§ 40-14B-1 — Definitions

As used in this chapter, the following terms shall have the following meanings:
(1) AFFILIATE. An affiliate of another person shall include any of the following:
a. A person who directly or indirectly either:
1. Beneficially owns 15 percent or more of the outstanding voting securities or other voting ownership interests of the other person, whether through rights, options, convertible interests, or otherwise; or
2. Controls or holds power to vote 15 percent or more of the outstanding voting securities or other voting ownership interests of the other person.
b. A person owning 15 percent or more of the outstanding voting securities or other voting ownership interests of which are directly or indirectly either:
1. Beneficially owned by the other person, whether through rights, options, convertible interests, or otherwise; or
2. Controlled or held with power to vote by the other person.
c. A partnership or limited liability company in which the other person is a general partner, managing member or manager, as the case may be.
d. An officer, director, employee, or agent of the other person, or an immediate family member of the officer, director, employee, or agent.
(2) ALLOCATION DATE. The date on which the certified investors of a certified capital company are allocated certified capital by the Alabama Development Office under this chapter.
(3) CERTIFIED CAPITAL. An investment of cash by a certified investor in a certified capital company that fully funds the purchase price of an equity interest in the company or a qualified debt instrument issued by the certified capital company.
(4) CERTIFIED CAPITAL COMPANY. A partnership, corporation, or trust or limited liability company, whether organized on a profit or not-for-profit basis, that has as its primary business activity the investment of cash in qualified technology businesses and that is certified as meeting the criteria of this chapter.
(5) CERTIFIED INVESTOR. An insurance company or other person that has state premium tax liability, that contributes certified capital pursuant to an allocation of premium tax credits under this chapter.
(6) PERSON. A natural person or entity, including a corporation, general or limited partnership, or trust or limited liability company.
(7) PREMIUM TAX CREDIT ALLOCATION CLAIM. A claim for allocation of premium tax credits.
(8) QUALIFIED DEBT INSTRUMENT. A debt instrument issued by a certified capital company, at par value or a premium, that:
a. Has an original maturity date of at least five years after the date of issuance.
b. Has a repayment schedule that is not faster than a level principal amortization over five years.
c. Has no interest, distribution, or payment features that are related to the profitability of the certified capital company or the performance of the certified capital company’s investment portfolio.
(9) QUALIFIED DISTRIBUTION. Any distribution or payment from certified capital by a certified capital company in connection with the following:
a. The reasonable costs and expenses of forming, syndicating, managing, and operating the company, including reasonable and necessary fees paid for professional services, including legal and accounting services, related to the formation and operation of the company, and an annual management fee in an amount that does not exceed two and one-half percent of the certified capital of the company; provided that no distribution or payment authorized by this paragraph a. be made directly or indirectly to a certified investor, except for distributions or payments made in consideration for a guaranty, indemnity, bond, insurance policy, or other payment undertaking described by subsection (b) of Section 40-14B-4.
b. Any projected increase in federal or state taxes, including penalties and interest related to state and federal income taxes, of the equity owners of the company resulting from the earnings or other tax liability of the company to the extent that the increase is related to the ownership, management, or operation of the company.
(10) QUALIFIED INVESTMENT. The investment of cash by a certified capital company in a qualified technology business for the purchase of any debt, debt participation, equity, or hybrid security of any nature or description, including a debt instrument or security that has the characteristics of debt but that provides for conversion into equity or equity participation instruments such as options or warrants.
(11) QUALIFIED TECHNOLOGY BUSINESS. A business that, at the time of a certified capital company’s first investment in the business:
a. Is headquartered in this state and intends to remain in this state after receipt of the investment by the certified capital company, or is headquartered in another state and intends to relocate its headquarters to this state after receipt of the investment by the certified capital company.
b. Has its principal business operations located in this state and intends to maintain business operations in this state after receipt of the investment by the certified capital company, or has its principal business operations located in another state, and intends to relocate business operations to this state within 90 days after receipt of investment by the certified capital company.
c. Has agreed to use the qualified investment primarily to either support business operations in this state, or in the case of a start-up company, establish and support business operations in this state, except in each case, advertising, sales and promotional operations which may be conducted outside of this state.
d. Has not more than 100 employees and either employs at least 80 percent of its employees in this state, or pays at least 80 percent of its payroll to employees in this state.
e. Is primarily engaged in any of the following:
1. Manufacturing, processing, or assembling products.
2. Conducting research and development.
3. Providing services.
f. Is not primarily engaged in any of the following:
1. Retail sales.
2. Real estate development.
3. The business of insurance, banking, or lending.
4. The provision of professional services provided by accountants, attorneys, or physicians.
(12) STATE PREMIUM TAX LIABILITY. Includes:
a. Any liability incurred by any person under Chapter 4A of Title 27, the Alabama Insurance Code.
b. If the tax liability imposed under Chapter 4A of Title 27, the Alabama Insurance Code, on January 1, 2002, is eliminated or reduced, any tax liability imposed on an insurance company or other person that had premium tax liability under Chapter 4A of Title 27, the Alabama Insurance Code, on that date.

Legislative History

(Act 2002-429, p. 1108, §1.)