EXHIBIT 10.28
PREMIUM TAX MORATORIUM AGREEMENT
BETWEEN SOUTH CAROLINA DEPARTMENT OF REVENUE AND TAXATION
AND SAFE AUTO INSURANCE COMPANY
AUGUST 31, 2004
PREMIUM TAX MORATORIUM AGREEMENT
This PREMIUM TAX MORATORIUM AGREEMENT ("Agreement") is made as of
August 31, 2004 between the South Carolina Department of Revenue (the
"Department") and SAFE AUTO INSURANCE COMPANY (the "Taxpayer").
WITNESSETH:
WHEREAS, Section 12-6-3365 of the Code authorizes the Department to
enter into an agreement utilizing the procedure in Section 12-6-2320(B) of the
Code establishing a moratorium on state insurance premium taxes imposed
pursuant to Chapter 7 of Title 3 8 of the Code for either ten or fifteen
taxable years beginning the first full taxable year after the Taxpayer
qualifies; and,
WHEREAS, to qualify for the moratorium on state insurance premium
taxes, the following criteria must be met: 1) the taxpayer must create and
maintain at least 100 full-time new jobs at a facility of a type identified in
Section 12-6-3360(M) of the Code, 2) the facility must be located in a county
with an average annual unemployment rate of at least twice the state average
during the last twenty-four months, based on the unemployment rate data on
November 1st or in a county that is one of the three lowest per capita income
counties, based on the average of the three most recent completed calendar
years of per capita income data that are available on November 1st, 3) at least
ninety percent of the Taxpayer's total investment in this State must be in the
county in which the qualifying facility is located, 4) the taxpayer must ask
the Department to enter into a contract utilizing the procedure in Section
12-6-2320(B), and 5) after reviewing the Taxpayer's proposed and planned new
facility or expansion, the South Carolina Advisory Coordinating Council for
Economic Development (the "Council") must certify that the new facility or
expansion will have a significant beneficial economic effect on the region for
which it is planned and that the benefits to the public exceed the cost to the
public; and,
WHEREAS, the Taxpayer has a new facility or an expansion that qualifies
under Code Section 12-6-3360(M) and has created at the facility 100 or more
full-time new jobs; and
WHEREAS, the county in which Taxpayer's facility is located is
Williamsburg County which was a county that for Calendar Years 2002 through
2004 was either: a) a county with an average annual unemployment rate of at
least twice the state average during the last twenty-four months, based on the
unemployment rate data on November 1st or b) a county with one of the three
lowest per capita income, based on the average of the three most recent
completed calendar years of per capita income data that were available on
November 1st, and,
WHEREAS, more than ninety percent of the Taxpayer's total investment in
South Carolina is located in Williamsburg County at the time the Taxpayer
created the 100 or more full-time new jobs; and,
WHEREAS, after reviewing the Taxpayer's proposed and planned new
facility or expansion, the Council certified that the new facility or expansion
will have a significant beneficial economic effect on the region for which it
is planned and that its benefits to the public exceed the cost to the public;
(The Council's certification is attached as Exhibit A, and incorporated into
this agreement);
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties agree to the following terms and conditions:
ARTICLE 1. DEFINITIONS
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The following definitions shall be applicable for purposes of this Agreement.
"Agreement" means this agreement executed between the Department of Revenue and
the Taxpayer.
"Code" means the Code of Laws of South Carolina 1976, as amended.
"Cut-off-date" means the fifth anniversary of the date the first job in
connection with this agreement is created. This date may be no later than
October 1, 2008 which is five years from the date that the first job in
connection with this project was created.
"Effective Date" means the date specified on the cover of this Agreement.
"Full-Time" is as defined in Section 12-6-3360(M)(4) of the Code.
"Fifteen-Year Premium Tax Moratorium Period" means the period beginning on the
first day of the first full taxable year after the Start Date and ending on the
last day of the fifteenth full taxable year or the year when the Taxpayer ceases
complying with the Increased Minimum Job Requirement, whichever occurs first.
"Increased Minimum Job Requirement" means 200 or more full-time new jobs.
"Minimum Job Requirement" means 100 or more full-time new jobs. "Moratorium
County" means Williamsburg County.
"New Job" is as defined in Code Section 12-6-3360(M)(3).
"Premium Tax Moratorium" shall mean the incentive provided for by Section
12-6-3365 of the Code as it relates to the Taxpayer by this Agreement subject to
the further terms and conditions listed herein.
"Premium Tax Moratorium Period" means either the Ten-Year Premium Tax Moratorium
Period if the Minimum Job Requirement is created and maintained, or, the
Fifteen-Year Premium Tax Moratorium Period, if the Increased Minimum Job
Requirement is created and maintained.
"Project" means the facility or facilities that are located in the Moratorium
County as described in Taxpayer's Application for Qualification of Premium Tax
Moratorium attached to, and incorporated into, this Agreement as Exhibit B.
"Start Date" means the date on which the Taxpayer met the Minimum Job
Requirement which was December 31, 2003.
"State" means the State of South Carolina. "Taxpayer" means Safe Auto Insurance
Company.
"Ten-Year Premium Tax Moratorium Period" means the period beginning on the first
day of the first full taxable year after the Start Date and ending on the last
day of the tenth year or the year when the Taxpayer ceases complying with the
Minimum Job Requirement, whichever occurs first.
ARTICLE II. TERMS AND CONDITIONS OF AGREEMENT
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2.1 Employment
The Taxpayer represents that on or before December 31, 2003, the
Taxpayer created on its payroll at the Project, jobs in number equal to, or
exceeding, the Minimum Job Requirement.
2.2 Obligations With Respect to the Project
The Taxpayer represents that it began operations at the project on or
before December 31, 2003. The Taxpayer shall be responsible for all costs,
contractual and other obligations associated with the acquisition, construction
and operation of the Project. Neither the Department, Council, the State, nor
any other agency or department of the State, or any employees thereof, shall be
liable in any manner whatsoever to any person for matters pertaining to or
arising in connection with the Project or this Agreement.
2.3 Notice Obligation
The Taxpayer by this Agreement notifies the Department that it has
exceeded the Minimum Job Requirement as of December 31, 2003 and elects to
start the Premium Tax Moratorium Period beginning with its tax year that
commences January 1, 2004 and the Department accepts such notification. If the
Taxpayer qualifies for, and the Taxpayer desires to use the Fifteen-Year
Premium Tax Moratorium Period, the Taxpayer shall notify the Department in
writing that it has met or exceeded the Increased Minimum Job Requirement and
is electing to utilize the Fifteen-Year Premium Tax Moratorium Period. Such
notification must be before the Cut-off Date.
2.4 Investment Representation
The Taxpayer represents that as of December 31, 2003, at least ninety
percent of the Taxpayer's total investment in this State is located in the
Moratorium County in which the project is located.
If the Taxpayer meets the Increased Minimum Job Requirement and elects to use
the Fifteen-Year Tax Moratorium Period, the Taxpayer represents that at time it
meets the Increased Minimum Job Requirement, at least ninety percent of the
Taxpayer's total investment in this State will be located in the Moratorium
County in which the project is located.
2.5 Certification by Department
The Department of Revenue certifies that even if the Moratorium County is
removed from the list of moratorium counties in a future year, the Taxpayer may
continue to use the Premium Tax Moratorium for either the Fifteen-Year Premium
Tax Moratorium Period or the Ten-Year Premium Tax Moratorium Period, provided
that the Taxpayer maintains the required number of jobs.
ARTICLE III. PREMIUM TAX MORATORIUM
The Taxpayer and Department agree that during the Premium Tax
Moratorium Period the Taxpayer shall be exempt from the Insurance Premium Tax
imposed pursuant to Chapter 7 of Title 38 of the Code, provided, however, the
Premium Tax Moratorium applies only to that portion of the Taxpayer's premium
tax that represents the ratio of the Taxpayer's new investment in the moratorium
county to its total investment in this State.
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ARTICLE IV. LIMITATION ON AGREEMENT
This Agreement is limited to matters set forth herein. Nothing in this
Agreement shall be construed as authorizing or governing any other obligation
of the Taxpayer to the State or to any agency, department or political
subdivision thereof or as impacting or affecting any other economic development
incentive, legal matter or arrangement between the Taxpayer and the State, its
agencies or departments or political subdivisions. Subject to the conditions
provided in Article V below, nothing contained in this Agreement shall be
construed to grant to employees, the Department or the Council or any agency of
the State the right to require the Taxpayer to hire, retain or terminate any
employee or employees or to require that the Taxpayer make a minimum capital
investment. Subject to the conditions provided in Article V below, the Taxpayer
maintains the right to cease operations at the Project if the Taxpayer so
determines in its sole discretion.
ARTICLE V. TERMINATION
5.1 Notice and Termination
If applicable, the Taxpayer must provide the Notice that it has met the
Increased Minimum Job Requirement, pursuant to Section 2.3 hereof, by the
Cut-off date, otherwise this Agreement shall be null and void.
5.2 Failure to Maintain Minimum Employment
If the Taxpayer fails to maintain the Minimum Job Requirement level for
any year(s) during the Premium Tax Moratorium Period for any reason other than
accident, natural disaster or any force majeure circumstance which make it
impossible for the Taxpayer to maintain the Minimum Job Requirement then the
Premium Tax Moratorium Period and this Agreement will terminate. If the Taxpayer
qualifies for and elects to use the Premium Tax Moratorium for the Fifteen-year
Premium Tax Moratorium Period, but fails to maintain the Increased Minimum Job
Requirement level for any year(s) during the Fifteen-year Premium Tax Moratorium
Period for any reason other than accident, natural disaster or any force majeure
circumstance which make it impossible for the Taxpayer to maintain the Increased
Minimum Job Requirement, then the Premium Tax Moratorium Period and this
Agreement will terminate at the end of the Ten-Year Premium Tax Moratorium
Period, or at the time the failure to maintain the Increased Minimum Job
Requirement occurs, whichever is later. Whether Taxpayer has met the Minimum Job
Requirement, or the Increased Minimum Job Requirement, if applicable, in any
year of the Premium Tax Moratorium Period will be determined using the
principles established under Section 12-6-3360 of the Code.
5.3 Notification.
The Taxpayer agrees to notify the Department within ninety days of any
period in which Taxpayer fails to maintain the Minimum Job Requirement or if
applicable, the Increased Minimum Job Requirement. If the Taxpayer fails to
notify the Department as required herein, any period of limitations for
assessment provided for in Code section 12-54-85 is suspended until 90 days
after such notification occurs.
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ARTICLE VI. MISCELLANEOUS
6.1 Notices.
Notices hereunder shall be sent by first-class mail, hand delivery or
facsimile transmission as follows:
If to the Department:
South Carolina Department of Revenue
Attention: Economic Development Projects Coordinator
Regular Mail Address
X.X. Xxx 000
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Overnight Courier Address
Columbia Xxxxx Building
000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
If to the Taxpayer:
SAFE AUTO INSURANCE COMPANY
Attention: Xxxx Xxxxxx, CFO
Regular Mail Address
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Telephone No.: (000) 000-0000 X0000
Facsimile No.: (000) 000-0000
Overnight Courier Address Same
With a copy to:
XxXxxx Law Firm, P.A. Attention: Xxxx
Xxxxxxxx, Esquire
Regular Mail Address
X.X. Xxx 00000
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Overnight Courier Address
0000 Xxxxxxx Xxxxxx
0
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
The parties may by notice given hereunder designate changes of address
and phone and fax numbers for purposes of this Agreement.
6.2 Governing, Laws.
This Agreement is made under and shall be construed in accordance with
the laws and regulations of the State of South Carolina. By executing this
Agreement the Taxpayer agrees to submit to the jurisdiction of the Department
and the Courts of South Carolina for all matters arising or to arise hereunder.
6.3 Mergers and Consolidations and Sale of the Project.
If the Taxpayer merges or consolidates with another entity which is not an
affiliate of the Taxpayer, or if the Taxpayer sells substantially all of the
assets associated with the project, based on fair market value, to another
entity which is not an affiliate of the Taxpayer then the Premium Tax
Moratorium will automatically terminate and this Agreement will be void,
whether the Taxpayer is the surviving entity of such merger or consolidation or
not. An affiliate of the Taxpayer with operations in the moratorium county as
of the date of the merger, consolidation, or sale, will not be treated as an
affiliate of the Taxpayer for purposes of this provision.
6.4 Additional Matters.
Modifications or waivers of any provisions of this Agreement must be in
writing.
IN WITNESS WHEREOF, this Agreement has been executed as of the
Effective Date.
SOUTH CAROLINA DEPARTMENT OF REVENUE
By: /s/ Xxxxx X. Xxxxxx, Xx.
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Print: Xxxxx X. Xxxxxx, Xx.
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ATTEST: Its: Deputy Director
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SAFE AUTO INSURANCE COMPANY
By: /s/ Xxxx X. Xxxxxx
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Print: Xxxx X. Xxxxxx
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ATTEST:/s/ Xxxx X. Xxxxxx Its: CFO
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