judgment or decree of any Governmental Authority shall
exist, and no action, suit, investigation, litigation or proceeding shall be pending or threatened in any court or
before any arbitrator or Governmental Authority, which: (i) purports to enjoin, prohibit, restrain or otherwise
affect: (A) the making of the Loans or providing the Letters of Credit; or (B) the consummation of the
transactions contemplated pursuant to the terms hereof or the other Loan Documents or (ii) has or has a
reasonable likelihood of having a Material Adverse Effect; and
(c) no Default or Event of Default shall exist or have occurred and be continuing on
and as of the date of the making of such Loan or providing each such Letter of Credit and after giving effect
thereto.
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
5.1 Grant of Security Interest. To secure payment and performance of all Obligations,
Parent hereby grants to Administrative Agent, for itself and the benefit of Secured Parties, a continuing security
interest in, a lien upon, and a right of set off against, and hereby assigns to Administrative Agent, for itself and
the benefit of Secured Parties, as security, a percentage of Parent's membership interests in Woodbridge
Holdings (the "Membership Interests"), which Membership Interest shall be certificated in the form as set
forth on Exhibit D attached hereto (the "Membership Interests Certificates"), having a value of not less than
$100,000,000.00 (the "Required Value"), as such value shall be tested and verified by Administrative Agent on
a semi-annual basis throughout the term of the Loan (together with all other collateral security for the
Obligations at any time granted to or held or acquired by Administrative Agent or any Lender, collectively, the
"Collateral"). In the event that following Administrative Agent's semi-annual testing of the value of the
Membership Interests, Administrative Agent shall have reasonably determined that the value of the Membership
Interests shall be less than the Required Value, then Parent shall, no later than ten (10) days from receipt of
written notice from Administrative Agent, deliver to Administrative Agent Membership Interests Certificates in
such an amount as shall have been reasonably determined by Administrative Agent to cause the value of the
Membership Interests to not be less than the Required Value.
5.2 Perfection of Security Interests.
(a) In accordance with the terms and conditions of the Security Agreement, Parent has
delivered (and shall deliver from time to time as may be required based upon Administrative Agent's semi-
annual testing of the value of the Membership Interests as set forth in Section 5.1 above) the
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Membership Interests representing the Required Value. Parent acknowledges and agrees that the Administrative
Agent shall have possession of the Membership Interests Certificates subject to and in accordance with the terms
and conditions of the Security Agreement. As such, Parent acknowledges and agrees that Administrative Agent
shall have perfected its security interest in the Collateral (i.e., the Membership Interests) by possession.
(b) Parent irrevocably and unconditionally authorizes Administrative Agent (or its
agent) to file at any time and from time to time such financing statements with respect to the Collateral naming
Administrative Agent or its designee as the secured party and Parent as debtor, as Administrative Agent may
require, and including any other information with respect to Parent or otherwise required by part 5 of Article 9 of
the UCC or required pursuant to any other legislation of such jurisdiction as Administrative Agent may
determine, together with any amendment and continuations with respect thereto, which authorization shall apply
to all financing statements filed on, prior to or after the date hereof. Parent hereby ratifies and approves all
financing statements (or other registrations or filings) naming Administrative Agent or its designee as secured
party and Parent as debtor with respect to the Collateral (and any amendments with respect to such financing
statements) filed by or on behalf of Administrative Agent prior to the date hereof and ratifies and confirms the
authorization of Administrative Agent to file such financing statements (and amendments, if any). Parent hereby
authorizes Administrative Agent to adopt any symbol required for authenticating any electronic filing. Until
such time as the Commitments have expired or terminated and all amounts due and payable the Loans or under
any Loan Document have been paid in full, in no event shall Parent at any time file, or permit or cause to be
filed, any correction statement or termination statement with respect to any financing statement (or other
registrations or filings) (or amendment or continuation with respect thereto) naming Administrative Agent or its
designee as secured party and Parent as debtor.
(c)
Parent and Woodbridge Holdings shall take any other actions reasonably
requested by Administrative Agent from time to time to cause the attachment, perfection and first priority
(subject to liens permitted under Section 8.7 hereof to be senior thereto) of, and the ability of Administrative
Agent to enforce, the security interest of Administrative Agent in any and all of the Collateral, including, without
limitation: (i) executing, delivering and, where appropriate, filing financing statements and amendments relating
thereto under the UCC or other applicable law, to the extent, if any, that Parent and Woodbridge Holdings
signature thereon is required therefor and executing and delivering any additional pledges, membership interest
transfer powers or other such documents required to perfect or continue to perfect Administrative Agent's and
Lenders' security interest in the Collateral; (ii) complying with any provision of any statute, regulation or treaty
of the United States as to any Collateral if compliance with such provision is a condition to attachment,
perfection or priority of, or ability of Administrative Agent to enforce, the security interest of Administrative
Agent in such Collateral; and (iii) obtaining the consents and approvals of any Governmental Authority or third
party, including, without limitation, any consent of any licensor, lessor or other person obligated on the
Collateral, and taking all actions required by any earlier versions of the UCC or by other law, as applicable in
any relevant jurisdiction.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrowers' Loan Accounts. Administrative Agent shall maintain one or more loan
account(s) on its books in which shall be recorded: (a) all Loans and other Obligations and the Collateral; (b) all
payments made by or on behalf of any Borrower; and (c) all other appropriate debits and credits as provided in
this Agreement, including fees, charges, costs, expenses and interest. All entries in the loan account(s) shall be
made in accordance with Administrative Agent's customary practices as in effect from time to time.
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6.2 Statements. Administrative Agent shall render to Borrower Agent each month a
statement setting forth the balance in the Borrowers' loan account(s) maintained by Administrative Agent for
Borrowers pursuant to the provisions of this Agreement, including principal, interest, fees, costs and
expenses. Each such statement shall be subject to subsequent adjustment by Administrative Agent but shall,
absent manifest errors or omissions, be considered correct and deemed accepted by Borrowers and conclusively
binding upon Borrowers as an account stated except to the extent that Administrative Agent receives a written
notice from Borrower Agent of any specific exceptions of Borrower Agent thereto within thirty (30) days after
the date such statement has been received by Parent. Until Administrative Agent shall have rendered to
Borrower Agent a written statement as provided above, the balance in any Borrower's loan account(s) shall be
presumptive evidence of the amounts due and owing to Administrative Agent and Lenders by Borrowers.
6.3 Payments.
(a) All Obligations shall be payable to the Agent Payment Account or such other
place as Administrative Agent may designate from time to time. Subject to the other terms and conditions
contained herein, Administrative Agent shall apply payments received or collected from any Borrower or for the
account of any Borrower (including, the monetary proceeds of collections or of realization upon any Collateral)
as follows: first, to pay any fees, indemnities or expense reimbursements then due to Administrative Agent,
Lenders and Issuing Bank from any Borrower; second, to pay interest due in respect of any Loans (and
including any Special Agent Advances) or Letters of Credit; third, to pay or prepay principal in respect of
Special Agent Advances; fourth, to pay principal due in respect of the Loans and to pay Obligations then due
arising under or pursuant to any Hedge Agreements of a Borrower with Administrative Agent or a Bank Product
Provider (up to the amount of any then effective reserve established in respect of such Obligations), on a pro
rata basis; fifth, to pay or prepay any other Obligations whether or not then due, in such order and manner as
Administrative Agent determines and at any time an Event of Default exists or has occurred and is continuing,
to provide cash collateral for any Letter of Credit or other contingent Obligations (but not including for this
purpose any Obligations arising under or pursuant to any Bank Products); and sixth, to pay or prepay any
Obligations arising under or pursuant to any Bank Products (other than to the extent provided for above) on a
pro rata basis. Notwithstanding anything to the contrary contained in this Agreement, unless so directed by
Borrower Agent, or unless a Default or an Event of Default shall exist or have occurred and be continuing,
Administrative Agent shall not apply any payments which it receives to any Floating LIBOR Rate Loans,
except: (A) on the expiration date of the Interest Period applicable to any such Floating LIBOR Rate Loans; or
(B) in the event that there are no outstanding Prime Rate Loans.
(b) At Administrative Agent's option, all principal, interest, fees, costs, expenses and
other charges provided for in this Agreement or the other Loan Documents may be charged directly to the loan
account(s) of any Borrower maintained by Administrative Agent.
(c) If after receipt of any payment of, or proceeds of Collateral applied to the payment
of, any of the Obligations, Administrative Agent or any Lender is required to surrender or return such payment
or proceeds to any Person for any reason, then the Obligations intended to be satisfied by such payment or
proceeds shall be reinstated and continue and this Agreement shall continue in full force and effect as if such
payment or proceeds had not been received by Administrative Agent or such Lender. Borrowers shall be liable
to pay to Administrative Agent, and do hereby indemnify and hold Administrative Agent and Lenders harmless
for the amount of any payments or proceeds surrendered or returned. This Section 6.3(c) shall remain effective
notwithstanding any contrary action that may be
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taken by Administrative Agent or any Lender in reliance upon such payment or proceeds. This Section 6.3 shall
survive the payment of the Obligations and the termination of this Agreement.
6.4 Authorization to Make Loans. Administrative Agent and Lenders are authorized to
make the Loans and provide any Letters of Credit based upon telephonic or other instructions received from an
Authorized Representative or, at the discretion of Administrative Agent, if such Loans are necessary to satisfy
any Obligations. All requests for Loans or Letters of Credit hereunder shall specify the date on which the
requested advance is to be made or Letter of Credit issued (which day shall be a Business Day) and the amount
of the requested Loan or Letter of Credit. Requests received after 11:00 a.m., EST on any day shall be deemed
to have been made as of the opening of business on the immediately following Business Day. All Loans and
Letters of Credit under this Agreement shall be conclusively presumed to have been made to, and at the request
of and for the benefit of, any Borrower when deposited to the credit of any Borrower or otherwise disbursed or
issued in accordance with the instructions of any Borrower or in accordance with the terms and conditions of this
Agreement.
6.5 Use of Proceeds. Borrowers shall use the initial proceeds of the Loans provided by
Administrative Agent to Borrowers hereunder only for: (a) the purposes set for in Section 2 above; and (b) costs,
expenses and fees in connection with the preparation, negotiation, execution and delivery of this Agreement and
the other Loan Documents. All other Loans made to or for the benefit of any Borrower pursuant to the
provisions hereof shall be used by such Borrower only for the purposes set for in Section 2 above. None of the
proceeds will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security (other
than open-market repurchases of the common stock of Parent in cancellation) or for the purposes of reducing or
retiring any indebtedness which was originally incurred to purchase or carry any margin security or for any other
purpose which might cause any of the loans to be considered a "purpose credit" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System, as amended.
6.6 Appointment of Borrower Agent as Agent for Requesting Loans and Receipts of
Loans and Statements.
(a) Each Borrower hereby irrevocably appoints and constitutes Borrower Agent as its
agent to request and receive Loans pursuant to this Agreement and the other Loan Documents from
Administrative Agent or any Lender in the name or on behalf of such Borrower. Administrative Agent and
Lenders may disburse the Loans to such bank account of Borrower Agent or a Borrower or otherwise make such
Loans to a Borrower and provide such Letters of Credit to a Borrower as Borrower Agent may designate or
direct, without notice to any other Borrower or Obligor.
of Borrowers pursuant to this Section 6.6.
(b) Borrower Agent hereby accepts the appointment by Borrowers to act as the agent
(c) Each Borrower hereby irrevocably appoints and constitutes Borrower Agent as its
agent to receive statements on account and all other notices from Administrative Agent and Lenders with respect
to the Obligations or otherwise under or in connection with this Agreement and the other Loan Documents.
(d) Any notice, election, representation, warranty, agreement or undertaking by or on
behalf of any other Borrower by Borrower Agent shall be deemed for all purposes to have been made by such
Borrower, as the case may be, and shall be binding upon and enforceable against such Borrower to the same
extent as if made directly by such Borrower.
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aforesaid shall be effective, except after ten (10) days' prior written notice to Administrative Agent.
(e) No purported termination of the appointment of Borrower Agent as agent as
6.7 Pro Rata Treatment. Except to the extent otherwise provided in this Agreement: (a) the
making of Loans shall be made by each Lender based on its Pro Rata Share; and (b) each payment on account of
any Obligations to or for the account of one or more of the Lenders in respect of any Obligations due on a
particular day shall be allocated among the Lenders entitled to such payments based on their respective Pro Rata
Shares and shall be distributed accordingly.
6.8 Sharing of Payments, Etc.
(a) Each Borrower agrees that, in addition to (and without limitation of) any right of
setoff, banker's lien or counterclaim Administrative Agent or any Lender may otherwise have, each Lender shall
be entitled, at its option (but subject, as among Administrative Agent and Lenders, to the provisions of Section
11.3(b) hereof), to offset balances held by it for the account of such Borrower at any of its offices, in United
States Dollars or in any other currency, against any principal of or interest on any Loans owed to such Lender or
any other amount payable to such Lender hereunder, that is not paid when due (regardless of whether such
balances are then due to such Borrower), in which case it shall promptly notify Borrower Agent and
Administrative Agent thereof provided, that, such Lender's failure to give such notice shall not affect the validity
thereof.
(b) If any Lender (including Administrative Agent) shall obtain from any Borrower
payment of any principal of or interest on any Loan owing to it or payment of any other amount under this
Agreement or any of the other Loan Documents through the exercise of any right of setoff, banker's lien or
counterclaim or similar right or otherwise (other than from Administrative Agent as provided herein), and, as a
result of such payment, such Lender shall have received more than its Pro Rata Share of the principal of the
Loans or more than its share of such other amounts then due hereunder or thereunder by any Borrower to such
Lender than the percentage thereof received by any other Lender, it shall promptly pay to Administrative Agent,
for the benefit of Lenders, the amount of such excess and simultaneously purchase from such other Lenders a
participation in the Loans or such other amounts, respectively, owing to such other Lenders (or such interest due
thereon, as the case may be) in such amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all Lenders shall share the benefit of such excess payment (net of any expenses that
may be incurred by such Lender in obtaining or preserving such excess payment) in accordance with their
respective Pro Rata Shares or as otherwise agreed by Lenders. To such end, all Lenders shall make appropriate
adjustments among themselves (by the resale of participation sold or otherwise) if such payment is rescinded or
must otherwise be restored.
(c) Each Borrower agrees that any Lender purchasing a participation (or direct
interest) as provided in this Section may exercise, in a manner consistent with this Section, all rights of setoff,
banker's lien, counterclaim or similar rights with respect to such participation as fully as if such Lender were a
direct holder of Loans or other amounts (as the case may he) owing to such Lender in the amount of such
participation.
(d) Nothing contained herein shall require any Lender to exercise any right of setoff,
banker's lien, counterclaims or similar rights or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other Indebtedness or obligation of any Borrower. If,
under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of
a setoff to which this Section applies, such Lender shall, to the extent practicable, assign such rights to
Administrative Agent for the benefit of Lenders and, in any event, exercise its rights
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in respect of such secured claim in a manner consistent with the rights of Lenders entitled under this Section to
share in the benefits of any recovery on such secured claim.
6.9 Settlement Procedures.
(a) In order to administer the Credit Facility in an efficient manner and to minimize
the transfer of funds between Administrative Agent and Lenders, Administrative Agent may, at its option,
subject to the terms of this Section, make available, on behalf of Lenders, the full amount of the Loans requested
or charged to any Borrower's loan account(s) or otherwise to be advanced by Lenders pursuant to the terms
hereof, without requirement of prior notice to Lenders of the proposed Loans.
(b) With respect to all Loans made by Administrative Agent on behalf of Lenders as
provided in this Section, the amount of each Lender's Pro Rata Share of the outstanding Loans shall be computed
weekly and shall be adjusted upward or downward on the basis of the amount of the outstanding Loans as of
5:00 p.m. EST on the Business Day immediately preceding the date of each settlement computation; provided,
that, Administrative Agent retains the absolute right at any time or from time to time to make the above-
described adjustments at intervals more frequent than weekly, but in no event more than twice in any
week. Administrative Agent shall deliver to each of the Lenders after the end of each week, or more frequently
as Administrative Agent shall determine, a summary statement of the amount of outstanding Loans for such
period (such week or lesser period or periods being hereinafter referred to as a "Settlement Period"). If the
summary statement is sent by Administrative Agent and received by a Lender prior to 12:00 p.m. EST, then such
Lender shall make the settlement transfer described in this Section by no later than 3:00 p.m. EST on the same
Business Day and if received by a Lender after 12:00 p.m. EST, then such Lender shall make the settlement
transfer by not later than 4:00 p.m. EST on the next Business Day following the date of receipt. If, as of the end
of any Settlement Period, the amount of a Lender's Pro Rata Share of the outstanding Loans is more than such
Lender's Pro Rata Share of the outstanding Loans as of the end of the previous Settlement Period, then such
Lender shall forthwith (hut in no event later than the time set forth in the preceding sentence) transfer to
Administrative Agent by wire transfer in immediately available funds the amount of the increase. Alternatively,
if the amount of a Lender's Pro Rata Share of the outstanding Loans in any Settlement Period is less than the
amount of such Lender's Pro Rata Share of the outstanding Loans for the previous Settlement Period,
Administrative Agent shall forthwith transfer to such Lender by wire transfer in immediately available funds the
amount of the decrease. The obligation of each of the Lenders to transfer such funds and effect such settlement
shall be
to or warranty by Administrative
Agent. Administrative Agent and each Lender agrees to mark its books and records at the end of each
Settlement Period to show at all times the dollar amount of its Pro Rata Share of the outstanding Loans and
Letters of Credit. Each Lender shall only be entitled to receive interest on its Pro Rata Share of the Loans to the
extent such Loans have been funded by such Lender. Because the Administrative Agent on behalf of Lenders
may be advancing and/or may be repaid Loans prior to the time when Lenders will actually advance and or be
repaid such Loans, interest with respect to Loans shall be allocated by Administrative Agent in accordance with
the amount of Loans actually advanced by and repaid each Lender and the Administrative Agent and shall
accrue from and including the date such Loans are so advanced to but excluding the date such Loans are either
repaid by Borrowers or actually settled with the applicable Lender as described in this Section.
irrevocable and unconditional and without recourse
(c) To the extent that Administrative Agent has made any such amounts available and
the settlement described above shall not yet have occurred, upon repayment of any Loans by a Borrower,
Administrative Agent may apply such amounts repaid directly to any amounts made available by Administrative
Agent pursuant to this Section. In lieu of weekly or more frequent settlements, Administrative Agent may, at its
option, at any time require each Lender to provide Administrative Agent
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with immediately available funds representing its Pro Rata Share of each Loan, prior to Administrative Agent's
disbursement of such Loan to Borrower. In such event, all Loans under this Agreement shall be made by the
Lenders simultaneously and proportionately to their Pro Rata Shares. No Lender shall be responsible for any
default by any other Lender in the other Lender's obligation to make a Loan requested hereunder nor shall the
Commitment of any Lender be increased or decreased as a result of the default by any other Lender in the other
Lender's obligation to make a Loan hereunder.
(d) Upon the making of any Loan by Administrative Agent as provided herein,
without further action by any party hereto, each Lender shall be deemed to have irrevocably and unconditionally
purchased and received from Administrative Agent, without recourse or warranty, an undivided interest and
participation to the extent of such Lender's Pro Rata Share in such Loan. To the extent that there is no settlement
in accordance with the terms hereof, Administrative Agent may at any time require the Lenders to fund their
participations. From and after the date, if any, on which any Lender has funded its participation in any such
Loan, Administrative Agent shall promptly distribute to such Lender, such Lender's Pro Rata Share of all
payments of principal and interest received by Administrative Agent in respect of such Loan.
(e)
If Administrative Agent is not funding a particular Loan to a Borrower (or
Borrower Agent for the benefit of such Borrower) pursuant to this Section on any day, Administrative Agent
may assume that each Lender will make available to Administrative Agent such Lender's Pro Rata Share of the
Loan requested or otherwise made on such day and Administrative Agent may, in its discretion, but shall not be
obligated to, cause a corresponding amount to be made available to or for the benefit of such Borrower on such
day. If Administrative Agent makes such corresponding amount available to a Borrower and such
corresponding amount is not in fact made available to Administrative Agent by such Lender, Administrative
Agent shall be entitled to recover such corresponding amount on demand from such Lender together with
interest thereon for each day from the date such payment was due until the date such amount is paid to
Administrative Agent at the Federal Funds Rate for each day during such period (as published by the Federal
Reserve Bank of New York or at Administrative Agent's option based on the arithmetic mean determined by
Administrative Agent of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m.
EST on that day by each of the three (3) leading brokers of Federal funds transactions in New York City selected
by Administrative Agent) and if such amounts are not paid within three (3) days of Administrative Agent's
demand, at the highest Interest Rate provided for in Section 3.3 hereof applicable to Prime Rate Loans. During
the period in which such Lender has not paid such corresponding amount to Administrative Agent,
notwithstanding anything to the contrary contained in this Agreement or any of the other Loan Documents, the
amount so advanced by Administrative Agent to or for the benefit of any Borrower shall, for all purposes hereof,
be a Loan made by Administrative Agent for its own account. Upon any such failure by a Lender to pay
Administrative Agent, Administrative Agent shall promptly thereafter notify Borrower Agent of such failure and
Borrowers shall pay such corresponding amount to Administrative Agent for its own account within five (5)
Business Days of Borrower Agent's receipt of such notice. Any Lender that has failed to fund any portion of the
Loans, participations in Letters of Credit required to be funded by it hereunder within one (1) Business Day of
the date required to be funded by it hereunder, or has otherwise failed to pay over to Administrative Agent or
any other Lender any other amount required to be paid by it hereunder within one (1) Business Day of the date
when due, shall be a "Defaulting Lender".
(f) Administrative Agent shall not be Obligated to transfer to a Defaulting Lender any
payments received by Administrative Agent for the Defaulting Lender's benefit, nor shall a Defaulting Lender
be entitled to the sharing of any payments hereunder (including any principal, interest or fees). For purposes of
voting or consenting to matters with respect to this Agreement and the other Loan Documents and determining
Pro Rata Shares, such Defaulting Lender shall be deemed not to be a "Lender"
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and such Lender's Commitment shall be deemed to be zero (0). All amounts otherwise payable in respect of the
Pro Rata Share of principal to a Defaulting Lender shall instead be paid to the other Lenders based on their Pro
Rata Shares calculated after giving effect to the reduction of the Defaulting Lender's Commitment to zero (0) as
provided herein or at Administrative Agent's option may instead be paid to and retained by Administrative
Agent. To the extent that Administrative Agent elects to receive and retain such amounts, Administrative Agent
may hold them and, in its reasonable discretion, relend such amounts to a Borrower. To the extent that
Administrative Agent exercises its option to relend such amounts, such amounts shall be treated as Revolving
Loans for the account of Administrative Agent in addition to the Revolving Loans that are made by the Lenders
other than Defaulting Leaders based on their Pro Rata Shares as calculated after giving effect to the reduction of
the Defaulting Lender's Commitment to zero (0) as provided herein but shall be repaid in the same order of
priority as Special Agent Advances for purposes of Section 6.3 hereof, except as Administrative Agent may
otherwise elect. The rights of a Defaulting Lender shall be limited as provided herein until such time as the
Defaulting Lender has made all payments to Administrative Agent that were the basis for it to become a
Defaulting Lender. Upon the cure by Defaulting Lender of the event that is the basis for it to be a Defaulting
Lender by making such payment or payments, such Lender shall cease to be a Defaulting Lender and shall be
entitled to payment of interest to the extent previously received and retained by Administrative Agent from or for
the account of Borrowers on the funds constituting Loans made by such Lender prior to the date of it being a
Defaulting Lender (and not previously paid to such Lender) and shall otherwise, after such cure, make Loans
and settle in respect of the Loans and other Obligations in accordance with the terms hereof. The existence of a
Defaulting Lender and the operation of this Section shall not be construed to increase or otherwise affect the
Commitment of any Lender, or relieve or excuse the performance by any Borrower or Obligor of their duties
and obligations hereunder.
(g) Nothing in this Section or elsewhere in this Agreement or the other Loan
Documents shall be deemed to require Administrative Agent to advance funds on behalf of any Lender or to
relieve any Lender from its obligation to fulfill its Commitment hereunder or to prejudice any rights that any
Borrower may have against any Lender as a result of any default by any Lender hereunder in fulfilling its
Commitment.
6.10 Obligations Several; Independent Nature of Lenders' Rights. The obligation of each
Lender hereunder is several; and no Lender shall be responsible for the obligation or commitment of any other
Lender hereunder. Nothing contained in this Agreement or any of the other Loan Documents and no action
taken by the Lenders pursuant hereto or thereto shall be deemed to constitute the Lenders to be a partnership, an
association, a joint venture or any other kind of entity. The amounts payable at any time hereunder to each
Lender shall be a separate and independent debt, and subject to Section 11.3 hereof, each Lender shall be
entitled to protect and enforce its rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
6.11 Bank Products. Borrowers, may (but no such Person is required to) request that the
Bank Product Providers provide or arrange for such Person to obtain Bank Products from Bank Product
Providers, and each Bank Product Provider may, in its sole discretion, provide or arrange for such Person to
obtain the requested Bank Products. Borrowers shall indemnify and hold Administrative Agent, each Lender
and their respective Affiliates harmless from any all obligations now are hereafter owing to any other Person by
any Bank Product Provider in connection with any Bank Products obtained by Borrowers other than for gross
negligence or willful misconduct on the part of any such indemnified Person. This Section 6.11 shall survive the
payment of the Obligations and the termination of this Agreement. Borrowers acknowledge and agree that the
obtaining of Bank Products from Bank Product Providers: (a) is in the sole discretion of such Bank Product
Provider; and (b) is subject to the rules and regulations of
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such Bank Product Provider. This Section 6.11 shall not apply to Indemnified Taxes, Other Taxes or Excluded
Taxes.
6.12 Taxes.
(a) Any and all payments by or on behalf of any Borrower hereunder and under any
Loan Document shall be made free and clear of and without deduction for any and all Taxes, except as required
by applicable law. In addition, Borrowers agree to pay to the relevant Governmental Authority in accordance
with applicable law any Other Taxes.
(b) If any Borrower shall be required by law to deduct or withhold in respect of any
Indemnified Taxes or Other Taxes from or in respect of any sum payable hereunder to Administrative Agent,
any Lender or Issuing Bank, then:
(i) the sum payable shall be increased, as necessary so that after making all
required deductions and withholdings (including deductions and withholdings applicable to additional sums
payable under this Section 6.12(b)) such Lender (or Administrative Agent on behalf of such Lender) or Issuing
Bank receives an amount equal to the sum it would have received had no such deductions or withholdings been
made;
(ii) such Borrower shall make such deductions and withholdings; and
(iii) such Borrower shall timely pay the full amount deducted or withheld to
the relevant Governmental Authority in accordance with applicable law or, at the option of Administrative
Agent, timely reimburse it for the payment of any Other Taxes.
(c) Within thirty (30) days after the date of any payment by any Borrower of
Indemnified Taxes or Other Taxes, upon Administrative Agent's request, such Borrower shall furnish to
Administrative Agent the original or a certified copy of a receipt evidencing payment thereof, or other evidence
of payment reasonably satisfactory to Administrative Agent.
(d) Each Lender and each Issuing Bank shall deliver to Administrative Agent and
Borrower Agent, before receiving such Lender's or Issuing Bank's first payment under this Agreement, either: (i)
an original executed IRS Form W-9; or (ii) any other IRS form (and in the case of a Lender or Issuing Bank
claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, a certificate
substantially in the form applicable to such Lender or such Issuing Bank provided as an exhibit in the Loan
Syndication and Trading Association Model Credit Agreement Provisions dated August 10, 2011 (or any
subsequent version published in final form by the LSTA)) certifying that such Lender or Issuing Bank is entitled
to a complete exemption from United States federal withholding Tax and United States federal backup
withholding Tax, as applicable, with respect to payments made hereunder and under any Loan Document. Each
Lender and each Issuing Bank shall provide new forms (or successor forms) to Administrative Agent and
Borrower Agent upon the expiration or obsolescence of any previously delivered forms and shall promptly
notify Administrative Agent and each Borrower of any change in circumstances which would modify or render
invalid any claimed exemption (provided, however, that notifying Administrative Agent and each Borrower of a
change in circumstances shall not affect whether any Tax constitutes an Excluded Tax).
(e) If a Lender or Issuing Bank is entitled to a reduction in the applicable withholding
Tax, Administrative Agent or the Borrowers may withhold from any interest payment to such Lender or such
Issuing Bank an amount equivalent to the applicable withholding Tax after taking into
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account such reduction. If the forms or other documentation required by Section 6.12(d) are not delivered to
Administrative Agent and the Borrowers, then Administrative Agent or any Borrower may withhold from any
interest payment to such Lender or such Issuing Bank not providing such forms or other documentation an
amount equivalent to the applicable withholding Tax.
(f) Borrowers will indemnify Administrative Agent, each Lender and each Issuing
Bank for the full amount of Indemnified Taxes and Other Taxes paid by Administrative Agent, such Lender or
such Issuing Bank and any reasonable expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes and Other Taxes were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by any Lender
or any Issuing Bank (with a copy to Administrative Agent) or by Administrative Agent on its own behalf or on
behalf of any Lender or any Issuing Bank shall be conclusive absent manifest error.
(g) If Administrative Agent, any Lender or any Issuing Bank receives a refund of any
Taxes as to which it has been indemnified by Borrowers or with respect to which Borrowers have paid additional
amounts pursuant to this Section 6.12, so long as no Default or Event of Default has occurred and is continuing,
it shall pay over any refund it has received to Borrowers (but only to the extent of payments made, or additional
amounts paid, by Borrowers under this Section 6.12 with respect to Taxes giving rise to such a refund) net of
all out-of-pocket expenses of Administrative Agent, such Lender or such Issuing Bank and without interest
(other than any interest paid by the relevant Governmental Authority with respect to such a refund); provided,
that, Borrowers, upon the request of Administrative Agent, such Lender or such Issuing Bank, agree to repay the
amount paid over to Borrowers (plus any penalties, interest or other charges, imposed by the relevant
Governmental Authority, other than such penalties, interest or other charges imposed as a result of the willful
misconduct or gross negligence of Administrative Agent, such Lender or such issuing Bank hereunder) to
Administrative Agent, such Lender or such Issuing Bank in the event Administrative Agent, such Lender or such
Issuing Bank is required to repay such refund to such Governmental Authority; provided, further, that in no
event shall Administrative Agent, any Lender or any Issuing Bank be required to repay any such amounts if such
payment would place Administrative Agent, such Lender or such Issuing Bank in a less favorable net after-Tax
position than if such indemnification payments or additional amounts giving rise to such refund had never been
paid. Notwithstanding anything in this Agreement to the contrary, this Section 6.12(g) shall not be construed to
require Administrative Agent, any Lender or any Issuing Bank to make available its tax returns tor any other
information which it reasonably deems confidential) to any Borrower or any other Person.
(h) lf a payment made to Administrative Agent, any Lender or any Issuing Bank
hereunder or under any other Loan Document would be subject to United States federal withholding tax imposed
pursuant to FATCA if Administrative Agent, such Lender or such Issuing Bank fails to comply with applicable
reporting and other requirements of FATCA (including those contained in Section 1471(h) or 1472(1) of the
Code, if applicable), Administrative Agent, such Lender or such Issuing Bank shall use commercially
reasonable efforts to deliver to the Borrowers and Administrative Agent at the time or times prescribed by
applicable law or as reasonably requested by the Borrowers or Administrative Agent, accurate, complete and
signed certification prescribed by applicable law and any other documentation reasonably requested by
Administrative Agent sufficient for the Borrowers and Administrative Agent to comply with their obligations
under FATCA and to determine that Administrative Agent, such Lender or such Issuing Bank has complied with
such applicable reporting and other requirements of FATCA. Solely for purposes of this Section 6.12(h), the
term "FATCA" shall include any amended or successor provisions.
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(i) Each party's obligations under this Section 6.12 shall survive the resignation or
replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender or
Issuing Bank, the termination of the Commitments and the repayment, satisfaction or discharge of all
Obligations under any Loan Document.
SECTION 7. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this Agreement and to make the Loans
and issue Letters of Credit, each Borrower hereby represents and warrants to Administrative Agent and Lenders
the following (which shall survive the execution and delivery of this Agreement), the truth and accuracy of
which are a continuing condition of the making of Loans and providing Letters of Credit to Borrowers:
7.1 Existence, Power and Authority. Each Borrower is a corporation or limited liability
company duly organized and in good standing under the laws of its state or other jurisdiction of organization and
is duly qualified as a foreign corporation or limited liability company, as applicable, and in good standing in all
states or other jurisdictions where the nature and extent of the business transacted by it or the ownership of
assets makes such qualification necessary, except for those jurisdictions in which the failure to so qualify would
not have a Material Adverse Effect. The execution, delivery and performance of this Agreement, the other
Loan Documents and the transactions contemplated hereunder and thereunder: (a) are all within each Borrower's
corporate or limited liability company powers; (b) have been duly authorized; (c) are not in contravention of any
applicable law or the terms of any Borrower's certificate of incorporation, by laws, articles of organization,
operating agreement or other organizational documentation, or any indenture, agreement or undertaking to
which any Borrower is a party or by which any Borrower or its property are bound; and (d) will not result in the
creation or imposition of, or require or give rise to any obligation to grant, any lien, security interest, charge or
other encumbrance upon any property of any Borrower. This Agreement and the other Loan Documents to
which any Borrower is a party constitute legal, valid and binding obligations of such Borrower enforceable in
accordance with
terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.
their respective
7.2 Name: State of Organization; Chief Executive Office.
(a) As of the date hereof and as of the date of each Compliance Certificate, the exact
legal name of each Borrower is as set forth on the signature page of this Agreement. Except as set forth on
Schedule 7.2, each Borrower has, during the five (5) years immediately preceding the date hereof been known
by or used any other corporate or fictitious name or been a party to any merger or consolidation, or acquired all
or substantially all of the assets of any Person, or acquired any of its property or assets outside of the ordinary
course of business.
(b) As of the date hereof and as of the date of each Compliance Certificate, each
Borrower is an organization of the type and organized in the jurisdiction set forth on Schedule 7.2. Schedule
7.2 sets forth the organizational identification number of each Borrower or states that such Borrower has none
and sets forth the federal employer identification number of each Borrower.
(c) As of the date hereof and as of the date of each Compliance Certificate, the chief
executive office and mailing address of each Borrower are located only at the address identified as such on
Schedule 7.2 and its only other places of business are the addresses set forth on Schedule 7.2,
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subject to the rights of any Borrower to establish new locations after the date hereof subject to and in accordance
with Section 8.1(c) below.
7.3 Financial Statements; No Material Adverse Change. All consolidated financial
statements of the Parent which have been or may hereafter be delivered by the Parent to Administrative Agent
and Lenders have been prepared in accordance with GAAP (except as to any interim financial statements, to the
extent such statements are subject to normal year-end adjustments and do not include any notes) and fairly
present in all material respects the consolidated financial condition and the consolidated results of operation of
the Parent as at the dates and for the periods set forth therein. Except as disclosed in any interim financial
statements furnished by the Parent to Administrative Agent prior to the date of this Agreement, there has been
no act, condition or event which has had or is reasonably likely to have a Material Adverse Effect since the date
of the most recent audited consolidated financial statements of the Parent furnished by the Parent to
Administrative Agent prior to the date of this Agreement.
7.4 Priority of Liens; Collateral. The Collateral will be certificated prior to the Closing and
upon consummation of the pledge and assignment of the Collateral to Administrative Agent pursuant to this
Agreement and the Security Agreement, and delivery to Administrative Agent of the Membership Interest
Certificates and one or more Membership Interest transfer powers executed in blank, to be held by
Administrative Agent pursuant to the terms of this Agreement and the Security Agreement, such pledge and
assignment will create a valid lien on and a perfected, first priority security interest in the Collateral securing the
payment of the Notes, without any filing, registration or other act by Administrative Agent. In connection with
the foregoing, Parent and Woodbridge Holdings hereby represent and warrant that:
(a) Parent is the sole legal and beneficial owner of good and indefeasible title to the
Membership Interests free and clear of all liens and encumbrances except for the Security Interests created by
this Agreement and the Security Agreement and the encumbrances permitted by Section 8.7 and has all
necessary authority to pledge, sell, transfer and assign the Collateral and such assignment and transfer is not
contrary to or in conflict with the Woodbridge Holdings Operating Agreement or any other agreement,
mortgage, indenture or contract binding on Parent or Woodbridge Holdings;(b) Subject to the terms of the
Woodbridge Holdings Operating Agreement, there are no restrictions on assignment, transfer, pledge,
hypothecation or mortgage of the Membership Interests;
(c) No financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any recording office, except such as may have been filed in favor of
Administrative Agent relating to this Agreement; and
time to time;
(d) The Collateral is a "security" as defined in Article 8 of the UCC as in effect from
7.5 Tax Returns. The Borrowers have filed, or caused to be filed, in a timely manner all U.S.
federal tax returns and all other material tax returns, reports and declarations which are required to be filed. All
information in such tax returns, reports and declarations is complete and accurate in all material
respects. Adequate provision has been made for the payment of all accrued and unpaid Federal, State, county,
local, foreign and other taxes whether or not yet due and payable and whether or not disputed.
7.6 Litigation. Except as set forth on Schedule 7.6, as of the date hereof and as of the date
of each Compliance Certificate: (a) there is no investigation by any Governmental Authority
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pending, or to any Borrower's knowledge threatened, against or affecting any Borrower, its or their assets or
business; and (b) there is no action, suit, proceeding or claim by any Person pending, or to any Borrower's
knowledge threatened, against any Borrower or its or their assets or goodwill, or against or affecting) any
transactions contemplated by this Agreement; in each case, which could reasonably be expected to have a
Material Adverse Effect.
7.7 Compliance with Other Agreements and Applicable Laws.
(a) Borrowers are not in default in any respect under, or in violation in any respect of
the terms of, any material agreement, contract, instrument, lease or other commitment to which it is a party or by
which it or any of its assets are bound, except where such violation could not reasonably be expected to result in
a Material Adverse Effect. Borrowers are in compliance in all material respects with the requirements of all
applicable laws, rules, regulations, listing standards and orders of any Governmental Authority, regulatory
agency or securities exchange relating to their Capital Stock or their respective businesses.
(b) Borrowers have obtained all permits, licenses, approvals, consents, certificates,
orders or authorizations of any Governmental Authority required for the lawful conduct of its business (the
"Permits"), except those which could not reasonably be expected to have a Material Adverse Effect. All of the
Permits are valid and subsisting and in full force and effect. There are no actions, claims or proceedings pending
or to any Borrower's knowledge, threatened that seek the revocation, cancellation, suspension or modification of
any of the Permits which even if resolved unfavorably, could reasonably be expected to result in a Material
Adverse Effect.
7.8 Environmental Compliance.
(a)
Except as set forth on Schedule 7.8, Borrowers and any Subsidiary of any
Borrower have not generated, used, stored, treated, transported, manufactured, handled, produced or disposed of
any Hazardous Materials, on or off its premises (whether or not owned by if) in any manner which at any time
violates in any material respect any, applicable Environmental Law or Permit, and the operations of Borrowers
and any Subsidiary of any Borrower complies in all material respects with all Environmental Laws and all
Permits, except in each case for such violations or failures which could not reasonably be expected to have a
Material Adverse Effect.
(b) Except as set forth on Schedule 7.8, there is no pending investigation by any
Governmental Authority or any proceeding, complaint, order, directive, claim, citation or notice by any
Governmental Authority or any other person nor is any pending or to any Borrower's knowledge threatened,
with respect to any non-compliance with or violation of the requirements of any Environmental Law by any
Borrower and any Subsidiary or the release, spill or discharge, threatened or actual, of any Hazardous Material
or the generation, use, storage, treatment, transportation, manufacture, handling, production or disposal of any
Hazardous Materials or any other environmental, health or safety matter, which in any case could reasonably be
expected to result in a Material Adverse Effect.
(c) Except as set forth on Schedule 7.8, Borrowers and their Subsidiaries have no
liability (contingent or otherwise) in connection with a release, spill or discharge, threatened or actual, of any
Hazardous Materials or the generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials which in any case could reasonably be expected to result in a
Material Adverse Effect.
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(d) Borrowers and their Subsidiaries have all Permits required to be obtained or filed
in connection with the operations of Borrowers under any Environmental Law and all of such licenses,
certificates, approvals or similar authorizations and other Permits are valid and in full force and effect, except as
could not reasonably be expected to result in a Material Adverse Effect.
7.9 Employee Benefits.
(a) Each Plan is in compliance in all material respects with the applicable provisions
of ERISA, the Code and other Federal or State law. Each Plan which is intended to qualify under Section 401(a)
of the Code, has either received a favorable determination letter from the Internal Revenue Service or can rely
on an opinion letter from the Internal Revenue Service issued to a pre-approved plan sponsor to the effect that
such Plan is so qualified and, to any Borrower's knowledge, nothing has occurred which would cause the loss of
such qualification. Each Borrower and its ERISA Affiliates have made all required contributions to any Plan
subject to Section 412 of' the Code, and no application for a funding waiver or an extension of any amortization
period pursuant to Section 412 of the Code has been made with respect to any Plan.
(b) Except as could not reasonably be expected to have a Material Adverse Effect,
there are no pending, or to any Borrower's knowledge, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan. Except as could not reasonably be expected to have a
Material Adverse Effect, there has been no prohibited transaction or violation of the fiduciary responsibility
rules under ERISA with respect to any Plan.
(c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) except
as could not reasonably be expected to have a Material Adverse Effect, each Borrower, and their ERISA
Affiliates, have not incurred and do not reasonably expect to incur, any liability under Title TV of ERISA with
respect to any Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iii) except as
could not reasonably be expected to have a Material Adverse Effect, each Borrower and their ERISA Affiliates,
have not incurred and do not reasonably expect to incur, any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 of ERISA with
respect to a Multiemployer Plan; and (iv) except as could not reasonably be expected to have a Material Adverse
Effect, each Borrower, and their ERISA Affiliates, have not engaged in a transaction that would be subject to
Section 4069 or 4212(c) of ERISA.
7.10 Bank Accounts. As of the date hereof, all of the deposit accounts, investment accounts
or other accounts in the name of or used by any Borrower maintained at any hank or other financial institution
are set forth on Schedule 7.10.
7.11 SEC Reporting Compliance. All reports filed by a Borrower with the SEC during the
past three (3) years, as amended, complied in all material respects with all SEC rules and regulations on the date
of filing and did not contain any material misstatement or material omission that caused a statement contained
therein in light of the circumstances under which it was made to be misleading.
7.12 Subsidiaries; Capitalization; Solvency.
(a) Exhibit 21.1 to the Parent's Annual Report on Form 10-K for the fiscal year ended
December 31, 2016 ("2016 Annual Report"), lists each Significant Subsidiary of the Parent as of the end of
such fiscal year. Except as set forth on the 2016 Annual Report and Schedule 7.12, as of the date hereof, Parent
does not have any other Significant Subsidiaries.
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(b) As of the date hereof, except as set forth on Schedule 7.12 with respect to
Bluegreen Corporation, each Borrower is the record and beneficial owner of all of the issued and outstanding
shares of Capital Stock (including membership interests as to limited liability companies) of each of the
Subsidiaries listed on Schedule 7.12 as being owned by such Borrower and, except as set forth on Schedule
7.12, there are no proxies, irrevocable or otherwise, with respect to such shares or membership interests and no
equity securities of any of the Subsidiaries are or may become required to be issued by reason of any options,
warrants, rights to subscribe to, calls or commitments of any kind or nature and there are no contracts,
commitments, understandings or arrangements by which any Subsidiary is or may become bound to issue
additional shares or membership interests or securities convertible into or exchangeable for such shares.
(c) As of the date hereof, the issued and outstanding shares of Capital Stock of each
Borrower (other than Parent) are directly and beneficially owned and held by the persons indicated on Schedule
7.12, and in each case all of such shares have been duly authorized and are fully paid and non-assessable, free
and clear of all claims, liens, pledges mid encumbrances of any kind, except as disclosed in writing to
Administrative Agent prior to the date hereof.
(d) Parent and Woodbridge are Solvent and will continue to be Solvent after the
creation of the Obligations, the security interests of Administrative Agent and the other transaction contemplated
hereunder.
7.13 Labor Disputes.
(a) Set forth on Schedule 7.13 is a list (including dates of termination) of all
collective bargaining or similar agreements between or applicable to each Borrower and any union, labor
organization or other bargaining agent in respect of the employees of any Borrower on the date hereof.
(b) Except as could not reasonably be expected to result in a Material Adverse Effect,
there is: (i) no significant unfair labor practice complaint pending against any Borrower or, to any Borrower's
knowledge, threatened against it before the National Labor Relations Board, and no significant grievance or
significant arbitration proceeding arising out of or under any collective bargaining agreement is pending on the
date hereof against any Borrower or, to any Borrower's knowledge, threatened against it; and (ii) no significant
strike, labor dispute, slowdown or stoppage is pending against any Borrower or, to any Borrower's knowledge,
threatened against any Borrower.
7.14 Material Contracts. Parent has filed each Material Contract required to be filed by
Parent with the SEC pursuant to the Exchange Act. Parent or its applicable Subsidiary is not in breach or in
default in any material respect of or under any Material Contract and have not received any notice of the
intention of any other party thereto to terminate any Material Contract.
7.15 Accuracy and Completeness of Information. All information furnished by or on
behalf of any Borrower in writing to Administrative Agent or any Lender in connection with this Agreement or
any of the other Loan Documents or any transaction contemplated hereby or thereby, including all information
on the Schedules attached hereto are true and correct in all material respects on the date as of which such
information is dated or certified and does not omit any material fact necessary in order to make such information
not misleading. Since December 31, 2017, no event or circumstance has occurred which has had or could
reasonably be expected to have a Material Adverse Effect, which has not been fully and accurately disclosed to
Administrative Agent in writing prior to the date hereof.
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7.16 Survival of Warranties; Cumulative. All representations and warranties contained in
this Agreement or any of the other Loan Documents shall survive the execution and delivery of this Agreement
and shall be deemed to have been made again to Administrative Agent and Lenders on the date of each
additional borrowing or other credit accommodation hereunder and shall be conclusively presumed to have been
relied on by Administrative Agent and Lenders regardless of any investigation made or information possessed by
Administrative Agent or any Lender. The representations and warranties set forth herein shall be cumulative
and in addition to any other representations or warranties which any Borrower shall now or hereafter give, or
cause to be given, to Administrative Agent or any Lender.
7.17 Patriot Act. To the extent applicable, the Borrowers are in compliance, in all material
respects, with the: (a) Trading with the Enemy Act, as amended, and each of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any
other enabling legislation or executive order relating thereto; and (b) Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001) (the
"Patriot Act"). No part of the proceeds of the Loans will be used by any Borrower or any of their Affiliates,
directly or indirectly, for any payments to any governmental official or employee, political party, official of a
political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain,
retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt
Practices Act of 1977, as amended.
7.18 OFAC. No Borrower nor any of its Subsidiaries is in violation of any of the country or
list based economic and trade sanctions administered and enforced by OFAC. No Borrower nor any of its
Subsidiaries: (a) is a Sanctioned Person or a Sanctioned Entity; (b) has its assets located in Sanctioned Entities;
or (c) derives revenues from investments in, or transactions with Sanctioned Persons or Sanctioned Entities. No
proceeds of any Loan will be used to fund any operations in, finance any investments or activities in, or make
any payments to, a Sanctioned Person or a Sanctioned Entity.
7.19 Anti-Terrorism Laws. No Borrower or any of their Subsidiaries is an "enemy" or an
"ally of the enemy" within the meaning of Section 2 of the Trading with the Enemy Act of the United States of
America (50 U.S.C. App. §§ 1 et seq.), as amended. No Borrower or any of their Subsidiaries is in violation of
(a) the Trading with the Enemy Act, as amended; (b) any of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or
executive order relating thereto; or (c) the Patriot Act. No Borrower or any of their Subsidiaries is a blocked
person described in Section 1 of the Anti-Terrorism Order or, to the best of its knowledge, engages in any
dealings or transactions, or is otherwise associated, with any such blocked person. Each Borrower shall deliver
to Administrative Agent, Issuing Banks and Lenders any certifications or other evidence requested from time to
time by Administrative Agent, any Issuing Bank or any Lender in its sole discretion, confirming compliance
with this Section 7.19.
SECTION 8. AFFIRMATIVE AND NEGATIVE COVENANTS
8.1 Maintenance of Existence.
(a) Except as permitted by Section 8.6, each Borrower shall at all times preserve,
renew and keep in full force and effect its existence as a corporation or limited liability company, as applicable,
and rights and franchises with respect thereto and maintain in full force and effect all licenses, trademarks, trade
names, approvals, authorizations, leases, contracts and permits necessary to carry on in all material respects the
business as presently or proposed to be conducted.
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(b) No Borrower shall change its name unless each of the following conditions is
satisfied: (i) Administrative Agent shall have received not less than thirty (30) days' prior written notice from
Borrower Agent of such proposed change in its corporate or limited liability company name, which notice shall
accurately set forth the new name; and (ii) the Borrower Agent shall promptly thereafter deliver to
Administrative Agent a copy of the amendment to the Certificate of Incorporation (or certificate of organization,
as the case may be) of such Borrower providing for the name change certified by the Secretary of State of the
jurisdiction of incorporation or organization of such Borrower promptly after it is available.
(c) No Borrower shall change its chief executive office, its mailing address,
organizational identification number (or if it does not have one, shall not acquire one), type or jurisdiction of
organization or other legal structure, in each case, unless Administrative Agent shall have received not less than
thirty (30) days' prior written notice from Borrower Agent of such proposed change, which notice shall set forth
such information with respect thereto as Administrative Agent may require and Administrative Agent shall have
received such agreements as Administrative Agent may reasonably require in connection therewith.
8.2 Compliance, with Laws, Regulations, Etc.
(a) Each Borrower shall, at all times, comply in all material respects with all laws,
rules, regulations, licenses, listing standards, approvals, orders and other Permits applicable to it and duly
observe all requirements of any foreign, Federal, State or local Governmental Authority, regulatory entity or
securities exchange except where the failure to so comply could not reasonably be expected to have a Material
Adverse Effect.
(b) Borrowers shall give written notice to Administrative Agent promptly upon any
Borrower's receipt of any notice of, or any Borrower's otherwise obtaining knowledge of: (i) the occurrence of
any event involving the release, spill or discharge, threatened or actual, of any Hazardous Material; or (ii) any
investigation, proceeding, complaint, order, directive, claims, citation or notice with respect to: (A) any non-
compliance with or violation of any Environmental Law by any Borrower; or (B) the release, spill or discharge,
threatened or actual, of any Hazardous Material other than in the ordinary course of business and other than as
permitted under any applicable Environmental Law, in each case which would reasonably be expected to have a
Material Adverse Effect. Copies of all material environmental surveys, audits, assessments, feasibility studies
and results of remedial investigations shall be promptly furnished, or caused to be furnished, by such Borrower
to Administrative Agent as reasonably requested by Administrative Agent. Each Borrower shall take prompt
action in accordance with applicable timetables pursuant to Environmental Law to respond to any material non-
compliance with any of the Environmental Laws and shall regularly report to Administrative Agent on such
response.
(c) Borrowers shall indemnify and hold harmless Administrative Agent and Lenders
and their respective directors, officers, employees, agents, invitees, representatives, successors and assigns, from
and against any and all losses, claims, damages, liabilities, costs, and expenses (including reasonable attorneys'
fees and expenses) directly or indirectly arising out of or attributable to the use, generation, manufacture,
reproduction, storage, release, threatened release, spill, discharge, disposal or presence of a Hazardous Material,
including the costs of any required or necessary repair, cleanup or other remedial work with respect to any
property of any Borrower and the preparation and implementation of any closure, remedial or other required
plans. All representations, warranties, covenants and indemnifications in this Section 8.2 shall survive the
payment of the Obligations and the termination of this Agreement.
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8.3 Payment of Taxes and Claims. Each Borrower shall, and shall cause any Subsidiary to,
duly pay and discharge all taxes assessments, contributions and governmental charges upon or against it or its
properties or assets (collectively, " Borrowers' Taxes"), except where the failure to so pay or discharge could
not reasonably be expected to have a Material Adverse Effect or with respect to Borrowers' Taxes the validity of
which are being contested in good faith by appropriate proceedings diligently pursued and available to such
Borrower or Subsidiary, as the case may be, and as to which adequate reserves have been set aside on its
books. Each Borrower shall be liable for any of its Taxes or penalties with respect thereto imposed on
Administrative Agent or any Lender as a result of the financing arrangements provided for herein and each
Borrowers agree to indemnify and hold Administrative Agent harmless with respect to the foregoing. The
foregoing indemnity shall survive the payment of the Obligations and the termination of this Agreement.
8.4 SEC Reporting; NYSE Listing. At all times during the term of the Loan, the common
stock of Parent shall remain listed on the New York Stock Exchange and all shares of any Borrower or
Subsidiary registered under the Securities Exchange Act of 1934 (the "Exchange Act") as of the date hereof
shall remain so registered. Parent shall cause the timely filing with the SEC of all reports of any Borrower or
Subsidiary required to be filed pursuant to the Exchange Act.
8.5 Financial Statements and Other Information.
(a) Parent shall keep proper books and records in which true and complete entries in
all material respects shall be made of all dealings or transactions of or in relation to the Collateral and the
business of the Borrowers and their Subsidiaries in accordance with GAAP. Borrowers shall promptly furnish to
Administrative Agent and Lenders all such financial and other information as Administrative Agent shall
reasonably request relating to the Collateral and the assets, business and operations of Borrowers. Without
limiting the foregoing:
(i) Parent shall furnish or cause to be furnished to Administrative Agent,
company-prepared operating budgets within ninety (90) days after each Borrower's fiscal year end (commencing
with the fiscal year ending on December 31, 2018) presenting the annual operating budgets of Parent and its
Subsidiaries as of the end of and through such fiscal year. Such operating budgets shall be in a form reasonably
satisfactory to the Administrative Agent and shall be certified to be correct by the chief financial officer or chief
accounting officer of Parent or an authorized signature of such Borrower attesting to the Administrative Agent
the accuracy of the operating budgets.
(ii) Parent shall furnish or cause to be furnished to Administrative Agent,
commencing on December 31, 2018, consolidated audited annual financial statements, including balance sheets,
and income statements within ninety (90) days after Parent's fiscal year end, presenting the financial position
and the results of the operations of Parent and its Subsidiaries as of the end of and through such fiscal
year. Such consolidated audited annual financial statements shall be: (a) in a form reasonably satisfactory to the
Administrative Agent; (b) certified to be correct by the chief financial officer or chief accounting officer of
Parent or an authorized signature of such Borrower attesting to the Administrative Agent the accuracy of the
financial statements; and (c) contain the unqualified opinion of the independent certified public accountants
auditing the same, that such audited annual consolidated financial statements have been prepared in accordance
with GAAP, and present fairly the results of operations and financial condition of Parent and its Subsidiaries as
of the end of and for the fiscal year then ended. Notwithstanding the foregoing, in the event that Parent delivers
to the Administrative Agent an Annual Report for Parent on Form 10-K for such fiscal year, as filed with the
SEC, within ninety (90) days after the end of such fiscal year, such Form 10-K shall satisfy the requirements of
this clause (a)(ii).
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(iii) Parent shall furnish or cause to be furnished to Administrative Agent, no
later than forty-five (45) days from the end of each fiscal quarter (commencing with the quarter ending on
December 31, 2018), quarterly interim unaudited financial statements, including balance sheets, and income
statements, presenting the consolidated financial position and the results of the operations of Parent and its
Subsidiaries as of the end of and through such fiscal quarter. Such quarterly interim unaudited financial
statements shall be: (a) in a form reasonably satisfactory to the Administrative Agent; (b) certified to be correct
by the chief financial officer or chief accounting officer of Parent or an authorized signature of such Borrower
attesting to the Administrative Agent the accuracy of the financial statements; and (c) accompanied by the
Compliance Certificate, along with a schedule in a form satisfactory to Administrative Agent of the calculations
used in determining, as of the end of such month, whether Borrowers are in compliance with the covenants set
forth in Section 8.14, Section 8.15 and Section 8.16 of this Agreement for such fiscal quarter. Notwithstanding
the foregoing, in the event that Parent delivers to the Administrative Agent a Quarterly Report for Parent on
Form 10-Q for such fiscal quarter, as filed with the SEC, within forty-five (45) days after the end of such fiscal
year, such Form 10-Q shall satisfy the requirements of this clause (a)(iii) (other than clause (a)(iii)(c)).
(b) Borrowers shall promptly notify Administrative Agent in writing of the details of:
(i) any loss, damage, investigation, action, suit proceeding or claim which could reasonably be expected to result
in any material adverse change in the Borrowers' business, properties, assets, goodwill or condition, financial or
otherwise (taken as a whole); (ii) any order, judgment or decree in excess of $5,000,000.00 shall have been
entered against any Borrower or any of its or their properties or assets; (iii) any notification of a violation of laws
or regulations received by any Borrower, which could reasonably be expected to result in a Material Adverse
Effect; and (iv) the occurrence of any Default or Event of Default.
(c) Parent shall promptly after the sending or filing thereof furnish or cause to be
furnished to Administrative Agent copies of all reports which Parent sends to its stockholders generally and
copies of all reports and registration statements which it files with the Securities and Exchange Commission, any
national securities exchange or the National Association of Securities Dealers, Inc. Notwithstanding the
foregoing, the information required to be delivered pursuant to this Section 8.5(c) shall be deemed to have been
delivered if such information shall be publicly available on the website of the SEC at http://www.sec.gov.
(d) Borrowers shall furnish or cause to be furnished to Administrative Agent such
budgets, forecasts, projections and other information with respect to the Collateral and the business of
Borrowers, as Administrative Agent may, from time to time, reasonably request. Administrative Agent is hereby
authorized to deliver a copy of any financial statement or any other information relating to the business of
Borrowers to any court or other Governmental Authority in response to any order from such court or
Governmental Authority and, as permitted by law, with the prior written notice to Borrower Agent of
Administrative Agent's intention to do so, or to any Lender or Participant or prospective Lender or Participant or
any Affiliate of any Lender or Participant. Any documents, schedules, invoices or other papers delivered to
Administrative Agent or any Lender may be destroyed or otherwise disposed of by Administrative Agent or
such Lender one (1) year after the same are delivered to Administrative Agent or such Lender, except as
otherwise designated by Borrower Agent to Administrative Agent or such Lender in writing.
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8.6 Consolidation, Merger, Dissolution, Etc.
Each Borrower shall not directly or indirectly,
(a) merge into or with or consolidate with any other Person or permit any other Person
to merge into or with or consolidate with it, except for any such merger, or consolidation of or by any Subsidiary
of a Borrower existing on the date hereof into such Borrower or by a Borrower into such Subsidiary so long as:
(i) the successor to the Borrower has unconditionally assumed in writing all of the payment and performance
obligations of the Borrower under this Agreement and the other Loan Documents; and (ii) such merger or
consolidation shall not result in a Material Adverse Effect.
(b) wind up, liquidate or dissolve; or
(c) agree to do any of the foregoing.
Notwithstanding the foregoing, nothing shall prohibit a Borrower (other than Parent or Woodbridge)
from dissolving or liquidating provided that such Borrower has no Loans outstanding under this Agreement at
such time.
8.7 Encumbrances/Negative Pledge.
(a) Parent and Woodbridge Holdings shall not create, incur, assume or suffer to exist
any security interest, mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on any of
the Collateral, or file or permit the filing of, or permit to remain in effect, any financing statement or other
similar notice of any security interest or lien with respect to the Collateral, except: (i) the security interests and
liens of Administrative Agent for itself and the benefit of Lenders and the rights of setoff of Secured Parties
provided for herein, pursuant to the Security Agreement or under applicable law; (ii) liens securing the payment
of taxes, assessments or other governmental charges or levies either not yet overdue or the validity of which are
being contested in good faith by appropriate proceedings diligently pursued and available to Parent or
Woodbridge Holdings, as the case may be and with respect to which adequate reserves have been set aside on its
books; and (iii) judgments and other similar liens arising in connection with court proceedings that do not
constitute an Event of Default or for which a stay of enforcement is in effect; provided, that: (i) such liens are
being contested in good faith and by appropriate proceedings diligently pursued; and (ii) adequate reserves or
other appropriate provision, if any, as are required by GAAP have been made therefor;
(b) From and after the date of this Agreement, and until payment and performance in
full of all Obligations due and owing or otherwise to be performed by Borrowers in accordance with the terms
and conditions of this Agreement and the other Loan Documents: (i) Parent covenants and agrees that it shall not
pledge, sell, assign, mortgage, encumber, hypothecate or otherwise transfer any of its equity interests in
Woodbridge Holdings; (ii) Woodbridge Holdings covenants and agrees that it shall not pledge, sell, assign,
mortgage, encumber, hypothecate or otherwise transfer any of its interests in and to the Bluegreen Dividends
corresponding to the Membership Interests pledged under the Security Agreement; and (iii) no Borrower shall,
directly, or indirectly, create or otherwise cause or suffer to exist any encumbrance or restriction which prohibits
or limits the ability of Bluegreen Corporation to pay dividends or make other distributions to Woodbridge
Holdings.
8.8 Indebtedness. Each Borrower shall not incur, create, assume, become or be liable in any
manner with respect to, or permit to exist, any Indebtedness, or guarantee, assume, endorse, or
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otherwise become responsible for (directly or indirectly), the Indebtedness, performance,
obligations or dividends of any other Person, except:
(a) the Obligations;
$100,000,000.00;
(b) Contingent Indebtedness (in the aggregate with all other Borrowers) not to exceed
hereof pursuant to loans by any Borrower permitted under Section 8.9(e) hereof;
(c) the Indebtedness of any Borrower to any other Borrower arising after the date
with a Loan for Business Acquisition Purposes;
(d) Indebtedness permitted to be assumed in connection with any acquisition funded
(e) Indebtedness of any Borrower entered into in the ordinary course of business
pursuant to a Hedge Agreement; provided, that: (i) such arrangements are with a Bank Product Provider; (ii)
such arrangements are not for speculative purposes; and (ii) such Indebtedness shall be unsecured, except to the
extent such Indebtedness constitutes part of the Obligations arising under or pursuant to Hedge Agreements with
a Bank Product Provider that are secured under the terms hereof;
(f)
the Indebtedness set forth on Schedule 8.8 and any refinancing, renewal,
amendment, modification or alteration thereof. Borrowers shall furnish to Administrative Agent all notices of a
default or an event of default in connection with such Indebtedness either received by any Borrower or on its
behalf, promptly after the receipt thereof, or sent by any Borrower or on its behalf, concurrently with the sending
thereof, as the case may be; and
(g) any other indebtedness, including, but not limited to, any indebtedness convertible
into or exchangeable for Capital Stock of any Borrower, not to exceed $100,000,000.00, in the aggregate.For the
avoidance of doubt, Indebtedness incurred by any Subsidiary of any Borrower shall not be deemed to have been
incurred by such Borrower unless such Borrower is legally obligated on such Indebtedness (whether such
liability is direct or contingent).
8.9 Loans, Investments, Etc.. Each Borrower shall not directly or indirectly, make any loans
or advance money or property to any person, or invest in (by capital contribution, dividend or otherwise) or
purchase or repurchase the Capital Stock or Indebtedness of any person, or agree to do any of the foregoing,
except:
Acquisition Purposes or Stock Buy Back Purposes;
(a) as permitted in connection with any Loan under this Agreement for Business
(b) the endorsement of instruments for collection or deposit in the ordinary course of
business;
investment;
(c) for investments in or loans to any Affiliates in which Borrower has an equity
(d) obligations of account debtors to any Borrower arising from accounts receivable;
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(e) the loans and advances set forth on Schedule 8.9(e) and any refinancing, renewal,
amendment, modification or alteration thereof. Borrowers shall furnish to Administrative Agent all notices of a
default or event of default in connection with such loans and advances either received by any Borrower or on its
behalf, promptly after the receipt thereof, or sent by any Borrower or on its behalf, concurrently with the sending
thereof, as the case may be.
8.10 Dividends and Redemptions. Each Borrower shall not, directly or indirectly, declare or
pay any dividends on account of any shares of class of any Capital Stock of such Borrower now or hereafter
outstanding, or set aside or otherwise deposit or invest any sums for such purpose, or redeem, retire, defease,
purchase or otherwise acquire any shares of any class of Capital Stock (or set aside or otherwise deposit or
invest any sums for such purpose) for any consideration or apply or set apart any sum, or make any other
distribution (by reduction of capital or otherwise) in respect of any such shares or agree to do any of the
foregoing; except, that:
(a) any Borrower may declare and pay such dividends or redeem, retire, defease,
purchase or otherwise acquire any shares of any class of Capital Stock for consideration in the form of shares of
common stock (so long as after giving effect thereto no Change of Control or other Default or Event of Default
shall exist or occur);
(b) any Subsidiary of a Borrower may pay dividends to a Borrower;
Holdings is paid its proportionate share;
(c) Bluegreen Corporation may pay Bluegreen Dividends, provided that Woodbridge
Preferred Stock;
(d) Parent may pay dividends on its outstanding five percent (5%) Cumulative
class of Capital Stock funded with a Loan for Stock Buy Back Purposes;
(e) any Borrower may redeem, repurchase or otherwise acquire any shares of any
(f) Parent may from time to time pay cash dividends on or declare a stock split in
respect of its outstanding shares of Capital Stock or may repurchase outstanding shares of Capital Stock;
provided, that:
after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing;
(i) as of the date of the payment for any such dividend or repurchase, and
terms of any indenture, agreement or undertaking to which any Borrower or its or their property are bound; and
(ii) such dividend or repurchase shall not violate any law or regulation or the
therefor.
(iii) such dividend or repurchase shall be paid out of legally available funds
(g)
for so long, as any Borrower is a member of a group filing a consolidated,
combined, unitary or similar tax return with any direct or indirect parent of such Borrower, Borrowers may make
payments to such direct or indirect parent in respect of a reasonable estimate of the allocable portion of the
consolidated, combined, unitary or similar income taxes of such group that are attributable to the income of such
Borrower and/or any Subsidiaries thereof (to the extent such taxes are not payable directly by any such
Borrower or any of their respective Subsidiaries) ("Tax Payments").
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8.11 Compliance with ERISA. To the extent as may be applicable, each Borrower shall: (a)
maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and
other Federal and State law; (b) cause each Plan which is qualified under Section 401(a) of the Code to maintain
such qualification; (c) not terminate any of such Plans so as to incur any material liability to the Pension Benefit
Guaranty Corporation; (d) not allow or suffer to exist any prohibited transaction involving any of such Plans or
any trust created thereunder which would subject such Borrower or such ERISA Affiliate to a material tax or
penalty or other material liability on prohibited transactions imposed under Section 4975 of the Code or ERISA;
(e) make all required material contributions to any Plan which it is obligated to pay under Section 302 of ERISA,
Section 412 of the Code or the terms of such Plan; (f) not allow or suffer to exist any failure to meet the
minimum finding standards of Section 412(a) of the Code in any material respect, with respect to any such Plan;
or (g) allow or suffer to exist any occurrence of a reportable event or any other event or condition which presents
a material risk of termination by the Pension Benefit Guaranty Corporation of any such Plan that is a single
employer plan, which termination could result in any material liability to the Pension Benefit Guaranty
Corporation.
8.12 End of Fiscal Years; Fiscal Quarters. Unless otherwise prescribed by law, Parent
shall, for financial reporting purposes, cause its: (a) fiscal years to end in December of each year; and (b) fiscal
quarters to end in March, June, September and December of each year.
8.13 Change in Business. Each Borrower shall not engage in any business other than the
business of such Borrower on the date hereof and any business reasonably related, ancillary or complementary to
the business in which such Borrower is engaged on the date hereof.
8.14 Fixed Charge Coverage Ratio. As of the last day of any fiscal quarter Borrowers shall
not permit the Fixed Charge Coverage Ratio to be less than 2.00 to 1.00 as tested on a trailing four (4) quarter
basis. Administrative Agent shall calculate the Borrowers' Fixed Charge Coverage Ratio using: (i) the quarterly
unaudited interim financial statements to be delivered to Administrative Agent pursuant to Section 8.5(a)(iii);
and (ii) the Compliance Certificate.
8.15 Senior Funded Debt to EBITDA. As of the last day of any fiscal quarter Borrowers
shall not permit the Senior Funded Debt to EBITDA ratio to be greater than 2.25 to 1.00 as tested on a trailing
four (4) quarter basis. Administrative Agent shall calculate the Borrowers' Senior Funded Debt to EBITDA
using: (i) the quarterly unaudited interim financial statements to be delivered to Administrative Agent pursuant
to Section 8.5(a)(iii); and (ii) the Compliance Certificate.
8.16 Unencumbered Minimum Liquidity. As of the last day of any fiscal quarter Borrowers
shall not permit, on a consolidated basis, the Unencumbered Liquidity to be less than $40,000,000.00 in the
aggregate. Administrative Agent shall calculate the Borrowers' Unencumbered Liquidity using: (i) the quarterly
unaudited interim financial statements to be delivered to Administrative Agent pursuant to Section 8.5(a)(iii);
and (ii) the Compliance Certificate.
8.17 Costs and Expenses. Borrowers shall pay to Administrative Agent on demand all costs,
expenses, filing fees and taxes paid or payable in connection with the preparation, negotiation, execution,
delivery, recording, administration, collection, liquidation, enforcement and defense of the Obligations,
Administrative Agent's rights in the Collateral, this Agreement, the other Loan Documents and all other
documents related hereto or thereto, including any amendments, supplements or consents which may hereafter
be contemplated (whether or not executed) or entered into in respect hereof and thereof, including: (a) all costs
and expenses of filing or recording (including UCC financing statement filing taxes and fees or other
registrations or filing fees, documentary taxes, intangibles taxes and mortgage recording taxes and fees, if
applicable); (b) search fees, costs and expenses of remitting loan proceeds, collecting
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checks and other items of payment, together with Administrative Agent's customary charges and
fees with respect thereto; (c) charges, fees or expenses charged by any bank or Issuing Bank in connection with
the Letters of Credit; (d) costs and expenses of preserving and protecting the Collateral; (e) costs and expenses
paid or incurred in connection with obtaining payment of the Obligations, enforcing the security interests and
liens of Administrative Agent, selling, or otherwise realizing upon the Collateral, and otherwise enforcing the
provisions of this Agreement and the other Loan Documents or defending any claims made or threatened against
Administrative Agent or any Lender arising out of the transactions contemplated hereby and thereby (including
preparations for and consultations concerning any such matters); and (f) the reasonable and documented fees and
disbursements of counsel (including legal assistants) to Administrative Agent in connection with any of the
foregoing.
8.18 Employment of Key Personnel. At all times during the term of the Loan, absent the
approval of the Administrative Agent, at least two (2) of Alan B. Levan, Jarrett S. Levan and John E. Abdo shall
remain employed or otherwise engaged in their respective positions with the Borrowers and Subsidiaries, as
applicable, with no material change to their titles, roles or duties.
8.19 Control of Certain Subsidiaries. At all times during the term of the Loan, Parent shall
own not less than one hundred percent (100%) of the issued and outstanding securities of Woodbridge Holdings
and Woodbridge Holdings shall own capital stock of Bluegreen Corporation representing a minimum of eighty
percent (80%) of the issued and outstanding and the aggregate voting power of all issued and outstanding shares
of common stock. Notwithstanding anything in this Agreement to the contrary, Bluegreen Corporation may
issue other shares of its Capital Stock.
SECTION 9. EVENTS OF DEFAULT AND REMEDIES
9.1 Events of Default. The occurrence or existence of any one or more of the fallowing
events are referred to herein individually as an "Event of Default," and collectively as "Events of Default":
(a) Borrowers fail to pay principal or interest on any Loan or any reimbursement
obligation with respect to Letters of Credit within five (5) Business Days after when due or shall fail to pay any
Obligation other than principal or interest on any Loan or any reimbursement obligation with respect to Letters
of Credit within five (5) Business Days after written notice of non-payment has been received by Borrowers
from the Administrative Agent;
(b) (i) Borrowers fail to perform any of the covenants contained in Sections 8.1(a),
8.5(b)(iv)(with respect to notices of Default or Events of Default), 8.6, 8.7, 8.8, 8.9, 8.10, 8.13, 8.14, 8.15,
8.16, 8.18 or 8.19 of this Agreement; or (ii) Borrowers fail to perform any of the terms, covenants, conditions
or provisions contained in this Agreement or any of the other Loan Documents ( other than those specified
elsewhere in this Section 9.1) and such failure shall continue for thirty (30) days after written notice thereof has
received been received by Borrowers from the Administrative Agent;
(c) any default by Bluegreen Corporation under any other loan facilities other than the
Credit Facility (whether or not such loan facilities were made by any of the Lenders) the effect of which shall
prohibit Bluegreen Corporation from making distributions to Woodbridge Holdings for two (2) consecutive
fiscal quarters;
(d) any representation, warranty or statement of fact made by Parent or Woodbridge
Holdings to Administrative Agent in this Agreement, the other Loan Documents or any other written agreement,
schedule, confirmatory assignment or otherwise shall when made or deemed made be false or misleading in any
material respect;
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(e) any Obligor (other than the Borrowers) revokes or terminates or purports to
revoke or terminate or fails to perform in any material respect any of the terms, covenants, conditions or
provisions of any guarantee, endorsement or other agreement of such party in favor of Administrative Agent or
any Lender;
(f) any final non-appealable judgment for the payment of money is rendered against
any Borrower or Obligor in excess of $10,000,000.00 in any one case or in excess of $10,000,000.00 in the
aggregate (to the extent not covered by insurance where the insurer has assumed responsibility in writing for
such judgment) and shall remain undischarged or unvacated for a period in excess of sixty (60) days or
execution shall at any time not be effectively stayed, or any judgment other than for the payment of money, or
injunction, attachment, garnishment or execution is rendered against any Borrower or Obligor or any of the
Collateral having a value in excess of $10,000,000.00;
business (in each case, except as otherwise expressly permitted hereunder);
(g) Parent or Woodbridge Holdings dissolves or suspends or discontinues doing
(h) Parent or Woodbridge Holdings (or any other Borrower to the extent the same
shall result in a Material Adverse Effect) makes an assignment for the benefit of creditors or calls a meeting of
its creditors or principal creditors in connection with a moratorium or adjustment of the Indebtedness due to
them;
(i) a case or proceeding under the bankruptcy laws of the United States of America
now or hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether at law or in
equity) is filed against Parent or Woodbridge Holdings (or any other Borrower to the extent the same shall result
in a Material Adverse Effect) or all or any part of their properties and such petition or application is not
dismissed within sixty (60) days after the date of its filing or Parent or Woodbridge Holdings (or any other
Borrower to the extent the same shall result in a Material Adverse Effect) shall file any answer admitting or not
contesting such petition or application or indicates their consent to, acquiescence in or approval of, any such
action or proceeding or the relief requested is granted sooner;
(j) a case or proceeding under the bankruptcy laws of the United States of America
now or hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether at a law or equity)
is filed by Parent or Woodbridge Holdings (or any other Borrower to the extent the same shall result in a
Material Adverse Effect) or for all or any part of their property;
(k) any default in respect of any Indebtedness of any Borrower or Obligor (other than
Indebtedness owing to Administrative Agent and Lenders hereunder), in any case in an amount in excess of
$10,000,000.00 which default continues for more than the applicable cure period, if any, with respect thereto or
any default by any Borrower or Obligor under any Material Contract in excess of $10,000,000.00, which default
continues for more than the applicable cure period, if any, with respect thereto and/or is not waived in writing by
the other parties thereto;
(l) any material provision hereof or of any of the other Loan Documents shall for any
reason cease to be valid, binding and enforceable with respect to any party hereto or thereto (other than
Administrative Agent) in accordance with its terms, or any such party shall challenge the enforceability
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hereof or thereof, or shall assert in writing, or take any action or fail to take any action
based on the assertion that any material provision hereof or of any of the other Loan Documents has ceased to be
or is otherwise not valid, binding or enforceable in accordance with its terms, or any security interest provided
for herein or in any of the other Loan Documents shall cease to be a valid and perfected first priority security
interest in any of the Collateral purported to be subject thereto (except as otherwise permitted herein or therein);
result in liability of any Borrower in an aggregate amount in excess of $1,000,000.00;
(m) an ERISA Event shall occur which results in or could reasonably be expected to
(n) any Change of Control;
(o) the indictment by any Governmental Authority, or as Administrative Agent may
reasonably and in good faith determine, the threatened indictment by any Governmental Authority of Parent or
Woodbridge Holdings (or any other Borrower to the extent the same shall result in a Material Adverse Effect) of
which the Borrowers or Administrative Agent receives notice, in either case, as to which there is a reasonable
possibility of an adverse determination, in the good faith determination of Administrative Agent, under any
criminal statute, or commencement or threatened commencement of criminal or civil proceedings against Parent
or Woodbridge Holdings (or any other Borrower to the extent the same shall result in a Material Adverse Effect),
pursuant to which statute or proceedings the penalties or remedies sought or available include (i) forfeiture of
any of the Collateral; or (ii) any other property of Parent or Woodbridge Holdings (or of other Borrower to the
extent the same shall result in a Material Adverse Effect) which is necessary or material to the conduct of its
business;
(p) there shall be a change in the business, assets or prospects of the Borrowers
(taken as a whole) after the date hereof which shall result in a Material Adverse Effect as to the Borrowers
(taken as a whole); or
(q) there shall be an event of default under any of the other Loan Documents after
the passage of any applicable cure period with respect thereto provided for under such other Loan Document;
provided, that, such event of default is capable of being cured during such cure period.
9.2 Remedies.
(a) At any time an Event of Default exists or has occurred and is continuing,
Administrative Agent and Lenders shall have all rights and remedies provided in this Agreement, the other Loan
Documents, the UCC and other applicable law, all of which rights and remedies may be exercised without notice
to or consent by any Borrower or Obligor, except as such notice or consent is expressly provided for hereunder
or required by applicable law. All rights, remedies and powers granted to Administrative Agent and Lenders
hereunder, under any of the other Loan Documents, the UCC or other applicable law, are cumulative, not
exclusive and enforceable, in Administrative Agent's discretion, alternatively, successively, or concurrently on
any one or more occasions, and shall include, without limitation, the right to apply to a court of equity for an
injunction to restrain a breach or threatened breach by any Borrower or Obligor of this Agreement or any of the
other Loan Documents. Subject to Section 11 hereof, Administrative Agent may, and at the direction of the
Required Lenders shall, at any time or times, proceed directly against any Borrower or Obligor to collect the
Obligations without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of Default exists or has
occurred and is continuing, Administrative Agent may, in its discretion, and upon the direction of the Required
Lenders, shall: (i) accelerate the payment of all Obligations and demand immediate payment
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thereof to Administrative Agent for itself and the ratable benefit of Lenders (provided,
that, upon the occurrence of any Event of Default described in Sections 9.1(g) and 9.1(h), all Obligations shall
automatically become immediately due and payable); and/or (ii) terminate the Commitments and this
Agreement.
(c) To the extent that applicable law imposes duties on Administrative Agent or any
Lender to exercise remedies in a commercially reasonable manner (which duties cannot be waived under such
law), each Borrower acknowledges and agrees that it is not commercially unreasonable for Administrative
Agent or any Lender: (i) to fail to incur expenses reasonably deemed significant by Administrative Agent or any
Lender to prepare Collateral for disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition; (ii) to fail to obtain third party consents for access to
Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain consents of any
Governmental Authority or other third party for the collection or disposition of Collateral to be collected or
disposed of; (iii) to fail to exercise collection remedies against account debtors, secondary obligors or other
persons obligated on Collateral or to remove liens or encumbrances on or any adverse claims against Collateral;
(iv) to exercise collection remedies against account debtors and other persons obligated on Collateral directly or
through the use of collection agencies and other collection specialists; (v) to disclaim disposition warranties; (vi)
to purchase insurance or credit enhancements to insure Administrative Agent or Lenders against risks of loss,
collection or disposition of Collateral or to provide to Administrative Agent or Lenders a guaranteed return from
the collection or disposition of Collateral; or (vii) to the extent deemed appropriate by Administrative Agent, to
obtain the services of other brokers, investment bankers, consultants and other professionals to assist
Administrative Agent in the collection or disposition of any of the Collateral. Each Borrower acknowledges that
the purpose of this Section is to provide non-exhaustive indications of what actions or omissions by
Administrative Agent or any Lender would not be commercially unreasonable in the exercise by Administrative
Agent or any Lender of remedies against the Collateral and that other actions or omissions by Administrative
Agent or any Lender shall not be deemed commercially unreasonable solely on account of not being indicated
in this Section. Without limitation of the foregoing, nothing contained in this Section shall be construed to
grant any rights to any Borrower or to impose any duties on Administrative Agent or Lenders that would not
have been granted or imposed by this Agreement or by applicable law in the absence of this Section.
(d) Administrative Agent may apply the cash proceeds of Collateral actually received
by Administrative Agent from any sale, foreclosure or other disposition of the Collateral to payment of the
Obligations, in whole or in part and in such order as Administrative Agent may elect, whether or not then
due. Borrowers shall remain liable to Administrative Agent and Lenders for the payment of any deficiency with
interest at the highest rate provided for herein and all costs and expenses of collection or enforcement, including
attorneys' fees and expenses.
(e) Without limiting the foregoing, upon the occurrence of a Default or an Event of
Default: (i) Administrative Agent and Lenders may, at Administrative Agent's option, and upon the occurrence
of an Event of Default at the direction of the Required Lenders. Administrative Agent and Lenders shall,
without notice: (a) cease making Loans or arranging for Letters of Credit or reduce the lending formulas or
amounts of Loans and Letters of Credit available to Borrowers; and/or (ii) terminate any provision of this
Agreement providing for any future Loans or Letters of Credit to be made by Administrative Agent and Lenders
to Borrowers.
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SECTION 10. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
10.1 Governing Law; Choice of Form; Service of Process; Jury Trial Waiver.
(a) The validity, interpretation and enforcement of this Agreement and the other Loan
Documents and any dispute arising out of the relationship between the parties hereto, whether in contract, tort,
equity or otherwise, shall be governed by the internal laws of the State of Florida but excluding any principles of
conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the
laws of the State of Florida.
(b) Borrowers, Administrative Agent and Lenders irrevocably consent and submit to
the non-exclusive jurisdiction of the Circuit Court of Broward or Palm Beach County, Florida and the United
States District Court for the Southern District of Florida, whichever Administrative Agent may elect, and waive
any objection based on venue or forum non conveniens with respect to any action instituted therein arising under
this Agreement or any of the other Loan Documents or in any way connected with or related or incidental to the
dealings of the parties hereto in respect of this Agreement or any of the other Loan Documents or the
transactions related hereto or thereto, in each case whether now existing or hereafter arising, and whether in
contract, tort, equity or otherwise, and agree that any dispute with respect to any such matters shall be heard only
in the courts described above (except, that, Administrative Agent and Lenders shall have the right to bring any
action or proceeding against any Borrower or its or their property in the courts of any other jurisdiction which
Administrative Agent deems necessary or appropriate in order to realize on the Collateral or to otherwise enforce
its rights against any Borrower or its or their property).
(c) Each Borrower hereby waives personal service of any and all process upon it and
consents that all such service of process may be made by certified mail (return receipt requested) directed to its
address set forth herein and service so made shall be deemed to be completed five (5) days after the same shall
have been so deposited in the U.S. mails, or, at Administrative Agent's option, by service upon any Borrower (or
Borrower Agent on behalf of such Borrower) in any other manner provided under the rules of any such courts.
(d) BORROWERS, ADMINISTRATIVE AGENT AND LENDERS EACH
HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN
CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWERS, ADMINISTRATIVE AGENT AND
LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY
AND THAT ANY BORROWER, ADMINISTRATIVE AGENT OR ANY LENDER MAY FILE AN
ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
(whether in tort, contract, equity or otherwise) for losses suffered by such Borrower in
(e) Administrative Agent and Lender shall not have any liability to any Borrower
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connection with, arising out of, or in any way related to the transactions or relationships contemplated by this
Agreement, or any act, omission or event occurring in connection herewith, unless it is determined by a final and
non-appealable judgment or court order binding on Administrative Agent, such Lender and Issuing Bank, that
the losses were the result of acts or omissions constituting gross negligence or willful misconduct. Each
Borrower: (i) certifies that neither Administrative Agent, any Lender, any Issuing Bank nor any representative,
agent or attorney acting for or on behalf of Administrative Agent, any Lender or Issuing Bank has represented,
expressly or otherwise, that Administrative Agent, Lenders and each Issuing Bank would not, in the event of
litigation, seek to enforce any of the waivers provided for in this Agreement or any of the other Loan
Documents; and (ii) acknowledges that in entering into this Agreement and the other Financing Agreements,
Administrative Agent, Lenders and each Issuing Bank are relying upon, among other things, the waivers and
certifications set forth in this Section 10.1 and elsewhere herein and therein.
10.2 Waiver of Notices. Each Borrower hereby expressly waives demand, presentment,
protest and notice of protest and notice of dishonor with respect to any and all instruments and chattel paper,
included in or evidencing any, of the Obligations or the Collateral, and any and all other demands and notices of
any kind or nature whatsoever with respect to the Obligations, the Collateral and this Agreement, except such as
are expressly provided for herein. No notice to or demand on any Borrower which Administrative Agent or any
Lender may elect to give shall entitle such Borrower to any other notice or demand in the same, similar or other
circumstances.
10.3 Amendments and Waivers.
(a) Neither this Agreement nor any other Loan Document nor any terms hereof or
thereof may be amended, waived, discharged or terminated unless such amendment, waiver, discharge or
termination is in writing signed by Administrative Agent and the Required Lenders or at Administrative Agent's
option, by Administrative Agent with the authorization of the Required Lenders, and as to amendments to any of
the Loan Documents (other than with respect to any provision of Section 11 hereof), by any Borrower; except,
that, no such amendment, waiver, discharge or termination shall:
(i) reduce the interest rate or any fees or extend the time of payment of
principal, interest or any fees or reduce the principal amount of any Loan or Letters of Credit, in each case
without the consent of each Lender directly affected thereby;
effect or provided hereunder, in each case without the consent of the Lender directly affected thereby;
(ii) increase the Commitment of any Lender over the amount thereof then in
(iii) release any Collateral (except as expressly required hereunder or under
any of the other Loan Documents or applicable law and except as permitted under Section 11.9(b) hereof),
without the consent of Administrative Agent and all of Lenders;
without the consent of Administrative Agent and all of Lenders;
(iv) reduce any percentage specified in the definition of Required Lenders,
(v) consent to the assignment or transfer by any Borrower of any of their
rights and obligations under this Agreement, without the consent of Administrative Agent and all of Lenders; or
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the consent of Administrative Agent and all of Lenders.
(vi) amend, modify or waive any terms of this Section 10.3 hereof, without
(b) Administrative Agent and Lenders shall not, by any act, delay, omission or
otherwise be deemed to have expressly or impliedly waived any of its or their rights, powers and/or remedies
unless such waiver shall be in writing and signed as provided herein. Any such waiver shall be enforceable only
to the extent specifically set forth therein. A waiver by Administrative Agent or any Lender of any right, power
and/or remedy on any one occasion shall not be construed as a bar to or waiver of any such right, power and/or
remedy which Administrative Agent or any Lender would otherwise have on any future occasion, whether
similar in kind or otherwise.
(c) Notwithstanding anything to the contrary contained in Section 10.3(a) above, in
connection with any amendment, waiver, discharge or termination, in the event that any Lender whose consent
thereto is required shall fail to consent or fail to consent in a timely manner (such Lender being referred to herein
as a "Non-Consenting Lender"), but the consent of any other Lenders to such amendment, waiver, discharge or
termination that is required are obtained, if any, then Administrative Agent shall have the right, but not the
obligation, at any time thereafter, and upon the exercise by Administrative Agent of such right, such Non-
Consenting Lender shall have the obligation, to sell, assign and transfer to Administrative Agent or such Eligible
Transferee as Administrative Agent may specify, the Commitment, or right to make new Commitment, as
applicable, of such Non-Consenting Lender and all rights and interests of such Non-Consenting Lender pursuant
thereto. Administrative Agent shall provide the Non-Consenting Lender with prior written notice of its intent to
exercise its right under this Section, which notice shall specify the date on which such purchase and sale shall
occur. Such purchase and sale shall be pursuant to the terms of an Assignment and Acceptance (whether or not
executed by the Non-Consenting Lender), except that on the date of such purchase and sale, Administrative
Agent, or such Eligible Transferee specified by Administrative Agent, shall pay to the Non-Consenting Lender
the amount equal to: (i) the principal balance of the Loans held by the Non-Consenting Lender outstanding as of
the close of business on the Business Day immediately preceding the effective date of such purchase and sale;
plus (ii) amounts accrued and unpaid in respect of interest and fees payable to the Non-Consenting Lender to the
effective date of the purchase (but in no event shall the Non-Consenting Lender be deemed entitled to any early
termination fee). Such purchase and sale shall be effective on the date of the payment of such amount to the
Non-Consenting Lender and the Commitment of the Non-Consenting Lender shall terminate on such date.
(d) The consent of Administrative Agent shall be required for any amendment, waiver
or consent affecting the rights or duties of Administrative Agent hereunder or under any of the other Loan
Documents.
(e) The consent of Administrative Agent and a Bank Product Provider that is
providing Bank Products and has outstanding any such Bank Products at such time that are secured hereunder
shall be required for any amendment to the priority of payment of Obligations arising under or pursuant to any
Hedge Agreements of a Borrower or other Bank Products as set forth in Section 6.3(a) hereof.
10.4 Waiver of Counterclaims. Each Borrower waives all rights to interpose any claims,
deductions, setoffs or counterclaims of any nature (other than compulsory counterclaims) in any action or
proceeding with respect to this Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
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10.5 Indemnification. Each Borrower shall, jointly and severally, indemnify and hold
Administrative Agent and each Lender, and its officers, directors, agents, employees, advisors and counsel and
their respective Affiliates (each such person being an " Indemnitee"), harmless from and against any and all
losses, claims, damages, liabilities, costs or expenses (including attorneys' fees and expenses) imposed on,
incurred by or asserted against any of them in connection with any litigation, investigation, claim or proceeding
commenced or threatened related to the negotiation, preparation, execution, delivery, enforcement, performance
or administration of this Agreement, any other Loan Documents, or any undertaking or proceeding related to any
of the transactions contemplated hereby or any act, omission, event or transaction related or attendant thereto,
including amounts paid in settlement court costs, and the fees and expenses of counsel; except, that Borrowers
shall not have any obligation under this Section 10.5 to indemnify an Indemnitee with respect to a matter
covered hereby resulting from the gross negligence or willful misconduct of such Indemnitee as determined
pursuant to a final, non-appealable order of a court of competent jurisdiction (without limiting the obligations of
Borrowers as to any other Indemnitee). To the extent that the undertaking to indemnify, pay and hold harmless
set forth in this Section may be unenforceable because it violates any law or public policy, Borrowers shall pay
the maximum portion which it is permitted to pay under applicable law to Administrative Agent and Lenders in
satisfaction of indemnified matters under this Section. To the extent permitted by applicable law, no Borrower
shall assert, and each Borrower hereby waives, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any of the other Loan Documents or any undertaking or
transaction contemplated hereby. All amounts due under this Section shall be payable upon demand. The
foregoing indemnity shall survive the payment of the Obligations and the termination or non-renewal of this
Agreement. This Section 10.5 shall not apply with respect to Taxes other than any Taxes that represent claims,
costs, losses, liabilities, damages or expenses arising from any non-Tax claim.
10.6 Currency Indemnity. If, for the purposes of obtaining judgment in any court in any
jurisdiction with respect to this Agreement or any of the other Loan Documents, it becomes necessary to convert
into the currency of such jurisdiction (the "Judgment Currency") any amount due under this Agreement or
under any of the other Loan Documents in any currency other than the Judgment Currency (the "Currency
Due"), then conversion shall be made pursuant to the Currency Exchange Convention at which Administrative
Agent is able, on the relevant date, to purchase the Currency Due with the Judgment Currency prevailing on the
Business Day before the day on which judgment is given. In the event that there is a change in the rate pursuant
to the Currency Exchange Convention prevailing between the Business Day before the day on which the
judgment is given and the date of receipt by Administrative Agent of the amount due, Borrowers will, on the
date of receipt by Administrative Agent, pay such additional amounts, if any, or be entitled to receive
reimbursement of such amount, if any, as may be necessary to ensure that the amount received by
Administrative Agent on such date is the amount in the Judgment Currency which when converted at the rate of
exchange prevailing on the date of receipt by Administrative Agent is the amount then due under this Agreement
or such other of the Loan Documents in the Currency Due. If the amount of the Currency Due which
Administrative Agent is able to purchase is less than the amount of the Currency Due originally due to it,
Borrowers shall indemnify and save Administrative Agent and Lenders harmless from and against loss or
damage arising as a result of such deficiency. The indemnity contained herein shall constitute an obligation
separate and independent from the other obligations contained in this Agreement and the other Loan
Documents, shall give rise to a separate and independent cause of action, shall apply irrespective of any
indulgence granted by Administrative Agent or any Lender from time to time and shall continue in full force and
effect notwithstanding any judgment or order for a liquidated sum in respect of an amount due under this
Agreement or any of the other Loan Documents or under any judgment or order. The term "Currency
Exchange Convention" as used herein shall mean the procedure used by Administrative Agent to value in
United States Dollars, any amount expressed in any currency, other than United States Dollars, in each
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case by using the spot price for the purchase of United States Dollars with such other currency
provided to Administrative Agent by the Reference Bank (or such other bank as Administrative Agent may
specify fur such purpose) for the immediately preceding Business Day.
SECTION 11. THE ADMINISTRATIVE AGENT
11.1 Appointment, Powers and Immunities. Each Secured Party irrevocably designates,
appoints and authorizes IBERIABANK to act as Administrative Agent hereunder and under the other Loan
Documents with such powers as are specifically delegated to Administrative Agent by the terms of this
Agreement and of the other Loan Documents, together with such other powers as are reasonably incidental
thereto. Administrative Agent: (i) shall have no duties or responsibilities except those expressly set forth in this
Agreement and in the other Loan Documents, and shall not by reason of this Agreement or any other Loan
Document be a trustee or fiduciary for any Secured Party; (ii) shall not be responsible to Secured Parties for any
recitals, statements, representations or warranties contained in this Agreement or in any of the other Loan
Documents, or in any certificate or other document referred to or provided for in, or received by any of them
under, this Agreement or any other Loan Document, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Finance Agreement or any other document referred
to or provided for herein or therein or for any failure by any Borrower or any other Person to perform any of its
obligations hereunder or thereunder; and (iii) shall not be responsible to Secured Parties for any action taken or
omitted to be taken by it hereunder or under any other Loan Document or under any other document or
instrument referred to or provided for herein or therein or in connection herewith or therewith, except for its own
gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of
competent jurisdiction. Administrative Agent may employ agents and attorneys in fact and shall not responsible
for the negligence or misconduct of any such agents or attorneys in fact selected by it in good
faith. Administrative Agent may deem and treat the payee of any note as the holder thereof for all purposes
hereof unless and until the assignment thereof pursuant to an agreement (if and to the extent permitted herein) in
form and substance satisfactory to Administrative Agent shall have been delivered to and acknowledged by
Administrative Agent.
11.2 Reliance by Administrative Agent. Administrative Agent shall be entitled to rely upon
any certification, notice or other communication (including any thereof by telephone, telecopy, telex, telegram
or cable) believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper
Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts
selected by Administrative Agent in good faith. As to any matters not expressly provided for by this Agreement
or any other Loan Document, Administrative Agent shall in all cases be fully protected in acting, or in refraining
from acting, hereunder or thereunder in accordance with instructions given by the Required Lenders or all of
Lenders as is required in such circumstance, and such instructions of such Lenders and any action taken or
failure to act pursuant thereto shall be binding on all Lenders.
11.3 Events of Default.
(a) Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default or an Event of Default or other failure of a condition precedent to the Loans and Letters
of Credit hereunder, unless and until Administrative Agent has received written notice from a Lender, or a
Borrower specifying such Event of Default or any unfulfilled condition precedent, and stating that such notice is
a "Notice of Default or Failure of Condition". In the event that Administrative Agent receives such a Notice of
Default or Failure of Condition, Administrative Agent shall give prompt notice thereof to the Lenders and
Borrower Agent. Administrative Agent shall (subject to Section 11.7) take such action with respect to any such
Event of Default or failure of condition precedent as shall be directed by the Required Lenders: provided, that,
unless and until Administrative Agent shall have received such
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directions, Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to or by reason of such Event of Default or failure of condition
precedent, as it shall deem advisable in the best interest of Lenders. Without limiting the foregoing, and
notwithstanding the existence or occurrence and continuance of an Event of Default or any other failure to
satisfy any of the conditions precedent set forth in Section 4 of this Agreement to the contrary, Administrative
Agent may, but shall have no obligation to, continue to make Loans and issue or cause to be issued Letters of
Credit for the ratable account and risk of Lenders from time to time if Administrative Agent believes making
such Loans or issuing or causing to be issued such Letters of Credit is in the best interests of Lenders.
(b) Except with the prior written consent of Administrative Agent, no Lender may
assert or exercise any enforcement right or remedy in respect of the Loans, Letters of Credit or other
Obligations, as against any Borrower or Obligor or any of the Collateral or other property of any Borrower or
Obligor.
11.4 IBERIABANK in its Individual Capacity. With respect to its Commitment and the
Loans made and Letters of Credit issued or caused to be issued by it (and any successor acting as Administrative
Agent), so long as IBERIABANK shall be a Lender hereunder, it shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not acting as Administrative Agent,
and the term "Lender" or "Lenders" shall, unless the context otherwise indicates, include IBERIABANK in its
individual capacity as Lender hereunder. IBERIABANK (and any successor acting as Administrative Agent)
and its Affiliates may (without having to account therefor to any Lender) lend money to, make investments in
and generally engage in any kind of business with Borrowers (and any of its Subsidiaries or Affiliates) as if it
were not acting as Administrative Agent, and IBERIABANK and its Affiliates may accept fees and other
consideration from any Borrower and any of its Subsidiaries and Affiliates for services in connection with this
Agreement or otherwise without having to account for the same to Lenders.
11.5 Indemnification. Lenders agree to indemnify Administrative Agent (to the extent not
reimbursed by Borrowers hereunder and without limiting any obligations of Borrowers hereunder) ratably, in
accordance with their Pro Rata Shares, for any and all claims of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against Administrative Agent (including by any Lender) arising out of or by
reason of any investigation in or in any way relating to or arising out of this Agreement or any other Loan
Document or any other documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including the costs and expenses that Administrative Agent is obligated to pay
hereunder) or the enforcement of any of the terms hereof or thereof or of any such other documents; provided,
that, no Lender shall be liable for any of the foregoing to the extent it arises from the gross negligence or willful
misconduct of Administrative Agent as determined by a final non-appealable judgment of a court of competent
jurisdiction. The foregoing indemnity shall survive the payment of the Obligations and the termination or non-
renewal of this Agreement.
11.6 Non-Reliance on Administrative Agent and Other Lenders. Each Lender agrees that
it has, independently and without reliance on Administrative Agent or any other Lender, and based on such
documents and information as it has deemed appropriate, made its own credit analysis of Borrowers and
Obligors and has made its own decision to enter into this Agreement and that it will, independently and without
reliance upon Administrative Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action
under this Agreement or any of the other Loan Documents. Administrative Agent shall not be required to keep
itself informed as to the performance or observance by any Borrower or Obligor of any term or provision of this
Agreement or any of the other Loan Documents or any other document referred to or provided for herein or
therein or to inspect the properties or books of
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any Borrower or Obligor. Administrative Agent will use reasonable efforts to provide Lenders with any
information received by Administrative Agent from any Borrower or Obligor which is required to be provided to
Lenders hereunder or which is reasonably requested by a Lender and with a copy of any Notice of Default or
Failure of Condition received by Administrative Agent from any Borrower or any Lender; provided, that,
Administrative Agent shall not be liable to any Lender for any failure to do so, except to the extent that such
failure is attributable to Administrative Agent's own gross negligence or willful misconduct as determined by a
final non-appealable judgment of a court of competent jurisdiction. Except for notices, reports and other
documents expressly required to be furnished to Lenders by Administrative Agent hereunder, Administrative
Agent shall not have any duty or responsibility to provide any Lender with any other credit or other information
concerning the affairs, financial condition or business of any Borrower or Obligor that may come into the
possession of Administrative Agent.
11.7 Failure to Act. Except for action expressly required of Administrative Agent hereunder
and under the other Loan Documents, Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further assurances to its satisfaction from
Lenders of their indemnification obligations under Section 11.5 hereof against any and all liability and expense
that may be incurred by it by reason of taking or continuing to take any such action.
11.8 Concerning the Collateral and the Related Loan Documents. Each Secured Party
authorizes and directs Administrative Agent to enter into this Agreement and the other Loan Documents. Each
Secured Party agrees that any action taken by Administrative Agent or Required Lenders (or such greater
percentage as may be required hereunder) in accordance with the terms of this Agreement or the other Loan
Documents and the exercise by Administrative Agent or Required Lenders (or such greater percentage as may
be required hereunder) of their respective powers set forth therein or herein, together with such other powers
that are reasonably incidental thereto, shall be binding upon all Secured Parties.
11.9 Collateral Matters.
(a) Administrative Agent may, at its option, from time to time, at any time on or after
an Event of Default and for so long as the same is continuing or upon any other failure of a condition precedent
to the Loans and Letters of Credit hereunder, make such disbursements and advances (" Special Agent
Advances") which Administrative Agent, in its sole discretion: (i) deems necessary or desirable either to
preserve or protect the Collateral or any portion thereof; or (ii) to enhance the likelihood or maximize the amount
of repayment by Borrowers of the Loans and other Obligations; provided, that, the aggregate principal amount of
the Special Administrative Agent Advances pursuant to this clause (ii), plus the then outstanding principal
amount of the additional Loans and Letters of Credit, shall not exceed the aggregate amount of ten percent
(10%) of the Maximum Credit outstanding at any time; or (iii) to pay any other amount chargeable to any
Borrower pursuant to the terms of this Agreement or any of the other Loan Documents consisting of costs, fees
and expenses and payments to any Issuing Bank of Letters of Credit. Special Agent Advances shall be
repayable on demand and be secured by the Collateral. Special Agent Advances shall not constitute Loans but
shall otherwise constitute Obligations hereunder. Interest on Special Agent Advances shall be payable at the
highest Interest Rate then applicable to any outstanding Loans and shall be payable on demand. Without
limitation of its obligations pursuant to Section 6.9, each Lender agrees that it shall make available to
Administrative Agent, upon Administrative Agent's demand, in immediately available funds, the amount equal to
such Lender's Pro Rata Share of each such Special Agent Advance. If such funds are not made available to
Administrative Agent by such Lender, such Lender shall be deemed a Defaulting Lender and Administrative
Agent shall be entitled to recover such funds, on demand from such Lender together with interest thereon for
each day from the date such payment was due until the date such amount is paid to Administrative Agent at the
Federal Funds Rate for each day
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during such period (as published by the Federal Reserve Bank of New York or at
Administrative Agent's option based on the arithmetic mean determined by Administrative Agent of the rates for
the last transaction in overnight Federal funds arranged prior to 9:00 a.m. EST on that day by each of the three
(3) leading brokers of Federal funds transactions in New York City selected by Administrative Agent) and if
such amounts are not paid within three (3) days of Administrative Agent's demand, at the highest Interest Rate
provided under this Agreement applicable to Prime Rate Loans.
(b) Lenders hereby irrevocably authorize Administrative Agent, at its option and in its
discretion to release any security interest in, mortgage or lien upon, any of the Collateral: (i) upon termination of
the Commitments and payment and satisfaction of all of the Obligations and delivery of cash collateral to the
extent required under Section 12.1 below; or (ii) approved, authorized or ratified in writing by all of
Lenders. Except as provided above, Administrative Agent will not release any security interest in, mortgage or
lien upon, any of the Collateral without the prior written authorization of all of Lenders. Upon request by
Administrative Agent at any time, Lenders will promptly confirm in writing Administrative Agent's authority to
release items of Collateral pursuant to this Section.
(c) Without in any manner limiting Administrative Agent's authority to act without
any specific or further authorization or consent by the Required Lenders, each Lender agrees to confirm in
writing, upon request by Administrative Agent, the authority to release Collateral conferred upon Administrative
Agent under this Section. Administrative Agent shall (and is hereby irrevocably authorized by Lenders to)
execute such documents as may be necessary to evidence the release of the security interest, mortgage or liens
granted to Administrative Agent upon any Collateral to the extent set forth above; provided, that: (i)
Administrative Agent shall not be required to execute any such document on terms which, in Administrative
Agent's opinion, would expose Administrative Agent to liability or create any obligations or entail any
consequence other than the release of such security interest, mortgage or liens without recourse or warranty; and
(ii) such release shall not in any manner discharge, affect or impair the Obligations or any security interest,
mortgage or lien upon (or obligations of any Borrower in respect of) the Collateral retained by such Borrower.
(d) Administrative Agent shall have no obligation whatsoever to any Lender or any
other Person to investigate, confirm, or assure that the Collateral exists or is owned by any Borrower or is cared
for, protected or insured or has been encumbered, or that any particular items of Collateral meet the eligibility
criteria applicable in respect of the Loans or Letters of Credit hereunder, or whether any particular reserves are
appropriate, or that the liens and security interests granted to Administrative Agent pursuant hereto or any of the
Loan Documents or otherwise have been properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any
duty or care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or
available to Administrative Agent in this Agreement or in any of the other Loan Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission or event related thereto, Administrative Agent
may act in any manner it may deem appropriate in its discretion, given Administrative Agent's own interest in the
Collateral as a Lender and that Administrative Agent shall have no duty or liability whatsoever to any other
Lender.
11.10 Agency for Perfection. Each Lender hereby appoints Administrative Agent and each
other Lender as agent and bailee for the purpose of perfecting the security interests in and liens upon the
Collateral of Administrative Agent in assets which, in accordance with Article 9 of the UCC can be perfected
only by possession (or where the security interest of a secured party with possession has priority over the security
interest of another secured party) and Administrative Agent and each Lender hereby acknowledges that it holds
possession of any such Collateral for the benefit of Administrative Agent as secured party. Should any Lender
obtain possession of any such Collateral, such Lender shall notify
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Administrative Agent thereof, and, promptly upon Administrative Agent's request therefor shall
deliver such Collateral to Administrative Agent or in accordance with Administrative Agent's instructions.
11.11 Successor Administrative Agent. Administrative Agent may resign as Administrative
Agent upon thirty (30) days' notice to Lenders and Parent. If Administrative Agent resigns under this
Agreement, the Required Lenders shall appoint from among the Lenders a successor agent for Lenders. If no
successor agent is appointed prior to the effective date of the resignation of Administrative Agent,
Administrative Agent may appoint, after consulting with Lenders and Parent, a successor agent from among
Lenders. Upon the acceptance by the Lender so selected of its appointment as successor agent hereunder, such
successor agent shall succeed to all of the rights, powers and duties of the retiring Administrative Agent and the
term "Administrative Agent" as used herein and in the other Loan Documents shall mean such successor agent
and the retiring Administrative Agent's appointment, powers and duties as Administrative Agent shall be
terminated. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Section 11 shall inure to its benefit as to any actions taken or omitted by it while it was
Administrative Agent under this Agreement. If no successor agent has accepted appointment as Administrative
Agent by the date which is thirty (30) days after the date of a retiring Administrative Agent's notice of
resignation, the retiring Administrative Agent's resignation shall nonetheless thereupon become effective and
Lenders shall perform all of the duties of Administrative Agent hereunder until such time, if any, as the Required
Lenders appoint a successor agent as provided for above.
11.12 Other Administrative Agent Designations . Administrative Agent may at any time
and from time to time determine that a Lender may, in addition, be a "Co-Administrative Agent", "Syndication
Administrative Agent", "Documentation Administrative Agent" or similar designation hereunder and enter into
an agreement with such Lender to have it so identified for purposes of this Agreement. Any such designation
shall effective upon written notice by Administrative Agent to Borrower Agent of any such designation. Any
Lender that is so designated as a Co-Administrative Agent, Syndication Administrative Agent, Documentation
Administrative Agent or such similar designation by Administrative Agent shall have no right, power,
obligation, liability, responsibility or duty under this Agreement or any of the other Loan Documents other than
those applicable to all Lenders as such. Without limiting the foregoing, the Lenders so identified shall not have
or be deemed to have any fiduciary relationship with any Lender and no Lender shall be deemed to have relied,
nor shall any Lender rely, on a Lender so identified as a Co-Administrative Agent, Syndication Administrative
Agent, Documentation Administrative Agent or such similar designation in deciding to enter into this Agreement
or in taking or not taking action hereunder.
11.13 Credit Bids. Lenders hereby irrevocably authorize the Administrative Agent, with the
consent of the Required Lenders, to submit a bid at a public or private sale in connection with the purchase of all
or any portion of the Collateral, in which any of the Obligations may be used and applied as a credit on account
of the purchase price (a "credit bid") and purchase at any such sale (either directly or through one or more
entities established for such purpose) all or any portion of the Collateral on behalf of and for the benefit of the
Lenders (but not as agent for any individual Lender or Lenders, unless the Required Lenders shall otherwise
agree in writing). Each Lender agrees that, except with the written consent of the Administrative Agent and the
Required Lenders, it will not exercise any right that it might otherwise have to credit bid at any sales of all or
any portion of the Collateral conducted under the provisions of the UCC or the Bankruptcy Code, foreclosure
sales or other similar dispositions of Collateral
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SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1 Term.
(a) This Agreement and the other Loan Documents shall become effective as of the
Closing Date and shall continue in full force and effect for a term ending on the Initial Maturity Date, unless
sooner terminated pursuant to the terms hereof or unless extended for an Extension Option.
(b) Upon any effective date of termination of the Loan Documents (including the
Maturity Date), Borrowers shall pay to Administrative Agent all outstanding and unpaid Obligations and shall
furnish cash collateral to Administrative Agent (or at Administrative Agent's option, a letter of credit issued for
the account of Borrowers and at Borrowers' expense, in form and substance satisfactory to Administrative
Agent, by an issuer acceptable to Administrative Agent and payable to Administrative Agent as beneficiary) in
such amounts as Administrative Agent determines are reasonably necessary to secure Administrative Agent,
Lenders and Issuing Bank from loss, cost, damage or expense, including attorneys' fees and expenses, in
connection with any contingent Obligations, including issued and outstanding Letters of Credit and checks or
other payments provisionally credited to the Obligations and/or as to which Administrative Agent or any Lender
has not yet received final and indefeasible payment and for any of the Obligations arising under or in connection
with any Bank Products in such amounts as Bank Product Providers providing such Bank Product may require
(unless such Obligations arising under or in connection with any Bank Products are paid in full in cash and
terminated in a manner satisfactory to such Bank Product Provider). Interest shall be due until and including the
next Business Day, if the amounts so paid by Borrowers to Administrative Agent are received later than 12:00
p.m. EST.
(c) No termination of this Agreement or the other Loan Documents shall relieve or
discharge any Borrower of its respective duties, obligations and covenants under this Agreement or the other
Loan Documents until all Obligations have been fully and finally discharged and paid, and Administrative
Agent's continuing security interest in the Collateral and the rights and remedies of Administrative Agent and
Lenders hereunder, under the other Loan Documents and applicable law, shall remain in effect until all such
Obligations have been fully and finally discharged and paid. Accordingly, each Borrower waives any rights it
may have under the UCC to demand the filing of termination statements with respect to the Collateral and
Administrative Agent shall not be required to send such termination statements to Borrowers, or to file them
with any filing office, unless and until this Agreement shall have been terminated in accordance with its terms
and all Obligations paid and satisfied in full in immediately available funds.
12.2 Interpretative Provisions.
UCC shall have the meanings given therein unless otherwise defined in this Agreement.
(a) All terms used herein which are defined in Article 1, Article 8 or Article 9 of the
shall also mean the plural unless the context otherwise requires.
(b) All references to the plural herein shall also mean the singular and to the singular
(c) All references to any Borrower, Administrative Agent and Lenders pursuant to the
definitions set forth in the recitals hereto, or to any other person herein, shall include their respective successors
and assigns.
import when used in this Agreement shall refer to this Agreement as a whole and not any
(d) The words "hereof", "herein", "hereunder", "this Agreement" and words of similar
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hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.
particular provision of this Agreement and as this Agreement now exists or may
limitation".
(e) The word "including" when used in this Agreement shall mean "including, without
(f) An Event of Default shall exist or continue or be continuing until such Event of
Default is waived in accordance with Section 11.3 or is cured in a manner satisfactory to Administrative Agent,
if such Event of Default is capable of being cured as reasonably determined by Administrative Agent.
(g) All references to the term "good faith" used herein when applicable to
Administrative Agent or any Lender shall mean, notwithstanding anything to the contrary contained herein or in
the UCC, honesty in fact in the conduct or transaction concerned.
(h) Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given in accordance with GAAP, and all financial
computations hereunder shall be computed unless otherwise specifically provided herein, in accordance with
GAAP as consistently applied and using the same method for inventory valuation as used in the preparation of
the financial statements of Parent most recently received by Administrative Agent prior to the date hereof.
(i) In the computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including", the words "to" and "until" each mean "to but excluding" and the
word "through" means "to and including".
(j) All references to the term "knowledge" used herein when applicable to any
Borrower shall mean the actual knowledge of any officer or director of a Borrower or constructive knowledge of
such facts that such person should have known in the course of the performance of their respective duties on
behalf of a Borrower but without requiring specific inquiries as to the applicable circumstances as to a
representation or warranty set forth herein each time such representation or warranty is made or deemed made
hereunder.
(k) Unless otherwise expressly provided herein: (i) references herein to any
agreement, document or instrument shall be deemed to include all subsequent amendments, modifications,
supplements, extensions, renewals, restatements or replacements with respect thereto, but only to the extent the
same are not prohibited by the terms hereof or of any other Loan Document; and (ii) references to any statute or
regulation are to be construed as including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.
and shall not affect the interpretation of tins Agreement.
(l) The captions and headings of this Agreement are for convenience of reference only
(m) This Agreement and other Loan Documents may use several different limitations,
tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are
cumulative and shall each be performed in accordance with their terms.
(n) This Agreement and the other Loan Documents are the result of negotiations
among and have been reviewed by counsel to Administrative Agent and the other parties, and are the products of
all parties. Accordingly, this Agreement and the other Loan Documents shall not be
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Agent's or any Lender's involvement in their preparation.
construed against Administrative Agent or Lenders merely because of Administrative
12.3 Notices. All notices, requests and demands hereunder shall be in writing and deemed to
have been given or made: if delivered in person, immediately upon delivery; if by telex, telegram or facsimile
transmission, immediately upon sending and upon confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next Business Day, one (1) Business Day after sending; and if by
certified mail, return receipt requested, five (5) days after mailing. All notices, requests and demands upon the
parties are to be given to the following addresses (or to such other address as any party may designate by notice
in accordance with this Section):
If to any Borrower:
With a copy to:
If to Administrative Agent:
c/o BBX Capital Corporation
401 East Las Olas Boulevard
Suite 800
Fort Lauderdale, Florida 33301
Attention: Raymond S. Lopez
Telephone: (954) 940-4925
Facsimile: (954) 940-4970
E-Mail: rlopez@bbxcapital.com
Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A.
150 West Flagler Drive
Suite 2200
Miami, Florida 33130
Attention: Alison W. Miller, Esq.
Telephone: (305) 789-3500
Facsimile: (305) 789 -2642
E-Mail: amiller@stearnsweaver.com
IBERIABANK
11 East Greenway Plaza
Suite 2700
Houston, Texas 77046
Attention: Jose Gonzalez/Laura McPhail
Telephone: (713) 624-7732/(713) 624-7763
Facsimile: (713) 624-7770
E-Mail: Clo-houston@iberiabank.com
and
IBERIABANK
900 SE 6th Avenue
Delray Beach, Florida 33483
Attention: J. Scott McCleneghen, Executive Vice President
Telephone: (561) 279-8145
Facsimile: (561) 279-8115
E-Mail: scott.mccleneghen@iberiabank.com
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With a copy to:
Broad and Cassel LLP
One North Clematis Street
Suite 500
West Palm Beach, Florida 33401
Attention: Carl V. Romano, Esq.
Telephone: (561) 832-3300
Facsimile: (561) 655-1109
E-Mail: cromano@broadandcassel.com
12.4 Partial Invalidity. If any provision of this Agreement is held to be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate this Agreement as a whole, but this
Agreement shall be construed as though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed and enforced only to such extent as
shall be permitted by applicable law.
12.5 Confidentiality.
(a) Administrative Agent and each Lender shall use all reasonable efforts to keep
confidential, in accordance with its customary procedures for handling confidential information and safe and
sound lending practices, any non-public information supplied to it by any Borrower pursuant to this Agreement
which is clearly and conspicuously marked as confidential at the time such information is furnished by such
Borrower to Administrative Agent or such Lender; provided, that, nothing contained herein shall limit the
disclosure of any such information: (i) to the extent required by statute, rule, regulation, subpoena or court order;
(ii) to bank examiners and other regulators, auditors and/or accountants, in connection with any litigation to
which Administrative Agent or such Lender is a party; (iii) to any Lender or Participant (or prospective Lender
or Participant) or to any Affiliate of any Lender so long as such Lender or Participant (or prospective Lender or
Participant) or Affiliate shall have been instructed to treat such information as confidential in accordance with
this Section 12.5; or (iv) to counsel for Administrative Agent or any Lender or Participant (or prospective
Lender or Participant).
(b) In the event that Administrative Agent or any Lender receives a request or demand
to disclose any confidential information pursuant to any subpoena or court order, Administrative Agent or such
Lender, as the case may be, agrees: (i) to the extent permitted by applicable law or if permitted by applicable
law, to the extent Administrative Agent or such Lender determines in good faith that it will not create any risk of
liability to Administrative Agent or such Lender, Administrative Agent or such Lender will promptly notify
Borrower Agent of such request so that Borrower Agent may seek a protective order or other appropriate relief
or remedy; and (ii) if disclosure of such information is required, disclose such information and, subject to
reimbursement- by Borrowers of Administrative Agent's or such Lender's expenses, cooperate with Borrower
Agent in the reasonable efforts to obtain an order or other reliable assurance that confidential treatment will be
accorded to such portion of the disclosed information which Borrower Agent so designates, to the extent
permitted by applicable law or if permitted by applicable law, to the extent Administrative Agent or such Lender
determines in good faith that it will not create any risk of liability to Administrative Agent or such Lender.
(c) In no event shall this Section 12.5 or any other provision of this Agreement, any of
the other Loan Documents or applicable law be deemed: (i) to apply to or restrict disclosure of information that
has been or is made public by any Borrower or any third party or otherwise becomes generally available to the
public other than as a result of a disclosure in violation hereof; (ii) to apply to or restrict disclosure of
information that was or becomes available to Administrative Agent or any Lender (or any Affiliate of any
Lender) on a non-confidential basis from a person other than a Borrower;
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and (iii) to require Administrative Agent or any Lender to return any materials furnished by a Borrower to
Administrative Agent or a Lender or prevent Administrative Agent or a Lender from responding to routine
informational requests in accordance with the Code of Ethics for the Exchange of Credit Information
promulgated by The Robert Morris Associates or other applicable industry standards relating to the exchange of
credit information. The obligations of Administrative Agent and Lenders under this Section 12.5 shall supersede
and replace the obligations of Administrative Agent and Lenders under any confidentiality letter signed prior to
the date hereof.
12.6 Successors. This Agreement, the other Loan Documents and any other document
referred to herein or therein shall be binding upon and inure to the benefit of and be enforceable by
Administrative Agent, Lenders, Borrowers and their respective successors and assigns; except, that, Borrower
may not assign its rights under this Agreement, the other Loan Documents and any other document referred to
herein or therein without the prior written consent of Administrative Agent and Lenders. Any such purported
assignment without such express prior written consent shall be void. No Lender may assign its rights and
obligations under this Agreement without the prior written consent of Administrative Agent, except as provided
in Section 12.7 below. The terms and provisions of this Agreement and the other Loan Documents are for the
purpose of defining the relative rights and obligations of Borrowers, Administrative Agent and Lenders with
respect to the transactions contemplated hereby and there shall be no third-party beneficiaries of any of the terms
and provisions of this Agreement or any of the other Loan Documents.
12.7 Assignments; Participations.
(a) Each Lender may, with the prior written consent of Administrative Agent, assign
all or, if less than all, a portion equal to at least $5,000,000.00 in the aggregate for the assigning Lender, of such
rights and obligations under this Agreement to one or more Eligible Transferees (but not including for this
purpose any assignments in the form of a participation), each of which assignees shall become a party to this
Agreement as a Lender by execution of an Assignment and Acceptance; provided, that: (i) such transfer or
assignment will not be effective until recorded by Administrative Agent on the Register; and (ii) Administrative
Agent shall have received for its sole account payment of a processing fee from the assigning Lender or the
assignee in such amount as required by Administrative Agent.
(b) Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the
Borrowers, shall maintain a register of the names and addresses of Lenders, their Commitments and the principal
amounts and stated interest of the Loans owing to each Lender pursuant to the terms hereof from time to time
(the "Register"). Administrative Agent shall also maintain a copy of each Assignment and Acceptance
delivered to and accepted by it and shall modify the Register to give effect to each Assignment and
Acceptance. The entries in the Register shall be conclusive and binding for all purposes, absent, manifest error,
and any Borrowers, Obligors, Administrative Agent and Lenders shall treat each Person whose name is recorded
in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrowers and any Lender at any reasonable time and from time
to time upon reasonable prior notice.
(c) Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, the assignee thereunder shall be a party hereto and
to the other Loan Documents and, to the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and obligations (including, without limitation, the
obligation to participate in any Letters of Credit) of a Lender hereunder and thereunder and the assigning Lender
shall, to the extent that rights and obligations hereunder have been
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assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement.
(d) By execution and delivery of an Assignment and Acceptance, the assignor and
assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than
as provided in such Assignment and Acceptance, the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or representations made in or in connection
with this Agreement or any of the other Loan Documents or the execution, legality, enforceability, genuineness,
sufficiency or value of this Agreement or any of the other Loan Documents furnished pursuant hereto; (ii) the
assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial
condition of any Borrower, Obligor or any of their Subsidiaries or the performance or observance by any
Borrower or Obligor of any of the Obligations; (iii) such assignee confirms that it has received a copy of this
Agreement and the other Loan Documents, together with such other documents and information it has deemed
appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon the assigning Lender, Administrative Agent or any other
Lender and based on such documents and information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents; (v)
such assignee appoints and authorizes Administrative Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement and the other Loan Documents as are delegated to Administrative
Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto; and (vi)
such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms
of this Agreement and the other Loan Documents are required to be performed by it as a Lender. Administrative
Agent and Lenders may furnish any information concerning any Borrower or Obligor in the possession of
Administrative Agent or any Lender from time to time to assignees and Participants.
(e) Each Lender may sell participations to one or more banks or other entities in or to
all or a portion of its rights and obligations under this Agreement and the other Loan Documents (including,
without limitation, all or a portion of its Commitments and the Loans owing to it and its participation in any
Letters of Credit, without the consent of Administrative Agent or the other Lenders); provided, that: (i) such
Lender's obligations under this Agreement (including, without limitation, its Commitment hereunder) and the
other Loan Documents shall remain unchanged; (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, and Borrowers, the other Lenders and Administrative
Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents; and (iii) the Participant shall not have any
rights under this Agreement or any of the other Loan Documents (the Participant's rights against such Lender in
respect of such participation to be those set forth in the agreement executed by such Lender in favor of the
Participant relating thereto) and all amounts payable by any Borrower or Obligor hereunder shall be determined
as if such Lender had not sold such participation,
(f) Nothing in this Agreement shall prevent or prohibit any Lender from pledging its
Loans hereunder to a Federal Reserve Bank in support of borrowings made by such Lenders from such Federal
Reserve Bank.
(g) Borrowers shall assist Administrative Agent or any Lender permitted to sell
assignments or participations under this Section 12.7 in whatever manner reasonably necessary in order to
enable or effect any such assignment or participation, including (but not limited to) the execution and delivery of
any and all agreements, notes and other documents and instruments as shall be requested
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and the delivery of informational materials, appraisals or other documents for, and the participation of relevant
management in meetings and conference calls with, potential Lenders or Participants.
(h) If a Lender: (i) fails to give its consent to any amendment, waiver or action for
which consent of all Lenders was required and Required Lenders consented; or (ii) is a Defaulting Lender; or
(iii) delivers a notice pursuant to Section 3.5(c) hereof or requests compensation under Section 3.5(a) or 3.5(f)
hereof, or if any Borrower is required to pay additional amounts or to make indemnity payments with respect to
any Lender pursuant to Section 6.3 hereof, then, in addition to any other rights and remedies that any Person
may have, the Administrative Agent or Borrower Agent may, by notice to such Lender within one hundred
twenty (120) days after such event, require such Lender to assign all of its rights and obligations under the Loan
Documents to one or more Eligible Transferees, pursuant to appropriate Assignment and Acceptances, within
twenty (20) days after the notice. The Administrative Agent is irrevocably appointed as attorney-in-fact to
execute any such Assignment and Acceptance if the Lender fails to execute it. Such Lender shall be entitled to
receive, in cash, concurrently with such assignment, all amounts owed to it under the Loan Documents at par,
including all principal, interest and fees through the date of assignment (but excluding any prepayment charge).
12.8 Entire Agreement. This Agreement, the other Loan Documents, any supplements
hereto or thereto, and any instruments or documents delivered or to be delivered in connection herewith or
therewith represents the entire agreement and understanding concerning the subject matter hereof and thereof
between the parties hereto, and supersede all other prior agreements, understandings, negotiations and
discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject
matter hereof, whether oral or written. In the event of any inconsistency between the terms of this Agreement
and any schedule or exhibit hereto, the terms of this Agreement shall govern.
12.9 Counterparts, Etc. This Agreement or any of the other Loan Documents may be
executed in any number of counterparts, each of which shall be au original, but all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of this Agreement or any of the
other Loan Documents by facsimile or other electronic means shall have the same force and effect as the
delivery of an original executed counterpart of this Agreement or any of such other Loan Documents. Any party
delivering an executed counterpart of any such agreement by facsimile or other electronic means shall also
deliver an original executed counterpart, but the failure to do so shall not affect the validity, enforceability or
binding effect of such agreement.
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IN WITNESS WHEREOF, the parties have caused these present to be duly executed as of the day and
year first above written:
BORROWER:
BORROWER:
BBX CAPITAL CORPORATION ,
corporation
a Florida
FOOD FOR THOUGHT RESTAURANT GROUP-
FLORIDA, LLC, a Florida limited liability company
By:
By:
Raymond S. Lopez, Executive Vice President and
Chief Financial Officer
Raymond S. Lopez, Chief Financial Officer
BORROWER:
BORROWER:
BBX CAPITAL FLORIDA LLC , a Florida limited
liability company
WOODBRIDGE HOLDINGS, LLC, a Florida
limited liability company
By:
By:
Raymond S. Lopez, Chief Financial Officer
Raymond S. Lopez, Chief Financial Officer and
Treasurer
BORROWER:
AS ADMINISTRATIVE AGENT AND A
LENDER:
BBX SWEET HOLDINGS, LLC, a Florida limited
liability company
IBERIABANK, a L ouisiana state-chartered bank
By:
Raymond S. Lopez, Chief Financial Officer
By:
J. Scott McCleneghen
Executive Vice President
LENDER:
CITY NATIONAL BANK OF FLORIDA, a national
banking association
By:
Print Name:
Title:
72
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EXHIBIT A
ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and Acceptance") is dated as
of
and
____________________________________
___________________,
(the "Assignee").
"Assignor")
between
made
2018
(the
is
WITNESSETH:
WHEREAS, IBERIABANK, a Louisiana state-chartered bank, in its capacity as Administrative Agent
pursuant to the Loan Agreement (as hereinafter defined) acting for and on behalf of the parties thereto as lenders
(in such capacity, "Administrative Agent"), and the parties to the Loan Agreement as lenders (individually,
each a "Lender" and collectively, "Lenders") have entered or are about to enter into financing arrangements
pursuant to which Administrative Agent and Lenders may make loans and advances and provide other financial
accommodations to BBX CAPITAL CORPORATION , a Florida corporation, FOOD FOR THOUGHT
RESTAURANT GROUP-FLORIDA, LLC, a Florida limited liability company, BBX CAPITAL FLORIDA
LLC, a Florida limited liability company, WOODBRIDGE HOLDINGS, LLC, a Florida limited liability
company a n d BBX SWEET HOLDINGS, LLC, a Florida limited liability company (each individually
"Borrower" and collectively, "Borrowers"), as set forth in the Loan and Security Agreement, dated March 6,
2018, by and among Borrowers, certain of their affiliates, Administrative Agent and Lenders (as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, the
"Loan Agreement"), and the other agreements, documents and instruments referred to therein or at any time
executed and "or delivered in connection therewith or related thereto (all of the foregoing, together with the
Loan Agreement, as the same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced, being collectively referred to herein as the "Loan Documents"); and
WHEREAS, as provided under the Loan Agreement, Assignor committed to making Loans (the
"Committed Loans") to Borrowers in an aggregate amount not to exceed the principal amount of $ at any
time outstanding (the "Commitment"); and
WHEREAS, Assignor wishes to assign to Assignee a portion of rights and obligations of Assignor
under the Loan Agreement in respect of its Commitment in an amount equal to $__________________ (the
"Assigned Commitment Amount") on the terms and subject to the conditions set forth herein and Assignee
wishes to accept assignment of such rights and to assume such obligations from Assignor on such terms and
subject to such conditions.
NOW, THEREFORE , in consideration of the foregoing and the mutual agreements contained
herein, the parties hereto agree as follows:
1. Assignment and Acceptance.
(a) Subject to the terms and conditions of this Assignment and Acceptance, Assignor hereby
sells, transfers and assigns to Assignee, and Assignee hereby purchases, assumes and undertakes from Assignor,
without recourse and without representation or warranty (except as provided in this Assignment and Acceptance)
an interest in: (i) the Commitment and each of the Committed Loans of Assignor; and (ii) all related rights,
benefits, obligations, liabilities and indemnities of the Assignor under
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and in connection with the Loan Agreement and the other Loan Documents, so that after giving effect thereto,
the Commitment of Assignee shall be as set forth below and the Pro Rata Share of Assignee shall be ______
percent (___%).
(b) With effect on and after the Effective Date (as defined in Section 5 hereof), Assignee shall
be a party to the Loan Agreement and succeed to all of the rights and be obligated to perform all of the
obligations of a Lender under the Loan Agreement, including the requirements concerning confidentiality and
the payment of indemnification, with a Commitment in an amount equal to the Assigned Commitment
Amount. Assignee agrees that it will perform in accordance with their terms of the obligations which by the
terms of the Loan Agreement are required to be performed by it as a Lender. It is the intent of the parties hereto
that the Commitment of Assignor shall, as of the Effective Date, be reduced by an amount equal to the Assigned
Commitment: Amount and Assignor shall relinquish its rights and be released from its obligations under the
Loan Agreement to the extent such obligations have been assumed by Assignee; provided, that, Assignor shall
not relinquish its rights under Sections 2.1, 6.3 and 6.8 of the Loan Agreement to the extent such rights relate to
the time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set forth herein, on the Effective Date
Assignee's Commitment will be $___________________________.
(d) After giving effect to the assignment and assumption set forth herein, on the Effective Date
Assignor's Commitment will be $___________________________ (as such amount may be further reduced by
any other assignments by Assignor on or after the date hereof).
2. Payments. As consideration for the sale, assignment and transfer contemplated in Section 1 hereof,
Assignee shall pay to Assignor on the Effective Date in immediately available funds an amount equal to
$___________________________, representing Assignee's Pro Rata Share-of the principal amount of all
Committed Loans. Assignee shall pay to Administrative Agent the processing fee in the amount specified in
Section 12.7(a) of the Loan Agreement.
3. Reallocation of Payments. Any interest, fees and other payments accrued to the Effective Date
with respect to the Commitment, Committed Loans and outstanding Letters of Credit shall be for the account of
Assignor. Any interest fees and other payments accrued on and after the Effective Date with respect to the
Assigned Commitment Amount shall be for the account of Assignee. Each of Assignor and Assignee agrees
that it will hold in trust for the other party any interest, fees and other amounts which it may receive to which the
other party is entitled pursuant to the preceding sentence and pay to the other party any such amounts which it
may receive promptly upon receipt.
4. Independent Credit Decision. Assignee acknowledges that it has received a copy of the Loan
Agreement and the Schedules and Exhibits thereto, together with copies of the most recent financial statements
of Parent and its Subsidiaries, and such other documents and information as it has deemed appropriate to make
its own credit and legal analysis and decision to enter into this Assignment and Acceptance and agrees that it
will, independently and without reliance upon Assignor, Administrative Agent or any Lender and based on such
documents and information as it shall deem appropriate at the time, continue to make its own credit and legal
decisions in taking or not taking action under the Loan Agreement.
4. Effective Date; Notices. As between Assignor and Assignee, the effective date for this Assignment
and Acceptance shall be ____________________, 20__ (the " Effective Date"); provided, that, the following
conditions precedent have been satisfied on or before the Effective Date:
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(a)
this Assignment and Acceptance shall be executed and delivered by Assignor and
Assignee;
(b) the consent of Administrative Agent as required (and the Borrower Agent to the extent as
may be required pursuant to Section 1.33(d) of the Loan Agreement) for an effective assignment of the
Assigned Commitment Amount by Assignor to Assignee shall have been duly obtained and shall be in full force
and effect as of the Effective Date;
(c) written notice of such assignment, together with payment instructions, addresses and
related information with respect to Assignee, shall have been given to Borrower Agent and Administrative
Agent;
(d) Assignee shall pay to Assignor all amounts due to Assignor under this Assignment and
Acceptance; and
(e) the processing fee referred to in Section 2 hereof shall have been paid to Administrative
Agent.
Promptly following the execution of this Assignment and Acceptance, Assignor shall deliver to Borrower
Agent and Administrative Agent for acknowledgment by Administrative Agent, a Notice of Assignment in the
form attached hereto as Schedule 1.
5. Administrative Agent. Assignee hereby appoints and authorizes Assignor in its capacity as
Administrative Agent to take such action as agent on its behalf to exercise such powers under the Loan
Agreement as are delegated to Administrative Agent by Lenders pursuant to the terms of the Loan
Agreement. Assignee shall assume no duties or obligations held by Assignor in its capacity a s Administrative
Agent under the Loan Agreement.
6. Withholding Tax. Assignee: (a) represents and warrants to Assignor, Administrative Agent and
Borrowers that under applicable law and treaties no tax will be required to be withheld by Assignee,
Administrative Agent or Borrowers with respect to any payments to be made to Assignee hereunder or under any
of the Loan Documents; (b) agrees to furnish to Administrative Agent and Borrowers prior to the time that
Administrative Agent or Borrowers are required to make any payment of principal, interest or fees hereunder,
the forms certificates and other information described in Section 6.12(d) of the Loan Agreement; and (c) agrees
to comply with all applicable U.S. laws and regulations with regard to such withholding tax exemption.
7. Representations and Warranties.
(a) Assignor represents and warrants that: (i) it is the legal and beneficial owner of the interest
being assigned by it hereunder and that such interest is free and clear of any security interest, lieu, encumbrance
or other adverse claim; (ii) it is duly organized and existing and it has the full power and authority to take, and
has taken, all action necessary to execute and deliver this Assignment and Acceptance and any other documents
required or permitted to be executed or delivered by it in connection with this Assignment and Acceptance and to
fulfill its obligations hereunder; (iii) no notices to, or consents, authorizations or approvals of any Person are
required (other than any already given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance, and apart from any agreements or undertakings or filings required by the Loan
Agreement, no further action by, or notice to, or filing with, any Person is required of it for such execution,
delivery or performance; and (iv) this Assignment and Acceptance has been duly executed and delivered by it
and constitutes the legal, valid and binding
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obligation of Assignor, enforceable against Assignor in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of general application
relating to or affecting creditors' rights and to general equitable principles. Assignor makes no representation or
warranty and assumes no responsibility with respect to any statements, warranties or representations made in or
in connection with the Loan Agreement or any of the other Loan Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Agreement or any other instrument or document
furnished pursuant thereto. Assignor makes no representation or warranty in connection with, and assumes no
responsibility with respect to, the solvency, financial condition or statements of Borrowers, or any of their
respective Affiliates, or the performance or observance by Borrowers or any other Person, of any of its
respective obligations under the Loan Agreement or any other instrument or document furnished in connection
therewith.
(b) Assignee represents and warrants that: (i) it is duly organized and existing and it has full
power and authority to take, and has taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or delivered by it in connection with
this Assignment and Acceptance, and to :fulfill its obligations hereunder; (ii) no notices to, or consents,
authorizations or approvals by any Person are required (other than any already given or obtained) for its due
execution, delivery and performance of this Assignment and Acceptance, and apart from any agreements or
undertakings or filings required by the Loan Agreement, no further action by, or notice to, or filing with, any
Person is required of it for such execution, delivery or performance; and (iii) this Assignment and Acceptance
has been duly executed and delivered by it and constitutes the legal, valid and binding obligation of Assignee,
enforceable against Assignee in accordance with the terms hereof, subject, as to enforcement, to bankruptcy,
insolvency, moratorium, reorganization and other laws of general application relating to or affecting creditors'
rights and to general equitable principles.
8. Further Assurances. Assignor and Assignee each hereby agree to execute and deliver such other
instruments, and take such other action, as either party may reasonably request in connection with the
transactions contemplated by this Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to Borrowers or Administrative Agent, which may be required in connection with the
assignment and assumption contemplated hereby.
9. Miscellaneous.
(a) Any amendment or waiver of any provision of this Assignment and Acceptance shall be in
writing and signed by the parties hereto. No failure or delay by either party hereto in exercising any right, power
or privilege hereunder shall operate as a waiver thereof and any waiver of any breach of the provisions of this
Assignment and Acceptance shall be without prejudice to any rights with respect to any other for further breach
thereof.
(b) All payments made hereunder shall be made without any set-off or counterclaim.
(c) Assignor and Assignee shall each pay its own costs and expenses incurred in connection
with the negotiation, preparation, execution and performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any number of counterparts and all
of such counterparts taken together shall be deemed to constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF FLORIDA.
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Assignor and Assignee each irrevocably submits to the non-exclusive jurisdiction of any State or Federal court
sitting in Palm Beach County, Florida over any suit, action or proceeding arising out of or relating to this
Assignment and Acceptance anal irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such Florida State or Federal court. Each party to this Assignment and Acceptance
hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to
the maintenance of such action or proceeding.
(f) ASSIGNOR AND ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE LOAN AGREEMENT, ANY
OF THE OTHER FINANCING, AGREEMENTS OR ANY RELATED DOCUMENTS AND
AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS
(WHETHER ORAL OR WRITTEN).
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IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment and Acceptance to be
executed and delivered by their duly authorized officers as of the date first above written.
ASSIGNOR:
IBERIABANK, a Louisiana state-chartered bank, as
Administrative Agent and a Lender
By:
Print Name:
Title:
ASSIGNEE:
By:
Print Name:
Title:
IBERIABANK/BBX CAPITAL
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SCHEDULE I
NOTICE OF ASSIGNMENT AND ACCEPTANCE
___________________, 20__
________________________
________________________
________________________
Attention: ___________
Re: Senior Secured Revolving Credit Facility in the amount of $50,000,000.00
Ladies and Gentlemen:
IBERIABANK, a Louisiana state-chartered bank, in its capacity as administrative agent pursuant to
the Loan Agreement (as hereinafter defined) acting for and on behalf of the parties thereto as lenders (in such
capacity, "Administrative Agent"), and the parties to the Loan Agreement as lenders (individually, each a
"Lender" and collectively, "Lenders") have entered or are about to enter into financing arrangements pursuant
to which Administrative Agent and Lenders may make Loans and advances and provide other financial
accommodations to BBX CAPITAL CORPORATION , a Florida corporation, FOOD FOR THOUGHT
RESTAURANT GROUP-FLORIDA, LLC, a Florida limited liability company, BBX CAPITAL
FLORIDA LLC, a Florida limited liability company, WOODBRIDGE HOLDINGS, LLC, a Florida limited
liability company a n d BBX SWEET HOLDINGS, LLC, a Florida limited liability company (each
individually "Borrower" and collectively, "Borrowers"), as set forth in the Loan and Security Agreement,
dated March 6, 2018, by and among Borrowers, certain of their affiliates, Administrative Agent and Lenders
(as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, the "Loan Agreement") and the other agreements, documents and instruments referred to therein or
at any time executed and/or delivered in connection therewith or related thereto (all of the foregoing, together
with the Loan Agreement, as the same now exist or may hereafter be amended, modified, supplemented,
extended,
the "Loan
Documents"). Capitalized terms not otherwise defined herein shall have the respective meanings ascribed
thereto in the Loan Agreement.
replaced, being collectively
to herein as
restated or
renewed,
referred
We hereby give you notice of, and request your consent to, the assignment by IBERIABANK, a
Louisiana state-chartered bank (the "Assignor") to ____________________ (the "Assignee") such that after
giving effect to the assignment Assignee shall have an interest equal to ______ percent (___%) of the total
Commitments pursuant to the Assignment and Acceptance Agreement attached hereto (the " Assignment and
Acceptance").
by
$_________________________ as the same may be further reduced by other assignments on or after the date
hereof.
the Assignor's Commitment
understand
reduced
We
shall
that
be
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Assignee agrees that, upon receiving the consent of Administrative Agent to such assignment.
Assignee will be bound by the terms of the Loan Agreement as fully and to the same extent as if the Assignee
were the Lender originally holding such interest under the Loan Agreement.
The following administrative details apply to Assignee:
(A) Notice address:
Assignee name
Address:
Attention:
Telephone:
Telecopier:
(B) Payment instructions:
Account No.:
At:
Reference:
Attention:
You are entitled to rely upon the representations, warranties and covenants of each of Assignor and
Assignee contained in the Assignment and Acceptance.
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IN WITNESS WHEREOF, Assignor and Assignee have caused this Notice of Assignment and
Acceptance to be executed by their respective duly authorized officials, officers or agents as of the date first
above mentioned.
Very truly yours,
ASSIGNOR:
a Louisiana
IBERIABANK,
Administrative Agent and a Lender
state-chartered bank,
as
By:
Print Name:
Title:
ASSIGNEE:
By:
Print Name:
Title:
IBERIABANK/BBX CAPITAL
SYNDICATED LOAN AND SECURITY AGREEMENT
4833-7494-6387.12
45083/0017
03/02/2018
A-9
EXHIBIT B
TO
LOAN AND SECURITY AGREEMENT
Compliance Certificate
To: IBERIABANK, as Administrative Agent
_______________________
_______________________
_______________________
For the [Quarterly/Yearly] Period Ending: ______________
Ladies and Gentlemen:
Reference is hereby made to the Loan and Security Agreement dated as of March 6, 2018 (as amended,
restated, supplemented or otherwise modified from time to time, the "Loan Agreement"), by and among BBX
CAPITAL CORPORATION , a Florida corporation, FOOD FOR THOUGHT RESTAURANT GROUP-
FLORIDA, LLC, a Florida limited liability company, BBX CAPITAL FLORIDA LLC , a Florida limited
liability company, WOODBRIDGE HOLDINGS, LLC, a Florida limited liability company and BBX SWEET
HOLDINGS, LLC, a Florida limited liability company (each a "Borrower" and collectively, "Borrowers")
and IBERIABANK, a Louisiana state-chartered bank, in its capacity as agent acting for and on behalf of the
parties to this Agreement as lenders (in such capacity, " Administrative Agent"), the parties to this Agreement
as lenders (individually a "Lender" and collectively, "Lenders"). Capitalized terms used herein without
definition shall have the meanings set forth in the Loan Agreement.
The undersigned hereby certifies as of the date hereof that he/she is the Chief Financial Officer of each
of the Borrowers, and that, as such, he/she is authorized to execute and deliver this Compliance Certificate (this
"Certificate") to Administrative Agent and the Lenders on the behalf of the Borrowers, and that:
1. Borrowers have delivered the financial information required by Section 8.5(a) of the Loan Agreement for
the fiscal quarter and/or year (as the case may be) of the Borrowers ended as of the above date. Such financial
information is true and correct in all material respects and fairly presents the financial condition and results of
operations of the Borrowers (in accordance with standard accounting principles consistently applied) as at such
date and for such period.
2. The calculations (as applicable) set forth in Annex 1 are computations of: (i) the Fixed Charge Coverage
Ratio for the purposes of Section 8.14; (ii) the Senior Funded Debt to EBITDA for the purposes of Section
8.15; and (iii) the Unencumbered Liquidity for the purposes of Section 8.16, and are true and accurate in all
respects on and as of the date of this Certificate.
3. Based upon a review of the activities of Borrowers and the calculations attached hereto during the period
covered thereby, as of the date hereof, [there exists no Default or Event of Default][a Default or Event of
Default as specified below]:
IBERIABANK/BBX CAPITAL
SYNDICATED LOAN AND SECURITY AGREEMENT
4833-7494-6387.12
45083/0017
B-10
and Borrowers [have taken][propose to take] the following actions with respect thereto:
4. Further based upon a review of the activities of Borrowers and other pertinent information, [there currently
exists no matter described in Section 8.5(b) of the Loan Agreement][Borrowers hereby provide notice to
Administrative Agent and the Lenders of the following events, as required pursuant to Section 8.5(b) of the
Loan Agreement]:
[if applicable, describe matter(s) disclosed; otherwise, state N/A]
BORROWER:
BORROWER:
BBX CAPITAL CORPORATION ,
corporation
a Florida
FOOD FOR THOUGHT RESTAURANT GROUP-
FLORIDA, LLC, a Florida limited liability company
By:
By:
Raymond S. Lopez, Executive Vice President and
Chief Financial Officer
Raymond S. Lopez, Chief Financial Officer
BORROWER:
BORROWER:
BBX CAPITAL FLORIDA LLC , a Florida limited
liability company
WOODBRIDGE HOLDINGS, LLC, a Florida
limited liability company
By:
By:
Raymond S. Lopez, Chief Financial Officer
Raymond S. Lopez, Chief Financial Officer and
Treasurer
BORROWER:
BBX SWEET HOLDINGS, LLC, a Florida limited
liability company
By:
Raymond S. Lopez, Chief Financial Officer
IBERIABANK/BBX CAPITAL
SYNDICATED LOAN AND SECURITY AGREEMENT
4833-7494-6387.12
45083/0017
B-11
ANNEX 1
Calculations of Financial Covenant(s)
[Attached]
B-12
IBERIABANK/BBX CAPITAL
SYNDICATED LOAN AND SECURITY AGREEMENT
4833-7494-6387.12
45083/0017
EXHIBIT C
TO
LOAN AND SECURITY AGREEMENT
Form of Draw Request
c/o BBX Capital Corporation
401 East Las Olas Boulevard
Suite 800
Fort Lauderdale, Florida 33301
Attn: Ray Lopez
("Borrower")
IBERIABANK, as Administrative Agent
11 East Greenway Plaza, Suite 2700
Houston, Texas 77046
Attention: Commercial Loan Operations
Borrower hereby requests an Advance in the amount of $___________ (broken down as follows)
pursuant to that certain Loan and Security Agreement by and among Borrower and Lenders dated March 6, 2018
(as amended, restated or otherwise modified from time to time, the "Loan Agreement"). The proposed date of
the Advance is ____.
Letter of Credit Purposes
$_______________ General Purposes
$_______________
$_______________ Business Acquisition Purposes
$_______________ Real Estate Investment Purposes
$_______________
$_______________ Total Advance Request
Stock Buy-Back Purposes
Borrowers hereby represent and warrant to Lender as follows:
(a) There exists no Default or Event of Default under the Loan Agreement.
(b) All representations, warranties and covenants made in the Loan Agreement are true and
correct as of the date hereof.
(c) The aggregate principal amount of all Advances outstanding under the Revolving Credit,
giving effect to the request herein, are $_____________.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE APPEARS ON FOLLOWING PAGE]
IBERIABANK/BBX CAPITAL
SYNDICATED LOAN AND SECURITY AGREEMENT
4833-7494-6387.12
45083/0017
C-1
BORROWER:
BBX CAPITAL CORPORATION ,
corporation
a Florida
Dated: ____________________, 20__
By:
Raymond S. Lopez, EVP and CFO
IBERIABANK/BBX CAPITAL
SYNDICATED LOAN AND SECURITY AGREEMENT
4833-7494-6387.12
45083/0017
C-2
EXHIBIT D
TO
LOAN AND SECURITY AGREEMENT
Form of Membership Interest Certificate
CERTIFICATE NO. 001 8,000 UNITS LIMITED LIABILITY COMPANY MEMBERSHIP UNIT CERTIFICATE WOODBRIDGE HOLDINGS, LLC A FLORIDA LIMITED LIABILITY COMPANY THIS CERTIFIES THAT BBX CAPITAL CORPORATION, A FLORIDA CORPORATION, IS THE OWNER OF 8,000 UNITS REPRESENTING LIMITED LIABILITY COMPANY MEMBERSHIP INTERESTS IN WOODBRIDGE HOLDINGS, LLC, A FLORIDA LIMITED LIABILITY COMPANY (THE “COMPANY”). THE UNITS REPRESENTED BY THIS CERTIFICATE ARE ISSUED, ACCEPTED AND HELD SUBJECT TO THE TERMS OF THE SECOND AMENDED AND RESTATED OPERATING
AGREEMENT OF THE CMOPANY DATED JANUARY 1, 2017, AS IT MAY BE AMENDED AND/OR AMENDED AND RESTATED FROM TIME TO TIME. IN WITNESS WHEREOF, THE COMPANY HAS CAUSED THIS CERTIFICATE TO BE EXECUTED BY THE SIGNATURES OF ITS DULY AUTHORIZED PROCESS. Dated: ____, 2018 ____ Name: Title: President ___ Name: Title:Secretary
IBERIABANK/BBX CAPITAL
SYNDICATED LOAN AND SECURITY AGREEMENT
4833-7494-6387.12
45083/0017
D-1
FOR VALUE RECEIVED, ____ does hereby sell, assign and transfer onto ____, the Units of limited liability company interests in the within named Company represented by the within Certificate, and does hereby irrevocably constitute and appoint ____ as attorney to transfer the said securities on the books of the within named Company with full power of substitution in the premises. Dated as of ___ ____
IBERIABANK/BBX CAPITAL
SYNDICATED LOAN AND SECURITY AGREEMENT
4833-7494-6387.12
45083/0017
D-2
SCHEDULE 7.2
Name, State of Organization; Chief Executive Office
Exact Legal Name:
BBX Capital Corporation
Previous Names (within past 5 years):
Prior Transactions (within past 5 years):
Jurisdiction of Organization:
Type of Entity:
FEIN:
Chief Executive Office:
BFC Financial Corporation
Effective as of December 15, 2016, BBX Capital
Corporation, a Florida corporation, merged with and
into BBX Capital Florida LLC (formerly known as
BBX Merger Subsidiary LLC), a Florida limited
liability company and wholly owned subsidiary of BFC
Financial Corporation, with BBX Capital Florida LLC
being the surviving entity.
BBX Capital Corporation acquired Renin Holdings,
LLC in October 2013.
Florida
Corporation
59-2022148
401 East Las Olas Blvd, Suite 800
Fort Lauderdale, FL 33301
Exact Legal Name:
Food For Thought Restaurant Group-Florida, LLC
Previous Names (within past 5 years):
Prior Transactions (within past 5 years):
Jurisdiction of Organization:
Type of Entity:
FEIN:
Chief Executive Office:
None
None
Florida
Limited Liability Company
81-3882265
401 East Las Olas Blvd, Suite 800
Fort Lauderdale, FL 33301
IBERIABANK/BBX CAPITAL
SYNDICATED LOAN AND SECURITY AGREEMENT
4833-7494-6387.12
45083/0017
Schedule 7.2-1
Exact Legal Name:
BBX Capital Florida LLC
Previous Names (within past 5 years):
Prior Transactions (within past 5 years):
Jurisdiction of Organization:
Type of Entity:
FEIN:
Chief Executive Office:
BBX Merger Subsidiary LLC and BBX Capital LLC
Effective as of December 15, 2016, BBX Capital
Corporation, a Florida corporation, merged with and
into BBX Merger Subsidiary LLC, a Florida limited
liability company and wholly owned subsidiary of BFC
Financial Corporation, with BBX Merger Subsidiary
LLC being the surviving entity.
Florida
Limited Liability Company
N/A
401 East Las Olas Blvd, Suite 800
Fort Lauderdale, FL 33301
Exact Legal Name:
Woodbridge Holdings, LLC
Previous Names (within past 5 years):
Prior Transactions (within past 5 years):
Jurisdiction of Organization:
Type of Entity:
FEIN:
Chief Executive Office:
None
None
Florida
Limited Liability Company
80-0478887
401 East Las Olas Blvd, Suite 800
Fort Lauderdale, FL 33301
Exact Legal Name:
BBX Sweet Holdings, LLC
Previous Names (within past 5 years):
Prior Transactions (within past 5 years):
Jurisdiction of Organization:
Type of Entity:
FEIN:
Chief Executive Office:
BBX Acquisition Sub, LLC
On June 16, 2017, BBX Sweet Holdings, LLC,
formed acquisition
indirectly
through a newly
subsidiary, acquired 93% of
IT'SUGAR, LLC's
membership interests.
Florida
Limited Liability Company
N/A
401 East Las Olas Blvd, Suite 800
Fort Lauderdale, FL 33301
IBERIABANK/BBX CAPITAL
SYNDICATED LOAN AND SECURITY AGREEMENT
4833-7494-6387.12
45083/0017
Schedule 7.2-2
SCHEDULE 7.6
Litigation
See Item 1, Note 10 of BBX Capital Corporation's Quarterly Report on Form 10-Q for the fiscal quarter ending
on September 30, 2017, filed on November 6, 2017.
IBERIABANK/BBX CAPITAL
SYNDICATED LOAN AND SECURITY AGREEMENT
4833-7494-6387.12
45083/0017
Schedule 7.6-1
SCHEDULE 7.8
Environmental Compliance
NONE
IBERIABANK/BBX CAPITAL
SYNDICATED LOAN AND SECURITY AGREEMENT
4833-7494-6387.12
45083/0017
Schedule 7.8-1
SCHEDULE 7.10
Bank Accounts
BBX Sweet Holdings, LLC
BBX Capital Corporation
Woodbridge Holdings LLC
BBX Capital Corporation
BBX Capital Corporation
BBX Capital Corporation
BBX Capital Corporation
BBX Capital Corporation
BBX Capital Corporation
BBX Capital Corporation
BBX Sweet Holdings, LLC
BBX Sweet Holdings, LLC
Checking Account
Checking Account
Checking Account
Money Market
Money Market
Money Market
Money Market
Money Market
Money Market
Money Market
Money Market
Checking
PNC
PNC
PNC
BB&T
PNC
CITY NATIONAL
IBERIA
FLORIDA COMMUNITY
GIBRALTAR
CENTENNIAL
IBERIA
IBERIA
IBERIABANK/BBX CAPITAL
SYNDICATED LOAN AND SECURITY AGREEMENT
4833-7494-6387.12
45083/0017
Schedule 7.10-1
SCHEDULE 7.12
Significant Subsidiaries; Capitalization; Solvency
Significant Subsidiaries: IT'SUGAR, LLC; BBX Grand Central, LLC; BBX Promenade, LLC
Capitalization:
BBX Capital Corporation owns 100% of the issued and outstanding Capital Stock of each of Food for Thought
Restaurant Group-Florida, LLC, BBX Capital Florida LLC, Woodbridge Holdings, LLC and BBX Sweet
Holdings, LLC.
For information regarding the ownership of BBX Capital Corporation, see BBX Capital Corporation's Definitive
Proxy Statement on Schedule 14A, filed on April 21, 2017.
IBERIABANK/BBX CAPITAL
SYNDICATED LOAN AND SECURITY AGREEMENT
4833-7494-6387.12
45083/0017
Schedule 7.12-1
SCHEDULE 7.13
Labor Disputes
See Item 1, Note 10 of BBX Capital Corporation's Quarterly Report on Form 10-Q for the fiscal quarter ending
on September 30, 2017, filed on November 6, 2017.
IBERIABANK/BBX CAPITAL
SYNDICATED LOAN AND SECURITY AGREEMENT
4833-7494-6387.12
45083/0017
Schedule 7.13-1
SCHEDULE 8.8
Indebtedness
1. Credit Agreement dated November 5, 2014, among Bluegreen Corporation, as Borrower, Fifth Third Bank,
as Administrative Agent and L/C Issuer, and Guarantors and Lenders party thereto.
2. Second Amended and Restated Secured Promissory Note dated June 25, 2015, by and among Bluegreen
Vacations Unlimited, Inc., as Borrower, and Pacific Western Bank, as Lender.
3. Second Amendment to Amended and Restated Loan and Security Agreement dated June 25, 2015, by and
among Bluegreen Corporation, as Borrower, and Pacific Western Bank, as Lender.
4. Third Amended and Restated Revolving Promissory Note (Hypothecation Facility) dated June 30, 2015, by
and among Bluegreen / Big Cedar Vacations, LLC, as Borrower, and National Bank of Arizona, as Lender.
5. First Amended and Restated Loan and Security Agreement (Hypothecation Facility) dated June 30, 2015,
by and among Bluegreen / Big Cedar Vacations, LLC, as Borrower and National Bank of Arizona, as Lender.
6. First Amended and Restated Promissory Note (Inventory Loan) dated June 30, 2015, by and among
Bluegreen / Big Cedar Vacations, LLC, as Borrower, and National Bank of Arizona, as Lender.
7. First Amended and Restated Loan Agreement (Inventory Loan) dated June 30, 2015, by and among
Bluegreen / Big Cedar Vacations, LLC, as Borrower, and National Bank of Arizona, as Lender.
8. Loan Agreement and Promissory Note, dated April 17, 2015, between BFC Financial Corporation and
Bluegreen Specialty Finance, LLC.
9. Amended and Restated Credit Agreement dated as of December 16, 2016, by and among Bluegreen
Corporation, as Borrower and Fifth Third Bank, as Administrative Agent and L/C Issuer.
10. Amended and Restated Security Agreement, dated as of December 16, 2016, by and among Bluegreen
Corporation, as Borrower, Bluegreen Vacations Unlimited, Inc. and Bluegreen Resorts Management, Inc. as
Grantors, and Fifth Third Bank, as Administrative Agent.
11. Fourth Amended and Restated Revolving Promissory Note (Hypothecation Facility) dated September 28,
2017, by and among Bluegreen / Big Cedar Vacations, LLC, as Borrower, and ZB, N.A. dba National Bank of
Arizona, as Lender.
12. Second Amended and Restated Loan and Security Agreement (Hypothecation Facility) dated September
28, 2017, by and among Bluegreen / Big Cedar Vacations, LLC, as Borrower, and ZB, N.A. dba National Bank
of Arizona, as Lender.
13. Second Amended and Restated Promissory Note (Inventory Loan) dated September 28, 2017, by and
among Bluegreen / Big Cedar Vacations, LLC, as Borrower, and ZB, N.A. dba National Bank of Arizona, as
Lender.
IBERIABANK/BBX CAPITAL
SYNDICATED LOAN AND SECURITY AGREEMENT
4833-7494-6387.12
45083/0017
Schedule 8.8-1
14. Second Amended and Restated Loan Agreement (Inventory Loan) dated September 28, 2017, by and
among Bluegreen / Big Cedar Vacations, LLC, as Borrower, and ZB, N.A. dba National Bank of Arizona, as
Lender.
15. Full Guaranty (Hypothecation Facility) dated September 30, 2010, by Bluegreen Corporation, as
Guarantor, in favor of National Bank of Arizona, as Lender.
16. Guarantor Consent and Ratification and Confirmation of and Amendment to Full Guaranty (Hypothecation
Facility) dated September 28, 2017, by Bluegreen Vacations Corporation, as Guarantor, in favor of Z.B.,
National Bank of Arizona, as Lender.
17. Full Guaranty (Inventory Loan) dated December 13, 2013, by Bluegreen Corporation, as Guarantor, in
favor of National Bank of Arizona, as Lender.
18. Guarantor Consent and Ratification and Confirmation of and Amendment to Full Guaranty (Inventory
Loan) dated September 28, 2017, by Bluegreen Vacations Corporation, as Guarantor, in favor of Z.B., National
Bank of Arizona, as Lender.
19. On April 17, 2015, BBX Capital Corporation ("BBX") entered into a Loan Agreement and Promissory
Note with a wholly-owned subsidiary of Bluegreen Corporation ("Bluegreen") pursuant to which Bluegreen's
subsidiary provided an $80 million loan to BBX to finance, in part, BBX's purchase of shares of BBX Capital
Corporation's (formerly BankAtlantic Bancorp, Inc.) (together with its successor by merger, BBX Capital
Florida LLC, "BCC") Class A Common Stock in the tender offer.
20. [In July 2014, BBX Capital Corporation entered into the Hialeah Communities joint venture with CC
Bonterra to develop approximately 394 homes in a portion of the newly proposed Bonterra community in
Hialeah Florida. BBX Capital Corporation transferred approximately 50 acres of land at an agreed upon value of
approximately $15.6 million subject to an $8.3 million mortgage which was assumed by the joint venture. In
March 2015, the joint venture refinanced the $8.3 million mortgage loan into a $31.0 million acquisition and
development loan. In March 2016, the loan was modified reducing the loan balance from $31.0 million to $26.5
million. BBX Capital Corporation is a guarantor of up to $1.5 million of the joint venture's $26.5 million
acquisition and development loan.]
21. During the year ended December 31, 2014, the Sunrise and Bayview Partners, LLC joint venture owned
50% by Procacci Bayview, LLC and 50% by a subsidiary of BBX Capital Corporation refinanced its land
acquisition loan with a financial institution. BBX Capital Corporation provided the financial institution with a
guarantee of 50% of the outstanding balance of the joint venture's loan which had an outstanding balance of
$5.0 million as of December 31, 2017.
22. BBX Capital Corporation is a guarantor on a $1.5 million note payable of Anastasia Confections
("Anastasia"), a wholly-owned subsidiary of BBX Sweet Holdings, owed to the former owner of
Anastasia. The Anastasia note payable is collateralized by the common stock of Anastasia.
23. BBX Sweet Holdings and BBX Capital Corporation are guarantors of a $1.5 million note payable of
Hoffman's Chocolates, a wholly-owned subsidiary of BBX Sweet Holdings, owed to Centennial Bank. This
note payable is collateralized by approximately $2.0 million of properties and equipment.
IBERIABANK/BBX CAPITAL
SYNDICATED LOAN AND SECURITY AGREEMENT
4833-7494-6387.12
45083/0017
Schedule 8.8-2
24. In October 2017, a wholly-owned subsidiary of BBX Capital Corporation, issued a $3.4 million unsecured
note to the seller of real estate to the Chapel Trail joint venture, in which the subsidiary has a 46.75% equity
interest. The unsecured note was part of the subsidiaries initial capital contribution to the Chapel Trail real
estate joint venture. The note is not secured by the joint venture property and BBX Capital Corporation
guarantees the repayment of the unsecured note.
25. On August 7, 2015, BBX Sweet Holdings entered into a Loan and Security Agreement and related
agreements with Iberiabank, which provides for borrowings by BBX Sweet Holdings of up to $5.0 million on a
revolving basis. The facility is secured by the assets of BBX Sweet Holdings and its subsidiaries and is
guaranteed by BBX Capital Corporation.
26. Food for Thought Restaurant Group, LLC enters into lease agreements for MOD restaurant locations. As
of December 31, 2017, BBX Capital Corporation is a guarantor on two of the lease agreements with an
aggregate lease obligation of $1.3 million.
27. Term loan to BBX Sweet Holdings with an outstanding balance of $1.5 million and $1.6 million as of
December 31, 2017 and 2016, respectively, collateralized by land and buildings with a carrying value of $2.0
million on each of December 31, 2017 and 2016. BBX Capital Corporation is the guarantor on this note
payable.
28. In October 2017, a wholly-owned subsidiary of BBX Capital Corporation, issued a $3.4 million unsecured
note to the seller of real estate to the Chapel Trail joint venture, in which the subsidiary has a 46.75% equity
interest. The note is not secured by the joint venture property and BBX Capital Corporation guarantees the
repayment of the unsecured note.
IBERIABANK/BBX CAPITAL
SYNDICATED LOAN AND SECURITY AGREEMENT
4833-7494-6387.12
45083/0017
Schedule 8.8-3
SCHEDULE 8.9(e)
Loans and Advances
1. Tax Sharing Agreement dated as of May 8, 2015, by and among BFC Financial Corporation, BBX Capital
and Bluegreen.
2. BBX pays Abdo Companies, Inc. approximately $25,520 per month in exchange for Abdo Companies,
Inc.’s provision of certain management services. John E. Abdo, the Company’s Vice Chairman, is the principal
shareholder and Chief Executive Officer of Abdo Companies, Inc.
3. Bluegreen paid or reimbursed BBX Capital Corporation $1.5 million, $1.3 million and $1.4 million during
2017, 2016, and 2015, respectively, for management advisory, risk management, administrative and other
services.
IBERIABANK/BBX CAPITAL
SYNDICATED LOAN AND SECURITY AGREEMENT
4833-7494-6387.12
45083/0017
Schedule 8.9(e)-1
Exhibit 12.1
BBX Cap ital Corporation
Computation of Ratio of Earnings to Fixed Charges
(Dollars in thousands)
2017
For the Years Ended December 31,
2014
2015
2016
2013
(In thousands)
$
93,374
78,036
(14,483)
(13,630)
64,683
1,565
64,378
573
96,898
30
12,852
91,743
37,994
9,449
47,443
13,267
77,673
37,243
5,249
42,492
139,186
2.93
120,165
2.83
-
-
-
66,248
42,173
4,536
46,709
112,957
2.42
64,951
47,402
4,271
51,673
116,624
2.26
96,928
50,621
3,593
54,214
151,142
2.79
Earnings Available to Cover
Fixed Charges:
Income before income taxes
(Income) loss from equity
investees
Distributed income to equity
investees
Add: Fixed charges:
Interest on borrowings
Interest portion of rent expense
Total fixed charges (1)
Earnings available to cover fixed
charges
Ratio of earnings to fixed charges
$
$
%
(1)
Consists of interest expense on all indebtedness (including costs related to the amortization of deferred financing costs),
capitalized interest and the portion of operating lease rental expense that is representative of the interest factor.
Subsidiaries of BBX Capital Corporation
Woodbridge Holdings, LLC
BBX Capital Florida, LLC
Eden Services, Inc.
BankAtlantic Financial Ventures II, LLC
I.R.E. Property Analysts, Inc.
I.R.E. Energy 1981, Inc.
Kingsway Services Inc.
Risk Management Services, LLC
BFC/CCC, Inc.
B-D2 Holdings, LLC
B-DJ Holdings, LLC
B-26 Holdings, LLC
D-2 Acquisition
BBX Sweet Holdings, LLC
Food for Thought Restaurant Group – Florida, LLC
Renin Holdings, LLC
LAS Trademark, LLC
Subsidiaries of Woodbridge Holdings, LLC
Bluegreen Vacations Corporation
BXG Florida Corporation
Core Communities of South Carolina, LLC
Carolina Oak Homes, LLC
ODI Program Partnership, LLLP
PF Program Partnership, LP
PF Program GP LLC
Subsidiaries of Bluegreen Vacations Corporation
BBCV Receivables-Q 2010, LLC
Big Cedar JV Interiors, LLC
Bluegreen Asset Management Corporation
Bluegreen Beverage, LLC
Bluegreen Communities of Georgia, LLC
Bluegreen Communities of Texas, LP
Bluegreen Communities, LLC
Bluegreen Corporation of Tennessee
Bluegreen Golf Clubs, Inc.
Bluegreen Guaranty Corporation
Bluegreen HoldCo, LLC
Bluegreen Holding Corporation (Texas)
Bluegreen Louisiana, LLC
Bluegreen Management Resources, LLC
Bluegreen Nevada, LLC
Bluegreen New Jersey, LLC
Bluegreen Properties N.V.
Bluegreen Properties of Virginia, Inc.
Bluegreen Purchasing & Design, Inc.
Exhibit 21.1
Jurisdiction of
Organization
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
So. Carolina
So. Carolina
Florida
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Georgia
Delaware
Delaware
Delaware
Delaware
Florida
Nevada
Delaware
Delaware
Delaware
Delaware
Delaware
Aruba
Delaware
Florida
Bluegreen Receivables Finance Corporation III
Bluegreen Resorts International, Inc.
Bluegreen Resorts Management, Inc.
Bluegreen Resorts of Canada, Inc.
Bluegreen Servicing LLC (f/k/a Bluegreen Florida, LLC)
Bluegreen Southwest Land, Inc.
Bluegreen Southwest One, L.P.
Bluegreen Specialty Finance, LLC
Bluegreen Timeshare Finance Corporation I
Bluegreen Treasury Services, LLC
Bluegreen Vacations Unlimited, Inc.
Bluegreen/Big Cedar Vacations, LLC
BRFC 2010-A, LLC
BRFC 2012-A LLC
BRFC 2013-A LLC
BRFC 2015-A LLC
BRFC 2016-A LLC
BRFC III Deed Corporation
BRFC-Q 2010, LLC
BRM Bahamas Limited
BXG Construction, LLC
BXG Mineral Holdings, LLC
BXG Realty, Inc.
Catawba Falls, LLC
Encore Rewards, Inc.
Family Fun Company, LLC
Great Vacation Destinations, Inc.
Jordan Lake Preserve Corporation
Leisure Capital Corporation
Leisure Communication Network, Inc.
Leisurepath, Inc.
Managed Assets Corporation
New England Advertising Corporation
Outdoor Traveler Destinations, LLC
Pinnacle Vacations, Inc.
Prizzma, LLC
Resort Title Agency, Inc.
SC Holdco, LLC
Select Connections, LLC
TFRI 2013-1 LLC
Subsidiaries of BBX Capital Florida, LLC
BBX Partners, Inc.
BBX Capital Asset Management, LLC
Florida Asset Resolution Group, LLC
BBX Capital Partners, LLC
Subsidiaries of BBX Partners Inc.
Heartwood Partners 1, LLC
Heartwood Partners 2, LLC
Heartwood Partners 3, LLC
Delaware
Delaware
Delaware
Canada
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Florida
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Bahamas
Delaware
Delaware
Delaware
North Carolina
Delaware
Delaware
Florida
North Carolina
Vermont
Delaware
Florida
Delaware
Vermont
Florida
Delaware
Delaware
Florida
Delaware
Delaware
Delaware
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Subsidiaries of BBX Capital Asset Management, LLC
BBX Chapel Trail, LLC
BBX Shingle Creek, LLC
BBX Miramar, LLC
BBX Centra, LLC
FL Cell Tower, LLC
BBX Bonterra Multifamily, LLC
BBX Gardens Multifamily, LLC
BBX Austin, LLC
BBX Hialeah Apartments, LLC
Hialeah Multifamily, LLC
BBX Residential Victoria Park, LLC
Premier Flagler, LLC
Banc Servicing Center, LLC
Fidelity Service, LLC
Fidelity Tax, LLC
Heartwood 3, LLC
Heartwood 4, LLC
Heartwood 7, LLC
Heartwood 11, LLC
FL Billboards, LLC
Heartwood 18, LLC
Heartwood 19, LLC
Heartwood 21, LLC
Heartwood 23, LLC
Heartwood 24, LLC
Heartwood 40, LLC
Heartwood 41, LLC
Heartwood 42, LLC
Heartwood 44, LLC
Heartwood 47, LLC
Heartwood 50, LLC
Heartwood 88, LLC
Heartwood 90, LLC
Heartwood 91, LLC
Heartwood 91-2, LLC
Heartwood 91-3, LLC
Heartwood 91-4, LLC
Heartwood 92, LLC
BBX Grand Central, LLC
BBX Promenade, LLC
Subsidiary of Florida Asset Resolution Group, LLC
Heartwood 58, LLC
FAR Holdings Group, LLC
Subsidiaries of Heartwood 58, LLC
FT Properties, LLC
Sunrise Atlantic, LLC
Heartwood 45, LLC
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Heartwood 56, LLC
Heartwood 57, LLC
Subsidiaries of FAR Holdings Group, LLC
Heartwood 2, LLC
Heartwood 43, LLC
Heartwood 55, LLC
FAR 1, LLC
FAR 2, LLC
FAR 3, LLC
FAR 4, LLC
FAR 5, LLC
FAR 6, LLC
Subsidiaries of BBX Sweet Holdings, LLC
The Hoffman Commercial Group, Inc.
Good Fortunes East, LLC
Boca Bons East, LLC
B&B Bons, LLC
S&F Good Fortunes, LLC
Hoffchoc, LLC
Hoffmans Chocolate, LLC
Brea Enterprises, LLC
Chocolate Acquisition Sub, LLC dba Kron Chocolatier
Las Olas Confections and Snacks, LLC
IT’SUGAR Holdings. LLC
Fantasy Chocolates, Inc.
Jer's Chocolates, LLC
Helen Grace Chocolates, LLC
Droga Chocolates, LLC
Kencraft Confections, LLC
Sweet Acquisitions UT2
Anastasia Confections, Inc.
IT’SUGAR, LLC
Subsidiaries of IT’SUGAR Holdings, LLC
Subsidiaries of IT’Sugar, LLC
IT’Sugar Atlantic City, LLC
IT’Sugar FLGC, LLC
Subsidiaries of Food For Thought Restaurant Group – Florida, LLC
Food For Thought Restaurant Group – LLC
Food For Thought Restaurant Group – Operations, LLC
Subsidiaries of Renin Holdings, LLC
Renin US, LLC
Renin Canada Corporation
Renin UK Corporation
Subsidiaries of Renin Canada Corporation
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
California
California
California
Utah
Utah
Florida
Florida
Delaware
Florida
Florida
Florida
Mississippi
Canada
United Kingdom
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have issued our reports dated March 9, 2018 with respect to the consolidated financial
statements and internal control over financial reporting included in the Annual Report of BBX
Capital Corporation on Form 10-K for the year ended December 31, 2017. We consent to the
incorporation by reference of said reports in the Registration Statements of BBX Capital
Corporation on Forms S-3 (File No. 333-216571 and File No. 333-219178) and on Forms S-8
(File No. 333-197195, File No. 333-206371, File No. 333-215247, File No. 333-215260 and File
No. 333-218265).
/s/ GRANT THORNTON LLP
Fort Lauderdale, Florida
March 9, 2018
Exhibit 31.1
I, Alan B. Levan, certify that:
1)
I have reviewed this annual report on Form 10-K of BBX Capital Corporation;
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: March 9, 2018
By:/s/Alan B. Levan
Alan B. Levan,
Chairman of the Board and
Chief Executive Officer
Exhibit 31.2
I, Raymond S. Lopez, certify that:
1)
I have reviewed this annual report on Form 10-K of BBX Capital Corporation;
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: March 9, 2018
By: /s/Raymond S. Lopez
Raymond S. Lopez,
Chief Financial Officer
Exhibit 32.1
Certification 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 Annual Report on Form 10-K of BBX Capital Corporation (the “Company”) for
the year ended December 31, 2017, as filed with the Securities and Exchange Commission on the date
hereof (the “Report”), I, Alan B. Levan, Chairman of the Board and Chief Executive Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
(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.
/s/ Alan B. Levan
Name: Alan B. Levan
Title: Chairman of the Board and Chief Executive Officer
Date: March 9, 2018
Exhibit 32.2
Certification 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 Annual Report on Form 10-K of BBX Capital Corporation (the “Company”) for
the year ended December 31, 2017, as filed with the Securities and Exchange Commission on the date
hereof (the “Report”), I, Raymond S. Lopez, Chief Financial Officer of the Company, certify, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(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.
/s/ Raymond S. Lopez
Name: Raymond S. Lopez
Title: Chief Financial Officer
Date: March 9, 2018