FINAL EXECUTION COPY

GUARANTOR CONSENT AND RATIFICATION AND CONFIRMATION OF

FULL GUARANTY

 

This Guarantor Consent and Ratification and Confirmation of Guaranty Agreement
(this "Consent") is dated as of May 31, 2011 and is made by BLUEGREEN
CORPORATION, a Massachusetts corporation ("Guarantor").

 

1.         Guarantor hereby acknowledges that:

 

(i)         Guarantor executed and delivered to National Bank of Arizona
("Lender") that certain Full Guaranty dated as of September 30, 2010 (the
"Guaranty Agreement"), pursuant to which Guarantor guaranteed the payment and
performance by Bluegreen/Big Cedar Vacations, LLC, a Delaware limited liability
company ("Borrower") of all the obligations owed by the Borrower to Lender under
or pursuant to the Loan and Security Agreement dated as of September 30, 2010
(the "Loan Agreement"), including, without limitation, the obligations of the
Borrower to the Lender under the Loan.

 

(ii)         Lender and Borrower are entering into that certain Amendment No. 1
to Loan and Security Agreement dated as of even date herewith (the "Amendment
No. 1") in order to amend the Loan Agreement in certain respects. The amendments
made pursuant to the Amendment No. 1 include, without limitation, a readvance by
Lender of up to $5,000,000 of principal Loan proceeds, which principal
advance(s) is identified in the Amendment No. 1 and referred to in this Consent
as Tranche B. Tranche B constitutes a portion of the Loan and is evidenced by
the Note.

 

2.         Guarantor hereby agrees that the Obligations shall include, without
limitation, the obligations of the Borrower under the Amendment No. 1, together
with the other documents and instruments executed in connection therewith, as
further amended from time to time, and shall include the obligation of Borrower
to repay Tranche B, together with interest thereon, in accordance with the
Amendment No. 1, the Loan Documents and the Note. All terms, conditions and
provisions set forth in the Amendment No. 1 and in any of the documents and
instruments executed by the Borrower in connection therewith are hereby
ratified, approved and confirmed. The Guaranty Agreement shall continue
undiminished and in full force and effect, notwithstanding the making of the
foregoing amendments.

 

3.         Except as set forth on Exhibit A attached hereto and incorporated
herein by this reference, Guarantor hereby confirms and restates as if made on
the date hereof each of its representations and warranties contained in the
Guaranty Agreement unless such representations and warranties specifically
related to a specific date in which case Guarantor hereby confirms and restates
such representation and warranty as of such specific date.

 

4.         Guarantor represents and warrants that:

 

 

1

--------------------------------------------------------------------------------

4.1        This Consent and the documents and instruments executed in connection
herewith by Guarantor have been authorized by all necessary action of Guarantor
and, when executed by Guarantor, will be the legal, valid and binding
obligations of the Guarantor, enforceable against it in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting 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).

 

4.2        Guarantor's execution, delivery and performance of this Consent do
not and will not (i) violate Guarantor's Articles of Organization or any law,
rule, regulation or court order to which Guarantor is subject; (ii) conflict
with or result in a breach of any agreement or instrument to which Guarantor is
a party or by which it or its properties are bound, or (iii) result in the
creation or imposition of any lien, security interest or encumbrance on any
property of Guarantor, whether now owned or hereafter acquired, other than liens
in favor of Lender.

 

4.3        It has had the opportunity to consult with counsel and with such
other experts and advisors as it has deemed necessary in connection with the
negotiation, execution and delivery of this Consent. This Consent shall be
construed without regard to any presumption or rule requiring that it be
construed against the party causing this Consent or any part hereof to be
drafted.

 

5.         It is further agreed that:

 

5.1        Section 2(o) of the Guaranty Agreement shall be amended and restated
in its entirety as follows:

 

Guarantor shall maintain a Tangible Net Worth of not less than $322,473,750
which covenant shall (A) be tested as of the last day of the calendar quarter
immediately prior to the Amendment No. 1 Closing and thereafter annually as of
the end of each fiscal year of Guarantor; and (B) increase annually, commencing
April 1, 2012 and continuing on April 1 of each calendar year thereafter, by 25%
of Guarantor's net income, including any net income (loss) attributable to the
non-controlling interest, from the Guarantor's prior fiscal year (the "Measuring
Period"). Guarantor's Tangible Net Worth as of December 31, 2010, was
$429,965,000. For the avoidance of doubt, in no event shall the foregoing
Tangible Net Worth covenant of Guarantor be decreased in the event Guarantor
incurs a net loss in any Measuring Period.

 

5.2        Guarantor will execute and deliver such further instruments and do
such things as in the judgment of Lender are reasonably necessary or desirable
to effect the intent of this Consent and to secure to Lender the benefits of all
rights and remedies conferred upon Lender by the terms of this Consent and any
other documents executed by Guarantor in connection herewith.

 

2

--------------------------------------------------------------------------------

5.3        If any provision of this Consent is held to be invalid, illegal or
unenforceable under present or future laws effective while this Consent is in
effect (all of which invalidating laws are waived to the fullest extent
possible), the legality, validity and enforceability of the remaining provisions
of this Consent shall not in any way be affected or impaired thereby. In lieu of
each such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Consent, a provision that is legal, valid and
enforceable and as similar in terms to such illegal, invalid and unenforceable
provision as may be possible.

 

5.4        THIS CONSENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF ARIZONA WITHOUT GIVING EFFECT TO ITS CONFLICT OF LAWS
PRINCIPLES.

 

5.5        This Consent and the Guaranty Agreement represent the entire
agreement between Guarantor and Lender with respect to the subject matter hereof
and supersede all prior oral and written agreements and representations between
Lender and Guarantor concerning the subject matter hereof. Delivery of an
executed counterpart of this Consent electronically or by telecopy is equally
effective as delivery of a manually executed counterpart of this Consent. This
Consent may be executed in any number of separate counterparts, each of which
when taken together will constitute one and the same instrument notwithstanding
the fact that all parties have not signed the same counterpart.

 

5.6        As used in this Consent, the masculine, feminine or neuter gender,
and the singular or plural number, shall each be deemed to include the others
whenever the context so allows.

 

6.         Unless otherwise defined herein, all capitalized terms used herein
shall have the same meaning as set forth in or as referenced in the Guaranty
Agreement.

 

[Signatures on following page]

 

 

3

--------------------------------------------------------------------------------

SIGNATURE PAGE FOR GUARANTOR CONSENT AND RATIFICATION AND
CONFIRMATION OF FULL GUARANTY

 

  GUARANTOR:       BLUEGREEN CORPORATION, a Massachusetts corporation       By:
___________________________   Name:   Anthony M. Puleo   Title: Senior Vice
President, CFO and Treasurer     Acknowledged and accepted this ___ day of
______________, 2011:       LENDER:       NATIONAL BANK OF ARIZONA, a national
banking association       By: _____________________________________   Name:
___________________________________   Title:
____________________________________           BORROWER:       BLUEGREEN/BIG
CEDAR VACATIONS, LLC, a Delaware limited liability company       By:
_____________________________________   Name:   Anthony M. Puleo   Title: Vice
President and Treasurer  

 

4

--------------------------------------------------------------------------------

EXHIBIT A

 

PENDING LITIGATION AND OTHER PROCEEDINGS

 

In 2005, the State of Tennessee Audit Division (the “Division”) audited certain
subsidiaries within Bluegreen Resorts for the period from December 1, 2001
through December 31, 2004. On September 23, 2006, the Division issued a notice
of assessment for approximately $0.7 million of accommodations tax based on the
use of Bluegreen Vacation Club accommodations by Bluegreen Vacation Club members
who became members through the purchase of non-Tennessee property. Bluegreen
believes the attempt to impose such a tax is contrary to Tennessee law, and has
vigorously opposed, and intends to continue to vigorously oppose, such
assessment by the Division. An informal conference was held in December 2007 to
discuss this matter with representatives of the Division. No formal resolution
of the issue was reached during the conference. On May 31, 2011, Bluegreen
Vacations received a letter dated May 25, 2011 from the State of Tennessee,
Department of Revenue in response to the informal conference (the “Letter”). The
Letter states that the sales tax portion of the assessment is upheld. The Letter
further states that it is in response to the facts and circumstances that were
presented and is not intended as a statement of policy of the State of
Tennessee, Department of Revenue. Bluegreen intends to vigorously contest the
findings of the Letter. While the timeshare industry has been successful in
challenging the imposition of sales taxes on the use of accommodations by
timeshare owners, there is no assurance that Bluegreen will be successful in
contesting the current assessment.

 

In 2006, an interpleader action was brought against Bluegreen Vacations seeking
a determination as to whether Bluegreen Vacations, as purchaser, or the
plaintiffs, as seller, were entitled to the $1.4 million escrow deposit being
maintained with the escrow agent pursuant to a purchase and sale contract for
real property located in Destin, Florida. Both Bluegreen Vacations and the
seller brought cross-claims for breach of the underlying purchase and sale
contract. The seller’s complaint, as amended, includes a fraud allegation,
contends that Bluegreen failed to perform under the terms of the purchase and
sale contract and claims entitlement to the full amount in escrow. Bluegreen
maintains that its decision not to close on the purchase of the property was
proper under the terms of the purchase and sale contract and therefore Bluegreen
is entitled to a return of the full escrow deposit. A trial date of May 31, 2011
has been set for this matter. Bluegreen believes the seller’s allegations are
without merit and intends to vigorously defend this claim.

 

The Office of the Attorney General for the State of Florida (the "AGSF") has
advised Bluegreen that it has accumulated a number of consumer complaints since
2005 against Bluegreen and/or its affiliates related to its timeshare sales and
marketing, and has requested that Bluegreen respond on a collective basis as to
how it had or would resolve the complaints. Bluegreen has determined that many
of these complaints were previously addressed and/or resolved by Bluegreen. The
AGSF has also requested that Bluegreen enter into a written agreement in which
the parties establish a process and timeframe for determining consumer
eligibility for relief (including where applicable monetary restitution, if
any). Bluegreen does not believe this matter will have a material effect on
Bluegreen's results of operations, financial condition or its sales and
marketing activities in Florida.

 

5 

--------------------------------------------------------------------------------

Bluegreen Southwest One, L.P., (“Southwest”), a subsidiary of Bluegreen, is the
developer of the Mountain Lakes subdivision in Texas. A declaratory judgment
action was filed against Southwest in Texas state court through which the
plaintiffs seek to develop their reserved mineral interests in, on and under the
Mountain Lakes subdivision. The property owners association and some of the
individual landowners have filed cross actions against Bluegreen, Southwest and
individual directors of the property owners association related to the mineral
rights and certain amenities in the subdivision as described below. On January
17, 2007, the court ruled that the restrictions placed on the development that
prohibited oil and gas production and development were invalid and not
enforceable as a matter of law, that such restrictions did not prohibit the
development of the plaintiffs’ prior reserved mineral interests and that
Southwest breached its duty to lease the minerals to third parties for
development. The court further ruled that Southwest was the sole holder of the
right to lease the minerals to third parties. Southwest appealed the trial
court’s ruling. On January 22, 2009, the appellate court reversed the trial
court’s decision and ruled in Southwest’s favor and determined that all
executive rights were owned by Southwest and then transferred to the individual
property owners in connection with the sales of land. All property owner claims
were decided in favor of Southwest. It was also decided that Southwest did not
breach a fiduciary duty to the plaintiffs as an executive rights holder. As a
result of this decision, no damages or attorneys’ fees are owed to the
plaintiffs. On May 14, 2009, the plaintiffs filed an appeal with the Texas
Supreme Court asking the Court to reverse the Appellate Court’s decision in
favor of Southwest. On September 15, 2010, the Court heard oral arguments on
whether to reverse or affirm the Appellate Court’s decision. No information is
available as to when the Texas Supreme Court will render a decision on appeal.

 

On September 14, 2009, plaintiffs brought suit against Southwest, Bluegreen
Southwest Land, Inc. and Bluegreen Communities of Texas, L.P., subsidiaries of
Bluegreen, alleging fraud, negligent misrepresentation, breach of contract, and
negligence with regards to the Ridgelake Shores subdivision, developed in
Montgomery County, Texas, specifically, the usability of the lakes within the
community for fishing and sporting and the general level of quality at the
community. The lawsuit sought material damages and the payment of costs to
remediate the lake. On September 10, 2010, a tentative settlement of this matter
was reached pursuant to which Bluegreen agreed to pay $0.3 million to provide
for improvements to the fish habitat and general usability of the lake
environment. The settlement agreement has since been fully executed and as of
December 31, 2010, Bluegreen paid $0.2 million of the agreed upon settlement
payment. Bluegreen has accrued the remaining $0.1 million due. Improvements to
the lake are ongoing and Bluegreen will disburse the remaining funds as they are
needed to complete the improvements.

 

On September 18, 2008, plaintiffs brought suit against Bluegreen Communities of
Georgia, LLC, a Bluegreen subsidiary (“Bluegreen Georgia”), alleging fraud and
misrepresentation with regards to the construction of a marina at the Sanctuary
Cove subdivision located in Camden County, Georgia. Plaintiffs subsequently
withdrew the fraud and misrepresentation counts and filed a count alleging
violation of racketeering laws, including mail fraud and wire fraud. On January
25, 2010, plaintiffs filed a second complaint seeking approval to proceed with
the lawsuit as a class action on behalf of more than 100 persons claimed to have
been harmed by the alleged activities in a similar manner. Bluegreen Georgia has
filed a response with the Court in opposition to class certification. Bluegreen
Georgia has also filed a Motion to Dismiss the lawsuit which the Court converted
to a Motion for Summary Judgment. No decision has yet been made by the Court as
to whether they will certify a class or grant Bluegreen Georgia’s Motion.
Bluegreen denies the allegations and intends to vigorously defend the lawsuit.

 

6 

--------------------------------------------------------------------------------

On June 3, 2010, plaintiffs filed suit against Bluegreen Georgia and Sanctuary
Cove at St. Andrews Sound Community Association, Inc., alleging breach by
Bluegreen Georgia and the community association of a bulk cable TV services
contract at Bluegreen's Sanctuary Cove single family residential community being
developed in Waverly, Georgia. In its complaint, the plaintiffs alleged that
approximately $0.2 million in unpaid bulk cable fees are due from the
defendants, and that the non-payment of fees will continue to accrue on a
monthly basis. Bluegreen and the community association allege incomplete
performance under the contract by the plaintiffs and that the cable system
installed was inferior and did not comply with the requirements of the contract.
The case went to mediation on September 20, 2010, but no resolution was reached.
Both parties have filed Motions for Summary Judgment in connection with the
issue whether the Community Association is a proper party under the lawsuit. A
hearing date of August 11, 2011 has been set to argue those Motions. The
original trial date was postponed in order for Motions to be argued and a new
trial date has not yet been set.

 

7 

--------------------------------------------------------------------------------