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EDC Compliance Recommendation Report FINANCIAL TRUST COMPANY, INC. Request for Suspension of Benefits FINANCIAL TRUST COMPANY, INC. REQUEST FOR SUSPENSION OF BENEFITS SUMMARY & RECOMMENDATION BENEFIT EXPIRATION DATE Income Taxes March 31, 2014 Gross receipt Taxes March 31, 2014 Excise Taxes Not Applicable Real Property Tax Not Applicable Customs Duty Not Applicable Employment Requirement: 10 This report is presented to suspend benefits from March 23, 2012 to March 22, 2013, with the right to extend the period of suspension should they determine that the economic climate is not sufficient to support intended operations. Summary: Financial Trust Company, Inc (“FTC”) submitted an application to the Economic Development Commission which was accepted as complete on February 22, 1999. Its initial application was approved for benefits by Governor John P. deJongh, Jr. on November 26, 1999. An application for extension of benefits was filed on January 13, 2009 approved by the governor on February 14, 2010. A certificate extending benefits was executed October 13, 2010 for a period of 5 years commencing April 1, 2009. The certificate was issued at an orientation on December 14, 2010. Financial Trust Company, Inc. was granted tax exemptions under Category IIA to conduct the operation of a designated service business providing financial and economic consulting, money management, investment advisor and fiduciary services for its clients. Clients may include individuals, trusts, foundations and business entities. FTC agreed to comply with the general, standard and special conditions of its EDC Certificate to include investing not less than the amount of $100,000 excluding inventory in the benefited business commencing in 2009 and completed in three years thereafter. To employ at least ten (10) full-time employees in the eligible activity of the benefited business commencing April 1, 2009 and continuing throughout the term of benefits. In addition, FTC agreed to comply with the general, standard, and special conditions of its certificate of benefits. On April 2, 2012, the Economic Development Commission issued an amended certificate to FTC changing the terms of the benefits to correctly reflect the business activity by removing the language relating to “investment advisory” effective January 1, 2012. SPECIFIC REQUEST: By correspondence dated April 4, 2012, FTC through its legal counsel, Attorney Erika Kellerhals notified the EDC that after careful review of the impact of the general decline in the economy and its impact on FTC’s business, and in addition to the onerous impact of recent legislative changes on potential businesses for FTC, they will no longer take benefits as of March 23, 2012. FTC has requested a suspension of its current certificate of benefits effective March 23, 2012 for a period of twelve months. Financial Trust Company, Inc. Summary & Recommendation COMPLIANCE STATUS: Aan initial compliance review for the period April 1, 1999 to December 31, 2006 was completed on April 17, 2008. FTC met and complied with all the conditions of its previous benefits certificate. A review covering the period January 1, 2007 to December 31, 2011 is scheduled to commence in 2012. FINDINGS: DEPARTMENT OF LABOR: A Notice of Action was submitted to the Virgin Islands Department of Labor (VIDOL). FTC provided details of the severance package offered t two employees affected by the suspension of benefits. FINANCIAL ANALYSIS: A review of FTC’s financial activity for 2007 to 2010 shows a significant decrease in net income from 2007 to 2008 and steady income of or 2008, 2009 and 2010. Actual Year Gross Receipts Increase/ Decrease | Approximate % Change Findings: In accordance with the conditions of benefits, the certificate shall be effective only for so long as the Beneficiary continues to observe and perform each and every condition in this certificate. FTC has voluntary requested a suspension of benefits for one year, March 23, 2012 to March 22, 2013, with the right to extend the period of suspension should they determine that the economic climate is not sufficient to support intended operations. RECOMMENDATION: Financial Trust Company, Inc. Summary & Recommendation 1. Grant a suspension of benefits effective March 23, 2012 to March 22, 2013. 2. Require Financial Trust Company, Inc. to provide proof of its compliance with severance pay within 30 days notice of the Board's decision. 3. Require Financial Trust Company, Inc. to provide notice to the EDC within 30 days of the expiration of the suspension of benefits on the business intent to (1) reactive its business operations, (2) terminate its Certificate or (3) to extend its suspension of benefits. 4. Hold Financial Trust Company, Inc. responsible for any non-compliance with the terms and conditions of its certificate of benefits for the period commencing January 1, 2007 to May 23, 2012. 5. Financial Trust Company, Inc. is required to provide preference in hiring to all employees laid off during the suspension period, and to provide proof to the EDC within ten (10) days upon rehiring staff. 6. Require Financial Trust Company, Inc. to provide the name and contact information of its resident agent; name, forwarding address, and telephone numbers gf the principals of the company. i LAY HLLAAT at Tn Fi MargarifalA. Greanidge-Berjamin Directof, Compliance DateApril 19; 2011 oi initials: wf - Percival E. Clouden Chief Executive Officer Attachments: Financial Trust Company, Inc. Letter dated April 4, 2012 Certificate of Benefits UNITED STATES VIRGIN ISLANDS oz GOVERNMENT OF THE TERRITORY OF THE VIRGIN ISLANDS OF THE UNITED STATES ECONOMIC DEVELOPMENT CERTIFICATE EXTENSION (Amended, effective January 1, 2012) FINANCIAL TRUST COMPANY, INC. (Beneficiary) Pursuant to the authority vested in me as the Chairman of the Virgin Islands Economic Development Commission (hereinafter the “Commission”) by Title 29 Virgin Islands Code, Chapter 12 and in the name of the Government of the Virgin Islands of the United States, I do hereby issue this certificate to Financial Trust Company, Inc. (hereinafter the “Beneficiary”) whose application for Economic Development Benefits was accepted by the Chief Executive Officer of the Economic Development Authority on January 28, 2009. The Commission finds that the Beneficiary is an eligible Beneficiary pursuant to §713(2)(b) of the Commission’s Rules and Regulations. The grant of benefits hereinafter described is for the Beneficiary or any successors approved by the Commission to conduct the operation of a Category IIA designated service business that provides financial and economic consulting to its clients which will include multinational business organizations. All of its clients are located outside the U.S. Virgin Islands. This certificate is subject to the acceptance of and full compliance by the Beneficiary with all the following general, standard, and special conditions, and the timely performance and observance of the same by the Beneficiary: I. The Beneficiary shall invest in this business in the Virgin Islands of the United States not less than the amount of One Hundred Thousand U.S. Dollars ($100,000), excluding inventory, in the benefited business commencing in 2009 and completed three (3) years thereafter. Il. The Beneficiary shall employ at least ten (10) full-time employees in the eligible activity of the benefited business commencing Apri] 1, 2009 and continuing throughout the duration of the term of benefits. During the entire period of this grant of benefits at least eighty percent (80%) of all employees shall be “Residents of the U.S. Virgin Islands” as defined in Title 29, V.I. Code, §703(e) and provided that not less than twenty percent (20%) in the area of management, supervisory and/or technical positions shall be filled by residents of the Virgin Islands, pursuant to Title 29, Chapter 12, §710(a). UNITED STATES VIRGIN ISLANDS Juvesters Dream Economic Development Certificate Ill. The following standard conditions shall apply: 1. Beneficiary shall comply with any and all reasonable requests during regular working hours of the Commission, the Virgin Islands Department of Finance, the Virgin Islands Bureau of Audit and Control, Virgin Islands Department of Labor, Virgin Islands Department of Licensing and Consumer Affairs, and the Virgin Islands Bureau of Internal Revenue. 2. — This certificate is conditioned upon the final determination of the Secretary of the Treasury of the United States or his designee, of compliance of the Beneficiary with the requirements of Section 934 of the United States Internal Revenue Code of 1986, as amended, if applicable. 3. Beneficiary shall fully and actually comply and continue to comply with all the applicable provisions of Title 29, Chapter 12 of the Virgin Islands Code, the regulations issued pursuant thereto, and all other applicable local and federal laws and regulations, including but not limited to those dealing with non-discrimination and veterans’ employment rights. 4. Beneficiary shall particularly comply, and continue to comply with federal and local laws, which establish standards of ecological and environmental compatibility, with rules and regulations of the Director of the Virgin Islands Bureau of Internal Revenue, and with the rules and regulations of the Economic Development Program. 5. Beneficiary shall particularly comply, with Section 8 of Act No 5768, which provides that the Beneficiary shall maintain payroll accounts, from which local employees are paid, in a bank licensed and conducting business in the United States Virgin Islands. 6. This certificate shall be effective only for so long as the Beneficiary continues to observe and perform each and every condition in this certificate. a3 Upon a written finding by the Commission, after a hearing if required, that the Beneficiary has failed to observe the conditions in this Certificate, or to comply with any of the time limits provided in this certificate or otherwise provided by law, and upon such further finding that such failure is not due to an act of God, a “force majeure,” (or to the reliance in good faith by the Beneficiary, (on a false statement by a third party unrelated to the Beneficiary,) then the Certificate may be revoked, suspended or modified by the Commission pursuant to 29 V.I.C. §722. If the Beneficiary is found to have made false or fraudulent statements or representations or false claims for benefits, UNITED STATES VIRGIN ISLANDS = Economic Development Certificate then pursuant to 29 V.1.C. §725 the Beneficiary shall pay or refund, as the case may be, to the Government of the Virgin Islands of the United States, the amount of every and all benefits received under the Certificate after the commencement dates specified herein; provided however that the Commission may for good cause shown, grant extensions of any such time periods as may be permitted, such extensions to be evidenced by an amendment to this certificate. The hearings and findings are referred to in the Code §722 and Subchapter 722 of the Rules and Regulations. Nothing in this section shall be construed to limit the Commission’s rights, duties and responsibilities under Title 29 V.I. Code §722 or Subchapter 722 of the Regulations. 8. Beneficiary shall commence the active conduct of the business for which this certificate was granted within five (5) years from the date the Chairman of the Economic Development Commission signs this certificate, unless otherwise provided or unless the business has already commenced. 9. Any new shareholders, partners, owners, members or beneficiaries added to the entity after its application has been approved may not claim benefits under the Economic Development Program without the prior written approval of the Economic Development Commission. IV. The following special conditions shall apply: 1. The Beneficiary will contribute One Hundred Thousand U.S. Dollars ($100,000) or one percent (1%) of gross receipts tax exemption value, whichever is greater, annually to various Virgin Islands charities, youth sports organizations and clubs; and symposiums held in the Virgin Islands. 2. The Beneficiary will fund an academic scholarship program for students of Ivana Eudora Kean High School and Charlotte Amalie High School. The Beneficiary will fund the program with a Twenty Thousand U.S. Dollars ($20,000) contribution annually for a period of five (5) years. Each high school will receive Ten Thousand U.S. Dollars ($10,000) annually to be awarded to a graduating senior who intends to study and/or major in math or science at an accredited college or university, and the Beneficiary will also contribute Twenty-Two Thousand Five Hundred U.S. Dollars ($22,500) annually to Workforce Development Fund established by the Economic Development Commission and not less than Three Thousand U.S. Dollars ($3,000) annually to the Territorial Scholarship fund pursuant to Title 29, VIC, §708(m). UNITED STATES VIRGIN ISLANDS ws Iuuesters Dream Economic Development Certificate 3s The Beneficiary will continue to provide its employees with one hundred percent (100%) employer paid health and dental insurance and will continue to permit employees to purchase dependent coverage through the same provider with employer paying one hundred percent (100%) of the cost. The Beneficiary will continue to provide its employees with employer-paid life insurance in an amount equal to two times (2x) each employee’s current base salary. The Beneficiary will continue to provide its full-time employees with a Simple IRA plan or similar retirement plan with employer matching one hundred (100%) of employee’s elective deferral up to a limit of three percent (3%) of annual compensation. The Beneficiary will continue to provide its employees with two (2) weeks of paid vacation during the first calendar year of employment for employees that are hired prior to July and one (1) week paid vacation during the first calendar year of employment for employees hired after July 1, 2009, three (3) weeks paid vacation annually during the second (2") through the fifth (5") years of employment and four (4) weeks paid vacation annually after five (5) years of employment. Employees will also receive two (2) paid personal days annually; along with holiday pay; five (5) personal emergency days annually; bereavement leave; jury duty; voting; and medical leave. The Beneficiary will comply with the management training program as approved by the Economic Development Commission. The Beneficiary will offer tuition reimbursement for short and long-term coursework in subject areas directly related to an employee’s current work. In accordance with and subject to Virgin Islands law, Title 29 Virgin Islands Code Chapter 12, §708(h) and applicable rules and regulations of the Economic Development Commission, with regard to the Eligible Supplier Program, the Beneficiary will purchase all goods and services from U.S. Virgin Islands entities duly licensed and in good standing under the laws of the Virgin Islands, whenever available, to the greatest extent possible. Item D: Specifically Excluded Trade or Business: U.S. Virgin Islands clients are specifically excluded from the tax benefits. UNITED STATES VIRGIN ISLANDS ws 4 Juvesters Dream Economic Development Certificate THEREFORE, pursuant to the public hearing on this Beneficiary’s application on, February 12, 2009 and the Commission meeting held April 27, 2009, May 7, 2009, May 28, 2009, and October 15, 2009, and based upon the representations of the Beneficiary made orally and in writing and as agreed to herein, the Commission, with the prior approval of the Governor of the Virgin Islands of the United States herein enters into this Benefits Certificate with the Beneficiary that if the Beneficiary complies with the conditions herein, the provisions of Title 29 V.I. Code, Chapter 12 as existing on the date of the Governor’s approval, the Rules and Regulations of the Commission promulgated in accordance with Title 29 V.I. Code §705(f) and all applicable laws and regulations of the Territory of the Virgin Islands of the United States and of the United States of America, then the Commission hereby grants the benefits stated in Appendices and Sub- Appendices A to C inclusive to commence and terminate as stated in each signed Appendix. IN WITNESS HEREWITH, the parties hereunto set their hands and seals on the dates noted below: Toes hs rors. (FEB fede Witness > Economic Development Commission Financial Trust Company, Inc, Name and Title: Date: 3/39 /. Iz UNITED STATES VIRGIN ISLANDS ws Juuestors Dream GOVERNMENT OF THE TERRITORY OF THE VIRGIN ISLANDS OF THE UNITED STATES ECONOMIC DEVELOPMENT CERTIFICATE APPENDIX A: USVI INCOME, GROSS RECEIPT AND EXCISE TAXES NAME, ADDRESS AND TELEPHONE NUMBER OF BENEFICIARY: NAME: Financial Trust Company, Inc. PHYSICAL LOCATION: 6100 Red Hook Quarter, B-3, St. Thomas, VI 00802 MAILING ADDRESS: 6100 Red Hook Quarter, B-3, St. Thomas, VI 00802 TELEPHONE: (340) 775-2525 Fax: (340) 775-2528 NATURE AND EXTENT OF BENEFITS: USVI Income Taxes: 81% percent exemption USVI Gross Receipt Taxes: 90% percent exemption USVI Excise Taxes (Raw Materials): 90% exemption from excise taxes (except gasoline taxes) on raw materials and component parts used by the Beneficiary in its production process. USVI Excise Taxes (Equipment, Machinery): 90% exemption from excise taxes on building materials, tools, pipes, conveyor belt, or other appliances, material, and supplies necessary for use in the construction, alteration, reconstruction or extension of the physical plant or facilities of the Beneficiary. COMMENCEMENT DATES OF BENEFITS: USVI Income Taxes: April 1, 2009 USVI Gross Receipt Taxes: April 1, 2009 USVI Excise Taxes (Raw Materials): Not Applicable USVI Excise Taxes (Equipment, Machinery): January 1, 2010 TERMINATION DATES OF BENEFITS: USVI Income Taxes: March 31, 2014 USVI Gross Receipt Taxes: March 31, 2014 USVI Excise Taxes (Raw Materials): Not applicable USVI Excise Taxes (Equipment, Machinery): December 31, 2014 AUTHORITY FOR BENEFITS: Title 29 V.I. Code §713b, 713a (a) (2), 713a (a) (3); Title 33 V.I. Code §43d Chief Executive Officer, EDA: le Date: 4}>\ \v UNITED STATES VIRGIN ISLANDS = GOVERNMENT OF THE TERRITORY OF THE VIRGIN ISLANDS OF THE UNITED STATES ECONOMIC DEVELOPMENT CERTIFICATE APPENDIX Al: USVI WITHHOLDING TAX ON DIVIDENDS AND INTEREST NAME, ADDRESS AND TELEPHONE NUMBER OF BENEFICIARY: NAME: Financial Trust Company, Inc. PHYSICAL LOCATION: 6100 Red Hook Quarter, B-3, St. Thomas, VI 00802 MAILING ADDRESS: 6100 Red Hook Quarter, B-3, St. Thomas, VI 00802 TELEPHONE: (340) 775-2525 Fax: (340) 775-2528 NATURE AND EXTENT OF BENEFITS: Dividend Withholding Tax Exemption in accordance with Title 29 V.I. Code Section 713d Interest Withholding Tax Exemption in accordance with Title 29 V.I. Code Section 713d Member Address Owned Jeffrey E. Epstein Little St. James Island 100% St. Thomas, VI COMMENCEMENT DATE OF BENEFITS: Dividend Withholding Tax Exemption: April 1, 2009 Interest Withholding Tax Exemption: April 1, 2009 TERMINATION DATE OF BENEFITS: Dividend Withholding Tax Exemption: March 31, 2014 Interest Withholding Tax Exemption: March 31, 2014 AUTHORITY FOR BENEFITS: Title 29 V.1. Code §713d Chief Executive Officer, EDA: SL. Lo Date: 4|>| ye / UNITED STATES VIRGIN ISLANDS ws Iuuestars Dream GOVERNMENT OF THE TERRITORY OF THE VIRGIN ISLANDS OF THE UNITED STATES ECONOMIC DEVELOPMENT CERTIFICATE APPENDIX B: USVI REAL PROPERTY TAXES NAME, ADDRESS AND TELEPHONE NUMBER OF BENEFICIARY: NAME: Financial Trust Company, Inc. PHYSICAL LOCATION: 6100 Red Hook Quarter, B-3, St. Thomas, V1 00802 MAILING ADDRESS: 6100 Red Hook Quarter, B-3, St. Thomas, V1 00802 TELEPHONE: (340) 775-2525 Fax: (340) 775-2528 NATURE AND EXTENT OF BENEFITS: Real Property Taxes: 90% exemption of taxes on real property used for the business of operating a designated service business. PARCEL(S) EXEMPTED: © None COMMENCEMENT DATE OF BENEFITS: Real Property Tax Exemption Starts: Not Applicable TERMINATION DATE OF BENEFITS: Real Property Tax Exemption Terminates: Not Applicable AUTHORITY FOR BENEFITS: Title 29 V.I. Code §713a (a) (1) A\ > \y2 Chief Executive Officer, eva: eee E. bof Date: Ay a ae an Arts UNITED STATES VIRGIN ISLANDS ws uuestors Dream GOVERNMENT OF THE TERRITORY OF THE VIRGIN ISLANDS OF THE UNITED STATES ECONOMIC DEVELOPMENT CERTIFICATE APPENDIX C: CUSTOMS DUTIES NAME, ADDRESS AND TELEPHONE NUMBER OF BENEFICIARY: NAME: Financial Trust Company, Inc. PHYSICAL LOCATION: 6100 Red Hook Quarter, B-3, St. Thomas, VI 00802 MAILING ADDRESS: 6100 Red Hook Quarter, B-3, St. Thomas, VI 00802 TELEPHONE: (340) 775-2525 Fax: (340) 775-2528 NATURE AND EXTENT OF BENEFITS: V.I. Customs Duties to be assessed on raw materials and component parts brought into the USVI by the Beneficiary for the purpose of producing, creating, or assembling an article, good or commodity as a result of industrial or manufacturing processing such raw materials or components parts shall be imported into the United States Virgin Islands at a customs duty rate of one percent (1%). COMMENCEMENT DATE OF BENEFITS: Customs Duties Reduction Begins: Not Applicable TERMINATION DATE OF BENEFITS: Customs Duties Reduction Terminates Close of Business: Not Applicable AUTHORITY FOR BENEFITS: Title 29 V.1. Code §713c Chief Executive Officer, EDA: Korat cog Date:_ 4) >|. 9100 Havensight Port of Sale, Suite 15-16 St. Thomas, VI 00802 TEL: (340) 779-2564 Esika A. Kellerhals FAX: (888) 316-9269 erika@kfllp.com www.kfllp.com KELLERHALS | FERGUSON April 4, 2012 Via Email: pclouden@usvieda.org Mr. Percival Clouden Chief Executive Officer Economic Development Authority 5055 Norre Gade St. Thomas, VI 00802 Re: Suspension of Benefits Financial Trust Company, Inc. Dear Mr. Clouden: Pursuant to the January 1, 2010, Economic Development Commission Protocol for Business Closure (“Protocol”), this letter shall serve as notice that Financial Trust Company, Inc. (“FTC”) will no longer take benefits as of March 23, 2012 and would like to suspend its current Extension Certificate of Benefits, effective as of March 23, 2012. FTC is currently operating under an Extension Certificate of Benefits that was issued by the Economic Development Commission effective as of April 1, 2009. FTC is seeking a suspension for a period of twelve (12) months, however FTC reserves the right to extend the period of suspension if it should determine that the economic climate is not sufficient to support FTC’s intended operations. The decision to suspend benefits as of March 23, 2012 was made after careful review of the impact of the general decline in the economy and its impact on FTC’s business, in addition to the onerous impact of recent legislative changes on potential businesses for FTC. Attached please find an Affidavit detailing the employees that have been affected by the suspension of benefits including current salary information. Each affected employee received the following severance package: e payment for vacation days accrued in 2012 and not used; e three (3) months of severance pay; e a lump sum payment of Five Thousand Dollars ($5,000.00); and e payment of life insurance premiums through December 31, 2012. In addition, a Notice of Action has been sent to the Department of Labor advising of layoffs associated with FTC’s suspension. Please contact me if you need additional information. Very truly yours, SS Erika Kellerhals Attachment AFFIDAVIT United States Virgin Islands District of St. ‘Thomas/St. John) ss: I, Cecile R. de Jongh, being first duly sworn depose and say: 1 I am the Manager of Hinancial Trust Company, Inc. (“F TC”). 2. On March 12, ott. and | sR advised that their positions with the company were bein, ig terminated as of March 23, 20N!2. — 3 P| served as Messenger/ Custodian served as Head of Sccurity. 4. At the time of her termination J «2s receiving an annual salary of $25,000.00. 5. At the time of his termination, AE was receiving an annual salary of $50,000.00. March 27, 2012