PARTIAL TAX REBATE AGREEMENT BETWEEN THE STATE OF UTAH AND ________________________ This Partial Tax Rebate Agreement ("Agreement") is made and entered into this ___day of _____________ 2006 by and between ______________________, a __________ corporation, (hereinafter referred to as the “Company”) and the State of Utah, acting through the Governor’s Office of Economic Development (hereinafter referred to as the “Department” or the “State”). RECITALS A. The Utah State Legislature has determined that fostering and developing industry in the State is a public purpose desirable to assure the welfare of its citizens, the growth of its economy, and adequate employment of its population; and in furtherance thereof, has enacted Utah Code annotated §63-38f-1701, et seq. (2005) (the “Act”). B. Pursuant to the Act, Economic Development Zones may be created by the Department, with the advice from the Board, that satisfy certain requirements of the Act; and Partial Tax Rebates may be given by the State to companies or individuals that generate new state revenues through new commercial projects operating within the Zone. C. A Development Zone has been created and the Company now desires to enter into this Agreement in order to qualify for and obtain Partial Tax Rebates by generating new state revenues, through its new project operating within the Development Zone. Now therefore, State and the Company do hereby agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS 1.1 DEFINED TERMS. As used in this Agreement, the following terms shall have the meanings set forth respectively after each in addition to other terms defined in this Agreement. “Act” has the meaning given in Recital Section A. above. “Administrator” means the Governor’s Office of Economic Development of the State of Utah. Affiliate” means, as to any Person, any other Person, which directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, "control" (and its correlative meanings, "controlled by" and "under common control with") shall mean possession, directly or indirectly, or power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise). 1
“Agreement” means this Agreement, either as originally executed or as it may from time to time be supplemented, modified, amended, restated or extended. “Annual New State Revenue Estimate Report” means the report filed with the Administrator by the Company, detailing the projected amount and type of new state revenue which the Company anticipates creating in the next Partial Rebate Period. “Annual Rebate Report” means the report filed with the Administrator by the Company, detailing the Partial Rebate for which the Company has qualified in the immediately preceding Partial Rebate Period. Company also shall list, describe and set forth on each Annual Rebate Report that it submits to the Administrator the amount of New State Revenues that it claims to have generated during the immediately preceding Partial Rebate Period and a projection indicating the amount and type of New State Revenues anticipated to be claimed for the coming Partial Rebate Period. The Annual Rebate Report must include verifiable evidence in support of the Company’s claim for Partial Rebates. The Annual Rebate Report shall describe with particularity the basis for the Partial Rebate claimed. If the Company believes that any information contained in the Annual Rebate Report qualifies as business confidential information and desires to protect it, the Company must follow the requirement referenced in Section 9.7 hereinafter. “Baseline” means the annual state taxes paid by Company in the year preceding the commencement of this Agreement, including appropriate adjustments. “Board” means the Board of the Governor’s Office of Economic Development. “Commencement Date” means the date the Company instructs the Department to commence the Partial Rebate Period. “Costs” means expenses described in the Project Description, or any relevant change order, that become actual expenses incurred by the Company in completion of the Project. “Default” means any Event of Default and/or any event that, with the giving of notice or passage of time or both, would be an Event of Default. “Department” means the Governor’s Office of Economic Development acting through its director. “Development Zone” means an Economic Development Zone created under Section 63-38f1704. “Dollars”, or “$”, means United States dollars. “Event of Default” means the occurrence of any of the events described in Section 8.1, provided that any requirement for notice or lapse of time has been satisfied. 2
“GAAP” means United States generally accepted accounting principles, consistently applied. “New State Revenues” means incremental new State tax revenues that are generated as a result of new economic commercial projects in a development zone, to include the State's portion of sales and use taxes generated by the projects, and company and employee income taxes derived from the projects, but not to include any portion of sales taxes earmarked for local governments or other taxing jurisdictions eligible for sales tax revenues. “Obligations” means all present and/or future obligations of every kind or nature of Company at any time and/or from time to time owed to the State, under any one or more of the PTR Documents, whether due or to become due, matured or un-matured, liquidated or un-liquidated or contingent or non-contingent including obligations of performance as well as obligations of payment, and including interest that accrues before or after the commencement of any bankruptcy or insolvency proceeding by or against the Company. “Officer” means without limitation any person who is authorized by the Company’s bylaws, operating agreement or other charter documents or pursuant to a delegation of authority in a resolution of its board of directors, managers or other governing body to legally bind the Company and to make written or oral requests to the State for Partial Rebates under this Agreement. “Partial Tax Rebates” (“PTR”) means the State returning to Company, as more fully described in Article III hereof, a portion of the New State Revenues generated by a new commercial project of the Company that, pursuant to this Agreement, has created new economic growth within the Development Zone. “Partial Tax Rebate Period” means a calendar year period of time, or part thereof, for which Partial Rebates are made to Company. Partial Tax Rebate Periods shall primarily be used by the Administrator for monitoring the Company’s continued generation of New State Revenues for purposes of tax rebates and the recapture provisions described in Article IV below. “Person” means any individual or entity, whether trustee, corporation, general partnership, limited partnership, limited liability company, sole proprietorship, joint stock company, trust, unincorporated organization, bank, business association, firm, joint venture, government, governmental agency, or otherwise. “Project” means the project as described in the Project Description, the Project Schedule, the Projected Employment Growth, and Article II. “Project Description” means a detailed description of the Project that will qualify the Company for Partial Rebates, including descriptions of the improvements to be made along with a summary of all one-time, non-recurring costs associated with the construction and development of the Project, which is attached to this Agreement as Attachment A; provided, however, that said description set forth in Attachment A may be amended by Company, in its good faith 3
judgment and in the ordinary course of business, so long as such changes do not materially amend the original scope of the Project except for an expansion of it. “Project Schedule” means the description of the projected dates by which various phases of the Project currently are expected to be completed which schedule is attached to this Agreement as Attachment B. “Projected New State Revenues” means the estimated amount of new revenue to be generated during each Partial Rebate Period as a result of, or in furtherance of, the Project. “PTR Documents” means, collectively, this Agreement, the application, and any other exhibits, certificates, attachments, documents or agreements of any type or nature executed or delivered by Company and/or any one or more of its subsidiaries or Affiliates to the State in any way relating to or in furtherance of this Agreement, in each case either as originally executed or as the same may from time to time be supplemented, modified, amended, restated or extended. “Term of this Agreement” means that period of time beginning on the Commencement Date through the period of years in which the Partial Tax Rebates may be granted (as described in Subsection 3.3(c) below) and ending ten (10) years thereafter. “Total Rebate” means the aggregate amount of Partial Rebates to be granted by the State to the Company pursuant to this Agreement as more fully described in Article III. “Utah Resident” means a person who resides in the State and pays Utah State income taxes. 1.2 ACCOUNTING TERMS. All accounting terms not specifically defined in this Agreement shall be construed in conformity with, and all financial data required to be submitted by this Agreement shall be prepared in conformity with GAAP, applied on a consistent basis, except as otherwise specifically prescribed herein. ARTICLE II PROJECT DESCRIPTION Company intends to establish a business (the “Project”) in __________ County, Utah, which has been designated by the Board as an Economic Development Zone, as more specifically described in Attachment A., “Project Description”; Attachment B., “Project Schedule”; and Attachment C., “Projected Employment and salary growth and other attachments,” which are each attached hereto and by this reference specifically made a part hereof. ARTICLE III PARTIAL TAX REBATES 3.1 PARTIAL TAX REBATES. In reliance upon the representations, warranties and covenants of the Company hereinafter set forth, the State hereby agrees to grant to Company 4
Partial Tax Rebates, subject to this Agreement and in accordance with the balance of this Article III and subject to the following terms and conditions: (a) No Partial Tax Rebates may be paid prior to verification, by the Department, of the New State Revenues upon which the tax rebate is based; (b) Partial Tax Rebates can only be paid on projects that are within the Development Zone;
(c) Partial Tax Rebates can only be paid on projects that bring new, incremental jobs to the State; (d) Projects must involve direct investment within the geographic boundaries of the Development Zone; (e) In order to claim payments representing Partial Tax Rebates of New State Revenues, the Company must: (i) keep supporting records for at least four years after final payment of partial rebates under this part; and (ii) submit to audits for verification of the amounts claimed. (f) Partial Tax Rebates can only be paid for Partial Tax Rebate Periods in which the total salary for each new full time employees hired under this Agreement is equal to or greater than ____% of the ________ County median wage. The median wage for _______ County for 2005 was $__________. 3.2 PAYMENT PROCEDURE FOR PARTIAL TAX REBATES. Payment of Partial Tax Rebates of New State Revenues shall be made in accordance with the following procedures: (a) Within 90 days of the end of each calendar year, the Company shall provide the Department with its Annual Rebate Report (similar to the proposed “Annual Rebate Report” in Attachment D). Attached to the Annual Rebate Report shall be documentation of the New State Revenues the Company claims to have paid to the State directly plus sales taxes paid to vendors for goods and services contracted for within the State during that calendar year, and salary information on all employees that worked at the Project during the year. (b) The documentation shall include the types of taxes and corresponding amounts of taxes paid directly to the Utah State Tax Commission, and sales taxes paid to Utah vendors and suppliers that are indirectly paid to the Utah State Tax Commission; (c) The Department shall have the right to audit the documentation in the Annual Rebate Report submitted by Company together with any and all supporting records. If Company provides supporting records and other necessary assistance in a timely manner and otherwise shows that it has met the disbursement requirements contained herein, then within sixty (60) days of the department’s receipt of the Annual Rebate Report, the State shall (i) approve those Partial Tax Rebates for which Company has duly qualified, but in all events not to exceed the annual percentage Partial Tax Rebate amounts and total Partial Tax Rebate amounts set forth below, or 5
(ii) notify Company in writing of its disapproval of the claimed Partial Rebate and its grounds for doing so. If the State disapproves the claimed Partial Tax Rebate, Company may thereafter submit an amended Annual Rebate Report that addresses the stated basis for disapproving the previously filed Annual Rebate Report. (d) In approving a partial tax rebate for employee state income taxes withheld by the Company, the Department shall apply an automatic 25% deduction, representing the average amount of tax refunds paid to employees by the Utah State Tax Commission. (e) The State shall be under no obligation to approve and release any Partial Tax Rebate funds until Company has fulfilled the requirements of this Article III and each of the conditions precedent listed in Article V. The State's obligation to approve and release any previously undistributed Partial Tax Rebates terminates upon the occurrence or existence of any Event of Default described in Section 8.1 of this Agreement. (f) For the first Partial Tax Rebate payment only, payment to the Company will not be made until after the beginning of the State’s fiscal year, which begins July 1. 3.3 SCHEDULE OF PERCENTAGE REBATE.
(a) Based upon the Company’s commitment to keep its operations for the subject Project in Utah for a minimum of ten years, the State shall rebate to the Company, on a post performance basis, Partial Tax Rebates for a period of ten years. In the event the Company ceases its operations in the State of Utah in less than ten years from the effective date, the obligation of the State to provide Partial Tax Rebates shall cease. (b) The schedule of percentage rebate allowable for each of the ten years of Partial Tax Rebate Periods is as follows:
1
__%
Year Rebate Percentage
2
__%
3
__%
4
__%
5
__%
6
__%
7
__%
8
__%
9
__%
10
__%
Rebate percentages in later years are subject to reduction to ensure that the cumulative rebate does not exceed 30% of New State Revenues over the life of the Project. Total cumulative rebate to Company for the period of this Agreement may not exceed $______________. A “Projected Rebate Schedule” is shown in Attachment E. (c) The Company shall notify the Department, in writing, as to the date it desires for the commencement of the rebate period. If the commencement date is other than the start of the calendar year, the Partial Tax Rebates of New State Revenues shall be calculated over the time beginning on the commencement date through the last date of that calendar year, for the first or stub year. Thereafter, Partial Tax Rebates shall be calculated and rebated on a calendar year 6
basis until the end of the Term of this Agreement. If the commencement date is other than the start of the calendar year, the Term of this Agreement will extend through the final stub period to complete the full term of the Agreement. 3.4 REPORTING OF ESTIMATES OF NEW STATE REVENUES: Estimates of New State Revenues shall be made in accordance with the following procedures: (a) On or before September 1st of each calendar year, the Company shall provide the Department with its Annual New State Revenue Estimate Report. Attached to the Report shall be documentation of the New State Revenues the Company anticipates creating in the next calendar year as well as updates for previously reported Partial Rebate Periods. (b) The documentation shall include the types of taxes and corresponding amounts of taxes anticipated to be paid directly to the Utah State Tax Commission, and sales taxes anticipated to be paid to Utah vendors and suppliers that are indirectly paid to the Utah State Tax Commission. (c) The Department shall have the right to audit the documentation in the Annual New State Revenue Report submitted by Company together with any and all supporting records. (d) Once the Department has approved the Company's Annual New State Revenue Report, the Department shall submit to the Utah Division of Finance, the Governor's Office of Planning and Budget, and the Office of Legislative Fiscal Analyst revenue estimates to be included in State budget revenue forecasts as directed in UCA 63-38f-1309(5)(a)(i). ARTICLE IV RECAPTURE OF PARTIAL TAX REBATE In the event that Company should for any reason cease operating the Project at any time in such manner that the aggregate of Partial Tax Rebates granted up to the date operations ceased exceed 30% of New State Revenues, the State shall be entitled to recapture from Company the amount of such excess. In the event Company defaults or does not fulfill the terms of this Agreement (and fails to cure such default), or leaves the State of Utah, or ceases operations in the State of Utah, this Agreement ends. If Company has received more money (rebates) than it is entitled to, Company will pay that amount to the Utah State Department of Finance within 30 days of the end of this Agreement. Provisions of this Article shall apply to a surviving entity in the event of a merger or acquisition of the Company, if it keeps its operations in the State of Utah during the period of this Agreement. ARTICLE V CONDITIONS PRECEDENT TO DISBURSEMENT 7
The obligation of the State to disburse any funds under this Agreement is subject to Company's satisfaction and completion of all of the following conditions precedent, each of which shall be satisfied and completed (as determined promptly and in good faith by the State) prior to or concurrently with the payment and release by the State of any Partial Tax Rebate Disbursement: 5.1 NO CHANGE. No material adverse change shall have occurred in the business, operations, condition (financial or otherwise) or prospects of Company in the State, taken as a whole, since the date hereof. 5.2 NO DEFAULT. No Default shall have occurred and be continuing.
5.3 CERTIFICATE OF COMPLIANCE. An authorized Officer of Company shall execute and deliver to the State a certificate of compliance, the form of which is attached hereto as Attachment F, certifying that: (a) Company is not in Default in the performance of any of its covenants or agreements contained in any PTR Document. (b) Company 's representations and warranties contained in this Agreement are true and correct as of the date of the certificate of compliance. (c) The conditions specified in Sections 5.1 of this Agreement are true and accurate.
(d) Company has not engaged any person to find a location out of the State to move or relocate the Project (and/or the business functions conducted at the Project) nor has Company entered into any agreement with respect to the same; provided, however, Company shall have the right to move certain specific lines, products and operations (but not all or substantially all of the Project) out of State based upon then-current or projected economic, market and technologically conditions. If Company moves lines, certain operations or all or part of Project out of Utah, then State has the right to refigure or reduce the future amount of incentives under this Agreement to reflect the current status of the Project. (e) In light of present economic, market and technological conditions, Company has no present plans or intentions to relocate all or any part of the Project (and/or the business functions conducted at the Project) outside of the State. (f) If Company has such plans or intentions to relocate all or any part of the Project, the authorized Officer of Company shall provide a description of these plans and intentions together with Company 's best estimate of the amount of any recapture that the State would be entitled to receive under Article IV of this Agreement. ARTICLE VI REPRESENTATIONS AND WARRANTIES 8
To induce the State to make each and any of the Partial Tax Rebate Disbursements, Company hereby represents and warrants to the State that: 6.1 EXISTENCE AND QUALIFICATION; POWER. Company is a corporation duly formed and validly existing under the laws of the State of __________________ and is in good standing and is duly qualified to do business in the State of Utah. Company has all requisite power and authority to conduct its business, to own and lease its properties in the State of Utah and to execute, deliver and perform all of its obligations under the PTR Documents. 6.2 AUTHORITY: COMPLIANCE. The individuals executing this Agreement and the other PTR Documents on behalf of Company are duly authorized to do so. The execution, delivery and performance by Company of the PTR Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary action, and do not and will not: (a) Require any consent or approval not heretofore obtained of any director, stockholder, creditor or any other Person; (b) Violate or conflict with any provision of Company's charter, organizational documents, or amendments thereto, as applicable; (c) Violate or conflict with any provision of any agreement, note, lease or instrument to which it is a party; (d) Violate any provision of any federal, state or local law, rule or regulation; and Company is not in default under any law, order, writ, judgment, injunction, decree or award or any indenture, agreement, note, lease or instrument in any respect that is materially adverse to the interests of the State or that would have any material adverse effect on the business, operations or condition (financial or otherwise) of Company in the State taken as a whole or its compliance with this Agreement. 6.3 COMPLIANCE WITH LAW. Company is in compliance with all laws and other legal requirements applicable to its business in the State, has obtained authorizations, consents, approvals, orders, licenses and permits from and has accomplished all filings, registrations and qualifications with, or obtained exemptions from any of the foregoing from, any governmental agency in the State that are necessary for the transaction of its business in the State, except where the failure so to comply, file, register, qualify or obtain exemptions would not have a material adverse effect on the business, operations or condition (financial or otherwise) of Company in the State taken as a whole. 6.4 FINANCIAL STATEMENTS. Company has furnished to the State the consolidated balance sheet of Company for its fiscal year ended 2004 and consolidated statements of profit and loss and of changes in financial position of Company for its fiscal year then ended. Such 9
financial statements fairly represent the financial condition, results of operations and changes in financial position of Company as of such date and for such period, in conformity with GAAP. 6.5 BINDING OBLIGATIONS. Each of the PTR Documents to which Company is a party will, when executed and delivered by Company, constitute the legal, valid and binding obligation of Company, enforceable against Company in accordance with its terms. 6.6 DISCLOSURE. No written statement made by Company to the State in connection with this Agreement or Company 's application for Partial Tax Rebate funds contains any untrue statement of a material fact or omits a material fact necessary to make the statement made not misleading. To the best knowledge of Company there is no fact which Company has not disclosed to the State in writing which materially and adversely affects nor, so far as Company can now foresee, is reasonably likely to prove to affect materially and adversely the business, operations, properties, prospects, profits or condition (financial or otherwise) of Company in the State taken as a whole or the ability of Company to perform its obligations under the PTR Documents. 6.7 NO MATERIAL ADVERSE CHANGES. Since December 19, 2005, Company has not suffered any one or more changes in its condition (financial or otherwise) or its assets, properties, liabilities, or prospects, which alone or in the aggregate would be materially adverse to Company’s operations in the State, taken as a whole, and Company has operated its business only in the usual and ordinary course. 6.8 INSOLVENCY AND RELATED MATTERS. Company is able to pay its debts as they mature, and has not: (a) made any assignment for the benefit of creditors; (b) admitted in writing its inability to pay its debts as they mature; (c) applied for or consented to the appointment of a receiver, trustee or similar official for its affairs; or (d) been the subject of any bankruptcy, insolvency, reorganization or liquidation proceeding, or any other proceeding for relief under any bankruptcy law or any law for the relief of debtors or benefit of creditors. 6.9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties contained herein or in any certificate, attachment, schedule or other writing delivered by or on behalf of Company shall survive at least two years after the final portion of the Total Partial Tax Rebate Disbursements has been made. ARTICLE VII AFFIRMATIVE COVENANTS During the Term of this Agreement, unless the State otherwise consents in writing, Company shall fully perform and satisfy the following obligations: 7.1 STATEMENTS AND REPORTS. Company shall deliver to the State at Company’s sole expense: (a) As soon as available, and in no event later than 90 days after the close of each calendar 10
year: (i) consolidated balance sheets of Company as of the end of such calendar year, setting forth in comparative form the corresponding figures as of the end of their preceding fiscal year; and (ii) consolidated statements of profit and loss and of changes in financial position of Company for such fiscal year, setting forth in comparative form the corresponding figures for their previous fiscal year, all in reasonable detail. Such balance sheets and profit and loss statements shall be prepared in accordance with GAAP, consistently applied, and shall be accompanied by a report of an independent auditor, if the above financial statements have been audited. (b) The State has the right to audit the Company’s books to check for compliance with this Agreement. (c) Immediately upon becoming aware of the existence of any condition or event which does or could constitute a Default, a written notice specifying the nature and period of existence thereof and what action Company is taking or proposes to take with respect thereto. (d) Provide to the State after any reasonable request such other data and information regarding Company, its’ affiliates and/or the Project to the extent it relates to Company’s operations in the State. If Company desires to protect the confidentiality of any information supplied, Company shall file a business confidentiality claim as set forth in Section 9.7 hereinafter. (e) As soon as available, and in no event later than ninety (90) days after the end of each calendar year, the Annual Rebate Report shall be submitted to the Administrator. (f) It is expressly agreed by the parties that the Administrator shall determine the manner of recognizing and accounting for Partial Rebates claimed by Company, but only in a manner consistent with this Agreement. Upon receipt by the State of the Annual Rebate Report, the Administrator or his or her staff shall review such report and to the extent required, may request additional information from Company which is reasonably necessary to determine the validity of any claimed Rebates. Company agrees to promptly provide all such information to the State. To the extent that the Administrator or his or her staff is still unable to reasonably verify the accuracy of any claimed Rebates, the Administrator shall cause its internal auditor to audit the amount of such claimed Rebates. Company shall reasonably cooperate with such audit, but the costs thereof shall be paid by the State. If upon the completion of such internal audit, there is a dispute between the Administrator and the Company as to the validity of any claimed Rebates, the Administrator may select and hire an independent auditor to audit the amount of such Partial Rebates claimed by Company. Company will pay any and all costs associated with the employment of such independent auditor upon presentation of the State's invoice and supporting information for the same. The independent auditor will be required to sign a confidentiality agreement that provides that release of any information obtained in the audit is limited to release to Company and to the State. If Company desires to protect the confidentiality of any information supplied to the State, as part of any audit Company shall file a business confidentiality claim as set forth in Section 9.7 hereinafter. Any Rebates claimed by Company that are not supported by the foregoing audit procedures shall be disallowed. If such 11
disallowance results in a determination that Company has received Partial Rebates in excess of those earned, Company shall repay the disallowed portion of the Partial Rebate(s) to the State pursuant to Article IV above. (g) At least a 180-day prior written notice containing a summary and description of any plans, agreements, letters of intent, offers, solicitations or intentions by or to Company to (i) move or relocate the Project and/or a significant portion of the business functions conducted at the Project out of the State, (ii) sell, rent or license the Project, or (iii) discontinue, sell, cease operating or terminate the Project and/or a significant portion of the business functions conducted at the Project. If changes above described occur, the State has the right to reallocate or reduce incentives given to Company. 7.2 REVISIONS OR UPDATES TO ATTACHMENTS. Should any of the information or disclosures provided in Attachments A through G originally attached hereto become outdated or incorrect in any material respect, at the time of and in connection with each request for disbursement, Company shall provide to the State such revisions or updates to such Attachments as may be necessary or appropriate to update or correct such Attachments. However, no such revisions or updates to any Attachments shall be deemed to have amended, modified or superseded such Attachments as originally attached hereto, or to have cured any breach of any warranty or representation resulting from the inaccuracy or incompleteness of any such Attachments, unless and until the State in its sole but reasonable discretion, shall have accepted in writing such revisions or updates to such Attachments. 7.3 PRESERVATION OF EXISTENCE. Company shall preserve and maintain its existence, licenses, rights, franchises and privileges in the jurisdiction of its formation and all authorizations, consents, approvals, orders, licenses, permits or exemptions from, or registrations with, any governmental agency that are necessary for the transaction of its business, and qualify and remain qualified to transact business in the State and in the jurisdiction of incorporation. 7.4 COMPLIANCE WITH LAWS. Company shall comply with the requirements of all applicable laws and orders of any governmental agency in the State or elsewhere, noncompliance with which could materially adversely affect the business, operations or conditions (financial or otherwise) of Company. 7.5 KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Company shall keep adequate records and books of account reflecting all financial transactions relating to the Project in conformity with GAAP. 7.6 NO TRANSFER OF PROJECT. Company shall not sell, rent, license, transfer, convey or assign its rights, interests and titles in the Project, a significant portion of the business functions conducted at the Project and/or the Project's assets (excluding sales or transfers of the Project's assets in the ordinary course of business) during the period of this Agreement beginning with the payment of the first Partial Tax Rebate disbursement without: (i) the buyer's assumption of Company 's duties and obligations described in this Agreement which assumption shall not 12
relieve Company of its duties to insure full performance hereunder, and (ii) the State receiving prior notice at the time Company is aware of the said event. ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES 8.1 EVENTS OF DEFAULT. The existence or occurrence of any one or more of the following events, whatever the reason thereof, shall constitute an Event of Default: (a) Company 's failure to repay any recapture under Article IV above, or any portion thereof, or any other amount due to the State under this Agreement when due. (b) Any failure by Company to notify the State of a Default as required by this Agreement.
(c) Company’s failure to perform or observe any other term, covenant or agreement contained in any PTR Document required to be performed or observed by it within thirty (30) days after the State has given Company notice of such Default, or such longer time as the parties mutually agree. (d) If any representation, warranty or covenant made by Company in this Agreement, in any PTR Document or in any certificate, agreement, instrument or other document made or delivered by Company pursuant to or in connection with any PTR Document proves to have been incorrect in any material respect when made or in any respect that is adverse to the interests of the State. (e) If Company terminates or discontinues daily operations or moves or relocates the Project or a significant portion of the business functions conducted at the Project out of the State prior to the end of the final Partial Rebate Period. (f) If any PTR Document, at any time after its execution and delivery and for any reason other than the agreement of the State or expiration of the Term of this Agreement, ceases to be in full force and effect or is declared by a court of competent jurisdiction to be null and void, invalid or unenforceable in any respect, or if Company denies that it has any or further obligation under any PTR Document, or purports to revoke, terminate or rescind the same. (g) If Company is the subject of an order for relief in a bankruptcy case, or is unable or admits in writing its inability to pay its debts as they mature, or makes an assignment for the benefit or creditors. (h) If there is an appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for Company, either upon Company's petition or consent or if such person is appointed without Company's consent and the appointment continues un-discharged or un-stayed for thirty (30) calendar days if filed by Company and ninety (90) days if without Company’s consent. 13
(i) If any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, custodianship or conservatorship is instituted with or without the consent of Company and continues un-dismissed or un-stayed for ninety (90) calendar days. (j) If any judgment, writ, warrant, attachment, execution or similar process is issued or levied against all or any material part of the Project and is not released, vacated or fully bonded within ninety (90) calendar days after its issue or levy. (j) If Company is dissolved, liquidated or all or substantially all of the assets of Company are sold, licensed or otherwise transferred (other than to an Affiliate) in violation of the provisions of this Agreement without the written consent of the State. 8.2 REMEDIES UPON EVENT OF DEFAULT. Without limiting any other rights or remedies of the State provided for elsewhere in this Agreement at law or in equity, by statute, by regulation, by common law or otherwise: (a) Upon the occurrence of any Default or Event of Default the State may refuse to grant any Partial Rebates claimed by Company until such Default or Event of Default is cured, regardless of whether such Partial Rebates were claimed before or after the Default or Event of Default. (b) Upon the occurrence of any Event of Default, the State without notice to or demand upon Company may proceed to protect, exercise and enforce its rights and remedies under the PTR Documents against Company and such other rights and remedies as are provided at law or in equity. (c) The order and manner in which the State's rights and remedies are to be exercised shall be determined by the State in its sole discretion, and all payments received by the State shall be applied first to the reasonable costs and expenses of the State, second to the payment of accrued and unpaid interest due to and including the date of such payment, and third, to the payment of all unpaid amounts due under this Agreement. No application of partial payments will cure any Event of Default, or prevent the exercise, or continued exercise, of rights or remedies of the State hereunder, or at law, or in equity. (d) Upon the occurrence of any event that would be an Event of Default under Section 7.1(g) with the passage of time, the State may take such action as it deems necessary to protect the interests of the State under the PTR Documents. (e) Upon the occurrence of any Event of Default, the State, or any employee, agent or representative thereof, may have reasonable access to examine, audit and make copies and abstracts from the records and books of account of Company regarding the Project and may visit and inspect the Project during reasonable business hours upon reasonable notice and, upon request, Company will furnish promptly to the State true copies of all documents and other information that has been disclosed to the U.S. Securities and Exchange Commission, or should have been disclosed to the U.S. Securities and Exchange Commission or to other governmental 14
agencies. ARTICLE IX MISCELLANEOUS 9.1 CUMULATIVE REMEDIES; NO WAIVER. The rights, powers, privileges and remedies of the parties provided herein are cumulative and not exclusive of any right, power, privilege or remedy provided at law or in equity. No failure or delay on the part of a party in exercising any right, power, privilege or remedy may be, or may be deemed to be, a waiver thereof; nor may any single or partial exercise of any right, power, privilege or remedy preclude any other or further exercise of the same or any other right, power privilege or remedy. The terms and conditions of Article V hereof are inserted for the sole benefit of State and the State may waive them in whole or in part, with or without imposing other terms or conditions. 9.2 AMENDMENTS; CONSENTS. No amendment, modification, supplement, extension, termination or waiver of any provision of this Agreement and no approval or consent thereunder, and no consent to any departure by Company therefrom may in any event be effective unless approved in writing signed by the Parties. 9.3 NOTICES. All written notices, demands and requests of any kind which any party may be required or may desire to serve upon the other party hereto in connection with this Agreement may be delivered by next business day courier or other means of personal service, or by registered or certified mail. Any such notice or demand so delivered by registered or certified mail shall be deposited in the United States mail, or in the case of courier, deposited with the courier, with postage thereon fully prepaid. All notices shall be addressed to the parties to be served as follows: If to the State: Martin Frey Managing Director Governor’s Office of Economic Development 324 South State Suite 500 Salt Lake City, Utah 84111 If to the Company: ________________ ________________ ________________ ________________ Service of any such notice or demand by mail so made shall be deemed complete three (3) days after deposit in the United States Postal Service with postage attached as shown or the date of actual delivery, whichever is earlier. Service of any such notice or demand by next business day courier so made shall be deemed complete one business (1) days after deposit with such courier 15 With a copy to: William Loos, Esq. Assistant Attorney General Office of Agency Council 324 South State Suite 500 Salt Lake City, Utah 84111
or the date of actual delivery, whichever is earlier. Any party hereto may from time to time by notice in writing served upon the other as aforesaid designate a different mailing address or a different or additional person to which all such notices or demands thereafter are to be addressed. 9.4 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon the parties and their respective successors and assigns. Company shall have the right to transfer or assign its rights and obligations under this Agreement to any Affiliate. 9.5 NON-LIABILITY OF THE STATE. Company acknowledges and agrees that:
(a) By accepting or approving anything required to be observed, performed, fulfilled or given to the State pursuant to this Agreement, including any certificate, financial statement, insurance policy or other document, the State shall not be deemed to have warranted or represented the sufficiency, legality, effectiveness or legal effect of the same, or of any term, provision or condition thereof, and such acceptance or approval thereof shall not constitute a warranty or representation to anyone with respect thereto by the State; (b) The relationship between Company and the State is and at all times will be and remain solely that of a grantee and grantor of financial assistance. The State shall not under any circumstance be construed to be a partner or joint venturer of Company. The State shall under no circumstance be deemed to be in a relationship of confidence or trust or a fiduciary relationship with Company, or to owe any fiduciary duty to Company. The State does not undertake or assume any responsibility or duty to Company to select, review, inspect, supervise, pass judgment upon or inform Company on any matter in connection with their property; Company shall rely entirely upon its own judgment with respect to such matters; and any review, inspection, supervision, exercise of judgment or supply of information undertaken or assumed by the State in connection with such matters is solely for the protection of the State and neither Company nor any other person is entitled to rely thereon; and (c) The State shall not be responsible or liable to any person for any loss, damage, liability or claim of any kind relating to injury or death to Persons or damage to property caused by the actions, inaction or negligence of Company and Company hereby indemnifies and holds harmless the State from any such loss, damage, liability or claim. 9.6 NO THIRD PARTIES BENEFITED. This Agreement is made for the purpose of defining and setting forth certain obligations, rights and duties of Company and the State in connection with Partial Tax Rebates and is made for the sole protection of Company and the State, and the State's successors and assigns and the Company’s successors and permitted assigns. Except as provided in Section 9.4, no other Person shall have any rights of any nature hereunder or by reason hereof. 9.7 CONFIDENTIALITY. The parties understand and agree that access to records prepared, owned, received, or retained by the State is governed by the Utah Governmental Records Access and Management Act ("GRAMA"), Utah Code Ann. Section 63-2-101, et seq. Company may 16
protect the confidentiality of any document it supplies to the State to the extent allowed by GRAMA if: (1) Company makes a written claim of business confidentiality under Section 63-2308, and (2) one or more of the exceptions noted in Section 63-2-304 apply. If the State determines that a record claimed to be confidential and protected under Section 63-2-308 and Section 63-2-304 should be released, Company has the right to appeal the decision to release the record pursuant to Section 63-2-401 to 405. Any decision to release confidential records may be reviewed by the State Records Committee and/or the District Court of the State of Utah. 9.8 ENTIRE AGREEMENT. This Agreement, all other PTR Documents dealing with Company on this specific Project, and any document or instrument executed and delivered pursuant to this Agreement constitute and are intended to constitute the complete, entire and final agreement of the parties regarding the subject matter hereof and expressly supersede all prior agreements, written or oral, regarding the subject matter. In the event of any conflict between provisions of this Agreement and those of any other PTR Document, the provisions of this Agreement shall control and govern; provided that the inclusion of supplemental rights or remedies in favor of the State in any other PTR Document shall not be deemed a conflict with this Agreement. 9.9 GOVERNING LAW. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Utah. 9.10 SEVERABILITY. Any provision in this Agreement that is held to be inoperative, unenforceable or invalid in whole or in part as to any party or in any jurisdiction shall, as to that party or jurisdiction, be inoperative, unenforceable or invalid to such extent without affecting the remaining provisions or the operation, enforceability or validity of that provision as to any other party or in any other jurisdiction. 9.11 HEADINGS. Article and Section headings in this Agreement are included for convenience of reference only and are not part of this Agreement for any other purpose. 9.12 CHOICE OF FORUM. Except as otherwise expressly provided, the parties agree, consent to and intend that the proper and exclusive forum for any litigation of any disputes or controversies arising out of or related to the PTR Documents, together with personal jurisdiction over each of the parties, shall be a court of competent jurisdiction located in the State of Utah, County of Salt Lake. 9.13 INABILITY TO BIND THE STATE. Company shall have no authorization, express or implied, to bind the State to any agreement, settlement, liability, or understanding whatsoever, nor to perform any acts as agent for the State. 9.14 ATTORNEYS FEES AND OTHER EXPENSES. Notwithstanding any other provision of this Agreement, if any legal action or other proceeding is brought for the enforcement, clarification or interpretation of this Agreement, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Agreement, the successful 17
or prevailing party shall be entitled to recover reasonable attorneys' fees, and any other fees and costs incurred in the action or proceeding, in addition to any other relief to which such party may be entitled. 9.15 TERM AND TERMINATION. This Agreement is effective as of the date set forth in the first paragraph of this Agreement above, and shall continue until the end of the final Rebate Disbursement Period, or until the State has finally approved the last payment under this Agreement, whichever is later. The Rebate Period shall commence upon the “Commencement Date” given to the Department by the Company, and shall continue for a period no longer than ten (10) years. Notwithstanding anything else contained herein, this Agreement may terminate before the conclusion of the final Rebate Disbursement Period if: (i) Company has been duly awarded all of the Rebate Proceeds, or (ii) Company is in Default of any of the terms and provisions of this Agreement, subject to the right of recapture provided for in Article IV. 9.16 ACQUISITIONS AND MERGERS. The Company agrees that the provisions of this Agreement pertaining to recapture of Partial Tax Rebates, as specified in Article IV, shall apply to a surviving business entity in the event that Company merges with another entity, acquires another entity, or is acquired by another entity.
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INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this Agreement to be duly executed as of the date first above written. THE STATE OF UTAH _________________ (Company)
____________________________ Martin Frey Managing Director Governor’s Office of Economic Development ____________________________ Jason P. Perry Director Governor’s Office of Economic Development Approval for Funding
___________________________________ Name / Position
_____________________________ Stanley Nance Finance Manager Governor’s Office of Economic Development Approval for Expenditure
_____________________________ Contract Number State of Utah Division of Finance Attachments ATTACHMENT A Project Description ATTACHMENT B Project Schedule ATTACHMENT C Projected Employment and Salary Growth ATTACHMENT D Proposed Form of Annual Rebate Report ATTACHMENT E Projected Rebate Schedule ATTACHMENT F Certificate of Compliance ATTACHMENT G Disclosure Authorization
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ATTACHMENT A PROJECT DESCRIPTION
20
ATTACHMENT B PROJECT SCHEDULE
21
ATTACHMENT C PROJECTED EMPLOYMENT AND SALARY GROWTH
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ATTACHMENT D ANNUAL REBATE REPORT
COMPANY NAME____________________________________ YEAR ENDING ______
NEW STATE REVENUES GENERATED AND CALCULATION OF REBATE AMOUNT
(A) Employee State Income Taxes withheld and remitted to State Tax Commission (B) Less 25% Refund Reduction (C) Net employee state income taxes (A-B) (D) State’s portion of sales taxes paid to Utah vendors and suppliers (E) State’s portion of Sales Taxes collected and remitted to Utah State Tax Commission (F) Company Income Taxes Paid to Utah State Tax Commission (G) Total of lines C+D+E+F (H) Less State Tax Revenues paid for full year prior to Commencement Date minus reduction of employee tax refunds for State Income Taxes withheld (I) Incremental New Direct State Revenues (G-H) (J) Percentage Rebate allowable (K) Rebate Amount (IxJ)
$_____________________
$_____________________ $_____________________ $_____________________
$____________________
$_____________________
$_____________________
$_____________________ $_____________________ ______________________% $_____________________
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ATTACHMENT E PROJECTED REBATE SCHEDULE
(Unaudited Financial Information) Projected New State Revenue and Partial Rebate Schedule (Thousands of Dollars, except as noted)
Year Project Data
1 2006 0 $0 $0
2 2007 0 $0 $0
3 2008 0 $0 $0
4 2009 0 $0 $0
5 2010 0 $0 $0
6 2011 0 $0 $0
7 2012 0 $0 $0
8 2013 0 $0 $0
9 2014 0 $0 $0
10 2015 0 $0 $0 Total 0 $0 $0
Employment (Jobs) Total Wages Average Wage (Dollars) New State Revenue Individual Income Tax Corporate Income Tax Sales Tax * Total Partial Rebate Partial Rebate Rate Partial Rebate Amount
$0 $0 $0 $0
$0 $0 $0 $0
$0 $0 $0 $0
$0 $0 $0 $0
$0 $0 $0 $0
$0 $0 $0 $0
$0 $0 $0 $0
$0 $0 $0 $0
$0 $0 $0 $0
$0 $0 $0 $0
$0 $0 $0 $0
0% $0
0% $0
0% $0
0% $0
0% $0
0% $0
0% $0
0% $0
0% $0
0% $0
0% $0
Ten-Year Project Life Rebate Limitations per Statute: No more than 30% rebate over the life of the project. Terms of Rebate: Cumulative dollar rebate cap: $_______________ Baseline of Utah Taxes Paid: Only increment above baseline tax is eligible for rebate. Percentage per Year: Rebate schedule governed by specific rebate percentage for each year of the contract period. Performance Based: Illustrative examples of rebate at varying performance levels based on fiscal impact model estimates. Payment Sequence: Rebate payment occurs in year subsequent to year in which new state revenues are generated. Recapture Avoidance: Rebate percentages in latter years are subject to reduction to meet the rebate cap of 30% over the life of the project. Assumptions: See Fiscal Impact Questionnaire (FIQ) provided by the company. *Paragraphs D+E of attachment D.
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ATTACHMENT F CERTIFICATE OF COMPLIANCE
The undersigned,__________________________, the____________________________________________ name of officer title of officer of_____________________, a _______________________________________________________________ name of applicant state or country, [corporation, limited liability company, partnership, limited partnership or sole proprietorship] ("Applicant"), hereby certifies to the State of Utah, acting through the Governor’s Office of Economic Development as Administrator of the Economic Development Zones Tax Incentive Fund (hereinafter referred to as the "State") pursuant to Section 5.3 of the Agreement ("Agreement") dated the ______________________________, by and between Applicant and the State, as follows: 1. I am the __________________________[title] of Applicant.
2. Any capitalized terms otherwise not defined in this Certificate of Compliance shall have the meanings given to them in the Agreement. 3. Applicant is not in Default in the performance of any of its covenants or agreements contained in any agreements with the State of Utah. 4. Applicant's representations and warranties contained in the Agreement are true and correct as of the date of this Certificate of Compliance set forth below. 5. The conditions specified in Sections 5.1 and 5.2 of the Agreement are true and accurate.
6. Applicant has not engaged any person to find a location out of the State to move the Project (and/or the business functions conducted at the Project) nor has Applicant has entered into any agreement with respect to the same. 7. Applicant has no present plans or intentions to relocate all or any part of the Project (and/or the business functions conducted at the Project) outside the State.
IN WITNESS WHEREOF, this Certificate of Compliance is executed this ______day of _______________ 2005. _________________________________________ Name of Applicant _________________________________________ Signature
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ATTACHMENT G
Authorization to Disclose Records _________________, a _____________ Corporation, (Company) registered and qualified to conduct business in Utah authorizes the Utah State Tax Commission (“USTC”) to provide the Governor’s Office of Economic Development with copies of returns and reports filed by Company with USTC: 1. for the tax period ending December 31, 2006 and in future years but only for the years in which company is seeking a disbursement from the Governor’s Office of Economic Development under agreement dated __________________________.
Notarized Signature
Title______________________________
Date______________________
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