In June 2009, the Company’s subsidiary, Palm Coast Data LLC (“PCD”), received $3,000,000 pursuant to an award agreement with an agency of the State of Florida as part of the incentives made available in connection with a project, completed in October 2011, to consolidate the Company’s Subscription Fulfillment Services business operations from three locations in Colorado, Florida and Illinois into PCD’s existing Palm Coast, Florida location. The award agreement, as amended (the “Award Agreement”), conditions PCD’s retention of the award, among other things, on its achievement of certain objectives through December 31, 2012 in terms of job retention and job creation, maintenance of average wages above a stated minimum, and capital expenditures exceeding a stated amount. Under the Award Agreement, if the objectives are not satisfied or are not maintained through December 31, 2014, the Florida government may require PCD to return up to $600,000 of the award, plus interest, in respect of each calendar year from 2010 through 2014 for which there is a deficiency.
Because PCD is not irrevocably entitled to retain the full award, its amount has been recorded as a liability in the Company’s financial statements.
On May 21, 2012, PCD received notice from the Florida government requiring the return within 60 days of $1,200,000 of the award, plus interest, principally by reason of shortfalls in meeting the award’s employment objectives for 2010 and 2011.
