New Jersey Administrative Code › Title 19 - OTHER AGENCIES › NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY › Chapter 31X - EVERGREEN › Subchapter 1 - EVERGREEN › Section 19:31X-1.10 - Recapture, decertification, and redemption

Current through Register Vol. 56, No. 14, July 15, 2024
(a) Absent extenuating circumstances or
				  written consent by the Authority, if a tax credit purchaser fails to fund at
				  least 80 percent of any component of its strategic commitment, the Authority
				  shall require the tax credit purchaser to pay, to the Fund, the amount equal to
				  the difference between the value of such strategic commitment component, as set
				  forth in the tax credit purchaser contract, and the actual amount funded by the
				  tax credit purchaser.
(b) If, at
				  any time, the Authority determines that a tax credit purchaser made a material
				  misrepresentation on the tax credit purchaser's tax credit bid application or
				  any submissions to the Authority under this program, the Authority may
				  recapture any or all of all tax credits awarded under the program, which shall
				  be in addition to any other remedies in the tax credit purchaser contract and
				  any criminal or civil penalties to which the tax credit purchaser and the
				  respective officer may be subject. Any such recapture amount may include
				  interest on the recapture amount, at a rate equal to the statutory rate for tax
				  deficiencies, plus any statutory penalties, and all costs incurred by the
				  Authority and the Division of Taxation in the Department of the Treasury in
				  connection with the pursuit of the recapture amount, including, but not limited
				  to, counsel fees, court costs, and other costs of collection. The Authority
				  shall confer with the Division of Taxation to determine the recapture
				  amount.
(c) The Authority shall
				  review each qualified venture firm's annual report for the disqualifying
				  criteria set forth at N.J.A.C. 19:31X-1.7(d), or other reasonable
				  industry-accepted standards, as determined by the Authority. The Authority
				  shall publish any such standards on its website. Upon such review, if the
				  qualified venture firm does not satisfy the criteria or standards, the
				  Authority shall decertify a qualified venture firm. If the annual report does
				  not demonstrate best efforts to comply with the diversity policies or plans
				  submitted pursuant to N.J.A.C. 19:31X-1.7(b)8 or, for a qualified venture firm
				  that proposed to dedicate a greater portion of qualified investments into
				  qualified businesses located within incentive areas, best efforts to achieve
				  such greater portion of qualified investments compared to the investment
				  information provided pursuant to N.J.A.C. 19:31X-1.7(b)17, then the Authority
				  shall reduce the qualified venture firm's evaluation score by the weight for
				  such criteria. If the reduced evaluation score is below the minimum, the
				  Authority shall decertify the qualified venture firm. Decertification shall not
				  affect any previously made qualified investment or the Fund's commitment to
				  make a follow-on investment in a qualified business.
(d) If a qualified venture firm fails to
				  timely submit the completed annual report pursuant to N.J.A.C. 19:31X-1.9 for
				  two consecutive years, the Authority shall decertify the qualified venture firm
				  and may remove the qualified venture firm from the Evergreen special purpose
				  vehicle or require the qualified venture firm to terminate the Evergreen
				  special purpose vehicle.
(e) If a
				  qualified venture firm fails to comply with the requirements of the qualified
				  venture firm agreement or Evergreen special purpose vehicle governing agreement
				  other than the failure to submit a complete annual report, or if the qualified
				  venture firm or affiliate of the qualified venture firm is removed from the
				  qualified venture firm active fund, the Authority may withhold or cease paying
				  management fees and direct expenses, decertify the qualified venture firm,
				  remove the qualified venture firm from the Evergreen special purpose vehicle,
				  or require the qualified venture firm to terminate the Evergreen special
				  purpose vehicle.
(f) If, at any
				  time, the Authority determines that a qualified venture firm made a material
				  misrepresentation on the qualified venture firm's application for
				  certification, application for a qualified investment, annual report, or any
				  submissions to the Authority under this program, the Authority shall cease
				  paying management fees and direct expenses. The Authority shall decertify the
				  qualified venture firm and may demand repayment of all management fees and
				  direct expenses previously paid, remove the qualified venture firm from the
				  Evergreen special purpose vehicle, or require the qualified venture firm to
				  terminate the Evergreen special purpose vehicle. The actions by the Authority
				  pursuant to this subsection shall be in addition to any other remedies in the
				  qualified venture firm agreement or the Evergreen special purpose vehicle
				  governing agreement and any criminal or civil penalties to which the qualified
				  venture firm and the respective officer may be subject.
(g) If an Evergreen special purpose vehicle
				  is terminated pursuant to (d), (e), or (f) above, the qualified venture firm
				  shall transfer the shares of stock to the Authority. The Authority may, at its
				  discretion, accept payment of an amount equal to the greater of the qualified
				  investment and all follow-on investments or the fair market value of the
				  qualified investment at the time of the demand. Upon such termination, the
				  Authority may require the qualified venture firm to forfeit any carried
				  interest.
(h) If a qualified
				  business fails to support its business operations in this State as set forth at
				  N.J.A.C. 19:31X-1.7(g)4i, or fails to provide the necessary documentation to
				  demonstrate its compliance, during two consecutive years during the qualified
				  business compliance period, the Authority may require the qualified business to
				  redeem the shares of stock purchased with the qualified investment and any
				  follow-on investment for an amount equal to the greater of the aggregate amount
				  of the qualified investment and follow-on investments or the fair market value
				  of the shares of stock at the time of the redemption demand. The Authority may,
				  at its discretion, accept the offer to purchase the shares of stock by the
				  qualified venture firm or any other investor in lieu of redemption.
(i) If a qualified business fails to comply
				  with any requirement under this program other than the failure set forth at (h)
				  above, the Authority may determine not to make any follow-on investments or may
				  demand a redemption as set forth at (h) above.
(j) If, at any time, the Authority determines
				  that a qualified business made a material misrepresentation on the qualified
				  venture firm's application for certification, application for a qualified
				  investment, annual report, or any submissions to the Authority under this
				  program, the Authority may determine not to make any follow-on investments or
				  may demand a redemption as set forth at (h) above. The actions by the Authority
				  pursuant to this subsection shall be in addition to any other remedies in the
				  qualified business side agreement and any criminal or civil penalties to which
				  the qualified business and the respective officer may be subject.
(k) In determining whether to require the
				  termination of an Evergreen special purpose vehicle or the redemption of the
				  shares of stock of a qualified business, the Authority may consider if
				  retaining the Evergreen special purpose vehicle or the shares of stock of the
				  qualified business furthers the purposes of the program, including, but not
				  limited to, the likelihood of an increase in value of the shares of stock and
				  the continued employment of full-time employees filling a position in New
				  Jersey.