Ala. Code § 40-9H-2

Current through the 2024 Regular Session.

Section 40-9H-2 - [See Note] Definitions

As used in this chapter, the following words shall have the following meanings:

(1) AFFILIATE. An entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with another entity. For the purposes of this subdivision, an entity is controlled by another entity if the controlling person holds, directly or indirectly, the majority voting or ownership interest in the controlled person or has control over the day-to-day operations of the controlled person by contract or by law.

(2) AGRIBUSINESS. A business that earns a majority of its revenues from either farming, forestry, biotechnology, fisheries, or biofuels and the processing, manufacturing, packaging, storage, distribution, marketing, and sales of those products or commodities, or the design, creation, manufacture, marketing, or sales of technology, equipment, or supplies related to those businesses.

(3) CLOSING DATE. The date the department and the growth fund execute the loan agreement.

(4) DEPARTMENT. The Alabama Innovation Corporation.

(5) FOLLOW-ON CAPITAL. The sum of 50 percent of each initial growth investment, subsequent growth investments made to satisfy subdivision (a)(2) of Section 40-9H-5 and any additional financing received by a growth business on or after the date of the initial growth investment, including senior debt, subordinate debt, mortgage debt, equipment financing, mezzanine debt, convertible notes, revolving lines of credit, letters of credit, capital leases, preferred equity, participating preferred equity, convertible preferred equity, common equity, warrants and simple agreements for future equity, and any other financing approved by the department.

(6) FOLLOW-ON CAPITAL PERCENTAGE. Fifty percent multiplied by a fraction, the numerator of which is the aggregate follow-on capital reported to the department in reports submitted pursuant to subsection (b) of Section 40-9H-6 and the denominator of which is 10 times the amount of the loan. The percentage may exceed 50 percent.

(7) FUND. The Alabama Rural, Agribusiness, and Opportunity Zone Jobs Act Account which is hereby established.

(8) FUNDING.

.

An amount up to twenty-five million dollars ($25,000,000) of monies appropriated to the Alabama Rural, Agribusiness, and Opportunity Zone Jobs Act Account.

(9) GROWTH BUSINESS. A business to which all of the following apply at the time of the initial investment in the company by a growth fund:

a. Has fewer than 200 employees.

b. Has its principal business operations in one or more growth zones in the state.

c. Is made in any of the following:

1. Any business in North American Industry Classification System codes 11, 21, 22, 23, 31 through 33, 48 through 49, 54, or 62 or, if not engaged in those industries, the department determines that the investment will be beneficial to the growth zone.

2. An agribusiness.

3. A minority owned business.

(10) GROWTH FUND. An entity certified by the department under subsection (g) of Section 40-9H-3.

(11) GROWTH INVESTMENT. Any capital or equity investment in a growth business or any loan to a growth business with a stated maturity at least one year after the date of issuance, provided that with respect to any loan to a growth business secured by accounts receivable, inventory, real estate, or other tangible property, the chief executive officer or similar official of the growth business executes an affidavit that the business sought and was denied similar financing from a banking institution doing business in this state. Fifty percent of a growth investment shall be comprised of a draw on the loan with the remaining 50 percent funded with the growth fund's matching capital.

(12) GROWTH ZONE. A rural county of the state with less than 50,000 in population pursuant to the 2020 Federal Decennial Census, or a qualified opportunity zone as designated pursuant to 26 U.S.C. § 1400Z-1 with a poverty rate of at least 20 percent, or otherwise meeting the definition of low-income community in 26 U.S.C. § 45D.

(13) HIGH WAGE EMPLOYMENT POSITION. An employment position that is filled, pays a wage of at least 110 percent of the county average as noted in the most recent quarterly County Employment and Wages report by the Bureau of Labor Statistics of the United States Department of Labor, and requires at least 35 hours of work per week or any other period of time generally accepted by custom, industry, or practice as full-time employment.

(14) INVESTMENT AUTHORITY. The amount stated on the notice issued under subsection (g) of Section 40-9H-3 certifying the growth fund.

(15) JOBS RETAINED. The number of high wage employment positions that existed before the initial growth investment and for which the growth business's chief executive officer or similar officer certifies that the high wage employment position would have been eliminated but for the initial growth investment. The retained jobs of a growth business shall be calculated each year based on the monthly average of high wage employment positions. The reported number of retained jobs may not exceed the number reported on the initial report required under subsection (a) of Section 40-9H-6.

(16) LOAN. A loan made to a growth fund using funding. The department and the growth fund shall execute a loan agreement which shall provide for:

a. An interest rate of one percent interest compounding annually which shall be due upon program exit or acceleration pursuant to Section 40-9H-5.

b. Forgiveness at exit of a percentage of principal and interest due on the loan equal to the sum of the follow-capital percentage and the new annual and jobs retained percentage, provided forgiveness shall not be available with respect to loans accelerated pursuant to Section 40-9H-5.

c. Subordination to matching capital funded directly or indirectly as debt, which subordination may be revoked pursuant to Section 40-9H-5.

d. Draws in connection with growth investments in accordance with subsection (c) of Section 40-9H-4.

(17) MANAGEMENT FEE. An amount equal to three percent per annum of the growth fund's investment authority that accrues annually, but shall not be paid until the growth fund exits the program in accordance with subsection (e) of Section 40-9H-5.

(18) MATCHING CAPITAL. An amount of capital raised by the growth fund as debt or equity and invested in growth businesses. Matching capital shall only be considered debt of the growth fund and eligible for repayment pursuant to paragraph (e)(2)a. of Section 40-9H-5 if the growth fund provides evidence of such direct or indirect debt to the department.

(19) MINORITY OWNED BUSINESS. A business that is more than 50 percent owned by one or more individuals of African-American, Asian, or Hispanic origin.

(20) NEW ANNUAL JOBS. Except as provided in paragraph c., the term means the difference between paragraphs a. and b. as follows:

a.

1. The monthly average of high wage employment positions for the preceding calendar year.

2. If the preceding calendar year contains the initial growth investment, the monthly average of high wage employment positions for the months including and after the initial growth investment and before the end of the preceding calendar year.

b. The number of high wage employment positions at the growth business on the date of the initial growth investment.

c. If the amount calculated in subparagraph a.1. is less than zero, the new annual jobs amount is equal to zero.

(21) NEW ANNUAL JOBS AND JOBS RETAINED PERCENTAGE. Fifty percent multiplied by a fraction, the numerator of which is the number of new annual jobs and jobs retained reported in annual reports submitted to the department pursuant to subsection (b) of Section 40-9H-6 and the denominator of which is the number of new annual jobs and jobs retained set forth in the growth fund's certification provided pursuant to subsection (g) of Section 40-9H-3. The percentage may exceed 50 percent.

(22) PRINCIPAL BUSINESS OPERATIONS. The place or places where at least 60 percent of the business's employees work or where employees that are paid at least 60 percent of the business's payroll work. A business that has agreed to relocate or hire new employees using the proceeds of a growth investment to establish its principal business operations in a growth zone in the state shall be deemed to have its principal business operations in this new location, provided the business satisfies this requirement within 180 days after receiving the growth investment, unless the department agrees to a later date.

(23) PROGRAM EXIT. The process described in subsection (e) of Section 40-9H-5.

Ala. Code § 40-9H-2 (1975)

Amended by Act 2024-403,§ 1, eff. 8/1/2024, but only shall become operative upon the appropriation by the Legislature of a minimum of twelve million five hundred thousand dollars ($12,500,000) appropriated to the Alabama Rural, Agribusiness, and Opportunity Zone Jobs Act Account for the fiscal year 2024-2025.

Added by Act 2021-492,§ 2, eff. 8/1/2021.

This section is set out more than once due to postponed, multiple, or conflicting amendments.