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Home My WebLink About06/14/2012 Meeting •s• •s�s s��s• •ro• •'s City of App�e Va��ey CITY COUNCIL REGULAR MEETING TENTATIVE AGENDA JUNE 14, 2012 -7:00 P.M. 1. Call to Order and Pledge. 2. Approval of Agenda. 3. Audience - 10 Minutes Total Time Limit - For Items NOT on this Agenda. 4. A�proval of Consent A�enda Items *: *A. Approve Minutes of May 24, 2012, Regular Meeting. *B. Adopt Resolutions Accepting Donations: * 1. Nine Pairs of Fire Boots from David Phillips for Use by Fire Department Explorer Program. *2. $25.00 from William Block for Park Landscaping. *3. $500.00 from Celeste Rekieta for Valleywood Clubhouse. *4. $500.00 from Loren Hegland for Valleywood Clubhouse. *C. Approve Change in Corporate Officer for Blazin Wings, Inc., d/b/a Buffalo Wild Wings Grill & Bar #28, 14658 Cedar Avenue, in Connection with On-Sale Liquor Licenses. *D. Approve Special Outdoor Event for Rich Management, Inc., d/b/a Bogart's/Apple Place Bowl, in Parking Lot at 14917 Garrett Avenue and 7300 147th Street W. on June 29 — July 1, 2012. *E. Adopt Resolution Appointing Judges for August 14, 2012, State Primary Election. *F. Approve 2012 Goal Setting Workshop Summary. * G. Performance Measurement Program: * 1. Adopt Resolution Approving 2012 Performance Measures. *2. Approve Survey Questions for Program Participation. *H. Receive Police Department 2011 Annual Report. *I. Authorize Transfer of Community Development Agency (CDA) Redevelopment Incentive Grant to Economic Development Authority for Business Assistance Program. *J. Dakota County GIS: * 1. Approve Joint Powers Agreement for Maintenance of GIS Database Containing Road Names and Addresses. *2. Designate City Planner as City Liaison. *K. Approve Letter of Authorization with Ameresco for Preliminary Feasibility Analysis for former City Hall Building. *L. Adopt Resolution Amending Date for Receipt of Bids for AV Project 2012-108, Water Treatment Plant Expansion to July 12, 2012, at 10:00 a.m. * Items marked with an asterisk (*) are considered routine and will be enacted with a single motion, without discussion, unless a councilmember or citizen requests to have any item separately considered. It will then be moved to the regular agenda for consideration. (continued on reverse side) 4. Approval of Consent A�enda Items * Continued: *M. Approve Water Quality Improvement Cost Share Program Agreements: * 1. Bryan Koll for Raingarden and Native Garden at 1088 Rome Court. *2. Nancy Joy Hegg for Raingarden and Native Garden at 12968 Finch Way. *3. David R. & Bridget J. Holmen, for Raingardens at 5681 125th Street W. *4. Diamond Path Place Association, Inc., for Raingardens on Lot l, Block 1, and Lot 1, Block 2, Diamond Path Sth Addition. *N. Approve Apple Valley, Burnsville, Lakeville, and Eagan (A.B.L.E.) Fire Training Facility Joint Powers Agreement. *O. Approve Work Site Agreement and Statement of Work with Tree Trust. *P. Approve Professional Services Agreements with Braun Intertec Corporation for Materials Testing Services: * 1. AV Project 2011-105, Flagstaff Avenue Extension. *2. AV Project 2011-107, 147th Street Extension. *Q. Approve Agreements for Various Services: * 1. Pearson Bros., Inc., for AV Project 2012-103, 2012 Trail Fog Sealing. *2. Ron Kassa Construction, Inc., for AV Project 2012-119, 2012 Concrete Removal and Replacement Services. *3. Xcel Energy for Electrical Service Installation at Intersection of Upper 147th Street and Johnny Cake Ridge Road, Connected with AV Project 2011-106, Upper 147th Street Extension. *R. Adopt Resolutions Awarding Various Contracts: * l. AV Project 2011-107, 147th Street Extension from Flagstaff Avenue to Johnny Cake Ridge Road. � *2. AV Project 2012-102, 2012 Micro Surfacing. *S. Approve Change Order No. 1 for AV Project 2012-121, 2012 Sealing of Decorative Concrete and Block Retaining Walls, with Budget Sandblasting & Painting, Inc., by Adding $2,113.33, and Approve Acceptance and Final Payment of $2,113.33. *T. Approve Acceptance and Final Payment on Contract with Thompson Construction of Princeton, Inc., for Valleywood Clubhouse Project #0330 — Cast-In-Place Concrete - $3,257.05. *U. Approve Personnel Report. *V. Set Special Informal Meeting on June 18, 2012, at 3:00 p.m. 5. Re ular A�enda Items: A. Freedom Days Celebration: 1. Resolution Proclaiming "46th Annual Apple Valley Freedom Days Celebration". 2. Authorize Helicopter Landing in Johnny Cake Ridge Park on July 3, 2012. 3. Agreement with RES Specialty Pyrotechnics, Inc., for Fireworks Display on July 4, 2012. 4. Resolution Establishing Temporary Parking Restrictions for 2012 Freedom Days Parade. . B. Proclaim "Music in Kelley Park", June 15 and 22, 2012; July 6, 13, 20 and 27, 2012; and August 3, 2012. 5. Re�ular A�enda Items - Continued: C. Stream International Business Subsidy Assistance: 1. Hold Public Hearing. 2. Resolution Authorizing Submittal of State of Minnesota Investment Fund Application to Department of Employment and Economic Development (DEED) for Funding Stream International Improvements at Headquarters and Business Service Center. D. Apple Valley Business Campus: l. Resolution Approving Final Plat and Subdivision Development Agreement. 2. Resolution Approving Site PlanBuilding Permit Authorization. 3. Resolution Approving Development Agreement with Spowd Developments, LLC. E. Restated Memorandum of Understanding with IMH Special Asset NT 175-AVN, LLC, for Legacy North Area of Central Village. 6. Other Staff Items A. Cedar Avenue Transitway Construction Update. 7. Council Items and Communications. 8. Calendar of Upcoming Events. 9. Glaims and Bills. � 10. Convene in Closed Session, Under the Labor Negotiations Exception to the Open Meeting Law, to Discuss AFSCME. 11. Adj ourn. NEXT REGULARLY SCHEDULED MEETINGS: Thursday June 28 7:00 p.m. (Regular) Thursday July 12 5:30 p.m. (Informal) " " 7:00 p.m. (Regular) Thursday July 26 7:00 p.m. (Regular) Regular meetings are broadcast, live, on Charter Communications Cable Channel 16. (Agendas and meeting minutes are also available on the City's Internet Web Site www. cityofapplevalley. org) ... :.': : .... ..., City of App�e Va��ey UPDATE OF CITY COUNCIL REGULAR MEETING ACTIONS JUNE 14, 2012 3. Audience - For Items NOT on this Agenda - No one requested to speak. 4. Approved All Consent A�enda Items *: *A. Approve Minutes of May 24, 2012, Regular Meeting. *B. Adopt Resolutions Accepting Donations: * 1. Nine Pairs of Fire Boots from David Phillips for Use by Fire Department Explorer Program. *2. $25.00 from William Block for Park Landscaping. *3. $500.00 from Celeste Rekieta for Valleywood Clubhouse. *4. $500.00 from Loren Hegland for Valleywood Clubhouse. *C. Approve Change in Corporate Officer for Blazin Wings, Inc., d/b/a Buffalo Wild Wings Grill & Bar #28, 14658 Cedar Avenue, in Connection with On-Sale Liquor Licenses. *D. Approve Special Outdoor Event for Rich Management, Inc., d/b/a Bogart's/Apple Place Bawl, in Parking Lot at 14917 Garrett Avenue and 7300 147th Street W. on June 29 — July l, 2012. *E. Adopt Resolution Appointing Judges for August 14, 2012, State Primary Election. *F. Approve 2012 Goal Setting Workshop Summary. * G. Performance Measurement Program: * 1. Adopt Resolution Approving 2012 Performance Measures. *2. Approve Survey Questions for Program Participation. *H. Receive Police Department 2011 Annual Report. *I. Authorize Transfer of Community Development Agency (CDA) Redevelopment Incentive Grant to Economic Development Authority for Business Assistance Program. *J. Dakota County GIS: * 1. Approve Joint Powers Agreement for Maintenance of GIS Database Containing Road Names and Addresses. *2. Designate City Planner as City Liaison. *K. Approve Letter of Authorization with Ameresco for Preliminary Feasibility Analysis for former City Hall Building. *L. Adopt Resolution Amending Date for Receipt of Bids for AV Project 2012-108, Water Treatment Plant Expansion to July 12, 2012, at 10:00 a:m. *M. Approve Water Quality Improvement Cost Share Program Agreements: * 1. Bryan Koll for Raingarden and Native Garden at 1088 Rome Court. *2. Nancy Joy Hegg for Raingarden and Native Garden at 12968 Finch Way. * Items marked with an asterisk (*) are considered routine and will be enacted with a single motion, without discussion, unless a councilmember or citizen requests to have any item separately considered. It will then be moved to the regular agenda for consideration. (continued on reverse side) 4. A�roved All Consent A�enda Items * Continued: *3. David R. & Bridget J. Holmen, for Raingardens at 5681 125th 5treet W. *4. Diamond Path Place Association, Inc., for Raingardens on Lot 1, Block 1, and Lot 1, Block 2, Diamond Path Sth Addition. *N. Approve Apple Valley, Burnsville, Lakeville, and Eagan (A.B.L.E.) Fire Training Facility Joint Powers Agreement. *O. Approve Work Site Agreement and Statement of Work with Tree Trust. *P. Approve Professional Services Agreements with Braun Intertec Corporation for Materials Testing Services: * 1. AV Project 2011-105, Flagstaff Avenue Extension. *2. AV Project 2011-107, 147th Street Extension. *Q. Approve Agreements for Various Services: * 1. Pearson Bros., Inc., for AV Project 2012-103, 2012 Trail Fog Sealing. *2. Ron Kassa Construction, Inc., for AV Project 2012-119, 2012 Concrete Removal and Replacement Services. *3. Xcel Energy for Electrical Service Installation at Intersection of Upper 147th Street and Johnny Cake Ridge Road, Connected with AV Project 2011-106, Upper 147th Street Extension. *R. Adopt Resolutions Awarding Various Contracts: * 1. AV Project 2011-107, 147th Street Extension from Flagstaff Avenue to Johnny Cake Ridge Road. * 2. AV Proj ect 2012-102, 2012 Micro Surfacing. *S. Approve Change Order No. 1 for AV Project 2012-121, 2012 Sealing of Decorative Concrete and Block Retaining Walls, with Budget Sandblasting & Painting, Inc., by Adding $2,113.33, and Approve Acceptance and Final Payment of $2,113.33. *T. Approve Acceptance and Final Payment on Contract with Thompson Construction of Princeton, Inc., for Valleywood Clubhouse Project #0330 — Cast-In-Place Concrete - $3,257.05. *U. Approve Personnel Report. *V. Set Special Informal Meeting on June 18, 2012, at 3:00 p.m. 5. Re�ular A�enda Items: A. Freedom Days Celebration: 1. Adopted Resolution Proclaiming "46th Annual Apple Valley Freedom Days Celebration". 2. Authorized Helicopter Landing in Johnny Cake Ridge Park on July 3, 2012. 3. Approved Agreement with RES Specialty Pyrotechnics, Inc., for Fireworks Display on July 4, 2012. 4. Adopted Resolution Establishing Temporary Parking Restrictions for 2012 Freedom Days Parade. B. Proclaimed "Music in Kelley Park", June 15 and 22, 2012; July 6, 13, 20 and 27, 2012; and August 3, 2012. 5. Re ul� ar A�enda Items - Continued: • : (Removed from agenda.) D. Apple Valley Business Campus: 1. Adopted Resolution Approving Final Plat and Subdivision Development Agreement. 2. Adopted Resolution Approving Site Plan/Building Permit Authorization. 3. Adopted Resolution Approving Development Agreement with Spowd Developments, LLC. E. Approved Restated Memorandum of Understanding with IMH Special Asset NT 175-AVN, LLC, for Legacy North Area of Central Village. F. Authorized Transmittal of Letter to Dakota County Regarding Cedar Avenue BRT Transit Facility at 147th Street. 6. Other Staff Items A. Cedar Avenue Transitway Construction Update. 7. Council Items and Communications. 8. Approved Calendar of Upcoming Events. 9. Approved Claims and Bills. 10. Convened in Closed Session, Under the Labor Negotiations Exception to the Open Meeting Law, to Discuss AFSCME. NEXT REGULARLY SCHEDULED MEETINGS: Thursday June 28 7:00 p.m. (Regular) Thursday July 12 5:30 p.m. (Informal) " " 7:00 p.m. (Regular) Thursday July 26 7:00 p.m. (Regular) Regular meetings are broadcast, live, on Charter Communications Cable Channel 16. (Agendas and meeting minutes are also available on the City's Internet Web Site www. cityofapplevalley. org) �"'� . !' CITY OF APPLE VALLEY Dakota County, Minnesota May 24, 2012 Minutes of the regular meeting of the City Council of Apple Valley, Dakota County, Minnesota, held May 24th, 2012, at 7:00 o'clock p.m., at Apple Valley Municipal Center. PRESENT: Councilmembers Bergman, Goodwin, Grendahl, and Hooppaw. ABSENT: Mayor Hamann-Roland. City staff inembers present were: City Administrator Lawell, City Clerk Gackstetter, City Attorney Dougherty, Park Maintenance Superintendent Adamini, Public Works Director Blomstrom, Assistant City Administrator Grawe, Human Resources Manager Haas, Finance Director Hedberg, Parks and Recreation Director Johnson, City Engineer Manson, Community Development Director Nordquist, Acting Police Chief Rechtzigel, and Fire Chief Thompson. Acting Mayor Goodwin called the meeting to order at 7:01 p.m. Everyone took part in the Pledge of Allegiance to the flag. APPROVAL OF AGENDA MOTION: of Grendahl, seconded by Hooppaw, approving the agenda for tonight's meeting, as presented. Ayes - 4- Nays - 0. AUDIENCE Acting Mayor Goodwin asked if anyone was present to address the Council, at this time, on any item not on this meeting's agenda. No one requested to speak. CONSENT AGENDA Acting Mayor Goodwin asked if the Council or anyone in the audience wished to pull any item from the consent agenda. There were no requests. MOTION: of Bergman, seconded by Hooppaw, approving all items on the consent agenda with no exceptions. Ayes - 4- Nays - 0. CONSENT AGENDA ITEMS MOTION: of Bergman, seconded by Hooppaw, approving the minutes of the regular meeting of May 10, 2012, as written. Ayes - 4- Nays - 0. MOTION: of Bergman, seconded by Hooppaw, approving issuance of a lawful gambling exempt permit, by the State Gambling Control Board, to Apple Valley Sons of the American Legion, Squadron 1776, for use on November 11, 2012, at the Apple Va11ey American Legion, 14521 Granada Drive, and waiving any waiting period for State approval. Ayes - 4- Nays - 0. CITY OF APPLE VALLEY Dakota County, Minnesota May 24, 2012 Page 2 MOTION: of Bergman, seconded by Hooppaw, approving issuance of a lawful gambling exempt permit, by the State Gambling Control Board, to Apple Valley Sons of the American Legion, Squadron 1776, for use on December 8, 2012, at the Apple Valley American Legion, 14521 Granada Drive, and waiving any waiting period for State approval. Ayes - 4- Nays - 0. MOTION: of Bergman, seconded by Hooppaw, approving issuance of a lawful gambling exempt permit, by the State Gambling Control Board, to Apple Valley Rotary Scholarship Foundation, far use on October 20 2012, at the Apple Valley Ford Lincoln, 7200 150th Street W., and waiving any waiting period for State approval. Ayes-4-Nays-0. MOTION: of Bergman, seconded by Hooppaw, adopting Resolution No. 2012-107 amending the On-Sale Intoxicating Liquor License and Special License for Sunday Liquor Sales issued to Rich Management, Inc., d/b/a Bogart's/Apple Place Bowl, at 14917 Garrett Avenue, to include the outdoor deck and walkway, identified in Exhibit A, as part of the licensed premises. Ayes - 4- Nays - 0. MOTION: of Bergman, seconded by Hooppaw, adopting Resolution No. 2012-108 assigning amounts to the committed 2011 Fund Balance for financial statement purposes. Ayes - 4 - Nays - 0. MOTION: of Bergman, seconded by Hooppaw, adopting Resolution No. 2012-109 amending 2012 budget for uncompleted 2011 projects. Ayes - 4- Nays - 0. MOTION: of Bergman, seconded by Hooppaw, adopting Resolution No. 2012-110 approving the City's 2012-2016 Capital Improvements Program (CIP). Ayes - 4- Nays - 0. MOTION: of Bergman, seconded by Hooppaw, adopting Resolution No. 2012-111 approving a 10-foot variance from the 30-foot front yard setback on Lot 4, Block 1, Valley Oaks Estates Addition (13628 Gotham Court), with conditions as recommended by the Planning Commission. Ayes - 4- Nays - 0. MOTION: of Bergman, seconded by Hooppaw, adopting Resolution No. 2012-112 approving a text amendment to the Land Use Chapter of the 2030 Comprehensive Plan for Single-Family Development Densities, and authorizing submittal to the Metropolitan Council, as recommended by the Planning Commission. Ayes - 4- Nays - 0. MOTION: of Bergman, seconded by Hooppaw, approving the Service Agreement for One- Stop Permit System with Dakota County, for $2,000.00 plus a monthly service fee, as attached to the Assistant City Engineer's memo dated May 18, 2012, and authorizing the Mayor and City Clerk to sign the same. Ayes - 4- Nays - 0. CITY OF APPLE VALLEY Dakota County, Minnesota May 24, 2012 Page 3 MOTION: of Bergman, seconded by Hooppaw, approving the Joint Powers Agreement with Dakota County and the City of Rosemount, for Milling, Bituminous Overlay, and Median Construction along County State Aid Highway 33 (Diamond Path), as attached to the Public Works Director's memo dated May 18, 2012, and authorizing the Mayor and City Clerk to sign the same. Ayes - 4- Nays - 0. MOTION: of Bergman, seconded by Hooppaw, approving the Professional Services Agreement with Braun Intertec Corparation for materials testing services relating to AV Project 2011-148, Cobblestone Lake South Shore 6th Addition, in an estimated amount of $5,616.00, and authorizing the Acting Mayor and City Clerk to sign the same. Ayes - 4- Nays - 0. MOTION: of Bergman, seconded by Hooppaw, approving the Lease Agreement Supplement with Loffler Companies for 36-Month Lease of Mu1ti-Function Copier and Services, in the amount of $12,975.12, and authorizing the City Administrator to sign the same. Ayes - 4- Nays - 0. MOTION: of Bergman, seconded by Hooppaw, approving the Intergovernmental Agreement with the Metropolitan Council, for the 2012 Citizen-Assisted Lake Monitoring Program (CAMP), in the amount of $2,475.00, for Cobblestone Lake, Farquar Lake, Long Lake, and Scout Lake, as attached to the Natural Resources Coordinator's memo dated May 24, 2012, and authorizing the Mayor and City Clerk to sign the same. Ayes - 4- Nays - 0. MOTION: of Bergman, seconded by Hooppaw, approving Change Order No. 2 to the agreement with Keys Well Drilling Company by deducting $6,470.00; and accepting AV Project 2011-149, Well Pumps 1, 2, 18, and Low Zone Pump 4 Maintenance, as complete and authorizing final payment in the amount of $4,177.60. Ayes - 4 - Nays - 0. MOTION: of Bergman, seconded by Hooppaw, approving hiring the part-time and seasonal employees and resignation of employees, as listed in the Personnel Report dated May 24, 2012. Ayes - 4- Nays - 0. MOTION: of Bergman, seconded by Hooppaw, canceling the Informal City Council Meeting on June 14, 2012. Ayes - 4- Nays - 0. END OF CONSENT AGENDA FLAGS FOR FALLEN MILITARY DONATION Mr. Johnson said Flags for Fallen Military has generously offered to donate a flagpole in honor of Apple Valley resident US Navy SN3 Jesse Henry. He then introduced Colleen and Vern Betlach and David Larson. CITY OF APPLE VALLEY Dakota County, Minnesota May 24, 2012 Page 4 Ms. Betlach, Jesse Henry's mother, thanked the City for allowing a flagpole to be placed on the west side of the Hayes Community and Senior Center in Hayes Park in honor of her son. Mr. Larson, founder of Flags for Fallen Military, spoke about the organization's mission. Their organization is pleased to donate the flag pole in memory of Jesse. MOTION: of Grendahl, seconded by Bergman, adopting Resolution No. 2012-113 accepting, with thanks, the donation of a flag pole from Flags for Fallen Military. Ayes - 4- Nays - 0. APPLE VALLEY LIONS CLUB DONATION Mr. Adamini said the Apple Valley Lions Club has generously offered to donate money for trees for Apple Grove Park. He then introduced Mr. Len Kaehler and Mr. Don Johnson from the Lions Club. Mr. Len Kaehler, President of the Apple Valley Lions Club, said their organization is pleased to donate $300.00 towards trees to be planted in Apple Grove Park. He said the Lions International President's goal is to plant trees around the world. Since July of 2011, 46,178 Lions Clubs have planted over 9,575,000 trees. They would like to increase that number by planting four swamp oaks in the park behind Fire Station L MOTION: of Bergman, seconded by Grendahl, adopting Resolution No. 2012-114 accepting, with thanks, the donation of $300.00 from Apple Valley Lions Club for trees in Apple Grove Park. Ayes - 4- Nays - 0. COMMUNICATIONS Mr. Blomstrom gave an update on the Cedar Avenue transitway construction project and various road improvement projects. Councilmember Bergman commented on the recent improvements to Applebee's restaurant. Mr. Blomstrom explained the water restrictions which are currently in place. Mr. Lawell invited everyone to the Yellow Ribbon City Proclamation Celebration on May 29, 2012, from 6:00 p.m. to 8:00 p.m., at the Hayes Community and Senior Center. Acting Mayor Goodwin invited everyone to the Memorial Day celebration at the Apple Valley American Legion, beginning at 11:00 a.m., on May 28, 2012. CITY OF APPLE VALLEY Dakota County, Minnesota May 24, 2012 Page 5 CALENDAR OF UPCOMING EVENTS MOTION: of Grendahl, seconded by Hooppaw, approving the calendar of upcoming events as included in the City Clerk's memo dated May 21, 2012, and noting that each event listed is hereby deemed a Special Meeting of the City Council. Ayes - 4- Nays - 0. CLAIMS AND BILLS MOTION: of Bergman, seconded by Grendahl, to pay the claims and bills, check registers dated May 17, 2012, in the amount of $802,696.47; and May 24, 2012, in the amount of $727,420.54. Ayes - 4- Nays - 0. MOTION: of Grendahl, seconded by Hooppaw, to adjourn. Ayes - 4- Nays - 0. The meeting was adjourned at 7:29 o'clock p.m. Respectfully Submitted, � (�t, Pamela J. Gac stetter, City Clerk Approved by the Apple Valley City Council on ... y-. g. i .... ..... :.: City of App�e Va ey MEMO Fire Department TO: Mayor, City Council, and City Administrator FROM: Nealon P. Thompson, Fire Chief/J�� DATE: June 14, 2012 SUBJECT: Phillips Donation The Fire Department has recently received a donation of nine (9) pairs of fire boots from David Phillips. The Fire Department appreciates the opportunity to receive this donation and would recommend its acceptance. This donation will enhance the personal protective equipment that is used by the Apple Valley Fire Deparhnent Explorer Program. RECOMMENDATION Accept donation of nine (9) pairs of fire boots for Fire Department use to enhance the personal protective equipment that is used by the Apple Valley Fire Department Explorer Program. ACTION REQUIRED Pass a Resolution Accepting Donation from David Phillips for nine (9) fire boots. Attachment: Resolution Accepting Donation CITY OF APPLE VALLEY RESOLUTION NO. 2012- A RESOLUTION ACCEPTING DONATION WHEREAS, the City Council of Apple Va11ey encourages public donations to help defray costs to the general public of providing services and improve the quality of life in Apple Valley; �a WHEREAS, David Phillips made the donation of nine (9) pairs of new firefighter boots to the Apple Valley Fire Department; and WHEREAS, Minnesota Statues 465.03 requires that all gifts and donations of real or personal property be accepted only with the adoption of a resolution approved by two-thirds of the members of the City CounciL NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Apple Valley, Dakota County, Minnesota, that this donation is hereby accepted for use by the City. BE IT FURTHER RESOLVED that the City sincerely thanks David Phillips for his generous donation. ADOPTED this 14�' day of June, 2012. Mary Hamann-Roland, Mayor ATTEST: Pamela J. Gackstetter, City Clerk . � ... �, g.2. .... ..... .... City of App�e Valley MEMO Parks and Recreation Department 7100 - 147�` Street West Apple Valley, MN 55124 952 / 953-2300 TO: Mayor, City Council and City Administrator FROM: Randy Johnson, Director of Parks and Recreation DATE: June 1, 2012 SUBJECT: Resolution Accepting Donation from William Block Attached please find a proposed resolution accepting the donation of $25.00 cash from William Block to be used by the Parks and Recreation Department toward landscape items within Greenleaf and Wildwood Parks. Action Requested: Adopt the attached resolution accepting the donation of $25.00 from William Block. Attachment: Resolution . � CITY OF APPLE VALLEY RESOLUTION NO. 2012- A RESOLUTION ACCEPTING DONATION WHEREAS, the City Council of Apple Valley encourages public donations to help defray costs to the general public of providing services and improve the quality of life in Apple Valley; and WHEREAS, William Block has offered to donate $25.00 for use by the Apple Valley Parks and Recreation Department toward the planting of landscape items within Greenleaf and Wildwood parks; and WHEREAS, Minnesota Statues 465.03 requires that all gifts and donations of real or personal property be accepted only with the adoption of a resolution approved by two-thirds of the members of the City Council. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Apple Valley, Dakota County, Minnesota, that this donation is hereby accepted for use by the City. BE IT FURTHER RESOLVED that the City sincerely thanks William Block for his gracious donation. ADOPTED this 14�' day of June, 2012. � Mary Hamann-Roland, Mayor ATTEST: Pamela J. Gackstetter, City Clerk :::. '-�. B. � .... ... City of App�e Va��ey MEMO Parks and Recreation Department 7100 - 147�` Street West Apple Valley, MN 55124 952 / 953-2300 TO: Mayor, City Council and City Administrator FROM: Randy Johnson, Director of Parks and Recreation DATE: June 8, 2012 SUBJECT: Resolution Accepting Donation from Celeste Rekieta Attached, please find a proposed resolution accepting the donation of $500.00 from Celeste Rekieta in memory of her friend Vicky Jabbra for use by the Parks and Recreation Department toward the new clubhouse at Valleywood Golf Couse. Action Requested Adopt the attached resolution accepting the donation of $500.00 from Celeste Rekieta. Attachment: Resolution • r CITY OF APPLE VALLEY RESOLUTION NO. 2012- A RESOLUTION ACCEPTING DONATION WHEREAS, the City Council of Apple Valley encourages public donations to help defray costs to the general public of providing services and improve the quality of life in Apple Valley; and WHEREAS, Celeste Rekieta has offered to donate $500.00 for use by the Apple Va11ey Parks and Recreation Department toward the new Valleywood Golf Course Clubhouse; and WHEREAS, Minnesota Statues 465.03 requires that all gifts and donations of real or personal property be accepted only with the adoption of a resolution approved by two-thirds of the members of the City Council. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Apple Valley, Dakota County, Minnesota, that this donation is hereby accepted for use by the City. BE IT FURTHER RESOLVED that the City sincerely thanks Celeste Rekieta for her gracious donation. ADOPTED this 14�' day of June, 2012. Mary Hamann-Roland, Mayor ATTEST: Pamela J. Gackstetter, City Clerk t T �t . g. �--} ... .... ..... .... ... City of AppVe I af ey MEMo Parks and Recreation Department 7100 - 147�' Street West Apple Valley, MN 55124 952 / 953-2300 TO: Mayor, City Council and City Administrator FROM: Randy Johnson, Director of Parks and Recreation DATE: June 8, 2012 SUBJECT: Resolution Accepting Donation from Loren Hegland Attached, please find a proposed resolution accepting the donation of $500.00 from Loren Hegland in memory of his wife's uncle Donald W. Rice for use by the Parks and Recreation Department toward the new clubhouse at Valleywood Golf Couse. Action Requested Adopt the attached resolution accepting the donation of $500.00 from Loren Hegland. Attachment: Resolution r r CITY OF APPLE VALLEY RESOLUTION NO. 2012- A RESOLUTION ACCEPTING DONATION WHEREAS, the City Council of Apple Valley encourages public donations to help defray costs to the general public of providing services and improve the quality of life in Apple Valley; and WHEREAS, Loren Hegland has offered to donate $500.00 for use by the Apple Valley Parks and Recreation Department toward the new Valleywood Golf Course Clubhouse; and WHEREAS, Minnesota Statues 465.03 requires that all gifts and donations of real or personal property be accepted only with the adoption of a resolution approved by two-thirds of the members of the City Council. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Apple Valley, Dakota County, Minnesota, that this donation is hereby accepted for use by the City. BE IT FURTHER RESOLVED that the City sincerely thanks Loren Hegland for his gracious donation. ADOPTED this 14�' day of June, 2012. Mary Hamann-Roland, Mayor ATTEST: Pamela J. Gackstetter, City Clerk ,.. t-}-. G .... �• ::• ... City of AppValle MEMO City Clerk's Office TO: Mayor, City Council, and City Administrator FROM: Pamela Gackstetter, City Clerk DATE: June 1 l, 2012 SUBJECT: ON-SALE AND SUNDAY LIQUOR LICENSES - CHANGE IN OFFICER Blazin Wings, Inc., d/b/a Buffalo Wild Wings Grill & Bar #28 14658 Cedar Avenue, Ste. D Blazin Wings, Inc., d/bfa Buffalo Wild Wings Grill & Bar #28 has filed an application for change in corporate officer required in connection with its "On-Sale Intoxicating Liquor" and "Special License for Sunday Liquor Sales" licenses, at 14658 Cedar Avenue, Ste. D. Ms. Emily Clark Decker is an additional Vice President. A personal information form has been filed on this individual and the Police Department has conducted the necessary background investigation. The information is on file should anyone � wish to review it. � � City Code Section 111.34 provides for City Council approval of such changes and approval of the change in officer is recommended. Recommended Action: Motion to approve the change in officer for Blazin Wings, Inc., d/b/a Buffalo Wild Wings Grill & Bar #28 in connection with the "On-Sale Intoxicating Liquor" and "Special License for Sunday Liquor Sales" licenses, at 14658 Cedar Avenue, Ste. D, naming Ms. Emily Clark Decker as an additional Vice President. �PJg •sa �. D as•• •4wR• sre• •s.. City of App�e Va��ey MEMO City Clerk's Office TO: Mayor, City Council, and City Administrator FROM: Pamela J. Gackstetter, City Clerk DATE: June 11, 2012 SUBJECT: TEMPORARY EVENT LICENSE Rich Management, Inc., d/b/a Bogart's/Apple Place Bowl Attached is a request from Bogart's/Apple Place Bowl for approval of a temporary event license in connection with a community festival. The temporary event license will cover two outdoor special events: Dancin' and Cruisin' from 2:00 p.m. on Friday, June 29, 2012, to 1:00 a.m. on June 30, 2012, and a classic bike show and dancing event from 1:00 p.m. on Saturday, June 30, 2012, to 1:00 a.m. on July 1, 2012. Both events will be held in Bogart's parking lot at 14917 Garrett Avenue and the Merchant's Bank Building parking lot at 7300 147th Street W. Music will begin at approximately 6:30 p.m. on Friday and 2:00 p.m. on Saturday, and end at midnight. The request for the temporary event license is planned in conjunction with the 4th of July celebration and coordinated with the Apple Valley Freedom Days Committee. The parking lots will be fenced and security will be provided. A map of the area showing the setup is attached. A certificate of insurance, stating there is liquor liability insurance coverage for the special events has been provided. Minnesota Liquor Contral Division advises that State law does not specifically address this type of event; but, as a policy, they allow cities to approve expansion of liquor licenses for specific temporary events. The request by Bogart's/Apple Place Bowl appears to meet the State policy and can be approved by the CounciL Recommended Action: Motion approving a temporary event license in connection with a community festival for two outdoor special events to Rich Management, Inc., d/b/a Bogart's/Apple Place Bowl, on June 29 and June 30, 2012, and June 30 and July 1, 2012, for use in the parking lot at 14917 Garrett Avenue and 7300 147th Street W. �P.lg Attachments City of Apple Valley, MN June 1, 2012 Rich Management, dba Apple Place Bowl is requesting a temporary event license in conjunction with the Apple Valley Freedom Days festival from 2:OOpm on June 29, 2012 until 1:OOam on June 30, 2012 and again from 1:OOpm on June 30, 2012 until 1:OOam on July 1, 2012 to be held at 14917 Garrett Ave, Apple Valley, MN 55124. Alcoholic beverages will only be served in the north parking lot where the outdoor concert is being held. The entire area will be fenced in using plastic fencing with three controlled entrances (ref: map with red boundary lines) which will be manned by Bogart's Security staff. There will also be ten or more trained security personnel equipped with wireless radio communication patrolling the Car Show event as well as the concert area to help, assist, and protect the customers. Everyone 21 years of age and older will be provided with wristbands to prevent consumption of alcohol by minors. The Car Show will be held in the parking lot between Bogarts/Apple Place Bowl and the Merchant's Bank building. This area will also be entirely fenced in allowing patrons to carry drinks while walking through the car show. No alcohol will be served in this area. A variety of food vendors including Bogart's Mainstreet Grill will be set up to help support this event. A classic bike show is also being added this year sponsored by the St. Croix Valley Riders on Saturday, June 30 from 2:OOpm to 6:OOpm. Music for the events will run from approximately 6:30pm to midnight on Friday, June 29 and from 2:OOpm to midnight on Saturday, June 30 A certificate of liability insurance and event location maps are enclosed. Please contact me if you have any questions, concerns, or suggestions for this event. Sincerely, �I�' Shonda Sauter General Manager Bogarts / Apple Place Bowl �1IEST � �G�R �F��V�` M�EN �IU � R�hl C� �� _ ._.. ... _ G�+crE ! �H��'E� �CH��L APPLE PLAGE BOWL ��IUT[i �t}�T� �� Ff�{lD � � F{?�►Ll � � � �� BO GART`S NIGHTGLUB �li� P�'�10 a � �, ��ER � rv� �� s�� so�t�� o�� +� POf�T-�,-4�OTTI�� I �I , BEEF.TUB � % ?:'a` "T@- , � �` °�� 1� � BEER�I'RUCK I�E�TRIJ`��'�Ft _ �;;��.�s�:,�;_.� �4¢ �fi��,��; �, GATE 3 .r ...� ..—» � .. .. . . , .. . . •_ i , : t � �4�- i �� . � .`: `L . !� �'" -' � � � �` t � . �,.. .. . , ,»M. � .. .. . .... ,'� t. � �,,, �,,; r , ,:,' `"s�r� , a �a,,., _ . .. .. . • • . .. • . - . � . an... . . .. __.... ._ :y ... y' , �, .... •!AR• •wi• •Yi= City of App�e Va��ey MEMO City Clerk's Office TO: Mayor, City Council, and City Administrator FROM: Pamela Gackstetter, City Clerk DATE: June 11, 2012 SUBJECT: RESOLUTION APPOINTING JUDGES FOR THE PRIMARY ELECTION Attached for your consideration is a resolution appointing judges for the Primary Election to be held August 14, 2012. The individuals listed in the resolution have indicated their willingness to serve at the upcoming election. In order to serve as a judge, the law requires regular judges to complete a minimum of two hours of training, head election judges to complete a minimum of three hours training, and election judges serving on the Absentee Ballot Board to complete training regarding the handling and processing of absentee ballots. The judge training will be completed over the next two months. Recommended Action: Motion adopting the resolution appointing individuals listed in the resolution to serve as judges for the Primary Election to be held on August 14, 2012. �PJg Attachment CITY OF APPLE VALLEY RESOLUTION NO. 2012- A RESOLUTION APPOINTING JUDGES FOR THE 2010 PRIMARY ELECTION Douglas Ackerman AM Robert Dittel PM Kristen Moyer PM Mark Ellenberg PM * Anthony Nelson Sharon Jardine AM Sandra Pung AM Michael Rose AM Darlene Sandey PM * Richard Russell Judy Jackson AM � Bryan Peffer PM PRECINCT 2 Hayes Communitv and Senior Center - 14601 Haves Road * Janet Ackerman Brett Bublitz PM Estella Banham PM Muriel Gilbertson AM Leonard Pankuch AM Daren Mehl PM Cathy Smalec James Rextraw PM Peggie Stewardson AM * Shannan Menya Thomas Sagstetter AM PRECINCT 3 Westview Elementarv School - 225 Garden View Drive Susanne Holmes AM Paul Bergevin Merton Horne Corinne Johnson PM Judith Kessler PM * Brian Mahon * George Savanick Betty Lue Salisbury AM Deborah Wessman PRECINCT 4 Apple Vallev Communitv Center - 14603 Haves Road David Kurud PM Lori Gluck AM * Jill Middlecamp Arlys Jensen Sandra Nelson * Alan Marble Richard Neumeg AM Patricia Riedell PM Judy Sieve AM Charles Tichy PM PRECINCT 5A Hope Church - 7477 145th Street W. Charles Quinn PM JoAnn George PM * Phyllis Rowley Nancy Hlas AM Sharyn Schroepfer AM Walton Mahlum Jacquie Slovak Charles McLucas, III * Kelly Vorachek Dorsey Grothe AM Carol Greenlee PM PRECINCT 5B Mount Olivet Assemblv of God Church - 14201 Cedar Avenue * Karen Brean Camille Burin * Kaare Festvog Jennifer Cooper AM Ruth Morrow PM Penny Ebel AM Nancy Quast AM Kurt Erickson PM Shelly Sampers PM Adam Grinsell PM William Spychalla AM PRECINCT 6 Augustana Health Care Center of Apple Valley - 14650 Garrett Avenue Virginia Bergstrom PM Susan Pitt Anderson PM Audette Karan PM * Karen Bromund Ruth Keely AM Phyllis Feldt AM Joyce Miller AM Mary Ocel AM Judy Northrup * Stephen Placeway Naomi Owen Caitlin Taverna PM * Linda Paseka PRECINCT 7 Shepherd of the Vallev Lutheran Church - 12650 Johnny Cake Ridqe Road Judith Bolin PM Charles Funderburk PM Gail Sater AM Helen Judkins AM Victoria Swanson PM Mary Anne Lantz AM Steven Wilson AM Daniel Tarro PM Ernest Lenertz * Jim Madigan * Corey Neuman PRECINCT 8 Greenleaf Elementarv School - 13333 Galaxie Avenue * Judy Madigan Patricia Benson AM * Cynthia McDonald Lucette Cardey PM Jane O'Neill Delores Denny PM Monica Nolte-Reed AM Majken Hall PM Kevin Schleppenbach Judy Storlie AM PRECINCT 9 Communitv of Christ Church - 5990 - 134th Street Court Ron Finger AM * Ronald Burke Anne Gedelman PM Deanna Jorgenson AM Robin Gernandt AM Emilie Kastner PM Patrick Reisinger PM Mary Mueller Karen Seglem '� Brian Buechele PRECINCT 10 South Suburban Evanaelical Free Church - 12600 Johnnv Cake Ridqe Road Mary Jo Kelly AM Russell Davies PM Rae Klinger Kim Haddy AM ` Mary Markes PM Virgie Jacobson AM * Jeremy Morgan * Diane Johnson James Scavio AM Karen Studt PM Peter Teravskis PM PRECINCT 11 ISD 196 District Service Center - 14445 Diamond Path Rachel Baumann * Anita Burke Lynn Filipas Gerald Davis AM * Craig Huber Lawrence Debelak AM Mark Determan PM Robert Brown AM Michelle Hanson PM * Jeanette Hill Sandy Porter PM PRECINCT 12 Spirit of Life Presbvterian Church - 14401 Pilot Knob Road Lorraine Haines AM Pauline Dark AM * Patricia Horne Philip Hanson PM Monica Long PM Bonnie Sejba * Carolyn Pal-Freeman Rosann Svendahl Randy Bailey PRECINCT 13 Diamond Path Elementarv - School of International Studies - 14455 Diamond Path Janette Brost PM Susan Hegarty PM Geraldine Johnson AM * Darlene Lemke William Ohmann AM Mary Nelsen AM Lorraine Robeson * Rhonda Tufte Susan Roiger PM Lanae Gabert PRECINCT 14 Apple Vallev Municipal Center - 7100 147th Street W. * Cami Dirnberger Jerry Ewing PM * Michael Leick Francis Kremer AM Gladys McKnight AM Sharon Nygaard '" Linda Nelson Morganna Ochtera PM Elizabeth Neumeg PM Eric Sewell AM PRECINCT 15 River Vallev Church - 14898 Energy Wav Joyce Hoehne AM James Brown PM Terry McKnight Mary Jawish AM Warren Porter PM * Tracy O'Brien Dianne Richardson Candice Augustine AM * Patricia Kriegl Amy Steeves PM * Denotes Co-Head Judge ABSENTEE BALLOT BOARD AND ELECTION OFFICIALS Jean Bryant Jane Byron Val Abbott Rachel Banasiak Julie Carlson Andrea Froeber Cheryl Groves Peggy Faber Jan Graff Pequita Jordan Taylor George Melissa Haas Stephanie Marschall Charles Grawe Mary Mueller Joan Murphy Kim Harris Kathy Jo Price Jan Reiner Missy Nelson Lisa Reiten Judy Shirk Dorene Perkins Penny Stewart Mary Thelen ABSENTEE BALLOT BOARD AND ALTERNATES Cindy Bauer Linda Blake Jeanne Blank Karen Erickson Marilyn Boelke Fran Feldhahn Judy Finger Marian Flanagan Muriel Hilligan AM Rebecca Fry Dennis Hoehne Barb Gist Wayne Lofsness Judy Grubb Sandra Nelson AM David Gugino Deborah Reisinger ponald Hansen Mary Roberson AM Joel Huspeni Roy Stricker John Johnson Shari Thomas Sally Kettle � Rita Mach Ron Bailey Charles McLucas, IV Sally Christenson Gloria Nyberg Patricia Koors Linda Parish Wallace Melin Harlan Paulson Margery Nelson Mary Perrault Sandra Scherb Steven Tasler Chuck Tindell Stephen Van Gordon Robert Alander BE IT RESOLVED by the City Council of the City of Apple Valley, Dakota County, Minnesota, that the foregoing individuals are hereby appointed as judges for the Primary Election to be held on August 14, 2012, in the City of Apple Valley with the understanding that amendments may be necessary to the appointments in order to fill vacancies. Judges will be paid at the rate of $8.50 per hour and Co-Head Judges at $10.50 per hour for time trained and worked. ADOPTED this 14th day of June, 2012. Mary Hamann, Roland, Mayor ATTEST: Pamela J. Gackstetter, City Clerk �. � � !� ��l� City of � �� A �e MEMO pp� Va�le Administration TO: Mayor and City Council Members FROM: Tom Lawell, City Administr� l� .. DATE: June 11, 2012 SUBJECT: Adoption of 2012 Goal Setting Warkshop Summary DISCUSSION The City Council conducted its annual Goal Setting Workshop on May 4, 2012. Soon thereafter the results of the workshop were summarized in a draft written document which was distributed to the City Council and participating staff inembers. The intent of including this item on the June 14, 2012 agenda is to have Council consider adoption of the 2012 Goal Setting Workshop Summary. RECOMMENDED ACTION Staff recommends that the City Council approve the attached 2012 Goal Setting Workshop Summary to guide our organizational efforts over the coming year. ACTION REQUIRED Should the Council concur with the recommendation, a motion should be made to approve the attached 2012 Goal Setting Workshop Summary. Goal Setting Session Summa � ••�r �iii +�� i �� i� ° Schaar's Gathering Center Hastings May 4, 2012 Summary The Apple Valley City Council and Senior City Staff met on May 4, 2012 at Schaar's Gathering Center in Hastings to discuss the current status and future goals of the City. The discussion was facilitated by City Administrator Tom Lawell. The workshop agenda, roster of attendees, and presentation materials used at the workshop are attached to this report. At the session, the Council reviewed the City's Mission and Vision and discussed the various Community Keys as described in the City's adopted 2030 Comprehensive Plan. The Council reviewed City Accomplishments from 2011. They also reviewed the outcome of the last Goal Setting session held April 8, 2011 and the progress made in addressing the major themes that were identified at that session: 1) Financial Stability, 2) Work to Retain Aaa Bond Rating, 3) Long Term Infrastructure Management, 4) Asset Management and Street Maintenance Funding, 5) Valleywood Clubhouse and 6) Council Budget Direction. Looking externally, the group also discussed the economic conditions facing the State of Minnesota and other emerging issues on the horizon that might affect the financial health of the City of Apple Valley. While the State of Minnesota presently has a$323 million budget surplus, projections for the next biennium forecast a$1.1 billion deficit. The group also discussed trends related to organization needs, demographic changes, property valuations, property tax delinquencies, special assessment delinquencies and tax court appeals. The opportunity to decertify one of the City's tax increment districts was also discussed. With that as background, the group undertook a process of listing and prioritizing collectiv� goals for 2012-2013. A total of 26 possible goals were identified through the process. Once everyone had a good understanding of the identified goals, each participant was then given three colored dots by which they could vote for the goals on the wall to help indicate their highest priorities. City Council member dots were red and staff member dots were green in order to be able to differentiate their identified goals. Top identified goals for 2012 include: o Maintain Financial Stability and Aaa Bond Rating o Job Creation / Stream Global Ribbon Cutting o Cedar Avenue Reconstruction Substantially Complete and Transit Stations/Skyway Issue Successfully Resolved o Flagstaff Extension Completed and 147 Street Extension Underway (Economic Development Jobs Corridor) o Recruit and Hire Police Chief Additional details on the outcome of the goal prioritization process are presented on the following pages. Goal Setting Workshop — May 4, 2012 Indicated Prefierence Goals to be Addressed in 2012 Council Staff Maintain Financial5tability and Aaa Bond Rating Assumed Annual Goal' Expand Online Services Via Web/Social Media 1 Successfully Conduct Primary and General Election 1 Stream Global Ribbon Cut#ing/Job'Creation 2' 2 Cedar Avenue Reconstruction Substantiaily Complete and 3 3 Transit Stationsf Skyway fssue Successfully Resolved Flagstaff Extension Cornpleted and 4 3 147th Street Extension Underway (Economic Development Jobs Corridor) Support Higher fducation/Old City Hall Lease Successfully Administer Multiple Grants {$2.2 million) Completion of lce Arena Business'P(an Successfully Open New Valleywood Clubhouse ' 1 Replace ABLE Fire Training Facitity 1 2 Recruit and Hire Pofice Chief 2 2 Liquor Operation Transfer - Equal or Better for`2013 Select Pubiic Safety CAD/Mobile/RMS Software 1 Water Treatment Plan Construction Underway ' 3 Implement Pavement Management Project List Energy ImprovementsjSavings Neighborhood Preservation/Code Enforcement 1 Data Requests — Document Handiing Best'Practices 1 2 Staffing Analysis — Retirements, Vacancies, Priorities 7 Park and Recreation Prograrn — Senior Center, Arenas, Festivals 1 Cedar Transit Oriented Development Ordinance 1 2 Time Square Improvements 2 High Performance Partnership Projects Electronic Packets Budget — Park and Recreation Program Review City of Apple Valley 2030 Comprehensive Plan Keys to Success Key 1 — Sustainable Key 2 — Livable Key 3 - Business Oriented Key 4 - Employment Focused Key 5 — Safe Key 6— Play and Preserve Key 7— Healthy and Active Key 8 — Accessibfe Key 9 - Successful Downtown Key 10 — Learning Key 11 — Service City of Apple Valley 2030 Comprehensive Plan Keys to Success Key 1 — Sustainable Apple Valley is a place with outstanding quality of life. We wisely use the natural, economic, and human resources needed to continue this quality of life. We seek to provide the resources required to maintain and enhance the quafity of life for future generations. We plan our community in ways that sustain the clean water and air that are essential elements of the quality of life in Apple Valley. In doing so, Apple Valley aspires to be sustainable. Key 2 — Livable Apple Valley is a great place to live. We build neighborhoods of enduring quality and character. They are active, healthy and safe places. Tree lined, well maintained streets increase the beauty and comfort of our neighborhoods. Sidewalks and parks provide places to meet our neighbors. The places we live are well connected to parks, schools, shopping and employment. Apple Valley offers choices in housing that allow people in all stages of their life to make a home in our community. Apple Valley is an affordable place to live. We encourage residents to be connected with their neighbors and engaged in community life with a commitment to volunteerism. We promote pride in property that results in actions that enhance the quality, integrity and value of existing neighborhoods. We are committed to maintaining and enhancing the future quality of life in Apple Valley. Key 3 — Business Oriented Apple Valley is a magnet for businesses. We provide an excellent location, strong regional transportation connections, a skilled work force, and a strong market place. We work with the Chamber of Commerce and other business organizations to actively attract and retain businesses to achieve the vision for Apple Valley, while remaining committed to our traditional high standards of quality. We seek an expanding array of jobs, goods, services and entertainment that meet the needs of our residents. We encourage businesses and their employees to play an active role in community life. Key 4 - Employment Focused Apple Valley offers the locations, the work force and the technological infrastructure that create more opportunities for people to live and work in Apple Valley. Increasing local jobs helps to take trips off of regional highways, reduces fuel consumption, and lower air pollution from automobiles. Short commutes give people more time to spend with family and in the community. Particular attention is given to growing jobs with incomes capable of sustaining a family. Apple Valley's location provides excellent access to employment centers in Minneapolis, Saint Paul and southern suburbs. A variety of regional highways, quality transit systems and proximity to the Twin Cities International Airport give access to jobs throughout the region and the world. We play an active role in the region to ensure that current and future transportation systems continue to provide Apple Valley residents with access, choice and flexibitity. Key 5 — Safe Apple Valley maintains a strong commitment to safety in all places, at every hour of the day. Through excellent police, fire and medical response services, our citizens feel safe knowing that help is only minutes away. We are committed to maintaining high service standards by adding resources as the community grows and changes. The commitment to safety extends to our residents. Apple Valley is a place where we care for our neighbors. Key 6— Play and Preserve Parks are an integral part of the fabric of our community. Every home has walkable access to a city park. Parks provide places for us to play and to gather with our neighbors. Parks help to preserve the natural environment of Apple Valley. Apple Valley parks are not seen as individual entities, but part of a broader, inter-connected system. This system includes the Minnesota Zoo, Lebanon Hills Regional Park and local schools. We provide a wide range of parks and recreational facilities with the ability to adapt to the changing needs of the population. We are committed to providing the resources to maintain and improve Apple Valley parks. The City works collaboratively with ISD 196, ISD 191, Dakota County, local athtetic associations and other groups to meet shared park and recreation needs and make best use of our resources. Key 7— Healthy and Active Apple Valley's policies are designed to make it the model of a healthy, active and safe community. A comprehensive system of sidewalks, trails and bike lanes connects neighborhoods, jobs, schools, and other destinations as an integral part of our transportation system. We ofFer a wide range of formal and informal recreation facilities that adapt to the changing needs of the population. Food, health care and other essential goods and senrices are readily accessible to all Apple Valley residents. We plan our community in ways that sustain the clean water and air that are essential elements of the quality of life in Apple Valley. Through stormwater management, pollution prevention practices and natural resources protection, we will continue to protect and sustain our environment. Through sustainable design and development, we are more efficient users of our resources. Key 8 - Accessible The ability to move safely and efficiently within Apple Valley and the region is essential. Apple Valley supports a multi-faceted transportation system that can accommodate automobiles, mass transit, bicycles and pedestrians. Apple Valley should be a place of "great streets". A great street extends beyond the street surFace to the sidewalks and landscaping in the adjacent right-of-way. A great street provides for the safe and efficient movement of vehicles while encouraging travel by bicycle and foot. A great street supports and enhances land use. A great street adds to the quality of life and identity of Apple Valley. The street system should be designed to avoid unintended traffic patterns and volumes. Key 9 - Successful Downtown Apple Vailey seeks a unique, identifiable and successful "downtown" area. We face this aspect of the vision with realism. Downtown Apple Valley will not be a singular place, but a collection of strongly connected destinations that serve and enhance the community. The core of the downtown area is the four quadrants of the Cedar Avenue/County Road 42 intersection, creating a setting different from the "traditional" downtown area. The scope of downtown Apple Valley continues to evolve in form, use and density and has expanded to include Central Village, the Transit Station and Fischer Marketplace. The downtown area wifl be first and foremost a place of commerce. It is the location of the goods and services needed by Apple Valley residents. We envision a downtown area that includes a growing mixture of places to shop, work, live, and play. It must continue to be the civic core of the community. While businesses require safe and convenient access by car, the downtown should be designed to allow people to reach it and move within it on foot or bicycle. Key 10 - Learning The quality of life in Apple Valley is inextricably linked to the quality of educational opportunities. Educating our children remains our highest priority. Schools are not only ptaces to fearn, but they are focal points of community life. Learning does not begin with kindergarten nor end with high school. It is a life long activity. We seek a future with increasing opportunities for continuing education located in Apple Valley. We work in strong partnership with Independent School District 196, Independent School District 191, Dakota County Technical College, St. Mary's University and other educators to achieve this vision. Key 11 — Service City government provides the services, infrastructure and land use controls that touch every aspect of this vision. While city government is not solely responsible for the vision, the vision cannot be realized without its leadership and stewardship. Quality leadership and excellent stafF should be continued hallmarks of Apple Valley. Gity government should be responsive to community needs, holding firmly to community standards while retaining the flexibility to seize opportunities. The City is a partner with businesses. City government sets high standards for its financial stewardship, making investments that pay dividends in quality of life and affordability. The quality of city government ultimately lies in the hands of our residents. We must care enough to become informed and involved. Governance in Apple Valley encourages and facilitates public involvement. Goal Setting Focus Session Friday, May 4, 2012 Schaar's Bluff — Hastings, MN Mavor and Citv Council Mary Hamann-Roland John Bergman Tom Goodwin Ruth Grendahl Clint Hooppaw Administration Tom Lawell Pam Gackstetter Charles Grawe Melissa Haas Finance Ron Hedberg Police Jon Rechtzigel Fire Nealon Thompson Communitv Develoqment Director Bruce Nordquist Public Works Todd Blomstrom Parks and Recreation Randy Johnson Leaal Sharon Hills Li uor Scott Swanson �-. G � - �. • � � CITY OF � � � � APPLE VALLEY MEMO •��• � � � � Administration Department �� TO: Mayor and City Council of Apple Valley Tom Lawell, City Administrator FROM: Charles Grawe, Assistant City Administrator DATE: June 14, 2012 SUBJECT: Adopt Resolution Adopting 2012 Performance Measures and Approve Survey Questions for Participation in Performance Measurement Program In 2010, the Minnesota State Legislature created the Council on Local Results and Innovation (CLRI). The CLRI created a standard set of ten performance measures for cities intended to aid residents, taxpayers, and state and local elected officials in determining the efficacy of cities in providing services and to measure residents' opinions on those services. On June 23, 2011, the Apple Valley City Council adopted Resolution No. 2011-96 adopting the ten performance measures for 2011. The City Council is now being asked to continue its participation in the program for 2012. Participation in the program is voluntary. However, participating cities are eligible for a reimbursement of $0.14 per capita in local government aid and are exempt from levy limits if levy limits are in effect. In June of 2011, the City of Apple Valley adopted a resolution to participate in 2012. The City is required to file a report on the collected measurements by July 1 St Attached is the performance data that was collected in 2011 that staff intends to submit to the State Auditor. Also attached is a survey instrument developed by the League of Minnesota Cities that addresses the performance measures specified by the CLRI. The results of the survey need to be publicized and shared with the community. Staff proposes to publish the survey on the City's website later this falL Also attached is a resolution making the necessary declarations and commitments for participation this past year and intended participation for ne� year. Staff recommends the City Council approve the attached survey questions for release to the community later this year and adopt the attached resolution adopting 2012 performance measures as recommended by the CLRI. Attachment CITY OF APPLE VALLEY RESOLUTION NO. 2012- RESOLUTION ADOPTING 2012 PERFORMANCE MEASURES AS RECOMI��NDED BY THE COUNCIL ON LOCAL RESULTS AND INNVOATION WHEREAS, in 2010, the Legislature created the Council on Local Results and Innovation (CLRn; and WHEREAS, in February 201 l, the CLRI released a standard set of ten performance measures for cities intended to aid residents, t�payers, and state and local elected officials in determining the efficacy of cities in providing services, and measure residents' opinions on those services; and WHEREAS, participation in the standard measures program by a city is voluntary; and WHEREAS, on June 23, 2011, the Apple Valley City Council adopted Resolution No. 2011-96 adopting the ten performance measures for 2011; and WHEREAS, in order to receive the per capita reimbursement in 2012 and obtain levy limit exemption for the calendar year 2013, the City must file a report with the Office of the State Auditor by July 1, 2012, with specified declarations. NOW, THEREFORE, BE TT RESOLVED by the City Council of the City of Apple Valley, Dakota County, Minnesota, that the City declares that it is in the process of implementing a local performance measurement system as developed by the CLRI; that it will report the results of the 10 adopted measures to its residents before the end of the calendar year through posting on the City's website and in the quarterly newsletter; and that it will survey its residents by the end of the calendar year on the services included in the performance benchmarks. BE TT FURTHER RESOLVED that the ten performance measures for cities as described by the CLRI are hereby adopted for 2012. ADOPTED this 14th day of June, 2012. Mary Hamann-Roland, Mayor ATTEST: Pamela Gackstetter, City Cl�rk s:\planning�ndl-docs\comp-pin�res-s&a.doc City of Apple Valley Performance Scorecard Performance Category � � � �� 2009 — �Q1� 2011� �i �'��, i�iih�i��in��ti�� 49376 � �#� 49,801 Population Estimate � i�� ; �,� , � _ General Government ;��!a�� I� �Il�j�q� J�� 9il�r��oo� �. � Percent Change in Total Taxable Market Value � ��3� -138% � _ -7.08% � �;�lii,�l�i�� i�i16iIP � �Hiii;� IiiPiiiiiio�E = { �� II y N �� `N �1itii ° �i�li�R�H'� � — i � ''�' � �� ij' "�� _ , pil� E ' I -i (ilil�lo) _ — �—_ —�� —, u ,�=„ _ = � €�� =En�imil��l��'tlJd�� _ ��i�� —i __°�;� i�[��9'��ill�6�((�I��II�I�"��h�atlahl�i(I'I��IhIii41I�'i�,alll6 iII II � �pyhiC � inioi��6��INi��Iii!�� Part 1 Crime Rate per 1,000 residents (violent crimes) -� 3L1� �� 27.67 ��"� 24J0 Part 2 Crime Rate per 1,000 residents (non-violent crimes) � N ��i;��, 5148 �� =��i.�5 41.61 Average Response Times (minutes) �� ;A&' 6 27 ��r � 6.11 � Number of Arrests � �'„ ��2�7�' il 2,137 y� �� 1,963 � Number of DWI Arrests �' � � �� 288 � ' 2�� = 213 Number if Traffic Citations Issued U ��,�� 7,997 ��r ,il�d 7,587 ISO Rating ��i � 3 �" ' � 3 Fire Call Response Time Under 5 Minutes � �,� �� '�) � ��' �°° 41% �� 7� 40% � .. ui�� (��U� � � . � o ��I�� ! ` o Fire Call Response Time 6-10 Minutes � � 48/ _� �� 51/ Fire Calf Re onse Time Over 10 Minutes � �- �� 11% 9% p ��Ih,�� i ��I� �p �� Number of Calls for General Fire Service ^ ` 1307 �.„��1 1408 � , i� �u� � �� 9 ��,��i�� i� � 4 � �� n �� N � �� u i � �� i i n�� li��I� = ��'1�9�9a .�io��i�l�� s � � � ,� _ � �. � "��`` �a�9 ��r��° ��; 50 � Number of Parks � � � 49 ��r�tdr��ut��,�� Total Acreage of Parks �� i) 847 `�� 7� � 879 Total ParkTrail Miles �� 65 ��a��i��'�� 65 ��I�Ui��ll�90�� il� � " � � � i�i i i I� i I -0II� ��i�� (� �� i�i �� '�Y��- ° ��II G � I � �'�, ��I � �— - � � � — y-= � � �II � I i�'�,. � ( ' :... . ,, i I i ii..° r i�il��i,nl� ��' r �� (��- _ _ . i�., � il�� uiil I _� Street�Lane Miles Maintained � �� 405 �jlr��`� �� ,� n � � 408 Cul-de-sacs Maintained � � --�� 314 � w. 329 Snow/ Ice Removal Events (�� = 48 � �� 29 ��d�� Overall Streets Pavement Condition Rating �� I;�+�u�u��p N/A � =�� 73 Water Operating Costs per million gallons of water pumped � �1�� $ 1328 �� $ 1,128 � Number of sanitary sewer blockages per 100 connections ��'��,�� i9�1�'�� 0 013 �� ` �� 0.013 Page 3 SURVEY INSTRUMENT Performance Measurement Program Citizen Survey 1. In which city do you live? 2. Indicate the number of years you have lived in this city: years 3. Please enter your email address [this will be used to help ensure that people don't respond more than once]. 4. How would you rate the overall appearance of the city? a. Excellent b. Good c. Fair d. Poor e. Don't know 5. How would you describe your overall feeling of safety in the city? a. Very safe b. Somewhat safe c. Somewhat unsafe d. Very unsafe e. Don't know 6. How would you rate the overall quality of fire protection services in the city? a. Excellent b. Good c. Fair d. Poor e. Don't know 7. How would you rate the overall condition of city streets? a. Excellent b. Good c. Fair d. Poor e. Don't know 8. How would you rate the overall quality of snowplowing on city streets? a. Excellent b. Good c. Fair d. Poor e. Don't know Page 4 9. How would you rate the dependability and overall quality of city sanitary sewer service? [would be replaced with city-specific alternate for cities without sewer service] a. Excellent b. Good c. Fair d. Poar e. Don't know � 10. How would you rate the dependability and overall quality of the city water supply? [would be replaced with city-specific alternate for cities without sewer service] a. Excellent b. Good c. Fair d. Poor e. Don't know 11. How would you rate the overall quality of city recreational programs and facilities (e.g. parks, trails, park facilities, etc.) a. Excellent b. Good c. Fair d. Poor e. Don't know 12. How would you rate the overall quality of services provided by the city? a. Excellent b. Good c. Fair d. Poor e. Don't know Sample alternates for cities that don't have water or sewer (or create your own as long as they are similar in structure to these): • How would you rate the library services in your city? • How would you rate the emergency medical services in your city (e.g. ER, paramedic services) • How would you rate the quality of environmental services in your city (e.g. solid waste, garbage collection, recycling)? • How would you rate the fiscal management and health of your city? • How would you rate the quality of the transit services in your city (e.g. busses, dial-a-ride)? • How would you rate the quality of licensing, permitting and building inspection services in your city? • How would you rate the quality of code enforcement services in your city (e.g. zoning, property maintenance)? T � M E M O R A N D U M TO: Mayor, City Council and City Administrator FROM: Acting Chief Jon Rechtzigel DATE: June 4, 2012 SUBJECT: 2011 Annual Report The Apple Valley Police Department is pleased to present to the City Council the Apple Valley Pofice Department's 2011 Annual Report. The report provides a summary of activities during the year, as well as the many initiatives of the department. Recommendation It is the recommendation of the police department that the City Council formally accept and acknowledge the receipt of the 2011 Annual Report. Action Required: If the Council so desires, accept and acknowledge the 2011 Annual Report of the Apple Valley Police Department. J R/pyj Enclosure Annual Re ort p 2 O11 �pr � � , �s � ttl. '— �.:� 4� �� . ' T ( ,. �.ds .: .: . . � �c ,�^. —rn � YJ' i�",�O//i.✓ � . . ..�v � . �. a l$ 3d l i �� ` y�+ . �{ t , (N ( �� / f�p i" .. R ,�a"�CY c�,� � � � 4 � � *�_.� � � � �. � �. , � � s. k i �N u�� r U 4 ( � i UY ; I ��i�i�� +�+wr � �'� irr91f ii�t I� � ,�� .��1 � p ir ll ( I _ R'�\ � � "� : � �� .. A le �alle Police De artment pp y p Apple Valley, Minnesota THE 20'! 1 ANNUA6. REPClR'9' OF 'PHE APPLE ilALLEY Pt�?LICE DEPARTMENT � � � � � ��„ � - �� t's�.� , �� ,, s � —� �� ;' ° � s � �� ' _ , . m � a � , � ,H,�, , � ....,; �. w� � � s-: �,�,� ��,.w�,� � _�� ' ;i� ��` ' `� � � � - � ' � A " �'��,�'�-.�1�e�suge ° � �,; , Recar+ds Un�t � �a � •' � .: �� , �� ,. 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'T��s�'a� �e c�ffi��r� ��au � � i� 6{ ��, � � �� ii;a��'��aa�is a�rivtug tl�t��: � �. `� 3 � , �N;;�� ; , ;' 4�Q0 � . � � ; �r �c��munun�€ty in�i� €��'��`Ic '- an��hi�� qi7rac� �ars d�l�e,��ali�� - ' � '��r��t�s �u�° r��de��nd visz�Qr� �: 2�C? ' � Th�Z�i�is�� co�r�sed �p��sp-, � � � '' a�;� ; � � �p� k�� c� ��a��; �� "atr�l �'ic��; � � � � � �'� t�t�0 ' �p�l,�'�'��;�nt T��°Cl��ezs� � � � � � ; � � Ca�i�t� ��t'a� 3 par�-ti�.ne C�mLnu- ; " , 2#l417 '' � �#�t�,TB ��` :, �O�tl r i�i `3�i�1 ' x t � ;;�� i � �` : t i i ; ; : �� CI II �� i�1�iW �111VV.kY' � � i i i: � • _ � . � i i i �. � -� I .� � I t - I I I �� I I � �{. : �� - i � I I I I I � � �. �I4 �� l1Tii1�,' �� 1 �l� �lf1T��SIiYY� "112�ri BriC� - � � � � � � ,� � _ 1�U(3111�ll Ck��i[> �r Iti!` �� '��C!'�£Q�r �' r � ' ' i � � ; � ; �' PP : � . �' ° � � ;� � � _ � � � �TJepartmen� iespc�� at��r ��(� t , . � . ' � � ca1�s �CC�r �er�;�c�� ere a pa� 4f�'icer ; � � � � � � � � � , � ws� �qu�e� ar neec�ed.=��{u' �fficers � � � � ��c�xked,dili�� ix �rz�er °to imprc��e ` � ' � ti�e qi��t� ��1ife in c�ur communit� �c�r e�ery reslden�. � �� ' � ' " � � � �� ' � � ` �.� � �� `° � [ �� Wher� it ac�m�s to tz�r yea3'�end�~e�iew " - ` c�ur c�rga�tizatitan'1a��su�a��r�1 �,an � - , �" � ; � eff�.rt�c� �valuat� ��t just �hat we did, �! � `� � but l�Qw wn�; di�. We are particularlY � ,; con�erned �it� the g�zality �af s�r�ce. , . ' : `� � .. ofF�re�i�nd �e pro��ctian we pravide '°" � to c�ur �ommunity. ' THE 201'1 ANNt�AL REPt3t2T OF THE APPd.E 1dAd.6.EY P�?�ICE DEPARTMENT Page �i 'I � I � � n '�� -� � ' ,�, � �� - _ � - � �� r � ,� �. I �i� . '�; , �: �!� � .��C4�a �c�unty�u�ti Agen�c�► � � , � Assistanc� Group - , �� , ; ��_ �� . ,�; !'�"�e I�ulti-Agency Assistance Group (MAAG) is made up �f 37 officers �rom 11 � ' j�isc�ieti�n� within Dakota �ounty:l�I1�G is a SWAT team that is �alled tt� �= ' ,' ' ��is� lacal agencies with high risk situations. These inelude high risk search �r �s`. � �� rest warrants, barricaded suspects a�d hQStage situations. The members of the � ��+��a �re highly trai��d in tactieal c�peratic�ns. ' ,;. � �� v�� z „ �� 2 . �� '� � � � 1?r�k� ta �� t�r I.��rug �� Task Fo rc� � � , � .. �� i �� ;, � ,; � r�, � � � r e : ` .. ; ;. . : � ��. �,. "� � 5 �`� ` ��4� 1 n I �� I I Y I � p ��l�lli r� ; i : The App1e �al�� 't�1r�e Department cornrnits one fiill time of �' ��i� ' ficer tc� the I�akata �c�unty Drug Tas� F�r�e on a ratating basis. Mas� dr�g �vestigati�ins le�d c�fficers vvell outside the city limits y , � ri � `'��.�p�e Val�ey. Each agency in I�akuta County, in addition to i � ��` � � ��e Savag�; Police I3epar�nent, has at le�st one officer'�vorking �.° r ��r - c►n the T�sk �t�r�e. Thes� ag�nts war� eo�lectively to inve�tiga`te ' :`�� '� � �a� � , '- �an.� prc�sec�te dru� crimes in Dakota Cc�unty and bey4nd, ,� ' `�'�� team is available around the clack seven days a week to'assist a�fieers �ith, drug ! ,' �rests or'investigations, Many times, � drug investigation leads to'weapans viola- tians ar ather seric�us crimes. With that, the Drag T�sk Farc�; works clo�ely witls s�at�; and federal �gencies as:�ell as prosecutors. The:T�rug Enfo�cement,Ager�cy �ia�ts a two w�ek dr�g', scl�+�ol .for new agent� tc�'attend: '�'he �ay-tn-�iay o�er�t�Qns are fast pac�;d and dangerous. Agents undergo eontinuc�us training throughc�ut �e Y�• 2fl11 �roved t4 be a bus� year for #he �akota County Drug Task Force. Agents made 70� drug arr�sts, executed 22b search warrants, seized' 22 �ehicles us�d i� t3rug '; crimes, and r.et�nved 54 guns frc�m the streets. , �� T�i� ��i 1 1�PONL1l4� R��1Rg f1� TF�I� I4PPLE VJ�1�.i.�Y ��E.ICE �EPAF��E�N'P �� 1�a�e � ��u, _ _ � � v� _ a � _; � 'I � I � ,u � � �� ' _ �� , � "� , � �, � : � � � � � � , = z� , s � ' i . � - w ; � � �� ;, ; � . k i i � i � . [: i; u.: � — , 5 I �� i . i � � �i . � � ,. . � E � d a� �"'n _ � � i i i i�i i i i � , �� ' b5 � i� �� i —� 5 � _ ��,3'' �y �� -"�', " � `� — iii� � i�� r 4 &� . s 3'�, ' ; , , ",'. " ;` , _ _ ' r _ ` �41 � �� :i��-�� ar �� rc��raxn: C7��ii>c�' E�a ��,��1��, �i;�,��r I� �� e� : � � ,° � ��3a�r �vere in�t�l��d �� ii�p�cayments; �h�� i�clu��e��i�,� �d�g �� n� �s1s�� a , , `� � }; � ��h�r age�r�� s 5 '�� .a�ar re�e��d_P�tr�1 ��,� �� i��r� � , ��r� �°� �'� t_ ': �� k�V�� #ll3� AW �� iLilV��A�]1�� ',. � i t�� f T � �' Y * i i i Ii�� d � �� i 14 i � � �� ay i � 4 i � K � ` I 4J' N � �� i � � i � i 9 i ,..: i i jYq{' � i �vk`' � i � i� � {,!bR ^' I 4 : . }� i i ; I 5 �5i 5'` i i —`° �� I I � I I I . I� "� I� � � � � I I I . i 5 t r . `� ' � � i' i � �. � i i � � i `� �`y _ : iii�� i i��i o-i � � $. i i �� Y � ( i � ��,�� . �.,.. � s i i i i ,: '= : �� ; i ,�-.� *�, - i i : i� i t a,k i ui�r� i tam ",s � � - ii i � a� ii� �ii � i — i : � � �5 � � 4�a� c ,.� y � � i � � z ii i i i i4 I ` n i '�, I � i . `�i i �"i i� � '� . i �i i i ' . i w ; i�� - � :i ii i , 4 � � � � "� " ''��s � iiu,� : i i ii �. i.i i�� Y � ir . ��. ' � �'�� i i �� i �... . i . �' ��,. .�. � tl� �� ; i . � . � � �° �r; i � i'F s t i i � ��. t� s � i � �„ i � '. �k ,�. �. � i ?i � �' N � i i �q Pb� � �a�, ii ' 1 i ? �^ '' � �,i i t � F a � � a � } ':� Fi� � �i I � i .: i : "V$h- ` p�� I — � � � - I � - � i iF E ..' 1�" ' " Y I 7�c. i i :. �' Sr � ` ' � � � ii i � �` � �i � � e �., � , .�, : i i i � � � � ; ii� ' �+s � � r � "� �' ' �i � `� �iit 5i U� �i,�'. a. - 1�i � �i.= x ,� yrt .,'�,,� ^ �ii r' ii�� ; �i " i ?ii i; i i, i �a � — � i n = � i .S - �`" ti iii � �:' . � "� �" = '�i�i �J A � �Ii �� , _` + t � S I i i '' - * iii E � ii � i�" - � ; � �� ; ; � � �,�°� � ,�� ,�: �� s ,,�';. _ � � i "� �� wU�„ai� �„ � ' : �� `�R e. �� r � ;� �'�,i �r. „y � ..r_, ' w, „I °� ,; a — � k1� � 4' � � ��`� �r�' � � _k � � �— l� � _? �, — � _�' , , a: r. I�� i �- �� € ' +�` � � -v..n... �� 4 r . .��.,.� ,�_ � 3� ` ° � ' " f� r n � ,. ,, � , � s ; : � � � �' � � '_ G ; , '� 'i'HE 2�19 ANNU/�� t�P�'}RT OF THE APPL� VALL�V` PO�.ICE D€PAR'1'MENT F�age � 'I � i � _ � i , '��eci�a� �pe�a��ns �'ea�' �, , � , � . , � . � , r.� � �, �� „� � ,. � � , '�e T�akc�ta Ccr��y ��al �perat�cros T�am � �'{DC�U'�') is a��t�p��rativ� effart ��'�ublic safety agen �„ t i cies in I�a�c�t� �t�unty. D��C3T currently �ocuse� on � �-i�ci�n�s in�t�l�ing �az�rd�us �aterials,'�� Weapt�ns c�� ' � � Mas��stru�tic�n, 'fiechnical R�pe Rescue, Confinecl i '��ace Re�� ar�d Tr�nchl2escue.i �� F ` � T�e �eatn �t��sists o� 36 mernbers �rc�m p�3ice, fire and - " � , : ;E�VI� ag�.cies wi�1�n �e-county. Tea�n members oper-' ��, , r,, f, ' ��t��s,�g�1y �killed�re��ueis, �vhi�e ens�ring t;rirne ' � ` �� , ;. _ sc��.pres�ati�r�� and. the �actieai sa�'��y �nd rescue of ''�� ,� `�; ,; � � ' thc�� in�c�lv�r3 in�� ine�c�ent. The D�SC�T is availa- _� ��`-. � n -��, . . � w b�e t� �si�fi ��enei�s �itk�in I3a��rta C�unty with �ci' " ,. ;, ' cients u�hic`h �eq�ire �dditi�nal resources o� �pecialized Con}'ined Space Trnining ; ,.sl�lls. - i��SC��:�s part 4ft�ie 11��nxi�sc�ta Stru�t�ra1"�iilapse i Tearn a�ui ��e�ota Task'��irce°C?�e, Togethex with ' �inneapr�lY�,`.�t. Paul, Edina an� ��chester Fire'-De- � �. �� " ' `� ' partin��ts, the� res�ond��t��pecialized.equipment � � � �� w '�� andt��iued �ersoun�l �o ��ist,a�it� searc� a�d res��, � � � � : �ri��t�cling s�nic� collapse inciden�s thr�ughout �in-; , � n�t� � � � � � _ � ` � � � �� ' ��fi�r Se� M�T�nig�a't � currently assign:ed to the �� , tea�'�� is a'. tearn cc�arditlator on I3CS(�T �nd a tearn ' � '' : ! 1�a�er with �Iir�n�:s�i`t� Task �o��e O�e. � � �� ; ��.. � �`,. �� ; , � ,� � .�r- � a ,--� � � � � � �'� � ��.� � ,, �� - �� ,; � � � �: � - � ��: � � k � ;. � ' . ' � �� , Uf�cer �Sean �lclCnighl ��gaged in �'! ; firearms tr�ining in,�isl� Haz M�zt geur, _ !i � �' i' �� . �r ,,;� - ;�. � � I �' p �� ° , . �' �'� n� <� ; � r � � ��, � � � � ��iw� � �� "� 7 �� "d� ��'� �� .� ��.�� .�Ci� ��/�� .I i � 1 , � �9�� _ _.. �� s� .- � .� �I i � � . �� ; r ' ' � t .a. c �,� � . ; � ��_. 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HE 20'! 1�9NNUA� RIEPOR'i OF 7`HE APPLE \01�1�.LEY F��lL6�� D�PA1tTMENT P'age � 'I � i � _ , , �� _ � � � � �� , ' ' ' �C�am�u�i� �erv�ce lJffi��er� ; , ' � ' ' , �, � �� _� ,,,� ,' �ervice C?��i�� are nan-sworn, u�formed e�ployees �vhc�se c��ties and r�spon��biliti�� o �i�t �� t1�e �t�enti�n �f � licens�d�alice afficer: 'I'��y;ar� full-time ccallege �#�uc�ent�,aenr��e� iii arla� , enfc�rc�m� prc�gr�rca an� ��xk part-tim� fc�r the palice dep�rt�nen�. The%r��uties i�iclude a��i�ti�g strand - ~'� m��c►ris�s, `��estigating animal `health a.�d nuis�ti�esissues, traffi�c direction, fi�ge�ri�ting,�tr�s�ri�r�g , � � ; "��den�� ar�d. �sist`�g �vit�t v�icle lack-ou��'�. ` � ' ' , , : ' � s � � �,; ,� � � � ' � a�. ` ��„ � �' �ti � w " � — ' �y� � ' � �, _ � ,a r-; ' ,, '" �' i �� , > • . > � � �� ` � �:I tir ��` i ,. � � � ` � ,• � r _ � . ' �. � � , �. ... i i; : ��, � �, 'a .,,awr � �' �w — , i"; ° .' �' �. � �,: �,,.i" ' = " � � �,`. �%•� � �� tl t ( � �� .p�� .W� �, ' ' ` ' ` I r . �: . 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Ui i y,�,� �� i t . ' _ _ � — � t, .+, ' � i �� i i`} `,v �u � ' � �"x � � i , �� ai a " � �� i�i f� : 4. , � �� d. = �i " � i i _ . � �� i, �� E� � i i�i r — a, e � �� — � ��,�� - . i Hi i. i i , ii � �ii � i '�-� �.. � � �; _ 1 # `�' - �{d�i9i " i/� s . �'� . � �. r i�, i i � �n' V� �rat'�r 70�� '�) �' ��6 �'�s � � � � � � q a I i i ! � � ,� � °�a � o .� i . � �. �� i i i i `�, i i „ u i i t t r . �� t � ��.� ��' W�I�Jp�t�� _ � � �� : ' �Xs'� �� "'��h, � � � . .'E� �IO� � �tt�p" �� ;,�. Ti� ii i�i '• � _ � y�,�V�� '��: : � —`�' i �, ' � � � i ; i & _ ��'k�a'�r'�2 �� i � ��7^'1G�� '��V��17�� ° ii � i i� M '- �a ih R"bi � g�..� � �� nsur�a�n�e ��n = " , �� Y 5y � I4 i i . L i� ^ffiS�I . , s Mra� Ts�> � � I I �y I I ' �� `l.t�I��I �� I � �P�� ,��_ a �� x� �T �,�`.�� > > ' � ". � ��"; , "ti � ' =I� �� y � �� r� 'W��rg� y� � �� , e, .. � � � �, T , , � �: �rf �ri'��c�� ' � � � f I` t I I t I � � � � �I I I . I YI I II � I. I 5 i r � �ii � �, �i :`i i � i = 'i Q r "� � i i i �� f _ �,��.�.�� '�, � . �J� �$�: 5 �*�'t+��l�t1e� W� � � �� 4� � " t ' � � � ';. �� $34 �73i' �� , , Se�sBit�'l� ' �fl ° ; , = 1�' - ��hild 'I��estra�r�# '' � .. , �, ; � � 1 �i . ;. !. 2,76fl Ec}�iptnen� � - 477 ' � . '.1,� 12 i;��s�el��r�e+�u�" ` � , ., The.��r�� +��unt� Trif�c S�.�et��'rcrject was cr�ated in:2UQ5 tc� r�uc.� the;;��mk�ert�f fatal,`, � � inj�3'; ar�c� �cca�c��-r�il�.t�� ras�e� t��ot� �ou�at��oac��ays> The ��e��`��ses c� �ed�ca�i�g !.�ivers �d enfarcing ira�fic 1auFs. � � ' �; ' ,,, � '�HE 20't 1�►NNtJJA�. IZEPOFET �� TH� APP�.E \f1��.LEY Pt1L10E DEFARTM�1+�� a�e 11 'I � I � � T��t�� .��e��it�on �vc�luatir�� ,� �'rr�g�ar� ; i , , , �, , - _ �� 7 ��., � _ _ � � - _ � , , � �� , �� - a ,, � �� , � �. �� , , � F� � � ' �;� � � +X _ d .-R, >}—'� J �' ( u � _ I I I� l �' � — ` y ; I — I � :81_ — '.I k 1' _ I I _ � I I - I� I , :I � ° �inc� ��1�5 #1�� .�pp�e �Va11ey Poii�e Dep�ment has been an activ� memb�r caf the Drug Rec�gr�t=; , '�``, �ac�n Eval�ation (D�.E) P�ogram. Currently in the State t�f Minnesota ther� are 92 �.gen�ies .a�d � 1'�7 ��cers dedicated #Q t�i� �rQgram. The �pple Ualley Police Department has thxee �ffi��zs wh�r are cet�i��d �rng �ecQgni�ian experts3 S�rgeant Nick Francis (2045), C�fficer 3ae1 H�r�zuk A (2fl�18) �d U�'ficer Dan Schyma (2�10).; 'I'�e �erti��atic�n prc��ss t'or becQni�g a�� is very inte�tse and typi�ally 1�t� £aur trr si� w�eks: ��' �n�e �e�tifisc�,! D�� s mus� c�mplete a minimum t�f two e�aluations in frc�nt of an instruc�tc�r eacl� e ; ; year as we�l, a�'ta��e p�.rt in �n �nu�1 in-service training. In 2�11 Officer Hc�razuk completed �he �►�Eu��t��r �,�urs�e �.r�d �aecame t�e department's second instructor (Sergeant Francis ��08). ; �s uu�s�ctors,;th� �articip�'te in the aru�u�l cerEification Qf new I)RE's; assist c��cers in the �� x��;rtif c�ti+�n � and �eaeh during the in-service training ses�ions. ' �*' , �� ;, '� ��E'� �re ��fa�ers �vi�c� u�e �eir �pecialized training fio detect i�pairment in t�rri�ers �hen �lcqho� ��s b�n rul�� ut. T�e pri�n�r� �� af � T)RE i� traffic related but often time� DRE's are °used �rr� �,�; m�i��3s, cr'�sis ��snplai��C� �c. wh�n drug impairment is suspect�cl. Whether a T�RE' is c��.u�t- ' i�� an �valuativn a£ their ovvn, assisting :anather �officer or agency'the s�me s�stemati� #�?v��v� s�ep p�c��s zs perf�rmed: At thh�; �d c�f the evaluatic�n, �he DRE deterrnines which c�� the sev�n drug ; categc�ries is �au�ing t�� imp�.irrnent. Often mc�re than one cate�ary is prese�t, In ��l 1,' Apple �7�.11ey DRE'� cc�nducted 12 ev�luafians c�n suspected drug impaired driver�, Apple ��l�ey T?TtE's;are a valu�ble asset to the tca the Apple Valley Police I�epartment as �vell as ' i� surr�unding �.gencies in prc�rnt�ting I)WI enforcement. �' - ��'aa; 'TH� ��1 ^� t�Nt�4.�;�A�. RERiJR 6` �!� THE AE��E taAL.ILEY 1PCi�.tGE LkEP'AI�Y�fl�N�'_ ��' �� l�age '�� _ ,�� . _ _ �.� � . 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' �� . , .'_ ; ,; . : ' :'. ; , i i+ . �� !� ��GL�� < _ _ ti�s ,�� i � �e - - �s _ i`� '� - i i me� �, ii i i � n�r i i i`i i��. - '� _ = t� ri : i i r ` - - _ - ° _ : _ , '�ie �ce�rc�s `�� er��a�s �. ��y c�� uppc� �erv��es ��rwk�� 1�� nd �c� w � � �ate �im�t�c�a � �espc�� u�� r�m �i�fi�cer�,ln�e�t�g��irs ��; ��iu�1��.� �� a� ' .�v��ual� �st�� t�� it ar� t�pi��e ��r t�i�; 3n�,i��a��e ar�� ai�i�i�� I t�� d�� ; ��eratec� b��the d�pa�ent ih�r��c�ut th,� y�a� '�`�.i� ��is� �� t��r' ,��1{� new recc�r�� I , � � � , ;� ge�era�� a�riaa�l� , , ,, ' , ��, , �� ' ' � �� ',� � ��:,,'� 'i � ir ' � ' The �� rr�� hes�e rect�r�s i�uo�� ''u � ,�,,�� u il � � � �he c��lect��n,��c�rd�u,�-�p�art��tg, ��ea�e �nc��tc�r �� '� � , _ , �� i � � � � �" age c>��ese r�rc�: T�.is � ��t�m��i�h,�� a�- ,I � , ; � �x ii i .4 :� , cc��danc�; �i� �1ie ��ci�� ri�a1 �c�m,�►is- r�� ; �'�� i�� iii , s��n �u��s, �tat� c�� nnesc�� c�rtin� re�}�ix� ; � ��; y ��" ` ��t�, c�urt Qrd��, �bpo�as, �r�l�c d��l�sure �� °" �� xeq��ts, an� �cti�her f�der�`l and state r�pQr�i�g r+e� �� s - ��i �_:_ quir�nenfs ;; � , � � s` , , � � ��,�� r, , � �� ; �-. � b �� ;�� ;. Thes� ��sk� ��id1�d �y ��en full-fii�� ,an� �n� . pa��-�me s��. � � ' ' - ' ; .��`Ze T�'ull�y Palice .Recnrrls �Tnit (fram �eft} B�v ' � � „ �rr��e, �ec�rls �'iaper�i��r S�e�th hfetlesmr��n, �u�l� ; � ' �uri�s', �,ur� ;Tl�nta, .�3�b�+Gievil� u�t T�ry , . - ! �cN�tty. �issy,�elsan a.�d.�lice Hnus� �at�ric�ure� TWE 2Q11 ANNUAF� �tEPORT O� 'i'HE APPLE VAL��Y Pt?LICE D�PARTMEN'9" Page 13 I I 1 ' ' � � , , �. ; , ` ��esti�atior�s Un�t: � �� - , �, T�i��stigation� unit's prima� res�ansibility is t� follow�up�n crirn�s �evmmittec� where �e susp��t ' _� i� ur�Cnown �r.�3i�ficult tc� Iocate. They �l�o �ake primary lead in many of #he maj�r case in�e��igafiiQns , such ��c��ce�y,.��rglar�� and criminal sexual assauIts. Detectiue� canc�ct intervie�vs, c�ilect evidence, ' ; p�c�s� �e�;a1' x�que�ts, �a�ecut� ��:arch warrax�`ts and cc�nr�uct follow-up case� tc� en�ure +cr�z�ina� �har��s a�e �c�u�ht. u ;� ' �;_ ��sc�.l day for a D�t��tive includes,�orki��.g �� a number of th�ir 8-Y2 cas�s t�at a�� typic�lly �iss- - ;,, ..sign�t� tc� �em. iM�ti�taski�g is � must in th�s �nit as � Det�ctive might wnrk �n Ic�catirig a dang�rc�us �u��c� rc��bbez� c��e minute, �d intervie�v a uictim .c�f a violent crime the next. �ha�� c�me cas�s '; ;, �� cc�me '�c� a qui�� n�l�sica�s,��tl�er� �ni� ht take mc�nths or ye�r� tQ complete the inv�stigati��, c�epe,�� < i�g can `the ��d��ive assi�r�ed the cal�. t�etec�ives �re o�z :�aIl az� nights and weeke�cis and =�fte�i get .,.; =�all��in �n th�eir �£ftirne tc� �ssist patxol with com�ale� i�vestigati�ns. , � . � d , „ ,, , � �� °� >�'�e ��fiiv� fi:�n2t is �cc�m,pris�ed of ane Sergeant, �c�ur Detectives, an additianal Detective assig�ed ; � �`�c�� tc� the Da�cc�ta Cc�unty T�rug Task Farce �nci one Evid�nce '�'echnician. Two c�f the D�t+ee�ives ro `r .' ta.te t��a�gh �� unit on a�ne-year ar three! year assignment and �wo' other Detectives are a�signed t� ' . �+� �it perrn�nei�tly. ,; , �'1�e �Z.let�t;i�� had a ��ry husy ye�r'i�,24�,1. There was �. �harp increase in �he nu�beri�fi�vestiga- . ,. �i�ris�o�cl�ict�c3, dzi��o #he sh4rtag� in patrol, jurnpi�g fram 498 in 2fl1� tc� 6(?3 in 2Q1 l. �'�rt of this�: . in�rea�e w� due tc� anewl� �nacted massage �rdi�ance which required backgrat�nd checks ana11 mas- sage l��si�se� an� �nplc�y�e� �'�ughout the city. �a�es in 2011 includeci � 77 U�ckgrc�ur�d ��vestiga ;: ti�� l��i thefts� 77 �i�ancial fraud�,; 3S eri�inal'sexual assaults, � 1 pred�.tory aff�nder,registrati�n ' �erific�.tions, 24 ehilc� prutection cc�mplaints, 2I burglaries,l9 assaults and 7 robberies. The Det�c-�; ti�s�s a7 sc� �ssist Qffieers, pr�seeutc�rs, � �r��a�� n `#�f`icer�, and social ��rk�;rs i� - � �vide variety of:o�her ir�vestig;a�i�n� � a #,�t•c�ug;houfi��he y�ar, � � �4�pii �� i ' , , ' ' ,�r„'; � �� „'. � ,�� ,�i; h �, ��, i ; �� ,�, � , �. �� , a �. � � ° �'��; � f�� ; �,p �,* , �� - � � � <,� ��° � ��. �„� �� - � �� - - � - �� m -, � � 7'H� �tt11 t� �.lRL R��OR1' �F TH� AP��.� VJ�LL�Y PC?LI�� iE�t�l'�7°iUIE T �� £ ��e 1� I i � ' ' � � � � �b, tt,e � � � � ,�: ; �v�, � �„ �� s� � �t„ � �`�� _ ' '� �. y , I I I � ��' ��1'��ate ��'� - I � � � ; , � � �� I _�� - - � �� ti � 5 �' � � � � r��z , , u .�,. � �. , x �� , « , �: . � �� , � } � ;. I � I � � k i I II y � . i `� ii i i � i �:� ; ,- i �, ? �w�r��er � z�e��e� ��'��lle� Pc�1�� epar�ent h�s a��i�et��a c�� ss t�� `��t�l �i�m� �3ffi��' �� r �vo��.��s€�l��i�,tb��ir��s� c��s, ��,�ger� �tt� �� e, cri�n� ��tica�, �har��n��a�i�z� �nd rais� ��ar��ss � th�=�i�i�s� c�rnrn��i�� i �i �`� � � ; � �!� ��el Tie�z s�+e+� � `�e �.�tt�� c�i�t�; (7F��er �ng ��J� � a �v�ki�g �,�� at`��`�1r�p, ��.�a�� at #�� v� �� `��i�cing,�� so�vi�ag �nes �`iq� t�� s� ��mmu�i�ty ��; '� � _ _ � � � I� � � - ��' _ ' �`� , i: ' o- = ' " i ' ' � � ( ` �� - � .,;� - � �� ' cal�� ,?�a ��`��ed l�� f�� t�l �ri�n� +�3�� a��ud��g, �nxer�� y� ��rFeit �c�r+en�� f��ne�:,��. Th� �.�ail C�me {`��cer��rd�at�s re�i��.� ' ;' t * � �at�� 'a�n,� �w'1�Eh��s� pre��►��ri �a�� "�n�. u�� w�h `�ar�� r ��k �nst�t�� , � ;' � � ��;, ,� �c�� abb�ry p��'�on �n� �� .��g , �� '� �� '� 'r�, � � � �,� �� i ��a � � � �� z � , „ � � , � � � � � �� f ��ch ��s �akes ��.�� hr�ii� a n�n pa�� +�x�a�ixza�� c�1�ci �,p�� .��y B�s�ess ��.�� , t k , � � j Busi�� `tch was �a��1 �� r�u� ��ep�r��e��ti�� le �� .��s�=c��nw�ity tc� �; `�el� ��ii�t� r�l��p� �n the �� a�iunit� �n�� #��'_��:.��y � ��,�i�i�� t�h �� t� �r��e acri�� ia� areas.; I�e�are��.�iues fri�m 1ci�� z��in�s�� t.:��;ularly� �� and a.ddress cz�rn� �i��te� in �e busi�� mmunity. The Bus�ri��s ��tch B��r� �1�� plans �� ; � ti . ... Jv r i i � i ii �va, �mm�i�y.�vents thrc�ugk��a�� ii�i as the ��a� �3usin��s '�'�� c�n� ��ne preven- ;' ; i - ' i " i � .k # � '�IL�°� '�I'�1Tt1Tl� ��k��1�1'�� ; I � I � , _ � �� " � �� .�4 I i i r� i i t � ) �� i' � , < . ! i : : � ' . .. �n 2Q11, #�e ��`t�l �r�m� C7��r �a��t��;� to wc�rk with �he �'I��e� I?ep��t��`��b��c ' �'� ��►3��1 ancl C3amb:l�g ��rc��n�nt i��visic�n t� cc�trd�ct a�lc�h� ��r�e��war��.�,�.'`�� ; � � �� .�il d��`ic�r ��c�,�� w�tt� a�h�z �i� c��rh�ents tt� �on��t � ci��t�� a��n , d��b�s�. ,�`�us s�r� � � ��;r��ra1 r�pt�sitc�ry fc� �xusi�+�� anfe�rtnat�t�n �� al t�i ��ie��i�e a3aci fire ` � ' _ � ��, � �i , �e�iart�ei�ts. � . _,. ; �, , � � v , �+,�'Y .� ! r ? ` ,:,�, �t i ., �n , ' . , ; • i' .r ��. i G _ 4 ' K 'I I I I�I�I � I I �III tI� II .• Gt�,� i� � 1 = — II�i� i�i'� 9.� a � i � i . �r ' ii� 4 � t Sa t � ��' �� i ' �4 " � �.:��.... . , .. � .� � , � � N.v '� � . i ' � : �� ... : `:. � ''. � � ' y. �� g . y �@ . � g iy^v .. ' �4a�d � ' � �� .. ��"�i� . _ � �, � �� : ' . . ^ i ' erre . . -_ �.: k f , � � � + " " � ,, l?ffic�r .IMich�l Tis�z prese�tti�t,g in,�`�rmatinn a�t �Y`�sc�p� � �� unn .�'raurl trr �h� �usin�ss Wa�h �rou� �� '1'H� 2011 QNNUAL REPORT OF THE APPL� VA��.�if E�f7►LICE DEPA1tTMENT �a�e 16 1►• ' ' I � � TM� ��b�rh�r�d �oll�a�ac�r�t�c�� ,�'ice� t ; � .. .�''rc�gram {��C�P) ' - ,��6 �� - �� , _ , °' �G'rime 1�'�ee �1��-��usi� � _ _ �, , , The App1� �a11�� F��ice `-Departarn�t partners with land�ords and tenants in the Crim� Free �ul�i- �,�c��g pra�ram. ;��n�; Free Mu1ti-Ho�sing is a three phase prc�g�ram which includes ��vner�rn�a��r ��uc�.t�o�, a,premise suruey, �c� annual �enan`k �eetings. The purp�se of th� �r�grain is to edu�at� `,. . � i�ndlor� and ten�nts ta ��lp �hh�m 1c��p their prvperti�s and harn� free �f �l�egal acti�i�y. �`he A�ple ,��;� �c�Ii�e I3epa��t��artners wit� neighboring p41i�e departm�nts to pravide �Cr��e Free �u��i= ' �Ic�us%�t� ��nage� Training. ' , �� t � . x ., � , � ; T�e Crime �'re�v�n��n..S�eciat'�st and Multi-HouSing U£fieer �ost mc�nthly manager/owr��r cc>aliti�n ; me�tings� The meetin,�� are an oppartunit� to share infarmation and dis�uss issues releVant �o �wning ' i and c�p�rati�ig ren� property in Apple Va�le�. ��ners and managers ofrental properties are pra�de�i with ineident summary repi�rts.�f palice calls that occurred an their property. �'haring t�is �fc�rmati�n ��s c�wner� and �ai%age�s �ta� infc�rm�d about what is happ�ing fl� their prapert�es sc� .they can �+�W; dress��enant,si��es ir� a tixneiy manner: A� irnpc�rtant part of this cflali�i�n i� ta enco��ge c��ners anii ' ' m��ag�r� �c� com� �oge�her tc� sh�re �r�£c�rrn�tion a�3d man�ge th�ir properties frc�� a erim� pre�`�ririti�n' � �#anc��z��nt. , � , � ; ; � ., i i � ; x , i i: i � . , . - �:, .� _ , ;� 2011, th�� I��Up `P�gr�am sei ��ot�1 c�� 35 aparime�t and tfl�vx�ome �o�nple�c�s. �e�en of th� �- ; apartme�t camplexes prc►vide hflnsing fc�r seniars, 'six townhome cornmunities provide affordable �c�r�� '��rce �ou��g; �1 ar� ��rtm�t cc�mxnuniti��, and �vc� are manufactur�d hausing c�m�ui�.ities;` ;��}11 the Crime Prei��nti��.��e+cial��t �nd t�e Multi-H�using Q£�i�er part�ered �ith ��ars�s fram i Fair�i�v ��,g� fi.� prc��vide free flu �ho�s t� the carnmunity, The flu shot clinic was h�1� in c�n�ju�,cti�n ! ';�#h �. cc��nmc�ity.'rn��g ior res�dent� t�f �edar Knnlls;�Vtanufactured Ht�using �c�m�t�ity to addre�� ' canc�ns with crime and j�ve�iile rni�chief fhat �vas occurring in the neighbcarho��. T�ie �rime �'re�entic�n �pe�ial.is�t �d th� Multi-Housing Officer ai�v reached out to the residents at � Academy Village. , They'•provided and �er�veci pizza to the youth in �the neighbarhood a�d sge�t�'time �talking and building relationships. �� '� �,�'�� ,� �� R u � m ; ��'� � NG��i�si�►�; ?'v �ie a relational and educautionul pre�- ��" ence in our c�r�mu�ity and immediately'addresr crime and '� � � � �� en � �_ _ � � �� qual�t,� vf'lif� is�ues �t the�r rovt. ;° „ � <�• �,� `�`�^�. �°�`�� #��'�'�'�``�� R zi«j � � � 7'�� a�'91 l�[dNUAL I��P€3E8'�" C2�'�'l�IE /4P��.� VALL�Y P0�10E ��PAig�"MEPB'�' � ;� Page 1� � � „� t _� � � , � , m _ � � �� ,� r � , t1� ' ' I � �i � '' ,,,�� a �� u � � � �� r � i iii wk,Sy.G�h' ..;wiiiie``y��i��i�Y,�� ``�-' h E.�. i � ( � i� i �� bfa � i . i , ,a� 4i � �i � iii . � i � i i i �� : � . '; � _ , �ii _ � :. � i i � L�� : _ J. r i: i i 4'st{.w . � � i i i i' : : i i� i , . 'Tii� .A,�pT� ��le�`��'��'�eg�tme�nt:��tn�r� ��th �t��ende�t ��"h�� is�ct 1��c� as- � � � Y I � " i Y ; � - i i r , � _ �� t�� aa�� 2fl�� tc� App1� �� } �c�c�� dl� _ � � � . ; y ' ��uo��a�� .� �zth�c�c�c�� r�lstr�ct st��`�r��he ��a�i ��, �� sJk�� ' �; �� ;� � ��n�<< � , � �� e . � � � � � � p�n�r�lup a�1"lc��'`��`s �a bein �e sc�i�c�i b��din�s ��nd`�� u��y x��`�,��th;r�a��i � � ; � ��n , � ��s ��_��1i��,��t��'cs�ir�i��kc��e�s��, �� r�d�� du � .�� : , � � � c�.t�a� b� m�ng pr��ent�t�n� c� p�b�� saf�t� d��i �rirn � �°��e �� e ��u�� , , � �� x � � i � � � � � � � , � �: � �. h � � �� , �� . , 3 � ;� �� ''� In 2�11, flffi�:r ��z�g �a�r� ser��l �s�� R� a� �a.s�i� ��i��,��e�r 11�1�; � ! t� i i� ' � �`� J ' i%v 3 i� y � ii ' ii �� ,a � �µ � �i� s�e�. a��p�e "��.�'�� ;�c�ic�+��, ��, �}��r �� et�+� �� :,k � � a ,, � k �; , , .� �a1�.�y.`s��'��ta��u��r,�l��'�� a��`£ ��=��.��,��. �r.�� r��c�r � �,,' � � � � , � I�� rde� r��ac�d Q��er Gu�mert �.t �� fiart �f k�� `2�� s�. �cho�� i � � ' �' i . 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Tl�� ;�� 1��a�� t �+�ld�n�� vi�es ��h��a� ��i �. ��s�� t w r �,=_ _ ��tact��tands�es�h�c�1 env�ari��z�tan�=��g�r��,sa�e�a�sue�� e ��"" ;_ _ ` �R�C►s ar� °n�� '�`��'��l �z�°'�ie c�.�-t�-�day �fiuden'� ��ie's* �h� ��'�� ; µ � _ �E� ��c�c��iices, ��r�curri��ar events �� pro�i� ; � ' � �s��s ��itic�� ; c�, - �,ct ca� ��en�s �i �n�c�ui �;l�t�c�nshi anc� � ac�tbi�i � i i ' - � �i i , � �� : ,�, � � N ;, , ��,�� _ � ,,� � � � ; , � , � , �, � � � ` _ � �� , � � � ' ��II ! ��'�� ' � �f�ic�� n �a,s s�l��d by tl�e �� r' � As��at�c� � �� ' � � ��l � �aa��sc�ta �uv�eni�e C�#�ic�r �r�#h�'�earx Tb�� a�arc� �a�,pr��a� ��'��a� , "�r� ; ' , � '_ � �� " i ; ��' � � � _ ' ,' ; ' : '' ; , ' �, ; � � , , ' ; , � � k � � � � _ F'`'J �'I I l `, {iA �� ii � i � ' o- i sY�_ v` III iii�i�tb W� i t. � i4�i i�: ' II �Q � i ' ��i � _ i I I I i i � t �� — . d � i y ,i i; III Iii ' , i � : : i � u ,,asi�� .sla� it � ' i� i � � iiFs � _� i � ��'' Y 4 - � ' �a � �b h IIIy� � �� ii i � i 7 �'ri � � � �;� �u� � �� ; i i i i i i d i i �� s ta '� i r; - i , i �� _ �' i i i i� �t��' � ��i��1� � i i� _' �� _ i i i ',r � _ �� i i i t : ; ' — �ii _ ;iiiii ii{ { ° ii�; � i . ; t _. tl r i "'" i � s ��I ' � ' � ? � A x � �� . ; ��I� �� j � '' � = i 1�4i5 "� � �� il i i ii , � ' �� . �: r "�a . i . �.. �� : i i j � �� i , . � i � i � i i i� _ ' ; ' i , '. - ; .,' ;'.�� : : " : " -, . �" � , r : : t : , :. i i . . k . � � i� u ',i;�� IIIG iilii'�'� 3� � ; �� § a � j�t , , � _ � , - �' ' � , � � �'� . . � .. _ ' i ` _ k _ ' , i = { a � : � : i � � ��7� +�` �1Cd�2�ld.'� ��fi�� ` . � . � F � .4 . � ; , � ,��"�'.7 ` i�i��.��uv�nil� ��"�€� �,� ��r ' � , ? THE 2011 ANNUAl. �E1�OiT'�' QF TH� APPLE VALLEIP` Pt'1LIC� DEPARTMENT Page 18 .. � � �_ t�� ' ' I � � , ,� � � �� zt��e�'s Ac� dem� , �I'�e pc�1�c�,e��partmeri� �g�.in c�ndueted its an��a1 = C'iti�e�a's Acad�m� iri April' of 2�311 wi#h �3 pa.r- - ��ts, �'h�;1��adem� w� very well received ' , b� all in ��dan�„ �'a�i�s; covered included in- ''` x �es��ati�ns, Dr�g'Ta�k �"�rr�e, �WI en€orcement, t��c �`t�p�� r�;�a,i1 crirr��, �9, as we11 as � txip fid �ne firi�� e tc� 1e�m abc�ut the u�e�gc�ns offic- ��e� �"hi� �inc��a�ec� a chance t�'t�st-£�r� th� , Pweap��, Part�cipants were also allowed tc� sigr� ;� up for a r��e ��ng s�;i� �vith an o#�icer c�uring the �� ve�k course. `�s a1�c��ws �a,rti�ipa�ts an �rp- p�rttini�y t�a �et flur nfficers and'see wh�,t they Members af the 2011 Teen �aliee �crademy , ' encounter �u�ien res�oncling to calls for ser�ice. �� - � ,� � �a �, .. Teen Po�i�c�e Acad+��.y a , ' In �Ol 1 th� Apple Va11e� 1'olice D�partment - .alsc� conducted its 7th annual Teen'Police _, , .;,, Academy. The academy is aimed at �i�ing hi�, schooY stude�ts !a� inside l�c�k at ��e pc�lice de- !'�� partme�t. Twenty four students par�icip�.ted in ''' � �� _�� _ �. ., �, „� �- i the Acad�ny. The �tuiients learn�d abc�ut th�; .° ., �� , � ' boQking prc�cess, Dakota +��a�munications Cen-' #,�r, Dakota Cou�t� I)xug Ta�k Fc�ree, �9 ��L�nit, '� crime scene investig�tion and even got tca par- ;' ticipate in a shoot-don't shoot seenario with simuniti4n weapons. All participants also MesnTiers of tTee 2�i1 �G'itizen:'s PnZiceAcademy enj'oyed th� hands on experienee processing �vidence and doi�g crime scene investigati�n, ,��. � ,°� �: � � � �� 'i'EI� ��11 AWINt�AL t�E�+C1F�'E" 47�' `P'�IE 1��P�.� VALL�'SC P6�ILICE IDE��Ait'�'M�NOT ��°�� F�ag� 'E� , . ��„ � � I!• ' ' I � � ' o � ; i�-' � i in ' , , i,�i ix�'�i�� i�l i W@,:�..i� tii ,ii � �� ^` � � � _ _ ' °` ,��'�t.'�l��G�G�►� �� t � `°� ' ' " . , ,�, �� ,� � ;�' �. �" � �� 3 0 0 � = I �� < � � �m "'� `' = � ' � ' ��rl �� r��tion � �� .�� is ��an�'� °busi : , �ti ne��, �Z �{��i��p�m�t �� f'c�rt #� ` ' � � ' ;�� rg�� ghb��c�d� �n� ��g'�bc��i�d �T�tch ; , , � ; ; , , ; � ': �gr��p�� rr�t��iav��,�#�.�'�`��ni��c3 ' aE ' m��.b��ids��i �ie�e� �re-��,i��nt�� 1 �� e�i�e�red � � � � � �� i�� ,�r�pr�� h�i'.� ��.��i.gli�c�r- , , ��. °��a��c�� a��' �� a �� at �� . , �a �r��.gs ��p�� h�r w�1� �.�cc�� „ ' ' � , � « � k � , �� , , , 5 ti iii ii i iEi � � �, � i i ii i� w`>s�t3"iii 7 J � � � � i i'� i I i Y : * ry �XI i�� d i i i� � t.. i i i b� i i�: �k' � � i �� ,�r; i I 1 � iii � �"r i r pk � ��' ii 'ii� �i � y�r� i } �'tl�i� �iHY„ro'"�t��'i�h��i^=s. �2�2 5 � o-�5� i ii � � � � � r� �« ss s � � N �' � � � i , i t o- i � � ;� � , � � ir i �Y�� y i� . i ' �� > it' � i" �,�n r � � i i i-. � � 4 5 — 6 st`-� i i i i P P t:�, i i : i �� i i r � ',i i i ; _ ,;s , i i � i i�: i i� th _ �., l � � - { �� ,i� � ii iit�� i �� i � o , , o ,• �� _ _ � .� i "# k = ��.' . i i � �� i i ' { : _ � y�k r � I � _. i — ? i y� Y i III : i " ' a � — i Iih � — �i� II i . ;i " 7 - = . .' �zII .:.: 5 f� y , ��' _ . ;a I r, v ,� , . x < _ �% v� ' I�1 ��1 �`;��#1�`��1 �'��ele��e� �t� �xrC1 �,nrliaal r� ` � �� , � , , iaa r � y�� c� ��ite.' �T'�ght�tc� I�� rn��:��r l�ta , �s,�� E�� : ��.. ° � �nal ��g�.t Ou� �c��s��ac�nc�� an �� ar- , � r� � � : , � � , , , , , ., ; , �,ii�i� tc� cc�r�� g�er ��r �ne n�g�'t�� gust � ; �.��a ��cc��rrbat ; �� ra '�� n�bc��h�� tt tc� , ' � , , , � �'� c�ne a��t1�� a�tt�r �e e��"��s �� has ��- ,�� :rrea�� ach ��r ��`in �1�, �� h�� gist�r�d ; a � � � �1ock p�es �ia �ti�� t�es��i�bar- � � hc��'p�ta�� i� �.ppl� ��11� F��i�� hc��#� ', ed a z��a� t��e ��en��K�t� �:1�� z� �� i��. ;`, � �S.p�ar+��ei�r�a�� 1�� p��p�e,�� ic� e��c� , � �; � br��, �l�s; g�� a�aC��s �r��e�-��s- � �� i � ' � � ��T�. , ' , ;x� —` "' 3?��,� ��w��w�i�� i � � � �� q �,�, r ,a. � r ,,, , � �. � , �,' �� - r �� ' i � � � � �,� — �� a _ �,� ��;�q �� e�t�rk ��i c�L�bra.te N�g��'�z� TS�t�'�e and �giv� ba�� = �� ii� ��,�V f ( �,' , I'� tc��r �i�n�i�� nei�t��rh�c��,were�'�ed � par- _ �' ' ��' * r� �a�i�rate;i� � s�h�cr� s��p'ly c�� c� cQ1��t ztern� �e�r - .�� ilc�ren ir� n�ed �� I�I) 1 �6� �P1�le �"alley��ighbc�r� ` � � �� hc��ds �lcaixated � �n�r��icl�a�� .ick full%��f schc�vl ` _ �upplies whieh u��r�e given'�c� �D 1��5 Cr�m�tTnity �ducatic�n �'�r cii�tr��utiQn � �kids in �eed fc�r the ��7-2412,��h�1��ar� , ; ! ;� , , � Y, � �d - , � �, � t '� � � � _ � �;: 'PH� 2011 ANNUAL REPORT �1� THE APP6.E VALLEY P�1►LICE DEPARTMENT Pa�� 20 I I � ' ' � � .,� , - , „ � .� � � � � � ; - -� �hi�� a�s��ger �afet� i �5 ,� � �R ' � �c��am ' , , ` � �, � � � � ��, � , � �` � �` ' i The ;�ple Val1e� �hi1d T'�ss�ng�r ��.�ety �rograrn cantiri��s #� ` , �c��ris� �y ��,�vitiin� �ir s��.fi� ch��CS by appt�intment a�d part- �' �.� ` � nering �th otl�e� ��i+�� •in i.�akota �c�u�ty �a provic�e child �, . . �a��!eng;� ��'et3� #�aining �nd ��in�ing �clucatir�n!. �� m : � �� .... �� ! � ��. � ,- �� ,�esid�nts �� a1I�� can seek �ae aa�sistance of � �erti- � :� ry �ed C�� Fasseng�r`�a�`et�r �I`�l�nician to assist them with the ' � , . prc�p�in�llahc��<i��'�h�ir,.child safet� seat. ' � �; � � ; t, � � .� , i� 2fl�� .�� pt�Ii�deparhnent had 56, appointrnents fi�r car seat �hecics. `�Ve also p�rticip�ted �n , ��e��aka� ��unty Child �'assenger 5af�t� Initiative car seat eciucation clinic to ch�ck f+�x �rc�p�r ..' ��,,i bc�ast� s�a.� use a�c�rig st�dents en�lleci in the �Iead St�rt Prograrn. ; - , , � �. , � � ,� ; _ ,. `, , , _ ' ��; � �� =. � � �� „ . , �l�tZC'� �V�i,i�'it�C'I'S " , ,,. , __� � i 3 , _ 1 "�'c�unt�ers ��e ��th th�e Pspple Valle3� Police i)�artment as Ual�xable rnembers c�f our c��part� �ent� a11c��igi'�� tc� engage the cc>rnrnun��y in ou� �vork and en3�anc� our ser�ices. �al�nteers ar�e e�t�aicall� mc�re �na�e m�mber� c�f the cdmmunity wha bring with, them valuabl� expersence �nd �. '� i, vv��: �ri� a� ski�l whic� be��fit the d�ppartment. _; IDut�ng �Ol I, Ber� �`�l�son an� �Vlatt Hedrick served as volunteers; �ssisting wi� the p� = ��'`cri�ri� iraci�� sum�nari�;s which iti�tify criine trends and prc�blem tenar�ts at �uiti-hQU�ing propert�e�. '1'l��;y a1sQ cc��pleted ath+er projects as the need arose. ' ,,; $. �� en�ourag� �nei�ibers c+f �ur cona�unity who seek a re�varding way tc�' serv� their �c�m�unity tci valunteer their services in the departmen� , ,, � �� 'B'i�� 2[�'1'1 ANNl,iA�. FCEPB'}i21f' tl� 7'HE J�6��L� 1dP►�.��Y �C1�.1�� Et�Ala'1"lk��t� �' �� ac�� 1 I!� ' • I � Chaplain Corps Since 1997, the Apple Valley Police Department Chaplains have been a valuable resource in assisting with difficult and sensitive situations. These include families in crisis and death notifications. The vol- unteer chaplains are available 24 hours a day to assist officers. They remain with family members and friends as long as necessary, freeing up officers to tend to other duties. Chaplains are a significant pres- ence at the police department through regular chaplain meetings, attendance at department meetings, ongoing training and riding with officers. The department's Chaplains are also active in the Midwest Chaplains Association. In 2011, the Chaplain group welcomed their newest member, Pastor Mike Swecker. Police Chaplains: Pastor Bill Gould, Apple Valley Baptist Church, Apple Valley Pastor Steve Swanson, Faith in Christ Fellowship, Apple Valley Pastor Mike Swecker, Hosannah! Lutheran Church, Lakeville Pastor Chuck Tindell (retired), Shepherd of the Valley, Apple Valley Pastor Ty Willems, Christ Church, Apple Valley � EE � y �M , ; „� f � s ,�,.. � P � � � � �,�s F� = �� ip s � �., � ' �,� r' i � i �' � h; �� _ ,� �.I �zu .3t. � ry �� ` � -- �� . . �_. - w ; s. � ��. - i�� rk � .. �- i , _ (! ! ' tl''' , ,.. Apple Valley Police Department Chaplains (from left): Pastor Bill Gould, Pastor Mike Swecker, Pastor Ty Willems, and Pastor Steve Swanson. Pastor Chuck Tindell not pic- tured. 'i'HE 20'!1 ANNUAL REPORT �?P THE IAPPLE YALLEY PC�LI�� DEP14R'L'M�NT �� °� Page 22 'I � � � , �- � � , �xp�c�rer .l'o�t _ _ �� `i, �n 2U1, ��;,� � t+�tal of 16 yc�� p�eipate� in-�.e App�� all�y �olice ��piorer �'rogra�. �"h� E�pl�r�r; _ �'Q�t ri�et t�i�� m�nt`h f�� traii�ing ant� ccimmunit� service �ppc�rtunities. T�ai�ing ti�pics f�� he yea�' s i = t , �nclttd�t�,= � . �� ; _ � , � � ; � � �� , - . ' � , ' I�stag� �Tegc�'ation i ` , ; ,' � � • B�glary;Respc�nse ' �• Fi�t Ai� � � , ; • Tr��f`a� Staps ' " � i)amestic Crisi� , � , � � ,� � ; +, A�r�st a�d Search T+echniques , � • White Cc�llar �rim�; � �` i �n�e�v�ew and Tnterrrogatir�n ' ' ; • Crim� `Seene Search ' ,; :In a.t��itic�� tQ th� sch�ciuled rneetings, the Explarers assisted with trair�ing �xercises with the ��i�e°t�e '� ; .�artm�nt �� a��lunteer to help .durin� t�e ��' c�f �uly activities.' The Apple Valley �olice ��pinr�r� alsc� ` ��s�istet� #h� 1�ak�ta �ounty Sh�riff's t)�fice in providing security at the Dal€Qta Cr�un� �'�r �`inally ;„ tht� �lt�rers parti�i�a�tetl a'n the an�u�i sta#e �onference held in Rochester< �hx1e �,t '�h� stafi� �a�f�r= _ �� . �° '� � , ' - ' � �� '�� ence, �; the Explorers cc�rn��ted ag�.i� s�C a�t��r � � �� pQSts'�� in the'��re�ol�tion c�f a°�ariety � � � _= x _ '� . � �� • ; � � , � . �olice sc�ar�as. '� , -� , = a , �,� � � . � a r � _ _ - �� , , ; � , ,�. , � � �, �.� , i �" ti? ��(f� � � i � �: � I Explorer'advisnrs Ufficer� Adam Tsehida and 1�ic Wo'tf with m�mbers of fhe Explorers at a enmpetition in Roches#e�, Minn�sa�rr. ' �;. , � � � Tti� Z�'� 1 tii�9id�91�L �t��t3RT €7� '�'6�6E 1�PP�.� 'dALL�Y POILIC� L1�PAF�'m'M�N'i' ��' � �'ag� 2� � „ _ „ �, , , _ _ � , , ,: � �, � t � � � , � � � � w� - �yt,u�� , � �� '�� , �� ,�� ti � � � - i YI i i, i i i i :i i. 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Tr� r��c�g�itit�n of��r �zntn- ' �> ; �„ � � , ;�,�t�,yee r,}'the Y��r ' , ��ns �o' �e suecess c�f �e �g��e �a�l�ey �'�� epa�� , � ; ; �;� , � ��'��"e �lc��l , , � � �' �nent, Tetr� M�Nult� is �arn�t� �� Emplfl�� :, °Ye� -� , , , ; ,�� ' � � �, � w ;� ",'�= � � �� - � i i W � � 3� „• �. 1 � ,i, � , iii �; i � i i i i i i �:�;� TH� 2Q� 1 ANNUA�. REPORT OF '�'HE APP�.E VALLEY l�OLI�E ClEPARTMENT Pag� �� / � ' ' � ' � I � � � � , j � �i� � � ' _ << '�J �u ' � �,� l �� : 1 � � - � �� - �� , � 1l�1��'�� ,��' �'��nd�tinr� � , 'I ` _ �, I r � . I I I I, . n1 . � i.. �i � : .- " . , �i . , �- ' -� � _ I i I - ..� 3 I _ �, I i I � � 1 . . ' � ... ' ._ ` . . _ . . .� �' �� I F�� h�� e�c�ptianal p�rformance during �e inves�igation of �, cc�mpl�� prescnpti�n f��ud case, Officer Tietz is awar��t3 the �` ' M�al ;c�� mmendatic�n. Dt�ring the investigation �f this cas� _ ;; ,..� i��eer Tiet� di�layeti ��ceptional dedicati�n in handling" a11 �s- ; pects o� tl�e inves�tigation. He took Qwnership +�� he case; �c�n- �, ,;; d�ct� ��t�rvi�ws, drafted and e�ecuted a sear�h wairant, and. „ �� i cc�ndu�ted �'r�11flw-up investigation. �Iis prof�ssional initiati��; an�. ,; �` ;�� ! diligen�e brings' great credit upon himself and contr�butes tt� �h�; ,. '�.'' � s�ccess t��the Apple Valle Police Department. ;,, , Meda��'Cnmmendatinn'� , ! = � ' � .' t�' f�� ,1t�'r�e Tiet� = ; s� � �. �, � ,� � t, _ �, � _ � �� ., �' �� In r��og�iti�n of h�s tiedication ancl persis�en�e in the in��stiga- '',:' �',.� �; �� tican of a�einvolving a�cnnestic Assau�t and -�Fimina� �e�uai ;; �•��uct,,Detective McKnight is award�d the Meda1 of �c�mrnen- da�i�n. '�'he investigati�n of this coxnplex and .challenging case , '' ��II� ° i�v�lved r,ond��ting numerons interviawS, gather�ng �f �vid��, ' ilCl �he ��ice df a search warrant, and e�tensiue fc��lo� u}�, whi�e over coming a language barrier. I3etectiv� McKnight's dagged pursuit of justice in this cas� reflects favc�rabl� upon himself and° ` brings credit tc� fihe Apple �7�lley Police Department. �; ; .�eda1 of Cnmmendati�►n � 73etectiVe Sertri 1f�IcBnight �i � � � ��z "�`&IE 2i�'� 1 1�fd�l�JA1. R�E��R"�' �� 't'IiIE APP�.E V1�l.LE''� P01.1�� D�l�I�RTMEP6T �� ""� Page �S � .� _ � a �. �� I � •• � • � / i , , s ,. .. �; � _ .. � � _ a P �� ° , � � _� 6� �uti�' ' �� °� � �� ; u� , � �,�, �� z � � _ S � � � - �� ,�� r �� r� ti�r �;� �� ,��: � �� ' �' � � '� � �` �°� 3 �,� � � � � � 7 � � ..„� , � a � � � r � � « �� ; � �; � � � �; ' � ' " " ' . � �� , r � � �� i i � ; i i� � *' � ! �� i i i � i f i i i4_fi ` . . i. 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I 4.? i i y i i _ � � �iii �, i ii � � . i� ;� ;�iiu i; i . a 7 �� i � � 4 �i i i ;:� !� ':� � ' _ I � � � � ;§ I �t � aj � i i � i i i�� i ii � � � �a � i i i � `� i I ' _ � � � �i ! �� '', � ' ° l'Ietective Briu� P�antz ' ; l��e�t�e �ean A�c�`nxg�tt . , THE 2t111 ANNU/AL REP�RT OF' THE APPLE VALLEY PQ�.1�� DEPARTMENT Page 26 � � � � , � � � � � i �� ' fi � t Y � 1 I � �i ��ii�in��7l,ih -- � s � �.. ° � z � :�� 1 �� , ;i �, � � ' z ti . : ,' _ i � � : �' , . � � , . ��epu��er�t.��v��d'��'.1V��rit ,� � � ; . . � , ti . „�� , r � � I � � �.i � � I ;, ; ; ��, ° ; , - �� x � I' � , — ' � � r. s � �� ' �'Fc�r his exc+�tit�nal ei�orts in the investigation and �nf'vr��ne�t - , ��' � �+�f��pa�r�cl driving c�f�enses in the City af Apple Uall�y,;L7f�c� ,� � ��_ �7ragseth is }aresentecl the Departm�nt'.Award c�f`Meri�� Offi�er ��, iDmgse�li ha� ccintributed' greatly �o public safety on the road- '� _ �� vvays in c�ur cc�nmunity t`hmugh his enforcer�ent actit�ns.' �??ffi�er `~�?rog�eth' s ef�arts were also recognized by the �iinnesata flffice �` � vf Tr�ff� Safety vszha narned him as ane afits 207� DWI En- �kx. .� fc�rcer Al1-5tars. ;� _ ,` �� ,. r $ Uepr�rlm�m�l�ard � :; � , _ ��f'icer Justin Drogseth � ; �� : � - , � : �� n recognition of hi�s exce�tional per�c�rman�e �nt� a�chie�emen� � duiring the can�u�t :c�f backgrc�und inv+estigataons, {flfficer 1'lan�z '� is pr��ntecl the Deparhar�ent Award c�f1VF�rit. Thr�ugh �s thar- :� ;, oug� �.nd diligen� effc�rt�,'�fficer Plantz wa�:able t� expc��e.ap- - �ilicattica�s wl�ich .eonfaineci �rau�ulent credential� tliereby,�r�� enti�g �an-qualified persons from abtai�ixig li�enses £rom the ; ��"! city. In ��aing sc� �e established background inuesti�atian proto- '6 c41s .for tl�e conduct c�f these types of.investigatic�ns anti �on- ;�''�I�, i�' tributed greatly fio the success f the Detective i7nit and the Ap- : ° ple Valley �'olice Department. ' � ';�ie�urtment�ward uf Merit ��'ficer �rian Pla�ati �� ! � . ,� �'�� {E11 Ja NUI��. 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( .. ! � .rY 'i t� �� _ __= '�NIi) ( �,'..�t i�it��,,�. ��"�. d4iiN�p 4r. �-� :a.'�"r�' �� t tt , �` / 'd �'"1i,; ..T� �rr�i- ;;� � -�_� s � �.`-. � ;: �'��ti;'.�I��IO�'i�;�� ,, � J�'rm��` �� k ."�.��h � ��" . , �.�,.�.. , ... .+aUt„�:a� .,,.._�=6�,�.,�.. . � �.�,n„��A �a�i�n:��. i r �nw.J,t��.�.,t��A�su.�,�a'� aa . .��!�M��Lk�,�1q�1'��..�� . wI(��'�` ..� v9��I . � n (i�k�l u„eo<<«w.�if�o V q ��F � ..L�•' _ ... , , _ ¢, .c ��J' ,. . x? . , _ f'OLIGF' ,:,. .. .. . . . . . � _= i ��" , . � _ l. J— ��. �«�.� �.�� e�� ... City of App Va��e MEMO Planning & Development Department TO: Mayar, City Council, City Administrator FROM: Margaret M. Dykes, Associate City Planner MEETING DATE: June 14, 2012 SUBJECT: Transfer of Dakota County CDA grant for Time Square Shopping Center Improvements to Apple Valley EDA for Business Assistance to Same In 2010, the City of Apple Valley received a Redevelopment Incentive Grant from the Dakota Count Community Development Agency ("CDA") for exterior renovations at Time Square, 7525 — 148�' St. W., 7530-149�' St. W, and 7540-64 149�' St. W. The $78,700 CDA grant is to be used to fund the following improvements: • Remilling of the parking lot asphalt • Restriping of parking spaces • Extending a pedestrian walkway from the Time Square Shopping Center to the trail on Cedar Avenue. This will require some coordination between Time Square, Dakota County, and the City. City staff is working on this item • Installing curb cuts at landscape islands to facilitate stormwater runoff. The grant requires a 2:1 match, which means the Time Square property owner must also use personal funds equaling at least $157,400 towards the improvements at the shopping center. The grant proposal referenced proposed changes to the exterior of the building to include cladding the support columns in brick, repairing the soffits to fill in holes, construction of courtyards with pergolas, new landscaping and stormwater infiltration areas, and painting the exterior. The CDA funds were to be provided to the property owner after the improvements were completed and invoices were provided. The City was to submit a report to the CDA for reimbursement, and the grant funds must be expended by June 30, 2013. At the time the City received the grant, a business assistance agreement was not required because the amount was less than $150,000. With the recent adoption of the amendments to the Apple Valley Economic Development Authority's ("EDA") Business Assistance Policy, a business assistance agreement is now required between the EDA and the owner of the Time Square Shopping Center. However, because the CDA funds were originally granted to the City, a transfer of the funds from the City to the EDA is now necessary. The EDA will review the business assistance agreement at its meeting of June 14, 2012. The EDA's approval of the agreement will be subject to the City Council's transfer of the funds. This is considered a"housekeeping" item Recommended Action Authorize the transfer of the Dakota County CDA RIG grant for $78,700 for improvements at Time Square Shopping Center from the City to the Apple Valley EDA. � � 4r �,_.:,.:- . DAKOTA COUNTY COMMUNITY DEVELOPMENT AGENCY REDEVELOPMENT INCENTIVE GRANT PROGRAM GRANT AGREEIVIENT AMENDMENT DATED MAY 8, 2012 Margaret M. Dykes, Apple Valley Associate City Planner, submitted a written request dated May 2, 2012 (attached), for a second extension to the Redevelopment Incentive Grant for the Time _ Square Renovations Redevelopment project. Request for a second extension has been approved and requires a written amendment (per term 1.07 in grant agreement). The prior e�cpiration date was June 30, 20Y2, and this approval will extend the end date to June 30, 2013. ARTICLE l: TERMS OF GR.ANT 1.04 Grant Term: The Project shall be completed in a timely manner and all Grant funds will be expended upon the later of (a) eighteen (18) months of the date of this Agreement or (b) June 30, 2013 (the "End Date"). For purposes of this Agreement, "Completed" means completion of the renovations at Time Square, 7525 — 148`�' St. W; 7530 — 149�' St. W; and 7540-64 149 St. W. Documentation af the renovations to the exterior improvements (sidewalk improvements; landscaping; construction of two gathering areas) and additional improvements to the rear of the building will be submitted to the CDA upon completion. GRANTEE DAKOTA COUNTY CDA �.�.� �� By o -.- . ,.� B Tom Lawell Mark Ulfers City Administrator, Apple Valley Executive Director Date � � � � \� ` � 2. Date � " � �, � � � � F " • ��' 4 ! DAKOTA COUNTY COMMUNITY DEVELOPMENT AGENCY REDEVELOPMENT INCENTIVE GRANT PROGRAM GRANT AGREEMENT THIS GRANT AGREEMENT entered into this 9th day of February, 2010 by and between the Dakota County Community Developmenf Agency, a public body corporate and politic (the "Agency"), and the City of Apple Valley, a political subdivision of the State of Minnesota (the "Grantee"). WHEREAS, pursuant to Resolution No. 06-4092 the Agency has established the Redevelopment Incentive Grant Program (the "Program") to improve the tax base and quality of life in Dakota County by assisting municipal redevelopment efforts and promoting the development of affordable housing; and WHEREAS, the activities to be undertaken under the Program are all activities that the Agency could undertake directly pursuant to Minnesota Statutes, §§469.001 to 469.047 and 469.090 to 469.1082; and WHEREAS, this Agreement shall constitute a cooperation agreement between the parties, as contemplated by Minnesota Statutes, §§469.041, clause (8) and 469.101, subdivisions 5 and 14; and WHEREAS, the Grantee submitted an application for a Redevelopment Incentive Grant (the "Application") in response to a request for proposals issued by the Agency and will use the grant funds made available under this Agreement to help fund the project identified in Attachment A (the "Project"); and VVHEREAS, the Agency has concluded that the Grantee has the necessary expertise, skill and ability to successfully complete the Project and that the Project is in the best interests of the Agency and will positively contribute to meeting the goals of the Program; and WHEREAS, the Grantee is a municipality of Dakota County that is supportive of the Agency's mission and of the development of affordable housing; and WHEREAS, the Agency had agreed to provide grant funds to the Grantee pursuant to the Program and Resolution No. 10-4701, subject to any terms, conditions, and clarifications hereo£ NOW THEREFORE, in consideration of the mutual covenants and agreement contained herein, the Agency and the Grantee agree as follows: �fy � � "�� - �� ... 1 � , � , �, ARTICLE 1: TERMS OF GRANT 1.01 Grant Amount: The Agency agrees to provide a grant to the Grantee in the amount of Seventy-Eight Thousand, Seven Hundred Dollars ($78,700.00) (the "Grant") from the Program upon the terms and conditions and for the purposes set forth in this Agreement. 1.02 Match Requirement: The Grantee shall match the total Grant amount received from the Agency based upon the expenditure of two dollars ($2.00) of Grantee funds for each one dollar ($1.00) of Grant funding ("Matching Funds"). Such Matching Funds shall (a) constitute the actual expenditure of Grantee funds on the Project described in Attachment A and not "in kind" contributions and (b) be in balance at the time of each Grant disbursement pursuant to Section 1.06 hereof. The source and amount of Matching Funds shall be identified by the Grantee in each Reimbursement Request, as described in Section 1.06. I.03 Use of Funds: The Grantee agrees to use the proceeds of the Grant solely for the purposes and activities described in Attachment A. A Project summary that identifies eligible uses of Grant proceeds, as approved by the Agency, is contained in Attachment A ("Eligible Uses"). Grant funds shall not be used for (a) construction costs, (b) soft costs related to the Project, (c) costs not included in the Application, (d) residential rehabilitation or house moving or (e) administration expenses. 1.04 Grant Term: The Project shall be completed in a timely manner and all Grant funds will be expended upon the later of (a) sixteen (16) months of the date of this Agreement or (b) June 30, 2011 (the "End Date"). For purposes of this Agreement "Completed" means issuance by the City of a certificate of occupancy for all or any portion of the Project. 1.05 Term Extension: The End Date may be extended beyond the original End Date at the sole discretion of the Executive Director of the Agency. The Grantee must submit any extension request in writing at least thirty (30) calendar days prior to the End Date (a) stating the reason for the extension request, (b) providing a proposed new End Date and (c) describing in reasonable detail proposed changes to the Project activities and budget, if any. The End Date may be extended only once and the extension shall not exceed one (1) year beyond the original End Date. 1.06 Disbursement of Grant Funds: The Agency will disburse Grant funds in response to written reimbursement requests ("Reimbursement Requests") submitted to the Agency by the Grantee upon forms provided by the Agency and accompanied by (a) copies of bills and invoices from third parties for which Grantee seeks reimbursement and (b) proof of expenditure of Matching Funds in an amount at least equal to two times the amount of the Reimbursement Request. Subject to verification of the facts contained each Reimbursement Request and a determination of compliance with the terms of this Agreement, the Agency will disburse the requested amount to the Grantee within fourteen (14) days after receipt of each Reimbursernent Request. 2 � , 1.07 Release of Unused Grant Funds: Upon the earlier of (a) Completion of the Project or (b) the End Date (the "Grant Release Date"), any Grant funds not previously disbursed to the Grantee for any reason shall be automatically released from the terms of this Agreement. ARTICLE 2: ACCOUNTING, AUDIT AND REPORTING REQUIREMENTS 2.01 Accountin� and Records: The Grantee agrees to accurately and completely establish and maintain detailed accounts and records relating to the receipt and expenditure of all Grant funds received under this Agreement: Such accounts and records shall be kept and maintained by the Grantee for a period of six (6) yeaxs following the Grant Release Date. Such financial recards shall sufficiently evidence the nature and expenditure of all Match Funds required. Accounting methods shall be in accordance with generally accepted accounting principles. 2.02 Audits The accounts and records of the Grantee described in Section 2.01 shall be audited in the same manner as all other accounts and records of the Grantee and may for a period of six (6) years following the Grant Release Date, be inspected on the Grantee's premises by the Agency or individuals or organizations designated by the Agency, upon reasonable notice thereof to the Grantee. The books, records, documents and accounting procedures relevant to this Agreement are subject to examination by the State Auditor in accordance with State law. 2.03 Report Requirements: The Grantee shall periodically report to the Agency regarding the status of Project activities and the expenditures of the Grant funds. Reports are due on each May 31 and November 30 during the Grant term, as defined in Section 1.04. A final report is due sixty (60) days following the Grant Release Date. This reporting requirement and all others required in this Agreement shall survive the termination or expiration of this Agreement. 2.04 Appraisal: The Grantee represents that an appraisal has been or will be carried out to determine the fair market value of any real property to be acquired as a part of Project activities and that any purchase offer and price paid was made based on the appraised value. The Grantee further represents that such appraisal conforms to Uniform Standards of Professional Appraisal Practice (USPAP) requirements and was performed by a qualified appraiser licensed in the State of Minnesota. 2.05 Acquisition and Relocation: The Grantee represents that all Project activities comply with all aspects of Minnesota Statutes, §§117.50 to 117.56 and the United States Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, if applicable. 2.06 Environmental Site Assessment: The Grantee represents that a Phase I Environmental Site Assessment or other environmental reviews have been or will be carried out, if such environmental assessment or review is appropriate for the scope and nature of the Project activities funded by this Grant and that any environmental issues have 3 � . _ � �,�. � been or will be properly and adequately addressed. Issuance of this Grant neither implies any Agency responsibility for contamination, if any, at the Project site nor imposes any obligation on the Agency to participate in any pollution cleanup of the Project site if such cleanup is undertaken or required. 2.07 Public Biddin�: The Grantee, in the expenditure of Grant funds, shall at all times comply with the requirements of Minnesota Statutes, §§469.015 and 471.345. ARTICLE 3: GRANTEE REPRESENTATIONS AND WARRANTIES 3.01 Authoritv: Grantee warrants that it is duly organized under applicable laws of the State of Minnesota and that it has authority to execute, deliver, and perform its obligations under this Agreement. 3.02 Use of Grant Funds: Grantee warrants that it shall use the proceeds of the Grant solely for Eligible Uses in accordance with Section 1.03 hereof. 3.03 Project Site Acknowled eg ments: The Grantee shall acknowledge the assistance provided by the Agency and Dakota County in promotional materials, press releases, reports and publications relating to the Project activities that are funded in whole or in part with the Grant funds. The acknowledgement should contain the following language: "Financing for this project was provided by the Dakota County CDA Redevelopment Incentive Grant Program and support from Dakota County". Until the Project is Completed, the Grantee shall ensure the above acknowledgement language, or alternative language approved by the Executive Director of the Agency, is included on all signs located at Project or construction sites that identify Project funding partners or entities providing financial support for the Project. 3.04 Assi�nment: Grantee shall not cause or permit any voluntary transfer, assignment, or other conveyance of this Agreement without the written consent of the Agency, which said consent may be withheld it the Agency's sole discretion. Any non-approved transfer, assignment or conveyance shall be void. 3.05 Indemnification: Grantee shall defend, hold harmless and indemnify the Agency and its elected and appointed officials, officers, agents and employees from and against all claims, liability, costs expenses, loss or damages of any nature whatsoever, including reasonable attorney's fees, arising out of or in any way connected with its failure to perform its covenants and obligations under this Agreement and any of its operations or activities related thereto, excluding the willful misconduct or the gross negligence of the person or entity seeking to be defended, indemnified, or held harmless. The provisions of this paragraph shall survive the termination of this Agreement. This indemnification shall not be construed as a waiver on the part of either the Grantee or the Agency of any immunities or limits on liability provided by applicable State law. 4 . < t ,, , ARTICLE IV: DEFAULT AND REM�DIES 4.01 Default Defined: The term "Default" shall mean, whenever it is used in this Agreement (a) any failure by the Grantee to substantially observe or perform any material covenant, condition, obligation or agreement on its part to be observed or performed hereunder or (b) any material breach of any representation set forth herein. 4.02 Remedies: Whenever a Default occurs, the Agency may immediately, without notice, suspend its performance under this Agreement. After providing thirty (30) days written notice to Grantee of a Default, but only if the alleged Default has not been cured within said thirty (30) days or, if the alleged Default cannot be cured within said thirty (30) days, within such time as is reasonably determined by the Agency as necessary ta cure (assuming Grantee diligently pursues such cure), the Agency ma� (a) terminate this Agreement by written notice, upon which all non-disbursed Grant Funds shall be released, and/or (b) pursue whatever action, including legal, equitable ar administrative action, which may appear necessary or desirable to collect any amounts due under this Agreement or to enforce the performance and observance of any obligation, agreement, or covenant hereo£ 4.03 No Remedv Exclusive: No remedy herein conferred upon or reserved to the Agency is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Agency to exercise any remedy reserved to it, it shall not be necessary to give notice, other than such notice as provided in Section 4.02. 4.05 No Additional Waiver Implied by One Waiver: In the event any agreement contained in this Agreement should be breached by the Grantee and thereafter waived by the Agency, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. ARTICLE 5: GENERAL PROVISIONS 5.01 Amendments: The Agency and the Grantee may amend this Agreement by mutual agreement and shall be effective only on the execution of written amendments signed by authorized representatives of the Agency and the Grantee. 5.02 EQual O�portunity: The Grantee agrees it will not discriminate against any employee or applicant for employment because of race, color, creed, religion, national origin, sex, marital status, status with regard to public assistance, membership or activity in local civil rights commission, disability, sexual orientation or age and will take affirmative 5 . ; r : action to insure applicants and employees are treated equally with respect to all aspects of employment, rates of pay and other forms of compensation, and selection for training. 5.03 Conflict of Interest: The members, officers and employees of the Grantee shall comply with all applicable state statutory and regulatory conflict of interest laws and provisions. 5.04 Severabilitv: If one or more provisions of this Agreement are found invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, the remaining provisions shall not in any way be affected, prejudiced, disturbed or impaired thereby, and all other provisions of this Agreement shall remain in full force. 5.05 Time: Time is of the essence in the performance of the terms and conditions of this Agreement. 5.06 Contacts: Reimbursement Requests, written reports and correspondence submitted to the Agency pursuant to this Agreement shall be directed to: Dakota County CDA Attn: Assistant Director of Community Revitalization 1228 Town Centre Drive Eagan, MN 55123 _ Any notice, demand, or other communication under the Agreement to the Grantee shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally to Grantee at: City of Apple Valley Attn: Community Development Director 7100 - 147 St W Apple Valley, MN 55124 or at such other address that Grantee may, from time to time, designate in writing. Mailed notices shall be deemed duly delivered two (2) business days after the date of mailing. 5.07 Warrantv of Le�al CaUacity: The individuals signing this Agreement on behalf of the Grantee and on behalf of the Agency represent and warrant on the Grantee's and the Agency's behalf respectively that the individuals are duly authorized to execute this Agreement on the Grantee's and the Agency's behalf, respectively and that this Agreement constitutes the Grantee's and the Agency's valid, binding and enforceable agreements. 5.08 Counterparts: This Agreement may be executed in multiple counterparts, and all such executed counterparts shall constitute the same Agreement. It shall be necessary to account for only one (1) such counterpart executed by each party hereto in proving the existence, validity or content of this Agreement. 6 . €. IN WITNESS WHEREOF, the Grantee and the Agency have caused this Agreement to be executed by their duly authorized representatives. This Agreement is effective on the date of final execution by the Agency. Agency: The D t ounty C mmunity Development Agency By: (� . Its: _ 4=��`�l Dated: ��(�U/'(� � 7 r ' s ¢ ,, � . � � . R + Grantee: The City of Apple Valley By : a,,.�.._.Q.,c.Q Its: —�'� �%.r.�,s�-o.r Dated: 3� 3ta � O 8 d � . �. � A .. :, ATTACHMENT A W � ,, �c._ �� u - G, _. �: .: �� .,..� � � v �...,. ..�� = ProjectName:� �� Times Square Renovations _ . . _ __ __ _. _ _ _ __ _ _ �_ _,_ _� _______ � .� ___ _�.._.__r._W.._�w _ _ � ___.__� �._ � � ____ �_ _.�___.� _� __ �_ Location: (Site Map Attached) � 7525 — 148 St W, 7530 —149`" St W, '1540-64 149 St W � Redevelopment Project Description: Reface building exterior, construct courtyard area at Time Square 1. '� Funds to be used for: Re-mill parking lot asphalt, restripe parking spaces, extend pedestrian walkway from site to reconstructed trial on Cedar Avenue, mstall curb cuts ;� at landscape islands to facilitate storm water runoff. f[ ., t.......... ......... ........... ......... ........ ..:.. ,..... ........ ....... _....... ...... ............. ..... ......... ". . ' - _�.._. .. ..............._., .,_,,...,.,_...........,.._..___.. .e �._ r -..�,......... ............ ,,.,�......,...._�.......�..�............,.. _....... � � ; ' �Project Activit j Bu dget: _ . .. � .. ....... . ..�. . .. . Parking lot asphalt remilling, walkway ;�$300,000 extension, curb cuts provided by: ,} � =4 � (1) Redevelopment Incentive Grant i $78,700 (2) Property Owner � $50,000 ;; � � , (3) Unknown source ; $171,300 __ _ _ _ _ _ __ __ �_____ �.___ _.,�.v___.__.� _______ __�__ ___�_._ ._ ..._._...._.____._.�...�...___________�_ _____. �.�.___ _ _ _ __ __ _ _ _ _ � _� _.___ ____ __ ,.� _� � ! _ __ � � � _ _ _ _ _ _ ��__w_____�______________._��. � __�__�...___�_____�._��__ _�___.___.�._�_.� �_�.� _____� _._.�.�.�_...�.�.� _.__ f __ __ __ __ __ _ � _ _ �___.._ __ �k��____.___..._ � �_.___ __ � ____,�.�______.. _._._____.__ ____. �.___.� _ _ �� ___ .�_.�_�.�_____� � __ � _ _ __ _ _ __ __. _ _ � _ _ _ __.__....�________�_._____�__ W _._ ____ ._ _ _�_�___ _ � ___�_ ._.._� �_ �..� � ��Matching Funds Sources: � Amounts � __ _ _ _ _ _ _ __ __ _ _ � Property owner for �construction and � $450,00O�� ,� materials costs for re-facing building ( � exterior and constructing a courtyard ; �� area at Time Square 1. � � '� _ �___. �._�...��_.�..� _��._ ��.__ _ .. ,_.�:___�--_�-----�- .�_�.�.______. �..�...� �. � _.�, d _ _ _ _ . , ,_�:_. �.� �..�_��_� _� �.�_..��.._. _ € ' _. � ..�._ .�.�.�.. �__ �_� �.__�__.�.�...� _�� .�._�._�. �_ � _ � . ___--.�...�. ��.� �.� ,_ :�._�.� �.._�.__ .�.. � _� E �,......._.� ..................... .... .... ........ ...... ..... ...... 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Time Square . � ' .i NA 5 � �' ShOppICIg Cel�Iter ��.AS°�LEVALLE � �128,958 LL� � � # ' q� . �� MONS Y � � � r � � � , 1MN S _ 50�0 , (] � 9 . � � � � � ,��' 7,6 � � . ! , . . Z ! � � � ' UNTING .. .. ENTER , .. a i .� _�.;x ; �. .. ..:, � . _ F S � � �. L P L-Ed/A �� TLU S Q s.... 0 „ !! �� . 2�9 e' � �GARA E •CQAIMONST 0 � � . . � N -c. � � � GA yEt , � � i 9 ° � 1 � � °° A �S , i � i _..._.�.._._�r � 2 0 � �i e `�,.� � .... w, � .� , '' ! I . 2 0 A �` C E � . � Q � � M LY N�TJTE . . Eil ? . LY �� L � . . �7 yB R � � �'.� - 9' .. I a' s. "�'"" . , � ...� I . � . Q ��. ,AME(�� IN ��4 �D �s , 77 .. �t °�: �-. _ � p .1 ,�_.b ' ;�°.a�.:,<„^-�.......� � .,,......»...�'� �. •��y.:. � �.. E3IJj .�. ..............w... �:�. . -�_��,.�«.a� � �a�- �ST::�i�m'» ,�-�^.� C� ��...- .'�°'_"""�.""" «� .»�...». � .. ,,...�a.�-.�-,.,�. .....� : � r - ' �""'""""""' =u, ,,••.�.�.�..�rc�,�.�..�..�..<,.�-�<: �.,. G ,�,...,....,...... ...�..-..,-.-...... � . �. _._.�__ ._..... . . _.. .._. ,� ;9� 1 �� «� .�.,._. �.�...._1 1.....,.�..v.....�.._..,,� �'--v �..�,__.,.� . ,,,.e � � 0,4 4 � i, �� SOUTHPORT P ' �� •APP �, Q � �v G �� , � •LEEANN I Y � � � j g Sk � � � � � � � � z [ x..�,�..�- �� . •CHIPO� : °FERKINS { °° °n �� •16 �-� ;. � � � YS . < _ _ " � _ j . . .. . ..�.. . � , � �� t � f � � , � A c ' � ' � ; ' t" .APPLE VALLEY SQUARE � 0 i� �,- OCKB � R VIDEO p ' � � '- �� .'119.438 �.xb7 � - _,� .� 576 � '��J�'J'� ��::-.:r":�P . i � A2 00� � F � t � � '� `i , � `'�'! 3 � .aaiNeow � � ,,..,,.dS�:�t'�.Tk{AI!l .�_°' ; � .ss,000 � � ,� ' � � � � 1 � � . . . � I .� � ,0 �� RE .� TARGET GREATLAN � c � ! - � 489,229 `�.t C� � . }�' 'I � •HEAL >BURLINGT N � '� i , 0 300 600 1,200 1,800 2,400 Feet TIME SQUARE RENOVATIONS �,�� .��}}�;,�=-� _ 8v �� ,F � (� - � s �`'w�;�� LOCATION MAP / � j � y -�.. �-� �t�.j � . Y ll a�' � A � . � � . . -�--� �I.�.- �••�� a �f Y '+7�` r 1 ' I�d� ��1' � !C�' �: C� - � ° �T� {� 3� )fi (';t..�l� ��, . �}�c.��.7`V�' Ei� r�.y� � '��, ` <a�� ' ,r - N �'�� .,, „ -, �� [ _s�,�*„a . � r" f �; __� _ W . E p� N.�� -, � t T ' �=w . S . '�a ,; � '` _ '�'1;'� ir�=- ;;`.•;. ITEM NO.: �_ � .... .... CITY OF App�e �� 2- Val'eY MEMO Community Development Department TO: Mayor, City Council, and City Administrator FROM: Thomas J. Lovelace, City Planner DATE: June 7, 2012 SUBJECT: Joint Powers Agreement with Dakota County for Maintenance of GIS Database Containing Road Names and Addresses CASE NO.: N/A For your review and consideration is a request to approve the attached Joint Powers Agreement (JPA) with Dakota County to maintain a common Geographic Information Systems (GIS) database of road names and addresses within Apple Valley as well as countywide. This agreement is the result of work by the Road Naming and Addressing Committee, which was created in 2009. The JPA identifies the roles and responsibilities of the cities, townships, and the County for maintaining a countywide common road naming and addressing system. The database will serve a variety of uses and with its primary emphasis on developing and maintaining the data for dispatching emergency services. The Road Naming and Addxessing Committee will continue to meet periodically to discuss issues related to assigning road names and addresses, and maintenance of the database. Therefore, the County is requesting that the City designate a liaison to the committee who will also act as the City's point person and will attend committee meetings on the City's behalf. Staff recommends that the City Planner, who has been the City's representative to the committee, be designated as the City liaison, The City Attorney has reviewed the JPA and has no issues with the agreement. Staff Recommendation: 1. A motion to approve the Joint Powers Agreement (JPA) with Dakota County for Maintenance of GIS Database Containing Road Names and Addresses, and authorize the City Administrator to sign the agreement. 2. A motion designating the City Planner as the City's liaison. JOINT POWERS AGREEMENT BETWEEN THE COUNTY OF DAKOTA AND CITY OF APPLE VALLEY FOR MAINTENANCE OF GIS DATABASE CONTAINING ROAD NAMES AND ADDRESSES This Joint Powers Agreement (the Agreement) is entered into on 2012, by and between the County of Dakota, a political subdivision of the State of Minnesota, Dakota County Administration Center, 1590 Highway 55, Hastings, Minnesota, 55033, hereinafter referred to as' COUNTY, and the City of Apple Valley; a Minnesota municipal corporation, 7100 W 147th, MN, 55124, hereinafter referred to as the CITY, pursuant to the authority contained in Minn. Stat. § 471.59. WHEREAS, Minn. Stat. § 471.59 authorizes local governmental units to jointly or cooperatively exercise any power common to the contracting parties; and WHEREAS, Minn. Stat. § 163.02 authorizes the COUNTY to name COUNTY roads located in the COUNTY; and WHEREAS, Minn. Stat. § 412.221 authorizes the CITY to name CITY roads and assign addresses located in the CITY; and WHEREAS, the CITY and COUNTY wish to maintain a common GIS database of addresses and road names for their mutual benefit for emergency dispatch and other purposes and wish to set forth their respective roles and responsibilities and the terms and conditions of their understanding. NOW, THEREFORE, in consideration of the mutual promises and benefits that they will derive from this Agreement, the COUNTY and the CITY do hereby agree as follows: ARTICLE 1 PURPOSE The purpose of this Agreement is to define the terms and conditions pursuant to which the COUNTY and the CITY will establish and maintain a common GIS database containing ali addresses and road names within the city and Dakota County. ARTICLE 2 TERM 2.1 Effective Date. The term of this Agreement shall commence on the last signature that this Agreement was executed by either party. 2.2 Expiration Date. This Agreement shall remain in fuH force and effect until terminated pursuant to Article 10 of this Agreement. ARTICLE 3 COOPERATION The COUNTY and the CITY agree to cooperate and use their reasonable efforts to ensure prompt implementation of the various provisions of this Agreement and to, in good faith, undertake resalution of any dispute in an equitable and timely manner. 1 ARTICLE 4 RESPONSIBILITIES OF THE CITY 4.1 DESIGNATE ROAD NAMING AND ADDRESSING AUTHORITY. The CITY will designate an individual staff with primary responsibility for naming roads and assigning addresses on roads over which the CITY has jurisdiction. This individual will be the primary contact for any questions or issues regarding road nam�s and addresses on city roads. 4.2 ASSIGN NEVV ROAD NAMES AND ADDRESS. All requests for new addresses and road names over which the CITY has jurisdiction will be directed to the Road Naming and Addressing Authority in that city. The Road Naming and Addressing Authority will assign road names and addresses that conform to the appropriate road naming and addressing system and identify and engage any other CITY staff to obtain formal approval, if necessary. 4.3 UPDATE ROAD NAME AND ADDRESS DATABASE. The CITY Road Naming and Addressing Authority wiil update the road name and address database using tools or procedures approved by the COUNTY prior to actually releasing the new road names and addresses to the property owner ar developer. 4.4 PARTICIPATE IN ROAD NAMING AND ADDRESSFNG COMMITTEE. The CITY Road Naming and Addressing Authority wili represent CITY on the Road Naming and Addressing Committee. 4.5 NOTIFICATIONS. After updating the county road name and address database, the CITY will be responsible for notifying any CITY departments, the property owner or developer, the U.S. Postal Service, and all other appropriate contacts except those notified by the COUNTY as stated in NOTIFICATIONS in Article 5 of this Agreement, of new road names and addresses. ARTICLE 5 RESPONSIBILITIES OF THE COUNTY 5.1 DESIGNATE ROAD NAMING AUTHORITY. The COUNTY will designate an individual staff with primary responsibility for naming roads over which the COUNTY has jurisdiction. This individual will be the primary contact for any questions or issues regarding road names on county roads. 5.2 DESIGNATE ROAD NAME AND ADDRESS DATABASE ADMINISTRATOR. The COUNTY will designate an individual with primary responsibility for administering the road name and address database. The database administrator wiil be responsible for managing ail access to the database and related applications. 5.3 ASSIGN NEW ROAD NAMES. All requests for new road names for roads over which the COUNTY has jurisdiction wifl be directed to the COUNTY Road Naming Authority. The COUNTY Road Narning Authority is responsible for assigning road names that conform to the COUNTY road naming system and identifying and' engaging any other COUNTY staff to obtain formal approval, if necessary. 5.4 UPDATE ROAD NAME AND ADDRESS DATABASE. The COUNTY Road Naming Authority will update the road name and address database using COUNTY supplied tools for COUNTY roads. The COUNTY Road Naming Authority wiii aiso perform updates for township roads prior to providing new road names and addresses to a township, which subsequently releases the new road names and addresses to the property owner or developer. 5.5 CQORDINATE ROAD NAMING� AND ADDRESSING COMMITTEE. The COUNTY Road Naming Authority will represent COUNTY on the Road Naming and Addressing Committee and will act as the Chair of the Committee. Committee wil! meet as needed to discuss issues related to maintaining and distributing the database. 2 5.6 DEVELOP, HOST, AND MAINTAIN DATABASE EDITING APPLICATIONS. The COUNTY is responsible for developing and hosting applications providing direct editing capabilities to the county-wide road and address GIS database. 5.7 PERFORM QUALITY ASSURANCE TESTING. The COUNTY will create and perform systematic testing and validation procedures to identify any issues and potential issues related to assigned addresses and road names. These issues will be documented and provided to the appropriate CITY Road Naming and Addressing Authority for resolution. 5.8 DISTRIBUTE ROAD NAME AND ADDRESS DATABASE. The COUNTY will be responsible for distributing road name and address database for use in other organizations and systems, including; LOGIS (Computer Aided Dispatch system), CJIIN (Records Management System), MetroGlS (for further distribution), CITY Information Technology staff (for integration into city applications), and others as needed. Distribution will be accomplished through standardized formats and procedures with an emphasis on automation to make the distribution as streamlined as reasonably possible. 5.9 NOTIFICATIONS. After confirming Updates to the county road name and address database, the COUNTY wiil be responsible for notifying other COUNTY departments and the Dakota Communications Center or its successor of new road names and addresses. ARTICLE 6 THE ROAD NAMING AND ADDRESSING COMMITTEE There is hereby created a Road Naming and Addressing Committee. CITY and COUNTY will participate in the proceedings of this committee through their respective Road Naming and Addressing Authorities who shall sit as members of the committee. The committee will be chaired and organized by the COUNTY to discuss any issues related to assigning road names and addresses and related applications and databases. The Chair will call for a meeting of the committee members upon a request by two or more committee members. ARTICLE 7 LIMITATION OF LIABILITY AND HOLD HARMLESS 7.1 Neither the COUNTY nor CITY is responsible for the independent acts and/or omissions of the other party, or their officers, employees, or agents nor, is either responsible for the independent acts and/or omissions of other cities that enter into the same or similar Agreements with the COUNTY for street naming and address assignment. 7.2 It is the intent ofi the parties that each party including their respective public safety agencies shall be responsible for any claims or liabilities arising from the negligent, willful, or intentional acts or omissions of their respective public safety personnei without contribution from the other party to this Agreement. 7.3 Each party agrees to indemnify, defend, and hold harmless the other party, its agents, officers, and employees from all claims whatsoever that may arise against the other party (including, their public safety agencies) as a result of the negligent, willful or intentional acts or omissions of the party or their respective public safety personnel; 7.4 Each party shall process and defend, at its own expense and without contribution from the other party, any and all claims of whatsoever kind or nature, with respect to the party's acts or omissions of services or otherwise in response to E911 or emergency or non-emergency requests for services, including any claims that allege information in the county road name and address database is not accurate. 3 7.5 It is understood and agreed that the provisions of the Municipal Tort Claims Act, Minn. Stat. Ch. 466, and other applicable laws govern liability arising from a party's acts or omissions. Each party warrants that they have an insurance or self-insurance program and that each has minimum coverage consistent with the liabifity limits contained in Minn. Stat. Ch. 466 ARTICLE 8 AUTHORIZED REPRESENTATIVES AND LIAISONS 8.1 AUTHORIZED REPRESENTATIVES. The following named persons are designated the authorized representatives of the parties for purposes of this Agreement. These persons have authority to bind the party they represent and to consent to modifications and subcontracts, except that the authorized representative shafl have only the authority specifically or generally granted by their respective governing board or council. Notice required to be provided pursuant to this Agreement shall be provided to the following named persons and addresses unless otherwise stated in this Agreement, or in a modification of this Agreement: TO THE COUNTY: Dakota County Lynn Thompson Physical Development Division Director 14955 Galaxie Avenue Apple Valley, MN 55124 TO THE CITY: City of Apple Valley Tom Lawell City Administrator 7100 W 147th Apple Valley, MN 55124 In addition, notification to the COUNTY regarding termination of this Agreement by the other party shall be provided to the Office of the Dakota County Attorney, 1560 Highway 55, Hastings, Minnesota 55033. 8.2 LIAISONS. To assist the parties in the day-to-day performance of this Agreement and to ensure compliance and provide ongoing consultation, a liaison shall be designated by the COUNTY and the CITY. The COUNTY and the CITY shall keep each other continually informed, in writing, of any change in the designated liaison. At the time of execution of this Agreement, the foliowing persons are the designated liaisons: COUNTY Liaison: Randy Knippel Telephone: (952) 891-7080 . Randy.knippei@co.dakota.mn.us CITY Liaison: Name: Telephone: EmaiL ARTICLE 9 MODIFICATIONS Any atterations, variations, modifications, or waivers of the provisions of this Agreement shaN only be valid when they have been reduced to writing, approved by the parties respective governing bodies and signed by the authorized representatives of the COUNTY and the CITY. 4 ARTICLE 10 TERMINATION Either party may terminate this Agreement for cause by giving seven days' written notice or without cause by giving thirty (30) days' written notice of its intent to terminate to the other party. If the termination is for cause, the notice shall specify the circumstances warranting termination of the Agreement. Cause shall mean a material breach of this Agreement and any supplemental agreements or amendments thereta Notice of Termination shall be made by certified mail or personal delivery to the authorized representative of the other party. Termination of this Agreement shall not discharge any liability, responsibility or right of any party, which arises from the performance of or failure to adequately perform the terms of this Agreement prior to the effective date of termination. ARTICLE 11 MINNESOTA LAW TO GOVERN This Agreement shall be governed by and construed in accordance with the substantive and procedural laws of the State of Minnesota, without giving effect to the principles of conflict of laws. All proceedings related to this Agreement shall be venued in the County of Dakota, State of Minnesota. ARTICLE 12 MERGER This Agreement is the final expression of the agreement of the parties and the complete and exclusive statement of the terms agreed upon and shall supersede all prior negotiations, understandings, or agreements. ARTICLE 13 SEVERABfLiTY The provisions of this pgreement shall be deemed severable. If any part of this Agreement is rendered void, invalid, or unenforceable, such rendering shall not affect the validity and enforceability of the remainder of this Agreement unless the part or parts that are void, invalid or otherwise unenforceable shall substantially impair the value of the entire Agreement with respect to either party. ARTICLE 14 DATA PRACTICES AND CONFIDENTIALITY The parties agree to comply with the provisions of the Minnesota Government Data Practices Act and its implementing rules and any other privacy laws that apply to any data coliected, created, received kept or shared by either party under this Agreement. ARTICLE 15 DISPOSITION OF PROPERTY Wh�n this Agreement is terminated, each party may retain any address and street name data or records that were created, shared or distributed to it pursuant to this Agreement. 5 IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date(s) indicated below. APPROVED AS TO FORM: COUNTY OF DAKOTA ¢ � /Y As � nt County Attorney Date By Date of Signature: CITY OF APPLE VALLEY By Date of Signature: Dakota County #C0023722 County Board Res. No. 12-150 K-11-412.001 K11-412.001 JPAwith City ofAppie Valley (JRS) 6 — T . � • � • CITY OF � � � � APPLE VALLEY MEMO ��• �::: Administration Department TO: Tom Lawell, City Administrator Mayor and City Councif of Apple Valley FROM: Charles Grawe, Assistant City Administrator DATE: June 14, 2012 SUBJECT: Approve Letter of Authorization with Ameresco to Complete a Preliminary Feasibiliiy Analysis Over the past few years the City Council has discussed the physical condition of the old City Hall building located at Cedar Avenue and 142" Street. We have been exploring ways in which to address deficiencies in the building, and are pursuing an innovative concept known as an Energy Savings Performance Contract (ESPC's). Cities are increasingly using ESPC's as a means to identify, implement, and finance deeper level energy savings improvements in city facilities. There are finro basic types of ESPCs. Some are tied to equipment manufacturers who want to implement their products in the solutian and often require maintenance agreements as weil. Others are independent companies that utilize solutions from a variety of different vendors to best meet the needs of the client and their facilities. Staff has been in conversation with one such independent firm known as Ameresco. A number of Metro cities, most notably Eagan, have used this model to help improve their facilities. Staff is recommending that we further explore our options with Ameresco by having them complete a Preliminary Feasibility Analysis for the former City Hall building. The infrastructure in the building is aging and inefficient and a comprehensive solution to upgrade multiple systems within the facitity is necessary. Once the study is complete, Ameresco would develop a program that utilizes guaranteed cost savings from the improvements to �nance the improvements. Ameresco would complete a Preliminary Feasibility Analysis of the former City Hall building free of charge to the City. During the course of the analysis, we would invite Ameresco to address the City Council at an informal workshop session to explain how their services work and to gauge the City's possible interest in pursuing some investment as a result of the study. As the work on the former City Hall is necessary within the next few years and as the former City Hall has its own dedicated funding source as a fallback, staff believes that it would be beneficial and of little risk to proceed with the Preliminary Feasibility Analysis. Staff recommends the City Council approve the attached letter of authorization and authorize the Mayor to sign on behalf of the City. Attachment � LETTER OF AUTHORIZATION The City of Apple Valley (City) is authorizing AMERESCO to complete a Preliminary Feasibility Analysis for its facilities and other assets. The analysis will be focused on finding enetgy and other cost reducrion opportuniries. An Energy Savings Performance Contract (ESPC) is a self-funding Public-Private Partnership to increase energy efficiency and upgrade infrastructure. Both Ameresco and the City understand that: �! Ameresco shall dedicate its xesources to developing a preliminary feasibility analysis of an ESPC for the City. � The City will work with Ameresco to complete the preliminary feasibility analysis and will provide necessary resources to support Ameresco. The City will also pxovide historical utility and operating expenses as requested to complete the assessment. � The purpose of the prelimuiary analysis is to establish the foundation for completing an ESPC. An ESPC is a negotiated professional services agreement as defined in Mimiesota Statute 471.345. � The City will add an agenda item for a brief ESPC Concept Presentation to an upcoming City Council/Committee Work Session to inform and educate Council MembeYS on this savings program. � Upon complerion of the feasibility analysis, a meeting will be held to discuss and present the prelimuiary findings and to define the next steps, if any, in the development of an ESPC. � Ameresco will not charge a fee for this preluninary analysis, and will complete the preliminary analysis within 30-45 days. The below approval authorizes Ameresco to begin the preluizinary facility assessment. CITY OF APPLE VALLEY: Authorized Signature Name• Title: Date: «�� • � �� o�. City of AppVa��e Y MEMO Public Works Department TO: Mayor, City Council, and City Administratar FROM: Carol Blommel Johnson, Public Works Superintendent DATE: June 12, 2012 SUBJECT: RESOLUTION TO AMEND THE RECEIPT OF BIDS DATE FOR AV PROJECT 2012-108; WATER TREATMENT PLANT EXPANSION On April 26, 2012, the Council approved June 28 as the Receipt of Bids date for the Water Treatment Plant Expansion project. Due to the size and complexity of the project, staff is requesting the date for receipt of bids be amended to July 12, 2012. This project includes the expansion of the existing water treatment facility to serve the full build-out of the City, rehabilitation and upgrade of the existing facility, and addition of a vehicle and equipment storage area, as well as a vehicle wash facility addition to the Central Maintenance Facility. Should City Council authorize amending the bid opening date to July 12, the award of contract is anticipated for July 26, 2012. Plans and specifications are available far viewing in the office of the Public Works Directar. Recommended Action: Adopt Resolution Amending the Receipt of Bids Date for AV Project 2012-108, Water Treatment Plant Expansion, and Set the Receipt of Bids Date for July 12, 2012, at 10:00 a.m. CBJ:cIg Attachments c: Todd Blomstrom, Public Works Director CITY OF APPLE VALLEY RESOLUTION NO. 2012- A RESOLUTION APPROVING AMENDING THE DATE FOR RECEIPT OF SEALED BIDS FOR AV PROJECT 2012-108, WATER TREATMENT PLANT EXPANSION WHEREAS, The Apple Valley City Council adopted Resolution No. 2012-95 approving plans and specifications and directing receipt of sealed bids for Project 2012-108, Water Treatment Plant Expansion; and WHEREAS, the Council recognizes the size and compiexity of the Water Treatment Plant Expansion and additional vehicle and equipment storage and wash facility; and WHEREAS, the Council considers it to be in the best interest of the City to allow additional time for the receipt of sealed bids. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Apple Valiey, Dakota County, Minnesota, as follows: 1. The Public Works Director is hereby authorized to receive sealed bids at the amended time and place specified in the form of notice attached hereto as E�ibit A. 2. The Public Works Director is authorized and directed to cause an advertisement for said bids to be published once in Apple Va11ey Sun Thisweek, being the official newspaper of the City, once in the online Quest Constniction Data Network, and once in Construction Bulletin, not less than ten (10) days prior to the opening of said bids. ADOPTED this 12th day of June, 2012. Mary Hamann-Roland, Mayor ATTEST: Pamela J. Gackstetter, City Clerk DOCLTMENT 00 11 13 ADVERTISEMENT FOR BIDS Water Treatment Facility Expansion City of Apple Valley, Minnesota SEH No. APPLE 118533 City Project No. 2012-108 Notice is hereby given that sealed Bids will be received by the City of Apple Valley until 10`.00 A.M. CDST, Thursday July 12, 2012 at the App1e Valley Municipal Center at 7100 West 147th Street Apple Valley, MN 55124, at which time they will be publicly opened and read aloud, for the furnishing of all labor and material and all else necessary for the construction of the Apple Valley Water Treatment Facility Expansion. Major components of the Work include: • 6.5 MGD concrete filter expansion • Steel trusses • Two new concrete backwash holding tanks � Electrical • 12,000 square foot garage/shop expansion • Standby Generator • A vehicle wash bay expansion • Mechanical • Demolition • HVAC • Process pumps • Painting • Chemical feed systems • Water Main • Process piping, fittings, and valves • Sanitary Sewer • Process instrumentation and controls • Storm Sewer • Concrete and brick masonry • Site Work • Tip-up precast walls (wash bay) • Landscaping • Precast ceiling • Bituminous Driveway Bids shall be on the form provided for that purpose and according to the Bidding Requirements prepared by Short Elliott Hendrickson Inc., dated June 7, 2012. The Bidding Documents may be viewed at http://www.sehinc.com Digital copies of the Bidding Documents are available at http://www.sehinc.com for a fee of $40. These documents may be downloaded by selecting this project from the BIDDING DOCLTMENTS link and by entering eBidDoc Number #' # � on the SEARCH PROJECTS page. For assistance and free membership registration, contact QuestCDN at 952.233.1632 or info(a�questcdn.com. Paper copies of the Bidding Documents may be obtained from Docunet Corp. located at 2435 Xenium Lane North, Plymouth, MN 55441 (763.475.9600) for a fee of $300. Minimum General Contractor Oualifications: The Bidder shall have experience of successfully completing work on at least three (3) water treatment plant facilities. Of these, the Bidder must have experience of successfully completing work on at least two (2) of these projects in the last 7 years as a General Contractor involving gravity or pressure filters or a lime softening water treatment plant, where the capacity of�he facility was equal to or greater than 5 million gallons per day, and where the work experience includes: earthwork, demolition, concrete, piping, process equipment, welding, coating applications, mechanical HVAC systems, electrical, instrumentation, and control work. Pre-Bid Conference: A pre-Bid conference will be held at 10:00 A.M. CDST on Tuesday, June 26, 2012, at the Water Treatment Plant located on 6442 West 140th Street in Apple Valley, Minnesota. Representatives of Owner and Engineer will be present to discuss the Project. Bidders of concrete, process pipin�, mechanical, electrical and paintin� work are strongly encoura�ed to attend and participate in the conference. Advertisement for Bids APPLE 118533 00 11 13 - 1 This Work shall be subject to minimum wages and labor standards in accordance with Minnesota Department of Labor and Industry, State Prevailing Wages for Highway and Heavy Construction. Bid security in the amount of S percent of the Bid must accompany each Bid in accordance with the Instructions to Bidders. Bids shall be directed to the City Clerk, securely sealed �nd endorsed upon the outside wrapper, "BID FOR APPLE VALLEY WATER TREATMENT FACILITY EXPANSION - CITY PROJECT NUMBER: 2012-108." Owner reserves the right to retain the deposits of the three lowest Bidders for a period not to exceed 60 days after the date and time set for the opening of Bids. No Bids may be withdrawn for a period of 60 days after the date and time set for the opening of Bids. The Owner reserves the right to reject any and all Bids, to waive irregularities and inforrnalities therein and to award the Contract in the best interests of the Owner. Pamela J. Gackstetter City Clerk City of Apple Valley, Minnesota Advertisement for Bids 00 11 13 - 2 APPLE 118533 ... � . M .... ..... .... ... ` _ ,� City of App�e Va��ey MEMO Public Works Department TO: Mayor, City Council, and City Administrator FROM: Jane Byron, Water Quality Technician DATE: June 14, 2012 SUBJECT: APPROVE 2012 WATER QUALITY IMPROVEMENT COST SHARE PROGRAM AGREEMENTS In 2009 the City of Apple Valley began a voluntary cost share program for residential, multiple- family, or institutional property owners to promote the installation of water quality improvements. These improvements typically consist of rain gardens, buffers, and shoreline stabilization projects to reduce and treat stormwater runoff prior to its entering the stormwater system. This cost share program assists the City in meeting State and Federal storm water management requirements. The program provides for reimbursement of 50 percent of qualifying expenses, not to exceed a total reimbursement from the City of $500. The program requires that the property owner maintain their project to meet program standards for a period of no less than seven years. In 2012 City staff has received complete water quality cost share applications for four projects and determined that these projects are eligible far the program. Name Address Project Watershed Bryan Koll 1088 Rome Court Raingarden Keller Lake Nancy Joy Hegg 12968 Finch Way Raingarden Long Lake David R. & Bridget J. Holmen 5681 125th Street West Raingarden Farquar Lake Diamond Path Place Association, Ina Lot 1, Bocks 1& 2, Raingardens Vermillion River Diamond Path Sth Addition Funding for this program is included in the 2012 operating budget for the Storm Drainage Utility. Recommended Action: Approve 2012 Water Quality Improvement Cost Share Program Agreements for the properties listed above, with individual payments not to exceed $500. JB:jcb Attachments c: Todd Blomstrom i-1-. M .1 WATER QUALITY IMPROVEMENT COST SHARE PROGRAM AGREEMENT Between City of Apple Valley and Brvan Koll Location: 1088 Rome Court This Cost Share Agreement ("Agreement") in furtherance of the City of Apple Valley's Water Quality Improvement Cost Share Program, is entered into between the City of Apple Valley, a Minnesota municipal corporation, ("City") and Bryan Koll ("Owner," whether one or more). The City and Owner are jointly hereinafter referred to as the "Parties". 1. Pu1�osE. In order to promote water quality and prevent degradation of the City's water resources, the City has a cost share program to assist the Owner to install and construct a 200 square foot raingarden and 70 square foot native garden ("Project"), as described in detailed in Exhibit "A" attached hereto; on the Owner's property. 2. LocAT�oN oF PROJECT The Owner is the fee owner of real property located at 1088 Rome Court in the City of Apple Valley, County of Dakota, State of Minnesota, and legally described as: Lot 11, Block 7, Apple Valley 12th Addition ("Property"). The Project to which the cost share program shall apply is to be located on the Property. 3 PROJECT COMPLBTION. The Owner has been approved for a cost share grant under the City's Water Quality Improvement Cost Share Program in accordance with the program policy, attached hereto as Exhibit "B" and made a part hereof. The Owner shall receive the approved grant funds in accordance with the Water Quality Improvement Cost Share Program Policy if and when the Owner installs and constructs the Project in accordance with the project plan specifications as set forth in Exhibit "A." The Owner shall install and construct the Project no later than Dctober T5, 2012. If the Owner fails to install or construct the Project in accordance with the specifications set forth in Exhibit "A" and on or before October 15, 2012, unless the City has granted an extension thereof, the Owner shall not be entitled to receive the cost share grant funds. 4. Gx�,NT AwAxD. Upon the completion of the Project and the City's receipt of documents verifying all construction expenses, excluding any claimed labor cost of the Owner or volunteers, the City will pay to the Owner the sum equal to fifty percent (50%) of the Owner's verified costs and expenses, not to exceed a grant award of $500.00. 5. RIGHT TO ENTER PROPERTY. The Owner shall permit the City to enter the Property, at any reasonable time and with reasonable notice to the Owner, for the purpose of inspecting the Project during and after the installation and construction of the Project to determine the Project meets the specifications and the on-going functioning and maintenance thereof. 6. ItvsTALLAT�oN. The Owner shall be responsible for the design and construction of the Project, including, but not limited to, locating and protecting existing underground utilities and preventing drainage and ground water impacts to existing structures on the property. 7. MA�1vTENAtvcE. The Owner shall maintain the Project in accordance with the terms of this Agreement and as specifically set forth in the Terms of Maintenance, attached as Exhibit "C" for a period not less than seven (7) years from the date the installation and construction of the Project is completed. If the Owner fails to maintain the Project for a period of seven (7) years or fails to maintain the Project in accordance with the Terms of Maintenance set forth in Exhibit "C," the Owner shall reimburse the City the amount of the grant award received by the Owner under this Agreement, unless the City determines that the failure to maintain the Project was caused by reasons beyond Owner's control and the City has directed the Owner to remove the Project. 8. PUBLicaTioNS. The Owner authorizes the City to obtain and disseminate photographs, video, digital recardings, depictions or any other literature or publication of the Project in connection with any City publication, the City web site, or any other City-sponsored materials distributed to the public. 9. CoMPL�ANCE wlTx LAws AND REGULAT�oNS. The Owner shall comply with any state, county, or city law or regulation applicable to the installation, construction, and maintenance of the Project. If the Owner hires a third party to complete the installation and construction of the Project, the Owner shall ensure that no person is excluded from full employment rights with participations in or the benefits of any program, service or activity; and that no person who is protected by applicable federal or state laws, rules or regulations against discrimination otherwise is subject to discrimination. 10. NoT�cES. Any written communication required under this Agreement shall be addressed to the identified persons for the Parties: City: Public Works Director City of Apple Valley 6442 —140 Street West Apple Valley, Minnesota 55124 Owner: Bryan Koll 1088 Rome Ct Apple Valley, MN 55124 2 10. INDE1vt1v�F�cAT�oN. The Owner indemnifies and holds the City harmless from any action, claim, loss, injury, or harm arising from the Owner's installation, construction or maintenance of the Project. The City specifically states and the Owner hereby acknowledges that the City does not waive any immunities or other defenses it may have in any action, claim, or lawsuit initiated in regard to the Project or the terms of this Agreement. The City shall have no obligation in connection with the Project except to the extent of providing the cost share grant funds as provided in this Agreement. �----� OWNER: ��'� ��,� �� Print N e: Bryan Koll CITY: City of Apple Valley, a Minnesota municipal corporation By: Mary Hamann-Roland Its: Mayor By: Pamela J. Gackstetter Its: City Clerk STATE OF MINNESOTA ) ) ss. COUNTY OF DAKOTA ) The foregoing instrument was acknowledged before me this a3 of , 20�, by 13r' y� ,,. lC o � � , �-�-- - ublic STATE OF MINNESOTA ) Ep�K�pMESCOSSALTER •°'�� NptARY PUBIIC • MiNNE50TA t COUNTY OF DAKOTA ) SS � �" ' ��M�SSlOND(PIRES01131118� The foregoing instrument was acknowledged before me this day of , 20 , by Mary Hamann-Roland and Pamela J. Gackstetter, the Mayor and Clerk of the City of Apple Valley, a Minnesota municipal corporation, on behalf of the municipal corporation. Notary Public 3 ATTACHMENT ��A" APPROVED PROJECT PLAN ` � ��, � � �.. �� I �� : � z '� � �� , � ,�� :. �� ;, � � � �� , � �� , � � � ��i �� a � :�°� � �� .' r ,,�- ;"�; 'ao t �"�',' � � � �;, 3 1 �• � �� Yl } > II � E „i . �'� IS a SY° �� iln' � �A E' 1� � $ � I 4 &, � § &° II I III �j . �. �. I I ' �3 ��§ e � �.; t � � . „ ,. � q � Q � S ::� . ,e E 3: 5 � P �Re '� � A s § � � }. � ., � g t � � \ �" ~ � a �� f � 4 H � y� & �� S c � � e a �" �° G . .» 3g ea.t.v. _ `_ _ Raingarden and native garden center positioned at approximately 44.726423°N and 93.245026°W. Raingarden depth at least 6 inches. Raingarden size approximately 200 square feet and native garden size approximately 70 square feet. Raingarden and native garden located outside of right- of-way. The raingarden shall not be installed over any utilities. Owner shall contact Gopher State One Call to locate all underground utilities prior to conducting excavation. The property owner shall only hand dig within 2 feet of utility markings and report any damage to utilities, including nicks to lines or pipes. 4 EXHIBIT "B" WATER QUALITY IMPROVEMENT COST SHARE PROGRAM POLICY In order to improve water quality and prevent degradation of surface waters, the City of Apple Valley will offer a voluntary cost share program to property owners of residential, multiple-family, or institutional zoned lots within the City subject to available funding. Property owners will be reimbursed for a portion of expenses incurred for the installation of projects that reduce and treat stormwater runoff prior to its entering the stormwater system. Projects providing the greatest perceived benefit to water resources will receive preference. The program will focus on providing cost share for raingarden, buffer, and shoreline stabilization projects. However, the City may consider funding other types of projects depending on the strength of the application presented. Projects must function by using one of the following treatment mechanisms: infiltration, bio-filtration, bio-retention, rainwater/runoff harvest/reuse, and other runoff reduction mechanisms. In addition to the standards already listed, the following standards shall govern approval of projects and disbursement of money under this program: Eligibility 1. Projects resulting from enforcement action due to violation of any agency's rule, statute, law, or ordinance are not eligible to receive grant money under this program. 2. Projects required as part of an Apple Valley permit to meet minimum water quality/quantity/resources standards are not eligible; however, projects that go beyond minimum City permit requirements may be eligible for funds. 3. Applicants proposing to install infiltration devices in industrial areas or areas with confirmed or a high potential for contaminated soils are ineligible to receive grant monies. 4. Projects found to be inconsistent with other City Ordinances or Policies are not eligible to receive grant money under this program. 5. The proposed project must score at least one third of the total points possible as averaged across all reviewers during the ranking process to be eligible for funding. Reimbursement Standards 1. Only projects approved by City of Apple Valley will be reimbursed. 2. Projects started prior to City approval will not receive reimbursement. 3. Projects will be funded on a first-come, first-served basis. Preference will be given to complete applications from first-time applicants. 5 4. Projects are eligible to receive up to one-half the total cost of the water quality improvement component of the project with a maximum of $500 per lot or project. 5. If the project is receiving monies from any other organization, the property owner must contribute at least 25 percent of the project cost. 6. Property owners may not reimburse themselves or volunteers for labor costs. 7. Reimbursement will not occur until a City of Apple Valley staff member has performed a final inspection that confirms all conditions of the grant agreement have been met, City standards have been met, and the device is functioning as intended. 8. Projects must be completed and installed no later than October 15 in the year approved. 9. Final inspections will only occur at those times of the year when City of Apple Valley can determine the conditions of the project. 10. Reimbursement will not occur until City has received a copy of all paid receipts and verified all expenses. Paid receipts must be received by 4:30 p.m., December 1, in the year approved. 11. The City may institute a maximum per unit material cost cap for any materials used in a project. Application Requirements 1. All projects must submit a grant application form and all other materials necessary for City of Apple Valley staff to evaluate the project. First round grant applications must be received at Apple Valley Municipal Center no later than 4:30 p.m., May 1, each year; or the first business day following May 1, should it fall on a weekend. A second grant round may commence if all monies available are not granted as a result of the first round. 2. Apple Valley staff may require a pre-installation consultation with the property owner prior to grant approval. 3. Projects must receive all required permits and approvals from all agencies prior to starting work. The City may elect to waive the application fee for a Natural Resources Management Permit and/or Right-of-Way Permit for approved projects; waiver of permit fees is not guaranteed. General Standards 1. Property owners accepting grant monies will be required to sign and commit to a maintenance and grant acceptance agreement. Maintenance and grant acceptance agreements shall apply for a term of no less than 7 years. Longer maintenance agreement terms shall be required if a project makes use of another City program requiring such. 2. By accepting grant monies, the property owner agrees to periodic inspection of the property and device by City staff. 3. Any devices installed must not cause increased erosion, have a negative impact on water quality, damage adjoining property, or create a public nuisance. 6 4. Generally, the City will use guidelines contained within the Minnesota Stormwater Manual and other guidance materials in addition to the standards listed elsewhere in this document to determine whether projects are designed correctly. 5. The City may require the addition of educational signage for certain projects at the City's expense. 6. All work must be completed in the year grant approval has been received. 7. Property owners shall locate all easements, rights of way, and utilities on their property and situate devices accordingly. 8. Preference will be given to projects occurring within subwatersheds of concern within the City. 9. The City will not allow device designs or devices to be located in such a manner that potentially inhibits the use of an easement or hinders access to utilities. Devices sited within an easement, right of way, or in close proximity to a utility may be removed by the City or public utility provider in order to perForm maintenance, replace facilities, construct improvements, or expand facilities. Additional Device Specific Standards RAINGARDENS 1. Raingardens consisting of native of ecotype plants will be given preference over those using non-natives and cultivars. 2. Raingardens shall be free of linings that prevent infiltration into underlying soils. 3. The raingarden base shall be covered with 3 inches shredded hardwood mulch. 4. Side slopes within raingardens shall not exceed 3(horizontal):1(vertical) or shall provide an adequate slope retaining system as approved by the City of Apple Valley. 5. The property owner shall avoid compaction and sedimentation in device area prior, during, and after installation. 6. Raingardens must be installed no closer than 15 feet from basement foundations or other underground rooms. 7. Raingardens must be installed a minimum of 3 feet from the curb and gutter or street edge if there is no curb and gutter. 8. Raingardens occurring in rights-of-way shall be evaluated on a case by case basis, subject to additional scrutiny, held to stricter design standards, subject to additional approvals, and subject to additional maintenance requirements if approved. Rights-of-way generally include the area between sidewalks and curbs, commonly referred to as the boulevard. 9. Raingarden location may be required to be adjusted to accommodate utilities, easements, and other public services. 10. Raingardens must provide a stabilized outlet. 11. Raingarden base must be at least 3 feet higher than seasonally high water table elevation. 12. Raingardens must be kept free of invasive plants. 7 13. Grant preference will be given to properties with higher soil infiltration rates without a history of soil contamination. 14. Preference will be given to gardens covering a larger area. 15. Depending on the location of the raingarden and the source of stormwater entering the garden, raingardens may be required to demonstrate that adequate pretreatment has been provided to reduce clogging. 16.Other standards may be required depending on the location of the raingarden and circumstances occurring on the lot or adjacent to the lot on which it is situated. BUFFERS AND SHORELINE STABILIZATIONS 1. Any project proposing work occurring below the Ordinary High Water Elevation (OHW) of a Minnesota Public Water must contact the Minnesota Department of Natural Resources (DNR) to determine if permits are required for the project. 2. All plants will be native of ecotype non-cultivars. 3. Projects receiving grant monies must be for buffers outside of any area required to be buffered as established through City ordinance, previous or existing permit, state or federal wetland law, agency required mitigation, restoration order, or other agency rule, statute, permit, or penalty. 4. Buffers must extend on average at least 16.5 feet landward. 5. No grant monies shall contribute to expenses for hard armoring as defined by the City (riprap, gabions, concrete block, wood or metal or block retaining walls, etc.) of the shoreline. 6. Buffers must be kept free of invasive plants. 7. Adequate erosion and sediment control must be installed throughout the life of the project. 8. Preference will be given to applicants whose buffer widths at minimum meet standards based on their wetland management class. 9. Preference will be given to those applicants installing wider and longer buffers. 10. Preference will be given to projects that plant below the OHW or NWL. OTHER STORMWATER TREATMENT PRACTICES 1. The project must meet manufacturer's guidelines, City of Apple Valley standards, may be subject to review by the City engineer, may be subject to City supervision during installation, and may require materials testing. 8 EXHIBIT "C" TERMS OF MAINTENANCE 1. The property owner shall maintain healthy plants suitable for use in raingardens and native gardens throughout the entire raingarden and native garden. The property owner shall replace dead or diseased vegetation with plants capable of tolerating conditions encountered in the raingarden and native garden. 2. Plants eligible for reimbursement within the native garden shall be native, propagated from an original plant source within 200 miles for herbaceous plants and 300 miles for trees and shrubs. 3. The percentage of native plants within the native garden shall remain the same or increase in percentage throughout the maintenance term and shall not be less than 50% of the native garden planting area. 4. The raingarden and native garden shall be kept free of non-native invasive plant species and noxious weeds, including buckthorn. 5. The overall area of the raingarden and native garden shall not be reduced during the maintenance term. 6. The raingarden and native garden shall be watered such that it receives 1 inch of water per week combined from rain and other sources during the first growing season. 7. Fertilizers shall not be applied to any part of the raingarden or native garden. 8. Insecticides and fungicides shall only be applied when damage from non-native species is of concern. 9. Herbicides shall be limited to spot applications. 10. The property owner may remove dried vegetation once a yeax in the spring prior to May 30 if desired. 11. The property owner shall maintain at minimum a three inch layer of shredded hardwood mulch for the maintenance term. 12. The raingarden must drain free of water within 48 hours after a rainstorm except for in times of frozen soils. 13. The raingarden and native garden lay in close proximity to the right-of-way held by the City of Apple Valley. The City of Apple Valley and any public utility providers retain the right to use the right-of-way to maintain, replace, construct improvements to, or expand facilities. The City of Apple Valley and utility companies will not be held liable for any damage or loss caused to landscaping, structures, or other improvements installed in the right-of-way in the course of exercising its rights to the right-of-way. 14. The property owner is responsible for locating all utilities prior to installation. The owner shall only hand dig within 2 feet of utility markings. The raingarden shall not be installed over any utilities. 9 �}. Nt .2 WATER QUALITY IMPROVEMENT COST SHARE PROGRAM AGREEMENT Between City of Apple Valley and Nancv Joy He�g Location: 12968 Finch Way ' This Cost Share Agreement ("Agreement") in furtherance of the City of Apple Valley's Water Quality Improvement Cost Share Program, is entered into between the City of Apple Valley, a Minnesota municipal corporation, ("City") and Nancy Joy Hegg ("Owner," whether one or more). The City and Owner are jointly hereinafter referred to as the "Parties". 1. Pu�oSE. In arder to promote water quality and prevent degradation of the City's water resources, the City has a cost share program to assist the Owner to install and construct a 200 square foot raingarden and 70 square foot native arden ("Project"), as described in detailed in Exhibit "A" attached hereto, on the Owner's property. 2. LocAT�oN oF PROJECT The Owner is the fee owner of real property located at 12968 Finch Wav in the City of Apple Valley, County of Dakota, State of Minnesota, and legally described as: Lot 3, Block l, GREENLEAF STH ADDITION ("Property"). The Project to which the cost share program shall apply is to be located on the Property. 3 PROJECT COMPLETION The Owner has been approved for a cost share grar�t under the City's Water Quality Improvement Cost Share Program in accordance with the program policy, attached hereto as Exhibit "B" and made a part hereof. The Owner shall receive the approved grant funds in accordance with the Water Quality Improvement Cost Share Program Policy if and when the Owner installs and constructs the Project in accordance with the project plan specifications as set forth in Exhibit "A." The Owner shall install and construct the Project no later than October 15, 2012. If the Owner fails to install or construct the Project in accordance with the specifications set forth in Exhibit "A" and on or before October 15, 2012, unless the City has granted an extension thereof, the Owner shall not be entitled to receive the cost share grant funds. 4. GR,e,NT AwARV. Upon the completion of the Project and the City's receipt of documents verifying all construction expenses, excluding any claimed labor cost of the Owner or volunteers, the City will pay to the Owner the sum equal to fifty percent (50%) of the Owner's verified costs and expenses, not to exceed a grant award of $500.00. 5. RIGHT TO ENTER PROPERTY Tl�e Owner shall permit the City to enter the Property, at any reasonable time and with reasonable notice to the Owner, for the purpose of inspecting the Project during and after the installation and construction of the Project to determine the Project meets the specifications and the on-going functioning and maintenance thereof. 6. I1vsTALLAT�oN. The Owner shall be responsible for the design and construction of the Project, including, but not limited to, locating and protecting existing underground utilities and preventing drainage and ground water impacts to existing structures on the property. 7. MAINTEtvANCE. The Owner shall maintain the Project in accordance with the terms of this Agreement and as specifically set forth in the Terms of Maintenance, attached as Exhibit "C" for a period not less than seven (7) years from the date the installation and construction of the Project is completed. If the Owner fails to maintain the Project for a period of seven (7) years or fails to maintain the Project in accordance with the Terms of Maintenance set forth in Exhibit "C," the Owner shall reimburse the City the amount of the grant award received by the Owner under this Agreement, unless the City determines that the failure to maintain the Project was caused by reasons beyond Owner's control and the City has directed the Owner to remove the Project. 8. PuBLICAT�o1vs. The Owner authorizes the City to obtain and disseminate photographs, video, digital recordings, depictions or any other literature or publication of the Project in connection with any City publication, the City web site, or any other City-sponsored materials distributed to the public. 9. COMPLIANCE WITH LAWS AND REGULATIONS. The Owner shall comply with any state, county, or city law or regulation applicable to the installation, construction, and maintenance of the Project. If the Owner hires a third party to complete the installation and construction of the Project, the Owner shall ensure that no person is excluded from full employment rights with participations in or the benefits of any program, service or activity; and that no person who is protected by applicable federal or state laws, rules or regulations against discrimination otherwise is subject to discrimination. 10. NoT�CES. Any written communication required under this Agreement shall be addressed to the identified persons for the Parties: City: Public Works Director City of Apple Valley 6442 —140 Street West Apple Valley, Minnesota 55124 Owner: Nancy Joy Hegg 12968 Finch Way Apple Valley, MN 55124 2 10. INDE�v�F�cATION. The Owner indemnifies and holds the City harmless from any action, claim, loss, injury, or harm arising from the Owner's installation, construction or maintenance of the Project. The City specifically states and the Owner hereby acknowledges that the City does not waive any immunities or other defenses it may have in any action, claim, or lawsuit initiated in regard to the Project or the terms of this Agreement. The City shall have no obligation in connection with the Project except to the extent of providing the cost share grant funds as provided in this Agreement. OWNER: Print Nam • t c Joy Hegg CITY: City of Apple Valley, a Minnesota municipal corporation By: Mary Hamann-Roland Its: Mayor By: Pamela J. Gackstetter Its: City Clerk STATE OF MINNESOTA ) ) ss. COUNTY OF DAKOTA ) � f�'�- The f egoing inst nt was acknowledged before me this � 7 day of , 2o�by ��i'r[.�G ��c`�.oC�� _��,�. ,� •��. PATRICIA A, �CHQLTEN � f �.. ��/ i��tary �utaHC-►v1inn� � `��:,�»� �'"' My Qommlesian �nair� Jsn st, Y Public STATE OF MINNESO ) ss. COUNTY OF DAKOTA ) The foregoing instrument was acknowledged before me this��'��y °f , 20 , by Mary Hamann-Roland and Pamela J. Gackstetter, the Mayor and Clerk of the it� of Apple Valley, a Minnesota municipal corporation, on behalf of the municipal corporation. Notary Public 3 ATTACHMENT "A" APPROVED PROJECT PLAN �g'e �.n.� � _ �F�;� yv � �� ; �e .e e �� °� , � ;..> � .,. �. � �1�,�q � l. �"g ° < g ,.. �� ° . � ' � �� -�� .� �,, t�� '� ^f .,x �" � � {.r . A's y� F �i "�� '�, C I � � �° �, �. �i W � A�F"`"'�' 3 � i . � V� � � �. � p .�., �e� ae .. *s stn'�.s� F ° e�a€�v'" t .,�° � k �: 4 "l + o.. � ,�: . ��y:, ��°�� `�� `'�� `�y`� �� ;� � . a �� . � � ee� ..�,. > � �.�.�,.,_�... �W'�� ., W a�: Raingarden and native garden center positioned at approximately 44.760655°N and 93.192237°W. Raingarden depth at least 3 inches. Raingarden size approximately 200 square feet and native garden size approximately 70 square feet. Raingarden and native garden located outside of right- of-way and outside of pipeline easement. The raingarden shall not be installed over any utilities. Owner shall contact Gopher State One Call to locate all underground utilities prior to conducting excavation. The property owner shall only hand dig within 2 feet of utility markings and report any damage to utilities, including nicks to lines or pipes. 4 EXHIBIT "B" WATER QUALITY IMPROVEMENT COST SHARE PROGRAM POLICY In order to improve water quality and prevent degradation of surFace waters, the City of Apple Valley will offer a voluntary cost share program to property owners of residential, multiple-family, or institutional zoned lots within the City subject to available funding. Property owners will be reimbursed for a portion of expenses incurred for the installation of projects that reduce and treat stormwater runoff prior to its entering the stormwater system. Projects providing the greatest perceived benefit to water resources will receive preference. The program will focus on providing cost share for raingarden, buffer, and shoreline stabilization projects. However, the City may consider funding other types of projects depending on the strength of the application presented. Projects must function by using one of the following treatment mechanisms: infiltration, bio-filtration, bio-retention, rainwater/runoff harvest/reuse, and other runoff reduction mechanisms. In addition to the standards already listed, the following standards shall govern approval of projects and disbursement of money under this program: Eligibility 1. Projects resulting from enforcement action due to violation of any agency's rule, statute, law, or ordinance are not eligible to receive grant money under this program. 2. Projects required as part of an Apple Valley permit to meet minimum water quality/quantity/resources standards are not eligible; however, projects that go beyond minimum City permit requirements may be eligible for funds. 3. Applicants proposing to install infiltration devices in industrial areas or areas with confirmed or a high potential for contaminated soils are ineligible to receive grant monies. 4. Projects found to be inconsistent with other City Ordinances or Policies are not eligible to receive grant money under this program. 5. The proposed project must score at least one third of the total points possible as averaged across all reviewers during the ranking process to be eligible for funding. Reimbursement Standards 1. Only projects approved by City of Apple Valley will be reimbursed. 2. Projects started prior to City approval will not receive reimbursement. 5 3. Projects will be funded on a first-come, first-served basis. Preference will be given to complete applications from first-time applicants. 4. Projects are eligible to receive up to one-half the total cost of the water quality improvement component of the project with a maximum of $500 per lot or project. 5. If the project is receiving monies from any other organization, the property owner must contribute at least 25 percent of the project cost. 6. Property owners may not reimburse themselves or volunteers for labor costs. 7. Reimbursement will not occur until a City of Apple Valley staff member has perFormed a final inspection that confirms all conditions of the grant agreement have been met, City standards have been met, and the device is functioning as intended. 8. Projects must be completed and installed no later than October 15 in the year approved. 9. Final inspections will only occur at those times of the year when City of Apple Valley can determine the conditions of the project. 10. Reimbursement will not occur until City has received a copy of all paid receipts and verified all expenses. Paid receipts must be received by 4:30 p.m., December 1, in the year approved. 11. The City may institute a maximum per unit material cost cap for any materials used in a project. Application Requiremen� 1. All projects must submit a grant application form and all other materials necessary for City of Apple Valley staff to evaluate the project. First round grant applications must be received at Apple Valley Municipal Center no later than 4:30 p.m., May 1, each year; or the first business day following May 1, should it fall on a weekend. A second grant round may commence if all monies available are not granted as a result of the first round. 2. Apple Valley staff may require a pre-installation consultation with the property owner prior to grant approval. 3. Projects must receive all required permits and approvals from all agencies prior to starting work. The City may elect to waive the application fee for a Natural Resources Management Permit and/or Right-of-Way Permit for approved projects; waiver of permit fees is not guaranteed. General Standards 1. Property owners accepting grant monies wi(I be required to sign and commit to a maintenance and grant acceptance agreement. Maintenance and grant acceptance agreements shall apply for a term of no less than 7 years. Longer maintenance agreement terms shall be required if a project makes use of another City program requiring such. 2. By accepting grant monies, the property owner agrees to periodic inspection of the property and device by City staff. 3. Any devices installed must not cause increased erosion, have a negative impact on water quality, damage adjoining property, or create a public nuisance. 6 4. Generally, the City will use guidelines contained within the Minnesota Stormwater Manual and other guidance materials in addition to the standards listed elsewhere in this document to determine whether projects are designed correctly. 5. The City may require the addition of educational signage for certain projects at the City's expense. 6. All work must be completed in the year grant approval has been received. 7. Property owners shall locate all easements, rights of way, and utilities on their property and situate devices accordingly. 8. Preference will be given to projects occurring within subwatersheds of concern within the City. 9. The City will not allow device designs or devices to be located in such a manner that potentially inhibits the use of an easement or hinders access to utilities. Devices sited within an easement, right of way, or in close proximity to a utility may be removed by the City or public utility provider in order to perform maintenance, replace facilities, construct improvements, or expand facilities. Additional Device Specific Standards RAINGARDENS 1. Raingardens consisting of native of ecotype plants will be given preference over those using non-natives and cultivars. 2. Raingardens shall be free of linings that prevent infiltration into underlying soils. 3. The raingarden base shall be covered with 3 inches shredded hardwood mulch. 4. Side slopes within raingardens shall not exceed 3(horizontal):1(vertical) or shall provide an adequate slope retaining system as approved by the City of Apple Valley. 5. The property owner shall avoid compaction and sedimentation in device area prior, during, and after installation. 6. Raingardens must be installed no closer than 15 feet from basement foundations or other underground rooms. 7. Raingardens must be installed a minimum of 3 feet from the curb and gutter or street edge if there is no curb and gutter. 8. Raingardens occurring in rights-of-way shall be evaluated on a case by case basis, subject to additional scrutiny, held to stricter design standards, subject to additional approvals, and subject to additional maintenance requirements if approved. Rights-of-way generally include the area between sidewalks and curbs, commonly referred to as the boulevard. 9. Raingarden location may be required to be adjusted to accommodate utilities, easements, and other public services. 10. Raingardens must provide a stabilized outlet. 11. Raingarden base must be at least 3 feet higher than seasonally high water table elevation. 12. Raingardens must be kept free of invasive plants. 7 13. Grant preference will be given to properties with higher soil infiltration rates without a history of soil contamination. 14. Preference will be given to gardens covering a larger area. 15. Depending on the location of the raingarden and the source of stormwater entering the garden, raingardens may be required to demonstrate that adequate pretreatment has been provided to reduce clogging. 16.Other standards may be required depending on the location of the raingarden and circumstances occurring on the lot or adjacent to the lot on which it is situated. BUFFERS AND SHORELINE STABILIZATIONS 1. Any project proposing work occurring below the Ordinary High Water Elevation (OHW) of a Minnesota Public Water must contact the Minnesota Department of Natural Resources (DNR) to determine if permits are required for the project. 2. All plants will be native of ecotype non-cultivars. 3. Projects receiving grant monies must be for buffers outside of any area required to be buffered as established through City ordinance, previous or existing permit, state or federal wetland law, agency required mitigation, restoration order, or other agency rule, statute, permit, or penalty. 4. Buffers must extend on average at least 16.5 feet landward. 5. No grant monies shall contribute to expenses for hard armoring as defined by the City (riprap, gabions, concrete block, wood or metal or block retaining walls, etc.) of the shoreline. 6. Buffers must be kept free of invasive plants. 7. Adequate erosion and sediment control must be installed throughout the life of the project. 8. Preference will be given to applicants whose buffer widths at minimum meet standards based on their wetland management class. 9. Preference will be given to those applicants installing wider and longer buffers. 10. Preference will be given to projects that plant below the OHW or NWL. OTHER STORMWATER TREATMENT PRACTICES 1. The project must meet manufacturer's guidelines, City of Apple Valley standards, may be subject to review by the City engineer, may be subject to City supervision during installation, and may require materials testing. 8 .� - . , EXHIBIT "C" TERMS OF MAINTENANCE 1. The property owner shall maintain healthy plants suitable for use in raingardens and native gardens throughout the entire raingarden and native garden. The property owner shall replace dead or diseased vegetation with plants capable of tolerating conditions encountered in the raingarden and native garden. 2. Plants eligible for reimbursement within the native garden shall be native, propagated from an original plant source within 200 miles for herbaceous plants and 300 miles for trees and shrubs. 3. The percentage of native plants within the native garden shall remain the same or increase in percentage throughout the maintenance term and shall not be less than 50% of the native garden planting area. 4. The raingarden and native garden shall be kept free of non-native invasive plant species and noxious weeds, including buckthorn. 5. The overall area of the raingarden and native garden shall not be reduced during the maintenance term. 6. The raingarden and native garden shall be watered such that it receives 1 inch of water per week combined from rain and other sources during the first growing season. 7. Fertilizers shall not be applied to any part of the raingaxden or native garden. 8. Insecticides and fungicides shall only be applied when damage from non-native species is of concern. 9. Herbicides shall be limited to spot applications. 10. The property owner may remove dried vegetation once a year in the spring prior to May 30 if desired. 11. The property owner shall maintain at minimum a three inch layer of shredded hardwood mulch for the maintenance term. 12. The raingarden must drain free of water within 48 hours after a rainstorm except for in times of frozen soils. 13. The raingarden and native garden lay in close proximity to a pipeline easement held by a third party. The City of Apple Valley will not be held liable for any damage or loss caused to landscaping, structures, or other improvements installed in the easement in the course of the third party exercising its rights to the easement. 14. The property owner is responsible for locating all utilities prior to installation. The owner shall only hand dig within 2 feet of utility markings. The raingarden shall not be installed over any utilities. 9 t � . I `'0 • 3 WATER QUALITY IMPROVEMENT COST SHARE PROGRAM AGREEMENT Between City of Apple Valley and David R. and Bridget J. Holmen Location: 5681 125th Street W. This Cost Share Agreement ("Agreement") in furtherance of the City of Apple Valley's Water Quality Improvement Cost Share Program, is entered into between the City of Apple Valley, a Minnesota municipal corporation, ("City") and David R. and Bridget J. Holmen ("Owner," whether one or more). The City and Owner are jointly hereinafter referred to as the "Parties". 1. PuxPOSE. In order to promote water quality and prevent degradation of the City's water resources, the City has a cost share program to assist the Owner to install and construct a 150 square foot raingarden ("Project"), as described in detailed in Exhibit "A" attached hereto, on the Owner's property. 2 LOCATION OF PROJECT The Owner is the fee owner of real property located at 5681 125th Street W. in the City of Apple Valley, County of Dakota, State of Minnesota, and legally described as: Lot 23, Block 5, Sunshine Estates ("Property"). The Project to which the cost share program shall apply is to be located on the Property. 3. PROJECT COMPLETION. T'he Owner has been approved for a cost share grant _ under the City's Water Quality Improvement Cost Share Program in accordance with the program policy, attached hereto as Exhibit "B" and made a part hereof. The Owner shall receive the approved grant funds in accordance with the Water Quality Improvement Cost Share Program Policy if and when the Owner installs and constructs the Project in accordance with the project plan specifications as set forth in Exhibit "A." The Owner shall install and construct the Project no later than October 15, 2012. If the Owner fails to install or construct the Project in accordance with the specifications set forth in Exhibit "A" and on or before October 15, 2012, unless the City has granted an extension thereof, the Owner shall not be entitled to receive the cost share grant funds. 4. Gx�NT AwA1t�. Upon the completion of the Project and the City's receipt of documents verifying all construction expenses, excluding any claimed labor cost of the Owner or volunteers, the City will pay to the Owner the sum equal to fifty percent (50%) of the Owner's verified costs and expenses, not to exceed a grant award of $500.00. 5. RIGHT TO ENTER PROPERTY. The Owner shall permit the City to enter the Property, at any reasonable time and with reasonable notice to the Owner, for the purpose of inspecting the Project during and after the installation and construction of the Project to determine the Project meets the specifications and the on-going functioning and maintenance thereof. 6. INSTALLAI'�oN. The Owner shall be responsible far the design and construction of the Project, including, but not limited to, locating and protecting existing underground utilities and preventing drainage and ground water impacts to existing structures on the property. 7. MAnvTENANCE. The Owner shall maintain the Project in accordance with the terms of this Agreement and as specifically set forth in the Terms of Maintenance, attached as Exhibit "C" for a period not less than seven (7) years from the date the installation and construction of the Project is completed. If the Owner fails to maintain the Project for a period of seven (7) years or fails to maintain the Project in accordance with the Terms of Maintenance set forth in Exhibit "C," the Owner shall reimburse the City the amount of the grant award received by the Owner under this Agreement, unIess the City determines that the failure to maintain the Proj ect was caused by reasons beyond Owner's control and the City has directed the Owner to remove the Project. 8. PuBLICAT�oNS. The Owner authorizes the City to obtain and disseminate photographs, video, digital recordings, depictions or any other literature or publication of the Project in co�nection with any City publication, the City web site, or any other City-sponsored materials distributed to the public. 9. COMPLIANCE WITH LAWS AND REGULATIONS. The Owner shall comply with any state, county, or city law or regulation applica�ie to the installation, construction, and maintenance of the Project. If the Owner hires a third party to complete the installation and construction of the Project, the Owner shall ensure that no person is excluded from full employrnent rights with participations in or the benefits of any program, service or activity; and that no person who is protected by applicable federal or state laws, rules or regulations against discrimination otherwise is subject to discrimination. 10. NoT�CES. Any written communication required under this Agreement shall be addressed to the identified persons for the Parties: City: Public Works Director City of Apple Valley 6442 —140 Street West Apple Valley, Minnesota 55124 Owner: David R. and Bridget J. Holmen 5681 125th Street W. Apple Valley, l�IN 55124 � � � � 2 10. INDEMNIF�cAT�oN. The Owner indem�ifies and holds the City harmless frorn any action, claim, loss, injury, or harm arising from the Owner's installation, construction or maintenance of the Project. The City specifically states and the Owner hereby acknowledges that the City does not waive any immunities or other defenses it may have in any action, claim, or lawsuit initiated in regard to the Project or the terms of this Agreement. The City shall have no obligation in connection with the Project except to the extent of providing the cost share grant funds as provided in this Agreement, OWNE : ' � ' lf , ,: Print Name: David R. Holmen . � '��, � Print Na . dget J. Holmen CITY: City of Apple Valley, a Minnesota municipal corporation By: Mary Hamann-Roland Its: Mayor By: Pamela J. Gackstetter Its: City Clerk STATE OF MINNESOTA ) ) ss. COUNTY OF DAKOTA ) The foregoing i strument was acknowledged before me this `�� day of M�✓ , 20 j .Z, by t .. `�� . > �1 YNTHIA MARIE VAN DUSA,F� --�..�" Notary Public ��. 1 '� Minnesota �" �e" ublic STATE OF MINNESOTA ) ) ss. COUNTY OF DAKOTA ) The foregoing instrument was acknowledged before me this day of , 20 , by Mary Hamann-Roland and Pamela J. Gackstetter, the Mayor and Clerk of the City of Apple Valley, a Minnesota municipal corporation, on behalf of the municipal corporation. Notary Public 3 ATTACHMENT "A" APPROVED PROJECT PLAN � �,� �.._ �. �, �° � �� ° �� 4� �,'�� °, ;.,. . . e:�e, ee � �§ d '� e �� 3`" � dF' . ��y 5 �� i �' i �� ''sa�';f�b_� .... Raingarden center positioned at approximately 44.767603°N and 93.180402°W. Raingarden depth at least 3 inches. Raingarden size approximately 150 square feet. Raingarden located outside of right-of-way. The raingarden shall not be installed over any utilities. Owner shall contact Gopher State One Call to locate all underground utilities prior to conducting excavation. The property owner shall only hand dig within 2 feet of utility markings and report any damage to utilities, including nicks to lines or pipes. � �, 4 EXHIBIT "B" WATER QUALITY IMPROVEMENT COST SHARE PROGRAM POLICY In order to improve �rater quality and prevent degradation of surFace waters, the City of Apple Valley will offer a voluntary cost share program to property owners of residential, multiple-family, or institutional zoned lots within the City subject to available funding. Property owners will be reimbursed for a portion of expenses incurred for the installation of projects that reduce and treat stormwater runoff prior to its entering the stormwater system. Projects providing the greatest perceived benefit to water resources will receive preference. The program will focus on providing cost share for raingarden, buffer, and shoreline stabilization projects. However, the City may consider funding other types of projects depending on the strength of the application presented. Projects must function by using one of the following treatment mechanisms: infiltration, bio-filtr�tion, bio-retention, _ rainwater/runoff harvest/reuse, and other runoff reduction mechanisms. In addition to the standards already listed, the following standards shall govern approval of projects and disbursement of money under this program: Eligibility 1. Projects resulting from enforcement action due to violation of any agency's rule, statute, law, or ordinance are not eligible to receive grant money under this program. 2. Projects required as part of an Apple Valley permit to meet minimum water quality/quantity/resources standards are not eligible; however, projects that go beyond minimum City permit requirements may be eligible for funds. 3. Applicants proposing to install infiliration devices in industrial areas or areas with confirmed or a high potential for contaminated soils are ineligible to receive grant monies. 4. Projects found to be inconsistent with other City Ordinances or Policies are not eligible to receive grant money under this program. 5. The proposed project must score at least one third of the total points possible as averaged across all reviewers during the ranking process to be eligible for funding. Reimbursement Standards 1. Only projects approved by City of Apple Valley will be reimbursed. 2. Projects started prior to City approval will not receive reimbursement. 3. Projects will be funded on a first-come, first-served basis. Preference will be given to complete applications from first-time applicants. 5 4. Projects are eligible to receive up to one-half the total cost of the water quality improvement component of the project with a maximum of $500 per:lot or project. 5. If the project is receiving monies from any other organization, the property owner must contribute at least 25 percent of the project cost. 6. Property owners may not reimburse themselves or volunteers forJabor costs. 7. Reimbursement will not occur until a City of Apple Valley staff member has performed a final inspection that confirms all conditions of the grant agreement have been met, City standards have been met, and the device is functioning as intended. 8. Projects must be completed and installed no later than October 15 in the year approved. 9. Final inspections will only occur at those times of the year when City of Apple Valley can determine the conditions of the project. 10. Reimbursement will not occur until City has received a copy of all paid receipts and verified all expenses. Paid receipts must be received by 4:30 p.m., December 1, in the year approved. 11. The City may institute a maximum per unit material cost cap for any materials used in a project. Application Requirements 1. All projects must submit a grant application form and all other materials necessary for City of Apple Valley staff to evaluate the project. First round grant applications must be received at Apple Valley Municipal Center no later than 4:30 p.m., May 1, each year; or the first business day following May 1, should it fall on a weekend. A second grant round may commence if all monies available are not granted as a result of the first round. 2. Apple Valley staff may require a pre-installation consultation with the property owner prior to grant approval. 3. Projects must receive all required permits and approvals from all agencies prior to starting work. The City may elect to waive the application fee for a Natural Resources Management Permit and/or Right-of-Way Permit for approved projects; waiver of permit fees is not guaranteed. General Standards 1. Property owners accepting grant monies will be required to sign and commit to a maintenance and grant acceptance agreement. Maintenance and grant acceptance agreements shall apply for a term of no less than 7 years. Longer maintenance agreement terms shall be required if a projec# makes use of another City program requiring such. 2. By accepting grant monies, the property owner agrees to periodic inspection of the property and device by City staff. 3. Any devices installed must not cause increased erosion, hav� a negative impact on water quality, damage adjoining property, or create a public nuisance. 6 4. Generally, the City will use guidelines contained within the Minnesota Stormwater Manual and other guidance materia.ls in addition to the standards listed elsewhere in this document to determine whether projects are designed correctly. 5. The City may require the addition of educational signage for certain projects at the City's expense. 6. All work must be completed in the year grant approval has been received. 7. Property owners shall locate all easements, rights of way, and utilities on their property and situate devices accordingly. 8. Preference will be given to projects occurring within subwatersheds of concern within the City. 9. The City will not allow device designs or devices to be located in such a manner that potentially inhibits the use of an easement or hinders access to utilities. Devices sited within an easement, right of way, or in close proximity to a utility may be removed by the City or public utility provider in order to perform maintenance, replace facilities, construct improvements, or expand facilities. Additional Device Specific Standards RAINGARDENS 1. Raingardens consisting of native of ecotype plants will be given preference over those using non-natives and cultivars. 2. Raingardens shall be free of linings that prevent infiltration into underlying soils. 3. The raingarden base shall be covered with 3 inches shredded hardwood mulch. 4. Side slopes within raingardens shall not exceed 3(horizontal):1(vertical) or shall provide an adequate slope retaining system as approved by the City of Apple Valley. 5. The property owner shall avoid compaction and sedimentation in device area prior, during, and after installation. 6. Raingardens must be installed no closer than 15 feet from basement foundations or other underground rooms. 7. Raingardens must be installed a minimum of 3 feet from the curb and gutter or street edge if there is no curb and gutter. 8. Raingardens occurring in rights-of-way shall be evaluated on a case by case basis, subject to additional scrutiny, held to stricter design standards, subject to additional approvals, and subject to additional maintenance requirements if approved. Rights-of-way generally include the area between sidewalks and curbs, commonly referred to as the boulevard. 9. Raingarden location may be required to be adjusted to accommodate utilities, easements, and other public services. 10. Raingardens must provide a stabilized outlet. 11. Raingarden base must be at least 3 feet higher than seasonally high water table elevation. � 12. Raingardens must be kept free of invasive plants. 7 13. Grant preference will be given to properties with higher soil infiltration rates without a history of soil contamination. 14. Preference will be given to gardens covering a larger area. 15. Depending on the location of the raingarden and the source of stormwater entering the garden, raingardens may be required to demonstrate that adequate pretreatment has been provided to reduce clogging. 16.Other standards may be required depending on the location of the raingarden and circumstances occurring on the lot or adjacent to the lot on which it is situated. BUFFERS AND SHORELINE STABILIZATIONS 1. Any project proposing work occurring below the Ordinary High Water Elevation (OHW) of a Minnesota Public Water must contact the Minnesota Department of Natural Resources (DNR) to determine if permits are required for the project. 2. All plants will be native of ecotype non-cultivars. 3. Projects receiving grant monies must be for buffers outside of any area required to be buffered as established through City ordinance, previous or existing permit, state or federal wetland law, agency required mitigation, restoration order, or other agency rule, statute, permit, or penalty. 4. Buffers must extend on average at least 16.5 feet landward. 5. No grant monies shall contribute to expenses for hard armoring as defined by the City (riprap, gabions, concrete block, wood or metal or block retaining walls, etc.) of the shoreline. 6. Buffers must be kept free of invasive plants. 7. Adequate erosion and sediment control must be installed throughout the life of the project. 8. Preference will be given to applicants whose buffer widths at minimum meet standards based on their wetland management class. 9. Preference will be given to those applicants installing wider and longer buffers. 10. Preference will be given to projects that plant below the OHW or NWL. OTHER STORMWATER TREATMENT PRACTICES. 1. The project must meet manufacturer's guidelines, City of Apple Valley standards, may be subject to review by the City engineer, may be subject to City supervision during installation, and may require materials testing. 8 EXHIBIT "C" TERMS OF MAINTENANCE 1. The property owner shall maintain healthy plants suitable for use in raingardens throughout the entire raingarden. The property owner shall replace dead or diseased vegetation with plants capable of tolerating conditions encountered in the raingarden. 2. The raingarden shail be kept free of non-native invasive plant species and noxious weeds, including buckthorn. 3. The overall area of the raingarden shall not be reduced during the maintenance term. 4. The raingarden shall be watered such that it receives 1 inch of water per week combined from rain and other sources during the first growing season. 5. Fertilizers shall not be applied to any part of the raingarden. 6. Insecticides and fungicides shall only be applied when damage from non-native species is of concern. 7. Herbicides shall be limited to spot applications. 8. The property owner may remove dried vegetation once a year in the spring prior to May 30 if desired. 9. The property owner shall maintain at minimum a three inch layer of shredded hardwood mulch for the maintenance term. 10. The raingarden must drain free of water within 48 hours after a rainstorm except for in times of frozen soils. 11. The property owner is responsible for locating all utilities prior to installation. The owner shall only hand dig within 2 feet of utility markings. The raingarden shall not be installed over any utilities. 9 ,�. , �.M.� WATER QUALITY IMPROVEMENT COST SHARE PROGRAM AGREEMENT Between City of Apple Valley and Diamond Path P1ace Association, Inc. Location: Lot 1 Block 1 Diamond Path Sth Addition and Lot 1 Block 2 diamond Path Sth Addition This Cost Share Agreement ("Agreement") in furtherance of the City of Apple Valley's Water Quality Improvement Cost Share Program, is entered into between the City of Apple Valley, a Minnesota municipal corporation, ("City") and Diamond Path Place Association, Inc. ("Owner," whether one or more). The City and Owner are jointly hereinafter referred to as the "Parties". 1. Pt�osE. In order to promote water quality and prevent degradation of the City's water resources, the City has a cost share program to assist the Owner to install and construct a 370 square foot raingarden 330 square foot raingarden and 350 sqare foot raingarden ("Project"), as described in detailed in Exhibit "A" attached hereto, on the Owner's property. � 2 LOCATION OF PROJECT The Owner is the fee owner of real property located at Lot 1 Block 1 Diamond Path Sth Addition and Lot 1 Block 2 diamond Path Sth Addition in the City of Apple Valley, County of Dakota, State of Minnesota, and legally described as: Lot 1, Block l, Diamond Path Sth Addition and Lot 1, Block 2, Diamond Path Sth Addition ("Property"). The Project to which the cost share program shall apply is to be located on the Property. 3. PROJECT COMPLETION The Owner has been approved for a cost share grant under the City's Water Quality Improvement Cost Share Program in accordance with the program policy attached hereto as Exhibit "B" and made a part hereof. The Owner sha11 receive the approved grant funds in accordance with the Water Quality Improvement Cost Share Program Policy if and when the Owner insta.11s and constructs the Project in accordance with the project plan specifications as set forth in Exhibit "A." The Owner shall install and construct the Project no later than October 15, 2012. If the Owner fails to install or construct the Project in accordance with the specifications set forth in Exhibit "A" and on or before October 15, 2012, unless the City has granted an extension thereof, the Owner shall not be entitled to receive the cost share grant funds. 4. G�N1' AwAxD. Upon the completion of the Project and the City's receipt of documents verifying all construction expenses, excluding any claimed labor cost of the Owner or volunteers, the City will pay to the Owner the sum equal to fifty percent (50%) of the Owner's verified costs and expenses, not to exceed a grant award of $500.00. 5. R�GxT To ENTER PROPERTY. The Owner shall permit the City to enter the Property, at any reasonable time and with reasonable notice to the Owner, for the purpose of inspecting the Project during and after the installation and construction of the Project to determine the Project meets the specifications and the on-going functioning and maintenance thereof. 6. MA�NTENAtvcE. The Owner shall maintain the Project in accordance with the terms of this Agreement and as specifically set forth in the Terms of Maintenance, attached as Exhibit "C" for a period not less than seven (7) years from the date the installation and construction of the Project is completed. If the Owner fails to maintain the Project for a period of seven (7) years or fails to maintain the Project in accordance with the Terms of Maintenance set forth in Exhibit "C," the Owner shall reimburse the City the amount of the grant award received by the Owner under this Agreement, unless the City determines that the failure to maintain the Project was caused by reasons beyond Owner's control and the City has directed the Owner to remove the Project. 7. PuBLICaT�oNS. The Owner authorizes the City to obtain and disseminate photographs, video, digital recordings, depictions or any other literature or publication of the Project in connection with any City publication, the City web site, or any other City-sponsored materials distributed to the public. 8. Co1v�PL1aNCE w�Tx Laws aND RE�uLaT�oNS. The Owner shall comply with any state, county, or city law or regulation applicable to the installation, construction, and maintenance of the Project. If the Owner hires a third party to complete the installation and construction of the Project, the Owner shall ensure that no person is excluded from full employment rights with participations in or the benefits of any program, service or activity; and that no person who is protected by applicable federal or state laws, rules or regulations against discrimination otherwise is subject to discrimination. 9. NoT�cES. Any written communication required under this Agreement shall be addressed to the identified persons for the Parties: City: Public Works Director City of Apple Valley 6442 —140 Street West Apple Valley, Minnesota 55124 Owner: Community Development, Inc Attn: Diamond Path Place Association, Inc. 7100 Madison Avenue West Golden Valley, MN 55427 10. INDEMN�F�cAT�oN. The Owner indemnifies and holds the City harmless from any action, claim, loss, injury, or harm arising from the Owner's installation, construction or 2 maintenance of the Project. The City specifically states and the Owner hereby acknowledges that the City does not waive any immunities or other defenses it may have in any action, claim, or lawsuit initiated in regard to the Project or the terms of this Agreement. The City shall have no obligation in connection with the Project except to the extent of providing the cost share grant funds as provided in this Agreement. OWNER: Diamond Path Place Association, Inc. � B . Nancy cham Its: President CITY: City of Apple Valley, a Minnesota municipal corporation By: Mary Hamann-Roland Its: Mayor � By: Pamela J. Gackstetter Its: City Clerk STATE OF MINNESOTA ) ) ss. COUNTY OF DAKOTA ) The fore oing instrum nt was acknowledged before me this � day of ��'`��='' � 20�, by njC. 2��. and , �—�� (� Not �- ROBERT �S�PH SCtAIVIANDA STATE OF MINNESOTA ) ?d�qTAli1� P�J�LyC-MiNNESOTA � SS. ; A+�' �om�l�i�rs kz�res <I�n. 31, 2015 COUNTY OF DAKOTA ) The foregoing instrument was acknowledged before me this day of , 20 , by Mary Hamann-Roland and Pamela J. Gackstetter, the Mayor and Clerk of the City of Apple Valley, a Minnesota municipal corporation, on behalf of the municipal corporation. Notary Public 3 EXHIBIT "A" APPROVED PROJECT PLAN Raingarden centers positioned at �� . � 44.736747°N, 93.175173°W; 44.736499°N, '�� 93.175058°W; �� and 44.73631 °W, 93.174828°N. Raingarden sizes ��° � approximately 370, 330, and 350 square feet. Raingarden depths 6 inches. Raingarden at ` 44.73631 °W, 93.174828°N has underdrain and closeable valve. 6 foot grass filter strip behind curb at each raingarden. Gopher State One Call shall be contacted and all utilities located prior to excavation. � �w� , �a 4 EXHIBIT "B" WATER QUALITY IMPROVEMENT COST SHARE PROGRAM POLICY In order to improve water quality and prevent degradation of surface waters, the City of Apple Valley will offer a voluntary cost share program to property owners of residential, multiple-family, or institutional zoned lots within the City subject to available funding. Property owners will be reimbursed for a portion of expenses incurred for the installation of projects that reduce and treat stormwater runoff prior to its entering the stormwater system. Projects providing the greatest perceived benefit to water resources will receive preference. The program will focus on providing cost share for raingarden, buffer, and shoreline stabilization projects. However, the City may consider funding other types of projects depending on the strength of the application presented. Projects must function by using one of the following treatment mechanisms: infiltration, bio-filtration, bio-retention, rainwater/runoff harvest/reuse, and other runoff reduction mechanisms. In addition to the standards already listed, the following standards shall govern approval of projects and disbursement of money under this program: Eligibility 1. Projects resulting from enforcement action due to violation of any agency's rule, statute, law, or ordinance are not eligible to receive grant money under this program. 2. Projects required as part of an Apple Valley permit to meet minimum water quality/quantity/resources standards are not eligible; however, projects that go beyond minimum City permit requirements may be eligible for funds. 3. Applicants proposing to install infiltration devices in industrial areas or areas with confirmed or a high potential for contaminated soils are ineligible to receive grant monies. 4. Projects found to be inconsistent with other City Ordinances or Policies are not eligible to receive grant money under this program. 5. The proposed project must score at least one third of the total points possible as averaged across all reviewers during the ranking process to be eligible for funding. Reimbursement Standards 1. Only projects approved by City of Apple Valley will be reimbursed. 2. Projects started prior to City approval will not receive reimbursement. 5 3. Projects will be funded on a first-come, first-served basis. Preference will be given to complete applications from first-time applicants. 4. Projects are eligible to receive up to one-half the total cost of the water quality improvement component of the project with a maximum of $500 per lot or project. 5. If the project is receiving monies from any other organization, the property owner must contribute at least 25 percent of the project cost. 6. Property owners may not reimburse themselves or volunteers for labor costs. 7. Reimbursement will not occur until a City of Apple Valley staff member has performed a final inspection that confirms all conditions of the grant agreement have been met, City standards have been met, and the device is functioning as intended. 8. Projects must be completed and installed no later than October 15 in the year approved. 9. Final inspections will only occur at those times of the year when City of Apple Valley can determine the conditions of the project. 10. Reimbursement will not occur until City has received a copy of all paid receipts and verified all expenses. Paid receipts must be received by 4:30 p.m., December 1, in the year approved. 11. The City may institute a maximum per unit material cost cap for any materials used in a project. Application Requirements 1. All projects must submit a grant application form and all other materials necessary for City of Apple Valley staff to evaluate the project. First round grant applications must be received at Apple Valley Municipal Center no later than 4:30 p.m., May 1, each year; or the first business day following May 1, should it fall on a weekend. A second grant round may commence if all monies available are not granted as a result of the first round. 2. Apple Valley staff may require a pre-installation consultation with the property owner prior to grant approval. 3. Projects must receive all required permits and approvals from all agencies prior to starting work. The City may elect to waive the application fee for a Natural Resources Management Permit and/or Right-of-Way Permit for approved projects; waiver of permit fees is not guaranteed. General Standards 1. Property owners accepting grant monies will be required to sign and commit to a maintenance and grant acceptance agreement. Maintenance and grant acceptance agreements shall apply for a term of no less than 7 years. Longer maintenance agreement terms shall be required if a project makes use of another City program requiring such. 2. By accepting grant monies, the property owner agrees to periodic inspection of the property and device by City staff. 6 3. Any devices installed must not cause increased erosion, have a negative impact on water quality, damage adjoining property, or create a public nuisance. 4. Generally, the City will use guidelines contained within the Minnesota Stormwater Manual and other guidance materials in addition to the standards listed elsewhere in this document to determine whether projects are designed correctly. 5. The City may require the addition of educational signage for certain projects at the City's expense. 6. All work must be completed in the year grant approval has been received. 7. Property owners shall locate all easements, rights of way, and utilities on their property and situate devices accordingly. 8. Preference will be given to projects occurring within subwatersheds of concern within the City. 9. The City will not allow device designs or devices to be located in such a manner that potentially inhibits the use of an easement or hinders access to utilities. Devices sited within an easement, right of way, or in close proximity to a utility may be removed by the City or public utility provider in order to perForm maintenance, replace facilities, construct improvements, or expand facilities. Additional Device Specific Standards RAINGARDENS 1. Raingardens consisting of native of ecotype plants will be given preference over those using non-natives and cultivars. 2. Raingardens shall be free of linings that prevent infiltration into underlying soils. 3. The raingarden base shall be covered with 3 inches shredded hardwood mulch. 4. Side slopes within raingardens shall not exceed 3(horizontal):1(vertical) or shall provide an adequate slope retaining system as approved by the City of Apple Valley. 5. The property owner shall avoid compaction and sedimentation in device area prior, during, and after installation. 6. Raingardens must be installed no closer than 15 feet from basement foundations or other underground rooms. 7. Raingardens must be installed a minimum of 3 feet from the curb and gutter or street edge if there is no curb and gutter. 8. Raingardens occurring in rights-of-way shall be evaluated on a case by case basis, subject to additional scrutiny, held to stricter design standards, subject to additional approvals, and subject to additional maintenance requirements if approved. Rights-of-way generally include the area between sidewalks and curbs, commonly referred to as the boulevard. 9. Raingarden location may be required to be adjusted to accommodate utilities, easements, and other public services. 10. Raingardens must provide a stabilized outlet. 7 11. Raingarden base must be at least 3 feet higher than seasonally high water table elevation. 12. Raingardens must be kept free of invasive plants. 13. Grant preference will be given to properties with higher soil infiltration rates without a history of soil contamination. 14. Preference will be given to gardens covering a larger area. 15. Depending on the location of the raingarden and the source of stormwater entering the garden, raingardens may be required to demonstrate that adequate pretreatment has been provided to reduce clogging. 16.Other standards may be required depending on the location of the raingarden and circumstances occurring on the lot or adjacent to the lot on which it is situated. BUFFERS AND SHORELINE STABILIZATIONS 1. Any project proposing work occurring below the Ordinary High Water Elevation (OHW) of a Minnesota Public Water must contact the Minnesota Department of Natural Resources (DNR) to determine if permits are required for the project. 2. All plants will be native of ecotype non-cultivars. 3. Projects receiving grant monies must be for buffers outside of any area required to be buffered as established through City ordinance, previous or existing permit, state or federal wetland law, agency required mitigation, restoration order, or other agency rule, statute, permit, or penalty. 4. Buffers must extend on average at least 16.5 feet landward. 5. No grant monies shall contribute to expenses for hard armoring as defined by the City (riprap, gabions, concrete block, wood or metal or block retaining walls, etc.) of the shoreline. 6. Buffers must be kept free of invasive plants. 7. Adequate erosion and sediment control must be installed throughout the life of the project. 8. Preference will be given to applicants whose buffer widths at minimum meet standards based on their wetland management class. 9. Preference will be given to those applicants installing wider and longer buffers. 10. Preference will be given to projects that plant below the OHW or NWL. OTHER STORMWATER TREATMENT PRACTICES 1. The project must meet manufacturer's guidelines, City of Apple Valley standards, may be subject to review by the City engineer, may be subject to City supervision during installation, and may require materials testing. 8 EXHIBIT "C" TERMS OF MAINTENANCE 1. The property owner shall maintain healthy plants suitable for use in raingardens throughout the entirety of each raingarden. The property owner shall replace dead or diseased vegetation with plants capable of tolerating conditions encountered in the raingardens. 2. The raingardens shall be kept free of non-native invasive plant species and noxious weeds, including buckthorn. 3. The overall area of the raingardens shall not be reduced during the maintenance term. 4. The raingardens shall be watered such that they receive 1 inch of water per week from rain and other sources during the first growing season. 5. Stormwater flows to the raingardens shall be diverted away from the gardens until plants installed are mature enough to tolerate temporary inundation for a period of 24 hours and surrounding soils are stabilized; runoff diversion shall not exceed one year following installation and final stabilization. 6. Fertilizers shall not be applied to any part of the raingardens. 7. Insecticides and fungicides shall only be applied when damage from non-native species is of concern. 8. Herbicides shall be limited to spot applications. 9. The property owner may remove dried vegetation once a year in the spring prior to May 30�' if desired. 10. The property owner shall maintain at minimum a three inch layer of shredded hardwood mulch for the maintenance term. 11. The raingardens must drain free of water within 48 hours after a rainstorm except for in times of frozen soils. 12. The raingardens lie in a drainage and utility easement held by the City of Apple Valley. The City of Apple Valley and any public utility providers retain the right to use the drainage and utility easement to maintain, replace, construct improvements to, or expand facilities. The City of Apple Valley will not be held liable for any damage or loss caused in the course of exercising its rights to the drainage and utility easement. 13. The property owner is responsible for locating all utilities prior to installation. The owner shall only hand dig within 2 feet of utility markings. The raingarden shall not be installed over any utilities. 14. A utilities lie within close proximity to the project areas. The City of Apple Valley will not be held responsible for any damages to utilities associated with this project. The City of Apple Valley will not be held liable for any damage or loss to landscaping, structures, or other improvements caused by maintenance or installation of utilities. 9 ... �. 1 `� .... :. :• ...• City of App�e Va��ey MEMO Fire Department TO: Mayor, City Council, and City Administrator FROM: Nealon P. Thompson, Fire Chie DATE: June 7, 2012 SUBJECT: Apple Valley, Burnsville, Lakeville, and Eagan (A.B.L.E.) Fire Training Facility Joint Powers Agreement (J.P.A.) The A.B.L.E. Fire Training Facility is a partnership (J.P.A.) between the Cities of Apple Valley, Burnsville, Lakeville, and Eagan. The site and structures are located in the City of Burnsville at 12321 River Ridge Boulevard, near the intersection of Cliff Road and River Ridge Boulevard. The facility and structures (burn building and tower) were constructed in 1987. The facilities life expectancy in 1987 was twenty years, they are now twenty-five years old. In 2009 an engineer was hired with A.B.L.E. maintenance funds to perform an evaluation of the fire training structures and recommend needed repairs. Recommendations, included replacing windows, doors, roof hatches, portions of the cement exterior block walls and resealing, along with repairing and resealing the leaking roof of the burn facility, quickly exceeded $100,000. In 2010 a master planning and feasibility study was conducted to explore the long term needs and replacement of the fire training facilities. The study recommended the immediate replacement of the burn building which is becoming costly to maintain. The building was actually red tagged for a period of time in the spring of 2011 and unusable until emergency repairs were completed. Due to the cost of repairs and still lingering concerns over the longevity of the current burn facility, the A.B.L.E. partnership is recommending the building of a new burn building. The rebuilding of the A.B.L.E. burn facility is contained in the City's 2012 Capital Improvement Plan. The budget for the rebuilding of the A.B.L.E. burn building is approximately $2 million with $500,000.00 coming from each city that participates in the joint powers agreement. The $2 million is projected to be procured from all of the cities in 2012 and 2013 with construction beginning in late 2012 and completion in 2013. The renewal of the J.P.A. is necessary to rebuild the fire training building. The renewed J.P.A. renews the term for the next 30 years until January 1, 2043. The renewed joint powers agreement also prescribes equal payments by a114 cities by January 31, 2013 for the rebuilding of the fire training building on the A.B.L.E. site. This J.P.A. has been a success in collaboration for more than twenty-five years and has benefitted the City of Apple Ualley. The renewed J.P.A. is proposed to function identically to the previous J.P.A. by having the Fire Chiefs from each city on a board to handle the operation of the facility. The City of Burnsville will continue to serve as the fiscal agent and carry out construction of a new burn building. RECOMMENDATION AND ACTION REOUIRED Approve a revised Joint Powers Agreement Fire Training Facilities between the cities of Apple Valley, Burnsville, Lakeville, and Eagan. Authorizing a financial payment/contributidn of $500,000 to the City of Burnsville before January 31, 2013. Attachment: Joint Powers Agreement Fire Training Facilities JOINT POWERS AGREEMENT FIRE TRAINING FACILITIES AGREEMENT made by and between the CTTY OF BURNSVII.,LE ("Burnsville"), the CITY OF LAKEVII,LE ("Lakeville"), the CITY OF EAGAN ("Eagan"), and the CITY OF APPLE VALLEY ("Apple Valley"), a11 Minnesota municipal coiporations in Dakota County, Minnesota. This Agreement is entered into pursuant to the authorization of the °Joint Powers Act" Minnesota Statutes § 471.59. NOW THEREFORE, the undersigned governmental units, in the joint and mutual exercise oftheir powers, agree as follows: 1. General Purpose. The purpose of this Ageement is to jointly provide fire training facilities for the use of inember cities and others. 2. Definitions. a"Property" -�ertain tracts of land legally described as Lot 4, Block 3, River Ridge Addition and Lot 2, Block 2, River Ridge 3rd Addition, Dakota County, Minnesota. b. "Facilities" — fire training facilities located on the Property consisting of a burn building and a training tower as described in plans and specifications approved by the Chief s Board. c. "Member Cities/Member City" — the member cities consist of Apple Valley, Burnsville, Eagan and Lakeville. d. "Capital Cost" — an amount not to exceed $500,000.00 to be paid by each Member City for the cost of replacing and constructing a burn building on the Property. e. "Chief's Board" — the chief s board shall consist of the Fire Chiefs of the Member Cities. f. "Operating and Repair Expenditures" — the costs of heat, utilities, cleaning, routine maintenance, including glass replacement, and replacemenUrepairs for the Facilities. g. "User Fee" — an equal share of an amount recommended by the Chief's Board and approved by each city's council to be paid each year by the Member Cities for Operating and Repair Expenditures. h. "ABLE Maintenance AccounY' — the account maintained by Burnsville in which the Capital Cost, User Fees and other funds collected related to the Facilities are deposited. 3. Construction of the Facilities. Bumsville sha11 constnict the burn building in accordance with the approved plans and specificatio�s. Burnsville sha11 use its best ef�ort to ha�e the Facilities constructed and ready for use by July 31, 2013. 4. Ownership. Burnsville shall be the sole owner of the Property and Facilities subject to the use by the other Member Cities, in accordance with the terms of this Agreement. 5. Payment of Capital Cost. Each Member City shall each pay its Capital Cost on or before January 31, 2013. Apple Valley, Eagan and Lakeville shall pay the Capital Cost to Burnsville. Burnsville shall deposit the other Member Cities' Capital Cost along with its Capital Cost into the ABLE Maintenance Account. 6. Payment of User Fees and ABLE Maintenance Account Expenditures. Each year during the duration of this Agreement, unless terminated earlier, each Member City shall deposit its User Fee into the ABLE Maintenance Account on or before June 1 St for Operating and Repair Expenditures. All expenditures from the ABLE Maintenance Account shall be approved by the Chief's Board and those expenditures shall be executed by Burnsville under its purchasing and project policies. Unused funds shall remain in the ABLE Maintenance Account and carry over year to year. If the costs of repairs and maintenance exceed the current balance in the ABLE Maintenance Account at any time, the Chie�s Board may recommend to each city's council that additional deposits be made into the ABLE Maintenance Account to cover such Operating and Repair Expenditures. 2 7. Liability Insurance. If Burnsville's liability insurance premium is increased as a result of the ownership and operation of the Facilities, each party shall pay twenty-five percent (25%) of the added cost. 8. Facility Use. Each Member City shall be entitled to equal use of the Facilities and Property, subject to scheduling under the written rules established by the Chiefs Board. 9. Use by Others. Burnsville may, according to guidelines established by the Chiefs Board, rent the Facilities to third parties at such times as the Facilities are not scheduled to be used by Member Cities. Burnsville shall provide adequate written notice to the other Member Cities of the intent to rent to a non- member city. Any rent collected shall be deposited in the ABLE Maintenance Account. Burnsville shall determine whether there is adequate liability insurance for the use of the Facilities by non-member cities and shall require that each non-member city using the Facilities fully indemnify the Member Cities against all loss, damage, liability claims, suits, judgments, costs and expense by reason of loss of or damage to property and injury to or death of persons caused by acts or omissions of the non-member city, its officers, agents, or employees, arising from or growing out of, directly or indirectly, wholly or partly, its operation or use of the Facility. 10. Chief s Board, The Chief's Board shall be responsible for the operation of the Facilities and shall establish rules for the operation and use of the Facilities. The Board shall act by majority vote. In the event of a tie vote, the tie shall be broken by a flip of the coin. 11. Indemnification. Each Member City does hereby fully indemnify the other Member Cities against all loss, damage, liability claims, suits, judgments, costs and expenses by reason of loss of or damage to property and injury to or death of persons caused by acts or omissions its officers, agents, or employees, arising from or growing out of, directly or indirectly, wholly or partly, its construction, maintenance, operation or use of the Facilities. 12. Term. This Agreement shall be null and void unless all the Member Cities have signed and approved the Agreement by August 1, 2012. All parties need not sign the same copy. Unless otherwise ageed 3 to in writing by the Member Cities, this Ageement shall terminate on January 1, 2043. Burnsville may terminate the Ageement at an earlier date by giving the Member Cities six (6) months written advance notice and promptly refunding to each city an amount equal to 3.34% of the Capital Cost paid by that city multiplied by the number of years this Agreement is terminated prior to 2043 plus 3.34% of the of the balance remaining in the ABLE Maintenance Account. Any other Member City may also withdraw from this Agreement by giving the other Member Cities six (6) months advance written notice. Upon receipt of such notice Burnsville shall, within three (3) years after a city voluntarily withdraws, refund to such withdrawing city an amount equal to 3.34% of the Capital Cost paid by that city multiplied by the number of years this Agreement is terminated prior to 2043. 13. Amendment. This Agreement may be amended only by approval of the city councils of all Member Cities. IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed by their respective duly authorized officers by authority of their respective governing bodies. CITY OF EAGAN CITY OF LAKEVILLE BY: BY: Mayor Mayor BY: BY: City Clerk City Clerk DATED: DATED: CITY OF BURNSVILLE CITY OF APPLE VALLEY BY: BY: Mayor Mayor BY: BY: City Manager City Clerk DATED: DATED: 4 ... �- o .,.. :� :• .,.. C�ty of AppVa��ey MEMO Parks and Recreation Department 7100 - 147�' Street West Apple Valley, MN 55124 952 / 953-2300 TO: Mayor, City Council and City Administrator FROM: Tom Adamini, Park Maintenance Superintendent DATE: June 11, 2012 SUBJECT: Approval of Work Agreement with Tree Trust As in past years, the City of Apple Valley Parks and Recreation Department would like to team with the Tree Trust and provide a quality work experience for at-risk youth. The program has been operational in Dakota County for several years and Apple Valley has benefitted many of those years through partnership with the organization. Youth within the program obtain useful work experience that will assist them in future employment and, in exchange, the City of Apple Valley will have work crews to address projects within the park system. For a$2,500 stipend, the City of Apple Valley will receive approximately nine weeks of work by ten participants and a supervisor. Scheduled work includes a biff screen, re-edging of the playground, and dirt work at Apple Valley East Park. The agreement would be in effect from June to August 2012. A copy is attached for your review. Action Approve Work Agreement with Tree Trust for June — August 2012. cc: Randy Johnson, Director of Parks and Recreation H: Adamini.• Treerl2. doc d `,I:' ; TREE TRUST Transforming Lives and Landscapes WORK SITE AGREEMENT AND STATEMENT OF WORK This agreement is made between the Tree Trust and: Apple Valley Parks Agency Name (and Work Site Name if applicable): Toward the provision of employment and training services to eligible youth participating in the Tree Trust Youth Employment Program. Authorized and funded under the Workforce Investment Act (WIA), the Economic Recovery Act (ERA), and/or the Minnesota Summer Youth Program (MYP). Working under the Minnesota Department of Employment and Economic Development (DEED) and the local Workforce Investment Boards (WIB) of Suburban Hennepin/Carver Counties, Dakota/Scott Counties, Ramsey, Anoka, Washington Counties, and the Cities of Minneapolis and Saint PauL Under this agreement, youth will be provided a useful work experience which will be consistent with each youth's capabilities and interests and which will assist said youth to obtain future unsubsidized employment. !t is agreed that such work will be conducted in a safe sanitary working environment and that there will be adequate supervision of each participant by qualified supervisots and adherence by all parties to the rules and regulations governing the summer youth program, including the following: • All Equal Employment Opportunity and Civil Rights laws as applicable. • All Data Privacy Rights laws, as applicable. • All work site safety laws, including the MN worker Right-to-Know Act, as applicable. • All Federal and MN Child Labor laws and the MN Child Labor Standards Act. • All Rules and Regulations governing the funding sources listed above. Term: This agreement will take effect June 15, 2012 and terminate no later than August 28, 2012. Work Activities: The work described in the attached Statement of Work will be performed by eligible participants on a scheduled work plan. Should the location of the work sites, the number of participants, or the activity of the work site change, the work site agency agrees to notify the Tree Trust so that this agreement may be modified. Participants may not participate in any political or sectarian activities while on the job. Supervision: The supervisor ratio will be at least one quaiified supervisor to every eight participants. 1t is the responsibility of Tree Trust to orient the work site supervisor/coordinator and to assure attendance at the training session prior to the start of participant placement and to provide the supervisor/coordinator with written materials needed to perform duties, including a copy of this agreement, WIA regulations and payroll forms. � Time, Attendance, and Compensation: Accurate time and attendance records will be kept by the supervisor on each participant and will reflect the time actually worked by each participant. Using the Tree Trust timesheets, participants shall sign-in when beginning work and sign-out when completing the work day. In no case may a worker sign-in and out simultaneously. Timesheets will be signed at the end of each pay period by the supervisor. Once completed, the timesheets will be mailed to Tree Trust according to the payroll schedule. Monitoring: It is understood that all work sites will be monitored by County, State, Federal agencies and Tree Trust staff. Each work site supervisor will maintain accurate and current time and attendance records as well as a listing of work site activities and locations, and will cooperate fully to provide monitors with work site information. ; Tree Trust Worksite Agreement page2 Union Status: Work sites must obtain written union concurrence from their union representative for all positions effected by a collective bargaining agreement. Are the positionlsl repuested covered under a collective barqaininq agreement? _ Yes _No If yes, which position(s) requested through SYETP are covered under the agreement? Union concurrence must be obtained in order to fill the above positions with summer youth participants (below). I, the undersigned Union Local Representative, do here-by grant concurrence that the above listed positions may be filled using SYETP participants. Union Representative Signature Date Union Local & Number Maintenance of effort: Regardless of union status of a requested work site, no participant may be placed in a position if any of the conditions below exist: a. An individual is in layoff status from the same or similar work. b. The work site has terminated an employee or otheruvise reduced the work force with the intention of replacing the paid employee(s) with participants. c. A participant will not displace current employee(s) (including partiat displacement such as reduction in hours of non-overtime work, wages, employment benefits or promotional opportunities). AGREEMENT APPROVAL SIGNATURES: TREE TRUST TREE TRUST AUTHORIZED SIGNATURE DATE WORK SITE AUTHORIZED SIGNATURE DATE WORK SITE . , Tree Trust Worksite Agreement page3 STATEMENT OF WORK Name of Worksite Agency: Apple Vallev Parks Agency Contact: Tom Adamini 6442 West 140th St. Apple Valley, MN 55124 Bus: (952) 953-2420 Listing of Work Site(s) if different from above: Appie Valley East 15335 Dunbar Ave Apple Valley, MN TT Site Supervisor Name: Phone Work Hours: Monday - Friday; 8:00 AM - 4:00 PM Site Supervisor's Job Responsibilities: Names of other staff who will be working directly with participants: Days and Hours Youth Work: • Monday - Friday: 8:00 AM — 4:00 PM Participant Duties: • Comp4etion of project assignment as directed by Tree Trust Crew Leader and support staff. Tools and Equipment Participants will be using: • Participants complete project utilizing a variety of Hand Tools: Wheel Barrows, Rakes, Sledgehammers, Shovels, Silage Forks, Post Hole Diggers, etc. • Under no conditions may a participant under age 18 operate any power equipment, and any youth over 18 may only operate power equipment after receiving TT training and with the direct permission of TT staff present. ... � •��• r i •��• •��• •�� City of A►pPVa��ey MEMO Public Works Department TO: Mayor, City Council, and City Administrator FROM: Colin G. Manson, City Engineer DATE: June 14, 2012 SUBJECT: MATERIALS TESTING AGREEMENT FOR PROJECT 2011-105, FLAGSTAFF AVENUE EXTENSION Attached for consideration is an agreement with Braun Intertec Corporation for materials testing services relating to the Flagstaff Avenue Extension project. The testing services will focus on materials quality control to meet the requirements of the project specifications. Total testing services for the project are estimated at $19,814. Costs associated with testing services have been included in the project budget and are, therefore, accounted for. � Recommended Action: Approve Agreement with Braun Intertec Corporation for Materials Testing Services Relating to AV Project 2011-105, Flagstaff Avenue Extension. CGM:jcb Attachment c: Todd Blomstrom �'�� : �'�'" �� - � ��c��ia�aG � �, �� c�a�h�,iH ��" �a. �� w � ��. :;� � � �_ � �� m� ia�-�...�?... �e�u*`� .. ..y�a.? _a�.... ..�. �.y°� ..._..�.� <.��.�.,,.._...a _--`��p�;!'. �-.��.�.�.�`�.. -. g �S��si� Ir�tc �°�€� €.°��r��€ir�� 6 Ez.,�f �,� �a�� ff€:t�3�`�.�a 5�.��E�E`;`�t•E*ti,. . .... � ¢�'FXt e€ w�.r�ff�� . � � .i� 11"sr:��.��.�ca��,. ��.a � � ��t�E�`� 1��E�;:s��t[ _rt��.�:�s.�� `, ' i��,3�., �Cl�� Pr'C��Q5�1 E3�.-1�-�1��2� 1�lr. 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'-��? � .�� ?�� . ;tc �� , �ta:s� .! � =c��;.e� e�f . � � � "�"$#��*lEi�°:T��`_l[ �s�et„¢ . .., �:. sa..lf�.'( �s�..�� if..��i�:,`�w �vE` � � . .. �. � � � � �� 't�� i}�":�€4i ef� t �v1I � :�'Ita��`:; sie� �t€�.=� �rc �,€ �.c�:cf'.c; €7fa[�. . . . �. . .. ... ... . ... i�4ft�.cf A�. �,aaktt''Y .:� ,..?aa�f itl��e. C£�a,t�� -k1t(�s�?v'�:�°`.. .... . . ... � . . . . . . � ... . ... . . � . .. .. ��>:t� r 4�� . �. . . . . . . ... . .. . . . . . . . . .. � � Ca4, .��a �. �.� ... � . P 2 .... ::::• City of App�e Va��ey MEMO Public Works Department TO: Mayor, City Council, and City Administrator FROM: Colin G. Manson, City Engineer DATE: June 14, 2012 SUBJECT: MATERIALS TESTING AGREEMENT FOR AV PROJECT 2011-107, 147TH STREET EXTENSION Attached for consideration is an agreement with Braun Intertec Corporation for materials testing services relating to the 147th Street Extension project. The testing services will focus on materials quality control to meet the requirements of the project specifications. Total testing services far the project are estimated at $18,703. Costs associated with testing services have been included in the project budget and are, therefore, accounted for. Recommended Action: Approve Agreement with Braun Intertec Corporation for Materials Testing Services Relating to AV Project 2011-107, 147th Street Extension. CGM:jcb Attachment c: Todd Blomstrom ii � ' � ` ` I �rauin€ Znt�rr��e �crr�€araCac��ii Plzone: 96��}�S.zaoo: m �iot3x Hampshire �ve S Fax. 45�•�95- l�fiz€neapolis, 14IN 55438 Webs braunintertec.cvm �U�E �, ZC}12 Pi'O�?OS31 BE.-1.2"-01872.E Mr. E?�vid Bennett, PE City of ApPle Valley 71QQ 147th Street West Apple Valley, MN 55124-751�" Re: Cost Estimate Propasal for Construction;Materials Tes�ing 147th'Street West Extensio€� Gity Project No. 2011-107 Ap�ale Va#{ey, Minnesota De�r Ntr. Bennett: We are pleased to submit this propasal for construction materials testing services for the 141th Street West Extension Prc�ject for the City af App�e Valley. C?ur Urtd�rstar�din� af Prcraect The 147th Street Wes� Extensiorr praject includes the car�structiQn af a ner�r roadway between Flagst�ff Avenue and 1€thnny Cake Ridge, The extension includes utility installati�n of storm sewer; san�tary storm sewer arrd watermaon. Also incfuded within the praject canstruction wilf be subgrade preparation, new curb'and gutter and bituminoas paving. Available Prc�ject Infarmation T"his praposal is based on aur r�view of tt}e documents<ar information described belovv.11V� will submit a revised scope o� servEC�s and cost if the pra�ect changes. � Plans and Specifications prepared by the City af Apple Valley, dated �ebruary 20th, 2022 and Aprit 2ath, 2012, respectively. Sco�r� o� �ervic�s We wil� pravide technicians or engineers — working under the directian of a Rrofessional Engineer — ta perform our c�bservation and testing services. Obsenratian and tes�ing services will be performed on an on-catl, as-needed basis as requested a�nd scheciuled by you ar the praject cvntractars. dNe have reviewed the available project information and propt�se to: ■ Observe and evai�ate the suitability pf prospective fil) materials'— this task incfudes perForming tabaratory classification tests specified in the project docurnent�. AA/E(:lE Prauiding engineerang antl ei�vironmental sotuhans siraee r9S7' City of Apple Valley Proposal BL-12-01872E Jt�ne 7, 2(l'22' Page' 2' ■ Measure the in-pface dry density, maisture cantent and relative cornpaction af filt placed �or pavement and/or utility support, and of utility backfill for compliance with the project dacuments—this task incfudes perforrning 4abora#ory Proctortests to provide maximum dry densities f�orn which the relative compaction afi fi�l can, be d�termined, as well as the use af � nuclear densi�y gauge to measure in-place dry densities and moisture contents. ■ Perform MnC�O�' Dynamie Cone Penetrometer (DCP� tests on aggregate base material for campliance with project specificat�ons. � Sa�r+ple and test biturrtinous pavement materials for compliance with the project documents — this task includes Rice speci�c gravity, gyratory density, asphalt content and extracted aggr�gate gradation tests af the b�t�mine�us. � Measure the #hieknes� and density af the cornpacted bituminaus pavement 6y the core m�thoct far compiiance with the project documents. We assume the bituminous contraetor's quality eontroi staff will eut t�e evres per MnDC}T's 2360 specification. � S�mple and test �resh concrete assaciated with pavement and/or curb-and-gutter, , retaining wall far corn�kiance with the prt�ject tic�cuments, and cast test cylintfers for laboratory campressive strength testing. We assume that we will be a�[e to: appropriately dispc�se a� excess cancrete (and associated wash water} �n site at no- adrtitianai cost to us. � Measure and r�p+�rt the compressiue strength of the concrete test cylinders for' compfiance writi� the project documents. ■ Pravide praject �rranagement for the quaiity tantror observation' a�tct testing services described abov� �- this t�sk inctudes scheduling field personnel, reviewing observation and test reports, and communicat`rng with yQU, the project contractor(s}, antl ather praject tearn members, as needed. 1l�TE'��`�C City of Apple Valley Prapasal BL-12-01872E June 7, 2Q12 Page 3 Schedutir�g Assumpt6ons Based an our understanding of th� project anrl the available project information, we assume the wark far this,phase �f the project will prc�ceed accarding to the fallawing schedules: ; E Der�sity testing wil! be pe�a�med using the r�uc�ear density ar�d MnDC}7 St�rrdard DCP Method. We assume twenty-fve trips for density testing (nuclear density gauge} of the subgrade, u#ility trench backfill, and select granular borrow and three trips for DCPs on aggregate base rnaterial. a R'[acement and campaction af bituminous pauement wil� be �ubstantEally complete �n seven days: ■ W� assum� nine sets of cr�ncrete to complefe this praject. °If work:is camp(eted at different rates than deseribed above, this praposa# should be rewised. Cast and Invt�ic�rag UVe will furni5h th� services descri�red herein far an estimated fee of $18,7t13. t?ur estimated costs are based an indwstry averages and our experience far constructian produetion. Dependir�g on the contractor's perforrnance our costs may be signi�icantly reduced or slightly higher than esfimated. For the limits af this proposal we have estimated the testing rate and contractor's praduction based aff our experience and have provided what we feei is a fair and r�alistic budget estimate. A tabutation showing aur estimated haurly and/or unit r�tes associated w�th our proposed scope of services is also attached. We would be happy to meet rt�rith yc�u to discuss our propased scope of services further, clarif}� the various scope components and discuss haw the scope rnay be adjusted to meet yt�ur pr€�ject requirements. Add�ti�n�� ervices and Qvertime !t "rs difficult to esti€r►ate alf of the servs'ces, and the quantity of each service, that will be require� for any project.'Qur services are also directly controlled by the schedule and perforrnance of others: Far these reaso�s, our actuat hourly or uni# quantities anci associated fees may vary frorn those eeported herein. �� C€ty of Ap�le Val(ey Proposal Bl.-12-01872E June 7, 2012 Page G If the number'af haurs or units uit�mate[y req�ired exceed Chose assumed fc+r purposes of this prcaposal, they wilf be invaiced at the hourly or uhit rates shown in ti�e a#tached t�bulation. I� services are ultimately required that have not been identified ar described hereir�, they will be inuaiced in accordance with our current Schedu{e of Charges. Priar to exceeding our estimated fees; we will update yt�u regarding the pr€�gress of our wark. Fees associated with acld�tional services wifl be summarized i'n a Change drd�r and submitted to you fc�r review and �uthorizatian. This proposal was developed with the understanding that the scope of services defined herein will be required and requested durir�g our normal w�rk haurs of 7:{�0 am to 4.{}0 pm, Monday thrc�ugh Friday. Services that we are asked fic� provide to meet the prc�ject requirements or a cQntractor's eanstruction sehedule c�utside our normal work haurs will be invaiced using an overtirrte rate factar. The factdr for serviees prav�ided oufside nur narmal wark hours or an Saturday will be 1.25 tirnes the normaC haurly rate for the service provided. The faetor for services pravided on Sunday or' legal; ho(idays will be 1.5 times the narmal hauriy rate fiorthe seruice pravided. C�ener�l Remarks We wi!( be happy tc� rneet witE� you to discuss our proposed sc�pe afi services further and cfarify the various scope components. 1Ne appreciate the oppartunity to present this proposal to you. it is provided ir� dupllcate sa the original can be retainec� for yaur records and the copy ean be signed and returned to us, PleaSe return fhe signed copy in its entirety. The praposed fee is based an the scope of services described and the assumptions that aur 5eruices wiU be authorized within 30 days and that athers will nvt delay us beyond our proposed schedule. �� City af Apple Vail�y Proposaf BL-12-01�72E . June 7, 2Q�2 Page 5 We inc(ude the Braun lntertec Cieneral Conditions, which provide additianai terms and are a part of our agreement. To have quest�ons answered or schedufe a time to me�t and discuss our approacfi to this praposal further, please call An�rew Valerius at 952.995,2242 nrJosh Van Abel at 952.995.231Q. Sir�cereEy, BRAUt� IPVTERTEC Ct}RPORATIC?N � �� -'�'�'"`�.�.- Ar�drew M. Va�erius Transportation Project Manager � � .io�hua �. Van Abel, PE' Associate Principal/Seniar Ertgineer � � ,�� :�-,� � Benjarnin P. Dziob�, PE, PMP, DB{A Principal Engineer AtTachments: 7able 1: Estimated Costs GeneraE Condifiions-GMT �6f 15j06} The Prapasal 7nct�rding the Braern lntertee General Cor�ditiQr�� is accepted, and you are auth+�rized' to proceed, Auth�rizer's Firm Authorizer's 5ignature' Autharizer's Nam� (please print dr type� Authorizer'� Title� � � 6]ate �� Braun lntertec Carporation Clienr. Cify af Appte Va1/ey Frojecls 147rh S'treex West Extensian, .4pple Va!ley, A�N �� -- — � � � � _ _ �- � � � � --- - z-° � - � e . � �< �' �� — o � , c �, �� ° -- . . . ,�� - � „ — -- 'xi3 j�..� :. .: _' ' _ ��^f _ r. R � � . �'-��`�+��iS� 0 — q � � a � � E �..�� ' � �'" � a�� "_ H .... .—•--- ..<....a il. . _ . � ..__ . n. . .,, n F. . -"e � — �. . _. � Gonstruction M�teria�s Testing Soil �bservations & Testin�, 7,473:QQ Conerete Observatians &c Testif�g 2,445.OQ I'avement Qhservations & Testing 6,304.OQ Engineering & Project Cvtanagement 2.485,06 Fhase Tata(t 18,70J:Ot1 Estimated Frojeet Tofal: 1$,703A6 Braun Inter�ec GQrporafion Clre�st: Gity af App1e Vailey Prajec�: 147th Streed �'est E.xterrsion, Apple YaZley, MN Braun lntertec FraposaX :, BL-12-07872E Prepared: 06If7712�t1 Qaantity: tTnits: U�sit Price: Extension: Construction Materials Testing Sail Observations & Testing �ompactian Testing 50',00 Hours 'S3.ti0 3,I54.OQ Select Granutar Borrow 3�4Q Trips at 2.D�I tlarars per Trrp Sub-Gracfe 2�00 Trips at Z.flO Hours�er T�°ip Utilities 2t1.ft� Tri�s at l.dD ffours per Trip Sample pick-up 6.00 Hours 63.00 378At1 6.f1D Trips at I.dO Hour per T`rip' Carnpaction Testing, DCP 9.00 Hours' 63AQ 567.00 3.00 Trips aE 3.OQ Hours per Trip Sieve anaiysis fhrough No. 2Q0 Sieve (ASTM C 13fs,'D I14Q or C 117) 8.�0 Tests 102.t�0 &I&.00 Nuclear maisture-density zreeter charge, per hour SO.Qp Hours E 5.Ob 754.pD Proctor'1"est (ASTM D 698 or ASTIvF D 1557} 6.Q0 Tests 142.0[} 852.Q0 Asphalt Gontent :(ASTM L} 2 T 72f6307} I.Ob '£est t 18.00 { 18.00 Percent;crushed (NfN/DOT) t.d� Test b2.p0 62.00 Trip charge 3(1'.O4 Trips 2b.00 780.00 Soil Qbservatians & Testing Total; 7,473.00 +Cunerete tlbservati�ns &' Testing Concrete Testing 18:04 Haurs 63.Ap 1,134,06 Ped Ram�sl Medianr/.Sidewal,ks 3:0� Trips at �, OO H'ours per Ti`fp Curb & Gutter b:QD Trips at 2.00 Hours per Trip Concrete Cylinder Fiek up 5.00 Honrs 63,OU 3 t 5:00 S.lIE? Trips ni' I. flll Holar per Trip Gvmpressive strength of4 x$" conarete cylinders (,AS'CM C 39}, per unii 36.OU Tests 19,00 B$4.Ot3 Per� Rampsl Mediansf Sidewalks 3, l}0 Sets of 4. �O-Cylirzders/Set Curb & Gutter b.00 Sets of 4. D(1 CyFinders/Sef Trip charge 12:04 Trips 26.�f}' 312_00 Concrete Observations & Testing Tota]> 2,445„0{} Pavement Observations &<TesEing Bituminous Sampte Fic�-up I4.0(3 Ha�tr 63.flt3 882.Q0 7.0� Trr`ps aX 2.t1D Hours per Trr� Bituminous Gore Obsecvation 8.Q0 Hour' &0.00 640.00 Z.fl(7 Trips at 4.0� Hours ger Trdp C2ice speeific gravity (AS�`M D 2041) 7.00 Tests 62.04 434.q0 Asphalr-Cantent (ASTM I� 2172J6307) 'I.00 Tests 11$.O(l $26A{� Extracted;aggregate gradation (AS1'M D 5444} 7':00 Tests &2.OQ 574,00 Thickness and density of pavement core (AS'FM D 2'726} 44.Ofl Tests 39.Q0" 1,71 b.QQ Gyratory gravity {AASHTO T3 t2} 7:00 Tests 142AQ 994.00 Trip charge 9:tlQ Trips 26.04 234.00 Pavement bbservacions' & Testing Tataf: 6,3€�D:00 Engineering & Project Nlansgemer�t 1'rojectManager 14.i�t} Hours 125.pfl 1,3SO.OU Seniar l'roject Manager 2.00 Haurs 146.OQ 28Q.OQ Project Assistant> 7.00 Hours 6S.OQ' 455:00'- Engineering & Project Managemen# Tofal: 2,485.Ob Construcfion,'Materiats Testing "["atat; 18 ,�a3.o6 Estimatcd' Project Total: 18,703.06', �1 r��:� �'�ns�r�r��ic��r �c��r�e�t 7'�stir� c�nd S ec�c�1 ��s �c��c�r�s � P�TE RT�� C}ur agrecment ("Agreesnent") wii� you �.5 W� witi provide a healeh and safety 2.5 The ti�nc aurfield p�csarinel spend consis�.s c�f these Gez�erat Cc�z�ditions and the pragram for our amplayees, but we will not on tt�e jc�b site ciepends upc�n the scheduling af �zcc�mp�€r�ying,written'jproposat c�r be respansible far cc�ntract�r �ob, c�r site the work vu� are observ�ng arttesti�a�. Ysru authorization. health or sat'ety unless we accept that duty in agree #hat any changes in scheduiin� may wri�in�: re:�ult in additional cc�sts and agree to pay for �ectimn 1'a E�[�r �tespansibi6ities those services ,at the rates listed in aur cost 1.6' You wili provicie, at nn cast to°tas, �stimate. 1.1 �de r�1t g�rovide the services ��propriate site safety me�sures as to wcirk s�ecifically descrabed in our Agreement wi� areas to be observed ot inspeeted by us. Orat Se�tion 3. Rept�rEs and Ftesc�rds you. Y ciu agree'tlxat we are not responsible far emptoyee� are authorized by y�u to refuse to services that are no� faicly included ira caur wark under conditions that rnay be ur�safe. 3.I We wilt fumish repc�rts ta you in speciF€c undertalczng.'Unless c�therwis� agreed' drtplicate. We wiLl retain analytical c�ata for in wri€ing, our �ndings opinians, anc€ 1.7 Estirnates of our fees ar otire� project seven years �nd �nancial c�a�a fi�r thrce yeaz-s. recamrnendations �vitl b� provid�d to you in ccssts witl be based on rnforsnat�an avail��le tio variting'. You agree nt�t to rely on oral us ant�'an aur exg�erience and knowled�e. Sach, �.� t�ur repc�ats,,nates, �alcuiations, and findin�s, opinlons, e�r recommendations estaan�tes are an exercise of c�ur profession�l other dt�cuments and nur computer saftware withQUt our v�jr�tten �ppr�e•al. judgment and are not �;u�rantecd ar warranteci, and data are insfrument� of our service to you, ActuaL costs may vary. You s�cruld altc�iv a and tlicy re�nazn our �Srtsperty but ar� subject 1.2 Iti �erfarmin�atu° professianal cant�ngency in addition to estirz�ated casts> to a license tc� yca�i for yaur use in fhe r�latec3 servfces, we will use �taat degree i�fcare and �Srojecti fur t�e purposes c�isclosed ta us.<Yoez sk�ll ordinarity-e�ercised under similar ��edaoa� 2: �our,€tespcsnsib�li��es rn�y not transfcr esur repcarts tc� oth�rs c�r u�� circumstances hy re�sutable m�mbers of aur t�seen for a purpose For whioh fhey were not professian practicing in the same Icrcality; If �.r You will pravide us with prior pre�ared withaut caur wtitte�z approu�E, wl�gch you direct us to<deviate frozn our geotechnic�F anci other reports, specifrcations, will not be unre�sonably witka�eld. You agree recc�mzne�ded procedures, yc�u a�ee ta h:ald plans and information ta which ,you hav� ta arzcletnrzify and hofd us harmiess frc�m us h less fro�n cla�ms; damages, and access abont ftze sit�. `Yau a�ree to �rcrrrid� us ciairr4�, damages, tosses, and �xpe�ase�; exgenses arising out caf youz directioti., wi�h al[ pIans, chan;es in pl:�ns, and new iztcluding attorney fees, arising out ofsuch:a in#'carza�a�ion as to site c€inditions ztnt�l vve have transfer ar use. At yaur request, ive wiil' B.3 We �il� r�ference our fietd completed our wc�rk. prt>vide endt�rs�ments �af aur repcsris or letters' observatic�tts and sarnpliz�g to ava�lable of relias�ce, bnt'onty if the recipients a� ee-tt� refere�a�c points, but we will raot sarvcy, set, 2.2 Yau will provic�e «ccess to t�se s�te. �� bc�und �y fh� texzus of aur a�;reem�rat with or chec� the accuraey �fthas� pgints unless En �l�e course c�t`our work sca�e site damag� is you a�d only rfwe are paid theadminastrative �ve accept t�at dufy in °urr�tang. I,ocations of nor�nal even wlren due -care �s exercised: We fce st�ted zn Qu� then current Schedute c�f �eld c�bservations or samplin�; �i�scrr'bed in witI use reasorsabie care ta manlmize damage Char�es'. oxir report or shor�m on �ur sketcl�es are based tc� �lie site. We P�ave not included th� ccsst of c�� inf�rinatican provlded by c�ihers ar restoraEic�n of narmal damage in'the estimated �;3 I3eca�ase etectronic docut�ents may estirnates made by csur perscannel', Ynu a�re�' cbar�es. be �nadified intientionalty or izuxdvert��stt�, t�at s�cl� din�ensipn�, depths, or �tevaticins are you agree that we wzi� not be liable for approxima�rc�n� unless specifrcal�y stated 2,3- If we natif� you that rafliogra�rt��e da�za�es r�su[ting fz-am change in an othenu�se in the r�po�t. Xou acce�t tl�e or ga�nma ray equipment or c�fher nuclear electrcinic dacu�Ta�:nt occurring a��r we; ini�erent risk t�ati s��npl�s c�r abservataans rr�ay' testing or �n�asuring device �vi1� 6e used,:.You �'�ri�mit ze to yc��a. �n case of,ar�� difference �r not i�e representative af thin�;s nat sampted or will be r�spansibte fcsr the cooperatian taf'your a�z6iguity betwec� aa electranic as�d a pa�er seen antk, Ftarkher, that site condiCions may' e�nplayees anc6 ya�r cc�ntractors in observin� dflc��nent, che'�aper doc�nent shat3 gavern. change ��•er tiirze. atl zarliation safety starzdaz�cls: 3,4 If yau €�c� not pay for �rur servzces in 1.4 tJur duti�s d� nof include 2.4 You will noti�y us c�f any fulP as a�reecf we may retais� work ne�E yei sugervtsing your contractc�rs or cammen�ing knowled�e or suspicion of the �sresence t�f detiver�d �c� yo�i and you agree to reCc�rn to ras azx, ov�rseeing„or praviding t11e means and hazardr�us ar ciangercaus materials at tlae work all af our wc�rk �hat is rn your passessiota e�r inethods ofrheir work, unless we accep� such site. if we observe or su�pecf the pcesence €�f under yc�ur canrroi. �ou agree nat tcs a�se ar tfuties in writing: We �ill taot be r�sponsibte contazninants n4t anticipated in our rely upctn our work Cor anY Purpose far Che faiture of your contrac�ors ta perfarn� Agreeznent, ��e may terminate our wark'. whatscaever untrl i� is pai� Eor rn full. in accordance �vith tkaeir unc3ertakings, aiad the w�ithQUt [iahility to yQU r�r to athers, and we provad'eng �f our services w�l� notxclieve wilt be'p�id far the services we have others o1`their respe�nsibilities to yc�u or tc� pr€�vided. t�thers, �'age 1 af � � ProvicTirzg en�ineering iz�ad envaronrrzental salutions sz�zce 1<I57 �ec��ce� �. �c�crspe�as��ic��a �e��icszz �: �fs��at�s, ��►age, aa�d �e�t��zt 6. �ea�er�� de�tni�icati��z �isi� A[�c�c��sm 4.1 You rvi[t pay fc�r ser� �ces as agreed 6n1 't�e �vilt �ndemnify and ho1el yan upon o� �zcccardin; tc� aur tlien curr�nt 5.1 Each of us wili exerc�se goad �'aith hanntess f�am and agar`nst de�raands, damages, �chedule af �har�;es ifthere is no o�her efforts to resolve disputes wii.�out liti�;ati�n. and c�penses to fhe corn�acative extGnt they writtcn agreement as ia price. �n estimated< Such efforts will ir�clude, but not he Iim'ated arc caused by our negligent acts or omissions cc�st is nt�t a�irm �S�ure. You agz�ce to pay aIi t€�, a mee€ing(s) attended b� e�ch party's c�r tliase negligent acts c�r omissi€�ns of s�le� taxes �z�d o�ier taxes hased on yaur represe�ta�zve(s) empawerec[ tc�-xesc�i4�� tt�e p�rsorss fo� whom we are ]egally res�ionsible, payanent of €�ur co��ensation. {?ur disp3tte. Before either ctf us cotnmences an You witt indemnify and hoid us'Izarmiess performance is subject to credit apgrau�I and actian against the csther; dis�zates {except, fram and against demanc3s, damages, and payment €�f any- specified retainer: cc�llections} will be s�t��itted to mediati�n'. expenses to the cocaapmrative extent they are caused by y�ur neglig�nt �cts or oanissio�s c�r 4.� Yau r�vili notify us af bitii�a� ' S.2 Ne°rther afus will be,liable for thczse ne�ligent acts or arnissi�ns of pc;rsQns dis�riites wi�in 15 days. Ynu w€1i pay specz�zl, iracidentat, cc�n,seqaaentiat, crr punrtive for wh�ni you are legaiZy responsible. un�isputed pflrfiior�.s caf invcrxcesron receipt. damages, ineluding b�t n�t lirxa�ted ta thcsse Yau a�ree to �s�y inierest c�n us�aid i�alances, aa frc�m delay, Ioss of use,lc�ss �sf pra�ts 6,2, TQ the �xtent it may be necessary ta be�;inning 30 d�ys after lrrvoice �tat�s at the or re�venue, loss af financing com�r�i�nents �r indeannify �ither of us under �ectian 6.�',, Yo€t rafe csf 1_5°lA per'mon2�s, ar at the inaaimum fe�s, or ttfe cost of capit�l. and we expr�ssly waive, in f�vai� of the �iLher rate allawed by taw. on�y, �ny imr�tr��ity rrr exerrapeian frc�tn 5.3 We �vili not be liabie for �lama�es Iiability that exgsts €�nc�er acay wtrrker 4.3 �f �ou direct �5 ta inv�ice another, unless suit s� commenced dv�tliin trx�o y�ars c�f eo�ipensatian 3aw. we udz`[� do scs bu! ycacz a�ree to be responsible t3�e date c�f'rnjury or loss or within twn years fc�r c�ac cc�rnperzsati�� unte�s yc�u �rrc�vide:us caf �bbe �iaEe of the c��npletaan of �sur servtc�s Se��is�zt 7. �&'Ias�ell��ca�s with tt�at �Sersc7n's written a�ce��ance c�f atl whiclte�er is earl�er. We will not be �iabte P'rovisio�zs tea af our Agreem�at azad w� a�e t€�, untess you h�ve ns�tifiecf us of the d�scovex ext�nd i:rec�it tn that persc�n and to r�le�se of the elaimed breach af contract, negligezat 7:2 We rvil� �arovide a-cerrificate of ycr�ta act, or c��nission w'rthin 34 days �f"the date €>f iz�suxaiace fo yc�u upon request. Any ctaun as dis�r�very and un}�ss yc�u have giu� �ts an an r�dditio�taE I�rsured shal! be limited ta �.� �'ou agree to cosn�en:s�te �as in oppc��ity to inve�tigate and ta reeam�nen� losses catz�ed i�y otar sole negfigenre. accordance with; ac�r fe� sch�dule;if w�e are u+�ys of mitigating dama�;esa asked crz requiz�d ta� respc�r�d ter le�� ptncess 7:2 '�'his A�;reen?e�# is oa�r entire aris'rng aafi af a prc�cee��n� rei�ted �o the 5.4 For you to crbtain the benefit ofa agreemen�. It supersedes pciar a�reements. Ft' ,prc�j�ct ans� as to wrfaiefa we � nat a pa�y: fee wv�ich zra.cludes a reascanab�� a1lc�wance �o�` may be rnoc�zfi�ci oniy in a�vrfting znaking risks, �ou a�ree that our a��re�ate liability' �peci�ic reference to the prc�visitra naor�ifiec3. 4.5, Ifwe �re detay�� by f�zctars beyc�nd will n€rt �xceed'the fee p�id fnr caur serviccs`ar 'our control, c�r ifgaroj�ct cc�zad'sticar�s or the $5tD,0�0, whichever zs gr�ater, and yc�u a�ree 7.3' Neattier ofus will assign or iransfer sc€�e or arnous�t af work chazt�e, or if to �ndemr�ify�,s from a111iabilr`ty tQ ott�ers irz any interest, �sy clair�a, any caus� c�f acti€rn, changed Ia�rcar ui�ion cc�nditifl�s result in ex�ess af tliat amount. I� you are unwzlling to c�r any right a�;ainst the Qther. Nei#(�er eaf us �tacrcaseci custs �lecreased ef�'iciency, c�r accept [his atiocatiai� eif ris�, we �F�itl ir�cre�se wiil assign or otherwise tr�ist'er ar encuenber delays if t�ae stanc3ards ar �nethtxEs ct�a��e;: our ag�regat� tiability to $100,47tJ0 pravS�et� any pcoceeds oe expectecl presceeds ar we wi��;gi�e yau tia�ely not'rce and we. witl that, within 10 days of the date af c�us° comgensation feam the proj�ct or �Sroject recei�rc art aquit�ble acij�tstment o�' nasr Agz°eement, }fou prov€de payzzsent an an ct�imsta any #hird gers�n, �heEiier directly ot° cc�m�ensation. If ycau and we do not reach amc�aznf ft�at witt increase o�sr fees by IU°la, as cattateraI ar othez�vvisc. agzee�i�rat on such cc�m�exisat"tc�n wi�hira 3� but nat less tharz $540 to compensate us fQr day�s af our �ritten applzcat��n, �rc �nay the �a z��sk unc�ertaken. Th�s irccreased fee 7.4 t?ur Agreement znay be terrriinated tcrn��nate �uzthout iiability ta yau or athers., �s not �he purchase af insuranc�. early crnly in wntin�,. We wztl receiv� an equitable adjustment �f our compensati�n in 4:6 If �ou fai[ tts pay us wzthin 60 cCays 5.5 If y�au cio not pay us withan 60 d�Y� �2ae �;vent c�f early terrn�natiaia. fotlo�rin�; iri�voice date, cve rnay consi�ler the c�f invoice d�te, or if yau make a`elairn�against � � dafa�slt � tc�tal breach o�'�iur Agreemer�t �acC, �s iEzat is resolved in our favor, y�a�a ag�-eetm 6-15-�kb at oc�r opt�rsn, t�rcr�inate aur ctuties'without reimburse aus expenses, incEuding but nat �iabiliry ts� yc�u c�r to otli�a-s, lim�ted to attnr�aey fees, staff time, expert �ri�ness fees, and other casis nf coilcction or 4.7 In eansic�eraticse� t�f our prcaviding lztig�tion. insuranc� ta caver claims made by yc�u, y�t�z hereby �uaave any right of affset as to fees 5.6 The law of`the state in which our €itllerwise eiue us, servicing offic� is locate�d wil] go��em ail disputes. �ach of us waiwes trial by JuT�'. No �;mployee acting within the scape of em�alayment shall have iadividua� 1'sability fc�z; h�s ar her acts or omissions, ancl you agr� not �nake a.claim against individuat empinyees< �'a�e Z of'Z CsC—CMT �� : �. Q . l ��. ��.� .�� . City of App�e � Va`�ey MEMO Public Works Department TO: Mayor, City Council and City Administrator FROM: Colin G. Manson, City Engineer DATE: June 14, 2012 SUBJECT: AGREEMENT FOR AV PROJECT 2012-103, 2012 BITUMINOUS TRAIL FOG SEALING On May 10, 2012, the City solicited quotations from three companies for the 2012 Bituminous Trail Fog Sealing work. Three quotes were received on May 31, 2012. The result of this quotation process is provided below. Compan�me Total Ouotation Pearson Bros., Inc. $32,696.00 Allied Blacktop Company $35,990.00 Minnesota Roadways Company $47,580.00 The low quote compares favorably to the engineer's estimate of $45,000. The following budget has been developed for the project based on the low quote received: �enses: Construction $32,696.00 Overhead - Engineering $ 2,500.00 Totai Estimated Cost $35,196.00 Fundin�: Public Works Streets $31,696.00 Park Bond Referendum $ 3,500.00 Total Funding $35,196.00 Funding for the 2012 Fog Sealing project is included in the 2012 operating budget for the Public Works Streets Division. Work performed on park trails will be funded through the park bond referendum. Should City Council award the contract, it is anticipated work will begin in mid- August with completion expected within one week. Recommended Action: Approve Agreement with Pearson Bros., Inc., for AV Project 2012-103, 2012 Bituminous Trail Fog Sealing, in the Amount of $32,696.00. CGM:jcb Attachment . c: Todd Blomstrom AGREEMENT FORM 2012 BITUMINOUS TRAIL FOG SEALING 2012-103 CITY OF APPLE VALLEY, MINNESOTA This Construction Agreement ("Agreement") is made this 14th day of June, 2012, by and between Pearson Bros., Inc., (hereinafter called the "CONTRACTOR"), and the City of Apple Valley, a Minnesota municipal corporation (hereinafter called the "OWNER") (Owner and Contractor are hereinafter called the "PARTIES"); WITNESSETH, that the OWNER and the CONTRACTOR, for the consideration hereinafter stated, agree as follows: l. SERVICES TO BE PERFORMED The CONTRACTOR hereby covenants and agrees to perform and execute all the provisions of the Contract Documents (identified in Section 8 of this Agreement) prepared by the Owner dated April 27, 2012, and made a part of this Agreement by reference, for the following improvement(s): 2012 BITUMINOUS TRAIL FOG SEALING 2012-103 The CONTRACTOR shall do everything required of this Agreement and the Contract Documents. The CONTRACTOR shall make good, replace, and renew at its own cost and expense any loss or damage to said Work and adjacent properties and facilities during the performance of the Work or prior to the final acceptance thereof by the OWNER, and shall be wholly responsible for the performance and completion of such Work. 2. COMPLETION DATE The CONTRACTOR shall commence Work under this Agreement within ten (10) calendar days after issuance of written Notice to Proceed and shall complete the Work in accordance with Special Provisions to the General Conditions of the Contract Documents. The CONTRACTOR shall notify the ENGINEER in writing of any and all causes of delay of such Work or any part thereof, within three (3) days of the beginning of such delay. 3. CHANGE ORDERS Any changes to the Wark specified by this Agreement shall be made in writing and signed by the PARTIES. Only the Engineer will have the authority to initiate any change orders which must be submitted to the City Council for approval. No payment will be made for any claim for additional charges not processed in this manner. A-1 4. PAYMENT The OWNER shall pay the CONTRACTOR for the performance of this Agreement according to the Proposal Form, attached hereto, listing the schedule of approximate quantities and unit prices as set out in the Proposal Form of the Contract Documents submitted by the CONTRACTOR on May 30, 2012, the aggregate of which is estimated to be $ 32,696.00. 5. 1NSURANCE, PERFORMANCE BOND AND PAYMENT BOND This Agreement shall be in full force and effect after execution hereof upon the filing and acceptance of the insurance documents and the performance and payment bonds as required in the Contract Documents. Said insurance documents shall be issued in accordance with the provisions of Section 4 of the General Conditions, thereby assuring that the OWNER has been named as an additional insured party on all such policies or has been provided separate insurance policies of the kind and amount stated therein. The performance bond shall be enforceable by both the OWNER and any other municipality wherein any part of this Work may be performed. 6. 1NDEMNIFICATION The CONTRACTOR shall indemnify and hold harmless the OWNER and its officers, agents and employees from and against all claims, damages, losses or expenses, including attorney fees, which may be suffered or for which they may be held liable, arising out of or resulting from the assertion against them of any claims, debts or obligations in consequence of the performance of this Agreement by the CONTRACTOR, its employees, agents or subcontractors, whether or not caused in part by a party indemnified hereunder. CONTRACTOR shall comply with all applicable laws and regulations relating to the safety of persons or property, or to the protection of persons or property from damage, injury, or loss. 7. CONTRACTOR'S REPRESENTATION In order to induce OWNER to enter into this Agreement, CONTRACTOR makes tfie following representations: CONTRACTOR has examined and carefully studied the Contract Documents; CONTRACTOR has visited the Project identified in the Contract Documents and become familiar with and is satisfied as to the general, local, and Project conditions that may affect cost, progress, and performance of the Work; CONTRACTOR is familiar with and is satisfied as to all federal, state, and local laws and regulations that may affect cost, progress, and performance of the Work; and the CONTRACTOR does not consider that any further examinations, investigations, explorations, tests, studies, or data are necessary for the performance of the Work in accordance with the other terms and conditions of the Contract Documents. A-2 8. CONTRACT DOCUMENTS The Contract Documents shall consist of the following component parts: A. The Contract (this Agreement) B. Information for Bidders C. General Conditions D. Special Provisions E. Technical Specifications F. Proposal Form G. Payment Bond H. Performance Bond I. Certificate of Insurance J. Addendum (s) K. Notice of Award L. Change Orders M. Field Orders N. Drawings This Agreement, together with the documents hereinabove mentioned, form the Contract for the Work. 9. WHOLE AGREEMENT This Agreement embodies the entire agreement between the PARTIES including all prior understanding and agreements and may not be modified except in writing signed by all the PARTIES. EXECUTED as of the day and year written below. A-3 CITY OF APPLE VALLEY Date By Mary Hamann-Roland, Mayor Date And Pamela J. Gackstetter, City Clerk PEARSON BROS., INC. Date � By Date And STATE OF ) ) SS. COUNTY OF ) On this day of , 2012, before me personally appeared and , to me known who, being by me duly sworn, did say that they are respectively the and of , that the seal affixed to the foregoing instnzment is the corporate seal of said corporation and that said instrument was executed in behalf of the corporation by authority of its Board of Directors, and said officers acknowledged the instrument to be the free act and deed of said corporation. (Notarial Seal) Notary Public A-4 ' PROros�, �ar.�t crr°� oF Ar�r� v.�LZ.B� � , 2pr2 B�'77111ZfNOt7S,�"�XL FOG S��IlVG � ' � 201?,.X03 To't�e Ci'ty o�Ap�1�'Vall�,y;' �� ' �'Tl�e undasigt�, hgviag saa�died rhe Coutiract• D�ocv�n��ents, dated May 2ai2, beiag fam�iar with local. . crno.dit�ome, having made th,e field i�ectia�s and m.v�igat�ans de�a�oci n.ece�ry, �nard bei�g familiar witb all factQrs and o�er c�ti.o�s a�g the wark a�d wst �� herebY P�P� t4 #im�tsh all Iabor, tools, ma't�ials, s1d11s, a� and atl el�e �ss�ry tfl cAmplete Project 20�2-103, 2�YZ Siera�i�o� �FogSeali�g � . '!�}� undera�ne� �idder ��ds tho quaz�ities Qf 'Wark as shown h�r�n �re sub�e� to i�acar�se or de�aae, �ud gmpases to do tha Wor1t �►bether f�ie quantities are increased ar dreroasod a� �Ethe unit �ric� s�ated �u tha fol�owm,g �cha�le af pricos. Th�e w�ait price as bid shall aone�tute co��i� in full f�r,r .the r�speckivej ite�s. . , . �. ' Na, Ibom ' Unit �a�. '�n#t Ta��a1 � � Qaantil�► Prico Priaa � • 1�ogseaun� cc#alton �Z,zoo $� 6� $� 3a, 6�6� a a T�i$�a � 3�, b9b.00 Nofie: The basi� far �on of qua�tiiale�: 8.12 t�all�ns/�quffi'e Yard In eui�mitti�g tb,is bid it i� 't�►d�rstood 1he Ovi+�aer r�ins th�e iight ba reject any and atl hfds and ta waive irce�ulasilia and infa�malities tt�er�in �d bo awaxd thc con�ract �u t�e be,st inte�st of the Ciiy. T�iis 9� to �c�no�wleage rece�pt o� addends numbered � . and �,,,. � submstting this'bid, it is ua�derstoot� that payment will be by cb�eck,. P-1 � ; � , • � ' Z'd S�� 'ON 50�8 P�OS�b3d W��6ti� l l Z lOt '0� 'A�W MAY.34.2017 11:44AM PEARS�N BR05 , �-a Na.43� P, 3 � 0 . �x�t��s �i� 9 w l '� ' � � . r ' 1 ��/ � � i � • . � �,S1 � � . � M • 1 � . � ,� a� � 4n � , � � � ��33Q ��il�d . .�o��d.ld '�'d . a��Z , . , ` �� '� 's��"s . . pxB . �d� �l�i ' � � . . �y � + ��s�+�� . �ra� �rn� ,�� 0 � �a . r �t.Q.2 :::. ::::• ... City of App�e Va��ey MEMo Public Works Department TO: Mayor, City Council, and City Administrator FROM: Michael Glewwe, Public Warks Superintendent �1� DATE: June 14, 2012 SUBJECT: AGREEMENT FOR AV PROJECT 2012-119, 2012 CONCRETE REMOVAL AND REPLACEMENT SERVICES On May 21, 2012, City staff solicited quotations from eight companies for concrete removal and replacement services at various locations within the City. On June 5, 2012, one company submitted a quote for the project. A summary is provided below. Company Name Total Quotation Ron Kassa Construction, Inc. $18,000 Attached is the proposed agreement between the City of Apple Valley and Ron Kassa Construction, Inc. Ron Kassa Construction, Inc. has successfully provided this service for the City in the past. Funding for this project will come from the 2012 operating budget for the Public Works Streets Division. Recommended Action: Approve Agreement with Ron Kassa Construction, Inc., for AV Project 2012-119, 2012 Concrete Removat and Replacement Services, in the Amount of $18,000. MG:dsm Attachments c: Todd Blomstrom Exhibit A BID TABULATION CITY PROJECT 2012-119 2012 CONCRETE REMOVAL AND REPLACEMENT SERVICES � Ron Kassa Construction, Inc. I ITEM EST. UNIT TOTAL Na ITEM UNIT QUANTITY PRICE PRICE 1 B618 CURB LF 150 $24.00 $3,600.00 ; 2 D412 CURB LF 100 $24.00 $2,400.00 3 SIDEWALK SF 1,000 $4.50 $4,500.00 4 SIDEWALK REMOVED BY OTHER SF 2,000 $3.40 $6,800.00 5 PEDESTRIAN CURB RAMP SF 100 $4.60 $460.00 6 TRUNCATED DOME PANEL SF 8 $30.00 $240.00 TOTAL BID $18,000.00 S:\Projects\2012 Public Infrastructure Projects\2012-119 2012 Concrete Removal & replacement Services\Bid Tab 2012-119.x1sx AGREEMENT FORM - 2012 CONCRETE REMOVAL AND REPLACEMENT SERVICES CITYPROJECT 2012-119 CITY OF APPLE VALLEY, MINNESOTA This Construction Agreement ("Agreement") is made this 14th day of June, 2012, by and between Ron Kassa Construction, Inc., (hereinafter called the "CONTRACTOR"), and the City of Apple Valley, Minnesota (hereinafter called the "OWNER"), (Owner and Contractor are hereafter called the "PARTIES"); WITNESSETH, that the OWNER and the CONTRACTOR, for the consideration hereinafter stated, agree as follows: l. SERVICES TO BE PERFORMED The Contractor hereby covenants and agrees to perform and execute all the provisions of the Contract Documents prepared by the Owner dated May 21, 2012, and made a part of this Agreement by reference, for the following improvement(s): 2012 CONCRETE REMOVAL AND REPLACEMENT SERVICES CITYPROJECT 2012-119 (the "Work") The CONTRACTOR shall do everything required of this Agreement and the Contract Documents, and all Work shall be done in the best and workmanlike manner. The CONTRACTOR shall make good, replace, and renew at its own cost and expense any loss or damage to said Work and adjacent properties and facilities during the performance of the Work or prior to the final acceptance thereof by the OWNER, and shall be wholly responsible for the performance and completion of such Work. 2. COMPLETION DATE The CONTRACTOR shall commence Work under this Contract within ten (10) calendar days after issuance of written Notice of Award and shall complete the Work in accordance with Special Provisions to the General Conditions. The CONTRACTOR shall notify the ENGINEER in writing of any and all causes of delay of such Work or any part thereof, within three (3) days of the beginning of such delay. 3. CHANGE ORDERS Any changes to the work specified by this Agreement shall be made in writing and signed by both parties. Only the Engineer will have the authority to initiate any change orders which � � A-1 � � must be submitted to the City Council for approval. No payment will be made for any claim for additional charges not processed in this manner. 4. PAYMENT The OWNER shall pay the CONTRACTOR for the performance of this Agreement according to the Proposal Form, attached hereto, listing the schedule of approximate quantities and unit prices as set out in the Proposal Form of the Contract Documents submitted by the CONTRACTOR on June 5, 2012, the aggregate of which is estimated to be $18,000. 5. INSURANCE This Contract shall be in full force and effect after execution hereof upon the filing and acceptance of the insurance documents as required in the Contract Documents. Said insurance documents shall be issued in accordance with the provisions of Section 4 of the General Conditions, thereby assuring that the City of Apple Valley has been named as an additional insured party on all such policies or has been provided separate insurance policies of the kind and amount stated therein. 6. INDEMNIFICATION The CONTRACTOR shall indemnify and hold harmless the City and its officers, agents and employees from and against all claims, damages, losses or expenses, including attorney fees, which may be suffered or for which they may be held liable, arising out of or resulting from the assertion against them of any claims, debts or obligations in consequence of the performance of this Agreement by the Contractor, its employees, agents or subcontractors, whether or not caused in part by a party indemnified hereunder. Contractor shall comply with all applicable Laws and Regulations relating to the safety of persons or property, or to the protection of persons or property from damage, injury, or loss. 7. CONTRACTOR' S REPRESENTATION In order to induce OWNER to enter into this Agreement, CONTRACTOR makes the following representations: CONTRACTOR has examined and carefully studied the Contract Documents; CONTRACTOR has visited the Project and become familiar with and is satisfied as to the general, local, and Project conditions that may affect cost, progress, and performance of the Work; CONTRACTOR is familiar with and is satisfied as to all federal, state, and local laws and regulations that may affect cost, progress, and performance of the Work; and the CONTRACTOR does not consider that any further exam'inations, investigations, explorations, tests, studies, or data are necessary for the performance of the Work at the Contract Price, within the Contract Time, and in accordance with the other terms and conditions of the Contract Documents. A-2 8. CONTRACT DOCUMENTS The Contract Documents shall consist of the following component parts: A. The Contract (this Agreement) B. Information for Bidders C. General Conditions D. Special Provisions E. Proposal Form F. Certificate of Insurance G. Addendum (s) H. Notice of Award I. Change Orders This Agreement, together with the documents hereinabove mentioned, form the Contract for the Work. 9. WHOLE AGREEMENT This Agreement embodies the entire agreement between the PARTIES including all prior understanding and agreements and may not be modified except in writing signed by all the PARTIES. A-3 EXECUTED as of the day and year written below. CITY OF APPLE VALLEY Date By Mary Hamann-Roland, Mayor Date �d Pamela J. Gackstetter, City Clerk RON KASSA CONSTRUCTION, INC. Date By Date �d STATE OF ) ) SS. COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 2012, by and , the and of , a [corporation/partnership], on behalf of the [corporation/partnership]. , (Notarial Seal) Notary Public A-4 PROPOSAL 2012 CONCRETE REMOVAL AND REPLACEMENT SERVICES AV PROJECT 2012-119 GITY OF APPLE VALLEY, MINNESOTA To the City of Apple Valley: The undersigned, having .studied the specifications, dated May 21, 20�2, being farniliar with local conditions, having rnade the field inspections and investigations deemed necessary, and being farn�liar with alI factors and other canditions affecting the work and cost thereof, hereby proposes to fumish a11 labor, tools, materials, skills, equipment, and all else necessary to complete AV Project �012-119,`2�12 Concrete Rernoval and Replacement Servic�s. The undersigned Pxoposer understands the quantities of Wark as shown herein are subject to increase or decrease, and p�oposes to do the Work whether the quantities are inereased or decreasecl at the unit price stated in the following schedule of prices. The unit price as quoted sh�ll constitute compensatian in full for the respective iterns. Na Item Unit Est.` ' Unit Total Quanti ' Price Price 1 Remo�e & Replace B618 concrete curb °'� "` 8i gutte� � LF 15b $ ; � � ;$ �� 2 Remove & Replace D412 concrete curb ° r� `` & gutter LF 1 Q4 $ � � � � �� 3 Remove & Replaee 4" concrete ,5 � �` ` sidewalk SF ' 1,000 $ � ' $ �� °" � �� A 4 4" concrete sidewalk, remaved by other SF 2,000 $ '� $ �� : o ✓ 5 Remo�e & Replace Pedestrian curb SF 10� $ � $ �� ramps ; �� ' „� �c 6 Truncated dome panel SF 8 $` ✓�� $ ��I� �� ` Total Quotation $ � �' In subrnitting this quote it is understood the City retains the right to,reject any and all quotes and ta waive irregulariries and informalities therein and to award the contract in the best interest of th� City. P-1 In subrnitting this quote it is understood that payment will be by check. Date _ �� '- � Respectfully subrni�ted, �� ,�- � fy.a'�'�� ``�' -�`'�" � � Name of Party Submitting Bid Signed By � � � ...� ��'�!-t�°� �' Title ,r�c� /�- .� �-�- Printed Name of Signer ' , ��.5" s c� � L� Address ��G /`�/°�'` �,�`C� � �3 , City, State & Zip Code ! .S�d�- �� ,3 7�� Telephone Number �l z. � � � `�..�.,� � ` Cell Phone Number �� FAX Nurnber ' Email Address P-2 ... �f. Q. 3 .... ..... .... ... City of ApPVa��ey MEMO Public Works Department TO: Mayor, City Council, and City Administrator FROM: Colin G. Manson, City Engineer DATE: June 14, 2012 SUBJECT: ELECTRICAL SERVICE AGREEMENT FOR AV PROJECT 2011-106, UPPER 147TH STREET EXTENSION Attached for consideration is an agreement with Xcel Energy for the installation of an underground electrical service at the intersection of Johnny Cake Ridge Road and Upper 147th Street West. This service will provide power for street lights on 147th Street both east and west of Johnny Cake Ridge Road. It will also make power available for a future signal at 147th Street and Johnny Cake Ridge Road. The cost associated with installation of the electrical service is $4,127.41. This cost was included in the project budget and is therefore accounted for. Recommended Action: Approve Agreement with Xcel Energy for Electrical Service Installation at the Intersection of Upper 147th Street and Johnny Cake Ridge Road as part of AV Project 2011-106, Upper 147th Street Extension. CGM:jcb Attachment c: Todd Blomstrom XceiEnergy� UNDERGROUND SERVICE FORM In consideration of Northern States Power Company, a Minnesota corporation ("Xcel Energy") hereinafter called "Xcel Energy", extending its facilities to make 120/240 volt, 1 phase, 3 wire underground service available to (Customer) City of Apple Valley at (Service Address) 14674 Johnny Cake Ridge Rd (City) Apple Vailey, MN 55124 the sum of Dollars ($ 4,127.41 ) will be paid to Xcel Energy by (if other than above) City of Apple Valley Address (if other than above) 7100 147th Street West CitylState/Zip Apple Valley, MN 55124 In accordance with the following terms: Receipt of the above amount hereby acknowledged on behalf of Xcel Energy by 1. The Customer hereby grants Xcel Energy the right, privilege and easement to install, operate and maintain its underground facilities on the property as described above and/or the approximate �ocation as shown on the attached "Exhibit A". 2. The Customer also agrees that, prior to Xcel Energy starting work, Customer shall ensure that (a) the route of Xcel Energy's underground installation shall be accessible to Xcel Energy's equipment; (b) all obstructions shall be . removed from such route at no cost or expense to Xcel Energy; (c) all privately-owned underground facilities such as sewer, water, sprinkler systems, invisible fences, or gas, electric or communication lines are marked or exposed; (d) ground elevation along the route shall not be above or more than four (4) inches below the finished grade; and (e) the area under the transformer pad shall be compacted to at least 2000 Ibs.lsq. ft. 3 City of Appie Valley agrees to pay all additional costs incurred by Xcel Energy because of (a) surface or subsurface conditions that impair the installation of underground facilities, such as rock formations, etc., and (b) sidewalks, curbing, black top, paving, sod or other landscaping and obstructions aiong the cable route. Xcel Energy will backfill trench with existing soii. Restoration of construction area on Customer property is the responsibility of the Customer. 4. Xcel Energy is not responsible for any Customer-owned underground facilities not marked or exposed at the time service is installed. 5. The underground installation may be subject to a winter construction charge if construction occurs between October 1 and April 15. Ciry of Appie Valley agrees to pay this charge if Xcel Energy determines winter conditions, as defined in the General Rules and Regulations of Xcel Energy's Electric Rate Book as they exist at the time the underground facilities are installed. Xcel Energy will waive the winter construction charge if prior to October 1 st the Customer is ready to accept electrical service, has executed this form and has notified Xcel Energy in writing that the requirements of Paragraph 2 hereof have been fulfilled. 6. The underground facilities instailed by Xcel Energy, shall be the property of Xcel Energy and any payments made by the Customer, or their Customer's contractor, shali not entitle the Customer to any ownership interest or rights therein. 7. The Customer agrees to pay the cost of installiing or relocating any portion of said underground facilities from the Company's designated location, if relocation is made to accommodate the customer's needs, or necessary because of Customer alterations to the grade, additions to structures, installation of patios, decks or gardens or any other surface or subsurface condition that makes maintenance of Xcel Energy's facilities impracticaL 8. Customer must provide, at minimum, the following clearance around the transformer: front, 10 feet; sides and back, 2 feet. EXCEPTION: side facing building must have 30" clearance. These clearances must be at the same grade as the transformers. If screening is to be used, the area in front of the transformer must be left open or a hinged door, easily operable by one person, must be provided. The area must be accessible 24 hours a day. Xcel Energy� $ 0.0o Excess U.G. Distribution Lateral $ o.00 Winter Const. Charge (Primary Cable) (See Paragraph 5) $ 0.00 Excess U.G. Service Lateral $ 4127.4� Specific Service Location or Route $ 0.0o U.G. Service Lateral $ o.00 Replace Overhead Line with Underground (Secondary Service From Utility Pole) $ o.00 U.R.D. Install Including UG Service Lateral $ o.00 Temporary Service KVA $ o.00 U.G. Distribution Lateral $ o.00 Other (Explain) (Primary Cable) Trench Ft. $ 4127.41 TOTAL �"Customer agrees to pay monthly Residential Service Underground rate of the rype of installation indicated by a double asterisk. �Applicable �Not Applicable Dated this day of Dated this day of Customer Contractor Print Full Name Signature Print Full Name Signature Customer Rep Contractor Rep Print Full Name Signature P�int Full Name Signature Xcel Energy Rep Xcel Energy Work Order # Print Full Name Signature Construction $ 4,127.41 Removal $ .= Total $ 4,127.41 Form 17-2759 ' EXHIBIT A � � � �� u p �� °�� ; �� i ., . �� : �� 4674 JOHNNY CAKE RIDGE RD �� j tAq�� v � !APPLE VALLEY s , � � :� ' �� ,�, � ---- -- , .. -- --- .-- — � _ ..__ _ —._ � .. « _� � � ;t �'�"� seau � pZ ' ' �JOA �PL(CE EXISTING 1/0 3PH � 47TH ST W s � s .,: SET 1 PH 50kVA XFMR FOR ' F CITY STREETLIGHT SVC EXTEND #2 TO NEW XFMR 277�� ° wakoa m _.,. �� 7. �,ec� zc�„ �, _ _. P1 sa��R��aa�a oosz�ie, . . 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City of AppVa��e y MEMo Public Works Department TO: Mayor, City Council and City Administrator FROM: Colin G. Manson, City Engineer DATE: June 14, 2012 SUBJECT: RESOLUTION AWARDING CONTRACT FOR APPLE VALLEY PROJECT 2011- 107, 14TTH STREET EXTENSION FROM FLAGSTAFF AVENUE TO JOHNNY CAKE RIDGE ROAD On May 31, 2012, six bids were received for the 147th Street Extension project. Bids ranged from $2,231,944.50 to $2,695,118.67. LaTour Construction, Inc., submitted the low bid. The bids compare favorably to the engineer's estimate of $2,403,000. The following budget has been developed for the project based on the low bid received: Estimated Project Cost: Construction Cost $ 2,231,945 Pipeline Lowering (per Magellan Reimb. Agreement) $ 1,400,000 Construction Contingency $ 105,000 Preliminary Geotechnical Exploration $ 5,000 Design, Legal, Testing, Inspection $ 250,000 Total Estimated Cost $ 3,991,945 Estimated Project Funding: Tax Increment Financing $ 2,591,945 Fischer Marketplace Pipeline Lowering Deposit $ 500,000 Assessments (Outlot A) $ 900,000 Total Estimated Funding $ 3,991,945 Should City Council award the contract, it is anticipated wark will begin in late June with the initial focus on preparation of the corridor for pipeline relocation. During pipeline relocation, work along the remainder of the corridar will proceed. The project is scheduled for completion November 16, 2012. Recommended Action: Adopt Resolution Awarding Contract with LaTour Construction, Inc., for AV Project 2011-107, 147th Street Extension from Flagstaff Avenue to Johnny Cake Ridge Road, in the amount of $2,231,944.50. CGM:jcb Attachment c: Todd Blomstrom EXTRACT OF MINUTES OF MEETING OF THE CITY COUNCIL OF THE CITY OF APPLE VALLEY DAKOTA COUNTY, MINNESOTA A regular meeting of the City Council of the City of Apple Valley, Dakota County, Minnesota, was duly held at the Municipal Center, 7100 West 147th Street, on the 14th day of June, 2012, at 7:00 o'clock p.m. The following members were present: and the following were absent: Member introduced the following resolution and moved its adoption: * * � * * * * � * * * =� * * � � � �x * :x CITY OF APPLE VALLEY RESOLUTION NO. 2012- A RESOLUTION AWARDING CONTRACT FOR PROJECT 2011-107 147TH STREET EXTENSION FROM FLAGSTAFF AVENUE TO JOHNNY CAKE RIDGE ROAD WHEREAS, pursuant to an advertisement for bids for improvements identified as Project 2011-107, bids were received, opened and tabulated according to law and the following bids were received complying with the advertisement: (Tabulation attached as Exhibit A), and; WHEREAS, it appears LaTour Construction, Inc., is the lowest responsible bidder. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Apple Valley, Dakota County, Minnesota: 1. That the Mayor and Clerk are hereby authorized and directed to enter into a contract with LaTour Construction, Inc., for its base bid in the amount of $2,231,944.50 for the completion of Project 2011-107 according to the plans and specifications heretofore approved by the Council and on file in the office of the City Clerk. 2. The City Clerk is hereby authorized and directed to return to all bidders the deposits made with their bids, except that the deposits of the successful bidder and the next lowest bidder shall be retained until a contract has been signed. 3. Estimated project funding shall be provided as follows: Tax Increment Financing $ 2,591,945 Fischer Marketplace Pipeline Lowering Deposit $ 500,000 Assessments (Outlot A) $ 900,000 Total Estimated Funding $ 3,991,945 ADOPTED this 14th day of June, 2012. Mary Hamann-Roland, Mayor ATTEST: Pamela J. Gackstetter, City Clerk * * * * :� * � * * * * � * * :x * * * � * The motion for the adoption of the foregoing resolution was duly seconded by Member and upon vote being taken thereon, the following voted in favor: and the following voted against the same: WHEREUPON, said resolution was declared duly passed and adopted and was signed by the Mayor and her signature attested by the City Clerk. 2 EXHIBIT A Project Name: 147th St 6ctension Flaqstaff to dCRR I hereby certily that this is an exact � City Project No.: 2011-107 reproduction of bids received. � � AppValley Bid Opening: Thursdav, May 31, 2012, at 10 A.M., C.D.S.T. Owner. Cit of A le Valle . olin G. Manson, � � � � � � Registration No. 44194 � � Bidder No. 1 Bidder No. 2. Bidder No. 3 � Bidder No. 4 Bidder No. 5 Bidder No. 6 BID TABULATION LaTour Construction, Inc. Ryan Contracting Co. Friedges Contracting, LLC Redstone Construction Co., Inc. Enebak Construction Co. Landwehr Construction, Inc. Item � Item UNts Qt Unit Price Total Unit Price Total Unit Price Total Unit Price Total Unit Price Total Unit Price Total PART 1- SANITARV SEW ER � 1 MOBILIZATION LS 1 $17,000.00 $17,000.00 $5,000.00 $5,000.00 $2,250.W � $2,250.00 . $18,000.00 $18,000.00 $0.01 $0.01� $5,000.00 $5,000.00 2 TRAFFIC CONTROL LS 1 $360.00 $360.00 $1,000.00 $1.000.00 $31,350.00 . $31,350.00 $500.00 � $500.00 $350.00 $350.00 $433.00 $433.00 3 CONNECT TO EXISTING MH EA 1 $1,700.00 $1,700.00 $2,500.00 $2,500.00 $2,695.00 $2,695.00 $731.00 $731.00 $1,390.00 $1,390.00 $1,555.00 $1.555.00 4 8" PVC SANITARY SEWER, SDR 35, 0-15' LF 288 � $19.00 $5,472.00 $40.00 $11,520.00 � $24.00 � $6,912.00 $21.10 $6,076.80 $2223 $6,402.24 $18.85 $5,428.80 5 8" PVC SANITARY SEWER, SDR 26, 0-15' LF 90 $38.00 $3,420.00 $40.00 $3,600.00 $24.00 $2,160.00 $3320 .$2,988.00 $25.12 $2,260.80 � $19.98 $1,798.20 � 6 8" PVC SANITARY S�WER, SDR 26, 15•20' � LF 816 � $42•00 $34,272.00 $55.00 $44,880.00 $25.00 � $20,400.00 � $42.40 $34,598.40 $31.34 $25,573.44 $24.95 � $20,359.20 � 7 8" PVC SANITARY SEWER, SDR 26, 20.25' LF 1�44 $48.0� $50,t12.00 $75.00 $78,300.00 $58.OD $60.552.00 $60.90 $63,579.60 $31.34 $32,718.96 $60.30 $62,95320 8 8" PVC PLUG EA 3 $97•00 $291.00 $200.00 $600.00 $25.00 $75.00 $54.80 $164.40 $56.13 $168.39 $111.00 $333.00 8" C-900 SANITARY SEWER OUTSIDE � 9 DROP LF 11 � $340.00 $3,740.00 $300.00 $3,300.00 $525.00 $5,775.00 $422.00 $4,642.00� $319.17 $3,510.87 � $316.00 $3,476.00 4' DIA SAN MH, 8' DEEP, INCL R-1642 � 10 CASTING & HDPE ADJ RINGS EA . 8 $1,900.00 � . $15,200.00 $3,000.00 $24.000.00 $3,400.00 $27,200.00 $2,070.00 $16,560.00 $2,226.90 $17,815.20 $2,745.00 $21,960.00 11 4' DIA SAN MH OVERDEPTH LF 104 $76.00 $7,904.00 $120.00 $12,480.00 $80.00 $8,320.00 $83.40 $8,673.60 $102.22 $10,630.88 $240.00 $24,960.00 TOTALPARTI-SANITARYSEWER 5139,471.00 $187,180.00 $167,689.00 � $156,513.80 $100,820.79 $148,256.40 PART 2- WATER MAIN � 12 MOBILIZATION LS 1 $7,100.00 $7,100.00 $1,000.00 $1,000.00 $2,250.00 $2,250.00 $18,000.00 $18,000.00 � $0.01 $0.01 $1,566.30 $1,566.30 . 13 TRAFFICCONTROL LS 1 $360.00 $360.00 $1,000.00 � $1,000.00 �$31,350.00 $31,350.00 � $500.00 $500.00 $350.00 $350.00 $433.00 $433.00 CONNECT TO EXISTWG 12" DIP WATER � � � 14 MAIN . � EA 1 $1,800.00 $1,800.00 $1,500.00 $1,500.00 � $1,300.00 $1,300.00 $950.00 $950.00 � �$715.00 $715.00 $1,555.00 $1.555.00 CONNECT TO EXISTING 16" DIP WATER 15 MAIN �EA 1 $3,500.00 $3,800.00 $3,000.00 $3,000.00 $1,300.00 $1,300.00 $2,600.00 $2,600.00 $1,925.00 $1,925.00 $1,929.00 $1,929.00 FURNISH AND INSTALL 24" STEEL � � 16 CASING LF 210 5160.00 $33,600.00 $130.00 $27,300.00 $200.00 . $42,000.00 $165.00 $34,650.00 � $20025 $42,052.50 $95.30 � $20,013.00 � 17 JACK 24" STEEL CASING LF � 84 $370.00 $31,080.00 $300.00 $25,200.00 $375.00 $31,500.00 $275.00 $23,100.00 � $380.72 $31,980.48 $301.00 $25,284.00 18 6" DIP WATER MAIN LF 328 $29.00 $9,512.00 $35.00 $11,480.00 $37.50 � $12,300.00 $31.40 $10,299.20 $28.97 . $9,502.16 $30.10 $9.872.80 � 1g 12" DIP WATER MAIN LF 319 $57.00 $18,183.00 $60.00 � $19,140.00 . $79b� � $25,360.50 $58.40 $18,629.60 $52.28 . $16,677.32 $56.57 $18,045.83 � 20 16" DIP WATER MAIN LF .2868 $74•00 $212,232.00 $75.00 $215,100.00 $87.50 $250,950.00 $73.90 $211,94520 $71.68 $205,57824 $76.40 $219,115.20 � 21 12" GV VALVE & BOX EA 5 $2,600.00 $13,000.00 $2,500.00 $12,500.00 $3,400.00 � $17,000.00 $3,230.00 �$16,150.00 $2,709.45 $13,547.25 $2,711.00 $13,555.00 - 22 16" BF VALVE & BOX EA 5 $2,700.00 $13,500.00 $2,500.00 $12;500.00 $3,500.00 $17,500.00 $3,250.00 $16,250.00 $2,633.60 $13,168.00 $3,016.00 $15,080.00 23 16" VERTICAL WATER MAIN OFFSET EA 1 $2.900.00 � $2,900.00 $3,000.00 $3,000.00 $5,200.00 $5,200.00 $866.00 $866.00 $440.00 $440.00 $744.00 $744.00 24 DUCTILE IRON FITTINGS � LB . 6416 $6.60 $42,345.60 $5.00 $32,080.00 $6.55 � $42,024.80 $5.90 $37,854.40 $7.07 $45,361.12 $7.80 $50,044.80 � 2011-107 Bid Tab.xls � � BT-1 � � � Bldder No. 7 Bldder No. 2 Bldder No. 3 � Bidder No. 4 Bidder No. 5 Bidder No. 6 BID TABULATION � LaTour Construction, Inc. Ryan Contracting Co. Friedges Contracting, LLC Redstone Construction Co., Inc. Enebak Construction Co. Landwehr Constructfon, Inc. Item Item � Units Qt Unit Price Total Unit Price Total Unit Price � Total Unit Price Total Unit Price � Total � Unit Price Total � 25 6" HYDRANT AND GV & BOX EA 8 $4,100.00 $32,800.00 $3,800.00 $30,400.00 $4,700.00 $37,600.00 $4,600.00 � $36,800.00 $3,997.37 $31,978.96 $4,450.00 $35,600.00 TOTALPART2-WATERMAIN $422,212.60 $395,200.00 $517,635.30 . $428,594.40 �$413,276.04 � $412,837.93 PART3-STORMSEWER . � . � 26 MOBILIZATION LS 1 $6,100.00 $6,100.00 $1,000.00 $1,000.00 $2,250.00 $2,250.00 $t8,000.00 $18,000.00 $0.01 � $0�.01 $1,566.30 $1,566.30 .27 TRAFFIC CONTROL LS 1 $360.00 $360.00 $1,000.00 . $1,000.00 $31,350.00 $31,350.00 � $500.00 $500.00 $350.00 $350.00 $433.00 . $433.00 � 28 CONNECT TO EXISTMG CBMH EA 1 $750.00 $750:00 $1,500.00 $1,500.00 $650.00 $650.00 $436.00 $436.00 $600.00 $600.00 $1,285.00 $1,285.00 2g 12" RCP STORM SEWER LF 95 $25.00 $2,660.00 $29.00 $2,755.00 $30.00 , $2,850.00 $35.30 � $3,353.50 $28.29 $2,687.55 $28.42 . $2,699.90 30 15" RCP STORM SEWER LF 1208 $24.00 $28,992.00 $30.00 $36,240.00 $27.00 $32,616.00 $25.20 $30,441.60 $27.43 $33,135.44 $27.25 $32,918.00 31 18" RCP STORM SEWER LF 424 $26.00 $11.024.00 $35.00 $14,840.00 $28.00 $11,872.00 $2720 � $11,532.80 $29.08 $12,329.92 $31.45 $13,334.80 32 24" RCP CL3 STORM SEWER LF 317 $31.00 $9,827.OQ $4�:00 $12,680.00 $31.00 $9,827.00 � $30.50 $9,668.50 $33.30 $10,556.10 $39.00 $12;363.00 � 33 27" RCP CL3 STORM SEWER LF 435 $37.00 $16,095.00 $46.00 $20,010.00 . $40.00 $17,400.00 $41.50 $18,052.50 $40.13 $17,456.55 $57.00 $24,795.00 . JACK 27" RCP THICK WALL STORM . � � 34 SEWER LF 96 $690.00 � $66,240.00 $625.00 $60,000.00 $595.00 $57,120.00 $615.00 $59,040.00 $690.08 $66,247.68 $711.00 $68,256.00 �� 35 30" RCP CL3 STORM SEWER LF 257 $41.00 $10,537.00 � $50.00 .. $12,850.00 $44.00 $11,308.00 $46.00 $11,822.00 $44.43 $11,418.51 $58.70 $15,085.90 36 30" RCP CL4 STORM SEWER LF 216 $45.00 $9,720.00 $75.00 $16,200.00 $52.00 $11,232.00 � $53.00 $11,448.00 $49.61 $10,715.76 $6625 $14,310.00 37 30" RCP CL5 STORM SEWER LF 919 $93.00 $85,467.00 $125.00 $114,875�.00 $85.00 $78,115.00 $89.30 $82,066.70 $69.88 . $64,219.72 $139.10 $127,832.90 38 36" RCP CL5 STORM SEWER CLASS 3 LF 106 $64.00 $6,784.00 $145.00 $15,370.00 � $86.00 $9,116.00 $114.00 $12,084.00 � $7828 $8,297.68 � $158.86 $'16,839.16 39 36" FES W/TRASH GUARD EA 1 $1,900.00 $1,900.00 $3,000.00 $3,000.00 $2,000.00 $2,000.00 $1,940.00 $1,940.00 $2,141.90 $2,141.90. $2,331.00 $2,331.00 � 40 Cl3 RIP RAP CY 38 576.00 $2.888.00 $60.00 $2280.00 $100.00 $3,800.00 $97.50 $3,705.00 $78.00 $2,964.00 $69.00 � $2,622.00 41 FURNISH AND WSTALL 12" PIUG EA 3 $78•00 $234.00 $150.00 $450.00 $115.00 . $345.00 .� $53J0 $161.10 $176.87 $530.61 $120.00 $360.W � 42 � FURNISH AND WSTALL 18" PLUG EA 1 $82•00 $82.00 . $200.00 $200.00 $145.00 $145.00 $66.60 $66.60 $198.47 $198.47 $128.00 �� $128.00 43 FURNISH AND INSTALL 27" PLUG EA 1 $119.00 � $119.00 $300.00 $300.00 $265.00 $265.00 � $88.80 $88.80 $223.84 $223.84 $170.00 $170.00 2'X3' CB INCL R3290VB CASTING & HDPE � � � 44 ADJ RINGS � � EA . 10 $1.300.00 $13,000.00 $1,300.00 $13,000.00 $1,800.00 $18,000.00 $1,340.00� $13,400.00 $1,438.66 $14,386.60 $1,205.00 $12,050.00 4' DIA CBMH INCL R3290V8 CASTING & . � . 45 HDPEADJRINGS EA 7 S1,S00.00 $12,600.00 � $1,500.00 $10,500.00 �$2,400.00 � $16,800.00 $1,830.00 $12,810.00 $1,928.W $13,496.49 $1,737.00 $12,159.00 4' DIA STORM MH WCL R1642 CASTING & � � � � � 46 HDPE ADJ RINGS � EA 2 $1,900.00 $3,800.00 � $1,500.00 . �$3,000.00 � �$2,400.00 .$4,800.00 $2,100.00 . $4,200.00 $1,837.02 $3,674.04 $2,025.00 $4,050.00 47 4' DIA STORM CBMH OVERDEPTH LF 4 $76.00 � $304.00 $130.00 $520.00 �$70.00 $280.00 � $83.80 $33520 $102.22 $408.88 $248.00 $992.00 48 4' DIA STORM MH OVERDEPTH LF 12 $76.00 $912.00 $130.00 $1,560.00 $70.00 $840.00 $83.30 � $999.60 � $102.22 � $1,226.64 $170.00 $2,040.W � � 5' CBMH INCL R3290VB CASTING & HDPE � � � 49 ADJ RINGS EA 8 $2,600.00 $20,800.00 $3,000.00 $24,000.00 $4,000.00 $32,000.00 $2,750.00 . $22,000.00 $2,642.43 $21,139.44 $3,350.00 $26,800.00 � 5' DIA STORM MH INCL R1642 CASTING & � � 50 HDPE ADJ RINGS EA 5 $2.600.00 $13,000.00 $3,000.00 $15,000.00 $5,000.00 $25,000.00 $2,890.00 $14,450.00 $2.551.38 $12,756.90 $3,371.00 $16,855.00 51 5' DIA STORM�CBMH OVERDEPTH LF 45 $128.00 $5,760.00 $200.00� � $9,000.00 $150.00 $6,750.00 $142.00 $6,390.00 $156.77 $7,054.65 $278.00 $12;510.00 52 5' DIA STORM MH OVERDEPTH . LF 75 . $125.00 $9,600.00 � $200.00 $15,000.00 $150.00 $11,250.00 $142.00 $10,650.00 � $156.77 $11,757.75 $278.00 . $20,850.00 6' CBMH INCL R3290VB CASTING & HDPE � . � . � � � � � 53 ADJ RINGS EA 1 $4,200.00 $4,200.00 � $5,000.00 $5,000.00 $5,500.00 $5,500.00 $5,060.00 � $5,060.00 $4,300.64 $4,300.64 $5,541.00 $5,541.00 2011-107 Bid Tab.xls . � . BT-2 . . � � � Bidder No. 1 Bidder No. 2 Bidder No. 3 Bidder No. 4 Bidder No. 5 Bidder No. 6 � BID TABULATION LaTour Construction, Inc. Ryan Contracting Co. Friedges Contracting, LLC Redstone Construction Co., Inc. Enebak Construction Co. Landwehr Construction, Inc. Item Item Units Qt Unit Price Total Unit Price Total Unit Price Total Unit Price Total � Unit Pdce Total Unit Price Total . TOTALPART3-STORMSEWER � $343,755.00 . $472,130.00 $403,481.00 $364,701.90 $334275.77 $451,176.96 PART4-STREETIMPROVEMENTS 54 MOBILIZATION �S 1 $22.000.00 $22,000.00 $35,000.00 � $35,000.00 $9,000.00 $9,000.00 � $30,000.00 $30,000.00 $52,050.00 $52,050.00 $5,000.00 $5,000.00 55 TRAFFIC CONTROL LS 1 $4,800.00 � $4,600.00 $1,000.00 $1,000.00 $215,000.00 $215,000.00 $5,000.00 $5,000.00 $4,750.00 � $4,750.00 $5,870.00 $5,870.00 � � REMOVE BARRICADES EA 3 $51.00 $153.00 $100.00 . $300.00 � $110.00 � $330.00 $50.00 $150.00 $50.00 $150.00 $62.00 $186.00 57 REMOVE SIGN EA 1 $26.00 $26.00 $100.00 $100.00 $55.00 $55.00 $25.00 $25.00 $25.00 $25.00 $46.00 $46.00 58 SAW BITUMINOUS PAVEMENT LF 285 53.00 $855.00 $5.00 $1,425.00 � $3.50 $997.50 $3.00 $855.00 $3.00 $855.00 $4.65 $1,325.25 � 59 REMOVE CONCRETE CURB AND GUTTER LF 277 $3.30 $858.70 $4.00 $1,108.00 $3.50 $969.50 � $2.00 $554.00 $3.50 $969.50 $3.88 $1,074J6 60 REMOVE BITUMINOUS PAVEMENT SY 1868 $2.65 $4,950.20 � $3.00 $5,604.00 $3.00 � $5,604.00 � $1.80 $3,362.40 �$3.00 $5,604.00 $220 $4,109.60 61 CLEARAN� GRUB TREE 3 $200.00 . $600.00 $300.00 � $900.00 $200.00 $600.00 $800.00 $2,400.00 $200.00 $600.00 $130.00 $390.00 . 62 CLEAR AND GRUB AC 2 $3,300.00 $6,600.00 $6,000.00 $12,000.00 $3,550.00 $7,100.00 $8,000.00 $16,000.00 $3�,200.00 $6,400.00 $388.00 $776.00 63 REMOVE SIGN PANEL EA 1 526.00 $26.00 $100.00 $100.00 $55.00 $55.00 $25.00 $25.00 $25.00 � $25.00 $32.00 $32.00 64 CONCRETE REMOVAL CY 750 $15.00 $11,250.00 $5.00 $3,750.00 $34.00 $25,500.00 � $22.10 $16,575.00 $15.00 $11,250.00 $10.56 $7,920.00 COMMON EXCAVATION - 65 TRAIL/SIDEWALK(EV) QY . 1550 $6.00 $9,300.00 $8.00 $12,400.00 . $9.85 $15.267.50 $10.20 $15,810.00 $9.36 $14,508.00 $625 $9,687.50 66 COMMON EXCAVATION STREET (EV) CY 62500 $6.00 $375,000.00 $5.00 $312,500.00 $3.85 $240,625.00 $6.12 $382,500.00 $7.80 $487,500.00 $628 $392,500.00 67 SELECT GRANULAR BORROW TN 32500 $0.01 $325.00 $0.01 $325.00 $0.01 . $325.00 $5.66 $183,950.00 $627 $203,775.00 $4.00 $130,000.00 � � AGGREGATE BASE, CLASS 5 � gg TRAIL/SIDEWALK � TN 2240 $12.00 $26,880.00 $15.00 $33,600.00 $14.00 $31,360.00 $9.38 $21,071.20 $13.00 $29,120.00 $15.50 $34,720.00 69 AGGREGATE BASE, CLASS 5 STREET TN . 9500 $12.00 $114,000.00 $11.00 $104,500.00 $12.00 $114,000.00 $9.38 $89,110.00 $13.50 . $128,250.00 $12.50 $118,750.00 � 70 8618 CONCRETE CURB AND GUTTER � LF 6500 $8•80 $57200.00 $11.00 $71,500.00 $8.65 $56,225.00 $8.65 $56225.00 $5.80 � $57,200.00 $9.00 $58,500.00 71 CONCRETE VALLEY GUTTER � SF 480 $6.00 $2,880.00 $5:00 $3,840.00 $7.95 . $3,816.00 $5.85 . $2,808.00 $5.67 $2,721.60 $6.00 $2,880.00 � 72 CONCRETE MEDIAN NOSE SF 120 $5.60 . � $672.00 � $10.00 $1,200.00 $8.05 . $966.00 $5.50 $660.00 $9.03 $7,083.60 $5.50 $660.00 73 CONCRETE MEDIAN � SF 690 $3.70 $2,553.00 $4.50 $3,105.00 $4.35 $3,001.50 $3.60 $2,484.00 $5.30 $3,657.00 $4.00 $2,760.00 74 CONCRETE PEDESTRIAN CURB RAMP SF 370 $4.60 $1,702.00 . $8.00 $2,960.00 $5.95 $2,201.50 $4.50 $1,665.00 $4.82 $1,783.40 $4.30 $1,591.00 75 � TRUNCATED DOME PANEL SF 64 $32.00 $2,048.00 $35.00 $2,240.00 . $30.00 $1,920.00 $31.50 $2,016.00 $30.00 � , $1,920.00 � � $32.00 $2,048.00 � TYPE SPNWC330F BITUMINOUS MIXTURE � � � 76 -STREET TN 2700 555.60 $750,120.00 $54.50 $147,150.00 $40.00 $108,000.00 $54.50 $147,150.00 $54.50 $147,150.00 $75.75 $204,525.00 � TYPE SPWE8340F BITUMINOUS MIXTURE � �� 77 -STREET TN � 4550 $56.00 $254,800.00 $55.00 $250,250.00 $40.00 $182,000.00 $55.00 $250250.00 $55.00 $250;250.00 $77.60 $353,080.00 TYPE SPWEA2408 BITUMINOUS MIXTURE � 7g -TRAIL � TN � 850 $77•00 . $65,450.00 $80.00 $68,000.00 $70.00 $59,500.00 $75.00 $63,750.00 $75.00 $63,750.00 $79.00 $67,150.W � � 79 BITUMINOUS MATERIAL FOR TACK COAT GAL � 2000 � $8.00 $16,000.00 $10.00 $20,000.00 $10.00 $20,000.00 � $5.00 $16,000.00 $5.00 $16,000.00 $3.00 $6,000.00 g0 ADJUST CATCH BASIN CASTING � EA 29 $87•00 $2,523.00 $400.00 $11,600.00 $175.00 $5,075.00 $85.00 �$2,465.00 $175.00 $5,075.00 $186.00 $5,394.00 81 ADJUST MANHOLE CASTING EA .12 $420.00 $5,040.00 $400.00 $4,800.00 $495.00 $5,940.00 $350.00 $4,200.00 $500.00 $6,000.00 $186.00 $2,232.00 . 82 ADJUSTGATEVALVEBOX EA 5 $230.00 $1,150.00 $400.00 $2,000.00 $405.00 $2,025.00 $250.00 $1,250.00 . $350.00 $1,750.00 $155.00 $775.00 2011-107 Bid Tab.xls . � BT3 Bidder No. 1 . Bidder No. 2 Bidder No. 3 Bldder No. 4 Bidder No. 5 � Bidder No. 6 BID TABULATION LaTOUr Construction, Inc. Ryan Contracting Co. Friedges Contracting, LLC Redstone Construction Co., Inc. Enebak Construction Co. Landwehr Construction, Inc. � Item Item Units Qt Unit Price Total Unit Price �- Total Unit Price Total Unit Price Total Unit Price � Total Unit Price Total 83 STORM DRAIN INLET PROTECTION EA 29 $130.00 $3,770.00 $100.00 $2,900.00 $135.00 $3,915.00 $125.00 $3,625.00 $100.00 $2.900.00 $170.00 $4,930.00 g4 PREMIUM TOPSOIL & COMPOST (LV) CY 1550 $28.30 $43,865.00 $30.00 $46,500.00 $22.00 $34,100.00 � $1J.84 $27,652.00 $29.19 $45,244.50 $36.00 $55,800.00 � 85 SALVAGEDTOPSOIL(LV) CY 3150 $1.85 $5,827.50 $15.00 $47,250.00 $�.00 $22,050.00 $3.68 $11,592.W � $8.00 $25,200.00 $5.60 � $17,640.00 � 260 SEED, FERTILIZER, MOISTURE � � � 86 PELLETS, BLANKET SY 9125 51.40 $12,775.00 $1.50 � $13,687.50 � $0.85 $7,756.25 $120 $10,950.00 � � $1.05 $9.581.25 $175 $15,96875 240 SEED, FERTILIZER, MOISTURE � � � � 87 PELLETS, MULCH � AC 4 $560.00 $2,240.00 $550.00 $2,200.00 $1,985.00 $7,940.00 $1,575.00 $6,300.00 � $475.00 $1,900.00 $680.00 $2,720.00 g8 WATERING SEEDED AREAS DAY 16 $460.00 $7,360.00 $450.00 $7200.00 $685.00 $10,960.00 $850.00 $13,600.00 $725.00 $11,600.00 $550.00 $8,800.00 � 89 2" GINKO (NON FRUITING MALE) EA 8 $410.00 $3,280.00 $320.00 $2,560.00 $375.00 $3,000.00 $430.00 $3,440.00 $429.86 $3,438.88 $531.00 $4,248.00 g0 2" SWAMP WHITE OAK EA � 14 5230.00 $3,220.00 $320.00 $4,480.00 $245.00 $3,430.00 $315.00 $4,410.00 . $31427 $4,399.78 $389.00 $5,446.00 91 2" NORTHWOODS MAPLE EA 11 $230.00 $2,530.00 $220.00 $2,420.00 $245.00 $2,695.00 $271.00 $2,981.00 $270.92 � $2,980.12 � $335.00 $3,685.00 � 92 2" HACKBERRY EA 12 $230.00 � $2.760.00 $220.00 $2,640.00 $245.00 $2,940.00 $271.00 $3,252.00 $270.92 $3251.04 $335.00 $4,020.00 � . g3 2" EMERALD LUSTER MAPLE EA 12 $230.00 $2,760.00 $220.00 $2,640.00 $245.00 $2,940.00 $271.00 � $3,252.00 $270.92 $3251.04 $335.00 $4,020.OQ 94 SILT FENCE, MACHINE SLICED . LF 2875 $1.80 $5,175.00 $1.75 $5,03125 $225 $6,468.75 $1.55 $4,45625 $1.30 $3,737.50 $220 $6,325.00 TEMPORARY CONSTRUCTION 95 ENTRANCE �� CY 90 $34.00 $3,060.00 $25.W � $2.250.00 $55.00 $4,950.00 $50.00 $4.500.00 $0.01 $0.90 $50.00 $4,500.00 �... 96 4" SOLID LINE, YELLOW PAINT LF 4600 $0.20 $920.00 $0.16 $736.00 $0.16 $736.00 $0.16 $736.00 $0.16 $736.00 $020 $920.00 g7 4" BROKEN LINE, YELLOW PAINT LF 1150 $0.20 $230.00 $0.16 $184.00 $0.16 $184.00 $0.16 $184.00 $0.16 $184.00 $0.20 $230.00 gg 4" SOLID LINE, WHITE PAINT LF 4970 $0.20 $994.00 $0.16 $79520 $0.16 $79520 $0.16 $79520 $0.15 $745.50 $0.20 $994.00 .gg 4" DOUBLE SOLID LINE, YELLOW PAINT LF 420 � $0.30 $126.00 $0.26 - $109.20 $026 $109.20 $0:26 $10920 $0.32 $134.40 � . $0.32 $134.40 � 100 12" SOLID LfNE, WHITE PAINT LF 270 $2.00 $540.00 . $2.00 � $540.00 $2.00 $540.00 $2.00 $540.00 $2.20 � $594.00 $2.50 $675.00 101 24" SOLID LINE, WHITE PAINT � LF 80 $3.30 $248.00 $3.00 $240.00 $3.00 $240.00 $3.00 $240.00 $2.50 � $200.00 $3.75 $300.00 � . 102 24" SOLID HA?CH LINE, YELLOW PAINT LF 105 $3.10 $325.50 $3.00 $315.00 $3.00 ��$315.00 $3.00 . $315.00 � $1.80 $189.00 $3.75 $393.75 PAVEMENT�MESSAGE-THROUGH � � � � � � � � 103 ARROW - WHITE PAINT EA 2 $51.00 $102.00 � $50.00 $100.00 $50.00 $100.00 $50.00 $100.00 � $60.00 $120.00 $618.00 $1,236.00 � PAVEMENT MESSAGE - RIGHT ARROW - � � � � 104 WHITE PAINT � EA 6 $41.00 $246.00 $40.00 $240.00 $50.00 $300.00 $40.00 $240.00 $60.00 $360.00 $62.00 $372.00 PAVEMENT MESSAGE - LEFT ARROW - � � � � � 105 WHITE PAINT � � EA 18 $41.00 $738.00 $40.00 $720.00 $50.00 $900.00 , $40.00 $720.00 $60.00 $1,080.00 $50.00 $900.00 106 SIGN PANEL TYPE C SF 21575 $30.00 $6,472.50 $29.00 $6,256.75 $29.00 $6,25675 � $29.00 $6,25675 � $29.00 $6256.75 $36.00 $7,767.00 � 107 2" SDR 11 HDPE CONDUIT LF 2900 $5.70 $16,530.00 $8.00 $23,200.00 $7.70 $22,330.00 $7.70 � $22,330.00 $7.70 $22,330.00 $9.50 $27,550.00 108 HANDHOLE FOR2" CONDUIT EA 3 $724.00 � $2,172.00 $1,030.00 $3,090.00 $1,030.00 $3,090.00 $1,030.00 $3,090.00 � $1,030.00 $3,090.00 $1,272.79 $3,818.37 109 LIGHTING UNIT � . EA 4 $3,640.00 $14,560.00 $3,730.00 � $14,920.00 $3,730.00 $14,920.00 $3,730.00 $14,920.00 $3,730.00 $14,920.00 $4,610.00 $18,440.00 110 1.5" NON-METALLIC CONDUIT EA 1600 $3.60 . $5,760.00 � $6.00 $9,600.00 $5.70 $9,120.00 $5.88 $9,088.00 � $5.68 $9,088.00 $7.00 $11,200.00 111 UNDERGROUND WIRE 1 COND N0 6 LF 3500 $1.25 $4.375.00 $1.10 $3,850.00 $1.10 $3,850.00 $1.10 $3,850.00 $1.10 $3,850.00 $1.35 $4,725.00 112 UNDERGROUND WIRE 1 COND N0 8 LF 1750 $1.00 $1,750.00 � $0.90 $1,575.00 �$0.90 $1,575.00 $0.90 $1,575.00 � $0.90 $1,575.00 $1.10 $1,925.00 � 113 UNDERGROUND WIRE 1 COND NO 12 LF 605 $O50 $302.50 $1.00 $605.00 $0.95 $574.75 $0.95 $57475 $0.95 $574.75 � � $1.20 $726.00 � 114 HANDHOLE FOR LIGHTING SYSTEM EA 3 $680.00 $2,040.00 $495.00 $1,485.00 $495.00 � $1,485.00 $495.00 $1,485.00 $495.00 $1,485.00 $612.00 $1,836.00 2011-107 Bid Tabxis � � BT-4 . . � Bidder No. 1 Bidder No. 2� Bidder No. 3 . Bidder No. 4 Bidder No. �5 Bidder No. 6 BID TABULATION � LaTOUr Conshuction,inc. Ryan Contracting Co. Friedges Contrecting, LLC Redstone Construction Co., Ina Enebak Construction Co. Landwehr Construction, Inc. Item Item Units �t Unit Price Total Unit Price Total Unit Price Total Unit Price Total Unit Price Total Unit Price Total � 115 NMCLOOPDETECTOR6'X6' EA 18 $790.00 $14,220.00 �$815.00 . � $14,670.00 $815.00 $14,670.00 $815.00 $14,670.00 $815.00 $14,670.00 $1,008.00 $18,144.00 116 SPECIAL HANDHOLE . EA 12 $800.00 $9,600.00 $933.00 � $11,196.00 $933.00 $11,196.00 $933.00 $11,196.00 $933.00 $11,196.00 $1,153.00 $13,836.00 117 2" NON-METALLIC CONDUIT LF 500 $5.50 $2,750.00 $7.00 $3,500.00 $7.00 $3,500.00 $6.92 $3,460.00 $6.92 $3,460.00 $8.55 $4,275.00 11g 4" NON-METALLIC CONDUIT LF 300 $10•40 $3,120.00 $12.00 $3,600.00 $12.00 $3,600.00 $11.76 $3,528.00 $11.76 $3,528.00 $14.55 $4,365.00 TOTALPART4-STREETIMPROVEMENTS $1,326,505.90 $1,356,542.90 $1,330,990.40 $1,518,263.75 $1,722,023.51 $1,682,847.38 � � TOTALPARTI-SANITARYSEWER � $139,471.00 $187,180.00 $167,689.00 $156,513.80 . $100,820.79 $148,256.40 ' TOTAL PART 2 - WATER MAIN� $422,212.60 $395,200.00 $517,635.30 � $428,594.40 $413,276.04 $412,837.93 � TOTALPART3-STORMSEWER $343,755.00 $412,130.00 $403,481.00 $364,701.90 $334,275.77 $451,176.96 TOTALPART4-STREET $1,326,505.90 . $1,356,542.90 � $1,330,990.40 � $1,518,26375 $1,722,023.51 $1,682,847.38 � TOTALCONSTRUCTION E2,237,944.50 $2,351,052.90 . � $2,419,79570 $2.468,073.85 $2,570,396.11 . $2,695,118.67 Company LaTOUr Construction, Inc Ryan ConUacting, Co. Friedges Contrecting, LLC stone Construction Company Inc. Enebak Construction Company Landwehr Construction, Inc. Address: 2134 County Road 8 P.O. Box 246, 26480 France Ave - 21980 Kenrick Ave 83 Highway 65 North, P.O. Box 218 P.O. Box 458 . P.O. 8ox 1086 � � Maple Lake, MN 55358 Elko, MN 55020 Lakeville, MN 55057 � Nora, MN 55051 Northfield, MN 55057 St Cloud, MN 56302 . Phone: � 320-9635993 952-894-3200 952-469-2121 320-679-4140 612-3331307 320-252-1494 - Signed By: Joseph LaTOUr Thomas J. Ryan Douglas L. Ims Stephen Johnson James H. Dockstader Michael Lohrman � Title: Vice President President General Manager President � VP Operations President BidSecurity: 5.00% . 5.00% . 5.00% � 5.00% � 5.00% 5.00% � Addenda Acknowledged: � Yes � Yes Yes Yes Yes Yes � 2011-107 Bid Tab.xls � � BT-5 � � � � ��. '-�. R. 2 ��. �� .�� . City of App�e Val�ey MEMO Public Works Department TO: Mayor, City Council and City Administrator FROM: Colin G. Manson, City Engineer DATE: June 14; 2012 SUBJECT: RESOLUTION AWARDING CONTRACT FOR AV PROJECT 2012-102, 2012 MICRO SURFACING During the advertisement period for the 2012 Micro Surfacing project, six companies were solicited to submit bids. On May 31, 2012, one bid was received for the work. The bid was submitted by Astech Corp. in the amount of $731,400.94. The bid compares favorably to the engineer's estimate of $970,000. The following budget has been developed for the project based on the low bid received: Ex e p nses: Construction $ 731,400.00 Admin, Engineering, Legal, Testing $ 60,000.00 Construction Contingency $ 30,000.00 Total Est. Cost $ 821,400.00 Fundin�: Road Improvement Fund $ 821,400.00 Total Est. Funding $ 821,400.00 Should City Council award the contract, it is anticipated work will begin in late July. Work is specified to be complete by August 24, 2012. Recommended Action: Adopt Resolution Awarding the Cantract with Astech Corp. for AV Project 2012-102, 2012 Micro Surfacing, in the Amount of $731,400.94. CGM:cIg Attachment c: Todd Blomstrom EXTRACT OF MINUTES OF MEETING OF THE CITY COUNCIL OF THE CITY OF APPLE VALLEY DAKOTA COUNTY, MINNESOTA A regular meeting of the City Council of the City of Apple Valley, Dakota County, Minnesota, was duly held at the Municipal Center, 7100 West 147th Street, on the 14th day of June, 2012, at 7:00 o'clock p.m. The following members were present: and the following were absent: Member introduced the following resolution and moved its adoption: � * � � * * � * * � * * � * * * � � � =x CITY OF APPLE VALLEY RESOLUTION NO. 2012- A RESOLUTION AWARDING CONTRACT FOR AV PROJECT 2012-102 2012 MICRO SURFACING WHEREAS, pursuant to an advertisement for bids for improvements identified as AV Project 2012-102, bids were received, opened and tabulated according to law and the following bids were received complying with the advertisement: (Tabulation attached as Exhibit A), and; WHEREAS, it appears Astech Corp., is the lowest responsible bidder. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Apple Valley, Dakota County, Minnesota: � 1. That the Mayor and Clerk are hereby authorized and directed to enter into a contract with Astech Corp., for its base bid in the amount of $731,400.94 for the completion of AV Project 2012-102 according to the plans and specifications heretofore approved by the Council and on file in the office of the City Clerk. 2. The City Clerk is hereby authorized and directed to return to all bidders the deposits made with their bids, except that the deposits of the successful bidder and the next lowest bidder shall be retained until a contract has been signed. 3. Estimated project funding shall be provided as follows: Road Improvement Fund $ 821,400.00 Total Est. Funding $ 821,400.00 ADOPTED this 14th day of June, 2012. Mary Hamann-Roland, Mayor ATTEST: Pamela J. Gackstetter, City Clerk =x * � * � :� � * * * �: � * * �x * � � * * The motion for the adoption of the foregoing resolution was duly seconded by Member and upon vote being taken thereon, the following voted in favor: and the following voted against the same: WHEREUPON, said resolution was declared duly passed and adopted and was signed by the Mayor and her signature attested by the City Clerk. 2 EXHIBIT A Project Name: 2012 Micro Surfacing � 1 hereby certify that this is an exact � City Project No.: 2011-102 � rep du o1 bids rec ived. AppValley Bid Opening: ThursdaV, May 31, 2012, at 10 A.M., C.D.S.T. Owner. CRy of Apple Valley /i[,� �� . olin G. Manson, - � Registration No. 44194 � Bidder No. 1 BID TABULATION La7our Construction, Inc. � . � Item Item Units Qt Unit Price Total � 1 MOBILIZATION LS 1 $50,000.00 $SQ000.00 . � . � 2 TRAFFIC CONTROL LS 1 $3Q000.00 $30,000.00 � . . � � 3 REMOVE BITUMINOUS PAVEMENT . SY 410 $425 $1,742.50 . � � � 4 REMOVE CONCETE CURB AND GUTTER LF 250 $13.50 53;375.00 � 5 REMOVE VALLEY GUTTER � SF 315 $7.00 52.205.00 � REMOVE PAVEMENT MARKINGS - 4" � � g LINES LF 99000 $0.40 $39,600.00 � ' , � REMOVE PAVEMENT MARKINGS - 12' � � � - 7 LINES � � �LF 4000 $135 $5,400.00 REMOVE PAVEMENT MARKINGS - 24" � � , 8 LINES � LF 1500 $2.00 � $3,000.00 � � � g � REMOVE ZEBRA CROSSWALK SF 2600 � $135 33,510.00 � 10 REMOVE STAMPED CROSSWALK SF 2300 $2.00 $4,600.00 � � REMOVEPAVEMENT MESSAGE-LEFT �� - � � � ARROW AND RIGHT ARROW - LEFT � � � 11 THROUGH ARROW EA 97 $50.00 $4,850.00 � � . . 12 ADJUST MANHOLE OR CATCH BASIN EA 2 $660.00 $1,320.00 � � � REMOVE�EX MH RINGS 8 INSTALL HDPE - �3 MHRINGS EA 4 $700.00 $2,800.00 . � . REMOVE CB RWGS & INSTALL HDPE CB � � � 14 RINGS EA � 7 $775.00 $5,425.00 . BITUMINOUS STREET PATCH TYPE � � �5 SPWEB240B � TN 115� $140.00 $16,100.00 . � 16 CONCRETE CURB AND GUTTER LF 250 $23.00 $5,750.00 � � �7 7" THICK CONCRETE VALLEY GUTTER SF 315 $10.00 $3,150.00 � BITUMINOUS MATERIAL FOR MICRO- � 18 SURFACING GAL 72,200 $3.40 � 5245,480.00 MIRCO-SURFACING SURFACE COUR3E �g (MNDOT TYPE 2 AGGREGATE) TN 2100 .$123.00 $258,300.00 � MIRCO-SURFACING RUT FILL (MNDOT . � p0 TYPE3AGGREGATE) TN . 95 $140.00 513,300.00 _ p� FOG SEAL GAL 950 $4.00 $3,800.00 . � . � 22 24" SOLID LINE, YELLOW LATEX LF 47 $235 $110.45 � - 23 4" BROKEN LINE, WHITE LATEX LF 1020 $020 $204.00 p4 4" BROKEN LINE, YELLOW LATEX LF 1990 $0.21 $417.90 � 25 4" SOLID LINE, YELLOW LATEX LF 9134 $0.21 $1,918.14 26 4" DOUBLE SOLID LINE, YELLOW LATEX LF 13215 $0.40 �5,286.00 z7� 4" SOLID LINE, WHITE LATEX . LF 31705 $0.20 86,341.00 � � � - Zg 12" SOLID LINE, WHITE LATEX LF 2433 $235 $5,7U.55 2g 24" SOLID LINE, WHITE LATEX LF 552 $2J0 $1,490.40 � " PAVEMENT MESSAGE - RIGHT ARROW - � � 30 WHITE LATEX EA 8 $66.00 $528.00 . � PAVEMENT MESSAGE - LEFT ARROW - � 31 WHITE LATEX EA 65 $66.00 $4.290A0 PAVEMENT MESSAGE - RIGHT THROUGH � 32 ARROW - WHITE LATEX EA 4 $93.00 $372.00 � � � � . PAVEMENT MESSAGE - LEFT THROUGH - 33 ARROW - WHITE LATEX EA 1 $93.00 593.00 - � . PAVMENT MESSAGE-THROUGHARROW � 34 - WHITE LATEX EA 1 $70.00 $70.00 � 35 INSTALL SIGN (TYPE C) SF 57 $15.00 $855.00 . TOTAL $731,400.94 � - Company ASTECH Corp. � Address: P.O. Box 1025 2012-102 Bid Tab.xls BT-1 � Bidder No. 1 BID TABULATION LaTour Construction, Inc. Item Item Units Qty Unit Price Total � SL Cloud, MN 56302 � � � � . . � � Phone: . 320-363-8500 � � Signed By: Dale R. Strandberg � � � Tifle: Vice President � � � � � � � � BidSecurity: � 5.00% . - ' � Addenda Acknowledged: None � 2012-102 Bid Tabxls � BT4 � �gi� � ��i �. l�� L �� City of App�e Valley MEMO Public Works Department TO: Mayor, City Council and City Administrator FROM: Michael Glewwe, Public Works Superintendent � ` J DATE: June 14, 2012 SUBJECT: APPROVAL OF CHANGE ORDER 1 AND F1NAL PAYMENT FOR AV PROJECT 2012-121, 2012 SEALING OF DECORATIVE CONCRETE AND BLOCK RETAINING WALLS Attached, please find Change Order 1 for AV Project 2012-121, 2012 Sealing of Decorative Concrete and Block Retaining Walls. The change order accounts for additional cost due to increasing sealant quantities on the Ring Route sidewalk. Additionally, staff is recommending approval of final payment for the project. This work was done in various locations in the City in order to protect the concrete and blocks from salt and water damage. The improvements have been inspected and found to be acceptable for final payment. This final payment of $2,113.33 will close the contract with Budget Sandblasting & Painting, Inc., andxesults in a total cost of $8,453.33 or 33% above the contract amount. Recommended Action: Approve Change Order No. 1 and Acceptance and Final Payrnent on Agreement with Budget Sandblasting & Painting, Inc., for AV Project 2012-121, 2012 Sealing of Decorative Sidewalk and Block Retaining Walls. MG:dsm Attachments c: Todd Blomstrom �0� +� sg Owner: City of Apple Valley, 7100 W. 147th St., Appie Valle , MN 55124 Date May 22, 2012 �� g�. City of Ap�3�� Contractor: Budget Sandblasting & Painting, Inc. 6202 Concord Blvd. Inver Grove Hts., MN 55076 �� Phone: 651-450-7992 CHANGE ORDER NO. 1 2012 SEALING OF DEC4RATIVE CONCRETE AND BLOCK RETAINING WALLS AV PROJECT 2012-121 The following items are deemed to be necessary to complete the project according to the intended design. In accordance with the terms of this Contract, the Contractor is hereby authorized and instructed to perform the work as altered by the following provisions. Description of Work Additional cost is due to increasing quantities on Ring Route sidewalk. Contract Unit Total No. Item Unit Quantity Price Amount 1 Applyingadditional55gallonbarrel EA 1.00 $2,11333 $2,11333 TOTAL CHANGE ORDER NO. 1 $2,113.33 AV Project2012-121 COlxls Approved by Contractor: Approved by Owner: BUDGET SANDBLASTING & PAINTING, INC CITY OF APPLE VALLEY Mary $amann-Roland, Mayar Date Date Approved by Public Works CITY OF APPLE VALLEY Attest: Pamela 7. Gackstetter, City Clerk � Date $=�9�.r�- Date c: Contractor Project File AV Proiect2012-121 COlxls � PAYMENT VOUCHER #2 2012 Sealing of Decorative Concrete and Block Retaining Walls AV Project 2012-121 For Period Ending: May 22, 2012 OWNER: CONTRACTOR: City of Apple Valley Budget Sandblasting & Painting, Inc. 7100 147th Street West 6202 Concorde Blvd. Apple Valley, MN 55124 Inver Grove Hts., MN 55076 Phone: 651-450-7992 Amount of Contract: $6,340.00 Total Amount $6,340.00 Contract Value Amount of Work Less Net Account Per Agreement Certified Less Previous Amount Number June 14 20�2 To Date Retained Payments Due Streets Division 1600-6249 $6 ,340.00 $8,453.33 $0.00 $6,340.00 $2,113.33 Subtotal $6,340.00 $8,453.33 $2,113.33 Totaf 6 340.00 8 453.33 2 113.33 Date: - o-/� �'/ � Public Works Super te c�ent - Streets Date: D�o • 0 8•/ Z a� Public orks Director CITY OF APPLE VALLEY, MINNESOTA APPLICATION FOR PAYMENT DATE: �v FOR PERIOD: PROJECT: % l� �� From� To / � CONTRACTOR:,�viY,� r� ' ��'i ' REQUEST FOR PAYMENT NO. o� ADDRESS: ' ,�- � , p �e�' �ll�P ,�l�'�`�r�J-�/ J�4�� SU M MARY: 1. Original Contract Amount $ .��,. �� 2. Change Order - ADDITION $ /� 3.� 3. Change Order - DEDUCTION $ 4. Revised Contract Amount $ � � -� 5. Total Completed and Stored to Date $ 6. Less Retainage % $ 7. Total Earned Less Retainage $ 8. Less Amount Paid Previously $ p� 9. AMOUNT DUE THIS CURRENT REQUEST $ a�� //�. 3 - 3 The undersigned Contractor certifies that to the best of his knowledge, information and belief, the work covered by this application for payment has been completed in accordance with the contract documents, that all amounts have been paid by him for work for which previous payments were received from the City and that current payment shown herein is now due. Contractor: v��r.�'4 G rn By: , Recommended for Payment By� ATTACH ITEMIZED INVOICE Title: Date: '�� ' Date: Ma 21 2012 Invoice # � ; �; BUDGET S�4NDBLAS�'ING � PAINTI[VG, INC. � £y ' _ -�� " Steven Barry (Rresident) ,; ;� � r.�;�� - 6202 Concord Bivd, �.: �"° Inver Grove Heights, MN 55076 . � C51-450-7992 t?ffice 651-450-8286 �ax Email: ��-�aC�?�sn.��n Website: wvrew.bsp-m�.com o: Location: City of Ap�le Vallev - 7100 147 Street W pple Vallev. MN 55124 C/O: Proiect 2012-121 Mike Glewwe QUANTITY : DESCRIPTION PRICE Regarding: Sealing of Decorative Concrete and Block Retaining Wails. Cost: ' Change Order (Apply additional 55 gallons) 2,113.33 ,S'�. Total Amount Due ,� �'/3 Terms: Net ten days THANK YOU FQR Y(}UR �USlNESS! ... �. -�- .... :::•: ... • City of App�e MEMO Va��ey Parks and Recreation Department 7100 - 147�' Street West Apple Valley, MN 55124 952 /953-2300 TO: Mayor, City Council and City Administrator FROM: Randy Johnson, Director of Parks and Recreation Dept. DATE: June 8, 2012 SUBJECT: Final Payment Application for Valleywood Clubhouse Cast-In-Place Concrete Project Attached please find a request for final payment from Thompson Construction of Princeton, Inc., on the Valleywood Clubhouse Contract #0330 — Cast-In-Place Concrete project. The work has been completed and found acceptable. The request has been reviewed and recommended for approval by Project Manager Bossardt Corporation, CHN Architects, and Staff. All required paperwork has been submitted to the City Clerk's office. Valleywood Clubhouse Contract #0330 — Cast-In-Place Concrete Original Contract Amount $63,986.00 Change Orders $ 1,155.00 Revised Contract Amount $65,141.00 Less Previous Payrnents $61,883.95 Final Pay Application $ 3,257.05 Please advise if you need more details. REQUESTED ACTION: Motion accepting Valleywood Clubhouse Contract #0330 — Cast-In-Place Concrete with Thompson Construction of Princeton, Inc., as complete and authorizing final payment in the amount of $3,257.05. H: Vlywood Clubhouse:Pay Applications: Thompson Construction-Fznal.doc ,,�' � � .�, � • �,, ,�� .,�� ` . � �;. APPUCATION AND CERTIFICATION FOR PAYMENT .�ADOCUMElv'1'G�o2 PAGEONEOF 1 PAGES 2 TO: PROJECT: Valleywood Clubhouse APPLICATION NO: 2—�� • ' tribution to: The City of Apple Valley A p pte Valle y MN X o W N E R 7100 West 147th Street QX ARCHTTECT Apple Valley MN 55124 PERIOD TO: 5/1/2012 QCONTRACTOR FROM SUBCONTRACTOR: VIA ARCHITECT: � Thomps[►n Construction of Princeton Inc. Q 10595 90th Street PROJECT NOS: 1104 Princeton MN 55371 CONTRACT FOR: Bossardt Corporation/ Construction Manager CONTRACT DATE 10/13/20ll CONTRACTOR'S APPLICATION FOR PAYMENT TheundersignedContractorcertifiesthattothebestoftheContractor'slmowledge, Application is made for payment, as shown below, in connec6on with the Contract. information and lheli�f the Work covered by this Application for Payment has been Continuation Sheet, AIA Document G703, is attached. completed in accordance with t6e Contract Documents, that all amounts ha've been paid by the Contractor for Work for which przvious Certificates for Payment were issued and payments received from the Owner, and that current payment shown herein is now due. 1. ORIGINAL CONTRACT SUM $ 63,986.00 2. Net change by Change Orders S 1,155.00 CONTI2ACTOR: Thompson Construction of Princetou, Inc. 3. CONTRACT SUM TO DATE (Line 1 f 2) S 65,141.00 4. TOTAL COMPLETED & STORED TO S 65,141.00 DATE (Column G on G703) By: ��,^ � , Date: 5/1/12 5. RETAINAGE: Matthew Thompson-�resi ent a. % of Completed Work S State of: Minnesota County of: Sherburne DlANE L TFIOMPSON (Column D+ E on G703) Subscribed and sw rn W before me this lst Day of May, 2012 b. 10 % of Stored Material a �0.00 Notary Public: �f �� C -��A (Column F on G703) My Commis ion expv�esK'� �(�`�� S ��] Total Retainage (Lines Sa+ Sb or �� y�,� Total in Column I ofG703) $ o.00 ARCHI C�' C ICA� F A N� 6. TOTAL EARNED LESS RETAINAGE $ 65,141.00 In accordance with the Contract Documents, based on on-site observations and the data (Line 4 L,ess Line 5 Total) comprising the application, the Architect certifies to the Owner that to the best of the 7. LESS PREVIOUS CERTIFICATES �'OR Architect's lrnowledge, information and belief the Work has progressed as indicated, PAYMENT (Line 6 from prior Certificate) $ 61,883.95 the quality of the Work is in accordance with the Contract Documents, and the Contractor 8. CURRENT PAYMENT DUE $ ::::::::::::::::::3;; ::;Lt �:; is enritled to payment ofthe AMOiJNT CERTIFIED. 9. BALANCE TO FINISH, INCLUDING RETAINAGE $ 0.00 (Line 3 less Line 6) AMOUNT CERTIFIED . .. . , , . , , . , $ CHANGE ORDER SUMMARY ADDITIONS DEDUCTIONS (Attach explanation :famount certifeed differs from the amount app[ied. Initial a/l figures on this Total changes approved Application and onthe ContinuaKon Sheet that are changed to conform with the amount cerh'feed.) in vious months Owner $1,155.00 ARCHITECT: Total a ved this Month By: Date: TOTALS $1,155.00 $0.00 This Certificate is not negotiable. The AMOIJNT CERTIFIED is payable only to the � NET CHANGES by Chan e Order 51,155.00 Contractor named herein. Issuance, payment and acceptance ofpayment are without prejudice to any ri. of the Owner or Contractor under this Contract. ___ ___. ._- .- :-• -•.w: �; AIA DOCUMENT G702 • APPLICATfON AND CERTiFICATION FOR PAVMENT • 1992 EDIT�ON • AIA� � m 1992 THE AMERICAN INSTITUTE OF ARCHI � YORK AV � � � Users may obtain vaNdation of this document by requesting a completed AIA Document D401 - Certification of Docur�r��tFienticity from the L' e . z000s-ssaz 0 �P�c�v� 1�n� �.57. -�. ,�p�pro�e� By � �� r,Z _ ��s _ ...� : CONTINUATION SHEET ArADOCVMENrG�o3 PA�E oF PAGES � AIA Document G702, APPLICATION AND CERTIFICATION FOR PAYMENT, containing APPLICATION NO: ` 2 Contractor's signed certification is attached. Thompson Construction of Princeton Inc. APPLICATION DATE: 5/1I2012 In tabulations below, amounts are stated to the neazest dollar. PERIOD TO: 5/1 /2012 Use Column I on Contracts where variable retainage for line items may apply. ARCHITECT'S PROJECT NO: Valleymood Clubhouse A le Valle MN 'A B C D E F G H I TI'EM DESCRIPTION OF WORK SCHED[JI,ED WORK COMPLETED MATERIALS TOTAL % BALANCE RETAINAGE N0. VALUE FROM PREVIOUS THIS PERIOD PRESENTLY COMPLETED (G + C) TO FINISH (IF VARL4BLE APPLICATION STORED AND STORED (C - G) RATE) (D + E) (NOT IN TO DATE D OR E) (D+E+F) 0001 Bond $1,131.00 $1,131.00 $1,131.00 100.00% Foundations 0002 Material $37,023.00 $37,023.00 $37,023.00 100.00°�0 0003 Labor $25,832.00 $25,832.00 $25,832.00 100.00%0 0004 CO#1 $0.00 $0.00 005 CO#2 $1,155.00 $1,155.00 $1,155.00 100.00% Retainage $3,257.05 $3,257.05 GRAND TOTALS $65,141.00 $65,141.00 $3,257.05 $0.00 $68,398.05 105.00% $0.00 $0.00 AIA DOCUMENt G703 ` CONTINUATION SHEET FOR G702 • 1992 EDtTION • AIA� • 01992 THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGtON o.c. z000s-szsz G703-1992 PERSONNEL REPORT 1 • � June 14, 2012 EMPLOYMENT ACTIONS The following employment actions are recommended for City Council approval: First Last Pay Pay Pay Date Name Name Action Position Status Dept. Rate Type Scale (on or about) Dayton Alba New Hire Lifeguard Seasonal 1940 $ 9.03 Hourly C 5/15/2012 Water Safety David Altnow Rehire Instructor Seasonal 1930 $ 10.40 Hourly D 6/15/2012 John Barrington New Hire Lifeguard Seasonal 1940 $ 9.03 Hourly C 6/15/2012 Christina Barth New Hire Program Leader Seasonal 1800 $ 8.64 Hourly B 6/15/2012 Accept Barbara Beane Resignation Receptionist Full-time 1021 6/19/2012 Danny Beckman New Hire Lifeguard Seasonal 1940 $ 9.03 Hourly C 6/15/2012 Jake Biehn New Hire Lifeguard Seasonal 1930 $ 9.03 Hourly C 6/15/2012 Grant Boyer New Hire Lifeguard Seasonal 1940 $ 9.03 Hourly C 6/15/2012 Water Safety Jeremy Caplin Rehire Instructor Seasonal 1930 $ 10.76 Hourly D 5/23/2012 Danielle Dexter Rehire Lifeguard Seasonal 1940 $ 9.38 Hourly C S/23/2012 Roma Dickey New Hire Lifeguard Seasonal 1940 $ 9.03 Hourly C 6/15/2012 Kathryn Eaton New Hire Lifeguard Seasonal 1940 $ 9.03 Hourly C 6/15/2012 Abigail Gibson New Hire Lifeguard Seasonal 1940 $ 9.03 Hourly C 6/15/2012 Megan Hedtke New Hire Lifeguard Seasonal 1940 $ 9.03 Hourly G 6/15/2012 Grant Hermes Rehire Concessions Manager Seasonal 1940 $ 10.61 Hourly E 5/23/2012 Alyssa Johns New Hire Lifeguard Seasonal 1940 $ 9.03 Hourly C 6/21/1902 Alex Kalal New Hire Maintenance I Seasonal 1710 $ 10.20 Mourly SM1 5/30/2012 Reed Luczak New Hire Lifeguard Seasonal 1940 $ 9.03 Hourly C 6/15/2012 Ryan Luczak New Hire Lifeguard Seasonal 1940 $ 9.03 Hourly C 6/15/2012 Brianne Marschall New Hire Program Leader Seasonal 1800 $ 8.67 Hourly B 6/15/2012 City of Apple Valley Human Resources Page 1 of 2 PERSONNEL REPORT June 14, 2012 First Last Pay Pay Pay Date Name Name Action Position Status Dept. Rate Type Scale (on or about) Evan Mattsen Rehire Maintenance l Seasonal 1710 $ 1Q.47 Hourly SM1 6/15/2012 Kristen McGuiggan Rehire Program Leader Seasonal 1800 $ 8.93 Hourly B 6/6/2012 Water Safety Kollin Michaels Rehire Instructor Seasonal 1930 $ 9.89 Hourly D 6/6/2012 Sophia Mitchell New Hire Lifeguard Seasonal 1940 $ 9.03 Hourly C 6/15/2012 Water Safety Jordan Montgomery New Hire Instructor Seasonal 1940 $ 9.64 Hourly D 6/15/2012 Nicholas Powers Rehire Maintenance I Seasonai 1710 $ 10.20 Hourly SM1 5/21/2012 Janice Reiner Rehire Clerical Assistant Seasonal 1015 $ 15.00 Hourly H 6/15/2012 Brock Rutzen New Hire Lifeguard Seasonal 1940 $ 9.03 Hourly C 6/15/2012 Accept 1Vicole Stolhanske Resignation Liquor Clerk Part-time 5020 5/26/2012 Madeline Swain New Hire Lifeguard Seasonal 1940 $ 9.03 Hourly C 5/15/2012 Sean Tompkins Rehire Maintenance I Seasonal 1600 $ 11.13 Hourly SM1 6/11/2012 Melanie Wagner Rehire Lifeguard Seasonal 1930 $ 9.38 Hourly C 5/23/2012 Toni Wright Rehire lifeguard Seasonal 1940 $ 9.38 Hourly C 6/15/2012 Alexandra Wylie Rehire Attendant Seasonal 1940 $ 9.08 Hourly A 5/23/2012 City of Apple Valley Human Resources Page 2 of 2 _[,� PERSONNEL REPORT �►ODENDUIM June 14, 2012 Addendum EMPLOYMENT ACTIONS The following emplayment actions are recommended for City Council approval: First Last Pay Pay Pay Date Name Name Action Position Status Dept. Rate 7ype Scale (on or about) Liquor Store Brett McCal New Hire Supervisor Part-time 5050 $ 14.35 Hourly V 6/15/2012 City of Apple Valley Human Resources Page 1 of 1 p�� • " •��gi �f�� ffis� MY�.. City of Apple Vasley MEMO Administration TO: Mayor and City Council Members FROM: Tom Lawell, City Administr� DATE: June 11, 2012 SUBJECT: Special City Council Informal Workshop Meeting — June 18, 2012 DISCUSSION As you are aware, we are currently in the process of recruiting and hiring a new Police Chief. As part of that process, it would be helpful to conduct a special City Council informal workshop session to review our progress to date and narrow the field down to our semi-finalists. To allow adequate time for discussion, staff would suggest that we meet on Monday, June 18� at 3:00 p.m. at the Apple Valley Municipal Center. ACTION REQUIRED � Should the Council so desire, a motion should be made to formally set a Special City Council Informal Workshop meeting for June 18, 2012 beginning at 3:00 p.m. at the Apple Valley Municipal Center. � - s.�. � ,.. .... #i��f��t Clt�/ Of �� MEMO Parks and Recreation Department 7100 - 147�' Street West Apple Valley, MN 55124 952 / 953-2300 TO: Mayor, City Council, and City Administrator FROM: Scott Breuer, Recreation Superintendent �,,� DATE: June 7, 2012 > SUBJECT: RESOLUTION PROCLAIMING APPLE VALLEY FREEDOM DAYS CELEBRATION Attached please find a resolution proclaiming the 46 Annual Apple Valley Freedom Days Celebration. The 2012 Freedom Days events will take place June 29-July 4. Apple Valley Freedom Days has traditionally offered activities to people of all ages and interests and this year is no different. From the popular Dancin' & Cruisin' through the spectacular Fireworks Show, there is a wide variety of activities and events taking place in Apple Valley. Thank you for your continued support. Requested Action Adopt the resolution proclaiming the 46�' Annual Apple Valley `Freedom Days Celebration. cc: Randy Johnson, Director of Parks and Recreation Attachment r � � CITY OF APPLE� VALLEY � � RESOLUTION NO. 2012- A RESOLUTION PROCLAIMING APPLE VALLEY FREEDOM DAYS CELEBRATION WHEREAS, the City of Apple Valley is proud to be a part of this great Nation and its heritage; and WHEREAS, this Nation became Independent on July 4, 1776, and Apple Valley wishes to honor this momentous occasion with a community-wide celebration; and WHEREAS, the Apple Valley residents, civic organizations, business community, Parks and Recreation Department, and Apple Valley Freedom Days Committee have joined together to develop a fantastic community celebration for this the 46th year. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Apple Valley that June 29, 2012 through July 4, 2012, is hereby proclaimed to be: "The 46th Annual Apple Valley Freedom Days Celebration" and this Council encourages the citizens to support and participate in the celebration. ADOPTED this 14th day of June, 2012. Mary Hamann-Roland, Mayor ATTEST: Pamela Gackstetter, City Clerk APPLE VALLEY FREEDOM DAYS JUNE 29-JULY 4, 2012 Come and celebrate Apple Valley's 46th Annual F�eedom Days! Date & Time Event Location Notes Friday, June 29 Dancin' & Cruisin' Bogart's Place -4:30pm: Car Cruise begins at 6:00 p.m.-Midnight 14917 Garrett Avenue Apple Valley American Legion Headliner: -6 to 9pm: Car Show The Johnny Holm Band -6 to l Opm: Vendor Fair -6 to 8pm: "DJ Sounds" -8:30 to midni ht: Johnn Holm Saturday, June 30 Junior's Tennis Tournament Apple Valley Sports Arena For players in grades 1— 12 9:00 a.m.-Com letion 14450 Ha es Road Saturday, June 30 Mixed-Up Doubles Apple Valley Sports Arena For players in High School and 5:00 .m.-Com letion Tennis Tournament 14450 Ha es Road Colle e Saturday, June 30 Carnival Johnny Cake Ridge Park-East Carnival Rides 5:00 p.m.-10:00 p.m. 5800 140` Street West Carnival Games Near intersection of 142 St SL Johnn Cake Rid e Road Sunday, July 1 Music In the Park featuring Bob & Johnny Cake Ridge Park-East This all-ages family fun show 7:00 p.m.-8:30 p.m. the Beachcombers (Soccer Stadium) features some SOs classic rock & Near intersection of 142 St & roll, 60s surfing hits, along with Johnny Cake Ridge Road 70s and 80s popular favorites! Brin a chair or blanket to sit on. Sunday, July 1 Carnival Johnny Cake Ridge Park-East Carnival Rides 1:00 p.m.-5:00 p.m. & 5800 140'�' Street West Carnival Games 6:00 p.m.-10:00 p.m. Near intersection of 142 St & Johnn Cake Rid e Road Monday, July 2 Carnival Johnny Cake Ridge Park-East Carnival Rides 6:00 p.m.-10:00 p.m. 5800 140 Street West Carnival Games Near intersection of 142" St & Johnn Cake Rid e Road Monday, July 2 Kids Fishing Derby Lac Lavon Park Kids age 5-11 are invited to 6:00 p.m.-8:00 p.m. 15607 Highview Drive showcase their fishing skills and j� � catch the "big one". Prizes will be II1 . awarded in various categories. � D Bring your fishing pole and tackle. m� Bait will be rovided. � Tuesday, July 3 Carnival Johnny Cake Ridge Park-East Carnival Rides 5:00 p.m.-10:00 p.m. 5800 140 Street West Carnival Games Near intersection of 142 St t4L Johnn Cake Ridge Road Tuesday, July 3 Cub Foods Family Fun Night Johnny Cake Ridge Park-East -Petting Zoo 5:00 p.m.-9:00 p.m. 5800 140�' Street West -Pony Rides Area surrounding adult softball -Kid's DJ/Games/Parade complex -Apple Valley Police & Fire -Inflatable Jumpers -Food Vendors -Helico ter Landing/Take-off Wednesday, July 4 2& 5 Mile Fun Run Hayes Park Call Parks & Recreation at 6:45 a.m. Race-day Registration 14603 Hayes Road 952-953-2300 for 8:00 a.m. Race Begins t/z Pint'/2 Mile (kids) Pre-Registration Information. Wednesday, July 4 Parade Starting at Fireside Drive, North One of the state's largest and most 1:00 p.m. on Pennock Avenue, West on admired parades. The parade 145` Street, begins near Health Partners and North on Ha es Road ends at A le Valle Hi h School. Wednesday, July 4 American Legion Post Events American Legion Post 1776 Chicken Dinner & Activities 14521 Granada Dr. (Information: 952-431-1776) Wednesday, July 4 Carnival Johnny Cake Ridge Park-East Carnival Rides 11:00 a.m.-10:00 p.m. 5800 140 Street West Carnival Games Near intersection of 142 St cYL Johnny Cake Rid e Road Wednesday, July 4 Pre-Firewarks Celebration Johnny Cake Ridge Park-East "DJ Sounds" and food vendors 6:00-10:00 p.m. 5800 140"' Street West will be at Johnny Cake Ridge Park Area surrounding adult softball and get you all primed for com lex and soccer fields fireworks. Wednesday, July 4 Fireworks Show Johnny Cake Ridge Park-East Rain Date: July 5, 10:00 p.m. 10:00 p.m. Please be aware that fees will apply to some events & activities �./'�.� ... .... ..... :::•. City of AppVa��ey MEMO Parks and Recreation Department 7100 West 147�' Street Apple Valley, MN 55124 952 / 953-2300 TO: Mayor, City Council, and City Administrator FROM: Scott Breuer, Recreation Superintendent DATE: June 7, 2012 � SUBJECT: AUTHORIZATION FOR HELICOPTER LANDING & LIFT-OFF As part of the Freedom Days celebration, Cub Foods Family Fun Night is scheduled at Johnny Cake Ridge Park-East on July 3 from 5:00 p.m. to 9:00 p.m. Similar to previous years, the helicopter will land and lift-off at Johnny Cake Ridge Park-East. Helicopter staff will provide procedural information to the public while the helicopter is on display. Requested Action: Approve helicopter landing and lift-off at Johnny Cake Ridge Park-East between the hours of 5:00 p.m. and 9:00 p.m. during Cub Foods Family Fun Night on Tuesday, July 3, 2012. cc: Randy Johnson, Director of Parks and Recreation 5.�.3 ... .... :� :• ... City of p►pPVa��ey MEMO Parks and Recreation Department 7100 West 147�' Street Apple Valley, MN 55124 952-953-2300 TO: Mayor, City Council, and City Administrator FROM: Scott Breuer, Recreation Superintenden DATE: June 5, 2012 = RE: AGREEMENT WITH RES SPECIALTY PYROTECHNICS, INC. Attached is a copy of an Agreement with RES Specialty Pyrotechnics, Inc., for providing fireworks display services on July 4, 2012, in the total amount of $20,000. The Agreement has also been sent to LMCIT for insurance coverage verification. The fireworks display will be held at Johnny Cake Ridge Park-East. We received show proposals, for a$20,000 show, from three companies: RES Specialty Pyrotechnics, Inc., Pyrotechnic Display, Inc., and Precocious Pyrotechnics, Inc. RES Specialty Pyrotechnics, Inc. was selected due to their superior show proposal and positive past performances in Apple Valley and other communities. An Application for Fireworks/Pyrotechnic Display has been completed by RES Specialty Pyrotechnics, Inc. and the City of Apple Valley Fire Marshal has issued a Permit. The Council is requested to approve the Agreement with RES Specialty Pyrotechnics, Inc., subject to receiving an acceptable certificate of insurance and permit approval by the fire department. The attorney's office has reviewed the Agreement and finds it acceptable. Requested Action: Approve the Agreement with RES Specialty Pyrotechnics, Inc., in the amount of $20,000, to provide fireworks display services on July 4, 2012; subject to receiving an acceptable certificate of insurance. cc: Randy Johnson Attachments RES Specialty Pyratechnics , r � _ � #}: !, . � DISPLAY CONTRACT AGREEMENT THIS AGREEMENT, made and entered into on this 23rd day of May, 2012 befinreen RES Specialty Pyrotechnics, Inc., a Minnesota corporation, hereafter referred to as the SELLER and the City of Apple Valley, a Minnesota municipal corporation, hereafter referred to as the BUYER. IT IS MUTUALLY AGREED BETWEEN THE SELLER AND THE BUYER AS FOLLOWS: Service Provided Outdoor Fireworks Display per bid specifications Date(s) Wednesday, July 4, 2012 Time 10:00 PM (approximately) Duration 23-30 minutes (depending on intensity) Location Scott Highlands/Johnny Cake Ridge Park; Apple Valley, MN Event Sponsor City of Apple Valley OBLIGATIONS OF SELLER: SELLER shall provide all materials, equipment and personnel necessary to perform the above-mentioned display. SELLER is required and will comply with NFPA 1123, Code for Outdoor Display of Fireworks, 2010 edition and NFPA 1126, Pyrotechnics before a Proximate Audience, 2006 edition. SELLER shall provide show liability insurance in the amount of $5,000,000.00 to cover the fireworks display and cleanup. SELLER shall include the BUYER, as co-insured on Certificate of Insurance. SELLER shall provide a copy of the Certificate of Insurance to BUYER. The Certificate of Insurance shall provide that the insurance shall not be modified, cancelled ar fail to be renewed without 30 days' prior written notice to the City of Apple Valley. SELLER shall, during the term of this agreement, maintain workers compensation insurance for those employees involved in the performance of this agreement. OBLIGAT{ONS OF BUYER: BUYER shall provide a suitable location for firing of the fireworks display. BUYER shall provide and cover all costs for security, safety and cleanup at the display site. TERMS AND CONDITIONS: The terms of this agreement shall begin on the day of the signing of this agreement and shall conclude upon the completion of the display. This agreement shall run no longer than one (1) calendar year. However, if before the date of the scheduled performance, the BUYER has not performed fully its obligations under the terms of this agreement or that the financial credit of the BUYER has been impaired, the SELLER may cancel this agreement at any time. In the event the BUYER does not perform fully all of its obligations herein, the SELLER shall have the option to perform or refuse to perform hereunder. In the event either party does not perform all of its 21595 288th S#reet • Belle Plaine, MN 58011 * Phone: 952.873.3113 ■ Fax: 952.873.2855 � j obligations herein, the prevailing party in any litigation shall be entitled to recover reasonable attorneys' fees and reimbursement of court costs. The SELLER shall retain the right to stop or interrupt the display at any time if, in the opinion of the SELLER, conditions have become unsafe. In event of rain on July 4, 2012, the fireworks display shall be rescheduled to July 5, 2012. In the event of rain on July 5, 2012, the fireworks display may be rescheduled at a mutually agreeable date. PAYMENT: Contracted amount: $20,000.00 inclusive of sales tax, if applicable. Contracted amount includes fire watch and permit fee. All payments shall be paid by BUYER to and in the name of RES Specialty Pyrotechnics, Inc. in the form of a company check, certified bank check, money order, or cash. The contracted amount shall be due and payable upon completion of the fireworks display. CANCELLATION: In the event the BUYER cancels this agreement any time during the contract period, the SELLER shall be entitled to and receive 25% of the contracted fee for the remainder of the contract period plus compensation for any pre- and post-production costs incurred for labor or materials that cannot be used for a fireworks display for another customer. NON ASSIGNMENT/INDEMNITY: This agreement may not be assigned by either party. Nonwithstanding any provision herein to the contrary, SELLER shall indemnify and hold BUYER and its City Council members, agents and employees harmless from any and all claims, demands, actions or causes of action, including reasonable attorneys' fees and costs, related to or arising out of any negligent act or omission on the part of SELLER or its agents or employees in the performance of this agreement. THIS AGREEMENT is the whole agreement of the parties' above named. No representation inducement or agreement has been given by one to the other to enter into this agreement other than expressly set forth herein. This agreement shall not be altered, modified, or amended except in writing by a duly authorized officer of each party. IN WITNESS WHEREOF, the parties hereunto set their names on the day and year listed below. CONTRACT VALID WHEN SIGNED BY AUTHORIZED PERSONS. BUYER: SELLER: Erv Haman - RES Specialty Pyrotechnics Title: Title: Director of Business Development Signature: Signature: ��----- s/' ��~�� Date: Date: 5/23/2012 21595 286th 5treet • Belle Plaine, MN 56011 ■ Phone: 952.873.3113 ■ Fax: S52.Si3.2859 s.�.�- �� m �� City of App�e Va��ey MEMo Public Works Department TO: Mayor, City Council, and City Administrator FROM: Michael Glewwe, Public Works Superintendent ��, �, . DATE: June 14, 2012 SUBJECT: RESOLUTION ESTABLISHING PARKING RESTRICTIONS FOR THE FREEDOM DAYS PARADE . The Public Works Department requests the City Council adopt the attached resolution establishing temparary parking restrictions for the July 4 Freedom Days Parade. The requested parking restrictions provide for an unrestricted parade route, staging area and Fun Run Route. Upon adoption of the resolution, the Public Works Department will schedule the installation of the appropriate "No Parking" signs by 11:00 a.m. on July 3 and remove the signs by 4:00 p.m. on July 4. Recommended Action: Adopt a Resolution Establishing Parking Restrictions for the Freedom Day Parade. MG:dsm c: Todd Blomstrom, Public Works Director Attachment - CITY OF APP�,E VALLEY RESOLUTION NO: 2012- A RESOLUTION RESTRICTING PARKING , WHEREAS, the Apple Valley City Code, Section 71.19, authorizes the City Council to restrict parking by ordering the erection of appropriate signs; and WHEREAS, it is necessary to restrict parking on certain City streets to provide for the July 4 Freedom Days Parade route, staging area, and Fun Run Route. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Apple Valley, Dakota County, Minnesota, that a No Parking zone is hereby established on the following streets from 11:00 a.m. on July 3, 2012, to 4:00 p.m. on July 4, 2012: • North side of Jonathan Drive from Mclntosh Drive to Pennock Avenue • Whitney Drive from Cedar Avenue to Harmony Way • Pennock Avenue from Whitney Drive to 153rd Street West • Pennock Avenue from 147th Street West to 145th Street West • 145th Street West from Pennock Avenue to Hayes Road • Hayes Road from 145th Street West to 140th Street West _ • North side of 143rd Street West from Hayes Road to Garden View Drive BE IT FURTHER RESOLVED that appropriate No Parking signs on said street segments are hereby ordered installed. ADOPTED this 14th day of June, 2012. Mary Hamann-Roland, Mayar ATTEST: Pamela J. Gackstetter, City Clerk Y ... `�j , � .... :::.• ... City of AppVa��ey MEMO Parks and Recreation Department 7100 - 147�' Street West Apple Valley, MN 55124 952 / 953-2300 TO: Mayor, City Council and City Administrator FROM: Randy Johnson, Director of Parks and Recreation DATE: May 21, 2012 SUBJECT: Proclaiming "Music in Kelley Park" Attached please find a proclamation for "Music in Kelley Park" at Kelley Park on summer evenings from 6:00 p.m. to 9:00 p.m. June 15, 22 and July 6, 13, 20, 27, and August 3, 2012. The proclamation declares the music series a community event. This event is being coordinated by Apple Valley Arts Foundation. As in the past, there will be various vendors selling food and beverages. Repuested Action Proclaim "Music in Kelley Park" on June 15, 22 and July 6, 13, 20, 27, and August 3, 2012. H:Apple Valley Foundation:Muszc Festival Resolution 12 memo.doc � � d CITY OF APPLE VALLEY PROCLAMATION WHEREAS, the City of Apple Valley is proud to provide cultural experiences far its residents; and WHEREAS, the Apple Valley Arts Foundation has offered to provide a music series on summer evenings June 15, 22 and July 6, 13, 20, 27, and August 3, 2012, from 6:00 p.m. to 9:00 p.m. at Kelley Park; and WHEREAS, the Apple Valley Arts Foundation, residents, civic organizations, business community, and Parks and Recreation Deparhnent have joined together to develop this free music celebration. NOW, THEREFORE BE IT RESOLVED, by the City Council of Apple Valley, Dakota County, Minnesota, that said dates in June, July, and August 2012, are hereby proclaimed to be: "MUSIC IN KELLEY PARK" The Council further declares this music series a community event and encourages the citizens of Apple Valley to support and attend these music events. PROCLAIMED this 14th day of June, 2012. Mary Hamann-Roland, Mayor ATTEST: Pamela J. Gackstetter, City Clerk CITY OF APPLE VALLEY PROCLAMATION WHEREAS, the City of Apple Valley is proud to provide cultural experiences for its residents; and WHEREAS, the Apple Valley Arts Foundation has offered to provide a music series on summer evenings June 15 and 22, July 6, 13, 20 and 27, and August 3, 2012, from 6:00 p.m. to 9:00 p.m. at Kelley Park; and WHEREAS, the Apple Valley Arts Foundation, residents, civic organizations, business community, and Parks and Recreation Department have joined together to develop this free music celebration. NOW, THEREFORE BE IT RESOLVED, by the City Council of Apple Valley, Dakota County, Minnesota, that said dates in June, July, and August 2012, are hereby proclaimed to be: "MUSIC IN KELLEY PARK" The Council further declares this music series a community event and encourages the citizens of Apple Valley to support and attend these music events. PROCLAIMED this 14th day of June, 2012. �� Ma a - and, ayor ATTEST: � GL.�',�P,p�.(� Pamela J. Gacl tetter, City Clerk � � � � � � �� FRI��DAY� � N��1 �� G� : STARTING - � ��o� � � �� KELLEY �� : �� PARK � . �� Grilled Food, Soft Drinks, Wine and Beer by Enjo�� : � � �� www.applevalleyarts.org 3 � , ., � . �I �p s. 5 . : t �.. _ F � F � .. Y b� "`. �x:x .r : :� _" «.,..'�'9v:� . � I�I � . .. � . .. . I� ' � � �'; .,.��`°_ ::� ,� e ; � ° ��- °�; � �?�� ;�<�: ,-��n � �M ; � � �� ` � �� /h�icl�A¢l � ��' � � �- �ON3�OQ �° j �� - � ; -� w� � , � �; "a�-�- � y,��i �� 3�� . � � , � � � � � �� . ��o(� �; �� Bikest! & an Acoustic Guitar Gi�eaway each event night in June & July! Sponsored By Walmart & Best Buy � �^, � � Giveawa on �n � ' � ' �, y June 15th... A le Valle "Music Jn Ketle Park" , SIX Bikes & an Acoustic Guitar! pp ��I.,ke" us on; Fa ebook �� Spdnsoretl by Wings F�nancial, � , www facebook.e4mlMusiclnKe{IeyPark '� �. �; : Vafley Bike & Ski, Best Buy and Sam s C/ub �'��;; Must be present to win. ,� ::� ��P� BIKES AND ACOUSTIC GUITAR GIVEAwAY AT EVERY EVENT! � SE7R�f} BYAI'PLE VALLEYARTS FOUNDATION, WALMART, BEST BIJ��I�Vi , VALLEY BII�AND SKI. EVENTS HOSTED BY: PLATINUM GOLD SILVER BRONZE PATRONS :.'.•.: � � s c,�� a�� •••• Walmart .,. in s [�bank. ,M� .... � 5ave mon y. Live better. �} � � � .� fINANCI�L �, App�e Fle�Pe,rks_ � ..�...�..,� Va��ey DoU��R�MO��A ,��°RpB;,�. moeon A�m��,�,ors /� �', Vall�e y *' � Attive Pazks and Recreation 8 �+��u+�� ., . �!^ � Apple Ualley Arts � � � � �(�e�l .. ..,..,.. Founda6on � � � . � . . � .)(EC U M E M Apple Valley Seasons at Apple Valley Post 1776 S. G ..� • �m�� 1 � 2 �.�� .. . .,. City of App�e Va��ey MEMO Community Development Department TO: Mayor, City Council, City Administrator FROM: Margaret M. Dykes, Associate City Planner M�ETING DATE: June 14, 2012 SUBJECT: Public Hearing on Submittal of Minnesota Investment Fund Application Requesting a Business Subsidy on Behalf of Stream International, Inc. Stream International, Inc., a global provider of sales, customer service and technical support services for Fortune 1000 companies, is seeking to relocate its 40-person headquarters from Wellesley, MA to the Wings Financial building, and create a 300-person call center in the Time Square Shopping Center. Because of the high costs of relocating the corporate headquarters and the creating a call center, Stream International, Inc. ("Stream") requested assistance from the State of Minnesota in 2011. The State has made available up to $1 million through the Minnesota Investment Fund ("MIF") program to assist Stream with the purchase of equipment such as phones, computers, servers, and the like. The MIF program provides grants to help add new warkers and retain high-quality jobs on a statewide basis. The program focuses on industrial, manufacturing, and technology-related industries to increase the local and state tax base and improve economic vitality statewide. Grants are awarded through the Department of Employment and Economic Development ("DEED") to local units of government who provide forgivable loans to assist expanding businesses. All projects must meet minimum criteria for private investment, number of jobs created or retained, and wages paid. Though the funds are for expanding businesses, the local unit of government must submit an application to DEED. The application process requires a public hearing and a finding by the local government that the proposed project has been thoroughly reviewed and no concerns remain. The application requires the business to submit detailed financial information, and to submit to a business credit check of all partners who have at least a 10% ownership interest. City staff has reviewed Stream's 10-K filings for 2009, 2010, and 2011 and find the company financially sound. The City Attorney has completed a credit check of Stream and subsidiaries and has not found any items of concern. The full MIF application for Stream is approximately 200 pages long. Because of this length, only excerpts of the application are attached. The full application is available for review in the Planning Department. Recom�nended Actions: 1. Open the public hearing, receive comments, and close the hearing. 2. If the City Council concurs, staff is recommending approval of the resolution authorizing the Mayor and City Administrator to submit a Minnesota Investment Fund applicat�on to the Department of Employment and Economic Development for the Stream International, Inc. project, and authorize same to sign all necessary documents. CITY OF APPLE VALLEY, MINNESOTA RESOLUTION NO. RESOLUTION AUTHORIZING AN APPLICATION TO THE DEPARTMENT OF EMPLOYMENT AND ECONOMIC DEVELOPMENT FOR MINNESOTA INVESTMENT FUNDS FOR STREAM 1NTERNATIONAL,INC. BE IT RESOLVED that the City of Apple Valley act as the legal sponsor for project(s) contained in the Business and Community Development Application to be submitted on June 14, 2012, and that the Mayor and City Administrator are hereby authorized to apply to the Department of Employrnent and Economic Development for funding of this project on behalf of the City of Apple Valley. BE IT FURTHER RESOLVED that the City of Apple Valley has the legal authority to apply for financial assistance, and the institutional, managerial, and financial capability to ensure adequate construction, operation, maintenance and replacement of the proposed project for its design life. BE IT FURTHER RESOLVED that the City of Apple Valley has not incurred any costs and has not entered into any written agreements to purchase property. BE IT FURTHER RESOLVED that the City of Apple Valley has not violated any Federal, State, or local laws pertaining to fraud, bribery, kickbacks, collusion, conflict of interest or other unlawful or corrupt practice. BE IT FURTHER RESOLVED that upon approval of its application by the state, the City of Apple Valley, may enter into an agreement with the State of Minnesota for the above-referenced project, and that the City of Apple Valley certifies that it will comply with all applicable laws and regulations as stated in all contract agreements and described on the Compliance Section (S-7) of the Business and Community Development Application. BE IT FURTHER RESOLVED that the City of Apple Valley has obtained credit reports and credit information from Stream International, Inc. Upon review by the City of Apple Valley and the City Attorney, no adverse findings or concerns regarding; but not limited to, tax liens, judgments, court actions, and filings with state, federal and other regulatory agencies were identified by date of application. Failure to disclose any such adverse information could result in revocation or other legal action. NOW, THEREFORE BE IT RESOLVED that the Mayor and City Administrator, or their successors in office, are hereby authorized to execute such agreements, and amendments thereto, as are necessary to implement the project on behalf of the applicant. ADOPTED this 14�' day of June, 2012. �RAFT Mary Hamann-Roland, Mayor ATTEST: Pamela J. Gackstetter, City Clerk QRAFT � � �� INITIAL APPLICATION MINNESOTA INVESTMENT FUND ��r�t �# �r�l��a�rrt �� S:�n�r�� v�P��rp�r�t Application shou/d not be submitted without consulting with DEED Loan Officer to discuss project eligibility. DEED will use the information below to better understand the project scope and to determine if the local government, business and project are eligible for Minnesota Investment Fund (MIF) program funds. DEED will make a project eligibility determination within 30 days of receiving a complete application. Supplemental project documents will be required following application approvaL LOCAL UNIT OF GOVERNMENT INFORMATION Applicant Name: City of Apple Valley Contact Name/Title: Margaret Dykes, Associate Plann� Address: �100 W. 147th Street �� Valley State: MN zip: 55407 Telephone: � 953-2569 Email: mdykes@ci.apple-valley.mn.us Does the local government have an EDA? ❑� Yes ❑No 1) Does applicant have a Revolving Loan Fund? � Yes ❑■ No If yes: What is the balance of the DEED revolving loan funds? What is the balance of all other revolving loan funds? What is the amount the local government is committing to this project? 2) Is the applicant up to date with the filing of Minnesota Business Assistance Forms? ❑� Yes ❑ No 3) Does the community have any outstanding TIF issues associated with the property? BUSINESS/PROJECT BACKGROUND INFORMATION Business Name: Stream International IIIC. Contact Name/Title: VI11Cetlt MOttOla Address: 20 William Street city Wellesley State: Mp` zip: 02481 Telephone: � 826-0736 Email: vincent.mottola@s#ream.com 4) Business Type: ❑ Startup ■❑ Expansion S) Will anyjobs be relocated from another Minnesota site orfrom outside of Minnesota? ❑ Yes ONo Ifi yes, which location(s) will the employees be relocated from? 17 YTD in antici ation of HQ relocati 6) Current Number of Full Time Equivalent (FTE) Employees in Minnesota: p ___ � *Full Time Equivalent (FTEJ is based on a total annual hours of 2080 7) Number of new FTE jobs to be created within 2 years in Minnesota: 340 befilVeen HQ and Call Center 8) What is the hourly base wage of the lowest paid job that will be created? � 11.00 1 � ' � �� INITIAL APPUCATION �' MINNESOTA INVESTMENT FUND �p��tt �f ��o�tr�� c��i� [��v�1��t�r�t 9) Will benefits be provided? ❑■ Yes ❑No If yes: What is the hourly value of the benefits? � 2'2� Which benefits will be provided? ❑■ Health ❑� Dental ❑■ Retirement ❑■ Life ❑■ Profit Sharing/Bonuses 10) Does the property or the business have any outstanding local, state or federal tax liabilities? 0 Yes ❑■ No If so, please detail tax and liability: ESTIMATED PROJECT TIMETABLE Task: Estimated Completion Date: Commitment of all funds 6/30/12 Start of construction 6/30/12 Purchase equipment 6/30/12 Complete construction 12/30/12 Begin operations 1/1/13 ESTIMATED SOURCES AND USES OF FUNDS MIF Bank Equity Local Other Total Government Property Acquisition � 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Site Improvement $ 62,500.00 $ 62,500.00 New Construction � 0.00 $ 0.00 $0.00 $0.00 $0.00 $0.00 Renovation of an Existing Building � 283,200.0 $ 0.00 $ 1,300,600.1$ 1,682,500.1 $ 0.00 $ 3,266,300. Purchase of Machinery & Equipment $ 716,800.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 716,800.00 Public Infrastructure $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Other $ 0.00 $ 0.00 $ 265,0OO.00 $ 0.00 $ 0.00 $ 265,0OO.00 Total Project Costs � 1,000,000.1 $ 0.00 $ 1,565,600.1$ 1,745,000.1 $ 0.00 $ 4,310,600.1 2 � �� , IN►T►AL APPLICATION MINNESOTA INVESTMENT FUND � r�t �� m��c��r�� c�� 3�v+��a�n# ATTACNMENTS Attach the following information with the application. Application is not considered complete until all documents have been received. 10) Include a project narrative which answers the following questions: A) Briefly describe the past and present operations of the business and/or events leading up to its creation. Include when business was established and any change in controlling ownership within the last five years. Does the marketing strategy support the planned expansion or start-up? What is the business' competitive position in the marketplace? B) Describe the proposed project for which financing is being requested. Discuss such topics as square footage of the new building, lease or ownership, etc. C) Provide local governments' summary of the projects financial feasibility. For example, summarize other funding sources, the debt/equity ratio and the retained earnings levels. D) Describe the local governments' ability to manage the grant, revolving loan fund, state and local compliance requirements, and the implementation of the project: E) Explain why MIF financing is necessary for this project? 11) Three years historical financial information: Balance sheets, Profit and loss statements and Cash flow statements 12) Business Plan: Company History, Market Opportunity and Competitive Advantage ENVIRONMENTAL 13) Are there any environmental risks associated with the site, building, or the business itself? ❑ Yes Q■ No 14) Will the project result in the loss or diminution of wetlands? ❑ Yes � No If yes, attach a narrative that describes the measures which will be taken to mitigate all functional values of the wetlands that will be lost or diminished. 15) Will the proposed project be located in a flood plain? ❑ Yes ❑� No If yes, is flood insurance required? ❑ Yes ❑ No 16) Have state environmental review requirements been met, if applicable? ❑■ Yes ❑ No 3 �' �� .� INITIAL APPLICATION � MINNESOTA INVESTMENT FUND ��nt s�� yrr�r� �� r�i� ��r��rn�nt BUSINESS OFFICIAL MUST READ AND SIGN THE FOLLOWING INFORMATION DATA PRIVACY ACKNOWLEDGEMENT: fennessen Warning Motice: per MN Statutes 13.04, Subd.2, this data is being requested from you to determine if you are eligible for a loan under the Minnesota Investment Fund program. You are not required to provide the requested information, but failure to do so may result in the department's inability to determine your eligibility for a loan pursuant to the criteria developed under the program's enabling legislation. The data you provide is classified as private or non- public and cannot be shared without your permission except as specified in statute. Data Privacy Notice: per MN Statutes 13.591, Subdivision 1, certain data provided in this application is private or non- public data; this includes financial information about the business, including credit reports, financial sta#ements, net worth calculations, business plans; income and expense projections; balance sheets; customer lists; income tax returns; and design, market, and feasibility studies not paid for with public funds. Per MN Statutes 116J.401, Subd. 3., certain data provided in this application is private data; this includes data collected on individuals pursuant to the operation of the Minnesota Investment Fund program. I have read the above statements and I agree to supply the information requested to the MN Department of Employment and Economic Development, Office of JOBZ and Business Finance with full knowledge of the information provided herein. I certify that all information provided herein is true and accurate and that the official signing this form has authorization to do sa Name/Title of Business Official: Signature of Business OfficiaL• Date: � 4 Stream International, Inc. Initial Application — Minnesota Investment Fund 10) Include a project narrative which answers the following questions. A)Briefly describe the past and present operations of the business and/or events leading up to its creation. Include when the business was established and any change in controlling ownership within the last five years. Does the marketing strategy support the planned expansion or start-up? What is the business' competitive position in the marketplace? Stream International, Inc. is a wholly owned subsidiary of Stream Global Services, Inc. which acquired Stream International in 2008. Stream International was incorporated over 20 e� a�o and Stream Global was incorporated in 2007. In October 2009, Stream acquired EGS Corp. a Phili�ines corporation, in a stock-for-stock exchan�e. Over the years, Stream has grown to become a lo�bal provider of sales, customer service and technical support services for the Fortune 1000. Stream's global footprint has expanded to cover 23 countries, with more than 30,000 employees across SO locations. Stream currentlymanages millions of voice, email and chat contacts each year from customers around the globe. Stream currentiv has annual revenue in excess of $850 million. In Apri12012 Stream Global's major shareholders, who previously owned over 90% of Stream's common stock, completed a transaction to acquire the remainin� outstanding shares. While Stream's historv is rich in technical su�ort, the company has �rown to be a provider of choice for companies lookin� for world-class customer care and revenue �eneration pro�rams as well. The companv's consultative a�proach enables it to tailor programs that s�ecifically speak to clients' �ecific business challen�es. And, with a lg obal presence across North America, Europe, the Phili�ines India Central America, the Middle East/Africa and China, Stream is able to ensure they are in the right �eo�raphies with the ri�ht market expertise to deliver successful su�port �rog ams. Stream's vision for the future includes expansion into new �eog�aphies, as well as continued dedication to client and customer satisfaction and further innovation of support services. By locating its head�uarters and operations footprint in Apple Valley, MN, Stream will be able to maximize activity with the East and West coasts during business hours because of its central location. B) Describe the proposed project for which financing is being requested. Discuss such topics as square footage of the new building, lease or ownership, etc. The proposedproject involves the location of Stream's corporate headquarters (HQ staff in Apple Valley, MN. There are currently 17 Full Time Equivalent (FTE) emplovees temporaril��erating in Bloomin�ton, MN until the permanent facilitv is renovated and modernized in A�le Valley. The proiect also involves the establishment of a call center in Apple Valley. Stream will commit to hire a total of 340 emplovees in this location (40-HQ, 300- Call center). Both Citv of A�ple Vallev funds and MIF funds will be used for buildin� and site improvements, building renovations, and the purchase of machinery and equipment. 1 The headquarters facility will be located in the Win�s Financial buildin� at 14985 Glazier Avenue, and will occupv ap�roximately 12,500 sq. ft. of leased space. The Wings Financial buildin� is a 12-year old, six-story Class A office buildin� that is the �lobal headquarters for the Win�s Financial Credit Union. The tenant space requires some modifications to accommodate Stream's needs (relocatin�demisin� walls and the like), but public resources will primarilv be used for office equipment and furnishin� and data/telecom s st� The call center will be located in the Time Square Sho�pin� Center at 7540-149 Street W., and will occu�v a�proximatelv 19 000 sq. ft. of leased space. The Time Square Shoppin� Center is a�roximately vamile from the HO site. The call center space requires extensive modifications, includin� the installation of a new back-up generator, new UPS, u��rades to the electrical svstem and HVAC svstem, and the fire protection svstem. Other improvements include new bathrooms, new demisin� walls for offices, carpet, ceilin� tiles, windows, doors, and the like. C) Provide local government's summary of the project's financial feasibility. For example, summarize other funding sources, the debt/equity ratio, and the retained earnings levels. Stream's SEC filin s�speak to the company's financial �erformance. The Cit�pple Valley ("City") is willin� to be a partner with Stream and DEED in creating a first class headquarters and call center facilitv. The Citv understands that a si�nificant financial investment is necessarv to ensure Stream has the facility it needs to compete in a g environment. Time Square is a 40-year old center that has seen hi�h vacancies and tenant turnovers. It requires over $2 million in improvements so that Stream is able to locate a call center in the building. As shown in the Sources and Uses section of the application the City's investment represents about half of the costs of the renovation work that prepares the Time Square buildin� for the call center. The MIF financin� is anticipated to be used primarily for office equipment as well as some of the buildin� equipment at Time Syuare necessarv for the call center, such as the �enerator. The remainin� financin� is to be undertaken by Stream with available ec�nitv. No private debt will be used to finance the relocation of the headquarters or the building renovations far the call center. The Citv is confident that the public financial resources that will be deployed for this project are the minimum necessarv to ensure Stream locates in Minnesota in a first class facility. D) Describe the local government's ability to manage the grant, revolving loan fund, state arid local compliance requirements, and the implementation of the project. Apple Vallev is a suburban communitv with a fullv-staffed Community and Economic Development team that is well-equi�ped to mana�e the grant, state and local compliance requirements, and the implementation of the proiect.The community leaders and staff have a history of over 20 years of facilitating business location and expansion, and supportive economic development resources. The Citv does not have a revolvin� loan fund with DEED. 2 E) Explain why MIF financing is necessary for this project. MIF financing is necessary, as per the si en d�Au�ust 10, 2011 business incentive a�reement between Stream and Commissioner Mark Phillips of the Deparhnent of Employment and Economic Development (see attached�providin� a total of $lmillion in Minnesota Investment Fund assistance for locatin� their corporate Headquarters and call center in the state of Minnesota. The aQreement between Stream and DEED was not contin�ent on a specific location within the state. A�le Valle�pleased to be the fiscal a�ent for this project and will su�port the department's decision to provide financial assistance to the compan� The MIF fundin�, part of DEED's incentive packa�e, was criticallv foundational in Stream's decision to relocate the companv to the Greater MSP region. But for the MIF financin�, Stream would not have considered the Greater MSP re�ion as financiallv viable for both HQ and the call center. This is due to a wa�e scale that is hi�her than in other parts of the United States as well as the lack of incentives available from other states. 11) Three years historical financial information: Balance sheets, profit and loss statements, and cash flow statements. See attached SEC filin�s: 10-K. 12) Business Plan: Company History, Market Opporlunity, and Competitive Advantage. See attached SEC filin�s: 10-K. 3 � ' �� SUPPLEMENTAL BUSINESS INFORMATION � MINNESOTA INVESTMfNT FUND STATE LOAN PROGRAM ��r��r�a� �# ��rt�(�ytr�� n�� [c�s��t Name of Borrower (Business Legal Name): Stl'eat'Tl 111teCClatl011a1, IIIC. Primary Business Contact: �111C@Clt MOttOla E-mail: VIC1Cellt.fllOttOla@Stl"@aCT'1.COfY1 NAICS Code: 561420 �UNS Number 808628502 A) OWNERSHIP STRUCTURE 1. Proprietorship, partners, officers, directors, holders of outstanding stock. 10 percent or more of business ownership must be accounted for: Name Title % of Ownership See attached list 2. List all affiliates and subsidiaries of the business: See attaChed liSt 3. Have there ever been judgments or injunctions against the business or owners? ❑ Yes ❑� No If yes, describe: 4. Is there pending litigation involving the business? ❑ Yes ❑■ No If Yes, attach summary and disposition. 5. Has the business or the owners of the business ever filed bankruptcy? ❑ Yes ❑� No If yes, describe: B) BUSINESS STRUCTURE 1. Indicate type of business and provide verification: ❑■ Corporation: Articles of Incorporation, By-Laws, Certificate of Incorporation ❑ Partnership: Partnership Agreement ❑ LLC: Articles of Organization, Operating Agreement, Member Control Agreement, Certificate of Organization ❑ Proprietorship or operates under a name other than the businesses legal name: Assumed Name Certificate, Affidavit of Publication ❑ Other: 1 � �� SUPPLEMENTAL BUSINESS INFORMATION MINNESOTA INVESTMENT FUND `� STATE LOAN PROGRAM C� ��tt s� �pl��t�t �r�d �c��a�� nt F) SOURCES AND USES Personal Guaranties are repuired as a condition of the MIF /oan. MIF Bank Equity Local Other Total Government Property Acquisition $ 0.00 Site Improvement $ 0.00 New Construction $ 0.00 Renovation of an Existing Building $ 0.00 Purchase of Machinery & Equipment $ 0.00 Other $ 0.00 Total Project Cost $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Term (years) Interest Rate 0.00% 0.00% 0.00% 0.00% 0.00% Collateral Lien Position G) LENDERCOMMITMENTS 1. Attach a detailed commitment letter from each of the above financing sources, including a letter of commitment for any business equity. Commitments must include amount, interest rate, term, collateral and conditions of loan. City of Apple Valley Bruce Nordquist a) Funding Source: Contact Person: (952) 953-2576 bnordquist@ci.apple-valley.mn.us Telephone Number: Email Address b) Funding Source: Contact Person: Telephone Number: Email Address: 2 � �� SUPPLEMENTAL BUSINESS INFORMATION # MINNESOTA INVESTMENT FUND STATE LOAN PROGRAM � �r! c�# �� rr� �r�C ��a��t�� [�+�u�lt�p��t H) JOB CREATION FORM - PERMANENT JOBS TO BE CREATED NUMBER OF ANNUAL HOURLY RATE HOURLY TOTAL HOURLY POSITION TITLE POSITIONS HOURS * WITHOUT VALUE OF WAGE BENEFITS BENEFITS INCLUDING ** BENEFITS See �ttached spreadsheet $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 0 $ 0.00 $ 0.00 Total jobs to be Created: Average hourly Wage: Average hourly benefits: * Part-time positions are converted to full-time equivalent with full-time equivalent representing 2,080 hours annually. ** This hourly compensation should include non-mandated benefits to the employee. Non mandated benefit include: health, dental, life and long-term disability insurance; profit sharing, retirement contribution by employer, clothing allowance, tuition reimbursement or direct payment for education expense, vacation and sick time (hourly value) and child care subsidy. Social security tax, unemployment insurance, workers compensation insurance and other bene�ts mandated by law MUST BE EXCLUDED, *** Per State Law governing the Minnesota Investment Fund Program, the total compensation including base wage and benefits must be at least 110% of the federal poverty income level for a family of four (verify current wage levels with loan officer at the time of application). -------------------------------------------------------------------------------------------------------------------------- CERTIFICATION l, , certify that the employment information is true and accurate. Name/Title of Business Official: Signature of eusiness Official: Date: 3 �� SUPPLEMENTAL BUSINESS INFORMATION MINNESOTA INVESTMENT FUND _� STATE LOAN PROGRAM �� c� ��o�� r�� r��€�p��t C) OFFICERS / KEY EMPLOYEES 1. List Officers / Key Employees (President, Vice President, etc.): Name Title Years With Company Kath n Marinello President and CEO 2 Matthew Ebert Chief Counsel and Secreta 5 Michael Henricks CF02 2 D) CURRENT EMPLOYMENT INFORMATION 1. Current Number of Full Time Equivalent (FTE) Employees in Minnesota: 19 YTD 111 a11tlClpatl011 Of HQ t'el 2. Current Number of Full Time Equivalent (FTE) Employees on site: NO empl0ye2S 01l SUbJeCt Apple Vall� *Provide the most recent payroll report which documents the current employment information stated above. The information provided in this section will be used as your base employment. Full Time Equivalent is based on a total annual hours of 2080 E) PROJECTTIMEFRAME Task Estimated Completion Date Commitment of all funds 6/30/12 Start of construction 6/30/12 Purchase Equipment 6/30/92 -------------------------------------------------------------------------------------------------------------------------- The data you supply in this application to the Minnesota Department of Employment and Economic Development will be used to assess your company's qualifications for a business loan. We will not be able to process the application without this information. If an award is provided for the project, the information contained in the application will become a matter of public record with the exception of those items protected under the Minnesota Government Data Practices Act found in Minnesota Statutes 1997, Chapter 13. I have read the above statement and I agree to supply the information requested to the Minnesota Department of Employment and Economic Development, Division of Business and Community Development with full knowledge of the information provided herein. I certify the information contained herein is true and accurate. Name/Title of Business Official: Signature of eusiness Official: Date: Telephone Number: Email Address: 4 � �� SUPPLEMENTAL BUSINESS INFORMATION MINNESOTA INVESTMENT FUND � STATE LOAN PROGRAM t�� t �� d�� d ��+��n� �v��c�p��t��st Q Notice of First Source Agreement * Must be completed when federa! funds are in excess of $200,000 Per Minnesota Statutes 116L66, a business or private enterprise receiving loans from the State of Minnesota in amounts over $200,000 must enter into a First Source Agreement with the Minnesota Department of Employment and Economic Development (DEED) to use the Job Service as its first source for recruiting, referring and placing of employees. The steps that will be followed to complete the First Source requirements have been simplified to assure a minimum amount of paperwork for the employer. 1. At the time of award by the JOBZ and Business Finance Office of the DEED, the Loan Officer will provide written notification to the WorkForce Services Division — Statewide Systems Office (SSO) of the DEED (St. Paul) by providing the name and address of the business as well as the contact person and phone number along with the number of jobs to be created as a result of the project. . 2. The WorkForce Services Office - SSO will contact the appropriate WorkForce Center nearest to the business location and send a copy of the First Source Agreement to the local Center along with the information provided by the JOBZ and Business Finance Office. 3. The WorkForce Center representative will contact the business to schedule a meeting with the business contact to negotiate and sign the First Source Agreement. Note: the employer must only list job openings in the State and only for those job classifications that are specified in the DEED project. Managerial positions or job openings to be filled by internal promotion need not be listed. 4. The business will then notify the WorkForce Center of job openings at least ten days prior to the anticipated hiring date. 1ob orders will be entered into Minnesota's Job Bank (http://www.minnesotaworks.net) for recruitment by the employer. 5. The applicants will contact the business to arrange an interview. The business will make all decisions on whom they will hire. The First Source Agreement is designed to help businesses find new employees by providing a free and simple method of recruiting and hiring qualified candidates. If you have questions please contact Brian Lambie with the MN Department of Employment and Economic Development at 1 National Bank Building, 332 Minnesota St., Suite E200, St. Paul, MN 55101. His telephone number is (651) 259-7501. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - — - - - - - - - - - - - - - - - - - - - - — - - - - - - - - - - - - - - - - - - - — - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 HAVE READ THE ABOVE ►NFORMATION AND 1 WILL SIGN A FIRST SOURCE AGREEMENT AS A CONDITIDN TO RECElVING A LOAN IN EXCESS OF $200,000 FROM THE MN DEPARTMENT OF EMPLOYMENT AND ECONOMIC DEVELOPMENT. Name/Title of Business OfficiaL• Signature of Business Official: Date: Telephone Number: Email Address: 5 F) SOURCES AND USES Sources and Uses Statement for Stream International, Inc. for HQ and Call Center MIF Bank Equity Local Government Other Total Property Acquisition $ - $ - $ - $ - $ - $ - Site Improvement $ - $ 62,500.00 $ 62,500.00 New Construction $ - $ - $ - $ - $ - $ - Renovation of an Existing Building $ 283,200.00 $ - $ 1,300,600.00 $ 1,682,500.00 $ - $ 3,266,300.00 Purchase of Machinery & Equipment $ 716,800.00 $ - $ - $ 716,800.00 Public Infrastructure $ - $ - $ = $ - Other $ - $ 265,000.00 $ 265,000.00 Total Project Costs $ 1,000,000.00 $ - $ 1,565,600.00 $ 1,745,000.00 $ - $ 4,310,600.00 7 years for subsidy to Stream; 2 years for subsidy toTime Square property Term ears owner Interest Rate 0.00% 0.00% 0.00% 6.00% 0.00% Collateral Lien Position NOTES: MIF will be used to support 12,468 sq. ft: of tenant space renovation in headquarters space at Wings Financial building, and to purchase equipment for both the Wings HQ space and Time Square call center. Equipment is to consist of phones, cables, furniture, computers, servers, generator. Local Government funds, in the form of a forgivable loan, will cover funds for additional parking and renovation of Time Square 19,589 sq. ft. call center space. Also included in this figure is $395,000 that will be allocated to the property owner for exterior improvements to be made to the 40-year old shopping center. Stream International will supply remaining funds for building renovation costs, equipment costs, and fees for brokers, contractors, attorneys, etc. MIF Application for Stream International, Inc. - Supplemental Business lnformation H)106 CREATION FORM - PfRMANENT JOBS TO BE CREATED Stream International MIF Appiication Health Dental i e Annual Hourly Rate w/o Hourly Rate Insurance Insurance Insurance Retirement Position Title -Headquarters location # of jobs Hours Benefits Benefits Benefits Benefits Benefits Benefits Other Director, Finance Operations, Americas 1 2080 $40.87 $8.17 Yes Yes Yes Yes Yes SVP, Global Finance 2 2080 $101.44 $20.29 Yes Yes Yes Yes Yes Pricing Analyst 2 2080 $30.05 $6.01 Yes Yes Yes Yes Yes Financial Analyst, Senior 3 2080 $34.17 $6.83 Yes Yes Yes Yes Yes Executive Assistant 2 2080 $37.74 $7.55 Yes Yes Yes Yes Yes Director, Pricing 1 2080 $43.27 $8.65 Yes Yes Yes Yes Yes Director, IT Finance 1 2080 $40.38 $8.08 Yes Yes Yes Yes Yes Project Mana er, Senior 1 2080 $45.67 $9.13 Yes Yes Yes Yes Yes Officer, Chairman & Chief Executive 1 Financial Analyst 1 2080 $17.31 $3.46 Yes Yes Yes Yes Yes Computer Services Operator, Senior 1 2080 $19.71 $3.94 Yes Yes Yes Yes Yes Director, Facilities 1 2080 $52.88 $10.58 Yes Yes Yes Yes Yes Director, Brand Management, Senior 1 2080 $62.50 $12.50 Yes Yes Yes Yes Yes Account Manager 1 2080 $35.82 $7.16 Yes Yes Yes Yes Yes Newly hired in anticipation of HQ relocation 19 VP, Global Recruiting 1 2080 $96.15 $19.23 Yes Yes Yes Yes Yes Financial Analysts 3 2080 $17.31 $3.46 Yes Yes Yes Yes Yes Human Resources Pricin Anal st 1 2080 $26.92 $5.38 Yes Yes Yes Yes Yes Director, Business 3 2080 $52.88 $10.58 Yes Yes Yes Yes Yes Human. Resources Project Mana er 1 2080 $31.29 $6.26 Yes Yes Yes Yes Yes Account Manager 2 2080 $35.82 $7.16 Yes Yes Yes Yes Yes Director, Marketin 2 2080 $46.59 $9.32 Yes Yes Yes Yes Yes Manager, Project & Re orting 2 2080 $35.98 $7.20 Yes Yes Yes Yes Yes Proposal Strate ist - Senior 1 2080 $35.98 $7.20 Yes Yes Yes Yes Yes Qualit Pro'ect Manager 1 2080 $27.21 $5.44 Yes Yes Yes Yes Yes Qualit Data Analyst 2 2080 $18.53 $3.71 Yes Yes Yes Yes Yes Marketing Writer 1 2080 $23.66 $4.73 Yes Yes Yes Yes Yes Computer Services Operator 1 2080 $15.54 $3.11 Yes Yes Yes Yes Yes Forecasted New Hires 21 ..� I��:,,� '��I��I't - " `lil��i�u = >_oolll°Ppl��l� 3.��.� '� � i Illl�l�ll��l�i ' : ..I�Ilny �I � . � �. ,. $ �- �� i6 � ;$7�.89 �II.' �; ��. ' �I��II��,�� iqI�01��i�,�N �., �� - , ' Initial HQ Total� 40 il��" �� `�'�i° �;��I�II'�� '�II�� ' �II�UG��' `�;i�;��y�� ; u�iu� �11111��d�l�,��; �°��i H) JOB CREATION FORM - PERMANENTJOBS TO BE CREATED Stream International MIF Application Healt enta Li e Annual Hourly Rate w/o Hourly Rate Insurance Insurance Insurance Retirement Position title- Call Center # of jobs Hours Benefits Benefits Benefits Benefits Benefits Benefits Other Customer Support Professional � 2080 $10.00 $2.00 Yes Yes Yes Yes Yes Customer Support Professional II 140 2080 $11.00 $2.20 Yes Yes Yes Yes Yes Technical Support Professional I 2080 $11.50 $2.30 Yes Yes Yes Yes Yes Technical Support Professional II 131 2080 $13.00 $2.60 Yes Yes Yes Yes Yes Sales Support Professionai II 2080 $11.00 $2.20 Yes Yes Yes Yes Yes Sales Support Professional II 2080 $12.00 $2.40 Yes Yes Yes Yes Yes Team Managers 15 2080 $19.45 $3.89 Yes Yes Yes Yes Yes Service Delivery Manager 1 2080 $31.89 $6.38 Yes Yes Yes Yes Yes Site Director 1 2080 $56.25 $11.25 Yes Yes Yes Yes Yes HR Manager 1 2080 $43.27 $8.65 Yes Yes Yes Yes Yes HR Generalist 1 2080 $28.81 $5.76 Yes Yes Yes Yes Yes HR Coordinator 1 2080 $18.37 $3.67 Yes Yes Yes Yes Yes Recruiter 1 2080 $14.73 $2.95 Yes Yes Yes Yes Yes Facilities Mana er 1 2080 $22.11 $4.42 Yes Yes Yes Yes Yes Computer Services Coodinator 1 2080 $28.33 $5.67 Yes Yes Yes Yes Yes Receptionist 1 2080 $11.28 $2.26 Yes Yes Yes Yes Yes Training Mana er 1 2080 $21.71 $4.34 Yes Yes Yes Yes Yes Classroom Training Manager 1 2080 $16.53 $3.31 Yes Yes Yes Yes Yes Quality Manager 1 2080 $24.57 $4.91 Yes Yes Yes Yes Yes Operations Analyst 1 2080 $18.27 $3.65 Yes Yes Yes Yes Yes Operations Planning Mana er 1 2080 $21.63 $4.33 Yes Yes Yes Yes Yes . , . a , �. �_ °uu ,k i ,� ,y � - � = 4 , �� • a i �"� i (�I��,� �F�I�•�� _ �+�.�4 '� .� I�I �� I�I�I� I �° i ( � ' � � , ��'- iil�i ' . j „ n �� oiili Call Center Total 300 u��liu y �� , ; , ��m��;�"�� i ' ' °,"�„� ��i��9�i��V!l �, � �G�i�i� �� ,i� -� Total jobs to be created = 340 Average hourly wage: For HQ = $39.45 For Call Center = $21.22 Average hourly benefits For HQ = $7.89 For Call Center = $4.24 �� SUPPLEMENTAL APPLICANT INFORMATION (LOCAL UNIT OF GOVERNMENTj d� MINNESOTA INVESTMENT FUND STATE LOAN PROGRAM ��r�nt c�f E�t�[��st �d �� p�l�� City of Apple Valley Stream International, Inc Applicant: Business Name: 57A 076514249 State Legislative District for Project Area: DUNS #: Margaret Dykes (952) 953-2569 Application Author: Author's Phone: author's E-mai�: mdykes@ci.apple-valley.mn.us Attach the following information with the application. Application is not considered complete until all documents have been received. 1) COMMUNITY NEEDS NARRATIVE � Attach a community and economic development needs narrative which identifies in detail the priorities and strategies for resolving these needs based on the following criteria: A. Economic vulnerability of the community: B. Events contributing to a depressed economy: C. Unemployment (long term, chronic, current, seasonal): D. Need to attract or retain essential services: E. Events contributing to a unique situation: F. Infrastructure conditions: G. Out-migration due to lack of jobs: H. Need to diversify industrial base: I. Project will support the economic viability of small, minority, or women-owned businesses: J. Under-employment of existing labor pool: K. Labor pool needs: L. An increase in the value of the parcel(s) of land that will be directly assisted by the project. Provide a letter from the county/city assessor that provides the following information: Current assessed valuation, current real estate taxes payable, projected assessed valuation and projected real estate taxes payable � 2) CITIZEN PARTICIPATION • A public hearing is required to provide citizen notification and involvement prior to submitting the application. Submit a copy of the public hearing minutes, a copy of the public notice and affidavit of publication, and the Local Government Resolution. 3) BUSINESS CREDIT CHECK • The following information searches on the business and owners holding 10 percent or more of the business must be acquired and reviewed prior to passing the Local Government Resolution: Lien/Judgment, Criminal Record, Pending Lawsuit, Dunn and Bradstreet, Credit Status Report, Bankruptcy (Also attach summary of findings and deposition). 1 �`� ��'� SUPPLEMENTAL APPLICANT INFORMATION (LOCAL UNIT OF GOVERNMENT) :� MINNESOTA INVESTMENT FUND STATE LOAN PROGRAM � ��# �� rr��[�yr��a� �� a��r�� C��r��p��t 4) PROJECT COMPLIANCE • Review and sign attached document titled Proiect Compliance with State Laws, Statues, and Rules which outlines various state laws, statutes and rules that must be adhered to while implementing this project. These same requirements must be used in the administration of the local Revolving Loan Funds. 5j REVOLVING LOAN FUND • Submit a copy of the tocal Government's Revolving Loan Fund policies and procedures. ^ 6) CHECKLIST OF REQUIRED DOCUMENTATION: ❑■ Completed Application (Applicant and Business) Q■ Notice of First Source ❑ Revolving loan fund guidelines ■❑ Public hearing minutes ❑■ Affidavit of publication ❑■ Local unit of Government Resolution ❑■ Project Compliance with State Laws, Statutes, and Rules ------------------------------------------------------------------------------------------------------------------- If an award is provided for the project, the information contained in the application will become a matter of public record with the exception of those items protected under the Minnesota Government Data Practices Act found in Minnesota Statutes 1997, Chapter 13. I have read the above statement and I agree to supply the information requested to the Minnesota Department of Employment and Economic Development, Division of Business and Community Development with full knowledge of the information provided herein. I certify the information contained herein is true and accurate. Typed Name/Title Signature of Local Government Official Date 2 �� '� SUPPLEMENTAL APPLICANT INFORMATION (LOCAL UNIT OF GOVERNMENT) MINNESOTA INVESTMENT FUND STATE LOAN PROGRAM ��t��e�t �� p��r�fi �� c��tn�� C#��I��er�t PROJECT COMPLIANCE WITH STATE LAWS. STATUTES. AND RULES 1. Minnesota Statutes, Section 181.59, discrimination on account of race, creed, or color prohibited in contracts. . 2. Minnesota Statutes, Section 363A.08 prohibits unfair discrimination practices related to employment or unfair employment practices. 3. Minnesota Statutes Chapter 363 Minnesota Human Rights Act. Requires that all public services be operated in such a manner that does not discriminate against any person in the access to, admission to, full utilization of or benefit from such public service. 4. Minnesota Statutes, Sections 176.181-176.182. Requires recipients and subcontractors to have worker's compensation insurance coverage. 5. Minnesota Statutes, Sections 290.9705. Requires that 8 percent of payments made to out-of-state contractors be withheld once cumulative payments made to the contractor for work done in Minnesota exceed $50,000 in a calendar year, unless a waiver is granted by the Department of Revenue. 6. Minnesota Statutes, Section 116J.871 applies to this project. This statute requires of recipients of state assistance to pay the prevailing wage rate to laborers and mechanics at the project construction site when state funds are provided for construction in the amount of $200,000 or more. 7. Minnesota Statutes Sections 471.87 and 471.88 - Forbids public officials from engaging in activities which are, or have the appearance of being, in conflict of interest. 8. Antitrust or unfair trade practices laws - Regulates and controls the sale of goods and services and prohibits deceptive and unfair competition between businesses. 9. Minnesota Statutes 116J.993-995, Business Subsidy Statute, epplies to this project. 10. Minnesota Statutes, 116J.8731, Minnesota Investment Fund applies to this project. 11. Minnesota Investment Fund Rules Chapter 4300. 12. Minnesota Statutes, Chapter 13, the Minnesota Government Data Practices Act. certifies compliance as so stated in the accompanying Local Government Resolution. (Signature of Applicant) 3 MIF Supplemental Applicant Information - Citv of Appfe Vallev on behalf of Stream International, Inc 1) COMMUNITY NEEDS NARRATIVE Attach a community and economic development needs narrative which identifies in detail the priorities and strategies for resolving these needs based on the following criteria: A. Economic vulnerability of the community: The Citv of Apple Vallev is at a job deficit in com�arison to similar sized communities in the metro area. There are a�proximately 13,900 jobs in the Citv that consist primarilv retail, government, and public school jobs. A�ple Vallev seeks the job diversity and work force size of adjacent cities to offer choices to our residents that would allow them to work and live in the same communitv. The neighborin� cities of Burnsville and Ea�an offer over 30,000 jobs and 50,000 'ob s res pectivelv. Because A�ple Vallev does not enjov the advanta�e that comes with proximitv to the Metropolitan-St. Paul Airport, or the 35E corridor, we are unable to provide for the emplovment needs of our residents. Today, Minneapolis and St. Paul offer the type of jobs that are sou l� it bv the 20,000 residents that commute to primarilv those locations ever ��day. The city strives to add jobs in two distinct areas that are forecasted by DEED to be the hi est potential areas of �rowth: headquarters and business services, and health and life sciences. The addition of the Stream International, Inc. headquarters and call center will help to fi�l the emplovment �ap b ay dding 340 jobs to the area. B. Events contributing to a depressed economy: As stated previouslY the employment needs of A�ple Vallev residents are unable to be met within the boundaries of the Citv, leading to the Citv being a net exporter of emplovees. Thou�h A�ple Vallev has a successful retail center and there are few si�nificant commercial vacancies, there are clearl_y unmet needs for other ty�es of emplo ent that train semi-skilled emplovees and provide them with future opportunities. A,�ple Valley's future economic �rowth is dependent u�on the ability to grow jobs in the Citv. The economic power that comes with providin� job choice and diversitv currentiv restrains A�le Valley's economic growth• C. Unemployment (long term, chronic, current, seasonal): Apple Vallev's unemployment rate was 4.4% in April 2012 , which is below the state avera�e. It is not the overall unemployment issue in the community, but the unem�loyrnent or underemployment of specific rg_oups. Stream will offer o�ortunities to provide training for hi�hlv technical jobs for the underemploved, under educated, recent �,raduates, returning veterans, and seniors in need of extra income. D. Need to attract or retain essential services: In the Citv of Apple Vallev 2030 Comprehensive Plan, the Economic Development Chapter describes the Citv's strategv to attract and retain essential services: . 1 MIF Supplemental Applicant Information - Citv of Apple Vallev on behalf of Stream International, Inc • Attract large employers and create places to work near the Citv's Downtawn (Countv Road 42 and Cedar Avenue). • Unify and redevelop the Downtown Area. • Connect A�ple Valley to the re�ion in new wa� • Act as apartner to �uide new development, redevelopment, and support existin� commercial property. • Attract businesses focused on science, technolo�v, en in� eering and math, and provide for a well-educated and compensated workforce. As a result, the Citv has �uided a majority of the still available land for job creation where housing and retail uses are incidental and jobs are seen as an essential service. The placement of the Stream corporate headquarters and the 300-person call center in Apple Vallev's Downtown meets the �oals of the Citv's Comprehensive Plan, and will help support an aging retail/commercial area. E. Events contributing to a unique situation: The Stream CEO lives in the City, the executive leadership team bein assembled by Stream lives in close proximity, and the Citv of A�le Valley is an experienced economic developer and financial contributor when job development o�portunities arise. It is the local resources, state resources and available vacant office and business service space that can be quickly assembled to act on a job �rowth o�portunitv that makes this situation unique. Perhaps just as important to a �lobal company like Stream is that A�le Vallev is 15 minutes awav from an international air�ort to serve their global network of locations and benefit with bein� centrallYlocated from both coasts. F. Infrastructure conditions: Apple Valle�is a modern city with a well-planned/maintained and directly available sewer, water, storm water, gas and electric su�lv and systems. In addition, fiber optic needs for the call center can be met, and unique �ower supply needs of Stream, with back-up protections, are bein�provided as part of the project. One of the lar�est infrastructure projects ever in the Citv is underwav ri�ht now with the expansion of Cedar Avenue to accommodate the first Bus Rapid Svstem in the state of Minnesota by 2013. A re�ional transit station stop is located less than 1 / mile from both the Stream headquarters and the call center locations. A�roximatelv 20% of employees will use the BRT to travel to and from work as part of a travel demand mana eg ment strate�y. Transit use is possible because of the compact downtown, and the site's proximit ��to the future 147th Street Station, which is a 5-minute walk from both the headquarters location in the Wings Financial building, and the call center in the Time Square Shoppin� Center. Stream will be able to more readily hire recent college graduates, veterans, disadvantaged v°� ag dults, and retirees - those that often rely heavily on transit services. 2 MIF Supplemental Applicant Information - City of Apple Valley on behalf of Stream International, Inc G. Out-migration due to lack of jobs: As stated earlier, a�roximately 20,000 Apple Vallev residents commute dailv to jobs in other cities because of the opportunitv deficit in A�le Vallev. The addition of Stream to the Apple Valleyiob base will provide new economic o�portunities to residents that mi�ht otherwise be unable to find employment in the Cit� H. Need to diversify industrial base: The proposal provides one step toward a more diverse job market. Thou�h the business is not industrial in nature, it does provide additional emplovment opportunities for Apple Valley. residents. I. Project will support the economic viability of small, minority, or women-owned businesses: CEO Kathryn Marinello is a woman, and employees sou�ht bv Stream will include women and minorities. The technical training�rovided will help to develop and support the under educated, under employed, recent college graduate without job experience, the returning veteran facin� higher unem�loyrnent rates, and the senior lookin tg o su�lement a fixed income. J. Under-employment of existing labor pool: See "I" above. Further, the technical skills needed to successfull�perform require without a unic�ue Stream training�rogram that emphasizes soft skill development: teamwork, client problem solving, and customer service. K. Labor pool needs: Stream recognizes that the employee hired, upon trainin� and receipt of experience from Stream, will make that employee more valuable and competitive in the job markett�lace. As a result, trainin� is a constant feature of the business operation and the outcome is a better educated, customer service oriented, technically trained employee that enriches the labor pool. L. An increase in the value of the parcel(s) of land that will be directly assisted by the project. Provide a letter from the county/city assessor that provides the following information: Current assessed valuation, current real estate taxes payable, projected assessed valuation and projected real estate taxes payable The proiect will occur in two different locations that are a�roximatelv %-mile apart. The followin cg hart provides the information requested as estimated bv the City Finanee Director. The Dakota Countv Assessors Office does not provide calculations until a construction project is 3 MIF Supplemental Applicant Information - Citv of Apple Valley on behalf of Stream international, Inc completed. The construction project should be completed by Januarv 2013; therefore, the assessed values will be estimated for 2014 for taxes pavable in 2015. There should be no chan�e to the assessed value for the headquarters location as Stream will be occub n�ng existing finished tenant space. MIF funds will be used to purchase equipment at this location and the call center. There will be some increase in vaiue at the call center location due to the substantial construction at the site. Use Location Current Current Real Projected Projected Real Assessed Estate Taxes Assessed Estate Taxes Valuation Payable Valuation Payable (for 2013) (2012 Taxes) (2014) (2015 Taxes) Stream Wings Financial $12,995,400 for $499,378 No change in No significant Headquarters Building land and building value. changes in taxes. Stream Call Time Square $7,924,300 for $308,898 $9,375,655 $365,650 Center Shopping Center land and buildings 4 MIF Supplemental Applicant Information - Citv of Apple Valley on behalf of Stream International, Inc 2) CITIZEN PARTICIPATION The public hearin� for the submittal of the MIF a�lication will be held at the Apple Valle�y Council meeting of June 14, 2012. Attached is the Affidavit of Publication. The executed resolution will follow after June 15�`. A co�v of the a�roved minutes of the June 14�' meetin� will not be approved by the City Council until its meetin� of June 28�'; a copy will be sent to DEED followin� that meeting_ 3) BUSINESS CREDIT CHECK The City Attornev has completed a credit check of Stream International, Inc. and, as of this date, found no information that would adversely affect its completion of the project. 4) PROJECT COMPLIANCE Attached 5) REVOLVING LOAN FUND The Cit r�of Apple Valley does not have a revolvin� loan fund; consequently, there are no procedures related to such a fixnd. 5 _ � �� INITIAL APPUCATION �� MINNESOTA INVESTMENT FUND ��t�� t�f ��[�rr�� t�lt��r�� Application should not be submitted without consulting with DEED Coan Officer to discuss project eligibility. DEED will use the information below to better understand the project scope and to determine if the local government, business and project are eligible for Minnesota Investment Fund (MIF) program funds. DEED will make a project eligibility determination within 30 days of receiving a complete application. Supplemental project documents will be required following application approvaL LOCAL UNIT OF GOVERNMENT INFORMATION Applicant Name: City of Apple Valley Contact Name/Title: MBrgaret Dykes Associate Plann� Address: 7100 W. 147th Street cityApple Valley state: MN zip: 55407 Telephone: �952) 953-2569 Email: mdykes@ci.apple-valley.mn.us Does the local government have an EDA? Q Yes ❑No 1) Does applicant have a Revolving Loan Fund? ❑ Yes ❑� No If yes: What is the balance of the DEED revolving loan funds? , What is the balance of all other revolving loan funds? What is the amount the local government is committing to this project? 2) Is the applicant up to date with the filing of Minnesota Business Assistance Forms? Q Yes ❑ No 3) Does the community have any outstanding TIF issues associated with the property? BUSINESS/PROJECT BACKGROUND INFORMATION Business Name: Stream International It1C. Contact Name/Title: VIf1C211t MOttOla address: 20 William Street �� Wellesley State: MA zip: 02481 Telephone: � 826-0736 Email: vincent.mottola@stream.com 4) Business Type: ❑ Startup Q■ Expansion 5) Will any jobs be relocated from another Minnesota site or from outside of Minnesota? ❑ Yes QNo If yes, which location(s) will the employees be relocated from? 6) Current Number of Full Time Equivalent (FTE) Employees in Minnesota: 17 YTD 111 a11tICIpat1011 Of HQ t'elOCatl� *Full Time Equivalent (FTE) is based on a total annual hours of 2080 7) Number of new FTE jobs to be created within 2 years in Minnesota: 340 befiNeen HQ and Call Center 8) What is the hourly base wage of the lowest paid job that wilt be created? � 11.00 � 1 � �� INITIAL APPLICATtON � �� MINNESOTA INVESTMENT FUND ��r�� f �m�1�� €� C��rit 9) Will benefits be provided? ❑� Yes ❑No If yes: What is the hourly value of the benefits? � 2•2� Which benefits will be provided? ❑■ Health ❑■ Dental ■❑ Retirement Q■ Life � Profit Sharing/Bonuses 10) Does the property or the business have any outstanding local, state or federal tax liabilities? ❑ Yes ONo If so, please detail tax and liability: ESTIMATED PROJECT TIMETABLE Task: Estimated Completion Date: Commitment of all funds 6/30/12 Start of construction 6/30/12 Purchase equipment 6/30/12 . Complete construction � 12/30/12 Begin operations 1/1/13 ESTIMATED SOURCES AND USES OF FUNDS MIF Bank Equity Local Other Total - Government . Property Acquisition � 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Site Improvement $ 62,500.00 $ 62,500.00 New Construction � 0.00 $ 0.00 $0.00 $0.00 $0.00 $0.00 Renovation of an Existing Building � 283,200.00 $ 0.00 $ 1,500,600. $ 1,087,500.1 $ 0.00 $ 2,871,300.1 Purchase of Machinery & Equipment � 716,800.0 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 716,800.00 Public Infrastructure $ 0.00 $ 0:00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Other $ 0.00 $ 0.00 $ 265,0OO.00 $ 4.00 $ 0.00 $ 265,0OO.00 Total Project Costs $ 1,000,OOO.I $ 0.00 $ 1,765,600.1$ 1,150,000. $ 0.00 $ 3,915,600.� i 2 , �, �� INITIAL APPL►CAT10N � � MINNESOTA INVESTMENT FUND ��nt �� I�y�� r�i� ��+��am�r�� ATTACHMENTS : Attach the following information with the application. Application is not considered complete until all documents have been received. 10) Include a project narrative which answers the following questions: A) Briefly describe the past and present operations of the business and/or events leading up to its creation. Include when business was established and any change in controlling ownership within the last five years. Does the marketing strategy support the planned expansion or start-up? What is the business' competitive position in the marketplace? B) Describe the proposed project for which financing is being requested. Discuss such topics as square footage of the new building, lease or ownership, etc. C) Provide local governments' summary of the projects financial feasibility. For example, summarize other • funding sources, the debt/equity ratio and the retained earnings levels. D) Describe the local governments' ability to manage the grant, revolving loan fund, state and loca) compliance requirements, and the implementation ofthe project: E) Explain why MlF financing is necessary for this project? 11) Three years historical financial information: Balance sheets, Profit and loss statements and Cash flow statements 12) Business Plan: Company History, Market Opportunity and Competitive Advantage ENVIRONMENTAL 13) Are there any environmental risks associated with the site, building, or the business itself? Q Yes ❑� No 14) Will the project result in the loss or diminution of wetlands? ❑ Yes Q No If yes, attach a narrative that describes the measures whicM will be taken to rnitigate all functional values of the wetlands that will be lost or diminished. 15) Will the proposed project be located in a flood plain? ❑ Yes Q■ No If yes, is flood insurance required? ❑ Yes ❑ No 16) Have state environmental review requirements been met, if applicable? ❑■ Yes ❑ No �- 3 , � �� INITIAL APPLICATION � � MINNESOTA INVESTMENT FUND ��a��t �s� ��I�r�€�� r� �c�r�r�� tt�rrr�r�� BUSiNESS OFFICIAL MUST READ AND SIGN THE FOLLOWING INFORMATION DATA PRIVACY ACKNOWLEDGEMENT: Tennessen Warning Notice: per MN Statutes 13.04, Subd.2, this data is being requested from you to determine if you are eligible for a loan under the Minnesota Investment Fund program. You are not required to provide the requested information, but failure to do so may result in the department's inability to determine your eligibility for a loan pursuant to the criteria developed under the program's enabling legislation. The data you provide is classified as private or non- public and cannot be shared without your permission except as specified in statute. Data Privacy Notice: per MN Statutes 13.591, Subdivision 1, certain data provided in this application is private or non- public data; this includes financial information about the business, including credit reports, financial statements, net worth calculations, business plans; income and expense projections; balance sheets; customer lists; income tax returns; and design, market, and feasibility studies not paid for with public funds. Per MN Statutes 116J.401, Subd. 3., certain � data provided in this application is private data; this includes data collected on individuals pursuant to the operation of the Minnesota Investment Fund program. . I have read the above statements and I agree to supply the information requested to the MN Department of Employment and Economic Development, Office of JOBZ and Business Finance with full knowledge of the information provided herein. I certify that all information provided herein is true and accurate and that the official signing this form has authorization to do so. Name/Title of Business Official: Signature of Business OfficiaL• Date: � q, Stream International, Inc. Initial Application — Minnesota Investment Fund 10) Include a project narrative which answers the following questions. A)Briefly describe the past and present operations of the business and/or events leading up to its creation. Include when the business was established and any change in controlling ownership within the last five years. Does the marketing strategy support the planned expansion or start-up? What is the business' competitive.position in the marketplace? Stream International Inc is a wholly owned subsidiarv of Stream Global Services, Inc. which acquired Stream International in 2008. Stream International was incorporated over 20 . e�ars a�o and Stream Global was incorporated in 2007. In October 2009 Stream acquired EGS Corp a Philippines cornoration in a stock-far-stock exchange. Over the years Strearn has �rown to become a�lobal provider of sales customer service and technical su�ort services for the Fortune 1000 Stream's �lobal foot�rint has expanded to cover 23 countries with more than 30 000 employees across 50 locations Stream currently man�es millions of voice, email and chat contacts each year from customers around the �lobe. Stream currentiv has annual revenue in excess of $850 million In April 2012 Stream Global's major shareholders, who previously owned over 90% of Stream's common stock com�leted a transaction to acquire the remainin� outstandin� shares. • While Stream's history is rich in technical su�port the companv has grown to be a provider of choice for companies looking for world-class customer care and revenue �eneration proQrams as well The company's consultative a�roach enables it to tailor programs that �ecificall�peak to clients' specific business challen And with a lg obal presence across North America Europe the Philippines India Central America the Middle East/Africa and China Stream is able to ensure thev are in the right geo�raphies with the ri�ht market expertise to deliver successful support pro�,rams• Stream's vision for the future includes expansion into new geo�raphies, as well as continued dedication to client and customer satisfaction and further innovation of support services Bv locating its headquarters and operations footprint in A�ple Valley MN Stream will be able to maximize activity with the East and West coasts durin� business hours because of its central location. B) Describe the proposed project for which financing is being requested. Discuss such topics as square footage of the new building, lease or ownership, etc. The proposed project involves the location of Stream's corporate headquarters (HQ) staff in A�ple Vallev MN There are currentiv 17 Full Time Equivalent (FTE) employees temporaril�peratin in Bloomington MN until the permanent facility is renovated and modernized in A�le Valley The proiect also involves the establishment of a call center in Apple Valley Stream will commit to hire a total of 340 employees in this location (40-HQ, 300- • Call center) Both City of A�ple Vallev funds and MIF funds will be used for buildin� and site im�rovements building�renovations and the purchase of machinery and equipment. 1 � The headquarters facility will be located in the Win�s Financial buildin� at 14985 Glazier � Avenue and will occunv a�roximately 12 500 sq ft of leased space. The Wings Financial building is a 12-Year old six-story Class A office buildin� that is the �lobal headquarters for the Win�s Financial Credit Union. The tenant space rec�uires some modifications to accommodate Stream's needs (relocating demising walls and the like but public resources will primarily be used for office equipment and furnishings, and dataltelecom s s� The call center will be located in the Time Square Sho�pin� Center at 7540-149 Street W and will occu�v a�roximately 19 000 sq ft of leased space The Time Square Sho�ping Center is a�proximatelv vsmile from the HQ site. The call center space requires extensive modifications including the installation of a new back-up �enerator, new UPS, up�rades to the electrical svstem and HVAC system and the fire �rotection system. Other improvements include new bathrooms new demisin� walls for offices caspet, ceiling tiles, windows, doors, and the like. C) Provide local government's summary of the project's financial feasibility. For example, summarize other funding sources, the debt/equity ratio, and the retained earnings levels. Stream's SEC filin s�speak to the company's financial performance. The Cit�f Apple Vallev ("City") is willin� to be a partner with Stream and DEED in creating a first class headquarters and call center facilitv. The City understands that a si�nificant financial investment is necessarv • to ensure Stream has the facilitv it needs to compete in a g,lobal environment. Time Square is a 40-year old center that has seen hi��h vacancies and tenant turnovers. It requires over $2 million in improvements so that Stream is able to locate a call center in the buildin�. As shown in the Sources and Uses section of the a�lication the CitY s investment represents about half of the costs of the renovation work that �repares the Time Sguare buildin� for the call center. The MIF �inancin� is anticipated to be used primarily for office equipment as well as some of the buildin� equipment at Time Sqnare necessarv for the call center such as the generator. The remaining financin� is to be undertaken by Stream with available e�uity. No private debt will be used to finance the relocation of the headquarters or the buildin� renovations for the call center. The City is confident that the �ublic financial resources that will be deployed for this project are the minimum necessary to ensure Stream locates in Minnesota in a first class facilitv. D) Describe the local government's ability to manage the grant, revolving loan fund, state and local compliance requirements, and the implementation of the project. A�ple Valley is a suburban community with a fullv-staffed Community and Economic Development team that is well-equi�ed to mana�e the Qrant state and local compliance rec�uirements and the implementation of the project The communitv leaders and staff have a historv of over 20 years of facilitatin� business location and expansion, and supportive economic development resources. The Citv does not have a revolvin� loan fund with DEED, � 2 E) E�plain why MIF financing is necessary for this project. � � MIF financin� is necessar�per the signed Au�ust 10 2011 business incentive a�reement between Stream and Commissioner Mark Phillips of the Department of Emplovment and Economic Development (see attached�providin� a total of $lmillion in Minnesota Investment Fund assistance for locatin� their cor�orate Head�uarters and call center in the state of Minnesota The a�reement between Stream and DEED was not contingent o� a specific location within the state A�le Valley is pleased to be the fiscal agent for this project and will support the department's decision to provide financial assistance to the companv. The MIF funding of DEED's incentive package was critically foundational in Stream's decision to relocate the company to the Greater MSP re�ion. But for the MIF financin� Stream would not have considered the Greater MSP reQion as financiallv viable for both HQ and the call center. This is due to a wage scale that is hi�her than in other parts of the United States as well as the lack of incentives available from other states. 11) Three years historical financial information: Balance sheets, profit and loss statements, and cash flow statements. See attached SEC filin�s: 10-K. . 12) Business Plan: Company History, Market Opportunity, and Competitive Advantage. See attached SEC filings: 10-K. . 3 20 Wtlltam Street, Suite 310 � i , We1lesEey, MA 02481 s'� �" � a � 781-304-1800 phone Gtabal Servites 781-3Q4-1701 fax ww4v.st�eam.com August 1:0, 2011 M�rk Phillips, Commissioner IwIN Dept. Ernployment and Economie Development 1 St National B�n.k Building, Suite E200 3321vMiru�esata Street ' Saint Faul, MN SSIQ1-1351 I�ear Gommzssioner Phillips; T am piease�i to inform yQU that S#ream Global Services, Inc. (Stre�acn) i�ntends to �xpa�d its ;: corporate presence in Mi�esota by locatin� � call c�nter facility, �d �cecutive head�uerters offfces, in tl�e city of Richfield (or anatlzer similar municipality in the g�neral surnounding area), in anticipation o£ and c�nditioned upern $1,4 million in state business assistanee suppart. In accordance wit�t our corporate plans, ax�d bas�d upon a Nc�vember l, ZU11 occupancy date, �tream expects ta create andlor lacate at thi� Minncsota facility, over the next two cal�ndar yea�, at l�ast 4� positions for #he corporate headquarters functions, an additional 15 call center manag�ment pasitians, and 6pQ call center servi�e professianat positions: � Stream understands that the MN l:lepartrnent of Emp�oyment and Economic �evelopmtent (I�EEI}} wit� provide to Stream a$500,040 forgivable loan for Che catl center pasitiorts and a $St}D,UQU forgivab�e toa� for the corporate executive headquarters functians. Streazn is awar� that DEED will work with the City af Richfield afficials (or the afficial� of such otlaer simiiar Minnesota municipality where Stream lacates its facility), who will adn�inister the forgivable loans and begin the fornial Minnesot� Investment Fund application process: It is alsv Stream's ttnderstanding that DEED will �ssist Stream with applyi�n� for a Minnesota Jab ° Skitls Partnership grant application for $4UO,OOU and that these grant funds, together wi#h matching dollars, will be used to fu�ance th� training costs far Stream's Minnesota warkforce. �trea�n is aware that final approval ofthe grant amount is determined by the Joh Skills Partnership Board and that DEED will w�rk 4n Stream's behalf to obtain fult funding af th� �� Strean�'s leadership team looks fonvard to making a joint announce,ment with Muuiesofa ' Governor Mark Dayton, GreaterMSP CEO, Mike Langley and you tv discuss our partnership and vur pians to exgand Stream's presence in the MinneapolislSaint Paut region. Sincerely, a � . . � �ysr. . . D�i1tllS I.�CE}� Chief Financial Of�'icer • Form 10-K 10-K 1 d10k.htm FORM 10-K •tble of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) � ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2009. OR ❑ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-33739 STREAM GLOBAL SERVICES, INC. (Exact name of registrant as specified in its charter) Delaware 26-0420454 (State or Other Jurisdiction of Incorporation or Organization) (I.RS. Employer ldentification No.) 20 William Street, Suite 310 Wellesley, Massachusetts 02481 (Address of Principal Executive Offices) (Zip Code) (781)304-1800 (RegistranNs Telephone Number, Including Area Code) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered Umts NYSE Amex Common Stock, $0.001 Paz Value NI'SE Amex Warrants NYSE Amex Securities registered pursuant to Section 12(g) of the Act: None Title of Class Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No X Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No X Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such repoRs), and (2) has been subject to such filing requirements for the past 90 days. Yes No� Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Reguladon S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registranYs knowledge, in definitive pmxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. � Indicate by check mark whether the registrant is a lazge accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of `9arge accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): � Large Accelerated Filex ❑ Accelerated Filer ❑ Non-accelerated Filer ❑x Smaller reporting company ❑ (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately $15,057,952 based on the last reported sale price httn •/hx�jvw sec otiv/ A rch ivas/PA oar/ti ata / l d(15 � R 7/M(11 19't 1751(1(15 �771 /rl l fllr htrn �5 /17/7(117 Q• 5 2• �d d TRl Form 10-K of the registranYs Common Stock on the NYSE Amex on June 30, 2009, which was the last business day of the registranYs most recently completed second fiscal quarter. There were 80,296,892 shazes of the RegistranYs common stock, $0.001 par value per share, issued and outstanding as of March 3, 2010. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registranYs definitive proxy statement for its 2010 annual meeting of stockholders, to be filed pursuant to Regulation 14A with the Securities and Exchange � Commission not later than 120 days afrer the registranYs fiscal year end of December 3 i, 2009, are incorporated herein by reference. Table of Contents TABLE OF CONTENTS r� PART L Item 1. Business 4 Item lA. Risk Factors 14 Item 1B. Unresolved Staff Comments , 31 Item 2. r erties 31 Item 3. Legal Proceedings 31 Item 4. Res rve 31 PART II. Item 5. Market for Re� istrant's Common E�uitX Related 4tockholder Matter� and Issuer Purchases of Eauitv Securities 32 Item 6. Selected Financiai Data 35 Item 7. Manae ement's Discussion and Anal vsis of Financial Condition and Results of Operations 37 Item 7A. Quantitative and nualitative Disclosures about Market Risk 50 Item 8. Financial Statements and Su}2plementarv Data 53 ConSOlidated Balance Sheet� at of December 31�2009 and 2008 and nro forma as of December 31 2008 55 C'onsolidated Statement� of O�erations for the years ended December 31. 2009 and 2008 and_the neriod of ince�tion to December 31, 2007, and for the vear ended December 31, 2007 and the seven months ended Julv 31. 2008 for Predecessor ("SHC"1 � Consolidated Statement� of Stockholders' Fquit�� fc�r the vears ended December 31_ 2009 and 20Q and the period of fi inception to December 31. 2007 57 Consolidated Statements of Cash Flow� for the vears ended December 31. 2009 and 2008 and the period of inception to December 31, 2007 and for the years ended December 31 2007 and the seven months ended Julv 31 2008 for the Predecessor ("SHC"1 58 Notes to Consolidated Financial Statements 60 Item 9. Changes in and Di�agreements with Accountants on Accountin¢ and Financial Disclosure 96 Item 9A. Controls and Procedures 96 PART III. Item 10. Directors. Executive Officers and Comorate Governance 97 Item 1 L �xecutive Compensation � 97 Item 12. e ritv Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 97 Item 13. Certain Relationshi�s and Related Transactions, and Director Indenendence 97 Item 14. Princinal Accountant Fees and Services 97 PART N. Item 15. Exhibits and Financial Statement Schedules 9g SIGNATURES 99 Stream is a registered trademark of Stream Global Services, Inc. 2 Table of Contents �_ • CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS ° This Report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and htm://www.sec.�ov/Archives/edear/data/1405287/000119312510052721/d10k.htmf5/17/2012 9:53:24 AMl Form 10-K Section 21 E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and uuknown risks, uncertainties � nd assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any e results, levels of activity, performance ar achievements expressed or implied by such forward-looking statements. In some cases, you can entify forward-looking statements by terminology such as "may," "should "could," "would," "expect," "plan," "target," "goal," "anticipate," « �,« »« » believe, estimate, continue, or th� negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in Item lA, "Risk Factors," of this Report and in our other Securities and Exchange Commission filings. Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"), we explicitly disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise to reflect actual results or changes in factors or assumptions affecting such forward-looking statements. You are advised, however, to consult any further disclosure we make in our reports filed with the SEC. 3 Tabie nf Contents PART I ITEM L BUSINESS Overview Stream Global Services, Inc. ("we", "us", "Stream", or "SGS") is a corporation organized under the laws of the State�of Delaware. We were incorporated on June 26, 2007 as a blank check company for the purpose of acquiring, through a merger, capital stock exchange, asset or stock acquisition, exchangeable share transaction or other similar business combination, one or more domestic or international operating businesses. In October 2007, we consummated our initial public offering ("IPO") in which we so1d31,250,000 units, each consisting of one share of our � on stock and a warrant to purchase one share of our common stock. We received total gross proceeds of $250.0 million and net proceeds of 6 3 million, including $7.5 million of proceeds from the sale of 7,500,000 warrants to certain of our founding s4ockholders, which were ueposited into a trust account. In connection with our IPO, a total of $7.5 million of underwriters' fees were deferred until the completion of our initial acquisition. In 2008 the underwriter's fees were reduced to $2.8 million. In July 2008, we acquired Stream Holdings Corporation ("SHC") for $128.8 million (which reflected the $200.0 million purchase price less assumed indebtedness, transaction fees, employee transaction related bonuses, professional fees, stock option payments and payments for working capital). Also in 7uly 2008, holders of 8,947,000 shares of our common stock exercised their conversion rights in connection with the acquisition, and we paid an aggregate of $70.59 million to such holders. In connection with our acquisition of SHC, we changed our name from Global BPO Services Corp. to Stream Global Services, Inc. In October 2009, pursuant to a Share Exchange Agreement, dated as of August 14, 2009 ("Exchange Agreement"), among EGS Corp., a Philippine corparation ("EGS"), the parent company of eTelecare Global Solutions, Ina, a Philippine company ("eTelecare"), EGS Dutchco B.V., a corporation organized under the laws of the Netherlands ("Dutchco"), and NewBridge International Investrtlent Ltd., a British Virgin Islands company ("NewBridge" and, together with Dutchco, the "EGS Stockholders"), we acquired EGS in a stock-for-stock exchange (the "Combination"). At the closing of the Combination (the "Closing"), we acquired all of the issued and outstanding capital stock of EGS (the "EGS Shares") from the EGS Stockholders, and NewBridge and/or its affiliate contributed, and we accepted, the rights of such transferor with respect to approximately $35,841,000 in principal under a bridge loan of EGS (the "Bridge Loan") in consideration for the issuance and delivery of an aggregate of 23,851,561 shares of our common stock and 9,800,000 shares of our non-voting common stock, and the payment of $9,990 in cash. Subsequent to the Closing, all of the 9,800,000 shares of non-voting common stock held by the EGS Stockholders were converted into shares of our voting common stock on a one-for-one basis. As of the Closing, the pre-Combination Stream stockholders and the EGS Stockholders owned approximately 57.5% and 42.5%, respectively, of the combined entity. Also in October 2009, pursuant to an indenture, dated as of October 1, 2009 (the "Indenture"), among Stream, certain of our subsidiaries and Wells Fargo Bank, National Association ("Wells Fargo"), as trustee, we issued $200 million aggregate principal amount of 11.25% Senior Secured Notes due 2014 (the "Notes") at an initial offering price of 95.454% of the principal amount. In addition, we and certain of our subsidiaries (collectively, the `Borrowers") entered into a credit agreement, dated as of October 1, 2009 (the "Credit Agreement"), with Wells Fargo Foothill, C("WFF"), as agent and co-arranger, and Goldman Sachs Lending Partners LLC, as co-arranger, and each of the lenders party thereto, as ers, providing for revolving credit financing (the "ABL Facility") of up to $100 million, including a$20 million sub-limit for letters of credit. � �:e ABL Facility has a maturity of four years. We used the proceeds from the offering of the Notes, together with approximately $26.0 million of cash on hand, to repay certain outstanding indebtedness, and to pay fees and expenses incurred in connection with the Combination, the Note offering and the ABL Facility. http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.hhn(5/17/2012 9:53:24 AM� Form 10-K 4 Table of Contents � � Our Business We are a leading global business process outsourcing (`BPO") service provider specializing in customer relationship management ("CRM") including sales, customer care and technical support for Fortune 1000 companies. Our clients include leading technology, computing, telecommunications, retail, entertainment/media, and financial services companies. Our service programs are delivered through a set of standardized best practices and sophisticated technologies by a highly skilled multilingual workforce capable of supporting over 35 languages across SO locations in 22 countries. We continue to expand our global presence and service offerings to increase revenue, improve operational efficiencies and drive brand loyalty for our clients. We seek to establish long-term, strategic relationships with our clients by delivering high-value solutions that help improve our clients' revenue generation, reduce operating costs, and improve customer satisfaction. To achieve these objectives, we work closely with our clients in order to understand what drives their economic value, and then implement processes and performance metrics to optimize results for our clients. We believe that this approach is crucial to winning and retaining clients and increasing our ability to withstand competitive pricing pressure. We view our investments in human capital as a critical value proposition and thus our culture is metric-driven and performance based. The success of our differentiated client value proposition is demonstrated, in part, by the tenure of our client relationships. Several of our top clients have been with us for over a decade and the average duration of our relationship with our top ten clients by revenue is approximately ten years. Our clients include leading technology, software, and telecommunications companies, such as our three largest clients, Dell Inc., the Hewlett-Packard Company and AT&T Inc., which, on a pro forma basis giving effect to the Combination as if it occurred on January 1, 2009, accounted for 19%, 12% and 9%, respectively, of our revenues for the year ended December 31, 2009. We target these sectors because of their growth potential, their propensity to outsource, their large, global customer bases, and their complex product and service offerings, which often require sophisticated customer interactions. For many of our clients, we service multiple customer touch points that may encompass several product and service lines. Far several of our large, global clients, we perform more than 15 different programs across 10 different languages in multiple countries around the world. In most �, � cases, our services for each client are performed under discrete, renewable, multi-year contracts that are individually negotiated with separate business leaders at the client and define, among other things, the service level requirements, the tools and technology, the operaring metrics, and various pricing grids depending on volume requirements. We typically bill our clients on a monthly basis either by the minute, the hour, or the transaction. In some cases, we also receive incentive based compensation from our clients that is directly connected to our performance and/or our ability to generate sales for our clients. The types of CRM and BPO services that we deliver are generally characterized by higher margins than those in the overall BPO sector. We had relationships with over 90 clients as of December 31, 2009. We believe that there are various barriers to entering the CRM and BPO services industry, including the need to establish a reputation in the marketplace, the importance of offering a global footprint, the value clients place on existing relationships, and the requirement to significantly invest in technology. Our Industry According to the 2009 IDC report titled "Worldwide and U.S. Outsourced Customer Care Services 2009-2013 Forecast Update: In the Wake of the Great Recession," the global CRM market, which IDC refers to as the "Worldwide Customer Care Services" market, totaled $59 billion in 2009 and is expected to grow to $76 billion by 2013, a 6.8% compound annual growth rate. Additionally, according to IDC, only 25% of the total customer care market is estimated to be outsourced in 2009, a number that is expected to grow to 40% by 2013. The contact center outsourcing industry is highly fragmented and competitive, with the largest company representing 7% of the market, according to Frost & Sullivan. Despite an increasingly competitive market, we believe outsourcing will continue to grow as a result of higher client demand for cost savings along with a need for high- quality customer interactions and innovative service solutions that deliver real value. We also believe the desire 5 '�'able of Contents for companies to focus on care competencies remains strong and will continue to drive them to outsource certain non-core functions to experienced outsource providers with the global scale, processes and technologies. Additionally, as business becomes more global, many companies fmd that they do not have sufficient capacity ar the optimal infrastructure; • international experience or technology tools to service their customers. Therefore, they increasingly look to global BPO service providers like us, who have invested in technology and infrastructure and who have established a global presence, to deliver customer facing services in both http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AMJ Form 10-K established and emerging markets. The largest CRM and BPO customers are typically large multinational companies that require global outsourcing solutions to service segments of their customer base in multiple countries, languages, and service offerings. At the same time, they ek to work with a service partner that they are confident will not only be able to serve their needs over the long-term, but also be able to adjust le quickly as volume requirements change. We believe that large corporations are increasingly outsourcing their CRM and BPO solutions as part �. an overall effort to focus intemal resources on their core competencies, improve customer satisfaction and retention, improve operating efficiencies, and reduce their overall cost of service. We believe that many of our clients have reduced or are considering reducing their number of service providers to a few care global relationships that can provide an integrated multi-service platform of offerings in a cost efficient manner. We also believe that many of our clients are seeking global BPO service providers that can provide services from many different countries where we currenfly do business, in geographic areas such as Europe, Africa, the Middle East, Central America, North America, India and the Philippines. We also believe that our clients wiil seek in-country services in the future from countries that include China, Japan, Brazil and Argentina. Our global clients require (i) global servicing capabilities to fit the needs of particular products or programs in multiple languages, (ii) a sophisticated tectuiology infrastructure that enables fully integrated customer interaction channels that are analytics enabled and virhzally accessible across a global delivery platform, (iii) a solution driven approach that solves multiple customer needs, such as total customer experience, retention and lower customer churn rates, and creates new or expanded revenue opporiunities for our clients, and (iv) a competitive total cost of solution that takes advantage of technology, applications, defined processes and a diverse global operation. Our Strengths Leading CRM and BPO services provider. We believe that we are one of the leading publicly traded global CRM and BPO services providers based on annual revenues. Our service of#'erings include a full portfolio of sales and revenue generation, warranty management, customer loyalty and brand management, customer care, tectuiical support, and customer life cycle management services. We believe this broad and integrated portfolio of global services is a key differentiating factor to win new clients and realize attractive cross-selling opportunities among our existing clients. Strong global presence. We operate SO locations across North America Central America, Europe, the Philippines, India, the Middle East, and Africa. In addition, we expect to commence operations in one or more of the following countries in the near future: Brazil, Argentina, China, or Japan. We believe that our customers value this strong global presence and our ability to do business in multiple geographies depending on factors such as the life cycle of �r products, the complexity of the work being performed, the cultural and language requirements, and the economics of the total service solution. i result, our ability to customize a multi-shore strategy enhances our ability to win new clients or expand our market share of existing clients. High quality, loyal client base in attractive sectors. � ,- We maintain broad and long-standing relationships with leading technology, software and telecommunications companies, such as Dell Inc., the Hewlett-Packard Company and AT&T Inc. In many cases, 6 Table of Content we service multiple customer touch points that may encompass several product and service lines and deliver services in a number of languages. For several of our large, global clients, we perform more than 15 different programs across 10 different languages in multiple countries around the warld. Several of our clients have been with us for over a decade and the average duration of our relationship with our top ten clients by revenue is approximately ten years. We believe that we have sustainable and long-term relationships with our clients that make us an integral component of their planning, strategy, and cost model. Our clients seek our services due to our ability to provide scalable and timely solutions that leverage our proven processes and technology investments. We believe that our approach to client service and our relationships will allow us to maintain our existing base of business and grow new business as our clients launch new products and enter new geographies. Our long-term client relationships enable us to establish recurring and predictable revenue. We have historically had a high level of success of renewing existing contracts and growing our base business with existing clients. In many cases, these long-term relationships allow us to sole source bid for opportunities and customize value-added CRM and BPO services for our clients in multi-geogaphic locations. Strong inditistry growth opportc�nities. We have traditionally focused on the technology, software, and telecommunications segments within the CR1VI and BPO market because of growth potential and attractive operating margins. IDC anticipates the CRM market growing from $59 billion in 2009 to $76 billion in 2013, �% compound annual growth rate. In addition, we seek to capitalize on the global trend toward outsourcing CRM and BPO services. We also believe that the current economic slowdown has increased demand for outsourcing not only because it can reduce customer service costs, but also because it offers an incremental channel to increase sales. At the same time, we expect to benefit from growth in emerging markets such as China and South America, including countries such as Argentina and Brazil, where we expect to provide services to a combination of in-country clients http:l/www.sec.gov/Archives/edgar/data/1405287J000119312510052721/d10k.htmf5/17/2012 9�5324 AMl Form 10-K and our existing multi-national clients. These emerging markets are estimated to grow at a higher rate than the developed markets. We �mploy a dedicated sales force that seeks to capitalize on and outperform these industry growth trends by winning new clients, increasing our market share of our existing client's outsourced business, and introducing new service offerings at existing clients. We also believe that many large, multi-nationa� companies are consolidating the number of global service providers they use to increasingly rely on those that offer a broad global footprint, advanced technology, and proven processes. We believe that the combination of these factors will allow us to continue to grow and gain market share over the next several years. Opportunity for margin and cash flow enhancement. We have increased our gross margins as a percentage of revenue by over 200 basis points year over year from 2008 compared to 2009. We have achieved this improvement by focusing on key operating metrics such as average handle time, utilization, productivity, and attrition of our service professionals. We have also implemented new technologies in 2009 that have made our operations more efficient for our clients that have in turn increased gross margins. We expect that future technology advances in Sessions Interaction ("SIP"), cloud computing and other applications and technologies will continue to increase our gross margins and improve our efficiency. In addition, we service our clients in established programs at a substantially higher gross margin than our new clients while they are in a ramp-up period because of unpaid training and production inefficiencies. Over the past six months have won a number of new clients that will increase revenues but will reduce short term gross margins in 2010 as we ramp these new programs. We also believe that our future gross margins will increase over the long term due to a higher proportion of our service delivery being performed offshore in places like the Philippines, where we currently have approximately 10,000 employees. We also believe that new emerging markets such as Brazil, Argentina and China will also generate higher gross margins due to the lower cost of labor and rapid growth. Strong executive leadership. Our management team is comprised of an experienced group of executives with a proven track record of creating value for clients, employees, and investors. Led by industry veteran, founder, chairman and chief 7 Table of Contents executive officer, R. Scott Murray, our management team has extensive experience in the CRM and BPO industry. In the past twelve months we` • have added several experienced executives who have extensive industry experience, including a few of our competitors (many of whom are much larger than we are in terms of annual revenues). In addition, over 40 members of our management team, including our founder, chairman and chief executive officer, have previously worked together at Stream and other technology and service businesses, thereby adding to the depth of experience of our management team. Committed financial sponsorship. Our financial sponsors, including Ares Corporate Opporiunities Fund II, L.P ("Ares"), Providence Equity Partners ("Providence"), the Ayala Corporation and its affiliates ("Ayala"), and other members of our board of directors, including our founder, chairman and chief executive officer, R. Scott Murray, have invested a total of approximately $335 million of cash equity into Stream and eTelecare. Each of these financial sponsors and our founder, chairman and chief executive officer, is represented on our board of directors and has agreed to resale restrictions on their shares until October 2011, demonstrating their long-term commitment to our company. Our Strategy Our strategy is to be a leading provider of integrated, global CRM and BPO services that allow our clients to create maximum value for their customers over the long-term. In order to achieve this strategy, we intend to offer a broad suite of services that leverages an integrated technology platform on a global basis. We expect to increase our revenues and profitability while further growing our market position by implementing our global business strategy, which includes, among other things, the following key elements Expand organic revenue growth. We expect to increase our revenue through a combination of winning business from new clients and increasing our service offerings and market share for existing clients. We expect to continue to win new clients in the future as more companies outsource their CRM and BPO services. Additionally, many of our clients are consolidating their CRM and BPO relationships to vendors who can provide multiple service offerings on a global basis. We expect to capitalize on this trend by increasing ow service offerings for existing clients and winning a greater share of services that they currently outsource. We also expect to generate new business by working with our clients to outsource non-core programs� are currently managed internally. � Enhance margins through global expansion and operating efficiency. http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K We seek to enhance our gross and operating margins by improving our systems and infrastructure and by expanding our global operations. We also continue to work to improve our operating metrics, such as utilization and productivity, employee attrition, and workforce management, nd take advantage of advanced technology tools, such as voice over internet protocol ("VoIP"), SIP, cloud computing, virtualization of the ;ktop, data center consolidation and hosting, learning and development platforms and standardized global processes to increase accessibility and aality of information and data �xchange. As a result of these efforts, our gross margins increased by over 200 basis points year over year from 2008 compared to 2009. We also believe that we will continue to improve our margins with our expanded presence in the Philippines, a market characterized by higher g�oss margins than other onshore locations in North America and Europe due to the high quality of low cost labor, a dependable telecommunication infrastructure, and a general acceptance by most clients of the Philippines as a location to provide GRM services. We also believe that the emerging markets in Asia and South America offer attractive growth opportunities and are experiencing higher than average economic growth rates. As a result we intend to expand our service offerings into China, Japan, and/or South America. Expand our revenue growth and market share through targeted acguisitions. We plan to grow our revenues and market share both organically and through targeted acquisitions. Our desire to enter new geographies, such as China, Japan and South America, as well as expand our service offerings 8 Table of Contents to include new offerings, such as data management and possibly credit and collections,.may be accomplished most efficiently and cost effectively through the acquisition of companies or assets, or through joint venture arrangements with third parties. Expand current, and develop and implement new, BPO service offerings to increase market share. We expect to expand our current service offerings, such as sales services, customer lifecycle management, and warranty services, within our existing client base to increase returns and profitability. Many of our clients are looking for global service providers that can not only provide an efficient and flexible cost model, but can also generate revenues to help reduce the overall cost of service and enhance customer interaction. . In the future, in addition to our core services, we expect to provide new BPO services that cross vertical segments, such as data management, �uage transcription and interpretation, and credit and collections to expand our business within our existing client base, as well as provide entry into new vertical markets, such as financial services, healthcare and government, and thereby increasing our market share. We believe that we will be able to provide such services from our offshore centers during local day time hours. These services are typically characterized by a lower employee wage, which does not require as high a degree of English proficiency as our core CRM services. We believe this will allow us to leverage ow existing technology and facilities to gain a higher rate of return on our service locations. And as our industry develops further, we � anticipate that our clients may outsource many other back-office infrastructure elements of their business to take advantage of our flexibility, technology, global infrastructure and standardized processes — all from one integrated service provider. Build and implement a multi-year global technology roadmap. We believe that technology applications and infrastructure are critical to our business and allow us to offer our clients efficient services on a cost-effective basis. We expect to continue to invest in technology and will evaluate opportunities including complex VoIP and SIP telecommunications (which allows for faster service at lower costs) and cloud computing (which allows our employees to download user applications tools and data, making our operations more efficient and lowering costs) and virtualization of the desktop (which increases efficiency, wark force and capacity management and lowers cost of applications). During 2009, we invested in tectuiology applications that enhance efficiency such as applicant tracking, human resource information management systems, data and information portals, screen consolidation tools, learning and development tools, self-help portals for employees to manage their benefits, and real-time web-based training. We may also implement various client-facing technologies that are expected to enhance our relationships and revenue creation opportunities with our clients. Examples of these programs include fee-based services for our clients' end user customers, remote diagnostics and security management, and analytical and data reporting services. Our Service Offerings Our fully integrated service offerings enable our clients to increase revenue and enhance overall brand value and customer loyalty at many customer touch points. Our full breadth of outsourced services includes technical support, customer care, sales and reveriue generation, as well as other professional back-office services. We blend agility and flexibility with a global, standardized delivery model to create solutions that deliver � value — even in highly specialized industries. We utilize a proprietary "Smart Shore" methodology to determine the optimal mix of support locations — onshore, nearshore, or offshore — and delivery mechanisms (voice, email, chat and self-service) to meet our clients' complete customer care objectives. We meet the challenge of staffing to complex technical and sales requirements with multilingual skill sets across ow global presence of 50 locations and 22 countries. http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K Whether delivered through voice, email or chat technologies, our complete suite of service offerings encompass the entire customer lifecycle, from technical support — typically the first point of post-sales contact — through ongoing customer care and cross-sell/up-sell opportunities. Our technical support services are designed 9 �� Table of Contents to provide clients with a high-quality, cost-effective and efficient service delivery platform to handle transactions from multiple market segments. Using multimedia service delivery channels, we enable our clients to expand their current technical support service delivery platforms with cost effective and robust solutions for consumer and business customers. Technical support services include transactions executed by end user customers who contact a solution center after they have purchased a product and/or service and are looking for assistance with its operation or usage. Technical support transactions may be initiated via a voice or via self-help, e-mail, chaUweb collaboration and callback. To provide quality service, we integrate our service mediums so that end users are able to easily choose the medium that best meets their support needs. In addition to technical support solutions, we offer ongoing customer service and customer care offerings. These are designed to manage customer relationships for our clients on an ongoing basis. We view each customer contact as an opportunity to build a relationship for our clients and enhance their overall brand value. We manage our clients' vital customer relationships through our standardized best practices that begin with the recruitment, hiring and training of our service professionals. We employ such practices in order to identify the right customer service support professionals and equip them with the tools and training necessary to provide high levels of customer service. We service many demanding and complex customer care engagements where a highly skilled workforce and specialized training are required. Our ability to resolve customer issues in a timely manner builds brand value for our clients and lays the foundation far future cross-sell and upsell opportunities. The blended care and sales programs that we develop help our clients reduce their operational costs while at the same time providing them the opportunity to increase their revenues. We place a high value on quality service delivery to create satisfied customers and strengthen brand loyalty. Our customer retention programs are designed to help our clients build brand loyalty by utilizing the right CRM techniques and tools to f" • improve response rates, increase order values and maximize revenues and profit. Since it is much more expensive to recruit a new customer than ,,, retain an existing one, we tailor the approach we take with each client to ensure we are delivering a unique customer experience that secures brand loyalty. As customer satisfaction and loyalty increase, the number of "brand advocates" who are eager to spread the news about the client's services/products increases. Our customer service and retention programs build ongoing, solid relationships with customers, thereby positioning us to maximize ongoing sales op�ortunities through cross-sell and upsell opportunities and revenue generation services. Our revenue generation services are designed to provide our clients with the tools necessary to meet their corporate strategic goals for profitability and revenue. As restrictions on outbound calling campaigns increase and customers become increasingly resistant to unsolicited contacts, more companies are looking for ways to develop a system that enables them to maximize the revenue potential of customer support interactions, while maintaining high levels of customer service and satisfaction. Our technology platform and application programs are central to providing BPO services to our clients. We provide a fully integrated comprehensive contact center delivery platform composed of interaction services that provide integrated customer interaction channels, contact center management services that allow us to efficiently deploy and optimize the use of our resources, and information services that provide for real-time analytics and reporting tools. Each of these three services is delivered virtually across our global infrastructure on a real-time basis. We einploy a combination of our tools to provide services to our clients that allow them to leverage our best-of-breed technology. Our interaction services utilize a combination of VoIP and SIP to deliver a rich set of integrated customer channels, including voice, speech, email and chat, that are integrated into a set of information and analytic platforms providing for the ability to leverage real time analytics and data analytic tools focused on enhancing the value of the customer interaction. 10 Table of Contents �.,. � Our proprietary contact center management platform is a comprehensive management framework developed with a combination of proprietary applications and customized off-the-shelf software and tools, such as Oracle (for fmancial reporting and human resources management), Kronos (for time and attendance), Taleo (for applicant tracking), Aspect eWFM (far warkforce management) and includes http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AMJ Form 10-K proprietary, quality monitoring, learning and development tools (including eLearning that allows for push-training directly to agent desktops) and workforce management tools. � Our proprietary and customized technology and application platform provides powerful CRM features and scalable solutions for our clients a global basis and when combined with our proprietary operating methods, creates a unique ability for us to deliver a richer customer experience at a lower cost, which is one of the critical factors that attract clients to us. Our clients are able to take advantage of our significant technology investment on a global basis. Markets and Clients We focus ow marketing efforts on high growth companies in the technology, computing and hardware, telecommunications, retail, entertainment/media and fmancial services industries. Pro forma for the Combination, revenue from our three largest clients, Dell Inc., Hewlett- Packard Company and AT&T, Inc., accounted for 19%, 12% and 9%, respectively, of revenues for the year ended December 31, 2009. We expect to expand ow existing service segments into areas such as healthcare, government and fmancial service industries in the future. Sales and Marketing We have a direct sales force and sales support arganization focused on high growth companies in the target industries in North America, Latin America, Asia and Europe. We use a consultative solution selling approach to our client relationships and generally focus our marketing efforts at the senior executive levels where decisions are made with respect to outsourcing critical CRM functions. We work closely with our clients at all phases of the service delivery process to develop and refine custom solutions to meet their needs that maximize cusfomer experience, effective cost management, technology tool utilization and revenue generations through various selling services. We practice a consultative approach to our sales process, which involves understanding the intricacies of our potential client's business and their particular needs and formulating a value proposition that directly speaks to these needs. First, we must fully understand the needs requirement for that particular client. Second, we assist in designing the solution for the client's needs. Third, we must customize the solution and implement the service requirements across many different geographic locations using a combination of our and our client's technology platforms. In addition, as we continue to develop relationships with senior management, such as the chief services officer, chief technology officer, chief financial officer, business unit leader and chief executive officer of our clients, our business model will continue to evolve into a trusted business advisor to our clients. • Our sales and marketing group also evaluates entry into new end markets, as well as identifying potential new clients within specific end markets. The factors that are considered in evaluating new market opportunities or winning new clients include potential market size, industry participants, market dynamics and trends, growth prospects and the propensity far outsourcing services. With respect to an individual client, the sales and marketing group will review its financial strength and market position and its anticipated need for long-term outsourcing services. We consider the ability to deliver those services, our competitive positioning and the likelihood of winning the contract in making such deternunations. Over the past year we have been successful in winning several new logo clients in the computing, telecommunications, media distribution, software, and travel industry. ll Table of C'ontent Employees Our success in recruiting, hiring and training highly skilled employees is key to our ability to provide high-quality CRM and BPO solutions to our clients on a global basis. We generally locate our service centers in locations that have access to higher education and a major transportation infrastructure. We generally offer a competitive pay scale, hue primarily full-time employees who are eligible to receive the full range of employee benefits; and seek to provide employees with a clear, viable career path. We also offer a combination of client based training, language training and internal technology certification courses to our employees. The combination of our training programs with close manager mentoring programs enables our employees to not only provide excellent service to our clients, but also progress into management positions within Stream. As of December 31, 2009, we had over 30,000 employees providing services to our client's customers and administrative services in our business. Except for our service centers in some countries within Europe and Africa where approximately 3,400 of our empioyees are subject to collective bargaining agreements using workers' councils (which are typical in these regions), our employees are not subject to collective bargaining agreements. We believe relations with our employees are good. �npetition The industry in which we operate is very competitive and highly fragmented. Our competitors range in size from very small firms offering specialized applications or short-term projects, to large independent firms, and the in-house operations of many clients and potential clients. A http://www.sec.gov/Archives(edgar/data/14052$7/000119312510052721/d10k.htmf5/17/2012 9:53:24 AM1 Form 10-K number of our competitors have greater capabilities and resources than we do. We compete directly and indirectly with certain companies that provide CRM and other BPO solutions on an outsourced basis, including, but not limited to, Aditya Birla Minacs, APAC Customer Services, Inc., TIVIT Terceirizacao de Tecnologia e Servicos SA Contax Participacoes SA, Atento Brasil S.A, Convergys Corporation, EXLService Holdings, Inc., Genpact Limited, Philippine Long Distance Telephone Company, SITEL Corporation, StarTek, Inc., Sutherland Global Services, Sykes Enterprises, Incorporated, TechTeam Global, Inc., Teleperformance S.A., Teletech Holdings, Inc., TransCom Worldwide SA, West Corporation,� Wipro Limited and WNS (Holdings) Limited. The list of potential competitors includes both publicly traded and privately held companies. Service Professional Tools We believe in making the necessary investments to ensure that each of our service professionals has the tools required to provide high quality service to end-users. We leverage a mix of in-house developed and third party software solutions across all of our enterprises. Many of these solutions are customized for our enterprise and facilitate data capture and transfer from the service professional to our various data storage and network systems. Our systems must also be flexible enough to operate clients' CRM interfaces, which operate on our desktops. Most of our client programs utilize our client's CRM interface and tools. Intellectual Property As of December 31, 2009, we had 12 registered trademarks in seven jurisdictions. In addition, we had 11 registered domain names that have expiration dates from September 3, 2010 through Ocfober 15, 2015. Corporate Information Stream Global Services, Inc. is a Delaware corporation. Our principal office is located at 20 William Street, Suite 310, Wellesley, Massachusetts 02481, and our telephone number is (781) 304-1800. Our website address is www.stream.com. 12 Table of Contents MANAGEMENT . • i Information concerning our executive officers as of March 9, 2010 is set forth below: _ Name Age Position — — . � l2. Scott Murray �'� � � � 46'� Chairman of the Board of Directors, Ghief Executive Officer and President :: �, : Sheila M. Flaherty 44 Executive Vice President, Chief Legal and Administrative Officer and Corporate Secretary Robert Decliant ' 48 Executive Vice President, Global Sales and Marketing' Dennis Lacey 56 Executive Vice President and Chief Financial Officer R. Scott Murray, our founder, has served as chairman of the board of directors, chief executive officer and president since oar inception on June 26, 2007. From February 2006 to February 2008, Mr. Murray served as non-executive chairman of the board of Protvcol Communications, Inc., a privately held provider of fully integrated marketing services in the business process outsourcing sector. In 2006, he served as chief executive officer and a director of 3Com Corporation and the chairman of the board of H3C, a joint venture operating in mainland China with Huawei Technologies. From August 2002 to August 2004, Mr. Murray was chief executive officer and a director of Modus Media, Inc., a privately held business process outsourcer in the global supply chain and hosting services sector. Modus had operations located around the world including North America, Mexico, Europe and Asia (including five locations in mainland China). From January 2000 until January 2002, following its acquisition in 2001 by Solectron Corporation, Mr. Murray served as president and chief operating officer of Stream International, Inc (a predecessor company to SGS). From February 1994 through May 1999, Mr. Murray served as the executive vice president and chief financial officer of The Learning Company, which was a publicly traded consumer software company. Mr. Murray is a Canadian chartered accountant and a graduate of the University of Western Ontario and holds a fmance and administration degree. Sheila M. Flaherty has been our executive vice president, chief legal and administrative officer (formerly general counsel) and corporate secretary since July 2007. From January 2006 to May 2007, Ms. Flaheriy was general counsel and vice president of Abiomed, Inc., a publicly traded medical technology company. From November 1998 to August 2004, Ms. Flaherty held several positions, including vice president, general counsel and secretary, at Modus Media, Inc., a privately held business process outsourcer in the global supply chain and hosting services sector. From 1996 through 1997, Ms. Flaherty served as associate general counsel at Astra Pharmaceuticals, Inc., a pharmaceutical company. From 1993 to 1996, Ms. Flaherty practiced law with the law firm of Nutter, McClennen & Fish. Ms. Flaherty received a bachelor's degree from the Unive� of Massachusetts and a Juris Doctorate from Georgetown University Law Center. �°° Robert Dechant has served as our executive vice president global sales and marketing since August 2008. Prior to joining us, Mr. Dechant served as senior vice president of sales and marketing and general manager of the Data and Voice Business Unit for 3Com Corporation from http://www.sec.gov/Archives/edgar/data/1405287/00011931251005272lld10k.htm[5/17/2012 9:53:24 AM] Form 10-K Apri12006 through June 2008. From February 2003 to October 2004, Mr. Dechant also served as executive vice president of sales and marketing of Modus Media lnc. From 1997 through 2003, Mr. Dechant handled several roles for Stream International as seniar vice president of sales and arketing and chief operating officer; From 1994 to 1997, Mr. Dechant also served as vice president of sales for Software Support Inc. (acquired Convergys Corp in 1996) and also held various roles at IBM Corp. Mr. Dechant received a bachelor's of science degree from Fairfield niversity. Dennis Laeey has served as our executive vice president and chief financial officer since January 2010. Prior to joining us, Mr. Lacey served as head of capital markets of Republic Financial Corporation, a private investment firm from September 2006 through September 2009. Prior to that, Mr. Lacey served as executive vice president and chief financial officer of TeleTech Holdings, Inc., a global CRM services provider from May 2003 to August 2006. Prior to that, Mr. Lacey was served as executive vice president and chief financial officer of CKE Restaurants Inc., a nationwide operator of fast food restaurants, from Apri12001 to March 2003. Prior to that, Mr. Lacey served as executive vice president and chief financial officer of Imperial Bancorporation, a 13 Table of Contents • NYSE listed commercial bank focused on high tech Jending and film finance, from April 1998 to January 2001. Prior to that, Mr. Lacey served as chief executive officer of Capital Associates, a NASDAQ listed equipment leasing company, from September 1989 to March 1998. Prior to that, Mr. Lacey served as an audit pariner at Coopers & Lybrarrd, an intemational accounting firm. ITEM lA. RISK FACTORS Our business is subject to numerous risks. The risk factors listed below include any material changes to and supersede the description of the risk factors associated with our business previously disclosed in Item IA of our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2009. The risk factors that appear below, among others, could cause our actual results to d�er materially from those expressed in forward-Zooking statements made by us or on our behalf in filings with the Securities and Exchange Commission, press releases, communications with investors and oral statements. Such forward looking statements are discussed under "Cautionary Note Regarding Forward-Looking tements. " Risks Relating to Our Business We have a history of losses and there can be no assurance that we will become or remain profitable or that losses will not continue to occur. For the year ended December 31, 2009, we had a net loss of $28.6 million. We may not achieve or sustain profitability in the future. Our ability to achieve profitability will depend, in part, on our ability to: • attract and retain an adequate client base; • manage effectively a large global business; . • react to changes, including technological changes, in the markets we target or operate in; • deploy our services in additional markets or industry segments; • continue to maintain operating efficiencies in our service centers across the globe; • respond to competitive developments and challenges, • attract and retain experienced and talented personnel; and • establish strategic business relationships. We may not be able to do any of these successfully, and our failure to do so is likely to have a negative impact on our operating results. A substantial portion of our revenue is generated from a limited number of clients, and the loss of one or more of these clients or a decline in end user acceptance of our client's products would materially reduce our revenue and cash flow and adversely affect our business. We have derived, and we believe that we will continue to derive a substantial portion of our revenue from a limited number of clients. Revenue from our three largest clients, our three largest clients Dell Inc., the Hewlett-Packard Company and AT&T Inc., which, on a pro forma basis giving effect to our acquisition of EGS Corp. as if it occurred on January 1, 2009, accounted for 19%, 12% and 9%, respectively, of our �ues for the year ended December 31, 2009. Although we generally enter into multi-year contracts with clients, most of which are typically ,�.:wable, these contracts generally do not require clients to provide a minimum amount of revenues and allow clients to ternunate earlier for convenience. There can be no assurance that we will be able to retain, renew or extend our contracts with our majar clients. Although some of these contracts require the client to pay a contractually agreed upon amount in the event of early termination, there can be no assurance that we will be able to collect such amount ar that such amount, if received, will sufficiently compensate us for any significant investment we may have made htto://www.seaeov/Archives/edear/data/1 405287/0001 1 93 1?510052721/c110k htmf5/17/2(1129•53•24 AMl Form 10-K to support the cancelled program or for the revenues we may lose as a result of the early termination. 14 __ _ __ _ _ f� Table of Contents There can also be no assurance that if we were to lose one or more of our major clients, we would be able to replace such clients with new clients that generate a comparable amounf of revenues. A number of factors could cause us to lose business or revenue from a client, and some of these factors are not predictable and are beyond our control. For example, a client may demand price reductions, change its outsourcing strategy, move work in-house or reduce previously forecasted demand. In addition, the volume of work we perform for specific clients may vary from year to year. In most cases, if a client terminates its contract with us or does not meet its forecasted demand, we would have no contractual recourse even if we have built-out facilities and/or hired and trained service professionals to provide services to the client. Thus, a major client in one year may not provide the same level of revenue in any subsequent year. Consequently, the loss of one or more of our major clients, or the inability to generate anticipated revenues from them, would have a material adverse effect on our business, results of operations, fmancial condition and cash flows. Our operating results for the foreseeable future will continue to depend on our ability to effect sales to a small number of clients and any revenue growth will depend on our success selling additional services to our large clients and expanding our client base. We typically charge our clients based on the number of inbound calls that we service, or the amount of time, by the minute or by the hour in most cases, our service professionals spend with end-users relating to our clients' products. We also provide inbound sales services to our clients, whereby we are paid based on our level of sales success and other client driven metrics. To the extent there is a decline in spending for our clients' products, whether as a result of a decline in product acceptance or general economic conditions, our business will be adversely affected. There are a number of factors relating to discretionary consumer and business spending, including economic conditions affecting disposable income (such as employment, business conditions, taxation and interest rates) which impact the ability of our clients to sell their products, and most of which are outside of our control. There can be no assurance that spending for our clients' products will not be affected by adverse economic conditions, thereby affecting our business, results of operations, financial condition and cash flows. Our revenue is highly dependent on a few industries and any decrease in demand for outsourced business processes in these industries could reduce our revenue and seriously harm our business. • Most of our revenue is derived from clients concentrated in the technology, software, computing and telecommunications indush The � success of our business largely depends on continued demand for our services from clients in these industries, as well as on trends in these industries to outsource business processes on a global basis. A downturn in any of the industries we serve, a slowdown or reversal of the trend to outsource business processes in any of these industries ar the introduction of regulations that restrict or discourage companies from outsourcing could result in a decrease in the demand for our services, which in turn could materially harm our business, results of operations, fmancial conditiori and cash flows. The current global recession has negatively affected the business of many of our clients and has in some cases resulted in lower volumes of work for us. In the event that the global recession continues or worsens, this may in turn continue to have a negative impact on our business due to lower volumes or pricing pressures. Other developments may also lead to a decline in the demand for our services in these industries. For example, the indusMes we primarily serve, particularly the communications industry, have experienced a significant level of consolidation in recent years. Consolidation in any of these industries or acquisitions, particularly involving our clients, may decrease the potential number of buyers of our services. Furthermore, many of our existing and new clients have begun or plan to consolidate ar reduce the number of service providers that they use for various services in various geographies. To the extent that we are not successful in becoming the recipient of the consolidation of services by these clients our business and revenues will suffer. Any significant reduction in, or the elimination of, the use of the services we provide within any of these industries would reduce our revenue and cause our profitability to decline. Our clients may experience rapid changes in their prospects, substantial price competition and pressure on their results of operations. This may result in increasing pressure on us from clients in these key industries to lower our prices, which could negatively affect our business, results of operations, financial condition and cash flows. 15 �able of Contents We may be unable to successfully execute on any of our identified business opportunities or other business opportunities that we determine to pursu� M1` � In order to pursue business opporiunities, we will need Yo continue to build our infrastructure, our client initiatives and operational { capabilities. Our ability to do any of these successfully could be affected by one or more of the following factors: • the ability of our technology and hardware, suppliers and service providers to perform as we expect; http://wwwsec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm�5/17/2012 9:5324 AM] Form 10-K • our ability to execute our strategy and continue to operate a large, more diverse business efficiently on a global basis, '• our ability to effectively manage our third party relationships; • our ability to attract and retain qualified personnel; � • our ability to effectively mana e our em lo ee costs and other ex enses• g P Y P � • our ability to retain and grow our clients and the current portfolio of business with each client; ` • technology and application failures and outages, security breaches or interruption of service, which could adversely affect our reputation and our relations with our clients, • our ability to accurately predict and respond to the rapid technological changes in our industry and the evolving service and pricing demands of the markets we serve; and • our ability to raise additional capital to fund our growth. Our failure to adequately address the above factors would have a significant impact on our ability to implement our business plan and our ability to pursue other opportunities that arise, which might negatively affect our business. Our business may be impacted by the performance of our clients. The current economic environment and global recession is having a negative impact on the revenue and sales unit volumes of many of our clients. Our revenue and call volume is often highly correlated with units sold, renewals from our clients' customers or end users, and revenue of our clients. In addition, many of our clients are seeking to consolidate their current group of service providers to a smailer more manageable group that is able to provide integrated service offerings on a global basis. In some cases we do not currently offer or have service locations in those geographic locations where our clients are seeking services. Our ability to sustain growth and profitability in the current environment is very dependent upon our ability to maintain and/or gain a greater share of business within our current clients, and to attract new clients. There can be no assurance that we will be able to do so in the future. Moreover, we are exposed to additional risks related to our clients' ability to pay and the resulting uncollectability of our accounts receivables. The economic slowdown, coupled with tightened credit availability, could adversely affect our clients' liquidity and cause them to delay or reduce their payments to us. Such delays or reductions or the non-payment by our clients of amounts owed to us may require us to incur a bad debt expense. To the extent that one of our major clients should file for bankruptcy protectiion or otherwise fail, it could have a material effect on our future business, results of operations, financial condition and cash flows. In the event that le of our service centers do not receive sufficient call volume in the future we may be required to close them and relocate business in other _�ters. This would require substantial employee severance, lease termination costs and other re-organization costs. We may not be able to achieve incremental revenue growth or profitability. Our strategy calls for us to achieve incremental revenue growth and profitability through initiatives, such as opening new or expanding our existing internationally located service locations in places like China, Egypt, Japan, and South America. Other initiatives we may pursue include, the addition or expansion of services, such 16 Table of Contents as sales services, warranty services, credit and collection services, data management and hosting, and language translation and interpretation services. Our strategy also includes the introduction of front-end technology-driven service solutions for fee-based services, self-help, and other technology driven solutions. Additionally, our strategy includes operational improvements in areas such as employee attrition, site capacity utilization, centralization of certain administrative services, productivity rates, use of technology and other operating metrics. We are also in process of consolidating and rationalizing certain of our service facilities and legacy administrative offices to improve our profitability. However, there can be no assurance that we will not encounter difficulties or delays in implementing these initiatives, and any such difficulties or delays would adversely affect our future operating results and financial performance. We have, on a consolidated basis, a substantial amount of debt, which could impact our ability to obtain future financing or pursue our growth strategy. We have substantial indebtedness. As of December 31, 2009, we had approximately $223.8 million of indebtedness (including capital leases) � d up to an additional $84S million of borrowings available under the ABL Credit Facility, before taking into account outstanding letters of it, subject to borrowing base limitations and other specified terms and conditions. Our high level of indebtedness could have important consequences and significant adverse effects on our business, including the following: • we must use a substantial portion of our cash flow from operations to pay interest on our indebtedness, which will reduce the funds http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm(5/17/2012 9:5324 AM] Form 10-K available to us for operations and other purposes; • our ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes may be � impaired; • our high level of indebtedness could place us at a competitive disadvantage compared to our competitors that may have proportionate;� less debt; • our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate may be limited; • our high level of indebtedness may make us more vulnerable to economic downturns and adverse developments in our business; and • our ability to fund a change of control offer may be limited. The instruments governing our ABL Credit Facility contain, and the instruments governing any indebtedness we may incur in the future may contain, restrictive covenants that limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply with these covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all or a portion of our outstanding indebtedness. Payments on our indebtedness will require a significant amount of cash. Our ability to meet our cash requirements and service our debt is impacted by many factors that are outside of our controb We expect to obtain the funds to pay our expenses and to pay the amounts due under the Notes primarily from our operations and borrowings under our ABL Credit Facility. Our ability to meet our expenses and make these payments thus depends on our future performance, which will be affected by financial, business, economic and other factors, many of which we cannot control. Our business may not generate sufficient cash flow from operations in the future and our currently anticipated growth in revenue and cash flow may not be realized, either or both of which could result in our being unable to repay indebtedness, including the Notes, or to fund other liquidity needs. Our ability to bonow amounts under our ABL Credit Facility will be subject to borrowing base limitations and other specified terms and conditions, and the ability of certain of our foreign subsidiaries to 17 Table of Contents { • borrow amounts under our ABL Credit Facility in the future is also subject, among other conditions, to our provision of security interests in certain assets of those foreign subsidiaries, which we did not provide upon the closing of the ABL Credit Facility and we may not be able to provide in the future. If we do not have sufficient cash resources in the future, we may be required to refinance all or part of our then existing debt, sell assets or borrow more money. We might not be able to accomplish any of these alternatives on terms acceptable to us ar at all. In addition, the terms of existing or future debt agreements may restrict us from adopting any of these altematives. Our failure to generate sufficient cash flow or to achieve any of these alternatives could materially adversely affect the value of the notes and our ability to pay the amounts due under the notes. We may be able to incur substantial additional indebtedness that could further exacerbate the risks associated with our indebtedness. We may incur substantial additional indebtedness in the future. Although the indenture governing the Notes and the loan agreement governing our ABL Credit Facility contain restrictions on our incurrence of additional debt, these restrictions are subject fo a number of qualifications and exceptions, and we could incur substantial additional indebtedness, including additional secured indebtedness. If we incur additional debt, the risks described above under "We have, on a consolidated basis, a substantial amount of debt, which could impact our ability to obtain future financing or pursue our growth strategy" and "Payments on our indebtedness will require a significant amount of cash. Our ability to meet our cash requirements and service our debt is impacted by many factors that are outside of our control" would intensify. Our business may not develop in ways that we currently anticipate due to negative public reaction to outsourcing and recently proposed legislation. We have based our growth strategy on certain assumptions regarding our industry, services and future demand in the market for our services. However, the trend to outsource business processes may not continue and could reverse. Outsourcing is a politically sensitive topic in the United States and elsewhere. For example, several organizations in the United States have publicly expressed concern about a perceived association between outsourcing providers and the loss of jobs in the United States. Public figures, such as President Obama, have supported legislation that they contend will generate new jobs in the United States, including limiting income tax credits far companies that offshore American jobs. This may also have a significant effect on government regulated companies or financial institutions or other businesses that have recently received � financial aid from the U.S. Federal government. ( There has been recent publicity about some negative experiences that organizations have had with outsourcing, such as theft and misappropriation of sensitive client data. Current or prospective clients may elect to perform such services themselves or may be discouraged from transfening these services from onshore to off-shore providers to avoid negative perceptions that may be associated with using an off-shore http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K provider. Any slowdown or reversal of existing industry trends towards off-shore outsourcing would seriously harm our ability to compete effectively with competitors that operate solely out of facilities located in the United States or Canada. . A variety of U.S. federal and state legislation has been proposed that, if enacted, could restrict or discourage U.S. companies from tsourcing services outside the United States. For example, legislation has been proposed that would require offshore providers of services requiring direct interaction with clients' customers to identify to clients' customers where the offshore provider is located. Because most of our clients are U.S. companies located in the United States, any expansion of existing laws or the enactment of new legislation restricting offshore outsourcing could harm our business, results of operations and financial condition. It is possible that legislation could be adopted that would restrict U.S. private sector companies that have federal or state government contracts from outsowcing their services to off-shore service providers. This would also affect our ability to attract or retain clients that have these contracts. 18 Table of Contents We may be unable to cost-effectively attract and retain qualified personnel, which could materially increase our costs. Our business is dependent on our ability to attract, retain and motivate key executives, including our, founder, Chairman and Chief Executive Officer, Mr. R. Scott Murray, and also recruit, hire, train and retain highly qualified technical and managerial personnel, including individuals with significant experience in the industries that we have targeted. The CRM and BPO service indushy is labor intensive and is normally characterized by high monthly employee turnover. Any increase in our employee turnover rate would increase our recruiting and training costs, decrease our operating effectiveness and productivity and delay or deter us from taking on additional business resulting in lower financial performance. Also, the introduction of significant new clients or the implementation of new large-scale programs may require us to recruit, hire and train personnel at an accelerated rate. In addition, some of ow facilities are located in geographic areas with relatively low unemployment rates, thus potentially making it more difficult and costly to attract and retain qualified personnel. There can be no assurance that we will be able to continue to hire, train and retain sufficient qualified personnel to adequately staff our business. We may not be able to predict our future tax liabilities. If we become subject to increased levels of tazation or if tax contingencies are resolved � versely, our results of operations and financial performance could be adversely affected Due to the international nature of our operations, we are subject to the complex and varying tax laws and rules of several foreign jurisdictions. We may not be able to predict the amount of future tax liabilities to which we may become subject due to some of these complexities if our positions are challenged by local taac authorities. Any increase in the amount of taxation incurred as a result of challenges to our tax filing positions or due to legislative or regulatory changes could result in a material adverse effect on our business, results of operations and financial condition. We are subject to ongoing tax audits, including issues related to transfer pricing, in the United States and other jurisdictions. We have material tax- related contingent liabilities that are difficult to predict or quantify. While we believe that our current tax provisions are reasonable and appropriate, we cannot be assured that these items will be settled for the amounts accrued or that additional exposures will not be identified in the future or that additional tax reserves will not be provided for any such exposures. Our financial results may be impacted by significant fluctuations in foreign currency exchange rates. A substantial amount of our operating costs is incurred in foreign currencies. In many cases, we bill our clients in U.S. dollar, Canadian dollar, Euro and U.K. pound sterling denominated amounts and incur costs in the host country m local currency. In recent periods, the U.S. dollar has dropped in value relative to other currencies and therefore our cost of providing services outside the United States has increased accordingly when measured in U.S. dollars. Any continued significant fluctuations in the currency exchange rates between the U.S. dollar, Canadian dollar, Euro and U.K. pounds sterling and the currencies of countries in which we operate may affect our business, results of operations, financial condition and cash flows. A substantial portion of our costs are incurred and paid in Philippine pesos. Therefore, we are exposed to the risk of an increase in the value of the Philippine peso relative to the U.S. dollar, which would increase the value of those expenses when measured in U.S. dollars. Although we engage in hedging relating to the Canadian dollar, the Indian rupee and the Philippine peso, our hedging strategy may not sufficiently protect us from further strengthening of these currencies against the U.S. dollar. As a result, our expenses could increase and harm our operating results. In the converse, if the U.S. dollar strengthens against the Canadian dollar, the Indian rupee or the Philippine peso, our hedging strategy could reduce the potential benefits we would otherwise expect from a strengthening U.S. dollar. We are also doing business in Latin America but do not yet hedge currencies from these countries. • - _ _.._ 19 _ _ . _ _ _ Table of Contents http://www.sea8ov/Archives/edQar/data/14n52R7/nnn7 19'� 1 �57 nnS�7�7 /Ai nk hr,,,r5/7 7/�ni � Q•5'2•�a AT�fI Form 10-K Our international operations and sales subject us to additional risks, including risks associated with unexpected events. We conduct business in various countries outside of the United States, including Canada, the Netherlands, the United Kingdom, Italy, Ireland, Spain, Sweden, Prance, Germany, Poland, Denmark, Bulgaria, India, the Philippines, El Salvador, Egypt, Tunisia, South Africa, Nicaragua, the Dominican Republic and Costa Rica. A key component of our growth strategy is our continued international expansion, especially/, in new markets, such as China, Eastem Europe, Japan, and South America. There can be no assurance that we will be able to successfully market, sell and deliver our services in these markets, or that we will be able to successfully expand international operations. The global reach of our busirtess could cause us to be subject to unexpected, uncontrollable and rapidly changing events and circumstances. The following factors, among others, could adversely affect our business and earnings: • failure to properly comply with foreign laws and regulations applicable to our foreign activities including, without limitation, employment law requirements; • compliance with multiple and potentially conflicting regulations in the countries where we operate now and in the future, including employment laws, intellectual property requuements, and the Foreign Corrupt Practices Act and other anti-corruption laws; • difficulties in managing foreign operations and attracting and retaining appropriate levels of senior management and staffing; • longer cash collection cycles; • seasonal reductions in business activities, particularly throughout Ewope; • proper compliance with local tax laws which can be complex and may result in unintended adverse tax consequences; • anti-American sentiment due to American policies that may be unpopular in certain countries; • diff culties in enforcing agreements through foreign legal systems; fluctuations in exchange rates that may affect product demand and may adversely affect the profitability in U.S. dollars of services we provide in foreign markets, where payment for our products and services is made in the local currency and revenues are earned in U.S. dollars or other currency; • changes in general economic and political conditions in countries where we operate; • the ability to efficiently repatriate cash to the United States and transfer cash between foreign jurisdictions; • changes in transfer pricing policies for income tax purposes in counh where we operate; • restrictions on downsizin o erations and ersonnel in Euro e and other 'urisdictions i.e. regulatory or works council restrictions) a�: • g P P P J � expenses and delays associated with any such activities; and • changes to or elimination of the international tax holiday for our subsidiaries in India or the Philippines. As we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and effectively manage these and other risks associated with our international operations. Our failure to manage any of these risks successfully could harm our global operations and reduce our global sales, adversely affecting our business and future financial performance. 20 Table nf Contents Countries where we do business have experienced political and economic instability and periodically experience civil unrest and terrorism, which could disrupt our operations and cause our business to suffen CounMes where we do business, and in particular the Philippines, have experienced significant inflation, currency declines and shortages of foreign exchange. We are exposed to the risk of rental and other cost increases due to inflation in the Philippines, which has historically been at a much higher rate than in the United States. Certain countries where we do business, such as the Philippines, India, Egypt and certain Latin American countries, also periodically experience civil unrest, terrorism and political turmoil and U.S. companies in particular may experience greater risk. In addition, we expect to enter into new markets in places such as China, Japan, South America and Eastern Europe, which may have similar risks. These conditions could disrupt our operations and cause our business to suffer. Current tax hnlidays in Che Plxilippines will expire within the next several years. We currently benefit from income tax holiday incentives in the Philippines pursuant to the registrations with the Philippine Economic Zone Authority, or FEZA, of our various projects and operations. Under such PEZA registrations, the income tax holiday of our various PEZA- �• registered projects in the Philippines expire at staggered dates through 2012. The expiration of these tax holidays will increase our effective � income tax rate. httn://www.seaQOV/Archives/ed�az/data/1405287/000119312510052721/d10k.hhn(5/17/2012 9:53:24 AM] Form 10-K Our revenues and costs are subject to quarterly variations that may adversely affect quarterly finkncial results. We have experienced, and in the future could experience, quarterly variations in revenues as a result of a variety of factors, many of which � outside our control, including: the timing of new client contracts; • the timing of new service offerings or modifications in client strategies, • our ability to attract and retain and increase sales to existing customers; • the timing of acquisitions of businesses and products by us and our competitors; • our ability to effectively build and start-up new solution centers; • product and price competition; • our ability to build an integrated service offering on a common technology platform; changes in our operating expenses; • software defects or other product quality problems; • the ability to implement new technologies on a timely basis; • the expiration or termination of existing contracts; • the timing of increased expenses incurred to obtain and support new business; • currency fluctuations; and • changes in our revenue mix among our various service offerings. In addition, our planned staffing levels, investments and other operating expenditures are based on revenue forecasts provided by our clients. If actual revenues are below these forecasts or our own expectations in any given quarter, our business, results of operations, financial condition and cash flows would likely be materially adversely affected for that quarter and thereafter. In addition, to the extent that we enfer into mergers and acquisitions or new business ventures in the future, our quarterly or future results may be impacted. � _ 21 Table of Contents Our financiaL results may be adversely affected by increases in labor-related costs. Because a significant portion of our operating costs relate to labor costs, an increase in U.S. or foreign wages, costs of employee benefits or taxes could have a material adverse effect on our business, results of operations and financial condition. Far example, over the past several years, healthcare costs have increased at a rate much greater than that of general cost or price indices. Increases in our pricing may not fully compensate us for increases in labor and other costs incurred in providing services. Some of our facilities are located in jurisdictions, such as France, Italy and Germany, where it is difficult or expensive to temporarily or permanently lay off hourly workers due to both local laws and practices within these jurisdictions. Such laws will make it more expensive for us to respond to adverse economic conditions. There can be no assurance that we will be able to increase our pricing or reduce our workforce to fully compensate for the increases in the costs to provide services. We may need to increase the levels of employee compensation more rapidly than in the past to remain competitive in attracting and retaining the quality and number of employees that our business requires. Wage costs in India and other offshare locations have historically been significantly lower than wage costs in the North America and Europe for comparably skilled professionals, which has been one of Stream's competitive advantages. However, because of rapid economic growth in India, increased demand for CRM and BPO services from India and increased competition for skilled employees in offshore low cost locations like India and the Philippines, wages for comparably skilled employees in offshore low cost locations like India and the Philippines are increasing at a faster rate than in North Amer�ca and Europe, which may reduce this competitive advantage. In addition, although eTelecare has not historically experienced significant wage inflation with its Philippine employees, we are faced with increasing competition in the Philippines for service professionals and technicians who generate revenue for us, and we expect this competition will continue to increase as additional outsourcing companies enter the market and expand their operations. In particular, there may be limited availability of qualified middle and upper management candidates. We have benefited from a suitable supply of college gaduates in the Philippines. If this favorable supply changes due to increased competition, it could affect the availability and the cost of service professionals � increase our arirition rate. Wages are generally higher for employees performing data anal tics services and risk and financial mana ement services than for em lo ees Y g P Y perfornung CRM and BPO services. As the scale of our data analytics services and our risk and financial management services increases, wages as a percentage of revenues will likely increase. Wage increases in the long term may reduce our profit margins. Additionally, because substantially all of our employees based outside the United States are paid 'm local currency, while our revenues are collected in other currencies (primarily in http:i/www.sec.govJArchives/edQar/data/1405287/000119312510052721/d10k.htm�5/17/2012 9:53:24 AM� Form 10-K U.S. dollars, the Euro and U.K. pounds sterling), our employee costs as a percentage of revenues may increase or decrease significantly if the exchange rates between these currencies fluctuate significantly. We have not experienced significant union activity or organized labor activity in the past. There can be no assurance thaf we will not experierice increased union organizing activity in the future. Such organization could increase our cost of labor, limit our abiIity to modify work � schedules and cause work stoppage. Our profitability will be adversely affected if we do not maintain sufficient capacity utilization. Our profitability is influenced significantly by the capacity utilization of our service centers. Because our business consists of inbound contacts from end-users, we have no control of when or how many end user customer contacts are made. Moreover, we have significantly higher utilization during peak (week day) periods than during off-peak (night and weekend) periods and therefore we need to reserve capacity at our service centers to anticipate peak periods. In the future, we may consolidate or close under-performing service centers in order to maintain or improve targeted utilization and margins. If we close service centers in the future due to insufficient customer demand, we may be required to record restructuring or impairment charges, which could adversely impact our business, results of operations and financial condition. There can be no assurance that we will be able to achieve or maintain optimal service center capacity utilization. 22 Table of Contents Many of our existing or emerging competitors are better established and have significantly greater resources, which may make it diffieult to attract and retain clients and grow revenues. The market in which we compete is highly competitive and fragmented. We expect competition to persist and intensify in the future. Our competitors include small firms offering specific applications, divisions of large entities, large independent firms and, most significantly, the in- house operations of clients or potential clients. Because we compete with the in-house operations of existing or potential clients, our business, results of operations, financial condition and cash flows could be adversely affected if our existing clients decide to provide CRM and other BPO solutions that currently are outsourced or if potential clients retain or increase their in-house customer service and product support capabilities. In addition, competitive pressures from currE • or future competitors or in-house operations could cause our services to lose market acceptance or result in significant price erosion, which would have a material adverse effect upon our business, results of operations, financial condition and cash flows. Some of our clients may in the future seek to consolidate services that we provide, which may in turn reduce the amounY of work we perform for them. Some of our existing and future competitors have greater fmancial, human and other resources, longer operating histories, greater technological expertise, more recognizable brand names and mare established relationships than we do in the industries that we currently serve or may serve in the future. Some of our competitors may enter into merger, strategic or commercial relationships among themselves or with larger, more established companies in order to increase their ability to address client needs. Increased competition, pricing pressure or loss of market share could reduce our operating margin, which could harm our business, results of operations, financial condition and cash flows. We may engage in future acquisitions that could disrupt our business, cause dilution to our stockholders and harm our financial position and operating results. . We may pursue acquisitions of companies or assets in order to enhance our market position and/or expand the types of services that we offer to our clients and may enter geographic markets where we do not currently conduct business. We may also acquire minority interest in companies or enter into joint venture arrangements with other parties, which may include existing clients. We may also pursue certain acquisitions on an unsolicited basis, which may cause management distractions and increased legal costs. We may not be able to find suitable acquisition candidates and we may not be able to consummate such acquisitions on favorable terms, if at a1L If we do complete acquisitions, we cannot be sure that they will ultimately strengthen our competitive position, or that our clients, employees or investors will not view them negatively. Acquisitions may disrupt ow ongoing operations, divert management from day-to-day responsibilities, increase our indebtedness, liabilities, exposure to different legal regimes and/ar regulations, and expenses and harm our operating results or financial condition. We may not be able to successfully integrate these acquisitions into our operations and may lose key clients, employees, members of management or not achieve the synergies and other benefits expected from the acquisition or investment. Future acquisitions may reduce our cash available for operations and other uses and could result in an increase in amortization expense, potentially dilutive issuances of equity securities or the incurrence of debt, which could harm our business, results of operations, financial condition and cash flows. Our business depends on uninterrupted service to our clients. A system jailure or labor shortage could cause delays or interruptions of servf, • which could cause us to lose clients. Our operations are dependent upon our ability to protect our service centers, computer and telecommunications equipment and software systems against damage or interruption from fire, power loss, telecommunications interruption or failure, natural disaster, breaches in data and http://www.seagov/Archives/edgar/data/1405287/0001 ]931251005272]/dlOk.htm(5/17/2012 9:53:24 AM] Form 10-K technology security integrity and other similar events in order to provide our clients with reliable services. Additionally, we depend on our employees to perform our services on behalf of our clients. If employees miss wark due to labor shortages, natural disasters and other similar vents, our ability to provide our clients with reliable services will be hindered. Some of the events that could adversely affect our ability to deliver able service include physical damage to , 23 Table of Contents our network operations centers; disruptions, power surges or outages to our computer and telecommunications technologies which are beyond our control; sabotage or terrorist attacks and cyber attacks or data theft; software defects; fire or natural disasters such as typhoons, hurricanes, floods and earthquakes; and labor shortages or walk-outs. Technology is a critical foundation in our service delivery. We utilize and deploy internally developed and third party software solutions that is often customized by us across various hardware and software environments. We operate an extensive internal voice and data network that links our global sites together in a multi-hub model that enables the rerouting of call volumes. We also rely on multiple public communication channels far connectivity to our clients. Maintenance of and investment in these foundational components are critical to out success. If the reliability of technology or network operations fall below required service levels, or a systemic fault affects the organization broadly, business from our existing and potential clients may be jeopardized and cause our revenue to decrease. If we experience a temporary or permanent interruption at one or more of our service centers and/or data centers, through casualty, operating malfunction, labor shortage or otherwise, our business could be materially adversely affected and we may be required to pay contractual damages to affected clients or allow some clients to ternunate or renegotiate their contracts with us. Although we maintain properiy, business interruption and general liability insurance, including coverage for errors and omissions, there can be no assurance that our exisring coverage will continue to be available on reasonable terms or will be available in amounts sufficient to cover one or more large claims, or that the insurer will not disclaim coverage as to any future claim. The occurrence of errors could result in a loss of data to us or our clients, which could cause a loss of revenues, failure to achieve product acceptance, increased insurance costs, product returns, legal claims, including product liability claims, against us, delays in payment to us by clients, increased service and warranty expenses or financial concessions, diversion of resources, injury to our reputation, or � ages to our efforts to build brand awareness, any of which could have a material adverse effect on our market shaze and, in turn, our business, 1ts of operations, finaticial condition and cash flows. We are subject to U.S. and foreign jurisdiction laws relating to individually identifiable information, and failure to comply with those laws, whether or not inadvertent, could subject us to legal actions and negatively impact our operations. We process, transmit and store information relating to identifiable individuals, both in our role as a service provider and as an employer. As a result, we are subject to numerous U.S. (both federal and state) and foreign jurisdiction laws and regulations, such as the U.S. Health Insurance Portability and Accountability Act and the European Union Data Protection Directive 95/46/EC, governing the protection and processing of individually identifiable information, including social security numbers, financial and health information. Failure to comply with these types of laws may subject us to, among other things, liability for monetary damages, fines and/or criminal prosecution, unfavorable publicity, restrictions on our ability to process information and allegations by our clients that we have not performed our contractual obligations, any of which may have a material adverse effect on our profitability and cash flow. Unauthorized disclosure of sensitive or confidential data could expose us to protracted and costly litigation and penalties and may cause us to lose clients. We are dependent on information technology networks and systems to process, transmit and store electronic information and to communicate among our locations and with our pariners and clients. Security breaches of this infrastructure could lead to shutdowns or disruptions of our systems and potential unauthorized disclosure of confidential information. We are also required at times to manage, utilize, record and store sensitive or confidential data. As a result, we are subject to numerous federal and state laws and regulations designed to protect this information. If any person, including any of our employees, negligently disregards or intentionally breaches our established controls with respect to such data or otherwise mismanages or misappropriates that data, 24 �hle of Contents we could be subject to monetary damages, fines and/or criminal prosecution. Unauthorized disclosure or recording of sensitive or confidential client or customer data, whether through system failure, employee negligence, fraud or misappropriation, could damage our reputation and cause us to lose clients. Similarly, unauthorized access to or through our information systems, whether by our employees or third parties, could result in http://wwwsec.gov/Archives/edQar/data/1405287/OO0119312510052721/dlOk.htmf5/17/2012 9:53:24 AMl Form 10-K negative publicity, legal liability and damage to our reputation, business, results of operations, financial condition and cash flows. We have a long selling cycle for our CRM and BPO services that requires significant funds and management resources and a long � implementation cycle that requires significant resource commitments. � We have a long selling cycle for our CRM and BPO services for new clients, which requires significant investment of capital, resources and time by both our clients and us. Typically, before committing to use our services, potential clients require us to expend substantial time and resources educating them as to the value of our services and assessing the feasibility of integrating our systems and processes with theirs. Our clienYs then evaluate our services before deciding whether to use them. Therefare, our selling cycle, which generally ranges from six to twelve months, is subject to many risks and delays over which we have little or no control, including our clients' decision to choose alternatives to our services (such as other providers or in-house offshare resources) and the timing of our clients' budget cycles and approval processes. In addition, we may not be able to successfully conclude a contract after the selling cycle is complete. Implementing our services involves a significant commitment of resources over an extended period of time from both our clients and us. Our clients may also experience delays in obtaining internal approvals or delays associated with technology ar system implementations, thereby delaying further the implementation process. Our clients and future clients may not be willing or able to invest the time and resources necessary to implement our services, and we may fail to close sales with potential clients to which we have devoted significant time and resources, which could have a material adverse effect on our business, results of operations, financial condition and cash flows. Once we are engaged by a client, it may take us several months before we start to recognize significant revenues. When we are engaged by a client after the selling process far our CRM and BPO services, it takes from four to six weeks to integrate the client's systems with ours and up to three months thereafter to ramp up our services and staff levels, including hiring and training qualified service professionals and technicians, to the client's requirements. Depending on the complexity of the processes being implemented, these time periods may be significantly longer. Implementing processes can be subject to potential delays similar to certain of those affecting the selling cycle. Therefare, we do not recognize significant revenues until after we have completed the implementation phase. If we are unable to adjust our pricing terms or the mix of products and services we provide to meet the changing demands of our CRM and BPO clients and potential CRM and BPO clients, our business, results of operations and financial condition may be adversely affected Industry pricing models are evolving, and we anticipate that clients may increasingly request transaction-based pricing. This pricing model will place additional pressure on the efficiency of our service delivery so that we can maintain reasonable operating margins. If we are unable to. adapt our operations to evolving pricing protocols, our results of operations may be adversely affected or we may not be able to offer pricing th� is attractive relative to our competitors. In addition, the CRM and BPO services we provide to our clients, and the revenues and income from those services, may decline or vary as the type and quantity of services we provide under those contracts changes over time, including as a result of a shift in the mix of products and services we provide. Furthermore, our clients, 25 Table of Contents some of which have experienced rapid changes in their prospects, substantial price competition and pressures on their profitability, have in the past and may in the future demand price reductions, automate some or all of their processes or change their outsourcing strategy by moving more work in-house or to other providers, any of which could reduce our profitability. Any significant reduction in or the elimination of the use of the services we provide to any of our clients, or any requirement to lower our prices, would harm our business. We depend on third party technology that, if it should become unavai[able, contain defects, or infringe on another party's intellectual property rights, could result in increased costs or delays in the production and improvement of our products or result in liability claims. We license critical third-party technology that we incorporate into our services on a non-exclusive basis. We customize the third-party software in many cases to ow specific needs and content requirements. While we monitor our usage of third-party technology and our compliance with ow licenses to use such technology, we may inadvertently violate the terms of our license agreements, which could subject us to liability, including the ternunation of our rights to use such software or the imposition of additional license fees. If our relations with any of these third-party technology providers become impaired, or if the cost of licensing any of these third-party technologies increases, our gross margin levels could significantly decrease and our business could be harmed. The operation of our business would also be impaired if errors occur in the third-party software that we utilize or the third-party software -,,• infringes upon another party's intellectual property rights. It may be more difficult for us to correct any defects or viruses in third-party soflware because the software is not within our control. If we are unable to correct such errors, our business could be adversely affected. There can be no assurance that these third parties will continue to invest the appropriate resources in their products and services to maintain and enhance the http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K capabilities of their software. In addition, although we try to limit our exposure to potential claims and liabilities arising from third-party infringement claims arising out of, and errars, defects or viruses in, such third-party software, in the license agreements that we enter into with �we uch third-party software providers, such provisions may not effectively protect us against such claims in all cases and in all jurisdictions. are unable to ke f ep pace wath technological changes, our business will be harmed Our business is highly dependent on our computer and telecommunications equipment, infrastructure and software capabilities. Our failure to maintain the competitiveness of our technological capabilities or to respond effectively to technological changes could have a material adverse effect on our business, results of operations or financial condition. Our continued growth and future profitability will be highly dependent on a number of factors, including our ability to: • expand our existing solutions offerings; • achieve cost efficiencies in our existing service center operations; • introduce new solutions that leverage and respond to changing technological developments; and • remain current with technology advances. There can be no assurance that technologies, applications or services developed by our competitors or vendors will not render our products or services non-competitive or obsolete, that we can successfully develop and markeY any new services or products, that any such new services or products will be commercially successful or that the integration of automated customer support capabilities will achieve intended cost reductions. In addition, the inability of equipment vendors and service providers to supply equipment and services on a timely basis could harm our operations and financiaT condition. 26 Table of Contents Defects or errors within our software could adversely affect our business and results of operations. • Design defects or software errors may delay software introductions or reduce the satisfaction level of clients and may have a materially erse effect on our business and results of operations. Our software is highly complex and may, from time to time, contain design defects or software errors that may be difficult to detect and/or conect. Since both our clients and we use our software to perfortn critical business functions, design defects, software errors or other potential problems within or outside of our control may arise from the use of our software. It may also result in financial or other damages to our clients, for which we may be held responsible. Although our license agreements with our clients often contain provisions designed to limif our exposure to potential claims and liabilities arising from client problems, these provisions may not effectively protect us against such claims in all cases and in all jurisdictions. Claims and liabilities arising from client problems could result in monetary damages to us and could cause damage to our reputation, adversely affecting our business and results of operations. Failure to comply with internal control attestation requirements could lead to loss ofpublic confidence in our financial statements. Any future acquisitions and other materiaI changes in our operations ltkely will require us to expand and possibly revise our disclosure controls and procedures, internal controls over our financial reporting and related corporate governance policies. In addition, the Sarbanes-Oxley Act of 2002 and associated regulations relating to effectiveness of internal controls over financial reporting are subject to varying interpretations in many cases due to their lack of specificity and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. If we fail to comply with these laws and regulations or our efforts to comply with these laws and regulations differ from the conduct intended by regulatory or governing bodies due to ambiguities or varying interpretations of the law, we could be subject to regulatory sanctions, the public may lose confidence in our internal controls and the reliability of our financial statements, and our reputation may be harmed. The industries in which we operate are continually evolving. Our services may become obsolete, and we may not be able to develop competitive services on a timely basis or at alL The CRM and BPO service industry is characterized by rapid technological change, competitive pricing, frequent new service introductions and evolving industry standards. The success of our company will depend on our ability to anticipate and adapt to these challenges and to offer competitive services on a timely basis. We face a number of difficulties and uncertainties associated with this reliance on technological development, such as: •: competition.from service providers using other means to deliver similar or alternative services; realizing economies of scale on a global basis (including conducting future business in places such as Eastern Europe, China, Japan and South America); . • responding successfully to advances in competing technologies and network security in a timely and cost-effective manner; and http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm�5/17/2012 9:53:24 AM� Form 10-K • existing, proposed or undeveloped technologies that may render our services less profitable ar obsolete. If we fail to manage future growth effectively, we may be unable to execute our business plan, maintain high leve[s of service or address � competitive challenges adequately. 4 We plan to expand our business. We anticipate that this expansion will require substantial management effort and significant additional inveshnent in infrastructure, service offerings and service center expansion. In addition, we will be required to continue to improve our operational, financial and management controls and our reporting procedures. Future growth of our company will place a significant strain on managerial, administrative, operational, fmancial and other resources. If we are unable to manage growth successfully, our business will be harmed. 27 Table of Contents Government regulation of our industry and the industries we serve may increase our costs and restrict the operation and growth of our business. Both the U.S. Federal and various state governments regulate our business and the outsourced business services industry as a whole. The Federal Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994 broadly authorizes the FTC to issue regulations restricting certain telemarketing practices and prohibiting misrepresentations in telephone sales. The FTC regulations implementing this Act are commonly referred to as the Telemarketing Sales Rule. Our operations outside the United States are also subject to regulation. In addition to current laws, rules and regulations that regulate our business, bills are frequently introduced in Congress to regulate the use of credit information. We cannot predict whether additional Federal or state legislation that regulates our business will be enacted. Additional Federal or state legislation could limit our activities or increase our cost of doing business, which couid cause our operating results to suffer. We could be subject to a variety of regulatory enforcement or private actions for our failure or the failure of our clients to comply with these regulations. Our results of operations could be adversely impacted if the effect of government regulation of the industries we serve is to reduce the demand for our services or expose us to potential liability. We may become involved in litigation that may materially adversely affect us. �• We are currently, and from time to time in the future we may become involved in various legal proceedings relating to matters incidental tu the ordinary course of our business, including patent, software, commercial, product liability, employment, class action, whistleblower and other litigation and claims, and governmental and other regulatory investigations and proceedings. Such matters can be time-consuming, divert management's attention and resources and cause us to incur significant expenses. Furthermore, because litigation is inherently unpredictable, there can be no assurance that the results of any of these actions will not have a material adverse effect on our business, results of operations or financial condition. An outbreak of a pandemic, flu or other disease, or the threat of a pandemic, flu or other disease, may adversely impact our ability to perform our services or may adversely impact client and consumer demand. We have a large number of employees across the world in many different countries with different levels of healthcare monitoring. Most of these employees work in relatively close proximity to each other in our service centers. A significant or widespread outbreak of a pandemic, such as the flu or other contagious illness, or even a perceived tl�reat of such an outbreak, could cause significant disruptions to our employee base and could adversely impact our ability to provide our services and deliver our products. This could have a significant impact on our business and our results of operations. Risks Related to Our Equity Securities There can be no assurance that NYSE Amex wil[ continue to list our securities on its exchange, and any delisting could limit investors' ability to make transactions in our securities and subject us to additional trading restrictions. Our units, common stock and warrants are listed on NYSE Amex, a national securities exchange. We cannot assure you that our securities will continue to be listed on NYSE Amex in the future. If NYSE Amex delists our securities from trading on its exchange and we are unable to list our securities on another exchange, our securities could be quoted on the OTC Bulletin Board, or "pink sheets." As a result, we could face significant adverse consequences, including but not limited to the following: • a limited availability of market quotations for our securities; • a determination that our common stock is a"penny stock" which will require brokers trading in our common stock to adhere to mor • stringent rules and possibly resulting in a reduced level of trading activity in the secondary trading market for our securities; 28 http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K Table of Contents �• a reduced liquidity for our securities; • a decreased ability to obtain new financing or issue new securities on favorable terms in the future; • a decreased ability to issue additional securities or obtain additional fmancing in the future; and a decreased ability of our security holders to sell their securities in certain states. The value of our units, common stock and warrants may be adversely affected by market volatility. The market price of our units, shares and warrants has been highly volatile and subject to wide fluctuations. In addition, our management and � financial sponsors hold a large percentage of our outstanding shares, which are subject to certain restrictions on resale, and our relatively low trading volume causes significant price variations to occur. If the market prices of our units, shares and warrants decline significantly, you may be unable to resell your units, shares and warrants at or above your purchase price, if at all. We cannot assure you that the market price of our units, shares and warrants will not fluctuate or decline significantly in the future. Some of the factors that could negatively affect the price of our units, shares and warrants or result in fluctuafions in the price or trading volume of our units, shares and warrants include: • significant volatility in the market price and trading volume of comparable companies; • actual or anticipated changes in our earnings ar fluctuations in our operating results or in the expectations of securities analysts; • the exercise of participation rights held by certain of our stockholders in connection with the exercise of our warrants, • announcements of technological innovations, new products, strategic alliances or significant agreements by us or by our competitors; • general economic conditions and trends; • catastrophic events; or recruitment or departure of key personnel. � e control that our financial sponsors have over us and provisions in our organizational documents and Delaware law might limit your abiliry nfluence the outcome of key transactions, including a change in control, and, therefore, depress the trading price of our common stocl� Our financial sponsors, Ares Corporate Opportunities Fund II, L.P., NewBridge International Investment Ltd. and EGS Dutchco B.V., collectively own approximately 87°/a of our common stock and are parties to a stockholders agreement that restricts our ability to undertake certain actions. Therefore, our fmancial sponsors collectively are able to determine the outcome of all matters requiring stockholder approval, are able to cause or prevent a change of control of our company or a change in the composition of our board of directars, and could preclude any unsolicited acquisition of our company. The market price of our shares could be adversely affected to the extent that this concentration of ownership and stockholders agreement, as well as provisions of our organizational documents, discourage or impede potential takeover attempts that our other stockholders may favor. Furthermore, our financial sponsors may, in the future, own businesses that directly or indirectly compete with us. Our financial sponsors may also pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. Provisions in our organizational documents and Delaware law may also discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, includ'mg transactions in which you might otherwise receive a premium for your shares of our common stock. These provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management. For example, our organizational documents require advance notice for proposals by stockholders and nominations, place 29 Table of Content� limitations on convening stockholder meetings and authorize the issuance of preferred shares that could be issued by our board of directors to thwart a takeover attempt. Moreover, certain provisions of Delaware law may delay or prevent a transaction that could cause a change in our controL . outstanding warrants have been, and in the future may be, exercised and trigger the exercise of certain participation rights held by our vr stockholders, wlzich have increased, and in the future would increase, the number of shares eligible for future resale in the public market and result in dilution to our stockholders. Tltis might have an adverse effect on the market price of our common stock In November 2009, pursuant to an agreement with Ares, we bought 425,000 of our public warrants at a price of $O. I S per wanant for a totai http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.hrin[5/17/2012 9:53:24 AM] Form 10-K of $63,750. In December 2009, we closed our self-tender offer to purchase up to 17,500,000 of our public warrants and accepted for purchase 9,956,689 warrants for a total cost of approximately $4,978,000, excluding fees and expenses related to the tender offer. As of December 31, 2009, 131,402 of our publicly traded warrants have been exercised for a total exercise price of $788,412, leaving 10,008,526 shares subject to outstanding warrants, including 30,223 shares of common stock underlying warrants embedded in our units. To the extent that additional warrant� are exercised, additional shares of our common stock will be issued, which will result in further dilution to our stockholders and increase the number of shares eligible for resale in the public market. In addition, the exercise of any of our publicly traded warrants triggers contractual participation rights for Ares, NewBridge and Dutchco, pursuant to which they would have the right to purchase from us 2.4364 additional shares of common stock at $6.00 per share for each of our publicly traded warrants that are exercised, up to a maximum of approximately 24,385,000. In connection with the exercise of 131,402 of our publicly traded warrants, Ayala Corporation exercised its contractual participation rights to purchase an additiona1320,146 shares of common stock at $6.00 per share, for a total purchase price of approximately $1,921,000. Sales in the public market of substantial numbers of shares acquired tlu either the exercise of these participation rights or the exercise of these warrants could adversely affect the market price of our shares. We do not expect to pay any dividends on our common stock for the foreseeable future. You should not rely on an inveshnent in our common stock to provide dividend income. We do not anticipate that we will pay any dividends to holders of our common stock in the foreseeable future. Instead, we plan to retain any earnings to maintain and expand our existing operations. In addition, we are restricted from paying dividends in certain circumstances under the terms of the indenture governing our Notes and the ABL Credit Facility. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any return on their investment. As a result, investors seeking cash dividends should not purchase our common stock. We may choose to redeem our outstanding warrants at a time that is disadvantageous to our warrant holders. We may redeem the warrants issued as a part of our publicly traded units at any time in whole and not in part, at a price of $0.01 per warrant, upon a minimum of 30 days' prior written notice of redemption, if and only if, the last sales price of our common stock equals or exceeds $11.50 per share for any 20 trading days within a 30 trading day period ending three business days before we send the notice of redemption. Redemption of the warrants could farce the warrant holders (1) to exercise the warrants and pay the exercise price therefore at a time when it may be disadvantageous for the holders to do so, (2) to sell the warrants at the then cunent market price when they might otherwise wish to hold the warrants or (3) to accept the nominal redemption price which, at the time the warrants are called for redemption, is likely to be substantially less than the market value of the warrants. 30 � � Table of Contents We have broad discretion in the use of the net proceeds frorrt the e.�ercise of the warrants. We cannot specify with certainty the particular uses of the net proceeds we will receive from the exercise of the warrants. Our management will have broad discretion in the application of the net proceeds. Accordingly, you will have to rely upon the judgment of our management with respect to the use of the proceeds, with only limited information concerning management's specific intentions. Our management may spend a portion or all of the net proceeds from this offering in ways that our stockholders may not desire or that may not yield a favorable return. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES Description of Property ` We have SO locations in 22 countries that are designed to be globally integrated. Our facilities are organized into two regions: Americas, which includes the United States, Canada, the Philippines, India, Costa Rica, the Dominican Republic, Nicaragua and El Salvador; and EMEA, which includes Europe, the Middle East and Africa. We do not own offices or properties but rather lease offices in the United States, Canada, the Netherlands, the United Kingdom, Italy, Ireland, Spain, Sweden, France, Germany, Poland, India, Tunisia, the Dominican Republic, Costa Rica, El Salvador, Nicaragua, the Philippines, Egypt, South Africa, Denmark and Bulgaria. Ow headquarters are located in Wellesley, Massachusetts. We believe that our facilities are adequate for our present needs in all material respects. (, � �� ._ ITEM 3. LEGAL PROCEEDINGS http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.hrin[5/17/2012 9:53:24 AM] Form 10-K We have been named as a third-party defendant in a putative class action captioned Kambiz Batmanghelich, on behalf of himsetf`"�nd`aIT"" Qthers similarly �itua c� an�l �n hPhalf of the general ,hl;� v 4iri � XM Radio, Inc , filed in the Los Angeles County Superior Court on November 10, 2009, and removed to the United States DisMct Court for the Central District of California. The Plaintiff alleges that Sirius XM dio, Inc. recarded telephone conversations between Plaintiff and members of the proposed class of Sirius customers, on the one hand, and Sirius d its employees, on the other, without the Plaintiff's and class members' consent in violation of California's telephone recording laws. The Plaintiff also alleges negligence and violation of the common law right of privacy, and seeks injunctive relief. On December 21, 2009, Sirius XM Radio, Inc. filed a Third-Pariy Complaint in the action against us seeking indemnification for any defense costs and damages that result from the putative class action. The Plaintiff has not alleged any claims against us. We believe that we have meritorious defenses to Sirius XM Radio, Inc.'s claims, but there can be no assurance as to the outcome of this lawsuit and an adverse outcome could have a material adverse effect on our business, results of operations or financial condition. ITEM 4. RESERVED 31 Table of Contents �� , � PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES On October 18, 2007, our units began trading on NYSE Amex under the symbol "OOO.U". Each of our units consists of one share of common stock and one warrant. On November 27, 2007, the common stock and warrants underlying our units began to trade separately on NYSE Amex under the symbols "000" and "OOO.WS", respectively. On October 26, 2009, we changed our symbols to "SGS," "SGS.U" and "SGS.WS", respectively. The following sets forth the high and low sales price of our common stock, warrants and units, as reported on NYSE Amex for the periods �wn: _. Common Stock Warrants Units H� h Low H�gh Low H�gh Low Fiscal Year Ended December 3I; 2007 i , .., ., ._ . �. , �5 , �_ �_ � <, � � �. �.� 4� Quarter (commencing October 18 2007) $ 7.30 $ 7.15 $ 0.68 $ 0.61 $ 8.10 $ 7.75 .:, - _ , � .,.._ �._ Fiscal Year Encling Decemkier 31, 2008 `'. ` ` � � � � � '�� ' ' � � � a ,,._ .. � �z _ � . ,.. ,, ��. _. , $7.65 $ 1 St Quarter 7.21 $ 0.65 $ 0.1$ $ 8.20 $ 7.63 � 2ndQuarter $7�.78°,�'$7.24 "$0.91� ��'�$0:12�'��.$8.55�: $�7.St# 3rd Quarter $ 7.99 $ 2.05 $ 0.79 $ 0.05 $ 8.50 $ 2.50 4?� Quarter i : $ 6.20 $' 1.I4 $ 0.59 $ 0.�1 `$ 7.50 :$ 1.�2' _ . � e_ Fiscal Year Ending December 31, 2009 E .� 1Si Quarter $4.35 . $2.84 $0.22 .$0.06 $3.51 $ 4.SQ 2nd Quarter . $ 5.05 $ 2.95 $ 0.80 $ 0.11 $ 3.75 $ 4.98 3rd Quarfer $5.50 $'3.39 $0.�5 ; $fl.0( ; $4.27 ' $ 5.43 4� Quarter $ 7.01 $ 5.30 $ 0.35 $ 0.06 $ 5.25 $ 7.44 On March 3, 2010, there were approximately 290 holders of record of our common stock, 1 holder of record of our warrants and 1 holder of record of our units. Dividend Policy We have not paid any dividends on our common stock to date. Our board does not anticipate declaring any dividends on the common stock in the foreseeable future. The payment of dividends on the common stock in the future, if any, will be within the discretion of our then Board of Directors and will be contingent upon our revenues and earnings, if any, capital requirements and general financial condition. During 2009, holders of the Series A and Series B Preferred Stock received dividends of $58,018. As discussed in the accompanying financial statements, all Preferred Stock outstanding was converted to shares of our common stock during 2009 in connection with the closing of r'ombination with eTelecare on October 1, 2009. � 32 http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htmf5/17/2012 9:53:24 AMl Form 10-K Table of Contents � � Equity Compensation Plan Information � Securities Autltorized for Issuance under our Equiry Compensation Plans At December 31, 2009, we had only one equity compensation plan, our 2008 Stock Incentive Plan. The following table contains information about our 2008 Stock Incentive Plan. See Note 14 in our Notes to Consolidated Financial Statements for a description of our 2008 Stock Incentive Plan. Number of Shares Remaining Available for Future Issuance Number of Shares to under Equity be Issued upon Weighted Average Compensation Plans Exercise of Exercise Price of (Excluding Shares Outstanding Options Outstanding Options Reflected Plan Category (Column A) (Column B) in Column A) Eqnity compensation plans that have been a�proved by our stockholders , 6,977,500(1) $ 6.15 2,368,119 Equity compensation plans that have not been approved by our stockholders — — — Total 6,977,500 ��_ '� 6.15 � 2,368,1 �9� (1) This amount does not include 654,381 shares of outstanding restricted stock granted to our employees. 33 Table of Contents Performance Graph r The following graph compares the cumulative total return of our common stock from November 27, 2007, the date that our common stock' first became separately tradable, through December 31, 2009 with the cumulative total return of (1) the Russe112000 Index, (2) the peer group of companies that we used for this graph in our Annual Report on Form 10-K far the year ended December 31, 2008, as described below (our "Peer Group 2008"), and (3) a revised peer group of companies that we chose for this Annual Report, as described below (our "Peer Group 2009"). The graph assumes $100 invested on November 27, 2007 in our common stock, the Russell 2000 Index, the Peer Group 2008 and the Peer Group 2009. This information shall not be deemed to be "filed" with the Securities and Exchange Commission and shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, unless we specifically incorporate it by reference. COMPARISON OF 25 MONTH CUMULATIVE TOTAL RETURN* ' Among Stream Global Services, Inc., The Russell 2000 Index, Peer Group 2008 And Peer Group 2009 �i� : �a� { �� ' � _ � � �t � . � . �tt� � �;- ,5„� _ _�-' T '�� 3 �'� -., .t�`� "�� • , . ;� � �aw � Y --.� �. � � ��_�� .__ a_.�_�_ ��.�___ _�.__.__ ._��.._�.._.__�� m=_�M_�_._��_�___,� � � �� _ � � �Er�a�t t`aEa�;t� 3�ro'It,�. �n�, — �tr � �t�t3e�l, 2f� ��-- F�r �¢ s�� J� �t--� E��r Gcnstp3 �4�4 http://www.sec.gov/Archives/edgar/data/1405287/00011931251005272Ud10k.htm[5/17/2012 9:53:24 AM] Form 10-K �" $100 invested on 11/2'7/07 in stock or index, including reinvestment of dividends. Fiscal year ending December 31. x l/27/2007 �.� � 12/3T�%2007 = 12/31)2008 � � 12f3112Q09 � ��. iGS 100.00 101.39 57.15 82.64 usse112000Index 100.00 �03.26 6$.37 8b:9S Peer Group 2008 100.00 110.80 65.02 120.16 iPeer Group 2009 100.00 108.48 60,06 148:29 34 Table of Contents Our Peer Group 2009 consists of the following companies Our Peer Group 2008 consists of the following companies: • APAC Customer Services Inc. • Affiliated Computer Services, Ina • Convergys Corporation • The Capita Group Plc • EXLService Holdings, Inc. • Convergys Corporation • Startek Ina • EXLService Holdings, Ina • Sykes Enterprises, Incorporated • Genpact Limited • TechTeam Global, Inc. • Infosys Technologies Limited • Teleperformance S.A. • Sykes Enterprises, Incorporated • TeleTech Holdings Inc. • TechTeam Global, Inc. �• Tivit Terceirizacao Processos Servicos • Teleperformance S.A. • Wipro Ltd. • TeleTech Holdings Inc. • WNS (Holdings) Limited • Wipro Ltd. � • WNS (Holdings) Limited Issuer Purchases of Equity Securities • During the fourth quarter of 2009, we repurchased the following number of our public warrants: � � � � (c) Maximum Total Number of Number of Warrants Warrants that (a) Purchased as may yet be Total Number of (b) Part of Publicly Purchased under ' Warrants Average Price Announced Plans the Plan or Period Purchased Paid per Warrant or Programs Program October 2009 �� " � � � � � ' (Oct. 1, 2009 — Oct. 31, � � � � � � � ,. , ; _ .. � � ,,,� � 009) =., � : �.. ' 0 , $ � "0 .: � 0� 0 � November 2009 � � ` � , _ � __, .. � (Nov. 1, 2009 — Nov. 30, 2009) 425,000 $ 0.15 0 0 December Z009 ` (Dec. 1, 2009. Dec. 31 2009) 9,956,689 $ 0.50 ' 9,956,689(1) , 0 Total � 10,381,689 � 9,956,689 0 � (1) On November 13, 2009 we commenced our publicly announced self-tender offer to purchase up to 17,500,000 of our public warrants that are exercisable far one share of our common stock for $6.00 in cash, at a purchase price of $.50 perwarrant net to the seller in cash, without interest, for a total purchase price of up to $8,750,000. We closed the self-tender on December 14, 2009, at which time we accepted for purchase 9,956,689 warrants for a total cost of approximately $4,978,000, excluding fees and expenses related to the tender offer. ITEM 6. SELECTED FINANCIAL DATA The data set forth below should be read in conjunction with Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. In October 2007, we consummated our initial public offering in which we sold 31,250,000 units, each consisting of one share of our common ^ck and a warrant to purchase one share of our common stock. We received total gross proceeds of $250.0 million and net proceeds of $2463 ion, including $7.5 million of proceeds from the sale of 7,500,000 warrants to certain of our founding stockholders, which were deposited into rust account. Our founders subsequently sold their 7,500,000 warrants to Ares, who have since sold them back to us in exchange for the issuance of 1,000,000 shares. http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:5324 AM] Form 10-K In July 2008, we acquired SHC for $128.8 million (which reflected the $200.0 million purchase price less assumed indebtedness, transaction fees, employee transaction related bonuses, professional fees, stock option 35 � Tabie of Content� payments and payments for working capital). Also in July 2008, holders of 8,947,000 shares of our common stock exercised their conversion rights in connection with the acquisition of SHC, and we paid an aggregate of $70.59 million to such holders. In connection with our acquisition of SHC, we changed our name from Global BPO Services Corp. to Stream Global Services, Inc., or SGS. In August 2009, Stream, EGS, the parent company of eTelecare and other parties signatory thereto, entered into a defuvtive agreement to combine in a stock-for-stock exchange. On October 1, 2009, the Combination closed, with the pre-Combination Stream and EGS stockholders owning approximately 57.5% and 42.5%, respectively, of the combined entity. The following balance sheet data and statements of operations data for each of the three years ended December 31, 2009 were derived from SHC's and SGS's audited consolidated financial statements. Consolidated balance sheets as of December 31, 2009 and 2008 and the related consolidated statements of operations and cash flows for each of the three years in the period ended December 31, 2008 and notes thereto appear elsewhere in this Annual Report on Form 10-K. In addition, in arder to assist investors in better understanding the historical performance of our operating business, we have also included below financial information for SHC for periods befare we acquired SHC. SGS Years Ended December 31, (In thousands, except per share amounts) 2009 2008 2007 Revenue�� $584,769-� �$211,373 �. � $ = _ _ Gross profit 242,576 83,095 — �, _.., � �� 5 545 � 5 229 �� 24^� Income (loss) frorri operations : ( � ) � �> > ( , Net income (loss) (28,573) 796 1,11` Income (loss) per share attributable to common stockholders per share: $(3.46) ) $(2.20) $ 0.07 ; SHC Seven months Years Ended December 31, ended July 31, (In thousands, except per share amounts) 2008 2007 2006 2005 Revenue? $ 312,085' $483,569 ! $405,547 ; ' $310,905 ._ Gross profit 109,409 162,634 128,679 93,827 Income (;loss) from opera'tions. _ (14,667) 5,894 J,) 5 470 ! (11,114� Net income (loss) $ (25,372) $ (11,323) $ (5,349) $ (17,544) SGS December 31, (In thousands) 2009 2008 T'ota� �urrent assets � $ 227 $ '146,85� Property, equipment and fixtures, net 96,816 41,634 Total as'sets � �'� 680,823 �329,945�� Total current liabilities 115,337 79,392 Long term debt and capital leases _ �� 218, I59 ; 6�,108 Preferred stock � � — 145,911 Stockholders' equity $ 303,411 $ 1;751 36 ---� _ - � f Table of Contents SHC http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K December 31, (In thousands) 2007 2006 2005 . , ,. � tal current assets � $138,914 � ! $102,8�5 $ 78,635� perty, equipment and fixtures, net 36,656 25,977 21,975� otal assets ��" � I�93,416 � ;` �45,1��17 � �'��T18,722 Total current liabiliries � � � � � � � 148,685 � 60,674 � 54,111 �ong term debt and capital leases 28,692' .` 66,207 I 42,264j Stockholders' equity �� $ 7,352 �$ 10,309 � $ 12,234 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to lrnown and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels ofactivity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied.by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "continue," ar the negative of such tertns or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings. Overview Stream Global Services, Inc. ("we", "us", "Stream", or "SGS") is a corporation organized under the laws of the State of Delaware and was incorporated on June 26, 2007. We were formed as a blank check company for the purpose of acquiring, through a merger, capital stock exchange, asset or stock acquisition, exchangeable share transaction or other similar business combination, one or more domestic or international operating businesses. In October 2007, we consummated our initial public offering ("IPO") in which we sold 31,250,000 units, each consisting of one share of our common stock, $0.001 par value per share ("common stock"), and a warrant to purchase one share of our common stock. We received total gross � roceeds of $250.0 million and net proceeds of $246.3 million, including $7.5 million of proceeds from the sale of 7,500,000 warrants to certain of founding stockholders, which were deposited into a trust account. In connection with our IPO, a total of $7.5 million of underwriters' fees were ened until the completion of our initial acquisition. In 2008, the underwriter's fees were reduced to $2.8 million. In July 2008, we acquired Stream Holdings Corparation ("SHC") for $128.8 million (which reflected the $200.0 million purchase price less assumed indebtedness, transaction fees, employee transaction related bonuses, professional fees, stock option payments and payments for working capital). Also in July 2008, holders of 8,947,000 shares of our common stock exercised their conversion rights in connection with tlie acquisition of SHC, and we paid an aggregate of $70.59 million to such holders. In connection with our acquisition of SHC, we changed our name from Global BPO Services Corp. to Stream Global Services, Inc. In August 2008, we issued and sold 150,000 shares of our Series A Convertible Preferred Stock, $0.001 par value per share (the "Series A Preferred Stock"), in a private placement with Ares Corporate Opportunities Fund II, L.P. ("Ares") for an aggregate purchase price of $150 million, and our founders also sold their 7,500,000 warrants to Ares. Also in August 2008, we commenced a self-tender offer to purchase up to 20,757,000 shares of our common stock at a purchase price of $8.00 per share. In September 2008, we closed the self-tender and 37 Table of Contents accepted for purchase 20,757,000 shares of our common stock, for a total cost of approximately $166.0 million, excluding fees and expenses related to the offer. In January 2009, we entered into the Fifth Amended and Restated Revolving Credit, Term Loan and Security Agreement, dated as of January 8, 2009 (the "Amended Credit Agreement"), with PNC Bank, National Association ("PNC"), as lender and as agent, Steel City Capital Funding, LLC, as term B lender and as term B agent, PNC Capital Markets LLC, as lead arranger, Stream Holdings Corporation ("SHC"), as borrowing agent, and the other loan parties signatory thereto, pursuant to which we borrowed an aggregate principal amount of $25 million in � er to reduce the senior secured revolving credit facility from $100 million to approximately $77 million and to repay approximately $2 million atstanding loans made to certain Foreign Borrowers (as defined in the Amended Credit Agreement). In March 2009, we entered into an Amendment No. 1 and Waiver to the Amended Credit Agreement and certain of our subsidiaries (the "Stream Entities") entered into a Guarantee and Reimbursement Agreement, dated as of March 2, 2009 (the "Reimbursement Agreement") with http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm(5/17/2012 9:53:24 AM� Form 10-K Ares pursuant to which Ares or one or more of its affiliates provided, or caused one or more financial institutions or other entities to provide, certain letters of credit or other guarantees or backstop anangements for the benefit of the Stream Entities in consideration of the issuance to Ares of one share of our Series B Convertible Preferred Stock, $0.001 par value per share (the "Series B Preferred Stock"). In addition, we entered into Subordination and Intercreditor Agreement, dated as of March 2, 2009, with PNC Bank, as agent, Steel City Capital Funding, LLC, as agent for � term B lenders and as term B agent, Ares and the other loan parties signatory thereto, pursuant to which the liens granted under the Reimbursemen� Agreement were made junior and subordinate to the obligations of the Stream Entities under, and to liens granted in connection with, the Amended Credit Agreement. In October 2009, pursuant to a Share Exchange Agreement, dated as of August 14, 2009 ("the Exchange Agreement"), among us, EGS Corp., a Philippine corporation ("EGS"), the parent company of eTelecare Global Solutions, Inc., a Philippine company ("eTelecare"), EGS Dutchco B.V., a corporation organized under the laws of the Netherlands ("Dutchco"), and NewBridge International Investment Ltd., a British Virgin Islands company ("NewBridge" and, together with Dutchco, the "EGS Stockholders"), we acquired EGS in a stock-for-stock exchange (the "Combination"). At the closing of the Combination (the "Closing"), we acquired all of the issued and outstanding capital stock of EGS (the "EGS Shares") from the EGS Stockholders, and NewBridge and/or its affiliate contributed, and we accepted, the rights of such transferor with respect to approximately $35,841,000 in principal under a bridge loan of EGS (the `Bridge Loan") in consideration far the issuance and delivery of an aggregate of 23,851,561 shares of our common stock and 9,800,000 shares of our non-voting common stock, and the payment of $9,990 in cash. Subsequent to the Closing, all of the 9,800,000 shares of non-voting common stock held by the EGS Stockholders were converted into shares of our voting common stock on a one-for-one basis. As of the Closing, the pre-Combination Stream stockholders and the EGS Stockholders owned approximately 57.5% and 42.5%, respectively, of the combined entity. Immediately prior to the Closing, pursuant to a certain letter agreement, dated as of August 14, 2009, between us and Ares, all of the issued and outstanding shares of our Series A Preferred Stock and Series B Preferred Stock held by Ares were converted into 35,085,134 shares of our common stock. In addition, we purchased from Ares 7,500,000 warrants to purchase Stream common stock that it held in consideration for the issuance of 1,000,000 shares of our common stock. Also in October 2009, pursuant to an indenture, dated as of October 1, 2009 (the "Indenture"), among Stream, certain of our subsidiaries and Wells Fargo Bank, National Association ("Wells Fargd'), as trustee, we issued $200 million aggregate principal amount of 11.25% Senior Secured Notes due 2014 (the "Notes") at an initial offering price of 95.454% of the principal amount. In addition, we and certain of our subsidiaries entered into a credit agreement, dated as of October 1, 2009 (the "Credit Agreement"), with Wells Fargo Foothill, LLC ("WFF"), as agent and co-arranger, and Goldman Sachs Lending Partners LLC, as co-arranger, and each of the lenders party thereto, as lenders, providing for revolving credit financing (the "ABL Facility") of up to ` 38 Table of Contents $100 million, including a$20 million sub-limit for letters of credit. The ABL Facility has a maturity of four years. We used the proceeds from the offering of the Notes, together with approximately $26.0 million of cash on hand, to repay all outstanding indebtedness under the Amended Credit Agreement, as amended by Amendment No. 1, the Bridge Loan, and to pay fees and expenses incurred in connection with the Combination, the Note offering and the ABL Facility. In November 2009, we commenced a self-tender offer to purchase up to 17,500,000 of our public warrants, each of which is exercisable for one share of our common stock for $6.00 in cash, at a purchase price of $.50 per wanant net to the seller in cash. In December 2009, we closed the self-tender and accepted for purchase 9,956,689 warrants for a total purchase price of approximately $4,978,000, excluding fees and expenses related to the tender offer. We are a leading global business'process outsourcing (`BPO) service provider specializing in customer relationship management ("CRM") including sales, customer care and technical support for Fortune 1000 companies. Our clients include leading technology, computing, telecommunications, retail, entertainmenUmedia, and financial services companies. Our service programs are delivered through a set of standardized best practices and sophisticated technologies by a highly skilled multilingual workforce capable of supporting over 351anguages across SO locations in 22 countries. We continue to expand our global presence and service offerings to increase revenue, improve operational efficiencies and drive brand loyalty far our clients. As of December 31, 2009, we had over 30,000 employees worldwide. We are subject to quarterly fluctuations in our revenues and earnings, based on the timing of new and expiring client programs and seasonality in certain client programs. From time to time clients seek to shift their CRM programs to lower cos�t providers, which may interrupt or decrease our results of operations as we seek to shift personnel and other resources to the CRM and other BPO services provided to our higher �t. margin clients. _ We bill monthly for our services in a variety of manners, including per minute, per contact, per hour and per full-time employee equivalent. Revenues also include reimbursement of certain expenses including telecom, training and miscellaneous costs for certain customers. A substantial http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/dlOk.htm[5/17/2012 9:5324 AM] Form 10-K amount of our operating costs is incurred in foreign currencies. In many cases, we bill our clients in U.S. dollar, Canadian Dollar, Euro and U.K. pound sterling denominated amounts and incur costs in the host country in local currency. � A§ubstantial portion of our costs are incurred and paid in Philippine pesos. Therefore, we are exposed to the risk of an increase in the value the Philippine peso relative to the U.S. dollar, which would increase the value of our expenses when measured in U.S. dollars. We occasionally use derivatives to mitigate risk relating to the Canadian dollar, the Indian rupee and the Philippine peso against the U.S. dollar. We are also doing business in Central America but do not yet hedge currencies from these countries. Critical Accounting Policies Use of Estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States requires the appropriate application of accounting policies, many of which require management to make estimates and assumptions about future events and their impact on amounts reported in our consolidated financial statements and related notes. Since future events and their impact cannot be determined with certainty, the actual results may differ from estimates. Such differences may be material to the consolidated financial statements. 39 Table of Contents Equipment and Fixtures Equipment and fixtures are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Furniture and fiztures are depreciated over a five-year life, software over a three- to five-year life and equipment generally over a three- to five- year life. Leasehold improvements are depreciated over the shorter of their estimated useful life or the remaining term of the associated lease. Assets held under capital leases are recorded at the lower of the net present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease. Amortization expense is computed using the straight-line method over the shorter of the estimated useful lives of e assets or the period of the related lease and is recorded in depreciafion and amortization expense. Repair and maintenance costs are expensed as �ed. � The carrying value of equipment and fixtures to be held and used is evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with authoritative guidance. An asset is considered to be impaired when the sum of the undiscounted fizture net cash flows expected to result from the use of the asset and its eventual disposition does not exceed its carrying amount. The amount of the impairment loss, if any, is measured as the amount by which the carrying value of the asset exceeds its estimated fair value, which is generally determined based on appraisals or sales prices of comparable assets. Occasionally, we redeploy equipment and fixtures from underutilized centers to other locations to improve capacity utilization if it is deternuned that the related undiscounted future cash flows in the underutilized centers would not be sufficient to recover the carrying amount of these assets. We estimate fair value of our asset retirement obligations, if any, associated with the retirement of tangible long-lived assets such as property and equipment when the long-lived asset is acquired, constructed, developed or through normal operations. Goodwill and Other Intangible Assets In accordance with the authoritative guidance goodwill is reviewed for impairment annually and on an interim basis if events or changes in circumstances between annual tests indicate that an asset might be impaired. Impairment occurs when the carrying amount of goodwill exceeds its estimated fair value. The impairment, if any, is measured based on the estimated fair value of the reporting unit. We operate in one reporting unit, which is the basis for impairment testing and the allocation of acquired goodwilL Intangible assets with a fmite life are recorded at cost and amortized using their projected cash flows over their estimated useful life. Client lists and relationships are amortized over periods up to ten years, market adjustments related to facility leases are amortized over the term of the respective lease and developed software is amortized over five years. Brands and trademarks are not amortized as their life is indefinite. In accordance with the authoritative guidance, indefmite lived intangible assets are reviewed for impairment annually and on an interim basis if events or changes in circumstances between annual tests indicate that an asset might be impaired. The carrying value of intangibles is evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with the authoritative guidance. An asset is considered to be impaired when the sum of the undiscounted +�ire net cash flows expected to result from the use of the asset and its eventual disposition does not exceed its carrying amount. The amount of impairment loss, if any, is measured as the amount by which the carrying value of the asset exceeds its estimated fair value, which is generally etermined based on appraisals or sales prices of comparable assets. Stock-Based Compensation http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K At December 31, 2009 and 2008, we had a stock-based compensation plan for employees and directors. Far share-based payments, the fair value of each grant, includ'mg both the time-based grants and the performance-based grants, is estimated on the date of grant using the Black-Scholes-Merton option valuation � 40 Table of Contents model. With the exception of one grant to R Scott Murray, our founder, Chairman and Chief Executive Officer that was valued using a Monte Carlo simulation and assumes the performance goals will be achieved. If such goals are not met, no compensation cost is recognized and any previously recognized cost is reversed. Stock compensation expense is recognized on a straight-line basis over the vesting term, net of an estimated future forfeiture rate. The forfeiture rate assumption (19.5% as of December 31, 2009 and 2008) is based on historical experience. Income Taxes We recognize income taxes in accordance with the authoritative guidance, which requires recognition of deferred assets and liabilities for the future income tax consequence of transactions that have been included in the consolidated fmancial statements or tax returns. Under this method deferred tax assets and liabilities are determined based on the difference between the carrying amounts of assets and liabilities for financial reporting purposes, and the amounts used for income tax, using the enacted tax rates far the year in which the differences are expected to reverse. We provide valuation allowances against deferred tax assets whenever we believe it is more likely than not, based on available evidence, that the defened tax asset will not be realized. Further we provide for the accounting for uncertainty in income taxes recognized in fmancial statements and the impact of a tax position in the financial statements if that position is more likely than not of being sustained by the taxing authority. Contingencies We consider the likelihood of various loss contingencies, including non-income tax and legal contingencies arising in the ordinary course of business, and our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued in accordance with the authoritative guidance, when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. We regularly evaluate current information available to determine whether such accruals should be adjusted. 4 Recent Accounting Pronouncements In December 2007, the Financial Accounting Standards Board ("FASB") issued new guidance on business combinations. This guidance establishes principles and requirements for how we: (1) recognize and measure in our financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; (2) recognize and measure the goodwill acquired in the business combination or a gain from a bargain purchase; and (3) determine what information to disclose to enable users of the fmancial statements to evaluate the nature and financial effects of the business combination. The business combinations guidance also requires acquisition-related transaction and restructuring costs to be expensed rather than treated as part of the cost of the acquisition. This guidance applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We adopted the business combination guidance on January l, 2009. Our nonfinancial assets and liabilities measured at fair value on a nonrecurring basis include assets and liabilities acquired in connection with a business combination, goodwill and intangible assets. We adopted the fair value measurement guidance as it relates to these assets and liabilities on January 1, 2009. In Apri12009, the FASB issued additional guidance on fair value measurements and disclosures. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants under current market conditions. The new guidance requires an evaluation of whether there has been a significant decrease in the volume and level of activity for the asset or liability in relation to normal market activity for the asset or liability. If there has been a significant decrease in activity, transactions or quoted prices may not be indicative of fair value and a significant adjustment may need to be made to those prices to estimate fair value. Additionally, an entity must consider whether the observed transaction was orderly (that is, not 41 Table of Contents distressed or forced). If the transaction was orderly, the obtained price can be considered a relevant, observable input for determining fair value.� � the transaction is not orderly, other valuation techniques must be used when estimating fair value. This guidance, which was applied by us prospectively as of June 30, 2009, did not impact our results of operations, cash flows or financial position for the year ended December 31, 2009. http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K In April 2008, the FASB issued guidance on determining the useful life of intangible assets. The intent of the guidance is to improve the consistency between the useful life of a recognized intangible asset and the period of expected cash flows used to measure the fair value of the � sset. This guidance requires an entity to disclose information for a recognized intangible asset that enables users of the financial statements to ess the extent to which the expected future cash flows associated with the asset are affected by the entity's intent and/or ability to renew or tend the anangement. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. We adopted this guidance on January 1, 2009. The adoption of this guidance did not have a material impact on our financial position or results of operations. In May 2009, the FASB issued guidance on subsequent events which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. This guidance is based on the same principles as currently exist in auditing standards and was issued by the FASB to include accounting guidance that originated as auditing standards into the body of authoritative literature issued by the FASB. The standard addresses the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition ar disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its fmancial statements and the disclosures ti�at an entity should make about events or transactions that occurred after the balance sheet date. We adopted this guidance during the quarterly period ended June 30, 2009. Unaudited Pro Forma and Adjusted Pro Forma Financial Information The following unaudited pro forma financial information presents the consolidated results of operations of SGS and EGS as if the acquisition of EGS had occurred as of the beginning of the periods presented below. The historical fmancial information has been adjusted to give effect to events that are directly attributable to the combination (including amortization of purchased intangible assets and debt costs associated with acquisition, debt costs associated with high yield debt offering and conversion of preferred stock to common stock), and in case of the pro forma statements of operations, have a recurring impact. The unaudited pro forma financial information is not intended, and should not be taken as representative of our future consolidated results of operarions or fmancial condition or the results that would have occurred had the acquisirion occurred as of the beginning of the earliest period. 2009 200& Revenue ��_ ° ' ° � �� ,.,.,,,� � �� " $797,O�S � $833,239 ; , �� . � �� . � �. , . Net income (loss) attributable to common shareholders V (40,698) (44,026) , � ic and;diluted net lass per share � �" � ° � � ��` � �- � � � � .� � ��; $ � (C1.51) �' � $ ; (0.56j In the fourth uarter of 2009 the former eTelecare busine 4 , ss generated revenue of $69.3 million and a net loss of $4.5 milhon. EGS was acquired on October 1, 2009 and thus its results of operations are included in the actual results of SGS far the period October 1, 2009 to December 31, 2009. The acquisition of SHC in July 2008 was our first business combination and, accordingly, we do not believe a historical comparison of the results of operations and cash flows for the years ended December 31, 2009 compared to December 31, 2008 and December 31, 2008 compared to December 31, 2007 are beneficial to our stockholders. In order to assist readers to better understand the changes in our business between the years ended 42 Table of Contents December 31, 2009, 2008 and 2007, we are presenting in management's discussion and analysis section below the pro forma results of operations for SGS and SHC far the year ended December 31, 2008 as if the acquisition of SHC occurred on January 1, 2008. We derived the pro forma results of operations from (i) the consolidated financial statements of SHC for the period from January 1, 2008 to July 31, 2008 (the date of the SHC acquisition) and (ii) our consolidated fmancial statements for the years ended December 31, 2008. We are presenting the pro forma information in order to provide a mare meaningful comparison of our operating results with prior periods. The pro forma results of operations are not necessarily indicative of results of operations that may have actually occurred had the merger taken place on the dates noted, or the future financial position ar operating results of SHC. The pro forma adjustments are based upon available information and assumptions that we believe are reasonable and provide useful information to the reader of this section. The pro forma adjustments include adjustments for interest expense, reversal of interest income for SGS, amortization of intangible assets, transaction costs, depreciation expense for assets written up and market lease � ortization. The following are actual results of operations for the year ended December 31, 2009, which include the consolidated results of operations of EGS for the fourth quarter of 2009, and pro forma unaudited results of operations for the years ended December 31, 2008 and 2007 assuming the acquisition of SHC occurred on January l, 2008 and 2007, respectively: tittp://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm�5/17/2012 9:53:24 AMl Form 10-K Stream Global Services, Inc. Consolidated Statements of Operations (unaudited) Years ended December 31, � ProForma ProForma 2009 2008 2007 Revenue ';. �� `$584,769 $523,458;' � $4&3,569 �� ,, , _ Direct cost of revenue 342,193 330,955 320,935 Gross profit' 242,576 192,503 162,634 Operating expenses � Selling, general and administrarive''expenses � 198,212 160,824 �� 143,117 Stock based compensation expense � 1,242 1,330 1,013 Transaction'related costs ' 12,245 - � Depreciation and amortization expense � � � �� 36,422 � 24,359 � 19,550 �� Totaf operating�expenses�� 248,12�i � �186,513 � � � 163,680 � Income (loss) from operations (5,545) 5,990 (1,046) Other (income) expenses; net: Foreign currency transaction loss (gain) 236 (535) 11 Other (income) expense, net - � 1,593 �'�� :� , `(I,008) '� Interest expense, net 18,410 6,894 8,692 Total otlier (incotrie) expetises, net �: 18,64'6 �= � i 7,952 '�� ,:� 7,695 '�� Income (loss) before provision for income taxes (24,191 (1,962 (8,741 Provision for Income taxes 4,382 , '� 9,697 �� :5,938 � �� Net income (loss) $ (28,573 $ (11,659 $ (14,679 � 43 Table of Contents �`� Amounts as a percentage of pro forma revenue: 2009 2008 2007 Revenue' ' 100:0% ! 100.0% 1_00.0% - Direct cost of revenue 58.5 63.2 66.4 Gross profit � 41.5 36.8 ��; 33.6 Operating expenses: Selling, genera,l and administrative expenses 33.9 ` 30.7 29.6 Stock based compensation expense 0.2 0.2 0.2 Transaction related costs - 2.1 __ . , . , -,. � Depreciation and amortization expense 6.2 4.7 4A Total operating expenses; 42_4 : 35.6 33.8 r. _ Income (loss) from operations (0.9) 1.2 (0.2) Otker (income) expenses, net: � Foreign currency transaction loss (gain) � � � � (0.0) (0.1) OA � Other (income) expense, net 0.0 0.3 ! ;(0.2} " Interest expense, net 3.1 1.3 1.8 Total ather (income) expenses, net 3.2 1.5 ; ? 1.6 Income (loss) befare provision for income taxes (4.1) (0.3) (1.8) Pro'vision for Income taxes Q.7 19 1.2 � . � _. _ ,,, _ Net income (loss) (4.9)% (2.2)% (3.0)% Revenues We derive the majority of our revenues by providing CRM services such as technical support, sales and revenue generation services and . customer care services. Our services are typically bundled together to include our work provided by our service professionals, our hosted � technology, our data management and reporting and other professional services. We bill monthly for our services in a variety of manners, including per minute, per contact, per hour�and per full-time employee equivalent. Certain customer contracts contain provisions under which we can earn bonuses or pay penalties on a monthly basis based upon performance. http://wwwsec.gov/Archives/edgar/data/1405287/000119312510052721/dlOk.htm[5/1'7/2012 9:53:24 AM] Form 10-K Direct Cost of Revenue � We record the costs specifically associated with client programs as direct cost of revenues. These costs include direct labor wages and efits of service professionals as well as reimbursable expenses such as telecommunication charges. The most significant portion of our direct cost of revenue is attributable to employee compensation, benefits and payroll taxes. These costs are expensed as they are incurred. Direct costs are affected by prevailing wage rates in the countries in which they are incurred and are subject to the effects of foreign currency fluctuations. Operating Expenses Our operating expenses consist of all expenses of operations other than direct costs of revenue, such as information technology, telecommunications, sales and marketing costs, finance, human resource management and other functions and service center operational expenses such as facilities, operations and training and depreciation and amortization. Also included in operating expenses are transaction costs related to acquisitions. Other Income and Expenses Other income and expenses consists of the foreign currency transaction gains or losses, other income, interest incorne and interest expense. Interest expense includes interest expense and amortization of debt issuance costs associated with our indebtedness under our credit lines, term loans, and capitalized lease obligations. 44 Table of Contents We generate revenue and incur expenses in several different currencies. We do not operate in any countries subject to hyper-inflationary accounting treatment. Our most common transaction currencies are the U.S. Dollar, the Euro, the Canadian Dollar, the British Pound, Philippine Peso and the Indian Rupee. Our customers are most commonly billed in the U.S. Dollaz or the Euro. We report our operating results using the average actual exchange rates in effect during the accounting period. . Income Tazes We account for income taxes in accordance with the authoritative guidance which requires recognition of deferred assets and liabilities for the future income tax consequence of transactions that have been included in the consolidated fmancial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax, using the enacted tax rates for the year in which the differences are expected to reverse. We provide valuation allowances against deferred tax assets whenever we believe it is more likely than not, based on available evidence, that the deferred tax asset will not be realized. Further this guidance clarifies the accounting for uncertainty in income taxes recognized in financial statements and requires the impact of a tax position to be recognized in the financial statements if that position is more likely than not of being sustained by the taxing authority. Results of Operations Year ended December 31; 2009 compared with year ended December 31, 2008 Revenues. Revenues increased $61.3 million, or 11.7%, to $584.8 million for the year ended December 31, 2009, compared to $523.5 million for the year ended December 31, 2008. The increase is primarily attributable to the acquisition of EGS on October 1, 2009 and the inclusion of $69.3 million of EGS prior to its acquisition of Stream ("Legaey EGS") revenue in the fourth quarter of 2009. Stream prior to the acquisition of eTelecare ("Legacy Stream") revenues for services performed in our U.S. and Canada service centers decreased $25.8 million, ar 11.5%, for the year ended December 31, 2009, compared to the year ended December 31, 2008 as a result of the loss of large volumes from a seasonal client in the year ended December 31, 2008, coupled with the termination of an internet service provider client contract which ended in the last half of 2008. Legacy Stream revenues for services performed in European service centers decreased $33.6 million, ar 15.7% far the year ended December 31, 2009, compared to the year ended December 31, 2008. The majority of this decrease was ariributable to decreased volumes from our clients, coupled with decreased revenue due to a weakening Euro relative to the U.S. dollar. Legacy Stream revenues for services performed in offshore service centers in India, the Philippines, El Salvador, Egypt, Costa Rica, the Dominican Republic and Tunisia increased $51.5 million, or 61.1%, for the year ended December 31, 2009, compared to the year ended December 31, 2008, due to additional � ume from our clients. Revenues in our offshore service centers represented 26.3°/a of consolidated revenues far the year ended December 31, , compared to 16.1% in the same period in 2008. Direct Cost of Revenue. Direct cost of revenue (exclusive of depreciation and amortization) increased $11.2 million, or 3.4%, to $342.2 million for the year ended December 31, 2009, compared to $331.0 million for the year ended December 31, 2008. This increase was primarily http://www.sec.gov/Archives/ed�ar/data/1405287/OO0119312510052721/d10k.hhn�5/17/2012 9:53:24 AM] Form 10-K attributable to the acquisition of EGS on October 1, 2009 and the inclusion of $37.7 million of Legacy EGS results in the fourth quarter of 2009. Gross Profit. Gross profit increased $50.1 million, or 26.0%, to $242.6 million for the year ended December 31, 2009 from $192.5 miliion for the year ended December 31, 2008. Gross profit as a percentage of revenue increased from 36.8% to 41.5%. Gross margin percentage increased primarily due to the acquisition of EGS on October 1, 2009 and the inclusion of $31.5 million of Legacy EGS results in the fourth quar�. of 2009. Following the acquisition of SHC, we implemented a number of changes, including hiring key operating 45 Table of Contents personnel in the America's operations. Our focus on operations improved certain metrics such as agent utilization, average call handle time, agent attrition and productivity. In addition, our focus on operating metrics resulted in an increase in customer satisfaction. We expect gross profit as a percentage of revenues to continue to. improve in fisca12010 due to continuing improvements in operating metrics and investment in new tools and technologies to improve efficiencies. We also anticipate expanding into new geographic regions such as South America and Asia. These new regions are expected to produce higher gross profit as a percentage of revenues due to the lower labor rates in those countries. Operating Expenses. Operating expenses (which includes depreciation and amortization expense) increased $61.6 million, or 33.0%, to $248.1 million or 42.4% of revenues for the year ended December 31, 2009, compared to $186.5 million or 35.6% of revenues for the year ended December 31, 2008, primarily due to the acquisition of EGS on October 1, 2009 and the inclusion of $34.5 million of Legacy EGS results in the fourth quarter of 2009. In conjunction with this acquisition we incurred $12.2 million of transaction related costs in the year ended December 31, 2009. Depreciation and amortization increased $12.1 million to $36.4 million for the year ended December 31, 2009 as compared to $24.4 million for the year ended December 31, 2008 as a result of the amortization of intangibles related to the acquisition of EGS and additions to equipment and fixtures totaling $33.1 million including capital leases during the twelve months ended December 31, 2009. The additions to equipment and fixtures were to support new business, open new service centers and maintain and upgrade our technology infrastructure. • Other Income Ex enses, Net. Other mcome ex enses net increased $10.7 million or 134.5% to $18.7 million for the ear ended � � � P �� ) P , , > Y December 31, 2009, compared to $8.0 million for the year ended December 31, 2008. This increase was due to an increase in interest expense related to the interest on the debt used to purchase EGS in October 1, 2009 and associated write-offs of capitalized costs of $49 million associated with the debt that was repaid during the year. Income Taxes. Income taxes decreased $5.3 million, or 54.8%, to $4.4 million for the year ended December 31, 2009, compared to $9.7 million for the year ended December 31, 2008. We operate in a number of countries outside the U.S. that generally have lower tax rates than the U.S. and this can have a significant impact on the effective tax rate. Net Income (Loss). Net loss increased by $16.9 million, ar 145.1%, to $28.6 million for the year ended December 31, 2009, compared to $11.7 million for the year ended December 31, 2008. This increase was primarily due to increased amortization costs, increased interest costs, and transaction costs related to the acquisition of EGS that was consummated in October 2009. Year ended December 31, 2008 compared with year ended December 31, 2007 Revenues. Revenues increased $39.9 million, or 8.3%, to $523.5 million for the year ended December 31, 2008, compared to $483.6 million for the year ended December 31, 2007. The increase is primarily attributable to growth in revenue due to increased volumes with our ten largest clients from both existing and new services provided to those clients in 2008. Revenues for services performed in our U.S. and Canada service centers decreased $32.1 million, or 12.5%, for the year ended December 31, 2008, as a result of large volumes from a seasonal client in the year ended December 31, 2007, coupled with an ISP client contract which ended in the last half of 2007. Revenues for services performed in European service centers increased $50.4 million, or 30.7%. The majority of this increase is attributable to increased volumes from both new and existing clients, coupled with additional revenue due to a 46 Table of Contents �. � strengthened Euro relative to the U.S. dollar. Revenues for services performed in offshore service centers in India, Costa Rica, the Dominican Republic and Tunisia increased $21.6 million, or 35.0%, due to additional volume from existing and new clients. Revenues in our offshore service http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d1Ok.htm[5/17/2012 9:53:24 AM] Form 10-K centers represented 15.9% of consolidated revenues for the year ended December 31, 2008, compared to 12.8% in the same period in 2007. Our revenue gowth is a result of a number of factors. These factors include a re-vamp of our sales and client management teams, introduction of new services such as warranty and up-sell programs and winning of new client contracts from both existing and new accounts. We believe that our wth is being effected positively by a number of macro economic factors that include our clients propensity to outsource to gain flexible lutions, our clients seeking to work with more global service providers like us and an ongoing effort by certain of our clients to consolidate service providers to those with global operations and broader service offerings. Direct Cost of Revenue. Direct cost of revenue (exclusive of depreciation and amortization) increased $10.0 million, or 31 %, to $331.0 million far the year ended December 31, 2008, compared to $320.9 million for the year ended December 31, 2007. This increase is primarily attributable to incremental labor cost required to support revenue growth. After excluding the $8.9 million Canadian and Ewo currency exchange impact, direct labor costs increased from $329.8 million to $331.0 million, or 0.1%. We expect cost of services as a percentage of revenues to decline in the future. Gross Profit. Gross profit increased $29.9 million, or 18.4%, to $192.5 million for the year ended December 31, 2008 from $162.6 million for the year ended December 31, 2007. Gross profit as a percentage of revenue increased from 33.6% to 36.8%. Gross margin percentage increased primarily due to higher margin contracts implemented and better management of our costs in connection with services performed in our European service centers. Following the acquisition of SHC, we implemented a number of changes, including hiring key operating personnel in the America's operations. Our focus on operations improved certain metrics such as agent utilization, average call handle time, agent attrition and productivity. In addition, our focus on operating metrics_resulted in an increase in customer satisfaction. . We are also expanding into new geographic regions such as Egypt, South America, Latin America and the Philippines. These new regions are expected to produce higher gross profit as a percentage of revenues due to the lower labor rates in those countries. Operating Expenses. Operating expenses (which includes depreciation and amortization expense) increased $22.8 million, or 13.9%, to $186.5 million or 35.6% of revenues for the year ended December 31, 2008, compared to $163.7 million or 33.8% of revenues for the year ended December 31, 2007, primarily due to an increase in selling, general and administrative expense, which grew from $143.1 million to $160.8 million, or 12.5%. The increase in selling, general and administrative expense was due to (i) a$3.7 million increase in labor costs due to incremental management, operations and administrative`staff required to support our revenue growth, and (ii) an occupancy expense increase of $63 million primarily attributable to new service center openings after the first half of 2007, and a$4.0 million Canadian and Euro currency exchange impact. Selling, general and administrative expenses as a percentage of revenue were approximately 31% far the year ended December 31, 2008 as pared to 30% for the year ended December 31, 2007. Depreciation and amortization increased $4.6 million as a result of additions to �ipment and fixtures totaling $17.3 million includ'mg capital leases during the twelve months ended December 31, 2008. The additions to equipment and fixtures were to support new business, open new service centers and maintain and upgrade our technology infrastructure. Operating expenses as a percentage of revenues increased to 35.6% for the year ended December 31, 2008 compared to 33.9% for the year ended December 31, 2007. Other (Income) Expenses, Net. Other (income) expenses, net increased $0.3 million, or 3.7%, to $8.0 million for the year ended December 31, 2008, compared to $7.7 million for the year ended December 31, 2007. T�iis 47 Tab}e of Contents increase consisted of a foreign exchange gain for the year ended December 31, 2008 of $0.5 million, compared to a foreign exchange loss of $OA million for the year ended December 31, 2007. Foreign exchange gains and losses are primarily the result of intercompany activity and related hedging. Income Tczzes. Income taxes increased $3.8 million, or 63.5%, to $9.7 million for the year ended December 31, 2008, compared to $5.9 million for the year ended December 31, 2007. Foreign tax expense comprised$93 million for the year ended December 31, 2008 and $5.2 million for the same period in 2007 and the effective foreign tax rate increased from 28.5% to 32.5%. The increase in expense was driven by a$2.5 million charge in respect to additional foreign tax liabilities, higher income in foreign jurisdictions offset by the decrease in the effective rate reflecting changes in the mix of operations. We operate in a number of countries outside the U.S. that are generally taxed at lower rates and this can have a significant impact on the effective tax rate. Net Income (Loss). Net loss decreased by $3.0 million, or 20.9%, to $11.7 million for the year ended December 3I, 2Q08, compared to $14.7 � illion for the year ended December 31, 2007. This decrease is primarily due to increased revenue and margins offset by increased income tax ense. - Liquidity and Capital Resources Our primary liquidity needs are for financing working capital associated with the expenses we incur in perfornung services under our client http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K contracts and capital expenditures for the opening of new service centers, including the purchase of computers and related equipment. We have in place a credit facility that consists of a revolving line of credit that allows us to manage our cash flows. Our ability to make payments on the credit facility, to replace our indebtedness, and to fund working capital and planned capital expenditures will depend on our ability to generate cash in the future. We have secured our working capital facility through our accounts receivable and therefore, our ability to continue servicing debt is � dependent upon the timely collection of those receivables. . We made capital expenditures of $33.1 million in the year ended December 31, 2009 as compared to $17.4 million on a pro forma basis for the year ended December 31, 2008. We continue to make capital expenditures to build new service centers, meet new contract requirements and maintain and upgrade our technology. We expect to continue to expand into new facilities in 2010 that might include places such as the Philippines, Egypt, Tunisia, China and South and Central America. We also expect to invest in technology initiatives such as unified communications and enabling technology, business continuity and data security, web based solutions and applications and distributed collabaration networking. The convergence of voice and data as well as the demand for real time diagnostics and analytics by our clients are requiring us to make substantial future investments in technology and solutions that will require additional capital investments. On October 1, 2009, we closed the Combination, with the pre-Combination Stream and EGS stockholders owning approximately 57.5% and 42.5%, respectively, of the combined entity. On October 1, 2009, we issued $200 million aggregate principal amount of 11.25% Senior Secured Notes due 2014 (the "Notes"). The Notes were issued pursuant to an indenture, dated as of October 1, 2009 (the "Indenture"), among us, certain of our subsidiaries (the "Note Guarantors") and Wells Fargo Bank, National Association, as trustee. The Notes were issued by us at an initial offering price of 95.454% of the principal amount. The indenture contains restrictions on our ability to incur additional secured indebtedness under certain circumstances. The Notes mature on October 1, 2014. The Notes bear interest at a rate of 11.25% per annum. Interest on the Notes is computed on the basis of a 360-day year composed of twelve 30-day months and is payable semi-annually on April 1 and October 1 of each year, beginning on April 1, 2010. 48 Table of Contents � � � The obligations under the Notes are fully and unconditionally guaranteed, jointly and severally, by certain of our direct and indirect t�• subsidiaries and will be so guaranteed by any future domestic subsidiaries of ours, subject to certain exceptions. The Notes and the Note Guarantors' guarantees of the Notes are secured by senior liens on our and the Guarantors' Primary Notes Collateral and by junior liens on our and the Guarantors' Primary ABL Collateral (each as defined in the Indenture). , On October 1, 2009, we, Stream Holdings Corporation, Stream International, Inc., Stream New York, Inc., eTelecare Global Solutions-US, Inc., eTelecare Global Solutions-AZ, Inc. and Stream International Europe B.V. (collectively, the "U.S. Borrowers"), and SGS Netherland Investment Corporation B.V., Stream Tnternational Service Europe B.V., and Stream International Canada Inc., (collectively, the "Foreign Borrowers" and together with the U.S. Borrowers, the `Bonowers"), entered into the Credit Agreement, with Wells Fargo Foothill, LLC, as agent and co-arranger, Goldman Sachs Lending Partners LLC, as co-arranger, and each of the lenders party thereto, as lenders, providing for the ABL Credit Facility of up to $100.0 million, including a$20.0 million sub-limit for letters of credit, in each case, with certain further sub-limits for certain Foreign Borrowers. The ABL Credit Facility has a maturity of four years. Letters of Credit. We have certain standby letters of credit for the benefit of landlords of certain sites in the United States and Canada. As of December 31, 2009, we had approximately $2.0 million of these letters of credit in place under our Amended Credit Agreement and approximately $6.6 million of letters of credit under the Reimbursement Agreement with Ares described above in this Liquidity and Capital Resources section. Contractual Obligations. We have various contractual obligations that will affect our liquidity. The following table sets forth our contractual obligations as of December 31, 2009: Payments Due by Period Less than More than Total 1 year 1-3 years 3-5 years 5 years (in thousands) Lorig-term debt obligations . $200,000 $ - $ — $ - $200,OOQ Revolving debt obligations 15,501 — —� 15,501 — Operating Iease obligations 123,352 39,291 49,624 ' 21,428 ' 13;0� Capital lease obligations � � � � 19,609 � 6,865 8,926 3,233 � 1S6 $58,550 $40,162 $213,594 Total �� .� ° ', . � � !, ;� $358,462 ; $46, �� Certain facility leases were backed by letters of credit totaling approximately $8.6 million at December 31, 2009. The obligations under the http://wwwsec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] �Form 10-K � � � � letters of credit decline annually as the underlying obligations are satisfied. As of December 31, 2009, we had $14.6 million in unrestricted cash and cash equivalents, and warking capital (measured by current assets �s current liabilities) of $112.0 million. Net cash used in operating activities totaled $252 million for the year ended December 31, 2009, a$10.6 million increase from the $14.6 million used in the year ended December 31, 2008. Non-cash charges were $28.3 million greater in the year ended December 31, 2009 than those generated in the period ended December 31, 2008 primarily as a result of the $25.4 million increase for the depreciation and amortization of acquired assets related to the purchases of SHG and EGS. The increase of $9.5 million in changes from operating assets and liabilities is due primarily to the increase of $9.6 million in cash used for other assets. Net cash provided by investing activities totaled $11.3 million for the year ended December 31, 2009 a$119.8 million decrease from the $131.1 million provided by the period ended December 31, 2008. This is primarily attributable cash acquired in the acquisition of EGS in 2009 as opposed to 2008 where the acquisition of SHC was paid for in cash. We used $22.1 million far additions to equipment and fixtures, net for the year ended December 31, 2009 as compared to $9.1 million use of cash for the year ended December 31, 2008. 49 Table of Contents Net cash provided by financing activities totaled $13.3 million for the year ended December 31, 2009, a$88.7 million increase from the $102.0 million of cash used in financing activities for the period ended December 31, 2008. The increase is due to 2008 activity which had proceeds from issuance of the Series A Prefened Stock offset by cash used to purchase shares of common stock in our self-tender offer and the proceeds from the sale of units in our IPO in the period ended December 31, 2007. Our foreign exchange forward contracts require the exchange of fareign currencies far U.S. Dollars or vice versa, and generally mature in one to 24 months. We had outstanding foreign exchange forward coniracts with aggregate notional amounts of $112.0 miliion as of December 31, 2009 and $20.7 million as of December 31, 2008. We are studying site rationalization as a consequence of the EGS acquisition and this may result in future charges to operations and the use • `ash. We believe that our cash generated from operations, existing cash and cash equivalents, and available credit will be sufficient to meet expected operating and capital expenditures for the next 12 months. Off-Baltance Sheet Arrangements We do not have any off-balance sheet anangements. Seasonality We are exposed to seasonality in our revenues because of the nature of certain consumer-based clients: We may experience approximately 10°/a increased volume associated with the peak processing needs in the fourth quarter coinciding with the holiday period and a somewhat seasonal overflow into the first quarter of the following calendar year. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates and interest rates. Market risk is the potential loss arising from adverse changes in market rates and prices. Our risk management strategy includes the use of derivative instruments to reduce the effects on our operating results and cash flows from fluctuations caused by volatility in currency exchange and interest rates. In using derivative financial instruments to hedge exposures to changes in exchange rates we exposes ourselves to counterparty credit risk. Interest Rate Risk We are exposed to interest rate risk primarily through our debt facilities since some of those instruments, including capital leases, bear interest at variable rates. At December 31, 2009, we had outstanding borrowings under variable debt agreements that totaled approximately $15.5 million. A hypothetical 1.0°/a increase in the interest rate would have increased interest expense by approximately $0.2 million and would have decreased annual cash flow by a comparable amount. The carrying amount of our borrowings reflects fair value due to their short-term and able interest rate features. There were no outstanding interest rate swaps covering interest rate exposure at December 31, 2009. Foreign Currency Exchange Rate Risk http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htmf5/17/2012 9:53:24 AMl Form 10-K We serve many of our U.S.-based clients using our service centers in Canada, India, the Dominican Republic, El Salvador, Egypt, the Philippines, Nicaragua and Costa Rica. Although the contracts with these clients are typically priced in U.S. dollars, a substantial portion of the costs incurred to render services under these contracts are denominated in the local currency of the country in which the contracts are serviced which creates fareign exchange exposure. We serve most of our EMEA based clients using our service centers in the � 50 Table of Contents Netherlands, the United Kingdom, Italy, Ireland, Spain, Sweden, France, Germany, Poland, Denmark, Bulgaria, Egypt, Tunisia and South Africa. We typically bill our EMEA based clients in EURO or British Pound Sterling. While a substantial portion of the costs incurred to render services under these contracts are denominated in EURO, a part is also denominated in the local currency in which the contracts are serviced which creates foreign exchange exposure. The expenses from these foreign operations create exposure to changes in exchange rates between the local currencies and the contractual currencies — primarily the U.S. dollar and EURO. As a result, we may experience foreign currency gains and losses, which may positively or negatively affect our results of operations attributed to these subsidiaries. The majority of this exposure is related to work performed froin call centers in Canada, India and the Philippines. In order to manage the risk of these foreign currencies from strengthening against the currency used for billing, which thereby decreases the economic benefit of performing work in these countries, we may hedge a portion, though not 100%, of these foreign currency exposures. While our hedging strategy may protect us from adverse changes in foreign currency rates in the short term, an overall strengthening of the foreign currencies would adversely impact margins over the long term. The following summarizes the relative (weakening)/strengthening of the U.S. Dollar against the local currency during the years presented: Year Ended December 31, 2009 2008 2007 U.S. Dollar vs: Canadian Dollar - :: (14.2%) 24.5% '� (15.8%� U.S. Dollar vs. EURO (1.7%) 4.3% (11 6� U.S. Dollar vs. Indian Rupee (4.6%) 24.7% (10.6%) �U.S. Dollar vs. Philippine Peso �� (2.6%) 15.2% (15.8°/o) U.S. Dollar vs. S. African Rand (21.7%} ! 38.1°l ; !(2.8%) „ _..-_ . _: : . U.S. Dollar vs. U.K. Pound Sterling (10.0%) 37.9°/a (1.9°/a) Cash Flow Hedging Program Substantially all of our subsidiaries use the local currency as their functional currency as a result of paying labor and operating costs in those local currencies. Certain of our subsidiaries in the Philippines use the U.S. dollar as their functional currency while paying their labor and operating cost in local currency. Conversely, revenue for most of these foreign subsidiaries is derived principally from client contracts that are invoiced and collected in U.S. dollars and other foreign currencies. To mitigate against the risk of principally a weaker U.S. dollar we purchase forward contracts to acquire the local currency of the foreign subsidiary at a fixed exchange rate at specific dates in the future. We have designated and account for certain of these derivative instruments as cash flow hedges where applicable, as defined by the authoritative guidance. Given the significance of our foreign operations and the potential volatility of the certain of these currencies versus the U.S. dollar, we use forward purchases of Philippine peso, Canadian dollars and Indian rupees to minimize the impact of cunency fluctuations. As of December 31, 2009, we had entered into forward contracts with three fmancial institutions to acquire a total of approximately $112A million at prices ranging from 46.63 to 50.49 PHP/USD. We do not hedge any currencies related to our EMEA operation. While we have implemented certain strategies to mitigate risks related to the impact of fluctuations in currency exchange rates, we cannot ensure that we will not recognize gains or losses from international transactions, as this is part of transacting business in an international environment. Not every exposure is or can be hedged and, where hedges are put in place based on expected foreign exchange exposure, they are based on 51 ._. _ ----- _ _ _ �_� Table of Contents forecasts for which actual results may differ from the original estimate. Failure to successfully hedge or anticipate currency risks properly could http:liwww.sec.govlArchives/edgar/data/1405287/OO0119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K affect our consolidated operating results. Market Risk • � Market risk is the sensitivity of income to changes in interest rates, foreign exchanges, commodity prices, equity prices, and other market- �riven rates or prices. Changes in market rates may impact the banks' LIBOR rate or prime rate. For instance, if either the LIBOR or prime rate were to increase or decrease by one percentage point (1.0%), our annual interest expense would change by approximately $0.2 million based upon our total credit facility. 52 Tabie of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of D'uectors and Shareholders Stream Global Services, Inc. We have audited the accompanying consolidated balance sheets of Stream Global Services, Ina (formerly Global BPO Services Corporation) (the successor) as of December 31, 2009 and 2008, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the years ended December 31, 2009 and December 31, 2008. We have also audited the accompanying consolidated statements of operations, stockholders' equity and cash flows of Stream Holdings Corporation (the predecessor) for the seven month period ended July 31, 2008 and for the year ended December 31, 2007. These financial statements are the responsibiliTy of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. � We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those dards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of inaterial sstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statemenfs, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the fmancial statements referred to above present fairly, in all material respects, the consolidated financial position of Stream Global Services, Inc. at December 31, 2009 and 2008, and the consolidated results of its operations and its cash flows for the years then ended and the consolidated results of operations and cash flows of Stream Holdings Corporation for the seven month period ended July 31, 2008 and the year ended December 31, 2007, in conformity with U.S. generally accepted accounting principles. As discussed in Note 5 to the consolidated financial statements, the Company changed its method of accounting for business combinations with the adoption of the guidance originally issued in FASB Statement No. 141(R), Business Combinations (codified in FASB ASC Topic 805, Business Combinations) effective January 1, 2009. /s/ Ernst & Young LLP Boston, Massachusetts March 10, 2010 53 Table of ontents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and the Stockholders of Global BPO Services Corp. http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.hhn[5/17/2012 9:5324 AM] Form 10-K We have audited the accompanying consolidated statements of operations, stockholders' equity and cash flows of Global BPO Services Corp. (a development stage company) and subsidiary for the period from June 26, 2007 (date of inception) to December 31, 2007. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. t We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the fmancial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Global BPO Services Corp. (a development stage company) and subsidiary for the period from 7une 26, 2007 (date of inception} to _ December 31, 2007 in conformity with accounting principles generally accepted in the United States of America. /s/ BDO SEIDMAN, LLP Boston, Massachusetts March 17, 2008 54 Table of Contents STREAM GLOBAL SERVICES, INC. - CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) December 31, �' • 2009 2008 Assets Current assets: : _ _ _ . _ _ ,. . _ Cash and oash equivalents $ =14,928 $ '10,660 ' Accounts receivable, net of allowance far bad debts of $532 and $267 at December 31, 2009 and 2008, . respectively 175,557 109,385 Income taxes receivable 2,988 ;1,559 � �Deferred income taxes � 15,870 � 14,899 Pr�paid e�penses and other current �;assets ��. � 18,043 < � � i 0,353 , � � � Total current assets � 227,386 146,856 � Equipmentandfixtures,net '96,816 41,634 Deferred income taxes � � � � � 5,306 � � � 2,698 . Goodwill .' 226,027 47,686 Intangible assets, net 104,834 83,319 �t�ther asseYs 20,454 �� 7,752 � � Total assets, ; _ _ $680,823 _ $329,945 Liabilities and Stockholders' Eguity ' Current liabilities: Accounts pa3�able �� $'�13,532 ` $ �;� 9,058 ` Accrued employee compensation and benefits � 57,475 40,335 Other accrued expenses ' 28,499 ,15,550 Income taxes payable 2,199 3,449 Curient'poi of long=term debt � � 90 '� � 2,614 '�� Current portion of capital lease obligations 5,529 2,260 � � Other liabilities �� 8,013 �� '� 6,12� Total current liabilities �� 115,337 79,3�_� Long-term debt; riet of currerit portiori 206,880 63,624 Capital lease obligations, net of current portion � � 11,279 5,484 http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K I�eferred'iricome��taXes "�� 2�,Q50` . � !17,396 ��' � � Other long-tertn liabilities 22,866 16,387 _ Total liabilities �� "' ° � ` �� " �� = �.� � � 377,412 �: � � 1'82,283 �s � nvertible Series A Preferred Stock, par value $0.001 per share,� 1,000 shares authorized; 0 and 150 shares issued and outstanding at December 31, 2009 and 2008 � - 145,9ll , ,., e. Stockholders' equity: ° � . � � ' � . , , � � ,. . Common stock, par value $0.001 per share, shares authorized-200,000 shares and 149,000 authorized at December 31, 2009 and 2008, respectively, issued and outstanding shares-79,616 and 9,458 shares at December 31, 2009 and 2008, respectively 80 9 Additional'paid-iri-capital ' 33,7 ' 1t,330 ' Retamed deficit � � � � (29,972) � (1,399) � Accumulated other comprehensive income (lo'ss) `,{3,732 " '($,189 ; Total stockholders' equity � 303 411 1 751 � , ,� � _.�. , �� , , Tota� liabilities and stockhalders', equity � � $680,823 � `; $329,945 � See accompanying notes to consolidated financial statements. 55 Table of Content STREAM GLOBAL SERVICES, INC. - • CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) For the period from Year June 26, 2007 Seven Months Ended Year Year (date of Ended December 31, Ended Ended inception) to July 31, 2008 2007 December 31, December 31, December 31, Predecessor Predecessor 2009 2008 2007 ("SHC") ("SHC") Revenue �� $ ��, 584,769 � $ . -211;373. _. . � $ � ' 4 - � : $ 312,085� � � � $ � 4$3,569 �: �; _ � Direct cost of revenue 342,193 128,278 - 202,676 320,935 Gross�profit ��' . � � ' �'�� 242,576 ; ` 83,095 :, ' � - '; - ,. �. .� :.109,409. ` � -� � 162,634 �'�� Operating expenses'. �` � � , ... , _ � � � _ Selling, general and administratiue. P �" � ` � ; . : �� . 199,454 , ` 66a88� � 240� 95,751. � � 144,681 � �� , � ` �ex enses �� Depreciation and amortization 36,422 10,982 2 8,810 12,059 Transaction rel`ated :costs 22,245 - - i 9,S I5 : �.. w , Total operating expenses 248,121 77,866 242 124,076 156,740 � r.-,. r . .� Iricome {Tbss) from operations � � � (5,545} �� 5;229 � . ',� �� (242)� � , (14,b67) � � �. �' S,$94 :' Other (income) expenses, net: �� Eoreign curi transactiori loss (gain) 236 9$1 - (1,�17) 11 , , _.. , a _ z � �_s. �. � -.� Other (income) expense, net - 260 - (87) (1,008) Interest (income} expense, net 18,4T0 (2,16? (2,I19 7,214 12,055 ! Total other (income) expenses, net 18,646 (926 (2,119 5,610 11,058 Income (loss) before mcome taxes ;, (24,191) 6;155 , ! ; l,&77 (20,277) (5,164�; Provision (benefit) for income taxes 4,382 5,359 760 � 5,095 � 6,159 Net incrnne (loss)' $ ,: �28,573) � $ 796 � � � . 1,117�� $ (25,372} ��. $ (11,323.j � es A Preferred Stock beneficial conversion � � � � � � � � eature 49,503 Cumulative con�erhble Prefeired Stock dividends` ` + 5$,018 1;790" - - - � . .. : -;. < Preferred Stock accretion 6,397 367 - - - Warrant issuance costs - 298 _ _ http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K Net income (loss) attributable to common stockholders $ (92,988) $ (51,162) $ 1,117 $ (25,372) $ (11,323) � �Vet income (loss) attributable to'common ' stockholders per share: Basic $ (3.46) $ (2.20) $ 0.07 N/A N/A� _ _ __ _ Diluted ; $ (3.46) $ (2.2Q) ; $ 0.07 N/A N/A Shares used in computing per share amounts: Basic ` 26 23,258 16,189 N/A N/A ` Diluted .: 26,887 23,258 16,189 N/A N/A See accompanying notes to consolidated financial statements. 56 Tabie of Contents STREAM GLOBAL SERVICES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In thousands) Series A Convertible Accumulated Preferred Stock Common Stock Additional Retained Other Par Par Paid in Earnings Comprehensive Shares Value Shares Value Capital (Deficit) Income (Loss) Total Balances aE 7une 30, �007 a ' ' $ - - $ g - - $ : =- �_ $.!.;� - $_� ` - � Sale of wmmon stock to founding stockholders � - - 8,984 9 41 - - 50 � ' Proceeds from's�ie of underwiitets puichase oprion - - - - - Proceeds from sale of warrants to founding stockholders - - - - 7,500 - - 7,500 Sale of'31,250 units through initial public offering, net of ' • underwriters' discount of $t7,500.and offering expenses of ( ! $1,005 and net o£ $73,875 proceeds allocable to 9,375 shares of common sfock subject to possi6le conversion - 21,875 22 157,547 - - 157,619 ! Common shares repurchased from founding stockholders - - (1,171) (1) (5) - - (6) "" 3�1et incoine �" - - �1�I17 �- ,�1,I17 - � Balances at December 31, 2007� � �� - � $ - 29,688 � $ 30 $ 165,133 $ 1,117 $� - � $ 166,280 _ .,�et incoma .� . .`.. � �. � � - '�- � '� _._. ._�i !79b , ' '� . . r- 796 : Currency hanslation adjustment - - - - - (9,430) (9,430) �°_�- IJnrealized loss on derivaCives, nef of faz of $0 : . � �� ;�°° � � . � - � � � - - b 1,241 _, _ � , . _ .v _, _ . . . E �� - ` '-, 1;24} Comprehensive ]oss - - - - - - (7,393) � ;� � Accretion�of benefic?al conveision preuiimn on prefecred 9fock , , - �, (46,191) " (33312)' _ _ - ; (49,503): � ,: _ , . _ _ Beneficial conversion premium on preferred stock - 49,503 - - 49,503 .-?; CwnulativedividendsoripFefeaedstobk"° - _.� �� - � =. - _ - �(],790) _ . _- i'{1,790); � � Rednction in deferred IPO costs �preferred stock�� - � � - f 4,718 - - 4,718 Coinmon shares purchased:froin sfockhoiders asi:a result of tender offer - - (2�,757) �� (21) (166 - - �,(166,059); Common shares issued under stock plans, net of cancella6ons - - 99 - 50 - - 50 Stock-based eompensadon expense - - - 73 - _ 73 ' _ _ � _ -- ,. . � � Warrant value associated with the issue of preferred stock to Ares - - 3,253 - - 3,253 r� 'WarranL issuance costs - - - (298) < < �`, (298) r Common stock released from redemption restriction - - 428 - 3,572 �- � - 3,572 ,. _ � ;�'`' Accretion ofpreferred stock� discount �� - ��_ !- ''� - (3b7) � , �. " � k -,,�`< ;_� (367); � Accretion ofin-hvstaccount - - - - � - �Z � Bala Net ]o s Dacembar 31, 2008'�� `' $ �_ . 9,458 � $ �9 :$ 11;330 - $ ��'$'399) $; . ' i (8,Y89) $_ . 1,751 !: v ,, , _ ,573) - (28,573�, � Cwreni� tiansla�ipn adjushnenf : `. - - - - - - ��5,78� . � 5,785 ' Unrealized loss on derivatives, net of tax of $0 - - - - - - (1,328) (1,328) ��`Compiehensive ]o'ss - - - - '�, (24,11�� _` Cumulative dividends on preferred stock - 57,729 - - (58,018) - - (289) �; Transfer`ofPrefeired`A Stock to equiry from mezzanine equiry; 150 , 145;394 - - - - �,145,394 � ,. - _. Accretion of preferred stock discount - 6,397 - - (6,397) - - � �` T'refer"red �sfock eonversion, to com�ori stiock �; �. _ ': ; `(150� � (209;520) , � 36,085 � �� 36 ` �'210,476 --- '�- ; 9R2 ' Stock-based compensation expense - - - - 1,242 - 1,242 �`, eommon shares`c�ncelled : `.Z1g) � �(��J -�'� � �� )� . .. ; . � , � �. � ��_ �_ � _ �_ �, _ �v � , < .: . � <t � � Repurchase of public war�ants - - - (7,373) - (7,373) =' Warrant exercises � , ' ` ; ' ` � " := � = .:, �� 131. . _ ; --- � 7$8 � ��- � � 788 ' Common stock and pre-emptive rights issued for acquisition of eTelecare - - 33,652 34 183,068 - 183,10" '� Common stock issued for - = - 308 - '' 1 � � 1,930 ��- ; ;- . � '� 1,9g Balances at December 31, 2009 - - 79,616 $ 80 � $ 337,035 $(29,972 $ (3,732 $ 303,41 r See accompanying notes to consolidated financial statements http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K 57 i tn STREAM GLOBAL SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the period from Predecessor Predecessor Year ended Year ended June 26, 2007 (�SHC") (°'SHC") December 31, December 31, (date of inception) to Seven months ended Year ended 2009 2008 December 31, 2007 July 31, 2008 December 31, 2007 Qpeiating actrv�t�es• ° � � �,� � : �, _� �" � �,' Net income (loss) �� f �� $ (28,573) $ 796 ��$ 1,117 $ (25,372) $ � (11 323)� � cah� ro ided b��used�ini �Pme o�ss to net � '. '' . � ) � ;°. .. � P� Y� � rahn aehv�hes � ..�� -� �� . ` Depreciation and amortiza6on 36 422 10,982 � 2 � 8 810 � 12 059 � � �:' ,�`Amqrtization of debk issuance costs "' S,574 .' ;. 206 '' I,Q7,0 1,285 `! � . . . . �,_ , �. � -' � . . � � � Interest income �" �'� � � � �� (2,119) � � �` AeFerred taxes' �3 59$) 31$ ;�.. , �f� y� . . ° �„ . . . _ . 683 .. � s�`� _ c ��, � 255 :� Market lease reserve � � (1 203) (91'7�) � - � � � � - ' (1 558) a . :- w . � ?.znorbzanon 4fbond dtscounG � � � � , _ � ' 3�q�, y �, , � � � ' � � r E. �,�� = _ � � Loss on disposal of assets � � � �� Zp3 ` ` - � � � � � � _ - � _ � � � � � ��Noncash stock�� cori�pemsat�on "' °-'� � :. ,1242; u � "1�2 r x °,29Q ��' � �� t � 13 � ' �� .. �». , . � ...�. ...� ��'.,°�_ ; �.°. � r., �.� .��,. � Noncash interest expense - - - 841 �� Changes in opera6ng assets and � � Iiabilities, n� ofethe effect'of � � � '�' � � �' � � � ' acquisxpons; ��.:� , � . � Accounts receivable �� (1Q203) � (ll,865) � � '� � � � � � � �15,139 � � (27085) b. � .. �.,.� � � �. `IncometaXes rece�vable Ppu -,` �. (863�� (938) - - �.$24 � ° �,�,�=" � _ (342); Prepaid�expenses and other current � � � ` � � � " ,°"'`°` � assets 1,767 (1,932) (151) 876 (834) - Otheiassets 1090b, , � 133Q �` ti�,1�1 �� 1;Q19.'- �� r� x . �. , e;' ., � , . ) r . < _ §. . .._:'_ ,� '.` ,. ` : �1,827) . � ,. � � 569 . - . �. �� x _ Accounts payable (93) 4,049 - � � Ac�rued expenses and oth� ;.:- � i , . �. " : � � ;,, y . � , . � liabilities (15,285 (14,037 897 14,93b 13,78Q ! cash prov�ded by (used in) operating actroities (25,187) (14,566) (254) 14,278 (12,409) hng actEVit�es. ,. � � :. � � �� -: � � � �'. : _ �� . ' � crease in xestncted cash �� - � � 246,404 � (104) � � � 437 Cash contritiuted�to hvst account: �` - - f245,3(l0� �� _� a x ,sd_ � n :':� �,�. _w. -' Withdrawal from trust account for working�� capital � � � � � � � ` ' � � purposes (including taces) - 1 206 A�qmsitionnfl�usinesses,netof;�ash�a�quiretl , , - 3�,400�� ; : . ; (106,13T) • s,�:: ' . ,, <. ,.e,��a.;_ ,.� y ��i� a , u ,� (2,594}„s .. ' • 3 � , , s � := � .,.� Add�t�ons to equipment and fixtures, net (22,06�3) (9,128) (29) (6,719) (17,145) Netca�h�prpv�dei�bytusedin)i�vesting`acrivities", ; 11,336�; -.. 131,i�}5 (245,133) °=E� '.,(6,823j ", �n(19,302)= c � Binancing activities: � �� ` ` � � ` " � ° Net liorrbwings (repayinents� on ime,of credit ` "` " ,:' .`(43,924} „' `;': (8,236J ; Q . � „^ ' " � , (276} � " 3b Q77' _ � ,e � .�.,at �, .� , e � • ._ _ �, Proceeds from issuance of long-term debt 216,187 - �- 120 7,014 Payinent`s on long-team debt �� ; � (152,059� (1,OSt)_, .•,, r � , '"` `, � t334) � °- �� ' ��1,187j'� � � � ,. w. �� Payment of capitaliease obhgations � (3,702) � (1,300) � � - ' � �� (1,186) � � � (2,343) �oaeeds €rom�capita]-]eases � 1,518; _ - - Proceeds from issuance of Preferred Stock�� -�� 145,217 � - �� - �� - FFroceeds froiri exercise af warrants 7�g; , _ _ � :,; _ �� . ; . _...s Proceeds from issuance of common stock related to pre-emptive rights and stock op6ons ],921 39 Proceeds �rom issuance of common stoek to :. ; founding sYockholders . - - �� SO - � �� ` � ��, � _� ' : ..:�. � Proceeds from notes a able to stockholders - _ Zpp _' _" PY Proceeds from issuance of wanants to foun� �`„ � = " (200) , e a ments� of notes ' a able fo stoold�old� ; ��, s : �: ding � . stockholders - 7,500 - Portion of nef proceeds from sale of units through '. public offering allocable to shares of common sYOCk subject to possible conversion ��'; - - 73,875 � - � �_ . � _ _. �; Re-purchase of common shares from founding stockholders - _ �� _ _ Re-purchase of warrants ` , _ „ ,�', ` (7,3731 - _ �. �° �.�� , �,_: �"_. - ., ..��_ ; ._ ; .. �,. .. � _, ' > -.�.5 � .� , , . � , . ,_. �_. �, � ,� �-:�� Net proceeds from sales of units - - 165,120 - Rgpurehases of coininon stock ° � ",� .. � �" i° : ' . (19:} : �: �; (236 ' „ .. . ; . ; ,`= (164) 'r � ;� .�. �-:: , . , � � �. Net cash provided by (used in) financing acrivities 13,346 (102,048) 246,538 (1,676) 33,436 EfFect of exchange rates on cash and cash ` ' equivalents , 4,773 (5,032) ' (2,943) : 4,702 ; � Net increase (decrease) in cash and cash equivalents 4,268 9,499 1,161 2,826 6,427 Gash and cash equivalents, be�nning of pgiiod r; 10;66Q :, 1;I61 " - 12,577 '" 6,150 . _ . � ,. _�_ � �� .__� � and cash equivalents, end of period $ 14,928 $ 10,660 $ 1,161 $ 15,403 $ 12,577 5g http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/U/2012 9:5324 AM] Form 10-K Table of Contents For the period from Predecessor Predecessor Year ended Year ended June 26, 2007 ("SHC") ("SHC") December 31, December 31, (date of inception) to Seven months ended Year ended 2009 2008 December 31, 2007 July 31, 2008 December 31, 20 Supplemental cash floiv info`rmation: Cash paid for interesf $ 4,843 $ 737 $ 3 $ 4,849 $ 9,695 Cash"paid �'for income taxes, �� ,'4 . , ; ` $ �' %. 8�246 �$ 5�077 �;� $ - � $ 3,600 �`; $ ' 3,6]% Noncash fnancing activities: Deferred transacdon cost incmred " _ _ ;°_ � . $,,� � . . '= _ � $ = $ _ � 165 < u � �.`; .$ � .. . , . ,.. � �� $ ' - Accrued interest beld in trust � — — 913 — — Fair value of underwriting piuchase opNon included: in offering costs ! — — 4,594 - — Defened undetwriting fee — — 7,500 — — Gain (loss) on forward 1,327 -- Capital lease 5nancing � � �11,082 � 1,298 � — 333 3,151 Cumuiati�e�dividencls on prefertecl stock �'� ; �. � . � � 58,�1$ , ;; � '��` � � �� 5, �— � _.. � �' T_ Accretion of preferred stock discount 6,397 Prefau�eddtookconvecsioritocominonstc$ck � , �,.. , ,. n - . - - Common stock and pre-emptive rights issued for acquisition of EGS $ 183,102 $ — $ — $ — $ — �i See accompanying notes to consolidated financial statements. 59 Table of Contents � { STREAM GLOBAL SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.hrin[5/17/2012 9:53:24 AM] Form 10-K December 31, 2009 - (In thousands, except per share amounts) � te 1—Our History and Summary of Various Transactions Stream Global Services, Ina ("we", "us", "Stream", or "SGS") is a corporation organized under the laws of the State of Delaware. We were incorporated on June 26, 2007 as a blank check company for the purpose of acquiring, through a merger, capital stock exchange, asset or stock acquisition, exchangeable share transaction or other similar business combination, one or more domestio or international operating businesses. In October 2007, we consummated our initial public offering ("IPO") from which we received total gross proceeds of $250,000 and net proceeds of $246,300, which were deposited into a trust account, which included $7,500 of proceeds from the sale of 7,500 warrants purchased by certain_of our founding stockholders. In connection with the IPO, a total of $7,500 of underwriters fees were deferred until the completion of our initial acquisition. In 2008, deferred the underwriter's fees were reduced by $4,700 due to stockholders who elected conversion rights and a negotiated fee reduction by us. In order to consummate an initial business combination, our certificate of incorporation provided that holders of no more than 29.9% of our common stock, or 9,375 shares of common stock, vote against our initial business combination and seek conversian rights for their pro rata share of the funds held in trust. We sold the units issued in our IPO, each unit consisting of one share of our common stock and a warrant to purchase one share of our common stock, to the underwriters at a price of $7.44 per unit (a discount of $0.56 per unit), resulting in an aggregate underwriting discount of $17,500. In connection with our IPO, we also sold to the underwriters, for $0.1, an option to purchase up to a total of 1,563 units (the "Unit Purchase Option"). Upon the consummation of our acquisition of Stream Holdings Corporation ("SHC"), as described below, the underwriters sold the Unit Purchase Option back to us for $0.1 per option. In July 2008, we acquired Stream Holdings Corparation ("SHC") for $128,815 in cash (which reflected the $200,000 purchase price less assumed indebtedness, transaction fees, professional fees, stock option payments and payments for working capital). Also in July 2008, holders of 8,947 shares of our common stock exercised their conversion rights in connection with the acquisition, and we paid an aggregate of $70,590 to such holders. In connection with our acquisition of SHC, we changed our name from Global BPO Services Corp. to Stream Global Services, Inc. In connection with this acquisition we exited the development stage of operations. In August 2008, we issued and sold 150 shares of our Series A Convertible Preferred Stock, $0.001 par value per share (the "Series A Preferred Stock"), in a private placement with Ares for an aggregate purchase price of $150,000 and our founders also sold their 7,500 warrants to � es. Also in August 2008, we commenced a self-tender off�r to purchase up to 20,757 shares of our common stock at a purchase price of $8.00 share. In September 2008, we closed the self-tender and accepted for purchase 20,757 shares of our common stock for a total cost of approximately $166,000 in cash, excluding fees and expenses related to the self-tender offer. In August 2009, Stream, EGS Corp. ("EGS"), the parent company of eTelecare Global Solutions, Inc. ("eTelecare") and other parties signatory thereto, entered into a definitive agreement to combine in a stock-for-stock exchange (the "Combination"). On October 1, 2009, the Combination closed, with the pre-Combination Stream and EGS stockholders owning approximately 57.5% and 42.5%, respectively, of the combined entity. Immediately prior to the Closing, pursuant to a certain letter agreement, dated as of August 14, 2009, between us and Ares, all of the issued and outstanding shares of our Series A Preferred Stock and Series B Convertible Preferred Stock, $0.001 par value per share (the "Series B Preferred Stock"), held by Ares were converted into 35,085,134 shares of our common stock. In addition, we purchased from Ares 7,500,000 ten- year 60 Table of Contents term private warrants to purchase Stream common stock at a strike price of $6.00 per share that it held in consideration for the issuance of 1,000,000 shares of our common stock. In November 2009, we commenced a self-tender offer to purchase up to 17,500,000 of our public warrants, each of which is exercisable for one share of our common stock for $6.00 in cash, at a purchase price of $.50 per warrant net to the seller in cash. In December 2009, we closed the self-tender and accepted for purchase 9,956,689 warrants for a total purchase price of approximately $4,978, excluding fees and expenses related to the tender offer. eTelecare results of operations are included in the consolidated results for the period October 1, 2009 (the date of the acquisition) through ember 31, 2009. Note 2—Our Business http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K We are a leading global business process outsourcing (`BPO") service provider specializing in customer relationship management ("CRM") including sales, customer care and technical support for Fortune 1000 companies. Our clients include leading technology, computing, telecommunications, retail, entertainment/media, and financial services companies. Our service programs are delivered through a set of standardized best practices and sophisticated technologies by a highly skilled multilingual workforce capable of supporting over 351anguages � across SO locations in 22 countries. We continue to expand our global presence and service offerings to increase revenue, improve operational efficiencies and drive brand loyalty for our clients. Pro Forma Results of Operations Following are pro forma unaudited results of operations for the year ended December 31, 2008 assuming the acquisition of SHC occurred on January 1, 2008: We derived the pro forma results of operations from (i) the audited consolidated fmancial statements of SHC for the period from January 1, 2008 to July 31, 2008 (the date of the SHC acquisition) and (ii) our audited consolidated fmancial statements for the year ended December 31, 2008. The pro forma results of operations are not necessarily indicative of results of operations that may have actually occurred had the acquisition taken place on the dates noted, or the future financial position or operating results of SHC. The pro forma adjustments are based upon available information and assumptions that we believe are reasonable. The pro forma adjustments include adjustments for interest expense, reversal of interest income for SGS, amortization of intangible assets, transaction costs, depreciation expense for assets written up and market lease amortization. 61 Table of Contents Stream Global Services, Inc. Pro Forma Consolidated Statements of Operations (unaudited) Year Ended December 31, 200 IZevenue . _ $ �-: : 523,45 , Direct cost ofrevenue � � 330,955 Gross pr'ofit - 1�42,503 �- Operating expenses Selling, general and administrative 160,824 '' Stock-based compensation expense 1,330 Depreciation and amortization expense '24,359 ' Total operating expenses 186,513 Income (loss� from operations ; 5,990 '� � Other (income) expenses, net: _ ___ _ _ _ Foreign currency transactioii loss (gain) ($�5� Other (income) expense, net 1,593 � Interest expense, net �; 6,894 �� Total other (income) expenses, net 7,952 Income (loss) before provision for incame taxes (1,962) Provision for income ta�es 9,697 Net iricome (loss) $ (11,659) Note 3—Basis of Presentation Our consolidated financial statements of SGS as of December 31, 2009 and 2008, and for the years ended December 31, 2009, 2008 and 2007, respectively, include our accounts and those of our wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have beenincluded. On July 31, 2008, we consummated our initial business acquisition with the acquisition of SHC and emerged from a development stage corporation. Prior to July 31, 2008, we were a blank check company formed for the purpose of acquiring an operating company. Accordingly, w'�• had no revenues prior to July 31, 2008 because we were in the development stage. SHC is deemed to be our "predecessor". As a result, the statement of operations and statement of cash flows of SHC for the period ended December 31, 2007 are presented for comparative purposes. The accompanying consolidated statements of operations and cash flows of SGS present the results of operations and cash flows for (i) the seven month http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K period preceding the acquisition of SHC on July 31, 2008, exclusive of SHC results of operations and cash flows and (ii) for the periods succeeding the acquisition, the consolidated results of operations including SHC are included in these fmancial statements. The results of o erations and cash flows on a consolidated basis subsequent to the acquisition of SHC are not comparative to the predecessor SHC results of � rations and cash flows because the basis for the acquired assets and liabilities of SHC have been adjusted to fair value pursuant to the horitative guidance nor are they indicative of future results. On October 1, 2009, we acquired EGS, the parent company of eTelecare, in a stock-for-stock exchange. The accompanying consolidated statements of operations and cash flows of SGS present the results of operations and cash flows for (i) the nine month period preceding the acquisition of EGS on October 1, 2009, exclusive of EGS results of operations and cash flows and (ii) for the periods succeeding the acquisition on October 1, 2009, the 62 Table of Contents consolidated results of operations including EGS are included in these financial statements. Refer to Note 5 for pro forma results. Note 4—Summary of Significant Accounting Policies Use of Estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States requires the appropriate application of accounting policies, many of which require management to make estimates and assumptions about future events and their impact on amounts reported in our consolidated fmancial statements and related notes. Since future events and their impact cannot � be determined with certainty, the actual results could differ from estimates. Such differences may be material to the consolidated fmancial statements. Cash Equivalents . +� We consider all highly liquid investments with maturities at the date of purchase of three-months or less to be cash equivalents. Cash and equivalents of $12,180 and $6,549 December 31, 2009 and 2008, respectively, were held in international locations and may be subject to ditional taxes if repatriated to the United States. Cash balances held in international currency are also,subject to fluctuation in their exchange rate if and when converted to U.S. currency. Accounts Receivabie and Concentration of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk are principally accounts receivable. Services are provided to clients throughout the world and in various currencies. Accounts receivable includes accrued revenues of $25,117 and $16,889 at December 31, 2009 and 2008, respectively, for services rendered but not yet invoiced. We generally invoice our clients within thirty to sixty days subsequent to the performance of services. We extend credit to our clients in the normal course of business. We do not require collateral from our clients. We evaluate the collectability of our accounts receivable based on a combination of factors that include the payment history and financial stability of our clients, our clients' future plans and various market conditions. In circumstances where we are aware of a specific client's inability to meet its financial obligations, we recard a specific reserve against amounts due. Historically, we have not experienced significant Iosses on uncollectible accourits receivable. We have a reserve for doubtful accounts of $532 and $267 as of December 31, 2009 and 2008, respectively. We recorded a bad debt expense of $191, $164 and $0 for the years ended December 31, 2009 and 2008 and the period from June 26, 2007 to December 31, 2007, respectively. Equipment & Fixtures and Operating Leases Equipment and fixtures are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Furniture and fixtures are depreciated over a five-year life, software over a three- to five-year life and equipment generally over a three- to five- year life. Leasehold improvements are depreciated over the shorter of their estimated useful life or the remaining term of the associated lease. Assets held under capital leases are recorded at the lower of the net present value of the minimum lease payments ar the fair value of the leased asset at the inception of the lease. Amortization expense is computed using the straight-line method over the shorter of the estimated useful iives of the assets ar the period of the related lease and is recorded in depreciation and amortization expense. Repair and maintenance costs are expensed as incurred. The carrying value of equipment and fixtures to be held and used is evaluated for impairment whenever events or changes in circumstances in icate that the carrying amount may not be recoverable in accardance with 63 http://www.sec.gov/Archivesledgar/data/1405287/000119312510052721/d10k.htm�5/17/2012 9:5324 AMl Form 10-K Table of Contents the authoritative guidance. An asset is considered to be impaired when the sum of the undiscounted future net cash flows expected to result from• the use of the asset and its eventual disposition does not exceed its carrying amount. The amount of the impairment loss, if any, is measured as the amount by which the carrying value of the asset exceeds its estimated fair value, which is generally detemuned based on appraisals or sales prices of comparable assets. Occasionally, we redeploy equipment and fixtures from underutilized centers to other locations to improve capacity utilization if it is determined that the related undiscounted future cash flows in the underutilized centers would not be sufficient to recover the carrying amount of these assets. Where we have negotiated rent holidays and landlord or tenant incentives, we record them ratably over the initial term of the operating lease, which commences with the build-out period where not rent payments are typically due under the lease. We estimate fair value of our asset retirement obligations associated with the retirement of tangible long-lived assets such as property and equipment when the long-lived asset is acquired, constructed, developed or tl�rough normal operations. We depreciate leasehold improvements over the initial lease term. Goodwill and Other Intangible Assets In accordance with the authoritative guidance goodwill is reviewed for impairment annually and on an interim basis if events or changes in circumstances between annual tests indicate that an asset might be impaired. Impairment occurs when the carrying amount of goodwill exceeds its estimated fair value. The impairment, if any, is measured based on the estimated fair value of the reporting unit. Fair value is deternuned based on discounted cash flows. We operate in one reporting unit, which is used for impairment testing and the allocation of acquired goodwill. We test our goodwill for impairment as of the first day of our fourth quarter. We concluded that there was no impairment for 2009. Intangible assets with a fmite life are recorded at cost and amortized using their projected cash flows over their estimated useful life. Client lists and relationships are amortized over periods of up to ten years, market adjustments related to facility leases are amortized over the term of the respective lease and developed software is amortized over five years. Brands and trademarks are not amortized as their life is indefinite. We evaluate the continuing value of brands and trademarks on a quarterly basis based upon their usage and value. We concluded that there was no impairment for 2009. _ The carrying value of intangibles is evaluated far impairment whenever events or changes in circumstances indicate that the carrying amo may not be recoverable in accordance with the authoritative guidance. An asset is considered to be impaired when the sum of the undiscounted � future net cash flows expected to result from the use of the asset and its eventual disposition does not exceed its carrying amount. The amount of the impairment loss, if any, is measured as the amount by wluch the carrying value of the asset exceeds its estimated fair value, which is generally determined based on appraisals or sales prices of comparable assets. Financial Information Regarding Segment Reporting We have one reportable segment and, therefore, all segment-related financial information required by the authoritative guidance is included in the consolidated fmancial statements. The reportable segment reflects our operating and reporting structure. Revenue Recognition We recognize revenues as the related services are performed if evidence of an arrangement exists, delivery of the service has occurred, the fee is fixed ar determinable, and collection is considered probable. If any of those criteria are not met, revenue recognition is deferred until such time as all of the criteria are met. Our dient contracts generally specify the metrics by which we bill for our services and the service requirements. We may be paid on a per minute, per hour, per call, per month, per participant, or per transaction basis. 64 Table of Contents We derive our revenues by providing various business processing services that include technical support, sales and revenue generation � services and customer care services. Our services are typically bundled together to include the services provided by our service professionals, our hosted technology, our data management and reporting and other professional services. � Direct Cost of Revenue t " We record the costs specifically associated with client programs as direct cost of revenues. These costs include direct labor wages and benefits of service professionals as well as reimbursable expenses such as telecommunication charges. Telecommunication charges that are directly http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K reimbursable are included in direct cost of revenue while telecommunication charges that are not directly reimbursed are included in operating expenses. The most significant portion of our direct cost of revenue is attributable to compensation, benefits and payroll taxes. �erating Expenses Our operating expenses consist of all expenses of operations other than direct costs of revenue, such as information technology, telecommunication sales and marketing costs, finance, human resource management and other functions and service center operational expenses such as facility, operations and training and depreciation and amortization. Income Taxes We recognize income taxes in accordance with the authoritative guidance, which requires recognition of deferred assets and liabilities for the fizture income tax consequence of transactions that have been included in the consolidated financiai statements ar tax returns. Under this method deferred tax assets and liabilities are determined based on the difference between the carrying amounts of assets and liabilities for financial reporting purposes, and the amounts used for income tax, using the enacted tax rates for the year in which the differences are expected to reverse. We provide valuation allowances against deferred tax assets whenever we believe it is more likely than not, based on available evidence, that the deferred tax asset will not be realized. Further we provide for the accounting for uncertainty in income t�es recognized in fmancial statements and the impact of a tax position in the financial statements if that position is more likely than not of being sustained by the taxing authority. Contingencies We consider the likelihood of various loss contingencies, includ'mg non-income tax and legal contingencies arising in the ordinary course of business, and our 'ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued in accordance with the authoritative guidance, when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. We regularly evaluate current information available to determine whether such accruals should be adjusted. Fareign Currency Translation and Derivative Instruments We account for financial derivative instruments utilizing the authoritative guidance. We generally utilize forward contracts expiring within one to 24 months to reduce our foreign currency exposure due to exchange rate fluctuations on forecasted cash flows denominated in non- functional fareign currencies. Upon proper designation, certain of these contracts are accounted for as cash-flow hedges, as defined by the � thoritative guidance. These contracts are entered into to protect against the risk that the eventual cash flows resulting from such transactions will adversely affected by changes in exchange rates. In using derivative financial instruments to hedge exposures to changes in exchange rates, we expose ourselves to counterparty credit risk. We do not believe that we are exposed to a concentration of credit risk with our derivative financial instruments as the counterparties are well established institutions and counterparty credit risk information is monitored on an ongoing basis. 65 �ble of Contents All derivatives, including foreign currency forward contracts, are recognized in other current assets on the balance sheet at fair value. Fair values far our derivative fmancial instruments are based on quoted market prices of comparable instruments or, if none are available, on pricing models ar formulas using current market and model assumptions. On the date the derivative contract is entered into, we determine whether the derivative contract should be designated as a cash flow hedge. Changes in the fair value of derivatives that are highly effective and designated as cash flow hedges are recorded in "Accumulated other comprehensive income (loss)", until the forecasted underlying transactions occur. To date we have not experienced any hedge ineffectiveness of our cash flow hedges. Any realized gains or losses resulting from the cash flow hedges are recognized together with the hedged transaction within "Other Income (expense)". Cash flows from the derivative contracts are classified within "Cash flows from operating activities" in the accompanying Consolidated Statement of Cash Flows. Ineffectiveness is measured based on the change in fair value of the forward contracts and the fair value of the hypothetical derivatives with terms that match the critical terms of the risk being hedged. We may also enter into derivative contracts that are intended to economically hedge certain risks, even though we elect not to apply hedge accounting as defined by the authoritative guidance. Changes in fair value of derivatives not designated as hedges are reported in income. Upon settlement of the derivatives qualifying as hedges, a gain ar loss is reported in income. � The assets and liabilities of our foreign subsidiaries, whose functional currency is their local currency, are translated at the exchange rate in ect on the reporting date, and income and expenses are translated at the average exchange rate during the period: The nef effect of translation gains and losses is not included in determining net income (loss), but is reflected in accumulated other comprehensive income (loss) as a separate component of stockholders' equity until the sale or until the liquidation of the net investment in the foreign subsidiary. Foreign currency transaction gains and losses are included in determining net income (loss), and are categorized as "Other income (expense)". http:Uwww.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K We formally document all relationships between hedging instruments and hedged items, as well as our risk management objective and strategy for undertaking various hedging activities. This process includes linking all derivatives that are designated as cash flow hedges to forecasted transactions. We also formally assess, both at the hedge's inception and on an ongoing basis (as required), whether the derivatives that � are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items on a prospective and retrospective basis. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge or if a forecasted hedge is no longer probable of occumng, we discontinue hedge accounting prospectively. At December 31, 2009, all hedges in Philippines Peso entered into since October 1, 2009 were determined to be highly effective. Our hedging program has been effective in all periods presented (except for contracts for the hedge of Indian Rupees entered into prior to November 30, 2008 and expiring after November 30, 2008, all contracts for the hedge of the Philippine Peso entered into prior to October 1, 2009, and all contracts for the hedge of the Canadian Dollar which were cancelled on September 30, 2009 by the Company's bank upon the early ternunation of credit arrangements with the bank), and the amount of hedge ineffectiveness has not been material. The value of tl�e Canadian dollar contracts cancelled on September 30, 2009 was a gain of $156, which was recognized in Other Income/(Expense) on the Statement of Operations. Hedge accounting is also discontinued prospectively when (1) the derivative is no longer effective in offsetting changes in cash flow of a hedged item; (2) the derivative expires or is sold, terminated, or exercised; (3) it is no longer probable that the forecasted transaction will occur; (4) a hedged firm commitment no longer meets the definition of a firm commitment; (5) the derivative as a hedging instrument is no longer effective; or (6) when assumed in purchase accounting. 66 Tabie of Contents As of December 31, 2009 and 2008, we had approximately $111;994 and $20,704, respectively, of foreign exchange risk hedged using forward exchange contracts and SHC as of December 31, 2007 had approximately $33,827. As of December 31 2009, the $111,994 of forward exchange contracts we held were comprised of $80,470 of contracts previously determined to be effective cash flow hedges but as of October l, 2009 subsequently deternuned to be ineffective, $7,733 of contracts determined to be effective cash flow hedges and $�3,791 of contracts for which we elected not to apply hedge accounting. � As of December 31, 2009 and 2008, the fair market value of these derivative instruments designated as cash flow hedges was a loss of $87 '' and a gain of $1,241, respectively, and as of December 31, 2007, SHC had gain of $251, which is reflected in accumulated other comprehensive income (loss). As of December 31, 2009, the fair market value of derivatives previously determined to be effective cash flow hedges but as of October 1, 2009 subsequently determined to be ineffective was a gain of $3,767, of which $2,265 was recognized in Other Income/Expense in the Statement of Operations. As of December 31, 2009, the fair market value of derivatives for which we elected not to apply hedge accounting was a gain of $238, which was recognized in Other Income/Expense in the Statement of Operations. Fair Value of Financial Instruments Effective January 1, 2008, we implemented the authoritative guidance, for our financial assets and liabilities that are re-measwed and reported at fair value at each reporting period, and non-fmancial assets and liabilities that are re-measured and reported at fair value at least annually. The following table presents information about our assets and liabilities and indicates the fair value hierarchy of the valuation techniques we utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in acrive markets for identical assets or liabilities. Fair values determined by Leve12 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values deternuned by Leve13 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability: Quoted Prices in Significant Other Significant December 31, Active Markets Observable Unobservable 2009 (Level 1) Inputs (Level 2) (I,evel 3) Description Long-term debt $ 223,000 $ 223,000 $ $ — Forward�'�exchange contracts 3,919� — 3,919 — � _. �. , ,.. Total $ 226,919 $ 223,000 $ 3,919 $ — The fair value of our long term debt is determined from market quotations obtained from Bloomberg Finance, L.P. The fair values of our �� forward exchange contracts are determined through market, observable and corroborated sources. The carrying amounts reflected in the consolidated balance sheets for other current assets, accounts payable, and accrued expenses approximate fair value due to their short-term maturities. To the extent we have any outstanding bonowings under our revolving credit facility, the http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K fair value would approximate its reported value because the interest rate is variable and reflects current market rates. � et Income (Loss) Per Share In 2009 and 2008, we calculated net income (loss) per share in accordance with the authoritative guidance which clarifies the use of the "two- class" method of calculating earnings per share. We determined that our Series A Preferred Stock represents a participating security for purposes of computing earnings per share and allocated earnings per share to a participating security using the two-class method for computing basic earnings per share. 67 �'able of Contents Under the two-class method, basic net income (loss) per share is computed by dividing the net income (loss) applicable to common stockholders by the weighted-average number of common shares outstanding far the period. Diluted net income (loss) per share is computed using the more dilutive of (a) the two-class method or (b) the if-converted method. We allocated net income first to preferred stockholders based on dividend rights under our certificate of incorporation and then to common and preferred stockholders based on ownership interests. Net losses are not allocated to preferred stockholders. Diluted net income (loss) per share gives effect to all potentially dilutive securities. Year Ended Year Ended December 31, 2009 December 31, 2008 Net �ncome (loss)'. : ' $ (2$,573} $! �=. 796, �� - : � � :.. � �.� � . . << , _ ;_ � �� ; :. Series A Preferred Stock beneficial conversion feature — 49,503 ; . Cumu�atiVe'Convertible �'teferred!Stock div�dends �� . ', � � � '.` w �y �' ��; �� 58,01$ ��., ��790 ,9 � � . .,a,... ;. . � ,.,..�. .. ,� �. . _ Preferred Stock accretion 6 397 367 � _, � � . �4 , Warrant issuance costs ° � ` — 298 � Net income (loss) attributable for common stockholders � � � $ � (92,988) $ (51,162) The following common stock equivalents were excluded from computing diluted net loss per share athibutable to common stockholders �use they had an anti-dilutive impact: Year Ended Year Ended December 31, 2009 December 31, 2008 Options io purchase cominon stocl� af $6.0�0 per share �� 6,�78� ;,,,; ��. 3,210�� , � � _. � �_ � � x Pre-emptive rights at $6.00 per share 24 385 — Preferred stock convertible fo� cornmon stock �at $6! 00 per share � �'� =25,298�� , � � � �� r �� ; �. � Ares warrants to purchase common stock at $6.00 per share — 7,500 P�iblicly held warrants at $b.00 per share ', ' 10,009 ! =: 31,250 Restricted�stock units � 58 � � 93 Tofal options, warrants and restricted stock uniYs exercisable into common stock 41,430 " ' 67,351 In January 2010 1,000 non-qualified options were issued to our founder, Chairman and Chief Executive Officer with a strike price based on the quoted market price on the date of issue. These options will be accounted for in our first fiscal quarter of 2010. Accumulated other comprehensive income (loss) consists of the following: December 31, December 31, 2009 2008 Unrealized �loss) gam onforwarcl,mexchange contracts $ : (87) ; $ , .1,241 . v a .. � - �- : Cumulative Translation adjustment (3,645) (9,430) � � $ ', (3,73�) � $ _ �8,189� � Market Lease Reserve We assumed facility leases in connection with the acquisition of SHC and EGS. Under the authoritative guidance, the operating leases are to be recorded at fair value at the date of acquisition. We deternuned that certain of the facility lease contract rates were in excess of the market rates at the date of acquisition, resulting in an above market lease reserve. The above and below market lease values for the assumed facility leases were � ded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between e contractual amounts to be paid pursuant to each operating lease and (ii) management's estimate of fair market lease rates for each corresponding operating lease, measured over a 68 http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K Tabte of Contents eriod e ual to the remaining term of the lease. The market lease reserves are amortized as a reduction of base rental expense over the remaining � P q term of the respective leases. In 2009, we recorded market lease adjustments of $3,778 of liabilities and $1,694 of assets due to the October 1, 2009 acquisition of EGS. In 2008, we recorded market lease adjustments of $15,258 of liabilities and $3,337 of assets due to the July 31, 2008 acquisition of SHC and October 15, 2008 acquisition of a call center business in El Salvador. For the years ended December 31, 2009 and 2008, the amortization of the market lease reserve, including imputed interest, was $680 and $1,046, respectively, and for SHC for the year ended December 31, 2007 was $2,658. Stock-Based Compensation At December 31, 2009 and 2008, we had a stock-based compensation plan for employees and directors. We adopted the fair value recognition provisions of the financial guidance at our inception. For share-based payments, the fair value of each grant (time-based grants with performance acceleration) is estimated on the date of grant using the Black-Scholes-Merton option valuation with the exception of a grant to our founder, Chairman and Chief Executive Officer that was valued under the Monte Carlo simulation method. Stock compensation expense is recognized on a straight-line basis over the vesting term with the exception of one grant that is accelerated, net of an estimated future forfeiture rate. The forfeiture rate assumption (19.5% as of December 31, 2009 and 2008) is based on the predecessor's historical experience. Recent Accounting Pronouncements In December 2007, the Financial Accounting Standards Board ("FASB") issued new guidance on business combinations. This guidance establishes principles and requirements far how we: (1) recognize and measure in our financial statements the identifiable assets acquired, the liabilities asswned, and any noncontrolling interest in the acquiree; (2) recognize and measure the goodwill acquired in the business combination or a gain from a bargain purchase; and (3) determine what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The business combinations guidance also requires acquisition-related transaction and restructuring costs to be expensed rather than treated as part of the cost of the acquisition. This guidance applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We adopted t� business combination guidance on January 1, 2009. Our nonfinancial assets and liabilities measured at fair value on a nonrecurring basis include assets and liabilities acquired in connection with a business combination, goodwill and intangible assets. We adopted the fair value measurement guidance as it relates to these assets and liabilities on January 1, 2009. In Apri12009, the FASB issued additional guidance on fair value measurements and disclosures. Fair value is defined as the priGe that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants under current market conditions. The new guidance requires an evaluation of whether there has been a significant decrease in the volume and level of activity far the asset or liability in relation to normal market activity for the asset or liability. If there has been a significant decrease in activity, transactions or quoted prices may not be indicative of fair value and a significant adjustment may need to be made to those prices to estimate fair value. Additionally, an entity must consider whether the observed transaction was orderly (that is, not distressed or forced). If the transaction was orderly, the obtained price can be considered a relevant, observable input for determining fair value. If the transaction is not orderly, other valuation techniques must be used when estimating fair value. This guidance, which was applied by us prospectively as of June 30, 2009, did not impact our results of operations, cash flows or financial position far the year ended December 31, 2009. In May 2009, the FASB issued guidance on subsequent events which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. This guidance is based on the same principles as currently exist in auditing 69 Table of Contents standards and was issued by the FASB to include accounting guidance that originated as auditing standards into the body of authoritative literature issued by the FASB. The standard addresses the period a8er the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occumng after the balance sheet date in its financial statements and the disclosures that an entity should �� x�ake about events or transactions that occurred after the balance sheet date. We adopted this guidance during the quarterly period ended June 30, -- 2009. http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K Note S--Acqu'isitions EGS.4cquisition: � On October 1, 2009, we consummated the acquisition of EGS, pursuant to which we acquired all of the outstanding shares of capital stock of S and EGS became a wholly-owned subsidiary of SGS. SGS acquired EGS to create one of the leading CRM and BPO services companies in the warld. With SO locations in 22 countries and over 30,000 employees worldwide, we will be able to offer our clients customized global capabilities that can deliver integrated services in almost any geographic region across the world. EGS gives SGS the ability to broaden service offerings to include a fu21 portfotio of sales and revenue generation, warranty management, customer loyalty and brand management, customer care, technical support, and customer life cycle management services. We believe this broad and integrated portfolio of globai services is a key differentiating factor to win new clients and realize attractive cross selling opportunities between clients. SGS and EGS entered into a share exchange agreement pursuant to which Stream issued 33,652 shares of our common stock for all the outstanding shares of EGS. The purchase price calculation is as follows: , ,-. � Purcliase price in cominon shares� ' � �` � � �� ' ' ' $ i $1� 718! � � �� , � ,, • � �, � � _ _... � � w� _,� �� ;.. � Value of pre-emptive rights 1,384 ,� . �� , � TotaF allocablepurch�se pnce��.; , ; � � ; y � . �,� $ 183� 102� � , _ . , � �� . -, ; ' � a Tha acquisition was accounted for in accardance with the authoritative guidance. The transaction was valued for accounting purposes at $183,102. The exercise of our public warrants trigger certain participation rights held by the following shareholders: Ares Management, Ayala Corporation and Providence Equity Partners (the "Participating Shareholders"). The Participating Shareholders have participation rights to purchase, for $6.00 per share, an aggregate number of shares of our common stock equal to 2.4364 multiplied by the number of shares actually issued upon exercise of the public warrants. Ayala and Providence received these participation rights in association with the acquisition of EGS and accordingly we have treated the value of these rights as additional purchase consideration. Under the purchase method of accounting, the assets and liabilities of EGS acquired are recorded as of the acquisition date at their respective ir values. The excess purchase price over those values is recorded as goodwill. The goodwill recognized is attributable primarily to the fair value he going-concern element and the fair value of expected synergies to be achieved. The following table summarizes the estimated fair value of sets acquired and the liabilities assumed and related deferred income taxes at the date of the acquisition. 70 Tahle of Contents �urrent assefs, � � , ` � ,. � �I$� 99,631 � Property and equipment 46 952 � � Good�vill � �= �77,�78 � �� Trade names f 100 � � -., � Custoiner ielationship� � , � � �0,30(l _� � �, .. d ,. �� -,n Customer contracts 1,701 Othernon-cun-enfia`ssets� ��'�4,898 ' � .�. �v Total assets acquired 361 060 .. � Current 1ia,bilities '_ , ($�,866�'� � Related party debt (85,254) � Otherl�abilities =`� �'� (10,838�_, Total liabilities assumed (177,958 Allocated purchase price , $ 183,102 The related party debt was subsequently refmanced as part of our high yield debt offering on October 1, 2009. Ayala Corporation and Providence Equity Partners received $74,408 and $15,210 including accrued interest, respectively in repayments on October l, 2009 related to the acquired related party debt from EGS. � We recognized $12,245 of transaction related costs that were expenses in the year ended December 31, 2009. These costs are included in the Z6nsolidated income statement in the line titled "transaction related wsts". The purchased intangibles and goodwill are not deductible for income tax purposes. However, for accounting purposes deferred income tax liabilities on purchased intangibles (other than goodwill and indefinite life assets) will be credited to our future consolidated condensed statements http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/dlOk.htm(5/17/2012 9:53:24 AMl Form 10-K of operations in proportion to and over the amortization period of related intangible assets. We have not identified any material unrecorded pre-acquisition contingencies where the related asset, liabiliry, or impairment is probable and the amount can be reasonably estimated. Our purchase accounting for the EGS acquisition is preliminarily therefore, prior to the end of the � measurement period, if information becomes available that would indicate it is probable that such events had occuned and the amounts can be reasonably estimated, such items will be included in the fmal purchase price allocation and may adjust goodwill. Certain of the representations and warranties, as well as the pre-closing covenants set forth in the exchange agreement, survive the date of the closing and continue for 12 months thereafter. The representations and warranties that survive the closing and that may serve as the basis for an indemnification claim are those relating to ownership of shares, capitalization, corporate authority, government filings and no violations, financial statements, compliance with laws, taY matters, and brokers' fees. The following unaudited pro forma fmancial information presents the consolidated results of operations of SGS and EGS as if the acquisition of EGS had occurred as of the beginning of the periods presented below. The historical financial information has been adjusted to give effect to events that are directly attributable to the combination (including amortization of purchased intangible assets and debt costs associated with acquisition, debt costs associated with high yield debt offering and conversion of prefened stock to common stock), and in case of the pro fonna statements of operations, have a recurring impact. The unaudited pro forma financial information is not intended, and should not be taken as representative of our future consolidated results of operations or fmancial condition or the results that would have occurred had the acquisition occurred as of the beginning of the earliest period. 71 Table of Contents 2009 2008 Revenue �.= � ��'� $797,005 � �� $823,239 �: Net income�(loss) attributable to common sbareholders (40,698) �� (44,026)� � Basic and diluted net loss per;share � I$ (0:51) �' $' (0��56) ��: In the fourth quarter of 2009, the former eTelecare business generated revenue of $69.3 million and a net loss of $4.5 million. �i SHC Acquisition On July 31, 2008, we consummated the acquisition of SHC, pursuant to which we acquired all of the outstanding shares of capital stock of SHC and SHC became a wholly owned subsidiary of SGS. The amended and restated merger agreement dated June 2, 2008, by and among SGS, SHC, and River Acquisition Subsidiary Corp., stated that the purchase price would be determined as $200,000 in cash less assumed indebtedness, transaction costs and payments for stock options and bonuses. The purchase price calculation is as follows: Pwchase price ; $200,000 Purchase adjustments for working capital items and cash acquired 9,gg� Purchase price befare liabilities 2Q9�88� ' Assumed indebtedness (89,221 Net cash paid at elosing � 120,666 �''�� SGS transaction-related costs 5,404 Total allocable purchase price ` $126,070 ,+; The acquisition of SHC was accounted for in accordance with tl�e provisions of SFAS No. 141. The transaction was valued for accounting purposes at $126,070. Included in the SGS transaction related costs are direct costs associated with investment banker fees and professional services for legal and accounting costs. Under the purchase method of accounting, the assets and liabilities of SHC acquired are recorded as of the acquisition date at their respective fair values, and added to those ours. The excess purchase price over those values is recorded as goodwill. The following table summarizes the estimated fair value of assets acquired and the liabilities assumed and related deferred income taxes at the date of the acquisition. Current assets $ 131,172 Property and equipment � � � � 40,961 �� G�oaW�ii as,s49 : Trade names_ - � � _ � � � .- � � _ _ 16,100 � Customer relationships 67,200 http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K Technology-based intangible assets 1,870 � Otker non current assets ; � '� � � �� ' • � ' ; 7,375 � � e. - � Total assets acquired 313,227 � Current liabilitie's � {75,829) Bank indebtedness (75,555 ) Obligations under caprtal lease (7,745� ` � � � � � � �� Other liabilities �28��2g � _� „ , • Alloo�habifities assurned � � � "_. _ _ - ; � ` � .. �.. � � � � _ � � � �� . , �� ( �. � ated purchase price $ 126,070 72 Table of Contentc The purchased intangibles and goodwill are not deductible for income tax purposes. However, for accounting purposes defened income tax liabilities on purchased intangibles (other than goodwill) will be charged to our future consolidated condensed statements of operations in proportion to and over the amortization period of related intangible assets. In accordance with the authoritative guidance, we accrued $1,428 of severance related costs incurred directly as a result of the acquisition. At December 31, 2009 the outstanding liability was $86. At the time of the closing of the acquisition of SHC, $10,000 of the purchase price was placed into escrow with an escrow agent (the "Escrow Fund") to secure the indemnity obligations of the SHC stockholders and the holders of vested options under the merger agreement for damages sustained by us and our subsidiaries as a result of breaches of representation and warranties and covenants by SHC. In 2008, we received $1,200 in payments from the Escrow Fund for claims related to working capital adjustments. In 2009, we received $3,470 in claims against the remaining Escrow Fund and recorded the cash receipts as a reduction to goodwill. In 2009, �e recorded an additional $4,333 to the purchase price of SHC resulting in an increase in goodwill to settle a contingent liability �t existed prior to our acquisition of SHC relating to a dispute involving our Indian subsidiaries. The following is a rollforward of goodwill from December 31, 2008: Balance at 12L31/08 j �� $� 47,686 �� _ . :, .. �� - � � � _ _ � = r : : < � �_ , Settlement of a contingent liability 4,333 q � Escrow claims " � ,; . , : . . � 4 ��_ Ac uisrtion of EGS 177,478 - � Balance af 12/�31/09 `_, �26;027 �� Intangibles and amortization Intangible assets at December 31, 2009 consist of the following: weightea average Estimated remaining Gross Accumulated usefullife life cost amortization Net Ciistomer��relation`shi�is !� Up to� 10 years . ''�� 7.7 � 1�0;037 12,�63& �� 87,39� � � � � , , �. : _.E Technology-based intangible assets 5 years 3.6 1,870 535 1,335 �o�emment grarrts 7.S months — i,:100 ° 1,10� : — � � � �� Trade names indefinite indefinite 16 200 � � 100 � 16 100 , , � � 1�19,�07, 14,373 � 104,834� Amortization expense consists of the following: For the , period from � June 26, 2007 Seven Months Year Ended � (date of Ended December 31, _ _. Year Ended Year Ended inception) to July 31, 2008 2007 December 31, December 31, December 31, Predecessor Predecessor 2009 2008 2007 ("SHC") (�SHC") Amortization,expense $ ` I0,$26 $ 3,7$1 $ .:+ — $ — $ — Future amortization expense of our intangible assets for the next five years is expected to be as follows: h ttp://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htmf5/17/2012 9:53:24 AMl Forrn 10-K 2010 2011 2012 2013 2014 Amortization ;15,295: I8,390 17,280 15,695 ' 10,194 _ : ` ' _ 73 _ • Tabie of Contents Note 6—Preferred Stock On August 7, 2008, we issued and sold 150 shares of our Series A Preferred Stock to Ares for an aggregate purchase price of $150,000. The Series A Preferred Stock was convertible at the option of Ares subject to adjustment for stock dividends, subdivisions, reclassifications, combinations or similar type events was redeemable at our option after August 7, 2015; and voted together with common stock, except on certain matters that affect the Series A Preferred Stock, in which case the Series A Preferred Stock voted as a separate class. On March 11, 2009, we filed an amendment to the certificate of designations of Series A Preferred Stock (the "Certificate of Amendment") with the Secretary of State of the State of Delaware that amended the terms of the Series A Preferred Stock as follows Dividends. The holders of the Series A Preferred Stock were entitled to receive dividends at a rate of 5% per annum, an increase from 3% per annum, commencing on March 11, 2009 or 10% per annum if we did not redeem at our option all of the then outstanding shares of Series A Prefened Stock prior to two business days after August 7, 2015 or all of the Series A Preferred Stock has not been converted into our common stock. If an Acceleration Event (as defined in the Certificate of Amendment) occurred before August 7, 2015, then the Stated Value of each share of Series A Preferred Stock would automatically increase by adding to the Stated Value all dividends that would otherwise be payable on a share of Series A Preferred Stock on each dividend payment date from the date on which the Acceleration Event occurs until August 7, 2015. The "Stated Value" for each share of Series A Preferred Stock equals the sum of (i) $1 plus (ii) all accrued but unpaid dividends (including, without duplication, dividends added to Stated Value) on such Series A Preferred Stock as of the date of calculation. In 2009, we accrued dividends of $57,729 for the Series A Preferred Stock. We accounted for the amended terms of the Series A Preferred Stock at fair value on the date of the amendment. Consistent with the provisions of the authoritative guidance, we determined that the fair value of the modified security was equal to the fair value of the initial security. Accordingly, we did not record any amount in earnings per share at the modification date and the increase in the dividend rate would be`� reflected in eamings per share as it is payable. On March 20, 2009, we issued one share of our Series B Preferred Stock to Ares in consideration of Ares' issuance of three letters of credit with a one year term in an aggregate amount of $7,006 pursuant to our request under the Guarantee and Reimbursement Agreement dated March 2, 2009 among Stream and some of its subsidiaries and Ares. We accounted for this preferred stock issuance as a guarantee and recarded at fair value as an asset and will amortize over one year into interest expense. The terms of the Series B Preferred Stock were similar to the terms of the Series A Preferred Stock except as follows: Dividends. Holders of the Series B Preferred Stock were entitled to receive dividends at a rate of 5% per annum, payable semi-annually in arrears every June 30 and December 31, commencing on September 30, 2009. An amount equal to the sum of all accrued but unpaid dividends was also payable upon a Fundamental Transaction that the holders of Series B Preferred Stock treated as a Liquidation Event (each as defined in the Certificate of Designations for the Series B Preferred Stock). Many of the events that would have triggered a Fundamental Transaction were similar to those contained in the definition of Acceleration Event for the Series A Preferred Stock in the Certificate of Amendment. In 2009, we accrued dividends of $289 for the Series B Preferred Stock. On October l, 2009, upon the closing of the Combination all of the outstanding Series A Preferred Stock and Series B Prefened Stock was converted into 35,085 shares of our common stock. In addition, we purchased from Ares, the ten-year private warrant to purchase 7,500 shares of our common stock with an exercise price of $6.00 per share and exercisable unti12018, in consideration for 1,000 shares of our common stock. The sum of the Preferred Stock conversion and the warrant repurchase of 36,085 shares is recorded in Stockholders' Equity. 74 Table of Contents Note 7—Warrants Pursuant to our IPO, we sold 31,250 units, each consisting of one share of our common stock and one warrant entitling the holder to purcha�� one share of our common stock at an exercise price of $6.00 per share. http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d1Ok.htm[5/17/2012 9:53:24 AM] Form 10-K The warrants became exercisable beginning on October 17, 2008 and will expire on October 17, 2011, unless redeemed earlier. Beginning October 17, 2008, we may redeem the warrants at a price of $OA1 per warrant upon a minimum of 30 days prior written notice of redemption if, and only if, the last sales price of our common stock equals or exceeds $11.50 per share for any 20 trading days within a 30 trading day period �ing three business days before we send the notice of redemption. During 2009, we repurchased 21,110 public warrants from holders for $7,188 in privately negotiated transactions and closed our self-tender offer to purchase up to 17,500 of our public warrants and accepted for purchase 9,957 warrants for a total purchase price of approximately $4,978. Also during the year holders of our wanants exercised 131 warrants for proceeds to us of $788. As of December 31, 2009 there were 10,009 warrants outstanding, including 30 shares of common stock underlying warrants embedded in our units. The exercise of our public warrants triggers certain participation rights held by the following shareholders: Ares Management, Ayala Corporation and Providence Equity Partners (the "Participating Shareholders"). The Participating Shareholders ha�e participation rights to purchase, for $6.00 per share, an aggegate number of shares of our common stock equal to 2.4364 multiplied by the number of shares actually issued upon exercise of the public warrants. As of December 31, 2009, Stream had 10,009 public warrants outstanding to acquire common stock at a cash exercise price of $6.00 per common stock that expire on October 17, 2011. In addition the Participating Shareholders have remaining participation rights to acquire 24,385 common shares for $6.00 per common share in cash, at a rate of 2.4364 common shares for each public warrant that is exercised for cash at $6.00 per share, if and when any of the pubiic warrants are exercised. These participation rights expire when the public warrants expire on October 17, 2011 or are reduced pro rata as the number of public warrants outstanding are reduced. Note 8-EquipmenY and Fixtures, Net Equipment and fixtures, net, consists of the following: December 31, December 31, 2009 2008 ,� . � - � ; ° Fwniture and fixtures" $;y 10,948 $ �,221. : _ _ � �, � � : ,, _ , , , Building improvements , 32,044 10,820 Gomputer;equipment � �"� '�� ` ;;� � ' � � � � 31,142 ��1,244 �� Software _; . _ �. - � � _ 14,586 .,. _� . _ _ • '2,266 .: Telecom and other equipment ; ' ': ;`38,157 16,651 � -�. ..,. �:..; � , , . � Fixed assets held for sale 22g - �iprnenf and fxtures not yet placed in service ' 1,4I5 1,695 ".' 128,520 48,897 Less: accumulated depreciation .' 3 i 704 ', . � � � _ ) . � �7,263 ��` � � - $ 96,816 $ 41,634 Depreciation expense consists of the following: For the period from June 26, 2007 Seven Months Year Ended (date of Ended December 31, Year Ended Year Ended inception) to July 31, 2008 2007 December 31, December 31, December 31, Predecessor Predecessor 2009 2008 2007 ("SHC") (�°SHC") . , � � � r� � �� _ �epreciation expense $ 25 596 $ . 7,26 $ . �; � �° 2 $ 8,810 � � $� ' 12,054�� 75 Table of Contents Note 9-Accrued Employee Compensation and Benefits Accrued employee compensation and benefits consists of the following: December 31, December 31, 2009 2008 Compensation related amounts '$ 29;213 $ 16,374 _; . . __ � Vacafion liabilities 13,492 10,091 � ical and derifal liabilities � �� 2;9�2 � � 713� loyer taxes 1,531 2,838 Retirementplans '' 7;806 ; 7,924 : . ,... � � � .. Other benefit related liabilities 2,461 2,395 5 � 57;475 $ � 40,335, http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K Note 10—Other Accrued Expenses and Other Liabilities Other accrued expenses consists of the following: December 31, December 31� 2009 2005 Professional fees 5,447 5,091 , . „ _ _ __ _ Accrued interest 6,041 324 qccupancy expense 3;678 ��. 1,45� Technology expense 4,050 2,275 Other accrued expenses ` 9;283 6,409 _ . _ . _ $ 28,499 $ 15,550 Other liabilities consists of the following: December 31, December 31, 2009 2008 I,ease�exit reserve �, $ �i 924 � $ . ,= 738'�, , _ __ Defened revenue 635 1,480 Market lease reserves .: 5,54$ ;, 3,460 : _ � � � �_ Other 906 448 Total current liabilifies = '$ 8;013 $ 6,126 Deferred revenue $ — $ 1,049 Iaeferred'� rent � � �; ,. '�� 955 " 183 Accrued income taxes � �� 11,976 � 6,245 �� Nlarket value lease reserves 7,418 ` 8,910 Assetretirement obligation 2,162 — , _ . � ��;355 �°' �. _, ., : , � � (Jtlier : � � Totallong-term $ 22,866 $ 16,387 76 �•'. Table of Contents Note 11—Long-Term Debt and Revolving Credit Facility On July 31, 2008, we, as guarantor, entered into the Fourth Amended and Restated Revolving Credit Term Loan and Security Agreement (the "PNC Credit Agreement") with PNC Bank, National Association ("PNC"), as Lender and as agent, PNC Capital Markets LLC, as lead arranger, SHC, as Borrowing agent, and the other Loan Parties signatory thereto, as loan parties. The PNC Credit Agreement amended and restated SHC's credit facility with PNC, providing for an increase in the revolving credit from $86,000 to $100,000, extending the maturity date by five years to 2013 and providing for SGS as a guarantor. The PNC Credit A�eement included a$10,000 collateral reserve. The PNC Credit Agreement did not otherwise materially change the terms of SHC's credit facility. This financing comprised a$100,000 senior secured revolving credit facility under which borrowing availability was based on, among other things, the Borrowers' (as defined in the PNC Credit Agreement) eligible billed and unbilled accounts receivable. The financing facilities had a five-year term. Outstanding balances under the revolving credit facility incurred interest at either LIBOR plus a margin ranging from 200 to 250 basis points or at the base rate plus a margin ranging from 0 to 25 basis points. The term loans incurred interest at LIBOR plus a margin ranging from 275 to 325 basis points or at the base rate plus a margin ranging from 25 to 75 basis points, in each case based on the combined fixed charge coverage ratio of SHC. The interest rate was subject to change under additional circumstances. The facility also required compliance with certain financial covenants. On November 14, 2008, we amended the PNC Credit Ageement to extend the date for delivery of an audited opening balance sheet of the borrowers to April 1, 2009. The obligations of the �orrowers' under the facility were secured by certain assets of the Borrowers' and by certain assets of SHC. In connection with the financing we paid a fee of $2,316 to PNC. This amount was being amortized over the life of the facility of five years but $984 was charged to interest expense in January 2009 in connection with the Amended Credit Agreement described below. In January 2009, we entered into the Fifth Amended and Restated Revolving Credit, Term Loan and Security Agreement, dated as of January 8, 2009 (the "Amended Credit AgreemenP'), with PNC as lender and as agent, Steel City Capital Funding, LLC, as term B lender and as term B agent, PNC Capital Markets LLC, as lead arranger, SHC, as borrowing agent, and the other loan parties signatory thereto, pursuant to whi�� we borrowed an aggregate principal amount of $25 million in order to reduce the senior secured revolving credit facility from $100 million to � approximately $77 million and to repay approximately $2 million in outstanding loans made to certain Foreign Bonowers (as defined in the �° Amended Credit Agreement). http://wwwsec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K In March 2009, we entered into an Amendment No. 1 and Waiver to the Amended Credit Agreement and certain of our subsidiaries (the, "Stream Entities") entered into a Guarantee and Reimbursement Agreement, dated as of March 2, 2009 (the "Reimbursement Agreement") with Ares, pursuant to which Ares or one or more of its affiliates provided, or caused one or more financial institutions or other entities to provide, am letters of credit or other guarantees or backstop arrangements for the benefit of the Stream Entities in consideration of the issuance to Ares one share of our Series B Preferred Stock. In addition, we entered into a Subordination and Intercreditor Agreement, dated as of March 2, 2009, with PNC, as agent, Steel City Capital Funding, LLC, as agent for term B lenders and as term B agent, Ares and the other loan parties signatory thereto, pursuant to the liens granted under the Reimbursement Ageement were made junior and subordinate to the obligations of the Stream Entities under, and to liens granted in connection with, the Amended Credit Agreement. We expensed in the year ended December 31, 2009, $3,882 related to this agreement, including $3,148 of fees associated with terminating the agreement, that were previously capitalized related to the PNC debt agreement. In October 2009, pursuant to an indenture, dated as of October 1, 2009 (the "Indenture"), among Stream, certain of our subsidiaries and Wells Fargo Bank, National Association ("Wells Fargo"), as trustee, we issued $200 million aggregate principal amoupt of 11.25% Senior Secured Notes due 2014 (the "Notes") at an initial offering price of 95.454% of the principal amount, the purpose of which was to pay off the debt from the PNC agreement along with debt acquired from EGS. In addition, we and certain of our subsidiaries (collectively, the "Barrowers") entered into a credit agreement, dated as of October 1, 2009 (the "Credit Agreement"), with Wells Fargo, as agent and co-arranger, and Goldman Sachs Lending Partners LLC, as co-arranger, and each of the 77 Table of Contents lenders party thereto, as lenders, providing for revolving credit financing (the "ABL Facility") of up to $100 million including a$20 million sub- limit for letters of credit. The ABL Facility has a maturity of four years. We capitalized fees of $7,552 and $3,631 associated with the Notes and the Credit Agreement, respectively, at the inception of these agreements that are being amortized over their respective lives. We expensed in the year ended December 31, 2009, $269 and $214, respectively, related to the Notes and the Credit Agreement. We are in compliance with the financiai covenants as of December 31, 2009. Substantially all of the assets of the Company excluding �ngible assets secure the Notes and the ABL Facility. See Note 17 for Guarantor Financial Information. Long-term borrowings consist of the following: December 31, December 31, �_ � � , . � 2009 2008 R�volving line of�credif �� . ' � °' ° � ' � - . : � � $ ; z . 15,SQ1 � � $ .,. 39,425 11.25% Senior Secured Notes 200,000 � 6,789 Other `�' �; 237 . 24 215,738 66,238 Less: currentportiori� � (90 � , (2,614 � Long-term debt $ 215,648 $ 63,624 Minimum principal payments on long-term debt subsequent to December 31, 2009 are as follows: Total 2010 , � : : $ 90 � 2011 � � � � �� 96 � 2012 51'' 2013 . _ �_ ,. ; � ° 15,501 2014 200;000 _ , Total $ 215,738 On March 18, 2009, in response to our request under the Reimbursement Agreement, Ares issued three letfers of credit in an aggregate amount of $7,006, and we issued 1 share of Series B Preferred Stock to Ares in consideration of such letters of credit. We had $6,600 LC Guarantees outstanding at December 31, 2009 and zero at December 31, 2008, respectively. � There was $82,429 available on the ABL Facility at December 31, 2009. We have $359 and $160 of restricted cash as of December 31, 2009 and 2008, respectively. Note 1�Defined Contribution and Bene�it Plans http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K We have defined contribution and benefit plans in various countries. The plans cover all full-time employees other than excluded employees as defined in the plans. The participants may make pretax contributions to the plans, and we can make both matching and discretionary contributions. In the years ended December 31, 2009 and 2008, we recorded $3,126 and $1,112 in matching contributions to the plans. Our define benefit plans are funded primarily through annuity contracts with third party insurance companies. We do not have any material obligations under� these plans other than funding the annual insurance premiums. 78 Table of Contents Note 13—Income Taxes The change in valuation allowances is net of the effect of foreign currency translation adjustments included in accumulated other comprehensive income (loss). The domestic and foreign source component of income (loss) before tax is as follows: Predecessor ("SHC") Predecessor Seven Months ("SHC") Ended Year Ended December 31, December 31, December 31, July 31, December 31, 2009 2008 2007 2008 2007 '�'otalUS $ {45,244) $ ;{5,431) ; $' 1,$77 $ (39,508) '. $ , (26,718) : Total Foreign 21,053 11,586 — 19,231 21,554 Total : $ (24,191) $ 6,155 $ 1,877 $ (20,277) $ .- ',(5,164) The components of the income expense (benefit) are as follows: Predecessor ("SHC") Seven Months Predecesso Ended ("SHC"( December 31, December 31, December 31, July, 31, December'; 2009 2008 2007 2008 2007 �uirent ?, Federal ._ $ < (17) ° $ 234 $_ 580 $ — $ ' — _ _ . ». _ _ . _ _ __ . _ State _ � � 15 �� i47 1&0 75 , .'.� � 10 Foreign . _ - 6,128 , S,Sb9 _ 4,277 : 4,933 ?�'otal Curr�nt , � 6,126 '�� 5'�,950 $ `- � 760 4�,352 � � 4,943' Deferred : Federal :- � (664) — — State : 26 - _ — — Foreign �_' � � �� (1,106 � (591 � '�� 743 '° 1,215 Total Deferred (1,744 (591 — 743 1,216 Total ` $ : 4,382' ; $ . 5',359 $ 760 $ 5',095 $ ` 6,159. 79 Table of Contents A reconciliation of the provision for income taxes with amounts determined by applying the statutory US Federal rate is as follows Seven Months Year Ended Ended July 31, December 31, 2008 2007 December 31, December 31, December 31, Predecessor Predecessor 2009 2008 2007 ("SHC") ("SHC") �ederaliaxr`ate .� � � ' $ '�' (8,46'�) $ 2�,154 $ �,�� 580 $' (6,$94� � $ (1,75F� State and local income taxes, net of federal � income tax benefits (20) 232 180 34 (73) Foreign iricome faxed at different rate to US 3,340' 937 — 967 ! 1,304 Change in Valuation Allowance � 10,000 (150) 6,748 � 4,370 � http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K Non deductible expenseslrelated 3o foreign tax � holida ` � " � � � Y � " ' � � � � � � �. = ; ��- �� 7,936 �� ' �� — '� � � � � '— — �. Y..�_ (6,709) (1,386) —..,. �.., e �980) �� (1,523)�� Credits and tax holida s nefit o#'prior year net operating losses . ', (2 141 J '— ' . ° = - = - 48 Reserve �819 1,334 � � � Permanent item§ :. � 50�� 1,�95 — �` 5,1�36 - 3,954 ( Other differences (426 243 — 84 (117 �rovision for mcome taxes $ � : 4 �. �$ . ., 5,359 $ ' 76Q ��,` '. $'�� 5,0�5 $ � : � 6,159. ` Defened income taxes consist of the following: December 31, December 31, 2009 2008 IDeferred_�taxassets: ��. � � _'� �� . � � � � � �� , . �� n �.. .• .. , �� . � � Accruals, allowances, and reserves $ 8,629 $ 9 808 _,.. � .. �-Tax credits��;and loss cany foravards;,�,�. . ' . �` I ` �;. - i � 19�4f13 ..._. � �:19,163� < � Depreciation � � � � �� 4 910 � � y � 2 620 � �.._ „ ,... � ; , , , �'�; ; Pa �ables � ` .Y . � ; .. . �'`�' `� �_��. � ; �.., : ""�� i ��;'� �� , �I�G,030 :i Other 732 458 .,, ., . . . , ° , � ... :, � �� •. � � _ � � � . . ;.., 55,92� 4$,D79 '�� . � � :. � � ;, . Valuation allowance � (18,234 (8,257 ` Totaf d'eferred tax asset`s , � � - . _ ;, ;= 37,69� �' _ :: ' 39,822 ��' Deferred tax liabilities: � � � � � � � � �� _ ; .� Iutang�ble , _ . � ��; ` � ,'�' � i, � �; , ? ., . ,! � �� : � � �1.�74� 29 ,3 33 ..,� � Other liabilities � � � � � � ' � � � �� .,,. .._ 5,462 9,553 �, , � �.Unrealized ��foreign exchange . _- ; � � � �� , �� `� � �04 �� 735 � ._ .:.. ... �_. . , .,r,. .� .. . . Total deferred tax liabilities 3�,566 39,621 Net deferred tax assets ;; ' $ - _ ; �26 $ • : 2Q1 Following the acquisitions of EGS on October 1, 2009 and SHC on July 31, 2008, we recognized certain deferred tax assets and liabilities ociated with the estimated fair value of assets acquired and the liabilities assumed. The most significant items were the deferred tax liabilities sociated with the intangible and tangible assets in the US and the Philippines, and the deferred tax assets attributed to the market lease reserve in both the US and foreign jurisdictions. As a result of the increase in the deferred tax liabilities associated with the amortizable intangible assets the valuation allowance for the US deferred tax assets was reduced. 80 Table of Contents At December 31, 2009 and 2008, we had $28,578 and $34,334, respectively, of U.S. federal net operating losses, which will expire between 2024 and 2028. At December 31, 2009 and 2008, we had $16,745 and $15,824, respectively of state net operating losses. At December 31, 2009 and 2008 the foreign operating loss carry forwards includes $4,277 and $1,852 with no expiration date, and $7,959 and $9,950, respectively, of fareign-generated net operating losses, which will expire over various periods through 2016. The net operating losses are evaluated for each foreign jurisdiction and a full valuation allowance established where we believe that it is more likely than not based on available evidence that the asset will not be realized. At December 31, 2009, we had $1,563 of credits available for carry forward which will expire between 2014 and 2028, and $2,547 of credits with no expiration date. As a result of the acquisitions of EGS on October 1, 2009 and SHC on July 31, 2008, we acquired net operating loss carry forwards. The utilization of these losses is subject to the Internal Revenue Code Section 3821imitations, and we have established a valuation allowance against the deferred tax assets for an amount that is more likely than not to be recognized. We have estimated the annual limitation imposed by the provisions of Section 382, and do not expect such limitation to restrict its ability to utilize the losses within the carry forward period. In 2008 we also farfeited $1,000 of existing net operating losses in foreign jurisdictions where the change of control resulted in a limitation of offset against future taxable income. • We had recarded a valuation allowance of $18,234 and $8,257 for the periods ended December 31, 2009 and 2008, respectively, against net operating losses and deferred tax assets for which realization of any future benefit is uncertain due to taxable income limitations. We file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. Currently, we are under federal audit for the year http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/dlOk.htm[5/17/2012 9:5324 AM] Form 10-K 2007. We operate in a number of international tax jurisdictions and are subject to audits of income tax returns by tax authorities in those jurisdictions. We have open audit periods after 2002 in India, Canada and Europe, including France, Italy, Ireland, the Netherlands and the United Kingdom and are currently under audit in India and Canada. We have been granted various tax holidays in foreign jurisdictions. These tax holidays are given as an incentive to attract foreign investme� and under agreements relating to such tax holidays we receive certain exemptions from taxation on income from export related activities. The income tax benefit from foreign tax holidays was $5,472 and $705 for the periods ended December 31, 2009 and December 31, 2008. Certain of the tax holidays are set to expire between 2010 and 2012. We currently benefit from income tax holiday incentives in the Philippines pursuant to the registrations with the Philippine Economic Zone Authority, or PEZA, of our various projects and operations. Under such PEZA registrations, the income tax holiday of our various PEZA- registered projects in the Philippines expire at staggered dates through 2012. The expiration of these tax holidays will increase our effective income tax rate. We have not provided taxes related to the potential repatriation of foreign subsidiary earnings because we believe they will be indefinitely reinvested outside of the United States. If future events necessitate that these earnings should be repatriated to the United States, an additional tax provision and related liability would be required. 81 Table of Contents Reconciliation of the beginning and ending total amounts of unrecognized tax benefits (exclusive of interest and penalties) is as follows: Beginnmg balance January 1; 2009 ' '$ 3,512 Additions to tax positions related to the current year 2,834 Reductions for ta�c positions related to current year . — Additions for tax positions related to the prior year 5,125 Reductions for tax p�sitions related tQ priar year �(554� �; Settlements with tax authorities (191) � Lapse of statute of limitations ' (429) Ending balance December 31, 2009 $10,297 We adopted the provisions of FIN 48 upon inception. Pursuant to the adoption of FIN 48, we recorded a reserve for unrecognized tax benefits of zera As of December 31, 2009 and 2008, the liability for unrecognized tax benefits (including interest and penalties) was $13,319 and $6,778, respectively, of which $1,344 and $533, respectively, was recorded in current liabilities and $11,975 and $6,245, respectively, was recorded within other long term liabilities in our consolidated financial statements. Included in these amounts are approximately $1,291 and $1,308, respectively, of unbenefitted tax losses, which would be realized if the related uncertain tax positions were settled. As of January 1, 2009, we had reserved $1,958 far accrued interest and penalties, which had increased to $2,472 as at December 31, 2009 and is included in the $13,319 of liability: We recognize accrued interest and penalties associated with uncertain tax positions as part of the income tax provision. The total amount of net unrealizable tax benefits that would affect the income tax expense, if ever recognized in our consolidated financial statements is $12,769. This amount includes interest and penalties of $2,472. We estimate that within the next 12 months, our unrecognized tax benefits, and interest and penalties, could decrease as a result of settlements with taxing authorities or the expiration of the statute of limitations by $1,047 and $842, respectively. The acquisition of EGS Corp resulted in an increase in the amount of unrecognized tax benefits of $5,884 on October 1, 2009. Note 14—Stock Options The 2008 Stock Incentive Plan (the "Plan") provides for the grant of incentive and nonqualified stock options. The Plan has authorized grants of up to 10,000 shares of common stock at an exercise price not less than 100% of the fair value of the common stock at the date of grant. The Plan provides that the options shall be outstanding for a period not to exceed ten years from the grant date. During the years ended December 31, 2009 and 2008, we granted options to purchase 4,903 and 3,230 shares of our common stock to our employees with an exercise price at the greater of $6.00 per share or fair value of the underlying common stock at the date of grant. Generally, options vest over a five-year period. In 2009, we granted options to certain former eTelecare employees that have 20% of the options vest on January 1, 2010 approximately two months after the, � initial grant. During 2009, ow founder, Chairman, and Chief Executive Officer was granted 1,000 options that are subject to a time-based vestinL schedule and become exercisable under certain conditions. The options become exercisable upon our common stock closing price at or above $10.60 for 60 consecutive trading days and public float, excluding affiliates, equals or exceeds $300,000 or the affiliated stockholders have, in the aggregate sold 25% or more of their aggregate ownership as measured against their ownership as of November 10, 2009. We have used the Monte http'.//www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K Carlo method to value these options. The accounting guidance requires us to recognize compensation expense related to options with market or performance conditions using an accelerated attribution method instead of on a straight-line basis over the requisite service period. The derived service period, as defined by the accounting guidance, was determined with the assistance of the valuation specialist and compensation expense �1 be recorded ratably for each tranche over the requisite service period. 82 Table of Contents At December 31, 2009 and 2008, 534 and zero stock option grants were vested, none had been exercised, and 1,062 and none had been farfeited. The per share fair value of options granted was determined using the Black-Scholes-Merton model. The following assumptions were used for the option gants in the year ended December 31, 2009: Year Ended . Year Ended December 31, December 31, . 2009 2008 Option term (years)�: �, , _ _ 6.375`i � 6.375 :; �� Volatility 43%-63%0 � 43%� � � Risk-free interestrate= � ' � �� ,. . ' � � � �� °�� .:�� 1.41-2.96°�0. �,.: '. �.;�2.41 3.27%> � z �� : . ,� .... r � s� Dividend yield . _ _ � _ . . ... � �� __ Weighted-average grant date fair �alue per option granted $ 3 36 ; $, Q.ZG The option term far 2009 and 2008 was calculated under the simplified method for all option grants during for the year ended December 31, 2009 and 2008 as we do not have a long history of granting options. As we are beginning to get a history in our common stock we transitioned in 2009 to have the expected volatility assumption be based on a weighted average of the historical volatilities for Stream and its peer group, while due to lack of stock trading history the assumption for 2008 was based upon the historical volatility of comparable companies from a representative � r group selected based on industry and market capitalization. The risk-free interest rate assumption was based upon the implied yields from the . Treasury zero-coupon yield curve with a remaining term equal to the expected term in options. The expected term of employee stock options granted was based on our estimated life of the aptions at the grant date. Stock options under the Plan during year ended December 31, 2009 were as follows: Weighted Average Weighted Weighted Remaining Average Averase Contractual Number Exercise Fair Term of oprions Price Value (Years) Outstanding at Decemlier 31, 200g 3,210 ;$. 6.00 9.74 �... � � � Granted � �� 4,903 6.22 $ 3.36 �� Exe'rcised ' — � Farfeited or canceled � � � � �� (1,135) � � 6A �� 2 Outstanding at December3l, 2009 ' 6,978 $.6.i5 9.3 At December 31, 2009, we had stock options to purchase 535 shares that were exercisable. The weighted-average exercise price of options currently exercisable is $6.00 at December 31, 2009. The weighted average remaining contractual term of options currently exercisable is 8.8 years at December 31, 2009. The total fair value of options vested during the year ended December 31, 2009 was $495. There are 4,611 shares outstanding, vested, and expected to vest (including forfeiture adjusted unvested shares) with a weighted average exercise price of $6.14 and a weighted average remaming contractual term of 9.39 years. For the years ended December 31; 2009, 2008, and 2007, we recognized net stock compensation expense of $1,097, $73 and zero, respectively, for the stock options in the table above. SHC recorded stock compensation expense of $1,234 and $887 respectively, for the 7 months ended July 31, 2008 and far the year ended December 31, 2007. As of December 31, 2009 and 2008, the aggregate intrinsic value (i.e., the difference in the estimated fair value of our common stock and the �rcise price to be paid by the option holder) of stock options outstanding, 83 http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K Table of Contents excluding the effects of expected forfeitures, was zero. The aggregate intrinsic value of the shares of exercisable stock at December 31, 2009 and. 2008 was zero. The intrinsic value of options exercised far the years ended December 31, 2009 and 2008, was zero. As of December 31, 2009 and 2008, there was $10,325 and $1,312, respectively, of unrecognized compensation cost related to the unvested portion of time-based arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 4.6 years from issue date. Restricted stock award activity during the year ended December 31, 2009 and 2008 was as follows: Weighted average Number ot Grant- Shares Date Fair Value Outstanding Decetnber 31; 2008 ' 92 $' 7`85 _._, _ . Granted 575 6.12 �° �vested ; (16} , 7�85� Farfeited _ _ _ (19 7.85 Outstanding December 31, 2009 632 $' 6.28 For the year ended December 31, 2009 and 2008, we recognized net compensation expense of $146 and $28, respectively, for the restricted stock awards. Restricted stock awards vest either quarterly over four years for grants in 2008 or semi-annually over a five year for grants in 2009. Note 15—Commitments and Contingencies Leases We lease our operating facilities and equipment under non-cancelable operating leases, which expire at various dates through 2015, and we have a capital lease obligation related to one facility. In addition, we have capital leases for furniture, computer and telephone equipment. The assets under capital lease are included in equipment and fixtures, net, on our consolidated balance sheets are as follows: December 31, December 31� 2009 2008 Furniture and f xtures $ 1,182 $ 235 � �. � Building improvements 8,588 3,117 Gomputer equipment 3,946 ' 696 . Telecom and other equipment 6,341 3,631 ' 20,057 7,679 Less: accumulated depreciation (3,221) (771) $ ' I6,836 ' $ 6,908 84 Tahle of Contents Future minimum payments under capital and operating leases consist of the following at December 31, 2009: Capital Operating Leases Leases 2010 $ 6,865 $ 39,291 20ll , 5,350 30,732 Z012 3,576 18,892 2013 . 2,489 13,344 2014 744 8,084 Thereafter _ 585 _ 13,009 Total future minimum lease payments 19,609 $123,352 Less amount representing interest (2,801) I6, 808 � � Less current portion (5,529) $11,279, , http://www.sec.gov/Archives/edgartdata/1405287/000119312510052721/dlOk.htm[5/17/2012 9:5324 AM] Form 10-K Rent expense is included in our consolidated statements of operations in selling, general and administrative expenses as follows: For the period � from Year June 26, 2007 Seven Months Ended Year Year (date of Ended December 31, Ended Ended inception) to Jaly 31, 2008 2007 December 31, December 31, December 31, Predecessor Predecessor 2009 2008 2007 ("SHC") ("SHC") I�ent expense $ � � "35 751 � '$ 11 102 � � , .., � � �� , �� ' '� ,_$- _. ._ —� $ _ 17,{46 � $�� 25,Ot1-'� Market lease reserve amortization (3,687 � (1,422 — (2,046 (3,632 l�et�ient expense : $. . �32,064 '; � � $ 9,680 $ � 0;. � � ` $ � . 15,600, � $ ` 21,387 �� Contingencies We are self-insured with respect to medical and dental claims by our employees located in the United States, subject to an annual insured stop-loss limit on per-claim payments of $125 for legacy Stream and $150 for legacy eTelecare employees and an overall insured stop-loss limit of $1.875 per covered participanT. We believe that our self-insurance reserves of $1;371 at December 31, 2009 and $713 at December 31, 2008 are adequate to provide for future payments required related to claims prior to that date. We are also subject to various lawsuits and claims in the normal course of business. In addirion, from time to time, we receive communications from government or regulatory agencies concerning investigations or allegations of non-compliance with laws or regulations in jurisdictions in which we operate. We establish reserves for specific liabilities in connection with regulatory and legal actions that we deem to be probable and estimable, and we believe that our reserves for such liabilities are adequate. We have been named as a third-party defendant in a putative class action captioned Kambiz Batman�,helich. on behalf of himself and all Qthers similarlv situated and on behalf of the neral �ublic v Siriu� XM Radio Inc , filed in the Los Angeles County Superior Court on ' November 10, 2009, and removed to the United States Dish Coiu for the Central DisMct of California. The Piaintiff alleges that Sirius XM Radio, Inc. recorded telephone conversations between Plaintiff and members of the proposed class of Sirius customers, on the one hand, and Sirius and its employees, on the other, without the Plaintiffls and class members' consent in violation of California's telephone recording laws. The Plaintiff also alleges negligence and violation of the common law � 85 �� _ _ . _ _ _ _ __ Table of Contents right of privacy, and seeks injunctive relief. On December 21, 2009, Sirius XM Radio, Inc. filed a Third-Party Complaint in the action against us seeking indemnification for any defense costs and damages that result from the putative class action. The Plaintiff has not alleged any claims against us. We believe that we have meritorious defenses to Sirius XM Radio, Inc.'s claims, but there can be no assurance as to the outcome of this lawsuit and an adverse outcome could have a material adverse effect on our business, results of operations or financial condition. Note 16—Geographic Operations and Concenfrations We operate in one operating segment, but provide services primarily in two regions: "Americas", which includes United States, Canada, the Philippines, India, Costa Rica, Nicaragua, Dominican Republic, and El Salvador; and "EMEA", which includes Europe, Micldle East, and Africa. The following table presents geographic information regarding our operations: For the period from Year June 26, 2007 Seven Months Ended Year Year (date of Ended December 31, Ended Ended inception) to July 31, 2008 2007 December 31, December 31, December 31, Predecessor Predecessor 2009 2008 2007 ("SHC") ("SHC") Reveriues Americas $ 371,944 $ 122,090 $ — $ 169,402 $ 309,299 EMEA 212,825 89,283 — 142,683 : 174,270 $ 584,769 $ 211,373 $ — $ 312,085 $ 483,569 December 31, December 31, �, ,� 2009 2008 otat assets: . � �� Americas : �. ;: . � :�� .. ,. �� <. � .. � � � i ? $ 594,116 $ 259,432 E�IEA , _ � 86,707� ��; � � . � �� 70,St3 http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm(5/17/2012 9:53:24 AMl Form 10-K $ 680,823 $ 329,945 We derive significant revenues from three significant clients. At December 31, 2009, two of our largest clients are global computer companies, and the other client is a satellite radio provider. • For the period from Year June 26, 2007 Seven D4onths Ended Year Year (date of Ended December 31, Ended Ended incepriou) to July 31, 2008 2007 December 31; December 31, December 31, Predecessor Predecessor 2009 2008 2007 ("SHC") ("SHC") Dell Iric:' 19% 17°l0! - 16°/n 16°/u Hewlett-Packard Company 17% 17% - 13% 13% Sirius X1VI Radio' Inc. 10% 12%' - 11%a ' 13% Related accounts receivable from these three clients were 29%, 15% and 6%, respectively, of our total accounts receivable at December 31, 2009. 86 Table of Contents Note 17-Guarantor Financial Information Our Notes are guaranteed by Stream, which is the parent company, along with certain of our wholly owned subsidiaries. Such guarantees are full, unconditional and joint and several. Condensed consolidating fmancial information related to us, our guarantor subsidiaries and our non-guarantor subsidiaries as of December 31, 2009, 2008 and 2007 are reflected below: • Condensed Consolidating Statement of Operations For the year ended December 31, 2009 ° Non- �� Guarantor Guarantor Parent subsidiaries subsidiaries Elimination Total Net revenue: Customers $ - $517,373 $ 67,396 $ - $584,769 Infercompany - 88,067 231,805 ' {319,872 - - 605,440 299,201 (319,872) 584,769 Direct cost of revenue ' Customers - 171,587 170,606 342,193 Int`ercompany 293,15� ' 26,717 ' (319,872 - - �464,742 197,323 (319,872) 342,193 Gross Profit - 1!�0,698 I 101,878 ; - 242,576 ' .� ..,. ,� . Operating expenses: Selling, general and administrative expenses ' 1,650 ' 117,080 !! ,8Q,724 ' 199,454 ' Transaction related costs 6,832 5,413 - - 12,245 Depreciation and amortization 44 25,178 I 11,20q ! - 36,422 i Total operating expenses 8,526 147,671 91,924 - 248,121 Income (loss) from operations (8,526) ; : (6,973)' ; 9,954 ! - , {5,545) ; Other (income)�expenses, net: � � � � Foreign currency transaction lo�s �gain) 1,289 - (1,053) ;_ - 236 � Other (income) expense, net - - - Interest (iricome) ezpense, net, �� 2,165 =- �_;11,898 �-�- � 4,347 �_ - ��18,�}IO �'� Equity in earnings of subsidiaries 18,924 - - (18,924) - Total other (income) expenses, net Z1,Q89 ; 13,187 : 3,294 ' (18,924 '18,646 '' Income (loss) before income taxes (29,615 ) (20,160 ) 6,660 18,924 (24,191) Provision (benefit) for income taaces �'(1,042) �� ' 4,729 i � 695 �' � . -- ' _4,382 �' , Net income (loss) � (28,573) (24,889) 5,965 18,924 (28,5'�+ CumuIative conveztible Preferred��Stock dividends 'S8,018 �� - � 5g>��8�� a �... . � � � � _�: �_. - _ -, _ _ _ Preferred Stock accrerion 6,397 - - - 6,397 Ne� income (loss} attributable �o comirio� stockholders � $,(92,988) ��° $ (24,889)�_', � $ '� 5,965 �.` $ -18,924 '�� $ (,g2,988} �� http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K 87 able of Contents Condensed Consolidating Statement of Operations For the year ended December 31, 2008 Non- Guarantor Guarantor , � • � Parent subsidiaries subsidiaries Elimination Total �et revenue:� -� � � �;.. ,.,:.... � . , � � � � � . - � , � ,;� _ . , � _.. - , � _> _-..,; .- ,�.. � ,:. ,� Customers $ - $200,119 $ 11,254 $ $211373 � Intercomp�iy ; - � 13,$51 �` � 92,9&6 : . (106,837 �- � � „ � - 213,970 104,240 106,837) 211,373 Direc� cost of rev�enue >` ;. � ' � � � ' � ti� � _ , � , �:,,:. � � Customers � � � � � �� 70 908 � 57 370 � � 12 � � �. , - , _ , - 8,278 ,. � . Intercom an '� , � . � �� _ -�� 93,903 � � ' ' . 12,934 ` (1Q6,837 P . Y � � ., , , „ - 164,811 70,304 (106,837) 128,278 . �� m Gross Profit . - 49,�59 �� 3,936�`' . � 83,095 � � � � . - ' . �� , ; � �� : . � , Operating expenses: . �, • � .. �� Sel�ing; general anc� adminisia experises � `�� `�� I,254 . ' 41,4_62 . : ; .;, 2�,1b$ �� " - b6,884 '�� Transaction related costs � . _ � � _ � � ��_ � _` � �� "' � �" � �, . ; ., Depreciation and amortization ? ,: ', 2I . : 8,1'19 ` 2,842 ` 10,982 ,, Total operating expenses 1,275 49,581 27,010 - 77,866 Income (loss) from opera�ions , ' (1,275) (422) 6,926, _. - `5,229 `: Other (income) expenses, net: � � � �: ` � , ' � ' � � _ � � . , , � Other (in� me) xpense�net 1`oss (gain) - -_. �. ' � . ' � � 99S ' �, (14)..- ;.; . ,... � �' = 981 ! - - 260 260 Interest (income) expense, net ; (4,229) 1,854 ` , 208 ;. (2,167), Equity in Earnings of Subsidiaries � � �� 1,074 � � - - � � (1,074 �� - � Total other (income) expenses, net (3,155 `" 2,849 454 (1,074 : ,(926 � � ) �� 1,880 (3,271 6,472 1,074 . � � 6,155 Income loss before income taxes Provision (benefit) f�r income taxes . 1,084 2,432 1,$43 - 5,359 :_ . � Net income (loss) 796 (5,703 4,629 1,074 796 Series A Preferrecj Stock lieneficial conversion feature �� 49,503 - - 49,503 ' � � . _. . _ . . � �� _ �� < � . Cumulative convertible Preferred Stock dividends 1,790 - - - 1,790 � ��_ .� Preferred S�ock accretion �- 367 - = �� 367 �: � � � � � � _ �_ . � � �� -� � . . Warrant issuance costs 298 - - 298 Net income (loss) attriliutable to cammori stockholders $(51,162 $ (5,703 $ 4,629 $ ' 1,074 ,' $ (51;162 88 Tabie of Contents Condensed Consolidating Statement of Operations For the year ended December 31, 2007 Non- Guarantor Guarantor Parent subsidiaries subsidiaries Elimination Total Revenue: �'� � �. � � � � � _ Customers $ - $ - $ - $ - $ - , Intercompariy � � - - - - - Direct cost of reveriue � �, , .r,. ;:... � _, Customers � � �� _ � � �� _ � � � � _ � �� _ http://www.sec.gov/Archives/edQar/data/1405287/000119312510052721/d10k.hhnf5/17/2012 9:53:24 AMl Form 10-K Intercompany - - - - Gross Profit - - - - -� Operating expenses. Sellmg; general and administrative;expenses 240 - ' 240 Transaction related costs - - - - - Depreciation and amortization 2 - - - 2 Total operating expenses 242 - - - 242 Iucome �loss) froin opera�ions '. (242) ,- - - - �242); Other (income) expenses, net: Foreign currency transacfion Ioss (gain� - - - - „ - Other (income) expense, net - - - - - �� Intei�est �income) eXpense, net � {'2,119) ', - - (2,1 T 9) �,. Equity in Earnings of Subsidiaries - - - - - Total other (incomej expenses, net (2,119 ? - - - j(2,119 Income (loss) before income taxes 1,877 - - - 1,877 Proyision (benefit) for income taxes , �� 760 ,�� - - - !' 760 ° Net income (loss) $ 1,117 $ - $ - $ - $ 1,117 89 Ta61e of Contents Condensed Consolidating Balance Sheet As of December 31, 2009 Non- Guarantor Guarantor Parent subsidiaries subsidiaries Elimination Total� Assets :. � ?.. �- � � � � � Current assets _ _ _ _ _ _ , . ,� Cash and cash equivalents : $ � 126 '�� -3,195 $ l I,607 $' �� - $� 14,928 ,.. � -�� _ _ � _ . , _ _ , n Accounts receivable net - 139 025 36,532 - 175,557 Income taxes receiyable - 2,473 515 - 2,9$8' Defened income taxes - 15,241 629 - 15,870 y � P'repaid e�enses and other �current �assets _ 2,083 � 5,726 10,234 - �� 18,043� Total current assets 2,209 165,660 59,517 - 227,386 _ __ Equipmenfi and fixtures, net 44 45,678 51,094 - 96,816 Deferred income taxes - 1,902 3,404 - 5,306 Investment in Subsidiary�, • 390,971 � 160,7�8 �27 , (551,796) , - Goodwill � � � � � - ll9,906 106,121 - 226,027 Intangible assets,�net � - 85,035 19,799 '104,834' Other assets � � 8,618 1,886 9,950 - 20,454 �� Total assets . $ 401,$42 $580,865 $249,912 $(551,79b $680,$23 Liabilities and Stockholders' Equity Current liabilities: P � ;. � _ ,_ _ � _ - Accounts payable $ - $ 6,521 $ 7,011 $ - $ 13,532 Accrued employee;compensation andbenefits - 23,414 34,061 - . 57,475 Other accrued expenses � �� 6,936 10,334 11,229 - 28,499 Income taxes payable �1,736) ,; 3,907 ; .28 - ��, 2,199' Current portion of long-term debt - 90 - - 90 � Tnterc`ompany Payable (Receivabie) {137,232) '�� 44,407 92,825 - - Current portion of capital lease obligations - 3,181 2,348 - 5,529 Qtlier liabilrties � '- 4,630 3,383 - � 8,01 ' Tota1 current liabilities (132,032) �� 96,484 150,885 - 115,�� Lorig-term debt, net of current poi .' 20b,733 ; ! 147 - - 206,88U �;.,. _, ,� � �� .. � , � Capital lease obligations, net of current portion - 4,132 7,147 - 11,279 Deferred'mcome taxes - 2Q,002 1,048 - 21,05.6 http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K Other long-term habilities - 16,381 6,485 - 22,866 Total h�bilities 74,741 137,14G : 165,565 - 377,412 �� otal shareholders' equity (deficit) 327,141 � 443,719 �� 84,347 ��(551,796 �303,411 � aI liabilities and stockholders' equity $ 401,842 ; $580,865 „ ; $249,912 $(551,796) $680,823 90 Tabie of Contents Condensed Consolidating Balance Sheet As of December 31, 2008 Non- Guarantor Guarantor �� , � � � . � � ,,. , ` Parent subsidiaries subsidiaries Elimination Total , f�SSOtS".� .�. `. � ' � _ . � � ._ , ;�.; � - � . � ,. ,, � C�.urent assets: � � . . � _ _ _ � �� ;a ., eash and caeh equivalents � _� � � � ��,� : ' $ 3,090 � � � �� $ � 2,�6 � � 4,$94 $' _ .$'_� 10,660: ..., , � e ��_.�. ._.� � Accounts receivable, net - 101,250 8,135 - 109,385 � ' � � Iricome taxes receivabl� � � � ` �� ' � � ,, . , I,292 ,i 267 - .,_ ,1,559 � . .. � , . f: _ „ �.. . � . _ _. Deferred income taxes 98 14,050 751 � - � 14,899 � �� :. � , � � � �� " :.' � � � �� , �° � � : �;�1(1,353 � : Pre a�d�ex enseg and other current aesets � � ��_501 ��= " �� 5 � � � �" � � � �. -, ,.�.. ,. p P. �._ 20 � 4 � Total current assets � 3,689 124,788 18,379 - �� 146,856 Ei�uipinent and fxtures, net ; !. ; 88 28,100 - 13;4�6 ; 41,634 , r ;. ; . � Deferred income taxes - 886 1,812 - 2,698 Irivestirierit�in� Subsidiary , � � .� I28a635 � � � 12,479 "�� 27 �. (141,1�}1) �°� - Goodwill � � � � � - ,686 � - � - � �� 47 686 47 , Intangible, assets, i�et �� - 81,788 1,531 ; - �� 83,31� � er assets - 3,594 � 4,158 � -� � 7,752 ` �� Total ��assets , ` : � ,.. , _ . ; � �� -� � � � �� $132,`412 ? $299,321 � ' $ 39,353 ;. � $�141;141 � . $329,945; � Liabilities and Stockholders' Equity Cuirent liabilities: , , , �. > . � � P Y 1 084 4 495 3 479 - 9 058 Accounts a able � � � �� `� ��`�� , , , , Accrued employee compensation and beneftts (25) 17,768 22,592 - 40,335 �, �. � , �� ; Other accrued expenses 563 8,809 6,178 - 15,550� � � . „, Income taxes payable .� "" �33) �� ° I,903 . 1,879 ` - ' 3,44� �.. _ _ _ � , � . � „e Current portion of long-term debt - 2,614 - - 2,614 Infercompaiiy Payable (Receivabfe)' (25�80Q) 44,583 . ! (18,7&3) - - �. .: � �. �� Current portion of capital lease obligations - 2,128 132 - 2,260 ` (3th�rl�abilirie`s - 4,$24 � 1`,3i�2 . - �;: 6,126 „_�� . Total current habilities (24,511) � 87,124 � 16,779 -� � 79,392 � Long terin debY, net of current portion - 63,b24 - - 63,624 Capital lease obligations, net of current portion � - � J 4,332 � 1,152 �� -� � 5,484 Defeir'ed incrnne faxes " - 17,396. - - �'�� 17,396 � _�,. _ �� r . � � ,: .. , >� : __ . Other long-term liabilities - 13 731 2 656 - 16 387 , > , � � ` Tota1 ]tabil�ties � � (24,311) 18b,207 i 20,587 � � - � 82,283'�� Convertible Series A Preferred Stock 145,911 v - - - 145,9ll Total sfiareliolders' equit�'(deficit� 11_,012 ° 113,11� ' 1$,766 � {141,141 : 1,751: q ty $132,412 $299,321 $ 39,353 $(141,141) $329,945 Total liabilities and stockholders' e ui 91 le of ntents Condensed Statements of Cash Fiows For the year ended December 31, 2009 http://wwwsec.gov/Archives/edgar/data/1405287/000119312510052721/dl Ok.htm�5/17/2012 9:53;24 AMl Form 10-K Non- Guarantor Guarantor Parent subsidiaries subsidiaries Elimination Total Cash Flows froiri operating activi�ies: �' � '� . �� _ �: �� Net income (28,573) (24,889) 5,965 18,924 (28,573 Undistributed equity in earnings of subsidiaries 18,924 . - (18,924) ,'; - Adjustments to reconcile net income to cash provided by (used in) operating activities, net (4,362 15,135 (7,387 - 3,386 IVet cash provided by (used in) operating activities (14,Q11 (9,754 (1,422 (25,187 __ _ Cash Flows from investing activities: Acquisition of businesses, net of cash acquired - 182 33,21$ - 33,40Q '; Investment in Subsidiary �� (80,721) � 79,221 1,500 - Additions to equipment and fixtures, net - (9,223) (12,841) (22,064) Other, net � - - - - - Net cash provided by (used in) investing aetivities�� 180,721) �- 70,18o- 21,&77 � �.11,336 �� Cash Flows from financing activities: Net borro�%ings (r�payments) on line of credit �15,501 �� (59,425) - (43,924)'� � Net boXrowmgs (repayments) on long term �� ' debt 190,908 (6,577) (120,203) - 64,128 ;-. Net borrowings �repayments) on capital leases - (1,255) (929) - (2,184) � � Net Intercom an �� 109 967) � 3 845 106 1 p y . , . __ � , 22 - - Proeeeds from exercise of uvarrants� 788 �� - - �� 78� '�, Pr ,.� �� sr - � _ _ oceeds from issuance of common stock related to pre-emptive rights and stock options 1,921 - - - 1,921 Re'-purchase of warrants �; ��(7,373) �� - _ - - (7,373) �, Repurchases of common �tock (10 - - - (10 � � �� Net cash pro�ided by financing activities 91,768 ��' �� (63,412) (15,010) � - � �13,34� Effect of exchange rates on cash and cash equivalents - 3,505 1,268 - 4,773 - Net increase (decrease) 'in`cash and cash equivalents (2,964 ', 519 6,713 - ', 4,268 ' Cash and cash equivalents, beginning of period 3,090 2,676 4,894 - 10,660 �ash and cash equivalents, end of period $' 126 $ 3,195 $ 11,607 $ - $ 14,928 , 92 Table of Contents Condensed Statements of Cash Flows For the year ended December 31, 2008 Non- Guarantor Guarantor Parent subsidiaries subsidiaries Elimination Total Gash Flows from operating activities: � Net income � $� 796 $ (5,703) $ 4,629 $ 1,074 � $ � 796 � Undistributed equity in earriings of subsidiaries 1,074 , - (1,Q74) ; - Adjustments to reconcile net income to cash provided by (used in) operating activities, net (5,520 (11,377 1,535 - (15,362 Net cash provided by (used in) operating , activities ` ! (3,650 (17,080 6,164 - (14,566 Cash Flows from investing activities: Decrease in restricted cash ' 246,300 - 104 - 246,404 " Acquisition of businesses, net of cash acquired (123,415) 9,480 7,804 (106,13�� Addifions to equipinent and �xtures, net ; (75) (6,22i) (2,832) - (9,12b, , Other, net � - � � - � - - - Net cash provided by (used in) 'investing http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/dlOk.htm[5/17/2012 9:53:24 AM] Form 10-K �. � activiries � 122,$1Q 3,2$9 , � .�.`,. . S,t176 — �;31,145 �' � Cash Flows from financing activities: Net borrowings (repayments� on lirie of credit — ($,236� — — '($,236�;' Netborrowings (repayments) on long term debt —� (1,081) � — — (1,081) ; Net borrbwings (repaymenfs� on capital leases — (1,169) (131} . — ' (1,30Q)'�! NetIntercompany � � (25,800) 31,498 (5,698) �� — �" � � �'roceeds from issnance of Pxeferxed Stock ;,, ' 145,217 — — ;; 145,217 ` , ;.�, . � � � , � _ _ ;_. Repurchases of common stock (236,648 — — � � — � (236,648 Effect of exchan � e rates on cash a � Net cash rovic�ed b;: fwancin q ctivities 117,231 ` 2�,012 ;". (5,829} , , (102,Q48) P . � � g � �) . .. g nd cash e uivalents (, 5 ) (517 — (5,032 �� Net mcrease (decrease) in cash and cash equivalents . I,929 2,676 4;894 — i 9,499 ; Cash and cash equivalenfs, begimm�g of period � 1,161 � — � — � — �� 1,161 � Cash arid cash equivalents, end ofpea ;' ; ^! $'' 3,090 $ 2,676 $ 4,894 . ' $ - `= '' ....' 10,660 : 93 Table of Contents Condensed Statements of Cash Flows For the year ended December 31, 2007 Non- Guarantor Guarantor � � . . a . : . Parent subsidiaries subsidiaries Elimination Total Cash Flows fxom operating activities: !. ' ` � �. � . - � , , �� .:. Net income � � $ 1,117 $ — $ — $ $ � 1,117 � ' Undistributed equzty in earnings �f subsidiaries ' ` ` ,_ _ .,.._ — � —. �� d .;� i Adjustments to reconcile net income to cash provided by (used in) operating activities, net (1,371 — — — (1,371 .. , � � �,_� � � � � ; - Net cash provided by �;(used inj operating � � � � �� ` � � � � � acrivities (254 — — — ; (254 Cash Flows from investing activities Cash contri�iuted to hust ac,count (246,3001 - ' - — (246,300) ' Additions to e ui ment and fixtures, net ( 9) — — � — �� (29) � q P 2 Withdrawal � from triist account for �vQrldng ;� capital �urposes �including taxes) ' 1,206 — � �1,206 '�� (245,123) — — = (245,123) �' Cash Flo�vs froin financing activities: . . � � . � �� : � � �. ; � ., . _ � � , � . v , . � Proceeds from issuance of common stock to founding stockholders 50 — — — 50 �,' Praceeds from notes payable to"stockholders 200 ° --- ' '--- ;: � � < > .:� � � -!,� �: ,; - 204 �'� Repayments of notes payable to stockholders (200) — — — (200) Proceeds �rom issuance of warrants to founding stockholders 7,500 — „7,500 _ , ._ � -� � � � . - � _,: . � _ _ �� . ' Portion of net proceeds from sale of units through ' public offering allocable to shares of common stock subject to possible conversion 73,875 — —' — 73,875 Re-purchase of common shares from founding stockholders ., .. '�� ) � — — ° ; � ��' Net proceeds from sales of units � � 165,120 � — — �— � 165,120 � ' Net cash provide''d by fmancing activities 246;538 ' — — 246,538 : _ Effect of exchange rates on cash and cash � �� equivalents _ _ _ _ _ mcrease (decrease) in cash`and eash equivalenfs 1,161 ' 1,161 .. _ , � � � , � �� .. sh and cash equivalents, beginning of period — — — — _ Cash and cash equivalents, end o£period� f � � $ '�� 1,161 ' '. .�. . —� '�� $ — $ $ � 1,16� '�� http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htmf5/17/2012 9:53:24 AMl Form 10-K ' 94 __ _ Table of Contents • Note 1$—Quarterly Results of Operations (Unaudited) ' SGS quarterly operating results were as follows 2009 2008 First Second Third Fourth First Second Third Fourth Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter Revenue , $��135,614;:. $125,67Q $121,875 $201,610 - $ — $ = � 81,53'7 $129,836 �- Gross profit 57,001 52,265 49,306 84,004 — — 31,008 52,087 Operaring income (l,oss) 6,834 . 3,136 (3,059) (12,456) ' (267) (287) . 1,371 4,412 Net income (loss) attributable to common stockholders $ 180 $ (4,726) $ (9,358) $(79,084) $1,172 $ 403 $(51,232) $ (1,505) Net income (loss) attributable to common stockholders �ier share: Basic and diluted $ 0.02 $ (0.50) $ (0.99) $ (099) ; $ 0.04 $ 0.01 ,. ., $ (2.12) ; $ (0.16� , SHC quarterly operating results were as follows: 2oos First Second Third Fourth Quarter Quarter Quarter * Quarter 3�e�enue�� $��'140,372 $ 128,714 �� $ 42,999 . $ — � � Gross profit � �� 46,461 �45,127 � 14,821 — � Operatirigincome(loss) ` m ' 3,71E? � 1,599 �� (1Z,042) � — Netincome (loss) $ (2,004) $ � (4,172) $ (19,197) $ — *—represents the one month ended July 31, 2008 � 95 � !� Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WTTH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES (a) Disclosure Controls and Procedures Our Chief Executive Officer, R: Scott Murray, and our Chief Financial Officer, Dennis Lacey, (our principal executive officer and principal financial officer, respectively) have concluded that our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d- 15(e)) were effective as of December 31, 2009, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by Stream in such reports is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable asswances of achieving the desired control objectives, and management necessarily was required to apply its judgment in designing and evaluating the controls and procedures. On an on-going basis, we review and document our disclosure controls and procedures, and our intemal control over fmancial reporting and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business. (b) Management's Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over fmancial reporting as defined in Rule 13a- �,� 15( fl and 15d-15( fl of the Exchange Act. Because of its inherent limitations, intemal control over fmancial reporting may not prevent or detect all errors or fraud. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:5324 AM] Form 10-K We assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2009. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control � Integrated Framework. Based on our assessment using those criteria, we concluded and hereby report that our internal control over financial orting was effective as of December 31, 2009. Management reviewed its assessment of our internal control over financial reporting with our Audit Committee of the Board of Directors. Management's report on internal control over financial reporting contained in this paragraph (b) of Item 9A shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing by us under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing. This Annual Report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered pubiic accounting firm pursuant to temporary rules "of the Securities and Exchange Commission that permit the Company to provide only management's report in this Annual Report. (c) Changes in Internal Control over Financial Reporting There were no changes in our internal control over fmancial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 of the Exchange Act that occurred during the period covered by this Annual Report that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 96 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by this item is incorporated herein by reference to the information contained in a defuutive proxy statement for our 0 annual meeting of stockholders (the "Proxy Statement") to be pursuant to Regulation 14A with the Securities and Exchange Commission not er than 120 days after our fiscal year end of December 31, 2009. ITEM ll. EXECUTIVE COMPENSATION The information required by this item is incorporated herein by reference to the information contained in the Proxy Statement to be filed not later than 120 days after our fiscal year end of December 31, 2009. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by.this item is incorporated herein by reference to the information contained in the Proxy Statement, to be filed not later than 120 days after our fiscal year end of December 31, 2009. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this item is incorporated herein by reference to the information contained in the Proxy Statement, to be filed not later than 120 days after our fiscal year end of December 31, 2009. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this item is incorporated herein by reference to the information contained in the Proxy Statement, to be filed not later than 120 days after our fiscal year end of December 31, 2009. 97 �ble of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.hhn(5/17/2012 9:53:24 AM] Form 10-K Documents filed as a part of this Report: 1. Financial Statements. We are filing our Consolidated Financial Statements as part of this Report, which include: Consolidated Balance Sheets as of December 31, 2009 and 2008 Consolidated Statements of Operations for the years ended December 31, 2009 and 2008 and the period of inception to December 31, 2007, and for the year ended December 31, 2007 and the seven months ended July 31, 2008 for Predecessor ("SHC") Consolidated Statements of Stockholders' Equity for the years ended December 31, 2009 and 2008 and the period of inception to December 31, 2007 Consolidated Statements of Cash Flows far the years ended December 31, 2009 and 2008 and the period of inception to December 31, 2007, and for the year ended December 31, 2007 and the seven months ended July 31, 2008 far the Predecessor ("SHC") Notes to Consolidated Financial Statements 2. Financial Statement Scheda�le. No financial statement schedules are provided as all required information is included in the consolidated financial statements. 3. Exhibits. We are filing as part of this Report the E�ibits listed in the E�chibit Index following the signature page to this Report. 98 Table of Contents SIGNATURES PursuanY to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. STREAM GLOBAL SERVICES, INC. March 10, 2010 By: /s/ R. Scott Murray �� R Scott Murray Chairman, Chief Executive Officer and President (Principal Executive Officer) March 10, 2010 By: /s/ Dennis Lacey Dennis Lacey Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ R. Scott Murray Chairman of the Board of Directors, Chief Executive March 10, 2010 x. scon M�rray Officer and President /s/ G. Drew Conway Director March 10, 2010 G.Drew Conway /s/ Paul G. Joubert Director March 10, 2010 Paul G. Joobert /s/ Julie G. Richardson Directar March 10, 2010 3ulie G. Richardson /s/ David B. Kaplan Director March 10, 2010 David B. Kaplan • i /s/ Alfredo I. Ayala Director March 10, 2010 Alfredo I. Ayala http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm[5/17/2012 9:53:24 AM] Form 10-K /s/ Gerardo C. Ablaza, Jr. Director March 10, 2010 Gerardo C. Ablaza, Jn � Director Kevin T. O'Leary /s/ Jeffrey B. Schwartz Director March 10, 2010 Jeffrey B. Schwartz /s1 R. Davis Noell Directar March 10, 2010 R Davis Noell � � � /s/ Nathan Walton Director March 10, 2010 Nathan Walton 99 Table of Contents EXHIBIT INDEX Exhibit No. Descriptiou 2.1 Amended and Restated Agreement and PIan of Merger, dated as of June 2, 2008, among the Registrant, River Acquisition Subsidiary Corp. and Stream Holdings Corporation (filed as E�ibit 2.1 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on June 5, 200$ and incorporated herein by reference). 2.2 Share Exchange Agreement, dated as of August 14, 2009, among the Registrant, EGS Corp., EGS Dutchco B.V. and NewBridge International Investment Ltd., (filed as Exhibit 2.1 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 20, 2009 and incorporated herein by reference). �� Third Amended and Restated Certif cate of IncorporaYion, filed with the Secretary of State of the State of Delaware on July 31, 2008 (filed as E�ibit 3.1 to the Registrant's Current Report on Form S-K (File No. 001-33739), filed with the SEC on August 6, 2008 and incorporated herein by reference). 3.2 Certificata of Amendment to Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on September 29, 2009 (filed as Exhibit 3.1 to the Registrant's Current Report on Form 8-K (File No. 001-33739), filed with the SEC on October 5, 2009 and incorporated herein by reference). 3.3 Certificate of Amendment to Certificate of Incorparation, filed with the Secretary of Sfate of the State of Delaware on September 29, 2009 (filed as E�ibit 3.2 to the Registrant's Current Report on Form 8-K (File No. 001-33739), filed with the SEC on October 5, 2009 and incorporated herein by reference). 3.4 By-Laws of the Registrant (filed as E�ibit 3.2 to the RegistranYs Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 20, 2009 and incorporated herein by reference). 41 Specimen common stock certificate (filed as Exhibit 4.2 to the Registrant's Current Report on Form 8-K (File No. 001- 33739), as filed with the SEC on August 6, 2008 and incorporated herein by reference). 42 Specimen unit certificate (filed as E�ibit 4.1 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 6, 2008 and incorporated herein by reference). 43 Specimen warrant certificate (filed as Exhibit 43 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 6, 2008 and incorporated herein by reference). 4.4 Form of Warrant Agreement between the Registrant and Continental Stock Transfer & Trust Company (filed as Exhibit 4.5 to the RegistranY s Registration Statement on Form S-1 (File No. 333- 144447), effective as of Oetober 17, 2007 and incorporated herein by reference), 4.5 Amended and Restated Registration Rights Agreement, dated as of August 14, 2009, among the Registrant, Ares Corporate Opportunities Fund II, L.P., NewBridge Intemational Investment Ltd., EGS Dutchco B.V., Mr. R. Scott Murray, and certain • stockholders of the Registrant (filed as Exhibit 4.2 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 20, 2009 and incorporated herein by reference). 4.6 Indenture, dated as af October 1, 2009, among the Registrant, the Guarantors named therein and Wells Fargo Bank, National Association, as Trustee, governing'the 11.25% Senior Secured Notes due 2014, including the form of 11.25% Senior http://www.sec.�ov/Archives/ed�ar/data/1405287/000119312510052721/d10k.htmf5/17/2012 9:53:24 AMl Form 10-K Secured Notes due 2014 (filed as E�ibit 41 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on October 5, 2009 and incorQorated herein by reference). 100 • Table of Contents Exhibit No. Description 4.7 Exchange and Registration Rights Agreement, dated as of October 1, 2009, among the Registrant, the Guarantors listed on the signature pages thereto and the Purchasers named therein (filed as Exhibit 4.2 to the Registrant's Current Report on Form 8-K (File No. 001-33-739), as filed with the SEC on October 5, 2009 and incorporated herein by reference). 4.8 Security Agreement, dated as of October 1, 2009, among the Registrant, the other Guarantors listed on the signature pages thereto and Wells Fargo Foothill, LLC (filed as Exhibit 4.3 to the Registrant's Current Report on Form 8-K (File No. 001- 33739), as filed with the SEC on October 5, 2009 and incorporated herein by reference). 4.9 Security Agreement, dated as of October 1, 2009, among the Registrant, the other Guarantors listed on the signature pages thereto and Wilmington Trust FSB (filed as Eachibit 4.4 to the Registrant's Current Report on Form 8-K (File No. 001- 33739), as filed with the SEC on October 5, 2009 and incorporated herein by reference). 4.10 Collateral Trust Agreement, dated as of October 1, 2009, among the Registrant, the Guarantors from time to time pariy thereto, Wells Fargo Bank, National Association, as Trustee, the other Secured Debt Representatives from time to time party thereto and Wilmington Trust FSB (filed as Exhibit 4.5 to the Registrant's Current Report on Form 8=� {�e]e No. 001- 33739), as filed with the SEC on October 5, 2009 and incorporated herein by reference). 4.11 Lien Subardination and Intercreditor Agreement, dated as of October 1, 2009, among the Registrant, the subsidiaries of the Registrant listed on the signature pages thereto, Wells Fargo Foothill, LLC and Wilmington Trust FSB (filed as E�ibit 4.6 to the Registrant's Current Repork on Form 8-K (File No. 001-33739}, as filed with the SEC on October 5, 2009 and incorporated herein by reference). 412 Letter Agreement, dated as of August 14, 2009, between the Registrant and Ares Corporate Opportunities Fund II, L.P. ,� (filed as E�ibit 43 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 20, 2009 and incorporated herein by reference). 10.1 Description of the Registrant's 2010 management incentive plan (reported in the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on February 3, 2010 and incorporated herein by reference). 10.2* Description of the Registrant's 2009 management incentive plan (reported in the Registrant's Current Report on Form 8-K (File No. 001-33739}, as filed with the SEC on December 23, 2008 and incorporated herein by reference). 10.3* Employment Agreement between the Registrant and R. Scott Murray, dated July 15, 2008 (filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on July 17, 2008 and incorporated herein by reference). 10.4* Letter Amendment to Employment Agreement between the Registrant and R. Scott Murray dated December 29, 2008 (filed as E�ibit 10.4 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001- 33739), as filed with the SEC on March 17, 2009 and incorporated herein by reference). 10.5* Letter Amendment to Employment Agreement between the Registrant and R. Scott Murray, dated May 6, 2009 (filed as E�ibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 (File No. 001-33739), as filed with the SEC on August 5, 2009 and incorporated herein by reference). 10.6� Letter Amendment to Employment Agreement between the Registrant and R. Scott Murray, dated November 10, 2009 (filed as Exhibit 10.2 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on November 13, 2009 and incorporated herein by reference). 101 Table of Contents l • Exhibit No. Description 10.7* Employment Agreement between the Registrant and Robert Dechant, dated August 7, 2008 (filed as Exhibit 10.5 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-33739), as filed with the SEC http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/dlOk.htm[5/17/2012 9:53:24 AM] Form 10-K - on Nlarch 17, 2009 and incorporated herein by reference). 10.8* Letter Amendment to Employment Agreement between the Registrant and Robert Dechant, dated December 29, 2008 (filed � as Exhibit 10.6 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001- 33739}, as filed with the SEC on March 17, 2009 and incorporated herein by reference). Description of the Registrant's 2009 management incentive plan (reported in the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on December 23, 2008 and incorparated herein by reference). 10.9* Letter Amendment to Employment Agreement between the Registrant and Robert Dechant, dated May 6, 2009 (filed as Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 (File No. 001-33739), as filed with the SEC on August 5, 2009 and incorporated herein by reference). 1010* Letter Amendment to Employment Ageement between the Registrant and Robert Dechant, dated November 9, 2009 (filed as E�ibit 10.4 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on November 13, 2009 and incorporated herein by reference). 10.11 * Employment Agreement between the Registrant and Stephen C. Farrell, dated October 14, 2008 (filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K (File No, 001-33739), as filed with the SEC on October 15, 2008 and incorparated herein by reference). 10.12* Letter Amendment to Employment Agreement between the Registrant and Stephen C. Farrell, dated December 29, 2008 (filed as E�ibit 10.8 to the Registrant's Annual Report on Form 10-K far the year ended December 31, 2008 (File No. 001- 33739), as filed with the SEC on March 17, 2009 and incorporated herein by reference). 10.13* Employment Agreement between the Registrant and Sheila M. Flaherty, dated July 16, 2008 (filed as Exhibit 10.2 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on July 17, 2008 and incorporated herein by reference). 10.14* Letter Amendment to Employment Agreement between the Registrant and Sheila M. Flaherty, dated December 29, 2008 (filed as E�ibit 10.10 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001- 33739), as filed with the SEC on March 17, 2009 and incorporated herein by reference). � .15* Letter Amendment to Employment Agreement between the Registrant and Sheila M. Flaherty, dated May 6, 2009 (filed as Exhibit 103 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 (File No. 001-33739), as filed with the SEC on August 5, 2009 and incorporated herein by reference). 10.16* Letter Amendment to Employment Agreement between the Registrant and Sheila M. Flaherty, dated November 9, 2009 (filed as Exhibit 103 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on November 13, 2009 and incorparated herein by reference). 10.17* Employment Agreement between the Registrant and Dennis Lacey, dated December 15, 2009 (filed as E�ibit 101 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on December 21, 2009 and incorparated herein by reference). 10.18* 2008 Stock Incentive Plan (filed as Annex D to the Registrant's Definitive Proxy Statement,.as filed with the SEC on July 7, 2008 and incorporated herein by reference). 102 Table nf Contents Exhibit No. Description 10.19* Form of Incentive Stock Option Agreement under the 2008 Stock Incentive Plan (filed as Eachibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 (File No. 001-33739); as filed with the SEC on November 6, 2009 and incorporated herein by reference). 10.20* Form of Non-Statutory Stock Option Agreement under the 2008 Stock Incentive Plan (filed as Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 (File No. 001-33739), as filed with the SEC on November 6, 2009 and incorporated fierein by reference). � 1* Form of Restricted Stock Agreement under the 2008 Stock Incentive Plan (filed as Bxhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 (File No. 001-33739), as filed with the SEC on November 6, 2009 and incorporated herein by reference). 10.22* Form of Restricted Stock Unit Agreement under the 2008 Stock Incentive Plan (filed as Exhibit 10.4 to the Registrant's http://www.sec.gov/Archives/edgar/data/1405287/000119312510052721/d10k.htm�5/17/2012 9:53:24 AMl Form 10-K Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 4, 2008 and incorporated herein by reference). 10.23* Option Agreement between the Registrant and R. Scott Murray, dated as of November 10, 2009 (filed as Exhibit 10.1 to the � Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on November 13, 2009). 10.24 Form of Management Rights Letter (filed as E�ibit 10.5 to the Registrant's Current Report on Form 8-K (File No. 0(�1- 33739), as filed with the SEC on June 5, 2008 and incorporated herein by reference). 10.25 Preferred Stock Purchase Agreement between the Registrant and Ares Corporate Opportunities Fund II, L.P., dated as of June 2, 2008 (filed as E�ibit 10.1 to the Registrant's Current Report on Form 8-K (File No 001-33739), as filed with the SEC on June 5, 2008 and incorporated herein by reference). 10.26 Amendment No. 2 to Preferred Stock Purchase Agreement between the Registrant and Ares Corporate Opportunities Fund II, L.P., dated as of July 17, 2008 (filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K File No. 001-33739), as filed with the SEC on July 22, 2008 and incorparated herein by reference). 10.27 Stockholders Agreement, dated as of October 1, 2009, among the Registrant, Ares Corporate Opportunities Fund II, L.P., EGS Dutchco B.V., NewBridge International Investment Ltd., R. Scott Murray and Trillium Capital LLC. (filed as E�ibit 10.2 to the Registrant's Cunent Report on Form 8-K (File No. 001-33739), as filed with the SEC on October 5, 2009 and incorporated herein by reference). 10.28 Form of Indemnification Agreement entered into between the Registrant and its directors and officers (filed as E�ibit 10.1 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 12, 2008 and incorporated herein by reference). 10.29 Credit Agreement, dated as of October 1, 2009, among Wells Fargo Foothill, LLC, Goldman Sachs Lending Partners LLC, and each of the other Lenders party thereto, the Registrant and its subsidiaries identified therein (filed as Eachibit 10.1 to the Registrant's Current Report on Fornn 8-K (File No. 001-33739), as filed with the SEC on October 5, 2009 and incorporated herein by reference). 12.1 # Statement of Computation of Ratio of Earnings to Fixed Charges. 14.1 Code of Business Conduct and Ethics (filed as Exhibit 14.1 to the Registrant's Current Report on Form 8-K (File No. 001- 33739), as filed with the SEC on September 26, 2008 and incorparated herein by reference). �• 21.1# Subsidiaries of the Registrant. 23.1# Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm. 103 �able of Contents Exhibit No. Description 23.2# Consent of BDO Seidman LLP, Independent Registered Public Accounting Firm. 31.1# Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule 13(a)- 14(a)/15d-14(a), by Chief Executive Officer (principal executive officer). 31.2# Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule 13(a)-14(a)/15d-14(a), by Chief Financial Officer (principal financial officer). 32.1# Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Executive Officer (principal executive officer). 32.2# Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Financial Officer (principal financial officer). * Management contracts or compensatory plans or anangements required to be filed as an exhibit hereto pursuant to Item 15(a) of Form 10-K. # Filed herewith. 104 . http:((www.sec.gov/Archives(edgar(data/1405287l0001193125100527211d10k.htm[5/17/2012 9:5324 AM] Form 10-K Page 1 of 79 10-K 1 dlOk.htm FORM 10-K • Tab1e of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) � ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2010. OR ❑ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number: 001-33739 �TREAM GLOBAL SERVICES, INC. (Exact name of registrant as specified in its charter) . - Delaware 26-0420454 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer ldentiScation No.) 20 William Street, Suite 310 Wellesley, Massachusetts 02481 (AddresS af Prmc�pal Executive Offices) (Zip Code) (781) 304-1800 (RegistranYs Telephone Number, Including Area Code) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered Umts NYSE Amex Common Stock, $0.001 Par Value NYSE Amex Warrants NYSE Amex Securities registered pursuant to Section 12(g) of the AcT. None Title of Class Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No X - Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section I S(d) of the Act. Yes No X Indicate by check mark whether fhe registrant (1) has filed ail reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No � Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registranYs knowledge, in definitive proay or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ❑ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of `9arge accelerated filer," `accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large Accelerated Filer ❑ Accelerated Filer ❑ Non-accelerated Filer ❑ Smalier reporting company ❑O (Do not check if a smal(er reporting company) ml-,tml•f;lo•//�7•\�'..,,„„„.,;,. Tlo�, D«,,;�,.+.,�c+..,.,..,,, T...�,....,.,.+:.......11a.�:��_�_._ 7�____�_�_�..r.__�a cinni�n�n Form 10-K Page 2 of 79 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X The aggregate market value of the voting and non-voting common equity he(d by non-affiliates of the registrant was approximately $25,159,120 based on the last E reported sale price of the registranYs Common Stock on the NYSE Amex on June 3Q 2010, which was the last business day of the registranYs most recently completed second fiscai quarter. There were 80,486,895 shares of ihe RegistranYs common stock, $0.001 par value per share, issued and outstanding as of February 25, 20ll . DOCUMENTS INCORPORATED BY REFERENCE Portions of the registranYs definitive pro�cy statement for its 2011 annual meeting of stockholders, which the registrant intends to file pursuant to Regulation 14A with the Securities and Exchange Commission not later than 120 days after the registranYs fiscal year end of December 31, 2010, aze incorporated herein by reference. � � �� k, � ml�lml•fln•//�T•�Frnnnmir �P\7 Prniarte\Ctraam Tntarnatinnal\MinnPenta IY1VPCtmf�nf 1'��n� ]l!-�1/l_Il� l Form 10-K Page 3 of 79 � ' Tabie of Conte�ts TABLE OF CONTENTS rage PART I. Item 1. Business 4 � Item 1A. Risk Faetors �� 10 � � Item 1B. Unresalved Staff Comments 26 Item 2. Properties 26 Item 3. Le��al Prnceedin�s 26 Item 4. Reserved 26 PART IL Item 5. Market for Re;;isfirant's Co�nman Equitv, Retated Stockhalder Matters and Issuer Purcl�ases of Ec�uitv Securities 27 Item 6. Seiected Fi��ancial Data 28 Item 7. 1Vlananen�ent's Disc;assion and �nalvsis of Financial Candition anc� Results c�f C3�rerations 29 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 37 Item 8. Financial Statements and S�.�pplementarv Dara 39 Consolidated Balance Sheets as af December 31 �Ol 0 and 2009 40 Cansalidated Statements ot Operatic�us for the vears ended Decetnber 31 �OI O a��d 2009 41 Consalidated Stateme�its of Stockholders' Equit�� for #he years ended Dece�nber 31 ?Ol 0 and ?009 42 Consolidated Statements af Cash Flows for the vears ended December 3 t 2010 and ?009 43 Notes to Consalidated Financial Statements 44 Item 9. Chan�es in ancl Disa�.reements ��ith Accountants c�n Accountin� and Financial Disclosure 70 Item 9A. Cantrols and Procedures �p • PART III. Item 10. Directc�rs. Fxecutive Officers and Cot�ocate Governance 71 Item 11. Executive Conl�ensation 71 Item 12. Security dwnership of Certain Beneficial Owners at�d Mana�ement and Related Stockholder Matters 71 Item 13. Certain Relationships and Related Tr�nsactians. and Director Independence 71 Item 14. Principal Accc�ut�tant Fees and Services '71 PART IV. Item 15. �xhibits and Financial Statement Sclledules 72 SIGNf1TURES 73 Stream is a registered trademark of Stream Global Services, Inc. 2 . mhtml•fila•//�T•\T-ii.nn�min nois pr�nin�.4c.�C4.�o.�rr� T..4o... T«�,....+....,.,..+L`„« c��nt�n�� Form 10-K Page 4 of 79 , Tabte t��Cantents �, CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "could," "would," "expect," "intend," "plan," "target," "goal," "anticipate," "believe," "estimate," "continue," or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in Item lA, "Risk Factors," of this report and in our other filings with the Securities and Exchange Commission ("SEC"). Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the SEC, we explicitly disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise to reflect actual results or changes in factors ar assumptions affecting such forward- looking statements. You are advised, however, to consult any further disclosure we make in our reports filed with the SEC. 3 �. • � �� ml�tml•fila•//�T TIP�, Prn;artc\Ctraam Tnternatinnal\MinnPCnta Tnve�tmentFund ___ 5/29/2012 Form 10-K Page 5 of 79 ` T��i� c�f Conte�#s PARTI ITEM 1. BUSINESS Overview Stream Global Services, Inc. ("we", "us", "Stream", or "SGS") is a corporation organized under the laws of the State of Delaware. We were incorporated on June 26, 2007 as a blank check company for the purpose of acquiring, through a merger, capital stock exchange, asset or stock acquisition, exchangeable share transaction or other similar business combination, one or more domestic or international operating businesses. We consummated our initial public offering in October 2007, receiving total gross proceeds of $250 million, and in July 2008, we acquired Stream Holdings Corporation far $128 million (which reflected the $200 million purchase price less assumed indebtedness, transaction fees, employee transaction related, restructzu�ing and severance expenses, bonuses, professional fees, stock option payments and payments for working capital). In October 2009, pursuant to a Share Exchange Ageement, dated as of August 14, 2009 ("the Exchange Agreement"), amongStream, EGS Corp., a Philippine corporation ("EGS"), the parent company of eTelecare Global Solutions, Inc., a Philippine company ("eTelecare"), EGS Dutchco B. V., a corporation organized under the laws of the Netherlands ("Dutchco"), and NewBridge International Investment Ltd., a British Virgin Islands company ("NewBridge" and, together with Dutchco, the "EGS Stockholders"), we acquired EGS in a stock-for-stock exchange (the "Combination"). At the closing of the Combination (the "Closing"), we acquired all of the issued and outstanding capital stock of EGS (the `BGS Shares") from the EGS Stockholders, and NewBridge and/or its affiliate contributed, and we accepted, the rights of such transferor with respect to approximately $35.8 million in principal under a bridge loan of EGS (the `Bridge Loan") in consideration for the issuance and delivery of an aggregate of 23,851,561 shares of our common stock and 9,800,000 shares of our non-voting common stock, and the payment of $9,990 in cash. Subsequent to the Closing, all of the 9,800,000 shares of non-voting common stock held by the EGS Stockholders were converted into shares of our voting common stock on a one-for-one basis. As of the Closing, the pre-Combination Stream stockholders and the EGS Stockholders owned approximately 57.5% and • 42.5%, respectively, of the combined entity. Immediately prior to the Closing, pursuant to a letter agreement, dated as of August 14, 2009, between Stream and Ares Corporate Opportunities Fund II, L.P. ("Ares"), all of the issued and outstanding shares of our Series A Convertible Preferred Stock, $.001 par value per share ("Series A Preferred Stock"), and Series B Convertible Preferred Stock, $.001 par value per share ("Series B Preferred Stock"), all of which were held by Ares, were converted into 35,085,134 shares of our common stock. The Series A Prefened Stock and Series B Preferred Stock were subsequently cancelled. In addition, we purchased from Ares a warrant to purchase 7,500,000 shares of our common stock in consideration of the issuance to Ares of 1,000,000 shares of our common stock. Also in October 2009, pursuant to an indenture, dated as of October 1, 2009, among Stream, certain of our subsidiaries (the "Note Guarantors") and Wells Fargo Bank, National Association ("Wells Fargo"), as trustee, we issued $200 million aggregate principal amount of 11.25% Senior Secured Notes due 2014 (the "Notes") at an initial offering price of 95.454% of the principal amount. In addition, we and certain of our subsidiaries entered into a credit agreement, dated as of October 1, 2009 (the "Credit Agreement"), with Wells Fargo Foothill, LLC, as agent and co-arranger, and Goldman Sachs Lending Partners LLC, as co-arranger, and each of the lenders party thereto, as lenders, providing for revolving credit financing (the "ABL Facility") of up to $100 million, including a$20 million sub-limit for letters of credit. The ABL Facility has a term of four years at an interest rate of Wells Fargo's base rate plus 375 basis points or LIBOR plus 400 basis points at our discretion. We used the proceeds from the offering of the Notes, together with approximately $26.0 million of cash on hand, to repay all outstanding indebtedness under the Fifth Amended and Restated Revolving Credit, Term Loan and Security Agreement, dated as of January 8, 2009, as amended, with PNC Bank, National Association and other parties thereto, the Bridge Loan, and to pay fees and expenses incurred in connection with the Combination, the Note offering and the ABL Facility. 4 � mhtml•fila•//N•\T.rnnn Tlo.� Dr.,;o..��\C�«o.,,,., T,..��....,,,+;,,„„ 1\Tif:......,.,.._a.. T.__.,,,.a.,._.,�a r.___a ci�ni�n�� Form 10-K Page 6 of 79 Tab1e af Cante��ts � � Our Business We are a leading global business process outsourcing (`BPO") service provider specializing in customer relationship management ("CRM"), including sales, customer care and technical support for Fortune 1000 companies. Our clients include leading computing/hardware, telecommunications/service providers, software/networking, entertainment/media, retail, travel, healthcare and financial services companies. Our service programs are delivered through a set of standardized best practices and sophisticated technologies by a highly skilled multilingual workforce with the ability to support 35 languages across 50 locations in 22 countries. We continue to expand our global presence and service offerings to increase revenue, improve operational efficiencies and drive brand loyalty for our clients. We seek to establish long-term, strategic relationships with our clients by delivering high-value solutions that help improve our clients' revenue generation, reduce operating costs, and improve customer satisfaction. To achieve these objectives, we work closely with our clients in order to understand what drives their economic value, and then implement processes and performance metrics to optimize results for our clients. The success of our differentiated client value proposition is demonstrated, in part, by the tenure of our elient relationships. Several of our top clients have been with us for over a decade and the average duration of our relationship with our top ten clients by revenue is approximately eight years. Our clients include leading computing and hardware companies, such as our two largest clients, Dell Inc. and the Hewlett-Packard Company, which accounted for approximately 16% and 12%, respectively, of our revenues for the year ended December 31, 2010. We target sectors such as the computing/hardware, telecommunications/service providers, software/netwarking, entertainment/media, and retail because of their growth potential, their propensity to outsource, their large, global customer bases, and their complex product and service offerings, which often require sophisticated customer interactions. For many of our clients, we service multiple customer touch points that may encompass several product and service lines. In most cases, our services for each client are performed under discrete, renewable, multi-year contracts that are individually negotiated with separate business leaders at the client and define, among other things, the service level requirements, the tools �• and technology, the operating metrics, and various pricing grids depending on volume and other requirements. We typically bill aur clients on a monthly basis either by the minute, the hour, or the transaction. In some cases, we also receive incentive based compensation from our clients that is directly connected to our performance and/or our ability to generate sales for our clients. We are subject to quarterly fluctuations in our revenues and earnings based on the timing of new and expiring client programs and the seasonality of certain client programs. From time to time, clients seek to shift their CRM programs to lower cost locations, which may negatively affect our results of operations as we seek to shift personnel to the lower cost off-shore locations, resulting in lower revenue but a higher gross margin percentage. A substantial amount of our operating costs is incurred in foreign currencies. We use derivatives to mitigate risk relating to foreign currency fluctuations. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations." Our Industry According to the May 2010, IDC report, "Worldwide and U.S. Outsourced Customer Care Services 2010-2014 Forecast: Reckoning with the Aftermath of a Credit Bubble," the global CRM market, which IDC refers to as the "Worldwide Customer Care Services" market, totaled over $54.5 billion in 2010 and is expected to grow to over $69.6 billion by 2014. IDC estimates that the span of years from 2005-2014 will reflect a compound annual growth rate of 6.1% for this market. The contact center outsourcing industry is highly fragmented and competitive, with the largest company representing approximately 7% of the market according to Frost & Sullivan. Despite the increasingly competitive 5 `,. w.l-,4rv.l•��n•//T�•�T�.n�nnmin nn�r Prnia�te�Ctraam Tn1'Prnatil�YlA��MtY1Y1PCl1tA TYIVP.Ct'tllP.Ylt F7111(j _.. 5�2.9�Zn��2 Form 10-K Page 7 of 79 S "T��rte of Co�te��.s nature of the market, we believe outsourcing will continue to grow as a result of higher client demand for cost savings along with the need for high-quality customer interactions and innovative service solutions that deliver real value. Stream also believes the desire for companies to focus on core competencies remains strong and will continue to drive them to outsource certain non-core functions to experienced outsourcing providers with the appropriate global scale, processes and technological expertise. Moreover, we believe that the current economic slowdown has increased demand for outsourcing because it offers an incremental channel to increase sales. As business becomes more global, many companies fmd they do not possess sufficient capacity or the optimal infrastructure, international experience or technology tools to service their customers. Therefore, they increasingly look to global BPO service providers like Stream — that have invested in technology and infrastructure and have established a global presence — to deliver customer facing services in both established and emerging markets. The largest CRM and BPO customers are typically multinational companies that require their service providers to have a global footprint in order to service segments of their customer base in multiple countries and multiple languages, and also be agile enough to scale quickly as volume requirements change. In essence, our global clients require (i) global servicing capabilities to fit the needs of particular products or programs in multiple languages; (ii) a sophisticated technology infrastructure that enables fully integrated customer interaction channels that are analytics enabled and virtually accessible across a global delivery platform; (iii) a solution driven approach that solves multiple customer needs, such as total customer experience, retention and lower customer churn rates, and creates new or expanded revenue opportunities for our clients; and (iv) a competitive total cost of solution that takes advantage of tecluiology, applications, defined processes and a diverse global operation. Our Strategy Our strategy is to be a leading provider of integrated, global CRM and BPO services that allow our clients to create • maximum value for their customers over the long-term. In order to achieve this strategy, we intend to offer a broad suite of services that leverages an integrated technology platform on a global basis. We expect to increase our revenues and profitability while further growing our market position by implementing our global business strategy, which includes, among other things, the following key elements: Expand organic revenue growth. We expect to increase our revenue through a combination of winning business from new clients and increasing our service offerings and market share for existing clients. We expect to continue to win new clients in the future as more companies outsource their CRM and BPO services. Additionally, many of our clients are consolidating their CRM and BPO relationships to vendors who can provide multiple service offerings on a global basis. We expect to capitalize on this trend by increasing our service offerings for existing clients and winning a greater share of services that they currently outsource. We also expect to generate new business by warking with our clients to outsource non-core programs that are currently managed internally. Enhance margins through globad expansion and operating eff ciency. We seek to enhance our gross and operating margins by improving our systems and infrastructure and by expanding our global operations. We also continue to work to improve our operating metrics, such as utilization and productivity, employee retention, and workforce management, and take advantage of advanced technology tools, such as voice over internet protocol ("VoIP"), virtualization of the desktop and server, learning and development platforms and standardized global processes to increase accessibility and quality of information and data exchange. We also believe that we will continue to improve our margins by continuing to expand our global presence in lower cost high quality off-shore locations. 6 . «,.l..a.,.,.l.l:l...//TT.\T,,.,.,....�]� T___ T��]__a_\['�a�__'__ L_a_'�'_i]__'_1\T.T7""___�_ L__'__�'_'_�� ci�n�nnin Form 10-K Page 8 of 79 T�b[e of �onte�ts � i Expand our revenue growth and market share through targeted acquisitions. We plan to grow our revenues and market share both organically and through targeted acquisitions. Our desire to enter new geographies may be accomplished most efficiently and cost effectively through the acquisition of companies or assets, or through joint venture arrangements with third parties. Expand current, and develop and implement new, BPO service offerings to increase market share. We expect to expand our current service offerings, such as sales and revenue generation services, customer lifecycle management, and technical support services, within our existing client base, as well as expand our service offerings to include new offerings, such as data analytics and social media, to increase returns and profitability. Many of our clients are looking for global service providers that can not only provide multiple service offerings in an e�cient and flexible cost model, but can also generate revenues to help reduce the overall cost of service and enhance customer satisfaction. Build and implement a multi year global technolo� roadmap. We believe that technology applications and infrastructure are critical to our business and allow us to offer our clients efficient services on a cost-effective basis. During 2010, we continued our investment in technology applications that enhance efficiency such as applicant tracking, human resource information management systems, data and information portals, screen consolidation tools, learning and development tools, self-help portals for employees to manage their benefits, and real-time web-based training. We expect to continue to invest in technology and will continue to evaluate and implement technologies such as complex VoIP, cloud services and virtualization of the desktop and servers, as the need and opportunities arise. Our Service Offerings Our fully integrated service offerings enable our clients to increase revenue and enhance overall brand value and customer loyalty at many customer touch points. Our full breadth of outsourced services includes technical support, customer 3 • care and lifecycle management, sales and revenue generation, as well as other professional back-office services, delivered through a variety of channels, such as voice, email and chat technologies. We blend agility and flexibility with a global, standardized deli�ery model to create solutions that deliver real value — even in highly specialized industries. We utilize a proprietary "Smart Shore" methodology to determine the optimal mix of support locations — onshore, nearshore or offshore — and delivery mechanisms (voice, email, chat and self-service) to meet our clients' complete customer care objectives. We meet the challenge of staffmg to complex technical and sales requirements with multilingual skill sets across our global presence of 50 locations in 22 countries. Technical support services include transactions executed by end user customers who contact a solution center after they have purchased a product and/or service and are looking for assistance with its operation or usage. Technical support transactions may be initiated via a voice or via self-help, e-mail, chat/web collaboration and callback. To provide quality service, we integrate our service mediums so that end users are able to easily choose the medium that best meets their support needs. Our technical support services are designed to provide clients with a high-quality, cost-effective and efficient service delivery platform to handle transactions from multiple market segments. Using multimedia service delivery channels, we enable our clients to expand their current technical support service delivery platforms with cost effective and robust solutions for consumer and business customers. 7 ; • ,Y.l-,�.,�1•flo•//�T•\�'...,,�,.,,Y,;�. Tlo<. Tlrninn4o�C4rn.�m T,�,4<,.-.-,�1-;..n�l\Adir�naenta Tnvactmant Fnnrl S/7Q/'�(117 Form 10-K Page 9 of 79 • T�i�le t�f e�ntert#s In addition to technical support solutions, we offer ongoing customer service and customer care offerings designed to manage customer relationships for our clients on an ongoing basis. We view each customer contact as an opportunity to strengthen brand loyalty and enhance overall brand value, thereby reducing our clients' operational costs while at the same time providing them the opporiunity to increase their revenues. We manage our clients' vital customer relationships through our standardized best practices that begin with the recruitment, hiring and training of our service professionals. We employ such practices in order to identify the right customer service support professionals and equip them with the tools and training necessary to provide high levels of customer service. We utilize our proprietary "xStream Seller" methodology to design customer retention programs that help our clients build brand loyalty by utilizing a behavior-centric sales methodology that actively engages and aligns the functional organization in the end to end delivery of sales service. Our operational execution is holistic in its approach focusing on improving response rates, increasing order values and maacimizing revenues and profit. Since it is much more expensive to recruit a new customer than to retain an existing one, we tailor the approach we take with each client to ensure we are delivering a unique customer experience that secures brand loyalty. Our customer service and retention programs are designed to build ongoing, solid relationships with customers and thereby position us to maacimize ongoing sales opportunities through cross-sell and up sell opportunities and revenue generation services. Our revenue generation services are designed to provide our clients with the tools necessary to meet their corporate strategic goals far profitability and revenue. Our proprietary "Navigator" technology platform is a fully integrated desktop solution that streamlines complex processes and workflows and provides real-time analytics and reporting virtually across our global infrastructure on a real-time basis. Navigator offers a wide yariety of features to create a customized client solution that delivers quantifiable value to our clients. Sales and Marketing • We have a direct sales farce and sales support organization focused on high growth companies in the target industries in North America, Latin America, Asia and Europe. We use a consultative solution selling approach and generally focus our marketing efforts at our clients' or prospective clients' senior executive levels where decisions are made with respect to outsourcing critical CRM functions. As we continue to develop relationships with senior management, such as the chief executive officer, chief technology officer, chief fmancial officer, chief services officer and business unit leader of our clients, our business model will continue to evolve into a trusted business advisor to our clients. We work closely with our clients at all phases of the service delivery process to develop and refine custom solutions to meet their needs of maximizing customer experience, reducing their operational costs and generating revenue. We practice a consultative approach to our sales process, which involves understanding the intricacies of our potential client's business and their particular needs and formulating a value proposition that directly speaks to these needs. Our customized solutions are implemented across many different geographic locations using a combination of our and our client's technology platforms. Our sales and marketing group also evaluates entry into new end markets, as well as identifying potential new clients within specific end markets. The factors that are considered in evaluating new market opportunities or winning new clients include potential market size, industry participants, market dynamics and trends, growth prospects and the propensity for outsourcing services. With respect to an individual client, the sales and marketing group will review its financial strength and market position and its anticipated need for long-term outsourcing services. We consider the ability to deliver those services, our competitive positioning and the likelihood of winning the contract in making such determinations. Over the past year we have been successful in winning numerous new logo clients in the entertainment/media, hea�thcare, software/networking, telecommunications, financial services and travel industries. 8 i .....L.�.....1.F:1,..I/T:T.\� ' _�_�c'��"______ r__�_"___1�___/lw.�'_._ _�_ r______ __�r____1 - e�/nA/nn�.. . .....,. _� r�___ n____ -- `---- Form 10-K Page 10 of 79 'T�bie of Conte�ts �Y ! Employees Our success in recruiting, hiring and training highly skilled employees is key to our ability to provide high-quality CRM and BPO solutions to our clients on a global basis. We generally locate our service centers in locations that have access to higher education and a major transportation infrastructure. We generally offer a competitive pay scale, hire primarily full-time employees who are eligible to receive a full range of employee benefits, and seek to provide employees with a clear, viable career path. We also offer a combination of client based training, language training and internal technology certification courses to our employees. The combination of our training programs with close manager mentaring programs enables our employees to not only provide excellent service to our clients, but also progress into management positions within Stream. As of December 31, 2010, we had over 30,000 employees providing services to our clients' customers and administrative services in our business. Except for our service centers in some countries within Europe and Africa where approximately 4,300 of our employees are subject to collective bargaining agreements using workers' councils (which are typical in these regions), our employees are not subject to collective bargaining agreements. We believe relations with our employees are good. Competition The industry in which we operate is competitive and highly fragmented. Our competitors range in size from very small firms offering specialized applications or short-term projects, to large independent firms, and the in-house operations of many clients and potential clients. In short, the competitive landscape is wide and diverse. We compete directly and indirectly with certain companies that provide CRM and other BPO solutions on an outsourced basis. These include, but are not limited to, U.S.-based providers, such as APAC Customer Services, Convergys, Sitel, Startek, Sykes, TechTeam Global, TeleTech, and West; Europe-based providers, such as Atento, Teleperformance Group, and Transcom Worldwide; South Asia-based providers, such as Aditya Birla Minacs, Genpact, SMT Direct, Wipro, and WNS; local entities in other offshore geographies, such as TIVIT and the Philippine Long Distance Telephone Company; small niche providers, such as Alpine Access, Arise, VIPDesk, and Warking Solutions; and large global companies that offer outsourced services within their portfolios, such as • IBM, HP, CapGemini, Accenture and Fujitsu. The list of potential competitors includes both publicly traded and privately held companies. Service Professional Tools We believe in making the necessary investments to ensure that each of our service professionals has the tools required to provide high quality service to end-users. We leverage a mix of in-house developed and third party software solutions across all of our service centers. Many of these solutions are customized for our enterprise and facilitate data capture and transfer from the service professional to oar various data storage and network systems, and are flexible enough to operate our clients' CRM interfaces. Intellectual Property As of December 31, 2010, we had 13 registered trademarks in 7 jurisdictions and 29 active registered domain names. Corporate Information Stream Global Services, Inc. is a Delaware corporation. Our principal office is located at 20 William Street, Suite 310, Wellesley, Massachusetts 02481, and our telephone number is (781) 304-1800. Our website address is wrvw.stream.com. 9 4 �• ....i..�..,.i.�;i�.iirs.��,.,.�,......:,. n,._, n..,.;,.,.+,.�c�..,.,.,.., r�.,,,.,-,,.�;,.,.,,l�ra:�„o�„�� Tr��oo4mari� Ri�n�I S/�Q/7(11� Form 10-K Page 11 of 79 • "Tatb[e af Cae�tents ITEM lA. RISK FACTORS Our business is subject to numerous risks. The risk factors listed below include any material changes to and supersede the description of the risk factors associated with'our business previously disclosed in Item IA of out- Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2010 and in Item IA of our Annuad Reporl on Form 10-K for the fiscal year ended December 31, 2009. The risk factors that appear below, among others, could cause our actual results to differ materially from those expressed in forward-looking statements made by us or on our behalf in filings with the Securities and Exchange Commission, press releases, communications with iravestors and oral statements. Such forward-looking statements are discussed under "Cautionary Note Regarding Forward-Looking Statements. " Risks Retating to Our Business We have a history of losses and there can be no assurance that we will become or remain profitable or that losses will not continue to occur. For the year ended December 31, 2010, we had a net loss of $53.5 million. We may not achieve or sustain profitability in the future. Our ability to achieve profitability will depend, in part, on our ability to: • attract and retain an adequate client base; • effectively manage a large global business; • react to changes, including technological changes, in the markets we target or operate in; ' • deploy our services in additional markets or industry segments; • continue to maintain operating efficiencies in our service centers across the globe; , • respond to competitive developments and challenges; . • ariract and retain experienced and talented personnel; and • establish strategic business relationships. We may not be able to do any of these successfully, and our failure to do so is Iikely to have a negative impact on our operating results. A substantial portion of our revenue is generated from a limited number of clients, and the loss of one or more of these clients or a decline in end user acceptance of our client's products would materially reduce our revenue and cash flow and adversely affect our business. We have derived, and we believe that we will continue to derive a substantial portion of our revenue from a limited number of clients. Revenue from our two largest clients, Dell Inc. and the Hewlett-Packard Company, accounted for 16% and 12%, respectively, of our revenues for the year ended December 31, 2010. Although we generally enter into multi-year contracts with clients, most of which are typically renewable, these contracts generally do not require clients to provide a minimum amount of revenues and allow clients to terminate earlier for convenience. There can be no assurance that we will be able to retain, renew or extend our contracts with our major clients. Although some of these contracts require the client to pay a contractually agreed upon amount in the event of early termination, there can be no assurance that we will be able to collect such amount or that such amount, if received, will sufficiently compensate us for any significant investment we may have made to support the cancelled program or for the revenues we may lose as a result of the early termir�ation. There can also be no assurance that if we were to lose one or more of our major clients, we would be able to replace such clients with new clients that generate a comparable amount of revenues. A number of factors could cause us to lose business or revenue from a client, and some of these factors are not predictable and are beyond our control. For example, a client may demand price reductions, change its outsourcing strategy, move work 10 � .....1.+....l:�:t,,. //i_T.\L'...�«....,.:.. Tl.�__ T]�.��.,.,1..\ C T�a"�".t]'"'_1\T .(L"""�_ T"'_'_'a"' _'_� r___ � c i�ni�n� � Form 10-K Page 12 of 79 Tabte t�t'Coa�tents �._• in-house or reduce previously forecasted demand. In addition, the volume of work we perform for specific clients may vary from year to year. In most cases, if a client terminates its contract with us or does not meet its forecasted demand, we would have no contractual recourse even if we have built-out facilities and/or hired and trained service professionals to provide services to the client. Thus, a major client in one year may not provide the same level of revenue in any subsequent year. Consequently, the loss of one ar more of our major clients, or the inability to generate anticipated revenues from them, would have a material adverse effect on our business, results of operations, fmancial condition and cash flows. Our operating results far the foreseeable future will continue to depend on our ability to effect sales to a small number of clients and any revenue gowth will depend on our success selling additional services to our large clients and expanding our client base. We typically charge our clients based on the number of inbound calls that we service, or the amount of time, by the minute or by the hour, that our service professionals spend with end-users relating to our clients' products. We also provide inbound and outbound sales services to our clients, whereby we are paid based on our level of sales success and other client driven metrics. To the extent there is a decline in spending for our clients' products, whether as a result of a decline in product acceptance or general economic conditions, our business will be adversely affected. There are a number of factors relating to discretionary consumer and business spending, including economic conditions affecting disposable income (such as employment, business conditions, taxation and interest rates) which impact the ability of our clients to sell their products, and most of which are outside of our control. There can be no assurance that spending for our clients' products will not be affected by adverse economic conditions, thereby affecting our business, results of operations, financial condition and cash flows. Our revenue is highly dependent on a few industries and any decrease in demand for outsourced business processes in these industries could reduce our revenue and seriously harm our business. Most of our revenue is derived from clients concentrated in the computing/hardware and telecommunications/service providers industries. The success of our business largely depends on continued demand for our services from clients in these industries, as well as on trends in these industries to outsource business processes on a global basis. A downturn in any of the industries we serve, a slowdown or reversal of the trend to outsource business processes in any of these industries or the ;• introduction of regulations that restrict or discourage companies from outsourcing, could result in a decrease in the demand for ` our services, which in turn could materially harm our business, results of operations, financial condition and cash flows. Despite recent signs of economic recovery in some markets, many of the markets in which we operate are still in an economic downturn that we believe has had and will continue to have a negative effect on the business of many of our clients, which has, in some cases, resulted in lower volumes of work far us. In the event that the global economy slips back into a recession or the economic downturn in some of the markets in which we serve worsens, we may experience even lower volumes and pricing pressures, which would negatively affect our business, results ofoperations, financial condition and cash flows. Other developments may also lead to a decline in the demand for our services in the industries we serve. Consolidation in any of the industries that we serve, particularly involving our clients, may decrease the potential number of buyers of our services. Furthermore, many of our existing and new clients have begun or plan to consolidate or reduce the number of service providers that they use for various services in various geographies. To the extent tfiat we are not successful in becoming the recipient of the consolidation of services by these clients our business and revenues will suffer. Any significant reduction in, or the elimination of, the use of the services we provide within any of these industries would reduce our revenue and cause oux profitability to decline. We may be unable to successfully execute on any of our identified business opportunities or other business opportunities tlzat we deterntine to pursue. In order to pursue business opportunities, we will need to continue to build our infrastructure, our client initiatives and operational capabilities. Our ability to do any of these successfully could be affected by one or more of the following factors: • the ability of our technology and hardware, suppliers and service providers to perform as we expect; 11 . . . 4.;., • ,v.L.�.�.l.�:lo.//LT.\L�'....,...,ti,,., Tlv.. D,-..,0..4�\C'4,-o.�rr. T.�.4orr.o4:�r.�1�A/Tinr�nonto Tnc�ae�man� Riin� S�7Q�7(�� 7 Form 10-K Page 13 of 79 � T�b�� f Contents • our ability to execute our strategy and continue to operate a large, mare diverse business efficiently on a global basis; • our ability to effectively manage our third party relationships; • our ability to attract and retain qualified personnel; • our ability to effectively manage our employee costs and other expenses; • our ability to retain and grow our clients and the current portfolio of business with each client; • technology and application failures and outages, security breaches or interruption of service, which could adversely affect our reputation and our relations with our clients; • our ability to accurately predict and respond to the rapid technological changes in our industry and the evolving service and pricing demands of the markets we serve; and • our ability to raise additional capital to fund our growth. Our failure to adequately address the above factors would have a significant impact on our ability to implement our business plan and our ability to pursue other opportunities that arise, which might negatively affect our business. Our business may be impacted by tlie performance of our clients. Our revenue and call volume is often highly correlated with units sold, renewals from our clients' customers or end users, and revenue of our clients. Our clients may experience rapid changes in their prospects, substantial price competition and pressure on their results of operations, which may result in lower volumes and/or pressure on us to lower our prices. In addition, many of our clients are seeking to consolidate their current group of service providers to a smaller more manageable group that is able to provide integrated service offerings on a global basis. In some cases we do not currently offer or have � service locations in those geographic locations where our clients are seeking services. Our ability to sustain growth and profitability in the current environment is very dependent upon our ability to maintain and/or gain a greater share of business within our current clients and attract new clients. There can be no assurance that we will be able to do so in the future. In the event that some of our service centers do not receive sufficient call volume in the future, we may be required to close them and relocate business in other centers. This would require substantial employee severance, lease termination costs and other re- organization costs. Moreover, we are exposed to additional risks related to our clients' ability to pay and the resulting non-collectability of our accounts receivables. In the event that our clients' prospects deteriorate or the availability of credit tightens, our clients' liquidity may be adversely impacted, resulting in delayed or reduced payments to us. Such delays or reductions in payment or the non-payment by our clients of amounts owed to us may require us to incur a bad debt expense. In the event that one of our major clients should file for bankruptcy protection or otherwise fail, our future business, results of operations, fmancial condition and cash flows could be materially adversely affected. We may not be able to achieve incremental revenue growth or profitabiliry. Our strategy calls for us to achieve incremental revenue growth and profitability through initiatives, such as opening new or expanding our existing internationally located service locations in places like China. Other initiatives we may pursue include, (i) the addition or expansion of services, such as sales and warranty services; (ii) the introduction of front-end technology-driven service solutions for fee-based services, self-help, and other technology driven solutions; and (iii) operational improvements in areas such as employee attrition, site capacity utilization, centralization of certain administrative services, productivity rates and use of technology. We are also in process of consolidating and rationalizing certain of our service facilities and legacy administrative offices to 12 � , . , .L.� , . , .1.�;1,,.//L7.\�,.,....,.,...:,.11.._. n «.......I..�O4......«. T«L.........L:�.��11iT:��.__�1., T�__._._l�_��4T__�.� ci�ni�ni� Form 10-K Page 14 of 79 T�abte csf CanteE�is f. � improve our profitability. However, there can be no assurance that we will not encounter difficulties or delays in implementing these initiatives, and any such difficulties or delays would adversely affect our future operating results and fmancial performance. We Iiave, on a consolidated basis, a substantia[ amount of debt, w/iicli could impact our ability to obtain future financing or pursue our growth strategy. We have substantial indebtedness. As of December 31, 2010, we had approximately $244.2 million of indebtedness (including capital leases) and up to an additional $75.5 million of borrowings available under the ABL Credit Facility, before taking into account outstanding letters of credit, subject to borrowing base limitations and other specified terms and conditions. Our high level of indebtedness could have important consequences and significant adverse effects on our business, including the following: • we must use a substantial portion of our cash flow from operations to pay principal and interest on our indebtedness, which will reduce the funds available to us for operations and other purposes; • our ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired; • our high level of indebtedness could place us at a competitive disadvantage compared to our competitors that may have proportionately less debt; • our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate may be lirnited; • our high level of indebtedness may make us more vulnerable to economic downturns and adverse developments in our business; and • our ability to fund a change of control offer may be limited. ; The instruments governing our ABL Credit Facility contain, and the instruments governing any indebtedness we may incur in the future may contain, restrictive covenants that limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply with these covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all or a portion of our outstanding indebtedness. Payments on our indebtedness will require a significant amount of cash. Our abiliry to meet our cash requirements and service our debt is impacted by many factors that are outside of our control. We expect to obtain the funds to pay our expenses and to pay the amounts due under the Notes primarily from our operations and borrowings under our ABL Credit Facility. Our ability to meet our expenses and make these payments thus depends on our future performance, which will be affected by financial, business, economic and other factors, many of which we cannot control. Our business may not generate sufficient cash flow from operations in the future and our currently anticipated growth in revenue and cash flow may not be realized, either or both of which could result in our being unable to repay indebtedness, including the Notes, or to fund other liquidity needs. Our ability to borrow amounts under our ABL Credit Facility will be subject to borrowing base limitations and other specified terms and conditions, and the ability of certain of our foreign subsidiaries to borrow amounts under our ABL Credit Facility in the future is also subject, among other conditions, to our provision of security interests in certain assets of those foreign subsidiaries, which we did not provide upon the closing of the ABL Credit Facility and we may not be able to provide in the future. If we do not have sufficient cash resources in the future, we may be required to refinance all or part of our then existing debt, sell assets or borrow more money. We might not be able to accomplish any of these alternatives on terms acceptable to us or at all. In addition, the terms of existing or future debt agreements may restrict us from adopting any of these alternatives. Our failure to generate sufficieni cash flow or to achieve any of these alternatives could materially adversely affect the value of the Notes and our ability to pay the amounts due under the Notes. 13 ', _• ,�.1.+„,1•�lo•//I7•\�'...,,,.,,,,;.. Tlo., pr,.;A,.+�\Ct,-Pa,�„ Tntarnat;nnal\A�TinnPCnta Tnveetmant Fnnrl 5�7A/7(117 Form 10-K - Page 15 of 79 • T�b�e of Cc�nte�ts We may be able to incur substantial additional indebtedness tlaat could furtlzer exacerbate the risks associated with our indebtedness. We may incur substantial additional indebtedness in the future. Although the indenture governing the Notes and the loan agreement governing our ABL Credit Facility contain restrictions on our incurrence of additional debt, these restrictions are subject to a number of qualifications and exceptions that permit us to incur substantial additional indebtedness, including additional secured indebtedness. If we incur additional debt, the risks described above under "We have, on a consolidated basis, a substantial amount of debt, which could impact our ability to obtain future financing or pursue our growth strategy" and "Payments on our indebtedness will require a significant amount of cash. Our ability to meet our cash requirements and service our debt is impacted by many factors that are outside of our control" would intensify. Our business may not develop in ways that we currently anticipate due to negative public reaction to outsourcing and recenlly proposed legislation. We have based our growth strategy on certain assumptions regarding our industry, services and future demand in the market for our services. However, the trend to outsource business processes may not continue and could reverse. Outsourcing is a politically sensitive topic in the United States and elsewhere due to a perceived association between outsourcing providers and the loss of jobs in the United States. A variety of U.S. federal and state legislation has been proposed that, if enacted, could restrict or discourage U.S. companies from outsourcing services outside the United States. For example, public figures, such as President Obama, have supported legislation that they contend will generate new jobs in the United States, including limiting income tax benefits for companies that offshore American jobs. Because most of our clients are U.S. companies headquartered in the United States, any expansion of existing laws or the enactment of new legislation restricting offshore outsourcing could harm our business, results of operations and fmancial condition. It is possible that legislation could be adopted that would restrict U.S. private sector companies that have federal or state government contracts from outsourcing their services to off-shore service providers. This would also negatively affect our ability to attract or retain clients that have • these contracts. In addition, many jurisdictions have enacted or proposed legislation relating to the protection of sensitive customer data or other consumer protections that has resulted or may result in increases in our operational expenses: Current or prospective clients may elect to perForm such services themselves or may be discouraged from transferring their services from onshore to off-shore providers as a result of the perceived diminishment of operational efficiencies or cost savings. Any slowdown ar reversal of existing industry trends towards off-shore outsourcing would seriously harm our ability to compete effectively with competitors that operate solely out of facilities located in the United States or Canada. We may be unable to cost-effectively attract and retain qualified personnel, wliich could materially increase our costs. Our business is dependent on our ability to attract, retain and motivate key executives and also recruit, hire, train and retain highly qualified technical and managerial personnel, including individuals with significant experience in the industries that we have targeted. The CRM and BPO service industry is labor intensive and is normally characterized by high monthly employee turnover. Any increase in our employee turnover rate would increase our recruiting and training costs, decrease our operating effectiveness and productivity and delay or deter us from taking on additional business resulting in lower fmancial performance. Also, the introduction of significant new clients or the implementation of new large-scale programs may require us to recruit, hire and train personnel at an accelerated rate. In addition, some of our facilities are located in geographic areas with relatively low unemployment rates, thus potentially making it more difficult and costly to attract and retain qualified personnel. There can be no assurance that we will be able to continue to hire, train and retain sufficient qualified personnel to adequately staff our business. 14 • m�4m�•��n•//L Tlo�. D«..,o.,4�\C1-«v.,,�. T,�.�v,......+;...�..,1\TA�;,.....0�..4.. T...<�o��,v.v,-.+L`,,,-,.-] G/'�(]/'ll117 � . Form 10-K Page 16 of 79 �}� Tabte c�f Contents We may not be able to predict our future tax liabilities. If we become subject to increased levels of taxation or if tax contingencies are resolved adversely, our results of operations and financial performance could be adversely affected. Due to the international nature of our operations, we are subject to the complex and varying taY laws and rules of several foreign jurisdictions. We may not be able to predict the amount of future tax liabilities to which we may become subject due to some of these complexities if our positions are challenged by local tax authorities. Any increase in the amount of taxation incurred as a result of challenges to our tax filing positions or due to legislative or regulatory changes could result in a material adverse effect on our business, results of operations and financial condition. We are subject to taY audits, including issues related to transfer pricing, in the United States and other jurisdictions. We have material tax-related contingent liabilities that are difficult to predict or quantify. While we believe that our current tax provisions are reasonable and appropriate, we cannot be assured that these items will be settled for the amounts accrued or that additional exposures will not be identified in the future or that additional tax reserves will not be provided for any such exposures. Our financial results may be impacted by significant fluctuations in foreign currency exchange rates. A substantial amount of our operating costs is incurred in foreign currencies. In many cases, we bill our clients in U.S. Dollar, Canadian dollar, Euro and U.K. pound sterling denominated amounts and incur costs in the host country in local currency. If the U.S. Dollar drops in value relative to other currencies, our cost of providing services outside the United States will increase accordingly when measured in U.S. Dollars. In addition, a substantial amount of our revenue is denominated in foreign currencies. If the U.S. Dollar increases in value relative to other currencies, the value of those revenues will decrease accordingly when measured in U.S. Dollars. Any continued significant fluctuations in the currency exchange rates between the U.S. Dollar, Canadian dollar, Euro and U.K. pounds sterling and the currencies of countries in which we operate may affect our business, results of operations; fmancial condition and cash flows. A substantial portion of our costs are incurred and paid in Philippine pesos. Therefore, we are exposed to the risk of an increase in the value of the Philippine peso relative to the U.S. Dollar, which would increase the value of those expenses when measured in U.S. Dollars. In addition, a significant amount of our revenue is denominated in Euro. Therefore, we are exposed ,• to the risk of an increase in the value of the U.S. Dollar relative to the Euro, which would decrease the value of those revenues accord'mgly when measured in U.S. Dollars. Although we engage in hedging relating to the Canadian dollar, the Indian rupee and the Philippine peso, our hedging strategy may not sufficiently protect us from further strengthening of these currencies against the U.S. Dollar. As a result, our expenses could increase and harm our operating results. In the converse, if the U.S. Dollar strengthens against the Canadian dollar, the Indian rupee or the Philippine peso, our hedging strategy could reduce the potential benefits we would otherwise expect from a strengthening U.S. Dollar. We are also doing business in Latin America but do not yet hedge currencies from these countries. Our international operations and sales subject us to additional risks, including risks associated wit/i unexpected events. We conduct business in various countries outside of the United States, including Canada, the Nethe'rlands, the United Kingdom, Italy, Ireland, Spain, Sweden, France, Germany, Poland, Denmark, Bulgaria, India, the Philippines, El Salvador, Egypt, Tunisia, South Africa, Nicaragua, the Dominican Republic and Costa Rica. A key component of our growth strategy is our entry into new markets or expansion of our existing markets, such as China. There can be no assurance that we will be able to successfully market, sell and deliver our services in these markets, or that we will be able to successfully expand our international operations. The global reach of our business could cause us to be subject to unexpected, uncontrollable and rapidly changing events and circumstances. The following factors, among others, could adversely affect our business and earnings: • failure to properly comply with foreign laws and regulations applicable to our foreign activities including, without limitation, employment law requirements; 15 {. � ml�tm�•f�a •��•�T-+rnnnmin nPV Prniante�Ctraam T„ta,-�,atinnalU�iiinneenta TnvPCtment Fnncl ... 5/29/2n17 Form 10-K ' Page 17 of 79 . Ta�[e of Cc�ntents • compliance with multiple and potentially conflicting regulations in the countries where we operate now and in the future, including employment laws, intellectual property requirements, and the Foreign Corrupt Practices Act and other anti-corruption laws; difficutties in managing foreign operations and attracting and retaining appropriate levels of senior management and staffmg; • longer cash collection cycles; • seasonal reductions in business activities, particularly throughout Europe; • proper compliance with local taY laws which can be complex and may result in unintended adverse tax consequences; • anti-American sentiment due to American policies that may be unpopular in certain countries; • difficulties in enforcing agreements through foreign legal systems; • fluctuations in exchange rates that may affect product demand and may adversely affect the profitability in U.S. dollars of services we provide in fareign markets, where payment for our products and services is made in the local currency and revenues are earned in U.S. dollars or other currency; • changes in general economic conditions or political strife or upheaval in countries where we operate; • the ability to efficiently repatriate cash to the United States and transfer cash between foreign jurisdictions; • chan�es in transfer pricing policies for income t� purposes in countries where we operate; • restrictions on downsizing operations and personnel in Europe and other jurisdictions (i.e. regulatory or works council restrictions) and expenses and delays associated with any such activities; and � • changes to or elimination of the international tax holiday for our subsidiaries in India ar the Philippines. As we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and effectively manage these and other risks associated with our international operations. Our failure to manage any of these risks successfully could harm our global operations and reduce our global sales, adversely affecting our business and future - fmancial performance. Countries wlaere we do business laave recently experienced political and economic instability and civil unrest and terrorism, which has and may continue to disrupt our operations and may cause our business to suffer. Certain countries where we do business, particularly Egypt and Tunisia; and less recently the Philippines, India, and certain Latin American countries, have experienced or are experiencing civil unrest, terrorism and political turmoil, resulting in temporary work stoppages and telecommunication or other technology outages. If such civil unrest or political turmoil increases or such operational disruptions become prolonged, our existing and potential new clients may hesitate to keep or move their business into such locations. In addition, we expect to enter into new markets in places such as China which may have similar risks. These conditions could disrupt our operations and cause our business to suffer. Moreover, countries where we do business, and in particular the Philippines, have experienced significant inflation, currency declines and shortages of foreign exchange. We are exposed to the risk of cost increases due to inflation in the Philippines, which has historically been at a much higher rate than in the United States. Current tax holidays in the Philippines will expire within tlte next two years. We currently benefit from income tax holiday incentives in the Philippines pursuant to the registrations with the Philippine Economic Zone Authority, or PEZA, of our various projects and operations. Under such PEZA 16 � mhtml �fi�r>•//N•�F�nnr�mir nav Prnian�o�CtrPOm Tr�4arnotie-.r�ol\AiTir�.-�on..4n Tv.s.oc,+mo,+4 L',,,�.7 G/')�/7l11'l Form 10-K Page 18 of 79 Tabl� of Contents �, • registrations, the income tax holiday of our various PEZA-registered projects in the Philippines expire at staggered dates through 2012. The expiration of these tax holidays will increase our effective income tax rate. Dur revenues and costs are subject to quarterly variations tlaat may adversely affect quarterly finr�ncial results. We have experienced, and in the future could experience, quarterly variations in revenues as a result of a variety of factors, many of which are outside our control, including: • the timing of new client contracts; • the timing of new service offerings or modifications in client strategies; • our ability to attract and retain and increase sales to existing customers; • the timing of acquisitions of businesses and products by us and our competitors; • our ability to effectively build and start-up new solution centers; • product and price competition; • our ability to build an integrated service offering on a common technology platform; • changes in our operating expenses; • software defects or other product quality problems; • the ability to implement new technologies on a timely basis; • the expiration or termination of existing contracts; • the timing of increased expenses incurred to obtain and support new business; • currency fluctuations; and , � • changes in our revenue mix among our various service offerings. In addition, our planned staffmg levels, investments and other operating expenditures are based on revenue forecasts provided by our clients. If actual revenues are below these forecasts or our own expectations in any given quarter, our business, results of operations, fmancial condition and cash flows would iikely be materially adversely affected for that quarter and thereafter. In addition, to the extent that we enter into mergers and acquisitions or new business ventures in the future, our quarterly or future results may be impacted. Our financial results may be adversely affected by increases in labor-related costs. Because a significant portion of our operating costs relate to labor costs, an increase in U.S. or foreign wages, costs of employee benefits or taxes could have a material adverse effect on our business, results of operations and fmancial condition. For example, over the past several years, healthcare costs have increased at a rate much greater than that of general cost or price indices. Increases in our pricing may not fully compensate us for increases in labor and other costs incurred in providing services. Some of our facilities are located in jurisdictions, such as France, Italy and Germany, where it is difficult or expensive to temporarily or permanently lay off hourly workers due to both local laws and practices within these jurisdictions. Such laws will make it more expensive for us to respond to adverse economic conditions. There can be no assurance that we will be able to increase our pricing or reduce our workforce to fully compensate for the increases in the costs to provide services. - We may need to increase the levels of employee compensation more rapidly than in the past to remain competitive in attracting and retaining the quality and number of employees that our business requires. Wage costs in India, the Philippines and other offshore locations have historically been significantly lower than wage costs in the North America and Europe for comparably skilled professionals, which has been one of Stream's 17 � . . � . 4 �:...,_• mhtml•fiilP •//�T•\Fennnmir nPV PrniPCtc\4trPam Tnternatinnal\1VTinnecnta Tnvestment Fupd ___ 5/29/2012 Form 10-K Page 19 of 79 �' 'T�bie taf Cc�rttents competitive advantages. However, because of rapid economic growth in India and the Philippines, increased demand for CRM and BPO services and increased coinpetition for skilled employees in offshore low cost locations like India and the Philippines, wages for comparably skilled employees in such locations are increasing at a faster rate than in North America and Europe, which may reduce this competitive advantage. As additional outsourcing companies enter the market and expand their operations, we expect competition for skilled employees at the service professional and middle and upper management levels to increase which would affect the availability and the cost of our employees and increase our attrition rate. Wage increases in the long term may reduce our profit margins. Additionally, because substantially all of our employees based outside the United States are paid in local currency, while our revenues are collected in other currencies (primarily in U.S. dollars, the Euro and U:K. pounds sterling), our employee costs as a percentage of revenues may increase or decrease significantly if the exchange rates between these currencies fluctuate significantly. We have not experienced significant union activity or organized labar activity in the past. There can be no assurance that we will not experience increased union organizing activity in the future. Such organization could increase our cost of labor, limit our ability to modify work schedules and cause work stoppage. Our profitability will be adversely affected if we do not maintain sufficient capacity utilization. Our profitabiliry is influenced significantly by the capacity utilization of our service centers. Because a majority of our business consists of inbound contacts from end-users, we have no control of when ar how many end user customer contacts are made. Moreover, we have significantly higher utilization during peak (week day) periods than during off-peak (night and weekend) periods and therefore we need to reserve capacity at our service centers to anticipate peak periods. In the future, we � may consolidate or close under-performing service centers in order to maintain or improve targeted utilization and margins. If we close service centers in the fizture due to insufficient customer demand, we may be required to record restructuring or impaument charges, which could adversely impact our busmess, results of operations and financial condition. There can be no • assurance that we will be able to achieve or maintain optimal service center capacity utilization. Many of our existing or emerging competitors are better established and have significantly greater resources, wliich may make it difficult to attract and retain clients and grow revenues. The market in which we compete is highly competitive and fragmented. We expect competition to persist and intensify in � the future. Our competitors include small firms offering specific applications, divisions of large entities, large independent firms and, most significantly, the in-house operations of clients or potential clients. Because we compete with the in-house operations of existing or potential clients, our business, results of operations, fmanciaT condition and cash flows could be adversely affected if our existing clients decide to provide CRM and other BPO solutions that currently are outsourced or if potential clients retain or increase their in-house customer service and product support capabilities. In addition, competitive pressures from current or future competitors or in-house operations could cause our services to lose market acceptance ar result in significant price erosion, which would have a material adverse effect upon our business, results of operations, fmancial condition and cash flows. Some of our clients may in the future seek to consolidate services that we provide, which may in turn reduce the amount of work we perform for them. Some of our existing and future competitors have greater financial, human and other resources, longer operating histories, greater technological expertise, more recognizable brand names and more established relationships than we do in the industries that we currenTly serve or may serve in the future. Some of our competitors may enter into merger, strategic or commercial relationships among themselves or with larger, more established companies in order to increase their ability to address client needs. Increased competition, pricing pressure or loss of market share could reduce our operating margin, which could harm our business, results of operations, financial condition and cash flows. 18 � mhtm�•fi�a•�I�T•��'i�nnnmi� TIAV Arnir �i-e�Qtroom Tr.+o.�.�..�4:.�r�.�1\AiT:r.v,v�.�4.� T,�.,o�4.�.�or.4 i�.�.r�rl G/'�01')l117 � Form 10-K Page 20 of 79 Tab(e of Cant�n�s �' .• We may engage in future acquisitions that could disrupt our business, cause dilution to our stockholders anc� harm our �nancia! position and operating results. We may pursue acquisitions of companies or assets in order to enhance our market position and/or expand the types of services that we offer to our clients and may enter geographic markets where we do not currently conduct business. We may also acquire minority interest in companies or enter into joint venture arrangements with other parties, which may include existing clients. We may also pursue certain acquisitions on an unsolicited basis, which may cause management distractions and increased legal costs. We may not be able to find suitable acquisition candidates and we may not be able to consummate such acquisitions on favorable terms, if at all. If we do complete acquisitions, we cannot be sure that they will ultimately strengthen our competitive position, or that our clients, employees or investors will not view them negatively. Acquisitions may disrupt our ongoing operations, divert management from day-to-day responsibilities, increase our indebtedness, liabilities, exposure to different legal regimes and/or regulations, and expenses and harm our operating results or financial condition. We may not be able to successfully integrate these acquisitions into our operations and may lose key clients, employees, members of management or not achieve the synergies and other benefits expected from the acquisition or investment. Future acquisitions may reduce our cash available for operations and other uses and could result in an increase in amortization expense, potentially dilutive issuances of equity securities or the incurrence of debt, which could harm our business, results of operations, fmancial condition and cash flows. Our business depends on uninterrupted service to our clients. A system failure or labor shortage could cause delays or interruptions of service, wliich could cause us to lose clients. Our operations are dependent upon our ability to protect our service centers, computer and telecommunications equipment and software systems against damage ar interruption from fire, power loss, telecommunications interruption or failure, natural c�isaster, breaches in data and technology security integrity and other similar events in order to provide our clients with reliable services. Additionally, we depend on our employees to perform our services on behalf of our clients. If we are unable to staff our service centers due to labor shortages, or employees miss work due to labor strikes ar civil or political 5• unrest, natural disasters and other similar events, our ability to provide our clients with reliable services will be hindered. Some of the events that could adversely affect our ability to deliver reliable service include physical damage to our network operations centers; disruptions, power surges or outages to our computer and telecommunications technologies which are beyond our control; sabotage or terrorist attacks and cyber attacks or data theft; software defects; fire or natural disasters such as typhoons, hunicanes, floods and earthquakes; civil unrest and political turmoil; and labor shortages or walk-outs. Technology is a critical foundation in our service delivery. We utilize and deploy internally developed and third party software solutions that is often customized by us across various hardware and software environments. We operate an extensive internal voice and data network that links our global sites together in a multi-hub model that enables the rerouting of call volumes. We also rely on multiple public communication channels for connectivity to our clients. Maintenance of and investment in these foundational components are critical to our success. If the reliability of technology or network operations fall below required service levels, or a systemic fault affects the organization broadly, business from our existing and potential clients may be jeopardized and cause our revenue to decrease. If we experience a temporary or permanent interruption at one or more of our service centers and/or data centers, through casualty, operating malfunction, labor shortage or otherwise, our business could be materially adversely affected and we may be required to pay contractual damages to affected clients or allow some clients to terminate or renegotiate their contracts with us. Although we maintain property, business interruption and general liability insurance, including coverage for errors and omissions, there can be no assurance that our existing coverage will continue to be available on reasonable terms or will be available in amounts sufficient to cover one or more large claims, or that the insurer will not disclaim coverage as to any future claim. The occunence of errors could result in a loss of data to us or our clients, which could cause a loss of revenues, failure to achieve 19 � , .� mlitml•fila•//N�\Frnnnmi� Tlav Prniartc\Ctraam TntarnatinnalU�/tinnacnta Tnvectment Fnnrl _ 5/?_9/?_(112. Form 10-K Page 21 of 79 � , Tab�e t�f �o�tents product acceptance, increased insurance costs, product returns, legal claims, including product liability claims, against us, delays in payment to us by clients, increased service and warranty expenses or fmancial concessions, diversion of resources, injury to our reputation, or damages to our efforts to build brand awareness, any of which could have a material adverse effect on our market share and, in turn, our business, results of operations, fmancial condition and cash flows. We are subject to U.S. and fareign jurisdiction laws relating to in�lividually identifiable information, and failure to comply with tl:ose laws, whether or not inadvertent, could subject us to legal actions and negatively impact our operations We process, transmit and store information relating to identifiable individuals, both in our role as a service provider and as an employer. As a result, we are subject to numerous U.S. (both federal and state) and foreign jurisdiction laws and regulations, such as the U.S. Health Insurance Portability and Accountability Act and the European Union Data Protection Directive 95/46/EC, governing the protection and processing of individually identifiable information, including social security numbers, fmancial and health information. Failure to comply with these types of laws may subject us to, among other things, liability for monetary damages, fines and/or criminal prosecution, unfavorable publicity, restrictions on our ability to process information and allegations by our clients that we have not performed our contractual obligations, any of which may have a material adverse effect on our profitability and cash flow. Unauthorized disclosure of sensitive or confidential data could expose us to protracted and eostly litigation and penalties and may cause us to lose clients. We are dependent on information technology networks and systems to process, transmit and store electronic information and to communicate among our locations and with our partners and clients. Security breaches of this infrastructure could lead to shutdowns or disruptions of our systems and potential unauthorized disclosure of confidential information. We are also required at times to manage, utilize, record and store sensitive or confidential data. As a result, we are subject to numerous federal and state laws and regulations designed to protect this information. If any person, including any of our employees, � negligently disregards or intentionally breaches our established controls with respect to such data or otherwise mismanages or misappropriates that data, we could be subject to monetary damages, fines and/or criminal prosecution. Unauthorized disclosure or recording of sensitive or confidential client or customer data, whether through system failure, employee negligence, fraud or misappropriation, could damage our reputation and cause us to lose clients. Similarly, unauthorized access to or through our information systems, whether by our employees or third parties, could result in negative publicity, legal liability and damage to our reputation, business, results of operations, financial condition and cash flows. We have a long selling cycle for our CRM and BPO services that requires significant funds and management resources and a long implementation cycle that requires significant resource commit`nents. We have a long selling cycle for our CRM and BPO services for new clients, which requires significant investment of capital, resources and time by both our clients and us. Typically, before committing to use our services, potential clients require us to expend substantial time and resources educating them as to the value of our services and assessing the feasibility of integrating our systems and processes with theirs. Our clients then evaluate our services before deciding whether to use them. Therefore, our selling cycle, which generally ranges from six to twelve months, is subject to many risks and delays over which we have little or no control, including our clients' decision to choose alternatives to our services (such as other providers or in-house offshore resources) and the timing of our clients' budget cycles and approval processes. In addition, we may not be able to successfully conclude a contract after the selling cycle is complete. Implementing our services involves a significant commitment of resources over an extended period of time from both our clients and us. Our clients may also experience delays in obtaining internal approvals ar delays 20 • � mL�tm�•��a•//T�•�Frnnnmin Tla�� Urniante�Ctraom Tn4nrnotinnoj��/Tinnae�t� Tnvao+maritT+'iin� S/7Q/7(11� Form 10-K Page 22 of 79 Table c�f Ca�atents � • associated with technology or system implementations, thereby delaying further the implementation process. Our clients and future clients may not be willing or able to invest the time and resources necessary to implement our services, and we may fail to close sales with potential clients to which we have devoted significant time and resources, which could have a material adverse effect on our business, results of operations, fmancial condition and cash flows. Onee we are engaged by a c[ient, it may take us several months before we start to recognize significant revenues. When we are engaged by a client after the selling process for our CRM and BPO services, it takes from four to six weeks to integrate the client's systems with ours and up to three months thereafter to ramp up our services and staff levels, including hiring and training qualified service professionals and technicians, to the client's requirements. Depending on the complexity of the processes being implemented, these time periods may be significantly longer. Implementing processes can be subject to potential delays similar to certain of those affecting the selling cycle. Therefore, we do not recognize significant revenues until after we have completed the implementation phase. If we are unable to adjust our pricing terms or the mix of products and services we provide to meet tlie c/aanging demands of our CRM and �PD clients andpotential CRM and BPO clients, our business, results of operations an�l financial condition may be adversely affected. Industry pricing models are evolving, and we anticipate that clients may increasingly request transaction-based pricing. This pricing model will place additional pressure on the efficiency of our service delivery so that we can maintain reasonable operating margins. If we are unable to adapt our operations to evolving pricing protocols, our results of operations may be adversely affected or we may not be able to offer pricing that is attractive relative to our competitors. In addition, the CRM and BPO services we provide to our clients, and the revenues and income from those services, may decline or vary as the type and quantity of services we provide under those contracts changes over time, including as a result of a shift in the mix of products and services we provide. Furthermore, our clients, some of which have experienced rapid � changes in their prospects, substantial price competition and pressures on their profitability, have in the past and may in the future demand price reductions, automate some or all of their processes or change their outsourcing strategy by moving more work in-house or to other providers, any of which could reduce our profitability. Any significant reduction in or the elimination of the use of the services we provide to any of our clients, or any requirement to lower our prices, would harm our business. We depend on third party technology that, if it shou[d become unavailable, contain defects, or infringe on anotlzer party's intellectual property riglzts, could result in increased costs or delays in tlze production and improvement of our products or result in liability claims. We license critical third-party technology that we incorporate into our services on a non-exclusive basis. We customize the third-party software in many cases to our specific needs and content requirements. While we monitor our usage of third- party technology and our compliance with our licenses to use such technology, we may inadvertently violate the terms of our license agreements, which could subject us to liability, including the termination of our rights to use such software or the imposition of additional license fees. If our relations with any of these third-party technology providers become impaired, or if the cost of licensing any of these third-party technologies increases, our gross margin levels could significantly decrease and our business could be harmed. The operation of our business would also be impaired if errors occur in the third-party software that we utilize or the third-parly software infringes upon another party's intellectual property rights. It may be more difficult for us to correct any defects or viruses in third-pariy software because the software is not within our control. If we are unable to correct such errors, our business could be adversely affected. There can be no 21 . . i � �...�::.• ,..,t,+,,,t•�:to•//u•��,.,,,,..,,,;,. T�o�� T�r�.;A��\C+,-Pam TntarnatinnalU��TinnPCnta TnvPCtmPnt Fnn[j S/29/7.n17. Form 10-K Page 23 of 79 � _ _. T�bde of ecantents assurance that these third parties will continue to invest the appropriate resources in their products and services to maintain and enhance the capabilities of their software. In addition, although we try to limit our exposure to potential claims and liabilities arising from third-party infringement claims arising out of, and errors, defects or viruses in, such third-party software, in the license agreements that we enter into with such third-party software providers, such provisions may not effectively protect us against such claims in all cases and in all jurisdictions. . If we are unable to keep pace witl: technological changes, our business will be harmed. Our business is highly dependent on our computer and telecommunications equipment, infrastructure and software capabilities. Our failure to rnaintain the competitiveness of our technological capabilities or to respond effectively to technological changes could have a material adverse effect on our business, results of operations or financial condition. Our continued growth and future profitability will be highly dependent on a number of factors, including our ability to: • expand our existing solutions offerings; • achieve cost efficiencies in our existing service center operations; • introduce new solutions that leverage and respond to changing technological developments; and • remain current with technology advances. There can �e no assurance that technologies, applications or services developed by our competitors or vendors will not render our products or services non-competitive or obsolete, that we can successfully develop and market any new services or products, that any such new services or products will be commercially successful or that the integration of automated customer support capabilities will achieve intended cost reductions. In addition, the inability of equipment vendars and service providers to supply equipment and services on a timely basis could harm our operations and fmancial condition. • Defects or errors within our software could adversely affect our business and results of operations. Design defects ar software errors may delay software introductions or reduce the satisfaction level of clients and may haye a materially adverse effect on our business and results of operations. Our software is highly complex and may, from time to time, contain design defects or software errors that may be difficult to detect and/or correct. Since both our clients and we use our software to perform critical business functions, design defects, software errors or other potential problems within or outside of our control may arise from the use of our software. It may also result in fmancial or other damages to our clients, for which we may be held responsible. Although our license agreements with our clients often contain provisions designed to limit our exposure to potential claims and liabilities arising from client problems, these provisions may not effectively protect us against such claims in all cases and in all jurisdictions. Claims and liabilities arising from client problems could result in monetary damages to us and could cause damage to our reputation, adversely affecting our business and results of operatio�s. Failure to comply with internal control attestation requirements could lead to loss af public confidence in our fina►zcial statements. Any future acquisitions and other material changes in our operations likely will require us to expand and possibly revise our disclosure controls and procedures, intemal controls over our fmancial reporting and related corporate governance policies. In addition, the Sarb�nes-Oxley Act of 2002 and associated regulations relating to effectiveness of internal controls over financial reporting are subject to varying interpretations in many cases due to their lack of specificity and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. If we fail to comply with these laws and regulations or our efforts to comply with these laws and regulations differ from the conduot intended by regulatory or governing bodies due to ambiguities or varying interpretations of the law, we could be subject to regulatory sanctions, the public may lose confidence in our internal controls and the reliability of our financial statements, and our reputation may be harmed. 22 • � ....,.1.4...,.1.-c:l.../�rr.�r._..�_�-:_ r ^--- T-`------.• _ .. _,�� • . , t �. . .. . . . ,-. . , �a,.,v,..,,. Form 10-K Page 24 of 79 Tabt� af Cor�te��ts �_ • The industries in wliich we operate are continually evolving. Our services may become obsolete, and we may not be able to develop competitive services on a timely basis or at all. The CRM and BPO service industry is characterized by rapid technological change, competitive pricing, frequent new service introductions and evolving industry standards. The success of our company will depend on our ability to anticipate and adapt to these challenges and to offer competitive services on a timely basis. We face a number of difficulties and uncertainties associated with this reliance on technological development, such as: • competition from service providers using other means to deliver similar or alternative services; • realizing economies of scale on a global basis; • responding successfully to advances in competing technologies and network security in a timely and cost-effective manner; and • existing, proposed or undeveloped technologies that may render our services less profitable or obsolete. If we fail to manage future growtlz effectively, we may be unable to execute our business plan, maintain high levels of service or address competitive clzallenges adequately. We plan to expand our business. We anticipate that this expansion will require substantial management effort and significant additional investment in infrastructure, service offerings and service center expansion. In addition, we will be required to continue to improve our operational, financial and management controls and our reporting procedures. Future growth of our company will place a significant strain on managerial, administrative, operational, financial and other resources. If we are unable to manage growth successfully, our business will be hanned. Government regulation of our industry and tlie industries we serve may increase our costs and restrict the operation and growth of our business. • Both the U.S. Federal and various state governments regulate our business and the outsourced business services industry ' as a whole. The Federal Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994 broadly authorizes the Federal Trade Commission ("FTC") to issue regulations restricting certain telemarketing practices and prohibiting misrepresentations in telephone sales. The FTC regulations implementing this Act are commonly referred to as the Telemarketing Sales Rule. Ow operations outside the United States are also subject to regulation. In addition to current laws, rules and regulations that regulate our business, bills are frequently introduced in Congress to regulate the use of credit information. We cannot predict whether additional Federal or state legislation that regulates our business will be enacted. Additional Federal or state legislation could limit our activities or increase our cost of doing business, which could cause our operating results to suffer. We could be subject to a variety of regulatory enforcement or private actions for our failure or the failure of our clients to comply with these regulations. Our results of operations could be adversely impacted if the effect of government regulation of the industries we serve is to reduce the demand for ou; services or expose us to potential liability. We may become involved in [itigation that �nay materially adversely affect us. We are currently, and from time to time in the future we may become involved in various legal proceedings relating to matters incidental to the ordinary course of our business, including patent, software, commercial, product liability, employment, class action, whistleblower and other litigation and claims, and governmental and other regulatory investigations and proceedings. Such matters can be time-consuming, divert managemenYs attention and resources and cause us to incur significant expenses. Furthermore, because litigation is inherently unpredictable, there can be no assurance that the results of any of these actions will not have a material adverse effect on our business, results of operations or financial condition. 23 ` `,,_. «..L.�,�.1.F;lo.//LT.\�.....-..�.Y.,,. Tl�..., D«.�,o..4�\C'+,-nnm Tv.4ornn4i�r..�1\AiTinrinon4o Tn��ae4mc�nt Riin� 5�7Q�7n� 7 Form 10-K Page 25 of 79 � ,. 'Ta�� t�fContents An outbreak of a pandemic, f1u or other disease, or the threat of a pandemic, flu or other disease, may adversely impact our ability to perfornz our services or may adversely impact client and consumer demand. We have a large number of employees across the world in many different countries with different levels of healthcare monitoring. Most of these employees work in relatively close proximity to each other in our service centers. A significant or widespread outbreak of a pandemic, such as the flu or other contagious illness, or even a perceived threat of such an outbreak, could cause significant disruptions to our employee base and could adversely impact our ability to provide our services and deliver our products. This could have a significant impact on our business and our results of operations. Risks Related to Our Equity Securities There can be no assurance that NYSEAmex will continue to list our securities on its exchange, and any delisting could limit investors' ability fo make transactions in our securities and subject us to additional trading restrictions. Our units, common stock and warrants are listed on NYSE Amex, a national securities exchange. We cannot assure you that our securities will continue to be listed on NYSE Amex in the future. If NYSE Amex delists our securities from trading on its exchange and we are unable to list our securities on another exchange, our securities could be quoted on the OTC Bulletin Board, or "pink sheets." As a result, we could face significant adverse consequences, including but not limited to the following: • a limited availability of market quotations for our securities; • a determination that our common stock is a"penny stock" which will require brokers trading in our common stock to adhere to more stringent rules and possibly resulting in a reduced level of trading activity in the secondary trading market for our securities; • a reduced liquidity for our securities; • : a decreased ability to obtain new fmancing or issue new securities on favorable terms in the future; a decreased ability to issue additional securities or obtain additional financing in the future; and • a decreased ability of our security holders to sell their securities in certain states. The value of our units, common stock and warrants may be adversely affected by market volatility. The market price of our units, shares and warrants has been highly volatile and subject to wide fluctuations. In addition, our financial sponsors hold a large percentage of our outstanding shares, which are subject to certain restrictions on resale, and our relatively low trading volume causes significant price variations to occur. If the market prices of our units, shares and warrants decline significantly, you may be unable to resell your units, shares and warrants at or above your purchase price, if at all. We cannot assure you that the market price of our units, shares and wan will not fluctuate or decline significantly in the future. Some of the factors that could negatively affect the price of oux units, shares and warrants or result in fluctuations in the price or trading volume of our units, shares and warrants include: • significant volatility in the market price and trading volume of comparable companies; • actual or anticipated changes in our earnings or fluctuations in our operating results or in the expectations of securities analysts; • the exercise of participation rights held by certain of our stockholders in connection with the exercise of our warrants; • announcements of technological innovations, new products, strategic alliances or significant agreements by us or by our competitors; 24 . � .....L�...,.1.C.1,_./ITT.\T,.��...-....._ T--- Ti- T-- T----- n--_-� . c/�n/nn�n . Form 10-K Page 26 of 79 Tabi� of Cor�tents � � • general economic conditions and trends; • catastrophic events; or • recruitment or departure of key personnel. T/ie control that our financial sponsors Itave over us and provisions in our organizational documents and Delaware law nzight limit your ability to influence t/ze outcome of key trarasactions, including a change in control, and, therefore, depress the trading price of our common stock. Our fmancial sponsors, Ares Corporate Opportunities Fund II, L.P., NewBridge International Investment Ltd. and EGS Dutchco B.V., collectively own approximately 87% of our common stock and are parties to a stockholders agreement that restricts our ability to undertake certain actions. Therefore, our fmancial sponsors collectively are able to determine the outcome of all matters requiring stockholder approval, are able to cause or prevent a change of control of our company or a change in the composition of our board of directors, and could preclude any unsolicited acquisition of our company. The market price of our shares could be adversely affected to the extent that this concentration of ownership and stockholders agreement, as well as provisions of our organizational documents, discourage or impede potential takeover attempts that our other stockholders may favor. Furthermore, our fmancial sponsors may, in the future, own businesses that directly or indirectly compete with us. Our fmancial sponsors may also pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. Provisions in our organizational documents and Delaware law may also discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares of our common stock. These provisions may also prevent or fiustrate attempts by our stockholders to replace or remove our management. For example, our organizational documenfs require advance notice for propasals by stockholders and nominations, place limitations on convening stockholder meetings and authorize the issuance of preferred shares that could be issued by our board of directors to thwart a takeover attempt. Moreover, certain provisions of • Delaware law may delay or prevent a transaction that could cause a change in our controL Our outstanding warrants have been, and in the future may be, e.zercised and trigger the exercise of certain participation rights held by our major stockholders, whicl: have increased, and in the future would increase, the number of shares eligible for future resale in the public market and result in dilution to our stockholders. This might have an adverse effect on the market price of our common stock. As of December 31, 2010, 7,357,004 publicly traded warrants were outstanding, including 30,323 shares of common stock underlying warrants embedded in our units. To the extent that additional warrants are exercised, additional shares of our common stock will be issued, which will result in further dilution to our stockholders and increase the number of shares eligible for resale in the public market. In addition, the exercise of any of our publicly traded warrants triggers contractual participation rights for Ares, NewBridge and Dutchco (collectively, the "Participating Stockholders"), pursuant to �vhich they would have the right to purchase from us 2.4364 additional shares of common stock at $6.00 per share for each of our publicly traded warrants that are exercised, up to a maximum of approximately 17,925,000 shares, which will cause further dilution to our stockholders. In addition, sales in the public market of substantial numbers of shares acquired through either the exercise of these participation rights or the exercise of these warrants could adversely affect the market price of our shares. We do not expect to pay any dividends on our conimon stoek for t/ze foreseeable future. You should not rely on an investment in our common stock to provide dividend income. We do not anticipate that we will pay any dividends to holders of our common stock in the foreseeable future: Instead, we plan to retain any earnings to maintain and expand our existing operations. In addition, we are restricted from paying dividends in certain circumstances under the terms of the indenture governing our Notes and the ABL 25 t � ...1.+...l.�lo./(LS•\T.'r.... Tlo.> D.-...0�.4�.\C4y.o.�,�. Tr�4o�.�4��n�1�A�Ti»r�aen4a Tnvac+mant T?»nrl S�'�Q�7(��'7 Form 10-K Page 27 of 79 � 'Tab[e af Car�tea�ts Credit Facility. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any return on their investment. As a result, investors seeking cash dividends should not purchase our common stock. We may choose to redeem our outstanding warrants at a time that is disadvantageous to our warzant holders. We may redeem the warrants issued as a part of our publicly traded units at any time in whole and not in part, at a price of $0.01 per warrant, upon a minimum of 30 days' prior written notice of redemption, if and only if, the last sales price of our common stock equals or exceeds $11.50 per share for any 201rading days within a 30 trading day period ending three business days before we send the notice of redemption. Redemption of the warrants could force the warrant holders (1) to exercise the warrants and pay the exercise price therefore at a time when it may be disadvantageous for the holders to do so, (2) to sell the warrants at the then current market price when they might otherwise wish to hold the warrants or (3) to accept the nominal redemption price which, at the time the warrants are called for redemption, is likely to be substantially less than the market value of the warrants. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES Description of Property We have 50 locations in 22 countries that are designed to be globally integrated. Our facilities are organized into two regions: Americas, which includes the United States, Canada, the Philippines, India, Costa Rica, the Dominican Republic, Nicaragua and El Salvador; and EMEA, which includes Europe, the Middle East and Africa. • We do not own offices or properties but rather lease offices in the United States, Canada, the Netherlands, the United Kingdom, Italy, Ireland, Spain, Sweden, France, Germany, Poland, India, Tunisia, the Dominican Republic, Costa Rica, El Salvador, Nicaragua, the Philippines, Egypt, South Africa, Denmark and Bulgaria. Our headquarters are located in Wellesley, Massachusetts. We believe that our facilities are adequate for our present needs in all material respects. ITEM 3. LEGAL PROCEEDINGS We have been named as a third-pariy defendant in a putative class action captioned Kambiz Batmanghelich, on behalf of himself and all others similarlv situated and on behalf of the general public v Sirius XM Radio Inc , filed in the Los Angeles County Supenor Court on November 10, 2009, and removed to the United States District Court for the Central District of California. The Plaintiff alleges that Sirius XM Radio, Inc. recorded telephone conversations between Plaintiff and members of the proposed class of Sirius customers, on the one hand, and Sirius and its employees, on the other, without the Plaintiff's and class members' consent in violation of California's telephone recording laws. The Plaintiff also alleges negligence and violation of the common law right of privacy, and seeks injunctive relie£ On December 21, 2009, Sirius XM Radio, Inc. filed a Third-Pariy Complaint in the action against us seeking indemnification far any defense costs and damages that result from the putative class action. On March 25, 2010, the Plamtiff filed an amended complaint that added us as a defendant. We believe that we have meritorious defenses to these claims, but there can be no assurance at this time as to the outcome of this lawsuit. ITEM 4. RESERVED 26 • mhtm�•fi�a•IIT-T•�Fnnnnmin Tlo.� pr�ion4o\C4�-on,ti, T,�4o«.�.,4;,�,-..,1\Tif;.�.�...,..4.. T...,�..+,..-..�,-,+L',,... ci�ni�n» Form 10-K Page 28 of 79 Table of Contents . PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUTTY SECURITIES On October 18, 2007, our units began trading on NYSE Amex under the symbol "OOO.U". Each of our units consists of one share of common stock and one warrant. On November 27, 2007, the common stock and warrants underlying our units began to trade separately on NYSE Amex under the symbols "000" and "OOO.WS", respectively. On October 26, 2009, we changed our symbols to "SGS," "SGS.U" and "SGS.WS", respectively. The following sets forth the high and low sales price of our common stock, warrants and units, as reported on NYSE Amex for the periods shown: Common Stock Warrants Units High Low High Low High Low Fiscal Year Ending December 31, 2009 15TQuarter $4.35 $2.84 $0.22 $0.06 $3.51 $4.50 2�a Quarter $5.05 $2.95 $0.80 $0.11 $3.75 $4.98 3�d Quarter $5.50 $3.39 $035 $0.06 $4.27 $5.43 4�'' Quarter $7.01 $5.30 $035 $0.06 $5.25 $7.44 Fiscal Year Ending December 31, 2010 1StQuarter $6.88 $5.71 $0.83 $0.45 $7.65 $6.65 2�a Quarter $6.92 $5.35 $0.82 $0.39 $7.63 $6.10 3�dQuarter $5.70 $338 $0.43 $0.15 $7.20 $4.34 4�'' Quarter $4.23 $3.45 $0.20 $0.04 $4.45 $3.90 On February 25, 2011, there were approximately 288 holders of record of our common stock, 1 holder of record of our • warrants and 1 holder of record of our units. Dividend Policy We have not paid any dividends on our common stock to date. Our board does not anticipate declaring any dividends on the common stock in the foreseeable future. The payment of dividends on the common stock in the future, if any, will be within the discretion of our then Board of Directors and will be contingent upon our revenues and earnings, if any, capital requirements and general fmancial condition. Our Credit Agreement also contains certain limitations on the payment of dividends. 27 4 ..:.• m1�4m1•��c�•//�T•�Fnnnnmin Tlav Prnivrte\CtrPam Tnternatinnal\Minnecnta TnvestmentFuncl ___ 5/29/2n12 Form 10=K Page 29 of 79 •_. T��,��ore��t��ts Equity Compensation Plan Information Securities Autharize�l for Issuance under our Equity Compensation Plans At December 31, 2010, we had only one equity compensation plan, our 2008 Stock Incentive Plan. The following table contains information about our 2008 Stock Incentive Plan. See Note 14 in our Notes to Consolidated Financial Statements for a description of our 2008 Stock Incentive Plan. Number of Shares Remaining Available for Future Issuance Number of Shares to under Equity be Issued upon Weighted Average Compensation Plans Exercise of Exercise Price of (Excluding Shares Outstanding Options Outstanding Options Ret�ected Plan CateQOry. (Column A) (Column B) in Column A) Equity compensation plans that have been approved by our stockholders 6,307,750(1) $ 6.13 3,293,080 Equity compensation plans that have not been approved by our stockholders — Total 6,307,750 $ 6.13 3,293,080 (1) This amount does not include 399,170 shares of outstanding restricted stock granted to our employees. Issuer Purchases of Equity Securities • During the fourth quarter of 2010, our Compensation Committee approved the payment of applicable tax withholding on the vesting of restricted stock and restricted stock units held by certain members of our senior management team through the surrender by such shareholders and the repurchase by us of that number of the vested shares or units equal to the total tax withholding obligations divided by the fair market value of our common stock on the trading day preceding the vesting date. Such repurchases by us were not made pursuant to a publicly announced repurchase program. The aggregate number of shares repurchased by us from such executives is set forth in the table below. � (c) Maximum Total Number of Number of Shares Shares that �a) Purchased as may yet be Total Number of (b) PaM of Publicly Purchased under Shares/[lnits Average Price Announced Plans the Plan or Period Purchased Paid per Share or Programs Pro�ram October 2010 (October 1, 2010 — October 30, 2010) — — - _ November 2010 (November 1, 2010 — November 31, 2010) 11,643 $ 3.91 — — December 2010 (December 1, 2010 — December 31, 2010) _ _ _ _ Total 11,643 $ 3.91 — — ITEM 6. SELECTED FINANCIAL DATA Not �.pplicable • 28 ,,, 1.�....l.�;lo.//i7.\L',.,....,....,:,.7�.._. n..,..�..a,.�c�a_�.._.., r�.�_.___.:_�_i�r,r.-------`_ T_____`------`r--_� ci�ni�nin Form 10-K Page 30 of 79 'Tab(e of Cantents `� � ITEM 7. M,ANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21 E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unlrnown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed ar implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "could," "would," "expect," "intend," "plan," target," "goal," "anticipate," "believe," "estimate," "continue," or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in Item lA, "Risk Factors," of this report and in our other filings with the SEC. Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the SEC, we explicitly disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise to reflect actual results or changes in factors ar assumptions affecting such forward- looking statements. You are advised, however, to consult any further disclosure we make in our reports filed with the SEC. Overview Our Business We are a leading global business process outsourcing (`BPO") service provider specializing in customer relationship management ("CRM"), including sales, customer care and technical support for Fortune 1000 companies. Our clients include leading computing/hardware, telecommunications/service providers, software/networking, entertainment/media, retail, travel, healthcare and fmancial services companies. Our service programs are delivered through a set of standardized best practices • and sophisticated technologies by a highly skilled multilingual workforce with the ability to support 35 languages across 50 locations in 22 countries. We continue to expand our global presence and service offerings to increase revenue, improve operational efficiencies and drive brand loyalty for our clients. We generate revenue based primarily on the amount of time our agents devote to a clienYs program. Revenue is recognized as services are provided. The majority of our revenue is from multi-year contracts and we expect that trend to continue. However, we do provide certain client programs on a short-term basis. Our industry is highly competitive. We compete primarily with the in-house business processing operations of our current and potential clients. We also compete with certain third-pariy BPO providers. Our industry is labor-intensive and the majority of our operating costs relate to wages, employee benefits and employment taxes. We periodically review our capacity utilization and projected demand for future capacity. In conjunction with these reviews, we may decide to consolidate or close under-performing service centers, including those impacted by the loss of client programs, in order to maintain ar improve targeted utilization and margins. This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements and notes thereto which appear elsewhere in this Annual Report on Form 10-K. 29 • m�4ml•��n•��T•��in�n�m�n nnv T�rniPr�ta\Ctraom Tntr rnatinnal�l��Tinnecnta TnvectmPnl F7m(� S�7A�7n� 7 � Form 10-K Page 31 of 79 • T'ab�e of Cc�a�t�nts Critical Accounting Policies Use of Estimates The preparation of the Consolidated Financial Statements in conformity with accounting principles generally accepted in the U.S. ("GAAP") requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the consolidated fmancial statements and the reported amounts of revenue and expenses during the reporting period. On an on-going basis, the Company evaluates its estimates including those related to derivatives and hedging activities, income taxes including the valuation allowance for deferred tax assets, valuation of long-lived assets, self-insurance reserves, litigation and restructuring liabilities, and allowance for doubtful accounts. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ materially from these estimates under different assumptions or conditions. Equipment and Fixtures Equipment and fixtures are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Furniture and fixtures are generally depreciated over a five-year life, software over a three- to five-year life and equipment generally over a three- to five-year life. Leasehold improvements are depreciated over the shorter of their estimated useful life or the remaining term of the associated lease. Assets held under capital leases are recorded at the lower of the net present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease. Amortization expense is computed using the straight-line method over the shorter of the estimated useful lives of the assets or the period of the related lease and is recorded in depreciation and amortization expense. Repair and maintenance costs are expensed as incurred. The carrying value of equipment and fixtures to be held and used is evaluated for impanment whenever events or changes • in circumstances indicate that the carrying amount may not be recoverable in accordance with authoritative guidance. An asset is considered to be impaired when the sum of the undiscounted future net cash flows expected to result from the use of the asset and its eventual disposition does not exceed its carrying amount. The amount of the impairment loss, if any, is measured as the amount by which the carrying value of the asset exceeds its estimated fair value, which is generally determined based on appraisals ar sales prices of comparable assets. Occasionally, we redeploy equipment and fixtures from underutilized centers to other locations to improve capacity utilization. We estimate fair value of our asset retirement obligations, if any, associated with the retirement of tangible long-lived assets such as property and equipment when the long-lived asset is acquired, constructed, developed or through normal operations. Goodwill and Other Intangible Assets In accardance with the authoritative guidance goodwill is reviewed for impaument annuaily and on an interim basis if events or changes in circumstances between annual tests indicate that an asset might be impaired. Impairment occurs.when the carrying amount of goodwill exceeds its estimated fair value. The impairment, if any, is measured based on the estimated fair value of the reporting unit. We operate in one reporting unit, which is the basis for impairment testing of all goodwill. Intangible assets with a fmite life are recorded at cost and amortized using their projected cash flows over their estimated usefu� life. Client lists and relationships are amortized over periods up to ten years, market adjustments related to facility leases are amortized over the term of the respective lease and developed software is amortized over five years. Brands and trademarks are not amortized as their life is indefinite. In accordance with the authoritative guidance, indefmite lived intangible assets are reviewed for impairment annually and on an interim basis if events or changes in circumstances between annual tests indicate that an asset might be impaired. The carrying value of finite-lived intangibles is evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accardance with the authoritative 30 � ,....t,+,�.1.F;i,,.i/u.�� .............. r�,,., n..,..,.,.�,. T...a,_...,...a.,..�..1\1�.T.��..,..,�-,. T.__...,.�......,.«�- ci�ni�ni� Form 10-K Page 32 of 79 Table of Conte�ats �� guidance. An asset is considered to be impaired when the sum of the undiscounted future net cash flows expected to result from the use of the asset and its eventual disposition does not exceed its carrying amount. The amount of the impairment loss, if any, is measured as the amount by which the carrying value of the asset exceeds its estimated fair value, which is generally determined based on appraisals or sales prices of comparable assets. Stock-Based Compensation For share-based payments, the fair value of each grant under our stock-based compensation plan for employees and directors, including both the time-based grants and the performance-based grants, is estimated on the date of grant using the Black-Scholes-Merton option valuation model. Stock compensation expense is recognized on a straight-line basis over the vesting term, net of an estimated future forfeiture rate. Income Tcixes We recognize income taYes in accordance with the authoritative guidance, which requires recognition of deferred assets and liabilities for the future income tax consequence of transactions that have been included in the consolidated fmancial statements or tax returns. Under this method deferred tax assets and liabilities are determined based on the difference between the carrying amounts of assets and liabilities for financial reporting purposes, and the amounts used for income tax, using the enacted taac rates for the year in which the differences are expected to reverse. We provide valuation allowances against deferred tax assets whenever we believe it is r�ore likely than not, based on available evidence, that the deferred tax asset will not be realized. Further we provide far the accounting for uncertainty in income taxes recognized in fmancial statements and the impact of a tax position in the fmancial statements if that position is more likely than not of being sustained by the taxing authority. Contingencies We consider the likelihood of various loss contingencies, including non-income tax and legal contingencies arising in the � • ordinary course of business, and our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued in accordance with the authoritative guidance, when it is probable that a liabiiity has been incurred and the amount of loss can be reasonably estimated. We regularly evaluate current information available to determine whether such accruals should be adjusted. Recent Accounting Pronouncements In January 2010, the Financial Accounting Standards Board ("FASB") issued guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires new disclosures on the transfers of assets and liabilities between Level 1(quoted prices in active market for identical assets or liabilities) and Leve12 (significant other observable inputs) of the fair value measurement hierarchy, including the reasons and the timing of the transfers. Additionally, the guidance requires a roll forward of activities on purchases, sales, issuance, and settlements of the assets and liabilities measured using significant unobservable inputs (Leve13 fair value measurements). The guidance became effective far us with the reporting period beginning January 1, 2010, except for the requirement to separately disclose purchases, sales, issuances and settlements of recurring Level 3 fair value measurements which is effective January 1, 2011. Other than requiring additional disclosures, adoption of this new guidance did not have a material impact on our financial statements. In October 2009, the FASB issued guidance on revenue recognition that will become effective for us beginning January 1, 201 l, with earlier adoption permitted. Under the new guidance, when vendor specific objective evidence or third party evidence for multi-element deliverables in an arrangement cannot be determined, a best estimate of the selling price is required to separate deliverables and allocate arrangement consideration using the relative selling price method. The new guidance includes new disclosure requirements on how the application of the relative selling price method affects the timing and amount of revenue recognition. We believe adoption of this new guidance will not have a material impact on our fmancial §tatements. 31 ',,.• «..1..4.....1.�:1...//i_7.\L Tl..�, n«,..,.,.4,.\C T«+.....-...4;.�....1\Aif:.�..�.0�.�4o Tr��ra�o4mnr�4 T.'��n� S�7Q�7n�7 Form 10-K Page 33 of 79 �; _; Ta�a(e c�f Contents Unaudited Pro Forma Financial Information The following unaudited pro forma financial information presents the consolidated results of operations of SGS and EGS as if the acquisition of EGS had occurred as of the beginning of the periods presented below. The historical fmancial information has been adjusted to give effect to events that are directly amibutable to the combination (including amortization of purchased intangible assets and debt costs associated with acquisition, debt costs associated with high yield debt offering and conversion of preferred stock to common stock), and in case of the pro forma statements of operations, have a recurring impact. The unaudited pro forma financial information is not intended, and should not be taken as representative of our fut�re consolidated results of operations or fmancial condition or the results that would have occurred had the acquisition occurred as of the beginning of the earliest period. 2009 2010 (Pro- (Audited) Forma) Revenue $800,173 $797,005 Net income (loss) attributable to common shareholders $(53,475) $(40,698) Basic and diluted net loss per share $ (0.67) $ (0.51) EGS was acquired on October 1, 2009 and thus its results of operations are included in the actual results of SGS for the period October 1, 2009 to December 31, 2009. The following are actual results of operations for the year ended December 31, 2010 and December 31, 2009, which include the consolidated results of operations of EGS beginning on October 1, 2009: Stream Global Services, Inc. Consolidated Statements of Operations � Amounts as a percentage of revenue: December 31, 2010 2009 Revenue i00.0% 100.0% Direct cost of revenue 58.9 58.5 Gross profit 41.1 41.5 Operating expenses: Selling, general and administrative expenses 32.6 33.4 Stock based compensation expense 0.6 0.2 Severance, restructuring and other charges 1.5 2.6 Depreciation and amortization expense g.2 6,2 Total operating expenses 429 42.4 Income (loss) from operations (1.8) (0.9) Other (income) expenses, net: Foreign currency transaction loss (gain) ; (0.2) (0.0) Other (income) expense, net OA 0.0 Interest expense, net 3.8 32 Total other (income) expenses, net 3.6 3.2 Loss before income taxes (5.4 (4.1 Provision for income taxes 13 0.8 Net income (loss) (6.7 (4.9 32 • ..,�..+.,..�.F;t�.iiu.��,.,....,....,,, r�,._, n.,,..,.,.,.� \C'�+«,.,...,. T«4,........4:..«,.1\Tii:««,...,.�,. T...�,,.,.�....,....� ct�ni�n» Form 10-K Page 34 of 79 Tab(e of Gontents 4 ° • Revenue We derive the majority of our revenue by providing CRM services such as technical support, sales and revenue generation services and customer care services. We bill monthly for our services in a variety of manners, including per minute, per contact, per hour and per full-time employee equivalent. Certain customer contracts contain provisions under which we can earn bonuses or are required to pay penalties on a monthly basis based upon performance. Direct Cost of Revenue We record the costs specifically associated with client billable programs identified in a client statement of work as direct cost of revenue. These costs include direct labor wages and benefits of service agents in our call centers as well as xeimbursable expenses such as telecommunication charges. The most significant portion of our direct cost of revenue is attributable to employee compensation, benefits and payroll t�es. These costs are expensed as they are incurred. Direct costs are affected by prevailing wage rates in the countries in which they are incurred and are subject to the effects of foreign currency fluctuations. Selling, general and administrative expenses Our selling, general and administrative expenses consist of all expenses of operations other than direct costs of revenue, such as information technology, telecommunications, sales and marketing costs, fmance, human resource management and other functions and service center operational expenses such as facilities, operations and training. Severance, restructuring and other charges Our severance, restructuring and other charges include expenses related to acquisitions, non-agent severance charges and expenses related to exiting leased facilities. Other Income and Expenses • Other income and expenses consists of the foreign currency transaction gains or losses, other income, interest income and interest expense. Interest expense includes interest expense and amortization of debt issuance costs associated with our indebtedness under our credit lines, senior secured notes; and capitalized lease obligations. We generate revenue and incur expenses in several different currencies. We do not operate in any countries subject to hyper-inflationary accounting treatment. Our most common transaction currencies are the U.S. Dollar, the Euro, the Canadian Dollar, the British Pound, Philippine Peso and the Indian Rupee. Our customers are most commonly billed in the U.S. Dollar or the Euro. We translate our results from functional currencies to U.S. Dollars using the average exchange rates in effect during the accounting period. Results of Operations Year ended December 31, 2010 compared with year ended December 31, 2009 Revenue. Revenues increased $215.4 million, or 36.8%, to, $800.2 million for the year ended December 31, 2010, compared to $584.8 million for the year ended December 31, 2009. The increase is primarily attributable to the full-year revenue effect from the acquisition of EGS on October 1, 2009. Revenues for services performed in our United States and Canadian service centers increased $216.1 million, or 58.1%, for the year ended December 31, 2010, compared to the year ended December 31, 2009, as a result of the acquisition of EGS on October 1, 2009 and the full-year inclusion of revenue from the EGS business 33 `,.• �,,.L.�,,.,1.F,lo.//T�.\�'....,�..,,,-.,., 710.. D,-.,,o..+�\C�ro�„-, T,-.4nrr.o4innol\l��iir�nacnta Tnvr etmant Fiin� S/79�7(�� 7 Form 10-K � Page 35 of 79 � ., . T��,�� r efl�ce�,t§ in our results of operations in 2010. Revenues for services performed in European service centers decreased $0.7 million, or 03%, for the year ended December 31, 2010, compared to the year ended December 31, 2009. This decrease is attributable to the shift in 2010 of revenue from our European service centers to Tunisia and Egypt at lower price points. Revenues for services performed in offshore service centers in the Philippines, India, El Salvador, Costa Rica, the Dominican Republic, Tunisia and Egypt increased $145.5 million, or 80.3%, for the year ended December 31, 2010, compared to the year ended December 31, 2009 due to the acquisition of EGS on October l, 2009 and the inclusion of the EGS business prior to its acquisition by Stream ("Legacy EGS") in our results of operations subsequent to the acquisition. Revenues in our offshore service centers represented 40.8% of consolidated revenues for the year ended December 31, 2010, compared to 31.0% in the same period in 2009. Direct Cost of Revenue. Direct cost of revenue (exclusive of depreciation and amortization) increased $129.2 million, or 37.8%, to $471.4 million for the year ended December 31, 2010, compared to $342.2 million for the year ended December 31, 2009. The increase is primarily ariributable to the acquisition of EGS on October 1, 2009 and the inclusion of the Legacy EGS business in our results of operations subsequent to the acquisitian. Gross Profit. Gross profit increased $86.1 million, or 35.5%, to $328.7 million for the year ended December 31, 2010 from $242.6 million far the year ended December 31, 2009. The increase is primarily attributable to the acquisition of EGS on October 1, 2009 and the inclusion of the Legacy EGS business in our results of operations subsequent to the acquisition. Gross profit as a percentage of revenue decreased slightly from the year ended December 31, 2009, as shown in the table above. Gross profit percentage decreased primarily due to the reductions in planned call volumes for a few of our key clients during the second quarter. , Operating Expenses. Operating expenses increased $95.4 million, or 38.5%, to $343.5 million for the year ended December 3 l, 2010, compared to $248.1 million for the year ended December 3 l, 2009. The increase is primarily attributable to the acquisition of EGS on October 1, 2009 and the inclusion of the Legacy EGS results in 2010. Selling, general and • administrative expense grew from $196.5 million for the year ended December 31, 2009 to $265.7 million, or 35.2% for the year ended December 31, 2010. Severance, restructuring and other charges of $11.9 miilion and $15.2 million for the years ended December 31, 2010 and 2009, respectively, relate to non-agent severance, lease exit costs, and facility impanment charges. Depreciation and amortization increased $29.5 million as a result of the inclusion of the Legacy EGS business in our results of operations subsequent to the acquisition and increased amortization associated with the intangibles acquired in the EGS acquisition. Operating expenses as a percentage of revenues increased to 42.9% for the year errded December 31, 2010 compared to 42.4% for the year ended December 31, 2009, primarily as a result of increased amortization of intangible assets related to the acquisition of EGS. Other (Income) Expenses, Net. Other (income) expenses, net increased $9.7 million, or 52.2%, to $28.3 million for the year ended December 31; 2010, compared to $18.6 million for the year ended December 31, 2009. This increase in interest expense of $123 million is primariIy due to our issuance of $200 million of the Notes during October 2009 related to the acquisition of eTelecare. As discussed under Item 7A, Stream has a foreign exchange hedging program. For the year ended December 31, 2010, we recorded foreign exchange gains of $2.4 million versus a loss of $0.2 million for the prior year. The majority of the recarded gains relate to hedging activity in the Philippine Peso in connection with our operations in the Philippines. As discussed in Footnote 4 of the consolidated financial statements contained within this report, in connection with the early termination of our prior credit facility on October 1, 2009, our former bank required cancellation of existing forward exchange currency contracts in the Canadian dollar. Thereafter we commenced a program to acquire new contracts under our new credit facility. However, due to the Canadian dollar strengthening versus the US Dollar during this time, our reported operating income was reduced. In addition, on an average annual translation basis, the EURO weakened versus the US Dollar during 2010 versus 2009, which also reduced our reported operating income. 34 • . il,,., D.....,.,,�„�a+..,.,..... T ..............�:,._.,.t�r,r..,..,.�..�4,. rr._...,.�.,.,.�.... r.__.,.a ci�ni�n� � Form 10-K Page 36 of 79 'Tab(e of Cantents # ,. .• Provision for Income Taxes. Income taxes increased $6.0 million, or 136.4%, to $10.4 million for the year ended December 31, 2010, compared to $4.4 million for the year ended December 31, 2009. Foreign tax expense comprised of $8.4 million and $5.0 million for the year ended December 31, 2010 and 2009, respectively. In the U.S., where we operated at a loss for tax purposes, we recorded $2.0 million income tax expense for the year ended December 31, 2010 primarily related to the fmalization of purchase accounting. We operate in a number of countries outside the U.S. that are generally taxed at lower statutory rates than the U.S. and also benefit from tax holidays. Liquidity and Capital Resources Our primary liquidity needs are for financing warking capital associated with the expenses we incur in performing services under our client contracts and capital expenditures for the opening of new service centers, including the purchase of computers and related equipment. We have in place a credit facility that consists of a revolving line of credit that allows us to manage ow cash flows. Our ability to make payments on the credit facility, to replace our indebtedness if desired, and to fund working capital and planned capital expenditures will depend on our ability to generate cash in the future. We have secured our working capital facility through our accounts receivable and therefore, our ability to continue servicing debt is dependent upon the timely collection of those receivables. We made capital expenditures of $31.0 million in the year ended December 31, 2010 as compared to $331 million for the year ended December 31, 2009. We expect to continue to make capital expenditures to build new service centers, meet new contract requirements and maintain and upgrade our technology. On October l, 2009, we issued $200 million aggregate principal amount of ll.25% Senior Secured Notes due 2014. The Notes were issued pursuant to the Indenture, among us, the Note Guarantors, and Wells Fargo, as trustee. The Notes were issued by us at an initial offering price of 95.454% of the principal amount. The Indenture contains restrictions on our ability to incur additional secured indebtedness under certain circumstances. The Notes mature on October 1, 2014. T'he Notes bear interest at a rate of 11.25% per annum. Interest on the Notes is • computed on the basis of a 360-day year composed of twelve 30-day months and is payable semi-annually on April 1 and October 1 of each year, beginning on April 1, 2010. The obligations under the Notes are fully and unconditionally guaranteed, jointly and severally, by the Note Guarantors and will be so guaranteed by any future domestic subsidiaries of ours, subject to certain exceptions. The Notes and the Note Guarantors' guarantees of the Notes are secured by senior liens on our and the Guarantors' Primary Notes Collateral and by junior liens on our and the Guarantors' Primary ABL Collateral (each as defined in the Indenture). On October 1, 2009, we, Stream Holdings Corporation, Stream International, Inc., Stream New York, Inc., Stream Global Solutions-US, Inc., Stream Global Solutions-AZ, Inc. and Stream International Europe B.V. (collectively, the "U.S. Borrowers"), and SGS Netherland Investment Corporation B.V., Stream International Service Europe B.V., and Stream . International Canada Inc., (collectively, the "Foreign Borrowers" and together with the U.S. Borrowers, the `Borrowers"), entered into the Credit Agreement, with Wells Fargo Foothill, LLC, as agent and co-arranger, Goldman Sachs Lending Partners LLC, as co-arranger, and each of the lenders pariy thereto, as lenders, providing for the ABL Facility of up to $100.0 million, including a$20.0 million sub-limit for letters of credit, in each case, with certain further sub-limits for certain Foreign Borrowers. The ABL Facility has a term of four years at an interest rate of Wells Fargo's base rate plus 375 basis points or LIBOR plus 400 basis points at our discretion. The ABL Facility has a fixed charge coverage ratio fmancial covenant that is operative when our availability under the facility is less than $20.0 million. At December 31, 2010, we had $68.6 million available under the ABL Facility. We were in compliance with the financial covenants as of December 31, 2010. 35 � ,_, • ,Y.l�,+ml•�lc�•//T�•\T'.n.�.,-,..min Tlev Ur�inn4o�C4rnom Tr�+c>rnoti�nol\A�Tinnaenta Tnvactmant Fnnr� S/'��/7(��7 Form 10-K Page 37 of 79 � T�bleoi'�onte►�ts Letters of Credit. We have certain standby letters of credit for the benefit of landlords of certain sites in the United States and Canada. As of December 31, 2010, we had approximately $6.9 million of these letters of credit in place under our ABL Facility. The obligations under the letters of credit decline annually as the underlying obligations are satisfied. Contractual Obligations. We have various contractual obligations that will affect our liquidity. The following table sets forth our contractual obligations as of December 31, 2010: Payments Due by Period Less than More than Total 1 year 1-3 years 3-5 years 5 years (in thousands) Long-term debt obligations $290,147 $22,596 $ 45,051 $222,SD0 $ — Revolving debt obligations 27,907 1,134 26,773 — — Operating lease obligations 117,703 40,885 43,435 18,403 14,980 Capital lease obligations 21,886 10,485 9,996 1,233 172 Total $457,643 $75,100 $125,255 $242,136 $ 15,152 Unrestricted cash and cash equivalents totaled $18.3 million for the year ended December 31, 2010 which is a$3.7 million increase compared to $14.6 million for the year ended December 31, 2009. Working capital increased $5.3 million to $117.3 million for the year ended December 31, 2010, compared to $112.0 million for the year ended December 31, 2009: Net cash provided by operating activities totaled $22.4 million for the year ended December 31, 2010, a$47.6 million increase from the $25.2 million used in the year ended December 31, 2009. Non-cash charges were $47.3 million greater in the year ended December 31, 2010 than those generated in the period ended December 31, 2009 primarily as a result of the $29.5 million increase for the depreciation and amortization of acquired assets related to the purchase of EGS. The increase in cash inflows from changes in operating assets and liabilities of $25.2 million is primarily due to acquisition related cash • oatflows in 2009 related to the acquisition of EGS. Net cash used in investing activities totaled $22.9 million for the year ended December 31, 2010 which is a$34.2 million decrease from the $i 13 million provided by the period ended December 31, 2009. This is primarily attributable cash acquired in the acquisition of EGS in 2009. We used $22.9 million for additions to equipment and fixtures for the year ended December 31, 2Q 10 as compared to $22.1 million use of cash for the year ended December 31, 2009. Net cash provided by financing activities totaled $3.8 million for the year ended December 31, 2010, a$9.5 million decrease from the $13.3 million of cash provided by fmancing activities for the period ended December 31, 2009. Our foreign exchange forward contracts require the exchange of foreign currencies for U.S. Dollars or vice versa, and generally mature in one to 18 months. We had outstanding foreign exchange forward contracts with aggregate notional amounts of $233.2 million as of December 31, 2010 and $112.0 million as of December 31, 2009. We believe that our cash generated from operations, existing cash and cash equivalents, and available credit will be sufficient to meet expected operating and capital expenditures for the next 12 months. Off-Balance Sheet Arrangements With the exception of operating leases discussed above, we do not have any off-balance sheet arrangements. 36 . „��,+„-,i•�;to•��r.��,.,,.,,,,,-,;,, r�o., v,.,.;o„+��c�,.�,,,.... T.,+�,....,,,;,.�„��ra;��.,�,,,-„ rr<,o�+,.,or� �„r,a ci��ni � Form 10-K Page 38 of 79 t_,:� Tabie of Contents Seasonality We are exposed to seasonality in our revenues because of the nature of certain consumer-based clients. We may experience approximately 10% increased volume associated with the peak processing needs in the fourth quarter coinciding with the holiday period and a somewhat seasonal overflow into the first quarter of the following calendar year. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates �nd interest rates. Market risk is the potential loss arising from adverse changes in market rates and prices. Our risk management strategy includes the use of derivative instruments to reduce the effects on our operating results and cash flows from fluctuations caused by volatility in currency exchange and interest rates. In using derivative fmancial instruments to hedge exposures to changes in exchange rates we exposes ourselves to counterpariy credit risk. Interest Rate Risk We are exposed to interest rate risk primarily through our debt facilities since some of those instruments, including capital leases, bear interest at variable rates. At December 31, 2010, we had outstandirig borrowings under variable clebt agreements that totaled approximately $27.1 million. A hypothetical 1% increase in the interest rate wouidhave increased interest expense by approximately $0.3 million and would have decreased annual cash flow by a comparable amount. The carrying amount of our borrowings reflects fair value due to their short-term and variable interest rate features. There were no outstanding interest rate derivatives covering interest rate exposure at December 31, 2010. Foreign Currency F�change Rate Risk We serve many of our U.S.-based clients using our service centers in Canada, India, the Dominican Republic, El • Salvador, Egypt, the Philippines, Nicaragua and Costa Rica. Although the contracts with these clients are typically priced in i U.S. dollars, a substantial portion of the costs mcurred to render services under these contracts are denominated in the local currency of the country in which the contracts are serviced which creates foreign exchange exposure. We serve most of our EMEA based clients using our service centers in the Netherlands, the United Kingdom, Italy, Ireland, Spain, Sweden, France, Germany, Poland, Denmark; Bulgaria, Egypt, Tunisia and South Africa. We typically bill our EMEA based clients in EURO or British Pound Sterling. While a substantial portion of the costs incurred to render services under these contracts are denominated in EURO, a part is also denominated in the local currency in which the contracts are serviced which creates foreign exchange exposure. 'Fhe expenses from these foreign operations create exposure to changes in exchange rates between the local currencies and the contractual currencies — primarily the U.S. dollar and EURO. As a result, we may experience foreign currency gains and losses, which may positively or negatively affect our results of operations amibuted to these subsidiaries. The majority of this exposure is related to work performed from call centers in Canada, India and the Philippines. In arder to manage the risk of these foreign currencies from strengthening against the currency used for billing, which thereby decreases the economic benefit of performing work in these countries, we may hedge a portion, though not 100%, of these foreign currency exposures. While our hedging strategy may protect us from adverse changes in foreign currency rates in the short term, an overall strengthening of the foreign currencies would adversely impact margins over the long term. 37 . . 4•::..:.. • . ,,,i,+,,,t•f;lo•//u•\�'.,,,v,,,,,,,,. T1e.. Dr.,,o..�� T,�,tA,-,�,�t;..,,al\Aifinnr�enta Tnvectment Fnn� 5/79/7(117 Form 10-K Page 39 of 79 � Tab€e af Co�ter�ts The following summarizes the relative (weakening)/strengthening of the U.S. Dollar against the local currency during the years presented: Year Ended December 31, 2010 2009 U.S. Dollar vs. Canadian Doilar (4.7%) (14.2%) U.S. Dollat vs. EURO 7 �1 �o/ U.S. Dollar vs. Indian Rupee 3.1% (4.6%) U.S. Dollar vs. Philippine Peso (5.4%) (2.6%) U.S. Dollar vs. S. African Rand (10.4%) (21.7%) U.S. Dollar vs. U.K Pound Sterling 2.9% (10.0%) Cash Flow Hedging Program Substantially all of our subsidiaries use the local currency as their functional currency as a result of paying labor and operating costs in those local currencies. Certain of our subsidiaries in the Philippines use the U.S. dollar as their functional currency while paying their labor and operating cost in local currency. Conversely, revenue for most of these foreign subsidiaries is derived principally from client contracts that are invoiced and collected in U.S. dollars and other foreign currencies. To mitigate against the risk of principally a weaker U.S. dollar, we purchase forward contracts to acquire the local currency of the foreign subsidiary at a fixed exchange rate at specific dates in the future. We have designated and account for certain of these derivative instruments as cash flow hedges where applicable, as defined by the authoritative guidance. Given the significance of our fareign operations and the potential volatility of the certain of these currencies versus the U.S. dollar; we use forward purchases of Philippine peso, Canadian dollars, Euros, South African Rand and Indian rupees to minimize the impact of currency fluctuations. As of December 31, 2010, we had entered into forward contracts with four • fmancial institutions to acquire the following currencies: Currency Notional Value USD Equivalent Highest Rate Lowest Rate Philippine Peso 4,868,000 111,415 50.14 43.56 Canadian Dollar 78,350 78,513 1.06 1.00 Indian Rupee 1,035,000 22,860 4739 44.70 Euro 12,118 16,190 1.32 1.32 South African Rand 28,000 4,206 6.78 6.78 While we have implemented certain strategies to mitigate risks related to the impact of fluctuations in currency exchange rates, we cannot ensure that we will not recognize gains or losses from international transactions, as this is part of transacting business in an international environment. Not every exposure is or can be hedged and, where hedges are put in place based on expected foreign exchange exposure, they are based on forecasts for which actual results may differ from the original estimate. Failure to successfully hedge or anticipate currency risks properly could affect our consolidated operating results. Market Risk Market risk is the sensitivity of income to changes in interest rates, foreign exchanges, commodity prices, equity prices, and other market-driven rates or prices. Changes in market rates may impact the banks' LIBOR rate or prime rate. Far instance, if either the LIBOR or prime rate were to increase or decrease by one percentage point (1%), our annual interest expense would change by approximately $0.3 million based upon our total credit facility. 38 • mHtm�•fi�a•//�T•�Fnnn�min Tlnc� pr�inn4o�C4rnom Tr�1-nrr�o4i�v�.�l\AiTiv�v�on�4n Tv��ootrv�ov+4 Ti'��n� G/70/7l11'7 Form 10-K � Page 40 of 79 � T�b(e af Cantents � � �� ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Shareholders of Stream Global Services, Inc. We have audited the accompanying consolidated balance sheets of Stream Global Services, Inc. as of December 31, 2010 and 2009, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the yeaxs ended December 31, 2010 and December 31, 2009. These fmancial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these fmancial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fmancial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over fmancial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis; evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall fmancial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Stream Global Services, Inc. at December 31, 2010 and 2009, and the consolidated results of operations and its cash flows for each of the years then ended, iri conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young LLP Boston, Massachusetts �' • March 2, 2011 39 1__ • mhtml•filP•//N•\Frnnnmi� TIPV Pr..;P�t�\Ctraam TntPrnatinnal\l��(innecnta Tnvectment F�mrl __ S/7.9/7n17 Form 10-K Page 41 of 79 � :_ T'ab�� of �ontents STREAM GLOBAL SERVICES, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) December 31, 2010 2009 ASSCtS ,.. . Current assets: Cash and cash equivalents $ 18,489 $ 14,928 Accounts receivable, net of allowance for bad debts of $714 and $532 at December 31, 2010 and 2009, respectively 180,211 175,557 Income taxes receivable 1,154 2,988 Deferred income taxes 15,665 15,870 Prepaid expenses and other current assets 20,371 18,043 Total current assets 235,890 227,386 Equipment and fixtures, net 80,859 96,816 Deferred income taxes 3,975 5,306 Goodwill 226,749 226,027 Intangible assets, net 83,674 104,834 Other assets 16,838 20,454 Total assets $647,985 $680,823 Liabilities and Stockholders' Equity Gurrent liabilities: Accounts payable $ 10,758 $ 13,532 Accrued employee compensation and benefits 59,797 57,475 � Other accrued expenses 29,989 28,499 Income taxes payable 1,796 2,199 Current portion of long-term debt 96 90 Current portion of capital lease obligations 9,100 5,529 Other liabilities � 7,072 8,013 Total current liabilities �� 118,608 115,337� Long-term debt, net of current portion 217,199 206,880 Capital lease obligations, net of current portion 10,491 11;279 Deferred income taxes 21,838 21,050 Other long-term liabilities 20,131 22,866 Totalliabilities 388,267 377,412 Stockholders' equity: Preferred stock, par value $0.001 per share, shares autharized-1,000 shares authorized; 0 shares issued and outstanding at December 31, 2010 and 2009 - - Voting common stock, par value $0.001 per share, shares authorized-200,000 shares and 149,000 authorized at December 31, 2010 and 2009, respectively, issued and outstanding shares-80,101 and 79,616 shares at December 31, 2010 and 2009, respectively 80 80 Non-voting common stock, par value $0.001 per share, shares authorized-11,000 shares authorized; 0 shares issued and outstanding at December 31, 2010 and 2009 - - Additional paid-in-capital 344,192 337,035 Retained deficit (83,447) (29,972) Accumulated other comprehensive loss 1 107) 3 732) Total stockholders' equity 259,718 303,411 Total liabilities and stockholders' equity $647,985 $680,823 � See accompanying notes to consolidated financial statements. 40 mhtml•fila•//F TIPV Prniarte�Ctraam TntPrnatinnal\l�/Tinnaenta TnvaetmPnt Fnnrl S/7Q/7(117 Form 10-K Page 42 of 79 TabEe of Cantents �� • STREAM GLOBAL SERVICES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) December 31, 2010 2 09 Revenue $800,173 $584,769 Direct cost of revenue 471,428 342,193 Grossprofit 328,745 242,576 Operating expenses: Selling, general and administrative expenses 265,705 196,508 Severance, restructuring and other charges 11,899 15,191 Depreciation and amortization expense 65,903 36,422 Total operating expenses 343,507 248,121 Income (loss) from operations (14,762) (5,545) Other (income) expenses, net: Foreign currency transaction loss (gain) (2,399) 236 Other (income) expense, net (2) — Interest expense, net 30,722 18,410 Total other (income) expenses, net 28,321 18,646 Loss before provision for income taxes (43,083) (24,191) Provision for income taxes 10,392 4,382 Net loss $ (53,475) $ (28,573) Cumulative convertible Preferred Stock dividends — 58,018 Preferred Stock accretion — 6,397 • Net loss attributable to common stockholders $(53,475) $(92,988)` Net loss attributable to common stockholders per share: Basic $ (0.67) $ (3.46) � Dil�tted� � $ (0.67) $ � (3.46) Shares used in computing per share amounts: Basic 79,905 26,887 Diluted 79,905 26,887 See accompanying notes to consolidated fmancial statements. 41 C; • mhtml�file�//H�\F.c�nnmic l�ev_ Prniectc\�tream Tnternatinnal\Minnesnta Tnvestment Fund ._. 5/29/2012 Form 10-K Page 43 of 79 � T�b(e of C�ntent� STREAM GLOBAL SERVICES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In thousands) Series A Convertible Accumulated Preferred Stock Common Stock Additional Retained Other Par Par Paid in Earnings Comprehensive Shares Value Shares Value Capital DeScit Income (Loss) Total Balances at December 31, 2008 — $ — 9,458 $ 9 $ 11,330 $(1,399) $ (8;189) $ 1,751 Net loss — — — — — (28,573) — (28,573) Currency translation adjustment — — — — 5,785 5,785 Unrealized loss on derivatives, net of taxbf $ — — — — — — �1,328) (1,328) Comprehensive loss — — — — - — — (24,116) Cumulative dividends on preferred stock — 57,729 (58,018) — — (289) Transfer of Preferred A Stock to equity from mezzanine equity 150 145,394 — — — — — 145,394 Accretion of prefened stock discount — 6,397 — — (6,397) — — — Preferred stock conversion to common stock (150) (209,520) 36,085 36 210,476 — — 992 Stock-based compensation expense — — — — 1,242 — 1,242 � Common shazes cancelled — — (18) — (1) — � — (1) Repurchase of public warrants — — — — (7,373) — — (7,373) Warrant exercises — — 131 — 788 — .— 788 Common stock and pre-emptive rights issued for acquisition of eTelecare — — 33,652 34 183,068 — — 183,102 Common stock issued for pre-emptive rights — — 308 1 1,920 — — 1,921 Balances at December 31, 2009 — — 79,616 $ 80 $ 337,035 $(29;972) $ (3,732) $303,411 Netloss — — — — — (53,475) — (53,475) Currency translation adjustment — — — — — — (2,820) (2,820) Unrealized gain on derivatives, net of tax of . $O _ _ — _ _ — 5,445. 5,445 Comprehensive loss (50,850) Common stock issued for pre-emptive rights 25 80 80 Warrant exercises — — 381 — 2,306 — — 2,306 Stock option exercises and vesting of restricted stock — — 119 — 192 — — 192 Stock-based compensation expense — — — — 6,429 — — 6,429 Taxes withheld on restricted stock — — (40) — (242) — — (242) Repurchaseofwarrants — — — — (1,608) — — (1,608) Balances at December 31, 2010 — — 80,101 $ 80 $ 344,192 $(83,447 $ (1,107 $259,718 See accompanying notes to consolidated financial statements 42 � mhtml•file•//�T•\Frnnnmir rlav Pt'l11P!'IC�\�YP9Yl1 T11�P1`t't0�lllY101��lYlYlP0ll+9 Tr�<�no4man+T.'nnrl S/7Q/7(117 Form 10-K Page 44 of 79 Ta�Ee mf Contents � � • STREAM GLOBAL SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Yearended December 31, 2010 2009 Operating Activities: Net income (loss) $(53,475) $ (28,573) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 55,903 36,422 Amortization of debt issuance costs 2,168 5,579 Defenedta�ces 3,125 (3,598) Market lease reserve 4,412 (1,203) AmoRization of bond discount 1,411 324 Impairment of fixed assets 2,884 203 Noncash stock compensation 6,429 1,242 Changes in operating assets and liabilities, net of the effect of acquisitions: Accounts receivable (8,401) (10,203) Income taxes receivable 1,732 (863) Prepaid expenses and other current assets 4;050 1,767 Other assets 1,398 (10,906) Accounts payable (2,539) (93) Accrued expenses and other liabilities (6,653) (15,285) Net cash provided by (used in) operating activities 22,444 (25,187) Investing Activities: Acquisition of businesses, net of cash acquired - 33,400 Additions to equipment and fixtures 22,904 (22,064) Net cash provided by (used in) investing activities (22,904) 11,336 Financing activities: . Net borrowings (repayments) on line of credit 9,004 (43,924) • Proceeds from issuance of long-term debt - 216,187 ; Payments from long-term debt (90) (152,059)i. Payment of capital lease obligations (7,529) (3,702) Proceeds from capital leases 1,669 1,518 Proceeds from exercise of warrants 2,307 788 Proceeds from issuance of common stock related to pre-emptive righu and stock options 268 1,921 Tax payments on withholding of restricted stock (233) - Re-purchase of warrants (1,608) (7,373) Repurchases of common stock - (10) Net cash provided by (used in) financing activities 3,788 13,346 Effect of exchange rates on cash and cash equivalents 233 4,773 Netincrease (decrease)in cash and cash equivalents 3,561 4,268 Cash and cash equivalents, beginning of period 14,928 1 Q660 Cash and cash equivalents, end of period $ 18,489 $ 14,928 Supplemental cash 11ow information: Cash paid forinterest $ 25,664 $ 4,843 Cash paid for income taxes 10,550 8,246 Noncash 5nancing activities: (Gain) loss on foreign exchange forward contracts (5,445) 1,327 Capital lease financing 8,219 11,082 Accrued cumulative dividends on preferred stock - 58,018 Accretion of preferred stock discount - 6,397 Preferred stock conversion to common stock - 21Q512 Common stock and pre-emptive rights issued for acquisition of EGS $ - $ 183,102 See accompanying notes to consolidated financial statements. ' 43 • ml�tml •fila•//�T•\Frnnnmir Tlav Prniartc\Ctraam Tntarnatinnal\Minnr>cnta Tnvectment Fnn� r 1�79�7n� 7. Form 10-K Page 45 of 79 � Tab[e of Contents . STREAM GLOBAL SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2010 (In thousands, except per share amounts) Note 1—Our History and Summary of Various Transactions Stream Global Services, Inc. ("we", "us", "Stream", or "SGS") is a corporation organized under the laws of the State of Delaware. We were incorporated on June 26, 2007 as a blank check company for the purpose of acquiring, through a merger, capital stock exchange, asset or stock acquisition, exchangeable share transaction or other similar business combination; one or more domestic or international operating businesses. We consummated our initial public offering in October 2007, receiving total gross proceeds of $250 million, and in July 2008, we acquired Stream Holdings Corporation for $128 million (which reflected the $200 million purchase price less assumed indebtedness, transaction fees, employee transaction related, restructuring and severance expenses bonuses, professional fees, stock option payments and payments for working capital). In October 2009, pursuant to a Share Exchange Agreement, dated as of August 14, 2009 ("the Exchange Agreement"), among Stream, EGS Corp., a Philippine corporation ("EGS"), the parent company of eTelecare Global Solutions, Inc., a Philippine company ("eTelecare"), EGS Dutchco B. V., a corporation organized under the laws of the Netherlands ("Dutchco"), and NewBridge International Investment Ltd., a British Virgin Islands company ("NewBridge" and, togeth�r with Dutchco, the "EGS Stockholders"), we acquired EGS in a stock-for-stock exchange (the "Combination"). At the closing of the Combination (the "Closing"), we acquired all of the issued and outstanding capital stock of EGS (the "EGS Shares") from the EGS Stockholders, and NewBridge and/or its affiliate contributed, and we accepted, the rights of such transferor with respect to approximately $35.8 million in principal under a bridge loan of EGS (the `Bridge Loan") in consideration for the issuance and delivery of an aggregate of 23,851,561 shares of our common stock and 9,800,000 shares of our non-voting common stock, and the payment of $9,990 in cash. Subsequent to the Closing, all of the 9,800,000 shares of non-voting • common stock held by the EGS Stockholders were converted into shares of our voting common stock on a one-for-one basis. As of the Closing, the pre-Combination Stream stockholders and the EGS Stockholders owned approximately 57.5% and 42.5%, respectively, of the combined entity. Immediately prior to the Closing, pursuant to a letter agreement, dated as of August 14, 2009, between us and Ares Corparate Opportunities Fund II, L.P. ("Ares"), all of the issued and outstanding shares of our Series A Convertible Preferred Stock, $.001 par value per share ("Series A Preferred Stock"), and Series B Convertible Preferred Stock, $.001 par value per share ("Series B Preferred Stock"), all of which were held by Ares, were converted into 35,085,134 shares of our common stock. The Series A Preferred Stock and Series B Preferred Stock were subsequently cancelled. In addition, we purchased from Ares a warrant to purchase 7,500,000 shares of our common stock in consideration for the issuance to Ares of 1,000,000 shares of our common stock. Also in October 2009, pursuant to an indenture, dated as of October 1, 2009 (the "Indenture"), among Stream, certain of our subsidiaries (the "Note Guarantors") and Wells Fargo Bank, National Association ("Wells Fargo"), as trustee, we issued $200 million aggregate principal amount of 11.25% Senior Secured Notes due 2014 (the "Notes") at an initial offering price of 95.454% of the principal amount. In addition, we and certain of our subsidiaries entered into a credit agreement, dated as of October l, 2009 (the "Credit Agreement"), with Wells Fargo Foothill, LLC, as agent and co-arranger, and Goldman Sachs Lending Partners LLC, as co-arranger, and each of the lenders party thereto, as lenders, providing for revolving credit financing (the "ABL Facility") of up to $100 million, including a$20 million sub-limit for letters of credit. The ABL Facility has a term of four years at an interest rate of Wells Fargo's base rate plus 375 basis points or LIBOR plus 400 basis points at our discretion. We used the proceeds from the offering of the Notes, together with approximately $26.0 million of cash on hand, to repa3� all outstanding indebtedness under the Fifth Amended and Restated Revolving Credit, Term Loan 44 • mlttml•fila•//N•\Frnnnmin Tlav Arnia�tc�Ctra�m Tntnrn�4i�no1�A/TinriAOnto Tnvaetman4 T+'nnA S/7Q/71117 Form 10-K Page 46 of 79 Tab€e of Cantents �= + and Security Agreement, dated as of January 8, 2009, as amended (the "PNC AgreemenP'), with PNC Bank, National Association and other parties thereto, the Bridge Loan, and to pay fees and expenses incurred in connection with the Combination, the Note offering and the ABL Facility. Note 2—Our Business We are a leading global business process outsourcing ("BPO") service provider specializing in customer relationship management ("CRM") including sales, customer care and technical support for Fortune 1000 companies. Our clients include leading technology, computing, telecommunications, retail, entertainment/media, and fmancial services companies. Our service programs are delivered through a set of standardized best practices and sophisticated technologies by a highly skilled multilingual workforce with the ability to support 35 languages across SO locations in 22 countries. We continue to expand our global presence and service offerings to increase revenue, improve operational efficiencies and drive brand loyalty for our clients. Note 3—Basis of Presentation Our consolidated fmancial statements of SGS as of December 31, 2010 and 2009, and for the years ended December 31, 2010 and 2009, respectively, include our accounts and those of our wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. On October 1, 2009, we acquired EGS, the parent company of eTelecare, in a stock-for-stock exchange. The accompanying consolidated statements of operations and cash flows of SGS present the results of operations and cash flows for (i) the nine month period preceding the acquisition of EGS on October 1, 2009, exclusive of EGS results of operations and cash flows and (ii) for the periods succeeding the acquisition on October 1, 2009, the consolidated results of operations including EGS are included in these financial statements. Refer to Note 5 for pro forma results. • Note 4—Summary of Significant Accounting Policies Use of Estimates The preparation of the Consolidated Financial Statements in conformity with accounting principles generally accepted in the U.S. ("GAAP") requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. On an on-going basis, the Company evaluates its estimates including those related to derivatives and hedging activities, income taxes including the valuation allowance for deferred taY assets, valuation of long-lived assets, self-insurance reserves, litigation and restructuring liabilities, and allowance for doubtful accounts. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ materially from these estimates under different assumptions or conditions. Cash Equivalents We consider all highly liquid investments with maturities at the date of purchase of three-months or less to be cash equivalents. Cash and cash equivalents of $16,906 and $12,180 December 31, 2010 and 2009, respectively, were held in international locations and may be subject to additional taxes if repatriated to the United States. Cash balances held in foreign currency are also subject to fluctuation in their exchange rate if and when converted to U.S. dollars. 45 `,._• mhtml•fila•//�T•\Frnnnmi� Tlav Prniartc\Qtraam TntarnatinnalU��Tinnacnta TnvectmPnt Ftm[� ___ S/Z9IZn�7 Form 10-K Page 47 of 79 •, Tab[e c�f Ccantents Accounts Receivable and Concentration of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk are principally accounts receivable. Services are provided to clients throughout the world and in various currencies. We generally invoice our clients within thirty days subsequent to the performance of services. We extend credit to our clients in the normal course of business. We do not require collateral from our clients. We evaluate the collectability of our accounts receivable based on a combination of factors that include the payment history arid fmancial stability of our clients, our clients' future plans and various market conditions. In circumstances where we are aware of a specific client's inability to meet its financial obligations, we record a specific reserve against amounts due. Historically, we have not experienced significant losses on uncollectible accounts receivable. We have a reserve for doubtful accounts and other of $714 and $532 as of December 31, 2010 and 2009, respectively. We recorded a bad debt expense of $162 and $191 for the years ended December 31, 2010 and 2009, respectively. Equipment & Fixtures and Operating Leases ' Equipment and fixtures are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Fumiture and fixtures are depreciated over a five-year life, software over a three- to five-year life and equipment generally over a three- to five-year life. Leasehold improvements are depreciated over the shorter of their estimated useful life or the remaining term of the associated lease. Assets held under capital leases are recorded at the lower of the net present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease. Amortization expense is computed using the straight-line method over the shorter of the estimated useful lives of the assets or the period of the related lease and is recorded in depreciation and amortization expense. Repair and maintenance costs are expensed as incurred. The carrying value of equipment and fixtures to be heid and used is evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with the authoritative guidance. An • asset is considered to be impaired when the sum of the undiscounted future net cash flows expected to result from the use of the asset and its eventual disposition does not exceed its carrying amount. The amount of the impairment loss, if any, is measured as the amount by which the carrying value of the asset exceeds its estimated fair value, which is generally determined based on appraisals or sales prices of comparable assets. Occasionally, we redeploy equipment and fixtures from underutilized centers to other locations to improve capacity utilization if it is determined that the related undiscounted future cash flows in the underutilized centers would not be sufficient to recover the carrying amount of these assets. Where we have negotiated rent holidays and landlord or tenant incentives, we record them ratably over the initial term of the operating lease, which commences upon execution of the lease. We estimate fair value of our asset retirement obligations associated with the retirement of tangible long-lived assets such as property and equipment when the long-lived asset is acquired, constructed, developed or through normal operations. We depreciate leasehold improvements over the initial lease term. Goodwill and Other Intangible Assets • In accordance with the autharitative guidance goodwill is reviewed for impaument annually and on an interim basis if events oaar changes in circumstances between annual tests indicate that an asset might be impaired. Impairment occurs when the carrying amount of goodwill exceeds its estimated fair value. The impaument, if any, is measured based on the estimated fair value of the reporting unit. We operate in one reporting unit, which is the basis for impairment testing of all goodwill. Intangible assets with a finite life are recorded at cost and amortized using their projected cash flows over their estimated useful life. Client lists and relationships are amortized over periods of up to ten years, market adjustments related to facility leases are amortized over the term of the respective lease and developed software 46 �. ,�...1,�,...1.�;1,,.//i3.\� .............:.. r>,._. n..�:....�„�c�.�__W r�4_�_..____i�w,r________._ r___�.:�____�r.___a ci�ni�nin Form 10-K Page 48 of 79 Table of Contents � � is amortized over five years. Brands and trademarks are not amortized as their life is indefmite. In accordance with the authoritative guidance, indefinite lived intangible assets are reviewed for impairment annually and on an interim basis if events or changes in circumstances between annual tests indicate that an asset might be impaired. The carrying value of intangibles is evaluated far impanment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with the authoritative guidance. An asset is considered to be impaired when the sum of the undiscounted future net cash flows expected to result from the use of the asset and its eventual disposition does not exceed its carrying amount. The amount of the impairment loss, if any, is measured as the amount by which the carrying value of the asset exceeds its estimated fair value, which is generally determined based on appraisals or sales prices of comparable assets. Financial Information Regarding Segment Reporting We have one reportable segment and, therefore, all segment-related fmancial information required by the authoritative guidance is included in the consolidated fmancial statements. The reportable segment reflects our operating and reporting structure. Revenue Recognition We recognize revenues as the related services are performed if evidence of an arrangement exists, delivery of the service has occurred, the fee is fixed or determinable, and collection is considered probable. If any of those criteria are not met, revenue recognition is deferred until such time as all of the criteria are met. Our client contracts generally specify the metrics by which we bill for our services and the service requirements. We may be paid on a per minute, per hour, per call, per month, per participant, or per transaction basis. We derive our revenues by providing various business processing services that include technical support, sales and • revenue generation services and customer care services. Our services include the services provided by our service professionals, our hosted technology, our data management and reporting and other professional services. Direct Cost of Revenue We record the costs specifically associated with client programs as direct cost of revenues. These costs include direct labor wages and benefits of service professionals as well as reimbursable expenses such as telecommunication charges. The most significant portion of our direct cost of revenue is attributable to compensation, benefits and payroll taxes. Operating Expenses Our operating expenses consist of all expenses of operations other than direct costs of revenue, such as inforniation technology, telecommunication sales and marketing costs, finance, human resource management and other fiznctions and service center operational expenses such as facility, operations and training and depreciation and amortization. Income Taxes We recognize income taxes in accordance with the authoritative guidance, which requires recognition of deferred assets and liabilities for the future income t� consequence of transactions that have been included in the consolidated fmancial statements or taY returns. Under this method deferred tax assets and liabilities are determined based on the difference between the carrying amounts of assets and liabilities for financial reporting purposes, and the amounts used for income taY, using the enacted tax rates for the year in u�hich the differences 47 � • ml�+ml•�ln•//i-T•�F��n�min Tlnv ArniA�te\Ctraam TntPrr,at;n„al\l��Tinnaenta Tnveetment Fimrl 5�7��7n� 7 Form 10-K Page 49 of 79 � "T�bEe of Conte��.� are expected to reverse. We provide valuation allowances against deferred taac assets whenever we believe it is more likely than not, based on available evidence, that the deferred taa� asset will not be realized. Further we provide for the accounting for uncertainty in income taxes recognized in fmancial statements and the impact of a tax position in the fmancial statements if that position is more likely than not of being sustained by the taxing authority. Contingencies We consider the likelihood of various loss contingencies, including non-income tax and legal contingencies arising in the ordinary course of business, and our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued in accordance with the authoritative guidance, when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. We regularly evaluate current information available to determine whether such accruals should be adjusted. Foreign Currency Translation and Derivative Instruments We account for financial derivative instruments utilizing the authoritative guidance. We generally utilize forward contracts expiring within one to 18 months to reduce our foreign currency exposure due to exchange rate fluctuations on forecasted cash flows denominated in non-functional foreign currencies. Upon proper designation, certain of these contracts are accounted for as cash-flow hedges, as defined by the authoritative guidance. These contracts are entered into to protect against the risk that the eventual cash flows resulting from such transactions will be adversely affected by changes in exchange rates. In using derivative fmancial instruments to hedge exposures to changes in exchange rates, we expose ourselves to counterparty credit risk. We do not believe that we are exposed to a concentration of credit risk with our derivative fmancial instruments as the counterparties are well established institutions and counterparty credit risk information is monitored on an ongoing basis. • All derivatives, including foreign currency forward contracts, are recognized in other current assets on the balance sheet at fair value. Fair values for our derivative fmancial instruments are based on quoted market prices of comparable instruments or, if none are available, on pricing models or formulas usmg current market and model assumptions. On the date the derivative contract is entered into, we determine whether the derivative contract should be designated as a cash flow hedge. Changes in the fair value of derivatives that are highly effective and designated as cash flow hedges are recorded in "Accumulated other comprehensive income (loss)", until the forecasted underlying transactions occur. To date we have not experienced any hedge ineffectiveness of our cash flow hedges (except certain cash flow hedges previously determined to be effective, as of October 1, 2009, the date of the Combination, which have since been designated to be ineffective at that date). Any realized gains or losses resulting from the cash flow hedges are recognized together with the hedged transaction within "Other Income (expense)". Cash flows from the derivative contracts are classified within "Cash flows from operating activities" in the accompanying Consolidated Statement of Cash Flows. Ineffectiveness is measured based on the change in fair value of the forward contracts and the fair value of the hypothetical derivatives with terms that match the critical terms of the risk being hedged. We may also enter into derivative contracts that are intended to economically hedge certain risks, even though we elect not to apply hedge accounting as defined by the authoritative guidance. Changes in fair value of derivatives not designated as hedges are reported in income. Upon settlement of the derivatives qualifying as hedges, a gain or loss is reported in income. The assets and liabilities of our foreign subsidiaries, whose functional currency is their local currency, are translated at the exchange rate in effect on the reporting date, and income and expenses are translated at the average exchange rate during the period. The net effect of translation gains and losses is not included in determining net income (loss), but is reflected in accumulated other comprehensive income (loss) as a separate 48 �- .��LaWl.l:l_.//TT_\T.`_�_'_""_ T_'____�_1[i..__'____ L_..______i'____7�w.r•__.____._ T__.__-a_____.r+.__ 1 C/nn/nn�r� Form 10-K Page 50 of 79 Table af Cantents �. c � component of stockholders' equity until the sale or until the liquidation of the net investment in the foreign subsidiary. Foreign currency transaction gains and losses are included in determining net income (loss), and are categorized as "Other income (expense)". We formally document all relationships between hedging instruments and hedged items, as well as our risk management objective and strategy for undertaking various hedging activities. This process includes linking all derivatives that are designated as cash flow hedges to forecasted transactions. We also formally assess, both at the hedge's inception and on an ongoing basis (as required), whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items on a prospective and retrospective basis. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge or if a forecasted hedge is no longer probable of occurring, we discontinue hedge accounting prospectively. At December 31, 2010, all hedges were determined to be highly effective (except certain cash flow hedges previously determined to be effective, as of October 1, 2009, the date of the Combination, which have since been designated to be ineffective at that date, and certain hedges where we elect not to apply hedge accounting as defined by the authoritative guidance. : Our hedging program has been effective in all periods presented (except for all contracts for the hedge of the Philippine Peso entered into prior io October 1, 2009, and all contracts for the hedge of the Canadian Dollar which were cancelled on September 30, 2009 by the Company's bank upon the early termination of credit arrangements with the bank), and the amount of hedge ineffectiveness has not been material. The value of the Canadian dollar contracts cancelled on September 30, 2009 was a gain of $156, which was recognized in Other Income/(Expense) on the Statement of Operations. Hedge accounting is also discontinued prospectively when (1) the derivative is no longer effective in offsetting changes in cash flow of a hedged item; (2) the derivative expires or is sold, terminated, or exercised; (3) it is no longer probable that the forecasted transaction will occur; (4) a hedged firm commitment no longer meets the definition of a firm commitment; (5) the derivative as a hedging instrument is no longer effective; or (6) when assumed in purchase accounting. As of December 31, 2010 and 2009, we had approximately $233,183 and $111,994, respectively, of foreign exchange ;• risk hedged using forward exchange contracts. As of December 31, 2010, the $233,183 of forward exchange contracts we held were comprised of $5,377 of contracts previously determined to be effective cash flow hedges but as of October 1, 2009 ' subsequently determined to be ineffective, $150,526 of contracts determined to be effective cash flow hedges and $77,280 of contracts for which we elected not to apply hedge accounting. As of December 31; 2010 and 2009, the fair market value of these derivative instruments designated as cash flow hedges was a gain of $5,358 and a loss of $87, respectively. As of December 31, 2010, the fair market value of derivatives previously determined to be effective cash flow hedges but as of October 1, 2009 subsequently determined to be ineffective was a gain of $468, which was recognized in Other Income/Expense in the Statement of Operations. As of December 31, 2010, the fair market value of derivatives for which we elected not to apply hedge accounting was a gain of $373, which was recognized in Other Income/Expense in the Statement of Operations. As of December 31, 2010, $5,222 of net gains, net of tax, may be reclassified to earnings within the next 12 months based on current foreign exchange rates. As of December 31, 2010 and 2009, the company had realized gains of $1,041 and $563 respectively on hedges for which the company elected to not apply hedge accounting. As of December 31, 2010 and 2009, the company realized gains of $1,986 and $3,083 on hedges which were deemed effective cash flow hedges. As of December 31, 2010 and 2009, the company realized gains of $5,945 and $1,096 on hedges which were previously determined to be effective cash flow hedges but as of October 1, 2009 subsequently determined to be ineffective. All realized gains for the periods were reflected in Other Income/Expense in the Statement of Operations. 49 `.. • «..L.�.�.1.�F;1�.//L7.\L`....,�........,, Tl,,., D,.,.,.,..��\C4.-o.,,v, T«,4v,-,�,n4ii.r.o1\AiTinriaen4� Tnc�AO4mnnt Ti'iin� S�7Q�7n17 Form 10-K Page 51 of 79 � Tab�� af Conte�ts Fair Value of Financial Instruments We implemented the authoritative guidance, for our fmancial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. The following table presents information about our assets and liabilities and indicates the fair value hierarchy of the valuation techniques we utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Leve13 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability: Quoted Prices in Significant Other Significant December 31, Active Markets Observable Unobservable 2010 (Level 1) Inputs (Leve12) (Level 3) Description Long-term debt $ 201,500 $ 201,500 $ — $ — Forward exchange contracts 6,764 — 6,764 — Total $ 208,264 $ 201,500 $ 6,764 $ — The fair value of our long term debt is determined from market quotations obtained from Bloomberg Finance, L.P. The fair values of our forward exchange contracts are determined through market, observable and corroborated sources. The carrying amounts reflected in the consolidated balance sheets for other current assets, accounts payable, and accrued expenses approximate fair value due to their short-term maturities. To the extent we have any outstanding borrowings under � our revolving credit facility, the fair value would approximate its reported value because the interest rate is variable and reflects current market rates. Net Income (Loss) Per Share In 2009, we calculated net income (loss) per share in accordance with the authoritative guidance which clarifies the use of the "two-class" method of calculating earnings per share. We determined that our Series A Preferred Stock represents a participating security for purposes of computing earnings per share and allocated eamings per share to a participating security usmg the two-class method for computing basic earnings per share. LL , Under the two-class method, basic net income (loss) per share is computed by dividing the net income (loss) applicable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted net income (loss) per share is computed using the more dilutive of (a) the two-class method or (b) the if-converted method. We allocated net income first to preferred stockholders based on dividend rights under our certificate of incorporation and then to common and preferred stockholders based on ownership interests. Net losses are not allocated to preferred stockholders. Diluted net income (loss) per share gives effect to all potentially dilutive securities. Year Ended Year Ended December3l, 2010 December 31, 2009 Net income (loss) $ (53,475) $ (28,573) Cumulative Convertible Preferred Stock dividends — 58,018 Preferred Stock accretion — 6,397 Net income (loss) attributable for common stockholders $ (53,475) $ (92,988) 50 . m}�tm�•fi�a•//T�•��'innnnmin Tlav Tlrnian4e�C+rnom Tn4orr�.�4i�r�o1\AiT:r..�nor�4o Tr...004mnn4 F:��r�rl G/7Q/7(117 Form 10-K Page 52 of 79 Ta�(e af Cant�nts � The following common stock equivalents were excluded from computing diluted net loss per share attributable to common stockholders because they had an anti-dilutive impact: Year Ended Year Ended December 31, 2010 December 31, 2009 Options to purchase common stock at $6.00 per share 6,308 6,978 Pre-emptive rights at $6.00 per share 17,852 24,385 Publicly held warrants at $6.00 per share 7,327 10,009 Restricted stock units 320 58 Total options, warrants and restricted stock units exercisable into common stock 31 41,430 Accumulated other comprehensive income (loss) consists of the following: December 31, December 31, 2010 2009 Unrealized (loss) gain on forward exchange contracts $ 5,358 $ (87) Cumulative Translation adjustment (6,465) (3,645) $ (1,107) $ (3,732) Market Lease Reserve We assumed facility leases in connection with the acquisition of SHC and EGS. Under the authoritative guidance, the operating leases are to be recorded at fair value at the date of acquisition. We determined that certain of the facility lease contract rates were in excess of the market rates at the date of acquisition, resulting in an above market lease reserve. The above and below market lease values for the assumed facility leases were recorded based on the present value (using a � discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts , to be paid pursuant to each operating lease and (ii) management's estimate of fair market lease rates for each corresponding � operating lease, measured over a period equal to the remaining term of the lease. The market lease reserves are amortized as a reduction of base rental expense over the remaining term of the respective leases. For the years ended December 31, 2010 and 2009, the amortization of the market lease reserve, including imputed interest, was $4,412 and $3,007, respectively. Stock-Based Compensation At December 31, 2010 and 2009, we had a stock-based compensation plan for employees and directors. We adopted the fair value recognition provisions of the financial guidance at our inception. For share-based payments, the fair value of each grant (time-based grants with performance acceleration) is estimated on the date of grant using the Black-Scholes-Merton option valuation Stock compensation expense is recognized on a straight-line basis over the vesting term, net of an estimated : future forfeiture rate. The Company estimates the forfeiture rate annually based on its historical experience of vested and forfeited awards. Recent Accounting Pronouncements In January 2010, the Financial Accounting Standards Board ("FASB") issued guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires new disclosures on the transfers of assets and liabilities between Level 1(quoted prices in active market for identical assets or liabilities) and Leve12 (significant other observable inputs) of the fair value measurement hierarchy, including the reasons and the timing of the transfers. Additionally, the guidance requires a roll forward of activities on purchases, sales, issuance, and settlements of the assets and liabilities measured using significant unobservable inputs (Leve13 fair value measurements). The guidance became effective for us with the reporting 51 t;, • m1�4m�•��a•//�-T•� -T'+r�nnnmir Tla�� Prniartc�C1'raam Tntarnal'inrla��M11111PC(1tA TYIVP.CtTI'1P,Ylt Fllll(j ___ S�29IZn�2 Form 10-K Page 53 of 79 � "I"�bt� c�f Cante�ts period beginning January 1, 2010, except for the requirement to separately disclose purchases, sales, issuances and settlements of recurring Leve13 fair value measurements which is effective January 1, 2011. Other than requiring additional disclosures, adoption of this new guidance did not have a material impact on our fmancial statements. In October 2009, the FASB issued guidance on revenue recognition that will become effective for us beginning January 1, 2011, with earlier adoption permitted. Under the new guidance, when vendor specific objective evidence or third � party evidence for multi-element deliverables in an arrangement cannot be determined, a best estimate of the selling price is required to separate deliverables and allocate arrangement consideration using the relative selling price method. The new guidance includes new disclosure requirements on how the application of the relative selling price method affects the timing and amount of revenue recognition. We believe adoption of this new guidance will not have a material impact on our financial statements. Note 5—Acquisitions EGS Acquisition: On October 1, 2009, we consummated the acquisition of EGS, pursuant to which we acquired all of the outstand'mg shares of capital stock of EGS and EGS became a wholly-owned subsidiary of SGS. � SGS acquired EGS to create one of the leading CRM and BPO services companies in the world. With 50 locations in 22 countries and over 30,000 employees worldwide, we are able to offer our clients customized global capabilities that can deliver integrated services in almost any geographic region across the world. EGS gave SGS the ability to broaden its service offerings to include a full portfolio of sales and revenue generation, warranty management, customer loyalty and brand management, customer care, technical support, and customer life cycle management services. We believe this broad and integrated portfolio of global services is a key differentiating factor to win new clients and create cross selling opportunities between clients. • Stream Global Services and EGS entered into a share exchange agreement pursuant to which Stream issued 33,652 shares of its common stock for all the outstanding shares of EGS. The purchase price calculation was as follows: Purchase price in common shares $181,718 Value of pre-emptive rights 1,384 Total allocable purchase price $183,102 The acquisition was accounted for in accordance with the authoritative guidance. The transaction was valued for accounting purposes at $183,102. The exercise of our publicly traded warrants trigger certain pre-emptive rights held by: Ares, EGS Dutchco B.V. and NewBridge International Investment Ltd. (collectively, the "Participating Shareholders"). Pursuant to their pre-emptive rights, the Participating Shareholders have the right to purchase, for $6.00 per share, an aggregate number of shares of our common stock equal to 2.4364 multiplied by the number of shares issued upon the exercise of the publicly traded warrants. The Participating Shareholders received these pre-emptive rights in association with the acquisition of EGS and, accordingly, we have treated the value of these rights as additional purchase consideration. Under the purchase method of accounting, the assets and liabilities of EGS were recorded as of the acquisition date at their respective fair values. The excess purchase price over those values was recorded as goodwill. The following table summarizes the preliminary estimated fair value of assets acquired and the liabilities assumed and related deferred income taxes at October 1, 2009, the date of the acquisition. 52 • ,,,l,t,„1•f;lo•/![7.\�,.,,,-,,,,,-,,,. T>„�, n..,..,.,,�..�o+..,.,....,. r...s.._......�:,....,.t�r,r;....�,...a,, r.,._.,...�..,.,..,...r......a ci�ni�ni� Form 10-K Page 54 of 79 Tab(e of Contea�ts � • Preliminary Amounts As Reported Adjustments Fina1 Purchase Price December 31, 2009 Recorded Allocation Current assets $ 99,631 $ 99,631 Property and equipment 46,952 46,952 Goodwill 177,478 722 178,200 Trade names 100 100 Customer relationships 30,300 30,300 Customer contracts 1,701 1,701 Other non-cunent assets 4,898 4,898 Total assets acquired 361,060 361,782 Current liabilities (81,866) (1,600) (83,466) Related party debt (85,254) (85,254) Other liabilities (10,838 878 (9,960) Total liabilities assumed (177,958) (178,680) Allocated purchase price $ 183,102 —_ $ 183,102 As described, a preliminary estimate of the allocation of the total allocable purchase price of $183,102 to the net assets of EGS was made as of the date of the acquisition. Pursuant to authoritative guidance, we had up to one year from the acquisition date to fmalize the allocation of the purchase price. During the year ended December 31, 2010, we adjusted the preliminary values assigned to certain assets and liabilities in order to reflect additional information obtained subsequent to the acquisition date. The opening balance sheet has been adjusted to reflect these changes, the most significant of which were an increase to current liabilities of $1.6 million following a court ruling made in September 2010 relating to a contingent liability that existed prior to our acquisition of EGS and a decrease to net deferred tax liabilities of $0.6 million. As of December 31, 2010, we have fmalized our allocation of the total allocable purchase price. The following is a roll-forward of goodwill from December 31, 2009: �• Balance at December 31, 2009 $226,027 Liability for pre-acquisition litigation 1,600 Adjustments to deferred t� liabilities � Balance at December 31, 2010 226,749 We recognized $12,245 of transaction related costs that were expensed in the year ended December 3 l, 2009. These costs are included 'm the consolidated income statement in the line titled "severance, restructuring and other charges". We recorded adjustments of $209 to our transaction related accruals for the year ended December 31, 2010. These costs are included in the consolidated income statement in the line titled "severance, restructuring and other charges". The following unaudited pro forma financial information presents the consolidated results of operations of SGS and EGS as if the acquisition of EGS had occurred as of the beginning of the periods presented below. The historical financial information has been adjusted to give effect to events that are directly attributable to the Combination (including amortization of purchased intangible assets and debt costs associated with the acquisition, debt costs associated with our high yield debt offering and conversion of preferred stock to common stock), and upon the pro forma statements of operations, have a recurring impact. The unaudited pro forma financial information is not intended, and should not be taken as representative of our future consolidated results of operations or financial condition or the results that would have occurred had the acquisition occurred as of the beginning of the earliest period. Yearended December 31, 2009 Revenue $ 797,005 Net loss attributable to common shareholders (40,698) Basic and diluted net loss per share $ (0.51) 53 '', . .• m�4m�•��o•�I�T•��in�r�nm�n Tlo.. 7�rniar4o�Ctraom Tntarnatinna��/TinnPCnta TnvACtYYIAIIt F71T1(� ... S�79I7.n� 7. Form 10-K Page 55 of 79 � T'�bte at�o�tents Intangibles and amortization Intangible assets at December 31, 2010 consist of the following: Weig6ted average Estimated remaining Gross Accumulated usefullife life cost amortization Net Customer relationships Up to 10 years 6.7 98,749 32,716 66,033 Technology-based intangible assets 5 years 2.6 2,445 904 1,541 Trade names indefmite indefinite 16,197 97 16,100 . 117,391 33,717 83,674 Amortization expense consists of the following: Year Euded Year Ended December 31, December 31, 2010 2009 Amortization expense $ 20,838 $ 10,826 - Future amortization expense of our intangible assets for the next five years is expected to be as follows: 2011 2012 2013 2014 2015 Amortization 17,003 14,331 11,497 7,5'71 5,652 Note 6—Warrants Pursuant to our IPO, we sold 31,250 units, each consisting of one share of our common stock and one warrant entitling • the holder to purchase one share of our common stock at an exercise price of $6.00 per share. The warrants became exercisable beginning on October 17, 2008 and will expire on October 17, 2011, unless redeemed earlier. Beginning October 17, 2008, we may redeem the warrants at a price of $0.01 per warrant upon a minimum of 30 days priar written notice of redemption if, and only if, the last sales price of our common stock equals or exceeds $11.50 per share for any 20 trading days within a 30 trading day period ending three business days before we send the notice of redemption. During 2010, we repurchased 2,271 public warrants from holders for $1,608 in privately negotiated transactions. In 2009, we closed our self-tender offer to purchase up to 17,500 of our public warrants and accepted for purchase 9,957 warrants for a total purchase price of approximately $4,978, excluding fees and expenses related to the lender. Also during the year, holders of our warrants exercised 381 warrants for proceeds to us of $2,286. As of December 31, 2010 there were 7,357 warrants outstanding, including 30 shares of common stock underlying warrants embedded in our units. The exercise of our public warrants triggers certain participation rights held by the following shareholders: Ares Management, Ayala Corporation and Providence Equity Partners (the "Participating Shareholders"). The Participating Shareholders have participation rights to purchase, for $6.00 per share, an aggregate number of shares of our common stock equal to 2.4364 multiplied by the number of shares actually issued upon exercise of the public warrants. As of December 31, 2010, Stream had 7,357 public warrants outstanding, including shares of common stock underlying warrants embedded in our units, to acquire common stock at a cash exercise price of $6.00 per share that expire on October 17, 2011. In addition the Participating Shareholders have remaining participation rights to acquire shares of our common stock for $6.00 per share in cash, at a rate of 2.4364 common shares for each public warrant that is exercised for cash at $6.00 per share, if and when any of the public warrants are exercised, up to an aggregate 17,925 shares. These participation rights expire when the public. warrants expire on October 17, 2011 or are reduced pro rata as the numbers of public warrants outstanding are reduced. 54 i_ .....L.a...,.t.C.l....//T.r.\r.....,..,..._:..7'l___ T T--�----�-'-'----��,r•.__ , r .., . _ _�, r�. ._ t � e/nn�nn,�� Form 10-K Page 56 of 79 Tab[e of Cante��ts � • Note 7- Severance, Restructuring and Other Charges During the year ended December 31, 2010 and 2009, we incurred significant severance charges primarily associated with changes in leadership and management positions within the Company. We include in these charges salary continuation and the expense associated with acceleration of stock awards. For the year ended December 31, 2010 and 2009 these charges were $6,502 and $6,126 respectively. For the year ended December 31, 2010 and 2009, we recorded exit charges of $3,443 and $2,069 related to call centers where we have ceased the use of and entirely vacated the space in advance of the coniractual termination of the lease. Lease exit costs include the present value of future lease payments in facilities and other exit related costs. During the year ended December 31, 2010 we recorded facility impaument charges in one of our call center locations in the amount of $1,746 where we determined that the future undiscounted cash flows will not exceed the book value of the assets. We continue to provide call center services in that facility. For the year ended December 31, 2010 and 2009, we recorded $209 and $6,996 of transaction related costs primarily related to the acquisition of EGS on October 1, 2009. Note 8-Equipment and Fixtures, Net Equipment and fixtures, net, consists of the following: December 31, December 31, 2010 2009 Furniture and fixtures $ 11,161 $ 10,948 Building improvements 36,196 32,044 Computer equipment 37,200 31,142 • Soflware 21,935 14,586 Telecom and other equipment 46,519 38,15Z Fixed assets held for sale - 228 Equipment and fiYtures not yet placed in service 1,232 1,415 154,243 128,520 Less: accumulated depreciation (73,384) (31,704) $ 80,859 $ 96,816 Depreciation expense consists of the following: Year Ended Year Ended December 31, December 31, 2010 2009 Depreciation expense $ 45,065 $ 25,596 Note 9-Accrued Employee Compensation and Benefits Accrued employee compensation and benefits consists of the following: December 31, December 31, 2010 2009 Compensation related amounts $ 31,805 $ 29,213 Vacation liabilities 12;646 13,492 Medical and dental liabilities 1,860 2,972 Employer taaces 2,825 1,531 Retirement plans 8,146 7,806 Other benefit related liabilities 2,515 2,461 $ 59,797 $ 57,475 55 �, • ,....t,+,...1.F:t.,.//u.\�,,,....,.,.....,, r�,... n_,..,.,.a,.\a�,.,.,.... 7...a,......,,�:,....,.t\T�r;,..,..,.,,,,�„ T,,.,o��,,,o„��',,,,a G/�O/7(11� Form 10-K Page 57 of 79 � Tab1e of Cc�ntents Note 10-Other Accrued Expenses and Other Liabilities Other accrued expenses consist of the following: December 31, December 31, 2010 2009 Professional fees 7,151 5,447 Accrued interest 5,921 6,041 Occupancy expense 2,250 3,678 Technology expense 3,116 4,050 Other accrued expenses 11,551 9,283 $ 29,989 $ 28,499 Other liabilities consist of the following: December 31, December 31, 2010 2009 Lease exit liability $ 1,743 $ 924 Deferred revenue 365 635 Market lease reserves 3,930 5,548 Other 1,034 906 Total current liabilities $ 7,072 $ 8,013 ' Deferred revenue $ - $ - Deferred rent 1,433 955 Accrued income taxes 12,268 11,976 Market value lease reserves 2,750 7,418 • Asset retirement obligation 2,053 2,162 Other 1,627 355 Totallong-term $ 20,131 $ 22,866 Note 11-Long-Term Debt and Revolving Credit Facility In October 2009, pursuant to an indenture dated as of October 1, 2009 (the "Indenture"), among �tream, certain of our subsidiaries and Wells Fargo Bank, National Association, as trustee, we issued $200 million aggregate principal amount of 11.25% Senior Secured Notes due 2014 (the "Notes") at an initial offering price of 95.454% of the principal amounf, the proceeds of which were used to pay off the debt from our Fifth Amended and Restated Revolving Credit, Term Loan and Security Agreement, dated as of January 8, 2009, as amended (the "PNC Agreement"), with PNC Bank, National Association ("PNC") and other signatories thereto along with debt acquired from EGS. In addition, we and certain of our subsidiaries (collectively, the `Borrowers") entered into a credit agreement, dated as of October 1, 2009 (the "Credit Agreement"), with Wells Fargo Foothill, LLC, as agent and co-arranger, and Goldman Sachs Lending Pariners LLC, as co-arranger, and each of the lenders pariy thereto, as lenders, providing for revolving credit financing (the "ABL Facility") of up to $100 million, including a$20 million sub-limit for letters of credit. The ABL Facility has a maturity of four years at an interest rate of Wells Fargo's base rate plus 375 basis points or LIBOR plus 400 basis points at our discretion. We capitalized fees of $7,815 and $3,929 associated with the Notes and the Credit Agreement, respectively, at the inception of these agreements that are being amortized over their respective lives. We amortized 'mto expense for the year ended December 31, 2010, $1,211 and $956, respectively, of such capitalized fees. The ABL facility has a fixed charge coverage ratio financial covenant that is operative when our availability under the facility is less than $20 million. As of December 31, 2010, we had $68,558 available under the ABL Facility. We are in compliance with the fmancial covenants in the Credit Agreement as of December 31, 2010. Substantially ali of the assets of Stream excluding intangible assets secure the Notes and the ABL Facility. See Note 17 far Guarantor Financial Information. 56 � , n�., �..,.;,.,.+..�c,-..,.,...., r...+,.....,.,:,.�,.i�r,r:��,.,.,.+,, r��,,.,.+.....,.�,-�,,,..a ci�ni�n�� Form 10-K Page 58 of 79 Table of Cante►�ts � • Long-term borrowings consist of the following: December 31, December 31, 2010 2009 � Revolving line of credit $ 24,506 $ 15,501 11.25% Senior Secured Notes 200,000 200,000 Other 147 237 224,653 215,738 Less: current portion (96) (90) Less: discount on notes payable (7,358) (8,768) Long-term debt $ 217,199 $ 206,880 Minimum principal payments on long-term debt subsequent to December 31, 2010 are as follows: Total 2011 $ 96 2012 51 2013 24,506 2014 200,000 2015 — Total $224,653 On March 18, 2009, in response to our request under the Reimbursement Agreement, Ares issued three letters of credit in an aggregate amount of $7,006, and we issued 1 share of Series B Preferred Stock to Ares in consideration of such letters of credit. • We had $6,936 LC Guarantees outstanding at December 31, 2010 and $6,600 at December 31, 2009, respectively. There was $68,SS8 available on the ABL Facility at December 31, 2010. We have $161 and $359 of restricted cash as of December 31, 2010 and 2009, respectively. Note 12—Defined Contribution and Benefit Plans We have defined contribution and benefit plans in various countries. The plans cover all full-time employees other than excluded employees as defined in the plans. The participants may make pretax contributions to the plans, and we can make both matching and discretionary contributions. In the years ended December 31, 2010 and 2009, we recorded $3,264 and $3,126 in matching contributions to the plans. Our defined benefit plans are funded primarily through annuity contracts with third party insurance companies. We do not have any material obligations under these plans other than funding the annual insurance premiums. Note 13—Income Taxes The change in valuation allowances is net of the effect of foreign currency translation adjustments included 'm accumulated other comprehensive income (loss). The domestic and foreign source component of income (loss) before tax is as follows: December 31, December 31, 2010 2009 Total US $ (68,897) $ (45,244) Total Foreign 25,814 21,053 Total $ (43,083) $ (24,191) 57 _ • � � ..�.ti.4w.�•��e•��u•�T.lnr.r�r�.v�+n nn<� T�r�inn4a Tn�Prnati�nal\A/Tinnacnta TnvectmPnt Fnil(� 5�/.Y�/.11� /. Form 10-K Page 59 of 79 � Tab[e ofContea�ts The components of the income tax expense (benefit) are as follows: December 31, December 31, 2010 2009 Current Federal $ 214 $ (1'7) State 326 15 Foreign 6,083 6,128 Total Current $ 6,623 $ 6,126 Deferred Federal $ 1,141 $ (664) State 308 26 Foreign 2,320 (1,106 Total Deferred $ 3,769 $ (1,744) Total $ 10,392 $ 4,382 A reconciliation of the provision for income taxes with amounts determined by applying the statutory US Federal rate is as follows: December 31, December 31, 2010 2009 Federal tax rate $ (15,079) $ (8,467) State and local income taaces, net of federal income tax benefits 300 (20) Foreign income taxed at different rate to US (6,226) 3,340 Change in valuation allowance 23,393 8,327 • Non deductible expenses related to foreign tax holiday 5,469 7,936 Credits and tax holidays (312) (6,709) Benefit of prior year net operating losses - (468) Reserve for uncertain tax positions 1,009 819 Permanent items 1,787 50 Other differences 51 (426) ProviSion for income taxes $ 10,392 $ 4;382 Deferred income taxes consist of the following: December 31, December 31, 2010 2009 Deferred tax assets: Accruals, allowances, and reserves $ 8,585 $ 8,629 Tax credits and loss carry forwards 22,798 19,403 Tangibles/Intangibles 10,982 4,910 Payables/Receivables 28,854 22,252 Other 757 732 71,976 55,926 Valuation allowance 40,603) (18,234) Total deferred taac assets 31,373 37,692 Deferred tax liabilities: Intangible assets 28,337 31,700 Other liabilities 4,671 5,462 Market leases 564 404 Total deferred taY liabilities 33,572 37,566 � Net deferred tax assets (liabilities) $ (2,199) $ 126 � 58 .....L.+«..1.-�1,..//i7.1D..,.«.......5,. T�_. Tl_..]....a_\[7i_-_'-- 7'-.._-°--�'----��a.r'-------i- T------'-----�T'---� cinninn�n Form 10-K Page 60 of 79 Table of Co�tent� `i' • At December 31, 2010 and 2009, we had $33,200 and $28,578, respectively, of U.S. federal net operating losses, which will expire between 2024 and 2030. At December 31, 2010 and 2009, we had $17,174 and $16,745, respectively of state net operating losses. At December 31, 2010 and 2009 the foreign operating loss carry forwards includes $5,984 and $4,277 with no expiration date, and $7,816 and $7,959, respectively, of foreign-generated net operating losses, which will expire over various periods through 2016. The net operating losses are evaluated for each foreign jurisdiction and a full valuation allowance established where we believe that it is more likely than not based on available evidence that the asset will not be realized. At December 31, 2010, we had $2,774 of credits availabie for carry forward which will expire between 2014 and 2029, and $2,018 of credits with no expiration date. We had recorded a valuation allowance of $40,603 and $18,234 for the periods ended December 31, 2010 and 2009, . respectively, against net operating losses and deferred tax assets for which realization of any future benefit is uncertain due to taxable income limitations. We file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. Currently, we are under federal audit for the year 2007. We operate in a number of international taY jurisdictions and are subject to audits of income taY retums by tax authorities in those jurisdictions. We have open audit periods after 2002 in India, Canada and Europe, including France, Italy, Ireland, the Netherlands and the United Kingdom and are currently under audit in India, Canada and Italy. We have been granted various tax holidays in foreign jurisdictions. These tax holidays are given as an incentive to attract foreign investment and under a�eements relating to such taac holidays we receive certain exemptions from taxation on income from export related activities. The income tax benefit from foreign tax holidays was $416 and $5,472 for the periods ended December 31, 2010 and December 31, 2009. Certam of the taY holidays are set to expire between 2011 and 2017. We currently benefit from income tax holiday incentives in the Philippines pursuant to the registrations with the '• Philippine Economic Zone Authority, or PEZA, of our various projects and operations. Under such PEZA registrations, the income tax holiday of our various PEZA-registered projects in the Philippines expire at staggered dates through 2012. The expiration of these tax holidays will increase our effective income tax rate. We have not provided taxes related to the potential repatriation of foreign subsidiary earnings because we believe they will be indefinitely reinvested outside of the United States. If future events necessitate that these earnings should be repatriated to the United States, an additional tax provision and related liability would be required. Reconciliation of the beginning and ending total amounts of unrecognized tax benefits (exclusive of interest and penalties) is as follows: Beginning balance January 1, 2010 $10,297 Additions to tax positions related to the current year 22g Additions for tax positions related to the prior year 358 Reductions for tax positions related to prior year (748) Lapse of statute of limitations (401) Ending balance December 31, 2010 $ 9,734 . As of December 31, 2010 and 2009, the liability for unrecognized taac benefits (including interest and penalties) was $13,227 and $13,319, respectively, of which $959 and $1,344, respectively, was recorded in current liabilities and $12,268 and $11,975, respectively, was recorded within other long term liabilities in our consolidated fmancial statements. Included in these amounts are approximately $1,599 and $1,291, respectively, of unbenefitted taY losses, which would be realized if the related uncertain taac positions were settled. As of 59 ,._.• .ti,b.4.v,1•F;lo•//L7•\R.,.�,,,.,,ti.,.. Tlo., 1�,•..,o..+�\C��-oom Tr�+orno4ir�nol\l�iTinnr anta Tn��aetman� �'iiin� 5/7Q/7(117 Form 10-K Page 61 of 79 • TabE� of Contents January 1, 2010, we had reserved $2,472 for accrued interest and penalties, which had 'mcreased to $2,635 as at December 31, 2010 and is included in the $13,277 of liability. We recognize accrued interest and penalties associated with uncertain tax positions as part of the income tax provision. The total amount of net unrealizable tax benefits that would affect the income taY expense, if ever recognized in our consolidated financial statements is $12,369. This amount includes interest and penalties of $2,635. We estimate that within the next 12 months, our unrecognized tax benefits, and interest and penalties, could decrease as a result of settlements with taYing autharities ar the expiration of the statute of limitations by $1,596 and $949, respectively. Note 14--Stock Options The 2008 Stock Incentive Plan (the "Plan") provides for the grant of incentive and nonqualified stock options. The Plan has authorized grants of up fo 10,000 shares of common stock at an exercise price not less than 100% of the fair value of the common stock at the date of grant. The Plan provides that the options shall be outstanding for a period not to exceed ten years from the grant date. During the years ended December 31, 2010 and 2009, we granted options to purchase 2,769 and 4,903 shares of our common stock to our employees with an exercise price at the geater of $6.00 per share or fair value of the underlying common stock at the date of grant. Generally, options vest over a five-year period. At December 31, 2010 and 2009, 2,066 and 534 stock option grants were vested, 35 and zero had been exercised, and 3,404 and 1,062 had been forfeited. The per s�hare fair value of options granted was determined using the Black-Scholes-Merton model. The following assumptions were used for the option grants in the year ended December 31, 2010: Year Ended Year Ended December 31, Aecember 31, 2010 2009 � Option term (years) 6375 6.375 Volatility 64%-68% 43%-63% Risk-free interest rate 1.57-3.06% 1.91-2.96% Dividend yield � 0% � � 0% � Weighted-average grant date fair value per option granted $ 3.46 $ 3.36 The option term for 2010 and 2009 was calculated under the simplified method for all optio� grants during for the year ended December 31, 2010 and 2009 as we do not have a long history of granting options: As we are beginning to get a history in our common stock we transitioned in 2009 to have the expected volatility assumption be based on a weighted average of the historical volatilities for Stream and its peer group. The risk-free interest rate assumption was based upon.the implied yields from the U.S. Treasury zero-coupon yield curve with a remaining term equal to the expected term in options. The expected term of employee stock options granted was based on our estimated life of the options at the grant date. 60 � " ....t..�...1.P:t,..//u.�t�,.�........:.. r��_. r�__._..4_�a�_____ r_.-�-�:----��*,r--____�_ r------�___�_..r.____a ci�nir►nin Form 10-K Page 62 of 79 Tab[e of C�ntera�s �<, • Stock options under the Plan during year ended December 31, 2010 were as follows: Weighted Average Weighted Weighted Remaining Average Average Contractual Number Exercise Fair Term of options Price Value (Years) Outstanding at December 31, 2009 6,978 $ 6.15 — 9.39 Granted 2,769 6.14 $ 3.46 Exercised 35 6.00 Forfeited or canceled 3,404 6.17 -0utstanding at December 31, 2010 6,308 $ 6.13 7.64 At December 31, 2010, we had stock options to purchase 1,466 shares that were exercisable. The weighted-average exercise price of options currently exercisable is $6.12 at December 31, 2010. The weighted average remaining contractual term of options currently exercisable is 5.56 years at December 31, 2010. The total fair value of options vested during the year ended December 31, 2010 was $5,626. There are 4,958 shares outstanding, vested, and expected to vest (including forfeiture adjusted unvested shares) with a weighted average exercise price of $6.13 and a weighted average remaining contractual term of 735 years. For the years ended December 31, 2010 and 2009, we recognized net stock compensation expense of $5,462 and $1,097 respectively, for the stock options in the table above. Stock option expense includes $1,809 and $0, respectively, related to the acceleration of equity awards resulting from restructuring activities. As of December 31, 2010 and 2009, the aggregate intrinsic value (i.e., the difference in the estimated fair value of our common stock and the exercise price to be paid by the option holder) of stock options outstanding, excluding the effects of • expected forfeitures, were both zero. The aggregate intrinsic value of the shares of exercisable stock at December 31, 2010 and 2009 were both zero. The intrinsic value of options exercised for the years ended December 31, 2010 and 2009, was $19 and zero, respectively. As of December 31, 2010 and 2009, there was $7,203 and $10,325, respectively, of unrecognized compensation cost related to the unvested portion of time-based arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 3.8 years from issue date. Restricted stock award activity during the year ended December 31, 2010 and 2009 was as follows: Weighted average Number ot Grant- Shares Date Fair Value Outstanding December 31, 2009 632 $ 6.28 Granted 200 6.23 Vested 149 6.21 Forfeited 284 6.15 Outstandin� December 31, 2010 399 $ 6.37 For the years ended December 31, 2010 and 2009, we recognized net compensation expense of $967 and $146, respectively, for the restricted stock awards. Restricted stock awards vest either quarteriy over four years for grants in 2008 or semi-annually over a five year for grants in 2009. 61 4 '....._:.. . ...,.1..4.....1.F:1,..//L7.\�....«...�.,,. Tl..�� D«..,o..��\C�4,�o.�,ti. T,�,+o,«��;.,.-,�1\1�iTinnaen4� T»��netmant T1iin� 5�7Q�7(�17 Form 10-K Page 63 of 79 •_ TabE� c�f Co�ttents Note 1�Commitments and Contingencies Leases We lease our operating facilities and equipment under non-cancelable operating leases, which expire at various dates through 2015, and we have a capital lease obligation related to one facility. In addition, we have capital leases for furniture, computer and telephone equipment. The assets under capital lease are included in equipment and fixtures, net, on our consolidated balance sheets are as follows: December 31, December 31, 2010 2009 Furniture and fixtures $ 1,846 $ 1,182 Building improvements : 8,602 8,588 Computer equipment 8,085 3,946 Telecom and other equipment 13,149 ` 6,341 31,682 20,057 Less: accumulated depreciation (10,597) (3,221) $ 21,085 $ 16,836 Future minimum payments under capital and operating leases consist of the following at December 31, 2010: Capital Operating Leases Leases 2011 10,485 40,885 2012 6,879 26,404 2013 3,117 17,031 � 2014 1,027 11,556 2015 206 6,847 Thereafter 172 14,980 Total future minimum lease payments 21,886 $117,703 Less amount representing interest (2,295 19,591 Less current portion (9,100 Long-term debt, net of current portion $10,491 Rent expense is included in our consolidated statements of operations in selling, general and administrative expenses as follows: Year Year Ended Ended December December 31, 31, 2010 2009 Rent expense $ 50,176 $ 36,334 Market lease reserve amortization 4,830) (3,687) Net rent expense $ 45,346 $ 32,647 Contingencies We are self-insured with respect to medical and dental claims by our employees located in the United States, subject to an annual insured stop-loss limit on per-claim payments of $125. We believe that our self-insurance reserves of $953 at December 31, 2010 and $1,371 at December 31, 2009 are adequate to provide for future payments required related to claims prior to that date. � � � � • 62 „�,L,�.,,i.f;to./JU.�L�,.,...,�.�.;,, t��., n,.,.:,.,.,-��r+..,.,....,. r...4,....,...+:,..,...��r,�:......,...,.+� r..._,,..,....,.,.:.,.�.....a ci�ni�ni� Form 10-K Page 64 of 79 Tal�te o.f Contents {:_-• We are also subject to various lawsuits and claims in the normal course of business. In addition, from time to time, we receive communications from government or regulatory agencies concerning investigations or allegations of non-compliance with laws or regulations in jurisdictions in which we operate. Although the ultimate outcome of such lawsuits, claims and investigations cannot be ascertained, we believe, on the basis of present information, that the disposition or ultimate resolution of such claims, lawsuits and/or investigations will not have a material adverse effect on our business, results of operations or financial condition. We establish specific liabilities in connection with regulatory and legal actions that we deem to be probable and estimable, and we believe that our reserves for such liabilities are adequate. We have been named as a third-party defendant in a putative class action captioned Kambiz Batman�helich, on behalf of himself and all others similarlv situated and on behalf of the general public, v. Sirius XM Radio, Inc., filed in the Los Angeles County Superior Court on November 10, 2009, and removed to the United States District Court for the Central District of California. The Plaintiff alleges that Sirius XM Radio, Inc. recorded telephone conversations between Plaintiff and members of the proposed class of Sirius customers, on the one hand, and Sirius and its employees, on the other, without the Plaintif�s - and class members' consent in violation of California's telephone recording laws. The Plaintiff also alleges negligence and violation of the common law right of privacy, and seeks injunctive relief. On December 21, 2009, Sirius XM Radio, Inc. filed a Third-Party Complaint in the action against us seeking indemnification for any defense costs and damages that result from the putative class action. On March 25, 2010, the Plaintiff filed an amended complaint that added us as a defendant. We believe that we have meritorious defenses to these claims, but there can be no assurance at this time as to the outcome of this lawsuit. Stream International (NI) Limited ("Stream NI") exercised its right to terminate its lease for certain premises in Northern Ireland and vacated such premises on or prior to the termination date of December 31, 2009. The landlord, Peninsula High- Tech Limited (the "Landlord"), has filed a claim against Stream NI alleging that the termination right under the lease was not validly exercised because Stream NI failed to reasonably perform and observe the covenants and conditions of the lease, and therefore such lease remains in subsistence and that the rent and service charges continue to accrue. The Landlord has filed proceedings for £365,273.87 plus interest for rent and service charges owing for the first nine months of 2010. If successful in ,, � its proceedings, the Landlard will have claims against Stream NI for unpaid rent and service charges for the entire five years remaining under the lease, an aggregate of £2,435,159.13, or until such time as another tenant enters into occupation of the premises. Stream NI has refuted the allegations and intends to vigorously defend against the claims asserted by the Landlard. Note 16—Geographic Operations and Concentrations We operate in one operating segment and provide services primarily in two regions: "Americas", which includes United States, Canada, the Philippines, India, Costa Rica, Nicaragua, Dominican Republic, and El Salvador; and "EMEA", which includes Europe, Derry Northern Ireland, Middle East, and Africa. 63 € • ...L.�,..1.�;1,,.//L7.\L',.,..-.,.«...,,. Tlo.� �,-,,,o..+�\C'�«o�,v, T,-,+a,-,-,�4;�.,-,nl\AiTinnaenta TnvaetmantF»nrl 5�7��7n�7 Form 10-K Page 65 of 79 �. � '�'able c�f Cont�e�ts The following table presents geographic information regarding our operations: � Year Year Ended Ended December December 31, 31, 2010 2009 Revenues Americas $588,029 $371,944 EMEA 212,144 212,825 $800,173 $584,769 Total assets: Americas $569,325 $594,116 EMEA 78,660 86,707 $647,985 $680,823 We derive significant revenues from three significant clients. At December 31, 2010, two of our largest clients are global computer companies, and the other client is a satellite radio provider. Year Year Ended Ended December Decem6er 31, 31, 2010 2009 �Hewlett-Packard Company 12% 17% Sirius XM Radio Inc. 7% 10% • Related accounts receivable from these three clients were 20%, 9% and 6%, respectively, of our total accounts receivable at December 31, 2010. 64 � ....L.4....1.L;1...//I7.\L' ' ' �r'-- i cinninn�.� ,.,...,........, r�___ n _ .. ___�_� c � .. ___--- T--'------�----nw r•- ----1- T---' Form 10-K Page 66 of 79 Table of Cante��ts �� Note 17-Guarantor Financial Information (LJnaudited) Our Notes are guaranteed by Stream, which is the parent company, along with certain of our wholly owned subsidiaries. Such guarantees are full, unconditional and joint and several. Condensed consolidating fmancial information related to us, our guarantor subsidiaries and our non-guarantor subsidiaries as of December 31, 2010 and 2009 are reflected below: Condensed Consolidating Statement of Operations For the year ended December 31, 2010 Non- Guarantor Guarantor Parent subsidiaries subsidiaries Elimination Total Net revenue: Customers $ - $638,444 $161,729 $ - $800,173 Intercompany - (15,877) 292,521 (276,644) - - 622,567 454,250 (276,644) 800,173 Direct cost of revenue Customers - 226,696 244,732 471,428 Intercompany - 236,228 40,416 (276,644) - - 462,924 285,148 (276,644) 471,428 Gross Profit - 159,643 169,102 - 328,745 Operating expenses 6,972 181,129 155,406 - 343,507 Non-operating expenses 25,959 (9,356) 11,718 - 28,321 Equity in Earnings of Subsidiaries 28,148 - - (2g,14g - Income (loss) before income taxes (61,079 (12,130 1,978 28,148 (43,083 Provision (benefit) for income taxes 7 604) 13,768 4,228 - 10,392 • Net income (loss) $(53,475) $ (25,898) $ (2,250) $ 28,148 $(53,475) Condensed Consolidating Statement of Operations For the year ended December 31, 2009 Non- • Guarantor Guarantor Parent subsidiaries subsidiaries Elimination Total Net revenue: Customers $ - $517,373 $ 67,396 $ - $584,769 Intercompany - 88,067 231,805 (319,872) - - 605,440 299,201 (319,872) 584,769 Direct cost of revenue Customers - 171,587 170,606 342,193 Intercompany - 293,155 26,717 (319,872) - - 464,742 197,323 (319,872) 342,193 Gross Profit - 140,698 101,878 - 242,576 Operating expenses 8,526 147,671 91,924 - 248,121 Non-operating expenses 2,165 13,187 3,294 - 18,646 Equity in Earnings of Subsidiaries 18,924 - - (18,924) - Income (loss) before income taYes (29,615 (20,160 6,660 18,924 (24,191 Provision (benefit) for income taxes (1,042 4,729 695 - 4,382 Net income (loss) $(28,573 $ (24,889 $ 5,965 $ 18,924 $ (28,573 65 �.:• „�L,+,v,l•f;lo•//�7•\�'...,,-,.,,Y,,.. Tlo�� D,-.,,o..��\C+ro�,Y, T,-,+A,-,-,�+in,�al\AiTinnPenta Tnvactmant Fiinrj S/7A�7(�17 Form 10-K Page 67 of 79 , Tab[e �f Casttents Condensed Consolidating Balance Sheet As of December 31, 2010 Non- Guarantor Guarantor Parent subsidiaries subsidiaries Elimination Total ASSEtS Cash and cash equivalents $ 6 $ 2,431 $ 16,052 $ - $ 18,489 Accounts receivable, net - 149,814 30,397 - 180,211 Other Current Assets 2,374 22,570 12,246 - 37,190 Total current assets 2,380 174,815 58,695 - 235,890 Equipment and fixtures, net and other assets 6,657 46,621 48,394 - 101,672 Investment in Subsidiary 497,477 70,931 17 (568,425) - Goodwill and intangible assets, net - 189,351 121,072 - 310,423 Total assets $506,514 $481,718 $228,178 $ 568 425 $647,985 Liabilities and Stockholders' Equity Current liabilities $ (19,611) $ 7,242 $130,977 $ - $118,608 Long-term liabilities 217,148 39,894 12,617 - 269,659 Total shareholders' equity (deficit) 308,977 434,582 84,584 568,425) 259,718 Total liabilities and stockholders' equity $506,514 $481,718 $228,178 $ 568 425 $647,985 Condensed Consolidating Balance Sheet As of December 31, 2009 • Non- Guarantor Guarantor Parent subsidiaries subsidiaries Elimination Total Assets Cash and cash equivalents $ 126 $ 3,195 $ 11,607 $ - $ 14,928 Accounts receivable, net - 139,025 36,532 - 175,557 Other Current Assets 2,083 23,440 11,378 - 18,043 Total current assets 2,209 165,660 59,517 - 227,386 Equipment and fixtures, net and other assets 8,662 49,466 64,448 - 122,576 Investment in Subsidiary 390,971 160,798 27 (551,796) - Goodwill and intangible assets, net - 2Q4,941 125,920 - 330,861 Total assets $ 401,842 $580,865 $249,912 $(551,796 $680,823 Liabilities and Stockholders' Equity Currentliabilities $(132,032) $ 96,484 $150,885 $ - $115,337 Long-term liabilities 206,733 40,662 14,680 - 262,075 Total shareholders' equity (deficit) 327,141 443,719 84,347 551,796 303,411 Total liabilities and stockholders' equity $ 401,842 $580,865 $249,912 $(551,796 $680,823 66 � ...,L.+,....t.�l,..//u.��,.,....,...,.:,. r� ..�. T)«..:....4..`04....._W T._L,_�_.,1.�__.,1\T.T.._�,_._�4., T�_.._..1W.�.�4 ci�ni�ni� Form 10-K Page 68 of 79 T�ab�e of car�tencs � � Condensed Statements of Cash Flows For the year ended December 31, 2010 Non- Guarantor Guarantor Parent subsidiaries subsidiaries Elimination Tota( Net cash provided by (used in) operating activities $ (22,321) $ 10,653 $ 34,ll2 $ — $ 22,444 Cash Flows from investing activities: Investment in Subsidiary ' (106,505) 105,038 1,467 — — Additions to equipment and fixtures, net — (15,081) (7,823) — (22,904) Net cash provided by (used in) investing activities � (106,505) 89,957 (6,356) � — (22,904) Cash Flow§ from financing activities: Net borrowings (repayments) on line of credit 9,004 — — — 9,004 Net borrowings (repayments) on long term debt — (90) — — (90) Net borrowings (repayments) on capital leases — (3,412) (2,448) — (5,860) Net Intercompany 118,968 (100,003) (18,965) — — Proceeds from issuance of common stock related to pre-emptive rights and stock options 268 — — — 268 Tax withholding on Restricted Stock (233) — — — (233) Proceeds from exercise of warrants 2,307 — — — 2,307 ;, • Re-purchaseofwarrants 1,608 — — — (1,608 Net cash provided by fmancing activities 128,706 (103,505) (21,413) — 3,788 Effect of exchange rates on cash and cash equivalents — 2,131 (1,898) — 233 Net increase (decrease) in cash and cash ' equivalents 120 (764 4,445 — 3,561 Cash and cash equivalents, beginning of period 126 3,195 11,607 — 14,928 Cash and cash equivalents, end of period $ 6 $ 2,431 $ 16,052 $ — $ 18,489 67 " ._; � ---t`---�_r_�__iirT_�r.,.�.�..W:_ r�..__ n..�:�,.a,.�oa..�,..,.., r...4,......,,�:,.....,t\TR;.....o�„+., Tr�<rnn4mcvi�Tiiin� S/�A/�l11� Form 10-K � Page 69 of 79 � Tab[e �ai' Co�tee�ts Condensed Statements of Cash Flows For the year ended December 31, 2009 Non- Guarantor Guarantor Parent subsidiaries subsidiaries Elimination Total Net cash provided by (used in) operating activities � $ (14,011) $ (9,754) � $ (1,422) $- — $(25,187) Cash Flows from investing activities: Acquisition of businesses, net of cash acquired — 182 33,218 — 33,400 Investrnent in Subsidiary (80,721) 79,221 1,500 — — Additions to equipment and fixtures, net — (9,223) 12,841) — 22,064) Net cash provided by (used in) investing activities (80,721 70,180 21,877 — 11;336 Cash Flows from fmancing activities: Net borrowings (repayments} on line of credit 15,501 (59,425) — — (43,924) Net borrowings (repayments) on long term debt 190,908 (6,577) (120,203) - 64,128 Net bonowings (repayments) on capital leases — (1,255) (929) — (2,184) NetIntercompany (104,967) 3,845 106,122 — — Proceeds from issuance of common - stock related to pre-emptive rights • and stock options 1,921 — = = 1,921 Tax withholding on restricted stock — Proceeds from exercise of warrants '78g — � _ �gg Re-purchase of warrants (7,373) — — — (7,373) Re-purchases ofcommon stock (10) — — — (10) Net cash provided by fmancing activities 91,768 (63,412) (15,010) — 13,346 Effect of exchange rates on cash and cash equivalents — 3,505 1,268 — 4,773 Net increase (decrease) in cash and cash equivalents 2,964) 519 6,7I3 — 4,268 Cash and cash equivalents, beginning of period 3,090 2,676 4,894 — 10,660 Cash and cash equivalents, end of period $ 126 $ 3,195 $ 11,607 $ — $ 14,928 68 � .�.L.+,ti,l.�;lo.//L7.\L' ...............71,.., D«,..,.,.�,.\oa.,.......,, r_.+��,.4..,�_t��.r_��___�_ T�----..�__�. r.__�J c�nni�n�n Form 10-K Page 70 of 79 Table cxi'Cantents �� _ Note 18—Quarterly Results of Operations (Unaudited) SGS quarterly operating results were as follows: 2010 2009 First Second Third Fourth First Second Third Fourth uarter uarter Quarter uarter Quarter Quarter Quarter uarter Revenue $196,575 $183,904 $197,146 $222,548 $135,614 $125,670 $121,875 $201,610 Gross profit 83,735 72,908 83,200 88,902 57,001 52,265 49,306 84,004 Operating income (loss) (2,868) $ (10,946) (2,903) 1,954 6,834 3,136 (3,059) (12,456) Net income (loss) attributable to common stockholders $ (10,475) $ (21,505) $ (12,580) $ (8,916) $ 180 $ (4,726) $ (9,358) $ (79,084) Net income (loss) ariributable to common stockholders per share: Basic and diluted $ (0.13) $ (0.27) $ (0.16) $ (0.11) $ 0.02 $ (0.50) $ (0.99) $ (0.99) Note 19—Subsequent Events During the first quarter of 2011, as a result of political unrest in northern Africa, the operations of our call centers in Tunisia and Egypt were impacted by local government imposed curfews and disruption in communication channels. We presently do not believe that our fmancial results will be materially impacted by these matters. Far the year ended December 31, 2010, the revenue from these locations was less than 10% of our total revenue and long-lived assets. Please refer to our risk factors contained within this Form 10-K for a further description of our risks related to international operations. 69 • �.; • � WLa.,.,.l.�l...//T7.\L',.,.«,.w.�. Tl.._. )l_.....,.4,.\C T«�.,«.-..,4;�..-,.,1\AiTi.-�v�on��o Tri��netman4Fiin� ri�7Q�7n�7 Form 10-K Page 71 of 79 � Tabie of �ont�a�ts ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES (a) Disclosure Controls and Procedures Our Chief Executive Officer, Kathryn V. Marinello, and our Chief Financial Officer, Dennis Lacey (our principal executive officer and principal financial officer, respectively), have concluded that our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) were effective as of December 31, 2010, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by Stream in such reports is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurances of achieving the desired control objectives, and management necessarily was required to apply its judgment in designing and evaluating the controls and procedures. On an on-going basis, we review and document our disclosure controls and procedures, and our internal control over financial reporting and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems , evolve with our business. (b) Management's Annual Report on Internal Control over Financial Reporting • Our management is responsible for establishing and maintaining adequate internal control over fmancial reporting as defined in Rule 13a-15(fl and 15d-15( fl of the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect all errors or fraud. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriarate. We assessed the effectiveness of the Company's internal control over fmancial reporting as of December 31, 2010. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on our assessment using those criteria, we concluded and hereby report that our internal control over fmancial reporting was effective as of December 31, 2010. Management reviewed its assessment of our internal control over financial reporting with our Audit Committee of the Board of Directors. Management's report on internal control over financial reporting contained in this paragraph (b) of Item 9A shall not be deemed "filed" for purposes of Section 18 of the Exchange Act ar otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing by us under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing. This Annual Report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this Annual Report. (c) Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 of the Exchange Act that occurred during the period covered by this Annual Report that have materially affected, or is reasonably likely to materially affect, our intemal control over financial reporting. • 70 ,�,1.4,.�.1.�f;lo.//L7.\� .............:.. Tl,.., n....:,.,.�..\a��...._._ T � 4 �..__ 4 ._�_t�A.r_------�- T-----`-----'-T'---� cinni�n�n Form 10-K Page 72 of 79 '�'able o#' Cantents � � PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by this item is incorporated herein by reference to the information contained in a definitive proxy statement for our 2011 annual meeting of stockholders (the "Proxy StatemenY'), which we intend to file pursuant to Regulation 14A with the Securities and Exchange Commission not later than 120 days after our fiscal year end of December 31, 2010. ITEM 11. EXECUTIVE COMPENSATION The information required by this item is incorporated herein by reference to the information contained 'm the Proxy Statement, which we intend to file not later than 120 days after our fiscal year end of December 31, 2010. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by this item is incorporated herein by reference to the information contained in the Proxy Statement, which we intend to file not later than 120 days after our fiscal year end of December 31, 2010. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this item is incorporated herein by reference to the information contained in the Proxy Statement, which we intend to file not later than 120 days after our fiscal year end of December 31, 2010. TTEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES t • The information required by this item is incorporated herein by reference to the information contained in the Proxy Statement, which we intend to file not later than 120 days after our fiscal year end of December 31, 2010. 71 `-:, • ,ti.L.tw.l.�lo•//C7.\�'..�„�,.,,Y,,,. Tlo<� D,-.,,e�.4o\C4roow, T,-.�o,-.,ot;.,,,�1\AiTinr�nenl Tnvactmant Fimrl r i�7A�7n� 7 Form 10-K Page 73 of 79 � T��t� caf Conte�ts PART IV ITEM 15: EXHIBITS AND FINANCIAL STATEMENT SCHEDULES Documents filed as a part of this Report: 1. Financial Statements. We are filing our Consolidated Financial Statements as part of this Report, which include: Consolidated Balance Sheets as of December 31, 2010 and 2009 Consolidated Statements of Operations for the years ended December 31, 2010 and 2009 Consolidated Statements of Stocic�olders' Equity for the years ended December 31, 2010 and 2009 Consolidated Statements of Cash Flows for the years ended December 31, 2010 and 2009 Notes to Consolidated Financial Statements 2. Financial Statement Schedule: No fmancial statement schedules are provided as all required information is included in the consolidated fmancial statements. 3. F�chibits. We are filing as part of this Report the Exhibits listed in the E�ibit Index following the signature page to this Report. 72 • � ,.,,t,r,�.�.�:�o.iiu.��,,,,�,,,...;,, ri�., n,.,.;�„�..�c+,.,,,..... T�+�..,..,,+:,...,.i�r,r;�r,.,.,.�„ T��,�.,+....or� �„ra ci��i�ni � Form 10-K Page 74 of 79 Tab[e of Cc�ntents �� SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. STREAM GLOBAL SERVICES, INC. March 2, 2011 By: /s/ Kathryn V. Marinello Kathryn V. Marinello Chairman, Chief Executive Officer and President � (Principal Executive Officer) March 2, 20ll By: /s/ Dennis Lacey Dennis Lacey Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Kathryn V. Marinello Chairman of the Board of Directors, March 2, 2011 Kathryn V. Marinello Chief Executive Officer and President /s/ Alfredo I. Ayala Director March 2, 2011 Alfredo I. Ayala , • /s/ G. Drew Conway Director March 2, 20ll � G. Drew Conway /s/ Matthew Cwerinia Director March 2, 2011 Matthew Cwertnia /s/ Paul G. Jourbert Director March 2, 2011 Paul G. Jourbert /s/ David B. Kaplan Director March 2, 2011 David B. Kaplan /s/ Peter Maquera Director March 2, 2011 Peter Maquera /s/ R. Davis Noell Director March 2, 2011 R Davis Noelt /s/ Julie G. Richardson Director March 2, 2011 Julie G. Richardson /s/ Nathan Walton Director March 2, 2011 Nathan Walton 73 #,, • m�tm�•��n•�I�T•��i�nnnmin nAV pYl�1P/+�Q�C�'TPOYYI Tntarnal-innal\A/Tinnacnta Tnvactment Fnr�� 1�7�f�7n� 7 Form 10-K Page 75 of 79 � Tabte t�f Contents EXHIBTT INDEX Exhibit No. Descr�tion 2.1 Amended and Restated Agreement and Plan of Merger, dated as of June 2, 2008, among the Registrant, River Acquisition Subsidiary Corp. and Stream Holdings Corporation (filed as Exhibit 2.1 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on June 5, 2008 and incorporated herein by reference). 2.2 Share Exchange Agreement, dated a"s of August 14, 2009, among the Registrant, EGS Corp., EGS Dutchco B.V. and NewBridge International Investment Ltd., (filed as E�ibit 2.1 to the Registrant's Current Report on Form 8-K (File No. 041-33739), as filed with the SEC on August 20, 2009 and incorporated herein by reference). 3.1 Third Amended and Restafed Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on July 31, 2008 (filed as E�ibit 3.1 to the Registrant's Current Report on Form 8-K (File No. 001-33739), filed with the SEC on August 6, 2008 and incorporated herein by reference). . 3.2 Certificate of Amendment to Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on September 29, 2009 (filed as E�ibit 3.1 to the Registrant's Current Report on Form 8-K (File No. 001-33739), fiied with the SEC on October 5, 2009 and incorporated herein by reference). 33 Certificate of Amendment to Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on September 29, 2009 (filed as Exhibit 3.2 to the Registrant's Current Report on Form 8-K (File No. 001-33739), filed with the SEC on October 5, 2009 and incorporated herein by reference). 3.4 By-Laws of the Registrant (filed as E�ibit 3.2 to the Registrant's Current Report on Form 8-K (File Na 001-33739), as filed with the SEC on August 20, 2009 and incorporated herein by reference). � 41 Specimen common stock certificate (filed as Exhibit 4.2 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 6, 2008 and incorparated herein by reference). 4.2 Specimen unit certificate (filed as E�ibit 4.1 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 6, 2008 and incorporated herein by reference). 4.3 Specimen warrant certificate (filed as E�ibit 4.3 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 6, 2008 and incorporated herein by reference). 4.4 Form of Warrant Agreement between the Registrant and Continental Stock Transfer & Trust Company (filed as Exhibit 4.5 to the Registrant's Registration Statement on Form S-1 (File No. 333- 144447), effective as of October 17, 2007 and incorporated herein by reference). 4.5 Amended and Restated Registration Rights Agreeme�t, dated as of August 14, 2009, among the Registrant, Ares Corporate Opportunities Fund II, L.P., NewBridge International Investment Ltd., EGS Dutchco B.V., Mr. R. Scott Murray, and certain stockholders of the Registrant (filed as E�ibit 4.2 to the RegistranYs Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 20, 2009 and incorporated herein by reference). 4.6 Indenture, dated as of October l, 2009, among the Registrant, the Guarantors named therein and Wells Fargo Bank, National Association, as Trustee, governing the 11.25% Senior Secured Notes due 2014, � including the form of 11.25% Seniar.Secured Notes due 2014 (filed as E�ibit 4.1 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on October 5, 2009 and incorporated herein by reference). • m�ltm�•��n•��•��'inr�v��min Tlov D«.�;o..4r.\Q4«........ T«4.......,.�].,..�1\1�d7�-----a- T'-----�------�T---- 1 �innir��r. Form 10-K Page 76 of 79 'i'able of Cantents � • Exhibit No. Description 4.7 Exchange and Registration Rights Agreement, dated as of October 1, 2009, among the Registrant, the Guarantors listed on the signature pages thereto and the Purchasers named therein (filed as E�ibit 4.2 to the Registrant's Current Report on Form &K (File No. 001-33-739), as filed with the SEC on October 5, 2009 and incorporated herein by reference). 4.8 Security Agreement, dated as of October 1, 2009, among the Registrant, the other Guarantors listed on the signature pages thereto and Wells Fargo Foothill, LLC (filed as Exhibit 4.3 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on October 5, 2009 and incorporated herein by reference). 4.9 Security Agreement, dated as of October 1, 2009, among the Registrant, the other Guarantors listed on • the signature pages thereto and Wilmington Trust FSB (filed as E�ibit 4.4 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on October 5, 2009 and incorporated herein by reference). 4.10 Collateral Trust Agreement, dated as of October 1, 2009, among the Registrant, the Guarantors from time to time pariy thereto, Wells Fargo Bank, National Association, as Trustee, the other Secured Debt Representatives from time to time party thereto and Wilmington Trust FSB (filed as Exhibit 4.5 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on October 5, 2009 and incorporated herein by reference). 4.11 Lien Subordination and Intercreditar Agreement, dated as of October 1, 2009, among the Registrant, the subsidiaries of the Registrant listed on the signature pages thereto, Wells Fargo Foothill, LLC and Wilmington Trust FSB (filed as Exhibit 4.6 to the Registrant's Current Report on Form 8-K (File Na 001-33739), as filed with the SEC on October 5, 2009 and incorporated herein by reference). 4.12 Letter Agreement, dated as of August 14, 2009, between the Registrant and Ares Corporate Opportunities �� Fund II, L.P. (filed as Eachibit 43 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 20, 2009 and incorparated herein by reference). 10.1 * Description of the Registrant's 2010 management incentive plan (reported in the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on February 3, 2010 and incorporated herein by refererice). 10.2* Description of the Registrant's 2010 executive sales incentive plan (reported in the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on February 3, 2010 and incorporated herein by reference). 103* Description of the Registrant's 2010 executive sales incentive plan, as amended (reported in the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on March 11, 2010 : and incorparated herein by reference). 10.4* Employment Agreement between the Registrant and R. Scott Murray, dated July 15, 2008 (filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on July 17, 2008 and incorporated herein by reference). 10.5 * Letter Amendment to Employment Agreement between the Registrant and R. Scott Murray dated December 29, 2008 (filed as E�ibit 10.4 to the RegistranYs Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-33739), as filed with the SEC on March 17, 2009 and incorporated herein by reference). 10.6* Letter Amendment to Employment Agreement between the Registrant and R. Scott Murray, dated May 6, 2009 (filed as E�iibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 (File No. 001-33739), as filed with the SEC on August 5, 2009 and incorporated herein by reference). i .v.l..�..-.l.�lo.//L7.\T.'.....-..�.v.;.. Tl�.. D«..;o..4.,\C4..o.�.ti. T.-.4o�-.�n4:�v�o1\1��Tinnno�4o TnvPetmant Fnnr� S�7A�7n� 7 Form 10-K Page 77 of 79 � 'Tab(e of Conte��ts Exhibit No. Description 10.7* Letter Amendment to Employment Agreement between the Registrant and R. Scott Murray, dated November 10, 2009 (filed as Exhibit 10.2 to the Registrant's Current Report on Form 8-K (File No. 001- 33739), as filed with the SEC on November 13, 2009 and incorporated herein by reference). 10.8* Separation Agreement between the Registrant and R. Scott Murray, dated August 19, 2010 (filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 20, 2010 and incorporated herein by reference). 10.9* Employment Agreement between the Registrant and Kathryn V. Marinello, dated August 19, 2010 (filed as E�ibit 10.2 to the Registrant's Current Report on Form 8-K (Fi1e No. 001-33739), as filedwith the SEC on August 20, 2010 and incorporated herein by reference). 10.10* Employment Agreement between the Registrant and Robert Dechant, dated August 7, 2008 (filed as E�ibit 10.5 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-33739), as filed with the SEC on March 17, 2009 and incorporated herein by reference). 10.11 * Letter Amendment to Employment Agreement between the Registrant and Robert Dechant, dated December 29, 2008 (filed as E�ibit 10.6 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2008 (File Na 001-33739), as filed with the SEC on March 17, 2009 and incorporated herein by reference). 10.13* Letter Amendment to Employment Agreement between the Registrant and Robert Dechant, dated May 6, 2009 (filed as E�ibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 (File No. 001-33739), as filed with the SEC on August 5, 2009 and incorporated herein by reference). � � � • 10.14* Letter Amendment to Employment Agreement between the Registrant and Robert Dechant, dated November 9, 2009 (filed as E�ibit10.4 to the Registrant's Current Report on Form 8-K (File No. 001- 33739), as filed with the SEC on November 13, 2009 and incorporated herein by reference). 10.15* Employment Agreement between the Registrant and Sheila M. Flaherty, dated July 16, 2008 (filed as Exhibit 10.2 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on July 17, 2008 and incorporated herein by reference). 10.16* Letter Amendment to Employment Agreement between the Registrant and Sheila M. Flaher[y, dated December 29, 2008 (filed as Exhibit 10.10 to the RegistranYs Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-33739), as filed with the SEC on March 17, 2009 and incorporated herein by reference). 10.17* Letter Amendment to Employment Agreement between the Registrant and Sheila M. Flaherty, dated May 6, 2009 (filed as EJChibit 103 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 (File No. 001-33739), as filed with the SEC on August 5, 2009 and incorporated herein by reference). 10.18* Letter Amendment to Employment Agreement between the Registrant and Sheila M. Flaherty, dated November 9, 2009 (filed as E�ibit 103 to the RegistranYs Current Report on Form 8-K (File No. 001- 33739), as filed with the SEC on November 13, 2009 and incorporated herein by reference). 10.19* Employment Ageement between the Registrant and Dennis Lacey, dated December 15, 2009 (filed as E�ibit 10.1 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on December 21, 2009 and incorporated herein by reference). 10.20* 2008 Stock Incentive Plan (filed as Annex D to the Registrant's Definitive Proxy Statement, as filed with the SEC on July 7, 2008 and incorporated herein by reference). � Y11I'7tYY1�•ft�P•�I�T•�T�-+nnrinm�n nn�� D.��ion4a.�C�4«�....« T...�,.«...,.+:,....,.1\Td:��___.._ r�____i_--__-�T_---� - �inninn�� Form 10-K Page 78 of 79 Tabde of Conte�ts �� Exhibit No. Description 10.21 * Form of Incentive Stock Option Agreement under the 2008 Stock Incentive Plan (filed as Exhibit 10.2 to the RegistranYs Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 (File No. 001- 33739), as filed with the SEC on November 6, 2009 and incorporated herein by reference). 10.22* Form of Non-Statutory Stock Option Agreement under the 2008 Stock Incentive Plan (filed as E�ibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 (File No. 001-33739), as filed with the SEC on November 6, 2009 and incorporated herein by reference): 10.23 * Form of Restricted Stock Agreement under the 2008 Stock Incentive Plan (filed as Eachibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 (File No. 001- 33739), as filed with the SEC on November 6, 2009 and incorporated herein by reference). 10.24* Fortn of Restricted Stock Unit Agreement under the 2008 Stock Incentive Plan (filed as Exhibit 10.4 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 4, 2008 and incorporated herein by reference). 10.25* Option Agreement between the Registrant and R. Scott Murray, dated as of November 10, 2009 (filed as Exhibit 10.1 to the Registrant's Current Report on Forni 8-K (File No. 001-33739), as filed with the SEC on November 13, 2009). 10.26 Form of Management Rights Letter (filed as E�ibit 10.5 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on June 5, 2008 and incorporated herein by reference). 10.27 Preferred Stock Purchase Agreement between the Registrant and Ares Corporate Opportunities Fund �I, L.P., dated as of June 2, 2008 (filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K (File No 001-33739), as filed with the SEC on June 5, 2008 and incorporated herein by reference). 10.28 Amendment No. 2 to Preferred Stock Purchase Agreement between the Registrant and Ares Corporate t • Opportunities Fund II, L.P., dated as of July 17, 2008 (filed as E�ibit 10.1 to the Registrant's Current ` Report on Form 8-K File No. 001-33739), as filed with the SEC on July 22, 2008 and incorporated herein by reference). 10.29 Stockholders Agreement, dated as of October 1, 2009, among the Registrant, Ares Corporate Opportunities Fund II, L.P., EGS Dutchco B.V., NewBridge International Investment Ltd., R. Scott Murray and Trillium Capital LLC. (filed as E�ibit 10.2 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on October 5, 2009 and incorporated herein by reference). 1030 Form of Indemnification Agreement entered into between the Registrant and its directors and officers (filed as E�ibit 10.1 to the Registrant's Current Report on Form 8-K (File Na 001-33739), as filed with the SEC on August 12, 2008 and incorporated herein by reference). 10.31 Credit Agreement, dated as of October 1, 2009, among Wells Fargo Foothill, LLC, Goldman Sachs Lending Partners LLC, and each of the other Lenders party thereto, the Registrant and its subsidiaries identified therein (filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K (File No. 001- 33739), as filed with the SEC on October 5, 2009 apd incorporated herein by reference). 1032 Employment Agreement between the Registrant and Brian Delaney, dated January 13, 2011 (filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on January 14, 2011 and incorporated herein by reference). 12.1# Statement of Computation of Ratio of Earnings to Fixed Charges. _�:i .-..1.+.�.1•�lo•//LT•\Ty�..�...nw��. Tloz� p�-��on4�.\C+ro.�m Tr�i-a�rno+inrio��T/Tinnae�fa Tnvactmant Fimrl 5�7��7n�7 Form 10-K Page 79 of 79 • T�(�Ig uf Cont�nts Exhibit No. Description 14.1 Code of Business Conduct and Ethics (filed as E�ibit 14.1 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on September 26, 2008 and incorporated herein by reference). 21.1# Subsidiaries of the Registrant. 23.1# Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm. 31.1# Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule 13(a)- 14(a)/15d-14(a), by Chief Executive Officer (principal executive officer). 31.2# Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule 13(a)-14(a)/15d-14(a), by Chief Financial Officer (principal fmancial officer). 32.1# Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Executive Officer (principal executive officer). 32.2# Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Financial O�cer (principal financial officer). * Management contracts or compensatory plans or arrangements required to be filed as an e�ibit hereto pursuant to Item 15(a) of Form 10-K. # Filed herewith. • •- mhtml•filP.•//�T•\Fennnmic TIPV Prniactc\Ctream Tntarnatinnal\A/Tinnacnta Tnvactmant Fimr� S/7A/7(117 Form 10-K Page l of 75 10-K 1 d263815d1Ok.htm FORM 10-K � Table of Cc�a�tents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) x❑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURTTIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 201L OR ❑ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF ' 1934 For the transition period from to . Commission File Number: 001-33739 STREAM GLOBAL SERVICES, INC. (Exact name of registrant as specified in its charter) � Delaware 26-0420454 (State or Ot6er Jurisdiction of Incorporation or Organization) (I.R.S. Employer ldentiScation No.) 20 William Street, Suite 31Q __ _ W�llesley, Massachusetts 02481 (Address of Principal Executive O1'Sces) (Zip Code) (781)304-1800 (RegistranYs Telephone Number, Includiug Area Code) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered Common Stock, $0.001 Par Vaiue NYSE Amex Securities registered pursuant to Section 12(g) of the Act: None Title of Class Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No X Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No X Indicate by check mark whetl�er the registrant (1) has filed all reports required to be filed by Section 13 or I S(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark whether the registrant has submitted electronically and posted o� its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such fites). Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registranYs knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ❑ Indicate bycheck mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the � definitions of `9arge accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large Accele�ated Filer ❑ Accelerated Filer ❑ Non-acceleraYed Filer ❑ Smaller reporting company O (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ,...1.+,.,,.1.�:1,..//!'�.\T7,.,._..\:._..._.�L__\ e��i'�_a_�r ___t\r,�:------��t�'--�---�R'---------r--�----�r�i cinninn�n Form 10-K Page 2 of 75 Yes . No X The aggregate market value of the voting and non-voting common equity held by rron-affiliates of the registrant was approximately $17,374,114 based on the last . reported sale price of the registranYs Common Stock on the NY3E Amex on June 30, 2011, which was the last business day of the registranYs most recently completed � second fiscal quarter. There were 76,025,505 shares of the RegisVanYs common stock, $0.001 par value per share, issued and outstanding as of February 24, 2012 (excluding treasury shares). DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's definitive pro�cy statement for its 2012 annual meeting of stockholders, which the registrant intends to file pursuant to Regulation 14A with the Securities and Exchange Commission not later than 120 days after the registranYs fiscal yeaz end of December 31, 2011, are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein. f • t • „-.k.�„�1•�;l0.//!'�.\TT�,a,-n\;,V.,,,..�L..,\ A,�.,�.Tl.,�-.,\T ,.,..,1\Aii:..,.,,�..,f'+\[]I3;;�,.1.,.,.�.\To,,,r,�.ror�� T„+nrr,o4 T.';1 S/77/7(117 Form 10-K Page 3 of 75 � Tab(e c�f Cr�nt�c3ts TABLE OF CONTENTS rage PART I. Item 1. Business 4 Item lA. Risk Factors 9 Item 1B. Unresolved Staff Comnlents 25 Item 2. Prc�perties 25 Item 3. Le;al Praceedin�s 26 Item 4. Mine Safetv Disclosures 26 PART IL Item 5. Market fc�rRe�istrant's C�mmon Equi Related Stockl�older Matters and Iss�er Purcl�ases of Equity Securities 27 Item 6. Setected Financial. Data 28 Ttem 7. lVIana<�en7ent's Discussian and Anal�%sis of Financ.ial C�nciitifln a��d Results af Operations 29 Item 7A. Qu�ntitative and O�ialitative Disclosures abaut Market Risk 38 Item 8. Financial Statements and Su.nvlemental Data 40 Consalidated Balance Sheets as of December � l, 20l 1 and 201 � 41 Consolidated Statements af Operatians far tl�e veaa ended December 31. 2011 and 2010 42 Caiisolidated Staten�ents of Stockholders' Fqui�� for the ��ears e�aded Decernber 31. ?Ol l and 2010 43 Cans�lid.ated Statelnents of Cash Flo��rs for the vears ended December 31, 2011 and?{�l0 44 ; Notes to Consalidated Financ.ial Statements 45 Item 9. Chan�es in and Disa�reernents with Aceountants c�n Accountin� and Financial Disclosure 66 Item 9A. Cantrols and Pracedures 66 . Item 9B. Othe� Inf'c�rmation 67 PART III. Item 10. Directors, E�ecutive Off'icers and Corporate Governance 68 It�m 11. Executiva Canl�ensation 68 Item 12. Securit�y 4cunershi� af Certain Bene�cial C)wners and ManaUement and Related Stockhalder Matters 68 Item 13. Certai�3 Relation.si�ips and Relateci Transactions, a��d Directar Itldepe��de��ce 68 Item 14. Principal Accountant Fees and Services 68 PART IV. Item 15. EYbibits Fi�7ancial Statement Schedules 69 SIGNATURES 70 Stream is a registered trademark of Stream Global Services, Inc. 2 • ,v.L.�,ti,l.�:lo.//(•.\TT�o,.�\:,�,,,,-. A.-...Tl.,f„\T ,�,..,7\T�f;�,-.,�,�fi-\iI7;,-.,a,,.,��\To,,,,.-..«�..�. T,,�v..,-.o+ �';1 G/77/7(117 Form 10-K Page 4 of 75 Tabie of Con�e��ts � • CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "could," "would," "expect," "intend," "plan," "target," "goal," "anticipate," "believe," "estimate," "continue," or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in Item lA, "Risk Factors," of this report and in our other filings with the Securities and Exchange Commission ("SEC"). Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the SEC, we explicitly disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise to reflect actual results or changes in factors or assumptions affecting such forward- looking statements. You are advised, however, to consult any further disclosure we make in our reports filed with the SEC. 3 � • ` • ....b.�.�.l.�;lo.//!�.\TT�o,-�\;,..,,,...b,..\ n,.,-.Tlo�.�\T ....�1\AiT;l.r�.o�.f1-\�x7inrincx�c\Tamr�nrarv TntarnatFil 5/77/7(117 Form 10-K Page 5 of 75 • Tab6� of Co�ate��ts PARTI ITEM 1. BUSINESS Overview Stream Global Services, Inc. ("we", "us", "Stream", the " Company" or "SGS") is a corporation organized under the laws of the State of Delaware. We were incorporated on June 26, 2007. We consummated our initial public offering in October 2007. In October 2009, we acquired EGS Corp., a Philippines corporation ("EGS"), in a stock-for-stock exchange. More than 90% of our outstanding common stock is indirectly owned by Ares Corporate Opportunities Fund II, L.P. ("Ares"), EGS Dutchco B.V. ("EGS Dutchco") and NewBridge International Investments Ltd. ("Newbridge"). Our Business We are a leading global business process outsourcing ("BPO") service provider specializing in customer relationship management ("CRM"), including sales, customer care and technical support primarily for Fortune 1000 companies. Our clients include leading computing/hardware, telecommunications service providers, software/networking, entertainment/media, retail, travel and financial services companies. Our service programs are delivered through a set of standardized best practices and sophisticated technologies by a highly skilled multilingual workforce with the ability to support 35 languages across 491ocations in 22 countries. We continue to expand our global presence and service offerings to increase revenue, improve operational efficiencies and drive brand loyalty for our clients. We seek to establish long-term, strategic relationships with our clients by delivering high-value solutions that help improve our clients' revenue generation, reduce their operating costs, and improve their customers' satisfaction. To achieve these objectives, we work closely with our clients in order to understand what drives their economic value, and then implement processes and performance metrics to optimize results far our clients. The success of our differentiated client value proposition • is demonstrated, in part, by the tenure of our client relationships. Several of our top clients have been with us for over a decade and the average duration of our relationships with our top ten clients by revenue is approximately eight years. Our clients include leading computing and hardware companies, such as our tl�ree largest clients by revenue, Dell Inc., Hewlett-Packard Co. and Microsoft Corp., which accounted for approximately 12%, 10%, and 10%, respectively, of our revenues for the year ended December 31, 2011. We target sectors such as computing/hardware, telecommunications service providers, software/networking, entertainment/media, and retail because of their growth potential, their propensity to outsource, their large, global customer bases, and their complex product and service offerings, which often require sophisticated customer interactions. For many of our clients, we service multiple types of customer interactions that may encompass several product and service lines. In many cases, our services for clients are performed under discrete, renewable, multi-yeax contracts that are individually negotiated with various business leaders at the client and define, among other things, the service level requirements, the tools and technology, the operating metrics, and various pricing grids depending on volume and other requirements. We typically bill our clients on a monthly basis by the minute, the hour, or the transaction. In some cases, we also receive incentive based compensation from our clients that is directly connected to our performance and/or our ability to generate sales for our clients. We are subject to fluctuations in our revenues and earnings based on the timing of new and expiring client programs and the seasonality of certain client programs. From time to time, clients seek to shift their CRM programs to lower cost locations, which may negatively affect our results of operations as we seek to shift resources to the lower cost off-shore locations, resulting in lower revenue but a higher goss margin percentage. 4 • m�4ml•�lo•//('•�TTaoro\�m��-r�l�<�\ A rr�Tl.�+.�\T ......1\l�if:...-.��,..#\��IT:.-..-1....��.\Tv.v...�.«.�.-�. T.�+4o....01� T.':1 C/77/7l117 Form 10-K Page 6 of 75 Table of Conte��ts � • A substantial amount of our operating costs is incurred in foreign currencies. We use derivatives to mitigate risk relating to foreign currency fluctuations. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations." Our Industry The contact center outsourcing industry is highly fragmented and competitive. Despite the competitive nature of the market, we believe outsourcing will continue to grow as a result of higher client demand for cost savings, the need for multi- national companies to service their global customers where they are located, along with the need for high-quality customer interactions and innovative service solutions that deliver real value. Stream also believes the desire for companies to focus on core competencies remains strong and will continue to drive them to outsource certain non-core functions to experienced outsourcing providers with the appropriate global scale, processes and technological expertise. As business becomes more global, many companies fmd they do not have the capacity, infrastructure, international experience or technology tools to adequately service their customers. In turn, they increasingly look to global BPO service providers like Stream—that have invested in technology and 'mfrastructure and have established a global presence—to deliver customer facing services in established and emerging markets. The largest CRM and BPO customers are typically multinational companies that require their service providers to have a global footprint to service segments of their customer base in multiple countries and multiple languages. They also require service providers that are agile enough to scale quickly as volume requirements change. Our clients require: 1. Global servicing capabilities to fit the needs of particular products or programs in multiple languages; 2. Sophisticated technology infrastructure that enables fully integrated customer interaction channels that are analytics enabled and virtually accessible across a global delivery platform; 3. A solution-driven approach that solves multiple customer needs, such as total customer experience, retention and lower customer churn rates, and creates new or expanded revenue opportunities for our clients; and �• 4. A competitive total cost of solution that takes advantage of technology, applications, defined processes and a diverse � global operations. Our Strategy Our strategy is to be a leading provider of integrated, giobal CRM and BPO services that allow our clients to create maximum value for their customers over the long-term. To achieve this strategy, we offer a broad suite of services that leverages an integrated technology platform on a global basis. We expect to increase our revenues and profitability while further growing our market position i�y implementing our global business strategy, which includes: Increasing revenues with new and existing clients. We expect to increase our revenue through a combination of being awarded business from new clients and increasing our service offerings and market share far existing clients. We expect to continue to garner new clients in the future as more companies outsource their CRM and BPO services. Additionally, many of our clients are consolidating their CRM and BPO relationships to a fewer number of vendors who can provide multiple service offerings on a global basis. We expect to capitalize on this trend by increasing our service offerings for existing clients and winning a greater share of services that they currently outsource. We also expect to generate new business by working with our clients to outsource non-care programs that are currently managed internally. 5 ' ... ml�+ml •f ln• //('•�T Tenre�imnrr�l�v� A r�r�Tlata�T n�al\T�i;�rnenft\�7Vinrin�z�c\Temnnrarv TntPrnet Fil 5�77�7n � 7 Form 10-K Page 7 of 75 • Tabt� of Co�te�ts • Enhancing margins through global expansion and operating efficiency. We seek to enhance our gross and operating margins by improving our systems and infrastructure and by expanding our global operations. We also continue to work to improve our operating metrics, such as revenue per full-time employee, utilization and productivity and employee retention, and our learning and development platforms and standardized global processes to increase accessibility and quality of information and data exchange. Expanding our revenue growth and market share through targeted acquisitions. We plan to grow our organic revenues and market share and review opporiunities to grow through targeted acquisitions. Our desire to enter new geographies or offer new lines of services may 6e accomplished most effciently and cost effectively through the acquisition of companies or assets or through joint venture arrangements with third parties. Expanding current, and developing and implementing new, BPO service offerings to increase market share. We expect to expand our current service offerings, such as sales and revenue generation services, customerlifecycle management and technical support services within our existing client base, as well as expand our service offerings to include new offerings, such as data analytics and social media, to increase margins and profitability. Many of our clients are looking for global service providers that can not only provide multiple service offerings in an efficient and flexible cost model, but also generate revenues to help reduce the overall cost of service. Building and implementing a multi year global technolo� roadmap. We believe that technology applications and infrastructure are critical to our business and allow us to offer our clients efficient services on a cost-effective basis. During 2011, we continued our investment in technology applications that enhance efficiency such as applicant tracking, human resource information management systems, data and information portals, screen • consolidation tools, learning and development tools, self-help portals for employees to manage their benefits, and real-time web-based training. We expect to continue to invest in our technology infrastructure; we are currently investing in a project to centralize our data centers that we expect to begin to generate cost savings in 2013. Our Service Offerings Our fully integrated service offerings enable our clients to increase revenue and enhance overall brand value and customer loyalty with many types of customer interactions. Our complement of outsourced services includes technical support, customer care and lifecycle management, sales and revenue generation, as well as other back-office services, delivered through a variety of channels, such as voice, email and chat technologies. We blend agility and flexibility with a global, standardized delivery model to create solutions that deliver value to our clients, in diverse specialized industries. We utilize a proprietary methodology to determine the optimal mix of support locations—onshore, nearshore or offshore—and delivery mechanisms (voice, email, chat and self-service) to meet our clients' complete customer care objectives. We align our staffmg to meet our clients' complex technical and sales requirements with multilingual skill sets across our global presence of 491ocations in 22 countries. Technical Support Through our technical support services we interact with people who contact our solution centers after they have purchased a product andlor service from one of our clients and are looking for help with its operation or usage. Technical support transactions typically originate by phone, self-help function, e-mail, chat/web collaboration and callback. To provide quality service, we integrate our service channels so that end users are 6 • , �..L , � , ....1.�;1...//!'�.\T7..,.«..\;........�...1..,\ n......rl..+..\r ,.,.,.1�A.f:,....,..._r+��n:�a�---..�m_W�.,....M_ 7��.__�_. r..l c!')rl/1n�n . Form 10-K Page 8 of 75 Table of Caa�te��ts � � � � � able to easily choose the option that best meets their support needs. Our technical support services are designed to provide clients with a high-quality, cost-effective and efficient service delivery platform to handle transactions from multiple market segments. Using multimedia service delivery channels, we enable our clients to expand their current technical support service delivery platforms with cost effective and robust solutions for consumer and business customers. Customer Sales and Retention Programs We utilize our xStream Seller methodology to conduct customer sales programs to increase our clients' product sales. xStream Seller takes a balanced approach to selling that focuses on proven recruiting and management strategies and consistently delivers high value sales. Our operational execution focuses on improving response rates, increasing order values and maYimizing revenues and profit. We tailor the approach we take with each client to ensure we are delivering a unique customer experience that secures brand loyalty. Our customer service and retention programs are designed to build ongoing, solid relationships with customers and position us to maximize ongoing sales opportunities through cross-sell and up-sell opporiunities and revenue generation services. Our revenue generation services are designed to provide our clients with the tools necessary to meet their corporate strategic goals for profitability and revenue. In addition to technical support and sales solutions, we offer ongoing customer service and customer care offerings designed to manage customer relationships for our clients on an ongoing basis. We view each customer contact as an opportunity to strengthen brand loyalty and enhance overall brand value. This ultimately helps reduce our clients' operational costs while providing them the opportunity to increase their revenues. We manage our clients' vital customer relationships through our standardized best practices that begin with the recruitment, hiring and training of oar service professionals. Our practices allow us to identify the right customer service support professionals and equip them with the tools and training necessary to provide high levels of customer service. Workflow, Analytics and Reporting Our proprietary technology platform includes a fully integrated desktop solution that streamlines complex processes and ;• workflows and provides real-time analytics and reporting virtually across our global infrastructure on a real-time basis. Our workflow methodology offers a wide variety of features to create a customized solution that delivers value to our clients. Sales and Marketing We have a direct sales force and sales support organization focused on high growth companies in the target industries in North America, Latin America, Asia and Europe. We use a consultative solution selling approach and generally focus our marketing efforts at our clients' or prospective clients' senior executive levels where decisions are made with respect to outsourcing critical CRM functions. As we continue to develop relationships with senior management, such as the chief executive officer, chief technology officer, chief fmancial officer, chief services officer and business unit leader of our clients, we strive to become a trusted business advisor to our clients. Our sales and marketing group also evaluates entry into new end markets, and identifies potential new clients in those markets. As we consider new markets, we analyze potential market size, industry participants, market dynamics and trends, growth prospects and the propensity for outsourcing services. With respect to an individual client, the sales and marketing group will review its fmancial strength and market position and its anticipated need for long-term outsourcing services. We consider our ability to deliver those services, our competitive positioning and the likelihood of winning the contract in making such determinations. 7 `°;: • ,�.A+,�.1.filo.Ul�.\TT�o.��\:..,,,,.,..1,..\A,-.,-.Tl.�+.�\Tnnol\A�Tinrna�f+\�xliri�n�x�e\Tamnnrarc�TntarnatFi� S/77/7(1�7 Fortn 10-K Page 9 of 75 � T�bie af Cc�nte��ts Employees Our success in recruiting, hiring and training highly skilled employees is key to our ability to provide high-quality CRM and BPO services to our clients globally. We generally locate our service centers where there is ready access to higher education and a majar transportation infrastructure. We generally offer a competitive pay scale, hire primarily full-time employees who are eligible to receive a full range of employee benefits, and seek to provide employees with a clear, viable career path. We also offer a combination of client based training language training and internal technology certification courses to our employees. The combination of our training programs with close manager mentoring programs enables our employees to not only provide excellent service to our clients, but also progress into management positions within Stream. As of December 31, 20ll, we had more than 31,000 employees providing services to our clients' customer� and administrative services in our business. The majority of our employees are not subject to collective bargaining agreements, with the exception of our service centers in some countries within Europe and Africa. In those locations approximately 4,100 of our employees are subject to collective bargaining agreements using workers' councils (which are typical in these regions). We believe relations with our employees are good. Competition The industry in which we operate is competitive and highly fragmented. Our competitors range in size from very small firms offering specialized applications or short-term projects, to large independent firms, and the in-house operations of many clients and potential clients. In short, the competitive landscape is wide and diverse. We compete directly and indirectly with certain companies that provide CRM and other BPO solutions on an outsourced basis. These include, but are not limited to, U.S.-based providers, such as Convergys, Sitel, Startek, Sykes, TechTeam Global, TeleTech, and West; Europe-based providers, such as Atento, Teleperformance Group, and Transcom Worldwide; South Asia-based providers, such as Aditya Birla Minacs, Genpact, SMT Direct, Wipro, and WNS; local entities in other offshore geographies, such as TIVIT and the Philippine Long Distance Telephone Company; small niche providers, such as Alpine Access, Arise, VIPDesk, and Working • Solutions; and large global companies that offer outsourced services within their portfolios, such as IBM, HP, CapGemini, Accenture and Fujitsu. Our competitors include both publicly traded and privately held companies. . Service Professional Tools We believe in making the necessary investments to ensure that each of our service professionals has the tools required to provide high quality service to end-users. We leverage a mix of in-house developed and third pariy software solutions across all of our service centers. Many of these solutions are customized for our enterprise and facilitate data capture and transfer from the service professional to our various data storage and network systems, and are flexible enough to interface with our clients' CRM systems. Intellectual Property As of December 31, 2011, we had 12 registered trademarks in 9 jurisdictions and 13 active registered domain names. Recent Developments On January 31, 2012, a Transaction Statement on Schedule 13e-3 (the "Schedule 13e-3") was filed by SGS Holdings LLC, a Delaware limited liability company wholly owned by Ares, EGS Dutchco and NewBridge ("SGS Holdings"), Ares, EGS Dutchco, NewBridge and the other persons listed on the cover of the Schedule 13e-3 above the caption "Name of Persons Filing Statement" (the "Filing Persons") pursuant to Section 13(e) of the Exchange Act and Rule 13e-3 thereunder. As disclosed therein, the Schedule 13e-3 was filed in connection with potential privately negotiated purchases of shares of our common stock and a contemplated subsequent "short-form" merger that, if consummated, would result in Stream becoming a private company. 8 • Ytl�lfm�'fl�e'//C�;'�TTCet'4�im��rnhv\Ant�T�ata\T.nr.al\Micrnenft\Winr�ncz�c\Tamr�nrarv TntPrnat Fil S/77/7(117 Form 10-K Page 10 of 75 Tab(e of Cont€nts � • The following is based solely on the disclosure in the Schedule 13e-3. As of January 31, 2012, SGS Holdings owns 70.1 million, or approximately 92%, of the issued and outstanding shares of our common stock, and Ares, NewBridge and EGS Dutchco own approximately 52%, 29% and 19%, respectively, of the units of inembership interest of SGS Holdings. SGS Holdings intends to seek to acquire additional shares of our common stock in privately negotiated transactions with certain selected stockholders of Stream (the "Private Purchases"). Any such Private Purchases are expected to be fmanced by loans from Ares, EGS Dutchco and NewBridge to SGS Holdings. Thereafter, SGS Holdings intends to evaluate whether to conduct a short-form merger (the "Merger"), under Section 253 of the General Corporation Law of the State of Delaware (the "DGCL"), pursuant to which a newly-formed Delaware corporation subsidiary of SGS Holdings would merge with and into Stream, with Stream as the surviving corporation, as a means of acquiring all of the other shares of our common stock not owned directly or indirectly by any of the Filing Persons. SGS Holdings has not yet determined whether to proceed with the Merger. If consummated, upon the effectiveness of the Merger, the shares of our common stock not owned by Stream, by any of the Filing Persons or by stockholders who properly exercise their statutory appraisal rights under the DGCL would be canceled and automatically converted into the right to receive the inerger consideration, which is expected to be $3.25 per share in cash, without interest. For more information, please see the full text of the Schedule 13e-3. Corporate Information Stream Global Services, Inc. is a Delaware corporation. Our principal office is located at 20 William Street, Suite 310, , Wellesley, Massachusetts 02481, and our telephone number is (781) 304-1800. Our website address is www.stream.com. ITEM lA. RISK FACTORS Our business is subject to numerous risks. The risk factors listed below include any material changes to and supersede the description of the risk factors associated with our business previously disclosed in Item IA of our Annual Report on Form `• 10-Kfor the fiscal year ended December 31, 2010. The risk factors that appear below, among others, could cause our actual results to differ materially fi•om those expressed in forward-looking statements made by us or on our behalf in filings with the Securities and Exchange Commission, press releases, communications with investors and oral statements. Such forward- looking statements are discussed under "Cautionary Note Regarding Forward-Looking Statements. " Risks Relating to Our Business We have a history of losses and there can be no assurance that we will become or remain profitable or that losses will not continue to occur. For the year ended December 31, 2011, we had a net loss of $23.6 million. We may not achieve or sustain profitability in the future. Our ability to achieve profitability will depend, in part, on our ability to: • attract and retain an adequate client base; • effectively manage a large global business; • react to changes, including technological changes, in the markets we target or operate in; • deploy our services in additional markets or industry segments; • maintain operating efficiencies in our service centers across the globe; • respond to competitive developments and challenges; • attract and retain experienced and talented personnel; and • establish strategic business relationships. 9 �� mhtml•file•//r•\T Tcerc\imnrnhv\A»nl�ata.\T ,�ca]\Micros�ft\Windows\Temborarv Internet Fil... 5/22/�012 Form 10-K Page 11 of 75 • "T�ble of Contents We may not be able to do any of these successfully, and our failure to do so is likely to have a negative impact on our operating results. A substantial portion of our revenue is generated from a limited number of clients, and the loss of one or more of tlZese c[ients or a decline in end user acceptance, of our client's products would materially reduce our revenue and caslT flow and adversely affect our business. We have derived, and we believe that we will continue to derive a substantial portion of our revenue from a limited number of clients. Revenue from our three largest clients, Dell Inc., Hewlett-Packard Co. and 1Vlicrosoft Corp., accounted for 12%, 10% and 10%, respectively, of our revenues for the year ended December 31, 2011. Although we generally enter into multi-year contracts with clients, many of which are renewable, these contracts generally do not require clients to provide a minimum amount of revenues and allow clients to terminate earlier for convenience. There can be no assurance that we will be able to retain, renew ar extend our contracts with our major clients. There can also be no assurance that if we were to lose one or more of our major clients, we would be able to replace such clients with new clients that generate a comparable amount of revenues. A number of factors could cause us to lose business or revenue from a client, and some of these factors are not predictable and are beyond our control. For example, a client may demand price reductions, change its outsourcing strategy, move work in-house or reduce previously forecasted demand due to circumstances wholly unrelated to our service levels. In addition, the volume of work we perform for specific clients may vary from year to year. Thus, a majar client in one year may not provide the same level of revenue in any subsequent year. In many cases, if a client terminates its contract with us or does not meet its forecasted demand, we would have no contractual recourse even if we have built-out facilities and/or hired and trained service professionals to provide services to the client. Consequently, the loss of one or more of our major clients, or the inability to generate anticipated revenues from them, would have a material adverse effect on our business, results of operations, financial condition and cash flows. Our operating results for the foreseeable future will continue to depend on our ability to obtain volume/revenues from a small number of clients and � any revenue growth will depend on our success in selling additional services to our large clients and expanding our client base. We typically charge our clients based on the number of inbound calls that we service, or the amount of time, by the minute or by the hour, that our service professionals spend with end-users relating to our clients' products. We also provide inbound and outbound sales services to our clients, whereby we are paid based on our level of sales success and other client driven metrics. To the extent there is a decline in spending for our clients' products, whether as a result of a decline in product acceptance or general economic conditions, our business will be adversely affected. There are a number of factars relating to discretionary consumer and business spend'mg, including economic conditions affecting disposable income (such as employment, business conditions, taxation and interest rates) which impact the ability of our clients to sell their products, and most of which are outside of our control. There can be no assurance that spending far our clients' products will not be affected by adverse economic conditions, thereby affecting our business, results of operations, fmancial condition and cash flows. Our revenue is highly dependent on a few industries and any decrease in demand for outsourced business processes in these industries could reduce our revenue and seriously harm our business. Most of our revenue is derived from clients concentrated in the computing/hardware and telecommunications service providers industries. The success of our business largely depends on continued demand for our services from clients in these industries, as well as on trends in these industries to outsource business processes on a global basis. A downturn in any of the industries we serve, a slowdown or reversal of the trend to outsource business processes in any of these industries or the introduction of regulations that restrict or discourage companies from outsourcing, could result in a decrease in the demand for our services, which in turn could materially harm our business, results of operations, fmancial condition and cash flows. Despite recent signs 10 � ,�.L,�,�.l.f;lo•//!'�.\Tr�o,-�\;,,,,,,.,-.1,�,` n..rr�..�..�r ,.,.,,t�r,r:,...,...,.r+�«�:�a......,�rr ................R, r..+,.,....,.+�;� ch�i�n» Form 10-K Page 12 of 75 Tab(e of Comtents �� of economic recovery in some markets, many of the markets in which we operate are still in an economic downturn that we believe has had and will continue to have a negative effect on the business of many of our clients, which has, in some cases, resulted in lower volumes of work for us. In the event that the global economy slips back into a recession or the economic downturn in some of the markets in which we serve worsens, we may experience even lower volumes and pricing pressures, which would negatively affect our business, results of operations, fmancial condition and cash flows. Other developments may also lead to a decline in the demand for our services in the industries we serve. Consolidation in any of the industries that we serve, particularly involving our clients, may decrease the potential number of buyers of our services. Furthermore, many of our existing and new clients have begun or plan to consolidate or reduce the number of service providers that they use for various services in various geographies. To the extent that we are not successful in becoming the recipient of the consolidation of services by these clients, our business and revenues will suffer. Any significant reduction in, or the elimination of, the use of the services we provide within any of these industries would reduce our revenue and cause our profitability to decline. We may be unable to successfully execute on any of our identified business opportunities or other business opportunities that we determine to pursue. In order to pursue business opportunities, we will need to continue to build our infrastructure, our client initiatives and operational capabilities. Our ability to do any of these successfully could be affected by one or more of the following factors: • the abiliry of our technology and hardware, suppliers and service providers to perform as we expect; • our ability to execute our strategy and continue to operate a large, more diverse business e�ciently on a global basis; • our ability to effectively manage our third pariy relationships; • our abiliry to attract and retain qualified personnel; t • • our ability to effectively manage our employee costs and other expenses; • our ability to retain and grow our clients and the current portfolio of business with each client; • technology and application failures and outages, interruption of service, security breaches or fraud which could adversely affect our reputation and our relations with our clients; • our ability to accurately predict and respond to the rapid technological changes in our industry and the evolving service and pricing demands of the markets we serve; and • our ability to raise additional capital to fund our growth. Our failure to adequately address the above factors would have a significant impact on our ability to implement our business plan and our ability to pursue other opportunities that arise, which might negatively affect our business. Our business may be impacted by tlze performance of our clients. Our revenue and call volume is often highly correlated with products sold, services purchased or renewed by our clients' customers or end users, revenue of our clients. Our clients may experience rapid changes in their prospects, substantial price competition and pressure on their results of operations, which may result in lower volumes and/or pressure on us to lower our prices. In addition, many of our clients are seeking to consolidate their current group of service providers to a smaller more manageable group that is able to provide low-cost integrated service offerings on a global basis. In some cases we do not currently offer or have service locations in those geographic locations where our clients are seeking services. Our ability to sustain growth and profitability 11 `, • .....1..�...,.1.�1,..//r.\rr,.,...,.1:.....,,.....1...,\ n,,....il,.+,.\T ,.,.,.1\A�i;,.«,.,,,.f'+\�x7;«.a,..,,�\To,�.,,�,.,«.,,-�� T„+or,-,n4 T.';t G/77/7(117 Form 10-K Page 13 of 75 . T:�b[e af Contents in the current environment is very dependent upon our ability to maintain and/or gain a greater share of business within our current clients and attract new clients. There can be no assurance that we will be able to do so in the future. In the event that some of our service centers do not receive sufficient call volume in the future, we may be required to close them and relocate business in other centers. This would require substantial employee severance, lease termination costs and other re-structuring costs. Moreover, we are exposed to additional risks related to our clients' ability to pay and the collectability of our accounts receivables. In the event that our clients' prospects deteriorate or the availability of credit tightens, our clients' liquidity may be adversely impacted, resulting in delayed or reduced payments to us. Such delays or reductions in payment or the non- payment by our clients of amounts owed to us may require us to incur a bad debt expense. In the event that one of our major clients should file for bankruptcy protection or otherwise fail, our future business, results of operations, financial condition and cash flows could be materially adversely affected. We may not be able to acliieve incremental revenue growth or profitability. Our strategy calls for us to achieve incremental revenue growth and profitability through initiatives, such as opening new or expanding our existing international service locations in places like China, Central and Latin America and the Philippines. Other initiatives we may pursue include, (i) the addition or expansion of services, such as sales and warranty services; (ii) the introduction of front-end technology-driven service solutions for fee-based services, self-help, and other technology driven solutions; and (iii) operational improvements in areas such as employee attrition, site capacity utilization, centralization of certain administrative services, productivity rates and greater use of technology to drive efficiencies and cost savings. However, there can be no assurance that we will not encounter difficulties or delays in implementing these initiatives, and any such difficulties or delays would adversely affect our future operating results and fmancial performance. We /iave, on a consolidated basis, a substantial amount of debt, which could impact our ability to obtain future financing • or pursue our growth strategy. We have substantial indebtedness. We and certain of our subsidiaries entered into a credit agreement, as amended by the First Amendment to Credit Agreement dated June 3, 2011 and Second Amendment to Cr�dit Agreement dated November 1, 2011 (the "Credit Ageement"), with Wells Fargo Capital Finance, LLC, as agent and co-arranger, and Goldman Sachs Lending Partners LLC, as co-arranger, and each of the lenders party thereto, as lenders, providing for revolving credit fmancing (the "ABL Credit Facility") of up to $100 million, including a$20 million sub-limit for letters of credit. As of December 31, 2011, we had approximately $266.6 million of indebtedness (including capital leases) and up to an additional $50.1 million of borrowings available under the ABL Credit Facility, subject to borrowing base limitations and other specified terms and conditions. Our high level of indebtedness could have important consequences and significant adverse effects on our business, including the following: • we must use a substantial portion of our cash flow from operations to pay principal and interest on our indebtedness, which will reduce the funds available to us for operations and other purposes; • our ability to obtain additional fmancing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired; • our high level of indebtedness could place us at a competitive disadvantage compared to our competitors that may have proportionately less debt; • our flexibility in planning for, or reacting to, changes in our business and the industry m which we operate may be limited; and • our high level of indebtedness may make us mare vulnerable to economic downturns and adverse developments in our b�siness. 12 � mhtm�• Ar�r�Tlo4n\T r...ol\TiTin..�n..FF\�7�I:..r1�.:.�,\To.ti....�.«....�. T.�,4o.-....�4 T.':1 C/'7'7/'7l11'l Form 10-K Page 14 of 75 Tal�le af Contents �� The instruments governing our ABL Credit Facility contain, and the instruments governing any indebtedness we may incur in the future may contain, restrictive covenants that limit our ability to engage in activities that may be in our long-term best interests. Any failure to comply with these covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all or a portion of our outstanding indebtedness. Payments on our indebtedness require a significant amount of cash. Our abiliry to meet our caslz requirements and service our debt is impacted by many factors that are outside of our control. We have outstanding $200 million aggregate principal amount of 11.25% Senior Secured Notes due 2014 (the "Notes"). The Notes were issued pursuant to the Indenture, among us, certain of our subsidiaries (the "Note Guarantors"), and Wells Fargo Bank, N.A., as trustee (the "Indenture"). We expect to obtain the funds to pay our expenses and to pay the amounts due under the Notes primarily from our operations and borrowings under our ABL Credit Facility. Our ability to meet our expenses and make these payments thus depends on our future performance, which will be affected by financial, business, economic and other factors, many of which we cannot control. Our business may not generate sufficient cash flow from operations in the future and our currently anticipated growth in revenue and cash flow may not be realized, either or both of which could result in our being unable to repay indebtedness, including the Notes, or to fund other liquidity needs. Our ability to borrow amounts under our ABL Credit Facility is subject to borrowing base limitations and other specified terms and conditions, and the ability of certain of our foreign subsidiaries to borrow amounts under our ABL Credit Facility in the future is also subject, among other conditions, to our provision of security interests in certain assets of those foreign subsidiaries which we did not provide upon the closing of the ABL Credit Facility and we may not be able to provide in the future. If we do not have sufficient cash resources in the future, we may be required to refmance all or part of our then existing debt, sell assets or borrow more money. We might not be able to accomplish any of these alternatives on terms acceptable to us or at all. In addition, the terms of existing or future debt agreements may restrict us from adopting any of these alternatives. Our failure to generate sufficient cash flow or to achieve any of these alternatives could materially adversely affect tl�e value of the Notes and our ability to pay the amounts due under the Notes. We may incur substantial additional indebtedness that could further exacerbate the risks associated with our indebtedness. `• We may incur substantial additional indebtedness in the future. Although the Indenture governing the Notes and the loan agreement governing our ABL Credit Facility contain restrictions on our incunence of additional debt, these restrictions are subject to a number of qualifications and exceptions that permit us to incur substantial additional indebtedness, including additional secured indebtedness. If we incur additional debt, the risks described above under "We have, on a consolidated basis, a substantial amount of debt, which could impact our ability to obtain future financing or pursue our growth strategy" and "Payments on our indebtedness require a significant amount of cash. Our ability to meet our cash requirements and service our debt is impacted by many factors that are outside of our control" would intensify. Our business may not develop in ways that we currently anticipate due to negative public reaction to outsourcing and proposed legislation. We have based our growth strategy on certain assumptions regarding our industry, services and future demand in the market for our services. However, the trend to outsource business processes may not continue and could reverse. Outsourcing is a politically sensitive topic in the United States and elsewhere due to a perceived association between outsourcing providers and the loss of jobs in the United States. A variety of U.S. federal and state legislation has been proposed that, if enacted, could restrict or discourage U.S. companies from outsourcing services outside the United States. For example, U.S. elected officials have supported legislation that they contend will generate new jobs in the United States, including limiting income taac benefits for companies that offshore American jobs. Because many of our clients are companies headquartered in the United States, any 13 �`.: • .V.1�4r.�1•f;lo•//!`•\TToor�\:Y.-..�.-r.l�.�\Av�v�Tl�4o�T�n�1\T�iTinrnenft��7�Tinran�x�e�Trmtlnratt/TY1fAYiletFl� 5�77.�7.n�7 Form 10-K Page 15 of 75 � Tabte of Contents expansion of existing laws ar the enactment of new legislation restricting offshore outsourcing could hartn our business, results of operations and fmancial condition. It is possible that legislation could be adopted that would restrict U.S. private sectar companies that have federal or state government contracts from outsourcing their services to off-shore service providers. This would also negatively affect our ability to attract or retain clients that have these contracts. In addition, many jurisdictions have enacted or proposed legislation relating to the protection of sensitive personal data or other consumer protections that has resulted or may result in increases in our operational expenses. Current or prospective clients may elect to perform such services themselves or may be discouraged from transferring their services from onshore to off-shore providers as a result of the perceived diminishment of operational efficiencies or cost savings. A slowdown or reversal of existing industry trends towards off-shore outsourcing could seriously harm our ability to compete effectively with competitors that operate solely out of facilities located in the United States or Canada. We may be unable to cost-effectively attract and retain qualified personnel, which could materially increase aur costs. Our business is dependent on our ability to attract, retain and motivate key executives and also recruit, hire, train and retain highly qualified technical and managerial personnel, including individuals with significant experience in the industries that we have targeted. The CRM and BPO service industry is labor intensive and is normally characterized by high monthly employee turnover. Any increase in our employee turnover rate would increase our recruiting and training costs, decrease our operating effectiveness and productivity and delay or deter us from taking on additional business resulting in lower financial performance. Also, the introduction of significant new clients or the implementation of new large-scale progams may require us to recruit, hire and train personnel at an accelerated rate. In addition, some of our facilities are located in geographic areas with relatively low unemployment rates, potentially making it more difficult and costly to attract and retain qualified personnel. There can be no assurance that we wili be able to continue to hire, train and retain sufficient qualified personnel to adequately staff our business. � We may not be able to predict our future tax liabilities. If we become subject to increased levels of taxation or if tax contingencies are resolved adversely, our results of operations and financial performance could be adversely affected. Due to the international nature of our operations, we are subjectto the complex and varying taac laws and rules of several foreign jurisdictions. We may not be able to predict the amount of future taY liabilities to which we may become subject due to some of these complexities if our positions are challenged by local tax authorities, Any increase in the amount of taxation incurred as a result of challenges to our tax filing positions or due to legislative or regulatory changes could result in a material adverse effect on our business, results of operations and fmancial condition. We are subject to tax audits, including issues related to transfer pricing, in the United States and other jurisdictions. We have material tax-related contingent liabilities that are difficult to predict or quantify. While we believe that our current tax provisions are reasonable and appropriate, we cannot be assured that these items will be settled for the amounts accrued or that additional exposures will not be identified in the future ar that additional tax reserves will not be provided for any such exposures. Our financial results may be impacted by significant fluctuations in foreign currency exchange rates. A substantial amount of our operating costs is incurred in foreign currencies. In many cases, we bill our clients in U.S. Dollar, Canadian Dollar, Euro and U.K. Pound Sterling denominated amounts and incur costs in the servicing country in local currency. If the value of the U.S. Dollar drops relative to other currencies, our cost of providing services outside the United States will increase accordingly when measured in U.S. Dollars. In addition, a substantial amount of our revenue is denominated in foreign currencies, especially the Euro. If the U.S. Dollar increases in value relative to other currencies, the value of those revenues will decrease accordingly 14 i „�,L,�,ti.l.f;lo.//!�.\TT�„«..\:......,....1._.� n..�r�..a��r �,...t��,r:_____n��ir._,---�'T'------------T--`-----�r�i cinninn,.. Form 10-K Page 16 of 75 T'abte of Contents �> � when measured in U.S. Dollars. Any continued significant fluctuations in the currency exchange rates between the U.S. Dollar, Canadian Dollar, Euro and U.K. Pound Sterling and the currencies of countries in which we operate may affect our business, results of operations, fmancial condition and cash flows. A substantial portion of our costs are incurred and paid in Philippine Pesos. Therefore, we are exposed to the risk of an increase in the value of the Philippine Peso relative to the U.S. Dollar, which would increase the value of those expenses when measured in U.S. Dollars. Although we engage in hedging relating to the Canadian Dollar, the Indian Rupee and the Philippine Peso, our hedging strategy, including our ability to acquire the desired amount of hedge contracts, may not sufficiently protect us from further strengthening of these currencies against the U.S. Dollar. As a result, our expenses when measured in U.S. Dollars could increase and harm our operating results. On the other hand, if the U.S. Dollar strengthens against the Canadian Dollar, the Indian Rupee or the Philippine Peso, our hedging strategy could reduce the potential benefits we would otherwise expect from a strengthening U.S. Dollar. We are also doing business in Latin America but do not yet hedge currencies from these countries as there are no markets available in these currencies where hedge contracts may be acquired. Our international operations and sales subject us to additional risks, including risks associated with unexpected events. We conduct business in various countries outside of the United States, including Canada, the Netherlands, the United Kingdom, Italy, Ireland, Spain, Sweden, France, Germany, Poland, Denmark, Bulgaria, India, the Philippines, China, El Salvador, Egypt, Tunisia, Nicaragua, the Dominican Republic and Costa Rica. A key component of our growth strategy is our entry into new markets or expansion of our existing markets, as we did in China in 2011. There can be no assurance that we will be able to successfully market, sell and deliver our services in these markets, or that we will be able to successfully expand our international operations. The global reach of our business could cause us to be subject to unexpected, uncontrollable and rapidly changing events and circumstances. The following factors, among others, could adversely affect our business and earnings: • failure to properly comply with foreign laws and regulations applicable to our foreign activities including, without f limitation, employment law and data protection requirements; • compliance with multiple and potentially conflicting regulations in the countries where we operate now and in the future, including employment laws, intellectual property requirements, the Foreign Corrupt Practices Act and other anti-corruption laws; • difficulties in managing foreign operations and attracting and retaining appropriate levels of senior management and staffmg; • longer cash collection cycles; • seasonal reductions in business activities, particularly throughout Europe; compliance with local tax laws which can be complex and may result in unintended adverse tax consequences; • anti-American sentiment due to American policies that may be unpopular in certain countries; • difficulties in enforcing agreements through foreign legal systems; • fluctuations in exchange rates that may affect product demand and may adversely affect the profitability in U.S. Dollars of services we provide in fareign markets, where payment for our products and services is made in the local currency and revenues are earned in U.S. Dollars or other currency; • changes in general economic conditions or political strife or upheaval in countries where we operate; • the ability to efficiently repatriate cash to the United States and transfer cash between foreign jurisdictions; 15 '. ,� ....L.�....1.F;le.//!�.\TT�.o..�,\:....�... A..rTl.�to\T (.nnl\Aiiinr�onft\�x7in��x�c\Tamr�nrarv TntPrnet Fil 5�77�`�n�7 Form 10-K Page 17 of 75 � 't abie c�f Co�te�tts • changes in transfer.pricing policies for income tax purposes in countries where we operate; • restrictions on downsizing operations and personnel in Europe and other jurisdictions (i.e. regulatory or works council restrictions) and expenses and delays associated with any such activities; and � • changes to or elimination of the international taa� holiday far our subsidiaries in the Philippines. As we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and ' effectively manage these and other risks associated with our international operations. Our failure to manage any of these risks successfully could harm our global operations and reduce our global sales, adversely affecting our business and future fmancial performance. Certain countries where we do business have recently experienced political an�l economic instability and civil unrest and terrorism, which have disrupted and may continue to disrupt our operations and may cause our business to suffer. Certain countries where we do business, particularly Egypt and Tunisia, and less recently the Philippines, India, and certain Latin American countries, have experienced or are experiencing civil unrest, terrorism and political turmoil, resulting in temporary work stoppages and telecommunication or other technology outages. If such civil unrest or political turmoil increases or such operational disruptions become prolonged, our existing and potential new clients may hesitate to keep or move their business into such locations. These conditians could disrupt our operations and cause our business to suffer. Moreover, countries where we do business, and in particular the Philippines, have experienced significant inflation, currency declines and shortages of foreign exchange. We are exposed to the risk of cost increases due to inflation in the Philippines, which has historically been at a much higher rate than in the United States: We may not be able to maintain control of our business in China. • The government of the People's Republic of China, or PRC, restricts foreign investment in telecommunications businesses. Accordingly, we operate our business in China through a variable interest entity in China (the "VIE") owned by two individuals designated by us who are PRC citizens. We have no equity ownership interest in the VIE and rely on contractual arrangements with the VIE and its stockholders to control and operate the VIE. These contractual arrangements may not be as effective in providing control over the VIE as direct ownership and we cannot ensure that we will be able to enfarce these contracts. For example, the VIE could fail to take actions required for, ar beneficial to, our business or fail to maintain its license despite its contractual obligations to do so. In addition, we cannot ensure that the shareholders of the VIE will always act in our best interests. If the VIE or its stockholders fail to perform their obligations under their respective agreements with us, we may need to engage in litigation in China to enforce our rights, which may be time-consuming and costly, divert management resources, or have other adverse effects on our business, and we may not be successful in enfarcing our rights. The laws and regulations governing our business in the PRC and the enforcement and performance of our contractual arrangements with the VIE and its stockholders are relatively new and may be subject to change and their official interpretation and enforcement may involve substantial uncertainty. New laws and regulations that affect our business may also be applied retroactively. We cannot ensure that the PRC government would agree that the operating arrangements comply with PRC licensing, registration, or other regulatory requirements, with existing policies, or with requirements or policies that may be adopted in the future. If the PRC government determines that we do not comply with applicable law, it could revoke our business and operating licenses, require us to discontinue or restrict our operations, restrict our right to collect revenue, require us to restructure our operations, impose additional conditions or requirements with which we may not be able to comply, impose restrictions on our business operations or on our customers, ar take other regulatory or enforcement actions against us that could be harmful to our business. 16 • m}itml•fila•U(`•UTcarc\im�irnhv\Or�r�Tlata\T nra��A/li�rnenFt�«Iin�n�x�e�Tnmr��r�rc� TntArnPtT'+i� C/77/7(117 Form 10-K Page 18 of 75 Tabte of Conte�rts �.�� Current tax Jzolidays in foreign jurisdictions in which we operate will expire over tlte coming years. We currently benefit from income tax holiday incentives for certain projects and operations in foreign jurisdictions, such as incentives in the Philippines pursuant to registrations with the Philippine Economic Zone Authority, or PEZA. These tax holiday incentives generally expire over a period of years. The income tax holiday of our various PEZA-registered projects in the Philippines expire at staggered dates starting 2013. In the event we are not able to renew, the expiration of these tax holidays will increase our effective income tax rate. Our revertues and costs are subject to quarterly variations that may adversely affect quarterly financial results. - We have experienced, and in the future could experience, quarterly variations in revenues as a result of a variety of factors, many of which are outside our control, including: • the timing of new client contracts; • the timing of new service offerings ar modifications in client strategies; • our ability to ariract and retain and increase sales to existing customers; • the timing of acquisitions of businesses and products by us and our competitors; • our ability to effectively build and start-up new solution centers; • product and price competition; • our ability to build an integrated service offering on a common technology piatform; • changes in our operating expenses; ,• • software defects or other product quality problems; • the ability to implement new technologies on a timely basis; • the expiration or termination of existing contracts; • the timing of increased expenses incurred to obtain and support new business; • currency fluctuations; and • changes in our revenue mix among our various service offerings. In addition, our planned staffmg levels, investments and other operating expenditures are based on revenue forecasts provided by our clients If actual revenues are below these forecasts or our own expectations in any given quarter, our business, results of operations, financial condition and cash flows would likely be adversely affected for that quarter and thereafter. In addition, to the extent that we enter into mergers and acquisitions or new business ventures in the future, our quarterly or future results may be impacted. Our financial results may be adversely affected by increases in labor-related costs. Because a significant portion of our operating costs relate to labor costs, an increase in U.S. ar foreign wages, costs of employee benefits or taa�es could have a material adverse effect on our business, results of operations and fmancial condition. For example, over the past several years, healthcare insurance costs have increased at a rate much greater than that of general cost or price indices. Increases in our pricing may not fully compensate us for increases in labor and other costs incurred in providing services. Some of our facilities are located in jurisdictions, particularly in Europe, where it is difficult or expensive to temporarily or permanently lay off workers due to both local laws and practices within these jurisdictions. Such laws will make it more expensive for us to respond to adverse economic conditions. There can be no assurance that we will be able to increase our pricing or reduce our workforce to fully compensate for the increases in the costs to provide services. 17 ''' • mh�m�•fi�a•�Ir •\TTcarc\imnrnhv\Ar�r�T)ata\T.nc�al\1UTirrncnft\Winrinwc\Tem»nratv TT1teTl�etF1L__ � SI22:IZO�Z Form 10-K Page 19 of 75 � Tab�e of Cantents We may need to increase the levels of employee compensation more rapidly than in the past to remain competitive in attracting and retaining the quality and number of employees that our business requires. Wage costs in India, the Philippines and other offshore locations have historically been significantly lower than wage costs in the North America and Europe far comparably skilled professionals. However, because of rapid economic growth in India and the Philippines, increased demand for CRM and BPO services and increased competition far skilled employees in offshore low cost locations like India and the Philippines, wages for comparably skilled employees in such locations are increasing at a faster rate than in North America and Europe, which may reduce the cost benefit enjoyed by our clients, thereby reducing the volumes they offer to us with an adverse effect on our future revenue. As additional outsourcing companies enter the market and expand their operations; we expect competition for skilled employees at the service professional and middle and upper management levels to increase which would affect the availability and the cost of our employees, increase our attrition rate and without a change in our pricing, reduce our gross margins. Wage increases in the long term may reduce our profit margins. Additionally, because substantially all of our employees based outside the United States are paid in local cunency, while our revenues are collected in other currencies (primarily in U.S. Dollars, the Euro and U.K. pounds sterling), our employee costs as a percentage of revenues may increase or decrease significantly if the exchange rates between these currencies fluctuate significantly. We have not experienced significant union activity or organized labor activity in the past. There can be no assurance that we will not experience increased union organizing activity in the future. Such organization could increase our cost of labor, limit our ability to modify work schedules and cause work stoppage. Our profitability will be adversely affected if we do not maintain sufficient capacity utilization. Our profitability is influenced significantly by the capacity utilization of our service centers. Because a majority of our business consists of inbound contacts from end-users, we have no control of when or how many end user customer contacts • are made. Moreover, we have significantly higher utilization during peak (week day) periods than during off-peak (night and weekend) periods and therefore we need to reserve capacity at our service centers to anticipate peak periods. We may consolidate or close under-performing service centers in order to maintain or improve targeted utilization and margins. If we close service centers in the future due to insufficient customer demand, we may be required to record restructuring or impanment charges, which could adversely impact our business, results of operations and financial condition. There can be no assurance that we will be able to achieve or maintain optimal service center capacity utilization. - Many of our existing or emerging competitors are better established and have significantly greater resources, which may make it difficult to attract and retain clients and grow revenues. The market in which we compete is highly competitive and fragmented. We expect competition to persist and intensify in the future. Our competitors include small firms offering specific applications, divisions of large entities, large independent firms and the in-house operations of clients or potential clients. Because we compete with the in-house operations of existing and potential clients, our business, results of operations, financial condition and cash flows could be•adversely affected if our existing clients decide to provide CRM and other business processes that currently are outsourced or if potential clients retain or increase their in-house customer service and product support capabilities. In addition, competitive pressures from current or future competitars or in-house operations could cause our services to lose market acceptance or result in significant price erosion, which woulc� have an adverse effect upon our business, results of operations, fmancial condition and cash flows. Some of our clients may seek to consolidate services that we provide, which may in turn reduce the amount of work we perform far them. Some of our existing and future competitors have greater financial, human and other resources, longer operating histories, greater technological expertise, more recognizable brand names and more established relationships than we do in the industries that we currently serve or may serve in the future. Some of our � � 18 � i m1�4m1•fila•//('•�TToara�im»rr�l��\ Ar�r�Tloto\T `.nol\AiTin.�na�f+\�x7iv�rl�iva�Tnmr��r�rc� Tr�+nrr�n4 T7:1 C/77/'7(l17 Form 10-K Page 20 of 75 Tabte of Gontients � � `�� competitors may enter into merger, strategic or commercial relationships among themselves or with larger, more established companies in order to increase their ability to address client needs. Increased competition, pricing pressure ar loss of market share could reduce our operating margin, which could harm our business, results of operations, fmancial condition and cash flows. We may engage in future acquisitions tlzat could disrupt our business, cause dilution to our stockholders and harm our �nancial position anrl operating results. We may pursue acquisitions of companies or assets in order to enhance our market position and/or expand the types of services that we offer to our clients and may enter geographic markets where we do not currently conduct business. We may also acquire minority interest in companies or enter into joint venture arrangements with other parties, which may include existing clients. We may also pursue certain acquisitions which may cause management distractions and increased legal costs. We may nof be able to fmd suitable acquisition candidates and we may not be able to consummate such acquisitions on favorable terms, if at all. If we do complete acquisitions, we cannot be sure that they will ultimately strengthen our competitive position, or that our clients, employees or investors will not view them negatively. Acquisitions may disrupt our ongoing operations, divert management from day-to-day responsibilities, increase our indebtedness, liabilities, expenses and exposure to different legal regimes and/or regulations and harm our operating results or fmancial condition. We may not be able to successfully integrate these acquisitions into our operations may lose key clients, employees and members of management and may not achieve the synergies and other benefits expected from the acquisition or investment. Future acquisitions may reduce our cash available for operations and other uses and could result in an increase in amortization expense, potentially dilutive issuances of equity securities or the incurrence of debt, which could harm our business, results of operations, fmancial condition and cash flows. Our business depends on uninterrupted service to our clients. A system failure or labor shortage could cause delays or interruptions of service, which could cause us to lose clients. '� Our operations are dependent upon our ability to protect our service centers, computer and telecommunications equipment and software systems against damage or mterruption from fire, power loss, telecommunications interruption or failure, natural disaster, breaches in data and technology security integrity and other similar events in order to provide our clients with reliable services. Additionally, we depend on our employees to perform our services on behalf of our clients. If we are unabie to staff our service centers due to labor shortages, or if employees miss work due to labor strikes or civil or political unrest, natural disasters and other similar events, our ability to provide our clients with reliable services will be hindered. Some of the events that could adversely affect our ability to deliver reliable service include physical damage to our network operations centers; disruptions, power surges or outages to our computer and telecommunications technologies which are beyond our control; sabotage or terrorist attacks and cyber attacks or data theft; software defects; fire or natural disasters such as typhoons, hurricanes, floods and earthquakes; civil unrest and political turmoil; and labor shortages or walk-outs. Technology is a critical foundation to our service delivery. We utilize and deploy internally developed and third party software solutions that are often customized by us across various hardware and software environments. We operate an extensive intemal voice and data network that links our global sites together in a multi-hub model that enables the rerouting of call volumes. We also rely on multiple public communication channels for connectivity to our clients. Maintenance of and investment m these foundational components are critical to our success. If the reliability of technology or network operations fall below required service levels, or a systemic fault affects the organization broadly, business from our existing and potential clients may be jeopardized and cause our revenue to decrease. We have commenced a project to consolidate our United States data centers in order to improve reliability and to generate cost savings. If we experience a temporary or permanent interruption at one or more of our service centers and/or data centers, through casualty, operating malfunction (whether caused by us, our vendor or otherwise), labor shortage or otherwise, our business could be materially adversely affected and we may be required to pay contractual damages to affected clients or allow some clients to terminate or renegotiate their 19 ` . ,,..l,�,v.l.�;lo.//!�.\TT..o,-�\;,...,,,-.�.1-.�.\ A.�.,..Tl.,+.,\T ....�1\AiT;..r�,�nf+\�x7ir�rin�x�e\Tamv�nrarv Tntarnat Fi� 5�77�7n�7 Form 10-K Page 21 of 75 � Tab[� �f Cca�tents contracts with us. Although we maintain property, business interruption and general liability insurance, including coverage for - errors and omissions, there can be no assurance that our existing coverage will continue to be available on reasonable terms or wili be available in amounts sufficient to cover one or more large ciaims, or that the insurer will not disclaim coverage as to any future claim. The occurrence of errors could result in a loss of data to us ar our clients, which could cause a loss of revenues, failure to achieve product acceptance, increased insurance costs, legal claims against us, delays in payment to us by clients, increased service and warranty expenses or financiaT concessions, diversion of resources, injury to our reputation, or damages to our efforts to build brand awareness, any of which could have a material adverse effect on our market share and, in turn, our business, results of operations, financial condition and cash flows. We are subject 10 U.S. and foreign jurisdiction laws relating to individually identifiable information, and failure to comply with those laws, whether or not inadvertent, could subject us to legal actions and negatively impact our operations. We process, transmit and store information relating to identifiable individuals, both in our role as a service provider and as an employer. As a result, we are subject to numerous U.S. (both federal and state) and foreign jurisdiction laws and regulations, such as the U.S. Health Insurance Portability and Accountability Act and the European Union Data Protection Directive 95/46/EC, governing the protection and processing of individually identifiable information, including social security numbers, and fmancial and health information. Failure to comply with these types of laws may subject us to, among other things, liability for monetary damages, fines and/or criminal prosecution, unfavorable publicity, restrictions on our ability to process information and allegations by our clients that we have not performed our contractual obligations, any of which may have a material adverse effect on our profitability and cash flow. Unautftorized disclosure of sensitive or confidential data could expose us to protracted and costly litigation and penalties and may cause us to lose clients. We are dependent on infortnation technology netwarks and systems to process, transmit and store electronic information • and to communicate among our locations and with our partners and clients. Security breaches of this infrastructure could lead to shutdowns or disruptions of our systems and potential unauthorized disclosure of confidential information. We are also required at times to manage, utilize, record and store sensitive or confidential data. As a result, we are subject to laws and regulations designed to protect this information. If any person, including any of our employees, negligently disregards or intentionally breaches our established controls with respect to such data or otherwise mismanages or misappropriates that data, we could be subject to monetary damages, fines and/or criminal prosecution. Unauthorized disclosure or recording of sensitive ar confidential employee, client or customer data, whether through system failure, employee negligence, fraud or misappropriation, could damage our reputation and cause us to lose clients and employees. Similarly, unauthorized access to or through our information systems, whether by our employees or third parties, could result in negative publicity, legal liability and damage to our reputation, business, results of operations, fmancial condition and cash flows. We have a long selling cycle for our CRM and BPO services that requires significant funds and management resources and a long implementation cycle that requires significant resource commitments. We have a long selling cycle far our CRM and BPO services for new clients, which requires significant investment of capital, resources and time by both our clients and us. Typically, before committing to use our services, potential clients require us to expend substantial time and resources educating them as to the vatue of our services and assessing the feasibility of integrating our systems and processes with theirs. Our clients then evaluate our services before deciding whether to use them. Therefore, our seiling cycle, which generally ranges from six to twelve months, is subject to many risks and delays over which we kave little ar no control, including our clients' decision to choose alternatives to our services (such as other providers or in-house offshore resources), changes in client management and the timing of our clients' budget cycles and approval processes. In addition, we may not be able to successfully conclude a contract after the selling cycle is complete. 20 � ... _T__�_.___�r�t �/nn/nn�n � Form 10-K Page 22 of 75 Tab�e of Conte��ts `, � Implementing our services involves a significant commitment of resources over an extended period of time from both our clients and us. Our clients may also experience delays in obtaining internal approvals or delays associated with technology or system implementations, thereby delaying further the implementation process. Our clients and future clients may not be willing or able to invest the time and resources necessary to implement our services, and we may fail to close sales with potential clients to which we have devoted significant time and resources, which could have a material adverse effect on our business, results of operations, fmancial condition and cash flows. Ofzce we are engaged by a- client, it may take us several months before we start to recognize significant revenues. When we are engaged by a client after the selling process for our CRM and BPO services, it takes several weeks to integrate the client's systems with ours and may take several months thereafter to fully ramp up our services and staff levels, including hiring and training qualified service professionals and technicians, to the client's requirements. While some client contracts require that the client reimburse us for up-front costs such as training and equipment, we may incur significant cost during the implementation stage of the engagement which we will not recover until we receive revenues under the contract. Implementing processes can be subject to potential delays similar to certain of those affecting the selling cycle. Therefore, we do not recognize significant revenues until after we have completed the implementation phase. If we are unable to adjust our pricing terms or tlze mix of products and services we provide to meet the changing demands of our CRM and BPO clients and potential CRM and BPO clients, our business, results of operations and financial condition may be adversely affected Industry pricing models are evolving, and we anticipate that clienfs may increasingly request transaction-based pricing. This pricing model will place additional pressure on the efficiency of our service delivery so that we can maintain desired operating margins. If we are unable to adapt our operations to evolving pricing models, our results of operations may be adversely affected or we may not be able to offer pricing that is attractive relative to our competitors. In addition, the CRM and BPO services we provide to our clients, and the revenues and income from those services, may ;• decline or vary as the type and quantity of services we provide under those contracts change over time, including as a result of a shift in the mix of products and services we provide. Furthermore, our clients, some of which have experienced rapid changes in their prospects, substantial price competition and pressures on their profitability, have in the past and may in the future demand price reductions, automate some or all of their processes or change their outsourcing strategy by moving more work in-house or to other providers, any of which could reduce our profitability. Any significant reduction in or the elimination of the use of the services we provide to any of our clients, and any requirement to lower our prices, would hann our business. We depend on tltird party technology that, if it should become unavailable, contain defects, or infringe on another party's intellectual property rights, could r.esult in increased costs or delays in the production and improvement of our products or result in liability claims. We license critical third-party technology that we incorporate into our services on a non-exclusive basis. We customize the third-party software in many cases to our specific needs and content requirements. While we monitor our usage of third- pariy technology and our compliance with our licenses to use such technology, we may inadvertently violate the terms of our license agreements, which could subject us to liability, including the termination of our rights to use such software or the imposition of additional license fees. If our relations with any of these third-pariy technology providers become impaired, or if the cost of licensing any of these third-party technologies increases, our gross margin levels could significantly decrease and our business could be harmed. The operation of our business would also be impaired if errors occur in the third-party software that we utilize or the third-party software infringes upon another party's intellectual property rights. It may be more difficult for us to correct any defects or viruses in third-party software because the software is not within our control. If we are unable to correct such errors, our business could be adversely affected. There can be no assurance that these third parties will continue to invest the appropriate resources in their products and services to 21 ' • "_1_i.__1_C_7_.//!'�.\TT._..�_\"�_""�_1_"\A��T..a..\T.,..,.1\T.T:,....,,..,la\`i7:«,7,...,..\T,......,....«..�...,T..4.�«,-.�4L';� ��77�7n�7 Form 10-K Page 23 of 75 � Tabt� of Contec�ts maintain and enhance the capabilities of their software. In addition, although we try to limit our exposure to potentiai claims and liabilities arising from third-party infringement claims arising out of, and errors, defects or viruses in, such third-party software in the license agreements that we enter into with such third-party software providers, such provisions may not effectively protect us against such claims in all cases and in all jurisdictions. If we are unable to keep pace with technological changes, our business will be I:armed. Our business is highly dependent on our computer and telecommunications equipment, infrastructure and software capabilities. Our failure to maintain the competitiveness of our technological capabilities or to respond effectively to technological changes could have a material adverse effect on our business, results of operations or fmancial condition. Our continued growth and future profitability will be highly dependent on a number of factors, including our ability to: • expand our existing solutions offerings; • achieve cost efficiencies in our existing service center operations; • introduce new solutions that leverage and respond to changing technological developments; and • remain current with technology advances. There can be no assurance that technologies, applications or services developed by our competitors or vendors will not render our products or services non-competitive or obsolete, that we can successfully develop and market any new services or products, that any such new services or products will be commercially successful or that the integration of automated customer support capabilities will achieve intended cost reductions. In addition, the inability of equipment vendors and service providers to supply equipment and services on a timely basis could harm our operations and financial condition. Software defects or errors could adversely affect our business and results of operations. � Design defects or software errors may delay software introductions or reduce the satisfaction level of clients and may have an adverse effect on our business and results of operations. Our software is highly complex and may, from time to time, contain design defects or software errors that may be difficult to detect and/or correct. Since both our clients and we use our software to perform critical business functions, design defects, software errors or other potential probiems within or outside of our control may arise from the use of our software. It may also result in financial or other damages to our clients, for which we may be held responsible. Although our agreements with our clients often contain provisions designed to limit our exposure to potential claims and liabilities arising from client problems, these provisions may not effectively protect us against such claims in all cases and in all jurisdictions. Claims and liabilities arising from client problems cauld result in monetary damages to us and could cause damage to our reputation, adversely affecting our business and results of operations. Failure to comply with internal control attestation requirements could Zead to loss of public confidence in our financial statements. Any future acquisitions and other material changes in our operations likely will require us to expand and possibly revise our disclosure controls and procedures, internal controls over our financial reporting and related corporate governance policies. In addition, the Sarbanes-0xley Act of 2002 and associated regulations relating to effectiveness of internal controls over fmancial reporting are subject to varying interpretations due to their lack of specificity and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. If we fail to comply with these laws and regulations or our efforts to comply with these laws and regulations differ from the conduct intended by regulatory or governing bodies due to ambiguities or varying interpretations of the law, we could be subject to regulatory sanctions, the public may lose confidence in our internal controls and the reliability of our financial statements, and our reputation may be harmed. The industries in which we operate are continually evolving. Our services may become obsolete, and we may not be able to develop competitive services on a timely basis ar at all. The CRM and BPO service industry is characterized by rapid technological change, competitive pricing, frequent new service introductions and evolving industry standards. The success of our company will depend on � 22 ,,,1 n......r�.,�., ,.,.,.1\T.T.,....,,...la\�t7:...1l.__.,.\T,..,..,,.,.«,.«.. T ...+,,....,,.,-�;t ci��i�ni � Form 10-K Page 24 of 75 Tabie of Cantents � • our ability to anticipate and adapt to these challenges and to offer competitive services on a timely basis. We face a number of difficulties and uncertainties associated with this reliance on technological development, such as: • competition from service providers using other means to deliver similar or alternative services; • realizing economies of scale on a global basis; • responding successfully to advances in competing technologies and network security in a timely and cost-effective manner; and existing, proposed or undeveloped technologies that may render our services less profitable or obsolete. If we fail to manage future growt/T effectively, we may be unable to execute our business plan, maintain levels of service or address competitive challenges adequate[y. We plan to expand our business. We anticipate that this expansion will require substantial management effort and significant additional investment in infrastructure, service offerings and service center exp�nsion. In addition, we will be required to continue to improve our operational, fmancial and management controls and our reporting procedures. Future growth of our company will place a significant strain on managerial, administrative, operational, fmancial and other resources. If we are unable to manage growth successfully, our business will be harmed. Government regulation of our industry and the industries we serve may increase our costs and restrict the operation and growth of our business. Both the U.S. Federal and various state governments regulate our business and the outsourced business services industry as a whole. The Federal Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994 broadly authorizes the Federal Trade Commission ("FTC") to issue regulations restricting certain telemarketing practices and prohibiting misrepresentations in telephone sales. The FTC regulations implementing this Act are commonly referred to as the Telemarketing Sales Rule. Our operations outside the United States are also subject to regulation. In addition to current laws, rules and regulations that �, regulate our business, bills are frequently introduced in Congess to regulate the use of credit information: We cannot predict whether additional legislation that regulates our business will be enacted. Additional legislation could limit our activities or increase our cost of doing business, which could cause our operating results to suffer. We could be subject to a variety of regulatory enforcement or private actions for our failure or the failure of our clients to comply with these regulations. Our results of operations could be adversely impacted if the effect of government regulation of the industries we serve is to reduce the demand for our services or expose us to potential liability. We may become involved in litigation that may materially adversely affect us. We are currently, and from time to time in the future we may become involved in various legal proceedings relating to matters incidental to the ordinary course of our business, including patent, software, commercial, product liability, employment, class action, whistleblower and other litigation and claims, and governmental and other regulatory investigations . and proceedings. Such matters can be time-consuming, divert management's attention and resources and cause us to incur significant expenses. Furthermore, because litigation is inherently unpredictable, there can be no assurance that the results of any of these actions will not have a material adverse effect on our business, results of operations or financial condition. An outbreak of a pandemic, flu or other disease, or the tlireat of a pandemic, flu or ot/zer disease, or natural disaster may adversely impact our ability to perform our services or may adversely impact client and consumer demand We have a large number of employees across the world in many different countries with different levels of healthcare monitoring. Most of these employees work in relatively close proximity to one other in our service centers. A significant or widespread outbreak of a pandemic, such as the flu or other contagious illness, or even a perceived threat of such an outbreak, or a natural disaster could cause significant disruptions to our employee base and could adversely impact our ability to provide our services and deliver our products. This could have a significant impact on our business and our results of operations. 23 s • ---i-`---i_r_i_.iir._�rT-----��--------i---� A"'"'T_�_\T ___1\T.TS,.�._._�Ci\TZ77�,�.��.,.\T..«.......«..«. V77/7l117 Form 10-K Page 25 of 75 � T�bEe of Cantents Risks Related to Our Equity Securities Our financial sponsors have disclosed tlaey are contemplating a going private transaction. On January 31, 2012, SGS Holdings and the other Filing Persons filed the Schedule 13e-3 in connection with potential privately negotiated purchases of shares of our common stock and a contemplated subsequent "short-form" merger (the "Merger") under Section 253 of the DGCL that, if consummated, would result in Stream becoming a private company. The following is based solely on the disclosure in the Schedule 13e-3. As of January 31, 2012, SGS Holdings owns 70.1 million or approximately 92%, of the issued and outstanding shares of our common stock. SGS Holdings has announced that it intends to seek to acquire additional shares of our common stock in privately negotiated transactions with certain selected stockholders of Stream and, thereafter, to evaluate whether to conduct the Merger. SGS Holdings would not enter into a merger agreement with Stream ar seek the approval of our board of directors and stockholders other than the Filing Persons will not be entitled to vote their shares of common stock with respect to the Merger. If consummated, upon the effectiveness of the Merger, the shares of our common stock not owned by Stream, by any of the Filing Persons or by stockholders who properly exercise their statutory appraisal rights under the DGCL would be canceled and automatically converted into the right to receive the merger consideration, which is expected to be $3.25 per share in cash, without interest. Accordingly, you may not be able to sell your shares at a price greater than $3.25 per share. Even if the Merger is abandoned, the control that eur financia! sponsors liave over us and provisions in our arganizational documents and Delaware law miglat limit your ability to influence the outcome of key transactions, including a change in control, and, therefore, depress the trading price of our common stock Our financial sponsors, Ares, NewBridge and EGS Dutchco collectively indirectly own approximately 92% of our common stock and are parties to a stockholders agreement with us that restricts our ability to undertake certain actions. Therefore, our financial sponsors collectively are able to determine the outcome of all matters requiring stockholder approval, . are able to cause or prevent a change of control of our company or a change in the composition of our board of directors, and could preclude any unsolicited acquisition of our company. The market price of our shares could be adversely affected to the extent that this concentration of ownership and stockholders agreement, as well as provisions of our organizational documents, discourage or impede potential takeover attempts that our other stockholders may favor. Furthermore, our fmancial sponsors may, in the future, own businesses that directly or indirectly compete with us. Our fmancial sponsors may also pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. Provisions in our organizational documents and Delaware law may also discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares of our common stock. These provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management. For example, our organizational documents require advance notice for proposals by stockholders and nominations, place limitations on convening stockholder meetings and authorize the issuance of preferred shares that could be issued by our board of directors to thwart a takeover attempt. Moreover, certain provisions of Delaware law may delay or prevent a transaction that could cause a change in our control. Even if the Merger is abandoned, there can be no assurance that NYSE Amex wiU continue to list our securities on its exchange, and any delisting could [i`nit investors' abiliry to make transactions in our securities and subject us to additional trading restrictions. Our common stock is listed on NYSE Amex, a national securities exchange. We cannot assure you that our securities will continue to be listed on NYSE Amex in the future. If NYSE Amex delists our securities from trading on its exchange and we are unable to list our securities on another exchange, our securities could be quoted on the OTC Bulletin Board, or "pink sheets." As a result, we could face significant adverse consequences, including but not limited to the following: • a limited availability of market quotations for our securities; 24 i , �.7..� , ...1.F:1�.//!"�.\Ti..,,«..\:....._„„ L,_.\ A._�T..�._\T . c/��i�nin Form 10-K Page 26 of 75 Table af Cantents � • a determination that our common stock is a"penny stock" which will require brokers trading in our common stock to adhere to more stringent rules and possibly resulting in a reduced level of trading activity in the secondary trading market for our securities; • a reduced liquidity for our securities; • a decreased ability to obtain new financing or issue new securities on favorable terms in the future; • a decreased ability to issue additional securities or obtain additional fmancing in the future; and • a decreased ability of our security holders to sell their securities in certain states. Tlie value of our common stock may be adversely affected by market volatility. The market price of our shares has been highly volatile and subject to wide fluctuations. In addition, our financial sponsors hold a large percentage of our outstanding shares, which are subject to certain restrictions on resale, and our relatively low trading volume causes significant price variations to occur. If the market prices of our shares decline significantly, you may be unable to resell your shares at or above your purchase price, if at all. We cannot assure you that the market price of our shares will not fluctuate or decline significantly in the future. Some of the factors that could negatively affect the price of our shares or result in fluctuations in the price or trading volume of our shares include: • significant volatility in the market price and trading volume of comparable companies; • actual or anticipated changes in our earnings or fluctuations in our operating results or in the expectations of securities analysts; • announcements of technological innovations, new products, strategic alliances or significant agreements by us or by our competitors; • general economic conditions and trends; � • catastrophic events; ar • recruitment or departure of key personnel. We do not expect to pay any dividends on our common stock for the foreseeable future. You should not rely on an investment in our common stock to provide dividend income. We do not anticipate that we will pay any dividends to holders of our common stock in the foreseeable future. Instead, we plan to retain any earnings, if any, to maintain and expand our existing operations. In addition, we are restricted from paying dividends in certain circumstances under the terms of the Indenture governing our Notes and the ABL Credit Facility. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any return on their investment. As a result, investors seeking cash dividends should not purchase our common stock. ITEM 1B. UNRESOLVED STAFF COMMENTS None. TTEM 2. PROPERTIES Description of Property We have 52 locations, with 49 service centers in 22 countries that are designed to be globally integrated. Our facilities are organized into two regions: Americas, which includes the United States, Canada, the Philippines, India, China, Costa Rica, the Dominican Republic, Nicaragua and El Salvador; and EMEA, which includes Europe, the Middle East and Africa. 25 � _..,.i,.,..,.i.r.1,..//n.�rr,,,,..,.�:.........,..t._,� n......r�,.+..�r ,.,.,.l�r,r:,.,.,.,,,.�i-�«7;,.,�,,.,,.,`To,,,,�.,.r�,-.. T„tA,-„At R;1 G/��/7(11� Form 10-K Page 27 of 75 ! Tak�te of Contea�ts We do not own offices or properties but rather lease offices in the United States, Canada, the Netherlands, the United Kingdom, Italy, Ireland, Spain, Sweden, France, Germany, Poland, India, China, Tunisia, the Dominican Republic, Costa Rica, El Salvador, Nicaragua, the Philippines, Egypt, Denmark and Bulgaria. Our headquarters are located in Wellesley, Massachusetts. We believe that our facilities are adequate for our present needs in all material respects. ITEM 3. LEGAL PROCEEDINGS We were a defendant in a putative class action captioned Kambiz Batmanghelich, on behalf of himself and all others similarly situated and on behalf of the general public v. Sirius XM Radio Inc filed in the Los Angeles County Superior Court on November 10, 2009, and removed to the United States District Court for the Central District of California. The Plaintiff alleged that Sirius XM Radio, Inc. recorded telephone conversations between Plaintiff and members of the proposed class of Sirius customers, on the one hand, and Sirius and its employees, on the other, without the Plaintiffls and class members' consent. In March 2011, the parties reached a settlement of the case which was subsequently approved by the court. As part of the settlement, the court certified a settlement class and notice was provided to the settlement class. In September 2011, the court entered a Final Order Approving Class Action Settlement and Judgment that, among other things, released all claims by class members relating to the recording of telephone conversations. Certain parties appealed the Final Order, but those appeals have been dismissed. We have fulfilled all of our obligations contained in the Final Order Approving Class Action Settlement and Judgment and the case is now concluded. The conclusion of this matter did not have a rnaterial adverse effect on our results of operations or fmancial condition. , In 2009, Stream International (NI) Limited ("Stream NI") exercised its right to terminate its lease for certain premises in Northern Ire�nd and vacated such premises on or prior to the termination date of December 31, 2009. The landlord, Peninsula High-Tech Limited (the "Landlord"), has filed a claim against Stream NI alleging that the termination right under the lease ;• was not validly exercised because Stream NI failed to reasonably perform and observe the covenants and conditions of the lease, and therefore such lease remains in subsistence and that the rent and service charges continue ta accrue. If successful in its proceedings, the Landlord will have claims against Stream NI for unpaid rent and service charges for the entire five years remaining under the lease, an aggregate of approximately $3.8 million, ar until such time as another tenant enters into occupation of the premises. Stream NI has refuted the allegations and intends to vigorously defend against the claims asserted by the Landlord. ITEM 4. MINE SAFETY DISCLOSURES None. 26 i � , ti.l - . 4, .�. 1 .�; 1 0.//! 7 .\TT. , � ,, .. , \;.�.. , «,..1.�,\A««T1..4..\T,.,.,.1\T�i:,.«,...,.A-\�57:.,..],.__.,.\T,......�......«.,T....�.,«...,.�L`:1 C/'17!'1l��1 . Form 10-K Page 28 of 75 Table of Contents � PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on NYSE Amex under the symbol SGS. The following sets forth the high and low sales price of our common stock, warrants and units, as reported on NYSE Amex, for the periods shown: Common Stock Warrants Units High Low High Low High Low Fiscal Year Ending December 31, 2010 1 Quarter $7.38 $5.50 $0.83 $0.45 $7.65 $6.65 2�a Quarter $7.00 $5.11 $0.82 $039 $7.63 $6.10 3rd Quarter $5.70 $3.20 $0.43 $0.15 $7.20 $4.34 4�h Quarter $430 $3.45 $0.20 $0.04 $4.45 $3.90 Fiscal Year Ending December 31, 2011 lst Quarter $4.00 $2.54 * * $3.80 $3.07 2�d Quarter $4.61 $2.73 * * $4.12 $3.21 3�d Quarter $3.92 $1.81 * * $3.65 $2.03 4th Quarter $3.40 $119 * * $2.19 $1.75 * Not available as a result of the expiration of the Warrants On February 24, 2012, there were 258 holders of record of our common stock. On October 17, 2011, our previously issued warrants expired. Dividend Policy • We have not paid any dividends on our common stock to date. Our Board of Directors does not anticipate declaring any dividends on the common stock in the foreseeable future. The payment of dividends on the common stock in the future, if any, will be within the discretion of our then Board of Directors and will be contingent upon our revenues and earnings, if any, capital requirements and general financial condition. The instruments governing our credit facility and the indenture that governs our notes also contain certain limitations on the payment of dividends. 27 • .,..1..�....1.F;lo.//l�.1TT�v«�\;,v.,,,-, A,-.,,Tlo�o\T .,..�1\AiT:nrnanf+\�xlin�nu�e�Tamr�nrarv TntPrnPt Fi� SI77I7n� 7 Form 10-K Page 29 of 75 � T;�b€e of Can�ea�ts Equity Compensation Plan Information Securities Authorized for Issuance under our Equity Compensation Plans At December 31, 2011, we had only one equity compensation plan, our 2008 Stock Incentive Plan. The following table contains information about our 2008 Stock Incentive Plan. See Note 14 in our Notes to Consolidated Financial Statements for a description of our 2008 Stock Incentive Plan. Number of Shares Remaining Available for Future Issuance Number of Shares to under Equity be Issued upon Weighted Average Compensation Plans Exercise of Exercise Price of (Excluding Shares Outstanding Options Outstanding Options Reflected Plan Category (Column A) (Column B) in Column A) Equity compensation plans that have been approved by our stockholders 5,438,250(1) $ 5.86 4,481,106 Equity compensation plans that have not been approved by our stockholders — _ _ Total 5,438,250 $ 5.86 4,481,106 (1) This amount does not include 80,644 shares of outstanding restricted stock granted to our employees. Issuer Purchases of Equity Securities • In December 2011, we repurchased from one of our former directors 477 shares of our common stock with a purchase price of $3.25 per share. The shares of common stock were transferred to treasury stock. (d) (c) Maximum Total Number of Number of Shares Shares that �a) Purchased as may yet be Total Number of (b) Part of Publicly Purchased under Shares/Units Average Price Announced Plans the Plan or Period Purchased Paid per Share or Programs Program October 2011 (October 1, 2011 — October 31, 2011) — — _ November 2011 (November 1, 2011 —November 30, 2011) _ _ _ December 2011 (December 1, 2011 — December 31, 2011) 477,254 $ 3.25 — — Total 477,254 $ 3.25 — - ITEM 6. SELECTED FINANCIAL DATA Not Applicable 28 • mhtml•file•// Sh7/7(117 Form 10-K Page 30 of 75 Table af Co�ten#s • ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21 E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some eases, you can identify forward-looking statements by terminology such as "may," "should," "could," "would," "expect," "intend," "plan," target," "goal," "anticipate," "believe," "estimate," "continue," or the negative of such terms or other similar expressions. Factors that might cause ar contribute to such a discrepancy include, but are not limited to, those described in Item lA, "Risk Factors," of this report and in our other filings with the SEC. Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the SEC, we explicitly disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise to reflect actual results or changes in factors or assumptions affecting such forward- looking statements. You are advised, however, to consult any further disclosure we make in our reports filed with the SEC. Overview Our Business We are a leading global business process outsourcing (`BPO") service provider specializing in customer relationship management ("CRM"), including sales, customer care and technical support primarily for Fortune 1000 companies. Our clients include leading computing/hardware, telecommunications service providers, software/netwarking, entertainment/media, retail, travel and financial services companies. Our service programs are delivered througi� a set of • standardized best practices and sophisticated technologies by a highly skilled multilingual workforce with the ability to support 35 languages across 491ocations in 22 countries. We continue to expand our global presence and service offerings to increase revenue, improve operational efficiencies and drive brand loyalty for our clients. We generate revenue based primarily on the amount of time our agents devote to a client's program. Revenue is recognized as services are provided. The majority of our revenue is from multi-year contracts and we expect that trend to continue. However, we do provide certain client programs on a short-term basis. Our industry is highly competitive. We compete primarily with the in-house business processing operations of our current and potential clients. We also compete with certain third-party BPO providers. Our industry is labar-intensive and the majority of our operating costs relate to wages, employee benefits and employment taxes. We periodically review our capacity utilization and projected demand for future capacity. In conjunction with these reviews, we may decide to consolidate or close under-performing service centers, including those impacted by the loss of client progams, in order to maintain or improve targeted utilization and margins. This ManagemenYs Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated fmancial statements and notes thereto which appear elsewhere in this Annual Report on Form 10-K. Recent Developments On January 31, 2012, a Transaction Statement on Schedule 13e-3 (the "Schedule 13e-3") was filed by SGS Holdings LLC ("SGS Holdings"), Ares Corporate Opportunities Fund II, L.P. ("Ares"), EGS Dutchco B.V. 29 • mhtml•�la•//(`•\TTePrc\imi�rnhv\Ar�r�Tlata\T nral\A�1ir�rncnft\Wintjnwc��T'Pm»(1TAtv Tt1teTllet F'1�___ S�ZZ�Zn12 Form 10-K . Page 31 of 75 � Tabte of Cont�n#s ("EGS Dutchco"), NewBridge International Investments Ltd. ("NewBridge") and the other persons listed on the cover of the Schedule 13e-3 above the caption "Name of Persons Filing Statement" (the "Filing Persons"). The following is based salely on the disclosure in the Scheduie 13e-3. The Schedule 13e-3 was filed in connection with potential privately negotiated purchases of shares of our common stock and a contemplated subsequent "short-form" merger that, if consummated, would result in Stream becoming a private company. SGS Holdings intends to seek to acquire additional shares of our common stock in privately negotiated transactions with certain selected stockholders of Stream and, thereafter, intends to evaluate whether to conduct a short-form merger, under Section 253 of the DGCL, as a means of acquiring all of the other shares of our common stock not owned directly or indirectly by any of the Filing Persons. SGS Holdings has not yet determined whether to proceed with the Merger. If consummated, the Merger would result in SGS Holdings owning all of our common stock and the other stockholders of Stream (as of immediately prior to the Merger) no longer holding any of our common stock. See `Business— Recent Developments." Critical Accounting Policies Use of Estimates The preparation of the Consolidated Financial Statements in conformity with accounting principles generally accepted in the U.S. ("GAAP") requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. We define our "critical accounting policies" as those that require us to make subjective estimates about matters that are uncertain and are likely to have a material impact on our fmancial condition and results of operations or that concern the specific manner in which we apply GAAP. On an on-going basis, we evaluate our estimates including those related to revenue recognition, the allowance for accounts receivable, derivatives and hedging activities, income taxes including the valuation allowance for deferred tax assets, valuation of long-lived assets, self- insurance reserves, contingencies, litigation and restructuring liabilities, and goodwill and other intangible assets. We base our . estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ materially from these estimates under different assumptions or conditions. Our estimates are based upon assumptions and judgments about matters that are highly uncertain at the time the accounting estimate is made and applied and require us to assess a range of potential outcomes. We believe the following critical accounting policies are those that are most important to the porirayal of our results of operations and financial condition and that require the most subjective judgment. Revenue Recognition We generate revenue based primarily on the amount of time our agents devote to a client's program. Revenue is recognized as services are provided. The majority of our revenue is from multi-year contracts and we expect that trend to. continue. However, we do provide certain client programs on a short-term basis. Our policy is to recognize revenue when the applicable revenue recognition criteria have been met, which generally include the following: Persuasive evidence of an arrangement—We use a legally binding contract signed by the customer as evidence of an arrangement. We consider the signed contract to be the most persuasive evidence of the arrangement. Delivery has occurred or services rendered—Delivery has occurred based on the billable time or transactions processed by each agent, as defined in the client contract. The rate per billable time or transaction is based on a pre- determined contractual rate. Contractually pre-determined quality and performance metrics may adjust the amount of revenue recognized. 30 � +v.1�4Y..l.�lo•//!�.\TToo�.o\�..�»�1....\ Arr�Tl.�4.�\T .�i..�l\Tif�i.«..�.�f'+\�7�7��.��i�n\Tomr��rnr�r Tr4nrnn+Ta'il G/7'7/7(11'� Form 10-K Page 32 of 75 Tab1e af �onte��ts • Fee is fixed or determinable—We assess whether the fee is fixed or determinable at the outset of the arrangement, primarily based on the payment terms associated with the transaction. Our standard payment terms are normally within 90 days. Our experience has been that we are generally able to determine whether a fee is fixed or determinable. Collection is probable—We assess the probability of collection from each customer at the outset of the arrangement based on a number of factors, including the customer's payment history and its current creditworthiness. If in our judgment collection of a fee is not probable, we do not record revenue until the uncertainty is removed, which generally means revenue is recognized upon our receipt of the cash payment. Our experience has been tl�at we are generally able to estimate whether collection is probable. Allowances for Accounts Receivable We maintain allowances for estimated losses resulting from the inability of our customers to make required payments. We perform credit reviews ofeach customer, monitor collections and payments from our customers, and determine the allowance based upon historical experience and specific customer collection issues. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances would be required. Accounting for Income Taxes In connection with preparing our fmancial statements, we are required to compute income tax expense in each jurisdiction in which we operate. This process requires us to project our current taac liability and estimate our defened taac assets and liabilities, including net operating loss and tax credit carryforwards. We also continually assess the need for a valuation allowance against deferred tax assets under the "more-likely than-not" criteria. As part of this assessment, we have considered our recent operating results, future taxable income projections, and all prudent and feasible tax planning strategies. As of December 31, 2011 and 2010 we maintained a full valuation allowance against our deferred tax assets in certain countries including the United States. We currently do not have sustained profitability sufficient to support a conclusion that a • valuation allowance is not required. We account for our uncertain tax positions in accordance with ASC 740-10, Income Taxes. We follow a two-step approach to recognizing and measuring uncertain tax positions. The first step is to determine if the weight of available evidence indicates that it is more likely than not that the taac position will be sustained on audit. The second step is to estimate and measure the tax benefit as the amount that has a greater than 50% likelihood of being realized upon ultimate settlement with the ta�c authority. We evaluate these uncertain tax positions on a quarterly basis. This evaluation is based on the � consideration of several factors including changes in facts or circumstances, changes in applicable tax law, and settlement of issues under audit. Interest and penalties relating to income taxes and uncertain tax positions are accrued net of tax in Provision for income taxes in the accompanying Consolidated Statements of Operations. In the future, our effective t� rate could be adversely affected by several factors, many of which are outside our control. Our effective t� rate is affected by the proportion of revenue and income before taxes in the various domestic and international jurisdictions in which we operate. Further, we are subject to changing tax laws, regulations and interpretations in multiple jurisdictions in which we operate, as well as the requirements, pronouncements and ruling of certain tax, regulatory and accounting organizations. We estimate our annual effective taY rate each quarterbased on a combination of actual and forecasted results of subsequent quarters. Consequently, significant changes in our actual quarterly or forecasted results may impact the effective tax rate for the current or future periods. Earnings of our foreign subsidiaries are designated as indefinitely reinvested outside the U.S. If required for our operations in the U.S., most of the cash held abroad could be repatriated to the U.S. but, under current law, would be subject to U.S. federal income ta�ces (subject to an adjustment for foreign tax credits). Currently, we do not anticipate a need to repatriate these funds to our U.S. operations. 31 � ,v.l,�,v.l•�lo•//!�.\TT�o«�\:,�,,,,...1,..\ A,...Tl.,�.,\T .....,1\Aif;..,-.��.�4'+\�II�r..l�.:�n\Tnmr��r�rc� Tntarnat Ril 5�77�7n� 7 Form 10-K Page 33 of 75 � Ta�rte of Cc�ntents Contingencies We consider the likelihood of various loss contingencies, including non-income taa� and legal contingencies arising in the ordinary course of business, and our ability to reasonably estimate the range of loss in determining loss contingencies. An estimated loss contingency is accrued in accordance with the authoritative guidance, when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. We regularly evaluate current information available to determine whether such accruals should be adjusted. Derivatives and Hedging We enter into foreign exchange forward contracts to reduce our exposure to foreign currency exchange rate fluctuations that are associated with forecasted expenses in non-functional currencies. Upon proper qualification, these contracts are accounted for as cash flow hedges. All derivative fmancial instruments are reported in the accompanying Consolidated Balance Sheets at fair value. Changes in fair value of derivative instruments designated as cash flow hedges are recorded in Accumulated other comprehensive income (loss), a component of Stockholders' Equity, to the extent they are deemed effective. Based on the criteria established by current accounting standards, all of our cash flow hedge contracts are deemed to be highly effective. Any realized gains or losses resulting from the cash flow hedges are recognized together with the hedged transaction within Direct Cost of Revenue. We also enter into fair value derivative contracts to reduce our exposure to foreign currency exchange rate fluctuations associated with changes in asset and liability balances. Changes in the fair value of derivative instruments designated as fair value hedges affect the carrying value of the asset or liability hedged, with changes in both the derivative instrument and the hedged asset or liability being recognized in Other income (expense), net in the accompanying Consolidated Statements of Operations. • While we expect that our derivative instruments designated as cash flow hedges will continue to be highly effective and in compliance with applicable accounting standards, if our cash flow hedges did not qualify as highly effective or if we determine that forecasted transactions will not occur, the changes in the fair value of the derivatives used as cash flow hedges would be reflected currently in Other income (expense), net in the accompanying Consolidated Statement of Operations. Goodwill and Other Intangible Assets � In accordance with the authoritative guidance, goodwill is reviewed for impairment annually and on an interim basis if events or changes in circumstances between annual tests indicate that an asset might be impaired. Impairment occurs when the carrying amount of goodwill exceeds its estimated fair value. The impaument, if any, is measured based on the estimated fair value of the reporting unit. We operate in one reporting unit, which is the basis for impanment testing of all goodwill. As approximately 92% of our common stock is indirectly owned by Ares, EGS Dutchco andNewBridge, who collectively appoint the majority of our Board of Directors, our stock is thinly traded. Accordingly, we utilize internally developed models to estimate our expected future cash flows in connection with our estimate of fair value of the reporting unit in the evaluation of goodwill and indefmite lived intangible assets. The key assumptions in our model consist of numerous factors including the discount rate, terminal value, growth rate and the achievability of our longer term fmancial results. Intangible assets with a finite life are recorded at cost and amortized using their projected cash flows over their estimated useful life. Client lists and relationships are amortized over periods up to ten years, market adjushnents related to facility leases are amortized over the term of the respective lease and developed software is amortized over five years. Brands and trademarks are not amortized as their life is indefmite. In accordance with the authoritative guidance, indefinite lived intangible assets are reviewed for impairment annually and on an interim basis if events or changes in circumstances between annual tests indicate that an asset might be impaired. The carrying value of finite-lived intangibles is evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with the authoritative guidance. An asset is considered to be impaired when the sum of the undiscounted future net cash flows expected 32 • mhtm�•fi�e•//('•�TTearc�imiirnhv�Arir�Tlata�T nra�U�/Tirrnenft\�7Uinrin�x�c\Tr>mnnrarc� Tntarnat T+il G/77/7(117 Form 10-K Page 34 of 75 'i'abte of Ct�nte�3ts , to result from the use of the asset and its eventual disposition does not exceed its carrying amount. The amount of the impairment loss, if any, is measured as the amount by which the carrying value of the asset exceeds its estimated fair value, which is generally determined based on appraisals or sales prices of comparable assets. Stock-Based Compensation For share-based payments, the fair value of each grant under our stock-based compensation plan for employees and directors, including both the time-based grants and the performance-based grants, is estimated on the date of grant using the Black-Scholes-Merton option valuation model. Stock compensation expense is recognized on a straight-line basis over the vesting term, net of an estimated future forfeiture rate. Key Operating Metrics and Other Items Direct Cost of Revenue We record the costs specifically associated with client billable programs identified 'm a client statement of work as direct cost of revenue. These costs include direct labor wages and benefits of service agents in our call centers as well as reimbursable expenses such as telecommunication charges. The most significanf portion of our direct cost of revenue is attributable to employee compensation, benefits and payroll taxes. These costs are expensed as they are incurred. Direct costs are affected by prevailing wage rates in the countries in which they are incurred and are subject to the effects of fareign currency fluctuations, net of the impact of any cash flow hedges. Selling, general and administrative expenses Our selling, general and administrative expenses consist of all expenses of operations other than direct costs of revenue, such as information technology, telecommunications, sales and marketing costs, finance, human resource management and other functions and service center operational expenses such as facilities, operations and training. • Severance, restructuring and other charges Our severance, restructuring and other charges include expenses related to acquisitions, non-agent severance charges and expenses related to exiting leased facilities. Other Income and Expenses Other income and expenses consists of foreign currency transaction gains or losses, other income, interest income and interest expense. Interest expense includes interest expense and amortization of debt issuance costs associated with our indebtedness under our credit lines, senior secured notes, and capitalized lease obligations. We generate revenue and incur expenses in several different currencies. We do not operate in any countries subject to hyper-inflationary accounting treatment. Our most common transaction currencies are the U.S. Dollar, the Euro, the Canadian Dollar, the U.K. Pound Sterling, Philippine Peso and the Indian Rupee. Our customers are most commonly billed in the U.S. Dollar or the Euro. We translate our results from functional currencies to U.S. Dollars using the average exchange rates in effect during the accounting period. Variable Interest Entity Operating in the People's Republic of China In 2011, we commenced the operations of Suzhou SiJun Information Services Co. Ltd., a China limited liability company ("SGS-Suzhou"). Due to regulatory restrictions in China that prohibit direct foreign ownership in certain Chinese entities, SGS-Suzhou is owned by two citizens of the People's Republic of China (the "PRC Shareholders"). We have entered into contractual arrangements with the PRC Shareholders which give one of our 33 � - .....L.+...,.1.�;1... //!'�.\T T......�,\:.�.-.,..«.L,�,\ A r.v.Tln4.��T nnn��/Tinrnan f+\�7(Tir�rl�n�xm\TPmnnrarv Tnternet Fil 5�77.�7n� 7 Form 10-K Page 35 of 75 � T�t�t� of Contents subsidiaries the power to direct the activities of SGS-Suzhou and the rights to the economic benefits of SGS-Suzhou. As a result, we consider SGS-Suzhou to be a variable interest entity (VIE) and we have consolidated it into our fmancial results. We concluded that consolidation was appropriate because we are obligated to fund the obligations of SGS-Suzhou with non- recourse debt, we direct the activities of SGS Suzhou and the PRC Shareholders have no rights to the expected returns of SGS Suzhou. Under the terms of an agreement with the PRC Shareholders, Stream has a call option to purchase all the equity interests in the VIE that are held by the PRC Shareholders at any time and the PRC Shareholders hold a put option to sell the equity interest to Stream at any time. The financial operations of this entity are not material to our assets,liabilities or operating results. The entity has been consolidated into our fmancial results of 2011. Recent Accounting Pronouncements In September 2011, the Financial Accounting Standards Board ("FASB") issued an update, Accounting Standards Update ("ASU") No. 2011-08, to existing standards on Intangibles — Goodwill and Other (Accounting Standards Codification ("ASC") Topic 350). ASU No. 2011-08 was issued to simplify the testing of goodwill for impairment by allowing an optional qualitative factors test to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test already included in ASC Topic 350. ASU No. 2011-08 is effective far annual and interim goodwill tests performed for fiscal years after December 15, 20ll. We will adopt the standard in 2012, and it will not have a significant impact on our eonsolidated fmancial statements or results of operations. In June 2011, the FASB amended its guidance on the presentation of comprehensive income. Under the amended guidance, an entity has the option to present comprehensive income in either one continuous statement or two consecutive fmancial statements. A single statement must present the components of nef income and total net income, the components of • other comprehensive income and total other comprehensive income, and a total for comprehensive income. In a two-statement approach, an entity must present the components of net income and total net income in the first statement. That statement must be immediately followed by a financial statement that presents the components of other comprehensive income, a total for other comprehensive income, and a total for comprehensive income. The option under the current guidance that permits the presentation of components of other comprehensive income as part of the statement of changes in stockholders' equity has been eliminated. The amendment becomes effective on January 1, 2012 and is applied retrospectively. This guidance will not have an impact on our financial-position, results of operations, or cash flows as it is disclosure-only in nature. Results of Operations Year ended December 31, 2011 compared with year ended December 31, 2010 Revenue. Revenues increased $46.7 million, or 5.8%, to $8469 million for the year ended December 31, 2011, compared to $800.2 million for the year ended December 31, 2010. The increase is primarily attributable to new business won in 2010 and 2011, expansion with existing clients and approximately $11.4 million due to fluctuations in currency exchange rates. Revenues for services performed in our United States and Canadian service centers decreased $1.8 million, or 0.6%, for the year ended December 31, 201 l, compared to the year ended December 31, 2010. Revenues for services performed in European service centers increased $223 million, or 14.8%, forthe year ended December 31, 2011, compared to the year ended December 31, 2010. This increase is attributable to the addition of customers and the strengthening of the Euro and U.K. Pound Sterling relative to the U.S. Dollar which resulted in approximately $8.8 million additional revenue in the twelve months of 2011 on a constant currency basis. Revenues for services performed in offshore service centers in the Philippines, India, El Salvador, Costa Rica, the Dominican Republic, China, Nicaragua, Tunisia and Egypt increased $26.2 million, or 34 i ,v,L,�,�.l.�lo•///"'.\TT.,�«�\;,...,,.«.1._,\A.....r�..4..�r___��w.r_------��v'-�----�'T'----------T--`------�r.i cinninnin Form 10-K Page 36 of 75 Table of Conte�ts • 8.0%, for the year ended December 31, 2011, compared to the year ended December 31, 2010 due to higher client volumes. Revenues in our offshore service centers represented 41.7% of consolidated revenues for the year ended December 31, 2011, compared to 40.8% in the same period in 2010. Direct Cost of Revenue. Direct cost of revenue (exclusive of depreciation and amortization) increased $24.9 million, or 5.3%, to $494.4 million for the year ended December 31, 2011, compared to $469.5 million for the year ended December 31, 2010. The increase is primarily attributable to the payroll-related costs to service greater client volumes. Gross Profit. Gross profit increased $21.9 million, or 6.6%, to $352.5 million for the year ended December 31, 2011 from $330.6 million for the year ended December 31, 2010. Gross profit as a percentage of revenue was 41.6% and 41.3°/a for the years ended December 31, 2011 and 2010, respectively. The increase in gross margin percentage was partly attributed to programs to improve agent utilization and retention as well as pricing of new business. Operating Expenses. Operating expenses consist of selling, general and administrative expense, severance, restructuring and other charges, net and depreciation and amortization expense. Operating expenses decreased $6.2 million, or 1.8%, to $337.3 million for the year ended December 31, 2011, compared to $343.5 million for the year ended December 31, 2010. We establish asset retirement obligations where required by the leases of our facilities. During the fourth quarter of 2011, certain lessors determined that they did not require the facilities to be restored and amended the leases to remove this requirement for no additional consideration and, accordingly, as the leasehold improvements at these locations were fully depreciated, the corresponding amount of the asset retirement obligations of $1.4 million were reversed into income. Operating expenses as a percentage of revenues decreased to 39.8% for the year ended December 31, 2011 compared to 42.9% for the year ended December 31, 2010, primarily as a result of the decreases in depreciation and amortization, higher revenue and the effect of the reductions in work-force that were conducted in the second and third quarters of 2011. Selling, general and administrative expense grew from $265.7 million for the year ended December 31, 2010 to $266.3 million, or 0.2% for the year ended December 31, 2011. Selling, general and administrative expense as a percentage of revenue was 31.4% and 33.2% for the years ended December 31, 20ll and 2010, respectively. The decrease in selling, general • and administrative expense is the result of profit improvement initiatives that were computed in 2011 and a$1.4 million reduction to a previously established asset retirement obligation in 2011. Severance, restructuring and other charges, net were a charge of $10.8 million and $119 million for the year ended December 31, 2011 and 2010, respectively. The charge in 2011 principally relates to severance costs of $11.1 million in connection with a reduction in non-agent staffing partially offset by a non-cash release of an acquisition related liability. The charge in 2010 related to non-agent severance, lease exit costs, and facility impaument charges. Depreciation and amortization decreased $5.6 million per the scheduled step down of amortization expense and certain fixed assets becoming fully depreciated. Other Expenses, Net. Other expenses, net include interest expense and foreign currency gains and losses. Other expenses, net increased $2.5 million, or 8.2%, to $32.7 million for the year ended December 31, 20ll, compared to $30.2 million for the year ended December 31, 2010. - Interest expense was $28.8 million and $30.7 million for the years ended December 31, 20ll and 2010, respectively. The decrease in interest expense is primarily attributed to interest income gained from forward points earned on our hedging contracts. Foreign currency loss (gain) consists of realized and unrealized gains and losses on forward currency contracts where we elect not to apply hedge accounting and the revaluation of certain assets and liabilities denominated in foreign currency. For the year ended December 31, 2011, we recorded a foreign currency loss of $3.9 million versus a gain of $0.5 million for the comparable period in the prior year. 35 • ...,.La.,.,.l.l:l...//!'�.\TT,.....,.1:.�"�L'"\ A�__Tl_�-.,\T .,_�1\T.TL,...._,...1`i\�I7:«,7,._.,,.\T,.«..«,....,«., T«+.....,...+L';1 G/'�'��'�(11'� � Form 10-K Page 37 of 75 � Tab�e ofCo�tegits� � � � Provision for Income Taxes. Income taYes decreased $4.3 million, or 41.4%, to $6.1 million for the year ended December 31, 2011, compared to $10.4 million for the year ended December 31, 2010. The decrease year over year is primarily related to the resolution of liabilities for uncertain taY positions for which the statute of limitations expired in the period resulting in a tax benefit of $2.9 million and the receipt of refunds in various jurisdictions resulting in a t� benefit of $1.2 million. Foreign taac expense was $7.5 mitlion and $8.4 million for the year ended December 31, 2011 and 2010, respectively. In the United States, where we operated at a loss for tax purposes, we recarded a tax benefit of $1:5 million - primarily as a result of the resolution of uncertain tax positions mostly due to expiration of statutes of limitations for the year ended December 31, 2011. We operate in a number of countries outside the United States where we are generally taxed at lower statutory rates than the United States and we also benefit from tax holidays in some foreign locations. Liquidity and Capital Resources Our primary liquidity needs are for financing working capital associated with the expenses we incur in performing services under our client contracts and capital expenditures for the opening of new service centers, including the purchase of computers and related equipment. We have in place a credit facility that consists of a revolving line of credit that allows us to manage our cash flows. Our ability to make payments on the credit facility, to replace our indebtedness if desired; arid to fund working capital and planned capital expenditures will depend on our ability to generate cash in the future. We have secured our credit facility through our accounts receivable and therefore, our ability to continue servicing debt is dependent upon the timely collection of those receivables. We made capital expenditures (including amounts financed under capital leases) of $51.1 million in the year ended December 31, 20ll as compared to $311 million far the year ended December 31, 2010. The increase related to refurbishments of existing sites and investments in technology, such as computers, phone switches, software and telecommunication networks. We expect to continue to make capital expenditures to build new service centers, upgrade existing service centers, meet new contract requirements and maintain and upgrade our infrastructure. � We have outstanding $200 million aggregate principal amount of 11.25% Senior Secured Notes due 2014 {the "Notes"). The Notes were issued pursuant to an Indenture among us, certain of our subsidiaries (the "Note Guarantors"), and Wells Fargo Bank, N.A., as trustee (the "Indenture"). The Indenture contains restrictions on our ability to incur additional secured indebtedness under certain circumstances. The Notes mature on October l, 2014. The Notes bear interest at a rate of 11.25% per annum. Interest on the Notes is computed on the basis of a 360-day year composed of twelve 30-day months and is payable semi-annually on April 1 and October 1 of each year, beginning on April 1, 2010. The obligations under the Notes are fully and unconditionally guaranteed, jointly and severally, by the Note Guarantors and will be so guaranteed by any future domestic subsidiaries of ours, subject to certain exceptions. The Notes and the Note Guarantors' guarantees of the Notes are secured by senior liens on our and the Note Guarantors' Primary Notes Collateral and by junior liens on our and the Note Guarantors' Primary ABL Collateral (each as defined in the Indenture). Stream, Stream Holdings Corporation, Stream International, Inc., Stream New York, Inc., Stream Global Solutions-US, Inc., Stream Global Solutions-AZ, Inc. and Stream International Europe B.V. (collectively, the "U.S. Borrowers"), and SGS Netherland Investment Corporation B.V., Stream International Service Europe B.V., and Stream International Canada Inc., (collectively, the "Foreign Borrowers" and together with the U.S. Borrowers, the `Borrowers"), have entered into the Credit Agreement, as amended by the First Amendment to Credit Agreement dated June 3, 2011 and Second Amendment to Credit Agreement dated November 1, 2011, with Wells Fargo Capital Finance, LLC, as agent and co-arranger, Goldman Sachs Lending Partners LLC, as co-ananger, and each of the lenders pariy thereto, as lenders (the "Credit AgreemenY'), providing for the 36 • mlitml•filP•//('•\TTcarc�imnrnhv\Ar�r�T�ata\T nral\AiTirrnenft\1xTin�n�a�c\Tamr�nrarv Tntarnat Fil S/77/7(117 Form 10-K Page 38 of 75 Table of Cantents • revolving credit fmancing (the "ABL Facility") of up to $100.0 million, including a$20A million sub-limit for letters of credit, in eact► case, with certain further sub-limits for certain Foreign Borrowers. The ABL Facility has a term of four years at an interest rate of Wells Fargo's base rate plus 375 basis points or LIBOR plus 400 basis points at our discretion. The ABL Facility has a fixed charge coverage ratio fmancial covenant that is operative when our availability under the facility is less than $20.0 million. At December 31, 2011, we had $50.1 million available under the ABL Facility. We were in compliance with the financial covenant as of December 3 l, 2011. Letters of Credit. We have certain standby letters of credit for the benefit of landlords of. certain sites in the United States and Canada. As of December 31, 201 l, we had approximately $5.2 million of these letters of credit in place under our ABL Facility. The obligations under the letters of credit decline annually as the underlying obligations are satisfied. Contractual Obligations. We have various contractual obligations that will affect our liquidity. The following table sets forth our contractual obligations as of December 31, 201 L• Payments Due by Period Less than More thau Total 1 year 1-3 years 3-5 years 5 years (in thousands) Long-term debt obligations $268,736 $22,956 $245,780 $ — $ — Revolving debt obligations 49,108 2,487 46,621 — — Operating lease obligations 156,250 43,846 56,626 36,659 19,119 Capital lease obligations 23,031 12,175 9,605 1,251 — Total $497,125 $81,464 $358,632 $37,910 $19,119 Unrestricted cash and cash equivalents totaled $24.4 million for the year ended December 31, 2011 which is a$6.1 million increase compared to $18.3 million for the year ended December 31, 2010. Working capital decreased $20.9 million to $96.4 million for the year ended December 31, 2011, compared to $1173 million for the year ended December 31, 2010. • Net cash provided by operating activities totaled $51.5 million for the year ended December 31, 2011, a$291 million increase from the $22.4 million provided by operations for the year ended December 31, 2010 primarily due to a$223 million decreasein accountsreceivable. Net cash used in investing activities totaled $39.3 million for the year ended December 31, 2011 which is a$16.4 million increase from the $229 million used in the period ended December 31, 2010. The increase is due to higher capital expenditures to support the growth in our business in 201 L Net cash used in financing activities totaled $3A million for the year ended December 31, 2011, a$6.8 million decrease from the $3.8 million provided by fmancing activities for the period ended December 31, 2010. T'he change was primarily due to net borrowings on line of credit of $203 million, offset by payments pursuant to capital leases of $10.7 million and repurchase of 4.2 million shares of common stock of $13.6 million during 201 L Our foreign exchange forward contracts require the exchange of foreign currencies for U.S. Dollars or vice versa, and generally mature in one to 18 months. We had outstanding foreign exchange forward contracts with aggregate notional amounts of $216.5 million as of December 31, 2011 and $233.2 million as of December 31, 2010. : We believe that our cash generated from operations, existing cash and cash equivalents, and available credit will be sufficient to meet expected operating and capital expenditures for the next 12 months. 37 • ml�+ml•fila•//(`•\T Tcarc\imnrnliv� O r�r�Tlata�T nral\A�Tirrnenft\�xlinr�nu�c\Tr mnnrarv TntPrnet FiL _ SIZZ�Zn� Z Form 10-K Page 39 of 75 � Tabie af Conte�ts Off-Balance SheetArrangements With the exception of operating leases discussed above, we do not have any off-balance sheet arrangements. Seasonality We are exposed to seasonality in our revenues because of the nature of certain consumer-based clients. We typically experience approximately 10% increased volume associated with the peak processing needs in the fourth quarter coinciding with our clients' holiday period. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to a variety of market risks, including the effects of changes in fareign currency exchange rates and interest rates. Market risk is the potential loss arising from adverse changes in market rates and prices. Our risk management strategy includes the use of derivative instruments to reduce the effects on our operating results and cash flows from fluctuations caused by volatility in currency exchange and interest rates. By using derivative fmancial instruments to hedge exposures to changes in exchangerates, we expose ourselves to counterparty credit risk. Interest Rate Risk We are exposed to interest rate risk primarily through our debt facilities since some of those instruments bear interest at variable rates. At December 31, 2011, we had outstanding borrowings under variable debt agreements thattotaled approximately $46.5 million. A hypothetical 1% increase in the interest rate would have increased interest expense by approximately $0.5 million and would have decreased annual cash flow by a comparable amount. The carrying amount of our variable rate borrowings reflects fair value due to their short-term and variable interest rate features. We had no outstanding interest rate derivatives covering interest rate exposure at December 31, 201 l. • Forei Curren Exchan e Rate R' S� �y g ask We serve many of our U.S.-based clients using our service centers in several non-U.S. locations. Although the contracts with these clients are typically priced in U.S. Dollars, a substantial portion of the costs incurred to render services under these contracts are denominated in the local currency of the country in which the contracts are serviced which creates foreign exchange exposure. The majority of this exposure is in Canada, India, the Dominican Republic, Egypt, Germany, Spain, Italy, Netherlands, the Philippines, Nicaragua and Costa Rica. We serve most of our EMEA-based clients using our service centers in the Netherlands, the United Kingdom, Italy, Ireland, Spain, Sweden, France, Germany, Poland, Denmark, Bulgaria, Egypt, and Tunisia. We typically bill our EMEA-based clients in Euros or U.K. Pounds Sterling. While a substantial portion of the costs incurred to render services under these contracts are denominated in Euros, we also incur costs in non-Euro currencies of the local countries in which the contracts are serviced which creates foreign exchange exposure. The expenses from these foreign operations create exposure to changes in exchange rates between the local currencies and the contractual currencies—primarily the U.S. Dollar and the Euro. As a result, we may experience foreign currency gains and losses, which may positively or negatively affect our results of operations attributed to these subsidiaries. The majority of this exposure is related to work performed from call centers in Canada, India and the Philippines. In order to manage the risk of these foreign currencies from strengthening against the currency used for billing, which thereby decreases the economic benefit of performing work in these countries, we may hedge a portion, although not 100%, of these foreign currency exposures. While our hedging strategy may protect us from adverse changes in foreign currency rates in the short term, an overall strengthening of the foreign currencies would adversely impact margins over the long term. 38 • m�tm�•f�a•//('•�TTeare�imnrr�hv\ Dr.r.Tloto\T �nnl\TiT;�.,-..�,.f'+1�I7;.,,7,..,,�1To,.„,�.,�«,,,.<, T,-.+o,�,.04 T�`;1 C/'�'�/7(177 Form 10-K Page 40 of 75 Table of Contents • The following summarizes the relative (weakening)/strengthening of the U.S. Dollar against the local currency during the years presented: Year Ended December 31, 2011 2010 U.S. Dollar vs. Canadian Dollar 1.9% (4.7%) U.S, Dollar vs. Euro 2.3% 7.5% U.S. Dollar vs. Indian Rupee 12.3% 31% U.S. Dollar vs. Philippine Peso (0.4%) (5.4%) U.S. Dollar vs. S. African Rand 22.1% (10.4%) U.S. Dollar vs. U.K. Pound Sterling 0.1% 2.9% Cash Flow Hedging Program Substantially all of our subsidiaries use the respective local currency as their functional currency because they pay labor and operating costs in those local currencies. Certain of our subsidiaries in the Philippines use the U.S. Dollar as their functional currency while paying their labor and operating cost in local currency. Conversely, revenue for most of our foreign subsidiaries is derived principally from client contracts that are invoiced and collected in U.S. Dollars and other non-local currencies. To mitigate the risk of principally a weaker U.S. Dollar, we purchase forward contracts to acquire the local currency of certain of the foreign subsidiaries at a fixed exchange rate at specific dates in the future. We have designated and account for certain of these derivative instruments as cash flow hedges where applicable, as defined by the authoritative guidance. Given the significance of our foreign operations and the potential volatility of certain of these currencies versus the U.S. Dollar, we use forward purchases of Philippine Peso, Canadian Dollars, Euros and Indian Rupees to minimize the impact • of currency fluctuations. As of December 31, 2011, we had entered into forward contracts with financial institutions to acquire the following currencies: Notional Value USD Equivalent Currency (in thousands) (in thousands) Highest Rate Lowest Rate Philippine Peso 5,295,272 120,125 44.61 42.64 Canadian Dollar 67,700 66,440 1.05 0.97 Indian Rupee 992,750 18,259 56.30 4636 Euro 9,000 11,666 1.30 1.30 While we have implemented certain strategies to mitigate risks related to the impact of fluctuations in currency exchange rates, we cannot ensure that we will not recognize gains ar losses from international transactions, as this risk is part of transacting business in an international environment. Not every exposure is or can be hedged and, where hedges are put in place based on expected foreign exchange exposure, they are based on forecasts for which actual results may differ from the original estimate. Failure to successfully hedge or anticipate currency risks properly could affect our consolidated operating results. Market Risk Market risk is the sensitivity of income to changes in interest rates, foreign exchanges, commodity prices, equity prices, and other market-driven rates or prices. Changes in market rates may impact the banks' LIBOR rate or prime rate. For instance, if either the LIBOR or prime rate were to increase or decrease by one percentage point (1%), our annual interest expense would change by approximately $0.5 million based upon our total credit facility. � 39 • m�4m� •f;lP•//r'•\TT�P,-�\;m,,,�„h��\A,,,,Tlata\T.nralUViicrncnft\Winrinwc\Temnnrarv Tnternet�Fil___ 5/22/2012 Form 10-K Page 41 of 75 � Tabte of Co�tents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Shareholders of Stream Global Services, Inc. We have audited the accompanying consolidated balance sheets of Stream Global Services, Inc. as of December 31, 2011 and 2010, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the years then ended. These fmancial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these fmancial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over fmancial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall fmancial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the fmancial statements referred to above present fairly, in all material respects, the consolidated financial position of Stream Global Services, Inc. at December 31, 2011 and 2010, and the consolidated results of its operations and its cash flows for each of the years then ended, in conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young LLP . Boston, Massachusetts February 2g, 2012 40 • mhtml•file•U(�'•\Ticare\imiirnh��\Ar�r�Tlata\T nra��l��Tirrnenft��x7in�ncx�e\TPmr.�rorc� Tntcrnn� �'ii� S/77/7(117 Form 10-K Page 42 of 75 Tabte af Conte►�ts • STREAM GLOBAL SERVICES, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) December 31, � 2011 2010 ASSetS Current assets: Cash and cash equivalents $ 24,586 $ 18,489 Accounts receivable, net of allowance for bad debts of $263 and $714 at December 31, 2011 and 2010, respectively 165,963 180,211 Income taxes receivable 644 1,154 Deferred income taxes 13,061 15,665 Prepaid expenses and other current assets 14,117 20,371 Total current assets 218,371 235,890 Equipment and fixtures, net 87,611 80,859 Deferred income taYes 3,711 3,975 Goodwill 226,749 226,749 Intangible assets, net 66,671 83,674 Other assets 14,921 16,838 Total assets $ 618,034 $647,985 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 13,827 $ 10,758 Accrued employee compensation and benefits 60,310 59,797 • Other accrued expenses 28,429 29,989 Income taxes payable 1,919 1,796 Current portion of long-term debt 453 96 Current portion of capital lease obligations 10,743 9,100 Other liabilities 6,251 7,072 Total current liabilities 121,932 118,608 Long-term debt, net of current portion 239,774 217,199 Capital lease obligations, net of current portion 9,964 10,491 Deferred income taxes 19,103 21,838 Other long-term liabilities 13,817 20,131 TotalIiabilities 404,590 388,267 Stockholders' equity: Preferred stock, par value $0.001 per share, shares autharized-1,000 shares authorized; issued and outstanding-0 shares - - Voting common stock, par value $0.001 per share, shares authorized-200,000 shares authorized; outstanding shares-75,948 and 80,101 shares at December 31, 2011 and 2010, respectively 80 80 Non-voting common stock, par value $0.001 per share, shares authorized-11,000 shares authorized; issued and outstanding shares-0 shares - - Additional paid-in-capital 346,525 344,192 Treasury stock, at cost (4,249 and 40 shares) (13,645) - � � Accumulated deficit � � � (107,084) (83,447) Accumulated other comprehensive loss (12,432 (1,107 Total stockholders' equity 213,444 259,718 Total liabilities and stockholders' equity $ 618,034 $647,985 See accompanying notes to consolidated financial statements. • 41 mhtml•fila•//(�'•\TTcare\imnrnl�v\Ar�r�T�ata\i.nral\Micrncnft\Winrinwc�Temnnr�YVTnteTtle,tF1�___ 5�22�2��2 Form 10-K Page 43 of 75 � Tabie of Co�ete�ts � STREAM GLOBAL SERVICES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS � (In thousands, except per share amounts) December 31, 2011 2010 Revenue $846,907 $800,173 Direct cost of revenue 494,426 469,537 Gross profit 352,481 330,636 Operating expenses: Selling, general and administrative expenses 266,252 265,705 Severance, restructuring and other charges, net 10,769 11,899 Depreciation and amortization expense 60,322 65,903 Total operating expenses 337,343 343,507 Income (loss) from operations 15,138 (12,871) Other expenses, net: Foreign currency transaction loss (gain) 3,902 (508) Interest expense, net 28,780 30,720 Total other expenses, net 32,682 30,212 Loss before provision for income taxes (17,544) (43,083) Provision for income taxes 6,093 10,392 Net loss $ 23,637 $ (53,475) Net loss per share: Basic and diluted $ (0.30) $ (0.67) • Shares used in computing per share amounts: Basic and diluted 77,966 79,905 See accompanying notes to consolidated fmancial statements. 42 • _ ml�+ml•�ln•//( Ar..-.Tl.�+.>\T .�...�1\Ad;..,.,.�.,.{'+\�I7;.,.7.�.�.�,\To,......,.,......, T. L';1 C/7'7/7(117 Form 10-K Page 44 of 75 Tab1e of Cc�ntents � STREAM GLOBAL SERVICES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In thousands) Common Stock Accumulated Additional Other Par Paid in Treasury Accumulated Comprehensive Shares Value Capital Stock DeScit Income (Loss) Total Balances at December 31, 2009 79,616 $ 80 $ 337,035 $ — $ (29,972) $ (3,732) $303,411 Netloss — — — (53,475) — (53,475) Currency translation adjustrnent — — — — (2,820) (2,820) Unrealized gain on derivatives, net of tax — — — — 5,445 5,445 Comprehensive loss — — — — — (50,850) Common stock issued for pre-emptive rights 25 — 80 — g0 Warrant exercises 381 — 2,306 — — 2,306 Stock option exercises and vesting of restricted stock . 119 — 192 — — 192 Stock-based compensation expense — — 6,429 — — 6,429 Taxes withheld on restricted stock (40) — (242) — — �242) Repurchaseofwarrants — — (1,608) — — 1608 Balances at December 31, 2010 80,101 $ 80 $ 344,192 $ — $ (83,447) $ (1,107) $259,718 Netloss — — — — (23,637) — (23,637) Currency translation adjustment — — — (3,561) (3,561) Unrealized loss on derivatives, net of tax — — — — — (7,764) (7,764) Comprehensive loss — — — — — — (34,96�) Vesting of restricted stock 56 — — — — — — Stock-based compensation expense — — 2,356 — — — 2,356 T�es withheld on restricted stock (9) — (23) — — — �23) Repurchase of common stock (4,200 — — (13,645 — — (13,645) Balances at December 31, 2011 75,948 $ 80 $ 346,525 $ 1( 3,645 $ (107,084 $ (12,432 $213,444 _ • See accompanying notes to consolidated financial statements 43 • .�.�.�.4m�•��o•//(�•�TTonro�im»�-.�.�� /�r�r�rl.�4o�T �no��/Tinrnanf4�«Iiri Tntarnat�Fi� ��77�7n�7 Form 10-K Page 45 of 75 � TabEe of Contents STREAM GLOBAL SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year ended December 31, � � � � � 2011 2010 Operating Activities: Netloss $(23,637) $(53,475) Adjushnents to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 60,322 65,903 Amortization of bond discount and debt issuance costs 3,997 3,579 Deferred taaces 811 3,125 Loss on impairment or disposal of assets 455 2,884 Noncash stock compensation 2,356 6,429 Changes in operating assets and liabilities: Accounts receivable 13,932 (8,401) Income taxes receivable (885) 1,732 Prepaid expenses and other current assets 800 4,050 Other assets 744 1,398 Accounts payable 3,092 (2,539) Accrued expenses and other liabilities 10 534) (2,241) Net cash provided by operating activities 51,453 22,444 Investing Activities. Additions to equipment and fixtures, net of disposais 39,312) 22,904 Net cash used in investing activities (39,312) (22,904) Finaucing activities: Net bonowings on line of credit 20,250 9,004 Proceeds from issuance of debt 1,300 - Payments on long-term debt ' (231) (90) Payment of capital lease obligations (10,685) (7,529) � Proceeds from capital leases = 1,669 Proceeds from exercise of warrants 2,307 Proceeds from issuance of common stock related to pre-emptive rights and stock options - 2(g Tax payments on withholding of restricted stock (23) (233) Re-purchase of warrants (1,608) Repurchase of common stock 1( 3 645) - Net cash provided by (used in) financing activities (3,034) 3,788 Effect of exchange rates on cash and cash equivalents (3,010) 233 Net increase in cash and cash equivalents 6,097 3,561 Cash and cash equivalents, beginning of period 18,489 14,928 Cash and cash equivalents end of period $ 24,586 $ 18,489 Supplemental cash flow information: Cash paid forinterest $ 25,908 $ 25,664 Cash paid for income taaces 9,776 10,550 Noncash financing activities: Capital lease financing 11,772 8,219 See accompanying notes to consolidated fmancial statements. 44 i m}tfm�•f�A•��('•�1Tcerc�imttrn}�v�At�t�Tlata�T n�a1�l��Ti�rnenf+\Z7Uinrin�x�c\Tamr�nrarc� Tntarnat Fil S/77/7(117 Form 10-K Page 46 of 75 ,,, �'able af Contents • STREAM GLOBAL SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 20ll (In thousands, except per share amounts) Note 1—Our History and Summary of Various Transactions Stream Global Services, Inc. ("we", "us", "Stream", the "Company" or "SGS") is a corporation organized under the laws of the State of Delaware. We were incorporated on Ju�1e 26, 2007. We consummated our initial public offering in October 2007. In October 2009, we acquired EGS Corp., a Philippines corporation ("EGS") in a stock-for-stock exchange. More than 90% of our outstanding common stock is indirectly owned by Ares Corporate Opportunities Fund II, L.P. ("Ares"), EGS - Dutchco B.V. (`BGS Dutchco") and NewBridge International Investments Ltd. ("NewBridge"). Note 2—Our Business We are a leading global business process outsourcing ("BPO") service provider specializing in customer relationship management ("CRM"), including sales, customer care and technical support primarily for Fortune 1000 companies. Our clients include leading computing/hardware, telecommunications service providers, software/networking, entertainment/media, retail, travel and financial services companies. Our service programs are delivered through a set of standardized best practices and sophisticated technologies by a highly skilled multilingual workforce with the ability to support 35 languages across 491ocations in 22 countries. We continue to expand our global presence and service offerings to increase revenue, improve operational efficiencies and drive brand loyalty for our clients. Note 3—Basis of Presentation Our consolidated financial statements of SGS as of December 31, 2011 and 2010, and for the years ended December 31, 2011 and 2010, respectively, include our accounts and those of our wholly owned subsidiaries. All significant intercompany • transactions and balances have been eliminated in consolidation. In compliance with ASC 810, Consolidation ("ASC 810"), the Company analyzes its contractual arrangements to determine whether they represent variable interests in a variable interest entity ("VIE") and, if so, whether the Company is the primary beneficiary. Although the Company does not have ownership of the voting shares, ASC 810 requires the Company to consolidate a VIE if the Company is determined to be the primary beneficiary. The Company is the primary beneficiary of a VIE in China, which it consolidates. Certain reclassif cations have been made in the December 31, 2010 consolidated fmancial statements to conform to the 2011 fmancial statement presentation. The reclassifications have no impact on net loss. For the year ended December 31, 2010: As previously reported in ' December 31, 2010 financial Reclassification December 31, 2010 statements amounts as reclassified Direct cost of revenue 471,428 (1,891)(1) 469,537 Foreign currency loss (gain) (2,399) 1,891(1) (508) (1) Reclassification of realized gains on effective cash flow hedges from Foreign currency loss (gain) to Direct cost of revenue in our consolidated statement of operations. We have evaluated subsequent events through the date these fmancial statements were issued. 45 • mhtml•fila•//(`•\TTeare\imnrnhv\Ar�nTlata\T nral\1Viicrnenft\Winrjnwc�TPmt�nrAYV TT1teY11etF'1�___ S�ZZ�Zn�2 Form 10-K Page 47 of 75 ! TabEe af Contents Note 4—Summary of Significant Accounting Policies Use of Estimates The preparation of the Consolidated Financial Statements in conformity with accounting principles generally accepted in the U.S. ("GAAP") requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. On an on-going basis, we evaluate our estimates including those related to revenue recognition, the allowance for accounts receivable, derivatives and hedging activities, income taxes including the valuation allowance for deferred taac assets, valuation of long-lived assets, self-insurance reserves, contingencies, litigation and restructuring liabilities, and goodwill and other intangible assets. We base our estimates on historical experience and an various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ materially from these estimates under different assumptions or conditions. Cash Equivalents We consider all highly liquid investments with maturities at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents of $15,762 and $16,906 December 31, 2011 and 2010, respectively, were held in international locations and may be subject to additional taxes if repatriated to the United States. Cash balances held in foreign currency are also subject to fluctuation in their exchange rate if and when converted to U.S. Dollars. Accounts Receivable and Concentration of Credit Risk Financial 'mstruments that potentially subject us to significant concentrations of credit risk are principally accounts receivable. Services are provided to clients �hroughout the world and in various currencies. Amounts included in accounts • receivable are incurred and billable at December 3 l, 201 L We extend credit to our clients in the normal course of business. We do not require collateral from our clients. We evaluate the collectability of our accounts receivable based on a combination of factors that include the payment history and financial stability of our clients, our clients' future plans and various market conditions. In circumstances where we are aware of a specific client's inability to meet its fmancial obligations, we record a specific reserve against amounts due. Historically, we have not experienced significant losses on uncollectible accounts receivable. We have a reserve for doubtful accounts and other of $263 and $714 as of December 31, 2011 and 2010, respectively. We recorded a bad debt expense of zero and $162 for the years ended December 31; 2011 and 2010, respectively. Equipment & Fixtures and Operating Leases Equipment and fixtures are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Furniture and fixtures are depreciated over a five-year life, software over a three- to five-year life and equipment generally over a three- to five-year life. Leasehold improvements are depreciated over the shorter of their estimated useful life or the remaining term of the initial lease. Assets held under capital leases are recorded at the lower of the net present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease. Amortization expense is computed using the straight-line method over the shorter of the estimated useful lives of the assets or the period of the related lease and is recorded in depreciation and amortization expense. Repair and maintenance costs are expensed as incurred. The carrying value of equipment and fixtures to be held and used is evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with the authoritative guidance. An asset is considered to be impaired when the sum of the undiscounted future net cash flows expected to result from the use of the asset and its eventual disposition does not exceed its carrying amount. The amount of the impairment loss, if any, is measured as the amount by which the carrying value of the 46 • mhtml•�1P•//(�•�TTcare�imnrnl�v\ Or�r�Tlata\T nral\l��Ti�rnenft\UUinrintx�c�Tr>mr�nrarv Tntarnat Fi� S/77/7(�17 Form 10-K Page 48 of 75 Tab(e af Car�te��ts � asset exceeds its estimated fair value, which is generally determined based on appraisals or sales prices of comparable assets. Occasionally, we redeploy equipment and fixtures from underutilized centers to other locations to improve capacity utilization if it is determined that the related undiscounted future cash flows in the underutilized centers would not be sufficient to recover the carrying amount of these assets. All of our facilities are leased with lease terms ranging from less than one year to eight years. Amortization of leasehold improvements is recorded ratably over the lesser of the life of the lease or the economic life of the assets. Where we have negotiated rent holidays and landlord or tenant incentives, we record them ratably over the initial term of the operating lease, which commences upon execution of the lease. We estimate fair value of our asset retirement obligations associated with the retirement of tangible long-lived assets such as property and equipment when the long-lived asset is acquired, constxucted, developed or through normal operations. We depreciate leasehold improvements over the initial lease term. Goodwill and Other Intangible Assets In accordance with the authoritative guidance goodwill is reviewed for impaument annually and on an interim basis if events or changes in circumstances between annual tests indicate that an asset might be impaired. Impairment occurs when the carrying amount of goodwill exceeds its estimated fair value. The impairment, if any, is measured based on the estimated fair value of the reporting unit. We operate in one reporting unit, which is the basis for impaument testing of all goodwill. Intangible assets with a fmite life are recorded at cost and amortized using their projected cash flows over their estimated useful life. Client lists and relationships are amortized over periods of up to ten years, market adjustments related to facility leases are amortized over the term of the respective lease and developed software is amortized over five years. Brands and trademarks are not amortized as their life is indefinite. In accordance with the authoritative guidance, indefmite lived intangible assets are reviewed for impairment annually and on an interim basis if events or changes in circumstances between annual tests indicate that an asset might be impaired. The carrying value of defmite lived intangibles is evaluated for impairment whenever events or changes in circumstances �• indicate that the carrying amount may not be recoverable in accordance with the authoritative guidance. An asset is considered to be impaired when the sum of the undiscounted future net cash flows expected to result from the use of the asset and its eventual disposition does not exceed its carrying amount. The amount of the impaurnent loss, if any, is measured as the amount by which the carrying value of the asset exceeds its estimated fair value, which is generally determined based on appraisals or sales prices of comparable assets. Financial Information Regarding Segment Reporting We have one reportable segment and, therefore, all segment-related financial information required by the authoritative guidance is included in the consolidated financial statements. The reportable segment reflects our operating and reporting structure. Revenue Recognition � We recognize revenues as the related services are performed if evidence of an arrangement exists, delivery of the service has occurred, the fee is fixed or determinable, and collection is considered probable. If any of those criteria are not met, revenue recognition is deferred until such time as all of the criteria are met. Our client contracts generally specify the metrics by which we bill for our services and the service requirements. We may be paid on a per minute, per hour, per contact, per month, per full-time employee, or per transaction basis. 47 �� m}�4m�•fi�a•//(�'•UTanro�im�.rr�l�v� Dr�r�Tlo4��T �nol�Aifinr�o�f+\�xTinrin.vo\Tr>mv�nran� Tntarnat Fi� 5�77�7(��7 Fortn 10-K Page 49 of 75 � Tabl� of eontents Direct Cost of Revenue We record the costs specifically associated with client programs as direct cost of revenues. These costs include direct labor wages and benefits of service professionals as well as reimbursable expenses such as telecommunication charges. The most significant portion of our direct cost of revenue is attributable to compensation, benefits and payroll t�es. Operating Expensc�s Our operating expenses consist of all expenses of operations other than direct costs of revenue, such as payroll and related costs, stock-based compensation, information technology, telecommunications, sales and marketing costs, fmance, human resource management and other functions and service center operational expenses such as facility, operations and training and depreciation and amortization. Income '�'axes We recognize income taxes in accordance with the authoritative guidance, which requires recognition of deferred assets and liabilities far the future income taac consequence of transactions that have been mcluded in the consolidated fmancial statements or taY returns. Under this method deferred taac assets and liabilities are determined based on the difference between the carrying amounts of assets and liabilities for fmancial reporting purposes, and the amounts used for income tax, using the enacted tax rates for the year in which the differences are expected to reverse. We provide valuation allowances against deferred tax assets whenever we believe it is more likely than not, based on available evidence, that the deferred tax asset will not be realized. Further we provide for the accounting for uncertainty in income taxes recognized in fmancial statements and the impact of a tax position in the financial statements if that position is more likely than not of being sustained by the taYing authority. Earnings of our foreign subsidiaries are designated as indefinitely reinvested outside the U.S. If required for our � operations in the U.S., most of the cash held abroad could be repatriated to the U.S. but, under current law, would be subject to U.S. federal income taxes (subject to an adjustment for foreign tax credits). Currently, we do not anticipate a need to repatriate these funds to our U.S. operations. Contingencies � � � � _� We consider the likelihood of various loss contingencies, including non-income taY and legal contingencies arising in the ordinary course of business, and our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued in accordance with the authoritative guidance, when it is prob�ble that a liability has been incurred and the amount of loss can be reasonably estimated. We regularly evaluate cwirent informatiori available to determine whether such accruals should be adjusted. Foreign Currency Translation and Derivative Instruments The assets and liabilities of our foreign subsidiaries whose functional currency is their local currency, are translated at the exchange rate in effect on the reporting date, and income and expenses are translated at the average exchange rate during the period. The net effect of translation gains and losses is not included in determining net income (loss), but is reflected in accumulated other comprehensive income (loss) as a separate component of stockholders' equity until the sale or until the liquidation of the net investment in the foreign subsidiary. Foreign currency transaction gains and losses are included in determining net income (loss), and are categorized as "Other income (expense)". We account for financial derivative instruments utilizing the authoritative guidance. We generally utilize forward contracts expiring within one to 18 months to reduce our foreign currency exposure due to exchange rate fluctuations on forecasted cash flows denominated in non-functional foreign currencies. Upon proper � 48 .... 1 .� , ... 1. F;t�.//r.�rr , . , .M , .�:. ,, . ,,, ... , . L , �.\A«..T 1, . 4, .\T , .....11T.T:.,...,,...Ci\�I7S�.7.,"".\T_W�.;_„�.T.,.a,...«„tT:l C/'l7/<1lltrl Form 10-K Page 50 of 75 , Tab1e of �onte��ts � designation, certain of these contracts are accounted for as cash-flow hedges, as defined by the authoritative guidance. These contracts are entered into to protect against the risk that the eventual cash flows resulting from such transactions will be adversely affected by changes in exchange rates. In using derivative fmancial instruments to hedge exposures to changes in exchange rates, we expose ourselves to counterparty credit risk. We do not believe that we are exposed to a concentration of credit risk with our derivative fmancial instruments as the counterparties are well established institutions and counterparty credit risk information is monitored on an ongoing basis. All derivatives, including foreign currency forward contracts, are recognized in other current assets or other current liabilities on the balance sheet at fair value. Fair values for our derivative fmancial instruments are based on quoted market - prices of comparable instruments or, if none are available, on pricing models or formulas using current market and model assumptions. On the date the derivative contract is entered into, we determine whether the derivative contract should be designated as a cash flow hedge. Changes in the fair value of derivatives that are highly effective and designated as cash flow hedges are recorded in "Accumulated other comprehensive income (loss)", until the forecasted underlying transactions occur. To date we have not experienced any hedge ineffectiveness of our cash flow hedges that we intended to be effective. Any realized gains or losses resulting from the cash flow hedges are recognized together with the hedged transaction within "Direct cost of revenue". Cash flows from the derivative contracts are classified within "Cash flows from operating activities" in the accompanying Consolidated Statement of Cash Flows. Ineffectiveness is measured based on the change in fair value of the forward contracts and the fair value of the hypothetical derivatives with terms that match the critical terms of the risk being hedged. We may also enter into derivative contracts that are intended to economically hedge certain risks, even though we elect not to apply hedge accounting as defined by the authoritative guidance. Changes in fair value of derivatives not designated as cash flow hedges are reported in "Other income (expense)". Upon settlement of the derivatives not qualifying as cash flow hedges, a gain or loss is reported in "Other income (expense)". We formally document all relationships between hedging instruments and hedged items, as well as our risk management '.• objective and strategy far undertaking various hedging activities. This process includes linking all derivatives that are designated as cash flow hedges to forecasted transactions. We also formally assess, both at the hedge's inception and on an ongoing basis (as required), whether the derivatives that are used in cash flow hedging transactions are highly effective in offsetting changes in cash flows of hedged items on a prospective and retrospective basis. When it is determined that a derivative is not highly effective as a cash flow hedge or that it has ceased to be a highly effective hedge or if a forecasted transaction is no longer probable of occurring, we discontinue hedge accounting prospectively. At December 31, 2011, all hedges were determined to be highly effective, except for certain hedges where we elect not to apply hedge accounting as defined by the authoritative guidance. Our hedging program has been effective in all periods presented and the amount of hedge ineffectiveness has not been material. Hedge accounting is discontinued prospectively when (1) the derivative is no longer effective in offsetting changes in cash flow of a hedged item; (2) the derivative expires or is sold, terminated, or exercised; (3) it is no longer probable that the forecasted transaction will occur; (4) a hedged firm commitment no longer meets the defmition of a firm commitment; (5) the derivative as a hedging instrument is no longer effective; or (6) when assumed in purchase accounting. As of December 31, 2011 and 2010, we had approximately $216,491 and $233,183, respectively, of foreign exchange risk hedged using forward exchange contracts. As of December 31, 201 l, the forward exchange contracts we heid were comprised of $130,997 of contracts determined to be effective cash flow hedges and $85,493 of contracts for which we elected not to apply hedge accounting. 49 s.• ,v,L,4w.1•f;lo•//(`•\TT�o,��\im..rr.l�..\ A,.r.Tlo4o\T �nol\T�iTinr�o� ��`�IlY1l�l�[I�C��TPYY11'�l1NaM7 TtI�PTYIP� Fl� 5�77�7n� 7 Form 10-K Page 51 of 75 � Tabi� of Contents As of December 31, 2011 and 2010, the fair market value of these derivative instruments designated as cash flow hedges reflected an unrealized loss of $2,424 and a gain of $5,358, respectively. As of December 31, 2011, the fair market value of derivatives for which we elected not to apply hedge accounting reflected an unrealized loss of $1,078. As of December 31, 2011, $2,539 of unrealized losses, net of tax, may be reclassified from other comprehensive income to earnings within the next 12 months based on current foreign exchange rates. Included in other current liabilities is $84 of fair market value of derivatives designated as cash flow hedges that were acquired from a commercial bank in which one of our financial sponsors owns a non-controlling:interest. For the years ended December 31, 2011 and 2010, the Company had realized a loss of $2,878 and a gain of $1,041 respectively on hedges for which the Company elected to not apply hedge accounting. For the years ended December 31, 2o11 and 2010, the Company realized gains of $4,416 and $1,986 on hedges which were deemed effective cash flow hedges. During the years ended December 31, 2011 and 2010, the Company realized gains of $298 and $5,945 on hedges which were previously determined to be effective cash flow hedges. Fair Value of Financial instruments We implemented the authoritative guidance, for our fmancial assets and liabilities t1�at are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. � The following table presents information about our assets and liabilities and indicates the fair value hierarchy of the valuation techniques we utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determmed by Leve12 inputs utilize data points that are observable such as quoted prices, interest rates and yieId curves. Fair values determined by Leve13 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the • asset or liability: Quoted Prices in Significant Other Significant December 31, Active Markets Observable Unobservable 2011 (Level 1) Inputs (Leve12) (Leve13) Description Forward exchange contracts (3,502 — (3,502 — Total $ (3,502) $ — $ (3,502) $ — The fair values of our forward exchange contracts are determined through market, observable and corroborated sources. The carrying amounts reflected in the consolidated balance sheets for other current assets, accounts payable; and accrued expenses approximate fair value due to their short-term maturities. To the extent we have any outstanding borrowings under our revolving credit facility, the fair value would approximate its reported value because the interest rate is variable and reflects current market rates. Net Income (Loss) Per Share and Accumulated Other Comprehensive Loss The following common stock equivalents were excluded from computing diluted net loss per share attributable to common stockholders because they had an anti-dilutive impact: Year Ended Year Ended December 31, 2011 December 31, 2010 Options to purchase common stock 5,438 6,308 Pre-emptive rights at $6.00 per share — 17,852 Publicly held warrants at $6.00 per share — 7,327 Restricted stock units 81 320 Total options, warrants and restricted stock units exercisable into common stock 5,519 31,807 s 50 « c/�l�l/'ln7�l Form 10-K Page 52 of 75 Tab(e of Cantents , On October 17, 20ll, our warrants and pre-emptive rights expired in accordance with their terms. Accumulated other comprehensive income (loss) consists of the following: December 31, December 31, � 2011 � � 2010 Unrealized (loss) gain on forward exchange contracts, net of tax $ (2,406) $ 5,358 Cumulative translation adjustment (10,026) 6,465) � $ �12,432� $ (i,lo�) Market Lease Reserve We assumed facility leases in connection with the acquisition of SHC and EGS. Under the authoritative guidance, the operating leases are to be recorded at fair value at the date of acquisition. We determined that certain of the facility lease contract rates were in excess of the market rates at the date of acquisition, resulting in an above market lease reserve. The above and below market lease values for the assumed facility leases were recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each operating lease and (ii) management's estimate of fair market lease rates for each corresponding operating lease, measured over a period equal to the remaining term of the lease. T`he market lease reserves are amortized as a reduction of base rental expense over the remaining term of the respective leases. For the years ended December 31, 2011 and 2010, the amortization of the market lease reserve, including imputed interest, was $3,298 and $4,412, respectively. Stock-Based Compensation At December 31, 2011 and 2010, we had a stock-based compensation plan for employees and directars. We adopted the ,• fair value recognition provisions of the financial guidance at our inception. For share-based payments, the fair value of each ' grant (time-based grants with performance acceleration) is estimated on the date of grant using the Black-Scholes-Merton option valuation. Stock compensation expense is recognized on a straight-line basis over the vesting term, net of an estimated future forfeiture rate. The Company estimates the forfeiture rate annually based on its historical experience of vested and forfeited awards. Recent Accounting Pronouncements In September 2011, the Financial Accounting Standards Board ("FASB") issued an update, Accounting Standards Update ("ASU") No. 2011-08, to existing standards on Intangibles - Goodwill and Other (Accounting Standards Codification ("ASC") Topic 350). ASU No. 2011-08 was issued to simplify the testing of goodwill for impaument by allowing an optional qualitative factors test to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impaument test already included in ASC Topic 350. ASU No. 2011-08 is effective for annual and interim goodwill tests performed for fiscal years after December I5, 2011. We will adopt the standard in 2012, and it will not have a significant impact on our consolidated financial statements or results of operations. In June 2011, the FASB amended its guidance on the presentation of comprehensive income. Under the amended guidance, an entity has the option to present comprehensive income in either one continuous statement or two consecutive fmancial statements. A single statement must present the components of net income and total net income, the components of other comprehensive income and total other comprehensive income, and a total for comprehensive income. In a two-statement approach, an entity must present the components of net income and total net income in the first statement. That statement must be immediately followed by a financial statement that presents the components of other comprehensive income, a total for other comprehensive income, and a total 51 ---- =s ..,.1.�....1.F:1,..//!+.\TT..,.«..\;.«.,««L.�,\ A««Tl..+..\T .�...,1\AiT;...-��...f'+\�]IT:.-.r1.�.i�c.�Tnmr�nrnn� Tntr rnnt Tii� 5�77�'7n� 7 Form 10-K Page 53 of 75 � "Tab[e of Cos�tents for comprehensive income. The option under the current guidance that permits the presentation of components of other comprehensive income as part of the statement of changes in stockholders' equity has been eliminated. The amendment becomes effective on January 1, 2012 and is applied retrospectively. This guidance will not have an impact on our fmancial position, results of operations, or cash flows as it is disclosure-only in nature. Note S--Goodwill and Intangibles Goodwill and7ndefinite Lived Intangible Assets We evaluate goodwill and indefinite lived intangible assets for impairment annually and whenever events or changes in circumstances suggest that the carrying value of goodwill and indefmite lived intangible assets may not be recoverable. As approximately 92% of our common stock is collectively indirectly owned by Ares, EGS Dutchco and NewBridge, who collectively appoint the majority of our Board of Directors, our stock is thinly traded. Accordingly, we utilize internally developed models to estimate our expected future cash flow and utilize a discounted cash flow technique to estimate the fair value of the Company in connection with our evaluation of goodwill and indefmite lived intangible assets. No impanment of goodwill and indefinite lived intangible assets resulted from our most recent evaluation of goodwill and indefinite lived intangible assets for impairment, which occurred in the fourth quarter of 2011, nar do we believe any indicators of impaument have occurred. Our next annual impaument assessment will be conducted in the fourth quarter of 2012. Intangible Assets We review identified intangible assets for impairment whenever events or changes in circumstances indicate the carrying value of the assets may not be recoverable. Recoverability of these assets is measured by comparison of their carrying value to future undiscounted cash flows that the assets are expected to generate over their remaining economic lives. If such assets are considered to be impaired, the impairment to be recognized in the statement of operations is the amount by which the carrying value of the assets exceeds their fair value, determined by either a quoted market price, if any, or a value . determined by utilizing a discounted cash flow technique. Intangibles and amortization Intangible assets at December 31, 2011 consist of the following: Weighted average Estimated remaining Gross Accumulated usefullife life cost amortization Net Customer relationships Up to 10 years 5.9 98,749 49,211 49,538 Technology-based intangible assets 5 years 1.8 2,311 1,278 1,033 Trade names indefmite indefinite 16,100 — 16,100 117,160 50,489 66,671 Future amortization expense of our intangible assets for the next five years is expected to be as follows: 2012 2013 2014 2015 2016 Amortization 14,331 11,497 7,571 5,652 4,435 Note 6—Warrants and Treasury Stock At the time of our IPO, we sold 31 units, each consisting of one share of our common stock and one warrant entitling the holder to purchase one share of our common stock at an exercise price of $6.00 per share. The warrants became exercisable beginning on October 17, 2008 and expired on October 17, 2011. In 2011, we repurchased from two of our former directors 4,200 shares of our common stock with a purchase price of $3.25 per share. The shares of common stock were transferred to treasury stock. i 52 mhtm�•fi�a•//(�'•�TTcr>rc�imnrnhv�Ar�r�Tlata�T n�al\A�Tirrnenft\�x7inrinu�c�Tamr�nrarv Tntarnat Fil 5/77/7(117 Form 10-K Page 54 of 75 Table of Conte�ts � Note 7—Severance, Restructuring and Other Charges During the year ended December 31, 2011 we recorded a net expense of $10,769, primarily related to salary continuation related to reductions in workforce that occurred in the second and third quarter of 2011, direct third party transaction related expenses incurred related to the review and pursuit of business development related activities, litigation expenses and the release of lease exit liabilities established at one of our facilities. During the year ended December 31, 2010 we recorded charges of $11,899, primarily related to lease exit liabilities established in vacated locations and charges related to changes in leadership and management positions within the company. Severance, restructuring and other charges, net, consist of the following: Year Ended December 31, 2011 2010 Severance related to reductions in non-agent workforce $11,079 $ 6,501 Lease exit charges, net 7 3,443 Asset impairment charge 275 1,746 Transaction related expense 39 209 Litigation settlements 631) — Severance, restructuring and other charges, net $10,769 $11,899 A_rollforward of the activity in the Company's restructuring liabilities, which are included in other current liabilities, is as follows: Reduction in work-force Closure of call • and severance centers Total � Balance at December 31, 2010 $ 2,491 $ 2,807 $ 5,298 Expense 11,196 946 12,142 casn Pa�a (1 i,62�> �s9�� (iz,s24� Reversals (1) (115 (1,421 (1,536) Balance at December 31, 2011 $ 1,945 $ 1,435 $ 3,380 (1) As previously disclosed in the first quarter of 2011, we reversed a previously recorded lease exit reserve. ` Note 8—Equipment and Fixtures, Net Equipment and fixtures, net, consist of the following: December 31, December 31, 20ll 2010 Furniture and fixtures $ 15,366 $ ll,161 Building improvements 47,870 36,196 Computer equipment 52,560 37,200 Software 30,920 21,935 Telecom and other equipment 54,241 46,519 Equipment and fixtures not yet placed in service 1,577 1,232 $ 202,534 $ 154,243 Less: accumulated depreciation 114 923) 73 384) $ 87,611 $ 80,859 53 t,. „, �'t�TYI�•T1�P•��r•�TTOPTC�tYYl17YY1�V� A11Y11 ,AtA�T nral\l��ii�rncnft\Winrinwc\TPmnnrarv TnternP.t F1L__ S/ZZ/�n� 7 Form 10-K Page 55 of 75 • Tab(e of Contents Note 9-Accrued Employee Compensation and Benefits Accrued employee compensation and benefits consist of the following: December 31, December 31, 2011 2010 Compensation related amounts $ 31,477 $ 31,805 Vacation liabilities 12,534 12,646 Medical and dental liabilities 2,284 1,860 Employer taYes 2,284 2,825 Retirement plans 10,112 8,146 Other benefit related liabilities 1,619 2;515 $ 60,310 $ 59,797 Note 10-0ther Accrued Expenses and Other Liabilities Other accrued expenses consist of the following: December 31, December 31, 20ll 2010 Professional fees $ 4,364 $ 7,151 Accrued interest 5,963 5,921 Occupancy expense 1,879 2,250 Technology expense 2,623 3,116 Forward exchange contracts 3,605 126 Other accrued expenses 9,995 11,425 • $ 28,429 $ 29,989 Other liabilitiea consist of the following: December 31, December 31, 2011 2010 Lease exit liability $ 1,083 $ 1,743 Deferred revenue 1,397 365 Market lease reserves 1,639 3,930 Other 2,132 1,034 Total other current liabilities $ 6,251 $ 7,072 Other long-term liabilities consist of the following: Decem6er 31, December 31, Deferred rent zoii 2oio $ 1,755 $ 1,433 Accrued income taxes 10,329 12,268 Market lease reserves 978 2,750 Asset retirement obligation - 2,053 Other 755 1,627 Total other long-term liabilities $ 13,817 $ 20,131 We establish asset retirement obligations where required by the leases of our facilities. During the fourth quarter, certain lessors agreed that restoration of the facilities was not required restored and amended the leases to remove this requirement. , Accordingly, as the leasehold improvements at these locations were fully depreciated, the amount of the asset retirement obligations of $1.4 million were reversed into income. • 54 � , v .l.4. ti ,l. � ;l v .// l 7.1 TTn , .«�\: , . , .. , .... ,1, . , \A«.:.Tl , .� „ \T , . ,,,, 1\T�T:,...,.,,..F+1�i7.«,�.,__.,.\T._W�,..,,.....T«4,..«,.,.�L`:t� C/'17/!1/�1�1 . . Form 10-K Page 56 of 75 Tabie af Cont��ts � Note 11—Long-Term Debt and Revolving Credit Facility Pursuant to an indenture dated as of October 1, 2009 (the "Indenture"), among Stream, certain of our subsidiaries and Wells Fargo Bank, National Association, as trustee, we issued $200 million aggregate principal amount of 11.25% Senior Secured Notes due 2014 (the "Notes") at an initial offering price of 95.454% of the principal amount, the proceeds of which were used to pay off the debt from our Fifth Amended and Restated Revolving Credit, Term Loan and Security Agreement, dated as of January 8, 2009, as amended (the "PNC AgreemenP'), with PNC Bank, National Association ("PNC") and other signatories thereto along with debt acquired from EGS. In addition, we and certain of our subsidiaries (collectively, the "Borrowers") entered into a credit agreement, dated as of October l, 2009 (the "Credit Agreement"), as amended by the First Amendment to Credit Agreement dated June 3, 2011 and Second Amendment to Credit Agreement dated November 1, 2011, with Wells Fargo Capital Finance, LLC, as agent and co-arranger, and Goldman Sachs Lending Partners LLC, as co-arranger, and each of the lenders party thereto, as lenders, provid'mg for revolving credit fmancing (the "ABL Facility") of up to $100 million, including a$20 million sub-limit for letters of credit. The ABL Facility has a maturity of four years at an interest rate of Wells Fargds base rate plus 375 basis points ar LIBOR plus 400 basis points at our discretion. We capitalized fees of $7,815 and $3,929 associated with the Notes and the Credit Agreement, respectively, at the inception of these agreements that are being amortized over their respective lives. We amortized into expense for the year ended December 31, 2011, $1,400 and $983, respectively, of such capitalized fees. The ABL facility has a fixed charge coverage ratio financial covenant that is operative when our availability under the facility is less than $20 million. As of December 31, 2011, wehad $50,078 available under the ABL Facility. We are in compliance with the fmancial covenant in the Credit Agreement as of December 31, 2011. Substantially all of the assets of Stream excluding intangible assets secure the Notes and the ABL Facility. See Note 17 for Guarantor Financial Information. Long-term borrowings consist of the following: December 31, December 31, � 2011 2010 Revolving line of credit $ 44,755 $ 24,506 ` 11.25% Senior Secured Notes 200,000 200,000 Other 1,215 147 245,970 224,653 Less: current portion (453) (96) Less: discount on notes payable (5,743 (7,358 Long-term debt $ 239,774 $ 217,199 Minimum principal payments on long-term debt subsequent to December 31, 2011 are as follows: Total 2012 $ 453 2013 45,297 2014 200,220 2015 — 2016 — Total $245,970 We had Letters of Credit in the aggregate outstanding amounts of $5,167 at December 31, 2011 and $6,936 at December 31, 2010, respectively. We have $215 and $161 of restricted cash as of December 31, 2011 and 2010, respectively. 55 �`'. .�.L.4.v.1•�ln.//(�.\TTno.-�.\�m»rr�l��\ Ar�rTln4o\T �nol\Aifinrna��f+\�x7inrl�v�e\Tamr�nrarc� Tntarnct Fil 5�77�7n�7 Form 10-K Page 57 of 75 � Tab[e of Contents Note 12—Defined Contribution and Benefit Plans We have defined contribution and benefit plans in various countries. The plans cover all full-time employees other than excluded employees as defined in the plans. The participants may make pretax contributions to the plans, and we can make both matching and discreti4nary contributions. In.the years ended December 31, 2011 and 2010, we recarded $3,717 and $3,264 in matching contributions to the plans. Our defined benefit plans are funded primarily through annuity contracts with third party insurance companies. We do not have any material obligations under these plans other than funding the annual insurance premiums. � Note 13—Income Taxes The change in valuation allowances is net of the effect of foreign currency translation adjusiments included in accumulated other comprehensive income (loss). ..� The domestic and fareign source component of income (loss) before tax is as follows: December 31, December 31, 2011 2010 Total US $ (37,669) $ (68,897) Total Foreign 20,125 25,814 Total $ (1T,544) $ (43,083) The components of the income tax expense (benefit) are as follows: December 31, December 31, � 2011 2010 Current � Federal $ (1,742) $ 214 State (37) 326 Foreign 6,532 6,083 Total Current $ 4,753 $ 6,623 . Deferred - Federal $ 301 $ 1,141 State 24 308 Foreign 1,015 2,320 Total Deferred $ 1,340 $ 3,769 Total $ 6,093 $ 10,392 A reconciliation of the provision for income taxes with amounts determined by applying the statutory US Federal rate is as follows: December 31, December 31, 2011 2010 Federal t� rate $ (6,141) $ (15,�79) State and local income taxes, net of federal income tax benefits (8) 300 Foreign income taYed at different rate to US (8,698) (6,226) Change in valuation allowance � 16,012 23,393 Non deductible expenses related to foreign tax holiday 10,034 5,469 Credits and taY holidays (1,227) (312) Benefit of prior year net operating losses (1;288) — Reserve for uncertain tax positions (1,897) 1,009 Permanent items 122 1,787 Other differences (816 51 Provision for income taYes $ b,093 $ 10,392 � 56 ml�tml•�ln•//("•\TTanro\im��r�l��\ A+�rTloto\T �i..�l\TiT:�...��.�{}\�1�7�rrl��i�o\Tomr�roM� Tr4o�-�n4 T.'il G/')7/7l117 Form 10-K Page 58 of 75 Table of Ccant�nts , Deferred income taxes consist of the following: December 31, December 31, 2011 2010 Deferred tax assets: Accruals, allowances, and reserves $ 10,391 $ 7,423 TaY credits and loss carry forwards 31,018 22,798 Tangibles/Intangibles 7,416 10,982 Payables/Receivables 25,964 28,854 Market leases 717 1,162 Other 162 757 75,668 71,976 � � Valuation allowance � � � � 58,314) (40,603) Total deferred tax assets 17,354 31 Deferred tax liabilities: Intangible assets 20,655 28,337 Other liabilities — 4,671 Market leases — 564 Total deferred tax liabilities 20,655 33,572 Net deferred tax assets (liabilities) $ (3,301) $ (2,199) At December 31, 2011 and 2010, we had $53,696 and $33,200, respectively, of U.S. federal net operating losses, which will expire between 2024 and 2031. At December 31, 2011 and 2010, we had $28,902 and $17,174, respectively of state net operating losses, which will expire between 2014 and 2031. At December 31, 2011 and 2010, the foreign operating loss carry forwards includes $14,983 and $5,984 with no expiration date, and $6,906 and $7,816, respectively, of foreign-generated net E• operating losses, which will expire over various periods through 2022. The net operating losses are evaluated for each foreign jurisdiction and a full valuation allowance established where we believe' that it is more likely than not based on available evidence that the asset will not be realized. At December 31, 2011, we had $4,870 of credits available for carry forward which will expire between 2014 and 2030, and $883 of credits with no expiration date. We had recorded a valuation allowance of $58,314 and $40,603 for the periods ended December 31, 2011 and 2010, respectively, against net operating losses and deferred tax assets for which realization of any future benefit is uncertain due to taxable income limitations. We file income taa� returns in the U.S. federal jurisdiction and various state jurisdictions. We operate in a number of international tax jurisdictions and are subject to audits of income tax returns by tax authorities in those jurisdictions. We have : open audit periods beginning after 2002 through the current period in various jurisdictions and are currently under audit in : India, Canada, Spain and Italy. We have been granted various tax holidays in foreign jurisdictions. These tax holidays are given as an incentive to attract fareign investment and under agreements relating to such tax holidays we receive certain exemptions from taxation on income from export related activities. The income tax benefit from foreign tax holidays was $629 and $416 for the periods ended December 31, 2011 and December 31, 2010. Certain of the tax holidays are set to expire between 2013 and 2022. We currently benefit from income tax holiday incentives in the Philippines pursuant to the regisirations with the Philippine Economic Zone Authority, or PEZA, of our various projects and operations. Under such PEZA registrations, the income tax holiday of our various PEZA-registered projects in the Philippines expire at 57 i` • ,v,l-,�,�.l.�lo•//(�•\TT�or�\;,V,,,,-,-.1-,..\ A,-„-,Tlo4�\T .,�.ol\AiT;nrnonft\�x7inrinum\Tamt�nran� TnternetFil ri�77�7n�7 Form 10-K Page 59 of 75 � T�bde af Cc��tents staggered dates through 2013. However, if there is an opporlunity to renew or extend the holiday every attempt will be made to do so. In the event we are not able to renew, the expiration of these taac holidays will increase our effective income tax rate. As of December 31, 2011, approximately $87,116 of earnings held by our foreign subsidiaries are designated as indefmitely reinvested outside the U.S. If required for our operations in the U.S., most of the cash held abroad could be repatriated to the U.S. but, under current law, would be subject to U.S. federal income taxes (subject to an adjustment for foreign taa� credits). Currently, we do not anticipate a need to repatriate these funds to our U.S. operations. Reconciliation of the beginning and ending total amounts of unrecognized taY benefits (exclusive of interest and penalties) is as follows: Beginning balance January 1, 2011 $ 9,734 Additions to tax positions related to the current year 141 Additions for taac positions related to the prior year 787 Reductions for taY positions related to prior year (2,035) Lapse of statute of limitations (2,301 Ending balance December 31, 2011 $ 6,326 As of December 31, 2011 and 2010, the liability far unrecognized t� benefits (including interest and penalties) was $10,349 and $13,227, respectively, of which zero and $959, respectively, was recorded in current liabilities and $10,349 and $12,268, respectively, was recorded within other long term liabilities in our consolidated fmancial statements. Included in these amounts are approximately $1,599 for both years ending December 31, 2010 and 2011 of unbenefitted tax losses, which would be realized if the related uncertain tax positions were settled. As of January 1, 2011, we had reserved $2,635 for accrued interest and penalties, which had decreased to $2,423 as at December 31, 2011 and is included in the $10,349 of liability. We recognize accrued interest and penalties associated with uncertain taac positions as part of the income tax provision. The total � amount of net unrealizable taY benefits that would affect the income taac expense, if ever recognized in our consolidated financial statements is $8,750. This amount includes interest and penalties of $2,423. We estimate that within the next 12 months, our unrecognized tax benefits, and interest and penalties, could decrease as a result of settlements with taYing authorities or the expiration of the statute of limitations by $2,448 and $280, respectively. Note 14—Stock Options The 2008 Stock Incentive Plan (the "Plan") provides for the grant of incentive and nonqualified stock options. The Plan has authorized grants of up to 10,000 shares of common stock at an exercise price not less than 100% of the fair value of the common stock at the date of grant. The Plan provides that the options shall be outstanding for a period not to exceed ten years from the grant date. During the years ended December 31, 2011 and 2010, we granted options to purchase 2,130 and 2,769, respectively, shares of our common stock to our employees. Generally, options vest over a five-year period. At December 31, 2011 and 2010, respectively, 1,225 and 2,066 stock option grants were vested, zero and 35 had been exercised, and 3,000 and 3,404 had been forfeited. The per share fair value of options ganted was determined using the Black-Scholes-Merton model. 58 � "'1_��_1.rL_//!'�.\TT...,�_\.W" A��T..a_\T ___t\1�.�]______�\z1i7__�_____\rr______________r__�_____..rr71 c/lln/�nin Form 10-K Page 60 of 75 Tat�t� of Contents � The following assumptions were used for the option grants in the year ended December 31, 2011: Year Ended Year Ended December 31, December 31, 20ll 2010 Option term (years) 6.380 6375 Volatility 67.15%- 63.71%- 74.54% 67.88% Risk-free interest rate 1.15-2.62% 1.57-3.06% Dividend yield 0% 0% Weighted-average grant date fair value per option granted $ 1.74 $ 3.46 The option term for 2011 and 2010 was calculated under the simplified method for all option grants during for the year ended December 3 l, 2011 and 2010 as we do not have a long history of granting options. The volatility assumption is based on a weighted average of the historical volatilities for Stream and its peer group. The risk-free interest rate assumption was based upon the implied yields from the U.S. Treasury zero-coupon yield curve with a remaining term equal to the expected term in options. Stock options under the Plan during year ended December 31, 2011 were as follows: Weighted Average Weighted Weighted Remaining Average Average Contractual Num6er Exercise Fair Term of options Price Value (Years) Outstanding at December 31, 2010 6,308 $ 6.13 — 7.64 Granted 2,130 5.44 $ 1.74 • Exercised — — ` Forfeited or canceled 3,000 6.13 Outstanding at December 31, 2011 5,438 $ 5.86 7.56 At December 31, 2011, we had stock options to purchase 1,225 shares that were exercisable. The weighted-average exercise price of options currently exercisable is $6.09 at December 31, 2011. The weighted average remaining contractual term of options currently exercisable is 5.15 years at December 31, 201 l. The total fair value of options vested during the year ended December 31, 2011 was $2,099. There are 4,299 shares outstanding, vested, and expected to vest (including forfeiture adjusted unvested shares) with a weighted average exercise price of $5.91 and a weighted average remaining contractual term of 720 years. For the years ended December 3 l, 2011 and 2010, we recognized net stock compensation expense of $2,072 and $5,462 respectively, for the stock options in the table above. As of December 31, 2011 and 2010, the aggregate intrinsic value (i.e., the difference in the estimated fair value of our common stock and the exercise price to be paid by the option holder) of stock options outstanding, excluding the effects of expected forfeitures, were both zero. The aggregate intrinsic value of the shares of exercisable stock at December 31, 2011 and 2010 were both zero. The intrinsic value of options exercised for the years ended December 3 l, 2011 and 2010, was zero and $19, respectively. As of December 31, 2011 and 2010, there was $5,196 and $7,203, respectively, of unrecognized compensation cost related to the unvested portion of time-based arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 3.47 years from issue date. 59 ,.• .--�_.__i_r�__iri ... � .��. _ .r�_�_�r ---��w.r'------��ir'--�-----�m-_--_-__..�_7�+�......_�T:1 G/')'1Nh�'1 Form 10-K Page 61 of 75 � T�bie of Conte��ts Restricted stock award activity during the year ended December 31, 2011 was as follows: � � Weighted average Number of Grant- _ Shares Date Fair Value Unvested December 31, 2010 399 $ 6.37 Granted — Vested 50 6.60 Forfeited 268 634 Unvested December 31, 2011 81 $ 6.34 For the years ended December 31, 2011 and 2010, we recognized net compensation expense of $284 and $967, respectively, for the restricted stock awards. Restricted stock awards vest either quarterly over four years for grants in 2008 or semi-annually over five years for grants after 2008. Note 1�Commitments and Contingencies , Leases We lease our operating facilities and equipment under non-cancelable operating leases, which expire at various dates through 2020, and we have a capital lease obligation related to one facility. In addition, we have capital leases for furniture, computer and telephone equipment. The assets under capital lease are included in equipment and fixtures, net, on our consolidated balance sheets are as follows: December 31, December 31, • Furniture and fixtures 2oii 2oio Building improvements $ 12,884 $ 8,602 Computer equipment 10,262 8,085 � Telecom and other equipment 17,778 13,149 43,892 31,682 Less: accumulated depreciation (17,917) 10,597) $ 25,975 $ 21,085 Future minimum payments under capital and operating leases consist of the following at December 31, 20ll: Capital Operating Leases Leases 2012 12,175 43,846 2013 7,017 31,103 2014 , 2,588 25,523 2015 759 21,030 2016 492 15,629 Thereafter — 19,119 Total future minimum lease payments 23,031 $156,250 Less amount representing interest (2,324 20,707 Less current portion (10,743 Capital lease obligations, net of current portion $ 9,964 60 � . rv,l-.4.v,l.��o.//!'�.\TTno�..�,\:,�.,,.....1,.�..\ A«...Tl..�-..\T ,.,.;.1VTQ:,...._,..,.Ci1t77_.,..7.,__...1T...,.,.�.,......�. T...a,......,.�-L':1 � G/'17/'l/117 Form 10-K Page 62 of 75 Table of �ontec�ts �`� Rent expense is included in our consolidated statements of operations in selling, general and administrative expenses as follows: Year Year Ended Ended December 31, December 31, 2011 2010 Rent expense $ 49,265 $ 50,176 Market lease reserve amortization (3,455 (4,830 Net rent expense $ 45,810 $ 45,346 Contingencies We are self-insured with respect to group medical plan claims by our covered employees based in the United States, subject to an annual insured stop-loss limit on per-meinber payments of $125. We believe that our self-insurance reserves of $1,424 at December 31, 2011 and $953 at December 31, 2010 are adequate to provide for future payments required related to claims prior to that date. We are subject to various lawsuits and claims in the normal course of business. In addition, from time to time, we receive communications from government or regulatory agencies concerning investigations or allegations of non-compliance with laws or regulations in jurisdictions in which we operate. Although the ultimate outcome of such lawsuits, claims and investigations cannot be aseertained, we believe, on the basis of present information, that the disposition or ultimate resolution of such claims, lawsuits and/or investigations will not have a material adverse effect on our business, results of operations or financial condition. We establish specific liabilities in connection with regulatory and legal actions that we deem to be probable and estimable, and we believe that our reserves for such liabilities are adequate. We were a defendant in a putative class action captioned Kambiz Batmanghelich, on behalf of himself and all others similarly situated and on behalf of the �eneral public, v. Sirius XM Radio, Inc., filed in the Los Angeles County Superior '• Court on November 10, 2009, and removed to the United States District Court for the Central District of California. The Plaintiff alleged that Sirius XM Radio, Inc. recorded telephone conversations between Plaintiff and members of the proposed class of Sirius customers, on the one hand, and Sirius and its employees, on the other, without the Plaintiff's and class members' consenE. In March 2011, the parties reached a settlement of the case which was subsequently approved by the court. As part of the settlement, the court certified a settlement class and notice was provided to the settlement class. In September 2011, the court entered a Final Order Approving Class Action Settlement andJudgment that, among other things, released all claims by class members relating to the recording of telephone conversations. Certain parties appealed the Final Order, but those appeals have been dismissed. We have fulfilled all of our obligations contained in the Final Order Approving Class Action Settlement and Judgment and the case is now concluded. The conclusion of this matter did not have a material adverse effect on our results of operations ar fmancial condition. In February 2009, Stream International (NI) Limited ("Stream NI") exercised its right to terminate its lease for certain premises in Northern Ireland and vacated such premises on or prior to the termination date of December 31, 2009. The landlord, Peninsula High-Tech Limited (the "Landlord"), has filed a claim against Stream NI alleging that the termination right under the lease was not validly exercised because Stream NI failed to reasonably perform and observe the covenants and conditions of the lease, and therefore such lease remains in subsistence and that the rent and service charges continue to accrue. If successful in its proceedings, the Landlord will have claims against Stream NI for unpaid rent and service charges for the entire five years remaining under the lease, an aggregate of approximately $3,803, or until such time as another tenant enters into occupation of the premises. Stream NI has refuted the allegations and mtends to vigorously defend against the claims asserted by the Landlord. 61 � ,...�+.....t.�;l.,.iir.�rr.,,,,.,.�:.....,....�..,� n,..,.r�„�,.�r ,.,.,.i�r,r;,.,.�,.,.r+��x�;.,a�.,,��rro„-„�,,,-�,�. T„�o,-„o* �;1 G/��/�n1� Form 10-K Page 63 of 75 • Tab�e of Canter�ts . Note 16—Geographic Operations and Concentrations We operate in one operating segment and provide services primarily in two regions: "Americas", which includes the United States, Canada, the Philippines, India, China, Costa Rica, Nicaragua, the Dominican Republic, and El Salvador; and "EMEA", which includes Europe, the Middle East, and Africa. The following table presents geographic information regarding our operations: Year Ended December 31, . 2011 2010 Revenues: Americas United States $193,385 $201,018 � Philippines � � 188,021 161,789 Canada 126,827 121,022 Others 100,530 104,200 Total Americas 608,763 588,029 EMEA 23 8,144 212,144 $846,907 $800,173 ' December 31, 2011 December 31, 2010 Total assets: Americas $ 546,906 $ 569,325 EMEA 71,128 78,660 $ 618,034 $ 647,985 � We derive significant revenues from three significant clients. At December 31, 2011, three of our largest clients by revenue are global technology companies. The percentage of revenue for each of these clients is as follows: Year Ended December 31, 2011 2010 Dell 12% 16% Hewlett Packard 10% 12% Microsoft 10% 6% Related accounts receivable from these three clients were 14%, 9% and 6%, respectively, of our total accounts receivable at December 31, 2011. . 62 � mhtml•file•//f •\TTcr rc\imiirnh�r\Ar�r�Tlata\T ��a��h�Tirrncnft\\7Uinrinave\Tamr�nran� Tntarnaf Fi� S/77/7(117 Form 10-K Page 64 of 75 Tab1e afContes�ts �.� Note 17-Guarantor Financial Information (Unaudited) The Notes are guaranteed by the Company, along with certain of our wholly owned subsidiaries. Such guaranties are full, unconditional and joint and several. Condensed consolidating financial information related to the Company, our guarantor subsidiaries and our non-guarantor subsidiaries as of December 31, 2011 are reflected below: Condensed Consolidating Statement of Operations For the year ended December 31, 2011 No�- Guarantor Guarantor Parent subsidiaries subsidiaries Elimination Total Net revenue: Customers $ - $693,960 $152,947 $ - $846,907 Intercompany - 95,849 326,522 (422,371) - - 789,809 479,469 (422,371) 846,907 Direct cost of revenue Customers - 223,364 271,062 494,426 Intercompany - 379,492 42,879 (422,371) - - 602,856 313,941 (422,371) 494,426 Gross profit - 186,953 165,528 - 352,481 Operating expenses 2,704 181,771 152,868 - 337,343 Non-operating expenses 28,906 (5,176) 8,952 - 32,682 Equity in earnings of subsidiaries 5,538 - - (5,538 - Income (loss) before income taYes 37,148) 10,358 3,708 5,538 17,544 Provision (benefit) for income taxes (13,511 13,957 5,647 - 6,093 Net income (loss) $(23,637) $ (3,599) $ (1,939) $ 5,538 $ (23,637) � • Condensed Consolidating Balance Sheet As of December 31, 2011 Non- Guarantor Guarantor Parent subsidiaries subsidiaries Elimination Totat L�.SSetS Cash and cash equivalents $ 6 $ 12,481 $ 12,099 $ - $ 24,586 Accounts receivable, net - 141,579 24,384 - 165,963 Other current assets 2,614 17,510 7,698 - 27 Total current assets 2,620 171,570 44,181 - 218,371 Equipment and fixtures, net and other assets 4,107 51,356 50,780 - 106,243 Investment in subsidiaries 431,363 74,284 17 (505,664) - Goodwill and intangible assets, net - 181,750 111,670 - 293,420 Total assets $438,090 $478,960 $206,648 $(505,664 $618,034 Liabilities and Stockholders' Equity Current liabilities $ 6,025 $ 52,430 $ 63,477 $ - $121,932 Intercompany (receivable) payable (20,391) 17,560 2,831 - - Long-terrri liabilities 239,012 33,757 9,889 - 282,658 Total shareholders' equity (deficit) 213,444 375,213 130,451 (505,664 213,444 Total liabilities and stockholders' equity $438,090 $478,960 $206,648 $(505,664 $618,034 63 � ,r,l,fml•fila•//(`•\TTearc\imiarnhv\AnnTlata\T nralU�/Tinrnenft\Win�nwc�Tem»nraYV TntP,Tnet Fl�___ S�ZZ�Zn�2 Form 10-K Page 65 of 75 � Tabie of Ct�nte�ts Condensed Statements of Cash Flows For the year ended December 31, 20ll Non- Guarantor Guarantor Parent subsidiaries subsidiaries Elimination Total Net cash provided by (used in) operating activities $ (4,447) $ 17,298 $ 38,602 $ — $ 51,453 Cash flows from investing activities: Investment in subsidiaries — (62,809) 62,809 — — Additions to equipment and fixtures, net — (20,062) (19,250) — 39,312) Net cash provided by (used in) investing activities — (82;871 43,559 — (39,312 Cash flows from fmancing activities: Net borrowings (repayments) on line of credit 20,250 — — — 20,250 Net borrowings (repayments) on long term debt — 233 $36 — 1,069 Net borrowings (repayments) on capital � leases — (7,486) (3,199) — (10,685) Net intercompany (2,135) 76,952 (74,817) — — T� withholding on restricted stock (23) — — — (23) Repurchase of common stock (13,645) — — — (13,645) Net cash provided by financing activities 4,447 69,699 (77,180) — (3,034) • Effect of exchange rates on cash and cash — — equivalents 5,924 (8,934) 3,010) Net increase (decrease) in cash and cash equivalents — 10,050 3,953) — 6,097 Cash and cash equivalents, beginning of period 6 2,431 16,052 — 18,489 Cash and cash equivalents, end of period $ 6 $ 12,481 $ 12,099 $ — $ 24,586 Note 18—Subsequent Events On January 31, 2012, a Transaction Statement on Schedule 13e-3 (the "Schedule 13e-3") was filed by SGS Holdings LLC a Delaware limited liability company wholly owned by Ares, EGS Dutchco and NewBridge ("SGS Holdings"), Ares, EGS Dutchco, NewBridge and the other persons listed on the cover of the Schedule 13e-3 above the caption "Name of Persons Filing Statement" (the "Filing Persons") pursuant to Section 13(e) of the Exchange Act and Rule 13e-3 thereunder. As disclosed therein, the Schedule 13e-3 was filed in connection with potential privately negotiated purchases of shares of our common stock and a contemplated subsequent "short-form" merger that, if consummated, would result in Stream becoming a private company. The following is based solely on the disclosure in the Schedule 13e-3. As of January 31, 2012, SGS Holdings owns 70,070, or approximately 92%, of the issued and outstanding shares of our common stock, and Ares, NewBridge and EGS Dutchco own approximately 52%, 29% and 19%, respectively, of the units of inembership interest of SGS Holdings. SGS Holdings intends to seek to acquire additional shares of our common stock in privately negotiated transactions with certain selected stockholders of Stream (the "Private Purchases"). Any such Private Purchases are expected to be financed by loans from Ares, EGS Dutchco and NewBridge to SGS Holdings. Thereafter, SGS Holdings intends to evaluate whether to conduct a short-form merger (the "Merger"), under Section 253 of the General Corporation Law of the State of Delaware (the "DGCL"), pursuant 64 � m�1 l,+ir+Tl.��o�T �n.��AQin�-�onf4�«7ir��n�vo�Tnmv��rnrc� Tr�+cmo4 �i'i� G/7')/7(117 Form 10-K Page 66 of 75 Table af Cc�ntents �� to which a newly-formed Delaware corparation subsidiary of SGS Holdings would merge with and into Stream, with Stream as the surviving corporation, as a means of acquiring all of the other shares of our common stock not owned directly or indirectly by any of the Filing Persons. SGS Holdings has not yet determined whether to proceed with the Merger. If consummated, upon the effectiveness of the Merger, the shares of our common stock not owned by Stream, by any of the Filing Persons or by stockholders who properly exercise their statutory appraisal rights under the DGCL would be canceled and automatically converted into the right to receive the merger consideration, which is expected to be $3.25 per share in cash, without interest. 65 `�� „�L,�,Y,1•f;1A•//(`•\TToA,-o\;,,�,,,-Y,l,�.\A,-„-,Tlo+o\T�...ol\Aif;nrnonft\�xlinrin�x�c\Tamr�nran�TnternatFi� 5�77�7n�7 Form 10-K Page 67 of 75 � Tab(e of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WTTH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES (a) Disclosure Controls and Procedures Our Chief Executive Officer, Kathryn V. Marinello, and our Chief Financial Officer, Dennis Lacey (our principal executive officer and principal fmancial officer, respectively), have concluded that our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) were effective as of December 31, 2011, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by Stream in such reports is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurances of achieving the desired control objectives, and management necessarily was required to apply its judgment in designing and evaluating the controls and procedures. On an on-going basis, we review and document our disclosure controls and procedures, and our internal control over fmancial reporting and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business. (b) Management's Annual Report on Internal Control over Financial Reporting � Our management is responsible for establishing and maintaining adequate internal control over fmancial reporting as defined in Rule 13a-15(� and 15d-15(fl ofthe Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect all errors or fraud. Also, pro�ections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the palicies or procedures may deteriorate. We assessed the effectiveness of the Company's internal control over fmancial reporting as of�December 31, 2011. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on our assessment using those criteria, we concluded and hereby report that our internal control over fmancial reporting was effective as of December 31, 201 L Management reviewed its assessment of our internal control over financial reporting with our Audit Committee of the Board of Directors. Management's report on internal control over fmancial reporting contained in this paragraph (b) of Item 9A shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing by us under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing. This Annual Report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this Annual Report. 66 � ' , v.1 , � , � , 1.F;lo•//f'.\TT�o,.�\;.v.,,«„L,<,\ A,...rl„+„1r ,.,.,,1\Tif:,.«,.....Ca\�ZT,....1.,__.,.\T....,....,�«,.«�, T«�,.««,.4 r:� c��i�n�� Form 10-K Page 68 of 75 Table af Conte�ts �� (c) CJ:anges in Internal Contro! over Financial Reporting There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 of the Exchange Act that occurred during the period covered by this Annual Report that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION None. 67 f • �,� .,.,.l,.a.,.,.l.l:l,..//!�.\TT,.,.«,.\:......,..._L._.\ A.,..,.Tl..�.,\T ,.,..,1\TiT;..,...�..#\�xTi.�rl�.ci�a TntPrnal' Fi� ��77�7n�7 Form 10-K Page 69 of 75 � 'I'abEg of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by this item is incorporated herein by reference to the information contained in a definitive proxy statement for our 2012 annual meeting of stockholders (the "Proxy Statement"), which we intend to file pursuant to Regulation 14A with the Securities and Exchange Commission not later than 120 days after our fiscal year end of December 31, 2011. ITEM 11. EXECUTIVE COMPENSATION The information required by this item is incorporated herein by reference to the information contained in the Proxy Statement, which we intend to file not later than 120 days after our fiscal year end of December 31, 2011. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by this item is incorporated herein by reference to the information contained in the Proxy Statement, which we intend to file not later than 120 days after our fiscal year end of December 31, 2011. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this item is incorporated herein by reference to the information eontained in the Proxy Statement, which we intend to file not later than 120 days after our fiscal year end of December 3l, 2011. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES • The information required by this item is incorporated herein by reference to the information contained 'm the Proxy Statement, which we intend to file not later than 120 days after our fiscal year end of December 31, 201 L 68 � . m�tm�•fi�a•//( G/7'lhl11') Form 10-K Page 70 of 75 Tab(e of Cantents �� PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES Documents filed as a part of this Report: 1. Financial Statements, We are filing our Consolidated Financial Statements as part of this Report, which include: Consolidated Balance Sheets as of December 31, 2011 and 2010 Consolidated Statements of Operations for the years ended December 31, 2011 and 2010 Consolidated Statements of Stockholders' Equity for the years ended December 31, 2011 and 2010 Consolidated Statements of Cash Flows for the years ended December 31, 2011 and 2010 Notes to Consolidated Financial Statements 2. Financial Statement Schedule. No fmancial statement schedules are provided as all required information is included in the consolidated fmancial statements. 3. Exhibits. We are filing as part of this Report the E�chibits listed in the E�ibit Index following the signature page to this Report. 69 �� ,...L.�,Y.l.�;lo.//!"�.\TT�v,-�\:,.-.,,...,,L.<.\ A, �,..�1\l�ii;..r.,or.f+\�x7inrl��x�e\Tamr�nrarv Tntarnat Fi� S/')7/7n17 Form 10-K Page 71 of 75 � Tabte of �ontea�ts SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. STREAM GLOBAL SERVICES, INC. February 29, 2012 By: /s/ Kathryn V. Marinello Kathryn V. Marinello Chairman, Chief Executive Officer and President (Principal Executive Officer) February 29, 2012 By: /s/ Dennis Lacey Dennis Lacey Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Kathryn V. Marinello Chairman of the Board of Directors, February 29, 2012 xatnryn v. Mar��euo Chief Executive Officer and President /s/ Alfredo I. Ayala Vice Chanman of the Board of Directors February 29, 2012 • Aifredo I. Ayala /s/ G. Drew Conway Director February 29, 2012 G. Drew Conway /s/ Matthew Cwiertnia Director February 29, 2012 Matthew Cwiertnia /s/ Paul G. Joubert Director February 29, 2012 Paul G. Joubert /s/ David B. Kaplan Director February 29, 2012 David B. Kaplan /s/ R. Davis Noell Director February 29, 2012 R. Davis Noeli /s/ Julie G. Richardson Director February 29, 2012 Julie G. Richardson /s/ Gilbert F. Santa Maria Director February 29, 2012 Gilbert F. Santa Maria /s/ Nathan Walton Director February 29, 2012 Nathan Walton 70 i mb �..,.t\t�,C------��c�'-- i-----.�m-_-------_._T_`-----lr'i cinninn�n . Fortn 10-K Page 72 of 75 Tab1e of Cante�3ts �� EXHIBIT INDEX Exhibit No. Description 3.1 Third Amended and Restated Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on July31, 2008 (filed as E�ibit 3.1 to the Registrant's Current Report on Form 8-K (File No. 001-33739), filed with the SEC on August 6, 2008 and incorporated herein by reference). 3.2 Certificate of Amendment to Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on September 29, 2009 (filed as E�ibit 3.1 to the Registrant's Current Report on Form 8- K(File No. 001-33739), filed with the SEC on October 5, 2009 and incorporated herein by reference). 33 Certificate of Amendment to Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on October 1, 2009 (filed as Exhibit 3.2 to the Registrant's Current Report on Form 8-K (File No. 001-33739), filed with the SEC on October 5, 2009 and incorporated herein by reference). 3.4 By-Laws of the Registrant (filed as E�ibit 3.2 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 20, 2009 and incorporated herein by reference). 4.1 Specimen common stock certificate (filed as Exhibit 4.2 to tt�e Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 6, 2008 and incorporated herein by reference). 4.2 Amended and Restated Registration Rights Agreement, dated as of August 14, 2009, among the Registrant, Ares Corparate Opportunities Fund II, L.P., NewBridge International Investment Ltd., EGS Dutchco B.V., Mr. R. Scott Murray, and certain stockholders of the Registrant (filed as Exhibit 4.2 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 20, 2009 and incorporated herein by reference). 43 Indenture, dated as of October 1, 2009, among the Registrant, the Guarantors named therein and Wells • Fargo Bank, National Association, as Trustee, governing the 11.25% Senior Secured Notes due 2014, including the form of 11.25% Senior Secured Notes due 2014 (filed as E�ibit 4.1 to the Registrant's Current Report on Form &K (File No. 001-33739), as filed with the SEC on October 5, 2009 and incorporated herein by reference). 4.4 Exchange and Registration Rights Agreement, dated as of October 1, 2009, among the Registrant, the Guarantors listed on the signature pages thereto and the Purchasers named therein (filed as Exhibit 4.2 to the Registrant's Eurrent Report on Form 8-K (File No. 001-33-739), as filed with the SEC on October 5, 2009 and incorporated herein by reference). 4.5 Security Agreement, dated as of October l, 2009, among the Registrant, the other Guarantors listed on the signature pages thereto and Wells Fargo Foothill, LLC (filed as E�ibit 4.3 to the Registrant's Current Report on Form &K (File No. 001-33739), as filed with the SEC on October 5, 2009 and incorporated herein by reference). 4.6 Security Agreement, dated as of October 1, 2009, among the Registrant, the other Guarantors listed on the signature pages thereto and Wilmington Trust FSB (filed as Exhibit 4.4 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on October 5, 2009 and incorporated herein by reference). 4.7 Collateral Trust Agreement, dated as of October 1, 2009, among the Registrant, the Guarantors from time to time party thereto, Wells Fargo Bank, National Association, as Trustee, the other Secured Debt Representatives from time to time party thereto and Wilmington Trust FSB (filed as E�ibit 4.5 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on October 5, 2009 and incorporated herein by reference). '`. ---i-`---i_r_i__iir+_�rr-----�:--------i---� A"_'_T��,_\T �__1lT.TS._�._..�la\�S7S.�.].��...\T..«......«..«.. C/77/7l11'� Form 10-K Page 73 of 75 � Table c��'Cc�n�ents Exhibit No. Description 4•g Lien Subordination and Intercreditor Agreement, dated as of October 1, 2009, among the Registrant, the subsidiaries of the Registrant listed on the signature pages thereto, Wells Fargo Foothill, LLC and Wilmington Trust FSB (filed as E�ibit 4.6 to the RegistranYs Current Report on Form 8-K (File Na 001-33739), as filed with the SEC on October 5, 2009 and incorporated herein by reference). 10.1 *� Description of the Registrant's 20ll Management Incentive Plan (reported in the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 (File No. 001-33739), as filed with the SEC on May 4, 2011 and incorporated herein by reference). 10.2* Securities Purchase Agreement, dated as of June 3, 2011, by and among Trillium Capital LLC, a Delaware limited liability company, R. Scott Murray and Stream Global Services, Inc. (filed as E�ibit 10.1 to the Registrant's Current Report on Form 8-K, as filed with the Securities and Exchange ' Commission on June 6, 2011 (File No. 001-33739) and incorporated herein by reference). 10.3 * Employment Agreement between the Registrant and Kathryn V. Marinello, dated August 19, 2010 (filed as E�chibit 10.2 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 20, 2010 and incorporated herein by reference). 10.4* Employment Agreement between the Registrant and Dennis Lacey, dated December 15, 2009 (filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K (Fil��io. 001-33739), as filed with the SEC on December 21, 2009 and incorporated herein by reference). 10.5* Employment Agreement, dated as of January 13, 2011, by and between Brian Delaney and Stream Global Services, Inc. (filed as E�chibit 10.1 to the Registrant's Current Report on Form 8-K, as filed with the Securities and Exchange Commission on January 14, 2011 (File No. 001-33739) and incorporated herein by reference). • 10.6a*# Employment Agreement, dated as of June 27, 2011, by and between Gregory Hopkins and Stream Global ^ Services, Inc. 10.6b*#� Description of the Registrant's 2011 Executive Vice President Sales Incentive Plan. 10.7a* Employment Agreement between the Registrant and Robert Dechant, dated August 7, 2008 (filed as E�ibit 10.5 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-33739), as filed with the SEC on March 17, 2009 and incorporated herein by reference). 10.7b* Letter Amendment to Employment Agreement between the Registrant and Robert Dechant, dated December 29, 2008 (filed as Exhibit 10.6 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-33739), as filed with the SEC on March 17, 2009 and incorporated herein by reference). 10.7c* Letter Amendment to Employment Agreement between the Registrant and Robert Dechant, dated May 6, 2009 (filed as E�ibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 (File No. 001-33739), as filed with the SEC on August 5, 2009 and incorporated herein by reference). 10.7d* Letter Amendment to Employment Agreement between the Registrant and Robert Dechant, dated November 9, 2009 (filed as E�ibit 10.4 to the Registrant's Current Report on Form 8-K (File No. 001- 33739), as filed with the SEC on November 13, 2009 and incorporated herein by reference). 10.7e* Separation Agreement, dated as of July 8, 2011, by and between Robert Dechant and Stream Global Services, Inc. (filed as E�chibit 101 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 (File No. 001-33739), as filed with the SEC on August 3, 2011 and incorporated herein by reference). 10.8a* Employment Agreement between the Registrant and Sheila M. Flaherty, dated 7uly 16, 2008 (filed as ` Exhibit 10.2 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC � on July 17, 2008 and incorporated herein by reference). w e-innin��.. � Form 10-K Page 74 of 75 Tab(e of Contents �f � Exhibit No. Description 10.8b* Letter Amendment to Employment Agreement between the Registrant and Sheila M. Flaherty, dated December 29, 2008 (filed as E�ibit 10.10 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-33739), as filed with the SEC on March 17, 2009 and incorporated herein by reference). 10.8c* Letter Amendment to Employment Agreement between the Registrant and Sheila M. Flaherty, dated M�y 6, 2009 (filed as E�ibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 (File No. 001-33739), as filed with the SEC on August 5, 2009 and incorporated herein by reference). 10.8d* Letter Amendment to Employment Agreement between the Registrant and Sheila M. Flaherty, dated November 9, 2009 (filed as E�ibit 103 to the Registrant's Current Report on Form 8-K (File No. 001- 33739), as filed with the SEC on November 13, 2009 and incorporated herein by reference). 10.8e* Separation Agreement, dated as of March 8, 2011, by and between Sheila M. Flaherty and Stream Global Services, Inc. (filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K (File No. 001- 33739), as filed with the SEC on March 14, 2011 and incorporated herein by reference). , 10.9* Form of Incentive Stock Option Agreement under the 2008 Stock Incentive Plan (filed as E�ibit 10.1 to the Registrant's Quarterly Report on Form 10-Q far the quarter ended September 30, 2009 (File No. 001- 33739), as filed with the SEC on November 6, 2009 and incorporated herein by reference). 10.10* Form ofNon-Statutory Stock Option Agreement under the 2008 Stock Incentive Plan (�led as E�ibit 10.2 to the RegistranY s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 (File No. 001-33739), as filed with the SEC on November 6, 2009 and incorporated herein by reference). � 10.11 * Form of Restricted Stock Agreement under the 2008 Stock Incentive Plan (filed as E�chibit 10.3 to the !• Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 (File No. 001- 33739), as filed with the SEC on November 6, 2009 and incorporated herein by reference). 10.12* Form of Restricted Stock Unit Agreement under the 2008 Stock Incentive Plan (filed as Exhibit 10.4 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 4, 2008 and incorporated herein by reference). 10.13 Form of Management Rights Letter (filed as Exhibit 10.5 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on June 5, 2008 and incorporated herein by reference). 10.14 Preferred Stock Purchase Agreement between the Registrant and Ares Corporate Opportunities Fund II, L.P., dated as of June 2, 2008 (filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K (File No 001-33739), as filed with the SEC on June 5, 2008 and incorporated herein by reference). 10.15 Amendment No. 2 to Preferred Stock Purchase Agreement between the Registrant and Ares Corporate Opportunities Fund II, L.P., dated as of July 17, 2008 (filed as E�ibit 10.1 to the Registrant's Current Report on Form 8-K File No. 001-33739), as filed with the SEC on July 22, 2008 and incorporated herein by reference). 10.16 Stockholders Agreement, dated as of October l, 2009, among the Registrant, Ares Corporate Opportunities Fund II, L.P., EGS Dutchco B.V., NewBridge International Investment Ltd., R. Scott Murray and Trillium Capital LLC. (filed as E�ibit 10.2 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on October 5, 2009 and incorporated herein by reference). t� ....1.�..,.1. F:1,.. ///�.\T T..,.«..\;,...,....1-..,\ A,-....Tl,.�,.\T ,�,,..1\Tii;�.«..�...4�+\�lU:.�rl��vo\Tomr�nr�n� TntarnPt Fi� S�77I'7n� 7 Form 10-K Page 75 of 75 � Ta�€e of Conte��s Exhibit No. Description 10.17 Form of Indemnification Agreement entered into between the Registrant and its directors and officers (filed as E�ibit 10.1 to the RegistranYs Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 12, 2008 and incorporated herein by reference). 10.18 Credit Agreement, dated as of October 1, 2009, among Wells Fargo Foothill, LLC, Goldman Sachs Lending Partners LLC, and each of the other Lenders party thereto, the Registrant and its subsidiaries identified therein (filed as E�ibit 10.1 to the Registrant's Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on October 5, 2009 and incorporated herein by reference). 10.19 First Amendment to Credit Agreement, dated as of June 3, 2011, by and among Wells Fargo Capital Finance, LLC, in its capacity as agent for the lenders and bank product providers party thereto, Stream Global Services, Inc. and each of the subsidiaries of Stream Global Services, Inc. signatory thereto (filed as E�ibit 10.2 to the Registrant's Current Report on Form 8-K, as filed with the Securities and Exchange Commission on June 6, 20ll (File No. 001-33739) and incorporated herein by reference). , 10.20 Second Amendment to Credit Agreement, dated as of November 1, 2011, by and among Wells Fargo Capital Finance, LLC, in its capacity as agent for the lenders and bank product providers pariy therefo, Stream Global Services, Inc. and e�ch of the subsidiaries of Stream Global Services, Inc. signatory thereto (filed as Eachibit 10.1 to the Registrant's Current Report on Form 8-K, as filed with the Securities and Exchange Commission on November 1, 2011 (File No. 001-33739) and incorparated herein by reference). 12.1 # Statement of Computation of Ratio of Earnings to Fixed Charges. 141 Code of Business Conduct and Ethics (filed as Exhibit 14.1 to the Registrant's Current Report on Form 8-K (File No, 001-33739), as filed with the SEC on September 26, 2008 and incorporated herein by reference). 21.1# Subsidiaries ofthe Registrant. • 23.1 # Consent of Ernst & Young LLP, Independent Registered Public Accounting Fum. 31.1# Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule 13(a)- 14(a)/15d-14(a), by Chief Executive Officer (principal executive officer). 31.2# Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule 13(a)-14(a)/15d-14(a), by Chief Financial Officer (principal fmancial officer). 32.1# Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Executive Officer (principal executive officer). 32.2# Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Financial Officer (principal fmancial officer). lO1.INS+ XBRL Instance Document lO1.SCH+ XBRL Taxonomy Extension Schema Document lO1.CAL+ XBRL Ta�conomy Extension Calculation Linkbase Document lO1.DEF+ XBRL Taxonomy Extension Definition Linkbase Document lO1.LAB+ XBRL Taxonomy Extension Label Linkbase Document lO1.PRE+ XBRL Taxonomy Extension Presentation Linkbase Document * Management contracts ar compensatory plans or arrangements required to be filed as an exhibit hereto pursuant to Item 15(a) of Form 10-K. # Filed herewith. � Portions of this exhibit have been omitted pursuant to the Registrant's request for confidential treatment. The Registrant has filed omitted portions separately with the SEC. � + XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exch�nge Act of 1934, as amended, and otherwise is not subject to liability under these sections. mhtml:file://C:\Users\imurvhv\AnnData\Local\Microsoft\Windows\Tempararv Internet Fil... 5/22/2012 ��:�� ,, � SUPPLEII�IENTAL APPLICANT IN�?RMATIQN ��: (LOCAL UNIT OF GOVERNMENT) � MINNESUTA INVESTMENT FUND . STATE LOAN PRC)GRAM ��f 8f �tt� . � � ��m� E�q� . '� City of Appfe Valiey Stream international, Inc Applicant: Business Name: 57A 076514249 � State Legislative District for Project Area: DUNS #: Margaret Dykes (952) 953-2569 Appiication Author: Author's Phone: Author's E-mai�: mdykes@ci.apple-valiey.mn.us Attach the foflowing informatian witN the application. Application is not considered complete until all documents have been received: � 1j CQMMUNITY NEEDS NARRATIVE • Attach a communiry and economic development needs narrative which identifes in detail the priorities and strategies for resolving these needs based on the following criteria: � A, Econornic vulrrerability of the community: B. Events contributing to a depressed economy: C_ Unemplayment (long terrn, chronic, current, seasonal): S D. Need to attracE or retain essential services: E. Events con#ributing to a unique situation: F. Infrastructure conditions: G. Out-rnigration due to lack ofijobs: N. Need to diversify industrial base: i. Project wilf support the economic viability of srnall, minority, or women-owned businesses: J. Under-emplayment of existing labor pooL• K. l.abor pool needs: L. An increase iri the value of the parcel(s) of land that will be directly assisted by the project. Provide a letter from the county/city assessor that provides the following information: Current assessed valuation, current real estate taxes payable, projected assessed valuation and projected real estate taxes payable 2y C[71ZEN PARTICIPATION • /� public hearing is required to provide citizen notification and invofvement prior to submitting the application. Submit a copy of the pubtic hearing minutes, a copy of the pubfic notice and affidavit of publication, and the Locaf Government Resolution. 3) BUSINESS CREDiT CHECK o The following informatian sea�ches on the business and owners holding 10 percent or more af the business rnust . be acquired and reviewed prior to passing the Loca! Government Resolution: Lien/Judgment, Criminal Recorcl, Pending Lawsuit, Dunn and Bradstreet, Credit Status Report, Bankruptcy (Afso attach summary of findings and deposition). � 1 � � �� f �' ; SUPPLEMENTAL APPLICANT (NFORI411AT)t7N �� {LOCAL UN�T OF G(7VERNMENT} - ;�: MINNESUTA WVESTMENT FUND . � STATE LOAN PROGRAM �.�.��t�� trt�� ri� 4) PRpJECT COMPlIANCE � • Review and sign attached document titied Proiect Complicrnce with State Laws, Statues, and Rules which outlines various state laws, statutes and rules that must be adhered to while implementing this project. These same requirements must be used in the administration of the loca! Revolving Loan Funds. 5� REVOLVING LDAN FUMD • Submit a capy of the Loca( Gavern.ment's Revalv.ing Lo�n Fund policies and procedures. 6j CHECKLIST OF REQUiRED DOCUMENYATION: 0 Completed Application (Applicant ant! Business) � Notice of First Saurce � � Revolving..loan fund guidelines � 0 Public hearing minutes • � Affidavit of publication ❑� Local unit ofi Government Reso[ution Q Project Cotnptiance with State Laws, Statutes, and Rules If an award is prov�ded for the project, the information contained in the application wilE become a matter of public record with the exception of those items protected under the Minneso#a Governme�t Data Practices Act found in Minnesota Statutes 1997, Chapter 13. I have read the above statement and I agree to supply the inforrnation requested to the Minnesota Department of Employment ancf Economic Development, Division of Business and Community Development with full knowledge of the information provided herein. I certify the information contained herein is true and accurate. : Typed Name/Title Signature of Local Government Official Date . . 2 �� ..� .: � � SUPPLEIUiENTAL APPLIGANT iNFORMATl06� �`� (LOCAL UNIT OF G01/ERNMENT) - � M(NNESOTA INVESTMENT �UND STATE LOAN PR�GRAM ��ct� �� p �! � �:t�t�. �re3o�t. ' FRQIECT COMPLIANCE WITH STATE LAWS STATUTES AND RULES 1. Minnesota Statutes, Section 181.59, discrimination on account of race, creed, or color prohibited 'sn contracts. . 2. M'tnnesota Statutes, Section 363A.08 prohib':ts unfair discrimination practices related to ernployrnent or unfair empiayment practices. 3. Minnesota Statutes Chapter 363 Minnesota Numan Rights Act. Requires that aIl public services be operated in such a manner that does not discriminate against any person in the access to, admission ta, fufl uti€ization of or benefit from such pub[ic�service. 4. Minnesota Statutes, Sections 176.181--176.182. Requires recipients and subcontractors to have worker's compensation insurance coverage. 5. Minnesota Statutes, Sections 290.97Q5. Requires that 8 percent of payments made to out-of-state contracfiars be withheld once cumulative payments made to the cQntractor for work done in . • Minnesota exceed $5Q,000 in a calendar year, unless a waiver is granted by tHe Department of Revenue. 6. Minnesota Statutes, Section 116J.871 applies to this project. This statute requires of recipients af state assistance to pay fihe prevailing wage rate ta lal�orers and mechanics at the project construction site when state funds are provided for construction in the amount of $200,000 or rnore. 7. Minnesota Statutes Sections 471.87 and 471.88 - Forbids public officials frorn engaging in activities which are, or have the appearance of being, in canflict of interest. 8. Antitrust or unfair trade practices [aws - Regulates and controls the sale of goods and services and prohibits deceptive and unfair cornpetition between businesses. 9. Minnesota Statutes ].16J.993-995, Business Subsidy 5tatute, applies to this project. 10. Minnesota Statutes, 116J.8731, Minnesota [nvestment Fund applies to this project. -11. Minnesota Investment Fund Ruies Chapter 430a. 12. Minnesota Statutes, Chapter 13, the Minnesota Government Data Practices Act. certifies comptiance as so stated in the accompanying Local Govemment Reso.lution. (Signature of Applicant) • 3 MIF Supplementai Applicant lnformation - Citv of Appie Vailey �_ on behalf of Sfream International, lnc � '1) COIUIMUNITY NEEDS NARRATNE Attacla.a communiiy and econoniic development needs narrative which identifies in detail the �riorities a.nd strategies far resolving tl�ese needs based on the following criteria: A. Economic vulnerabiliEy of the community: The Citv of Apnle Valle lv 's at a�ob deficit in com�arison to similar sized communities in the nletro area. There are approximatelv I3 9001obs in the City that consist primarily retail, �overnment and public school jobs. Apple Valiey seeks the iab diversity and work force size of adjacent c'rties to offer choices to oux residents that would allow fhem to work and live in the same co�imunity. The nei�hborin� cities of Burnsville and Ea�an offer over 30,OOQ jobs and 50 000 iobs res ecp tively Because A�le Va1le�does not enjoy fhe advanta�e that comes with proximity to the Metro�olitan-St. Paul Airport or the 35E corridor, we are unable to provide foz the emploYment needs of our residents Todav Minnea�olis and St Paal offer the type of '�obs tha� are son�ht by the 20 000 residents that coinmute to primarilv those locations everv dav. The city strives to add i�ibs in tvvo distinct areas that are forecasted by DEED to be the hi est - Uotential areas of �x ]ieadquarters and business services, and hea�th and lzfe sciences. The addition of the Stream �nternational Inc. headquarters and call center will hel� to fill the einployment �ap by addiz��340 jobs to the area. • B. Events contributing to a depressed econorny: As stated previously the em�loyment needs of Apple Valle�residents are unable to be met within the l�oundaries of the Cit to the City being a�aet ex�orter of em�loyees. Thou�h Apple Va11ey has a successful reta:il center and tliere are few sig�ificant comrr�ercial vacancies, tl�ez are clearlv unmet needs for other ty�pes of einployment that train seini-skilled employees and provide thern with futuxe o�portunities A�le Vallev's fiature economtc �rowth is _ de�endent upon the abilitv to - g L row jobs in the Citv. The economic power that cames with providing�ob chaice and diversitX currentiv restrai�s A�ple Valley's econornic growth, C. Unemployment (long term, chronic, current, seasonal}: Apple Valley's unemploy�ment rate was 4 4% in Apri12012 which is below the state avera�;e. It is not the overal� unernployment issue in the community, but the nnemploynnent or undezen�loyment of specific �roups Stream will offer opportunities to provide training for highlv teehnical jobs for t�e underemploved under educated recent ,�araduates veterans, and seniors in need of extra income. D. Need to attract or retain essential services: • In the Czty of A�ple Vallev 2030 Conlprehensive Plan the Economic Development Chapter describes the City's strateg�o atlract and retain essential sexvices: 1 MIF Supp[ementat Applican# tnfarmation - Citv of Apple Val�ev on behalf of Str�am international, Inc � • Attract Iarge employers and create �alaces to work near the Citv's Downtown (County Road 42 and Cedar Avenue). + Unifv and redevelop the Do�vntown Area. • Connect A�ple Valley to the region in new ways_ • Act as a partner to guide new developrnent, redevelopment, and support exist�n� commercial propert� • Attract businesses focused on science technoto�y ei��iz�ee�zn� and n�ath, and provide for a well-educated and compensated workforce. As a result, the City has �uided a ma'�orztv of the still availaUle land for Lob creation where housin� and retail uses are incidental and jobs are seeri as an essential service. The placement of . the Stream corporate headquarters and the 300-person call. center in A�ple Vailey'sDowntown meets the �oals of the Citv's Comprehensive PIan and will help suppo� an a�ing retailfcommercial area. E. Events contributing to a unique situation: The Stream GEO lives in tlie Citv the executive leadexship team bein�assembled by Stream lives in close proximity and the Cit�o£ A�ple Vailey is arz expexienced econoznic develo� and finiancial contributor w�en. job development o�poa arise. Tt is the local resourees state • resourees and available vacant office arzd business service space that can be c�uickly assembled to act on a job �owth o�ominity that makes this situation unique. Perhaps iust as important to a ^loba.l coibpany like S�'eaxn is that AUple Valley is 15 minutes away frorn an inte��ational airport to serve their�Iobal network of locations and benefit with bein c�entrally located frorn bath coasts. T F. Infrastructure conditions: Apple_ Valley is a modern city with a well-plannedlmaintairzed and directly available se�c�ver water, storn� watex, �as and electric suppl a�ystems. In additio�, fiber optic needs for the call center cax� be met, and unique powe�r supplv needs o� Stream wi.th back-u� protections are bezng �rovided as pas of the �ro�ect. One of the largest infrastructure projects ever in the Citv is undenvav ri�ht now with the expansioiz of Cedar Avenue to accommodate the first Bus Rapid System in the state of Minnesota bv 2013 A re�ional transit station. sto�is located less than 'l� rnile from both the Streanx headc�uarters and the call center locations. A�proximately 20% of e inp lovees will use the BRT to travel to and from=�vork as paxt of a travel demand mana e� rnent strate�y. Transit use is possible because of tlie compact downtawn, and tke site's proxizzzity to the fiiture 147th Street Station, which is a 5-minute walk from both the headquarters location in the Win�s Financial building, and the ca11 center ii� the Time Square Sh�pin� Center. Sh•eam will be able to more readily hire recent college �raduates, veterans, disadvanta�ed voun� adults, and retirees - those that ofte�� rel heavily an transit services: • 2 MIF iupplemen�al ,4pplicant Ir�formation - City of Apple Va(Eey on behalf of Stream fnternational Inc � G. Out-migration due to lack of jobs: As stated earlier, ap�roximately 20 000 A�ple Va11ey residznts commute daily to jobs irz otl�ez' cities because af the o�portui�ity deficit in A��le Valley The addition of Streaxxz to the. Apple Vallev iob base wil�xovide new economic o�ortunities to residents that mi�ht otherwise be unable to find employrnent in the City_ H. Need to diversify industrial base: The pro�osal �rovides one step toward a more diverse jab market. Thouah the business is not industi in nature, it does �rovide additzanal emplo�t ot�portunities for Apple Vallev - residents. I. Pz vvi11 support the economic viability of snnall, minority, or women-owned businesses: CEO Kathrvn Marinello is a woman and emplovees soug�ht by Streaxn will include women and zninoz The technical trainin�provided will helt� to develap and support the under educated� under emploved, recent colle�aduate without iob experience. the retuz veteran facin� l�i�l�er unemployment rates, and the senior lookin� to �u��lement a fixec� inconie. � 3. Under-empioyment of existing laUor pooL• See "I" above. Further, tl�e tecluiical skills needed to successfully perform require without a uni�ue Stream trainiri� pro�ram that etnphasizes soft skill develot�ment: tearnwork, client problem solvin�, asid customer service. , K. Labor pool needs: Stream reco�nizes that the ezza.plovee hired u�on trainin� aud receipt of eXperience from Stxeam will make that emplovee more valuable and com�aetitive in the job marketplace. As a result, trazx�in� is a co�xstant feature of the business o�eration and the outcorne is a better educated, customer service oi�ented technically trained employee that enriches the laUor pool. L_ An increase in tIie value of the parcel(s) of laud that will be directly assisted by the project. Provide a letter from the counry/city assessor that provides the following infoz�aation: Cuzrent assessed valuat�on, current xeal estate taxes payable, projected assessed valuation and �rojected real estate t�es payable The project wiil acc�u in two different locations that are a�pro�imately'/-mile apart. The • followin� chart provides the infonnation requested as estimated bv t�e City Finance Director. The Dakota Countv Assessors Office does not�rovide calculations until a constructzon pxoiect is 3 MIF �uppi�mental /�pplicant lnformativn - Cifiv of Appfe Valley on behalf of Sfream International, inc � � � com�leted. The construction proiect should be completed bv 3anuary 201�, therefare, the assessed values will be estimated for 2� 14 for taxes �avable in 2015. There should be no change to t1�e assessed value fox the headquarters tocation as Stream will be accu�vin� existing finished tenant space. MIF funds will be used to �urchase eqitipment at this location and the call center_ �There will be some increase in value at the call center location due to the substantial constzuction at the site. Use Location Current Current Real Projected Projected Real Assessed Estate Taxes Assessed Estate Taxes VaIuatiou Payable Valuation Payable (for 2013) (2012 Tates) (2014) (2015 Taxes} Stream Wings Financial $ I2,995,400 for $499,378 No change iu No significant� Headquaz Building land and building value. changes in t�es. Stream Call Time Square $7,924,300 for $30�,898 $9,375,655 $3b5,650 Center Shop ing Center Iand and buildings . . 4 MI� SuppEemental Applicant Information - City of .4ppte Valley on behatf of Strearn International, Inc • 2) C{TtZEN PARTICIPATION The public hearing for the submittal o£ the MIF a�plication will be held at the Apple Valley City Co uncil meetili� of�une 14 20 Attached is t�ie Affidavit of Publication. The executed resolutiox� will follow after 7une 15� A copy of the a�roved minutes af the June 14`� meetin� wi11 not �ie appraved bv the City Council until its meetin� of June 28�• a copv wiil be sent to DEED followin� that Fneetiz��. 3) BUSINESS CREDIT CHECK The Citv Attorney has com let� ted a credit check of Streana International I:c�c. and as of this date, fo�uid �o information that would adversely affect its com�letion of the project. 4} PROJECT COMPL(ANCE Attaclied 5} REVOLVING LOAN FUND • The City of A�le Vallev does not liave a revolvin� loan £und' consequentiv there are no procedures related to such a fund. � s � � AFFIDAVIT O� PUBLIGAT�O�I STATE OF MINNESOTA } ' COl1NTY O� DAKOTA ) � Tad Johnson, being duly sworn on oath says that he is the managing editor of the _ newspaper(s) .icnown as Sun Thisweek Apple Valley/Rosemount, and has full .knowiedge of , P�BL{G+ ��•� the facts which are stated belovi: � NOT7CE OF PUBl1G HEAfiiNC PROf'QSED PUBiJC BUSiNESS (A} Tlie newspaper(s} has/have complied with alE of the requirements constituting . - �SUBSIGYANp5U8MtSS7UNOF � f]U2IIt1C3�lOD5 as a lega3 newspaper(s), as provided� by Minnesota Stacue 331A.02, 331A.07 � RdINNESOTAINYES7MENTFONp and btFier applicabie laws; as amended. � � APPUCA110N 1N THE Ciiy OF , . � >: APPLE YALl.EY '� �� . ' NO710E IS HERE6Y,GIVEN that ihB Crt y�� B} T}1C printed � legal notice, wbich is aftached rvas cui from � the columns of saicE icounc,ior�nac��yoraPP�evauey,�twra:; newspaper{s} and wag printed and published once a week for one week; it was first published Courtty Minnasota wiUmeet at ihe Munlcf- , `paic�,ner;7�oo aa�r�.s�rae�w;�„aune, on Friday, the lst _day of June, 20i2, and was therefore printed and published on every '.t42012,a['7pm orassoonthereaft�as:;� . ;passible.Thepurpose �rid�y t0 and including Friday, the 2st day of June, �012, and printed be[ow is a copy of the hold a pubtic hearmg'pursuazri to Mmne;' �OwCI' case alphabet from A to Z, both inclusive, which is hereby acknowtedged as being ihe sota Siatuies 17fiJ 994,,$ubdlvision 3 Tela-:_ `u�em me s�bm�rai ot ai� appr�ca�wnw�rie size and kind of type used in Yhe composition and publication of ihe notice . �MmnesofaDepartrr�entofEmployitieirtand; � � � • Economic Developmepk tor Minneso[a ; `inves�me)tt�Fund 1aan funds on pehalf of - Stream intemailonal ttic A cOpp pf the °, abcdef�hijkimrtopqrstuvwRyz - . appl�catwn:wil} be avalab�e for r�ew�at the: � � . Ctty b(flcas"dunng business (�ours irom B.! `am io4:30pm _ , - :.< NOTlCEJS FfJRTtiER.G1YEN that�thesg.�; . . ' . . procsedmgs are instrtuted by theApp(e � . Valley Gtty Counc�l A)1 �nterested parties ? witl be glveo:an opportun�ty to be heard at � � sa�d bme and: placs -' '. . ..:. DATED thf5 25tF� day of May.2012 :; ._.�. � . !s! Siaptaan�e Mar$c1ia11 �� . � � � . - ��. StephaniaMarschall��:�ePuIYQlY:'C�erk.:��. . . . . 3034T69 :' 6/1/92': _ Managing Editor Subscrihed and sworn to before me on � this lst day of J�ne, 2012 � � . '; :� : : .. .. : i _ � � :' �'... '�.:� . ...� �. '... � ::� ' : :: ' . ..,'_�:. ".. ��. 4' . . . ' �' ' . � Notacy Pablic 45u[CP `,� [A�lI�� RV�L ��/ 1 l � J fVt � _.:� iVotary Pub;ic-�7innescta 'y<•� •_;.: ��' l�lY Commisshn E�iras Jan 3� , 20:4 � • . . �w�.�rv�✓v 3034'!69 � �. ��'�� SUPPLEMENTAL•BUSINESS iNFQRMATIQN fVIINNESOTA INVESTMENT FUND _ - � STATE LOAN PRQCRAM r � �#�� ct � .... ..��€et� . - _ Name of Bort (Business Legal Name): S'h'eafTl IClteffla�lOC1�l, IflC. primary Business contact: ��c ent Mot�ola �_� vin NAECS Code: 56 142 0 , DuNS Number $08628502 � _ A) OWIVERSNIP STRUtTU�2E . � l. Proprietorship, partners, ofFicers, directors, holders of outstanding stock 10 percent or more of business , awRership must be accounted far: Name Titte °� of Ownership See attached list • 2. List ait affil�ia#e i' See affached list • s and subs diaries of the busmess: 3. Ftave there ever been judgments or injunctions against the business or awners? ❑ Yes 0 Mo If yes, describe: 4. Is there pending litigation involviRg �he business? ❑ Yes Q■ No If Yes, attach summary and disposition. � 5. Has the business or the owners of the business ever filed bankruptcy? � Yes Q No lf yes, describe: - B) BUSINESS STRUCTURE 1. Indicate type of business and provicie verification: Q Corporation: Articles of Incarporation, By-Laws, Certificate of [ncorparation , ❑ Partnership: Partnership Agreement ❑ Ll.C: Articles of Qrganization, Operating Agreement, Member Control Agreement, Certificate of � Organization ❑ Proprietorship or operates under a name other than the businesses tegal r�ame: Assumed Name Certificate, Affidavit of Publication • ❑ Other: 1 �� 6.��. � SUPPLEMENTAL BUSINESS 1N�ORMATION �� MiNNESOTA lNVESTMENT FUND STA7E LOAN PR�GRAM �� : _ �4 a��r�o��# �c� ��a�i� �+�r��;� C) OFFlCERS / KEY EMPLOYEES ' 1. List a�cers / Key Employees (President, Vice President, etc.): . Narne Titte Years With Company Kath n Marinelfo Presidenfi and CEO Z Matthew Ebert Chief Counsel and Secreta 5 Michael Henricks � CF02 2 D) CURRENT EMPLOYMENT tNFORMATiON � 1. Current Number ofi Full Tirne Equivalent (FTE) Employees in Minnesota: ��D ifl aritiClpafl0tl Of HQ ��I 2. Current Number of Full Time Equivalent (FTE) Employees on site: NQ emp{oyees on subject Appfe VaE(� . *Pravide the most recent payroll report which documents the current employmeni' information stated above. The infarmation provided in this section wi!! be used as your b�se employment. FuU Time Equivalent is based on a tot�! �• annuaf hours of 2080 E) PR�JEGTTiMEFRAME � Task Estimated Completion Date Commitrnent oF all funds 6/30/12 Start of construction 6/30/12 Purchase Equipment 6/30/12 � 7he data you suppfy in this application to the Minnesota Repartmenk af Employment and Economic Developmen# wilf be used to assess your company''s qualificatians far a basiness loan. We will not be able to process the application without this information. if an award is provided far the project, the information contained in the apptication wii) become a matter of public record with the exception of those items protected under the Minnesota Government Data Practices Act found in Minnesota Statutes 1997, Chapter 13. E have read the abo�e statement and I agree to supply the information requested to the Minnesota E7epartmetrt of Employment and Economic Developrnenf, Division of Business and Cornmunity Developmer�# with full knawledge of the information provided herein. I certify the information contained herein is tree and accurate. Name/]"itle of Business OfficiaL• Signature af Business OffitiaL• Date: Telephone Number: EmQiJAddress: �_, • 4 � . �. �� SU�FLEMENTAL BUS[NESSINFORMATIQN MINNESOTA INVESTMENT FUND _ � STATE L�AN PROGRAM ��t�€�� :.: ....��i+c13:�+�*lt��naen#: F} St)URCES AND USES � Personal Guardnties are required as p condition ot the Mlflvan. . � MIE Bank Equity Local Other Total Government PropertyAcquisition ' $ D,aO Site fmpro�ement � 0,�� New Constracfion � $ 0.40 Renovation of an Existing $ 0.00 Building Purchase of Machinery & Equipment � 0 . 0 � Other � O • Total Project Cost $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Term (years} Interest Rate 0.0�% O.OQ% 0.00% OAO% O.QO°lo Collateral lien Position G} LENDER COMMITMENT$ 1. Attach a detailed commitment ietter from each of the above financing sources, including a letter of commitment for any business equity. Commitments must include amount, interest rate, term, col[ateral and canditions of loan. a) Funding Source: � ity of Apple Valley Contact Person: B�� Nordqu}st - (952) 953-257'6 bnordquist@ci.apple-valley.mn.us Telephone Number: Email Address b} Funding Source: Contact Person: Telephone Number. Email Address • 2 �°.�� SUPPLEMENTAL BUSiNESS INFORMATION �``, MINNESOTA INVESTMENT FUND STATE LOAN PROGRAM �� t�# �f ��t��#� �: E��i� [�v� H} JOB CREATION F�RM - PERMANENT JOBS TO BE CREATED NUMBER OF ANNUAL HOURLY RATE HQURLY 70TAL HOURLY POSITION TIT1.E POSITIONS HOUR5 * WITHOUT VALUE OF WAGE � • BENEFITS BENEFITS 1NCLUDING _ �* BENEFITS See attached spreadsheet $ 0.00 - � � a.00 � � o-oo � a.00 � a_oo � � a.00 � o.oa � aoo � o.00 � a.00 � � o.00 ` � 4 � o.00 � o.oa Total jobs to be Created: Average hourly Wage: Average hauriy benefits: * Part-time positions are converted to fuH-time equivalent with fult-time equivalent representing 2,080 hours annualty. *�` 7his hourly compensation shou�d include non-mandated benefits to the emptoyee. Non mandated be�eft include: health, dental, life and long-term disability insurance; profitsharing, retirement.contribution by eniptoyer, elothing aUawance, tuition reimb.ursement or direct payment for education expense, vaca#ion and sick time {hourty value} and cF�i1d care subsidy. Sociaf security tax, unemplayment insurance, workers campensation insuranCe ar�d other benefits rr�andated by !aw MUST BE EXCLUDE0. '�#�` Per State Law governing the Minnesota [nvestment Fund Program, the total compensation including base � tinrage and benefits must be at least 110% of the federal poverty income fevel for a fami�y of four (verify current wage (evels with loan .officer at the time of application). CERTlF1CATIQN 1� , certify that the emplo.yment information is true and accurate. Name/Tftle af Business Official: Signature af Busrness OfficiaL• Date: • i ` 3 � � � �� '� SUPPLEMENTAL BUStIVESS INFORM;ATION MINNESOTA 1NVESTMENT FUND ' . STATE LOAN PROGRAM � aa� i�t� ��l ��snts��ic �e�st� _ . '_� I) Notice of First Source Agreement * Must be completed when federal funds are in excess of $200 �00 � Per Minnesota Statutes 116L66, a business or private enterprise receiving ioans from the State of Minnesota in amounts , over $200,000 must enter into a First Source Agreement with the Minnesota Department af Employment and Economic peveEopment {DEED) to use ihe Job Service as its first source for recruiting, referring and placing of emp[oyees. The steps that will be fo[lowed to complete the First Source requireme�ts have been simplified to assure a minimum amount of paperwork for the employer. 1. At the time of award by the JOBZ and Business Finance Office af the DEED, the Loan Officer will pro�ide written rrotification #a the WorkForce Services Division — Statewide Systems Office {SSQ) of the DEED (St. Paul} by providing the narrte and address of the business as well as the contacE person and phone number along with the number of jobs to be created as a result af the projec 2. The WorkForce Services OfFice - 5S0 will contact the appropriate WorkForce Center nearest to the business location and send a capy af the First Source Agreement to the local Center alang with the information pravided by • the JOBZ and Business Finance Office. 3. The WorkFarce Center representative wi�l contact the business to schedule a meetmg with the business contact to � nQgotlate and sign the First Source Agreement. Nate: the emplayer must onfy list job openings in the State and only for those job classifications that are specified in the DEED project. Managerial positions or jab openings to 6e filled b.y internal promotian need not be fisted. 4. The business wilf then notify the WorkForce Center af job openings at least ten days prior to the anticipated hiring date. Job orders will be entered into Minnesota's Job Bank (http://www.minnesotawarks.net) for recruitment by the empEoyer. � 5. The applicants wi[I contact the business to arrange an interview. The business wifl make all decisions on whom they will hire. The First Source Agreerrient is designed to help businesses find new empioyees by providing a free and simple method of recruiting and hiring qualified candidates_ If you have questions please contact Brian Lambie with the MN Department of Eenploymenfi and Economic Development at 1 National Bank Building, 332 Minnesota St., Suite E2Q0, 5t. Paul, MN �5101. His telephone number is (551) 259-75Q1. l NA1lF READ THE ABOVE 1NFORMATION AND 1 W!!L S(G1V A FIRST SOURCE AGRFEMFNT AS A CONDITIDN TO R�CFNIN6 A L�QAN IN IXCESS OF $2UtJ, 000 FROM THE MN DEPARTMENT OF FMPLOYMENT ,AND ECQNbMIC DEVELOPMEN7: 1Vame/Tit1e of 8usiness OfficiaL• Signature of Business OfffciaL• Date: Telephone Number. Email Address: • � ; � i � � . • i � � :� �'�� lnr��t avPUCar�on► � ; � � MINNESt�TA INVESTMENT FUND i � � D+�'a0'6�'N�d�� , . , ; ; ,B,�N�SS OFFldA! MUST READ AND 51f N THE POL�„OWlNG IN�MATIQN i - pATA PWYALY AdWOWL�EDGEMENT: � �'ent�tn Warnl�g Notioe: per MN 5tatutes 13.04, Subd.2, this data is belqg rcquested fivm you to deter+'�►Ine if ynu �re ellgi6k far a[osn under the Minnesota lewesiment �und program. Yau �re not requlred to pravEde the reqoested �r►fof+»atio�, but failune to do so may resu�t in the de�aRmant's Inabllity to de�kertnine your eltgibil{ty for a ban pursuant �o the crfderla devebp�d underthe prograrn's enabGng legisletion. The data�yau provide is clas��iied as pr�rate or norr �6iit and cannot be shared without yaur pemxission except as apedFfled in sKatuhe. , . �ata Priwcy I+t�tica: per MN Statutes 33.591, Subdivtsbn 1, oertain data prqvtded in th�s apnl'�a#ion is private or non- blfc dat�; thls includes f�arulat irrformation about the business, i�cluding �edit repoRs, financial sraterne�ts, net orkl� wlaulations, bustness plans; Income �nd expense projeetinns; balante�sheets; custom�er lists; income ta�t retums; � desigm, markM and feaslbiGry stadtes not pald for witM public funds. Pet MN Statutes 116t.401, Subd. 3., certa� at� pmv�ded in thls appficatian fs private data; this inc[udes data ootlected qn �dlviduals pursuar�t to the operation crF '�he Minnqsutt�ee Invesement Fnad program. • �ha�re reaa[ tha above statE�rrieMs and t a�gree ta supply the tnformatlon ►eqaested xo the MN Departmerit af �inplayment and Economic pevelopment, OfFic�. af )OBZ and 9usiness �inanae with fiall knowledge of the lr�formation �rovided i�erein. I certify that atl inforrnatfon pmvided he�in is �nie and accurate arsd tRat the ofiicla! signing thls form 1�8s authomYtatbn to dp 50. � F �'8111@�� t� �US�ll�SS ��C��: Y � /" C.. "�i �� f ' ' C"i � �gn�ture of Busireess O#fic�al: •''� Dace: � � , i i . � � ' . � � i I � ; � ' , PC)SITIVELY ; SUPPI.EMENXAI. BUStNESS I{��ORMATION ' � r MINNESOTA INVESTMENT fUND STATtl t,OAN PRQGRAM 1:D�n�nt ot �mployrheRt �d Erono�eiic Dw�bp�runt (�) vF�ic�as / �r oua��nr�s ; � 1 . l3sC C)fFicers / Key Emp(ayees (President Vice President, etc.�: � � fYame '�Itle Ysa�s W1ch _ Com ' Kath n Marinelio Preside t etnd CEO 2 Matther+v Et�er� Chief Couns I and Secreta 5 + Michaef Menricks C �D2 � � , ; p) tvw�Nr �Mr��xn��r iN�o��nonr ; ` 1. Current Numberof Full Ti�ne Equiwakni (FTE) Employees In Mirtrtes�+ta �� D in anticipatian af HQ re! . ; � ' 2. Current Numl�er of Ful! Time Equivalent {FTE) Emplayees on site Np 9mployses on subject App1e Vall� � . �'Pravtat� the most reter�[ payroH report wi+ich docurrrenu �he current empVoymerrt lnforrrrat�on stared o6ove. The �nforrt�ali�n provided in rhis sectlon yviN be used os your bose employmei►!t Fu1/ Time Equivalent is bosed on o racal � �r��rr�a! hours oj2080 , �} PRt?1EC71'IMEFRAM6 � Task fstl,�ated Cnrnpletiwn Date ' Cammitment of al! funds g/�� 5#art of constructian ��/.�� Purchase E ui ment 6/30/72 �. �..�..r�r...�.+ww��w��w.+�awr�..�-.+.ri.�,.....w.�r��..r�e..��...��wn�.�o..�....e..��.wwwo«�...��w.w�� . ; "�be data �rou sa�pplr 1n thls applicadon to the MMnesota Departmer�t of �mploy,nent aed £conomk Dewelopment �irill be used to assaess your compaeys qualiflcatiarac tair a buslness laan. We wtil nat be able to prace�s Ehe �pP��catlan whfiout this �a�ormatFon. ff an award Is provldad for thie p[o�ett, !he Inforrn�tio�n contatned fn the i�spllcatlon vwl[ becpm�e a matter at puW1c record with the. exceptian nf t,�vse Items prote�ted under the e lnnesota Go+re�rnmeni Data Practtces At# found !n Mfnnesota Statutes 1,997, �apter 13. � ithave read the abor+e s:ate�ent and i agree to suPply che irtfarmstlan r�quested ta the Mtnnesoka Deparprteat of Rmplayment a�d Economk pevelopment, Diviston of Business and Comrt�u�lty D�veEopment v►rtth fuii knowledgc �Me infonnarlon provid�d hereln. ! c�rtify rhe information containad hlereln is trus and accurate. 1�4a'fie/7`ttM of 6usfness pfficial: � • ��l r J •� .�jBnoturc af Buslness ��ciat: � QL@: p � 'l�t�ephone Nymber.� �J� � 7` • �o� .�.� ,%/ 7 � ,�mnil Address: �!'✓�.+�2.,/ � 6.�'/ � ...3 �I��/Sf y'� . ' , d i � POSITIVE�.Y ; • SUPPCEMENTAt BUSINESS tNFQRMATI4N ��i . � ry MINNES07A lNVESTMENT FUNO STATE LOAN PROGRAM ;#1�prl��nt d �mploYn�ent ar�! Economie Qe�nMop�n�t �� Notke af Flrst Svu►ca A6*ea�nra�t �' M!c%�+ be comaleted wfr�n�ederalfunds are in excess of SZOQ,�� : - Per Mlnnesota SLatutes 1'i6L.68 a busi�ess or pt�vat� enterprise reoeiving Icans from tfie State cf Mlnnesat� in arnaunts prver $20q,OQ0 must enter fnto a First Souroe Agreentent witM the Minnesota Depercment af Employment and Economlc pev�elopment (DEED1 to us� the lob 5ervice as fts first source for recruitirtg, t�etrU�g and pi�ting of empioyees. . �he steps that will he foUowed to complete the F;rst Saurce requireEnerrts ha�Ve been simpl'rFled to assure a minirnum prnount of papetwark to� the em��oy�r, �, At the time of award by the 106Z and 6usiness Pinance Offiee of the �IEEa the laan O�cei will pravide writun pdtlficatbn to the WarkForce Services Divisian — Statewide Systerns 01�ice {SSO) of the DEED (SL. Pau!) by prcvidMg t�4+e name and address of the trusiness as weil as tfie conYactpstson and phone numbe� along with the number of jol�s to be created as a result of the project. �, Th�e WorkParae Servlcas Offlce - SSO will cor►Eact the approprlate WorkForte Center nearest to �e business lacstion and send a eopy of the First Source Agreement to the local Ce�er aiong with the information provlded by the J09Z and Business F;nance Offlce. �. Ttxe WorkForce Center representativa wili contact t1�e busiaess to schedule a meeci�►g with the business contact to �. negotiate artd slgn tt►e First Source Agreeme�t. iVate the em�rloye� �ust onty qst jo6 opentngs in the 5ute and only for those job classifications Lhat are specified in the pEEO projeet. Managerfal posieions or jott openings ta be ; filled by intemal prornotion need rsot be iisted. !4, Th�e buslness wlli then notffy the WarkForce Centet of job openings a� least ten days prior to the arrTlclpated h{ring daRe. Job orders will be enterec! ir+ia Minnesata's Job Ban& (http:l/�•minnesocaworks.nex) for recruitmern by the empiol+er. �. Tl�e appllpnrs wiil contsct the business to arrange an interview. The #�usiness wit! make al! decislens on whom . th�y witt hlre. fihe First Saurce Agreement is designed to help businesses flnd new amployeps hy providing a froe and simple method of �ecruiting and hi►ing qualffEed candldates. IP you have qt�sL(ons please cqntaict Brien Lambie with the MN Qep�rtmentaF �mployrt►Qnt and EcoAOmlc Development at 1" Natlonal Bank Building, 392 M�nrtesata St., Stlite E2U0, 5� Paul, MM 551Q3. �lis tekphone number is (65�.) �59-75Q1, ; .. _ ...._•__________...�..,._.�.__._..�...�._.�- -- - --- �" HAVE RBAD THEABOVE INFtyRMAT/ON AND I NRLL S/GN A FIRST SOt/RCEAGREEMFM AS A COND1TfQN TO REC;E�VtNG 1t tDAN IW EXGESS OF $200,000 fROM TiIEJNlV DEPARTMENi'Of E'A+►PZOYA�FJVT ANU ECONOMIC DEYFLOPIMIENT, � '' ,_.� f � �Uarne/T�tlle af 8uslness Afficiok ' .N��'� Stgnatu� ,of eusfness Oj}fc)aL• ✓'6°� Dabe, � S�� 'e�epho��+ Af u�n6er. � � r�''�+ En'�aN Address: f •� i !+./ � ��1u �� ' ` ��. �� • . S A) OWNERSHIP S7RUCTURE Owners, Partners, Affitiates and Subsidiary List � For Stream International, Inc./5tream Globat Services Campany Name Directors O�cers & Titles Otfice Address (EfFecGve Rate of (Effective Dabe of E[ection) Registered Address (if differeni than office addressj Appointment) Regisiration Number Rlace & Date of Inoorporation Shareholder ( 9b} ' NORTN AMERICAN ENTftIES Stream Glubal SenriCes, int. Kathryn V. Mar.inello Kathryn V. Marinello CEO & President (f/kJa 6lobal BPO Services Corp.) G. Drew Conway Dennis Lacey Executive Vite Presiden# & Chief Fnancial . Paul G. Joubert Officer Office: 2Q LWilliam Street, Suite 310, We11es[ey, MA 02481 David Kaplan eriart Delaney Executive Vice Presideat & Chief dperating Matthew LWiertnia Officer 2711 Centenrille Rd, Suite 400, Wilmington, DE 14808 Nate Walton . Jim Radzicki Exewtive �ce President, Chief Technology � Julie Richardson and Information Officer FEIN#: 26-Q420454 . R Davis Noell Greg Hopidns Executive Vce Presidenf, Global 5ales Alfredo I. Ayala Barbara 1Neyl Executive Vice President, Human Encorparated in Delaware in Q6I25/2007 &ifbert Santa Maria Resources Matthew Ebert Secretary Parent- Pu61ic campany Leo Vannoni 7reasurer Stream Holdings Corporation , Kathryn V. Ntarinello Kathryn V_ Marinello CEO & President (OS(19/201D) (f/kf a Call Center Holdings, lnc.) (08/14/2010} Matthew Ebert 5ecretary{04/01/2011) Mike Henricks Chief Financial �ffic2r (03/13/2012) Office: 20 William Street, Suite 314, Wellesley, MA 02481 1-eo Vannoni (04/Ol/2011) Lea Vannani Treasurer (08J19J2010} • . ftichard WanstaEl Senior Yce President, Finance 2711 Centeroi{le Rd, 5uiie 400, Wilmington, DE 19808 1��tthew Ebert (08/19/2Di0j (U4/01/2011) FEIN #: 90-0253095 • Inrnrporated in Delaware in 06/03/2003 ' - Owned by Stream Gla6al Services (100%) Stream GEobal Services- US,inc. Kathryn V. Marinello Kathryn V. Marinello CEO & Presiden# (OS/19/2010) (d8/19/2010) Greg Hopkins F�cecutive Vice President, Globaf Sales O�ce: 20 Wiliiam Street Suite 310, Wellesley, MA 024&1 _ (07/01/2021) Leo Vannan9 (04/01/201I) Mattfiew Ebert Secretary (04/DiJ2011) 2751 CentervilJe Rd, Suite 400, Wilmington, DE 19&08 Mike Nenricks Chief Fnancial Officer {43/13/2012} MatthewEbert Leo Vannoni Treasurer (Q8/19/2010} FEtN #: 95-4786d49 (04/01/201i) Richard Wanstall Senior Vice President, Einance (08/19/2010) Incorporated in Delaware in 02/29/200a Owned by 5trearn Holdings Corporation (1�0%} . Stream Global ServiCes- AZ, inC. Kathryn V. Marinello Kathryn V. Marinelfo 'CEO & President {OS/19/2410) ' • {O8/19/2010) Greg Hopkins Executive �ce President, Global Sales Office: 20 William SYreet, Suite 310, �IVellesley, MA.02481 (07/01/2011} Leo Vannoni [d4/01/2411) Matthew Ebert Secretary {04/fl1/2011) FEIN !i: 86-0920048 Mike Henricks Chief Financial Qfficer (03J13J2012j Matthew Ebert Leo Vannoni 7reasurer {O5/Ol/2016), Incorporated in Arizona in OS/41/1998 �04/p1J2011J Richard Wanstall Senior Vice President, Finance (OS/01/2010j Ownec! by Stream G�obal Services- US, Inc. (1{IQ%) Stream Globaf Services G1.0 Kathryn V. Marinello CEO & President Matthew Ebert Seaetary OfFice: 20 Witliems Street, Surte 3I0, Wellesley, MA Mike Henricks Chief �nancial Officer {03/13/2012} 42481 Leo Vannoni Treasurer Richard Wansiall Senior Vice President, Finance Incorparated in DeEaware on 12J21/2009 � Owned hy SGS Netherlands CV [i0p%) 1 ` MIF Application for Stream Inte� fnc. — Supplemental Business tnformation Stream Global Services Subsidiaries Chart Stream In#emationai, Inc. Kathryn V. Marinello Kathryn V. Mariaello CEO & President (08/14/2010} � i {f/k/a Stream International Services Corp.} (08/19J2010) Greg Hapkms Execufilve Vice President, Global Safes . (07/01/2011) • OfFice: 20 William Street, Suite 310, Welfesley, MA 02481 �o Vannoni (04/Ol/2D31) Matthew Ebert Secretary (04/Ol/201A) Mike Henricks Chief Financial Officer (03/13/2012) 271Z Centerville Rd, Suke 400, �Imington, DE 19848 Matthew Ebert Leo Vannoni Treasurer (04/13/2009) (04/01/2011) Richard WanstaEl Senior Vice President, Finance FElN #:04-2776573 ' {05(01/2010) Incorporated in Delaware in 12/29/1982 Owned by Stream Holdmgs Corporation (100%) S.Stream iniernattonai lnc �trev� a��f�L.��l�j Kathr�+n V Mannejlo :�., Kathc�m V:�+1ar�nella CEO & PresidenY �08/.i9)2o�.0) � ,� M �41 f � �; �� .�� '�.� � '�� OS11�1� fl�(�1 '' z � �� tatdte�nr�ber[� -� Serretary (44/fl1�2fl1i} � � � i' ,. �- ��s � �-�.'� �� ..�.. ,,.� -� _ � « C7fifi e'�sie � �4$1 ��- � -°.� �� , D�nn�lace�� thiefEi�ant�dl{3�cer � .f �,� .?,,. rs �w � t�:'r"� r -s k �^�'� '. .. �� , �� ,� � �� r� . � . ,.: �� z'iF,r�„ �.� `�RU _�J"��'� ��'� �c^'�"� '�. i{PO��(}f�t2711 .��: ��PQ'�/��iTfl�(Il �.7P�SL��xC� i r �z.�- � ..� � � .�: � . . .'� th�.�.s� ��..:... ,� � ,.. `� .�.�`, . -�*� s" "� . y . '� t hT` �� --'" 5261Hii`1/1 '�.� 2 ,��P.�1t Fltiat7LC � .Y i :. fEt�t-# �$=03543�.''i �'" �` �� - � ,{fM4 A2�30� �-�' �"� � �� ,�a�� . G f �,�-. ' , '�� ''�'�'�^`.�.`"� �� . � �,4��„-°'' �:.;� 'F�s � �` ` � C ,�'�..� ��y�''� $ �. � � � ,e a'.�c�. � "�, . .,� s � � (�r� � : . 'Yn�r.Q[{ror�d et d i� �lenada i 3�2j32�95 � ' �, . "� ��e ��3e1� "rs,^°s." -�. ?j t- a ��a,,� r � .r�`� -�^��,.,�� ;<c �„_ � � ��"� . ,�...�, r .. F „ . ��"'. � 3. � �c . '�'v�,�.� `� � �` `� �'r �: � .f _ � F � �. � 5 * ��4��'� T�`�� f.T � .�� +K � x��,�'�^',�,�� '� . � 3 -. J Ovustetl S#rearq �nternaGonal; ly�c {10096�� - ;; , '� ,� '�� `.. .� � �_ � _�"z -�- .- . � '= �,. _, � �.� . � �� ``s�a �! _ � *, Stream Enternational Canada, lnc David Brown — �irector Kathryn W. Marinel(o CEO & President (OSJ19/2014} Resident (WeirFoldsLLP) Greg Hopldns Executive Vice President (07/01/2011) 540 Dundas Street West, Belleville, ON K8P iBB, Canada {04/14/2004} � Matthew Ebert Secretary (03/48/2011) Dennis Lacey bcecutive Vice President, Chief Financial Pi�: �.azo�si Kathryn V. Marinello or�cer (os/�/2oso} . CRA: 86644 5642 (08/I9/2010} Leo Vannoni Treasurer (06/23/2010) Richard Wanstall Senlor Vce President, Finance Incorporated In Ontario in 05/ZS/20DD leo Vannoni (06/23(2010) - {03/08/2011) Owned by Stream international, Inc. {10090) Matthew Ebert (; • (03/08/2011) SYream florida [nC. (ff k/0 ECE H8lding5, InC.} Kathryn V_ Marinello Kathryn V. Marinef[o CEO & President (08/19/2010) (08/19/2010) Maithew Ebert Secretary (04/Ol/2011} Office: 20 William Street, Suite 310, Wellesley, MA OZ481 Milce Henricks Chief Financial Qfficer (03/13/2012) Leo Vaononi (04/01/2011) Leo Vannoni Treasurer (08(79/2010) 2711 CentervilEe Rd, Suite 4Q0, Wilmington, DE 198Q8 Richa'rd WansialE Senior �ce President, Finance Matthew Ebert (08/19/2010) FEW #:55-0873073 {04/01/2011} 3ncorporated in Delaware in 02/03/2003 Owned by Stream Holdings Corporetion {i[f0%J 5tPeam NewYOrk InC. Kathryri V. Marinello Kathryn V. Marinello Cf0 & President (08J19/201Q) {08/15/2010} Matthew Ebert Secretary (04/01/2011� Office_ 20 William Street, Suite 310, We]leslEy, MA Q24S1 Mike Henric[cs Chief Financial Officer {Q3/i3/20J.2} Leo Vannoni (04J01/2011) Leo Vannoni Tteasurer (08/19/2010) 2711 Ceoterviile Rd, Suite 4Q0, Witmington, DE 19808 Richard Waasta([ Seniorvice PresideM, Finance Matthew Ebert (08/39/2010� FEfN #:13-42p5024 (04/01/201A) Incorporated in Delaware in 07/26/2002 _ Owned byStream Holdings Corporation (100%) ��, • z Strearn Glohal Services Subsidi.azies Chart � � � EMEA EIVTITIES Stream Intemational BuEgaria E00� Kathryn V. Marinello (Not appGcabte) . (�BA: CTFYNl1M V1HT2jlN@Ll1bHW1 Sblif3pNA� EOO,Lj) (IO/14J2010} 9-11, Maria Louisa Bivd, 7` Floor, Sofia, Vazrajdane Matthew Ebert region, eulgaria (04./28/2011J Company IC1-1752579+F2 Leo Vannoni (04/28/2d11} Incorporated in Bulgaria in p3/28/2fl07 Owned hy Stream Intemationai Europe BV (100%r , Stream GIOb81 Senrites DanmOrk ApS Kathryn V. Marinello Frankvan Eijl- Managing Directar (06/21/2011) {14/12/2Q10) Alfred Nobels Vef 25 � 9z20 Aalborg Q4st, Denmark Matthew E6ert (06/21/20I1) CVR- no 32 38 35 35 Leo Vannoni � fncorporaked in Denmark in 07J1Q/2009 {05%2S/2011) Qwned by Stream Internaiional (Bermudaj Ltd. (30Q%J Stream International Egypt Limited Liability Kathryn V. Marinello Company {o9/iz/2oiz) c% RAYA/C3, Block 7A Matthew Ebert , • AI Motamayez district 6Yh of October fQ Cairo, Egypt Leo Vannoni(09/12/2011j CR Namber:36799 Dawlat KadryAhmed EI � Incorporated in Egypt in 01/26/2009 Sayed (09/12/2Q11) (DLA Matouk Ba55iouny} Owned by Stream Internationat Service Europe, BV (99%) and Strearn Internationat {Herniuda) Limited (1%) . Streatn Global $ervites GmbH Kathryn Marinello (Not applicable) (12/01J2010) Komturstrasse 18 12q99 Berlin, Germany Leo Vannoni (06/07/2011� Registration Number: HRB No.69642B Matihew Ebert � � (06/07J20�.J.) Incorporated in Germany in 12J07/1998 Clwned by Stream international, Inc. (1Od45) Stream Ireland ContaCt ServiCes Limited Kathryn V. Marinello (Not app[icablej (fJk/a ECE EMEA, Ltd.} {ps/�.y/zosa) Merrion Hpuse, Merrion Road Matthew Ebert Dubiin 4 freldnd (Q3/OS/2011) Registration Number:369663 l.eo Vannoni {Q3/08/2011) Ineorporated in Irelaad in 04/Q9/2003 Owned byStream Florida trtc. (100%j � � Strearn Globa.l Services Subsidiaries Chart Stream Irefand Limited � Kathryn V_ Marinello {Not appiicable) �• {08/19/2010) Merrinn House, Merrion Road Dablin 4lreland Matthew Ebert �a3/oa/zoii) Registration Num6er. 442890 Leo Vannoni �03/08/2011} Incorporated in frefand Owned hy Stream International Services Europe, BV (S00%j Stream lialy S.r.L Kathryn V. Marineilo- (Not applicable} Chairman (11/19/2010} �a Grandi 8, 20063 Cernusco suf Naviglio (Mf) Italy Leo Vannoni �03/1fi/2011} Purchased on 12/06/2002 Matthew Ebert � Qwoed by Stream Haldings Corporation {l�%} (OS/18/2031} SGS NetE�erlancfs C.V. Stream Internatiooal, inc {Not applicabte) (DE} Kabelweg 43 1024 BA Amsterdam Sfream Holdings Corp. • The Netherlands � lncorporated in The Netherlands , Owned by Stream Intemational, Inc. (99%} and Stream Holdings Corporation (1�0) �PARTNERSHiP- managed 6y partners SG5 Netherlancfs Cooperatisf U.A. Kathryn V. Marinello (Not appGcable) ,• � (08/14/2010) ' Kabelweg 43 1024 BA Amsterdam Leo Vannoni (03/08/2011) The Netherlands John Dick{07/O1/2011) lncorporated in The Nether�ands on 09/02/2A09 Frank van Eijl {07/01/2011) Company Registration Number: 343563�4 pwned by SGS Netherlands CV (99%j and Stream Global Services LLC (1%} SGS Neiherlancls Irrvesiment Corporation B.V. Kathryn V. Marinello {Not applicable) �a (08/19/2010� Kabelweg43 Leo Vannoni [03/08/2611} 1014 BA Amsterdam The Netheriands lohn Dick{07/01/2U11) lncorpor.ated in The Netheriands on 09(ZS/20o9 Fran& van Eijl {o7/O3/z0�1} Company RegistraYion Num6ec 34349051 *can act independendy Owned by 5GS Netherlands Cooperatief U.A. (100%) t :::• ' 4 Stream Global Sez Subsidiaxies Chart � Stream international5ervice Europe BV ( Kathryn v. Marinello (IVot applicable) {08/19/�OiO) Kabelweg 43 1014 BA Amsterdam !eo Vannoni (03/DS/2011) The Netherlands �onn ��c� to�/oi/iou� . Incorporated in the Netherfands in 02J27J2Qd8 Fran& van Eijl (07/01/2011} Company Registration Number: 3429607b fcan act independecrtty Uwned by Stream, Internationa[ (Bermuda} Eid. (10030) Stream Intematiana[ Europe BV ("BVi"} Kathryn V. Marinello (Not applicabfe) (OS/19/20I0) Kabelweg 43 • 1014 BA Amsterdam Leo Vannoni {03/OS/2011) Th�' Netherlands Jahn Dic.k (07/Ol/Z011) Irtcorporated in The Netherlands in 12J01/1494 � � Frank van Ejl (07/Q1/2d11} Company Registraiion Number.33258450 Owned 5y Stream Internationa! [nc. (1i30%) *ran act independently Stream IntemBtionaf (NI} ltd. Kathryn V. Marinello - Mat#hew Ebert-Secretary (D8/15/2011) Ciass A{08/19/2010) Abogado Nominees Limited- Secretary (OS/15/2015} lllster Science and Technology Park Buncrana Road Matthew E6ert- qass A Londonderry (0428/2011} Northern Ireland BT480J8 • leo Vannoni - Class A Incorporated in Northern Ireland, U.K_ on {D428J2011) 09/12/1995 Owned by Stream International, inc. (30095) • Stream fritemdtionai 5p. Z.o.o. (P(JLAND) Kathryn V. Marinello (Not applicabEe) {12/30/201Q} AL Wojska Polskiego 62, 70-470 5zczecin, Poland Matthew Ebert VAT:PL85222453727 (08/31J2011} Incorporated in Poland in 07(29J20U5 Leo Vannoni (08/31/2011j Owned by Stream fnternationat, inc. (49%j and Stream Intemational (I�i) Ltd. {196) Stream Business Process Outsourcing South Kathryn V. Marinello Dennis Lacey- Executive �ce President Africa (Proprietary) Ltd. (08Ji9/2010} . Leo Vannoni -Treasurer Stadium on Main, Claremont Matthew Ebert Cape Town, 7708, South Africa {03/08/2Q11J Jim Davidson - AssisYant Treasurer Campany Number: 2D05/029751/07 �eo Vannoni (03/0$/2011j Chris Wilson- Pub[ic Officer Incarporated in South Africa on 08J18/20D5 Owned by Stream Globa! Services -�ngapore Pte_ Ltd. (100%} INAf:I"IVE- South Africa . 5 - ' Stream Global Services Subsidiaries Chart - F Stream Servicios de Apoyo Informatico 5.L Kathryn v. nnarinello- Power of Aitomey: �� {SPAIlV) Chairman (10/07/2010� Calle Newton, 7 Leo Vannoni (03/30/2011} 15 DO& La Coruna, Spain Matthew Ebert Incorporated in Spain on Ol/03/2000 (03/3i/201i) Owned by Stream International ine. (100q) 5tream Intemational Nordic AB (SWEDEN} Kathryn V. Marinello- (Not applicable) Chairman (08/19/2010} Box 5076 � (.�o Vannoni (04/28/2011} 25D OS Hefsingborg ' Sweden ' Frank vaa Eijl {p4/28/201ij RN:556598-6105 , John Dick (09/07/207.1) � [ncorporated in Sweden on 10/18/2000 _ �nrrred by S#ream International Inc. (100%) Stream Tunisie S.A.R.L. (TUNISIA) Kathryn V. Marinello (10/06/2011) 16, rue des metiers ZI Charguia ll Eeo Vannoni (10/06/2011} Ariana, �'unisia � Mai#hew Ebert Filing Number; Q330$62006 (10/o6/zo11) Incorporated in Tunisia on d5/27/2004 Jacques Pitel . {04/13/2011) Owned by Stream International Europe, BV (94%) and E Stream international (NI) Ltd. (19'0) eTelecare 6lobal 5olutions - UK, Limited , Leo Vannoni (04/14/2011) Kathryn Marinello- President (12/.Ol/2011} Matthew Ebert-Secretary (12/01/2011} UlsterScienc8 and Technology Park Kathryn Marinello Leo Vanno�i-Treasurer (12/OS/2011) Buncrana Road (12/Ol/2011) Richard Wansta[I- Senior Vice President, Finance (12/Ol/2011� Londonderry Nortfiern Ireland BT48 OJB Matthew Ebert (J.2/O1J2011) lNACfl�E- Unitetf Kin�dom ' Owned by Stream Global Services - 5iregapore Pte. Ltd. (100%) ASIA PAC StreOtn Global 5ervicBS Mong Kong Llmited Kathryn v. Marinello- (Not applicabie) ' Chairman and Legal 43rd �loor, GloucesterTower, The Landmark Representative 15 Queen's Road Centra[, Hong Kong (7:0/O8/2Q10) Incorporated in Hong Kongon 12/2009 Mattfiew Ebert (03J08/2011) SGS Netherfands Investment Corporetion 6.V., Sole Member Leo Vannoni (03/08/2011} Stream (Suzhou) Information Consulting Co., Ltd. Kathryn Marinello Jane Tsoang- Legaf Representative & General Manager ("WFOE°) {Chairman) Floar 2, Unit BIEI-23 Leo Vannoni Creative lndustry Industrial Park , Matthew Ebert 328 Xingf,u Street Suzhou Industria[ Park ' � �`_ _ � Stream Global Services Subsidiaries Chart - • Incarporatedin China Business Registration Number: 320594400027460 Owned by Stream Giobal 5ervices Hong Kong Eimited (10096f Suzhau Silun Infprmati0� Service5 Co. L#d. ("VIE"] `1 Ma (Chairman) Jane Tsuang- General Manager Yiyi Ma- Legal Representative Floor 2, Unit Bill-23 KatBryn V. Marinello ,, Creative Indusiry Industr'ral Park ' 328 Xinghu Street Leo Vannoni (07/OS/20ISJ Suzhou industrial Park � Matthew Ebert Encorporated in China (07/OS/2011) . Business Registrafion NumGer: 3205940Q0182177 (10U90 owned by two individual shareholders and rnnuactually controlled by the WFOE, not ownership, affifiated wiih Providence] 5tream Internatianal Services, Pvt. Ltd. Katfiryn V. Marinello {Nat appEiwble} KamEa Mil1s Compound Shardul Thac[cer-Mulla & Building A Mutta Senapati Bapat Marg Lower Parel Bindiya Raichure-Mulla & Mum6ai 400 013 Mulfa CIN#: U72200MH2O00PTC126794 AdiCooper , � Incorporated in India on OS/26/2000 Matthew Ebert , . (08/04/201Z} Owned by Stream Mauritius Ltd. (100%] • Leo Vannoni {08/Q4/2011} Infawavz InternationaE Private limited Kathryn V. Marir�ello {Noi applicable} Stream Mumbai North 5hardul Thacker- Mulla & • Everest House Mulla � 6 Suren Road � Andheri East Bindiya Raichura- Mulla & Mumbai 400093 Mulla CIN# U72900MH2O00PTC124280 Adi Caoper lncorporated in Maharashtra, India on 02/1b/2000 Matthew Ebert {08/04/2011) Owned by Stream Internetiona[ Services, Pvt. ltd. , � j98%)and ESOP (2%) Leo Vannoni (OS/04/2011) Strearn MauritiUS Ltd. Qaig Downes Mniticonsult Ltd. - Seaetary c/o Multiconsult Ltd. {i0(31/2008� Rogers House, 5, PresidentJohn Kennedy Street Kathryn Marinello Po�t �ouis, Mauritius (1p/15/2010} Registration Number. 25176/6054 Cl/GlV16L Sha�nmeemldian . Abdoolakan- MulticonsuR Incorporated in Mauritius in 07/24/2000 Ltd. (03/lb/2011} Owned by8tream Irrtemational {Berrnuda} Ltd. {10�) �eo Vannoni � � Matthew Ebert 7 Stream Global Services Subsidiaries Chart . Siream IRterna#ional Global Servi�RS Philippines Kathryn V. Marinello Kathryn V. Marineflo-President & CEO _ �� ina {fJk/a eTelecareGlobal5olations, lnc.) (Chairrnan) Leo Vannoni-�ce President Randi Lorica- Treasorer 15`" Ffoor, PBCom Tower Leo Vannoni Gemma Santos - Secretary (1Oj01/2009} fi795 Ayala Avenue corner V.A. Rufin Stree# Makati City, Philippines Michael Montero S.E.C. Registration Number. A200002574 Lucas Nunag inco�po2ted in T6e Phiiippines on 01/28/2�00 Chona Yasay • Owned by SGS Netfiertands Investmeni Corporation B.V. (100�) Stream Global 5ervices Phils, Int. � Kathryn v. Marinello Kathryn V. Marinello- Presideni & CEO �f/k/a eTeletare Ctark Senrices, Ent_) Leo Vannoni President • Leo Vannorti MicJ�ael Mpntera Treasurer Incorporated an 04i28/1998 � Gemma Santos (10/01/2009) Randi Lorica Michael Montero - Treasu�er (10/Ol/2009) Bldg. 211� & Z113 C.P. Garcia Street PAichaek Montero CSEZ, Clark FieEd ' Pampanga Chona Yasay . Phifippines Incbrporated in The Philippines Owned by Stream International Global Services Philippines, Ina (10096) e7elecare Philippines, Inc. Alfredo l. Ayala (Chair} Gemma M. Santos - Corporate Secretary (10/Ol/2009) 31�` Floor, CyberOne Building Michael Montero Eastwood Gty Cyberpark • Libis, Quezon City � Philippines INACTIVE -The BhiEippines Owned by Stream Internationat Global Services Philippines [nc. (1q09b) Stteam Global Secvices- Singapare Pte. Ltd. Kathryn V. Marine{Eo Tricor Evatthouse Corporate Services {Secretarial Agent) (f/k/a eTelecare Global Servicesr Singapore Pte. Ltd.) Michael Montero Woo May Poh- Secretary (Tricar} 80 Robinson Road #02-00 Woo May Poh (Tricor} Joanna Lim Lan Sim-Secretary Singapore 068$98 {Tricors offiteJ Leo Vannoni Incorporated in Singapo�e on Q3/28/2008 Owned by 565 Netherlands investment Corporation � B.V.(iD09o} CALA E1V31TIE5 � Str'eam Int@matiOnal {Bermuda) Ltd. Kathryn Marinello Kathryn Marinello - PresideM (08/19/201Q) (08/19/2010) Matthew Ebert- Secretary Carton's Court ApplebyServices (Bermuda) Ltd. = 5ecretary 22 Victoria Street Leo Vannoni (OS/OS/2011) Dennis Lacey- Vice President & Chief Financiaf Qfficer (in prac:ss af Hamilton, HMI2, Bermuda appointing Mike Henricks in his place) Matthew Ebert Richard Wanstall- Vice President, Finance Inco�porated in Bermuda in 06/08/2000 (OS/OS/2011} Leo S. Vannoni - Treasurer Registration Number: 28645 Owned hy 5tream Hotdings Corporetioo (100%) Branch: Santo Domingo, DR- Est. OSJ30/2 t ! • $ Stream Global Services Subsidiaries Chart , 5tream tnterttational Costa Rit2 S_A. Kathryn Marinello - President Matthew Ebert- 5ecretary Zona Franca Americana Lea Vannoni-Treasurer .. 600 M North From Mall Dennis Lacey- Comptraller Cariari Postal Code Z97-3006 Edgar Odio Rohrmaser- Resident Agent Heredia, Costa Rica Company ID - 3101300047 Registered with Sofia C�dy Court - Case No. 4788/2007 lncorporated in Costa Rica on Ol/20U7 Owned by SYream InternationaE (Bermuda) Ltd. (10096} . � Stream Glabal Services EI Salvador, SA de CV � Kathryn V. Marinello Kathryn V. Marinello- President (11J12/2010} Salvador Rivas Salvador Ernesta 5alazar Rivas- Vice President Alameda Roosevelt 62 Mark Boyer- Ahemate Ave Sur, Col. Escafon t.eo Vannoni-AI#emate San Salvadar, EI Salvador Incorporated io EI Salvador on 10/16/2008 Owned by 5tream Global Services, lnc. (1%) and Stream Mtematianaf (Bermuda} Lid, (9996) � ,._ ,. Stream &(obat 5ennces Honduras 5�°j�n process ,,. � ofi. f,Rrmatian] � - ' ` ' _ - .. ... .. .:. .. ...........: _ - : ,: -:-.,..... .... Stream 61oba1 Services Nicaragua, S.A. Kaihryn Marineilo {Stream Kathryn Marinello - President & Secretary {11/15j2010) � Global Services- Singapore Dennis Lacey- Chief Financial Officer (11/15/201p} � ' Rotanda EI_PeriodisW,150 mts al sur PCe. Ltd. Representative) Richard Wansb[I-Senior Vice President, Finance (11/15J2010) Ofiplaza Ef Retiro. Edificio #3 Lea Vaononi- Freasorer (11/15/2010� Managua, Nicaragua {In process of changing 5[�aro Internatiana3 • Incorporated in Nicaragua Global Services Fhilippines representative} Owned by Stream Global 5ervices - Si.ngapore Pte. Ltd. (Note: Stream intematrona! G(obat Servites PhFfippines lnc. owrrs a nomina! numbero}'shpres and Kathryn V. Marinello owns one share) • . 9 � � • 8} BUSINESS STRUCTURE ARTICLES OF INCORPORATfON FOR STREAM IN7ERNA'fIONAL, INC. �, • t., • � - � I��! �� P�iGE 1: _:-- � 2�r.e �irst State .I ,7E�'�'RE7C W BULLOG'1�, SECRE�'ARY �F ST�TE+: DF T73E 3TATE G?�' - ]3E:GAWI#],4E, DO HER�BY E£`R3`IFY THE A!`TAC.H�Il ARE TR�IE AAi1J CQ�iREGT CUPIES O.�' A.�I, 1]OGU.l�?EN�"5 FI.T�EI3 FROM AND INC.LUIaING TI3E RESTATED ' CE�TI�'7GA�'E OR A��2GER WITH A RESTAT`.�D CERTF:F'3CAR'E Al`TACH�ED OF' - HSl"�3M T�l�RNATSONAL. :'�NE. "' .�l.S REGEIT�D AND FIT�:E� IA� TRI'$ DFF;ICE� . " TFIE FOT,EOW�ItYG DGtCUMEN�'S 19AVE BIsEN CERT3`F'SED ' � RESTATLD� GE�iTIFIGATE, FI.T+ED T� SECI]ATI1 DAIr O�' JII.LrY, A..D_ I9'98� A`l 3 E3'GEOCg P:M. . . CI��R�IFIGATE .OF' l�s'R.GER, �'I�.EIJ T'HE 3'iiIRTY—F'IRS1' DAY DF t l?ECEMBER, A 20.U1� �1T 12:30 O'CLOCK P.l�f. CERTIF.IC�ITE .(JF �+dERGER, FIS�EI] TBE 1`BIRI'Y`-�'TRST DAY OF IJEG�iBER, A._ I}. 2001 � .�T 12: 31 Q'C�,Q:G� P_l�f. � C.i'sRTIFICAT� Q�'` OWNERSIdIi�� CHANGIN� Ifi� NAMF FROM "STItLAM �NT75'RNA'�`IONAL 5L+'R CQRP ." TO. "STREAM IATTERNA�,I(3N�1Ii INC. n r FII,ED THS TH.2RT�=FIRS�' i�,Y OF DECEMBER, A. D. 200I,. Al' �2 ; 3.�' !3' GZOCR �'._.M. CEI23'IFIeAZ'Ef aF CSANG'E �F REGISTER�1? AGEN'T; FST�ED TB� 'L`WEN1`Y-FIRST DAI'` OF MAY, A_ U 20(12, AT 9 0 FCI,C)G,F� A_M_ _ �__.,,�' . � � 5tY'S �� ' . . . - ��f . � ,�:,, . , ; . • - .:.- , , � m , : ;,��,?;�; a �fi . _ _ ,�� .. _ �. � ,o. , �y ¢� :� �_ : ja(ireY W_ Butb[k Secretary of SYate �- 095I406 8I(lOX� � "�,�� {f _ . _3E?�; 7553635 � ��;� , - t)908922�7 ^�..�.`,,�,�� ;DATE:� tT9—�9—(J9 You may verify this. certificata online. - at carp.del.aware.gov/8U#hver.ahtml. s��i2� oF rz��sur� SECRu4`ARY OF �`�iTATE DIVIB£ON OF CDRPORA3`IONS E'II.ED 03:00 PM Q7/02/1998 c • 98125996Q — 095.14a5 F . i R�sT,�r�n cExrz�c�,TE vF u�co.�tPORArroN o� s�:�iv� arrr�xnra SERV�CES CO� _ Stteam Inten�atior�t 5e�vices Cot�i. {the ``Caporacion"j�. a corpQiafiun. vr,�aniz.e� and exist'tng un8er and by virtus of the. Genera.t Corporation i.aw �f the Stafe pf Delaware (the S° DGCG"), hereby r.ertifes �.s fo![ows; 1, 'Th� [�sna of the Corporation. is Strearo !.(�temational: Seiviccs. Cotp The original Gettifii�te o�' Cn�or�oration of the CorRoration was filed w�;th the Secrefar� of Staie of Detaware ` �n TT.?eecemfies� 29, 19�2. The origC►ial name of t}qe Goxporation was Corparate So�c�vare � : - ��. � ��;� �`#� ��rafr� v�a� � La Stream ta�ss��a�3 �. . . �t: t�i t�t� �-: w t�ai�e=s�.t�rie. _.: � �ct �si ��e�srisat'y �� . The ��ame �af��C. . . �� - �k��g�f t� �t�rt� I�€em�t5�#�� 4 . pur��'ta the Cert�ica�e �i�mer�e�s� �� ?� v�a�h #Iie:$ecr�tary �f �ia� ott �iF�t` �� :9�'� � . .. � , �.. `This Restated Certificafe af Lncorporatton only restates and mieg�a[es, and does not ii��ther amend che provisiansof che Cexti�cate uf inco;p�ion: ofthe C�rporatioa, as ' a�ended,. and theie is na discrepaticj+ tietvneen t[ie.�v[sions af'this Restated Certiftcate �af incorpciration and the provis�ons of t�ie Gerti.fieaxe �f Ince,porati of tf►e Corpo.ra�itm, as a�riended and resta;�ti: 'Chis Rcstated' �Ce.z�ificete of ]ncarpo:ratian was daly adopted by ths �aard ofDirectcjrs ofih.e. C�rporation in ac�ordarica wiEh the provsswns of Sectton ?A�S of tbe pGCL. �• : Th� iesotutian settrng f�Rh the Restated ��rtif catc of Incc�r�oi�ati¢n is as foil:ows; . - RF�SOI.VED: That the Cert'tfcafe o€lncorporaiian of thc Corporat�on, as ainended and restate�, t�e and hereby i5 reStated in ir� entuety so. tiiat ttie same: shajl re�d as follows= ,ar�fcle I 1V 81T1E Tfzc narr►e of the Corporation is STRE�1v1 INTERN.ATIONA� SERvICES C4RF.. Arti�tt II . K��isEereQ 4ffice and �gister�d Agerrt The registeted o�ce .pf th is Gorporaxion in the SFate of D.eia�xarc is located at 1204' Qranga Sir2et, in the city af Vif iltzting#on,. Gnunty �f Ncw CastXq. Thc namc of its T��isCetcd �tgenr at such add�ess is �'��lE CARPORA?EON TRUS� CONlPAN1'_ ,Artic[e III Gorporasc Purpase � The purpose vf thSs Corporat�on is to engage in any lawful act or activiiy for ufiicb corporatibn5 rnay be organized under the Generai Ca�porai�on I,aw of th� State of Dtlawar� (the "{DGGL") • � �il�'tid� IV - Capital Stcick �'he total number af �bares of capita� scc►ck. v�hich this Corporation fias sutFiii�iiy to issu� is Lhree t�ou�d (3,Q00� shares of cummor► st�¢k, par vs�ue $.0 1 per sharE. .�ach sEiai� of co�i�,mor� st�ck sbati be �nti�[ed ta �i�e �ote. Artiele. v Directvts _ (A). Z'he. election of directort ne�ci rtot be by bailo�. unless the By-la of this CorpomtioFZ (ihc `°� -v laws"J shall sa nequire. {Bj To the futlest extent permstted � t��;p�-$ �,� �q ��y� h,ere�er �c amended, no dir�c�vrt�ctixs � �� II � �e�n�t� }��fe ta thss �ot�oration. or its s�tackhal� �'� m�ne�a�r c�'�a� i�t . t�8��`i€�;�i.arjf : duty as a d��ctar No. amcndniee�� :: afi� �t�s� ;: s�� : . oftt�is Arttc1� V s�iall app1y to �� e�t`��e� liabi[ity c�f anX duectorof chis ` ��ciror �v�� r�s�tt�3 �#��' omi;:5ians tyf SuCh dire:ctor occuT�� '��t �n�r�ds��t+tirr��. A�teele VI Antendrhe�Ys zo Cl�aner and 8y-taws: Ia�' furtherastCa and nat in limitation di the �ower confe;re� upaa t}�e Boarc( qf Direetors �� '-�� ire�r� s��d �� q�v� � ntake, ado t ait�e amend and ce pe�►l fmm '��° . J��€.s �r��,�s �ar�r�� su�� to the right of the stacicl�older� cntiticd to vor.e � �� ` ; � ��`�� oF y �irectars a.e proaid�d for , �3a� �d�e E� t� _ � � :: �� `��aticse� Ssss��z� �r�rvisisa� �#b�;:�erein, this CAtrpou�ation _�� r� ,_t#� .. _ , � � � ��:et, re��i �� ,rzy�.p��i� �� iri �his eert;fcttte �� ct�or�ti�:s� tl��ii� a�r k�+��,�r�a�bed by law:. � . Artic.�e. Yg . IrtdernaiScaeian of J)irectors, (7ffc�rs And Others T3�is �a:rparativn sha.l �, ta t#�a maxiiitum e�c#ettt �ermitted from time ta tiizie under xbe Faw vf xhc �tate af I)�� - - . _ �t,� �.��: requcsc �i�tI ad�a��c� �� ss�y person �vhv �s c.,�r was a par�cy t�r i� _ t� �#�. �y�� ty ��ri �rc�n ��t ? ssc com feted . . � �� activrt, sui� proc��g ��1��.',��G�er civ�f,. crcm»1, ax£rnxii�ive R3l' t��figati�e, lijr_ reasori af the fact that su�h persot� is or was or has a�reed iQ �e.a. directar or o�'icer of thiS Corpatat�an or whife a direcwr or a�ce� is or was servix�g at:the �pquest nf this Carporation as � d.iicefor; �o£#'xcer, par#ner, trustee eEnployee oT x►ge�t of an� cvrpo.ratia�, pa�tncrsfiiF Jol[tt veizture, uuai �r .ott��r eote�prise, ii�clu�i�g service wr.t�.xespect to emptov�e bene!`rt platts agsinst exp�ses (�nc�uding uftorney's fees and qcpenses}, judgment� fines, penatties.and amau�s paid !n sex[�ennent �naurred in connaction wltli the investi�*ation, prcparation: to clefend or defense of such acriqre, sui� prc?ceedin� ar claim; rvvid'cd, how�e�v , t}�at the faregoing st�all nc�t require tittS CO�ioratTon to inderimify ar advarice 4cpenses to any person iri c.Qnnect;on� iuit3� any actic�n, sait, proceedi,�.g, ciai� ��a�t�laim itiitiated by vr oa behaff Of such person. 5uch - inderrfns�c,azi.or�. shafl nof be exclusive pfother inde�nni�cation rights ariSJng under er�y 6y-law, a��n�; vofc vf �r�ctors or stacic�alders or other�t and shal( inute 2b ih� benefit af ihe heirs . . and legal representatives of such persnn.: tA�ty person reeking ��demnifiCAtian under Ehis Articl.e �� • YiF shall be deemed to hava met the standard af conducf require� for such indemn�carion. unfess the confr,�ry s}iail5e.��rtis��d. Aapx��[: oz'modi�cata4n ofi}►e #'tjreaoing provisions of this Article Vi( sha11 nQE:ar3=r�l;y'�'�'�ct:�ir�y ri�ht o? ptateMion Qf A diracfflr or o�cer nf t#sis CuFparation witli. res�c�t�i ari�r � or ai�issions of svch directuz or afficcr accuxring priur to suoh repeat or modi�ication. � � Articit �tlil Cocpors[e Books The books of Y�is Co�rporaciQn may (sabject tv. any s�utory reyuireme�ts) be kep� vu�side of the State af DeIa�,are as. may b.e, dasignated by rlZe Iioard of Aic�ctors: :ar in the By-taws: af tf�is �or�►otatiort.. , ' Arfiele IX ^ . Exerription f'rom Status Regarding Cestain Busisress Cor�tbiriaiions This Giirpi�sation tier�b3r ei�ressly e4ec�s piirsuaant to Sec:ti4n 2Q3 (b) (i ) of the DGCL, noE to: be gavccned by 5�ciian 203 of tbe AGC�� EXECUTED a. t Can.ton; Magsachusetts on _'� � t 998; �� STR6AM IN�RNATIUNAL S�R . i��S C€�i�P.-.. .. - � • , ......... ,.._. . -�:.= , . B�r_ : ,. _... .. _. . _.. . .. _ _... _ Jsi . h. ; ��i4,; Presider� . �. 1►�ttesf: BY�: �� -- ��i,e A_ 1�3.�a�i.r 6ss�. Secxc�aicy � . • _ s�s��x� o� sa�� _ „ I7.I`V7SION OF CO�'tPDI2ATIONS F2LED 12; .3:0 PM 3.2%31/20Q2 �, OIaS77672 - 09.5Z4,06 CERTTFICATE C}l� MER+GE`l� - O� . STREAM �ItN,�iT`ION.AL LZC: � {a De�aware limited liabili.t7` ��P�Y) 11�'F'{� S '?RCAIvt b�'TLI2NATIQNAI: SER'VIGES CORP. (a Delar�+are C�poration) �ursuant to �ecl�oa 264 of the . _ _ G�er�l. Corpoc�tion T.aw of#he Stett of Uelawaxe: (t[�e "]��'rCL"} � �e�tion �8-2�4' of the Li�nited Liahi'd�'ty Company t3.�t of �e State of Dclaware �tke "�LLC�k")_ - � The tmdersigned aorporatio .n orgaaized �nd existing �mder and 1�y virEue of � I3G+CL DOES HER�BY CERTTFX FT�T: The name', t�`� and sta#e of iargat�ization ofeach aftta.e oonstituen� cntities af thc m�rger azc as: fQlIaws: • St�s of 1Kame Ty�re of F�l;ity tlr,ganez�tionfJ[nc�rpora#ion Strea�t internatian�I �,LC �imit�ed. liability comgaa.y Deiawae�: � , - Sti+ea� Iuterna�ianal carpos��ion Dels�ware Scrviic�s Corp. . �EGUND: Tht�.t a� Agree�enl and Plan of Mer,�er (the "Mer�er Agreemet3t"} �ed as af 17ece�nber 13, �001 bY aad 6etvv�eri. St�eam: lnt�atio�al LL+C. a Dclawate limitecl liability campanY, and Stream Iaueraatio�al �cTYiccs Cvxp.. a Dcla�sre • corporaEion, :setiing f�rdi. the terms snd condiuons of the. merger (fh� `•ll�erges"j of . Sircaan Intet�ticu�al: I�I,C with arttf iuto Sti`esai Inte�ruatio.nai 5�rvic�s Cozp (each a "Ct�nstitucut Coa�gany"�, h�s bacn approvcd,°advpte�, certifi�d, execute� and acknowledged by ea+ch Cons�it�nt �ompany in accorda�ce with th� requi�ezncnts of Sections 2�4(c) of the DC3CL �aci Sec�a:or� i 8-209 of thc DLLCA. ?HIRD: The sutviviag Cntity of th:e Merger {the "S�viving CotporatiQn"} is 8tzeam It�temational �erviccs Corp. FO€J'RTH: T�e Certifioate of Incotgcaratio� of Stream Iutecaational Services eorp wiil be the Certifc�cate aflncorporaxion ofttt.e Surviving Carparation aad vuill nc�t change as a result ofthe Merg�c_ i . � ET�'d O�:�S ��-0� ��tl .. ..... _ _ __ _ _ ._.. ---._. .. _ , .. .... - .. . . . . . .. . . .. .... ...... .S. -. : kl4 d R11U1: R' +r . { � FI�TH: That an r_xecute� co�y of du N�erger Agreem�nt i� on filc at 4i�e principa! place nf b�z�e�s of tlie Survivi� Corporstion. Tlie ad�ss of tl� prici�ipal p3ac� of busi.��ess �f thc Surviving Cprparation is: � 5�t'cam �nt�znatiorial. Ser�ices Corp- SS Dan Bosd Can�ton,l�tA. 4�2 L StXT�I; T�txat a capy af t1�c Mer�er �1grc,�mt arill lx furnisl� by tb� Surviviiig � Corpot�tioa, �n ruEt�csE sr�d vvithput c�t, to mxy stnc[tholdct or meml�ec, as: tt�e casc may . bc, �f aa�y C�msti�ent Com}�Y: � .. . , . . S�V ENTH; 'I�at th� Mergc�r sltalt �eccritte cffi�ti�!� ti� thc fiting 4f tfi.is , Ccxs�ificaf� of M�rg�cr wi#� t� 5ccretary cf Statc of tt� ��te af Dclaware. LN Vi/TI`P+tE�� P'; �trcam inter�ati�1 Scrvi�es �r,p. ttas caus�d ch'is Ccxtificate af Merger ro bc c�cearted by �sf.��,.... a. �aaT-, its suthori� offic�ir, this �day ofDe�ember, 2QU1. . , .. �1'REAM II+�T��'� �`t�:L. 5�:� � Ct}RF;, 3� ` - �• �I�ri�: S�cghen D. A. Moere ' Ti#lG: Giiief Executiva Officnr �. �0i£0'd BT.;Tt i00Z-0�-�3fI � • „ STBTE OF DEI&WBRS SECR'E�AKY OF SfiATE ZJIVZS.IOlV OF CGIRPOItgfiION,S � FI� 12: .Pi�F 3213If20.03 � 020677673 - 0.95..i.4(16 �II2T.EFICATE O�' OWNE'R.SI-�F At�TD ME .R:GER " OF STItEAM SERVICES iNC. (a Delawaxa co�por�ati.on) t�.ND STREAIVI TN?E�ATIONAL SER.VIC�S �O�RP. ° ' {a Delawere coxporati�rn) � Pucsuan� to 5�cti4n Z53� af th� �General �rporatiat► Law ofth� Statce ofL�eta�rau�e (the "T]eGL'� _ TS�e w�deasign�. carpo�ration oTg�cuzed and exr'stirig ns�dcr a�d by via#u� oft�e DGC�., . no�s ��x e�� - �.. Stream Internatiorial S:erviu� Cazp: (hereinatit�.r sometimes refeized to as �"'�o�F�Y'� � a co�orstiou irsccirpi�rated ��i #se Statie o€Delaware: 2, 'llie Com�any as t�,e ovrner af ai� of � antstaziding shaires of the. stock of • Sti�atti Seivices Inc , which is als� � corporativn incorparated in t3ie 3tacte of D�1a�waret 3: t�tir ��c�nber 13, ZtiO�, ti� Board a�'Dire�ctors of the Cvmpany adv}�t�id the foltowiug reso�u�i�as to merge St�i Sezv�c� In�: wi.t�i and into the Comgany: �. � RESOLVEDs'T�t #� Pres'ident; any�!ice Presidc� t6e Treasur�r� the Secretary oi arty Assistant S�ec t�� ' ��.��d Officers°'� be, and . eac�i of them 1�� n�', ". �� dazected to cavsc tfic �ntpaf�y to be m�rg�ed with 8tream S�rnces Tzzc„ a De]aware corparat�on �"Stream: Service.s"}, w'stli tlie Co�npeny �Seing fhe surviivix� entity of �uch . mer&er (r.he "Serv�c�s Merger`�, and to �Ie or c�use to be filed, w'rth ass'istanc� frari� siich perso�s as T�o ur she dccnus ad�asablc, all ce�rtihcates ` or �ticles c��mcrger, tagetber wi� such notices, repc�rts or other . docranaems as are tec�ui�ed to b� filed vviith at�y fed�erai, state o� local afficia! in orcicr ta effect tk�e transaction� crnntemplated by the S�ri►yc�s Mergcr and th�se res�lutians; s�t� furifter - XtESaLYEI)s `Tl�at tl�e Sc�vices 1vlerger be, an+d it izerebY. �� aPProvetl and adopte� in a1I x�espccts by the Contpatiy on its o�vn bel�alf and in its capacity as the sole �tockboldcr �f Strr.am Senrir,es; an,d further . RESO��1}: T.t�tt �Zearn€ Services be mecged vvitt� and into the Coznpas�Y, with thr� Company contiz►uirlg as the s�zving entity; and fiuther • � ' £T/£0'd � �p0ti 'L�Z-OZ--�3Q - --� � . �i R'�SO�..VED: That the Certifcate of fh�vnership and lvierger to be fil� vvi.th_ the Secr�Eary of State of DeIavvare (�:e "Seivices C,�rtificate ofMerg�r"}, a cop� of whzck� has .been pres�ted. to aad reviewed by rhis �3oard o� Diseckors, w�ich provides far the.l�!terger of S�ream S�ervi�s �ititv ti�e Cua�ipany be, atf�i it he�eby' is; appm��3 and adopted in �+t� respects; �.nd �rEh�r RE�UL�ED: That the A�hoiiz�d Offcers be; asid each... v€tI�em acting sin�Iy hercby is, � autl�or��d, empnwered att,d direcbed � execufe, aclrnowledge and f l� with the Secretary of State of Delaware, the �ervices Certificate o£Afi�erger, with such ct�anges: th�ein as such Authariz�ed. Officer(s) �xecuting lh� . same s'�ali �pp�ovc, siiGti apgroval, and this Board of Directors' authu�izarion tfiereof; to be conclusiv�ly evidcaced by such Autharized . Offcer's c�ecution anc3 delivery theseof � � 4:. T`liis �ertificate nf Ownersbig aiic�. Merger sh�ll bec�m� e,�fecriva. upon tlie . filin� of tfiis Certificate of C?vuneiship and Mergei wigh � Secretar�r of State o�'th� Siat� of Dela+�vaxe. ' . . � iN ViWTT1�ES5 WH.LREOF, �treaa� Zntc�raiafianal Sotvices Corp. txas caused this , .. . , _ c�� n�o��p �a �� a �r �=� T1_ R_ Mner�_: lt5 authoriaed officcr thi� 3 Lsd�y of.I�ecember, 24f1f. � .� _ . . • S� , - '� CQRP:: By - -- Name: '��,�p�e� D.B. Afoore Tltie: Ci�ie£ Executive Officer . ' _. FT�trO-d . az:ot i�az-e�—��a � " S2'�TS OF F�LAA�I?8 � • S,�CRL2'ARY OF STAYE i' *.. � DIVI3IOD1 C38 CORPOR�T7CkRS. � �rs�n s�:.� � iz/�.x.r'2voz � ' 1 0�0677d77 -- 0953�40E _ � CERTiFICATE OF O.VJNERSHI�' ANI3 NSERGER. ;s � , g. _ � UF . �: . . _ � s��t n�t�r�tTZO�t�,z, n�re; � � ta l�lawaze corporation) i E AND `t � .. . � �: s�.d.�s na s�v�cES c4�. ; (a I�elavvare corpitration� � ,: . R Ptiu'suant to Sectiea 253 of. t�ic GencraT Corpar�tiari Law of the % - Statc of T�leI�vvaTe (the "Dt'rG�,;'� � ' � � _ � 'X'he undersigrt�d corporat�a�i azganiz$d and exi�ting. under and :by Yirhie of #tie �:G�L; � o I)QFS HEREBY CEft'�7�Y: � �. Stream �nterxxiafiosi�al In�. {herciiiaftcx sometimes r�eferre .d. to �.a the � � "C�mpany"� is a corporation. incorporated ip t��:State of Delarr�are. �: � � � 2. Thc �oirqpany is th� awner c�f a11 of tlic outstanding shar�s of Lhe stack o£ � �trea7m InternuatianaI Serancces: Corg, whir.k� is also a corporation incacpnrated iu the Sta#� � e � o�Delaware. � 3.: C}n Daxmber 13,.3.O�l,.ti�e $oard o£I>�sectors aftt�e Comp�y ado�ted � a flie: fallowing t�soEutians to m�rge t�e Campany wifh and inta Stream Ir�teinafiona� Sez�vices Carp. (the "1Vlerger"�: w�th Strearsi IntenaaGo�al Services Corp. being t�i� . � �urviving c�ration o#`suah Iti?�erger (t�e "Surviving Carpara�on'�}, an.d to chsug� the � naaae of the Surviviu�g Corporation to "SE�esm IutCTnat[vhi11 Ixle.": . " f t , E Merger ofthe Comn�v �ir►to Stream ]nternatinnai Servic�s Corp. � k • ` RESQL�:1 h�t this Bnard of Uirectors: deems it advisable: and iri �}ie best interests af ; th� �ocnpany and its saie stociciiolder ttt�c t�e �ornpany be ineaged iarith � az� irito S?reani .Inte�sationaI S�rvices �orp., a Delaw�re corporation: ; ("SIS�"} and wholly arot�ned sutssidiary nf ilie ConE►pariY, wi�li SiSG � contir�uin€g �.s tTie swrviving en#ity (tl�c "Pare»t M,erger'�'; and furii�er R.ESt1.I.V'ED: That tixis $oard of DisecEars tecommends to the solc stc�ckl�.older of the ' i Coing�ny tlaat tIia.Parent Merger be approved; and that the President any ; Vice President, the Treasttter, th� Secretary ar any Assistant Secretary of ', the Carnpany {th� "Anthorized.Offc�rs") be, a�nd each ofth� act"sng = . sing�y h�'e'#i}r is,. authoriz�d and, directed to su�amit �xe Parent Mergef fi� � thc sole stockY►rsldcr of tlie Campai�y for i�s appzovat, a�d xhis Bo�rii. of ;. � # ! ; � ' � , �� Direc#ors hereby approves the Parent Mesger on be�tf of tbe Campany in. ' its r.a;sacity as sole stockholdcr af SISC; and furfher RE�� Tbiat, upon appro� af the NFerger by flie sale st8�khotde� of th� � Company,. the AutharSzed Offi�ers b� and: each of them hereby is, authorized, emgou+ered and directed ta co�summate tlse P�t�ent Merger, . and; to f Ie or eausc w be filed, with assisiaa�e fram such persans as hs vr shC. sieems advisaEsle, all c�ertificates or ait%cles of inerg�r, bagether witb �. . � sucti �txc�s, repaq'ts or otber �aeuments as are requirecl io be filed. rvith auy fec�era� 54atC �X lOCal OffiClal' i4 QrK#er t0 e�ect t}�e #ran5actiOtls cont,ei�ipiat.�d by tize Farent Merger and {hese. resotutioiis; as�d furtlie�• RFSOL'VEB; That the Gecti�cafe af f?viruership and Ivlerger to. be filed with ihe " . 5ecretary of 5taze of Detavuaxe (the Certificate vf iV�exge:t"), a copy of ae which has been presented ta snd.reviewed by th'is Bcsazd af Y3�ors, V vu�ich pnovides for th+� merger af the Gompany inta SiSC be and it hereby is appmved and adopi�ti in aIl r��is; and furthet . , R�S.OLVED: 'Fb�att: #he Autborized O�ic�rs lie, �wi each nf them acting.singly herebY �> acu�liori?ed,. empowesed and diireci�d to exeeute acknowledge and file, with. #�e Secretary of Stafa of 1Delaware ttie Certificate: af Nlerger, with such , changes therein. as such Authorized Offioer(sj exeauting t�e �am� shall . aPP%v� such appmval, and this Board af T?iirectoz's' autharization fhereof, . tQ tie: canelus'rveiy evidenced by s�nch Authorized Officer's execu�on. and €• ijec�ivety tliereof; and: furthsr RESOLVED: T�Zat up�n the su.rrender of auy certificates iepresent?ng �lie sioc�c of tlie Campany �ollow�ng. �he conscimasation of ihe Parent Nlerger the holde�c : thereof slial� be. issue�: stocic. of SISC oa a pro zata ba:sis �c�arc3i�ng: to #h� _ Ir�ld.�r's awnersiup .of star.Ic. of #he �ompaa�. : , _ �- C�'f�Jit: 4'��1e d��e�3'��d . �tft� >:.�e�i�t and " "�caz�t.o�'�� , ,. . _ _...._.. _ ' af InC.� �'ation - RESOLVED:11ia�t simultaneausly witlT t�e. Parent Mergex, the nam� of S�C be: cFianged to: : „ Stieam Ittt�n'►ati�nai. Finc: :" ;. and further �t�SOLT+'ED: That this: $patd af Directoas deerns it advisable aiad in tl� best interssts of the Compa�iy and i#s sote stv��e1�^t� s�in�Tt�e�a�.t��r ��e �sres►t Ivleti'ger, SISC:'s Certifica#e o��a��t?�.'� s€nes�f� �kd �t�,.�iec�:t�i reacl ix� Yts erisit�cty as seE forth s� ��'#� A; �� ,�� 'ici Restated Certif cat�' such. ' �t �?� x�st�:t�'�� '�?"�e i'f� the n�'i'ie of th:e� siuviving carporatian af the Par�nt Ivier�er s�sali 6� ; �, • _ , . . ' � .T... . � . • . t.. .. ,� • �. ' "Stream Intemational T.nc." a.nd ta be identiaal to the certificate of _. i[icvrpoiation of th�. �ompany as it.exists inunediatety prior to ihe Merger �d. furt�sei� � �SULV��:'I'hat this I3vard of Directors reco�iends �o tite �le stackho[der of tl�e Gampancy #hat t�e. Amended �nd Restated Certi�icate be appraved; and thai t.�e Authvrized Of�cets he, and cacli cr£r3iem. acCing singly 4�by is, au#hvrized and directe�tn.submit tt�e.Ame�ded.and Restated Certific�te to. . .�.�.�:.. _. tt►e sole siockhoIder of'3he Conipany fiir its appraval; anad further �SQLVEDr: 7"liat, ugc►n approYal. afthe Arirended and Restated Certificate by ttie soie stockholdei of tF�e Compar►j; SIS�E is aut3iori�d 1�t have 1U authori�ed: E _ .. ... . , : officers e�cecute and file: the Ariieiiided and Restated. Cert��cafe wi#h t�e ��ci�etary of State c�f Dela�aze;. and, further � General Authori�aitzon _ �. • RE�L�D: flte Authnrazed O�cers be, and: each of'flaem her�by is, autlic�rized, ;. empowcred. asui directed fo prepars; execute,, acieno.wledge; deliver, file and: r�.ord su.c.h .documents, certifiicafes; agr�esnents or other irastruments in; thc a�zam� a�d �n behalf at`the Coriipany ancl ianc�r its coxporat� seai, if so desired, and fo take all uther actions ss. such A'utho�ri�ed �b�'#icer in. his • or her salc d'ss�retian msy deesn netessary or dssiia�il�. ta accomplisb fhe . intents and pur�nses of ttie fare�oing resbltitions. 4. 7'ise Mer�er �as �een. appmved by ths soIe stockiiatdec ot tbe Company by : V,?rittes� consent in Iieu of a mee#ing: 5. The Ame.nded and Resiaied Certific,�te uf Iuc�fpbrati:oii af t�ie 5.urviving �,�r�rarativn shaIl l.� as atfached h�ta as F..�c�ibit A. . d. This Gertaficate :Qf Owt�ership and Merger sliall becc�aue effective upon the . f�ling oftius Certifica.te ofOwnesship au;d..Mergcr vYith t1�e 5�cretary► af Sta�e o�the Sta#e vf Delavv�. II*t '4VTTNESS 'UVH£REQF, Stream Int�raatiflnal Inc. has caused this Certifieate of � QHme.i�ship and I±�lerger to be �xeeuted by .5ce��iea D� R . Moore_ . its authorized offzcer; this:��lay of I3ecerx►bc% 20Q1 � ; .;_ .�I�.I.. �� __...,,,,r. , __ _ � N� :'� st: — :�t n: 8,- Moore - T�ltle: Chie# ExeCUt�ve Of�icei� � ' �• ��1IIBIT A AhtEI�D�D AND IiESTA'�ED . CERTI�'ICATE QF XNCt}RYC1�A�()1�C . . o� STR�A.M INTFY�NATIONAL INC.. . F11tST. T6e nanxce pf tl�e Corparati�in is Sfream Intemational Inc. 5E!�UND. T6e addres� of kti� Gorpnratian's regis2ored.nffice ui the State of = 3]clawar� is:1:209 Change Slrect, in:the city o.f. Wilmington, �'�►�3' oENew Cast1�, Delawarc 19801.. '1'}se natne af its registered agent r�t svcli addreas is the C�+�ion ' Z'rust Camparey, ��g �7ie �iupase ofthe. GazpoTation is to engage iri any tar?�ut act or activity fur w;tiicI� c;��poratiaris may l�e orgainized uiaderti�o Genaral Corgarandn T au+ of the Stafe qf D�elaware; , ]F�UIiTH. (a) �#�asses.t�fS# �.�t��srrzec�. Th� �cirpr� p�zon, is ` z � autharized tg issue one class ��scl�to be d� ��+�rnmon 5inc�3s. Z�e tatai i nur�abar of shares t�f:C��uakc��: �ek tTiat: th� �o�� :'autEx►�i�d � issUe Ys ��e _ Thousaud (I,04Q) shares witli � par value of �0 07 pra' shaie. 1'�e shares of Comruon Stock may be issued firQm fim� fo time far such. cansiderafion as t�e board of directors inay determine, . � (b} Votin Ri t� �f Eaaunon �tack F.ach halder of shares of Coux�yon Stoek shall be en#itle� to one vote for eacl� shaze of Common Stnck held af record on �It tnati�rs on wI?�ch t�►e.holders bf Co�tmo� Stock are entitled to vaie. ��g. The Corpossii�n is to have p�p�tua� exestence>: SDLT7f3: In �urtheran�c arid noi in limitation of tfie poiwcxs: coi�ferred by statu�, the board of ciirectars sf the Corporat'€on as. expressly autharized #� ac�opt, aniend €sr repeai the Bylaws of:the Corpazatian. - gE'�ENT7ri. Elections of directars need not be wri#en ba�lot unle.ss. a stockholc�er dsmands. sl�ox► hy writt�n ba11�S at: ihe mcetu� a�zd befor� vnting begins or upiess tl� 8ylaws o�'th.e Corporatiou shaEl so pcavide. EIGHTI�,: 1�±leeting5 of the stoekhoIdeis riiay be held wi�ici bx wittwut the: �tate af D.elawar�; as the Bylaws af tt�e Gorparation may provide. The boaks of tb,e Corp4ratian �ay be kept. v.vtside af the Stat� ofDelaware �t such place or places as may ' ��. �: r . _ � * �be siesignated fram time. fa time by the baard ofdirectoxs of the Corporation ar in il�e Byl�ws of'the Gorpcsrario�; � tVI2�iTk�. Exc�pt tv the extent that the General Corpar.�tiori T,aw of the State of Delaware prohibits 1�i� eliuunation ar timi#ation vf liability of directors for br�ehcs af fid�c'iary duiy, no director:of �tlie �q�pzataqn shaIt be personatly Ii$ble to the Cvrparataon or i#s Stucktialdsrs fnr manefary damages fot any breach of fduciary dufy as a dit�eckor; nof�yithsta�ti:tiing anY Provzsion of Iaw u�iposing sucb: iiability No amendn�ierit to or .. . ' repeai. af this provision sh�ll appiy to or uave any eff.ect on the liabiIity vr. alIeged l.iabilit� - of an� directos of the Corpraratioia fbx or wi#h res�ecE fo any acts Qr amissi+ons of. such . di1'BCiaiC DCC[IFFitS�; prlOF � SUC�I atTlciu�iiien� , -> - ' TENTFI: '��.� i9.cti� �'�s-.act� Fr��ee�s ��a;e� �° � �tr r� i�� tt€� � : the Co ration: T3o.e �.vxa�issn:s�I[-��x�t�t�r �ach _. ��i� �� c�a� a pa� �r i� : t�reatened ta �ie macie � p� � ar€� ?t� Pending or comp[eted acbga :suii or ' ��ag, ��i�er ��, �� , a�zY3S�#1 ... 'YE aF 3nY�i�al�ve (ol�l�r t��l SFi �Ctian � 7��e�c� itt� �t�z,�k�t n�#�,� ��ast�n af tlie fa�t rhat he ar she �s or was, o; #�as _ �c�tic��g-� �; � ��e, � �ir.�� ff�e ��t� .C��aon, or i� �r was serving, or has . ¢ � �`@ �erv� at �:�e�.��orpctx�io� �� dii�:cior, offieer ur tnist� o� ar � n .� �t ��i'�y �v.�'t�; �t r °��?�i�attosi,. partnershig.,,�ain{ venture t.rust :br oi�xe�' entcxpris� (including any employ�e iaenefit plan� (all suc13 persons being re f e� r e d z:a . �eafter as an. "�ndemnitec"�, pr by reasaa of any ac�an alle�ec� �v bave e�i en :or • omit�ed in such c�pacity, against a�i ex�ses {inclu�in� attorneys' fees}, judgrn�ts. ` fines aa� amowats paid in settlement actua�y a� r�asonably incurred by him or� Qr on � his ar het hel�f' in cont�ection wi$i suc� a�tior�, suit t�r proceeding ar�d an� appeaL , therefrnm if tie ar s�ae acteci in. gcioci. faith �ti in a�annet �e ar sti� rea�vna.bly bel.i�re� - to be in, o� ncsti opprased to, tl�e fse'sf iriterests oftha earporatiii�n, axi:d, �h res�ect to ang � criminat acti .o:ri or gracxedir�g.. had no Ceasoibable cause: ta bel.iev� his oc her conduct was. u��s�. '�?�r�►�t€�A o��a�.i€��, .suii �t��n8 �3'.l�dgme.nt, order, �_._._ _=cr��srni: cr� ugo�r a�+��fna��.�a3at�� oi its ec�unralent; sha�l not, af . _ ��f, s� ��gucr�t tl��. t�;��i did �o€ �� gond f,atth aicd in a manner wl3ich he ar she_ Tcasonably believed: to be. in, nr ncst appcised. to, th� best interests oE the �orpozatian, anc3, u+it.3.i respetf ta an�t criziiinal actian or pro had x�easoriabie eause ta 1�efieve ti�at his or fier c�nduct was upla+vfu�: Narwitbstanding a_nYthi�ig to the contrasy ` � , ... , . �a t�s R�� . ��i �`ortt� tia �tst�=(� below, ti�e Corporat�aa s�al! .nat . < - . • .. ' = ; CS�1QiD 1� C4I17'iCC�lQA WIljl a . CEediri UP �j! �t1. � , _ Y�� +3�t�C.�l�i�_. . _. � � 1 �$:�aa,E� �aitr�d" ��3��'��ittEt� t�ess the initiation ther�eof viras appravecl [i}+ the . ,�s�. ti��re�i�sYs ��_t�C� �o�zatic��i.. �� A�r.�ic�ns r�r Sucts ;�� sn t�c.� � v�"the �rs r�zs� � Carpurat�on sha�I �z��r � �et�ut� �hc� � �m ��T�:1�Y �`r � t�C�e�3 t� � .� made a Partyr io_ �n3! �t�� ,�. Qr cc�� act�c�i� �z� suc�_'by or i�. �� t t�� _ - - ..._ the Corpvravan �� r�r�,t�� a :_ �t irt �'� �c�r��_�as�i� �af'�Ti�. �act. � �a� �rs�.�s �r x�vas, ar has agreed. fo become, a directar r►r oi�cer esf th� Carparation, or is ar was: . servsn.g,. or h�s agr�ed to serv:e af the: request of the Cnrgaration, as a director, affcer .o� txtrstee €�f; c�r in a si►nilar capaczty with, another corparation, partnership j0111t �tet2ture mxst ar Qfhe.� enferprise {includirig' aoy emgloyce benefit pIan),. ar by reason of any actinn • . .. . .,; L ... �� • alleged ta have be�n tatten or omitted in. such capacitY. against all. �penses (ineludiu� atiomeys' fees� �nd aniaunts paid in settiement actnally and seasoiiabEy 'tncurred by him: or herc�r vn �iis: or I�er behaif in r�eeti .a.ri wi�h such action, sui� ar procecding sud any �ppeal therefrom, if he ar slae acted in good. £aith and an a rnarinerhe or she reasona�l}+ � believed to be in, or maf opposed to, the .b. .est: interes�s af the Corparatien; cxcept ihat no indenn�zificatitin shaii be inade in respect af any claim, issve or matter as io which such person sha11 have beezi' �djuctgec� #o be liable to tlie Corparatian tueless and only itt die e9ctent tE�at ttie Cot��t of �Iiancery of Delaware �r the court in whic6_ s�uch actic�n. nr suit was brought. shaTf deterrn:ine upon �ppli�ation:�hat, despite the adjudicaEio� �f st�3� I�ability but in v�ew of atl tbe. dreumssaitces ofthe case; such person is fair�y and - . � x�asonably entided tn itndem€nity for sucb expeuses (inoluding arttarneys' fees} wtucli ttie Court Of. Cl�aaYCery af Delavvaic or 5uc� oiher court shall de�m prop�' . . (c) Iudem,aificatson far ExU�� af Surcessful PatiY-. ' ` Nnfwif�standis�g the otl�er pm�.sians af�us Article, w the ra[ient that an Indernnitee has �a suceess£�:, vn t�e merits or aiheri�!ise; 'tn defensa of any acttan,. suiR or gr4ceeclin.g y refened to. in Secfions (a) and (b) of �I�is ArticIe; or in t�efense of aiiy- claun, issue ar rna#te,s' thersin, ar on: apgeal �ram any sucli acfion. suit or proceedxng he br sh�: sl�all be } indemnified against aII ex�peeiises (including �ttortaeys' fees) a�tualCy and reas��ably incurred by hirn or her or on his or her behalf in. cannection thereY+nth. Witlao�t 1�rn[unS =: � :. ; , #h�e foregoing, if any action, suit or proceedtng is d�sposed of, on the �ierits os atticr�nse � __ . ... . withouf (i� the dispo�tinn bcirig adverse to + �'uycluding a d�sposition v�nthout preyt�.dice), the lasiemrutee, {i� a� adjudicauori ti�sat the Indemrriiee was Gable tv th� Corpox�io�r, {iii} ..• a glea �f guilty ar nalti con#eudcre. by the Iiideam�ifee, (iv} an adjudicat�an ttiat the . In�emnitee did not g�t: in good. faich and ia a manner he or she reasvnably tielreve.d ta bs in ar not ogposed tio the best . interests of fh� Car,�sor�tipn,. and ��) w� respect �o ariy crizninal proceed'sng..an. adjud'i�atian that the Ind.e.�ziri.i.tee l�ad reasonable cause io believe .his ar her carsduct: vuas: unl:awful, fhe Indemnitee �h�al�' be cqnsi dezed fflr tiie purpases hereof ta havs bcei� w�iolly suecessful wit�i: respec.t thereto. �d) Noti�tcation and Defeuse of Claim: As a conditiun pxecedent ict his ot her rigtit to. be i.n.demnifi. ed, the In�emnit�e.mast notify tbe Corporativri is� wrifing as soon as practic.ab3e. vf any action, S{�Iti RFt��CC�iI)� flT 7S]'VCStl�c1$OT! U7YOIYII'if,� bim as feer ar foc v�hiah indcmnity will or eould be songh�: '�iVith respeci to any actios�,: suit; .prncceding or investigatian o£ ivlaich the Corparation is so noiifie�, the �arpnration: : will 1'u emtitled: to p�'ticigate thereiri at i� own expcnse: andlor to ass�uno. tiae dcfensc tliereof at its awn expense, with Ieg�l caunseI r�asonably acceptal?le to the Indemnitee. Ati.er nvtice Trom tlie'CorFozaiion to the lndemnitee vf its electian. so to ass�une snch defense, the Carporatzoz�. st�al.i nat be liahie tii the Tndes�nite� for any legat or other expenses suizsequent�y incurted by the Ind�znnitee in e,e�nnect�o� wkth ssicli claixn, other #�san as provided below in this S�Qn. (d). Tfoe Indemnitee shall hava. ihe r��ht to employ his oz her owaa counsel. in ccinciection wiEh such e]�.in>> but the fees amd expenses Qf 5�ch cnunsel inc�mer3 af��r noticc fram ths Co;pozafioQ of its assumptivn a€tlie defense ihereof shakl be at ihe exgens� of th,e Indemnifee utiless (i� the einployment uf counsel hy the Indemnitee I�as becn autharized by tl�e Cvrpnrafian, {ii} counsel to the indeninitee sf�ali �ave reasonabCy cone�uded that there may i�e a conflie# �f intsrest or positia�i an any signifi�ant issi�e i�etweesa the Cnrparatian acid the Indeananitee in the conduct c�€ th�e � . w ,..:.. , � . .. . � � _ def�se nf stich: actiori oi �ii): il�� CDrporativn shall. �i�t ui �'aci have employ�d caunsef. ta as�stirde xhe defeizse of suCh actio� in each of whicli. cases tIie fees aiid ±�;�tpenses of cvuuse� for #he Intfieiniiitee sha�i be &t the expe�zse �f i�e Cospor�txvn, exc�ept as. atherwise , , . , � expeessly provxded by tl�s Art'ic��, The Corporation sha�i not b� entiticti without the - consent af the Indemnitee, ta assume �tie cl�fense of an� claim bsougli# by or in th� right of'tttc Coxporatian or as to which counseF for the Tndernn4te� sha]I havc: reaso??abiy made the conclusion provic�ed for in c�ause {ii} abcive. . (e} Advance ofF..��ses. Subject to #fie pro�isions o#' Sectioia (�} . below, ii� the event that the Coi�xiratic�a does nof: assume the defcnse. pursuant: to Seciivri . �d} oftFtis Article vf any actiun, suit�' pracee.dirig or iiivestigation of which the Carpnratzor� receiVes noiice under this ArticJe, �iy exp�ses {�nctuding aEforn�ys' fees} in�urted:6y qit oa behalf o£an Indemnitee in defemt.ing a civil or sxineinal action suit; > ..... ..... . ' paid 6y the Corparativa en , praceedxt� nr uZVe�Ctgat�o� :nr any appeat tl�eref'ram. shall be �dvance uftb� fuial �iispasiti�►n of such ma�ner; zavided, hoiu�v�r,. t3iat the payment af such ... . . cxpez�se �curred: bj! .or on behalf ofan fndemnitee in advance ofthe �naE � dispositiori. ofsucli ma�ter shall be msde nn�y upan receipt �fan undertakin� by .ar an b�half af tbe Indemttitee ta repay aI]: amnunts sa $dvanced in the evenf thaf it sha7� ult�Inately be d � etermincd that th� Indeninite� is notentitled;tu be indemnified 6.y the Corparation as authorized in�this Article �u.ch undertaking may be accep#e� v�!itEiout .. _. - �eference to the fiaaneial at�iFity cafthe Indeinnit�e t4 rnake such rEpayr�'it � (fj Proc�dtue �'ryrTnde�ni�c�tian. In order iQ .abtaui indemnEificatian or advanceineio,t ofexp�tYSes gursuant ta Section Ea), (bJ, (c) or {e) of'this. �rticle,. the Indemnitee shail submit:fa the �arporati�a a written requesf, includu� i�t - such req�st sucb documentatian and inf'�ranat�an. as is re.asanably avaiiatile tc?. tlie �a�€emnitee and is reasonabIy ne.�ssary to �etermine wheth�r and tu wt�a# ext�ni: ttie = liuieranitee is entitied to indemn.%�cation or adY�rzcemetst of expenses. Auy such: iinden�nificafian ar advancemenf:ofc,�c�senses �all be tnade pramptIy, and in �y evesit - v�ithin 5Q deys after receipt by �e Gorparat%on of the wt�Et�n r�quest af t�ie Indemri��ee . unless.witt+ respect to requesLs vnde:r Se,�tton. (a); (b) ar (e) tlse Cotporation detemnines, bY cl�ar and coavincing �vidence, within suc� b[t-day period #taat the Ind�tnnite� rl�d riot �t.tlie applicable standard of conduct seY forth in Section (a) ar (b), as the case may be; Sticli deferinivation s3�a11. be made in each iEtstance i�y (i) a. majorit}+ vcat� nf a quaru�n of � diiCCtOIS 8�S�1G �`i3fp()iat14D COriSiStibg bf pC7S013S W�7Q �ie �lOt. at t�taY #iine paities fo , : . tl�e actati�t, stut oc proce�dmg in ��testion (."disintetest� direcfors"� (�u) if no such quarum-is obfairiable, a majority vatc: of a committe� of two or niore �isinierested � d�ct4rs, {iu) a.majority vote af a: quocurn o�'the autstand�g siaares of stock flf al� elFSSSes enti�led m vute for directors, voting° as. a single cIass, whicii quar�un shali cozxsisf �if 51aa,l��ldess w}�o arc not ax xhat 4ime pxrtieS f o tIne nction, suit �r pso�eeding in q#aestiun, . . �iv) independextt legai cnunsel {who trsay be regular lega€1 counsel tc� the +Caiporsitinn). or � {v} a. c�iirt of campet�ctt jurisdictio� (gj emedies.: The rigbt to indemnificat��n or actvanc�s as granted by tltis Article sS�al] be enforceablc. by'fhe Indemixitee in any court af canapetent: . jw7.sdiction zf the Co�parati�n denies s�ch. request, yn whole oz in gart, or if no dispositinn tIyereof is mads within the bU-day peri�d referred to aksove ia Sectic�n �f}: Unless • 4 :;�,:., �. _ :. . , . . � ' �,:� r otherwi.se provided �iy law, ttie burden of �mviri� that the indEmni�ee is not en#i�ed io zndeznnification �r ad.vaace of expenses under this Article shall be c�n tl�e Cot�mra#ion. N'either fhe fai.lure of ttie Corporation. to have made a. determiitation prior to tlie comnnencemant of such actian tt�at ind�nriif cation is proper in the circcunstancss _ ... .... . . beca.use tlie indernnitee.has met tiie appticable stairdard of caruiuct nor an acCUal defemnination hy E�ie �or�ratiba gucsuant ia Section (tj t3aat fhe tndemnite.e has not met such apg3icable standard o�f conduct,. s�iall be a defezise �o tiie ac�ion ar create a . gresumprion ibat tlie Indemnitee. 6as. not. met t'he apptt�abt.e standasd of canduct, The Indemnitee'� expenses �includin� aitnmeys' fees) incurreii yn corinecti�n wiih � successfiilty establishi�g his i�r her ri�ht. to indetnnificat�oii,: � v►+'hole tir iin part, in any such proceeding sha11 alsa be indetriYiified by the Corpqratian. _ jh� SubseQuent �eridcnent_ No amendrnent, t�rtnination ar. . ...� ., � repesl afthis �ir�ici;e t�r af the relevarrt pr�ovts�o�s; of the General Ca�poration.:I;aw of � D:elavt��re or any ��her ��rplic�F�le laws shal� affect:or diminisb in any �y t� ?�$�'►�s af _ a�sy Inderiiriitee to indemuif cation under tbe prn�isiAns �iereof wiih respect to any a�ctio�, . suit; proceeding orinvest�gation arisang out af or relmi�n� to any actioz�s, #ransaei,ions or : factS.�ecurririg prior ta tlie: final: adoptian of such a�endment, terminafio�. o,r repzal. � (i} Other Rzr�his. Ttie Indr.�nificatiou. and ad�ranc�ment of = expenses prQVi�ed: �y thrs Ar�i�ic shal� nat be deemcd exelusiu� of any otlier rights ta : which an Indemniice seekiug indemnification nr �dvanaement Qf expenses may bc . entitled undsr any ]aw (comin�n or �tatutaiYl 3gT�men� Oi �ofe: o�Stockholders or +. disinceresEed directcrrs ar ot�ierunse, both as to action in his orfler�f�c`ia� c.anacity and as � � actioa in any Qther capacity vvhile t►oIdu�g office for the Carporatio�, and stiatl .:.... continue as i� an In�e,n�unitee u�$o has ceased to be a d�rectorar off cer, and st�all inure ta ths be�aefit af the estate,l�eirs, execiators aad a�ninistratois: of t�e Itsdemnitee� Notbing contained in thas Article s3Sali bg dee�med pro�u'bit, and #he Corporat�on �s: specifcally , authorized to enier into, agr�eirie�.�s �vith of�cers and d"irectors praviilin� uidemnification� . ri.ghYs and grocedures ciifferent frarn fliose set fortl� in this Artic�e. In add�.ti.on, t6e. Coi�oration.maq, to thc extent aafhaxized: froni tim�e to t�me Iry i#s Board o�T3irectors, grant indemnificatiQn r�ghts_ta otl�cer emplctyecs or agen2s of� Cozporati�n ar other persons serving,the Corparation and stscli rsghts may be equivalent w, or greater or less tha:i, ti�ii�se set £oEth in this Article.. _ _ (j) Partial Indemnifi�ation. Ifan Ii�d�mnitee is entitled under aF?Y provisioxi of this A=ticle ta: indemnffcation by the Corporat3o�. for same ar a portion of the expenses (including. a�tcir�ieys' fees}, judgwenis;. t'ines ar arnoun�ts gaid in settlement acivally a�� reastrri�b�y in�urred b� him ar her or on his or her behal€in cvnnec�an wi�h ariy action, suit, prac�eding or uivescigatit�n and any appeal therefio.m but not, however, fur tJyo totat amouirl ih�reoE; the �rpctratian shall ueyerthe�es9 inderns�ify tht: 7ride�liniice for th� parEi,on o£ sur.�i. expenses �incZuding aftomeys' fees), �udgnents, fiss�es ar �iour� paid in. settjeinent fo whicfi the .Indeirmilea is entit�ed. (k.) Irisuratxe. The Corporatiau may gurchase add i�riaintain insuranoe,. at its expense, fo pro�crct iLself and any dsrector� �fficer employee or agent of oint v.entur� tzus� ar athcr enterpr�se the Corporati�. or ar�ather corpora�on, parin�rshig. j. ;. �, • v � ' ... ' _ , � a. + -. � � . {incl�idirig anp empioyee benefit plan} against any exgense liability �r loss inciiixed by hina or he.r iri any sucii �apacity; or arisntg out. ofhis or har status as.such whether oF not " . the Corpoc�tion w�uld have thc pa�ve.r i� i�demnify such p�r�p agalnst.such. �get�se, _. �iability ar Ios� �det the Gerieral Corgoratiom Law of Delaware. {l) Mer��z t�r Eonsolit�at�o�t. Ifthe �arpo�ion is merged utto c�i' . consoIidat�ed with auother carporaiion sizd t1�: Corporatian is. not the surviv`zag - ecirpt►ratioa, ths sprvivirtg eoFp�raiian shall assume: the obligativns c}t fihe Carporatiori � iuicler this Article. ryith resp�ct to any a,�tivn, sui� Praceeding or invesli�atitrn. aii�ir�g aut of orrelating. to any actians, transacricnis vr facfs. occuzzing priar. #a the date of sacb mexger or �onsoiidafiian�. (in� Savin�s �Clause. l.f thi� ArticIe or arcy �orti.�rn hereof shall bc iava3iciat�d os�: aay graun�i by any covxt of narnpetent jiirisdictioi�, t1�ed the �cispozation shall ii�uerthcles� in. deminify each [ridemnifcc as to a€��+ expe�►sC� (i�zclu�zsig,. attorneys' fees}, judgsnanfs, fu�es atid aittautits: paici in settlement in. connectiaA witti .acRy actycm, serit; praeeeding or investigaiion, w�efher �i�il, r.riminal nr adsninistra�iue, inctue�i�ig: ari . sction 6y �r in the right uf tbe Corporation, fa. the fullest extent pem�ifted by aiiy . appIiCable gortian of t�is Articie that s�tal! noY have bees2 invalidated aad ia the f�illest . exfent.pern�itted �S}' aPPlicable taw. � (n) pefinitions, T�rans iised .h�rcin and defzncd itt Sectiori 14�(ki} arid Sectiori 145(i} of the General eorporation L,aw of Delaware sl� h�ve t�,e resgective • meanings assigned to s�c� terms in �uch: �ectasm �t45(hj and Sectiod 145�i}. ro} Subscpuent I.egislati�ri. Ifthe Genera� Corpvration Law is f amended. a�er the adopTion of this Arti�Ic ta. expand. further the iademtufication germit�ed � ta �nclemnit�ees, �]Cri t�'1C COYp�S�1ClA 3278II:12tCIPIYlilf�j! 5[1C�1. �TSOflS. #O C�1� �II�SL eXC�11t , permitied by tl�e General. Coipcsra#ion Law, as so a�nen�ed. i _ __. ___. _ _ � ._ _ __ . . .+ . w.�:Yi i i i' i. 4 . .+ � . ST�TL. OF DEZ�W.�SRE SECI�2'BRY OF` STA�'E DFVISIQN' OF CURPORSTIQiVS � FZ.ZEII D9: 00. dl�i 05f22/20D 02f?324CIT3 - 09�14U6` � CER'TIEICATE �F GI3AN€�E QF T:ACATION 4F REGISTERED OFFYCE AND OF REGISTERET3 .AGEN T STREAI� II�lTERNATI4N� INC. � It is �ereliy ce.rEifieci tha� I. The name Qf i3�e corpc�ration {hereina�� called the "corporation`� is: ST�dEA1VI Il�i'�`ERNATIO1�Ar. INC. 2. Th.e ��recl of�ic� vf fhe catg�orati�a vvithin t}ie State af Delaware is �.e�by .. , �hanged:to 271 Z Cetrternite Road; Sutte 4�f?, C:`ity'a€W7miiigto�t .19808, Cottnty af New Cast�s: 3. The regi�ered age�� of the corparatian wif�in tlie State of I]ela.wa�� s h�re6y changed ta Corporabiaiu SeYVice: Coinpany; th,e,b�ysiness o.ffce Qf whieh is fdenfic<a� with fiJ�e re�isteced. a�xce of t'�e caxpoiratio�r as �ereby changed. . r • 4. The corporativn bas a.utharized the: changes h�e%n1iefare set forth. by t+esoluhon: of its Board of.I?irectoxs. : Signed ou. .. .. �'"�� 2�02 _ �. �,--- � . . � - Nam�: &tc ,A: E�'!�� Titt�: Ass� Secnetary DE HC D-;COA..CERI3PIG4TE OF CHANGE 09/QO (#I63) . i f � . � PAGE 1 = �. : _ . r . _ _ �. _ .... _ ,. :. _ `��28 `�lYS� ��G�.�� I. H.F�.RRI��' SMI�'H WTI�'I3�QR SEGRET�SRY t3�' STATE OF TBE �TA.�� OE" ; DEIxAA.ARI�,. DO HEREBY G`EF'�`TIF� `1?Hi�: A'1'2".�1CFil�.l� IS` ,A TRU� ANI) COR1��.' ( ; COPY OF THE CERTI�'�Ci�'iLE �I" �}'�EI2SH�P, WH.I�$ 1!�ER.�ES::; �: k � "S�R�s�±i �N��T��IQN.A.� I�C. !', ,A DELAWARE ��7R1?t3A�.�'�QN,� ' T+tITF� � �1sTTC7 •"STREAM IN`�ERNFiTIO�L SER�IGE�u CC?RP.. " �INDE�,. �'8E i�3;A�lE �3� ��,'�A� �NTERt�TATIONA.� I'��,►!, .A CQRP012AT1C7RC` CJR��'�,��3 _...... ; AND EXT�T�NG UI�Ti)ER R!H� L�'�� '' THE 5��:�'E QF DELAW�3RE, �iS ; RECEI�7EI� .AN'I3: �'ILEl7 IN �HIS. t�F�`T�E THE �HIBTY`—�'T�T �?AY OF D�CEMBER;, �i.D. 2001 AT 3,�.z3� Q'CLO� P.M. ; . �i FL�LI� eOPY O�` TfiIS CER�IFI�ATE HA� B�EI+T �'GtRi�3�iRDED TO THE • � � I�iEt� �.t3.S3.'I,� CQTJNT.Y R�Ci3Ft13ER tJ�` I2£EbS . i r � - ' h��.�,s � �� ,; .� � � � � ,� �G�.�.�e:,..�. ,�:�n�..�.��'�' �� -`� �� }iarriet 5mith Wandsor, ae�r�ta�y o# �taee � 09a];.�:D6 810QT+�: � $�- AUTHENTI�I9.T�C)I�I: �,5:39722 �. D1:0:�'i'�?�s�� 17ATE: p2-0.�4-Q� . {' � I . � ' STATS t3F` DELAW� � ,_ SECRE�'3RLF dE` STATE - • - DIv.+C'SIDN OF CORPdRATIONS i � � k'i;�EZ? Z2:32 P1�2' Z2/.?Z12Q0� j � f3.t.0if77fiTZ — 09514OS i i 1 � 8 ... . . . .... . ..... .... . .. . . .. i ! CfiRTI�`ICATE t�F �WNER:SHIP AN]� ME��R � I # OF � � . . . s ; — ; � S'�'.REANf INTERNAT.IQI�#L INC: � {a I)elaware corporation}, � j . t i r i AIhD � � ST�EA�I :XNT,E�iN�iTI`C?NAL �ER'�+?�CE� CORI'. �: (� Defawar� e�rporatictn� . � ��. _�iii�itant to Sectian �3 si�`t�e Gcneral. Corparaticiz� �i �f tlie � u n t Stata of Delaw�ie (�he I>GCL } � " � i; - i The undersigned �€�zporatio�i�z;gariiz.ed. and exist�rtg: iu�ider arid by virfue oft�i� DGCL, � _ D4ES HEREBY CE.RTiF'Y'� - _ ;. . 1: . Stream I�terna�io�a� Iric_ (hereii,after- sariletirr►es reierred ta as the ; "�oznpany") is � corptara�iQ�n i�co.rpaxated in tl�� Sta#e: of I)e��:ware: t . 2. Th� C�rripan� �s �te owrxer af a�t. of tla� Qut�taiiding shares af ths st .ack. �f i Streatri. Iiiternational �eivice� Ca�p� �n�hic�.is aiso a cozpvrat�an incorporated in tl�e Stiat� '} •. � of �?e�a.i,vare_ ; ` 4 3. flst Deceznb� 7.3; �Otl�. the B'oard of i3irectt�rs Df':fhe Com�any ad4ptsd � �he fallowiiig resolutions to �erge th�; ��npa�y wit�i ai�d ui�o Streairi International Services Corp. {#he "Mer�er") �vi�h. Stream IiiternafionaI Services Corp. being th� � - . - .: . _ �• . ; „ and ta cha�� e the ; suzvi€v�iig caxporat�an of suc� �erger {t�� iI�IV1I1� �UTj�4k��liiTZ } S =. �3�L11e Q�fIIE SIITViV1T3� C�TjT(3T141flti. iQ �' Stream Interr�a�ivnal �: r � � ? • ; i lv�er�e� of �i� Ccirri�az�� into Streacn InteizaafiQ�al �ervices �a�t?. � � - - -- _. ._...._. . . .... � � ��€�L�E#�:.1'�Sat �s: Boaz�. of S7irec#ars. deems ii advisal�le arid zn t]z+e� besx iutere.�ts cif ` ; t�e ��sm�iaiiy :arid. its sole stocl�ialc�er.. t�Za# t�ae Campariy be r�er�ed vuitlt ; �x�.d ix�tQ. Streatn: Internatit�naE 5erv�ces Corp., a D�laWare Co��ationi { � - (`.`SISC."} and�u�holly owned subsid'aary oftTle Compaiiy, wit� SIS� j cQntiriuirig. a� t�e survzving entify {the "�a�ent �rlerger"); and further i � �2,ESE1LYE3}: That t�is Baard ofJ"�irectors recomrnends to t�ie sole stockl�older aFth� � .. . � Campamy tha� tIi� Parent 11�Isrger b� appr�ved,• and that the Pz'esid�nt, axty Vice Presitiez�'� the `FTeasurer, ilae Secretary or any Assistant Secretary of � the Com��y ��ze "Autharized Off'fc�xs"} be,. az��3 each of tt�e�si acti�a� I singly here.by �s suiharized and d�rected. to su�imit t'�e Parent lvterg�r to ;� the sole scoc2eholder of t�e Corripany for �ts appxati�al, and this Boaid .of '; ; ` i i �`''• - i . . �. .. . ... . . .... .... .. .. . . - . � . . ! ' .�� , . l � • . . . . � � I�i�ectors hereb� approves the Par.ent Vlerger an belxalf of tlie Compan� in its ca�acity as sole st�cic.h�lder of��ISG; at7d furth�r RE�a�'VE13�_ 'F�a�,'upa�t appro�zal i��t�e lVferge�` �y'the soIe stocl�i��deF of the C.�ri�P�3'::. the Authonze.d. C�fficers be and eacli o�th�r�i. �ereby is, aixtt�iar�zed, �npowe��€� aud .dir�cted ta �zrsurnrnate the �arent Mergers _ and. tQ file or cause ta h� fi7�d, with assi�fia�e frctrii. su�I�.persans as he: or . she cle�si?�s ai�visable all ciert�cates ar aTti;c�es�o.f m�rger foge�3ier s�itl� , such nt�tices3 reporfs. or r�tt�er ; document�s. as are r..eq�.ired to �Se �1ert wifh any fecle�cal� state vr l��ai i�fficial in az�der 'tv e�'ect the h�a�tions . contemp[ated �s}� tkie Parent Mexger and: these resglutiv�is, �ncl fiLZttier : ; . RESt'lL��: That. fhe +Gezti��ate of`Qwners}u� and Iviexger to b� filed r�it� kh� : �ec��tary of �tai� s�f I}eta��at'� �tl�� "Ce�tafisa#e:.zzfi�I�zger"}, a�c�gy t�f' whic#� �tas treen �r�n�ed 'to and z�viewed by i�si� ��ard rif Directt�rs --.. w pr..ovides �CSr t�.e: merger of i�i� �om�a.i�y iirtcs �� iae and it I�er�b,� . is; app�ss�►ed ar�d ado�ted iri aIl respe�ts� �rii� furfher ' _ . Jl��:Y`�U: 'Fl�at t�� Aut�cicized {J��ers 1?�; and eac�i of tlien� acti�g si�glp herehy is; aut�o�aze�i, e�powerez� a�i� :cI'i,rect�l: io �xecu.�e acknow�� .ai�d fle �ii� ti�e Seeretary of State af ID�iavs�are, th� �eztificate of Mer�er v�?{ith suci� - ._ cl��sges �herein as sucf� �uf�az�d. t��e�(s� executing t�e sa�rie shalI. • approve, �x�k� appranal, azit� #�is B a�rd of �ir+e.ctaxs' auth�n�atian. tlaereaf,. � to be c,o�.clus�cvety evidene� by such ��flrized C�fficsr'� e�ceeut�on and . _ : deiivery t7��t�£,. and futtt�� RESLII�'4�D.; Tbat up�n t�xe. surreader af: an� certificates representing the sfack vf the ; Cc�mpan3� �'�1lmwiiig the ct�nsur�ination �#'th� Paz�ent Merg�';. tI�e laolder � thereafs�iall be issued stock ofSI�C cm, a pro rata basis acr€trdi�g t'n th�. � lioldez's t�vvriership of sioc[c i�f the �orr�pa��= Chan�e c�f I�i"siz�e nf Suru�v�rt� �oiporati€on;. t�naendment anc�.Res�atement o�.�ti��:#e _.... af Incorp.tiraticrzi RES�LVE� simultaneo.uslj� vaitfh tl�e �arein�-.1�!ferger, the nam� �i� SISC bs: cb�anged . ta: . "Siream Interna�ional Inc °' ; anr3 £�ut��K ��X.,'4'�D: That th�s: B�ard_ of Diiecioz�s cleeins �t ac?;v�sable a:izd in t�ie� lie�sf i�.terests of the Cou�p�y and its sale stockha[dert��at, �ii�iu3tatte+ousJy vF��li fI�e Parea�f Mergex`, :SI xG's Certifrcaie of I.ncotporat%�?n b� aruend�d and x�stated to read iii its e�tirety as set fa�th in Exiiibit �i �er�ta tth� "Aaz`ien,aleii and Restafed Cer��tcate'�,. sucb ainend�nant aud restatement ta� pro�r,is�e that � #he nassiie t�f'the surviving ccsrpoxa�ion o#`tl�e �arent Merger- slia�l be � � . . r ' . i t i • 1 �� • I t i � I "Stream �nterna�[otaa.l Iiic." and to k�� ider�tical to the ceifificafe �f ' incorporatian v��i� �ompany as it exisfs imi�iediafeiy prior to f�ie:Miei'ge�; i and furthe� � E ; � ; _.. : RE�C}�:;�]�Ia: Tiiat this Baaird �.f D�recfors iecommenti's to tlie sole stock3�oider of fli� ; Corngany that fhe �mEn�et€ and Ftestaf�c� Ceifi�ica�te be appro.ved; and. �IiaC : ; .. . . , i � � #he: Auttiorizec� O�cer� �, ai?d each o�ti�t�.�.ettrtg: scn�l:y herel�y ts # autii�rized and directed: to; submi#: tl�e ,�In�encied art.d.. Resiated Certificate. to ; tlie sole stockt�iolder af tli� �ompaciy for its ap�F�vaT, aIICi furidier r ; _ � _ � I � RESt7LV��; That, upot�_appra.val of the Airien:c�ed. and Restated �eitificat� by #he sole a stoc�SYie�l�3er: flf th� Gomgan�, �[S� is authorizeci �t� havc a'�s au�h��.zed � <... . �ifficers e�ecut� aiicl �'ile the A;miendecl :ai�� Restated �ert�fi�a� v+��i t1i� j . � i Secre�ary`Q�`�f?a� ��Dela��are; s�nc� �urtIi�r ; _ ; �eti�r�t �ri#�i�i'i2ati6n ; k .. E ; _. _. . _ _ _ , ; • �. ; �SUI.VET� '�`ha#: tl�e.:�uthan�ed Q#�cers, (ie, and eac�i of t�ie:�t ereby ��, autliorizesl, 4 ; empoweied and dizeGt�ci, ta �ie�rare, execu�, ackno�ledge, :deliver, fite. ; � �».d reco� suc� doc�m$r�#s, certificates agr�ee3n�nfs .<;r aflaer instrutnents, ; i ir� t'he name ar�d on behalf of tlae. Company a�?� under its cQrp.pi..a.te seat, if ; .��i cles�ed,. aikd ta #ake all t�ther actions as su��s. Au�i�i�i�d �3f�:cer in his 1 or �i�t' sot� dise.retiaa m�y �lc�x�: zi�cessary or ctesira�sle tt� accomp�ish tl�e �• �ntems ��r� gurposes of �ie �'ox�going resaluiio� #` . � 4. T�,e �erget lias been a��io:vetel,�S� ihe sole stc,ckiic��de� affia� Coxnpany by i varit�n cc�r�seritin Iie�o�a meeting, . i i i �. The �ieiaded and Restated Certifieate af Tncorpora.t�:an saf the Su��vi�Y�, ; Cor�,nr�tioc�. sha1� b� as a�aciied hereto as:E�cli�bii t�i.. t 6. This C�rteficat� of �wners�tig �nc� 1V�erger shali bec�rne: ��fective up.on the • fling of this Certificate of ('J��ersIiip and Meige�' �!i:t�i the Secretary of �tat� a�tt�� #ate i ��I�e�avrafe: ' i � iN' "t�T`I`I�IE�S WH�IZLC1�', Sfirearri Internaticinal Inc., laas cau.sed this. Cert[ficaie of ;' � . Ovvnershi�i and. �lezger'to be exe�CU#ed I�y 5te.phe� D'..� Mov=e ; �fs; autl�i4xiz.ed o��eer, �: this � �ay r�f l�ecemher; 200I . � f F STRE.. T �t"�I�Tt�I.INC. � . fi � ¢ � z : JJ � l'aTatlt _ Sisphen D. R. ].�3�czre `' �'ifle: Chief Execu�iane �ff�.c�� : � , {.. i �_ - . ;` �: , � EXF-IIBi?`�i { . __ _ - , AM��ZI�� ,�;ND T�ES'�A:TET) � C�RTIFI�CA'I`E OF TNCC}RPt�R:�1TIC3�t Q:� . S'I'.R��S'I II�iTE�TA'I`ICINAL Il��: ' �RST; `I'h� n.arne: ofthe Carp�rafioii.js �tre,am Triternai�onal �n�. # `e_ f- . SE�t3TdI3. Th$-�cidress af the Corpoiati�in's register.ed affice. n� �1ie ��ai;� r3�` ; Delaware is i?09 �ran�� Stteef, ir� �Tt� ci#y of Ws'l�ii�gtan county. ofNew Casfl�,_ � �; i3.alaware� 198(I1. Ttte name of.��;, rr�gistered a�;ent a'� $�c� adc�ess. i� th� Ci�rparat�o�i: � Ti-�s# ��mgany. . �'�:: I'l�e puiprsse c�f tiie. �QipvraGion "i� tcr �aiga�e i;ii siiy Iavvfiil act cir , �ivity �or which carpozations rnay �S:e aig�ized un�er tfie: Gene�rai Corpt�r�tion T.aw of , 3tie S,t�:xe: af I�el��are: - F�UC�'�''H,.. (a�. Classes c�f Sitz�#� Authorized, Tii� Ccxr�sara�co�. is. .= � atiti��ri�d fss �su�' o��c c�ass of srtock to be r��sig�iat.ed as Goinrzron �t�s�k. T�e total: - ' riurn�ex c��zare� ��£ii�risi�ori Sto�k #hat t� ��irpora#ioti is aut�ortz�s� t� issu� �s aiie - �'�io�a�ci �1.,�� sliar�s, �vith a p� ual�e of:�.��. per sTiare, �e s�iares �� nm�iion ' . Si� :ck tna3� b� i�su€c'I �'xbrr�. �e �a fime for �u�� consiiteratior�.as fhe b�aarci a�'dir.�efars. �rsajt c�ciern�irie. - , �� Votizi� Ri�ts o� �om�3or� Sfack: �ac� .�:s�i'�e� c►f s�ares:.a£ � > Cri�:m€�n �tcir,ic stiall be �zctitted to one vo� f€irr each sIiare of Goint�ion �xoc�: helct +�E rect�rd on �1 mattexs o� wPi�eh the holders t�f Gt�r,�non Stack are er�tif3ed ta v�fe: . ;: FII�`Fi: Tl�e �cs _ . ." igoration. is to hav� p�rpefual existence. SI�TI In fi�xtl�erai�� and. �ot in lirnztsfian oft��:��vvers cara.�erred by statute, f1�e: li�ard of direc#or5 of th� Co�-perration is eicpress�3� �iui�torized ta adc�pt; amend �: arre�eal �3Ze Bylaws of the Corp4ration. ;: �E�'EItiTTH, ElectiQZ�s af d'are�fors ii�eed isot ba writteri bal�o� �lnless a:. . stc3ck�Qlder d�mancis. �lect�on by wrii#eu 1�a11ot a� fhe meeting and. before: �oting begitis csr iil�less tlie �:ylav�s oftkie Gor�ratio� shall so�pr.avide. EIG�IT�I. Ivleefings c�fthe sfaekl�crlclers rn.ay be. held wi�lxa�.or a�uittio:e�t tlie Staie iafDeiay�rare as.tEie I3��lavvs �f`t.he Coiporatic�n may prouide� Tf�e:books .of tlle �orgc3xati�sn mx� ba kept atrfsid� of' th� S�te of De�aware at: sueh ptace or �Zlaces as mu�y 4 �� . . . . . . . • , �• � be desi�nat�i3 fioni ti�e to time by tlae Iiaard. of directors: �f the �orparatian cir %ri 3h� . Bytaws c�f. fhe. C�rp.caration. l�tiNTI�. Except #o ths exferit t,�at. th� GeneraF ��rp4ratio�i Law vf t�e Sta�e of Delaarare pr�l.ii'b�ts tki�e �.Ix�ina�ion or ix�nitaki��. of li�.b�I�ty vfdrzeciors for bre�ch..es �� fid�ciary duty, no due.c�or. o£ tYie Corporai�ton shali be parsQnal:i.y �iable to the Corporaa.ion ��' ,its Stacklzolders f�r mr�iteiar}+ damages �"c� �y,breac� of �clur�ary ctuty as a drrecEesr, - notv�ithsf.anditig anjt pr�visitsxt of law impostng su_ ch liab�it�, I�Itr �endme�it ta or r�peal. of�ltis �rovisia� shali app#y! to oi 1�ave an_y eff�ct on t_h.e l�ab�I?iy' ur aETeged liabi:li� ofai� diTector of the Carps�ratiuri fi�r oi vnfi�x,xespe�.. to any acts ��' ori?.�ssio.ns df such �ire�iar cicctir;ring pr'ior tiv sue�.;ainendanenf. � �: 'T`E�YTH;. � (a}� Act'ior�, �uits and Proceec�in�s Other than b� or �n ili� Ri�ia�r of , ' e �ac� persa�: wi�c+. was ar �s ��y or _is - ihe C€�rt��tion; 'Ih� C�rporatio� s�i�� in�.:�ii�ifY threatened to b� �sde � party ta ar�� #�rcatened p�nd'r� ; ar EQn�ple�ed ac#ion, stt�� a�� ror.eedin�, wl�e�ex czr�il, criminal, ad�nis�strativs ai~inuesu�a�tve (otlier thaii ��cti�a�t - {�� oF is� fhe i�ighi of the �iixporafion), b� �e2S� of the fact tha� h� QC sYie is or w��a�, or lias _ agreed to 3iecom�e:, a c�irector ur o�icer �f t�e Cfirpoiatici�,. �r is r�' �sra� serving, or has a��e�l. to s.erv�, a# tbe xeqt�� cif th� Coz��ratton, as a dir-ecta� c�t�ice� or ts�tstee of,. or ii� � simil��' capaaity with, at�Qtiler:corporatioz�. parfrie.rsliip, Jo�ni ��`iturer ltusx qr orher enferpiise (inciuding any em�3t�.yee benefit glasi} (alt such peKSt�tss b..eing refe�zed ta - li�xeafter as. an "Iisde�rin��e��, .or by reas,��i t�f :a� aetion alle�ecT fv have been taken or : : _. c�tted in sueh. ca�acfty aga�t.all expenses (ii�Gluding attorneys i'�es} • firies and. amounts paid iz�. se�lement aci�aally and reasonably �cu€red b� i�ia� or �er c�r on r his_�r �ei �eha�f in c�nn�ctt+��t "w�t� such ac#�rari, si�zt or procse+d�ng., and ar� appeal f ' thex�fz�m if �ie or she acted i�: ,��d faith ar�d ia a manner he ox she r.�ascar�at�� belze�.ed tci be �z�, or not opposed ta, tl�e Tiesf intesests a��e Corporati�n, and, w��x r�spect ta any cri�iu�al aetinn or proceec�ing, �d. no. xeasaua�st� cause to taeiieue his: or heF Goi��iict. was �in�awful:. '�hs termination of'a��y action, sufi oz �roceedirig by'�uc�grnen:f; flrs�er . =' lea of aoto can�endere ar its equival�n#, slia�l not; of • sett�enz�rit; conv�et�oiz or upon � p �ts�l� cxeafe a presu�nptiou th,attlie person di.d not acti in gofld f�itl� •and � a zi►ailr��i: �vlii�h h� c�r s be �easona�ly believed to be u�, cir not o}?pased to, tha �iest int�iests 4f tl�e Cc��ratiiin; and �+.3*itli r�speet tfl any �minal act�i�n or groceeding, t�ad reasanabCe cause. to be�Zev� tli�€ ��s a� �er conduct �vas iuzlawful. N�atu�ths#a�nding anyth�ng to �the c:amfrary �.n this Ar�tcle, �xcegt �s set. forth �n S�cii�n (f� below,'�e �orporakion� shall not indemi�ify an Inde�xte� s�eking ind�mnz�cataan iA conx�ec�son witti a proceedin� (or � p�rt thereof� ixzitia#ed b� t��e indemnitee. unless�the initiation:thereof`kvas approved by th� �ard, af 1?irectars of the Cot'porataon. {li) AcEions or Sui#s hy iiir ifl the Rigl�t ofthe Gs�xporat�or�. Tlie �orporation shall indemn�f� any Indemnitee wh� �vas or xs a.party or �s Itu�eatened �g be ri�ade a, pa.rty to any t�u�at�ened., pesiding or ccimpCeted action or stut �� or xA tl�e. �z�ht of �� Corpozation to procure a. judgment in its �vor by reason of tii.e fact that �ie ot she i s or �vas, or kas. agxeed to bect��e, a di�ector or off�.cer of the Corp�z or is ox. vti:as seriting, ar lias agreed fio sarv�� at the r�ques� o,f the Corpora�i�n, as a:dlre��.az, c��cer or i t�stee of� or in a similar capacity with,. aaQ#her corporation, parttzersh�,� jaint �renture, mast nx ��lie,i enterprise {iricl�ding any einplo,�ree bene�t pxan}, or by reas�i� of any action � � ! r � ` ' , � � . • - ; I f a alleged to l�ave be,en taker� ar ornitted in sucIa capacrty, agains� al�l expenses {xncIvdin�; �.. af�Qrneys' fees) and anzounts paicf in settTementactu�tly'�n.d reasoriabIy uzctrrre� by him E. ar �ier c�r an his or her behalf in �annecti'ion w�th st�h a�iiesri, suit ar groceeiling �ni� aa'i� � �I?i?'eal tI�ezefrom,. if he ar s�ie acf�d �n gc�Qd fai� arid i�i a maz�ner �ie or she reason�Eb�� i j beI%e�v�d to be ii� or not oppas�d. ft�, t�ie be:st interests' o.f �tie G.orpaxati.an, �x�egf t�iat nri � iueleannif�c�tian. sha11 Ue made izi: respect :of any clai�rr, issue pr aia�tex as tn wlirch su��r � p�rson �hati k��v� been acljusig�d to b� Eiat�1� to tite G&iz�ratiq�i uniess and only t.� tl�e: � : �. e�t�n� tItat 1he �c3tirx. of Cliat�c� mf �eta�vare or tiae cpitrUnt,lii��cFi suc� action or s�fi ;. was: brot�gk�t s}aa�: determua. upQn. appT"rcatior� �liat, desgite the ad�udic�xtioia: of sueh � ; l�a�ilcf� b� �n vicvr �f ai� the. ci�rcu�nst�stce� a�`tl�e cass, � pers��n is_ �airly and �. ;� xeasonab�� en€if1,�� iiicie�ty �or sucii ex�ense:s (incluclin�; attt�rn�3'tsx �Pes) vuhich tlie- . � �qiirt of ��iaz�er}� o� I�1s�warje or snc� q�h;�r ieflurt shall d�e�rt p�t�per . � f . _ �� . �(c� �n�erz��fcati�n ft�.�E�:�enses of Success�ul Par�.� _ Notucithstanding ihe other proves%atis of #i�s Ar�� t� �lie extent ihaf an I�tdemr�zxtee �as � heei�-SU�cessfii(, o� tl�e rnerits or'.ttL�ie�'tse, in.�defen�: af zny act�on, su�t ar graceed�n.g , , _ re��red t� i�n. Sectio� (a) and (b� �� tl�r� ,�rti�le, di� m:�e�ense of any �c]ain1, issue or ` 17f��'r�' #�X�t'C;iI2 flC OI� � eal froni an sircb ��t'son, su�t:.or ��edrn �Se i �� . � ... . � �� r -. Qi S�IC S}f3�.� �F': ' i i€nderna�f�sd agai�xst ai� e�enses (irtc7ud�ing aito�ey� #'ees� ae�ually ar�ci' i•easanabl y � inciiir�eci �ry hzm ar her br t�n his orlier beT�al#'in conn�etio��.�erev,ri�. �V"it�iout 1i�nitari� : ; f�� fare�oivg, �f any act�azi, suit or proc��d"ing 'i� dispz�se�3 af �n t}��: �nerits or a�Y►envas�. . � ��iuetu� � dispasi#i�n t�itrinut �r�e3ut�ce� u+txthout �� tlxe dtspc3s�laon �ieing ad�erse t+o . th� �Iemni�e�� {�� C�J1tdlC�tlt}I1 l�I2t'tlle ItldetTlll]4e� 1a+�5 ��.� � E�i� ��21]t]2'atF011 (i'iij _ a plea s�f�uil�y c�x nolo �c�rne��dere by th� iudeinn�tee, �iv� an. ��.ju�st�ota t�at the � ins��i.tee di� nof a��t in gaod faith and i� a'mann�:r he c��' sYz� ��±c�za�s�� aeved. to �.e ; iii oi nat ci�� Q �Ehe �ae� ii�ierests. �f f�i� �orpora#i�rn., anc� ��'� t�it�t r�spect �o a.n � crimi�� prt�c�dziig, �4' atrl�j�tli.cation fEiaX Izidei�ueitee had xea�t�nable r.aus� to lieJiev� i, his ax �Se� co�tciuc# wa� uri�awfuf, the inde�anifee. shaiI be aonsi�er� f4� t�� pi�tposes : ` �i�re�sf #a tiave b�e�a who�l suer.�ssful urit� re ect �hexatcr, � _ Y �? • � . ; _ ; d, "]�Tcittfiaatioi� anri I3e��use af C1aim. As a co��3i:�i�� pxece.dent �..) ' t� his or her right iv be iaic�e�rinified, the: In�[em rbusf natify the Cor�resra�ii�ri. i� �vri#uig as soon: as pracxicab�e of any actinnf �uit, pr�eeeding Qr inv�sti.ga't�oz� i�volving; him cir he�r or far wh�ch ind�nii%ty. ivill or �o�1sl 1�� sougi�r. �litli respect. €c� an� a��t�t�, � suit praceeding o� investigai�c� t�fwhich the Carpr�zatiam %s so notified '�I'1C �j?l7Xcfhk411 v�a<il; lxe ezitiitled: ta participat� tlie�s�n: a,t ifs owzz �cpe�e ac�dlor to assume the ticef'fense i thez?e�� at its. o�vn expeazse, wi#b� 1e�1 c�un.set. re�n��1� acceptabl� to the Indemnitee. I ARer natice f�m tka.� eorparatxon to the In�errznitee crf its �l�cti�n � to asstime such [ de#`e�e, �� oip�ratiozi shall not �i� �iab�� tci tl�e Ir3demi�te� ft�r �n}? IegaJ, t�r other � e�e�ses s�x6sec�,iently krieurred by ttliie.Iinde�ru7it� in contnectY�n with suc� cI.aim, other _. : tlYan: as provid:ed b�lo+,3v in fliis Secti+on �e�. The �ndeuir�itee s�iall lxave ihe re,�ht to. e►npl�y his or hei avim coi�nse� in. eannecfi��. wi#�r sucli claim �Sixi #he f'ees: aiid. expenses' of'siich counsel, inc�rred a�er rio�ce froin the �or.poiation o#'its ass�r�t�tion u�i�e defense t11et'ecif .ShaTl be at tk�e �x�e�se of ttz� I�tiei�nitee unless (x� ttie �mp�pyinent ofcounsel by ;.. _ : the Ixtd�mzukee �ias bee�. a�#hnnzed by tlie �orporatioz�, (u) enunsel tci t�ie Indeinmte� ; shall ha��: seas�ina62� cezncluded i1�a# t�ere rimay be a cor�t�ct p�int�rest sr position oi� any signif�a�f issue Uetwveet� the Car�oratr'.an arcc� tl�e Incle�ut�ztee � the c�ai�duct of the � ; i . , . ; . � ; � + � , � ; .. � ; defense. n#'sticll actian or (iu) tlie CaXpora�csn:shall nof in facthav� en�playeii �ounsel to ; � assume f1ie: defense o#',such acti.on, ua eacl� s�f wlii,ch cases the fees and exper�ses of Y i . �aunset for the Ir�d�mnit� shall I�e at the e�cpense cif �{a� Corporafion, �eXCept as otherv�'r.se � � expressiy pra�d�cl:b� �s yA�rcicle. The Cor{�ora�ic�nshall not b� ea�f��d, wifil�ou! t�� i i consent o�tke Indernr�itee; #cr assUrne the defen�e �f`any cl�im brought by or in tl�� ri�l�:t: � � of the Corporation or as ta �viiich caunsel fr�r tF��: �'nc��mi�'z�ee sh�Tl ha"v� reaso�iably rri�tle ; � fhe: conclusion prqviti'ec� �fl� iri ctause. (ii} aliiive, � I i �e} A.dva�ce of �xUenses Sui�jec� tn t�ae prov`isians af 5�t�oi� (�' � ; belm�, in the. eveni €hat �lie Csar}ia�a�on does not assiu�e the det'ens� pursuan# to SectROn; ; i (d� q£ih2� tirtic[e vf`�ny acfion, suEl, proceeding nr inu.es�igatian of which the � ! Corporatiota receiues rio�ice und��lrzs;ArtzeJe, any exper�e� �irielvdi.�l�.attomeys' fees) � ' ` ziicurreci. �}� flr on liehaif of an Tndemx�tee in defending a ca�� o� e�rninal a�tzon, suit, } � . proc,eedsii� or �ntv��tz�atiori or any app�. t�erefrozn shall be paid Y�y tl� +�+orporatian in a � advance of t�e £�ii�� dis}��sition of such rt�an,n�r. vicividetl, t�o��e�t, i�ist t�t� p��ment..c�f I � sucl� expense. incu�r�d by �r �n. belialf of an I�i�fiee in adv�rrce �f f�ie f�nai ; ; dispositiori nf suCh rn�#k� shal� be made �n1y u�t�t ree�ip� of an undertak�g b� ur �n � behaT� o� tl�e Tndeiruu"tee #r� repa� a1j am .auz�t5 s�t efi��st�d �n. lhe ev�nt �Ytat �t sk�all r ultimatel}i be deterntin�d: thai the T�denutitee is not etif.i�ed fa tie� indeiuntfied. by th� � i i. �oiporanori as auf�anrtz�d �u thY�.l�rticle. Sueh und�aicin� n�ay be'a�cepted vsri#ha��:t , , ` �efere��ce to the fin�neia] �l?�1�ty o�che. Inderniuiee tt� m�i� s�ch repayn�en�. ; �f} gr�c��ure #'or Indeznnifica�s�nY Tn order to ob#ain �' m��u��cation or ad�an�erne�€ �f expetases pursuat� #!� �ec#t.ot� (a), (b), (c) or (e) af tliis. r } ,�E�;c�e;. tlie Indemnitee siiall st�brs�� to fhe CQrporati�n a v�tr«ten reqnest, ineluding 'i��t `� St��l€�c�u�sf such documenta�o� and infocmatio� as is re�.sanabl� availab3e ta the ; ° ' indemaiitee ax�d is reasonably necess�ry to det�rtn�ne vv�et�ez anefi to wliat� exten# dae I , Ir�ciemnitee is entitled t4 intlemriifdeai�on or adv�scemen# af expenses. Any such ; in�emnificafion or ad.vaneemen.t t�f expe�ses shall �e made geainptly, arid. in any everat � wittiiii 6() days af�er recei�t b�? t�i� CorparatiQn o�the: �ir�t#en rec�itesf of the Tndemnrtee, I urii�ss. wifti r�spect ici reqi;esfs ��e� Sectipn (a), (ti) s�r Ce) tf�e Cc�t�?orat�o�r. determanes; ; b� cte�€ �ad. conyincltig ev�der�e; �us�iin sueh. �i}-day pe�adthaL t�ie Inde.riinitee dici ncit ; , ru�t #.�� applieable standard o cvnducf. set forth itt Sectxon �,�� Qr (1�) as tl�e case rnay be- ; , Suc� d�terrni�a�son siial:l be made in e�c� ins#ance by (i} a rnajorrt�vaf.e o�a c�uara�n� of ; tlie cixr�ct+o�s o�'ttxe C;�rporat'san cansistiri� c�£ p�?sons w�xa aFe ii€�f at tEiat t�me. parties to ; tlie action, s�i��. c�r proce��iiisg in qnesfiit�n �"dis�st�xes�ed directc�rs"), (ii� zf nr� s�zel'► : qu�rum. is oi�tairiable, ��a�o�itj' vots of a c�n�inkttee :+�f ta�cr or rt�ore. d�sinter.ested i I � ciirectors, (iii� a m�aon#� v��e. af a quorun� o£t� .�utstanciz�ig sbares of stbck �� all �l:asses ; { er�t�tlect. to yote for drreetors vating as a sing�e class,. tivl��sl� quorum shall consisi c�f ; i �ioc�olders whca aie n�x at that tizn.e garties to the aetion suif or proceeding in question, : ; {iv� independent legal etiun�et {who. may be re�ular begal. �aunsel to di� .Corporation�, oi; . ; (v) a. coiirt af competen� jurisdictxon'. ; � {g� l�emedies. The rigiit c� ind�rxxr��cation or �d.�f�r�ccs as �ra�iteci ; ' b� �axs �`ti.cle shall 1� etifar£ea�ile by the Indemrutee in any co�rt o�' cc�mpete�at j jurisdiction if tt�e Corpt�z �.t�on denies such request� Sn �tuhoTe tir in part, or if ncs dispvsitiaii ! ' � = t�ereof is made withi .n the. �:Q-...d.a}r period referred to abave zi� Section {f}: Lnless t. �i ,, t €' i j� �� ; otliert�i'se pravic�e� �y l��v, the binrdert of prav.;in� that th.e. �n�emnitee is not entified ta. ` " indemni.fication �r advanc� of expenses iunc�ei itiis,Ax�%�le stia;ll b� ori t�e Corpflratian_ . .: � Neit'�ei the #'aiIure o�'t�e �.orporati.o.n to have m.ade a determin�t�i�n px�or to the ,. - i c�mna�ncernen# 4f su�� :�ction: t1�af iri�i�t�ni ,ficatior� i�. �roper in th� �ireurnstance�. ! becat�s� the Txidemnrtee has met tI1e agpIi:eable statxdar.d of ct�t�du�, �itir an actuai deterra�iaatign by the C�rporation pursuant ta Seetion �f� that th� Inz�ernni.tee has nai �ei . , . suclt agplic�bte siandard �f c�i�ducf, st�.alllie a de�`et�se to tlie action ci� c��ate a : ! presum�t�o» th�t the Ir�demnitee l�as not zn�f:the applicable standard ofcc��duct. The . ; . _ � I Indemnitc�.'s. expersses (irtcluciing attor�e�s' fees�: i�citr�'ed �n cor��ecti�n w.sth ' successfiiiI�r �sta�lishin� h�� tcae right ta ��id�inru�c,�i:itin, in wh�I.e or i� Rart in. aii� � such proc�ed�� shall a�so. b� itnc�emriifieii b.y #he Corp��ati�n.. i � , i � , � ' {�) Sub�e�t��t.Ame�ien.f.: Nc� aanendlnent, te�nrr��ti�rin. or i ��e� esf this Ar�i�cIe or of Yl�i� r�leva�f provisi�aii� o�tt►e' (%e��ra� :Ci�rpoxatiori Lau� o�' � ; T}�T��iare or arry cs�her appIicable law� s�iatl affee� or dirni�ish �� an3� vvay the r�g�s of � � az�� Inderrinitee tr� inderrtriificatian uriet� #he provisi�o�s h�:reo� �vi�li respect ta aat}� a�#a�n, ' � � suit, pmc�eding or inve�tigafoz�; ans�� q�f of or rel'ating tn ai� �r.��nis,, transactioris vr facts oe�'�ri-i�. �xzar to f�e. fina�: ad�sptioxs o� such a.tn�ndiiiei�t, i�cr�u��tion �r re�ea�:� �� C�her Ri�hts. �ize Indemn��atian aud a�t��n.�inent of . - expezss�.�ri?�!icleii by this :Aiticte shaCl not be deemeti exclusive �i€any ot�ier nghts tcx . whi+ch an ��mz�itee se�34iag �deu�nifi�atzt�n or ad�ari�eii� e�t of expErises rnay be e�titleci �i3tter an� law (cc�ri3z�,r�ri: or statutar�r), ag�'eeme�t or vote �rf �tt�e�c�Iders ar • disinterested r�arectors cir otksrwise, bath. as to actaon �i h�s: ar her affieiat capacity and as � to ac�t�rt in an3{ �fher c�pacz� tultil e h�Idit�� af�ce for t�: �orporatia�„ aa�t� s��l contin�s a:� to a�t Ti�demn[t� vv�o has ceasec� �a be a di��i�ni offi�er �nd: sttall in�re tCa • : the benefi.i aft�ie estaxe, �cirs �X�cutors. aric� �€iiinini.suatrsrs af the Ir�rier�n'xfee; Nothin�. contained izi th� .Article s[ia� �ie �eemed tc� ��ot�ibsi, ar�c3 f�� Car�rationi 7� ��afically authQri�ec� to stitsz tnto, agr�em.enfs. ��vit�i o��ers atiifi �I.ir��tors pravidix�g i��eninificatiai� xight� �rsd gsr.o�tiures diffeienf fxozin:those, s�f �axth i� t�iis :4rticle. In.�a.ddi�aoi'�, the . Corporation inay:, to the exterzt authoriz+�d �oz�t. fi�te to '�inie by its BaarCt o� T3irectors: �ant indemnificaf��rr� tighCs to otli�r employees or agen�s 4#'th.e :Corpar�t��ri o� o.�l�ei �iers�ns serying tli� Cfli�gora#iozi ai�d sizch rtglit� iaiay be equiWatent to, vr gr�at�r or less tliatz, those. sst for� in:�is ArticIe: . � .�j� Partiax Indemnifica�ion:. If � Inde�rin;itee 'is entit2ed uz�ce�' an}*� ; gri�vis�t�s� ��tliis t�rticie �c� z�+�,�mn��ion, by tli.� {Cc�r�.oratian for sa�� ctr a porf�c?n �f tlae expenses �izzcludirig. a�korF1eys' fees}; �}u�{gments ��s or arn:oun�ts pa�d iz�. se�lemexrt aci�ally an� reasonabiy ir��c�rte�l by hir� ar �:e� ar o�i hi� c�r hec �elia�f in. caz�.nectiai� wi�h any actiflri, siiz�. p�t�ce�di�ig or investigation and an� �.p�eal therefrom �iut not, 3�owever; �ar the tatal amount ihereof, #h_e Corpcirafita� sliall neverthe�:ess inde�nnrfy the ls�deini�itee far the portzon o�'suah �t}��nses �inciudin�. at#urneys fees).,,j�.idgrraents, ��es oz an�ounts. paid in s.etE3einerot to whiel�.ttze ��demni�e� ts enti�led.. (k) I�zsuranc�. T�t�: Corpoz�#ia� zriay purcizase aaa.d �naintain insurance, at �ts �xpense ic� pratect i�se��a�d any disec#o�,. offi�r, $zziplo��e �r agent n� - th.e Corparati on pr: anatl�er c�rporation, paren�rsl�p, j:oi�rt: venture, irust or o.tlier ent�erpn�+e -�� + . . ,. _ y ' � • STA 2'E 6F DELdWARE SEC�'&TARY OE` STATE . , , • �� DI'VISZON O�' CG�RPORATSOIV$ . ��'CEIS�IJ OZ: I:S FT4 3 �1/31/21J02 _ . ., -' U 77fi77 . i. IO& _. {ine�uc�irig any emplo��ee �en�fit plan). against ariy ekgense, liabiiity or loss iri�urr�d: by I��tta. oc her in. any suc� ca�►acity Qr arising ouf ofliis ar her s[aiu� as such wltefher c�x not . � t}i� �oiporat�ori waul� have t�ie pc��uer to indemizif�r- such persari against sucli expense .� liab�laty �+r Ivss �nder ttie �enera.� Coi�rafian La� of I}etaware, i , {1} I�ez�er or Coz�so3idation. �f the Carporatiazr is:merged int� or coiisoli�a€ted i?�itfi. anottier c�.rporafion a�id fhe Cozpoi�a�ion is not the. �urviuing : corpc�ratiaii, 'the siiruiving corpar�.tion si�atl assuarie i�ie �bligations a#`tne G4r�oration ` umder this.Artic�e. vvith reapect to any a�#�ii�:, suit, pr;oceed�zi� or irivesf�ga#�� ari�ing out a#' or xeiatiin� �o ari� gctions, trar�saefi�in� o� fa�cts occuz�rii�g �rior td ihe �iafe:i�f �uch. �arger ar consolidation. ' �� Savin�s Clause Xf:tk.�s Artic}�crr an� �artian h�te��s�i�J:� �e _ i % � � �nv�3�ti�tet! o�i a�y grr�un� 6�?� a�t3� c+aurt of cr��ipetent jurksdYCtio� then the Cor�rs�at��i�. �� i s�i�I r��!ert�ieless �ndemzaa� eac� Tndemn�tee as i,o aciy expenses ��n�kudipg att�tr�eys' i �ees}, �n�s and atrzot�a3s paid in setll�meni in co�ne�fic�n ��th arty action�. � i sui� proceedmg: or investiga�oil, whett�er �ivil, �mina� or admmistw�.t�ve, izic��lir� ai� . action by oran t�e nght: of th� Corporation, to #he ft�3lest eictent perriiit�ed by'any � applica�ile port�an of th:i:s Article tha3 s1�all riat I�av� b:eez� ii�yalidated aud ta th� �Ilest '° i . extent peiirti�e;c� �y �:ppl.icable Iaw; , (n) Defin.itiori�,: Temis �sec� her�iis and defi.ned. i� �eciian �45(h} a�id Sec�io�x 145{i� �fthe General Corporat�on. T,ativ of ia�iavrare s�i�l l�a�e t�ie res�'sect�ve meanin�;s a5sig�e�k tt� sttch te.rms �n Suc�i S�Gti.ori 145�. �td Section I4�(i �• . ` � cs Subsequer€t Le�isTatidm. I�'the Ca.eriecal Corparation La� i� �j ari�euded af#er t13e �dop�ii:on' of this. Ar#ict� ta ex�sand fur�ter �ze ind.emnification �ier�3itied , to Inc�emnifces, tixen tfte Cor�oratiori shail indemnify such �Sersons to the futtest ��tei�t permitted �y fbe C��nesal C�xjiora#ion. Lai�v as so amende�; E� � _ � ! !� F) SOURC�S AND USES Sources anc! Uses Sta�Eement for Stream internatianal, Inc. for HQ �and Call Cenfer M!F Bank Equity Laca[ Gavernment Other Total Praperty Acquisition $ - $ - $ - $ - $ - $ _ Site Improvement $ - $ 62,500.00 $ 62,500.00 New Construction $ - $ - $ - � .. � _ � _ Renovation of an Existing Building $ 283,200.00 $ - $ 1,300,600.00 $ 1,682,5Q0.00 $ - $ 3,266,300.00 Purchase of Machinery & Equipment $ 718,800.00 $ - $ - $ 716,$00.00 Public Infrastructure $ - $ - $ - � _ Other $ - $ 265,000.00 � $ 265,0OO.OQ - Total Project Costs $ 1,D00,000.00 $ - $ 9,565,600.00 $ 1,745,000.00 $ - $ 4,310,6�0.00' 7 years far subsidy to Stream; 2 years � for subsidy toTime Square property Term ears owner Interest Rate 0.40% O.OQ% O.flO% 6.p0% Q.Op% Coflaferal Lien Position NOTES: Mf� will be used ta suppart 12,468 sq. ft. of tenant space renovation in headguarfers space at Wings Financial building, and to purchase equipment for both the Wings HQ space and Time Square caU cen#er. Equipment is to consist of phones, cables, furniture, computers, servers, generator. Local. Government.funds, in the farm of a forgivable loan, will co�er funds for additionaf parking and renovation of 7ime Square 19,589 sq, ft. call center space. !�lso included in #his figure is $395,000 tha# will be �Ilocated fo the property owner for exterior improvements ta be made to the 40�year old shopping center. _ Stream [r�ternational wilf supply remaining funds for building renava#ion casts, equipment costs, and fees fo.r brokers, contractors, attorneys, etc. � MIF Application far S#ream International lnc. - Supplemental Business Informafion SECTIUN G — LENDER CC?MMITMENTS 4 � Attached is a Lender Commitment l.etter from the City of Apple Valley for participating funds. ` • � �� l� �� Telephone (952) 953-2500 C��Y af �j� �i 7i00 147th Street West Fax (952) 953-2515 �� i` �� Apple Valiey, MN 55124-9016 www.cityofapplevaEley.org � J J�une $, 2012 Ms. Sariiantha DiMaggio Senior Loan Offcer MN Department of Employment and Econornic Development 1 st National �3ank Buildi.ng 332 Minnesota Street, Suite E200 Sf. Paul, MN 55101 _ RE: Minnesota Investment Fur�d for Stream International, Inc. — Supplemental Applicant Information — Local Unit of Government Lender Commitrnent Dear Ms. DiMaggio: �'he Minnesota Investment Fuud Application requires a Lender Commitment.Letter from all entities providing funds that will support the project. The Apple Va11ey Econonuc Development Authority {EDA) will hold public hearings on two Business Subsidy Agreements a� June 14, 2012 for the following items: l. Business Subsidy to Stream International, Inc. in the amount of $1,350,000 for substantial building renovations at the Time Square Shopping Center to accommodate a19,589 sq. ft. 300- • person call center. Substantial renovations for the call center will inclnde expansion of the existing parking lot, interior demolition, window and lightin� improvements, partition walis, heating, coolir.g and ventilation improvements, screening for the generator, upgrades or relocations of e�ectrical and data/communications systems, and permits. 2. Business Subsidy to the property owner of Time Square Shopping Center in the amaunt of $395,Q00 for substant�al renovations to the Time Square Shapping Center_ Substant'ia1 � renovations will aIlaw t11e praperty owner to improve the 43-year old shopping cer�ter sa that it can accommodate the S� Tnterna#ional call center. .Substantial renovations will consist of repairs to the existing parking lot, exterior imgrovements to including painting, repair of fascia, repair of sidewalks, construction of dutnpster screening walls, and permits. The EDA, whicli has informally expressed st.ippart far the project previously, is expected to act on these _ items on June 14�'. We look forward to working with DEED on this important ecanomic development projecf that will benefit not only Apple Valley, but also Minnesota. Sixzcerely, CITY OF APPLE �TALL�Y ��.:,, �� _ � ce Nordquist, AIC �� Cotnmunity Development Director � Horne of fhe Minnesota Zoologica! Garden N) JOB GREATlON �ORM - PERMANENTJOBS TO BE CREATED Stream International. MIF Application � ea t entai t e Annual Hourly Rate w/o Haurly Rate Insurance [nsurance tnsuran�e Retirement pasition Title -Headquarfers toca#ion # of jobs Hours Benefits Benefits Benefits Benefits Benefits Benefits Other Director, Finance Operations, Americas 1 2080 $40,87 $8.17 Yes Yes Yes Yes Yes SVp, Giobal Finance 2 2080 $101.44 $20.29 Yes Yes Yes Yes Yes Prlcin Anal st 2 2080 $30.05 $6.01 Yas Yes Yes Yes Yes Financlal Analyst, Senior 3 2080 $34.17 $6.83 Yes Yes Yes Yes Yes Execufive Assistant 2 20$0 $37.74 $7.55 Yes Yes Yes Yes Yes Director, Pricin 1 2080 $43.27 $8.65 Yes Yes Yes Yes Yes Director, IT Finance 1 2080 $40.38 $8.0$ Yes Yes Yes Yes Yes Pro'ect Mana er, Senior 1� 208Q $45.67 $9.13 Yes Yes Yes Yes Yes Offcer, Chairman & Chief Executive 1 Financial Anal st 1 2080 $17.31 $3.46 Yes Yes Yes Yes Yes Computer Services Operator, Senlor 1 2080 $19.71 $3.94 Yes Yes Yes Yes Yes Director, Facilities 1 2080 $52.88 $10.58 Yes Yes Yes Yes Yes Director, Brand Management, Senior 1 2080 $62.50 $1i.50 Yes Yes Yes Yes Yes Accaunt Mana er '[ 2080 �$35.$2 $7.18 Yes `" Yes Yss Yes Yss Newly hired in anticipafion of HQ relocation 19 VP, Global Recruitin 1 2Q80 $96.15 $'f 9.23 Yes Yes Yes Yes Yes Financial Analysts 3 2080 ,$17.31 $3,46 Yes Yes. Yes Yes Yes Human Resources Pricin Anal st 1 2080 $26.92 $5.38 Yss Yes Yes Yes Yes Director, Business 3 2480 $52.88 $10.58 Yes , Yes Yes Yes Yes Human Resources Pro'ect Mana er 1 2080 $31.�9 $6.26 Yes Yes Yes Yes Yes Account Manager 2 2080 $35.82 $7.16 Yes Yes Yes Yes Yes Qirector, Marketing 2 2080 $46.59 $9.32 Yes Yes Yes Yes Yes Mana er, Pro'ect & Re orting 2 2080 $35,98 ' $7.20 Yes Yes Yes Yes Yes Pro osal 5trate isf - Senior 1 2080 $35.98 $7.20 Yes Yes Yes - Yes Yes Quality Pro'ect Manager 1 2080 $27.21 $5.44 Yes Yss Yes Yes Yes �ualit Data Anal st 2 2080 $18.53 $3.71 Yes Yes Yes Yes Yes Marketing Writer 1 2Q80 $23,66 $4.73 Yes Yes Yss Yes Yes Computer Services O erator 1 2080 $15.54 $3.11 Yes Yes Yes Yes Yss Forecasted lVew H(res 21 ,: ; , . ; ; ; - $39.:45 < ':$7 89 . ; ,. . . - aa ; . , initial HQ Total , ,.. �; 1 4 hiCt � ; • • � � • ' � H} JOB CREATkON FORM - P£RMANENTJaB5 TO BE CREATED Stream international M1F Applicatian ea t en al i e Annual Hour{y Rate w/o Houriy Rate Insurance lnsurance Insurance Retiremenf Posftion t9tle- Ca!! Center # of jobs Haurs Benefits Benefits Benefits Benefits Benefits Bene#its Other Customer Su ort Professional I 2080 $10.00 $2.00 Yes Yes Yes Yes Yes Customer Su ort Professfanal i) 140 2080 $11A0 $2.20 Yes Yes Yes . Yes Yes Technical Sup ort Pro#ess(onal 1 2080 $11.50 $2.3Q Y'�s Yes Yes Yes Yes Technical Suppor� Professional II 131 2080 $13A0 $2.60 Yes Yes Yes Yes Yes Sales Su ort Professional {I 2080 $11.00 $2.20 Yes Yes Yes Yes Yes 5ales 5u ort Professional fl 2080 $12.00 $2.40 Yes Yes Yes Yes Yes Team Mana ers 15 2080 $19.45 $3.89 Yes Yes Yes Yes Yes Service Dalive Mana er 1 2080 $31.89 $6.38 : Yes Yes Yes Yes Yes Site Director 1 2050 $56.25 $11.25 Yes Yes Yes Yes Yes HR Mana er 1 2080 $4327 $8.65 Yes Yes Yes Yes Yes HR Generalist 1 20$0 $28.81 $5,76 Yes Yes Yes Yes Yes HR Coordlnatar 1 2080 $18.37 $3.67 Yes Yes Yes Yes Yes Recrulter 1 2080 $14.73 $2.95 Yes Yes Yes Yes Yes Facilities Mana er 1 2080 $22.11 $4.42 Yes Yes Yes Yes Yes Computer Services Coodinator 1 2Q80 $28.33 $5.67 Yes Yes Yes Yes Yes Recepfilonlst 1 2080 $1 �.28 $2.26 Yes Yes Yes Yes Yes Trainin Manager 1 2080 $21.71 $4.34 Yes Yes Yes Yes Yes Classroom Training Manager 1 2080 $16.53 $3.3'1 Yes Yes Yes Yes Yes , Qualit M�nager 1 2080 $24.57 $4.91 Yes Yes Yes Yes Yes O eratlons Anal st 1 2080 $18.27 - $3.65 Yes Yes Yes Yes Y�s � Operations Plannin Mana er . 1 2080 $21.83 $4 33 Yes Yes `�es Yes Yes _ , . ;< � .: ,: � �.; ,: $.21 s22. .. . : $4 2d - .., .: Call Center Total 300 ` '; K � �� : ` ; : �� , °, � , , ,, , ' '° .: � �' <: � , Tatal jobs to be created = 340 Average haurly wage: � For H4 = $39.45 � For Call Cenfier = $21.22 �►verage hourly benefifs For HQ = $7.s9 For Call Center = $4.24 � S. I� �Z � ClTY OF APPLE VALLEY PRt�JECT` SUMMARI� _ _ APPLE VALLEY BUSINESS CAMPUS Agenda Item: i - Applicant; Hebert and Associates, ln�. Case Number• PC11-28-5 and PG�12-�i-B _ Applicatian Date: `July 2Q, 20'I'1 antl January 34, 2012, ,, Staff Reuiewer: Thomas J, Lovelace _ Meetin� Date: June 14, 2�92 � _ Petifion for: . Fina1 plat and subdivision agreement approval • Site plan/building pernut authorization for two industrial buildings in the APPLE VALLEY BUSINESS CAMPUS subdivision. Purpose: For your consideration is information pertaining to a request by the applicant for approval of the fmal plat and subdivision agreement for the APPLE VALLEY BUSINESS CAMPUS addition, a 27-acre industrial development that consists of two (2) lots and two (2) outlots. The property is located at the northeast corner of 147�` Street West and Flagstaff Avenue. The information includes the fmal plat and subdivision agreement. The subdivision agreement outlines the obligations and responsibilities associated with the development of the property within the final plat. The applicant is also requesting site plan/building permit authorization approval to allow for construction of a 54,501 sq. ft. building on L,ot 1, and 50,000 sq. ft. building on Lot 2 of the APPLE VALLEY BUSINESS CAMPUS subdivision Summary of Issues: The most westerly portion of the site is the current location of several underground pipelines that are currently located within a 200-foot wide easement. The pipelines extend northward from the existing petroleum tank farm located south of the proposed subdivision and cross over the future roadway for 147�' Street West. Construction of the roadway will require the relocation of the pipelines. The property owner has dedicated additional easement area that will allow for the relocation of Magellan's pipelines on the property. The site plan identifies a trash enclosure for each building that will be located in the service area at the end of the striped parking spaces located along the north property lines of each lot. The enclosure shall be sufficient in size to accommodate all the trash receptacles for each building and the exterior finish of the enclosure shall compliment the building's finish. Access to the Lots 1 and 2 will be via a driveway off Felton Court that will straddle the common property line. This driveway will provide vehicular access to the parking lots and service areas on both lots. Because half of the driveway is on each lot, a cross access agreement will need to be executed prior to issuance of a building pernut. Vehicular access to the proposed subdivision will be via the future extension of 147` Street West. Construction of this roadway, from Johnny Cake Ridge Road to Flagstaff Avenue is expected to begin this year. A temporary construction easement may likely be required to allow for work outside of the right-of- way of this street. Fifty-seven parking spaces are located along the rear properly lines of the two lots, with portion of one space located on each lot. Because of this, a cross parking agreement will need to be executed prior to issuance of a building permit. Fire hydrants within Lots 1 and 2 shall be spaced with a 250-foot radial coverage in accordance with the City Engineer. The submitted plans do not point out the location of any mechanical protrusions. All mechanical protrusions visible to the exterior shall be screened in accordance with City code. The site plan shows a sidewalk along both sides of Felton Court. Five-foot wide sidewalks will be constructed in front of the each building on Lots 1 and 2. The applicant shall install pedestrian connections from the sidewalk along Felton Court to the sidewalks in front of the buildings. Recommended The subdivision request was reviewed by the Planning Commission at its August 17, 2011, Action: February 1, 2012,meetins; and the site plan/building pernut authorization request at its March 7, 2012, meeting. On February 1�; the Commission voted unanimously (6-0) to recommend approval of the preliminary and on March 7 t1i the Commission again voted unanimously (6 0) to recommend approval site plan/building permit authorization. The following actions will approve the request in accordance with the Commission's and staff's recommendations: 1. Adopt the draft resolution approving the APPLE VALLEY BUSINESS CAMPUS final plat and subdivision agreement. 2. Adopt the draft resolution approving the site plan/building permit authorization to allow for construction of a 54,501-sq. ft. multi-tenant industrial building with i44- space surface parking lot located on Lot 1, Block 1; and 50,000-sq. ft. mulfi-tenant industrial building with 139 surface parking spaces located on Lot 2, Block 1, APPLE VALLEY BUSINESS CAMPUS. APPLE VALLEY BUSINESS CAMPUS PROJECT REVIEW E�sting Conditions Property Location Northeast corner of Flagstaff Avenue and 147"' Street West Legal Description Outlot A, MAGELLAN ADDITION Comprehensive Plan Designation "IND" (Industrial) Zoning Classification "I-2" (General Industrial) E�sting Platting Platted Current Land Use Used for cash crop production �ize 27.2 acres Topography Steep slopes along the west side of the property with grades leveling off as you traverse to the east E�sting Vegetation A stand of significant deciduous trees are located along the northern and western edge of the property Other Significant Natural Features None Adjacent NORTH Eastview Senior High School Properties/Land Comprehensive Plan "P" (Parks and Open Space) Uses Zoning/Land Use "P" (Institutional) SOUTH Magellan Petroleum Tank Farm Comprehensive Plan "IND" (Industrial) Zoning/Land Use "I-2" (General Industrial) EAST Hanson Pipe and Products Concrete Facility Cornprehensive Plan "IND" (Industrial) Zoning/Land Use "I-2" (General Industrial) WEST Fischer Market Place and Midtown Village Comprehensive Plan "C" (Commercial) and "HD" (High Density ResidentiaU�2+ units per acre) Zoning/Land Use "PD-646" (Planned Development) Development Project Review Comprehensive Plan: The current Comprehensive Plan 2030 Land Use Map designates the site "IND" (Industrial). This designation allows offices, assembly, warehouse, manufacturing and other similar activities within an enclosed building. Zoning: The property is currently zoned "I-2" (General Industrial), which allows for a variety of uses, including office, manufacturing, warehouse, and showroom uses. The proposed lot and building layout appear to be designed to accommodate the uses perniitted by ordinance Final Plat: The fmal plat indicates the subdivision of a 27-acre outlot into two (2) lots and two (2) outlots. The total areas of the lots and outlots are the following: • Lot 1 = 6 acres • Lot 2 = 6 acres • Outlot A = 11 acres • Outlot B = 3 acres Rights-of-way for future Flagstaff Avenue, which cuts across the northwest corner of Lot 1; and 147 Street West, which abuts the south property lines of Outlots A and B, ha�e been previously dedicated as part of the MAGELLAN ADDTTION. The final plat identifies the dedication of right-of-way for a third street, Felton Court. This 80-foot wide public street, which will provide access to all the lots and outlots within the plat, will terminate in a cul-de-sac and will be constructed to City standards. The most westerly portion of the site is the current location of several underground pipelines that are currently located within a 200-foot wide easement. The pipelines extend northward from the existing petroleum tank farm located south of the proposed subdivision and cross over the future roadway for 147 Street West. Construction of this roadway requires the relocation of the pipelines, which in turn requires an additional 1.23 acres of pipeline easement area in the southwest corner of the site. The additional pipeline easement area has been identified on the fmal plat. An access restriction agreement which limits access to Flagstaff Avenue shall be executed as part of the fmal plat approval. A public hearing on the subdivision of the land was held by the Planning Commission on August 17, 201 L The Commission recommended approval at their February 1, 2012, meeting and the City Council approved the preliminary plat at its February 23, 2012, meeting. Please note that there continues to be some discussion between the City and the developer over items contained within the subdivision agreement that may require some minor revisions. Staff will present any revisions to the subdivision agreement to the City Council on the 14 Site Plan: The site plan indicates the proposed development of a 27-acre site that will include the following: • 54,501-sq. ft. multi-tenant industrial building with 144-space surface parking lot located on 6 acres (Lot 1, Block 1). • 50,000-sq. ft. multi-tenant industrial building with 139 surface parking spaces located on 6 acres (Lot 2, Block 1). • 71,940-sq. ft. multi-tenant industrial building with 173 surface parking spaces on a 10-acre parcel (Outlot A). • 41,800-sq. ft. multi-tenant industrial building with 111 surface parking spaces on a 3-acre parcel (Outlot B). The development project will be done in two or more phases. The first phase will include the construction of the two buildings on Lots 1 and 2, with later phases occurring on Outlots A and B. Access to the site will be via future 147` Street West and Felton Court. All four parcels will ha�e direct access from Felton Court. Two private driveway connections will be allowed off 147�' Street West that will provide direct access to Outlots A and B. The final locations of those private driveways will be determined during the review of development proposals on the two outlots. The site plan identifies a trash enclosure for each building that will be located in the service area at the end of the striped parking spaces located along the north property lines of each lot. The enclosure shall be sufficient in size to accommodate all the trash receptacles far each building and the exterior finish of the enclosure shall compliment the building's finish. Access to the Lots 1 and 2 will be via a driveway off Felton Court that will straddle the common property line. This driveway will provide vehicular access to the parking lots and service areas on both lots. Because half of the driveway is on each lot, a cross access agreement will need to be executed prior to issuance of a building permit. Parking: Lot 1 will have a 118-space parking lot in front of the building with an additiona126 parking spaces located in the service area. Lot 2 will have a 106-space parking lot in front of the building with an additional 31 parking spaces in the service area. The 57 parking spaces in the rear flow seamlessly along the rear property lines of the two 2 lots, with portion of one space located on each lot. Therefore, a cross parking agreement will need to be executed prior to issuance of a building permit. The plans indicate that approximately 25% of each building will be devoted for office with the remaining space used as warehouse space. They have calculated their parking needs based on that ratio and both sites exceed the minimum parking required based on that ratia City code calculates minimum parking requirements for warehouse uses in the following manner, one parking space far each 400 sq. ft. of gross floor area for up to 6,000 sq. ft. in area, plus one additional space for each 800 sq. ft. of gross floor area over 6,000 sq. ft. Using this calculation, which assumes that some area will be devoted to office, the minimum required number of spaces for Lot 1 is 76 and for Lot 2 are 70. If you were to use the Institute of Transportation Engineer's requirement for industrial parks (multi-tenant or mix of service and warehouse), which is 1 space per 500 sq. ft. of floor area, the minimuxn required number of spaces for Lot 1 would be 109 and for Lot 2 would be 100. Therefore it appears that there will be adequate parking for the two buildings. No parking lot islands are shown on the submitted plans. City code requires that landscaped islands shall be provided in parking lots containing more than 25 parking stalls. Total area of islands shall be at least 2% of the parking lot area, except that no island sh�l be less than the size of a standard parking stall. Islands shall be surrounded by a concrete curb and provided with a weed retardant mesh or plastic sheeting. Islands shall be planted with a minimum 2%2-inch diameter tree at the rate of one tree per 150 square feet of island area. Parking lot islands shall be required to be installed in accordance with City code. Several parking spaces in the rear of the building appear to be in conflict with the turning radiuses of delivery vehicles accessing the service area. It is likely that those spaces will be occupied by building's employees and not customers. Elevation Drawings: The elevation drawings indicate that the building will be constructed with corduroy precast concrete panels with a buff exposed aggregate finish. A smooth cast-in-place horizontal band will run the length far the elevations. The banding will also be uses above each main entry door and between the windows on the front elevations, as well as between and above the windows on the side of the building. Staff has no issue with the proposed finish for the two buildings. The submitted plans do not point out the location of any mechanical protrusions. City requires that a11 necessary mechanical protrusions visible to the exterior shall be screened or handled in a manner such that they are not visually obvious and are compatible with the surrounding development. Rooftop equipment shall be set back from the edge of the roof a minimum of 20 feet. Screening shall consist of either a parapet wall along the roof's edge or by an opaque screen constructed of the same material as the building's primary vertical exposed exterior finish. Equipment shall be painted a neutral earth-tone color. Landscape Plan: City code requires that the minimum cost of landscaping materials (live plant material excluding sod) for industrial projects shall be 1-1/2% of the estimated building construction cost based on Means construction data. A detailed planting price list shall be required for verification of the City's 1-1/2% landscaping requirement at the time of submission of plans for a building permit. There are a number of significant trees (8"diameter and greater) on this site. It appears that the majority of the trees are Siberian elm and boxelder, including a few cottonwoods. The plans show that the building and service area on Lot 1 will extend into a wooded area. City code requires that a tree survey be prepared by the developer to deternune the actual number of significant trees, species, and condition; and a tree mitigation plan for any of the significant trees that will be removed as part of construction. Replacement of trees lost should equal 10% of the total caliper inches of significant trees to be removed. The landscape plan proposes two species of crabapple trees. The Spring Snow crabapple tree is very susceptible to apple scab, which is a common leaf disease that causes premature leaf drop and often times is very significant. Staff recommends replacing this species with a disease resistant crabapple variety or different oin�mental tree species such as Japanese tree lilac, hawthorn, or serviceberry. 3 Colorado spruce, shown as Blue spruce on plan, is very susceptible to a variety of diseases. It is recommended to replace the Colorado spruce with Black Hills spruce which is much more resistant. Trees could be added to many locations on the site, especially in the ponding areas. Swamp white oak and river btrch are tolerant of wet sites. Other tree species would be suitable to the upper most slope areas where water inundation is less likely. A list of plants and seed mixes is requested for the ponding areas and should be submitted with the NRMP application. Grading Plan: The site is relatively flat with the exception of along the west side of the property, which has a ledge rising 20 to 25 feet from west to east. All that area is contained within the existing 200-foot pipeline easement and will not be disturbed except for the pipeline relocation and construction of 147�' Street West. Site grading will be for the purpose of establishing building sites, street grades, and ponding/infiltration areas. The ponding area located in Outlot A encroaches into the new pipeline easement area. Adjustments will need to be made to the pond to move it out easement. Availability of Municipal Utilities: No utilities are currently available to the site. Existing sanitary sewer and watermain lines to serve the site will be extended from the west as part of the construction of 147`" Street West and Felton Court. In order to provide a future water line loop connection to the vacant property to the east, the City Engineer has requested that the water lateral line within this proposed development be extended to the northeast corner of the site. This will require the establishment of a drainage and utility easement over that water line. Sanitary and water service lines for all the buildings shall be off Felton Court. Fire hydrants will be installed in the front of all the buildings and in the rear parking lots of Lots 1 and 2 and shall be spaced with a 250-foot radial coverage in accordance with the City Engineer. Storm sewer will be installed to serve the site. The City Engineer has reviewed the storm sewer plan and has no outstanding issues. Street Classifications/Accesses/Circulation: Access to the development will be via future 147�` Street West, a minor collector street with a projected 2030 traffic volume of 12,004 vehicle trips per day; and Felton Court, which will be designed and constructed as a local street and will be able to handle 3,000-5,000 vehicle trips per day. Pedestrian Access: Pathways will be constructed along 147�' Street West and the site plan shows a sidewalk along both sides of Felton Court. Five-foot wide sidewalks will be constructed in front of the each building on Lots 1 and 2. The applicant shall install pedestrian connections from the sidewalk along Felton Court to the sidewalks in front of the buildings. There has been discussion with Dakota County regarding the possible location of a section of the proposed North Creek Greenway along the east edge of the property; however, nothing has been finalized. The City will continue to work with Dakota County and properiy owners on the greenway location. Attachments: Draft Final Plat Resolution Zoning Map Iandscape Plan Draft Subdivision Agreement MAGELLAN ADDTTION Final Plat Site Plan Draft Site Plan/Bldg. Pernut Resolution Certificate of Survey/Topo Survey Elevations Approved Preliminary Plat Resolution Preliminary Plat Location Map UUlity Plan Comprehensive Plan Map Master Grading/Diainage Plan 4 CITY OF APPLE VALLEY RESOLUTION NO. 2012- FINAL PLAT AND SUBDIVISION AGREEMENT APPROVAL APPLE VALLEY BUSINESS CAMPUS WHEREAS, pursuant to Minnesota Statutes 462.358, the City of Apple Valley adopted, as Appendix B of the City Code, regulations to control the subdivision of land within its borders, and WHEREAS, pursuant to Appendix B of the City Code, the City Planning Commission held a public hearing on an application for subdivision of land by plat on August 17, 2011, and WHEREAS, the City Planning Commission found th� preliminary plat to be in conformance with the standards of Appendix B of the City Code and made a recommendation as to its approval on February l, 2012, which was subsequently approved by the City Council on, February 23, 2012, and WHEREAS, pursuant to Appendix B of the City Code, a subdivision agreement between the applicant and the City detailing the installation of the required improvements in the subdivision and the method of payment therefor has been prepared. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Apple Valley, Dakota County, Minnesota, that the subdivision agreement and final plat for the following described plat of land are hereby approved and the Mayor and City Clerk are authorized to sign the same, to wit: APPLE VALLEY BUSINESS CAMPUS BE IT FURTHER RESOLVED, pursuant to Appendix B of the City Code, that said plat shall be filed with the Dakota County Recorder within sixty (60) days of the certified release from the City offices or such approval shall be null and void. ADOPTED this 14� day of June, 2012. Mary Hamann-Roland, Mayor ATTEST: Pamela J. Gackstetter, City Clerk � r ° �� i �� CERTIFICATE As Apple Valley City Clerk, I hereby certify that the foregoing is a true and correct copy of a resolution adopted by the City Council and the final plat described therein is hereby released for recording with the Dakota County Recorder this day of , Pamela J. Gackstetter, City Clerk SUBDIVISION DEVELOPMENT AGREEMENT Between SPOWD DEVELOPMENTS LLC And CITY OF APPLE VALLEY For APPLE VALLEY BUSINESS CAMPUS � � f � � � � o pC� D C� WHEREAS, the City of Apple Valley, a Minnesota municipal corporation (the "City"), has been requested by SPOWD Developments LLC, a Minnesota limited liability company (the "Developer") to approve for recording the following described subdivision of land: The Plat of APPLE VALLEY BUSINESS CAMPUS (the "Subdivision"); and WHEREAS, Developer intends to develop the Subdivision as two (2) lots and two (2) outlots; and WHEREAS, pursuant to City Ordinances, the Planning Commission held a public hearing with reference to the application for approval of the plat on August 17, 201 l; and WHEREAS, the Planning Commission recommended its approval on February 1, 2012; and WHEREAS, the City Council approved the preliminary plat on February 23, 2012. NOW, THEREFORE, in consideration of the mutual agreements of the parties it is hereby agreed by and between the parties as follows: L Plat. Subject to the terms and conditions of this Agreement, the City hereby approves for recording the plat known as APPLE VALLEY BUSINESS CAMPUS, as shown and noted on Exhibit "A" attached hereto. 2. Zonin�. This Subdivision is governed by the terms and conditions of the City's Zoning Ordinance (the "Ordinance"). Any use or development of the Subdivision shall be in accordance with the I-2 (General Industrial) provisions of the Ordinance. 3. Assessable Municipal Improvements. The City has initiated the installation of certain improvements which benefit the Plat which improvements are identified as: Apple Valley Project 2011-107 (147�` Street, utilities, trails and street lighting), the "Municipal Improvements." Upon completion, the Municipal Improvements shall be maintained as follows: A. The City shall only be responsible for maintenance of sanitary sewer lines located within public streets and utility easements dedicated to the City which were installed as part of the Municipal Improvements. Maintenance of service and lateral lines, installed outside of the public streets and easements dedicated to the City and having a pipe of less than eight inches in diameter, shall be the responsibility of the individual property owner or property owner's association. B. The City shall only be responsible for maintenance of water lines located within public streets and utility easements dedicated to the City which were installed as part of the Municipal Improvements. Maintenance of services, shut offs and lateral lines, installed outside of the public stxeets and easements dedicated to the 1 City and having a pipe of less than six inches in diameter, shall be the responsibility of the individual property owner or property owner's association. C. The City shall only be responsible for maintenance of the storm sewer system located within public streets and utility easements dedicated to the City. Maintenance of catch basins and leads to manholes outside of the public streets and easements dedicated to the City shall be the responsibility of the individuaL property owner or property owner's association. The Developer hereby requests that the cost of the Municipal Improvements be levied as assessments against the Subdivision. Developer hereby waives all notice and hearing requirements relating to any assessment levied hereunder. The Developer does hereby waive all rights, including those contained in Minnesota Statute §429.081, to contest or appeal the levying of assessments associated with Project 2011-107. The assessments against the Subdivision shall be levied in the principal amount of $900,000.00, together with interest, and shall be levied in accordance with the schedule attached hereto as Exhibit "B." Should the Developer/future owner of any lot wish to prepay the assessment levied against the lot, the cumulative total of the remaining years assessments, shall be due at the time of prepayment. 4. Developer Installed Imurovements. In addition, Developer has requested, and the City has agreed, to design additional sanitary sewer, water main, storm sewer system; sidewalk, streets and street lighting system to service the Subdivision which improvements are identified as: Apple Valley Project 2011-144 ("Developer Improvements"). Subject to the provisions hereunder, the Developer shall grade the lots and outlots in the Subdivision and install improvements within the Subdivision, in accordance with and under the following conditions: A. To construct and install the Developer Improvements in accordance with the design and specifications prepared by the City. B. To install and provide utilities within the lots in the Subdivision in accordance with the utility plans prepared by Jacobson Engineering & Surveyors, dated January 27, 2012. C. To grade the Subdivision in accordance with the grading and erosion control plans prepared by Jacobson Engineering & Surveyors, dated January 27, 2012, as revised per plans dated June 5, 2012. D. To construct sidewalk(s), parking lots and drive aisles within the lots in the Subdivision with concrete or bituminous material in accordance with plans dated January 27, 2012. 2 E. To install and establish landscaping in accordance with the plan(s) prepared under the direction of Lampert Architects, dated January 27, 2012. F. To install all utilities underground in the Subdivision, specifically including electrical, telephone, cable television and gas services. The Developer hereby represents that all utility services will be available for a building prior to occupancy. G. To install a protective box and cover over each sewer cleanout and water shutoff, in accordance with plans approved by the City. H. To install all perimeter monuments and lot monuments for the Subdivision prior to October 31, 2012. L The Developer agrees to comply with all requirements of the Natural Resources management regulations as set forth in Chapter 152 of the Apple Valley City Code prior to, during and after the development of the Subdivision. The Developer further agrees to submit to the City for its approval, a Natural Resources Management Plan prior to any construction of land-disturbing activity in connection with the construction on each lot in the Subdivision. The Developer shall implement and comply with all terms and conditions of the approved Plan prior to and during any construction or land-disturbing activity, including, but not limited to, maintaining the performance security required in Chapter 152 of the Apple Valley City Code. J. To install erosion control measures in accordance with the Apple Valley Natural Resource Preservation Plan. The Developer shall pay the City a fee as required by Section 152.15 of the City Code and calculated by the City to offset the cost of inspections to ensure compliance with the Plan. Payment shall -be made at or prior to the issuance of a Natural Resources Management Permit and building permit(s). K. Construction shall be limited to the hours of 6:30 a.m. to 10:00 p.m. Monday through Friday. Weekend construction hours shall be limited to the hours of 8:00 a.m. to 4:30 p.m. Saturdays only. L. Earthmoving activities shall be limited to between the hours of 6:30 a.m. to 5:30 p.m. Monday through Friday and to between the hours of 8:00 a.m. to 4:30 p.m. on Saturday. M. To install each item noted in Paragraph 4, herein, at the Developer's sole cost and expense, in accordance with all plans reviewed and approved by the City. N. To attend a meeting with representatives of the City, which meeting requires the attendance of all contractors and subcontractors, prior to commencement of any Developer Improvements. O. Developer will not bury any pipe nor install bituminous surface nor pour concrete without the specific approval of the City Inspector, which approval shall not be 3 unreasonably withheld, conditioned or delayed and shall be made by applying City standards uniformly and consistently applied in other City projects, prior to the work being performed. P. To deliver and to keep in existence with the City letters of credit or casfi escrows in the original aggregate amount of $1,04,630.00 to secure the performance and payment of the obligations under this Agreement to the satisfaction of the City. Each letter of credit must contain a provision that it is automatically renewable for successive one-year periods unless at least thirty (30) days prior to its expiration the issuer delivers written notice to the City of its intention to not renew the letter of credit. Following receipt of notice of non-renewal, the City may at any time thereafter, present the letter to the issuer and draw in cash the remaining principal obligation under the letter of credit. (i) $600,000.00 of the required security represents an allocation as security for the payrnent of the cost for the construction of Felton Court and attendant utilities required in connection with Project 2011-144. So long as the Developer is not in default of its obligations under this Agreement, this amount of the letter of credit shall be released forty (40) days after the City accepts Felton Court for maintenance by the City. (ii) $346,400.00 of the required security represents an allocation as security for the payment of the cost for the construction of the ponds identified in the grading plans (Paragraph 4.C) so long as the Developer is not in default of the obligations under this Agreement, and the City Engineer has approved the completion of the pond, this amount of the letter of credit shall be released within forty (40) days after the City receives a request by Developer. (iii) The balance of the letter of credit shall be retained by the City, until the City is satisfied, in its own discretion, that all of the Developer's obligations hereunder are fulfilled in their entirety. Q. To pay the special assessments, when due, for all amounts associated with Project 2011-107. � � � R. That any material violation of the terms of this Agreement and in particular this section, shall allow the City to stop and enjoin all construction in the Subdivision until autliorization to proceed is given by the City. The Developer agrees to hold the City harmless from any damages, causes of action, or claims related to the construction being stopped by the City. 5. OccupancV. No occupancy of any building in the Subdivision shall occur until water, sanitary sewer, and a paved surface are available for use to that building. Additionally, no occupancy of any building in the Subdivision shall occur and no Certificate of Occupancy ("CO") shall be issued until 147th Street and Felton Court are substantially complete and 4 accepted by the City. For purposes herein, the installation of the first lift of blacktop shall satisfy the requirement of substantial completion. 6. Service Fees. Upon submission of a building permit application(s), the Developer agrees to pay the City for the public services furnished to each lot within the Subdivision, an amount as determined below upon the basis of units (per building) as determined by the City Engineer, which amount shall be paid in the following manner: (i) Sewer Availability Charge - The rate per unit is based on the year in which the building permit is issued (presently $2,656.00 per unit -$2,365.00 Metro and $291.00 City). The person who applies for a building permit shall pay, at the time of the issuance of the permit, an amount equal to the rate times the number of units. This fee is subject to change if the obligation of the City to the Metropolitan Waste Control Commission changes. (ii) Water System, Supply and Storage Charge - The rate per unit is based on the year in which the building permit is issued (presently $766.00 per unit). The person who applies for a building permit shall pay, at the time of the issuance of the permit, an amount equal to the rate times the number of units. 7. Park Dedication. The parties mutually recognize and agree that park dedication requirements for Lots 1 and 2 of the Subdivision, as provided in Chapter 153 of the City Code, shall be satisfied by a cash payment of $9,980.00. This amount is due and payable prior to the release of the plat for recording. Additional cash payments far park dedication will be due and owing upon the development of each of the outlots, at the rates in effect at the time of replat. 8. Storm Water Dedication. The parties mutually recognize and agree that the storm water pond dedication requirement, as provided in Chapter 153 of the City Code will be satisfied with the completion of the grading of the ponds identified in the grading plans referred to in Paragraph 4(C), to the City's satisfaction. 9. Trunk Charges. The Developer shall be responsible for the trunk charges calculated on the acreage contained in the subdivision, multiplied by the rate established in the City Code. (i) Sanitary Sewer. The Developer agrees and acknowledges that sanitary sewer trunk charges will be paid at the issuance of building permits for each lot in the Subdivision based on the SAC units allocated to the buildings use and design at the rate then in effect. (ii) Water Trunk. The Developer is responsible for water trunk charges based on the area of the Subdivision (excluding Magellan easements). Payment of $23,314.89 is due for Lots 1 and 2 of the Subdivision prior to the release of the plat for 5 recording. Additional cash payments for trunk charges will be due and owing upon the development of each of the outlots, at the rates in effect at the time of replat. (iii) Storm Sewer Trunk. The Developer is responsible for storm sewer trunk charges based on the area of the Subdivision (excluding Magellan easements). Payment of $78,368.39 is due prior to the release of the plat for recording. Additional cash payrnents for trunk charges will be due and owing upon the development of each of the outlots, at the rates in effect at the time of replat. 10. Lighting Plans. The Developer must provide to the City a lighting system plan for the Subdivision, in accordance with Section 155.353 of the City Code. 11. Access Restriction. The Developer shall dedicate access restriction easements to the City to restrict driveway access from the Subdivision to dedicated public streets, except at locations permitted by the City (See Exhibit "C" attached hereto). The City agrees to grant two private driveway accesses adjacent to 147 Street subject to the approval of the City Engineer. The two driveways must have a minimum centerline-to-centerline spacing of at least 390 feet. Additionally, the centerline of the easterly driveway must stay a minimum of 35 feet from the easterly property line and must meet all applicable setbacks as identified in the City Code. 12. As-Built Survevs. The Developer must provide the City with as-built surveys ("Survey") for each building constructed within the Subdivision and each lot graded within the Subdivision, prior to the issuance of the Certificate of Occupancy ("CO") for that building; provided, in the event Developer is proceeding in good faith to obtain the Survey, and the Survey's availability is the only impediment to the City's issuance of the CO, the City agrees to accept a deposit of $5,000.00 to ensure completion of the Survey and upon receipt of such deposit, the City will issue the CO. 13. Release. The Developer hereby specifically releases the members of the City Council from any personal liability in connection with handling funds pursuant to the terms of �his Agreement, and further agrees to indemnify and hold the members of the City Council harmless from any claim, of any and every nature whatsoever caused or contributed to by the acts or omission of Developer except for the members' willful misconduct, that may arise as a result of this Agreement or the creating of the Subdivision. 14. Temporary Easement. The Developer hereby grants the City a temporary easement for drainage and utility purposes over, upon and across the southerly 100 feet of the 6 westerly 100 feet of Lot 1. The City shall be allowed to direct and retain storm water drainage within the easement area until the City accepts the completion of the construction of the Developer Improvements. 15. Easement Acquisition A�reement. Developer has entered into an Easement Acquisition Agreement with the City dated April 12, 2012 (`Basement Acquisition Agreement") that provided for Developer granting an easement to the City and Magellan Pipeline Company, L.P. upon lands within the Subdivision (Exhibit "D"). As part of the Easement Acquisition Agreement, if the City and the Developer could not agree on the amount of just compensation to be paid to the Developer for the easement, the City was to commence eminent domain proceedings. The Developer does hereby acknowledge that it has received full and just compensation, waives any right to additional damages as compensation, and releases the City and Magellan Pipeline Company, L.P. from any obligation to commence eminent domain proceedings.� All terms of the Easement Acquisition Agreement have been fully satisfied and the Easement Agreement is hereby terminated in all respects. 16. Binding Terms. The parties mutually recognize and agree that all terms and conditions of this Agreement run with the Subdivision and shall be binding upon the respective heirs, administrators, successors and assigns of the Developer. 17. Grading License. The Developer does hereby grant the City a limited license to enter upon the Subdivision for the purpose of grading the edges of the Subdivision to attain matching grades between the Municipal Improvements and the final grades for the Subdivision. The City's license shall be confined to a strip of land being ten (10) feet wide lying adjacent to and abutting the public streets as shown and denoted on the plat. The parties agree that this limited license shall cease at such time that rough grading of the Subdivision and rough grading of the Municipal Improvements have ceased, but in no event shall the license extend beyond December 31, 2013. The City agrees to cooperate with Developer and the Developer agrees to cooperate with the City in the coordination of grading operations to ensure orderly and non- conflicting grading projects between the Subdivision and Municipal Improvements. The City agrees to indemnify and hold Developer harmless from any loss, claims or damages arising as a result of City's access of the Subdivision in the performance of its licensed activities. IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as of the day of , 2012. 7 DEVELOPER: SPOWD DEVELOPMENTS LLC, a Minnesota limited liability company By: Its: STATE OF MINNESOTA ) ) ss. COUNTY OF ) On this day of , 2012, before me a Notary Public within and for : said County, personally appeared to me personally known, who being by me duly sworn, did say that he/she is the of SPOWD Development, LLC, a Minnesota limited liability company, named in the instrument, and that said instrument was signed on behalf of said corporation by authority of the corporation and acknowledged said instrument to be the free act and deed of the corporation. Notary Public CITY OF APPLE VALLEY By: Mary Hamann-Roland Its: Mayor By: Pamela J. Gackstetter Its: City Clerk 8 STATE OF MINNESOTA ) ) ss. COUNTY OF DAKOTA ) On this _ day of , 2012, before me a Notary Public within and for said County, personally appeared Mary Hamann-Roland and Pamela J. Gackstetter to me personally known, who being each by me duly sworn, each did say that they are respectively the Mayor and Clerk of the City of Apple Valley, the municipality named in the foregoing instrument, and that the seal affixed on behalf of said municipality by authority of its City Council and said Mayor and Clerk acknowledged said instrument to be the free act and deed of said municipality. Notary Public THIS 1NSTRUMENT WAS DRAFTED BY: DOUGHERTY, MOLENDA, SOLFEST HILLS & BAUER P.A. 7300 West 147th Street, Suite 600 Apple Valley, Minnesota 55124 (952) 432-3136 (MGD: 66-31663) 9 EXHIBIT "A" Plat of Apple Valley Business Campus � � 10 APPLE VALLEY BUSINESS CAMPUS . � . LLC, o ut�nasata cvtify iM1Ot tM1iv pla! wz prepve0 by me or un0er my DAKOTA CWNM SURVEYOR � Ilm�feE cwnpony, x�ne of fM1e�idlawng 1 Eexr1leE DroO�Y � E^ecl MNUn�Mat�l wn tluly LlceneeE Lmtl Surveyor In !M1e 51 le e( Mlnneeota� ' ot ! m oa�ie rcct re entalien�l t„a bounE aarv moMemotwo�l � hareb rtif �hat In o cortlanca w�IM1 M�nneaoto SlaWtes, Sacllon 505.021, SuhE. 11, Oab m nignaleE D�ot; aeplcteE . Y �a Y lo ae tlafineEen�Minnea�ab SecNOn�505��, SubE.�3,�os�ol�lhe�tl ta�at�lM1'm�� Ih�e plat M1as been renaNetl an0 approve0 M�e _ tlay of , 2012. own antl NbNeU m I�la plat: antl all publlc xa�s ar< aM1Orm and IabeleE � � �ateE lhie _ Eoy of 2012. OuNa! P, MACELLArv AWInIXI, accorGnq b tne r«ar oa< <�e.aal. By. � okola cw�nry, MMneaom. � � ToEtl B. Tolle/son Grant 0. Jocabeon. Liceneatl LmE Surveycr Dakota Cwnly Surroyor � Mlnneaota Lkrnse No. 23189 � � . . SiRTE OF � . , � � � COUNiY OF ' � � Thia lnaUUmanl rvaa acknowledgeA Oelae me m Ey Cranl D. Jacobaon � � . ONKOTA COUNtt DEPM1MENi OF PRCPERTY TAXA110N AND RECORDS �ndy dedlcola to tM public�lar�0� uee I�e�puNic�aye m�E tlranaqv Purwanl �o Minnesola SbNlea, Seclion 505.021, SubE. 9, lawea papble in Ne Kar ana u y vem waleE ty tnp piot � . 20_ an tNe IanC F<rNnOelne Oesvlbe0 M1avo �aen poid. Nso, Dunuant to Mlnnesota . Nolory PuDliq SIaNGa. Seet�en 2]2.11, tM1ere are na Eelinquent tavee ontl 4aneter entereE thie _ My Commiasion eFpiree Eay oi 2012 . � In wilness rvM1ereof wi0 SPOYlD Developmmts LLC. a Minneaata limited liabtlity . � cemOa�Y. �os 0\M1Vae preeente lo De •�qnea ey i�a proper ol�cer t�is � daY ol . 2012 . � . Olrecta PLANNING COMMISSION OF APPLE VALLEY. MINNESOTR DeparGnml ol Property Tavotim and R¢corEs qpproved by ll�a Manninq Cwnmieelon of Ne Clty of Apple VaRey. Minneeata, thie � SPOND Developmenta LLC � , � � _ Goy ol . 2012. By. CIXINTY RECORDER, CWNTV OF OAKOTA, STATE OF MINNESOTA Mark R. Heberl, Itc Chle1 Alanaga � � " . � By I �ereEy certlfy I�at Uis plol o/ NPPLE VAILEV BUSINE55 CHMPUS xaa tiled in lM1e office � SiF1E OF MINNESOTA Chair Sttrebry � of Ue Cwnty RecarEer tw o�e�K nco.a o� mia _ aay o� � ccuun a � �a��. e� - o=io�x _.u. �a woe emy mea M aod� oe vmia mie instr�me�t • acMOwleEgetlbefara m � voqe _. oa oor.,m.ne H�mee. . by Mark R. HMert 9 CM1lef Managx of SPOND Oewlopmanla LLC, a Minnesoto . Ilmit<A IioOiliry <ampony, an be�al! ol Ue comDe�Y� , County Pecartler - CITY CWNdL OF APPIE VALLEY. MINNESOTA This plat ol APPLE VALLEY BUSINE55 CRMPUS waa approveC an0 aaepteE by Ne City Cauncil � Nolary PubliG, o( lM1e Ci�y o� Rpple Vqley, Mlnneaota at a re9�lar meewv ��e�eor n.ia mm _ . � � � My Cammission e�pircs Eoy of 201t. 0 Y Moycr Clerk � . � SHEET 1 OF 2 SHEETS '`� � APPLE VALLEY BUSINESS CAMPUS WEST QUARTER CORNER OF / F C � SECiION 26-Ti15-R]0 � (DAHOTq COVN1v CAST iFON MON.)-1 xaPin uxE Oi rx[-- 4 j ' . � � sw V+ � s[cnor� za � �� . � _> e � . \ \ �\ i ( f e� Vii:aii _:.��i.�..�.:. �v��t� �� viTi.�.°: N 8zZ6 3Z E ._....NORTH �INE �G WTLOT A, MAGELLAN AODITION ` \ � � ��r.0 . . q� E . 54).42 es s oo � — — — — — — — _ -��. . . � . `C �O � /"''O�' � � �� " � � � . / /"�,.9 � ..._�uN� .w un� E,�ar_-; � q _M 89•53't5" E n - oqux�[ �uo unutt [ns[u[rvi _ �i�� Q' / //- vp �' IA 89•53'15' E _ �� — — — 2}�.55 � �-._. . . _ _ . � 3 /� � / � . / '1'18.48 I a ; � . �� ^ ��M � l r------ . o' YQ � i .,�o,'N / . �z°°F>� // I � I . � I z ;�� `„ i , � BLOCK �� 1 I 5 � � °/ I"�I I % / � � I'" I 2 I � ; � � / � I I I � o ,o ,zo � / � I I I '( -: �,; � I / I I � . oE.o,�s �w� o�PE u��uE�..allo „ I / I I I �� zo zo � � 4.RKEO�a: u� «��o.. ��E.� .o ,z,es sE.. 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SHEET 2 OF 2 SHEETS EXHIBIT "B" Allocation of Assessments for Apple Valley Project No. 2011-107 Assessment Lot One Lot Two Outlot A Outlot B Collection Year 2014 $7,125 $7,149 $12,291 $3,435 2015 $30,875 $30,979 $53,261 $14,885 2016 $30,875 $30,979 $53,261 $14,885 2017 $30,875 $30,979 $53,261 $14,885 2018 $30,875 $30,979 $53,261 $14,885 2019 $30,875 $30,979 $53,261 $14,885 2020 $30,875 $30,979 $53,261 $14,885 2021 $30,875 $30,979 $53,261 $14,885 2022 $2,375 $2,383 $4,097 $1,145 11 EXHIBIT "C" Access Restriction Easement � 12 i ACCESS RESTRICTION EASEMENT THIS EASEMENT, made tlus day of , 2012, between Spowd Development, L.L.C., a Minnesota limited liability company (hereinafter referred to as "Grantor") and the City of Apple Valley, a Minnesota municipal corporafiion, organized under the laws of the State of Minnesota, (hereinafter referred to as the "City"). WITNESSETH: That the Grantor, in consideration of the sum of One Dollar ($1.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, does hereby grant and convey unto the City, its successors and assigns, forever, the easement over the following described property: The westerly �ne foot (1') of Lot One (1), Block One (1), Apple Va11ey Business Campus, Dakota County, Muinesota; and See also Exhibit "A" attached hereto and incorporated herein. This easement is granted for and limited to the express purpose of restricting vehicular access to Flagstaff Avenue, except at locations permitted by the City, over and upon the afore-described Iand, it being understood: 1. The Gity shall have no obligation to maantain the land and that the Crrantor, its successors and assigns, may sod, seed, plant and maintain the land, provided that no driveway or other form of accessway may be constructed thereon. 2. The purpose of the easement is strictly limited to access restriction and the City shall have no right to utilize the land for any other puipose by reason of this easement. This instrument and the covenants and agreement herein contained are binding upon the parties, their successors and assigns. y r �� ,� � � EXHIBIT � � � IN WI'I'NESS WHEREOF, the Grantor has caused this instrument to be executed as of the day and year first written above. SPOWD DEVELOPIVI�NT, L.L.C., a Mirmesota liinited liability company By: Its: STATE OF MINNESOTA ) ) ss. COUNTY OF ) On this day of , 2012, before me a Notary Public withi.n and for said County, personally appeared to me personally known, who being by me duly sworn, did say that he/she is the of SPOWD Development, : LLC, a Minnesota limited liability company, named in the instrument, and that said instrument was signed on behalf of said corpoxation by authority af the corporation and acicnowledged said znstrument to be the free act and deed of the corporation. Notary Pu61ic THIS 1NSTRUMENT WAS DRAFTED BY: DOUGHERTY, MOLENDA, SOLFEST, _ HILLS & BAUER P.A. 730Q West 147th Street, Suite 600 Apple Va11ey, MN 55124 (952) 432-3136 (MGD: 66-31663) , � � � � �°`�'��¢ � �,�,� � �,` f � APPLE VALLEY BUSINESS CAMPUS @Nf�iA CdlNIY CW moN YmaJ' 1 . av �I n � m � � �� . . � �� . i .S C �� N 69•53'15' E . � . . . � � � � iiIGH oCN00L FCL'R � 2�:6 ACa� I1btJ 722S.3a� • r ---�4n , uHt a ounor ti w�cEUnN roamx . . . �� . evzr�s• c . . . . � �.. � _ ,3 L � �'� le:BO � . 541.�2 j �� // � a � $ � A �./ . 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I � , E .� .wutnavYWmai^�'L.. . I . � Eci i ' . �@ �'P� ._- `_ � � • . . . ` y � b^'m _ -wwuxc ' I . . . y , a `cr � � �� % r�l_ - , 1 n h � � ^ ,� : � . � i�'� t ` , � � � � . " �i/ ' I �a� j � r . k� � ��.t�� n"r r` - 1 a � � F � � � . � � t � V�' l" � v < < � � \ . � � "K � 1`� . ` � R . � ' ' ' _ � . ! � VS� �/, 'I ' , i � . y , 1 �1a � . `` �� rt ,{ °� . � , � � ' g x�v �/� � xe +H ' . � . / � " m I ' �� \x OUiLDT A \ � { `�- { � � ' �� I � f� �� . 1 �. ` „ p l ounoT a � m,�-�. � � / /z w ; � � � ! r� �d µ� 1 1 . . � $� ` O ,� . • ' � � sw i/s . � s[ t/a r.'.� o.� � ', r� � �� u � � I __ � � \ �:s s�� s\ � ,� • �- � `� ,�,, m.�., _ I � �v�llp R _�_�—� � . N 69•4]0 ri . . , \ . .� . � I . 8 � . •`� •, p ,� . ' I J I / ` ' x � • � �� E � ' � " ` 1 ��" y -' . � � . ( � =�� . . . \ � . �L�� 609 VE /�ts� � � uwua.w�..�. .�r . . � � ' I ' 'a 51`a ' � ' `°' S � 3'3O �„t�,R��' �� f' � ' °"° . � I { \ z i . , � � J. /` � � i �'` . . . (_'o . ' � j' ,r �� " � ^ ./-� ~ . � �� - I /``� Rc aao $ f- '` � . �-- �___.�,---�-----;--'—__ .,-�—____---`", s i�,�_ : .,-y __1� i�--- � 443.80 � Lf+30�-B4 palb°4753. � ` 8 /"�- � ' . R N 89'42'OY W ,�� ' ~ t _--^�� , �e v ta. x ww..a.axu�wc miar . � w��w�wr wG ue � --- _ -- - — - — - i 47iH • ."iiFF�Ei :'.'Ea i � _ •�---- ._1- - - .. ,. ., ! �,�,..m..` �r�".c � 1-- �D:oa:on'; = 1 W1D.E EASEMENT —�� . . i __ _� _�- _ , � � RESTR{CTING ACC�SS. • - cR r�� .�:wEt^.l.t= ADOIiiOd � � . �y�� , . - .� SHEET 2 Of, 2 SHEETS EXHIBIT � � � - s� EXHIBIT "D" Easement Acquisition Agreement 13 EASEMENT ACQTJ][SIT�ON AG�E�ENT This Easement Acquisi�ion Agree;tzaent ("Agreement") is made and ez�texed into as of l�is ►�.� day of �� ... 2012 b� and between Spovvd Developments LLC, a Mint�esota li�na�tecl Iiability cornpa.�y (the "Landowner") and the City of Apple Valley, a` Mit�nesota n�:u�i.cipa� corporation (fhe "City"}. (T�e Landowner and the City are hereina�'ter collectively referred to as the "k'ar�ies.") 'WHER7EAS, tlie City is undertaking a public improvement project fax the iz�stallation of utilities in the extensioxz of 147�' Street to th.e e�st of �lagstaff Avenue (hereinafter the "Pzoject"); and WHEREAS, in conx�ection �ith the Projeet, it is necessaxy �a�r tYxe C'rLy to relocate cex�ain pzpelines; an.d V�HE�A�, in orcler to accomplish the relocation of the pipeli�.es and the consi�ructior� ' of the street, it is nec�ssary for tlie City to acqture an easernent ta accommodate the relocated ' pipelines as w�ll as a da�ain�age and utility artd temporary coxZSttlzction easement; and W�TtEAS, the City desires to complete the P�•oject in a tim.e�y fashion and has requested that t1�e Owne� provide the easement to a11ow for timely construction; a.nd �REAS, the Owner is wi.11ing ta grant the easement ta tkie City and the City is : willing t'o accept said eas�men�, a1I upon the tenns an.d conditions containecl. r�erein. NOW, THEI�F�R�, i�n considex�tion of the faregoizxg aiid other good and value consider�,tioza,. the i�ceipt a.�.cl sufficiencq bf which is hereby acls�iowledged, the Parties ag�ree as follovc�s: I. GRANT oF .EASE1v�NTS. Owner hereby gran.ts unto City ar�d Mage�lan Pipeline Coznpany L.�'. a perpeti.ial easement in f11e form aaid text of Exbuibrt "A" at�ached � herefo. Owner �uri:her graaats unto the City a perpetual drainage an.d utility easement atia iern��ior�ry const�uc�o,n easement ;� �he f��, and te�t of Ex�.�bit "B" attached hereta. 2. COMPENSATTON FOR EASBMENT The grant of the aforementioned easeme�t is not � deemed a�vvaiver by Owner of its right to obtaan just comgensaf�on for the gxant of tb,e easement. The Cit� xs in the process af preparing an appraxsal o� damages for the acquisition of the easex�ent and will begi� negotiations with O�vi�er al� as required by Minz�. Stat. § 1 ].7.03b. 3. DRtv�?WAYS. The Ci#.y agrees to grant two pri�ate d�iveway aocesses adjacent to 147� Street subject to the a�proval af the City En.gineer. The two driveways rx�,ust have a EXHIBIT b a a S minimum centerline-to-centerline spacing of a# least 390 feet. Additianally, the centerline af t1�e easterl.y driveway must stay a�nuvintuxi of 35 feet from the easterl� , property Iine and zn.ust meet all applicable setbac�s as identi�.ed in City Code. �. C�MMENCEMENT OF EMINENT DOMAIN. In the event the Parties ca�u�ot agree oxl the arnduuit of just compensation to be paid to Ovvn,er far the easeznents, the City aa ees to co�nence em;inent domain proceedings to provide just cornpensatzon to Owner. S. DA7'�? o�' TAKING. The Parties agree that for �urposes of prnvidix�g just compe�sation, the date of taking sha11 be tlze date af this Agreement. ]�T'4'4'.�'Z'NESS WL�R�+ O�', tlae Parhes have executed this A.greement: SPOWD DEV�LOPMENTS LLC, a Mira�esota linr�.ted liability carnpany Dated:� �tc?^ � /�.3�— BY: ..--�.-� . �� l'�c�"'�a�� STATE OF MINNESOTA) )ss. COUNTY' OF DAK(7TA ) The foregoing instx-�e+?t w?s ac1_rnowl�l.g�d bef�re me this � day of ` � 2.012, by �`'tG�.w�c �t� �ir.v��' _, ;}�c ��- t� �<r� �e=�e��p��s LLC, a Ivt�-�es�a li:r�r�tEd 1'zability company, on be f of the Iirnited liability con�pany. � � ,JF�IN CATl�EAIiVE gRYR�tT' �� blic hfQTARY PUBLIG-MINN�SaTA y fs4Y Commtssfon fxpir�Jan.31, 2d15 a�a . 2 CITY OF .APPLE VALLEY, a Mit�a.esota municipal corporation Dated: , �� 0- ]BY� � Mary am� - d Its: a o D�tecl: �j -- 3 �' 12 BY: 0�'►'�.5�^- 1'anciela J. Ga.cicstetter �ts: City Clerk STA.TE OF N�INNESOTA.) )ss. COUNTY OF AAKOTA ) Tkie foregoing instxument was acic�owledged before me thi.s ``� day of 201.2, by Mary Hamann-l�.olaud and Pamela J. Gackstetter, the Mayor and City C ez�C of the City of Apple Valley, a Mirinesota mur�icipal corporation, on behalf af the muriici�a.l co�parafion. r ot �'ublic STEPNANIE A. �� . ��as� Ni►nr�escs� 31 .2o1s r 4st� Cammission E r�s Janua „�^� , �;�, • THIS IN'STRUZVIENT WAS DRAFTED BX: Severson�, �heldon, D�ughe�`ty & Molez�da, P.A. 730U West 14�' Street, Suite 600 Apple Vatley, MN 55124 (952) 432-3136 (iZBB: 66-30789} 3 EXIiIBIT "A" (Draftod by & whon; Ned retum W: Magellan P�e Line Canpeny, LP, P, 0. Box 22186, MD 27•2 (Rea1 Eslale —S, Gulhde�, Tulsa, Oklahnma 7Al21-2186, 9181574 7350.� STAtdaARD FORIlh E�sement and Right of Way Agreement i'or und in consideration of tlie sum of Ten Dollars ($10,00) nnd other good nnd vt�funUle consideration to d�e undersi�nad in l�nnd pxid, the receipc of wlticli is hereby e�alrnowiedged SPOWll D�iV�LOPMENT5 Lt.C, A Minnesota 14mit�,d liability com��auy, with en address of 23300 Granclviaw Trail, I.akevilla, Minnesotn 55044 (hereinnftar refezred ta fls "Qrnnto�", whether one or more), does (aereUy grAnt t�nd comey iinto Mn�ellan Pipeiine Company, L.P. pr designee, witl� tut addrass of P.O. Box 22186, atin: Real Estate, Tulsa, Oklalioma 74121 ("Mflgellan"), a�d tlte CI'�'X'' OF AhPLE VAL.LEY, a Minnasofi muniaipa] oozporation, wlth nn nddress af 7100 West 147�' StreqY, Apple Va11ey, MumesotES, 55124 (tlae "City'� (Mageilnn And the. Cily pro harein�ftar oollectively re£erred to as ".�'ir�ntees"}, thair succassars flnd assigns, �n ettsement (hereinafter; togetl�er with tUe rigiita and privileges hereiry gnmted, refetred to as the "Easement" witlt the right, from time to time, to survey,lny, constroct, instnll, n�odify, t�st, xnaintain, inspect, operate, �mtect, repnir, npgrade, repiaee wiilt the sama or different size pipe, ulter, substitute, irenew, reconstruct, restora, change tiie size of, relocace widiicl the right of way ttact, ubAndon in ' pince nndlor retY,ove (a) a pipeline or pipeJines, to�edier with nppurtenances tl�ereto, inchlding but not liivited to cothodic protecd}�n equiptvent �nd valves, for clfe transportation of such substxnces or comme��cieA produets ns mfly be hunsported in a pipaliue, and (b) pipelines, cables, conduits and reiatad equipment vid nppurtenances for talecommunicari¢na or any att�er pmpose, wlietl�ar relntad to pipelines, along n(ract or route described ou Exhibit "tl" attaclied I�e�b and made a part heceof (wlvch hhct or routa is hereinaiteY refened to as klae "Easement Area"), on, in, over, un�ler, through and across pie following described laud (hereinafler reEerred ta ns tfia "Propas�ty�') locnted in die cou� nty of Dnkota, State of Minnesotx, to wiL That patt oF Outlot A, MAG�LLAN ADDITTON, accordin� to ti�e recorded plat thereo� Dakotu County„Minn��sotn described as £oUows: ', Commancing at the southwest corner of said Outlok A; thence Soutfl 89 da�rees 42 minutes 47 seconds �ast, assumed bearing nlong the so�ith Iine anid Outlot A, 200.01 f�eet to tl�e east l'u�a o£ the Weat 200.00 feet of snid Outlot A, and said point beiug the point of baginning; tbence conrinuuig South $9 degrees 42 minutes 07 seconds �ttst fllong said sontla line, 201,10 feet; th¢uce North 00 dagrees 11 miniites 14 seconds VJest, 221.74 feat; ti�ence North 89 degrees 42 minutes Q7 seconds West, 4�.87 feat; thence NortU 52 degrees 43 minutss 49 seconds West, 195.55 feet to s�aid eost lina o£ the West 200.00 feet; thence Soudi 00 degrees 11 mimites 14 seconds �ost nlong snid east Iine, 339.35 feet to the point of beg.miing. Said pe6manent pipaline easement conWins �53,719 square feat. rogedier with th� riglat of in�ress and egress to, from nnd aSong tlae L�asement fueu nnd to nnd firom nny public roadway flnci tlie;rigl�t t� nse existing nnd fnture roads and gtttes ott die Property for the uforesaid purposes (Grnntee ahnll and does hqreby agree to malce reasonable repairs ta, or at its option, reasonnble payment for nny damaga to such lands, gates� or roads eaused by its use tl�areo fl. As betKteen ihe Cily and IvLlgellan, And their successors snd ttssigns, the City ocknowledges and agrees thnt its riglits and oU�ations grunted heremnder are subordinata to tliose of Mngellan and the City will not exercise its rigUts liereunder in any w1y dtat would otl�erwise interfere witl� or obfuscate the rights and ob�igations �ranted to Magellan haraur�der to survey, lay, constn�et, instsill, :nodify, test, maintain� inspect, opei�tte, protect, repair, upgrad�, raplace�widi Uie �an�e or different size pipe, alter, substitute, renew, reconstruct, restore, ct�nn�e the siae of, reloct�te witfiin �lro rigl�t of wny trnct, nbandon in p�ace andlor.remove (a) a pipalina or piQelines, toget6er with nppurten�nces tl�'eretq including but not limited to enthodic protection equipment and valves, £or tha trunsportation of � such suUst�n�es or coinmercial products as may be transported in n pipeline, and (b) pipetlnes, caUles, conduits nnd relnted equipmeut nnd appurtca3Ances for telecommunications or flny other purpose, w1�eWer related to pipel3nes, nlong tlie &�se3nCnt tlrea, No addationnl paymonts for rigl�t of way or construction damages shall he iequired for aiiy facillties aet fard� in t�e first pnragraplz above fl�nt �nAy be laid or consmicted, �tt nny time or tuues, by any Grantee, i�c successors or as9igns. Notwitltst�ttding, after the constttiction of lhe lnitini fve (S) pipelizaes (including appurEenauces} to be constntcted aF x�-routas of the five (5) presently eacisting (on �d}acent innds) pipelinea and ¢ppuri.enancas to uccommodszte tke building of 14'7` Street by the City of Appta Valley, end in die event tUe C3rantea pexforms additional work within die �asen�el�t .Ai�a af any fnriue tune, Grantea shall maJte reasonable restorntions of the �asement Areu to a similar aondition that esistad prior to the constmcdon acriviry. Grantor agrees that payment for tUe Ensement mada by Grnniee inefucles full pn}miant for constniction damnges for any facilities consducted at any dme or times by Grantee on the Ensement Area. Grantee shal! c¢use ROCtM F,ItIW Agrmt Il/1]-(ViOD.) Tiroct 3202-A - Dakotn County, MN - Agent - DM - Proj. Id-082 reasonable payttlant or, at the option of H�e Grantor, require reasoi�able repairs ta be mude for actual dnma�es to ro�ds, parking s4u�faces twd otlier improvements belon�ing to Grantor which nre located off oY the Bflsement Area and which direc�iy result from the exercise of nny rights herein �ranted occurring after completion of die pipeline(s) to be coushucte�i on tl�e Sasament Area. In the e�ent Ihat Gr�intar is dissacisf ed with tlia omount of tho paymeut or repairs undertaken by Grantee, Qrentee sht�ll ]�ave tha respousibility ro commence eminenf domain proceedings to provide just cou�pensadon to Grnutor for �uiy work perfonned outside d�e finsement Am:a. . Granto�, for itself, its successors and assigns, coven�nts attd agrees that Giantor shn11 not erect, construet, plunt or create a�y Uuildin�s, improvements, structures, trees, siuubs or obswcflons of any kind on, Above or below Uie surface of tl�e groimd withiu ti�e Easement Area, or chnnge tfia grnde or elevatioxi t1»reof, or cause or perniit these tltuz�s to 1�e done Uy others, withoul fhe prior written permission of Grantee, oC its successora iat intezest, Gra�rtor £urther agrees uot to perform or allow to ba perPormed Uy otl�ers nny such construotiou or raining activities which would andnnger laternl support of the grounct within the Pasement AreA, Subjeet; to the #'ore�oing provislous, Grantor raserves tUe right to the use and ez�joynient of snid EaseAnei�t Area nnd may, subject to enteriug into an onerouchment agreement 3n 1 fozm reflsonably ncceptable to the psxrties, use tf�oae portioais of ilie Easement Aren as designated in sucU encro�clmient agreenaeixt for a pfu'lciug lot and die ` purposes described in that paragraph immediate.ly preceding @�o pnrngrt�pli Ueginnin� witlx "FURTfiFR RLSrRVED" it� tUat certain Special Warranty Daed tecorded ns Docuutcut tQo. 2512127 and filed in the D�lcotai Coutlty records �ou April 25, 2007. Grnntor may request flr�u�tea to permit certain otlier specil':cally described eneronclunents, ptlter ilian thoso described iu snid Documont No. 2512127, in tUe �asame��t Area. Grantee will evnluate such en,Grouclunent requests iu its normal mmtuer for oncroac�ment requests and mAy upprove, subjecl to iha teims o£ Gs�dntee's stsxnda�•d encrouchment agreemei�t (cucrent at the� time of sueh requrst, plus auy s��ecia3 requirements c�eemed appropriate l�y Grantee for sucl� specific encroncl�mont situaboa�), if such i�equested encroaclunents x�eet the approval oF Gruntee. Tl�is Basement is subject to all righta reserved iv said Docnxnent Na 2512127 unto W�Ilinms Pipe Line Company, LLC, its successors and nssigns. Grante� shall not be permitted to coivstruct a chain liuk feuce within the Easeroeiik Area unless such fence is needecE to protect auy surfnce instnliukton (including, but not limited to a vaiva surFaca site for fhe pipeluies). Grantor�represents and warrauts that Grantor is tha owner in fee simple of tha T'iasemant Area, subject to a 10-foot drainAge,tuid nCilify e�sement as shown on the plut ol'record of sflid Magellan Addition, and sub;ject only to outst�nding nwx�ga�es or deeds of tivst (hereinafter referrad to as "mottgage liens"), if any, uow of recard in Dnkoka Cowity, pud in tUe event of dafault ou a�iy such mortgage lien Uy Grnntoz, Grautee shall have tUe ri�tit to discharge or reddein the sama fnr Grantor, in whole or iu part, us well as to redeem nny t�x lien or other fien on said T'roperty and fhereupon be suUrogated to such lien rights iuoident thereto. Grtmtor covenants thnt Grantor hae tGo right ro cotsvey tl�ls Easement aud that (3rnntor shali execiit� sucli further assurances tkereof as rnay 6e rsquired. This L��senuenk may be signed in couucerparts wslh the sauie effect ns if eacls namod Grantox aigned one • instrument. �ncl�; counterpart sl�all constituta a sepnrate A�reauient between che parties tl�ereto, subjact to proration of ttny payments dua hemuuder in aCcordanca with each Grantor's ownership shnre. Tha ni�hfs here3n granted, or nny af tUem, uituy be assz�ed in whole or in part and may be exercised by the Grnntee herein, tlleir successors ; andlor Assigns ei�lier joinU.y or separately. Tl�c Grantor represenFS that che nbove desciiUed 11pd is not t+ented. uted this day of , 2012. SPOWD DEVELOPM�NTS LLC Minnesata limited liability co y By: Its: STA'C;C OF ) ' � 88. COUNTX OF ) The forogoing instrument was ac owledge fora me fl�ie day of , , 2012 , by ' ti�e of Spowd Developrnents LLC, a Itifiunesoftt 1' tad liabiliry compqny, bal�alf of tlie t'uniled linUiliry company. Notnry PuUlic f�'OR,NI ER/W Agrnrt 11l11-(MOD.) Trqct 3202-A - Du[ccrta County, MN — Agen t— DM - ProJ. t0•082 �IiI31T "A" i CI"C'Y t�F AP'PLE VALLEY I � � :.�' , � � �.,Gti. � �._ - � �� . ' � ry � '9 �,�'st� I � rv . /N �r� nr a . � . . vV ��.V � n � � . . •a A rta9°azro7"1V . 44.87 , .. . , i �S d � � � C3 �. �,� �� W .+ fi,o �� ^° o �� ..� � � � �� g tm . o; �� E,^a� WM$ I�4u �� t� � � �� }� '� �� , . . - �li�' saithiXteafOVtA�tA \� � r�' . � � . . _ 14M. . . MAGElIAN AODlT[ON t �� /� • J n'�N , ,,,.,,_ . . . . . . . i . . — �2W.pt� • IW.1p � . � 5B9°�120TE 567°42tl7"8 - . . . . i�l��1 �{ J 1 �1F.� i r�i£J j . � .. ' . . . � . . __ . . ...._� . . � . . ._� . . .��. . . �..� . . �..�- . . . . �� . � PERAIANkT{TI+TI' . .�....IEGEWO.- � A permanent ea�ementlor p��r�Ine purymses over� under, anq avoss that pazt � Permonent F1pellno �:nsermeN • . � Of OUtlot �, MAGEUAN h�DTTION, accor�lln� m Bio remrdetl plat thereof, . � � �aknta Cntuity� fa rnnnsata dc&crlhr,d as fnl�vs: . � Commencdig at;he socithwe5t comer oFsaiA Oul1oGA� t�ence Sq�th 87 dcqrees 42 minutes 07 sq'conds Gast, assune�f beaNrn� ahnc� the squth 1p�e aaNf Oufk�t � A. 2U0.01 feet ta( the east ¢r�e of tha West 200.00 lect afsald outkftA, end saN . � . point betng thz pk�lnt of Uegtnnyy�; lhr.nce cantlnuing Saulti R4 degrees 42 � � m[nutes 0� Ser.ar�AS FaStalon� sald south I1nB,.201�10 feeh, thenr.elVa�th 00 N � �� . . � degree5 Il mtnu�es 14� seconds Wes4 221.74 feet; Ihenre tia��h 89 degrees q�l � Norhontal5calc In Fat � . mfnutes 07 sew s West, 95.67 feet; thence Mor�h 52 degmes 43 mhwtrs 49� � - �. seconds West, 1�555 feet to saW east Ilne of the West ?00,00 feet the�xc . SouG100 degree� 11 In6�utes 44 semnds Eastalo�g sald east line, 339.35 �eet - ro the polnt oT bykjk�nlnc�. � Sald(,+ermanent�#y��pneeasementrontainst53,714squareleet � � - , REVISED; January 31, 2012 - NO 6e1J ti�ork wes mmplat vd fnr this descrVptlen nnd akbtcb. � 1�tS� .iarwary li Z012 PILE NhME � 6610�Y59V6QZ.dWCj . AROI. NO, �RA1YI1 DIn SURVEY . 1 HFJkE9Y CERTIFY TNATTIiIS PtAH, SPF.C117CATIQk, QR AEPCNtT � � . . WAS pREPAftEQ BY ME DR UNUER MY QIR'FCF SUPERYfSION 5 pAllF �ICB qND fltAT 7 AM A DI,YLY UCEftSED PRpFE'SfONAL IAND SURVEYOA UNDERTIiELAW50FTHE5'lATEOFMIFlMESpf16 �� 233SWeStN��lnvey�6 � . pRtHT enME: QANtEI. ]� ROEBEIi � SC. Pavl, MN 55Y13 '�"^ � Phona: 65l-636�4600 � SiGNANRE: � ' � x �� BOCI@5�V�]0 w�iv�'iv. � . p �� DECF�IBER 9, 20]1 G , No , 43133 ROIiM GR(W A�rmtl 11/I1-(1410D.) Tract 3202-A - plkota Counry, MN — Agent— DM - Proj. 10-082 EXIIIB�T "�" � Y3RAINAG� AN'il U'TYLYTY AND TEMPCIRARY CO�iSTRUCTION �ASEMEN�T � T�IS I7RAINA:GE AND UTZLZTY AND TEMPORARY CONSTRLJCTION � EASE112ENT is made �us day of , 2d12, betwee� SP�OWD D�V�LOpMEN'TS LLC, a Nlirulesota limited liability company, (hegeinai�er refened to as "Lando�er"), and tia.e �YTY OF APPLE VAL�,EY, a m�uuucipal corpoxat�o�u, organiz�d u�der tlie lavc�s af tlxe State of Minnesota, (hereinafter refex�red to as the "City"}. WITNESSE�'I 'That the Lan.downer, iz� consideration of the sum af C}ue Do�llar ($1.00) and othe�r good aud� valuable Consi.dera�ion, the reeeipt and.sti2fficiency o� which is hereby a.cknowledged, does hereby grant arid conve� unto the Gity, its successars and assigns, a p�erinanent draiilage and utility easein�nt, trver, across and under the following de�cribed pre�.ises (the "Easement Area"), situated within T�akota Cauiity, Mi�nesota, to-wi�: ' The East 20.00 �eet of Outlat A 1VIAGELLAN ADDiTIO�t, according to the recorded plat thereaf, Dakota County, Minnesata. The sidelines of said easement are prolonged or shortened to terminate on the �iorth and south lii�es of said Out�at A. Tog�ther v��i�.h: A temporar� easerr�ent for cox�stru-ction purposes over, under, ar�d acTOSS the West �0�.��d it��ti z�r �ir� E� �O.�G f�et �� Gr�'ra� .E�., 1'c��LLAN AD��"I'IOI�, aceording to the recorded plat thexeof, Dakota County, Minnesota. Tl�e sidelines of said easeznent are �rolonged ox sliortened to terx�nate an the north azzd south lines of sa�id Oatlot A. Said ternporaty co�struetion easemen� shall exp�xe an J'une 30, 2013. See also Exhibit "A" attached hereto and zncorporated herein. The grant of the foregoing perznanent easement for drainage and u�ility pux�oses ��ciudes the right of the City, its� con�ractoxs, agerits and servants to enter upon the Easement Area at a11 reasonable fimes to canst��ct, reconstz�ct, inspect, repair and maintain pipes, conduits and naains; a�ad the £urtlier rigl�t, but �ot obligation, to enter n�an t��e Easezxient Area at all xeasonable tim.es to reznove potential obstructions, such as wood, brush, Ieaf piles, grass clippin.gs, or other objec�s that znay p�ug �he pipes, co�.duits or maiias Af�er comple�ion of suc� construction, mainteilance, repai'r or remoyal, the City sk�all res�ore the Ease�nent Area to �lae conditi4n in which it was found prioz to the caan.tnenceineilt of such actioi�s, save onky far t�xe i�ecessary retx�oval o£ poteniial _ obsi�.ictions. � The grant o�the foregoing tempo�ary ease:t�ent for site gradi.ng putposes iri�ludes tY�e right of the City, its co��tractaxs, agents and servants to enter u�on the Easeinent Area at all reasotaable tiriies to construct, xeconstruct and ii�spect site grad.irzg aud the furtbex xight to remove trees, brush, unclergrowth anii ot�ier obs�.�uctions. Aftex cvn�pletio�t. of such constn:xcrion, inaxn.tenance, repau or reriioual, the �xty sha11 restore the Easexnent Area to the condiiion izi which it was found prior to the comm�icement of snc� actioris save oniy for the necessary reinoval of trees, bLVsh, tuldergrawth aurl other obstriiGtions, subject only to pezma��.ent easement alteratio�.s. No�i.ng hez�eii� sha11 prohibzt La�downer fiom usin.g the Easement Area, prowided such use does not interfere with the City's constructi.on wit7lin the Easement ,A,xea. An:d the Lando�ner, it successors and assign.s, daes� covenarit with the City, its successoxs aancl assigns, it is t�e Laiida�vner of the �asement Area aforesaid and laas good right ta gxant ar�d convey the easeinemt herein to �lie Citq. lIV TESTIM4NY WI-�REOF, the Lando�wn.er k�as caused this easement to be e�ecuted as of tlae day and year first above written. SPOWD DEVELOPMENTS LLC, a Minnesota ]inr�ited liability compaz�y ,�'� By: ._.—,-- Its: �`�'�' Y�'�� `��EO'�'�44} )ss. COUN'TY OF ? �'b.e foregoing instrument was owledged befoxe me this day of 2012, , the � o� SPO D�VELOPMENTS LLC, a Muu�esota. limited liability company, o eha1� of the limited liabxlity mpanY• Notary 1'ublic 2 'THTS 1NSTRUMENT WAS DItAFTED B`Y: DOUGHER.TY, MOLENDA, SOLk'EST HTLLS & BAUER P.A. 7300 West 147th Street, Suite 600 APpI� Valle� MN 55124 (952)432-3136 (RBB: 66-34789) 3 EXHYB�T "A" . ' �� y � �� _____ .� , ��.r •- :tatpflneai�u�{at� _J ��^ lF.4GEiiJa2� /a�in3'[ON � {� , • y , �; . � � � ,t t �ia . �F . .. � '��iyC^'y'�` . . `.. . . . � . � � . . � � . �, � . . . - i . , . . � � . �� VV I I � . " � �L . � � s � �:, e� a� � � ;1 � y st5 I *1 1 { ; - .� ` F ��5�;� 1a 1'1' . � '5cxzUt Grcec �af [5.43at A , { �9kC0.LA41 RGIDFITSSN �'ti . � � �H�F� Y� � . � . . r.✓' � ,��",�� "''��"" . . I . , . . . r ""� • � � . . :. � , r _„�� ' . � � - a � ' ' . . �..-. . . ---- — • ' '�� .�""" . i•Pd !� Ji i��l� -.�+"' . 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'. • '`,�.•-�- ��1M��1'��3 www.boc,�st�oa•asm � . F�BRI.�Y �9, �b12 pt t 43�33 � CITY OF APPLE VALLEY RESOLUTION NO. 2012 - A RESOLUTION AUTHORIZING ISSUANCE OF A BUILDING PERMIT FOR APPLE VALLEY BUSINESS CAMPUS AND ATTACHING CONDITIONS THERETO WHEREAS, pursuant to Minnesota Statutes 462.357 the City of Apple Valley has adopted, as Title XV of the City Code of Ordinances, zoning regulations to control land uses throughout the City, and WHEREAS, said regulations provide that issuance of a building permit for commercial, industrial, and multiple residential uses require the specific review and approval of development plans by the Apple Valley Planning Commission and City Council, and WHEREAS, approval of such a building permit issuance has been requested for the above referenced project, and WHEREAS, the Apple Valley Planning Commission has reviewed the development plans and made a recommendation as to their approval at a public meeting held on March 7, 2012. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Apple Valley, Dakota County, Minnesota, that the issuance of a building permit for Apple Valley Business Campus is hereby authorized, subject to all applicable City Codes and standards, and the following conditions: 1. If the Building Permit is not paid for and issued within two (2) years of the date of approval, the approval shall lapse. 2. The Building Permit shall be applicable to property identified as Lots 1 and 2, Block 1, APPLE VALLEY BUSINESS CAMPUS addition. 3. Construction sha11 occur in conformance with all conditions set forth in the City of Apple Valley Resolution No. 2012-52. 4. Construction shall occur in conformance with the site plan dated January 27, 2012, including parking lot paving and a non-surmountable concrete curb and gutter around the entire perimeter with a minimum driveway approach radius of 1 S' at each public street, and a valley gutter at the edge of the street pavement. 5. Parking lot islands shall be installed in the parking lots in accordance with city code. 6. The ponding area located in Outlot A shall be constructed as not to encroach into the pipeline easement. ° � D D �� '� � � � h:\2o12\avbc (pc12-06-b)\bldg-pmt.doc 1 7. Pedestrian connections shall be extended from the sidewalk along Felton Court to the sidewalks in front of the buildings on Lots 1 and 2. 8. Construction shall occur in conformance with the landscape plan dated January 27, 2012, (including sodded/seeded public boulevard area up to each street curbline); subject to submission of a detailed landscape planting price list for verification of the City's 1%2 % landscaping requirement at the time of building permit application. 9. The Colorado blue spruce trees shall be replaced with Black Hills spruce trees. 10. Trees, such as swamp white oak and river birch, along with other more suitable tree species shall be planted in the upper most slopes of the ponding areas. 11. A list of plants and seed mixes that will be planted in the ponding areas shall be submitted and approved by the City prior to issuance of a building permit. 12. A tree inventory of a11 the existing significant trees located within the site and a mitigation plan for all the significant trees to be removed in accordance with the City's Natural Resources Ordinance shall be submitted and approved prior to issuance of a building permit. 13. Sod/seed designations shall be shown on the final landscape plan for all disturbed areas. 14. Construction shall occur in conformance with the elevation plan dated February 8, 2012. 15. All trash enclosures shall be sufficient in size to accommodate all the trash receptacles for each building and the exterior finish of the enclosure shall compliment the buildings finish. 16. All mechanical protrusions shall be screened in accordance with city code. 17. Site grading shall occur in conformance with a Natural Resources Management Plan (NRMP) which shall include final grading plan to be submitted for review and approval by the City Engineer; subject to the applicant submitting a copy of the General Storm Water Permit approval from the Minnesota Pollution Control Agency pursuant to Minnesota Rules 7100.1000 - 7100.1100 regarding the State NPDES Permit prior to commencement of grading activity. 18. The property owner shall execute a maintenance agreement or other suitable agreement to be filed with the deed that ensures the perpetual maintenance of the pond buffer area and the two infiltration areas. 19. All infiltration basins shall be constructed in conformance with the City standards. 20. Any site lighting shall consist of downcast, shoebox lighting fixtures or wallpacks with deflector shields which confines the light to the property. h:\2012\avbc (pc12-06-b)\bldg-pmt.doc 2 21. Cross access and parking easements that provide vehicular access to the parking lots and parking spaces, and service areas on Lots 1 and 2, Block 1, APPLE VALLEY BUSINESS CAMPUS addition shall be executed prior to issuance of a building permit 22. Approval of a signage plan is not included with this site plan and building permit authorization. A separate application and signage plan in conformance with the sign regulations must be submitted for review and approval to the City prior to the erection of any signs. 23. Construction shall be limited to the hours of 6:00 a.m. to 10:00 p.m. Monday through Friday. 24. Earthmoving activities shall be limited to the hours of 6:30 a.m. to 5:30 p.m. Monday through Friday and 8:00 a.m. to 4:30 p.m. on Saturday. 25. Earthmoying activities shall not occur when wind velocity exceeds thirty (30) miles per hour. Watering to control dust shall occur as needed and whenever directed by the Apple Valley Building Official or Zoning Administrator. 26. Issuance of a Building Permit and a final certificate of occupancy is contingent upon the project being constructed in conformance with all the preceding conditions as well as all applicable performance standards of the current zoning regulations. In the event that a certificate of occupancy is requested prior to completion of all required site improvements, a suitable financial guarantee in the amount of 125% of the estimated cost of the unfinished improvements shall be required along with an agreement authorizing the City or its agents to enter the premises and complete the required improvements if they are not completed by a reasonably stipulated deadline, with the cost of such City completion to be charged against the financial guarantee. 27. The ongoing use and occupancy of the premises is predicated on the ongoing maintenance of the structure and all required site improvements as listed in the preceding. No alteration, removal, or change to the preceding building plans or required site improvements shall occur without the express authorization of the City. Site improvements which have deteriorated due to age or wear shall be repaired or replaced in a timely fashion. 28. Notwithstanding Chapter 153 of the Apple Valley Code of Ordinances, a permit may be issued prior to the platting of the land provided that the land must be platted prior to occupancy. BE IT FURTHER RESOLVED that such issuance is subject to a finding of compliance of the construction plans with the Minnesota State Building Code, as determined by the Apple Valley Building Official, and with the Minnesota State Uniform Fire Code, as determined by the Apple Valley Fire MarshaL h:\2012\avbc (pc12-06-b)\bldg-pmt.doc 3 ADOPTED this 14�' day of June, 2012. Mary Hamann-Roland, Mayor ATTEST: Pamela J. Gackstetter, City Clerk h:\2012\avbc (pc12-06-b)\bldg-pmt.doc 4 ` i v . �; F CITY OF APPLE VALLEY RESOLUTION NO. 2012-52 PRELINr1NARY FLA'I' APPR4VAL AFFLE VALLEY BUSINESS CAMPUS � WHER.EAS, pursuant to Minnesota Statutes 462.358 the City of Apple Vaiiey adapted, as Chapter 153 of the City Code, regulations to control the subd.ivision of land within its borders, and WIIEREAS, p�.usizant to Chapter 1 S3 of the City Code, the City Planning Conn�znission held a public heaxing on an application �t�r subdivision of Iar�d by plat on August 17, 2011, and WHEREAS, 1:he City Pla��ing Coinmission ieviewed tl�e preliminary plat for car3fozmance with the standards of Chapter 153 of the City Code and made a rec�mmendation regatding its approval an Febniary 1, 2012, subject to conditions, NO�U, THEREFORE, BE IT RESOLVED by the City Council of the City of Apple Val�ey, Dalcota County, Miz�t�esota, that fhe preliminary plat for ttie following �esc�bed ptat of land is hereby approved for a two year period, to wit: APPLE VALLEY BUSINESS CAMPUS . T3E IT FURTHER RES4LVED, pursuant to Chapter 153 of #he eity Code, that said preliminary plat approval is subJect to �lie fallowiz�g condi�ions, wi�zch shall be incorporated into a subdivision agreement to be considered for approval at the time of subrnission af the request for final plat approval: I. `I'he p�at shall be config�.u to have twa (2) lots and two {2} outlots. 2. i'ark dedication requirements are based upon the Ciiy's finding that the subdivision will create 2?Q occEipants that will generate a need for .21 acres of parkland in accordance with adopted City standards for pa.rk services. This xequired dedication shall be satisfied by a cash-in-lieu of Iand contribution based Qn .21 acres of needed land area at a benchmark iand value of $104,000.00 per acre, which the City reasanably determines that it wili need ta expencl to acquize land elsewhere zn order ta provide the necessary park services as a zesuit af fhis subdiv�sion. 3. Storn� waier pand requirem.ents shall be satisfied by the dedication of easements accord'ang to the prelirr�inary glat, w�ich is the land the City reasonably determines tl�at it will need in order to provide the necessazy storn� water management as a result of this subdivision. � � � : � 4. Dedication on the fuial piat of a ten foot {10') vvide easement for drainage, utility, street, sidewatk, street lights, and tree plantings along the entire perimeter af lot(s) within the plat wherever abutting public road right=af-ways. 5. Dedication on ti�e final plat of a five foot (S') wide drainage and utility easement along atI camrnan lot lines. 6. Dedicatian on the final plat af a 25-foot vvic�e drainage and utiliiy easernent aiong the east properry line over a fufure trunk storm sevvex line: 7. Dedication on the final plat of all easements associated with the relacation of pipelines necessary for the constz of 147�' Street and the execution of an easement ab eement with Magellan Pipeline Company. 8: The. final plat sha�l designate the correct location of the easement �ox the relo�ated pipelines anci utiliiy/drain.age in accordance with the fully execiited easemer�t conveyanc� ageeizlent with Magellan Pipeli;ne Company and the City as described in the above condition. - 9. �siallation of municipa� sanitary sewer, water, storm sewer, aud street improvements as necessary to serve tlie plat, constnacted in aceardance with adopted City stanciards, , including the acquzsztion qf any necessary easeznents outside the boundaries of the • plat whieh are needed to install connections to said necessary izn�rovez�ents, The Develape� shall enter inta an agreement with the City for payment af the desigxz of said rriunicipal impra�vernents. 10. �torm water calculations shall be subinilted for review by the City Engineer pri.ar to issuance of a Natural Resources Management Permit (NR.MP). � 1 l. Thz n�ber of inlet pipes into the proposed ponding areas shall be lunited ta two pex pond. . . 12. Stor�11 water pond iniet and outlet pipes shalI be at tl�e opposite ends of the ponds. 13. Storm water pond inlets sha1l be located in a mar�ner that allows for City access for future maintenar�ce and sediment removaL 14. The dischar�e point of stornn sewer from the site will be in the northeast cornerof the lo� 15. A minimurn of one foot of vertical separa.tian from the Emergency Overflaw Locatio��s (EOF} to fhe 5nished flaor elevation af each building sha11 be rec�uired. � 16, Emergency Overtlow Locations {EOF) ancl elevations for the ponds shall be shown on aIl future grading plans. � 2 � 0 4 � . 17. Sanitary and water service Iines for all the buildings within the plat shall be off Flagstaff Court. � 18. Fire hydrants within Lots 1 and 2 shall be spaced with a 250-foot radial caverage in accorda��ce with �he City Engineer. ].9. Installation of pedestrian improvexnents in accordance with the City's adopted Trail and Sidewalk Policies, to coxisist of six foot (6') wide concrete sidewalks aiong the Ftagstaff Court aaid/ar ezght foot {8') wide along bituminous pathways along fihe 147�' Street West and Flagstaff Avenue: � � . 20. Submissioi� of a fiz� gxacling plari and lot elevations with erosian contral - proc�dures, to be r�viewed and approved by �l�e City Engineer. If th� site is one {1) � ar more acres in size the applicant shall also sLtbmit a copy of tlae af the Generai Storm Water Perinit approval from the Minnesota Pollutian Control Ageacy pursuant to Tvfuznesota Rules 7100.1000 - 7100.1100. regarding the State NPDES Per�nit priar to commericement of grading activity. 21. Installation of City street trees on boulevard areas of public street rig}at-of-ways, in accordanee with species, si�e, and spacing staizdards established in the Apple Valley Streetscape 1Vlanagement Plan. 22. Dedication of one foot {1') wi.de easement wi�ich restrict direct driveway access to 147 Street West except at two private driveway Iocafions to be approved by tlze C�ty at tlie time of submission of final plat and development plans for Outlots.A and B. 23: There shall t�e a miuimum separation distance of 350 feet between trie private � d�iveways on Outlats A and B ai�d Flagstaff Court, as measured from fi11e centerlines of the driveways and street. 24. T�ie centerline of the private driveway lacated on Outlot B shall be located a xninimum of 3s' from tl�e east properly line of fihe Outlot. 25. Dedicatian of one foot {1'} wide easement which restrict direct driveway access to Flagstaff Avenue. 26. Installation of a public (or private) street lighting systern, consti�ucted to City and � _ Dakota Eleetric Connpany standards. � 27. Construction shall be Iirnited to tI�e ho�us of 6:30 a.in. to 1U:00 p.r�. Monday through Friday. VVeekend corisiruction hoi�rs shall be lin�ited to the liours of 8:0� a.m. to 4:30 p.m. Saturdays only. 3 ; � � � Y' u 28. Eaxlh.movi�ng aciivities skzaIl be iimited to the hours af 6:30 a.m. to 5:30 p.ri�. Monday through Friday. � 29. The Czty receives a hold hazmtess agreement zn favor af the City as dxafted by the Cify Attorney and incorporated into the subdivision agreement. ADOPTED this 23rd clay of Febnzary, 2012. � M oland, Mayor ATTEST: �� Pa.inela J. Ga stetter, City Clerk � 4 � �" � .� f ��.-... � a r � � � � ;��.� � � ` � � � �� , � � � � -1 � �� 3 „ �� k ��` �� . � �� * �� ; 1 � a m , i ..� � � � f � ��: �:� . . �� ' x - `� ' o * � �� „ _:s �;, t ' �. c _ i � � � � � � � �} . . . .. I _ � , `�� -. � . . €�- � ? � � � f � �� 'u 3 "r�' � „ �,. - �_ � ° �=F D 3� * . 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CITY OF App�e Valley MEMO Community Development Department TO: Mayor, City Council and City Administrator FROM: Thomas Lovelace, City Planner DATE: June 14, 2012 SUBJECT: Revised APPLE VALLEY BUSINESS CAMPUS Subdivision Agreement CASE NO.: PCl 1-28-S Attached is a revised subdivision agreement for the APPLE VALLEY BUSINESS CAMPUS development. Many of the revisions are minor, such as additional dates and language. I have highlighted in yellow some of the significant changes, which include revisions to escrow amounts in paragraph 4P on page 4 and an additional storm water calculation contained in paragraph 8 on 5. I c------------------------------------ --------- ---'�� D��:<object> SUBDIVISION DEVELOPMENT AGREEMENT Between � SPOWD DEVELOPMENTS�LLC _ , oe��ed: , And CITY OF APPLE VALLEY For APPLE VALLEY BDSINESS CAMPUS Ic ----------------------------------------------------------------'"" Del�¢d:<objecP WHEREAS, the City of Apple Valley, a Minnesota municipal corporation (the "City"), has been requested by SPOWD Development�LLC,_a Minnesota limited liability company (the_, _- oeieted: , "Developer;�, to approve for recording the_followin� described subdivision of land:_ ____ ,,- oeietea: �� The Plat of APPLE VALLEY BUSINESS CAMPUS (the "Subdivision"); and WHEREAS, Developer intends to develop the Subdivision as two (2) lots and two (2) outlots; and WHEREAS, pursuant to City Ordinances, the Planning Commission held a public hearing with reference to the application for approval of the plat on August 17, 2011; and WHEREAS, the Planning Commission recommended its approval on February 1, 2012; and WHEREAS, the City Council approved the preliminary plat on February 23, 2012. NOW, THEREFORE, in consideration of the mutual agreements of the parties it is hereby agreed by and between the parties as follows: 1. Plat. Subject to the terms and conditions of this Agreement, the City hereby approves for recording the plat known as APPLE VALLEY BUSINESS CAMPUS, as shown and noted on Exhibit "A" attached hereto. 2. Zonin . This Subdivision is governed by the terms and conditions of the City's Zoning Ordinance (the "Ordinance"). Any use or development of the Subdivision shall be in accordance with the 1-2 (General Industrial) provisions of the Ordinance. 3. Assessable Municiaal Improvements. The City has initiated the installation of certain improvements which benefit the Plat which improvements are identified as: Apple Valley Project 2011-107 (147`" Street, utilities, trails and street lighting), the "Municipal Improvements." Upon completion, the Municipal Improvements shall be maintained as follows: A. The City shall only be responsible for maintenance of sanitary sewer lines located within public streets and utility easements dedicated to the City which were installed as part of the Municipal Improvements. Maintenance of service and lateral lines, installed outside of the public streets and easements dedicated to the City and having a pipe of less than eight inches in diameter, shall be the responsibility of the individual property owner or property owner's association. B. The City shall only be responsible for maintenance of water lines located within public streets and utility easements dedicated to the City which were installed as part of the Municipal Improvements. Maintenance of services, shut offs and lateral lines, installed outside of the public streets and easements dedicated to the 1 I c------------------------------- ,.. DCICCCd:<ob'ecV _, J City and having a pipe of less than six inches in diameter, shall be the responsibility of the individual property owner or property owner's association. C. The City shall only be responsible for maintenance of the storm sewer system located within public streets and utility easements dedicated to the City. Maintenance of catch basins and leads to manholes outside of the public streets and easements dedicated to the City shall be the responsibility of the individual property owner or property owner's association. The Developer hereby requests that the cost of the Municipal Improvements be levied as assessments against the Subdivision. Developer hereby waives all notice and hearing requirements relating to any assessment levied hereunder. The Developer does hereby waive all rights, including those contained in Minnesota Statute §429.081, to contest or appeal the levying of assessments associated with Project 2011-107. The assessments against the Subdivision shall be levied in the principal amount of $900,000.00, together with interest, and shall be levied in accordance with the schedule attached hereto as Exhibit `B." Should the Developer/future owner of any lot wish to prepay the assessment levied against the lot, the cumulative total of the remaining years assessments; shall be due at the time of prepayment. I �4_ __ Developer Installed Improvements._In_addition, Developer has requested, _and• _-- wrmaaea: �on keep with next the City has agreed, to design additional sanitary sewer, water main, storm sewer system; ��' ¶ sidewalks and street to service the Subdivision which improvements are identified as: Apple Valley Project 2011-144 ("Developer Improvements"). Subject to the provisions hereunder, the Developer shall grade the lots and outlots in the Subdivision and install improvements within the Subdivision, in accordance with and under the following conditions: A. To construct and install the Developer Improvements in accordance with the design and specifications prepared by the City. B. To install and provide utilities within the lots in the Subdivision in accordance with the utility plans prepared by Jacobson Engineering & Surveyors, dated I January 27, 201� as revised �er pians dated June 7�012 , oeieted: : � Formatted: Highlight C. To grade the Subdivision in accordance with the grading and erosion control plans � �� prepared by Jacobson Engineering & Surveyors, dated January 27, 2012, as —.__-------- revised per plans �dated�lune ? �OI Z_ ,,- Formatted: HighligM _� -------------- - - -- _ � Deleted: D. To construct sidewalk(s), parking lots and drive aisles within the lots in the Subdivision with concrete or bituminous material in accordance with plans dated January 27, 2012. E. To install and establish landscaping in accordance with the plan(s) prepared under the direction of Lampert Architects, dated January 27, 2012. 2 I c----------------------------------------------------------------'�� Deleted:<object> F. To install all utilities underground in the Subdivision, specifically including electrical, telephone, cable television and gas services. The Developer hereby represents that a11 utility services will be available for a building prior to occupancy. G. To install a protective box and cover over each sewer cleanout and water shutoff, in accordance with plans approved by the City. H. To install all perimeter monuments and lot monuments for the Subdivision prior to October 31, 2012. I. The Developer agrees to comply with al] requirements of the Natural Resources management regulations as set forth in Chapter 152 of the Apple Va]ley City Code prior to, during and after the development of the Subdivision. The Developer further agrees to submit to the City for its approval, a Natwal Resources Management Plan prior to any construction of land-disturbing activity in connection with the construction on each lot in the Subdivision. The Developer shall implement and comply with all terms and conditions of the approved Plan prior to and during any construction or land-disturbing activity, including, but not limited to, maintaining the performance security required in Chapter l52 of the Apple Valley City Code. J. To install erosion control measures in accordance with the Apple Valley Natural Resource Preservation Plan. The Developer shall pay the City a fee as required by Section 152.15 of the City Code and calculated by the City to offset the cost of inspections to ensure compliance with the Plan. Payment shall be made at or prior to the issuance of a Natura] Resources Management Permit and building permit(s). K. Construction shall be limited to the hours of 6:30 a.m. to ] 0:00 p.m. Monday through Friday. Weekend construction hours shall be limited to the hours of 5:00 a.m. to 4:30 p.m. Saturdays only. L. Earthmoving activities shall be limited to between the hours of 630 a.m. to 5:30 p.m. Monday through Friday and to between the hours of 8:00 a.m. to 430 p.m. on Saturday. M. To install each item noted in Paragraph 4, herein, at the Developer's sole cost and expense, in accordance with all plans reviewed and approved by the City. N. To attend a meeting with representatives of the City, which meeting requires the attendance of all contractors and subcontractors, prior to commencement of any Developer Improvements. O. Developer will not bury any pipe nor install bituminous surface nor pour concrete without the specific approval of the City Inspector, which approval shall not be unreasonably withheld, conditioned or delayed and shall be made by apply+ng City standards uniformly and consistently applied in other City projects, prior to the work being performed. 3 I c----------------------------- ------ _' DeletCd•<ob'ecV ------------------------ ° � � P. To deliver and to keep in existence with the City letters of credit or cash escrows ( in the original aggregate amount of 22 230.(HI to secure the_performance and ,- �eieted: �,tss,'s�e payment of the obligations under this Agreement to the satisfaction of the City. �'' Formatted: Hi9nii9nc Each letter of credit must contain a provision that it is automatically renewable for successive one-year periods unless at least thirty (30) days prior to its expiration the issuer delivers written notice to the City of its intention to not renew the letter of credit. Following receipt of notice of non-renewal, the City may at any time thereafter, present the letter to the issuer and draw in cash the remaining principal obligation under the letter of credit. � (i) 60.5�, 0 of the required security represents an allocation as security ____,- ueieted: Tss,i�o for the payment of the cost for the construction of Felton Court and `�' rormatted: Hi9hii�nt attendant utilities required in connection with Project 2011-144. So long as the Developer is not in default of its obligations under this Agreement, this amount of the letter of credit shall be released foriy (40) days after the City accepts Felton Court for maintenance by the City. ( (ii) 25 000.0(I of the required security represents an allocation as security_ __, ,. - wrmatted: H�9nu9nc -� for the payment of the cost for the construction of the ponds identified in ��' oeieted: s�s,�oo the grading plans (Paragraph 4.C) so long as the Developer is not in default of the obligations under this Agreement, and the City Engineer has approved the completion of the pond, this amount of the letter of credit sha11 be released within forty (40) days after the City receives a request by Developer. (iii) The balance of the letter of credit shall be retained by the City, until the City is satisfied, in its own discretion, that all of the Developer's � obligations hereunder are Substantially com�leted ,, oeiete tt�t�ued�as�m,o,ory. -------__-------- � __ �formatted:Highlight Q. To pay the special assessments, when due, for all amounts associated with Project 2011-107. R. That any material violation of the terms of this Agreement and in particular this section, shall allow the City to stop and enjoin all construction in the Subdivision until authorization to proceed is given by the City. The Developer agrees to hold the City harmless from any damages, causes of action, or claims related to the construction being stopped by the City. 5. Occuaancv. No occupancy of any building in the Subdivision shall occur until water, sanitary sewer, and a paved surface are available for use to that building. Additionally, no occupancy of any building in the Subdivision shall occur and no Certificate of Occupancy ("CO") shall be issued until 147th Street and Felton Court are substantially complete and accepted by the City. For purposes herein, the installation of the first lift of blacktop shall satisfy the requirement of substantial completion. 4 I c-------------- -----------------------� � DEICted:<objecV 6. Service Fees. Upon submission of a building permit application(s), the Developer agrees to pay the City for the public services furnished to each lot within the Subdivision, an amount as determined below upon the basis of units (per building) as determined by the City Engineer, which amount shall be paid in the following manner: (i) Sewer Availability Charge - The rate per unit is based on the year in which the building permit is issued (presently $2,656.00 per unit -$2,365.00 Metro and $291.00 City). The person who applies for a building permit shall pay, at the time of the issuance of the permit, an amount equal to the rate times the number of units. This fee is subject to change if the obligation of the City to the Metropolitan Waste Contro] Commission changes. (ii) Water System, Supply and Storage Charge - The rate per unit is based on the year in which the bui(ding permit is issued (presently $766.00 per unit). The person who applies for a building permit shall pay, at the time of the issuance of the permit, an amount equal to the rate times the number of units. 7. Park Dedication. The parties mutually recognize and agree that park dedication requirements for Lots 1 and 2 of the Subdivision, as provided in Chapter 153 of the City Code, shall be satisfied by a cash payment of $9,980.00. This amount is due and payable prior to the release of the plat for recording. Additional cash payments for park dedication will be due and owing upon the development of each of the outlots, at the rates in effect at the time of replat. 8. Storm Water Dedication. The parties mutually recognize and agree that the storm water pond dedication requirement, as provided in Chapter 153 of the City Code will be satisfied with the completion of the grading of the ponds identified in the grading plans referred _ _.__ __— -- to in Paragraph 4(C), to the City's satisfactior4 Tha rate of storm water dischar�e from the site , �( Formatted: H�9ni�ync shall not exceed 1.0 cubic foot per second. 9. Trunk Charses. The Developer shall be responsible for the trunk charges calculated on the acreage contained in the subdivision, multiplied by the rate established in the City Code. (i) Sanitary Sewer. The Developer agrees and acknowledges that sanitary sewer trunk charges will be paid at the issuance of building permits for each lot in the Subdivision based on the SAC units allocated to the buildings use and design at the rate then in effect. (ii) Water Trunk. The Developer is responsible for water trunk charges based on the area of the Subdivision (excluding Magellan easements). Payment of $23,314.89 is due for Lots 1 and 2 of the Subdivision prior to the release of the plat for recording. Additional cash payments for trunk charges will be due and owing 5 I c------------------------------------ - DClet¢d:<objecV upon the development of each of the outlots, at the rates in effect at the time of replat. (iii) Storm Sewer Trunk. The Developer is cesponsible for storm sewer trunk charges based on the area of the Subdivision (excluding Magellan easements). Payment of $78,368.39 is due prior to the release of the plat for recording. Additional cash payments for trunk charges will be due and owing upon the development of each of the outlots, at the rates in effect at the time of replat. (iv) 10. Li¢htine Plans. The Developer must provide to the City a lighting system plan for the Subdivision, in accordance with Section 155.353 of the City Code. 11. Access Restriction. The Developer shall dedicate access restriction easements to the City to restrict driveway access from the Subdivision to dedicated public streets, except at locations permitted by the City (See Exhibit "C" attached hereto). The City agrees to grant two private driveway accesses adjacent to 147` Street subject to the approva] of the City Engineer. The two driveways must have a minimum centerline-to-centerline spacing of at least 390 feet. Additionally, the centerline of the easterly driveway must stay a minimum of 35 feet from the easterly property line and must meet all applicable setbacks as identified in the City Code. 12. As-Built Survevs. The Developer must provide the City with as-built surveys � ("Survey") for each building constructed within the Subdivision and each lot graded within the Subdivision, prior to the issuance of the Certificate of Occupancy ("CO") for that building; provided, in the event Developer is proceeding in good faith to obtain the Survey, and the Survey's availability is the only impediment to the City's issuance of the CO, the City agrees to accept a deposit of $5,000.00 to ensure completion of the Survey and upon receipt of such deposit, the City will issue the CO. 13. Release. The Developer hereby specifically releases the members of the City Councii from any personal liability in connection with handling funds pursuant to the terms of this Agreement, and further agrees to indemnify and hold the members of the City Council harmiess from any claim, of any and every nature whatsoever caused or contributed to by the acts or omission of Developer except for the members' willful misconduct, that may arise as a result of this Agreement or the creating of the Subdivision. I 14. Temporary Easement._ _The Developer_ hereb}� grants the_ City _a temporary_, _- rrormatted: underline easement for drainage and utility purposes over, upon and across the southeriy 100 feet of the westerly 100 feet of Lot 1. The City shall be allowed to direct and retain storm water drainage 6 I � --------------------- - DeICtOd:<object> within the easement area unti] the City accepts the completion of the construction of the Developer Improvements. ] 5. Easement Acquisition APreement. Developer has entered into an Easement ------ _----._� AcquisiCion Agreement with the City dated April 12, 2012 ("Easement (acquisition Agreement")_, _--� Formatted: Highlight that provided for Developer granting an easement to the City and Magellan Pipeline Company, I L.P. upon lands within the Subdivision (Exhibit "D'�. As part of the Easement �cquisition_ __-� F inatted: Highlight _ __ v � Agreement, if the City and the Developer could not agree on the amount of just compensation to be paid to the Developer for the easement, the City was to commence eminent domain proceedings. The Developer does hereby acknowledge that it has received full and just compensation, waives any right to additional damages as compensation, and releases the City and Magellan Pipeline Company, L.P. from any obligation to commence eminent domain ---_ _ ___.�_� proceedings. All terms of the Easement �1cQuisition Agreement have been fully satisfied and the ,.-{ Formatted: Highhght - ---- -- --- Easement�cc�uisition Agreement is hereby terminated in all respects. _ _ _.- F rmatted: Highhght _ _-- _ —_� 16. Binding Terms. The parties mutually recognize and agree that all terms and conditions of this Agreement run with the Subdivision and shall be binding upon the respective heirs, administrators, successors and assigns of the Developer. 17. Grading License. The Developer does hereby grant the City a limited license to enter upon the Subdivision for the purpose of grading the edges of the Subdivision to attain matching grades between the Municipal Improvements and the final grades for the Subdivision. The City's license shall be confined to a strip of land being ten (10) feet wide lying adjacent to and abutting the public streets as shown and denoted on the plat. The parties agree that this limited license shall cease at such time that rough grading of the Subdivision and rough grading of the Municipal Improvements have ceased, but in no event shall the license extend beyond December 31, 2013. The City agrees to cooperate with Developer and the Developer agrees to cooperate with the City in the coordination of grading operations to enswe orderly and non- conflicting grading projects between the Subdivision and Municipal Improvements. The City agrees to indemnify and hold Developer harmless from any loss, claims or damages arising as a result of City's access of the Subdivision in the performance of its licensed activities. 7 I c- ----------------------------------------------------------'�� De18tCd:<objecv IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as of the day of , 2012. DEVELOPER: � SPOWD DEVELOPMENT�LLC, a Minnesota ____ _, �eieted: , limited liability company By: Its: STATE OF MINNESOTA ) ) ss. COUNTY OF ) On this day of , 2012, before me a Notary Public within and for said County, personally appeared to me personally known, who being by me duly sworn, did say that he/she is the of � SPOWD Developmenl�LLC, a Minnesota limited liability company, named in the instrument,___, oeietea:, and that said instrument was signed on behalf of said corporation by authority of the corporation and acknowledged said instrument to be the free act and deed of the corporation. Notary Public CITY OF APPLE VALLEY By: Mary Hamann-Roland Its: Mayor By: Pamela J. Gackstetter Its: City Clerk 8 I c-------------------------- _,,, D61Cted:<objecv ------------------------------------- STATE OF MINNESOTA ) ) ss. COUNTY OF DAKOTA ) On this day of , 2012, before me a Notary Public within and for said County, personally appeared Mary Hamann-Roland and Pamela J. Gackstetter to me personally known, who being each by me duly sworn, each did say that they are respectively the Mayor and Clerk of the City of Apple Valley, the municipality named in the foregoing instrument, and that the seal affixed on behalf of said municipality by authority of its City Council and said Mayor and Clerk acknowledged said instrument to be the free act and deed of said municipality. Notary Public THIS INSTRUMENT WAS DRAFTED BY: DOUGHERTY, MOLENDA, SOLFEST HILLS & BAUER P.A. 7300 West 147th Street, Suite 600 Apple Valley, Minnesota 55124 (952) 432-3136 (MGD: 66-31663) 9 �------------------------------------ -----------------------------''" Deleted:<object> EXHIBIT "A" Plat of Apple Valley Business Campus 10 I c--------------------------- ----- -, DCICtCd:<objecv EXHIBIT "B" Allocation of Assessments for Apple Valley Project No. 2011-107 Assessment Lot One Lot Two Outlot A Outlot B Collection Year 2014 $7,125 $7,149 $12,29] $3,435 2015 $30,875 $30,979 $53,26] $14,885 2016 $30,875 $30,979 $53,261 $14,885 2017 $30,875 $30,979 $53,261 $14,885 2018 $30,875 $30,979 $53,261 $14,885 2019 $30,875 $30,979 $53,261 $]4,885 2020 $30,875 $30,979 $53,261 $14,885 2021 $30,875 $30,979 $53,261 $14,885 2022 $2,375 $2,383 $4,097 $1,145 11 I c----------------------------------------- ,�- DCIEYed:<objecV. ---------------------- EXHIBIT "C" Access Restriction Easement 12 I c----------------------------------------------------------------''� Del�¢d:<objecv EXHIBIT "D" Easement Acquisition Agreement 13 S. D. 3 esae s��s esa�o s�� City of Apple Va�ley NiENio Finance Department TO: 1Vlayor, City Council, and Tom Lawell, City Administratox FROM: Ron Hedberg, Finance Director DATE: June 10, 2012 SUBJECT: Adopt Resolution Approves Development Assistance Agreement with SPOWD Developments, LLC Introduction The City Council is asked to authorize the execution of a development assistance agreement SPOWD Developments LLC. The EDA and the City Council recently created a new Tax Increment Financing (TIF) District, number 14. The EDA approved this subject development agreement at the June 4�' EDA meeting. SPOWD Developments is proposing to develop 21 acres that comprises TIF 14. Staff has been negotiating with SPOWD Developments, LLC (represented by Hebert and Associates) for assistance with their project in the Apple Valley Business Campus, the area adjacent to the 147�' St extension project, east of Flagstaff and west of Johnny Cake Ridge Road. The timing of this project is expected to begin along with the anticipated construction of 147�' St between Flagstaff and Johnny Cake. The significant issues in the negotiation was obta.ining the easement required for the lowering of the pipeline along with the assessments, the development agreement provides t�e City with this easement. Discussion: This development agreement and the new TIF District No. 14 includes the development of 21 acres, comprised of two separate phases including four buildings, totaling 200,000 square feet of office/ show room/ warehouse. The total development costs are estimated to be $13,930,000. The assistance requested by the developer is to offset the anticipated special assessments related to the construction of 147�' St and Felton Court. Felton Court would be constructed during the first phase of the project and would serve only the four properties ultimately constructed on the site. 147�' Street, Flagstaff to Johnny Cake, would be completed and serve as the Ring Route connection to the east. Because of the site layout and the plans by the develo�er to construct the northern two buildings first, it is necessary to construct both Felton Court and 147 Street at the same time. The property is owned by SPOWD Development and is encumbered by an agreement between the City and the property owner that calls for the City to construct 147�' street by 2015 and in turn ca11s for the assessment of the road costs to be levied against the SPOWD Development parcels. The agreement also called for the costs to be assessed for the portion of the assessable cost related to the City Council and City Administrator Approve Development Agreement with SPOWD Developments June 10, 2012 Page 2 1Vlagellan parcel against the SPOWD Developments parcel which shifted significant development costs to the SPOWD parceL The agreement caps the special assessment amounts for 147�' Street at $900,000 plus estimated financing and issuance costs and interest with an associated bond issu� to finance this portion of the project. In addition to the cost for 147�' the cost for Felton Court (formerly referred to as Flagstaff Ct.) is approximately $800,000, for a total of $1,700,000 in road costs. The attached proforma shows that the costs for 147�' Street would be assessed and the costs for Felton Court would be financed by the developer. The developer has requested that the repayment of the special assessments be structured around the timing of the T� Increments that would be generated from the project, this results in the inclusion of capitalized interest of $32,000 in the financing costs. The developer would be reimbursed TIF eligible costs through the mechanism of a TIF developer note, and any repayments would be restricted to the available increment generated and assuming full development would generate appro�cimately $1,931,000 towards reimbursement of eligible costs. The development agreement includes a pay as you go TIF district, with the costs incurred secured by the property in the form of a special assessment levied against the property. The available increment would be the amounts generated from the project less 10% to provide for administrative costs incurred by the City and the amounts deducted by the State Auditor. Based on the initial values of the development of $70 per square foot for phase I and $73.50 for phase II the project as contemplated would generate tax increment of appro�mately $1,079,000 on the first phase and $853,000 in the second phase, a total of $1,932,000, assuming both phases are completed assuming a 1.5% taxable market value appreciation. The first phase of the project would commence in early 2012 and the second phase would be in 2014. Recap of SPOWD Developments costs associated with the construction of 147�' and Felton Ct: Phase I Phase II Total T� Increment Generated $ 1,102,000 $ 871,000 $ 1,973,000 Project Costs: 147�' Street (900,000) -0- ( 900,000) Felton Court -0- 800,000- ( 800,000) Assessment Financing costs ( 180,000) -0- (180,000 TotalAssessment/Construction Costs (1,080,000) 800,000- (1,880,000) Difference between Developer Costs and Revenues Generated from the Project 22,000 71,000 93,000 Because of the timing of the road construction and the timing of each of the phases there remains a significant gap and the developer would be assuming the risk of the development occurring within a City Council and City Administrator Approve Development Agreement with SPOWD Developments June 10, 2012 Page 3 time frame that generates resources to cover the project costs. For example, if only phase I is completed none of the costs for Felton Ct. would be reimbuxsed. Staff Recommendation Staff recommends the adoption of the attached resolution approving the Development Assistance Agreement with SPOWD Developments, LLC. Action Requested: Adopt Resolution approving the Development Assistance Agreement with SPOWD Developments, LLC. EXTRA.CT OF MINUTES OF MEETING OF THE CITY COUNCIL OF THE CITY OF APPLE VALLEY, MINNESOTA JLTNE 14, 2012 Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of Apple Valley, Dakota County, Minnesota, was duly called and held on the 14th day of June, 2012, at 7:00 p.m. The following members of the Council were present: and the following were absent: Member introduced the following resolution and moved its adoption: CITY OF APPLE VALLEY RESOLUTION NO. 2012- RESOLUTION APPROVING DEVELOPMENT AGREEMENT WHEREAS, pursuant to Minnesota Statutes, Section 469.124 to 469.134, the City of Apple Valley, Minnesota (the "City") has heretofore established the Apple Valley Master Development District (the "Development District") and has adopted a development program therefor (the "Development Program"); and WHEREAS, pursuant to the provisions of Minnesota Statutes, Section 469.174 through 469.1799, as amended (hereinafter, the "Tax Increment Act"), the City has heretofore established, within the Development District, Tax Increment Financing District No. 14 (the "Tax Increment District") and has adopted a tax increment financing plan therefor (the "Tax Increment Plan") which provides for the use of tax increment financing in connection with certain development within the Development District; and WHEREAS, the Apple Valley Economic Development Authority, Minnesota (the "Authority") and Spowd Developments LLC, a Minnesota limited liability company (the "Developer") have determined to enter into a Development Agreement, dated as of April _, 2012 (the "Development Agreement") in connection with construction and equipping of two Industrial I-2 warehouse/office buildings of approximately 100,000 square feet, in the aggregate (the "Project"), located in the City; and WHEREAS, Pursuant to Minnesota Statutes, Sections 116J.993 to 116J.995 (the "Business Subsidies Act") it is necessary for the City to approve the Development Agreement; and 4615144v1 NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Apple Valley, Minnesota, as follows: 1. The City Council hereby approves the Development Agreement in substantially the form submitted. 2. The approval hereby given to the Development Agreement includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the Authority authorized by a resolution of the Authority to execute the Development Agreement. The execution of the Development Agreement by the appropriate officer or officers of the Authority shall be conclusive evidence of the approval of the Development Agreement in accordance with the terms hereof. 3. In accordance with the provisions of the Business Subsidies Act, the City has determined that the public purpose of the Project is to encourage the development of an area of the City, to help prevent the emergence of blight, to provide employment opportunities, to improve the tax base and to encourage the expansion of warehouse/office facilities in the City. After holding a public hearing, the Authority approved the Development Agreement as a subsidy agreement under the Business Subsidy Law. Councilmember moved the adoption of the foregoing resolution, and said motion was duly seconded by Councilmember , and upon vote being taken thereon, the following voted in favor thereo£ and the following voted against the same: whereupon said resolution was declared duly adopted. ADOPTED by the Apple Valley City Council on June 14, 2Q12. Mary Hamann-Roland, Mayor ATTEST: Pamela Gackstetter, City Clerk 2 4615144v1 CITY CLERK'S CERTIFICATE I, the undersigned, being the duly qualified and acting City Clerk of the City of Apple Valley, Minnesota, DO HEREBY CERTIFY that I have carefully compared the attached and foregoing extract of minutes of a duly called and regularly held meeting of the City Council of said City held on Apri126, 2012, with the original minutes thereof on file in my office and I further certify that the same is a full, true, and correct transcript thereof insofar as said minutes relate to the approval of a development agreement and related actions referenced therein with respect to the Tax Increment Financing District No. 14. WIT`NESS my hand officially and the official seal of the City this day of , 2012. Pamela J. Gackstetter, City Clerk Apple Valley, Minnesota (SEAL) 4615144v1 � � for Preliminary Discussion Purposes Only � � . SPOWD Development, LLC � � Development and Gapital Pro Forma � � TiF 14, Apple Valtey, MN Submited by Developer Updated by City for Discussion Difference � PHASE I PHASE Q COMBINED PHAS 1 � PHASE Q COMBINED . . Building Square Footage 100,000 100,000 200,000 100,000 100,000 200,000 - � . PROJECT COSTS � SITE COSTS - All . . Amount �S ount Amou ount Amou Site Acquisition 8275,000 E275,000 $550,000 E275,000 E275.000 E550,000 $0 � Environmental $0 $0 $0 $0 $0 $0 $0 Property Survey Cost $0 $0 $0 $0 $0 $0 $0 TOTAL LAND GO5T5 5275,000 5275,000 5550,000 5275,000 E275,000 $550,000 $0 � � BUiLDING CO5T5 . Site Work 8100,000 ES00,000 $200,000 5100,000 $100,000 5200,000 EO . . Parapet $0 $0 $0 $135,021 $135,021 $270,042 $270,042 Shell $3,550,000 $3,550,000 $7,100,000 � $3,550,000 $3,550,000 $7,100.000 $0 � � �Tenantlmprovements $1,550,000 $1,550,000 $3,100,000 $1,550,000 $1,550,000 E3,100,000 $0 . � . Parking $0 EO $0 b0 $0 $0 $o Landscaping E20,000 $20,000 E40,000 $20,000 $20,000 $40,000 $0 Flagstaff Court Improvements $0 $0 $0 �$800,000 $0 $800,000 $800,000 - Construction Contingency(10%) $0 $0 � $0 $0 b0 50 E� � � TOTAL BUILDING COSTS . E5,220,000 55,220,000 510,440,000 56,155,021 55,355,021 E31,510,042 $1,070,042 � TOTAL S1TE/BUILDING COSTS - ALL 55,495,000 55,495,000 E10,990,000 56,430,021 $5,630,021�� $12,060,042 $1,070,042 SOFT GO5T5 & ADMIMISTRATiVE Architectural & Design $30,000 $30,000 560,000 $30,000 $30,000 $60,000 $0 Insurence $15,000 E15,000 $30,000 $15,000 $15,000 530,000 $0 Leasing Sso,000 Eso,000 Sioo,000 $so,000 Sso,000 Sioo,000 So Financing Interim Costs $125,000 $125,000 $250,000 � $125,000 $125,000 $250,000 $0 Financing Permanent Costs $75,000 $75.000 $150,000 $75,000 $75,000 $150,000 $0 Advertising and Marketing Costs $0 $0 EO $0 $0 $0 $0 � Trunk Utility Fees - Sanitary Sewer $0 $0 50 $5,700 $0 E5,700 $5,700 Trunk Utility Fees - Water $0 $0 SO $27,000 _ $0 $27,000 $27,000 � � � Trunk Utility Fees - Storm Sewer EO $0 SO 591,000 $0 $91,000 $91,000 � � Building Permit $25,000 525,000 $50,000 $52,000 E58,000 $110,000 $60,000 SAC Charge due with Building Permit $0 $0 b0 $62,000 $66,000 $128.000 $128,000 . WAC due with Building Permit EO $0 $0 517,500 $19,000 $36,500 $36,500 Park Dedication Fee $0 $0 $0 E9,000 $11,000 $20,000 $20,000 � Subto[al City Deve(opment Fees $25,000 $25,000 $50,000 $264,200 $154,000 $418,200 $368,200 � � - City Street Assessmen[s - 147th Street � $650,000 E650,000 $1,300,000 E900,000 $0 $900,000 ($400,000) � � . City Street Assessments - Flagstaff Court $400,000 $400.000 $800,000 $0 $0 $0 ($800,000) . Special Assessments (Paid Annually) $0 $0 SO ($900,000) $0 ($900,000) ($900,000) � Subtotal5pecialAssessments $1,050,000 $1,050,000 82,100,000 $0 80 $0 ($2,100,000) � � � Conetruction Interest Expense � EO $0 $0 $0 $0 � $0 $0 . . Development Fee/Project Manager $100,000 5100,000 $200,000 5100,000 E100,000 $200,000 EO � Development Contingency (10%) � � SO $0 $0 $0 $0 $0 $0 � TOTAL SOFT COSTS & ADMIN 51,470,000 51,470,000 E2,940,000 �659,200 5549,000 E1,208,200 ($1,731,800) . TOTAL DEYELOPMENT COSTS 56,965,000 56,965,000 513,930,000 $7,089,221 56,179,021 E13,268,242 ($661,758) � . IIFCOntribution $1,050,000 $1,050,000 $2,100,000 $0 50 $0 ($2,100,000) . . Net Development Cost b5,915,000 $5,915,000 $11,830,000 $7,089,221 $6,179,021 $13,268,242 51,438,242 � Construction Loan Amount � $0 $0 $0 $0 $0 $0 $0 � Project Equity b5,915,000 $5,915,000 $11,830,000 37,089,221 $6,179,021 $13,268,242 51,438,242 +xaa�;Ht� �'+etrent�i"�t� 4/26/2012 �ama.eek s xTasna �scac"s � . For Preliminary Discussion Purposes Only SPOWD Development, LLC 10-Year Operating Pro Forma TIF 14, Apple Valle , MN PHASE I AND PHASE II COMBINED Phase 1 Year 1 2 3 4 5 6 7 8 9 10 Phase II Year 1 2 3 4 5 6 7 8 9 10 CalendarYear 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Office (square footage) 25,000 25,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 Warehouse (square footage) 75,000 75,000 150,000 15�,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000 1NCOME Office $212,500 $212,500 $435,500 $435,500 $439,875 $448,545 $448,545 $457,470 $461,978 $461,978 $466,619 $466,619 Warehouse $337,500 $337,500 $700,500 $700,500 $707,625 $714,510 $714,510 $721,778 $728,800 $728,800 $736,213 $736,213 Gross Potentia! Rents $550,000 $550,000 $1,136,000 $1,136,000 $1,147,500 $1,163,055 $1,163,055 $1,179,248 $1,190,779 $1,190,779 $1,202,832 $1,202,832 Vacancy/Loss (5%) $27,500 $27,500 $56,800 $56,800 $57,375 $58,153 $58.153 $58,962 $59,539 $59,539 $60,142 $60,142 Less Revenue Loss: $27,500 $27,500 $56,800 856,800 857,375 $58,153 558,153 $58,962 559,539 $59,539 860,142 $60,142 Ef(ective Rental Income $522,500 $522,500 $1,079,200 $1,079,200 $1,040,125 $1,104,402 $1,104,902 $1,120,285 $1,131,240 $1,131,240 $1,142,691 $1,142,691 CAM $100,000 $200,000 $400,000 $500,000 $600,000 $606,000 $606,000 $612,000 $618,120 $618,120 $624,240 $624,240 Other Income - lIF PAY-GO $24,292 $66,701 $139,191 $213,300 $253,339 $275,851 $280,301 $284,816 $289,400 $145,555 $0 $0 Effective Gross [ncome E646,792 $789,201 $1,618,391 $1,792,500 $1,943,464 $1,986,754 $1,991,203 $2,017,301 $2,038,760 $1,895,214 $1,766,931 $1,766,931 EXPENSES CAM Costs $50,000 $100,000 $150,000 $200,000 $200,000 $z02,000 $202,000 $204,000 $206,040 $206,040 $208,080 $208,080 Property Management Fees $15,563 $18,063 $36,980 $39,480 $42,253 $42,772 $42,772 $43,307 $43,734 $43,734 $44,173 $44,173 Real Estate Taxes $106,344 $159,515 $319,032 $372,204 $425,376 $425,376 $425,376 $425,376 $425,376 $425,376 $425,376 $425,376 Special assessment** $30,000 $130,000 $130,000 $130,000 $130,000 $130,000 $130,000 $130,000 $130,000 $10,000 $0 $0 Legal $1,000 $1,000 $2,000 $2,000 $2,000 $2,020 $2,020 $2,040 $2,060 $2,081 $2,101 $2,122 Accounting $1,000 $1,000 $2,000 $2,000 $2,000 $2,020 $2,020 $2,040 $2,060 $z,081 $2,101 $2,122 Leasing $25,500 $25,500 $51,000 $51,000 $51,000 $54,328 $54,328 $58,963 $59,539 $59,539 560,141 $60,141 Total Expenses $229,407 5435,078 $691,012 $796,684 $852,629 $858,516 $858,516 $865,726 $868,809 $748,851 $741,972 $742,014 Net Operating [ncome $417,385 $354,123 $927,379 $995,816 $1,090,835 $1,128,238 $1,132,687 $1,151,375 $1,169,951 $1,146,363 $1,024,959 $1,024,917 Reseroes $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 NOI After Reserves $417,385 5354,123 $927,379 $995,816 $1,090,835 51,128,238 $1,132,687 $1,151,375 $1,169,951 $1,146,363 $1,024,959 $1,024,917 NOI After Reserves wkhout Pay-Go $393,093 $287,422 $788,188 $782,516 $837,496 $852,386 $852,386 $866,559 $880,551 $1,000,509 $1,024,959 $1,024,917 Project Costs with Assistance 7,089,221 7,089,221 13,268,242 13,268,242 13,268,242 13,268,242 13,268,242 13,268,242 13,268,242 13,268,242 13,268,242 13,268,242 Projed Costs without Assista�ce 7,089,221 7,089,221 13,268,242 13,268,242 13,268,242 13,268,242 13,268,242 13,268,242 13,268,242 13,268,242 13,268,242 13,268,242 ROR with Assistdnce 5.9% 5.0% 7.0% 7.5% 8.2% 8.5% 8.5% 8J% 8.8% 8.6% 7.7% ' 7.7% ROR without Assistance 5.5% 4.1% 5.9% 5.9% 6.3% 6.4% 6.4% 6.5% 6.6% 7.5% 7J% 7•7% 1 Developer notes that minimum unleverage rate of return must equal 7.5 to 10%. See Phase 1 and Phase ll Oper Pro Forma far additional notes. r�r�€et ��s *ru s�s na€��a�� 4/26/2012 . � ��c �'�- � at�ca��az,�w.��:. . . For Preliminary Discussion Purposes Only SPOWD Development, LLC 10-Year Opereting Pro Forma TIF 14, Apple Valley, MN PHASEI Year 1 2 3 4 5 6 7 8 9 10 11 12 Taxes Payable Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Adjusting Rate Office 0.00% 2.00% 4.00% 2.00� Adjusting Rate Warehouse 0.00% 2.00% 2.00% 2.00% Office (square footage) 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 Warehouse (square footage) 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 INCOME Office $212,500 4212,500 $216,750 $216,750 Y216,750 $225,420 4225,420 4225,420 $229,928 $229,928 $229,928 8229,928 Warehouse $337,500 8337,500 $344,250 $344,250 $344,250 $351,135 $351,135 $351,135 $358,155 $358,158 $358,158 5358,158 Gross PotenrialRents $550,000 $550,000 $561,000 $561,000 $561,000 $576,555 $576,555 $576,555 $588,086 $588,086 $588,086 $588,086 Vacancy/Loss (5%) 827,500 $27,500 428,050 $28,050 $28,050 $28,828 $28,828 $28,828 $29,404 $29,404 $29,404 $29,404 Less Revenue Loss: SZ7,500 $27,500 $28,050 $28,050 $28,050 $28,828 $28,828 828,818 $29,404 $19,404 $29,404 $29404 Ef(ective Rental Income 8522,500 8521,500 $532,950 8532,950 $532,950 $547,727 $547,727 $547,727 $558,682 5558,682 5558,682 $558,682 CAM $100,000 $200,000 $300,000 $300,000 $300,000 $306,000 $306,000 $306,000 $312,120 $312,120 $317,120 $312,120 Other Income - TIF PAY-G0 $24,292 $66,701 $106,930 $131,103 $134,992 $137,926 $140,150 $142,408 $144,700 $72,927 $0 $0 Effective Gross Income Y646,792 4789.201 Y939,880 5964,053 5967,942 5991,653 5993.878 S9B6,135 51,015,502 ;943,729 $870,802 $870,802 EXPENSES CAM Costs 450,000 $100,000 8100,000 8100,000 4100,000 E102,000 S1o2,o00 $102,000 4104,040 $104,040 $104,040 $104,040 Property Management Fees $15,563 $18,063 320,824 $20,824 $20,824 $21,343 $21,343 $21,343 821,770 $21,770 $11,770 $21,770 Insurance Real EsWte Taxes 4106,344 $159,515 $213,751 $212,156 $212,688 $212,688 $212,688 $212,688 $212,688 $212,688 $212,688 $212,688 Special assessments to property $30,000 $130,000 $130,000 $130,000 $130,000 $130,000 $130,000 $130,000 $130,000 $10,000 Legal $1,000 $1,000 $1,000 $1,000 $1,000 $1,020 $1,020 $1,020 $1,040 $1,061 $1,061 $1,061 Accounting $1,000 $1,000 $1,000 $1,000 $1,000 $1,020 $1,020 $1,020 $1,040 $1,061 $1,061 $1,061 Leasing $25,500 $25,500 $25,500 $25,500 $25,500 $28,828 $28,828 $28,828 $29,404 $29,404 $29,404 $29,404 ToWI Expenses E229,407 ;435,078 3492.075 $490,480 5491,012 E496,899 5496,899 5496,899 E499.982 E380,024 $370,024 $370,024 Net Operating lncome 5417,385 $354,123 5447,805 E473,573 5476,930 $494,754 E496,979 5499,236 $515,520 3563,705 4500,778 $500,778 Reserves $0 $0 $0 $0 $0 $0 $0 $6 $0 $0 $0 SO NOI After Reserves 5417,385 5354,123 4447,805 5473,573 ;476,930 5494,754 5496,979 5499,236 5515,520 5563,705 $500,778 ;500,778 NOI After Reserves without Pay-Go 5393,093 5287,422 5340,875 5342,470 $341,938 $356,828 $356,828 5356.828 5370.820 5490,778 5500,778 5500,778 Project Costs with Assistance 7,089,221 7,089,221 7,089,221 7,089,221 7,089,221 7,089,221 7,089,221 7,089,221 7,089,221 7,089,221 7,089,221 7,089,221 Project Costs without Assistance 7,089,221 7,089,221 7,OS9,221 7,089,221 7,089,221 7,089,221 7,089,221 7,089,221 7,089,221 7,089,221 7,089,221 7,089,211 RORwithAssistance 5.9% 5.0% 6.3% 6.7% 6.7% 7.0% 7.0% 7.0% 7.3�0 8.0% 7.1% 7.1% RORwithoutAssistance 5.5% 4.1% 4.8% 4.8% 4.8% 5.0% 5.0% 5.0% 5.2% 6.9% 7.1% 7.1% 1 Developer notes that minimum unleverage rate of retum must equa17.5 to 10°h. 2 Estimate for amount of annual assessment of $1,080,000 payable over 10 years at an agreed to fixed payment schedule. � � 4f'lBTFI€..d*3kk.TK4'T€5;[C4 . 4/26/2012 � � m��^ces�s ��ea a�cnug. For Preliminary Discussion Purposes Oniy SPOWD Development, lLC 10-Year Operating Pro Forma T[F 14, Apple Valley, MN PHASEll Year 1 2 3 4 5 6 7 8 9 10 Taxes Payable Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Adjusting Rate Office 0.0096 2.00% 4.00% 2.00°� Adjusting Rate Warehouse 0.00% 2.00% 2.00% 2.00% Office (square footage) 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 Warehouse (square footage) 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 W CO ME Office $218,750 $218,750 $223,125 $223,125 $223,125 $232,050 $232,050 $232,050 $236,691 $236,691 Warehouse $356,250 $356,250 $363,375 $363,375 $363,375 $370,643 $370,643 $370;643 $378,055 $378,055 Gross Potentia( Rents $0 $0 $575,000 8575,000 $586,500 $586,500 5586,500 $602,693 $602,693 $602,693 $614,746 $614,746 Vacancy/Loss (5%) $28,750 $28,750 $29,325 $29,325 $29,325 $30,135 $30,135 $30,135 $30,737 $30,737 Less Revenue Loss: $0 $0 $28,750 $28,750 829,325 $29,325 $29,325 $30,135 $30,135 830,135 $30,737 $30,737 Effective Renta! Income $0 SO $546,250 $546,250 $557,175 $557,175 $557,175 $572,558 5572,558 $572,558 $584,009 $584,009 �qM $100,000 $200,000 $300,000 $300,000 $300,000 $306,000 $306,000 $306,000 $312,120 $312,120 Other Income - TIF PAY-G0 $0 $0 $32,261 $82,197 $118,347 $137,926 $140,150 $142,408 $144,700 $72,927 $0 $0 Effective Gross lncome $0 SO 5678,511 $828,447 $975,522 $995,101 $997,325 $1,020,966 $1,023,258 $951,485 $896,129 ;896,129 EXPENSES CAM Costs $50,000 $100,000 $100,000 $100,000 $100,000 $102,000 $102,000 $102,000 $104,040 $104,040 Property Management Fees $16,156 $18,656 $21,429 $21,429 $21,429 $21,964 $21,964 $21,964 $22,403 $22,403 Real Estate Taxes $105,251 $160,048 $212,688 $212,688 $212,688 $212,688 $212,688 $212,688 $212,688 $212,688 Special assessment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Legal $1,000 $1,000 $1,000 $1,000 $1,000 $1,020 $1,020 $1,020 $1,040 $1,061 Accounting $1,000 51,000 $1,000 $1,000 $1,000 $1,020 $1,020 $1,020 $1,040 $1,061 Leasing $25,500 �25,500 $25,SOQ $25,500 �25,500 $30,135 $30,135 $30,135 $30,737 $30,737 Total Expenses SO SO 5198,937 5306,204 $361,617 5361,617 $361,617 5368,827 $368,827 5368,827 $371,948 5371,990 Net Operating lncome $0 $0 $479,574 5522,243 $613,905 $633,484 $635,708 $652,139 $654,431 $582,658 $524,181 ;524,139 Reserves SO $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 NOI After Reserves $0 $0 $479,574 $522,243 $613,905 $633,484 $635,708 $652,139 $654,431 5582,658 $524,181 $524,139 NOI After Reserves without Pay-Go $0 $0 ;447,313 $440,046 $495,558 $495,558 $495,558 $509,731 5509,731 $509,731 $524,181 $524,139 Project Costs with Assistance 6,179,021 6,179,021 6,179,021 6,179,021 6,179,021 6,179,021 6,179,021 6,179,021 6,179,021 6,179,021 Project Costs without Assistance 6,179,021 6,179,021 6,179,021 6,179,021 6,179,021 6,179,021 6,179,021 6,179,021 6,179,021 6,179,021 ROR with Assistance' 7.8% 8.5% 9.9% 10.3% 10.3% 10.6% 10.6% 9.4°/v 8.5% 8.5% ROR witho�t Assistance 7.2% 7.1% 8.0% 8.0% 8.0% 8.2% 8.2% 8.2% 8.5% 8.5% 1 Developer notes that minimum unleverage rate of retum must equal 7.5 to 10%. Yc.s��t�d.�ielt�5l�ArEGEk^r � s�ac��.��naiacre E�•ew��. . � 4/26/2012 � � Exhibit G Tax Increment Financing District No. 14 Projected Tax Increment Assumed 100.00% 10.00% 0.36�o Available TIF Taxes New Base Captured Original Estimated State Annual District Value Payable Tax Tax Tax Tax Tax City Auditor Tax Year Year Year Capacity Capacity Capacity Rate Increment Admin. Deduct. Increment Phase I Phase ll 1 2013 2014 70,975 {21,25Q) 49,725 108.997% 54,199 (5,42Q) (195) 48,584 48,584 2 2014 2015 108,059 {21,250) 86,809 108.997% 94,620 (9,462) (341) 84,817 84,817 3 2015 2016 219,361 {21,250) 198,111 108.997% 215,935 {21,594) (777) 193,564 129,043 64,521 4 2016 2017 259,760 {21,250) 238,510 108.997% 259,968 {25,997} (936) 233,035 133,163 99,872 5 2017 2018 301,321 (21,250) 280,071 108.997% 305,269 {30,527} {1,099} 273,643 136,822 136,822 6 2018 2019 305,841 (21,250) 284,591 108.997% 310,196 (31,020) {1,117} 278,060 139,030 139,030 7 2019 2020 310,429 (21,250) 289,179 108.997% 315,196 {31,520) {1,135) 282,542 141,271 141,271 8 2020 2021 315,085 {21,25Q} 293,835 108.997% 320,271 (32,027) {1,153} 287,091 143,545 143,545 9 2021 2022 319,8ll (21,250} 298,561 108.997°/a 325,423 (32,542) (1,172) 291,709 145,855 145,855 TOTAL = 2,20 1,07 7 ( 220,10$) (7,92�} 1,973,045 1,10Z,129 870,916 Key Asssumptions 1 Phase I Assumed development = 100,000 sf @$71.35/sf 2 Phase II Assumed development = 100,000 sf @$73.49/sf 3 New economic development TIF district 4 District excluded from Fiscal Disparities contributtion 5 Tax rate for taxes payable 2012 (County provided final 2012 Tax Rates on March 7, 2012) 6 Assume 1.5% annual appreciation in value over 8 year life of district. � ��a�r��c,�a��r�r��es � � � � . 5�4cE�E Pra�(��c� �r�t�7��. 4/26/2012 PRELIMINARY - For Discussion Only City of City of Apple Valley Tax Increment Financing District No. 14 G.O. Bonds for Public Improvements Interest Start Date 6/1/2013 Total Costs To Finance 900,000 First Principal 12/1/2015 Less: Up-Front Funds - Term (Years) 10 Net Cost 900,000 Finance Expense 27,000 Capitalized Interest 32,000 Rounding (9,000) Totai Bond Issue 950,000 Funds Available Taxes Payable Payment Estimated Capitalized Assessment Balance in Year Date Principal Rate Interest P&I Interest Payments* Total Fund 2013 6/1/2013 - - - - 32,000 12/1/2013 - 0.30% 8,028 8,028 8,000 - 8,000 23,973 2014 6/1/2014 - 8,028 8,028 8,000 15,000 23,000 30,945 12/1/2014 - 0.50% 8,028 8,028 8,000 15,000 23,000 37,918 2015 6/1/2015 - 8,028 8,028 8,000 65,000 73,000 94,890 12/1/2015 95,000 OJO% 8,028 103,028 65,000 65,000 56,863 2016 6/1/2016 - 7,695 7,695 65,000 65,000 114,168 12/1/2016 95,000 0.90% 7,695 102,695 65,000 65,000 76,473 2017 6/1/2017 - 7,268 7,268 65,000 65,000 134,205 12/1/2017 95,000 1.10% 7,268 102,268 65,000 65,000 96,938 2018 6/1/2018 - 6,745 6,745 65,000 65,000 155,193 12/1/2018 95,000 1.35% 6,745 101,745 65,000 65,000 118,448 2019 6/1/2019 - 6,104 6,104 65,000 65,000 177,344 12/1/2019 95,000 1.60°/a 6,104 101,104 65,000 65,000 141,240 2020 6/1/2020 - 5,344 5,344 65,000 65,000 200,896 12/1/2020 95,000 1.85% 5,344 100,344 65,000 65,000 165,553 2021 6/1/2021 - 4,465 4,465 65,000 65,000 226,088 12/1/2021 95,000 2.05% 4,465 99,465 65,000 65,000 191,623 2022 6/1/2022 - 3,491 3,491 65,000 65,000 253,131 12/1/2022 95,000 2.25% 3,491 98,491 65,000 65,000 219,640 2023 6/1/2023 - 2,423 2,423 5,000 5,000 222,218 12/1/2023 95,000 2.45% 2,423 97,423 5,000 5,000 129,795 2024 6/1/2024 - 1,259 1,259 - - 128,536 12/1/2024 95,000 2.65% 1,259 96,259 - - 32,278 TOTAL 950,000 129,723 1,079,723 32,000 1,080,000 1,112,000 Note: Beginning Fund Balance includes capitalized interest. *Assessments pmts would be collected in May and Oct of eac ` ar to cover rinci and interest payments made in Jun and Dec, respectively. h7cr�1 Fi�..� � � 11€A'i t.c.tCi+�' � 4/26/2012 . '��e�'a� re�isnct �n�c€� . . . PRELIMINARY - For Discussion Only City of Apple Vailey Tax Increment Financing District No. 14 Tax Increment Revenue Note Interest Start Date: 2/1/2013 Costs Reimbursed: 1,700,000 Interest Rate: 3.600% First Payment: 8/1/2014 Last Payment: 2/1/2023 100% Taxes Annual Tax Reimbursible Payable Payment Increment Costs Year Date Interest Principal P+I for Note Outstanding 2014 8/1/2014 24,292 - 24,292 48,584 1,700,000 2/1/2015 24,292 - 24,292 1,700,000 2015 8/1/2015 30,600 11,809 42,409 84,817 1,688,191 2/1/2016 30,387 12,021 42,409 1,676,170 2016 8/1/2016 30,171 66,611 96,782 193,564 1,609,559 2/1/2017 28,972 67,810 96,782 1,541,749 2017 8/1/2017 27,751 88,766 116,518 233,035 1,452,983 2/1/2018 26,154 90,364 116,518 1,362,619 2018 8/1/2018 24,527 112,294 136,822 273,643 1,250,325 2/1/2019 22,506 114,316 136,822 1,136,009 2019 8/1/2019 20,448 118,582 139,030 278,060 1,017,427 2/1/2020 18,314 120,716 139,030 896,711 2020 8/1/2020 16,141 125,130 141,271 282,542 771,581 2/1/2021 13,888 127,382 141,271 644,198 2021 8/1/2021 11,596 131,950 143,545 287,091 512,249 2/1/2022 9,220 134,325 143,545 377,924 2022 8/1/2022 6,803 139,052 145,855 291,709 238,872 2/1/2023 4,300 1 41, 5 55 145,855 97,317 TOTAL 370,362 1,602,683 1,973,045 1,973,045 ' �t��r��c.�� sx��°s°� _ '�.S��im;G Rras��4 Cr�+�� . � . 2012 TAX RATES _ AV TIF 14 SPOWD DEVELOPMENT APR 26 2012 4/26/2012 � S . Dr � • Development Assistance Agreement with SPOWD I}evelopments LLC ( Valley Business Campus) City Council meeting : 6-14-12 • Previous Action related to TIF # 14 - Apple Valley Business Campus � TIF # 14 was created by City Council 3-22-12 • TIF # 14 approved by EDA 5-7-12 • TIF # 14 - requirements a Allowed under the "temporary authority—Jobs Bill" • Constr.uction must begin by 7-1-12 • Economic Development District w/ max life of 9 years • EDA authorized execution of development agreement with SPOWD Developments 6-4-12 • 1 • Location of Proposed TIF 14 CITY OF APPLE VALLEY MASTER DEVELOPMENT DISTRICT �... , :L ;} . 8, , :�:�; 's � . f � F t ...:d'� � .�* o•+""r � . � f, • . � . . ; - Le9end L ; c s �, € E : ��rxMa�r . ,,� - @ . { ;��rr-�oe�'� ^'e�n i € �''�,M.:.j � ' � „! �nFOavki� � @ � : � -nPDlspktta � .� � � -nFOeuc�ia . {..... j #�� ..A.b.g . �� i �� ; � � . � �� ... i ,. � � � � £1M..+MnN ...� :±�.� - - x �.�.. .....� + E r�....r u.S.....��.....�......rww.rwww�wn...w�... a ..�...... � • New District — Valley Business Campus � Summary of "Valley Business Campus" • 2 Phases — total 200,000 Sq Ft • 2 buildings of 50,000 ftz in each phase • Total Building Value $ 13M • Construction of 147th Street & Flagstaff Ct. � TIF eligible costs of up to $2.1M plus financing cost r Reimbursement in form of Pay as You go financing � Development risk remains with SPOWD r S A Bonds issued for 147th — secured by Special Asmt • Developer financing of Felton Ct. (formerly Flagstaff Ct.) • 2 • Development Costs - �IYI B . .�r� I . � ' s y . _ �., t . �' ��11.�� t��,'��' • 1 �c �, $ 1,102,000 $ 871,000 $ 1,973,000 I I •.� �.�i .� . � (900,000) -0- ( 900,000) � � '�� I�I� -0- (800,000) ( 800,000) � � � ( 180,000) -0- ( 180,000 _ , � : . . . - • � _ . (1,080,000) (800,000) ( 1,880,000) . . . . .. .- e- ..- •. . - . , ' " ' 22,000 71,000 93,000 • Tax Increment Financing (TIF) k Project is estimated to generate from $1.1M to $1.9M in tax increment over 9 years — depending on phases completed and the timing Year Phase 1 Phase II Combined 1 48,584 48,584 2 84,817 84,817 3 129,043 64,521 193,564 4 133,163 99,872 233,035 5 136,822 136,822 273,644 6 139,030 139,030 278,060 7 141,271 141,271 282,542 8 143,545 143,545 287,090 9 145.855 145.855 291.710 Total 1,102,129 870,916 1,973,045 • 3 < � • Tax Increment Financing (TIF) k Project qualifies as an economic development district under temporary legislative authority � Construction must commence by July 1, 2012 � Requirement for creation/retention ofjobs will be met � Tax increment may be collected for up to 9 years � Proposed use of TIF is to reimburse the Developer for cost of public improvements that will be assessed and/or constructed by the Developer (Felton Court and 147th Street) • Development Outcomes � Required ROW for the extension of 147th St ° Encourages development of difficult area with office / warehouse facilities � Provides employment opportunities � Improves the tax base • 4 � RequestedAetion F Resolution Approving the Development Assistance Agreement with SPOWD Developments, LLC • � 5 ..a S. E. ��.� . �.... «... R6�t.�c.E .... City of App�e Va��ev Community Development TO: Mayor, City Council and City Administrator FROM: Bruce Nordquist, Community Development Director, AICP � Ron Hedberg, Financial Director DATE: �°�i�� June 13, 2012 SUBJECT: Updated IMH/Titan Memorandum of Understanding *See bold Items below: As this memo was being prepared, the County, legal counsels for parties involved (IMH, Titan, EDA, City) and City/EDA staff are having an ongoing discussion about the contents of a restated Memorandum of Understanding (MOU). The information provided here was the best draft available at the end of the day Monday, June 11. This information will be updated as finalized for the June 14 EDA and City Council meeting. xAttached is the June 13 final City Attorney prepared and IMH accepted version of the MOU. Also, attached is a June 13 version of the Finance Director memo. Please discard the June 11 version of the Finance Director memo. At the June 4th EDA meeting, Tammy Omdal from Northland Securities reviewed with the EDA the ongoing financial discussion with IMH through Titan Development and staff to resolve delinquent property tax and special assessment obligations that leads to future development of the Legacy North property. The EDA responded, wanting: - further due diligence of the owner/developer; report from Northland attached - to review the most current understandings; attached - to consider those understandings in a timely manner as a June 20 deadline for IMH to complete a Confession of Judgement Agreement is coming shortly. Given the June 20 deadline that is approaching, staff is forwarding the attached agreement. The requested action on June 14, by both the EDA and the City Council, is to consider a final agreement in a form acceptable to the City Attorney, that meets EDA and City Council approval. *Recommended Action: Following a presentation by the City Attorney and the Finance Director, authorize the "Restated Memorandum of Understanding between IMH Special Asset NT 175 —AVN, LLC and the Apple Valley Economic Development Authority and the City of Apple � Valley." � � Restated Memorandum of Understanding Between IMH Special Asset NT 175--AVN, LLC and Apple Valley Economic Development Authority and the City of Apple Valley This Memorandum of Understanding ("MOU") between IMH Special Asset NT 175—AVN, LLC ("IMH") and the Apple Valley Economic Development Authority (the "EDA") and the City of Apple Valley ("the City") is made and entered into on the date and pursuant to the terms set forth below. References to "City" refer to both the EDA and the City unless otherwise indicated. It supersedes and replaces that certain Memorandum of Understanding between IMH and the EDA, dated as of January 6, 2012. Whereas, IMH is the fee owner of fourteen (14) platted lots in a portion of the City's Legacy Village referred to as Legacy of Apple Valley North as identified in the attached Exhibit A("the IMH Property"), resulting from a foreclosure action against the former owner; and Whereas, the IMH Property is subject to Ordinance No. 739, establishing the Central Village together with certain development approvals for the Legacy of Apple Valley North, entitled Planned Development Agreement, Park Dedication Agreement and Development Agreement, all of which are dated May 27, 2004; and Whereas, the IMH Property has been improved with public utilities and street improvements financed by a$6,832,152 special assessment duly adopted by the City pursuant to Minn. Stat. 429.061 and for which there was no appeal; and Whereas, IMH, as successor in possession of the IMH Property, is in default on the aforementioned special assessment in the amount of approximately $2,661,164, together with past-due taxes payable to Dakota County in the amount of approximately $452,169; and Whereas, Dakota County is exercising its statutory authority under Minn. Stat. 281.23 to pursue tax forfeiture against the IMH Property effective on June 20, 2012, based on the aforementioned delinquent special assessments and property taYes; and Whereas, the result of Dakota County's forfeiture action would be IMH's loss of ownership of the IMH Property; and Whereas, the City's special assessments on the IMH Property would be cancelled by Dakota County's forfeiture action, but pursuant to statutory authority under Minn. Stat. 429.071 may be re-levied at a future date; and Whereas, time is of the essence to avert the pending forfeiture and elimination of the special assessments affecting the IMH Property; and Whereas, IMH and the City desire to pursue development of the IMH Property on terms mutually acceptable to the City and IMH and based on City approval of amendments to the development approvals for the IMH Property; and Whereas, the City acknowledges that IMH has actively been pursuing the development of the IMH Property and has acted in good faith and with diligence with respect to the proposed project and IMH acknowledges that the City has acted in good faith and with diligence in seeking a resolution of the past-due and future special assessments on the IMH Property; and Whereas, any future agreement between the City and IMH regarding the terms and conditions of any new use of the IMH Property will be conditioned on resolving both the past-due taxes payable to Dakota County and the delinquent and future special assessments payable to the City related to the IMH Property. NOW THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS: 1. IMH agrees to diligently prepare and submit applications to the City seeking approvals for the use of the IMH Property, which is expected to include approximately 331 multi- family housing units and approximately 10,000 square feet of retail on a portion of the IMH Property. Initial construction is expected to commence no later than June 30, 2013, based upon City approval of the IMH plans no later than September 30, 2012, subject to business conditions and further subject to City and IMH acceptance of the terms below. 2. The City will promptly, and in good faith, process the IMH applications proposing a change to the allowed use of the IMH Property for consideration at duly scheduled meetings and special meetings of the City's Planning Commission and City Council. Nothing in this MOU is to be construed as pre-approval by the City of any IMH application. 3. In conjunction with IMH's pursuit of approvals governing the use of the IMH Property and tax increment financing as noted below, and subject to the City and EDA actually adopting such approvals, the EDA will recommend to the City the purchase of four (4) parcels identified as A, B, C and D on Exhibit A("the Park Parcels") of the IMH Property for the expansion of Kelly Park at a price of $7.26/square foot, for a total purchase price of $787,451. 4. The City and IMH will use their best efforts to complete the sale of the Park Parcels to the City on or before July 31, 2012. In conjunction with purchasing the Park Parcels, the City will assume responsibility for the future taxes and special assessments allocable to the Park Parcels. IMH will pay the delinquent special assessments, interest and penalties on the Park Parcels, together with the first half property taxes due in 2012. In addition, the City will pay the second half property taxes due in 2012 and the remaining assessments for the Park Parcels, which are estimated to be $251,611.00. 5. Concurrently with IMH's sale to the City of the Park Parcels, which is anticipated to occur on or before July 31, 2012, the EDA will be asked to pay to IMH the sum of $1,150,000 as part of an eligible event under tax increment financing, in exchange for which IMH will provide a guaranty of $1,150,000 to the EDA, in a form and from an issuer reasonably satisfactory to the EDA, assuring the repayment. The IMH guaranty 2. will remain in force and not be released until the issuance of building permits and the actual commencement by IMH of construction in conformity with the approved Plans. 6. Upon submittal of an application, the EDA will be asked to approve the establishment of a Tax Increment Finance ("TIF") housing district, or other applicable TIF district category, to generate up to $6,500,000 of authorized TIF eligible expenditures with a term not to exceed 25 years. a. Twenty percent (20%) of the available increment will be retained by the EDA. b. $5,350,000 pay-as-you-go TIF Note to be issued to IMH with interest at 5%. Payments will be based upon 80% of the available increment. 7. The City will be asked to reimburse IMH within thirty (30) business days upon receipt of the funds paid by IMH to Dakota County and reimbursed by the County to the City for accrued penalties and interest on the delinquent special assessments. Currently, the total amount of such penalties and interest is approximately $1,131,324. 8. The City may be requested by IMH to consider reallocating the remaining special assessments attributed to the IMH Property over a term of up to 20 years or such other term as may be allowed by state law. If IMH is successful in extending the term of the special assessments, the City, to the extent permitted by law, will agree to the new extended term for the payments of the special assessment. 9. The City and IMH will cooperate to ensure timely consideration and approval, as appropriate, of the review of the IMH Property applications, together with the plans, specifications and agreements contemplated by this MOU and as required by law. 10. Notwithstanding the terms of this MOU, IMH reserves the right to challenge in Dakota County district court (or another court with jurisdiction), the authority of Dakota County to seize the IMH Property and ta address the past-due special assessments on the IMH Property. In the event IMH determines in the interest of the development of the IMH Property that pursuit of court action is necessary, IMH and the City, nonetheless, pledge to cooperate jointly to achieve an acceptable outcome of all issues affecting the IMH Property. 11. While the parties agree to negotiate in good faith regarding all aspects of this MOU, nothing in this MOU shall bind the City, the EDA or IMH with respect to the terms and conditions identified in this MOU and no party shall have a right to pursue a claim arising from its terms. 3. AGREED TO BY: IMH Special Asset NT 175—AVN, LLC By: IMH Financial Corp., its managing member By: Will Meris Its: President Dated: Apple Va11ey Economic Development Authority By: Larry S. Severson Its: President � � � Date: By: Thomas Lawell Its: Executive Directar Date: City of Apple Valley By: Mary Hamann-Roland Its: Mayor By: Pamela J. Gackstetter Its: City Clerk 14093131 4. �� City Of Applg Valley MEMO Finance Department TO: Mayor, City Council and Tom Lawell, City Administrator FROM: Ron Hedberg, Finance Director DATE: June 13, 2012 SUBJECT: Update to the Recap of Sources and Uses of the IMH proposal Introduction On Tuesday we received updated numbers from the County on the Confession of Judgment (COJ) with IMH. The information in this memo beginning on page 4 following the "Financial impacts of the proposal to other funds" has not changed and is included here again. The overall outlines of the terms remain the same and they are: (1) IMH enters into Confession of Judgment (COJ) to pay delinquent t�es and special assessments current over the term of the COJ, (2) The purchase of parcels to expand Kelley Park, the rebate of penalties and interest on special assessments, and (3) The consideration of a housing TIF district on a number of parcels previously guided for a multi-use project. I have updated the sources and uses of the IMH proposal below, but the changes made by the county have to do with the execution of the COJ and the timing of the delinquencies and what items can and can not be included in the COJ. The County will not be allowing the parcel classified as commercial to participate in the COJ for the delinquent special assessment portions, they can still participate in the COJ for the delinquent property taa{es at the 5 year amortization.. Also the County will a11ow the parcels that are classified as residential to be amortized over 10 years, rather than the original 5 years, and also there was one parcel previously not deemed eligible to participate that may now be able to participate in the COJ because it is a residential classified property. Updated amounts The table below recaps the proposal along with the timing of the flow of resources. • The first column shows the amounts needed to be paid by IMH by June 20�`, a total of $1,401,674. Of this the City will receive $1,396,832, of which $1,111,431 is for delinquent special assessments and $60,255 is delinquent property ta�ces. T'he difference is $341,881 and will be recovered over time through the COJ. • The second column shows the amounts to be paid by the end of the current year and include the 2 half payment due in 2012, IMH will pay an additional $935,160, and under the proposal the City would rebate $364,314 to IMH which equals the amount of penalties and interest received by the City during 2012. In addition during 2012 the proposal includes the City purchasing 4 parcels for the expansion of Kelley Park in the amount of $787,451 (or $7.26 per ft The source of funding for the land purchase would be the park dedication fund and in addition to the purchase price the proposal includes that the City assumes the Mayor, City Council and City Adminsitratar IMH Sources and Uses June 6, 2012 Page 2 remaining special assessments on the property ($225,146) and could be paid over the next 10 years as they are spread for collection or they could be prepaid at anytime. This item is $211,790 lower than the original and is the penalties and interest on the special assessments. • The 3'� column represents the upfront TIF assistance in the event of an eligible TIF event and the City receiving adequate security for the TIF assistance provided. Over the life of the TIF District, the City will be reimbursed from the TIF proceeds. • Over the remaining years, IMH will continue to make payments toward the COJ of $1,377,009 in delinquent special asmts and $336,916 of property ta�ces and will need to stay current on the special assessments as they are spread for collection, the $2,749,340. Also under the proposal IMH would pay an additional $767,010 of penalties and interest on delinquent, under the proposal the City would rebate these amounts after collection. In addition IMH will pay interest on the COJ of $771,949 and the City of Apple Valley will receive interest of approximately $436,000 on the special assessments portion. Delinquent Upfront TIF remaining IMH Allocation of Amounts Due: portion Assistance Portion (years'11 Current year on Eligible (Years '13 & and earlier) '12 event later) Total Property Taxes (incl COJ) 124,255 98,501 336,916 559,672 Special Asmts (ind CO1) 1,111,431 592,992 1,377,009 3,181,432 Penalties & Interest on Delq Taxes 25,373 19,968 131,269 176,610 Penalties & Interest on Delq SpecAsmts 140,615 223,699 ,��a� ,,��'�� 1,131,324 Interest paid on COJ 771,949 771,949 Park Dedication Fee 390,000 390,000 Future spread Special asmts 2,749,340 2,749,340 city reimbursement of Penalties on Special �� ;,; ` Assessments ��'�,�'i � �� (767,010) (576,461) Purchase of Parcels by City � t��3; ��,�� (787,452) � lad�aiS ' ; �o�r� r � _ 'g�� ; City contribution of upfront TIF - 4 ,�.�� (1,150,000) Total Net MH Uses: 1,401,674 (216,606) (1,150,000) 5,756,483 5,791,551 Delinquent Upfront TIF remaining portion Assistance Portion (years '11 Current year on Eligible (Years '13 & City allocation of Amounts Due: and earlier) '12 event later) Total Property Taxes on City Purchase Parcels (2nd half pmt) 6,555 6,555 Special Asmt on City Parcels (2nd half pmt) 20,794 20,794 ti , , � � � 4� a ° �a a� Penalties & Interest on Delq SpecAsmts h � = 3�,��n° �: ",d��', 1,131,325 Future Special Asmts on parcels purchased 225,146 225,146 � � ` ` �� 787,452 Purchase of Parcels by City y "� ; 7�� .. �: � City contribution of upfront TIF ��,''�.��,�t� 1,150,000 Net City Uses - 1,404,261 1,150,000 767,010 3,321,271 Mayor, City Council and City Adminsitrator IMH Sources and Uses June 6, 2012 Page 3 The following table recaps the flow of resources into the city and totals $6,398,978 over the years. Over the term of the COJ the City will receive property ta�ces of $295,399, and collections on special assessments of $3,327,370. Assuming the development occurs as proposed; the City would also recover the upfront TIF assistance contemplated as well as the additional interest on the COJ payments of $436,000 on the special assessments alone. Upfront TIF remaining Delinquent Assistance Portion portion (years Current on Eligible (Years '13 & Sources for City '11 and earlier) year'12 event later) Total Property Taxes 50,037 42,306 55,673 295,399 Special Asmts (incl COJ) 1,111,431 613,786 1,287,009 3,102,224 Penalties & Interst on Delq Taxes 10,218 8,041 52,861 71,121 � h4S4F , �j„it�� ii x�� rv i� ;'!�i ,�.�; Penalties & Interst on Delq Spec Asmts � ,r „ �� 1,131,325 Future spread Special asmts 225,146 225,146 COJ interest on special asmts 436,000 436,000 Capture ofTIF 1,150,000 1,150,000 1,396,832 1253,593 1,150,000 2,598,553 6,398,978 Financial impacts of the proposal to other funds. The City of Apple Valley has 3 separate bond funds related to the installation costs of the initial streets and infrastructure for the Legacy project in addition to a fourth bond fund that is also experiencing deficits requiring future support. Because of the delinquencies on the Legacy project and the Founders Circle project it has been necessary to use funds in the Closed Bond Fund and the Future Capital Projects Fund. In addition to this reliance on other funds to support the debt services the proposal calls for the purchase of 4 parcels to expand Kelley Park with the funding coming from the Park Dedication Fund. Park Dedication Fund Rark oedication Fnnd As of 12-31-2011 the Park Dedication ' Fund has $1,594,000, but from this 1 � 6 °Q•°�' - - -- _____ .. _ ..—_ ; there is an existing commitment of up ;��A°°=°°fl ; to $1,200,000 for the Valleywood l,�oo,000 ; - - - - - Clubhouse construction. If the : �,00a.«,� - '� decision is made to purchase the , soa,� - — -- -- -- -- — ; parcels an interfund loan could come �� y ; i from the G.O. Closed Bond Fund to a �� ', � finance a portion of the purchase until 240,004 ._. _ . .. .... . park dedication fees are received in the future The chart at right includes zao4 �oas zane zao� zooa zoos za�o �osi xoia zai3 ao�� zors ' the projected park dedication fees {2 from an earlier Community Development report showing an average of $ 360,000 per year in Mayor, City Council and City Adminsitrator IMH Sources and Uses June 6, 2012 Page 4 park dedication fees. This project is estimated to pay $390,000 in park dedication fees in 2013 when construction begins. Future Capital Projects Fund The 2012 CIP included a long term projection of the Future Capital Projects Fund and which includes approximately $5 million in support of special assessment bonds. If this project doesn't proceed it will likely be necessary to use these funds for debt service. If the project proceeds as proposed and the COJ is completed it would not be necessary to draw on these funds beyond the near term. If the project concludes as proposed there will be a positive swing in the cash balances in this fund of approximately $5 million. The Future Capital Projects Fund will need to support the debt service funds over the next couple of years, but once the Confession of Judgment is satisfied the fund would be made whole. The assumptions used include the projects identified in the CIP and no additional transfers from the general fund. If the proposed project does not conclude as proposed, the fund may have insufficient funds to complete the construction of capital projects shown in the later years of the City's adopted Capital Improvements Plan. Balances with Debt Service Support: Balances without Debt Service Support: ... ..... .... Puture Capitai Projects Fund Baia�ces With Suppart of 6Q Special Rsmt Bands ... .. ...... Future Capital Projects Fund Balances 1M1t'tthout-SuRp� flf G4 Speciat Asmt Bonds �� $i$.064,OOQ ..... . . .. ..... . .. . . ..... .... . ..... , I S18A00�� ..... ..... _.... ..... ..... ..... .. _.. ... '�. $16��,W0 .. ..... .... ..... . ..... .......... ,,, ', 515.OQU.� .... . .. ..... ..... ..... ..... ..... ... .. �. $1A.000,� .... . ..... . ..... ..... ...... .... .. ..... . ',, SSA,�.� .... . ..... .._. . . ..... .. . ..... .__. ..... . .._ , $iz,n�,noa _ ' Su.000.� ' �io.c�,000 Ss�oou,00a Sia,000.s�oo SsAOa.o� Ss.a�.� Sa 55.oao.oao S2,000,aoo g{zfr ' , � �� $1�,�,�{ $' � 2010 2pii 2012 2013 2p14 2035 2016 2417 2018 2019 2020 2421 2022 '�, '� 2014 2611 2Q12 2413 2614 2fl15 ZO16 201T 2015 2014 2420 2tt21 2022 '�. Mayor, City Council and City Adminsitrator IMH Sources and Uses June 6, 2012 Page 5 Debt Service Funds Debt Outstanding There were four separate bonds that were issued to finance the Legacy project along with other improvement projects. As of 12-31-11 there is $5,120,000 of outstanding debt that included the Legacy project, there is also the 2007 Bonds that didn't include the Legacy Project but did include the Founders Circle Project and also have deficits and that would include the need to have support for future debt service in the event a COJ is not completed. Bond Fund Note 12/3ll2011 12/31/11 Principal Remauung Balance Interest 2008 Imp ('01 imp) (2) 1,590,000 141,556 2004 Imp (1) 2,135,000 182,975 2006Imp (2) 1,395,000 57,875 5,120,000 382,406 200'7Imp (3) 2,725,000 695,577 7,845,000 1,077,983 Notes: (1)— Includes Legacy project (2)— Includes both Legacy and Founders Circle projects (3)- includes Founders Circle Project Balances in the Debt Service Funds In total these four bond funds have a negative balance of $3,178,124 as of 12-31-11 and total delinquent special assessments of $3,456,138. The delinquent special assessments are those assessments that have been levied and spread for collection and remain unpaid. As of 12-31-11 there are deferred special assessments of $6,127,977. Deferred special assessments are assessments that have not yet been spread for collection by the County for collection. For those deferred assessments related to the Legacy (and the Founders Circle) project without the completion of the COJ it is not certain that they will be paid when due. Bond Fund Note 12/31/2011 12/31/11 12/31/2011 Cash Balance Delinquent Deferred Special Asmts Special Asmts 2008 Imp ('O1 imp) (2) (1,985,771) 114,172 913,246 2004Imp (1) 1,306,855 142,085 492,465 2006Imp (2) (1,904,454) 2,128,833 1,968,801 (2,583,370 2,385,090 3,374,512 2007Imp (3) (594,754) 1,071,048 2,753,465 (3,178,124) 3,456,138 6,127,977 Notes: (1)— Includes Legacy project (2)— Includes both Legacy and Founders Circle projects (3)- includes Founders Circle Project Mayor, City Council and City Adminsitrator IMH Sources and Uses June 6, 2012 Page 6 Debt service fund projections — modeling current performance The table below recaps the projected ending balances and delinquent balances in each of the bond funds at the end of the life of the bond fund when the debt is retired. An assumption was made that no further payments are made on the Legacy (or Founders Circle) Project, and the assessments paid by the other property owners will continue to be made previously scheduled. When the debt is finally retired, the total projected deficit will be $9,989,704, and at that time the delinquent special assessments will be $9,511,808. Under this scenario, resources from the Future Capital Projects Fund ($5 million) and the Closed Bond Fund (the remainder) would be used to cover the deficits and pay the bonds as they come due. Even though the Founders Circle project is not a subject of the MOU it is included because it is a commitment towards the available resources. Bond Fund — balances Note Ending Cash Delinquent assuming no further Balance upon Special Asmts payments Debt Retired upon Debt Retired 2008 Imp ('O1 imp) (2) (2,635,931) 215,668 2004Imp (1) (794,43'7) 573,633 2006Imp (2) (2,838,798) 4,160,135 (6,269,166 4,949,436 2007Imp (3) (3,720,538) 4,562,372 (9,989,704) 9,511,808 Notes: (1)— Includes Legacy project (2)— Includes both Legacy and Founders Circle projects (3)- includes Founders Circle Project Mayor, City Council and City Adminsitratar IMH Sources and Uses June 6, 2012 Page 7 Debt service fund projections — modeling COJ for Legacy project If the COJ is executed and payments are made each year when due and the future assessments are paid when due for the Legacy Project, the projected ending balances and delinquent balances in each of the bond funds are shown below. When the debt is finally retired, the total projected deficit will be $5,452,547, and at that time the delinquent special assessments will be $5,124,824. Under this scenario, the requirement for the use of resources from the Future Capital Projects Fund and the Closed Bond Fund could be reduced by $4.5 million to cover the deficits and pay the bonds as they come due. Even though the Founders Circle project is not a subject of the MOU it is included because it is a commitment towards the available resources. Bond Fund — balances Note Ending Cash Delinquent assuming Legacy COJ is Balance upon Special Asmts executed Debt Retired upon Debt Retired 2008 Imp ('O1 imp) (2) (2,594,940) 102,280 2004 Imp (1) (192,617) 0 2006Imp (2) 1,055,548 460,172 (1,732,009) 562,452 2007Imp (3) (3,720,538) 4,562,372 (5,452,547) 5,124,824 Notes: (1)— Includes Legacy project (2)— Includes both Legacy and Founders Circle projects (3)- includes Founders Circle Project Action Requested: No action required, this memo is background to support the Memorandum of Understanding and has been updated to reflect the updated amounts received from the County. N`C��`I'HL.AN�J SECURI°I'I�S MEMORANDUM To: City of Apple Valley From: Rusty Fifield and Tammy Omdal Date: June 11, 2012 Re: Due Diligence The purpose of this memorandtun is to summarize the due diligence efforts by Northland Securities related to the proposed Legacy of Apple Valley North project. Our comments are based on our understanding of the proposed development. The current development proposal consists of approximately 330 units of rental housing with a small retail component. The development would be built on property owned by IMH Financial Corporation dba IMH Special Asset NT 175 - AVN, LLC. IMH will be the owner of the property, thru a single purpose entity owned 100% by the parent company. IMH will provide 100°/o of the equity and guarantees to the lender. The developer will be Titan Development LLC. Titan has been retained by IMH under a fee agreement to perform all development services for the project. The chart below shows the current development team for the project. Le9aCY V�tag� E�ve�pmer�f Lawret�ee EI. 9ain �� AcUng COt3 (MH Sig�ret QevelopmeM, LlC T� Clevekspr�nt 1, LLG New War[d Reatiy Local lV�tron�t Advisors, LLC DeveE�ment F�iner Devet�pmersi P�tner Advisors to 1Mti Tmofhy F. Nichais Sh�art R. Davis Sefh B. Lipsay President Presideni �d CEC} Execubve [►1ar�agin4 �inecftx' Our initial observations about the project and the development group are as follows: 1. IMH has the financial capacity to build the proposed development. Financial infarmation about the company is available from SEC filings that can be accessed through the IMH website (www.imhfc.com). 45 South 7th Street, Suite 2000,1Vfiiuteapolis, MN 55402 Main: (612) 851-5900 / Direct (612) 851�992 / Email: rfifield@northlandsecurifies.com Member FINRA and SII'C Due Diligence June 11, 2012 Page z 2. Titan is a privately owned real estate firm based in Denver. Titan s portfolio of completed projects shows the capacity to undertake the project proposed in Apple Valley. 3. We have worked with Titan to create an operating pro-forma for the development concept. The pro-forma shows that financial assistance from the City/EDA is needed to make the project financially feasible. The model will allow us to monitor financial issues as the design development process provides more accurate information, 4. Our ability to more specifically opine on the developer and the project is limited by the current status of the project. Final designs for the project have not been created. The specific details of the entity to own/operate the project and its relationship to IMH have not been reviewed. That said, several factors mitigate the risk of these unknown factors. • The only immediate financial commitment of the City is the purchase of four parcels. This land will be used to expand Kelly Park. • The Confession of Judgment process will result in monies from delinquent assessments, delinquent taxes, penalties and interest coming to the City. • No other City/EDA funds will be disbursed to the developer until a development agreement is prepared and approved. The key unknown issues must be resolved for the development agreement. • The City/EDA will enter into a Memorandum of Understanding (MoU) with IMH to provide a common understanding and framework for future actions. The MoU facilitates a significant financial comxnitment by Il��H and allows for continued work to design the project and eliminate uncertainties. We look forward to addressing these issues and answering your questions on Thursday. 1-----Btl�m�eeE Iwq�eeps WbM Mxw p�qM� �p . . F ' ...� ��1�� ...�.: .�.." � ..' . � y. x' P �. 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Narthland5ecwitiesisnotprovidingadvireonthetiming, terms,stiuctureoisimiloimattersrelotedto aspecificbondissue. 1 • � � - • Provide overview of proposed development • Identify challenges to development • Explain proposal for City/EDA assistance • Explain actions for City/EDA • Review due diligence findings z � 1 6/14/2012 • ' ► � • March 5 EDA meeting with development team • Creation of detailed concept proforma • Vetting of assumptions • Analysis of numerous concept scenarios • Negotiation of assistance proposal • Inability to obtain legislative authority to address assessment issues ne 4 EDA meeting with development team 3 • � i � • Planned development — 331 housing units • Rental • Mixed income — market rate and affordable —10,000 sf of retail space • Start construction in Spring 2013 4 � 2 6/14/2012 . � •� . y I�� , � ��I� �d' � i f il I I�iV � Y�� !I�*�� E Legacy Village Deuelopment 'Owner - IMH � � �� °�t� t� � i �l f" �'�=�J�,�''I'� �� i � :Signe� Titan New 1Norfd Deve#opment Qevelopment R�alty Advisors 5 . � i i „ ;. �v • Project owned by IMH — Single purpose entity 100% owned by parent • IMH —100% of equity/guarantees to lender 6 � 3 6J14/2012 � � � ! • i i � ,.� .:� • Waive (or reimburse) penalties + interest on delinquent speciai assessments • Purchase four parcels — Pay 2012 taxes on these parcels — Pay outstanding assessments on these parcels • Establish TIF district � � . , , . _ •$176,609 for P/I on delinquent property taxes •$1,131,324 for P/I on delinquent assessments — Reimburse this amount as payments are received under the Confession of Judgment 8 � 4 6/14/2012 . • ' �g._ ;,�.� �. • Purchase parcels A, B, C, and D for $787,451 9��'��ii �� 91 , 4 I h�'� li�� — Appraised value of $7.26/SF • City also pays 2nd half ' 2012 taxes + remaing assessments ($251,611) • Kelley Park expansion . 9 . � • Request will be for establishment of "housing" TIF district — At least 20% of units must annually meet statutory affordability (income) requirements — Maximum 25 year duration �o s 5 6/14/2012 . • � . . � • $1,150,000 for development costs • IMH provides $1,150,000 guarantee that construction starts by 6/30/13 • City retains first 20% of tax increment to repay loan with interest (and administrative expense) Not finalized until TIF district established �� • � P_F. , • Remaining 80% of tax increment used to reimburse IMH for eligible costs with interest •$5,350,000 pay-as-you-go TIF Note at 5% interest rate requested • Terms to be negotiated • No City obligation to make whole if tax increment less than estimated �z � 6 6/14/2012 • � � • , - • Limitations due to current status of project • More will become known (and evaluated as project evolves 13 . , � e t • IMH financial capacity • Titan project resume • Pro-forma analysis • Factors mitigating City risk 14 . 7 6/14/2012 � � • s ��F • Waive (or reimburse) penalties + interest on delinquent special assessments • Purchase four parcels — Pay 2012 taxes on these parcels — Pay outstanding assessments on these parcels • Establish TIF district 15 . • 8 S.� ... .... ..... .... ... City of App�e Va��ey MEMO Administration TO: Mayor and City Councilmembers FROM: Tom Lawell, City Administr o DATE: June 14, 2012 SUBJECT: Authorize Transmittal of Letter to Dakota County Regarding Cedar Avenue BRT Transit Facility at 147 Street DISCUSSION The City is in receipt of a June 12, 20121etter from Dakota County Administrator Brandt Richardson regarding the construction of the Cedar Avenue Bus Rapid Transit (BRT) transit facility at 147 Street. In his letter, Mr. Richardson requests a reply back from the City regarding our interest in having a pedestrian skyway installed at this location and an indication of the City's willingness to advance fund its construction. Attached please find a draft letter of reply to Mr. Richardson. It is recommended that the Mayor and Council consider any necessary revisions to the letter and authorize its transmittal to Dakota County. ACTION REQUIRED Council should consider any necessary revisions to the attached letter and authorize its transmittal to Dakota County. •�• •��• •��• •��• •�•� City of A I e » 00 147th Street W Telephone (952) 953-2500 �� Fax (952) 953-2515 ��"� Apple Valley, MN 55124-9016 www.cityofapplevalley.org � June 14, 2012 Brandt Richardson Count Administrator � �� , Y Dakota County Administration Center 1590 Highway 55 Hastings, MN 55033 Dear Brandt: ! am in receipt of your .fune 12, 2012 letter regarding the development of a BRT transit stop at 147�' Street and Cedar Avenue. The intent of this letter is to clarify the City's position relative to this matter and chart a path to resolution. Planninct Commission Consideration In your letter you reference the Apple Valley Planning Commission meeting held on June 6, 2012. As you know, the Planning Commission chose to table action on the Metropolitan CounciPs application for Site Plan and Building Permit authorization at that meeting. What you may not know is that the Metropolitan Council significantly revised the building design for the 147�" Street station at 2:17 p.m. on June 6, 2012, just hours before the Planning Commission meeting. In addition, the Metropolitan Council had been asked in advance for additional information which was not provided prior to the Planning Commission meeting. Given the last minute revisions and missing information, it would be customary for the Planning Commission to take the action they did to table the application for two weeks. How did the building design change? The Metropolitan Council states that the design team uncovered a structural concern with the 147"' Street station. Given ._ the length, height and narrow width of the facility, lateral loads were deemed to be too high and the facility needed more structural stability. As a result, the Metropolitan Council proposed to construct the elevator core/tower as part of Phase 1 construction. While likely a positive change, it was a significant revision to the plans that had been distributed to the Planning Commission in advance of their meeting. What missing information? One important subject that has been of concern to the City for over a year has been the plan to handle parking demand that might be created by the transit stations at 140 and 147 Streets. This has been a frequent discussion topic with your staff and has been discussed at many public meetings. As you know, there is no park and ride capacity being provided at these locations. While the County has maintained these stations are to be "walk-up" stations, it is Home of the Minnesota Zoological Garden Brandt Richardson L�-J DRAFT June 14, 2012 Page 2 likely that some transit riders will attempt to park in neighborhoods and private parking lots to use the transit services offered in these locations. To address this concern, the Metropolitan Council was asked to provide a Traffic and Parking Management Plan to address such concerns. This plan was not provided in time for the Planning Commission's consideration. In fact, the plan was just received this week on June 12, 2012. This information will most assuredly be a topic of discussion before the City Council. As such, it is important that the Planning Commission has time to review and comment on this information prior to making their recommendation to the CounciL The next Planning Commission meeting is scheduled for June 20, 2012 at which time the Commission will resume its discussion on the application. I am hopeful that the information requested of the Metropolitan Council will be presented at that meeting and that the Commission will be able to make a recommendation on the application at that meeting. The Planning Commission's recommendation will be based on land use considerations only. While the Commission is certainly aware of our related, but separate, discussions involving the pedestrian skyway at 147 Street, they will be making their recommendation based on what has been submitted for consideration. Timinq Your letter seems to infer that only Dakota County and the Metropolitan Council are concerned about the commencement date for BRT service in the corridor. Clearly the City is concerned as well. Apple Valley residents and businesses have experienced the lion's share of construction impacts related to this project. We are reminded of this fact daily as lanes are closed and traffic backs up. Construction delays benefit no one, and for that reason, it is vitally important that we build the transit facilities right the first time. That is why the City has strongly advocated for the addition of a pedestrian skyway at 147 as part of the initial construction. The prospect of coming back later to add the skyway only promises additional delays and inconveniences to motorists and transit riders. We need look no further than 155 Street for a prime example. The transit facilities at that location were initially built too smalL Within two years of opening, the entire facility needed to be taken out of service for enlargement, inconveniencing thousands of motorists and transit riders. Why would we want to repeat that experience at 147 Street? Brandt Richardson June 14, 2012 1�-J DRAFT Page 3 Fundina Your letter contains the statement that the County has "seen no movement by the City to try to work towards a mutually agreeable solution." I couldn't disagree more. The City has been actively working with your staff to explore possible solutions. In fact, we were encouraged when your staff outlined options that provided various cost—sharing solutions, including some where the County would advance fund some or all of the cost of the skyway installation to be repaid by the City in the future if certain ridership thresholds were not met by 2030. These concepts were shared with our elected officials and were being actively considered. Only later were we told these options were not viable and that the City would have to come up with $2.37 mitlion to have the 147 Street skyway constructed. In addition, we were told the City would need to contribute an additional $50,000 ep r year to support the maintenance of the skyway. These costs seem extraordinarily high and need to be validated. One concept advanced by,your staff was to include the pedestrian skyway element in the bid package in order to determine an actual cost for the addition. This is an excellent idea and one that would allow all parties to truly understand the cost impacts before deciding to move forward with the addition. This is particularly important as the recent design change made by the Metropolitan Council to the 147 Street station will likely transfer costs from Phase II to Phase I. Next Steps The Planning Commission will consider the Metropolitan CounciPs Site Plan and Building Permit Application at its June 20, 2012 meeting. Any recommendation made by the Planning Commission will then be considered by the City Council at their June 28, 2012 meeting. The City may be interested in advance funding the 147 Street pedestrian skyway, but not at the extraordinary cost we have been presented. We support the concept of preparing a bid package for facility construction that would include a "bid alternate" for the construction of the pedestrian skyway element as part of Phase I. This will allow all parties to have a precise cost to base their funding decisions. As noted above, this is particularly important as the recent design change made by the Metropolitan Council to the 147"' Street station. Brandt Richardson June 14, 2012 Page 4 Conclusion The City has put in countless hours in partnership with our residents, businesses, the County, the Metropolitan Council, the Minnesota Valley Transit Authority and many others to make sure the Cedar BRT Transitway serves us well for years to come. We value these partnerships and are confident we can find a way to resolve outstanding issues at the 147 Street station. The above described next steps will get us one step closer. Sincerely, CITY OF APPLE VALLEY -~ DRAFT Tom Lawell City Administrator cc: Mayor and City Council � • • • � ROAD IMPROVEMENT PRO E CTS T . ., � , ` • • . '' CEDARAVENUE CONSTRUCTION GENERAL UPDATE Cedar Avenue at County Road 42 ■ CR 42 limited to one lane each direction ■ Outside lanes established, shifting to inside lanes ■ June 27 scheduled restoration of #our lanes 147t" Streef ■ Shift construction frorn CR 42 to 147t" Street (June 27) ■ Phase 1- construct outside lanes along east and west Iegs of 147t" Street (est. 10 days} 142n� Street — Ulfest Leg ■ Underground utility installation ■` Tentatively scheduled for 2 day �losure (June 29 and 30) . ! � � CEDARAVENUE CONSTRUCTION GENERAL UPDATE Cedar Avenue Overnight Closures ■ June 22nd 145t" Street to 140t" Street ■ June 29t" from CR 42 to 145t" Sfreet Traffic Signals — June 21 ■ Se#ting steel structures at 147t" Street and 145t" Street ' ■ O�ernight short-term closures to se# mast arms . � � • STREET RESURFACING UPPER 136TH STREET AND 157TH STREET 4+E'£�3 �c+� a ^tr � s�c a�+; 3 , �44 G ' �40 �OUi� 3:lL�Q � �EG�I'�4C} PEET � � � .,z�.i ->Ee- /�/ �..'E>rkEE � �.. . .� .q.::.. : . ,+1./ . . t:. . . 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Gackstetter, City Clerk DATE` June 14, 2012 SUBJECT: CALENDAR OF EVENTS Following are upcoming events for your cafendars: Day/Date Time Location Event Thur./June 14 10:00 a.m. HealthSource Ribbon Cutting Ceremony Chiropractic Thur./June 14 4:00 p.m. Municipal Center EDA Meeting Thur./June 14 7:00 p.m. Municipal Center Regular City Council Meeting * Fri./June 15 6:00-9:00 p.m. Kelley Park Music in Kelley Park Concert Series Mon./June 18 11:00 a.m. Mattress Firm Ribbon Cutting Ceremony June 20-22 Duluth, MN League of Minnesota Cities 2012 Annual Conference LaGrand Wed./June 20 11:30 a.m.-1:00 p.m. Conference Center Chamber Monthly Luncheon at GrandStay Wed./June 20 9:00 a.m. Municipal Center Firefighters Relief Association Wed./June 20 7:00 p.m. Municipal Center Planning Commission Thur./June 21 4:30-6:30 p.m. Gunner's Garage Chamber Business After Hours Fri./June 22 6:00-9:00 p.m. Kelley Park Music in Kelley Park Concert Series Thur./June 28 7:00 p.m. Municipal Center Regular City Council Meeting * Each of the above-noted events is hereby deemed a Special Meeting of the City Council, the purpose being informational or social gathering. Only at events marked with an asterisk will any action of the Council take place. :sam R55CKREG Cv�a20000 CITY OF APPr, .LLEY 5/31, 8:52:04 Council Check Register Pa9e" � 5/24/2012 -6/1/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledge Account Description Business Unit 808 6/1/2012 100701 ACE HARDWARE 2.12 PK EYE BOLT 35340 206803 47590 1765.6215 EQUIPMENT-PARTS PARK EQUIPMENT MAINTENANCE 20.82 PK TOILET PARTS 35340 206804 47612 1730.6229 GENERAL SUPPLIES PARK BUILDING MAINTENANCE 150.66 PK TURF BUILDER 35340 206805 47671 1720.6213 FERTILIZER PARK GROUNDS MAINTENANCE 13.89 PK DRILL BIT 35340 206806 47680 1715.6211 SMALL TOOLS & EQUIPMENT PARK ATHLETIC FIEID MAINTENANC 10.64 PK EYE BOLT 35340 206807 47680 1715.6229 GENERAL SUPPLIES PARK ATHLETIC FIELD MAINTENANC 5.86 PK CORED PLUG 35340 206808 47730 1730.6229 GENERAL SUPPLIES PARK BUILDING MAINTENANCE 5.33 PK WATERING CAN 35340 206809 47647 1930.6229 GENERAL SUPPLIES REDWOOD POOL 9.70 PK NUTS/BOLTS 67845 206810 47737 1920.6229 GENERAL SUPPLIES HAYES COMMUNITY & SENIOR CTR 17.01 PK ROPE CLIP 35340 206811 47748 1715.6229 GENERAL SUPPLIES PARK ATHLETIC FIELD MAINTENANC 6.39 SWIM DRILL BIT 35340 206812 47785 1940.6211 SMALL TOOLS & EQUIPMENT AQUATIC SWIM CENTER 30.27 SWIM NUTS/BOI.TS 35340 206813 47814 1940.6229 GENERAL SUPPLIES AQUATIC SVNM CENTER 3027- SWIM CR NUTS/BOLTS 35340 206814 47827 1940.6229 GENERAL SUPPLIES AQUATIC SVNM CENTER 14.92 SWIM COMP CONNCTR 35340 206815 47816 1940.6229 GENERAL SUPPLIES AQUATIC SWIM CENTER 29.60 PK RDWD HARDWARE 35340 206816 47808 1730.6229 GENERAL SUPPLIES PARK BUILDING MAINTENANCE 7.47 PK GLUE/WELD 35340 206817 47807 1780.6229 GENERAL SUPPLIES PARK HIGH SCHOOL #4 FIELDS 12.97- PK DISCOUNT 35340 206818 51512 1730.6333 GENERAL-CASH DISCOUNTS PARK BUILDING MAINTENANCE 4.26 POL SCRUB BRUSH 67646 206819 47706 1210.6211 SMALL TOOLS & EQUIPMENT POLICE FIELD OPERATIONS/PATROL 8.00 POL TIRE PROTECTANT 67647 206820 47783 1210.6229 GENERAL SUPPLIES POLICE FIELD OPERATIONS/PATROL 1.15- POL DISCOUNT 206821 51512 1200.6333 GENERAL-CASH DISCOUNTS POLICE MANAGEMENT 40.41 REC CONCESSION KEYS 68189 206822 47576 1850.6229 GENERAL SUPPLIES REC SOFTBALL 3.78- REC DISCOUNT 68189 206823 51512 1650.6333 GENERAL-CASH DISCOUNTS REC SOFTBALL 20.81 CABLE ADAPTER/ DOOR STOP 64891 206824 47744 2012.6229 GENERAL SUPPLIES CABLE N JOINT POWERS 17.09 CH PLIERS 35176 206825 47670 1060.6211 SMALL TOOLS & EQUIPMENT MUNICIPAL BLDG & GROUNDS MNTC 6.94 CH PULL CHAIN SWITCH 35176 206826 47670 1060.6229 GENERAI SUPPLIES MUNICIPAL BLDG & GROUNDS MNTC 9.60 CH DOOR STOP 35176 206827 47818 1060.6229 GENERAL SUPPLIES MUNICIPAL BLDG & GROUNDS MNTC 5.10- CH DISCOUNT 206828 51512 1060.6333 GENERAL-CASH DISCOUNTS MUNICIPAL BLDG & GROUNDS MNTC 23.50 UTIL FLARING TOOL 35231 206829 47694 5375.6211 SMALL TOOLS & EQUIPMENT SEWER MAINTENANCE AND REPAIR 16.47 UTIL HARDWARE 35231 206830 47725 5330.6229 GENERAL SUPPLIES WTR MAIN/HYDRANT/CURB STOP MNT 20.96 UTIL PAINT SUPPLIES 35231 206831 47791 5320.6229 GENERAL SUPPLIES WATER WEL�/BOOSTER STN MNT/RPR 5.29- UTIL DISCOUNT 206832 51512 5305.6333 GENERAL-CASH DISCOUNTS WATER MGMT/REPORT/DATA ENTRY 434.16 809 6/1/2072 720949 AIRGAS NORTH CENTRAL 88.62 SHOP-ARGON, CO2 MIX 00035214 206666 9005702337 1530.6229 GENERAL SUPPLIES CMF SHOP EQUIP MNTC & REPAIR 72.39 UTIL-NITROGEN 00035214 206667 9005702338 5325.6229 GENERAL SUPPLIES WATER TREATMENT FCLTY MNTC/RPR 161.01 810 6/112012 140449 AMERICAN INDUSTRIAL REFRIGERAT 120.50 IA2-RPR COOLING TOWER 00068499 206761 797297 5265.6266 REPAIRS-BUILDING ARENA 2 BLDG MAINTENANCE-HAYES 120.50 CITY OF APPLE VALLEY 5/31l2012 8:52:04 RSSCKREG LOG20000 Council Check Register Pa9e - 2 5/24/2012 -6/1/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledger Account Descrip6on Business Unit 811 6/1/2012 100702 COLLEGE CITY BEVERAGE 562.40 GOLF-KTN BEER 00008159 206873 302316 5120.6419 GOLF-BEER GOLF KITCHEN 475.15 GOLF-KTN BEER 00008159 206874 303534 5120.6419 GOLF-BEER GOLF KITCHEN 1,037.55 812 6H/2012 100729 DAKOTA AWARDS & ENGRAVING 9.62 FIRE-ENGRAVE PAR TAGS 00068869 206759 12225 1330.6281 UNIFORMlCLOTHING ALLOWANCE FIRE OPERATIONS 9.62 813 617/2012 100685 EMERGENCYAPPARATUSMAINTENANC 61.81 FIRE-MOTOR FOR DEFROST FAN #4ID068873 206758 61504 1350.6215 EQUIPMENT-PARTS FIRE VEHICLE MAINTENANCE 61.81 814 6/1/2012 100217 GRAINGER 759.03 UTIL-MASTER LOCKS 00067431 206764 9825463228 5330.6229 GENERAL SUPPLIES WTR MAIN/HYDRANT/CURB STOP MNT 159.03 UTIL-MASTER LOCKS 00067431 206765 9825463236 5330.6229 GENERAL SUPPLIES WTR MAIN/HYDRANTlCURB STOP MNT 382.82 HCSC-BELTS, FUSE TO RPR COOLIp0067844 206766 9831127577 1920.6229 GENERAL SUPPLIES HAYES COMMUNITY & SENIOR CTR 700.88 875 6/1/2012 127099 OLSEN FIRE INSPECTION INC 118.00 HCSC-AIR REGULATOR RPLCMNT 206755 21204145 1920.6266 REPAIRS-BUILDING HAYES COMMUNITY & SENIOR CTR 330.00 HCSC-FIRE SPRINKLER INSP 206755 21204145 1920.6249 OTHER CONTRACTUAL SERVICES HAYES COMMUNITY & SENIOR CTR 448.00 816 6f1/2072 701709 SHAMROCK DISPOSAL 420.98 PK-30 YARD DUMPSTER 00039459 206641 44697 1770.6240 CLEANING SERVICE/GARBAGE REMOVPARK GENERAL MAINTENANCE 420. STR-30 YARD DUMPTER 00039459 206641 44697 1610.6240 CLEANING SERVICE/GARBAGE REMOVSTREET/BOULEVARD REPAIR & MNTC 841.96 817 6/1/2012 118365 SHI INTERNATIONAL CORP 19,173.38 IT-HP COMPAQ ELITES (30) 00051107 206763 600627585 1030.6725 CAPITAL OUTLAY-OFFICE EQUIP INFORMATION TECHNOLOGY 19,173.38 878 6I1/2012 100485 TWIN CITY FILTER 3ERVICE INC 41.15 GOLF-KTN FILTERS 00035397 206869 5108171N 5120.6249 OTHER CONTRACTUAL SERVICES GOLF KITCHEN 41.15 GOLF-KTN FILTERS 00035397 206872 5099581N 5120.6249 OTHER CONTRACTUAL SERVICES GOLF KITCHEN 82.30 819 6/7/2012 100363 XCEL ENERGY 48.17 POL-GUN RANGE ELECTRIC 206776 422860831 1255.6255 UTILITIES-ELECTRIC POLICE GUN RANGE 48.17 R55CKREG �c.o20000 CITY OF APF .LLEY 5/31 8:52:04 Council Check Register Page - 3 5/24/2012 —6l1/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledge Account Description Business Unit 820 6/7/2072 100528 ZIEGLER INC 891.34 STR-COUPLER ROD 00035447 206658 PC001377499 1630.6215 EQUIPMENT-PARTS STREET EQUIPMENT MAINTENANCE 891.34 247303 5/30/2012 143060 CHONG, MOON 35.66 REF OVPMT UTIL 13265 GALLERIA 206897 2012530 5301.4997 WATER/SEWER ACCT REFUNDS WATER & SEWER FUND REVENUE 35.66 247304 5/30I2012 143061 FALCONE, JAMES 39.06 REF OVPMT UTL 12745 DIAMOND PA 206898 2012530 5301.4997 WATER/SEWER ACCT REFUNDS WATER & SEWER FUND REVENUE 39.06 247305 5/30/2012 143062 GAUNT, KAREN 78.10 REF OVPMT UTIL 14220 HERITAGE 206899 2012530 5301.4997 WATER/SEWER ACCT REFUNDS WATER & SEWER FUND REVENUE 78.10 247306 5/30I2012 143063 HAHN, JULIE 11.24 REF OVPMT UTIL 8562 134TH ST W 206900 2012530 5301.4997 WATER/SEWER ACCT REFUNDS WATER & SEWER FUND REVENUE 11.24 247307 5/30/2012 143064 JABARI, SIROS 17.92 REF OVPMT UTIL 13635 HAVELOCK 206901 2012530 5301.4997 WATER/SEWER ACCT REFUNDS WATER & SEWER FUND REVENUE 17.92 247308 5/30/2072 743036 BAUERNFEIND GOEDTEL 2,850.00 VALLEYWOOD APP #1 206977 5190.6810 2011137G CONSTRUCTION IN PROGRESS GOLF CLUBHOUSE CONSTRUCTION 2,850.00 247309 6130I3072 142900 CANNON CONSTRUCTION, INC. 7,306.45 VALLEYWOOD APP #2 206973 5190.6810 2011137G CONSTRUCTION IN PROGRESS GOLF CLUBHOUSE CONSTRUCTION 7,306.45 247310 5I30/2012 143037 JIM MURR PLUMBING, INC. 33,592.00 VALLEYWOOD APP #1 206978 5190.6810 2011137G CONSTRUCTION IN PROGRESS GOLF CLUBHOUSE CONSTRUCTION 33,592.00 247311 6/30I2012 104749 MET-CON CONSTRUCTION, INC. 25,727.25 VALLEYWOOD APP #4 206972 5190.6810 2011137G CONSTRUCTION IN PROGRESS GOLF CLUBHOUSE CONSTRUCTION 25,721.25 247312 5130/2012 143038 PRIOR LAKE BLACKTOP, INC. 56,715.00 VALLEYWOOD APP #1 206979 5190.6810 2011137G CONSTRUCTION IN PROGRESS GOLF CLUBHOUSE CONSTRUCTION CITY OF APPLE VALLEY 5/31l2012 8:52:04 R55CKREG LOG20000 Council Check Register Page - 4 5/24/2012 —6/1/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 56,715.00 247313 5130I2072 142815 REGAL CONTRACTORS INC. 14,456.15 VALLEYWOOD APP #3 206974 5190.6810 2011137G CONSTRUCTION IN PROGRESS GOLF CLUBHOUSE CONSTRUCTION 14,456.15 247314 SI3012012 142899 SCHAMMEL ELECTRIC, INC. 8,512.00 VALLEYWOOD APP #2 206976 5190.6810 2011137G CONSTRUCTION IN PROGRESS GOLF CLUBHOUSE CONSTRUCTION 8,512.00 247315 5/30I2072 737298 SCHINDIER ELEVATOR CORPORATION 3,325.00 VALLEYWOOD APP #1 206970 5190.6810 2011137G CONSTRUCTION IN PROGRESS GOLF CLUBHOUSE CONSTRUCTION 3,325A0 247316 5/30/2012 142737 THOMPSON CONSTRUCTION OF PRINC 31,127.70 VALLEYWOOD APP #1 206971 5190.6810 2011137G CONSTRUCTION IN PROGRESS GOLF CLUBHOUSE CONSTRUCTION 31,127J0 247317 5130/2012 701309 WASCHE COMMERCIAL FINISHES INC 332.50 VALLEYWOOD APP #1 206975 5190.6810 2011137G CONSTRUCTION IN PROGRESS GOLF CLUBHOUSE CONSTRUCTION 332.50 247318 5I30I2072 138482 DROGSETH, JUSTIN 8.16 POL-SCHL EXP 206643 1225.6275 SCHOOLS/CONFERENCESlEXP LOCAL POLICE TRAINING 8.16 247319 5/3012072 100925 HEMPHILL, KRISTIN 39.41 REC-MILEAGE JAN-MAY 206645 1825.6277 MILEAGE/AUTO ALLOWANCE REC SUMMER PLAYGROUND ACTIVITY 39.41 247320 5130/2012 109091 PETERSON, JAY 89.97 IA1-JEANS 206648 5205.6281 UNIFORM/CLOTHING ALLOWANCE ARENA 1 MANAGEMENT 89.97 247321 SI30/2012 700444 SODERHOLM, TODD C 21.20 POL-SCHL EXP 206644 1225.6275 SCHOOLS/CONFERENCES/EXP LOCAL POLICE TRAINING 21.20 247322 5/30/2012 100649 SPENCER, IVAN W 69.97 PK-JEANS 206647 1710.6281 UNIFORM/CLOTHING ALLOWANCE PARK MAINTENANCE MANAGEMENT 69.97 RSSCKREG �._ �10000 CITY OF APF iLEY 5/31 ;8:52:04 Council Check Register Page - 5 5/24/2012 -6/1/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledge Account Description Business Unit 247323 6I30/2072 737519 WEBER, JEFF M 8.03 POL-SCHL EXP 206642 1225.6275 SCHOOLS/CONFERENCES/EXP LOCAL POLICE TRAINING 8.03 247324 5/30/2072 103168 AMERICAN FLAGPOLE AND FLAG CO 60.38 PK-FLAGPOLE TRUCK, ROPE 00069103 206762 100421 1770.6229 GENERAL SUPP�IES PARK GENERAL MAINTENANCE 60.38 247325 513012012 700958 ANCOM COMMUNICATIONS INC 145.48 FIRE-RPR LIGHT TOUCH SWITCH 00068870 2D6857 29279 1330.6265 REPAIRS-EQUIPMENT FIRE OPERATIONS 145.48 247326 5/30/2012 100747 ARAMARK UNIFORM SERVICES INC 25.22 SHOP-UNIFORM RENT MAY 46863 2�6674 6297500590 1530.6281 UNIFORM/CLOTHING ALLOWANCE CMF SHOP EQUIP MNTC & REPAIR 25.22 STR-UNIFORM RENT MAY 46863 206675 6297500590 1600.6281 UNIFORM/CLOTHING ALLOWANCE STREET MANAGEMENT 25.22 PK-UNIFORM RENT MAY 46863 206676 6297500590 1710.6281 UNIFORMlCLOTHING ALLOWANCE PARK MAINTENANCE MANAGEMENT 25.23 UTIL-UNIFORM RENT MAY 46863 206677 6297500590 5305.6281 UNIFORM/CLOTHING ALLOWANCE WATER MGMT/REPORT/DATA ENTRY 25.22 SHOP-UNIFORM RENT MAY 46863 206678 6297490773 1530.6281 UNIFORM/CLOTHING ALLOWANCE CMF SHOP EQUIP MNTC & REPAIR 25.22 STR-UNIFORM RENT MAY 46863 206679 6297490773 1600.6281 UNIFORM/CLOTHING ALLOWANCE STREET MANAGEMENT 25.22 PK-UNIFORM RENT MAY 46863 206680 6297490773 1710.6281 UNIFORM/CLOTHING ALLOWANCE PARK MAINTENANCE MANAGEMENT 25.23 UTIL-UNIFORM RENT MAY 46863 206681 6297490773 5305.6281 UNIFORM/CLOTHING ALLOWANCE WATER MGMT/REPORT/DATA ENTRY 25.22 SHOP-UNIFORM RENT MAY 46863 206682 6297495691 1530.6281 UNIFORM/CLOTHING ALLOWANCE CMF SHOP EQUIP MNTC & REPAIR 25.22 STR-UNIFORM RENT MAY 46863 206683 6297495691 1600.6281 UNIFORM/CLOTHING ALLOWANCE STREET MANAGEMENT 25.22 PK-UMFORM RENT MAY 46863 206684 6297495691 1710.6281 UNIFORM/CLOTHING ALLOWANCE PARK MAINTENANCE MANAGEMENT 25.23 UTIL-UNIFORM RENT MAY 46863 206685 6297495691 5305.6281 UNIFORMlCLOTHING ALLOWANCE WATER MGMT/REPORT/DATA ENTRY 302.67 247327 5/30/2072 141748 BASER & PL UMPIRES 5,765.50 REG5/1-5/15 UMP FEES 206769 1850.6235 CONSULTANT SERVICES REC SOFTBALL 5,765.50 247328 5/30/2012 100709 BATTERIES PLUS 186.98 FIRE-BATTERIES 00035612 206657 17251901 1330.6215 EQUIPMENT-PARTS FIRE OPERATIONS 186.98 247329 5130/2012 101766 BIG APPLE BAGELS 36.87 POL-FOOD FOR CITIZEN ACADEMY00067888 206649 528371 1275.6229 GENERAL SUPPLIES POL COMMUN OUTREACH/CRIME PREV 36.87 247330 SI30/2012 122460 BRYAN ADVERTISING CO 83.07 REC-STAFF SHIRTS 00068187 206662 377.51 1700.6281 UNIFORMlCLOTHING ALLOWANCE PARK & RECREATION MANAGEMENT 262.34 LIQ1-SHIRTS 00067762 206665 37749 5025.6281 UNIFORM/CLOTHING ALLOWANCE LIQUOR #1 OPERATIONS CITY OF APPLE VALLEY 5/31/2012 8:52:04 R55CKREG LOG20000 Council Check Register Page - 6 5/24/2012 -6/1/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 345.41 247331 5/30/2072 100932 BUDGET SANDBLASTING � PAINTING 6,340.00 STR-2012 SEALINC� OF DECORATIVE 206768 1600.6249 2012121G OTHER CONTRACTUAL SERVICES STREET MANAGEMENT 6,340.00 247332 5/30/2012 139111 CENTRAL TURF � IRRIGATION SUPP 2,775.37 PK-HEADS, DECORDER PRT 00050521 206659 502816400 1715.6215 EQUIPMENT-PARTS PARKATHLETIC FIELD MAINTENANC 2,775.37 247333 6130/2072 100878 CHARTER COMMUNICATIONS 67.26 GOLF-HIGH SPEED INTERNET 00040357 206772 5110.6237 TELEPHONE/PAGERS GOLF CLUBHOUSE BUILDING 67.26 247334 SI30/2072 739352 CLARK, KATHLEEN 679.00 HCSC-YOGA CLASS 206754 1920.6249 OTHER CONTRACTUAL SERVICES HAYES COMMUNITY & SENIOR CTR 679.00 247335 5/30I2012 121732 CLEARY LAKE VETERINARY HOSPITA 97,82 POL-ANNUAL EXAM 00067463 206756 162660 1281.6235 CONSULTANT SERVICES POLICE K-9 97.82 247336 S/30/2012 100114 CUB FOODS 130.40 CH-MISC SUPPLIES 65493 206880 1060.6229 GENERAL SUPPLIES MUNICIPAL BLDG & GROUNDS MNTC 75.55 POL-SNACKS CITIZEN ACADEMY 67883 206881 1275.6229 GENERAL SUPPLIES POL COMMUN OUTREACH/CRIME PREV 34.55 POL-SNACKS INVESTIGATORS MTC367881 206882 1275.6229 GENERAL SUPPLIES POL COMMUN OUTREACH/CRIME PREV 31.59 POL-SNACKS CITIZEN ACADEMY 67884 206883 1275.6229 GENERAL SUPPLIES POL COMMUN OUTREACH/CRIME PREV 5.09 REC-DR SEUSS SUPPLIES 68812 206884 1875.6229 GENERAL SUPPLIES REC PRESCHOOL PROGRAMS 10.67 REC-TEA PARTY SUPPLIES 68812 206885 1875.6229 GENERAL SUPPLIES REC PRESCHOOL PROGRAMS 85.38 REC-ACTIVITY SUPPLIES, DAILY E 68812 206886 1840.6229 GENERAL SUPPLIES REC TEEN PROGRAMS 53.96 POL-SNACKS CITIZEN ACADEMY 67886 206887 1275.6229 GENERAL SUPPLIES POL COMMUN OUTREACH/CRIME PREV 46.27 POL-SNACKS CITIZEN ACADEMY 67889 206888 1275.6229 GENERAL SUPPLIES POL COMMUN OUTREACH/CRIME PREV 473.46 247337 5/30/2012 119052 CUSTOM HOSE TECH INC 286.03 STR-MISC HYD FITTINGS 00049940 206650 65107 1630.6215 EQUIPMENT-PARTS STREET EQUIPMENT MAINTENANCE 289.57 UTIL-RPR WORK 00068075 206753 65058 5375.6265 REPAIRS-EQUIPMENT SEWER MAINTENANCE AND REPAIR � 575.60 247338 SI30/2012 100139 DAKOTA COUNTY UCENSE CENTER 11.00 POL LICENSE l�32 206889 1210.6215 EQUIPMENT-PARTS POLICE FIELD OPERATIONS/PATROL 64.50 POL TITLE 3 2013 FORD INTERCEP 206890 ' 1210:6215 EQUIPMENT-PARTS POLICE FIELD OPF 'NS/PATROL R55CKREG L...,20000 CITY OF APP; LLEY 5/31. +8:52:04 Council Check Register Page - 7 5/24/2012 -6/1/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledge Account Description Business Unit 41.50 CH TITLElREG 2012 CHEV TRAVERS 206891 1060.6215 EQUIPMENT-PARTS MUNICIPAL BLDG & GROUNDS MNTC 41.50 ENG TITLE/REG 2012 CNEV TRAVER 206892 1510.6215 EQUIPMENT-PARTS PW ENGINEERING & TECHNICAL 1,451.63 CH SALES TAX- 2012 CHEV TRAVE 206893 1060.6730 CAPITAL OUTLAY-TRANSPORTATION MUNICIPAL BLDG & GROUNDS MNTC 1,451.63 ENG SALES TAX-2012 CHEV TRAVER 206894 1510.6730 CAP�TAL OUTLAY-TRANSPORTATION PW ENGINEERING & TECHNICAL 41.50 PK TITLE/REG 2012 FORD F350 4X 206895 1765.6215 EQUIPMENT-PARTS PARK EQUIPMENT MAINTENANCE 1,486.66 PK SALES TAX-2012 FORD F350 4X 206896 1720.6730 CAPITAL OUTLAY-TRANSPORTATION PARK GROUNDS MAINTENANCE 4,589.92 247339 5I30/2012 100137 DELEGARD TOOL CO 1624 POL-CHARGER PIN RPR 00035179 206760 694714 1210.6211 SMALL TOOLS & EQUIPMENT POLICE FIELD OPERATIONS/PATROL 32.50 SHOP-CHARGER PIN RPR 00035179 206760 694714 1530.6211 SMALL TOOLS & EQUIPMENT CMF SHOP EQUIP MNTC & REPAIR 48.74 247340 5I30/2072 700434 DOUGHERTY MOLENDA SOLFEST HILL 383.90 GENERAL CRIMINAL-APRIL 206833 128195 1055.6231 LEGAL SERVICES LEGAL PROSECUTING ATTORNEY 52.65 GENERAL CIVIL MATTERS-APRIL 206834 128196 1050.6231 LEGAL SERVICES LEGAL GENERAL SERVICES 1,395.68 CONVICTION APPEAL 206835 126117 1055.6231 LEGAL SERVICES LEGAL PROSECUTING ATTORNEY 108.72 SENIOR CENTER CONTRACTS 206836 128197 4938.6231 LEGAL SERVICES 2007 SENIOR CENTER PROJECT 103.75 08395 LEGACY NORTH RETAIL BLD 206837 128198 4404.6231 LEGAL SERVICES OS-395 LEGACY NORTH RETAIL 489.24 OS-392 CEDAR AVE CORRIDOR STUD 206838 128199 4037.6231 2008107G LEGAL SERVICES 08-392 CEDAR AVE CORRIDOR 124.50 10-445 THINK BANK (CBL LAKE CO 206839 128200 4602.6231 2010114G LEGAL SERVICES ENG DEV REVIEW NON-REIMBURS 2,106.45 FISCHER POINT ADDITION 206840 128201 4902.6231 2012112R LEGAL SERVICES PHYSICAL IMPROVEMENTS ESCROW 2,065.68 147TH ST EXT-FLAGSTAFF TO JCRR 206841 128202 4712.6231 2011107G LEGAL SERVICES 147TH ST EXT FLAGSTF TO JCAKE 1,399.77 TIF DISTRICTS-GENERAL 206842 128203 4717.6231 LEGAL SERVICES VALLEY BUSINESS PARK 4077 VALLEYWOOD CLUBHOUSE 206843 128204 5190.6231 2011137G LEGAL SERVICES GOLF CLUBHOUSE CONSTRUCTION 1,390.25 AV BUSINESS CAMPUS 206844 128205 4902.6231 2011144R LEGAL SERVICES PHYSICAL IMPROVEMENTS ESCROW 373.50 GENERAL LEGAL-AT&T LEASE AMEND 206845 128206 1050.6231 LEGAL SERVICES LEGAL GENERAL SERVICES 516.42 CODE VIOLATIONS-MISC. 206846 128207 1135.6231 LEGAL SERVICES DEV CODE COMPLIANCE 271.80 CEMETERY LAND PURCHASE 206847 128208 5605.6231 LEGAL SERVICES CEMETERY 40.77 GENERAL CRIMINAL-POL LITIGATIO 206848 128209 1055.6231 LEGA4 SERVICES LEGAL PROSECUTING ATTORNEY 822.83 GENERAL CIVIL-MET COUNCIL IITI 206849 128210 1050.6231 LEGAL SERVICES LEGAL GENERAL SERVICES 543.60 FIRE RELIEF ASSN-WEBSITE 206850 128211 1365.6231 LEGAL SERVICES PIRE RELIEF 420.00 COBBLESTONE LAKE COMMERCIAL 206851 127534 4902.6231 LEGAL SERVICES PHYSICAL IMPROVEMENTS ESCROW 2,092.86 AV COMMONS II 206852 127531 4718.6231 2012136G LEGAL SERVICES AV COMMONS II 145.25 PIZZA RANCH-CBL LK COMM 4TH 2O6853 127527 4902.6231 2012138G LEGAL SERVICES PHYSICAL IMPROVEMENTS ESCROW 1,277.46 AV COMMONS II 206854 126&33 4718.6231 2012136G LEGAL SERVICES AV COMMONS II 16,165.85 247341 S/30/2012 119227 DRIVER & VEHICLE SERVICES 66.00 FIRE-SPECIAL PLATES 206777 1350.6229 GENERAL SUPPLIES FIRE VEHICLE MAINTENANCE 66.00 RSSCKREG LOG20000 CITY OF APPLE VALLEY 5/31/2012 8:52:04 Council Check Register Page - 8 5/24/2012 -6/1/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledge Account Description Business Unit 247342 5/30/2012 103235 ELSMORE AQUATIC 399.20 SWIM-STAFF UNIFORMS 00068191 206661 56190 1940.6281 UNIFORM/CLOTHING ALLOWANCE AQUATIC SVNM CENTER 399.20 247343 5/30/2012 100407 EMERGENCY AUTOMOTIVE TECHNOLOG 89.78 POL-MAP LIGHT 00038694 206664 38694 1210.6215 EQUIPMENT-PARTS POLICE FIELD OPERATIONS/PATROL 89.78 247344 5/30/2072 100768 FRONTIER COMMUNICATIONS OF MN 205.97 GOLF-DATA LINE-MAY 206640 222310022612136 5105.6237 TELEPHONE/PAGERS GOLF MANAGEMENT 205.97 247345 5/30I2012 701507 GALAXIE CAR CARE CENTER 200.68 POL-CAR WASHES, APR 38833 206908 1501001 1210.6265 REPAIRS-EQUIPMENT POLICE FIELD OPERATIONS/PATROL 11.00 FIRE-CAR WASHES, APR 39194 206909 1501027 1350.6265 REPAIRS-EQUIPMENT FIRE VEHICLE MAINTENANCE 5.60 DEV-CAR WASHES, APR 43279 206910 1501397 7100.6265 REPAIRS-EQUIPMENT DEV MANAGEMENT 217.28 247346 5/30/2012 124261 GREEN STUFF INC 17,668.51 PK-SPRING WEED APP, PARKS 00051059 206953 56936 1720.6249 OTHER CONTRACTUAL SERVICES PARK GROUNDS MAINTENANCE 17,668.51 247347 5/30/2012 107023 HEDBERG AGGREGATES 6.71- CEMETERY-DISCOUNT 00067227 206757 251743 5605.6333 GENERAL-CASH DISCOUNTS CEMETERY 358.53 CEMETERY-GRANITE, POLY 00067227 206757 251743 5605.6740 CAPITAL OUTLAY-MACH/EQ/OTHER CEMETERY 351.82 247348 5/30I2072 131225 HEGGIES PIZZA 59.80 GOLF-KTN PIZZA 00049094 206862 1042194 5120.6420 GOLF-FOOD GOLF KITCHEN 127.95 GOLF-KTN PIZZA 00049094 206863 1042775 5120.6420 GOLF-FOOD GOLF KITCHEN 187.75 247349 5130/2012 127078 HELENA CHEMICAL COMPANY 333.17 GOLF-DACONIL ULTREX 50087 206911 134719222 5150.6214 CHEMICALS GOLF COURSE MAINTENANCE 5878 GOLF-TURF NECTAR 50087 206912 134719223 5150.6214 CHEMICALS GOLF COURSE MAINTENANCE 606.97 GOLF-HERBICIDE, INSECTICIDE 50087 206913 134719101 5150.6214 CHEMICALS GOLF COURSE MAINTENANCE 998.92 247350 S/30/2012 102847 HOWLAND'S IKON .19 IA1-EMBROIDER LOGO HIVIS VEST945237 206917 120756 5205.6281 UNIFORM/CLOTHING ALLOWANCE ARENA 1 MANAGEMENT .28 CH-EMBROIDER LOGO HIVIS VEST3l5237 - 206918 120756 1060.6281 UNIFORM/CLOTHING ALLOWANCE MUNICIPAL BLDG & GROUNDS MNTC .28 AVCGEMBROIDER LOGO HIVIS VE9{b237 206919 120756 ' 1900.6281 UNIFORM/CLOTHING ALLOWANCE AV COMMUNITY Cf R55CKREG Lv:�20000 CITY OF APF. ;LLEY 5/31 , 8:52:04 Council Check Register Page - 9 5/24/2012 -6/1/2012 Check # Date Amount Suppiier / Explanation PO # Doc No Inv No Account No Subledge Account Description Business Unit .28 ENG-EMBROIDER LOGO HIVIS VES�15237 206920 120756 1510.6281 UNIFORM/CLOTHING ALLOWANCE PW ENGINEERING & TECHNICAL .48 INSP-EMBROIDER LOGO HIVIS VES�5237 206921 120756 1400.6281 UNIFORM/CLOTHING ALLOWANCE INSPECTIONS MANAGEMENT .68 SHOP-EMBROIDER LOGO HIVIS VE94b237 206922 120756 1530.6281 UNIFORM/CLOTHING ALLOWANCE CMF SHOP EQUIP MNTC & REPAIR .48 NR-EMBROIOER LOGO HIVIS VEST945237 206923 120756 1520.6281 UNIFORM/CLOTHING ALLOWANCE NATURAL RESOURCES 2.30 PK-EMBROIDER LOGO HIVIS VESTSM15237 206924 120756 1710.6281 UNIFORM/CLOTHING ALLOWANCE PARK MAINTENANCE MANAGEMENT 2.30 STR-EMBROIDER lOGO HIVIS VESTB'i237 206925 120756 1600.6281 UNIFORM/CLOTHING ALLOWANCE STREET MANAGEMENT .98 UTIL-EMBROIDER LOGO HIVIS VES�l5237 206926 120756 5365.6281 UNIFORM/CLOTHING ALLOWANCE SEWER MGMT/REPORTS/DATA ENTRY .98 UTIL-EMBROIDER LOGO HIVIS VES�t5237 206927 120756 5305.6281 UNIFORM/CLOTHING ALLOWANCE WATER MGMT/REPORT/DATA ENTRY .38 GOLF-EMBROIDER LOGO HIVIS VE946237 206928 120756 5105.6281 UNIFORMlCLOTHING ALLOWANCE GOLF MANAGEMENT 22.50 PK-LOGO SCREENPRINT SEASONA�SQ37 206929 120756 1710.6281 UNIFORM/CLOTHING ALLOWANCE PARK MAINTENANCE MANAGEMENT 2.88 STR-LOGO SCREENPRINT SEASONA,5237 206930 120756 1600.6281 UNIFORM/CLOTHlNG ALLOWANCE STREET MANAGEMENT 1.72 UTIL-LOGO SCREENPRINT SEASON�T9237 206931 120756 5365.6281 UNIF�RMlCIOTFiING ALLOWANCE SEWER MGMTJREPORTSiDATA ENTRY 1.72 UTIL-LOGO SCREENPRINT SEASON�'9237 206932 120756 5305.6281 UNIFORM/CLOTHING ALLOWANCE WATER MGMT/REPORT/DATA ENTRY 38.43 247357 5/30/2012 100244 INDUSTRIAL UNIFORM CO LLC 13.22 IA1-SHIRTS 48333 206933 E40238 5205.6281 UNIFORM/CLOTHING ALLOWANCE ARENA 1 MANAGEMENT 33.07 CH-SHIRTS 48333 206934 E40238 1060.6281 UNIFORM/CLOTHING ALLOWANCE MUNICIPAL BLDG & GROUNDS MNTC 26.45 AVCGSHIRTS 48333 206935 E40238 1900.6281 UNIFORM/CLOTHING ALLOWANCE AV COMMUNITY CENTER 33.07 INSP-SHIRTS 48333 206936 E40238 1400.6281 UNIFORM/CLOTHING ALLOWANCE INSPECTIONS MANAGEMENT 46.30 SHOP-SHIRTS 48333 206937 E40238 1530.6281 UNIFORM/CLOTHING ALLOWANCE CMF SHOP EQUIP MNTC 8 REPAIR 33.07 NR-SHIRTS 48333 206938 E40238 1520.6281 UNIFORM/CLOTHING ALLOWANCE NATURAL RESOURCES 138.92 PK-SHIRTS 48333 206939 E40238 1710.6281 UNIFORMlCLOTHING ALLOWANCE PARK MAINTENANCE MANAGEMENT 165.37 STR-SHIRTS 48333 206940 E40238 1600.6281 UNIFORM/CLOTHING ALLOWANCE STREET MANAGEMENT 72.78 UTIL-SHIRTS 48333 206941 E40238 5365.6281 UNIFORM/CLOTHING ALLOWANCE SEWER MGMT/REPORTS/DATA ENTRY 72.78 UTIL-SHIRTS 48333 206942 E40238 5305.6281 UNIFORM/CLOTHING ALLOWANCE WATER MGMT/REPORT/DATA ENTRY 26.45 GOLF-SHIRTS 48333 206943 E40238 5105.6281 UNIFORM/CLOTHING ALLOWANCE GOLF MANAGEMENT 661.48 247352 5/30I2012 . 101796 INTERSTATE BATTERY SYSTEM OF M 99.34 PK-BATTERY 00042258 206673 220012455 1765.6216 VEHICLES-TIRES/BATTERIES PARK EQUIPMENT MAINTENANCE 99.34 247363 5/30l2072 100013 J J TAYLOR DISTRIBUTING CO OF 35.80 GOLF-KTN BEER 00046768 206867 1767381 5120.6419 GOLF-BEER GOLF KITCHEN 35.80 247354 5/30/2012 777243 JERRY'S TRANSMISSION SERVICE I 112.32 FIRE-LENS, BULB HOLDER 00068872 2D6858 19169 1350.6215 EQUIPMENT-PARTS FIRE VEHICLE MAINTENANCE 112.32 247355 5/30/2012 100044 JIM COOPERS TIRE 8 AUTO STORES R55CKREG LOG20000 CITY OF APPLE VALLEY 5l31/2012 8:52:04 Council Check Register Page - 10 5/24/2012 -6/1/2012 Check # Date Amount Supplier / Explanatian PO # Doc No Inv No Account No Subledger Account Description Business Unit 311.12 PK-TIRES, TUBE, RPR WORK 00035334 206656 024866 1765.6216 VEHICLES-TIRES/BATTERIES PARK EQUIPMENT MAINTENANCE 311.12 247556 5/30I2012 718232 JOHN DEERE FINANCIAL 221.53 PK-MOWER PARTS 00035352 206950 P28114 1765.6215 EQUIPMENT-PARTS PARK EQUIPMENT MAINTENANCE Supplier 100608 FRONTIER AG & TURF 106.32 STR-MOWER BLADES, BELTS 00037942 206951 P27988 1630.6215 EQUIPMENT-PARTS STREET EQUIPMENT MAINTENANCE Supplier 100608 FRONTIER AG & TURF 86.50 STR-MOWER BLADES 00069052 206952 P28561 1630.6215 EQUIPMENT-PARTS STREET EQUIPMENT MAINTENANCE Supplier 100608 FRONTIER AG 8 TURF 414.35 247357 5/30/2012 102759 JOHN DEERE LANDSCAPES/LESCO 73.66 GOLF-NOZZLE, SPRAY GUN 00047782 206668 60938720 5150.6211 SMALL TOOLS & EQUIPMENT GOLF COURSE MAINTENANCE 73.66 247368 5/3012012 100255 JOHNSON BROTHERS LIQUOR 183 .00 GOLF-LIQ FOR SALE 00046398 206864 1287227 5120.6429 GOLF-LIQUOR GOLF KITCHEN 183.00 247359 5130/2012 741814 JTK DISTRIBUTORS 228.00 GOLF-CIGARS 00035055 206866 5115.6417 GOLF-CIGARS GOLF PRO SHOP 228.00 247360 5l30/20t2 100267 KEYS WELL DRILLING CO 4,177.60 UTIL-FINAL PYMT WELL PUMPS 1,2 206767 5320.6265 2011143W REPAIRS-EQUIPMENT WATER WELUBOOSTER STN MNT/RPR 4,177.60 247361 5/30/2012 100659 LAVERNES PUMPING SERVICE 225.00 GOLF-PUMP HOLDING TANKS 00050894 206669 13202 5110.6266 2011138G REPAIRS-BUILDING GOLF CLUBHOUSE BUILDING 460.00 QP-PUMP HOLDING TANK 00050732 206670 13203 1945.6266 REPAIRS-BUILDING QUARRY POINTE 685.00 247362 6/30/2012 737634 LIFT BRIDGE BREWERY 168.00 BEER#2[INVOICE S/B 5/2/12] 50160 206907 17 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 168.00 `247363 5/30/2012 700309 MENARDS 12.79 NR HERBICIDE 67374 206690 97885 1520.6214 CHEMICALS NATURAL RESOURCES 9.56 NR GLOVES 67374 206691 97885 1520.6229 GENERAL SUPPLIES NATURAL RESOURCES 32.02 PK SHAKE N FEED 35348 206692 96763 1720.6213 FERTILIZER PARK GROUNDS MAINTENANCE 21.35 PK 150W BULB 35348 206693 97843 ; 1730.6229 GENERAL SUPPLIES PARK BUILDING M/' VANCE R55CKREG �:.v20000 CITY OF APF 1LEY 5/3' 8:52:04 Council Check Register Page - 11 5/24/2012 -6l1/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 28.83 POL BIKE TOOL BOX 67634 206694 95769 2057.6211 SMALL TOOLS & EQUIPMENT POLICE SPECIAL PROJECTS 10.84 NR BOARD/PVC CAP 67371 206695 94961 1520.6229 GENERAL SUPPLIES NATURAL RESOURCES 9.48 NR BIT HOLDER/BITS 67371 206696 94961 1520.6211 SMALL TOOLS & EQUIPMENT NATURAL RESOURCES 123.50 CMF INSULATION 35439 206697 95417 1540.6215 EQUIPMENT-PARTS CMF BUILDINGS & GROUNDS MNTC 52.28 POL LUMBER 68214 206698 95008 1281.6229 GENERAL SUPPLIES POLICE K-9 101.83 GOLF OIL 35389 206699 95036 5155.6212 MOTOR FUELS/OILS GOLF EQUIPMENT MAINTENANCE 63.57 GOLF TIES/BOLT 35389 206700 95036 5150.6229 GENERAL SUPPLIES GOLF COURSE MAINTENANCE 7.79 GOLF SOCKET SET 35389 206701 95036 5150.6211 SMALL TOOLS & EQUIPMENT GOLF COURSE MAINTENANCE 132J0 GOLF CEILING TILES 35439 206702 95863 1540.6229 GENERAL SUPPLIES CMF BUILDINGS 8 GROUNDS MNTC 48.00 PK RV ANTIFREEZElPERF SHEET 35348 206703 95073 1730.6229 GENERAL SUPPLIES PARK BUILOING MAINTENANCE 64.88 PK PAINT SUPPLIES 35348 206704 95774 1730.6229 GENERAL SUPPLIES PARK BUILDING MAINTENANCE 55.40 FIRE SOFTENER SALT 36477 206706 95575 1340.6229 GENERAL SUPPLIES FIRE BLDG & GROUNDS MNTC 8.27 FIRE WRENCH PENETRANT 36477 206707 96011 1350.6229 GENERAL SUPPLIES FIRE VEHICLE MAINTENANCE 208.19 PK BOARDS/CONCRETE 35348 206708 96212 1760.6229 GENERAL SUPPLIES PARK CONSTRUCTION 8.00 PK TAPE MEASURE 35348 206709 98253 1730.6211 SMALL TOOLS & EQUIPMENT PARK BUILDING MAINTENANCE 70.68 PK UPRIGHT/SHELF SUPPORT/MIS�5348 206710 98253 1730.6229 GENERAL SUPPLIES PARK BUILDING MAINTENANCE 45.02 PK 2 X 4/BUNGEE CORDS 35348 206711 98349 1715.6229 GENERAL SUPPLIES PARK ATHLETIC FIELD MAINTENANC 118.25 PK PLYWOOD 35348 206712 98742 1715.6229 GENERAL SUPPLIES PARK ATHLETIC FIELD MAINTENANC 28.24 PK ADAPTERS/PLUGS 35348 206713 98699 1730.6229 GENERAL SUPPLIES PARK BUILDING MAINTENANCE 38.64 PK GLOVES 35348 206714 99024 1770.6229 GENERAL SUPPLIES PARK GENERAL MAINTENANCE 40.59 PK ACRYLIC SHEET/CAULK 35348 206715 99405 1730.6229 GENERAL SUPPLIES PARK BUILDING MAINTENANCE 43.41 GOLF CLEANING SUPPLIES 35389 206716 98299 5110.6229 GENERAL SUPPLIES GOLF CIUBHOUSE BUILDING 38.41 GOLF SOCKETS/MOP 35389 206717 98299 5110.6211 SMALL TOOLS & EQUIPMENT GOLF CLUBHOUSE BUILDING 12.14 PK WALL ANCHORS 35348 206718 660 1730.6229 GENERAL SUPPLIES PARK BUILDING MAINTENANCE 4123 PK MURIATIC ACID/SPRAYER 35348 206719 1238 1770.6229 GENERAL SUPPLIES PARK GENERAL MAINTENANCE 42.22 PK MURIATIC ACID 35348 206720 1629 1770.6229 GENERAL SUPPLIES PARK GENERAL MAINTENANCE 25.33 PK MURIATIC ACID 35348 206721 1533 1770.6229 GENERAL SUPPLIES PARK GENERAL MAINTENANCE 68.18 GOLF MOLDING/TIES/MISC 35389 206722 2645 5150.6229 GENERAL SUPPLIES GOLF COURSE MAINTENANCE 21.32 IA1 HANDLE RPR KITS 68488 206723 1921 5210.6229 GENERAL SUPPLIES ARENA 1 BUILDING MAINTENANCE 7.15 PK 4 X 4 X6 35348 206724 1529 1735.6229 GENERAL SUPPLIES PARK PLAY EQUIPMENT MAINTENANC 21.35 PK 35W BULB 35348 2D6725 1529 1730.6229 GENERAL SUPPLIES PARK BUILDING MAINTENANCE 14.47 POOL PLUMBING SUPPLIES 35346 206726 3657 1930.6229 GENERAL SUPPLIES REDWOOD POOL 127.87 UTIL PLUMBING SUPPLIES 35238 206727 1146 5325.6229 GENERAL SUPPLIES WATER TREATMENT F,CLTY MNTC/RPR 64.02 STR BAGS 35439 206728 99342 1610.6229 GENERAL SUPPLIES STREET/BOULEVARD REPAIR & MNTC 21.29 STR COOLFLOW VALVE 35439 206729 96260 1610.6229 GENERAL SUPPLIES STREET/BOULEVARD REPAIR 8 MNTC 25.39 STR CONCRETE 35439 206730 94990 1680.6229 GENERAL SUPPLIES TRAFFIC SIGNS/SIGNALS/MARKERS 20.43 STR WIRE/MISC 35439 206731 99497 1625.6229 2012120R GENERAL SUPPIIES STREET RING ROUTE MAINT 42.57 PK CHAIN/5-HOOKS 35348 206732 4213 1715.6229 GENERAL SUPPLIES PARK ATHLETIC FIELD MAINTENANC 38.37 PK BRASS PARTS 35348 206733 3781 1770.6229 GENERAL SUPPLIES PARK GENERAL MAINTENANCE 96.16 PK LANDSCAPE FABRIC 35348 206734 2287 1720.6229 GENERAL SUPPLIES PARK GROUNDS MAINTENANCE 43.61 CH ANCORS 65492 206735 1552 1060.6229 GENERAL SUPPLIES MUNICIPAL BLDG & GROUNDS MNTC R55CKREG LOG20000 CITY OF APPLE VALLEY 5/31/2012 8:52:04 Council Check Register Page - 12 5/24/2012 -6/1/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 44.16 GOLF CLEANING SUPPLIES 35389 206736 4154 5150.6229 GENERAL SUPPLIES GOLF COURSE MAINTENANCE 16.61 PK MASONRY BITS 35348 206737 5062 1730.6211 SMALL TOOLS & EQUIPMENT PARK BUILDING MAINTENANCE 33.18 PK ANCHORS 35348 206738 5062 1730.6229 GENERAL SUPPLIES PARK BUILDING MAINTENANCE 92.32 SWIM BOARDS 35348 206739 4516 1940.6229 GENERAL SUPPLIES AQUATlC SWIM CENTER 22.61 PK PRY BAR/BLADES/CHAULK LINE35348 206740 4516 1940.6211 SMALL TOOLS & EQUIPMENT AQUATIC SWIM CENTER 42.71 PK BAGS 35348 206741 6727 1730.6229 GENERAL SUPPLIES PARK BUILDING MAINTENANCE 21.36 CMF WEED KILLER 35439 206742 4978 1540.6229 GENERAL SUPPLIES CMF BUILDINGS & GROUNDS MNTC 32.01 CMF SPRAYER 35439 206743 4978 1540.6211 SMALL TOOLS & EQUIPMENT CMF BUILDINGS & GROUNDS MNTC 13.39 PK BUNGEE/CLAMP 35348 206744 6881 1715.6229 GENERAL SUPPLIES PARK ATHLETIC FIELD MAINTENANC 124.95 GOLF SUPPLIES 35369 206745 6722 5150.6229 GENERAL SUPPLIES GOLF COURSE MAINTENANCE 46.46 GOLF TOOLS 35389 206746 6722 5150.6211 SMALL TOOLS & EQUIPMENT GOLF COURSE MAINTENANCE 7.03 STR WIRE 35439 206747 3730 1610.6229 GENERAL SUPPLIES STREETlBOULEVARD REPAIR 8 MNTC 16.00 STR FABRIC PINS 35439 206748 4271 1610.6229 GENERAL SUPPLIES STREET/BOULEVARD REPAIR & MNTC 7.76 STR BITS 35349 206749 4684 1610.6211 SMALL TOOLS & E�UIPMENT STREET/BOULEVARD REPAIR & MNTC 12.14 STR ANCHORS 35349 206750 4684 1610.6229 GENERAL SUPPLIES STREET/BOULEVARD REPAIR & MNTC 32.00 CMF SHRINKWRAP 35439 206751 4158 1540.6229 GENERAL SUPPLIES CMF BUILDINGS & GROUNDS MNTC 32.00 CMF SHRINKWRAP 35439 206752 1923 1540.6229 GENERAL SUPPLIES CMF BUILDINGS & GROUNDS MNTC 2,752.51 247364 5/3012072 140780 METRO JANITORIAL SUPPLY INC 113.04 AVCC-HAND SANITIZER 00068193 206660 11011422 1900.6229 C,ENERAL SUPPLIES AV COMMUNITY CENTER 113.04 247365 5/30/2012 140602 MIDWAY FORD 22,966.76 PK-'12 FORD F350 PU #242 00051007 206954 126700 1720.6730 CAPITAL OUTLAY-TRANSPORTATION PARK GROUNDS MAINTENANCE 22,966J6 247366 5/30/2012 100334 MN DEPT OF HEALTH 150.00 PERMIT FEE-147TH ST EXT 206774 4712.6399 2011107G OTHER CHARGES 147TH ST EXT FLAGSTF TO JCAKE 150.00 247367 5/30/2012 700325 MN POLLUTION CONTROL AGENCY 310.00 PERMIT FEE-147TH ST EXT 206773 4712.6399 2011107G OTHER CHARGES 147TH ST EXT FLAGSTF TO JCAKE 310.00 247368 b/30/2012 137771 MOST DEPENDABLE FOUNTAINS , 285.89 PK-ORING ASSY, VALVES 00069104 206672 INV25500 1770.6229 GENERAL SUPPLIES PARK GENERAL MAINTENANCE � 18.39- 00069104 206672 INV25500 1000.2330 DUE TO OTHER GOVERNMENT GENERAL FUND BALANCE SHEET 267.50 247369 SI30/2072 702092 MRPA 2,310.00 REC-USSSA SOFTBALL TEAM SANCTI 206775 ;' 1850.6399 _ OTHER CHARGES REC SOFTBALL , R55CKREG C�v20000 CITY OF APP., .LLEY 5/31, '8:52:04 Council Check Register Page - 13 5/24/2012 —6/1/2012 Gheck # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledge Account Description Business Unit 2,310.00 247370 5/30/2012 142014 MUSIC TOGETHER IN THE VAILEY I 2,029.60 REC-WINTER MUSIC TOGETHER CLAS 206949 1845.6249 OTHER CONTRACTUAL SERVICES REC SEIF SUPPORT PROG GENERAL 2,029.60 247371 5i3012072 120496 NATURE CALLS INC 197.75 REC-PORTABLE TOILETS,LIGHTNIN�050750 206771 15874 1820.6310 RENTAL EXPENSE REC CULTURAL PROGRAMS 197J5 247372 5/30I2012 122157 NELSON AUTO CENTER 26,292.82 POL-'13 FORD INTERCEPTOR 00051067 206955 F3814 1210.6730 CAPITAL OUTLAY-TRANSPORTATION PO�ICE FIELD OPERATIONS/PATROL 26,292.82 POL-'13 FORD INTERCEPTOR 00051067 206956 F3815 1210.6730 CAPITAL OUTLAY-TRANSPORTATION POLICE FIELD OPERATIONS/PATROL 24,400.61 POL-'13 FORD INTERCEPTOR 00051067 206957 F3813 1210.6730 CAPITAL OUTLAY-TRANSPORTATION POLICE FIELD OPERATIONS/PATROL 76,986.25 247373 6130@012 119604 OLSEN CHAIN 8 CABLE 261.08 PK-STRAP, ROPE FOR VB COURTS 00065071 206646 684065 1715.6229 GENERAL SUPPLIES PARK ATHLETIC FIELD MAINTENANC 261.08 247374 6/30/2012 779041 POSITIVE ID INC 20.87 POL-ID CARD, STEVE KURTZ 206655 12398 1200.6239 PRINTING POLICE MANAGEMENT 20.87 247375 5130l2012 108865 PRECISION TURF & CHEMICAL INC 499.11 GOLF-STARTER FERTILIZER 00050893 206671 38145 5150.6213 FERTILIZER GOLF COURSE MAINTENANCE 499.11 247376 SI30/2012 143066 RANGER 22,332.80 ENG-'12 CHEV TRAVERSE #114 00051073 206958 25766 1510.6730 CAPITAL OUTLAY-TRANSPORTATION PW ENGINEERING & TECHNICAL 22,332.80 CH=12 CHEV TRAVERSE #1201 00051073 206959 27780 1060.6730 CAPITAL OUTLAY-TRANSPORTATION MUNICIPAL BLDG & GROUNDS MNTC 44,665.60 247377 5/30/2012 100745 ROSEMOUNT, CITY OF 1929 REC-REIMB FOR PROGRAM SUPPLI�ID68190 206663 1845.6229 GENERAL SUPPLIES REC SELF SUPPORT PROG GENERAL 19.29 247378 SI30@012 132465 SAM'S CLUB DIRECT 107.40 REC FOOD FOR EARTH DAY 68182 206778 3206 1700.6399 OTHER CHARGES PARK & RECREATION MANAGEMENT 9.88 GOLF KNIVES FOR KITCHEN 49151 206779 1939 5120.6422 GOLF-KITCHEN SUPPLIES GOLF KITCHEN 136.89 GOLF KITCHEN FOOD 49151 206780 1939 5120.6420 GOLF-FOOD GOLF KITCHEN 13.96 NR BLUE THUMB WORKSHOP FOO[57376 206781 4550 1520.6229 GENERAL SUPPLIES NATURAL RESOURCES R55CKREG LOG20000 CITY OF APPLE VALLEY 5l31l2012 8:52:04 Council Check Register Page - 14 5/24/2012 -6/1/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 174.78 GOLF KITCHEN FOOD 49151 206782 8954 5120.6420 GOLF-FOOD GOLF KITCHEN 43.64 GOLF KITCHEN CUPS 49151 206783 3570 512D.6422 GOLF-KITCHEN SUPPLIES GOLF KITCHEN 35.12 GOLF KITCHEN FOOD 49151 206784 3570 5120.6420 GOLF-FOOD GOLF KITCHEN 30.24 GOLF KITCHEN POP 49151 206785 3570 5120.6421 GOLF-NON ALCOHOLIC BEVERAGES GOLF KITCHEN 87.71 IA1 SHRUBS FOR GARDEN 68496 206786 6273 5210.6229 GENERAL SUPPLIES ARENA 1 BUILDING MAINTENANCE 36.16 GOLF KITCHEN FOOD 49151 206787 4241 5120.6420 GOLF-FOOD GOLF KITCHEN 11.48 GOLF KITCHEN CUPS 49151 206788 4223 5120.6422 GOLF-KITCHEN SUPPLIES GOLF KITCHEN 163.23 GOLF KITCHEN FOOD 49151 206789 4223 5120.6420 GOLF-FOOD GOLF KITCHEN 30J2 GOLF KITCHEN POP 49151 206790 4223 5120.6421 GOLF-NON ALCOHOLIC BEVERAGES GOLF KITCHEN 17.61 AVCC MIRACLE GROW SOIL 68821 206791 5636 1900.6229 GENERAL SUPPLIES AV COMMUNITY CENTER 37.44 REC PIZZAS FOR TC 68821 206792 5636 1840.6540 TAXABLE MISC FOR RESALE REC TEEN PROGRAMS 50.51 GOLF KITCHEN CUPS, PLATES, FOFg9151 206793 9680 5120.6422 GOLF-KITCHEN SUPPLIES GOLF KITCHEN 40.59 GOLF KITCHEN FOOD 49151 206794 9680 5120.6420 GOLF-FOOD GOLF KITCHEN ,47_ 00049151 206795 7030 5100.2330 DUE TO OTHER GOVERNMENT GOLF FUND BALANCE SHEET 7.35 GOLF KITCHEN FOIL 49151 206795 7030 5120.6422 GOLF-KITCHEN SUPPLIES GOLF KITCHEN 41.94 GOLF KITCHEN POP 49151 206796 7030 5120.6421 GOLF-NON ALCOHOLIC BEVERAGES GOLF KITCHEN 156.97 REC CONCESSION FOOD 206797 7828 1850.6540 TAXABLE MISC FOR RESALE REC SOFTBALL 156.97 REC CONCESSION FOOD 206798 7828 1850.6540 TAXABLE MISC FOR RESALE REC SOFTBALL 6.71 GOLF KITCHEN FOOD 49151 206799 8315 5120.6420 GOLF-FOOD GOLF KITCHEN 57.88 GOLF COFFEE 49151 206800 8315 5150.6229 GENERAL SUPPLIES GOLF COURSE MAINTENANCE 5.87 REC TC GARDENING SOIL 68834 206801 604 1840.6229 GENERAL SUPPLIES REC TEEN PROGRAMS 12.93 REC WINE GLASS PAINTING SUPPL68834 206802 604 1845.6229 GENERAL SUPPLIES REC SELF SUPPORT PROG GENERAL 216.08 GOLF KITCHEN FOOD 00049151 206865 7030 5120.6420 GOLF-FOOD GOLF KITCHEN 42.64 GOLF BOWLS 00049151 206868 1939 5150.6229 GENERAL SUPPLIES GOLF COURSE MAINTENANCE 2,74_ 00049151 206868 1939 5100.2330 DUE TO OTHER GOVERNMENT GOLF FUND BALANCE SHEET 294.27 REC ADOPT A PARK PICNIC FOOD/�0068180 206870 1945 1700.6399 OTHER CHARGES PARK & RECREATION MANAGEMENT 4.43- 00068180 206870 1945 1000.2330 DUE TO OTHER GOVERNMENT GENERAL FUND BALANCE SHEET 70.16 GOLF KITCHEN SUPPLIES 00049151 206871 8954 5120.64�2 GOLF-KITCHEN SUPPLIES GOLF KITCHEN 2.60- 00049151 206871 8954 5100.2330 DUE TO OTHER GOVERNMENT GOLF FUND BALANCE SHEET 172.70 REC CONCESSION SUPPLIES 00068181 206875 5348 1850.6540 TAXABLE MISC FOR RESALE REC SOFTBALL ,q�_ 00068181 206875 5348 1000.2330 DUE TO OTHER GOVERNMENT GENERAL FUND BALANCE SHEET 172.70 QP CONCESSION SUPPLIES 00068181 206878 5348 1945.6540 TAXABLE MISC FOR RESALE QUARRY POINTE ,q�_ 00068181 206678 5348 1000.2330 DUE TO OTHER GOVERNMENT GENERAL FUND BALANCE SHEET 126.96 GOLF KITCHEN BAGGIES, CLEANEIi�049151 206879 4241 5120.6422 GOLF-KITCHEN SUPPUES GOLF KITCHEN g,17_ 00049151 206679 4241 5100.2330 DUE TO OTHER GOVERNMENT GOLF FUND BALANCE SHEET 2,554.28 � 247378 • 5/30/2012 700913 SOUTH CEDAR GREENHOUSES 154.92 STR-BEDDING PLANTS 00062926 206654 61970 1625.6229 GENERAL SUPPLIES STREET RING ROUTE MAINT 154.92 R55CKREG �..�20000 CITY OF APF. .LLEY 5/31 ' 8:52:04 Council Check Register Page - 15 5/24/2012 -6l1/2012 M Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledge Account Description Business Unit 247380 6I30I2012 100447 SOUTH RIVER HEATING & COOLING 783.64 AVCC-SPRING MAINT. HVAC SYSTEM 206876 1215715 1900.6266 REPAIRS-BUILDING AV COMMUNITY CENTER 778.53 UTIL-ANN. MAINT FARQUAR, ALIMA00035244 206877 1215724 5385.6265 REPAIRS-EQUIPMENT SEWER STORM INFRASTRUCTURE 1,562.17 2473$7 6/30/2012 100467 STREICHERS INC 5,060.00 POL-UNIFORM 00051074 206856 1929751 1200,6281 UNIFORM/CLOTHING ALLOWANCE POLICE MANAGEMENT 5,060.00 24T382 6/30/2012 100329 SUN NEWSPAPERS 363.00 HR-EMPL AD, LIFEGUARDS 206855 1378460 1020.6239 PRINTING HUMAN RESOURCES 300.00 LIQ-EMPL AD, STORE CLERK 206859 1377255 5005.6239 PRINTING LIQUOR GENERAL OPERATIONS 663.00 247383 S/30/2072 101753 SYSCO MINNESOTA, INC 707.10 GOLF-KITCHEN FOOD 27785 206914 205111510 5120.6420 GOLF-FOOD GOLF KITCHEN 46.40 GOLF-KITCHEN SUPPLIES 27765 206915 205220717 5120.6422 GOLF-KtTCHEN SUPPLIES GOLF KITCHEN 767.37 GOLF-KITCHEN FOOD 27765 206916 205220717 5120.6420 GOLF-FOOD GOLF KITCHEN 1, 520.87 247384 5/30/2012 700481 TRI-STATE BOBCAT INC 92.97 STR-PULLEY, KEY 00069151 206651 115071 1630.6215 EQUIPMENT-PARTS STREET EQUIPMENT MAINTENANCE 253.94 STR-SPINDLE 00069151 206652 115334 1630.6215 EQUIPMENT-PARTS STREET EQUIPMENT MAINTENANCE 79.19 STR-FITTING, NUTS #347 00069151 206653 115071 1630.6215 EQUIPMENT-PARTS STREET EQUIPMENT MAINTENANCE 426.10 247385 5/30I2012 142614 USA SAFETY SUPPLY CORP 166.85 PK-HIVIS CLOTHING 51076 206686 69312 1710.6281 UNIFORM/CLOTHING ALLOWANCE PARK MAINTENANCE MANAGEMENT 21.39 STR-HIVIS CLOTHING 51076 206687 69312 1600.6281 UNIFORM/CLOTHING ALLOWANCE STREET MANAGEMENT 12.84 UTIL-HIVIS CLOTHING 51076 206688 69312 5365.6281 UNIFORM/CLOTHING ALLOWANCE SEWER MGMT/REPORTS/DATA ENTRY 12.84 UTIL-HIVIS CLOTHING 51076 206689 69312 5305.6281 UNIFORM/CLOTHING ALLOWANCE WATER MGMT/REPORT/DATA ENTRY 213.92 247386 5/30/2012 138390 USPCA 18 100.00 POL-CANINE CERT REG 18 206770 1281.6275 SCHOOLS/CONFERENCES/EXP LOCAL POL4CE K-9 100.00 247387 5/30/2072 100512 WENDLAND DISTRIBUTING INC 40.07 STR-MISC SHOP SUPPLIES 00035444 206860 10511 1630.6215 EQUIPMENT-PARTS STREET EQUIPMENT MAINTENANCE 30.23 SHOP-MISC SCREWS, PIPE FITTIN(3D0035213 206861 10510 1530.6215 EQUIPMENT-PARTS CMF SHOP EQUIP MNTC & REPAIR 70.30 R55CKREG LOG20000 CITY OF APPLE VALLEY 5/31l2012 8:52:04 Gouncil Check Register Page - 16 5/24/2012 —6/1/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 247388 5/30/2072 100296 WIRTZ BEVERAGE MIN - BEER INC 128.00 GOLF-KTN BEER 11037 206902 892348 5120.6419 GOLF-BEER GOLF KITCHEN 168.00 GOLF-KTN BEER 11037 206903 895645 5120.6419 GOLF-BEER GOLF KITCHEN 201.60 GOLF-KTN BEER 11037 206904 898483 5120.6419 GOLF-BEER GOLF KITCHEN 357.00 GOLF-KTN BEER 11037 206905 901630 5120.6419 GOLF-BEER GOLF KITCHEN 19.65- GOLF-KTN BEER, CREDIT 11037 206906 5120.6419 GOLF-BEER GOLF KITCHEN 834.95 20120537 5/25/2072 100873 HEALTHPARTNERS 4,173.87 DENTAL CLAIMS 5/17-5/23/12 206944 20120523 7105.6146 DENTAL INSURANCE INSURANCE TRUST DENTAL 4,173.87 20120538 6/2b/2012 102664 ANCHOR BANK 51,821.95 FEDERAL TAXES PR 206945 1205028 9000.2111 ACCRUED FEDERAVFICA PAYROLL CLEARING BAL SHEET 15,716.30 EMPLOYEE FICA 206945 120502B 9000.2111 ACCRUED FEDERAUFICA PAYROLL CLEARING BAL SHEET 23,200.05 CITY SHARE FICA 206945 1205028 9000.2111 ACCRUED FEDERAUFICA PAYROLL CLEARING BAL SHEET 7,504.30 EMPIOYEE MEDICARE 206945 120502B 9000.2111 ACCRUED FEDERAUFICA PAYROLL CLEARING BAL SHEET 7,504.3Q CITY SHARE MEDICARE 206945 1205028 9000.2111 ACCRUED FEDERAUFICA PAYROLL CLEARING BAL SHEET 105,746.90 20120539 5125/2072 100657 MN DEPT OF REVENUE 22,006.53 PAYROLL STATE TAX 206946 120502G 9000.2112 ACCRUED STATE W/H PAYROLL CLEARING BAL SHEET 22,006.53 20720540 6/1/2072 100000 MN DEPT OF REVENUE 69,900.00 SALES/USE TAX-JUNE EST TAX 206947 1000.2330 DUE TO OTHER GOVERNMENT GENERAL FUND BALANCE SHEET 69,900.00 20120541 6/1/2012 130957 GENESIS EMPLOYEE BENEFITS INC 363.49 FLEX SPENDING MEDICAL 2012 206948 120601 N 9000.2719 ACCRUED FLEX SPENDING PAYROLL CLEARING BAL SHEET 792.30 FLEX SPENDING DAYCARE 2012 206948 120601N 90002119 ACCRUED FLEX SPENDING PAYROLL CLEARING BAL SHEET 555.79 643,490.05 Grand Total Payment Instrument Totals Check Total 417,096.28 Transfer Total 202,383.09 ` , � Pay ModeX Total 24,010.68 Total Payments 643,490.05 �� ,� � � R55CKSUM l. d000 CITY OF APP +LLEY 5/3, ' 8:52:32 Council Check Summary Page - 1 5/24/2012 - 6/1/2012 Company Amount 01000 GENERAL FUND 298,785.00 02010 CABLE N RESERVE FUND 20.81 02055 POLICE SPECIAL PROJECTS FUND 28.83 04030 DAKOTA CTY CONSTRUCT PROJ FUND 489.24 04400 2008 CONSTRUCTION FUND 103J5 04600 ENG DEV REVIEW NON-REIMBURS 124.50 04710 TIF DIST#7-CAPITAL PROJECTS 2,525.68 04715 20121MPROVEMENTS 4,770.09 04900 PHYSICAL IMPROVEMENTS ESCROW F 4,061.95 04935 2007 PARK BOND FUND 108J2 0 05000 IIQUOR FUND 730.34 05100 GOLF FUND 192,047.55 05200 ARENA FUND 332.91 05300 WATER & SEWER FUND 6,253.97 05600 CEMETERY FUND LEVEL PROGRAM 623.62 07100 INSURANCE TRUST DENTAL FUND 4,173.87 09000 PAYROLL CLEARING FUND 128,309.22 Report Totals 643,490.05 R55CKREG L:lu20000 CITY OF APF. :LLEY 6/7/. + 9:22:03 Councii Check Pa9e' � 5/31/2012 -6/8/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledge Account Description Business Unit 821 6/8/2012 700049 BACHMAN'S 40.88 CEMETERY-TREES 00067228 206992 37483 5605.6740 CAPITAL OUTLAY-MACH/E�/OTHER CEMETERY 107.39 PK-FLATS OF FLOWERS 00069105 207186 50603038 1720.6229 GENERAL SUPPLIES PARK GROUNDS MAINTENANCE 148.27 822 61812012 123075 BOTACH TACTICAL 2,244.31 POL-FUJI POLICE BIKES (3) 00051117 207167 88178 2062.6211 SMALL TOOLS & EQUIPMENT POLICE CRIME 144.37- 00051117 207167 88178 2060.2330 DUE TO OTHER GOVERNMENT POLICE CRIME BALANCE SHEET 210.00 POL-PANTS 00066681 207182 87338 1200.6281 UNIFORM/CLOTHING ALLOWANCE POUCE MANAGEMENT 2,309.94 823 6l8/2012 700828 BREUER, SCOTT A 102.08 REC MILEAGE MAY 207297 6612 1700.6277 MILEAGE/AUTO ALLOWANCE PARK & RECREATION MANAGEMENT 102.08 824 6l8/2072 101329 CUMMINS NPOWER lLC 906.71 CH-PREVENTATIVE GEN. MAINT. 207165 10092955 1060.6266 REPAIRS-BUILDING MUNICIPAL BLDG & GROUNDS MNTC 906.71 825 618I2012 100976 DICK'S LAKEVIILE SANITATION IN 150.86 CH JUNE 207136 1388285 1060.6240 CLEANING SERVICElGARBAGE REMOVMUNICIPAL BLDG & GROUNDS MNTC 80.26 FIRE STA1 JUNE 207737 1388280 1340.6240 CLEANING SERVICE/GARBAGE REMOVFIRE BLDG & GROUNDS MNTC 34.22 FIRE STA 2 JUNE 207138 1388281 1340.6240 CLEANING SERVICE/GARBAGE REMOVFIRE BLDG 8 GROUNDS MNTC 34.56 FIRE STA 3 JUNE 207139 1388282 1340.6240 CLEANING SERVICE/GARBAGE REMOVFIRE BLDG & GROUNDS MNTC 486.19 CMF JUNE 207140 1388284 1540.6240 CLEANING SERVICE/GARBAGE REMOVCMF BUILDINGS & GROUNDS MNTC 316.65 AVCC JUNE 207141 1388283 1900.6240 CLEANING SERVICE/GARBAGE REMOVAV COMMUNITY CENTER 158.32 IA2 JUNE 2071d2 1388283 5265.6240 CLEANING SERVICE/GARBAGE REMOVARENA 2 BLDG MAINTENANCE-HAYES 57.76 REDWOOD JUNE 207143 1388286 1730.6240 C4EANING SERVICE/GARBAGE REMOVPARK BUILDING MAIN7ENANCE 70.45 LIQt JUNE 207144 1388278 5025.6240 CLEANING SERVICE/GARBAGE REMOVLIQUOR #1 OPERATIONS 76.07 LIQ2 JUNE 207145 1388279 5065.6240 CLEANING SERVICE/GARBAGE REMOVLIQUOR #2 OPERATIONS 46.80 LIQ3 JUNE 207146 1388290 5095.6240 CLEANING SERVICE/GARBAGE REMOVLIQUOR #3 OPERATIONS 229.32 TEEN CNTR JUNE 207147 1388289 1730.6240 CLEANING SERVICE/GARBAGE REMOVPARK BUILDING MAINTENANCE 205.40 GOLF JUNE 207a48 1388288 5145.6240 CLEANING SERVICE/GARBAGE REMOVGOLF SHOP BUILDING MAINTENANCE 100.00 UTIL COMPOST RENTAL MAY 49074 207149 1388291 5375.6240 CLEANING SERVICE/GARBAGE REMOVSEWER MAINTENANCE AND REPAIR 1.56.59 JCR PK JUNE 207150 1388287 1730.6240 CLEANING SERVICE/GARBAGE REMOVPARK BUILDING MAINTENANCE 33.16 VM JUNE 207151 1387544 1730.6240 CLEANING SERVICE/GARBAGE REMOVPARK BUILDING MAINTENANCE 77.36 QP JUNE 207152 1389301 1730.6240 CLEANING SERVICE/GARBAGE REMOVPARK BUILDING MAINTENANCE 2,313.97 826 618/2012 138812 DIMENSIONAL GROUP, THE 9,493.71 REGSUMMER CITY NEWSLETTER 00051022 207210 INVOOD32126 1700.6239 PRINTING PARK & RECREATION MANAGEMENT 10,436.34- REC-SUMMER NEWSLETTER-CREDQD051022 207211 RTN0001029 1700.6239 PRINTING PARK & RECREATION MANAGEMENT R55CKREG LOG2000Q CITY OF APPLE VALLEY 6/7l2012 9:22:03 Council Check Register Page - 2 5/31/2012 —6/8/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledge Account Description Business Unit 10,436.34 REC-SUMMER CITY NEWSLETTER 00051022 207212 INV00031797 1700.6239 PRINTING PARK 8 RECREATION MANAGEMENT 9,493.71 827 61812012 101571 FARMERS MILL 8 ELEYATOR INC 113.23 STR-PESTICIDE 00069057 207173 WCO27480 1610.6214 CHEMICALS STREET/80ULEVARD REPAIR & MNTC 3,614.15 PK-FERTILIZER 00050769 207195 37272 1720.6213 FERTILIZER PARK GROUNDS MAINTENANCE 3,504.63 PK-FERTILIZER 00050769 207196 37205 1720.6213 FERTILIZER PARK GROUNDS MAINTENANCE 7,232.01 828 6/8I2012 114009 FIRE EQUIPMENT SPECIALTIES INC 482.95 FIRE-NAME PANELS 207006 7531 1330.6281 UNIFORM/CLOTHING ALLOWANCE FIRE OPERATIONS 1,109.75 FIRE-TURNOUT COAT 207007 7536 1330.6281 UNIFORM/CLOTHING ALLOWANCE FIRE OPERATIONS 1,592.70 829 61812072 100216 GRAFIX SHOPPE 1,090.00 FIRE-REFLECTIVE KITS #4972,497 00051124 207179 81005 1350.6730 CAPITAL OUTLAY-TRANSPORTATION FIRE VEHICLE MAINTENANCE 1,090.00 830 61812012 100217 GRAINGER 39.41 CH-RPIC BRUSH HEADS 68218 207283 9839312734 1060.6229 GENERAL SUPPLIES MUNICIPAL BLDG 8 GROUNDS MNTC 17.40 UTIL-COUPLING 67434 207284 9828715335 5330.6229 GENERAL SUPPLIES WTR MAIN/HYDRANT/CURB STOP MNT 5.11 UTIL-COUPLING 67434 207285 9829715698 5330.6229 GENERAL SUPPLIES WTR MAIN/HYDRANT/CURB STOP MNT 229.73 UTIL-PIPES 67434 207286 9830002391 5330.6229 GENERAL SUPPLIES WTR MAIN/HYDRANT/CURB STOP MNT 291.65 831 618/2072 101169 HAWKINS INC 1,872.17 POOL-CHLORINATOR HEAD, VALVE00051105 207178 3342038 1930.6229 GENERAL SUPPLIES REDWOOD POOL 1,872.17 832 61812012 101794 INFRATECH 501.60 UTIL-VACTRAP W/COVER #401 207183 1200221 5375.6215 EQUIPMENT-PARTS SEWER MAINTENANCE AND REPAIR 501.60 833 618/2012 707077 INTOXIMETERS 146.37 POL-MOUTHPIECES 00067532 207185 362609 1210.6211 SMALL TOOLS & EQUIPMENT POLICE FIELD OPERATIONSlPATROL 146.37 `834 `61812072 131791 IRRIGATION BY DESIGN INC 162.15 PK-IRRIG RPR COBBLESTONE 00049633 207001 137350 1720.6249 OTHER CONTRACTUAL SERVICES PARK GROUNDS MAINTENANCE 147.96 PK-IRRIG RPR COBBLESTONE 00049833 207002 137345 1720.6249 OTHER CONTRACTUAL SERVICES PARK GROUNDS MAINTENANCE 310.11 ` CITY OF APF,. ,LLEY 6/7/: 9;22:03 R55CKREG Cv�20000 `-" Council Check Register Page - 3 5/31/2012 -6/8/2012 Check # Date Amount Suppiier / Explanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 835 6I8/2012 101696 LAW ENFORCEMENT LABOR SERV 1,554.00 POL UNION DUES #71 207319 606128081410 9000.2120 ACCRUED BENEFIT LIABILITY PAYROLL CLEARING BAL SHEET 1,554.00 836 6I812012 100279 LAW ENFORCEMENT LABOR SERVICES 336.00 SGT UNION DUES #243 207325 60612808142 9000.2120 ACCRUED BENEFIT LIABIUTY PAYROLL CLEARING BAL SHEET 336.00 837 6I8f2012 138249 MiNNESOTA ENVIRONMENTAL FUNO 45.50 MINNESOTA ENVIRONMENTAL FUND 207324 606128081415 9000.2120 ACCRUED BENEFIT LIABIUTY PAYROLL CLEARING BAL SHEET 45.50 838 6/8/2012 118834 OPEN YOUR HEART 125.50 OPEN YOUR HEART DEDUCTION 207320 606128081411 9000.2120 ACCRUED BENEFIT LIABILITY PAYROLL CLEARING BAL SHEET 125.50 839 6/8I2092 103014 PADGETT, MARCIE D 112.82 REC MILEAGE MAY 207296 6612 1700.6277 MILEAGE/AUTO ALLOWANCE PARK & RECREATION MANAGEMENT 112.82 840 6I8I2012 703192 SPRINT 17.57 CH MOBILE PHONE APR 207129 233995425100 1060.6237 TELEPHONElPAGERS MUNICIPAL BLDG & GROUNDS MNTC 7028 INSP MOBILE PHONE APR 207130 233995425100 1400.6237 TELEPHONE/PAGERS INSPECTIONS MANAGEMENT 34.27 ENG MOBILE PHONE APR 207131 233995425100 1510.6237 TELEPHONE/PAGERS PW ENGINEERING & TECHNICAL 1,242.24 POL MOBILE PHONE APR 207132 732773312126 1200.6237 TELEPHONE/PAGERS POLICE MANAGEMENT 59.36 POL CELL PHONE EQ 207133 732773312126 1200.6211 SMALL TOOLS & EQUIPMENT POLICE MANAGEMENT 223.55 FIRE MOBILE PHONE APR 207134 691466141068 1300.6237 TELEPHONE/PAGERS FIRE MANAGEMENT 8.66 1T MOB{LE PFVONE APR 47543 207135 826258817054 1030.6237 TELEPHONE/PAGERS INFORMATION TECHNOLOGY 1,655.93 841 6I8t2012 142722 STANTEC CONSULTING SERVICES, I 28.75 2012 LONG LAKE RETROFIT BMP'S 207303 588588 5552.6235 2011143D CONSULTANT SERVICES CONSTRUCTION PROJECTS 2,805.25 TRK STMS SEWER ANALYSIS 207304 588588 5505.6235 2012134G CON5UlTANT SERVICES STORM DRAIN UTILITY 3,542.25 WELL NO. 20 PUMPING FACIIITY 207305 588589 5360.6235 2011113W CONSULTANT SERVICES CONSTRUCTION PROJECTS 7,689.25 SANIT UFT STN #2 REPLCMNT 207306 588590 5360.6235 2011108S CONSULTANT SERVICES CONSTRUCTION PROJECTS 380.55 2012 STREET MAINTENANCE 207307 588591 2027.6235 2012104R CONSUITANT SERVICES ROAD ESCROW 172.50 PENNOCK SHORES POND FLOOD MITI 207308 588595 5505.6235 2010138D CONSULTANT SERVICES STORM DRAIN UTILITY 1,200.00 UTILITY MAP & INFRASEEK 207309 588596 5305.6235 CONSULTANT SERVICES WATER MGMT/REPORT/DATA ENTRY 480.55 GPS CONSTRUCTION SURVEY 207310 588597 5190.6235 2011137G CONSULTANT SERVICES GOLF CLUBHOUSE CONSTRUCTION 3,750.25 2012 LONG LAKE RETROFIT BMP'S 207311 588598 5552.6235 2011143D CONSULTANT SERVICES CONSTRUCTION PROJECTS 2,944,45 CBL LAKE SOUTH SHORE 6TH 2O7312 588599 4502.6235 2011148G CONSULTANT SERVICES CONSTRUCTION PROJECTS 22,993.80 R55CKREG LOG20000 CITY OF APPLE VALLEY 6/7/2012 9:22:03 Council Check Register Page - 4 5/31/2012 -6/8/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledge Account Description Business Unit 842 6/8/2012 700566 TITLEIST 1,644.00 GOLF BALLS 207110 613451 5115.6412 GOLF-BALLS GOLF PRO SHOP 116.20 GOLF FREIGHT 207111 613451 5115.6424 GOLF FREIGHT ON RESALE MDSE GOLF PRO SHOP 1,998.00 GOLF BALLS 207112 625518 5115.6412 GOLF-BALLS GOLF PRO SHOP 47.62 GOLF FREIGHT 207113 625518 5115.6424 GOLF FREIGHT ON RESALE MDSE GOLF PRO SHOP 222.00 GOLF BALLS 207114 638738 5115.6412 GOLF-BALLS GOLF PRO SHOP 8.60 GOLF FREIGHT 207115 638738 5115.6424 GOLF FREIC�HT ON RESALE MDSE GOLF PRO SHOP 4.50- GOLF DISCOUNT 00068723 207180 658693 5115.6423 GOLF-CASH DISCOUNT GOLF PRO SHOP 8.53 GOLF FREIGHT 00068723 207180 658693 5115.6424 GOLF FREIGHT ON RESALE MDSE GOLF PRO SHOP 225.00 GOLF PUTTER 00068723 207180 658693 5115.6414 GOLF-CLUBS GOLF PRO SHOP 4.51- GOLF DISCOUNT 207293 675929 5115.6423 GOLF-CASH DISCOUNT GOLF PRO SHOP 8.53 GOLF FREIGHT 207293 675929 5115.6424 GOLF FREIGHT ON RESALE MDSE GOLF PRO SHOP 225,00 GOLF PUTTER 207293 675929 5115.6414 GOLF-CLUBS GOLF PRO SHOP 4,494.47 843 6/8/2012 137686 TOWMASTER 12,350,48 STR-ANTI-ICE SYSTEM FOR #322 00051045 207205 339209 1665.6215 EQUIPMENT-PARTS STREET SNOW & ICE MATERIALS 12,350.48 844 6/8/2012 700496 VAN PAPER CO 227.54 BAGS#1 8795 207046 237283 5025.6229 GENERAL SUPPLIES LIQUOR #1 OPERATIONS 2.28- DISCT#1 8795 207047 237283 5025.6333 GENERAL-CASH DISCOUNTS IIQUOR #1 OPERATIONS 225.26 845 6/812012 100834 VERSATILE VEHICLES INC 506.59 GOLF-LEASED REFRESHER CART-MAY 207209 &1109 5120.6310 RENTAL EXPENSE GOLF KITCHEN 506.59 846 618/2012 100498 VIKING INDUSTRIAL CENTER 444.04 UTIL-OXYGEN SENSORS 00035251 207192 297639 5375.6211 SMALL TOOLS & EQUIPMENT SEWER MAINTENANCE AND REPAIR 444.04 847 B/812072 119627 WILSKE, JOSHUA J 11.51 IT MILEAGE MAY 207172 6612 1030.6277 MI�EAGE/AUTO ALLOWANCE INFORMATION TECHNOLOGY 11.51 � 848 � 61812012 100528 ZIEGLERINC 1,191.66 FIRE-RPR GENERATOR AFS1 207175 SW050182641 1340.6215 EQUIPMENT-PARTS FIRE BLDG & GROUNDS MNTC 1,191.66 247390 6/61� 143116 ISAACSON, BENJAMIN R55CKREG `c�v20000 CITY OF APF .LLEY 6/7/: 9:22:03 Council Check Register Page - 5 5/31/2012 -6/8/2012 Check # Date Amount Suppiier / Explanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 114.00 REF OVPYMT UTIL 15838 GRIFFON 206980 5301.4997 WATER/SEWER ACCT REFUNDS WATER & SEWER FUND REVENUE 114.00 247391 6/612012 143116 LUNA � LUNA LLP 261.39 REF OVPYMT UTIL 13195 FLAGSTAF 206981 5301.4997 WATERlSEWER ACCT REFUNDS WATER & SEWER FUND REVENUE 261.39 247392 6/6/2012 1A3117 REYES, JAMES . 58.10 REF OVPYMT UTIL 14305 ESTATES 206982 5301.4997 WATER/SEWER ACCT REFUNDS WATER & SEWER FUND REVENUE 58.10 247393 6/6/2012 137905 S& S RENOVATIONS 16.70 REF OVPYMT UTIL 13446 FERNAN00 206983 5301.4997 WATER/SEWER ACCT REFUNDS WATER & SEWER FUND REVENUE 16J0 247394 6!6/2072 143718 3WENSON, RYAN 19.98 REF OVPYMT UTIL 13990 HOLYOKE 206984 5301.4997 WATER/SEWER ACCT REFUNDS WATER 8 SEWER FUND REVENUE 19.98 247395 6/6/2012 143119 TEGELER, WAYNE 12.96 REF OVPYMT UTIL 14292 FREEPORT 206885 5301.4997 WATER/SEWER ACCT REFUNDS WATER 8 SEWER FUND REVENUE 12.96 247396 6/6/2012 143720 TOLLEFSON, RICHARD 25.00 REF OVPYMT UTIL 937 BEACON LN 206986 5301.4997 WATER/SEWER ACCT REFUNDS WATER & SEWER FUND REVENUE 25.00 247397 6/6/2012 143723 BOOM ISLAND BREWING COMPANY, L 928.00 BEER#3 51132 207107 167 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 928.00 247398 6!6/2072 100799 GETTMAN MOMSEN INC 92.12 TAX#1 24781 207017 18308 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 72.03 TAX#2 24781 207018 18311 5055.6540 TAXABLE MISC FOR RESALE LIQUOR #2 STOCK PURCHASES 148.51 TAX#3 24781 207019 18309 5085.6540 TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 312.66 247399 6I6I2072 143122 JACQ LLC 708.90 TAX#1 51127 207108 H10394 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 474.21 TAX#3 51127 207109 H10393 5085.6540 TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 583.11 R55CKREG LOG20000 CITY OF APPLE VALLEY 6/7/2012 9:22:03 Council Check Register Page - 6 5/31/2012 -6/8/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 247400 6/6/2012 100255 JOHNSON BROTHERS LIQUOR 1,738.36 WINE#1 109 207057 1297853 5015.6520 VNNE LIQUOR #1 STOCK PURCHASES 2,065.22 WINE#1 109 207058 1297855 5015.6520 WINE LIQUOR #1 STOCK PURCHASES 3,319.20 WINE#1 109 20�059 1297858 5015.6520 WINE LIQUOR #1 STOCK PURCHASES 465.10 WINE#1 109 207060 1303223 5015.6520 WINE LIQUOR #1 STOCK PURCHASES 351.00 WINE#1 109 207061 7303226 5015.6520 WINE LIQUOR #1 STOCK PURCHASES 1,942.89 WINE#1 109 207062 1303228 5015.6520 WINE LIQUOR #1 STOCK PURCHASES 1,687.83 WINE#2 109 207063 1297859 5055.6520 VNNE LIQUOR #2 STOCK PURCHASES 1,448.44 WINE#2 109 207064 1297862 5055.6520 WINE LIQUOR #2 STOCK PURCHASES 700.60 VNNE#2 109 207065 1297863 5055.6520 WINE LIQUOR #2 STOCK PURCHASES 749.18 WINE#3 109 207066 1297864 5085.6520 WINE LIQUOR #3 STOCK PURCHASES 907.48 WINE#3 109 207067 1297865 5085.6520 WINE UQUOR #3 STOCK PURCHASES 993.80 VNNE#3 109 207068 1297869 5085.6520 WINE LIQUOR #3 STOCK PURCHASES 1,165.50 WINE#3 109 207069 1303235 5085.6520 VNNE LIQUOR #3 STOCK PURCHASES 624.30 WINE#3 109 207070 1303237 5085.6520 WINE LIQUOR #3 STOCK PURCHASES 4.33- CMWINE#1 109 207071 534318 5015.6520 WINE LIQUOR #1 STOCK PURCHASES 9.65- CMWINE#1 109 207072 534319 5015.6520 WINE LIQUOR #1 STOCK PURCHASES 6.00- CMVNNE#2 109 207073 534320 5055.6520 VNNE LIQUOR #2 STOCK PURCHASES 24.12- CMWINE#2 109 207074 534321 5055.6520 WINE LIQUOR #2 STOCK PURCHASES 4.83- CMVNNE#2 109 207075 534322 5055.6520 WINE LIQUOR #2 STOCK PURCHASES 41.60- CMWINE#2 109 207076 534323 5055.6520 WINE LIQUOR #2 STOCK PURCHASES 8.96- CMWINE#3 109 207077 534324 5085.6520 WINE LIQUOR #3 STOCK PURCHASES 22.04- CMWINE#3 109 207078 534326 5085.6520 WINE LIQUOR #3 STOCK PURCHASES 3.89- CMWINE#3 109 207079 534328 5085.6520 WINE LIQUOR #3 STOCK PURCHASES 314.85 BEER#1 109 207080 1303224 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 20;99 BEER#2 109 207081 1297860 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 83.96 BEER#3 109 207082 1297866 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 371.00 TAX#1 109 207083 1303216 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 72.00 TAX#1 109 207084 1303225 5015.6540 TAXAB�E MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 16.00 NOTAX#1 109 207085 1303225 5015.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 36.00 TAX#3 109 207086 1297867 5085.6540 TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 64.50 TAX#3 109 207087 1303233 5085.6540 TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 1,972.14 LIQ#1 109 207088 1297854 5015.6510 LIQUOR LIQUOR #1 STOCK PURCHASES 39,114.56 LIQ#1 109 207089 1303215 5015.6510 LIQUOR LIQUOR #1 STOCK PURCHASES 114.55 LIQ#1 109 207090 1303217 5015.6510 LIQUOR LIQUOR #1 STOCK PURCHASES 2,292.12 LIQ#1 109 207091 1303222 5015.6510 LIQUOR LIQUOR #1 STOCK PURCHASES 5,686.91 LIQ#1 109 207092 1303227 5015.6510 LIQUOR LIQUOR #1 STOCK PURCHASES � 947.70 LIQ#1 109 207093 1304226 5015.6510 LIQUOR UQUOR #1 STOCK PURCHASES 983.00 LIQ#1 109 207094 1304379 5015.6510 LIQUOR LIQUOR #1 STOCK PURCHASES 197.74 LIQ#2 109 207095 1297861 5055.6510 LIQUOR LIQUOR #2 STOCK PURCHASES __ 12,071.69 LIQ#2 109 207096 1303229 5055.6510 LIQUOR LIQUOR #2 STOCK P� �RCHASES r R55CKREG `'c�,.i20000 CITY OF APF iLLEY 6R� 922:03 Council Check Register Page' � 5/31/2012 -6l8/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No ` Account No Subledge Account Description Business Unit 1,014.12 LIQ#2 109 207097 1303230 5055.6510 LIQUOR LIQUOR #2 STOCK PURCHASES 561.54 LIQ#2 109 207098 1303231 5055.6510 LIQUOR LIQUOR #2 STOCK PURCHASES 320.25 UQ#2 109 207099 1304380 5055.6510 LIQUOR LIQUOR #2 STOCK PURCHASES 230.49 LIQ#3 109 207100 1297868 5085.6510 LIQUOR iIQUOR #3 STOCK PURCHASES 229.10 LIQ#3 109 207101 1303221 5085.6510 LIQUOR LIQUOR #3 STOCK PURCHASES 13,553.92 LIQ#3 109 207102 1303232 5085.6510 LIQUOR LIQUOR #3 STOCK PURCHASES 292.00 LIQ#3 109 207103 1303234 5085.6510 LIQUOR LIQUOR #3 STOCK PURCHASES 796.82 LIQ#3 109 207104 1303236 5085.6510 LIQUOR LIQUOR #3 STOCK PURCHASES 320.25 LIQ#3 109 207105 1304381 5085.6510 LIQUOR LIQUOR #3 STOCK PURCHASES 8.58- CMLIQ#3 109 207106 534327 5085.6510 LIQUOR LIQUOR #3 STOCK PURCHASES 99,703.10 247401 6/6I2012 100372 PAUSTIS d� SONS 39.00 WINE#1 paying back decided 1291 207048 8344432 5015.6520 WINE LIQUOR #1 STOCK PURCHASES 125 FREIGHT#1 paying back decided 1291 207049 8344432 5015.6550 FREIGHT ON RESALE MDSE LIQUOR #1 STOCK PURCHASES 4,146.01 WINE#1 1291 207050 8350228 5015.6520 WINE LIQUOR #1 STOCK PURCHASES 57.50 FREIGHT#1 1291 207051 8350228 5015.6550 FREIGHT ON RESALE MDSE LIQUOR #1 STOCK PURCHASES 1,776.00 WINEt�2 1291 207052 8350227 5055.6520 WINE LIQUOR #2 STOCK PURCHASES 25.00 FREIGHT#2 1297 207053 8350227 5055.6550 FREIGHT ON RESALE MDSE LIQUOR #2 STOCK PURCHASES 5,228.65 WINE#3 1291 207054 8350226 5085.6520 WINE LIQUOR #3 STOCK PURCHASES 73.75 FREIGHT#3 1291 207055 8350226 5085.6550 FREIGHT ON RESALE MDSE LIQUOR #3 STOCK PURCHASES 240.00 BEER#3 1291 207056 8351521 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 11,587.16 247402 61612072 100521 WINE MERCHANTS 2 VNNE #1 22992 207009 407504 5015.6520 WINE LIQUOR #1 STOCK PURCHASES 1,952.00 WINE #1 22992 207010 409370 5015.6520 WINE LIQUOR #1 STOCK PURCHASES 285.75 WINE #1 22992 207011 410309 5015.6520 WINE LIQUOR #1 STOCK PURCHASES 3.18 WINE #2 22992 207012 405512 5055.6520 VNNE IIQUOR #2 STOCK PURCHASES 1,040.00 WINE #2 22992 207013 407505 5055.6520 WINE LIQUOR #2 STOCK PURCHASES 919.25 VNNE #2 22992 207014 409371 5055.6520 WINE LIQUOR #2 STOCK PllRCHASES 1,588.00 WINE#3 22992 207015 407506 5085.6520 WINE LIQUOR #3 STOCK PURCHASES 991J5 WINE#3 22992 207016 409372 5085.6520 WINE LIQUOR #3 STOCK PURCHASES 9,395.68 247403 6/6I2012 700219 WIRTZ BEVERAGE MINNESOTA WINE 98.28 TAX#1 105 207020 749911 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 130.20 NOTAX#1 105 207021 749911 5015.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 8.05 FREIGHTlk1 105 207022 749911 5015.6550 FREIGHT ON RESALE MDSE LIQUOR #1 STOCK PURCHASES 33.38 TAX#2 105 207023 746691 5055.6540 TAXABLE MiSC FOR RESALE LIQUOR #2 STOCK PURCHASES 1.15 FREIGHT#2 105 207024 746691 5055.6550 FREIGHT ON RESALE MDSE LIQUOR #2 STOCK PURCHASES 34.16 TAX#2 105 207025 749907 5055.6540 TAXABLE MISC FOR RESALE LIQUOR #2 STOCK PURCHASES CITY OF APPLE VALLEY 6/7/2012 9:22:03 R55CKREG LOG20000 Council Check Register Pa98 " $ 5/31/2012 -6/8/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 33.38 NOTAX#2 105 207026 749907 5055.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #2 STOCK PURCHASES 2.30 FREIGHTfk2 105 207027 749907 5055.6550 FREIGHT ON RESALE MDSE LIQUOR #2 STOCK PURCHASES 34.16 TAX#3 105 207028 749898 5085.6540 TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 81.86 NOTAX#3 105 207029 749898 5085.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 4.60 FREIGHT#3 105 207030 749898 5085.6550 FREIGHT ON RESALE MDSE LIQUOR #3 STOCK PURCHASES 356.00 LI�#1 105 207031 746693 5015.6510 LI�UOR LIQUOR #1 STOCK PURCHASES 3.45 FREIGHT#1 105 207032 746693 5015.6550 FREIGHT ON RESALE MDSE LIQUOR #1 STOCK PURCHASES 8,698.46 LIQ#1 105 207033 749910 5015.6510 LIQUOR LIQUOR #1 STOCK PURCHASES 82.80 FREIGHT#1 105 207034 749910 5015.6550 FREIGHT ON RESALE MDSE LIQUOR #1 STOCK PURCHASES 178.37 LIQ#1 105 207035 750727 5015.6510 LIQUOR LIQUOR #t STOCK PURCHASES 2,787.73 LIQ#2 105 207036 749906 5055.6510 LIQUOR LIQUOR #2 STOCK PURCHASES 24.15 FREIGHT#2 105 207037 749906 5055.6550 FREIGHT ON RESALE MDSE LIQUOR #2 STOCK PURCHASES 120.00 LIQ#3 105 207038 746277 5085.6510 LIQUOR LIQUOR #3 STOCK PURCHASES 1.15 FREIGHT#3 105 207039 746277 5085.6550 FREIGHT ON RESALE MDSE LIQUOR #3 STOCK PURCHASES 5,356.21 LIQ#3 105 207040 749897 5085.6510 LIQUOR LIQUOR #3 STOCK PURCHASES 42.55 FREIGHT#3 105 207041 749897 5085.6550 FREIGHT ON RESALE MDSE LIQUOR #3 STOCK PURCHASES 5.50- CMLIQ#1 105 207042 860249 5015.6510 LIQUOR LIQUOR #1 STOCK PURCHASES 3.00- CMLIQ#2 105 207043 860260 5055.6510 LIQUOR LIQUOR #2 STOCK PURCHASES 65.90- CMLIQ#3 105 207044 859777 5085.6510 LIQUOR LIQUOR #3 STOCK PURCHASES 1.15- CMFREIGHT#3 105 207045 859777 5085.6550 FREIGHT ON RESALE MDSE LIQUOR #3 STOCK PURCHASES 18,036.84 247404 6/6/2072 701060 BONE, BRIAN A 10.17 POL STRESS WRKSHP EXP 207161 6612 1225.6275 SCHOOLS/CONFERENCES/EXP LOCAL POLICE TRAINING 10.17 247405 6I6/2012 100620 GLEWVYE, RICHARD R 31.98 PK-JEANS 207174 1710.6281 UNIFORMlCLOTHING ALLOWANCE PARK MAINTENANCE MANAGEMENT 31.98 247406 6/612072 143724 HOUSE, ALICE 140.00 POL NOTARY FEES 207162 6612 1205.6280 DUES & SUBSCRIPTIONS POLICE RECORDS UNIT 140.00 247407 6I6/2012 127557 JENSEN, JOSH D 60.00 UTIL-JEANS 206996 5365.6281 UNIFORM/CLOTHING ALLOWANCE SEWER MGMT/REPORTS/DATA ENTRY 60.00 247408 6/6I2072 702293 SKINNER, STEPHAN C 238.05 REC MILEAGE MARCH/APRIL 207163 6/6H2 1700.6277 MILEAGE/AUTO ALLOWANCE PARK & RECREATION MANAGEMENT 238.05 � CITY OF APF- ,LLEY 6/7!. ' 9:22:03 R55CKREG COia20000 °°-` Council Check Register Page - 9 5/31/2012 -6/8/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Acwunt No Subledge Account Description Business Unit 247409 616I2012 117062 WEISS, TODD R 54.39 REC MILEAGE MAY 207295 6612 1700.6277 MILEAGE/AUTO ALLOWANCE PARK & RECREATION MANAGEMENT 54.39 247410 6/6I2012 700529 ZINCK, JAMES R 87.69 GOLF MILEAGE MAY 207171 6612 5105.6277 MILEAGE/AUTO ALLOWANCE GOLf MANAGEMENT 87.69 247411 6l6/2012 774540 ALEX AIR APPARATUS INC 475.00 FIRE-AIR QUALITY TEST 206994 21709 133�.6265 REPAIRS-EQUIPMENT FIRE OPERATIONS 475.00 247412 6/6/2012 779272 AMERICAN GLASS & MIRROR 395.00 AVCC-RPLC BROKEN WINDOW, GAME 2D6998 A0303637 1900.6266 REPAIRS-BUILDING AV COMMUNI7Y CENTER 395.00 247413 6l6/2072 700072 BRAUN INTERTEC CORPORATION 568.00 NR-WATER SAMPLES 00047796 207194 1201875 5505.6235 CONSULTANT SERVICES STORM DRAIN UTILITY 568.00 247414 6/612012 122460 BRYAN ADVERTISING CO 146.84 LIQ3-SHIRTS 00065886 207181 37749 5095.6281 UNIFORM/CLOTHING ALLOWANCE LIQUOR #3 OPERATIONS 54.09 LIQ2-SHIRTS 00067065 207202 37749 5065.6281 UNIFORM/CLOTHING ALLOWANCE LIQUOR #2 OPERATIONS 200.93 247416 6l6/2012 100726 BUG BUSTERS INC 97.26 AVCC-PEST CONTROL-MAY 00035323 207206 82370 1900.6249 OTHER CONTRACTUAL SERVICES AV COMMUNITY CENTER 97.26 247416 6l6/2012 137689 BUSHNELL OUTDOOR PRODUCTS 571.82 GOLF RANGE FINDERS 207116 776915 5115.6418 GOLF-PRO SHOP OTHER GOLF PRO SHOP 5.72- GOLF DISCOUNT 207117 776975 5715.6423 GOLF-CASH DISCOUNT GOLF PRO SHOP 1,743.31 GOLF RANGE FINDERS 207118 750658 5115:6418 GOLF-PRO SHOP OTHER GOLF PRO SHOP 877.85 GOLF RANGFINDERS 207119 759388 5115.6418 GOLF-PRO SHOP OTHER GOLF PRO SHOP 8.03 GOLF FREIGHT 207120 759388 5115.6424 GOLF FREIGHT ON RESALE MDSE GOLF PRO SHOP 3,195.29 247417 6/6/2012 739117 CENTRAL TURF 8� IRRIGATION SUPP, 1,053.80 GOLF-IRRIG SUPPLIES 00050452 207003 50275'6300 5160.6215 EQUIPMENT-PARTS GOLF IRRIGATION MAINTENANCE 1,053.80 247418 6l6/2012 138614 CHRIST CHURCH R55CKREG LOG20000 CITY OF APPLE VALLEY 6/7/2012 9:22:03 Council Check Register Page - 10 5/31/2012 -6l8/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledge Account Description Business Unit 21.43 POL-PIZZA FOR CHAPLAIN GROUP 206988 1225.6275 SCHOOLS/CONFERENCES/EXP LOCAL POLICE TRAINING 21.43 247419 6I6@012 100100 CNH ARCHITECTS 1,000.00 LIQ1-DESIGN WORK 206993 9381 5025.6740 CAPITAL OUTLAY-MACH/EQ/OTHER LIQUOR #1 OPERATIONS 1,000.00 247420 616/2072 122019 CROWN RENTAL CO INC 10.67 PK-FLASHLIGHT #227 00047286 206989 1236751 1770.6229 GENEf2Al SUPPLlES PARK GENERAL MAINTENANCE 160.05 PK-WEED VNiIP HEADS 00047286 206989 1236751 7715.6215 EQUIPMENT-PARTS PARK ATHLETIC FIELD MAINTENANC 170.72 247421 6/6/2072 100139 DAKOTA COUNTY LICENSE CENTER 41.50 UTIL LIClREG'12 CHEV 4X4 PICK 51053 207269 5305.6215 EQUIPMENT-PARTS WATER MGMT/REPORT/DATA ENTRY 41.50 UTIL LIC/REG'12 CHEV 4X4 PICK 51053 207270 5365.6215 EQUIPMENT-PARTS SEWER MGMT/REPORTS/DATA ENTRY 1,596.49 UTIL SALES TAX-'12 CHEV 4X4 PI 51053 207271 5305.6730 CAPITAL OUTLAY-TRANSPORTATION WATER MGMT/REPORT/DATA ENTRY 1,596.49 UTIL SALES TAX-'12 CHEV 4X4 PI 51053 207272 5365.6730 CAPITAL OUTLAY-TRANSPORTATION SEWER MGMT/REPORTS/DATA ENTRY 3,275,98 247422 61612012 729764 DAKOTA COUNTY TREASURER-AUDITO " 2,070.14 POL-RADIOS-APRIL 207218 APR12 1200.6280 DUES & SUBSCRIPTIONS POLICE MANAGEMENT 93.04 P1A�RADIOS-APRIL 207219 APR12 1500.6249 OTHER CONTRACTUAL SERVICES PW MANAGEMENT 1,465.38 FIRE-RADIOS-APRIL 207220 ' APR12 1300.6249 OTHER CONTRACTUAL SERVICES FIRE MANAGEMENT 3,628.56 247423 61612012 100128 DAKOTA ELECTRIC ASSOCIATION 905.22 GOLF CLUBHSE/SEC LT 207262 27316 5110.6255 UTILITIES-ELECTRIC GOLF CLUBHOUSE BUILDING 290.81 GOLF MAINTENANCE BLDG 207263 27316 5145.6255 UTILITIES-ELECTRIC GOLF SHOP BUILDING MAINTENANCE 137.36 QUARRY POINT WATER TOWER 207264 27316 5320.6255 UTILITIES-ELECTRIC WATER WELUBOOSTER STN MNTlRPR 92.52 VALLEYWOOD RESERVOIR 207265 27316 5320.6255 UTILITIES-ELECTRIC WATER WELUBOOSTER STN MNT/RPR 793.35 STREET LIGHTS 207266 27316 5805.6545 NON-TAXABLE MISC FOR RESALE STREET LIGHT UTILITY FUND 144.22 LIFT STN STRM SWR GALAXIE 207267 27316 5385.6255 UTILITIES-ELECTRIC SEWER STORM INFRASTRUCTURE 40.27 GALAXIElFOUNDER LN SPRINKLER 207268 27316 1610.6255 UTILITIES-ELECTRIC STREET/BOULEVARD REPAIR & MNTC 2,403.77 247424 6l6/2012 100434 DOUGHERTY MOLENDA SOLFEST HILL 23,547.00 POL-LEGAL SERVICE-JUNE 207216 66112720612 1055.6231 LEGAL SERVICES LEGAL PROSECUTING ATTORNEY ' ' 12,148.00 GEN LEGAL SERVICE-JUNE 207217 66112730612 1050.6231 LEGAL SERVICES LEGAL GENERAL SERVICES 35,695.00 247425 6I6/2072 147522 DR COMFORT _ 5.00 GOLF SOCKS 00068725 207294 3544119 ? 5115.6413 GOLF-CAPS/HATS/CLOTHING GOLF PRO SHOP R55CKREG Lz.�20000 CITY OF APP:, �LEY 6/7/. '9:22:03 Council Check Register Page - 11 5/31/2012 -6/8/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 5.00 GOLF FRE�GHT 00068725 207294 3544119 5115.6424 GOLF FREIGHT ON RESALE MDSE GOLF PRO SHOP 10.00 247426 6/6/2012 100151 EAGAN, CITY OF 9,977.45 SAN SEWER 2ND QUARTER 2012 207351 5365.fi318 BURNSVILLE/EAGAN SWR REIMBURSESEWER MGMT/REPORTS/DATA ENTRY 9,977.45 247427 6/612012 139034 FAIRCON SERVICE COMPANY 452.42 GOLF-RPR ICE MACHlNE 207203 49537 5110.6265 REPAIRS-EQUIPMENT GOLF CLUBHOUSE BUILDING 452.42 247428 6IBI2012 100176 FLEXIBLE PIPE TOOL 574.90 UTIL-MECH. ROOT CUTTER RPR. 207164 15269 5390.6265 REPAIRS-EQUIPMENT SWR EQUIPNEHICLE MISC MNTC/RP 574.90 247429 6I6I2012 100180 FOOTJOY 216.00 GOLF SOCKS 207334 4205507 5115.6413 GOLF-CAPS/HATS/CLOTHING GOIF PRO SHOP 12.27 GOLF FREIGHT 207335 4205507 5115.6424 GOLF FREIGHT ON RESALE MDSE GOIF PRO SHOP 10.80- GOLF DISCOUNT 207336 4205507 5115.6423 GOLF-CASH DISCOUNT GOLF PRO SHOP 277.47 247430 6I6/2012 100548 FORKLIFTS OF MINNESOTA, INC 726.56 AVCC-FLOOR MACHINE RPR 207184 1S2593100 1900.6265 REPAIRS-EQUIPMENT AV COMMUNITY CENTER 726.56 247437 6/6/2012 129789 GENERAL SECURITY SERVICES CORP 12.83 PK-MONITORING SVC-REDWOOD-JUNE 207208 266512 1730.6249 OTHER CONTRACTUAL SERVICES PARK BUILDING MAINTENANCE 12.83 247432 6l6/2012 112352 GREG LESSMAN SALES 7.19 GOLF GRIPS 00066463 207159 47072 5115.6424 . GOLF FREIGHT ON RESALE MDSE GOLF PRO SHOP 33.90 GOLF GRIPS 00066463 207159 47072 5115.6418 GOLF-PRO SHOP OTHER GOLF PRO SHOP 41.09 247433 6/6/2012 103104 HALDEMAN-HOMME INC 292.00 AVCC-RPR BASKETBALL EQUIP 00068852 206997 140386 1900.6265 REPAIRS-EQUIPMENT AV COMMUNITY CENTER 292.00 247434 6/6I2012 100891 HANCO CORPORATION 15.30- STR-GREDIT, TUBE 68332 207246 621928 1630.6216 VEHICLES-TIRES/BATTERIES STREET EQUIPMENT MAINTENANCE 31:55- STR-CREDIT, TUBE 68332 207247 621929 1630.6216 VEHICLES-TIRES/BATTERIES STREET EQUIPMENT MAINTENANCE 30.10 STR-CARLISLE T1RE 68332 207248 621927 1630.6216 VEHICLES-TIRES/BATTERIES STREET EQUIPMENT MAINTENANCE _ CITY OF APPLE VALLEY 6!7/2012 9:22:03 R55CKREG LOG20000 Council Check Register Page - 12 5/31/2012 -6/8/2012 Check # Date Amount Supplier / Expianation PO # Doc No Inv No Account No Subledger Account Description Business Unit 31.55 STR-TUBES 68332 207249 621926 1630.6216 VEHICLES-TIRES/BATTERIES STREET EQUIPMENT MAINTENANCE 14.80 247435 6/6/2072 100570 HD SUPPLY WATERWORKS LTD 769.50 UTIL 1 1/2" OMNI METER 00035250 207213 4790603 5310.6215 EQUIPMENT-PARTS WATER METER RPR/REPLACE/READNG 714.94- UTIL-OVERPAYMENT 00035250 207214 4789965 5310.6215 EQUIPMENT-PARTS WATER METER RPR/REPLACE/READNG 54,56 247436 616I2072 107431 HEALTH FUND, THE 130.50 HEALTN FUND DEDUCTION 207332 60612808149 9000.2120 ACCRUED BENEFIT LIABILITY PAYROLL CLEARING BAL SHEET 130.50 HEALTH FUND DEDUCTION 207353 120601 M 9000.2120 ACCRUED BENEFIT LIABILITY PAYROLL CLEARING BAL SHEET 261.00 247437 616/2012 137419 HEDBERG, RON � 6.00 POL PLATE FEE FOR UNMARKED S@81331 207287 1210.6215 EQUIPMENT-PARTS POLICE FIELD OPERATIONS/PATROL 66.48 REC TEEN CENTER SUPPLIES 68300 207288 1840.6229 GENERAL SUPPLIES REC TEEN PROGRAMS 10.66 REC PUPPET WAGON VIDEO TAPES8300 207289 1605.6229 GENERAL SUPPLIES REC PUPPET WAGON 38.30 REC MISC PRESCHOOL SUPPUES 68300 207290 1875.6229 GENERAL SUPPLIES REC PRESCHOOL PROGRAMS 34.92 REC MISC PROGRAM SUPPLIES 68300 207291 1845.6229 GENERAL SUPPLIES REC SELF SUPPORT PROG GENERAL 5.96 GOLF BLOODY MARY MIX 68754 207292 5120.6421 GOLF-NON ALCOHOLIC BEVERAGES GOLF KITCHEN 162.32 247438 61612072 102931 JRK SEED 8 TURF SUPPLY INC 331.31 PK-INFIELD CHALK 00049835 206999 4287 1715.6229 GENERAL SUPPLIES PARK ATHLETIC FIEL,D MAINTENANC 554.68 PK-FERTILIZER 00049835 206999 4287 1715.6213 FERTILIZER PARKATHLETIC FIELD MAINTENANC 885.99 247439 6I6/2012 100267 KEYS WELL DRILLING CO 900.00 UTIL-INLET PURGE, COBB LIFT ST 207177 2012050 �385.6265 REPAIRS-EQUIPMENT SEWER STORM INFRASTRUCTURE 900.00 247440 6!6/2072 137345 KIRVIDA FIRE INC 719.00 FIRE-RPRS TO PUMPER #4997 207000 2718 1350.6265 REPAIRS-EQUIPMENT FIRE VEHICLE MAINTENANCE 719.00 247441 6I6/2072 103337 KLM ENGINEERING INC 1,100.00 UTIL-ANTENNA REVIEW, AT&T 207166 4511 5330.6249 OTHER CONTRACTUAL SERVICES WTR MAIN/HYDRANT/CURB STOP MNT • ' 1,100.00 247442 61612012 132646 KWIK KOPY BUSINESS SOLUTIONS 116.54 2012 STREET MAINTENANCE 207313 11544 2027.6239 2012101 R PRINTING ROAD ESCROW 356.54 FLAGSTAFF AVE EXTENSION 207314 11577 4703.6239 2011105G PRINTING FLAGSTAFF EXTEN ' CITY OF APF, 6/7/: ! 9:22:03 RSSCKREG Cvv20000 .LLEY Councii Check Register Page - 13 5/3V2012 -6/812012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 965.56 147TH ST EXT-FLAGSTAFF TO JCRR 207315 11576 4712.6239 2011107G PRINTING 147TH ST EXT FLAGSTF TO JCAKE 273.32 EAGLE RIDGE BUSINESS PARK (LIF 207316 11578 4502.6239 2011141G PRINTING CONSTRUCTION PROJECTS 246.99 2012 STREET MAINTENANCE 207317 11579 2027.6239 2012101R PRINTING ROAD ESCROW 1,958.95 247443 6/612012 100276 LAKEVILLE TROPHY 113.89 POL-PLAQUES, PLEXI & TRACKS 0006�650 206991 14879 1200.6281 UNIFORM/CLOTHING ALLOWANCE POLICE MANAGEMENT 113.89 247444 6/612012 7006b9 LAVERNES PUMPING SERVICE 225.00 GOLF-PUMP SEPTIC 00050894 207187 13221 5110.6266 2011138G REPAIRS-BUILDING GOLF CLUBHOUSE BUILDING 225.00 247445 6l6l2012 100646 LAWSON PRODUCTS INC 129.75 SHOP-MISC PARTS, MAY 00035191 207193 9300837939 1530.6215 EQUIPMENT-PARTS CMF SHOP EQUIP MNTC 8 REPAIR 129.75 247446 6I6/2072 101200 LOFFLER COMPANIES INC 652.22 IT COPIER LEASE-DEV & 2ND FL M 207273 204314504 1030.6310 RENTAL EXPENSE INFORMATION TECHNOLOGY 189.81 IT COPIER MAINT-2ND FL MAIN 207274 204314504 1030.6265 REPAIRS-EQUIPMENT INFORMATION TECHNOLOGY 92.72 IT COPIER MAINT-DEV 207275 204314504 1030.6265 REPAIRS-EQUIPMENT INFORMATION TECHNOLOGY 364.74 POL COPIER LEASE-2ND FL 207276 204314504 1200.6310 RENTAL EXPENSE POUCE MANAGEMENT 349,87 POL COPIER LEASE-1ST FL 207277 204314504 1200.6310 RENTAL EXPENSE POLICE MANAGEMENT 38520 REC COPIER LEASE-AVCC 207278 204314504 1700.6310 RENTAL EXPENSE PARK & RECREATION MANAGEMENT 196.70 IT COPIER LEASE-MAIL ROOM 207279 204314504 1030.6310 RENTAL EXPENSE INFORMATION TECHNOLOGY 88.58 POL COPIER MAINT-1ST & 2ND FL 207280 204314504 1200.6265 REPAIRS-EQUIPMENT POLICE MANAGEMENT 152.38 REC COPIER MAINT-AVCC 207281 204314504 1700.6265 REPAIRS-EQUIPMENT PARK & RECREATION MANAGEMENT 38.12 IT COPIER MAINT-MAIL ROOM 207282 20431450A 1030.6265 REPAIRS-EQUIPMENT INFORMATION TECHNOLOGY 2,510.34 247447 616/2012 143129 MCGRATH ELECTRIC 47.19 PARTIAL REFUND OF PERMIT FEE 207349 701� 1001.4924 ELECTRICAL PERMIT GENERAL FUND REVENUE 47.19 247448 6/6I2012 100334 MN DEPT OF HEALTH 390.50 GOLF-POOD/ALCOHOL LICENSE UPGR 207207 5105.6280 DUES & SUBSCRIPTIONS GOLF MANAGEMENT 24,075.00 WATER SVC CONNECT FEE-2ND QTR 207215 - 5300.2332 STATE WATER TESTING FEE WATER & SEWER FUND BAL SHEET 24,465.50 247449 616I2012 742014 MUSIC TOGETHER IN THE VALLEY I 1,672A� REGSPRWG CLASSES 207197 1845.6249 OTHER CONTRACTUAL SERVICES REC SELF SUPPORT PROG GENERAL 1,672.00 CITY OF APPLE VALLEY 6!7/2012 922:03 R55CKREG LOG20000 Council Check Regiater Page - 14 5/31l2012 -6/8/2012 Check i! Date Amount Supplier / Exptanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 247450 616I2012 722063 MVMA INC 280.00 REC-SPRING CLASSES, REGISTRA�0068838 206987 M128 1845.6249 OTHER CONTRACTUAL SERVICES REC SELF SUPPORT PROG GENERAL 280.00 247461 616/2012 141961 PAUTZ CONSTRUCTION SERVICES IN 440.00 NR-RPR SILT FENCE 13657 EMBRY 206990 23712 5505.6249 OTHER CONTRACTUAL SERVICES STORM DRAIN UTILITY 440.00 247452 61612012 100382 PILGRIM PROMOTIONS 8.35 IAi-SHIRTS 45236 207250 14642 5205.6281 UNIFORMlCLOTHING ALLOWANCE ARENA 1 MANAGEMENT 12.53 CH- SHIRTS 45236 207251 14642 1060.6281 UNIFORM/CLOTHING ALLOWANCE MUNICIPAL BLDG & GROUNDS MNTC 12.53 AVCC-SHIRTS 45236 207252 14642 1900.6281 UNIFORM/CLOTHING ALLOWANCE AV COMMUNITY CENTER 12.53 ENG-SH�RTS 45236 207253 14642 1510.6281 UNIFORM/CLOTHING ALLOWANCE PW ENGINEERING & TECHNICAL 20.87 INSP-SHIRTS 45236 207254 14642 1400.6281 UNIFORM/CLOTHING ALLOWANCE INSPECTIONS MANAGEMENT 29.22 SHOP-SHIRTS 45236 207255 14642 1530.6281 UNIFORMlCLOTHING ALLOWANCE CMF SHOP EQUIP MNTC & REPAIR 20.87 NR-SHIRTS 45236 207256 14642 1520.6281 UNIFORM/CLOTHING ALLOWANCE NATURAL RESOURCES 100.20 PK-SHIRTS 45236 207257 14642 1710.6281 UNIFORM/CLOTHING ALLOWANCE PARK MAINTENANCE MANAGEMENT 100.20 STR-SHIRTS 45236 207258 14642 1600.6281 UNIFORM/CLOTHING ALLOWANCE STREET MANAGEMENT 41.75 UTIL-SHIRTS 45236 207259 14642 5365.6281 UNIFORM/CLOTHING ALLOWANCE SEWER MGMT/REPORTS/DATA ENTRY 41.75 UTIL-SHIRTS 45236 207260 14642 5305.6281 UNIFORMlCLOTHING ALLOWANCE WATER MGMT/REPORT/DATA ENTRY 16.70 GOLF-SHIRTS 45236 207261 14642 5105.6281 UNIFORM/CLOTHING ALLOWANCE GOLF MANAGEMENT 417.50 247453 6/612012 100262 PING 294.00 GOLF IRONS 66465 207153 11266319 5115.6414 GOLF-CLUBS GOLF PRO SHOP 10.15 GOLF FREIGHT 66465 207154 11266319 5115.6424 GOLF FREIGHT ON RESALE MDSE GOLF PRO 5HOP 5.88- GOLF DISCOUNT 66465 207155 11266319 5115.6423 GOLF-CASH DISCOUNT GOLF PRO SHOP 231.00 GOLF DRIVER 66464 207156 71255442 5115.6414 GOLF-CLUBS GOLF PRO SHOP 8.79 GOLF FREIGHT 66464 207157 11255442 5115.6424 GOLF FREIGHT ON RESALE MDSE GOLF PRO SHOP 4.62- GOLF DISCOUNT 66464 207158 11255442 5115.6423 GOLF-CASH DISCOUNT GOLF PRO SHOP 533.44 247454 616I2072 179682 PLAYPOWER LT FARMINGTON INC 50,074.25 PK-PLAY STRUCTURE, RUBBER TILE 207188 1400164259 4940.6229 GENERAL SUPPLIES 2007 GENERAL PARK IMPROVEMENTS 50,074.25 ' 247455 ' 616/2012 716303 POLAR CHEVROLET 24,581.41 UTIL-'12 CHEV 4X4 TRUCK #409 00051053 207350 CZ313800 5305.6730 CAPITAL OUTLAY-TRANSPORTATION WATER MGMT/REPORT/DATA ENTRY 24,581.41 UTIL-'12 CHEV 4X4 TRUCK #416 00051053 207350 CZ313800 5365.6730 CAPITAL OUTLAY-TRANSPORTATION SEWER MGMTIREPORTS/DATA ENTRY 49,162.82 CITY OF APF: :LLEY 6/7/; ;` 9:22:03 R55CKREG c:,:�20000 - - Council Check Register Page - 15 5/3 U2012 - 6/8l2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledge Account Description Business Unit 247456 616/2012 711374 RAMY TURF PRODUCTS 320.63 STR-GRASS SEED 00067223 207189 OP2471506 1610:6229 GENERAL SUPPLIES STREET/BOULEVARD REPAIR & MNTC 336.66 STR-GROUNDS CREW MIX 207198 OP2423206 1610.6229 GENERAL SUPPLIES STREET/BOULEVARD REPAIR & MNTC 336.66- STR-CREDIT GROUNDS CREW MIX 207199 OP2471406 1610.6229 GENERAL SUPPLIES STREET/BOULEVARD REPAIR & MNTC 320.63 247457 6I612072 700042 ROTARY CLUB OF APPLE VALLEY 143.00 DEV MTG REG NORDQUIST 1ST QTR 207121 351 1100.6275 SCHOOLS/CONFERENCES/EXP LOCAL DEV MANAGEMENT 50.00 DEV DUES NORDQUIST 1ST QTR 207122 351 1100.6280 DUES & SUBSCRIPTIONS DEV MANAGEMENT 143.00 DEV MTG REG NORDQUIST 2ND QTR 207123 417 1100.6275 SCHOOLS/CONFERENCES/EXP LOCAL DEV MANAGEMENT 50.00 DEV DUES NORDQUIST 2ND QTR 207124 417 1100.6280 DUES & SUBSCRIPTIONS DEV MANAGEMENT 143.00 POL MTG REG JOHNSON 4TH QTR 207125 325 1200.6275 SCHOOLSlCONFERENCES/EXP LOCAL POUCE MANAGEMENT 50.00 POL DUES JOHNSON 4TH QTR 207126 325 1200.6280 DUES & SUBSCRIPTIONS POLICE MANAGEMENT 143.00 ADM MTG REG LAWELL 2ND QTR 207127 420 1010.6275 SCHOOLS/CONFERENCES/EXP LOCALADMINISTRATION 50.00 ADM DUES LAWELL 2ND QTR 207128 420 1010.6280 DUES & SUBSCRIPTIONS ADMINISTRATION 772.00 247458 6/6I2012 100439 SKB ENVIRONMENTAL 847.22 STR-SWEEPING DEPRIS DISPOSAL00047766 207176 57172 1600.6240 CLEANING SERVICE/GARBAGE REMOVSTREET MANAGEMENT 847.22 247459 61612072 71987b SOUTH METRO RENTAL 241.03 STR-SMALL TOOLS 00069056 207191 41843 1610.6211 SMALI TOOLS & EQUIPMENT STREET/BOULEVARD REPAIR 8. MNTC 241.03 247460 616/2012 143128 STANTON, JOSEPH 504.35 REF OVPYMT CLOSED ACCT FLOAT C 207352 5301.4997 WATER/SEWER ACCT REFUNDS WATER & SEWER FUND REVENUE 504.35 247461 6I6/2072 100329 SUN NEWSPAPERS 225.00 IA1-SUMMER SENSATIONS AD 00069251 207200 1377254 5205.6239 PRINTING ARENA 1 MANAGEMENT 225.00 247462 616/2072 712755 TAHO SPORTSWEAR 267.00 POOL-TSHIRTS 00051114 207008 12TF1008 1930.6281 UNIFORM/CLOTHING ALLOWANCE REDWOOD POOL 492.80 SWIM-TSHIRTS 00051114 207008 12TF1008 ' 1940.628t UNIFORM/CLOTHING ALLOWANCE AQUATIC SWIM CENTER 759.80 247463 6/612012 142745 TARGET BANK 3.74 POL-ISOPROPYLOL 00067645 207204 6430766606 1210.6211 SMALL TOOLS & EQUIPMENT POLICE FIELD OPERATIONS/PATROI 3.74 R55CKREG LOG20000 CITY OF APPLE VALLEY 6/7/2012 9:22:03 Council Check Register Page - 16 5/37/2012 -6/8/2012 Check # Date Amaunt Supplier / Explanation PO # Doc No Inv No Account No Subledge Account Description Business Unit 247464 6/6I2012 700464 TAYLOR MADE GOLF 7.03 GOLF FREIGHT 207160 17671930 5115.6424 GOLF FREIGHT ON RESALE MDSE GOLF PRO SHOP 180.00 GOLF SHOES 207160 17671930 5115.6416 GOLF-SHOES GOLF PRO SHOP 736.00 GOLF CLUBS MARTIN 207338 18073337 5115.6414 GOLF-CLUBS GOLF PRO SHOP 12.66 GOLF FREIGHT MARTIN 207339 18073337 5115.6424 GOLF FREIGHT ON RESALE MDSE GOLF PRO SHOP 14.72- GOLF DISCOUNT MARTIN 207340 18073337 5115.6423 GOLF-CASH DISCOUNT GOLF PRO SHOP 88.00 GOLF WEDGE MARTIN 207341 18097426 5115.6414 GOLF-CLUBS GOLF PRO SHOP 8.13 GOLF FREIGHT MARTIN 207342 18097426 5115.6424 GOLF FREIGHT ON RESALE MDSE GOLF PRO SHOP 1J6- GOLF DISCOUNT MARTIN 207343 18097426 5115.6423 GOLF-CASH DISCOUNT GOLF PRO SHOP 301.00 GOLF CLUBS MARTIN 207344 18063440 5115.6414 GOLF-CLUBS GOLF PRO SHOP 8.67 GOLF FREIGHT MARTIN 207345 18063440 5115.6424 GOLF FREIGHT ON RESALE MDSE GOLF PRO SHOP 6.02- GOLF DISCOUNT MARTIN 207346 18063440 5115.6423 GOLF-CASH DISCOUNT GOLF PRO SHOP 1,318.99 247465 616/2012 143126 TOPGUN VBC 752.00 REGSPRING VB CLASSES 207170 1845.6229 GENERAL SUPPLIES REC SELF SUPPORT PROG GENERAL 752.00 247468 616/2012 100481 TRI-STATE BOBCAT INC 31.70 STR-BEARINGS FOR TOOLCAT M0�9059 207168 1630.6215 EQUIPMENT-PARTS STREET EQUIPMENT MAINTENANCE 31.70 247467 61612072 147946 TWIN CITIES BOILER REPAIR INC 10,950.00 PK-RPR BOILERS 1&2 ACQUATIC C�0051090 207169 32353 4940.6399 OTHER CHARGES 2007 GENERAL PARK IMPROVEMENTS 10,950.00 247468 616I2072 107587 TWIN CITY WATER CLINIC INC 375.00 UTIL-COLIFORM SAMPLES, APRIL 00048457 207190 2240 5305.6249 OTHER CONTRACTUAL SERVICES WATER MGMT/REPORT/DATA ENTRY 375.00 247469 6/6/2012 142614 USA SAFETY SUPPLY CORP 70.51 UTIL-HI VIZ COAT 51076 207221 69094 5365.6281 UNIFORMlCLOTHING ALLOWANCE SEWER MGMT/REPORTS/DATA ENTRY 2.82 IA1-HI VIZ COAT 51076 207222 69094 5205.6281 UNIFORM/CLOTHINCo ALLOWANCE ARENA 1 MANAGEMENT 4.25 CH-HI VIZ COAT 51076 207223 69094 1060.6281 UNIFORM/CLOTHING ALLOWANCE MUNICIPAL BLDG & GROUNDS MNTC 4.25 AVCC-HI VIZ COAT 51076 207224 69094 1900.6281 UNIFORMlCLOTHING ALLOWANCE AV COMMUNITY CENTER 4.25 ENG-HI VIZ COAT 51076 207225 69094 1510.6281 UNIFORM/CLOTHING ALLOWANCE PW ENGINEERING & TECHNICAL 7.05 INSP-HI VIZ COAT 51076 207226 69094 1400.6281 UNIFORMfCLOTHING ALLOWANCE INSPECTIONS MANAGEMENT ' ' 9.87 SFiOP-HI VIZ COAT 51076 207227 69094 1530.6281 UNIFORM/CLOTHING ALLOWANCE CMF SHOP EQUIP MNTC & REPAIR 7.05 NR-HI VIZ COAT 51076 207228 69094 1520.6281 UNIFORM/CLOTHING ALLOWANCE NATURAL RESOURCES 33.84 PK-HI VIZ COAT 51076 207229 69094 1710.6281 UNIFORM/CLOTHING ALLOWANCE PARK MAINTENANCE MANAGEMENT 33.84 STR-HI VIZ COAT 51076 207230 69094 1600.6281 UNIFORM/CLOTHING ALLOWANCE STREET MANAGEMENT 14.09 UTIL-HI VIZ COAT 51076 207231 69094 �' ; 5365.6281 UNIFORM/CLOTHING ALLOWANCE SEWER MGMT/REF 'DATA ENTRY t R55CKREG Cuv20000 CITY OF APF, :tLEY 6/7Y. 9:22:03 Councii Check Register Page - 17 5/31/2012 -6/8/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledge Account Description Business Unit 14.09 UTIL-HI VIZ COAT 51076 207232 69094 5305.6281 UNIFORM/CLOTHING ALLOWANCE WATER MGMT/REPORT/DATA ENTRY 5.64 GOLF-HI VIZ COAT 51076 207233 69094 5105.6281 UNIFORM/CLOTHING ALLOWANCE GOLF MANAGEMENT 6.12 IA1-SWEATSHIRTS 51076 207234 69095 5205.6281 UNIFORM/CLOTHING ALLOWANCE ARENA 1 MANAGEMENT 9.18 CH-SWEATSHIRTS 51076 207235 69095 1060.6281 UNIFORM/CLOTHING ALLOWANCE MUNICIPAL BLDG & GROUNDS MNTC 9.18 AVCC-SWEATSHIRTS 51076 207236 69095 1900.6281 UNIFORM/CLOTHING ALLOWANCE AV COMMUNITY CENTER 9.18 ENGSWEATSHIRTS 51076 207237 69095 1510.6281 UNIFORM/CLOTHING ALLOWANCE PW ENGINEERING & TECHNICAL 75.27 INSP-SWEATSHIRTS 51076 207238 69095 1400.6281 UNIFORM/CLOTHING ALLOWANCE INSPECTIONS MANAGEMENT 21.38 SHOP-SWEATSHIRTS 51076 207239 69095 153D.6281 UNIFORM/CLOTHING ALLOWANCE CMF SHOP EQUIP MNTC & REPAIR 15.27 NR-SWEATSHIRTS 51076 207240 69095 1520.6281 UNIFORM/CLOTHING ALLOWANCE NATURAL RESOURCES 73.33 PK-SWEATSHIRTS 51076 207241 69095 1710.6281 UNIFORM/CLOTHING ALLOWANCE PARK MAINTENANGE MANAGEMENT 73,33 STR-SWEATSHIRTS 51076 207242 69095 1600.6281 UNIFORM/CLOTHING ALLOWANCE STREET MANAGEMENT 30.55 UTIL-SWEATSHIRTS 51076 207243 69095 5365.6281 UNIFORM/CLOTHING ALLOWANCE SEWER MGMTlREPORTS/DATA ENTRY 30.55 UTIL-SWEATSHIRTS 51076 207244 69095 5305.6281 UNIFORM/CLOTHING ALLOWANCE WATER MGMT/REPORT/DATA ENTRY 12.22 GOLF-SWEATSHIRTS 51076 207245 69095 5105.6281 UNIFORM/CLOTHING ALLOWANCE GOLF MANAGEMENT 517:11 247470 6I6/2012 737424 W F NORMAN CORPORATION 136.16 CEMETERY-GRAVE MARKERS 00068584 206995 91273 5605.6229 GENERAL SUPPLIES CEMETERY 136.16 247471 6l6/2012 137671 WILD OUTDOOR SERVICES INC 495.00 FIRE-OPEN IRRIG, 3 STATIONS 207004 9712 1340.6249 OTH@R CONTRACTUAL SERVICES FIRE BLDG & GROUNDS MNTC 300.00 FIRE-IRRIG SENSORS STN 2&3 207005 9722 1340.6249 OTHER CONTRACTUAL SERVICES FIRE BLDG & GROUNDS MNTC 795.00 247472 6I612012 138341 WINDMILL FEED & PET SUPPLY CO 137.24 POL-DOG FOOD 00067533 207201 936946 1281.6229 GENERAL SUPPLIES POLICE K-9 137.24 20720542 513112012 735249 NORTHLAND TRUST SERVICES, INC. 60,666.25 INT LIQ REV BOND 2008 207347 5032.7015 DEBT SERVICE-INTEREST LIQ#3 REV BOND 2008, $3,295 25,822.50 INT GO REF BOND 2008 207347 3197.7015 DEBT SERVICE-INTEREST TAX REF OF 2008, $2,420,000 27,546.88 INT GO IMPROV REF BOND 2008 207347 3287.7015 DEBT SERVICE-INTEREST REF BOND OF 2008, $2,415,000 36,400.00 INT GO ROAD REF BOND 2008 207347 3307.7015 DEBT SERVICE-INTEREST REF BONDS OF 2009, $2,775,000 425.00 FEE GO ROAD REF BOND 2008 207347 3307.7020 BOND PAYING AGENT FEES REF BONDS OF 2009, $2,775,000 19,450.00 INT GO REF BOND 2010A 207347 3322.7015 DEBT SERVICE-INTEREST BONDS OF 2004, $4,325,000 11,275.00 INT GO REF BOND 2010A 207347 3332.7015 DEBT SERVICE-INTEREST BONDS OF 2006, $5,785,000 3,550.00 INT GO REF BOND 2010A 207347 3337J015 DEBT SERVICE-INTEREST EQUIP CERT OF 2006, $860,000 2,025.00 INT GO REF BOND 2010A 207347 5505.7015 DEBT SERVICE-INTEREST STORM DRAIN UTILITY 187,160.63 20720543 5/31/2072 707348 DEPOSITORY TRUST COMPANY R55CKREG LOG20000 CITY OF APPLE VALLEY 6/7/2012 9:22:03 Council Check Register Page - 18 5/37/2012 —6l8/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledge Account Description Business Unit 95,723.75 INT GO REFUND PARK BOND 2004 207348 3062.7015 DEBT SERVICE-INTEREST BONDS OF 1997, $8,370,000 7,255.00 INT CEMETERY BOND 2004 207348 3067.7015 DEBT SERVICE-INTEREST BONDS OF 1997, $795,000 1,543.75 INT GO REFUND BOND 2004 207348 3192.7015 DEBT SERVICE-INTEREST REF BONDS OF 2004, $565,000 7,600.00 INT RECREA REV REFUND 2004 207348 5260.7015 DEBT SERVICE-INTEREST ARENA 2 MANAGEMENT-HAYES 2,250.00 INT GO REFUND BOND 2002 207348 5402.7015 DEBT SERVICE-INTEREST WATER/SEWER CONNECTION CHARGE 114,372.50 20120601 6/8/2012 100240 VANTAGEPOINT TRANSFER AGENTS - 30,370.85 PLAN #301171 FULL TIME ICMA 207318 60612808141 9000.2120 ACCRUED BENEFIT LIABILITY PAYROLL CLEARING BAL SHEET 30,370.85 20120602 6/8@012 726459 VANTAGEPOINT TRANSFER AGENTS - 275.00 PLAN #705481 ROTH IRA 207321 606128081412 9000.2120 ACCRUED BENEFIT LIABILITY PAYROLL CLEARING BAL SHEET 275.00 20720603 618I2012 729553 US BANK 3,177.48 HSA FUNDING-EMPLOYEE 207322 606128081413 9000.2125 ACCRUED HSA/HRA BENEFIT PAYROLL CLEARING BAL SHEET 3,177.48 20120604 61812012 129576 US BANK 228.42 SERGEANT PEHRA FUNDING-GROSS W 207323 606128081414 9000.2120 ACCRUED BENEFIT LIABILITY PAYROLL CLEARING BAL SHEET 71.17 SERGEANT PEHRA FUNDING-ANNUAL 207323 606128081414 90002120 ACCRUED BENEFIT LIABILITY PAYROLL CLEARING BAL SHEET 1,183.98 POLICE PEHRA FUNDING-GROSS WAG 207323 606128081414 9000.2120 ACCRUED BENEFIT LIABILITY PAYROLL CLEARING BAL SHEET 168.30 POLICE PEHRA FUNDING-ANNUAL LE 207323 606128081414 9000.2120 ACCRUED BENEFIT LIABILITY PAYROLL CLEARING BAL SHEET 394.77 POLICE PEHRA FUNDING-COMP 207323 606128081414 9000.2120 ACCRUED BENEFIT LIABILITY PAYROLL CLEARING BAL SHEET 2,046.64 20120605 6I8/2012 100392 PUBLIC EMPLOYEES RETIREMENT AS 37,377.97 EMPLOYEE SHARE PERA 207326 60612808143 9000.2114 ACCRUED PERA PAYROLL CLEARING BAL SHEET 48,707.28 CITY SHARE PERA 207326 60612808143 9000.2114 ACCRUEO PERA PAYROLL CLEARING BAL SHEET 86,085.25 20720606 618I2012 700455 AFFINITY PLUS FEDERAL CREDIT U 2,402.10 CREDIT UNION DEDUCT 207327 60612808144 9000.2120 ACCRUED BENEFIT LIABILITY PAYROLL CLEARING BAL SHEET 2,402.10 . 20720607 6/8/2012 101238 MINNESOTA CHILD SUPPORT PAYMEN � 358.56 001441500301GLEVNNE, RICHARD R 207329 60612808146 9000.2120 ACCRUED BENEFIT LIABILITY PAYROLL CLEARING BAL SNEET 171.97 001414224501 WACHTER, GARY N 207330 606128D8147 9000.2120 ACCRUED BENEFIT LIABILITY PAYROLL CLEARING BAL SHEET 24.45 001089320701FLEMING, JESSE M 207331 60612808148 9000.2120 ACCRUED BENEFIT LIABILITY PAYROLL CLEARING BAL SHEET 554.98 CITY OF APF�. .LLEY 6/7/'� 922:03 R55CKREG L`C7'1�20000 � � �`""'� � �� Council Check Register Page - 19 5/3 U201 Z — 6!8/2012 � . Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledge Account Description Business Unit 20120608 6/8/2012 730957 GENESISfMPLOYEE BENEFITS INC 1,294.19 FLEX SPENDING MEDICA�-2012 207333 120602N 9000.2119 ACCRUED FLEX SPENDING PAYROLL CLEARING BAL SHEET 2,115.30 FLEX SPENDING DAYCARE-2012 207333 120602N 9000.2119 ACCRUED FLEX SPENDING PAYROLL CLEARING BAL SHEET 3,409.49 20720609 614/2013 107671 MN DEPT OF REVENUE 77.62 DIESEL TAX-PARKS 207337 20120604 1765.6212 MOTOR FUELS/OILS PARK EQUIPMENT MAINTENANCE 100.93 DIESEL TAX-STREETS 207337 20120604 163D.6212 MOTOR FUELS/OILS STREET EQUIPMENT MAINTENANCE 27.94 DIESEL TAX-WATER 207337 20120604 5345.6212 MOTOR FUELS/OILS WATER EQUIPNEHICLE/MISC MNTC 140.43 DIESEt TAX-SEWER 207337 20120604 5390.6212 MOTOR FUELS/OILS SWR EQUIPNEHICLE MISC MNTC/RP 346.92 865,538.38 Grand Total Payment InstrumeM Totais Check Total 360,977.69 Transfer Total 430,201.84 Pay ModeX Total 74,358.85 Total Payments 865,538.38 �� RSSCKSUM �_.__.�0000 CITY OF AF. ALLEY 6/'i. ' 9:22:36 Council Check Summary Pa9e - � 5/31/2012 - 6/8/2012 � Company k Amount 01000 GENERAL FUND 94,118.91 02025 ROAD ESCROW FUND 744.08 02060 POLICE CRIME FUND 2,099.94 03060 PARK BOND 1997, $8,370,000 95,723.75 03065 CEMETERY BOND 1997, $795,000 7,255.00 03190 REF STATE AID 2004, $565,000 1,543.75 03195 GO TAXBL REF 2008, $2,420,000 25,822.50 03285 REF GO BOND 20Q8, $2,415,000 27,546.88 03305 ST AID RD REF 2009,$2,775,000 36,825.00 03320 GO IMP BOND 2004, $4,325,000 19,450.00 03330 GO IMP BOND 2006, $5,785,000 11,275.00 03335 EQ CERT 2006, $860,000 3,550.00 04500 CONSTRUCTION PROJECTS 3,217•77 04700 TIF DIST#13-CAPITAL PROJECTS 356.54 04710 TIF D�ST#7-CAPITAL PROJECTS 965.56 04935 2007 PARK BOND FUND 61,024.25 05000 LIQUOR FUND 142,166.06 05030 LIQ REV BOND 2008, $3,295,000 60,666.25 05100 GOLF FUND 14,449.25 05200 ARENA FUND 8,000.61 05300 WATER & SEWER FUND 105,083.35 05400 WATER/SEWER CONNE¢TION CHG FUN 2,250.00 05500 STORM DRAINAGE UTILITY FUND 6,010.75 05550 CONSTRUCTION PROJECTS 3,779.00 05600 CEMETERY FUND LEVEL PROGRAM 177.04 05800 STREET LIGHT UTIL FUND 793.35 09000 PAYROLL CLEARING FUND 130,643.79 Report Totals 865,538.38 CITY OF APP. .LLEY 6/14 11:10:17 R55CKSUM LOG20000 " ° � Council Check Summary Page - 1 5/31/2012 - 6/15/2012 Company Amount 01000 GENERAL FUND 117,455.04 02025 ROAD ESCROW FUND 363,130.65 03205 CLOSED SA BOND ISSUES 15,641.04 04500 CONSTRUCTION PROJECTS 59,489.38 04700 TIF DIST#13-CAPITAL PROJECTS 495,765.80 04710 TIF DIST#7-CAPITAL PROJECTS 97.44 D4935 2007 PARK BOND FUND 28,131.14 05000 LIQUOR FUND 268,656J5 05100 GOLF FUND 355,543.06 05300 WATER & SEWER FUND 475,888.66 05500 STORM DRAINAGE UTILITY FUND 3,647.54 05600 CEMETERY FUND LEVEL PROGRAM 138.94 05800 STREET LIGHT UTIL FUND 148.12 07100 INSURANCE TRUST DENTAL FUND 9,518.22 07200 RISK MANAGEMENT/INSURANCE FUND 2,818.00 09000 PAYROLL CLEARING FUND 284,528.60 Report Totals 2,480,598.38 CITY OF APP. :�LEY 6/14: 1:09:35 R55CKREG Lv:�20000 "`-`" - Council Check Register Page - 1 5/31/2012 -6/15/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 849 6/14/2012 737610 A H HERMEL COMPANY 42.52 TAX#1 50148 207469 298500 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 722.10 NOTAX#1 50148 207470 298500 5015.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 49.35 TAX#1 50148 207471 299774 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 269.50 NOTAX#1 50148 207472 299774 5015.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 1,083.47 860 6/14l2012 100360 ARCTIC GLACIER INC 73.24 NO TAX#1 2202 207454 387212208 5015.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 135.16 NO TAX#1 2202 207455 387213020 5015.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 80.80 NO TAX#1 2202 207456 395213609 5015.6545 NON-TAXABLE MISC FOR RESALE LI4UOR #1 STOCK PURCHASES 105.68 NO TAX#1 2202 207457 388214015 5015.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 54.72 NO TAX#1 2202 207458 463214504 5015.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 130.62 NO TAX#t 2202 207459 463215206 5015.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 121.24 NO TAX#2 2202 207460 379212916 5055.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #2 STOCK PURCHASES 60.22 NO TAX#2 2202 207461 463213811 5055.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #2 STOCK PURCHASES 93.96 NO TAX#2 2202 207462 378214213 5055.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #2 STOCK PURCHASES 63.98 NO TAX�i2 2202 207463 463215207 5055.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #2 STOCK PURCHASES 68.64 NO TAX#3 2202 207464 381212305 5085.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 149.02 NO TAX#3 2202 207465 387213008 5085.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 63.34 NO TAX#3 2202 207466 463213809 5085.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 107.68 NO TAX#3 2202 207467 378214211 5085.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES . 96.24 NO TAX#3 2202 207468 463215210 5085.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 1,404.54 857 6174/2012 700207 BDI GOPHER BEARING 5.70 GOLF-OIL SEALS 00067269 207698 2694149 5155,6215 EQUIPMENT-PARTS GOLF EQUIPMENT MAINTENANCE 5J0 852 6/14/2012 700090 CATCO 81.78 PK-PRESSURE VALVE #232 00035175 207684 9057874 1765.6215 EQUIPMENT-PARTS PARK EQUIPMENT MAINTENANCE 81 J8 853 6/14/2072 100702 COLLEGE CITY BEVERAGE 7,878.00 BEER#1 114 207473 302623 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 301.20 WINE#1 114 207474 302623 5015.6520 WINE LIQUOR #1 STOCK PURCHASES 49.05 TAX#1 114 207475 302623 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 152.50 BEER#1 114 207476 303434 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 11,804.85 BEER#1 114 207477 303984 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 225.90 WINE#1 114 207478 303984 5015.6520 WINE LIQUOR #1 STOCK PURCHASES 1675 TAX#1 114 207479 303984 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 2,107.00 BEER#1 114 207480 304495 5015.6530 BEER LIQUOR #1 STOCK PURCHASES RS5CKREG 1OG20000 CITY OF APPLE VALLEY 6/14/2012 11:09:35 Council Check Register Page - 2 5/31l2012 -6/15/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 746.70 BEER#1 114 207481 304891 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 9,449.20 BEER#1 114 207482 305208 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 2,575.85 BEER#2 114 207483 302621 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 15.55 TAX#2 114 207484 302621 5055.6540 TAXABLE MISC FOR RESALE LIQUOR #2 STOCK PURCHASES 265.00 BEER#2 114 207485 303421 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 3,459.45 BEER#2 114 207486 303985 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 111.25 TAX#2 114 207487 303985 5055.6540 TAXABLE MISC FOR RESALE LIQUOR #2 STOCK PURCHASES 3,877.30 BEER�t2 114 207488 130215 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 6,562.75 BEER#3 114 207489 302625 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 17.55 TAX#3 114 207490 302625 5085.6540 TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 200.80 WINE#3 114 207491 302625 5085.6520 WINE LIQUOR #3 STOCK PURCHASES 268.50 BEER#3 114 207492 303435 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 4,104.15 BEER#3 114 207493 303978 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 307.00 BEER#3 114 207494 304878 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 7,103.70 BEER#3 114 207495 305217 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 150.60 WINE#3 114 207496 305217 5085.6520 WINE LIQUOR #3 STOCK PURCHASES 34.30 TAX#3 114 207497 305217 5085.6540 TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 61,784.90 854 6/14/2072 100129 DAKOTA AWARDS 8 ENGRAVING 363.38 POL-8X10 PLAQUES 00069351 207703 12339 1200.6281 UNIFORM/CLOTHING ALLOWANCE POLICE MANAGEMENT 363.38 855 6/74/2012 100133 DAY DISTRIBUTING CO 5,939.28 BEER#1 115 207498 652335 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 2,60120 BEER#1 115 207499 651251 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 22.40 TAX#1 115 207500 651251 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 1,166.45 BEER#1 115 207501 653247 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 21.50 TAX#1 115 207502 653247 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 1,179.75 BEER#2 115 207503 651250 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 22.40 TAX#2 115 207504 651250 5055.6540 TAXABLE MISC FOR RESALE LIQUOR #2 STOCK PURCHASES 21.95 NOTAX#2 115 207505 651250 5055.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #2 STOCK PURCHASES 1,226.20 BEER#2 115 207506 652334 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 36.80 TAX#2 115 207507 652334 5055.6540 TAXABLE MISC FOR RESALE LIQUOR #2 STOCK PURCHASES 431.90 BEER#2 115 207508 653246 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 1,997.90 BEER#3 115 207509 651254 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 2,417.30 BEER#3 115 207510 652338 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 718.40 BEER#3 115 207511 653252 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 17,803.43 856 6/74/2012 101365 ECM PUBLISHERS INC 36.00 LEGAL AD-STREAM INTL 207361 389528 ' 1015.6239 PRINTING CITY CLERK/ELEC' � CITY OF APF_. .LLEY 6/14 11:09:35 R55CKREG CU1i20000 " " Council Check Register Page - 3 5/31/2012 -6/15/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 31.50 LEGAL AD-MN INVESTMENT FUNDS 207362 389537 1015.6239 PRINTING CITY CLERK/ELECTIONS 36,00 LEGAL AD-TIMES SQUARE 207363 389527 1015.6239 PRINTWG CITY CLERK/ELECTIONS 103.50 857 6l14/2012 119126 EXTREME BEVERAGES LLC 155.00 TAX#1 43761 207512 W538573 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 200.50 TAX#1 43761 207513 W542118 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 77.50 TAX#1 43761 207514 W545526 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 186.50 TAX#1 43761 207515 W5489S9 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 63.00 TAX#1 43761 207516 W552529 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 117.50 TAX#2 43761 207517 W542119 5055.6540 TAXABLE MISC FOR RESALE LIQUOR t�2 STOCK PURCHASES 29.00 TAX#2 43761 207518 W548990 5055.6540 TAXABLE MISC FOR RESALE LIQUOR #2 STOCK PURCHASES 31.50 TAX#3 43761 207519 W538575 5085.6540 TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 94.50 TAX#3 43761 207520 W545528 5085.6540 TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 955.00 858 6/74I2012 720373 FASTENAL COMPANY 199.88 PK-ADHESIVE FOR KELLEY PLAYGFS6896 207755 MNLAK79376 1735.6229 GENERAL SUPPLIES PARK PLAY EQUIPMENT MAINTENANC 574.69 PK-WRENCH, NAILER, MISC. 66896 207756 MNLAK73366 4940.6229 GENERAL SUPP�IES 2007 GENERAL PARK IMPROVEMENTS 623.72- PK-RETURN NUTS, MISC. 66896 207757 MNLAK72043 1735.6229 GENERAL SUPPLIES PARK PLAY EQUIPMENT MAINTENANC 150.85 869 6/14/2012 700217 GRAINGER 323.40 SWIM-IRON RPR CLAMP, FAC 00069107 207440 9830002409 1940.6229 GENERAL SUPPLIES AQUATIC SWIM CENTER 31.39 SWIM-ROTARY BRUSH, FAC 00069107 207443 9829715706 1940.6229 GENERAL SUPPLIES AQUATIC SWIM CENTER 83.22 UTIL-O RINGS 00067437 207686 9840953013 5330.6229 GENERAL SUPPLIES WTR MAIN/HYDRANT/CURB STOP MNT 438.01 860 6114/2012 101169 HAWKINS INC 763.84 SWIM-BT� BACKWASH, PH TO HYDFi�624 207676 3338606 1940.6214 CHEMICALS AQUATIC SVNM CENTER 780.62 SWIM-SODIUM HYPOCHIORITE 44824 207677 3342259 1940.6214 CHEMICALS AQUATIC SWIM CENTER 150.16 SWIM-PH TO HYDROCHOLORIC ACI�1824 207678 3341318 1940.6214 CHEMICALS AQUATIC SWIM CENTER 1,094.62 861 6H4/2012 142337 MANSON, COLW 32.77 ENG MILEAGE MAY 207381 61312 1510.6277 MILEAGE/AUTO ALLOWANCE PW ENGINEERING � TECHNICAL 32.77 862 6I14/2012 725996 MIDWEST MINI MELTS 1,312.50 SWIM-ICE CREAM 00047982 207685 15735 1940.6540 TAXABLE MISC FOR RESALE AQUATIC S1MM CENTER 1,312.50 R55CKREG LOG20000 CITY OF APPLE VALLEY 6/14/2012 11:09:35 Council Check Register Page - 4 5/31/2012 -6/15/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subiedge Account Description Business Unit 863 6/14I2072 707500 PREMIUM WATERS INC 42.14 POL-BOTTLED WATER 00038902 207709 3138050512 1250.6229 GENERAL SUPPLIES POLICE FACILITY 42.14 864 6114/2012 100393 PUMP 8 METER SERVICE INC 1,066.23 CMF-PEDESTAL, FUEL SYS CARD R�035198 207436 M337321 1540.6266 REPAIRS-BUILDING CMF BUILDINGS 8 GROUNDS MNTC 1,066.23 865 6/14/2072 101123 USA BLUE BOOK 365.66 UTIL-MARKING PAINT, MTR SEALS 00067438 207689 683926 5330.6229 GENERAL SUPPLIES V1frR MAIN/HYDRANT/CURB STOP MNT 365.66 866 6H4/2012 100496 VAN PAPER CO 102.02 BAGS#2 8795 207405 237526 5065.6229 GENERAL SUPPLIES LIQUOR #2 OPERATIONS 1.02- DISCT#2 8795 207406 237526 5065.6333 GENERAL-CASH DISCOUNTS LIQUOR #2 OPERATIONS 101.00 867 611412012 121767 VARNER TRANSPORTATION 157.50 FREIGHT #1 45995 207393 24352 5015.6550 FREIGHT ON RESALE MOSE LIQUOR #1 STOCK PURCHASES 327.60 FREIGHT#1 45995 207394 24365 5015.6550 FREIGHT ON RESALE MDSE LIQUOR #1 STOCK PURCHASES 294.00 FREIGHT#1 45995 207395 24382 5015.6550 FREIGHT ON RESALE MDSE LIQUOR #1 STOCK PURCHASES 712.95 FREIGHT#1 45995 207396 24397 5015.6550 FREIGHT ON RESALE MDSE LIQUOR #1 STOCK PURCHASES 113.40 FREIGHT#2 45995 207397 24353 5055.6550 FREIGHT ON RESALE MDSE LIQUOR #2 STOCK PURCHASES 89.25 FREIGHTJ�2 45995 207398 24366 5055.6550 FREIGHT ON RESALE MDSE LIQUOR #2 STOCK PURCHASES 147.00 FREIGHT#2 45995 207399 24383 5055.6550 FREIGHT ON RESALE MDSE LIQUOR #2 STOCK PURCHASES 164.85 FREIGHT#2 45995 207400 24398 5055.6550 FREIGHT ON RESALE MDSE LIQUOR #2 STOCK PURCHASES 93.45 FREIGHT#3 45995 207401 24354 5085.6550 FREIGHT ON RESALE MDSE LIQUOR #3 STOCK PURCHASES 174.30 FREIGHT#3 45995 207402 24367 5085.6550 FREIGHT ON RESALE MDSE LIQUOR #3 STOCK PURCHASES 130.20 FREIGHT#3 45995 207403 24384 5085.6550 FREIGHT ON RESALE MDSE LIQUOR #3 STOCK PURCHASES 239.40 FREIGHT#3 45995 207404 24399 5085.6550 FREIGHT ON RESALE MDSE LIQUOR #3 STOCK PURCHASES 2,643.90 868 6174/2012 100834 VERSATILE VEHICLES INC 506.59 GOIF-LEASED REFRESHER CART-JUN 207711 61567 5120.6310 RENTAL EXPENSE GOLF KITCHEN 3,600.00 GOLF-LEASED CARS-JULY 207712 61562 5115.6410 GOLF-RENT POWER CARTS GOLF PRO SHOP 4,106.59 869 6/74/2072 700363 XCEL ENERGY 148.12 UTIL-LIGHTS 207710 424707491 5805.6545 NON-TAXABLE MISC FOR RESALE STREET LIGHT UTILITY FUND 148.12 870 6/74!` 138342 YOCUM OIL COMPANY INC CITY OF APF; 1LLEY 6/1� >11:09:35 R55CKREC, cvG20000 ""' � Council Check Register Page - 5 5/31/2012 —6/15/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 18,261.60 DIESEL FUEL 00050328 207452 492758 1000.1520 INVENTORY-SUPPLIES GENERAL FUND BALANCE SHEET 13,681.56 GASOLINE 00050328 207693 493656 1000.1520 INVENTORY-SUPPLIES GENERAL FUND BALANCE SHEET 10,442.95 GASOLINE 00050328 207694 493655 1000.1520 INVENTORY-SUPPLIES GENERAL FUND BALANCE SHEET 42, 386. U 247473 6/14/2012 743133 LAUDERDALE PROPERTIES 36.75 REF OVPMT UTIL 13493 GEORGIA D 207366 61312 5301.4997 WATER/SEWER ACCT REFUNDS WATER & SEWER FUND REVENUE 36.75 247474 6114/2072 143132 MN ABSTRACT & TITLE 150.00 REF OVPMT UTIL 12522 DOVER DR 207367 61312 5301.4997 WATERlSEWER ACCT REFUNDS WATER & SEWER FUND REVENUE 150.00 247475 6/74/2012 1A3131 RUT2EN, LOUIS 60.00 REF OVPMT UTIL 12993 ECHO LN 207368 61312 5301.4997 WATER/SEWER ACCT REFUNDS WATER 8 SEWER FUND REVENUE 60.00 247476 6/14/2012 142765 BENNETT, DAVID 52.69 ENG MILEAGE MAY 207382 61312 1510.6277 MILEAGE/AUTO ALLOWANCE PW ENGINEERING & TECHNICAL 52.69 247477 6114/2012 128731 BILEK, MATTHEW 36.63 GOLF MILEAGE MAY 207442 61312 5105.6277 MILEAGE/AUTO ALLOWANCE GOLF MANAGEMENT 36.63 247478 6/14/2072 707339 BRADY, GREGORY P 100.00 AMBO CONF SUBSIST BRADY 207380 61312 1460.6278 SUBSISTENCE ALLOWANCE INSPECTIONS TRAINING 100.00 247479 617412072 700150 DYER, WILLIAM M 25:33 POL SCHL EXPENSE 207441 61312 7225.6275 SCHOOLS/CONFERENCES/EXP LOCAL POLICE TRAINING 25.33 247480 6114/2012 712753 PRICE, KATHY JO 128.48 HR MTG EXP APR-JUNE PRICE 207622 61312 1020.6275 SCHOOLS/CONFERENCES/EXP LOCALHUMAN RESOURCES 128.48 247481 6114/2012 122765 WILLMAN, DAVID G 95.97 UTIL-JEANS 207692 5305.6281 UNIFORM/CLOTHING ALLOWANCE WATER MGMT/REPORT/DATA ENTRY 95.97 247482 6N4/2072 142737 THOMPSON CONSTRUCTION OF PRINC R55CKREG LOG20000 CITY OP APPLE VALLEY 6l14/2012 11:0935 Council Check Register Page - 6 5/31/2012 -6/15/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subiedge Account Description Business Uni 3,257.05 VW CLUBHOUSE-FINAL 207783 5190.6810 2011137G CONSTRUCTION IN PROGRESS GOLF CLUBHOUSE CONSTRUCTION 3,257.05 247485 6/74/2072 100334 MN DEPT OF HEALTH 390.50 GOLF-FOOD/ALCOHOL LICENSE UPGR 207207 5105.6280 DUES 8 SUBSCRIPTIONS GOLF MANAGEMENT 390.50 247484 6/14/2072 100989 70000 LAKES CHAPTER 90.00 AMBO CONF BRADY 207384 61312 1460.6276 SCHOOLS/CONFERENCES/EXP OTHERINSPECTIONS TRAINING 90.00 247485 6I74/2012 100854 AMERICAN TEST CENTER 2,200.00 FIRE-ANN. SAFETY INSP, TRUCKS 207453 2121630 1350.6265 REPAIRS-EQUIPMENT FIRE VEHICLE MAINTENANCE 2,200.00 247486 6I14/2012 100039 APPLE VALLEY FORD 266.25 POL VEHICLE LEASE-JUNE 00050162 207720 1215.6310 RENTAL EXPENSE POLICE DETECTIVE UNIT 46.04 POL BLOWER MOTOR-#902 00035168 207721 269100 1210.6215 EQUIPMENT-PARTS POLICE FIELD OPERATIONS/PATROL 327.89 POL COOLING FAN & MODULE #90400035168 207722 269132 1210.6215 EQUIPMENT-PARTS POLICE FIELD OPERATIONS/PATROL 640.18 247487 6I14/2012 100747 ARAMARK UNIFORM SERVICES INC 25.22 SHOP-UNIFORM RENT JUN 46863 207648 6297510294 1530.6281 UNIFORM/CLOTHING ALLOWANCE CMF SHOP EQUIP MNTC & REPAIR 25.22 STR-UNIFORM RENT JUN 46863 207649 6297510294 1600.6281 UNIFORM/CLOTHING ALLOWANCE STREET MANAGEMENT 25.22 PK-UNIFORM RENT JUN 46863 207650 6297510294 1710.6281 UNIFORM/CLOTHING ALLOWANCE PARK MAINTENANCE MANAGEMENT 25.23 UTIL-UNIFORM RENT JUN 46863 207651 6297510294 5305.6281 UNIFORM/CLOTHING ALLOWANCE WATER MGMT/REPORT/DATA ENTRY 25.22 SHOP-UNIFORM RENT MAY 46863 207652 6297505399 1530.6281 UN�FORM/CLOTHING ALLOWANCE CMF SHOP EQUIP MNTC & REPAIR 25.22 STR-UNIFORM RENT MAY 46863 207653 6297505399 1600.6281 UNIFORM/CLOTHING ALLOWANCE STREET MANAGEMENT 25.22 PK-UNIFORM RENT MAY 46863 207654 6297505399 1710.6281 UNIFORM/CLOTHING ALLOWANCE PARK MAINTENANCE MANAGEMENT 25.23 UTIL-UNIFORM RENT MAY 46863 207655 6297505399 5305.6281 UNIFORM/CLOTHING ALLOWANCE WATER MGMT/REPORT/DATA ENTRY 201.78 247488 6/14/2012 113977 ATLAS PEN 8 PENCIL CORP 273.55 GOLF-BAG TAGS 00068726 207697 50022120 5115.6229 GENERAL SUPPLIES GOLF PRO SHOP 17.60- 00068726 207697 50022120 5100.2330 DUE TO OTHER GOVERNMENT GOLF FUND BALANCE SHEET 255.95 247489 611412012 743036 BAUERNFEIND GOEDTEL 17,705.15 VW CIUBHOUSE-APPL #2 207776 5190.6810 2011137G CONSTRUCTION IN PROGRESS G�LF CLUBHOUSE CONSTRUCTION 17,705.15 247490 6114 138336 BERNICK'S BEVERAGE CITY OF APF.. :LLEY 6/14 11:0935 RSS�KREG Cu�i20000 °" Councii Check Register Pa88 " � 5/31/2012 —6/15/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 140.00 NOTAX#1 50356 207407 10221 5015.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 307.50 BEER#1 50356 207408 10222 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 20.00 N07AX#3 50356 207409 10224 5085.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 84.50 BEER#3 50356 207410 10225 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 32.10 WINE#3 50356 207411 10228 5085.6520 WINE LIQUOR #3 STOCK PURCHASES 584.10 247491 6N4/2012 109954 BERRY COFFEE COMPANY 226.55 CMF-BEVERAGES FOR MTGS, ETC 62749 207645 1018458 1540.6229 GENERAL SUPPLIES CMF BUILDINGS & GROUNDS MNTC 156.75 CH-BEVERAGES FOR MTGS, ETC 41013 207646 1021488 1060.6229 GENERAL SUPPLIES MUNICIPAL BLDG & GROUNDS MNTC 117.75 POL-BEVERAGES FOR MTGS, ETC 41039 207647 1018443 1250.6229 GENERAL SUPPLIES POLICE FACILITY 501.05 247492 6/14/2012 101008 BINFORD & ASSOCIATES INC 516.34 POOL-RAMUC WHITE, BLUE PAINT 00055400 207434 20234 1930.6229 GENERAL SUPPLIES REDWOOD POOL 516.34 247493 6114/2072 100797 BLOOMINGTON SECURITY SOLUTIONS 272.01 CMF-DOOR SOLENOID 00068333 207687 S78084 1540.6215 EQUIPMENT-PARTS CMF BUILDINGS & GROUNDS MNTC 272.01 247494 6/74/2012 100069 BOSSARDT CORPORATION 11,875.00 GOIF CONST MGMNT SERVICE MAY 207386 10457 5190.6235 2011137G CONSULTANT SERVICES GOLF CLUBHOUSE CONSTRUCTION 11,875.00 247495 6174l2012 735548 BOSTROM SHEET METAL WORKS, INC 16,620.10 SENIOR CENTER PMT #12 FINAL 207719 4938.6810 CONSTRUCTION IN PROGRESS 2007 SENIOR CENTER PROJECT 16,620.10 247496 6/74/2012 142817 BRETH-ZENZEN FIRE PROTECTION, 16,39225 VW CLUBHOUSE-APPL #2 207774 5190.6810 2011137G CONSTRUCTION IN PROGRESS GOLF CLUBHOUSE CONSTRUCTION 16,392.25 247497 6174l2012 100932 BUDGET 3ANDBLASTING 8� PAINTING 16,016.00 STR-PAINT LIGHT POLES 207768 1625.6249 2012120R OTHER CONTRACTUAL SERVICES STREET RING ROUTE MAINT 16,016.00 247498 6/74@Q12 1429U0 CANNON CONSTRUCTION, INC. 12,856.35 VW CLUBHOUSE-APPL #3 207772 • 5190.6810 2011137G CONSTRUCTION IN PROGRESS C�OLF CLUBHOUSE CONSTRUCTION 12,856.35 247499 6114@072 100089 CARQUEST R55CKREG LOG20000 CITY OF APPLE VALLEY 6/14/2012 11:09:35 Council Check Register Page - 8 5/31/2012 -6/15/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 4.22 PK GREASE CAPS 35338 207623 1594171154 1765.6215 EQUIPMENT-PARTS PARK EQUIPMENT MAINTENANCE 20.81 POL AC COIL CLEANER #1 35174 207624 1594171010 1210.6215 EQUIPMENT-PARTS POLICE FIELD OPERATIONS/PATROL 31.43 POL AUTO TENSIONER 35174 207625 1594171113 1210.6215 EQUIPMENT-PARTS POLICE FIELD OPERATIONS/PATROL 70.52 PK BRAKE CNTRL #243 35174 207626 1594171177 1765.6215 EQUIPMENT-PARTS PARK E�UIPMENT MAINTENANCE 2.57 SHOP FUSE 35174 207627 1594171463 1530.6215 EQUIPMENT-PARTS CMF SHOP EQUIP MNTC & REPAIR 40.44 SHOP UTIL ROLL 35174 207628 1594171538 1530.6215 EQUIPMENT-PARTS CMF SHOP EQUIP MNTC 8 REPAIR 39.05 UTIL UTIL ROLL 35174 207629 1594171538 5345.6215 EQUIPMENT-PARTS WATER EQUIPNEHICLE/MISC MNTC 39.05 STR UTIL ROLL 35174 207630 1594171538 1630.6215 EpUIPMENT-PARTS STREET EQUIPMENT MAINTENANCE 2.31 SHOP OIL FLTR #701 35174 207631 1594171546 1530.6215 EQUIPMENT-PARTS CMF SHOP EQUIP MNTC & REPAIR 15.40 PK CIRCUIT BREAKER #218 35338 207632 1594171810 1765.6215 EQUIPMENT-PARTS PARK EQU�PMENT MAINTENANCE 9.36 STR SPARK PLUGS 35174 207633 1594171526 1630.6215 EQUIPMENT-PARTS STREET EQUIPMENT MAINTENANCE 297.49 INSP FUEL PUMP/LOCK CYL #107 35174 207634 1594171675 1400.6215 EQUIPMENT-PARTS INSPECTIONS MANAGEMENT 47.13 STR SEA FOAM 35174 207635 1594171703 1630.6229 GENERAL SUPPLIES STREET EQUIPMENT MAINTENANCE 24.57 POL UN DYE 35174 207636 1594171923 1210.6215 EQUIPMENT-PARTS POLICE FIELD OPERATIONS/PATROL 24.57 STR UN DYE 35174 207637 1594171923 1630.6215 EQUIPMENT-PARTS STREET EQUIPMENT MAINTENANCE 296.98 POL EQ PARTS #30 35174 207638 1594171997 1210.6215 EQUIPMENT-PARTS POLICE FIELD OPERATIONS/PATROL 12.16 PK IMPACT SOCKET 35338 207639 1594172278 1765.6211 SMALL TOOLS & EQUIPMENT PARK EQUIPMENT MAINTENANCE 70.18 PK BRAKE PAD #240 35174 207640 1594172196 1765.6215 EDUIPMENT-PARTS PARK EQUIPMENT MAINTENANCE 30.25- FIRE CR GAS CAPS #4988 35174 207641 1594172606 1350.6215 EQUIPMENT-PARTS FIRE VEHICLE MAINTENANCE 36.48 FIRE GAS CAPS #4988 35174 207642 1594172589 1350.6215 EQUIPMENT-PARTS FIRE VEHICLE MAINTENANCE 22.44- POL CR A/C COMP CORE 35174 207643 1594172509 1210.6215 EQUIPMENT-PARTS POLICE FIELD OPERATIONS/PATROL 50.34 STR AIR/OIL FILTERS 35174 207644 1594172504 1630.6215 EQUIPMENT-PARTS STREET EQUIPMENT MAINTENANCE 1,082.37 247500 6/14/2072 117458 CHISAGO LAKES DISTRIBUTING CO 403.15 BEER #1 42951 207390 473606 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 933.95 BEER #3 42951 207391 471801 5085.6530 BEER LIGIUOR #3 STOCK PURCHASES 355.35 BEER #3 42951 207392 472947 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 1,692.45 247501 6114/2012 100100 CNH ARCHITECTS 6,254.83 GOLF CLUBHOUSE ARCHITECT MAY 207387 9386 5190.6235 2011137G CONSULTANT SERVICES GOLF CLUBHOUSE CONSTRUCTION 6,254.83 247502 6/7412012 100314 COCA-COLA REFRESHMENTS USA, IN 357.20 TAX#1 122 207521 118442713 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 453.31 TAX#1 122 207522 118443604 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 26.88 NOTAX#1 122 207523 118443604 5015.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 109.44 TAX#2 122 207524 178457825 5055.6540 TAXABLE MISC FOR RESALE LIQUOR #2 STOCK PURCHASES 17.33- CMTAX#2 122 207525 178459211 5055.6540 TAXABLE MISC FOR RESALE LIQUOR #2 STOCK PURCHASES 238.56 TAX#2 122 207526 178459210 5055.6540 TAXABLE MISC FOR RESALE LIQUOR #2 STOCK PURCHASES 4.60- CMTAX#3 122 207527 118443315 ° ' S085.6540 TAXABLE MISC FOR RESALE LIQUOR #3 STOCK' 'dASES CITY OF API- .LLEY 6/1•. 19:09:35 R55GKREG rc>G20000 "` Council Check Register Page - 9 5/31/2012 -6/15/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 321 .68 TAX#3 122 207528 118443314 5085.6540 TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 1,485.14 247503 6114/2072 122365 CONROY PH D, DENNIS L 750.00 POL-CONSULT, OFFICER POST SHOO 207450 1200.6235 CONSULTANT SERVICES POLICE MANAGEMENT 750.00 247504 6H4/2012 122019 CROWN RENTAL CO INC 24.8 PK-SCREW, GASKETS FOR BLOWEI�0047286 207700 W4807 1765.6265 REPAIRS-EQUIPMENT PARK EQUIPMENT MAINTENANCE 24.84 247505 6/14/2012 128708 DAKOTA COUNTY 20.00 CLERK NOTARY-GACKSTETTER 00068615 207708 1015.6280 DUES & SUBSCRIPTIONS CITY CLERK/ELECTIONS 20.00 CLERK NOTARY-HARRIS 00068615 207708 1015.6280 DUES & SUBSCRIPTIONS CITY CLERWELECTIONS 40.00 247506 6/1412012 100569 DAKOTA COUNTY FINANCIAL SERVIC 353,559.22 COUNTY PROJ 23-59 207364 1868 4702.6735 2010108G CAPITAL OUTLAY-OTHER IMPROVEME CEDAR AVENUE 4,468.88 COUNTY PROJ 23-64 207365 1874 4702.6735 2010108G CAPITAL OUTLAY-OTHER IMPROVEME CEDAR AVENUE 358,028.10 247507 6/14@012 100122 DAKOTA COUNTY TREASURER-AUDITO 8,11720 Prop taxes McNamara / Flagsta 207819 01-47900-00-010 4703.6710 2011105G CAPiTAL OUTLAY-IAND FLAGSTAFF EXTENSION Suppiier 129779 DAKOTA COUNTY PROPERTY TAXATIO 14,818.59 Special Asmt Johny Cake Ridge 207820 01-32901-01-020 3207.6312 TAXES/SPECIAL ASSESSMENTS CLOSED BOND ISSUES Supplier 129779 DAKOTA COUNTY PROPERTY TAXATIO 1.53 prop Taxes Cobblestone Park 207821 01-18070-00-140 3207.6312 TAXES/SPECIAL ASSESSMENTS CLOSED BOND ISSUES Supplier 729779 DAKOTA COUNTY PROPERTY TAXATIO 1.53 prop Taxes Cobblestone Park 207822 01-18070-00-040 3207.6312 TAXES/SPECIAL ASSESSMENTS CLOSED BOND ISSUES Supplier 129779 DAKOTA COUNTY PROPERTY TAXATIO 1.53 prop Taxes Cobbiestone Park 207823 01-18070-00-100 3207.6312 TAXES/SPECIAL ASSESSMENTS CLOSED BOND ISSUES Supplier 129779 DAKOTA COUNTY PROPERTY TAXATIO 1.53 prop Taxes Cobblestone Park 207824 01-18070-00-010 3207.6312 TAXES/SPECIAL ASSESSMENTS CLOSED BOND ISSUES Supplier 729779 DAKOTA COUNTY PROPERTY TAXATIO 260.37 prop Taxes Cobblestone Pavk 207825 01-18060-00-060 3207.6312 TAXESlSPECIAL ASSESSMENTS CLOSED BOND ISSUES Supplier 129779 DAKOTA COUNTY PROPERTY TAXATIO 211.22 prop Taxes Cobblestone Park 207826 01-18060-00-010 3207.6312 TAXESISPECIAL ASSESSMENTS CLOSED BOP1D ISSUES Supplier 129779 DAKOTA COUNTY PROPERTY TAXATIO 163.57 prop Taxes Cobblestone Park 207827 01-18052-00-130 3207.6312 TAXES/SPECIAL ASSESSMENTS CLOSED BOND ISSUES Supplier 129779 DAKOTA COUNTY PROPERTYSAXATIO 151.36 prop Taxes Cobblestone Park 207628 01-18052-00-070 3207.6312 TAXES/SPECIAI ASSESSMENTS CLOSED BOND ISSUES Supplier 129779 DAKOTA COUNTY PROPERTY TAXATIO R55CKREG LOG20000 CITY OF APPLE VALLEY 6/14/2012 11:0935 Council Check Register Page - 10 5/31 /2012 - 6H 5/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv Na Account No Subledge Account Description Business Un 29.81 prop Taxes Galaxie pond ROW 207829 01-22425-00-010 3207.6312 TAXES/SPECIAL ASSESSMENTS CLOSED BOND ISSUES Supplier 129779 DAKOTA COUNTY PROPERTY TAXATIO 23,758.24 247508 6I14/2012 100148 DPC INDUSTRIES INC 467.00 UTIL-CHLORINE 207688 8270070312 5325.6214 CHEMICALS WATER TREATMENT FCLTY MNTC/RPR 467.00 247509 6/1412012 107403 ENEBAK CONSTRUCTION 19,114.38 EAGLE RIDGE BUSINESS PARK 207785 4502.6810 2011141G CONSTRUCTION IN PROGRESS CONSTRUCTION PROJECTS 40,375.00 EAGLE RIDGE BUSINESS PARK 207785 4502.6810 2011141G CONSTRUCTION IN PROGRESS CONSTRUCTION PROJECTS 59,489.38 247510 6114/2012 741795 EXCEL TURF AND ORNAMENTAL 545.06 GOLF-FUNGICIDE 00050884 207431 9259 5150.6214 CHEMICALS GOLF COURSE MAINTENANCE 545.06 247511 6/74/2012 700177 FLUEGEL ELEVATOR INC 363.69 GOLF-FLOWERS 00067268 207779 714084 5150.6229 GENERAL SUPPUES GOLF COURSE MAINTENANCE 138.94 STR-SUNDRY 00069060 207780 774098 1610.6229 GENERAL SUPPLIES STREET/BOULEVARD REPAIR & MNTC 502.83 247b12 6/1412072 100995 GENUINE PARTS CO-MINNEAPOLIS 4.89 PK FUSE 35350 207354 444075 1765.6215 E�UIPMENT-PARTS PARK EQUIPMENT MAINTENANCE 20.10 GOLF FUEL FLTR/INSERTS 35390 207355 444686 5155.6215 EQUIPMENT-PARTS GOLF EQUIPMENT MAINTENANCE 98.84 GOIF FUEL FLTR/FUSE 35390 207356 444685 5155.6215 EQUIPMENT-PARTS GOLF EQUIPMENT MAINTENANCE 32.06 GOLF EQ PART 35390 207357 445266 5155.6215 EQUIPMENT-PARTS GOLF EQUIPMENT MAINTENANCE 10.14 STR NOS SEAL 35835 207358 444605 1630.6215 EQUIPMENT-PARTS STREET EQUIPMENT MAINTENANCE 166.03 247513 6/14/2012 102694 GERTENS 3,659.40 STR-RPLCMENT TREES, RING RODU6051129 207435 253412 1625.6229 GENERAL SUPPLIES STREET RING ROUTE MAINT 3,659.40 247674 6/14/2072 738448 HARTFORD GROUP BENEFITS DIVISI 171.95 BASIC LIFE INSURANCE 207794 58816562 9000.2117 ACCRUED LIFE INSUR-BASIC PAYROLL CLEARING BAL SHEET 8,466.45 SUPP/DEP LIFE INSURANCE 207794 58816562 9000.2118 ACCRUED LIFE INSUR-SUPP/DEPEND PAYROLL CLEAR�NG BAL SHEET 8,638.40 247575 6l1412012 700510 HD SUPPLY WATERWORKS LTD _ 2,209:77 UTIL-WATER METERS FOR RESALE00035249 207438 4789974 5310.6540 TAXABLE MISC FOR RESALE WATER METER RPR/REPLACE/READNG 1,466.98 UTIL-WATER METERS FOR RESALE00035249 207439 4789973 ` 5310.6540 TAXABLE MISC FOR RESALE WATER METER RP' 'LACElREADNG CITY OF APF. +LLEY 6/1a ;11:0935 R55CKREG Lvi�20000 "' Council Check Register Page - 11 5/31/2012 -6/15/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledge Account Description Business Unit 3,676.75 247516 6/14/2012 101431 HEALTH FUND, THE 130.50 HEALTH FUND DEDUCTION 207332 60612808149 9000.2120 ACCRUED BENEFIT LIABILITY PAYROLL CLEARING BAL SHEET 130.50 247577 6174/2012 142866 HEALTHPARTNERS 4.43 NEW HIRE L. FREY EFF 6/1l12 207�93 7105.6146 DENTAL INSURANCE INSURANCE TRUST DENTAL 925.87 CONSULT/ADM FEES ON INVOICE FR 207793 7105.6146 DENTAL INSURANCE INSURANCE TRUST DENTAL 930.30 247518 6l7412012 700231 HOHENSTEINS INC 135.00 BEER#1 5574 207412 599198 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 694.38 BEER#1 5574 207413 599219 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 809.50 BEER#1 5574 207414 601051 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 135.00 BEER#1 5574 207415 601935 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 1,251.34 BEER#1 5574 207416 602811 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 387.50 BEER#2 5574 207417 599365 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 430.45 BEER#2 5574 207418 601052 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 382.50 BEER#2 5574 207419 602819 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 1,067.50 BEER#3 5574 207420 599366 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 28.00 TAX#3 5574 207421 599366 5085.6540 TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 76.50 BEER#3 5574 207422 601003 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 1,128.95 BEER#3 5574 207423 601053 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 199.00 BEER#3 5574 207424 601936 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 1,359.00 BEER#3 5574 207425 602818 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 8,084.62 247b19 6114I2012 100242 INDEPENDENT BLACK DIRT CO 224.44 GOLF-BLACK DIRT 35385 207656 9584 5150.6229 GENERAL SUPPLIES GOLF COURSE MAINTENANCE 27.79 UTIL-BLACK DIRT, WALNUT/RIDGEV35235 207657 9625 5330.6229 GENERAL SUPPLIES WTR MAIN/HYDRANT/CURB STOP MNT 69.47 CEMETERY-BLACK DIRT 35429 207658 9608 5605.6229 GENERAL SUPPLIES CEMETERY 69.47 CEMETERY-BLACK DIRT 35429 207659 9601 5605.6229 GENERAL SUPPLIES CEMETERY 27.79 PK-BLACK DIRT 35343 207660 9786 1720.6229 GENERAL SUPPLIES PARK GROUNDS MAINTENANCE 224.44 GOLF-BLACK DIRT 35385 207661 9766 5150.6229 GENERAL SUPPLIES GOLF COURSE MAINTENANCE 240.47 PK-1-2-1 MIX 35343 207662 9820 1715.6229 GENERAL SUPPLIES PARK ATHLETIC FIELD MAINTENANC 240.47 PK-1-2-1 MIX 35343 207663 9819 1715.6229 GENERAL SUPPLIES PARK ATHLETIC FIELD MAINTENANC 69.47 STR-BLACK DIRT FOR RR TREES 35429 207664 9818 1610.6229 GENERAL SUPPLIES STREET/80ULEVARD REPAIR 8 MNTC 1,193.81 247520 6/74/2012 143159 IRBY, TUNISIA 400.00 HCSC DAMAGE DEPOSIT REFUND 207788 1001.5116 RENTS-HAYES COMM & SENIOR CTR GENERAL FUND REVENUE R55CKREG LOG20000 CITY OF APPLE VALLEY 6/14/2012 11:09:35 Council Check Register Page - 12 5l31/2012 -6/1b/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledge Account Description Business Unit 400.00 247521 6/14/2012 700073 J J TAYLOR DISTRIBUTING CO OF 5,449.87 BEER#1 116 207529 1755094 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 15.00 TAX#1 116 207530 1755094 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 44.60 NOTAX#1 116 207531 1755094 5015.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 6,478.95 BEER#1 116 207532 1776923 5015.6530 BEER IIQUOR #1 STOCK PURCHASES 10,166.80 BEER#1 116 207533 1776952 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 83.40 NOTAX#1 116 207534 1776952 5015.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 167.00 BEER#1 116 207535 1776955 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 8,914.43 BEER#1 116 207536 1807420 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 15.00 TAX#1 116 207537 1807420 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 38.80 NOTAX#1 116 207538 1807420 5015.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 330.00 BEER#1 116 207539 1807421 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 30.00- CMBEER#1 116 207540 1182688 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 4,270.47 BEER#1 116 207541 1776472 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 91.00 BEER#1 116 207542 1813205 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 3,399.25 BEER#2 116 207543 1776867 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 1,965.75 BEER#2 116 207544 1776915 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 6,714.76 BEER#2 116 207545 1776964 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 15.00 TAX#2 116 207546 1776964 5055.6540 TAXABLE MISC FOR RESALE LIQUOR #2 STOCK PURCHASES 3,720.00 BEER#2 116 207547 1776998 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 3,441.85 BEER#2 116 207548 1807452 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 44.60 NOTAX#2 116 207549 1807452 5055.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #2 STOCK PURCHASES 262.00 BEER#2 116 207550 1776473 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 4,554.85 BEER#3 116 207551 1776866 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 92.30 BEER#3 116 207552 1776872 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 1,829.05 BEER#3 116 207553 1776914 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 7,464.25 BEER#3 116 207554 1776962 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 38.80 NOTAX#3 116 207555 1776962 5085.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 84.00 BEER#3 116 207556 1776969 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 5,077.90 BEER#3 116 207557 1807418 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 23.00 TAX#3 116 207558 1807418 5085.6540 TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 44.60 NOTAX#3 116 207559 1807418 5085.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 4,424.91 BEER#3 116 207560 1807450 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 15.00 TAX#3 116 207561 1807450 5085.6540 TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 38.80 NOTAX#3 116 207562 1807450 5085.6545 NON-TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 79,285.99 247522 6/14/2012 743037 JIM MURR PLUMBING, INC. . 36,271.00 VW CLUBHOUSE-APPL #2 207775 5190.6810 2011137G CONSTRUCTION IN PROGRESS GOLF CLUBHOUSE CONSTRUCTION CITY OF APP:. .�LEY 6/14. s 1:09:35 RSSCKREG CCi�20000 "°' ° Council Check Register Page - 13 5/31/2012 -6/15/2012 Check # Dale Amount Supplier! Explanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 36,271.00 247523 6114/2012 102759 JOHN DEERE LANDSCAPES/LESCO 392.27 GOLF-INSECTICIDE BAIT 00047782 207430 61495712 5150.6214 CHEMICALS GOLF COURSE MAINTENANCE 392.27 247524 6114I2072 102937 JRK SEED S TURF SUPPLY INC 413.61 PK-BAGS OF BLUE RYE 00049835 207444 4383 1715.6229 GENERAL SUPPLIES PARKATHLETIC FIELD MAINTENANC 1,854.28 PK-LINE CHALK 00049835 207699 4466 1715.6229 GENERAL SUPPLIES PARK ATHLETIC FIELD MAINTENANC 2,267.89 247525 6114/2012 132646 KWIK KOPY BUSINESS SOLUTIONS 45.96 POL-BUS CARDS, DEMING 00067583 207445 11615 1200.6239 PRINTING POLICE MANAGEMENT 45.96 247526 6114/2012 143160 LATOUR CONSTRUCTION INC 14,055.44 FLAGSTAFF AVE EXTENSION 207786 5385.6810 2011105G CONSTRUCTION iN PROGRESS SEWER STORM INFRASTRUCTURE 29,732.63 FLAGSTAFF AVE EXTENSION 207786 5360.6810 2011105G CONSTRUCTION IN PROGRESS CONSTRUCTION PROJECTS 129,495.50 FLAGSTAFF AVE EXTENSION 207786 4703.6810 2011105G CONSTRUCTION IN PROGRESS FLAGSTAFF EXTENSION 153;348.23 FLAGSTAFF AVE EXTENSION 207786 5360.6810 2011105G CONSTRUCTION IN PROGRESS CONSTRUCTION PROJECTS 326,631.80 247527 6/14/2012 700659 LAVERNES PUMPING SERVICE 205.00 PK-PUMP HUNTINGTON 00050732 207448 11235 1730.6266 REPAIRS-BUILDING PARK BUILDING MAINTENANCE 410.00 QP-PUMP HOLDING TANKS 00050732 207448 11235 1945.6266 REPAIRS-BUILDING QUARRY POINTE 225.00 GOLF-PUMP HOLDING TANKS 00050894 207449 11236 5110.6266 2011138G REPAIRS-BUILDING GOLF CLUBHOUSE BUILDING 840.00 247528 6/74/2012 703338 LEROY JOB TRUCKING7NC 170.00 STR-EMPTY ROAD KILL FREEZER 00062928 207778 14793 1610.6240 CLEANING SERVICE/GARBAGE REMOVSTREET/BOULEVARD REPAIR & MNTC 170.00 247529 6/14/2012 137634 LIFT BRIDGE BREWERY 168.00 BEER#3 50160 207568 311021 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 168.00 247530 6/1412012 141863 LIONS ALL STAR BASEBALL TOURNA 135.00 GOLF-AD IN TOURNEY PROGRAM 00068727 207695 5105.6239 , PRINTING GOLF MANACoEMENT 135,00 247531 6/14/2072 101616 LMC INSURANCE TRUST 172.36 WC DEDUCTIBLE-LAFFRENZEN-MAY 207679 7205.6315 WORKERS COMP-DEDUCTIBLE RISK MANAGEMENTS/INSURANCE R55CKREG LOG20000 CITY OF APPLE VALLEY 6/14/2012 11:09:35 Council Check Register Page - 14 5/31/2012 -6/15/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account N Subledge Account Description Business U nit 191.87 WC DEDUCTIBLE-RAMSTAD-MAY 207680 7205.6315 WORKERS COMP-DEDUCTIBLE RISK MANAGEMENTS/INSURANCE 2,227.18 WC DEDUCTIBLE-REITEN-MAY 207681 7205.6315 WORKERS COMP-DEDUCTIBLE RISK MANAGEMENTS/INSURANCE 114.59 WC DEDUCTIBLE-GETTING-MAY 207682 7205.6315 WORKERS COMP-DEDUCTIBLE RISK MANAGEMENTS/INSURANCE 11 2.00 WC DEDUCTIBLE-GUMMERT-MAY 207683 7205.6315 WORKERS COMP-DEDUCTIBLE RISK MANAGEMENTS/INSURANCE 2,818.00 247532 6H4/2012 116371 LOFFLER 363.38 IT-TONER FOR FINANCE 207706 1412999 1030.6249 OTHER CONTRACTUAL SERVICES INFORMATION TECHNOLOGY 200.93 IT-TONER FOR POLICE 207707 1409655 7030.6249 OTHER CONTRACTUAL SERVICES INFORMATION TECHNOLOGY 564.31 247533 6/74/2072 101200 LOFFLER COMPANIES INC 71.65 PW COPIER MAINT 00049802 207717 205254436 1500.6265 REPAIRS-EQUIPMENT PW MANAGEMENT 245.59 PW COPIER LEASE 00049802 207717 205254436 1500.6310 RENTAL EXPENSE PW MANAGEMENT 317.24 247534 6/14/2012 700934 LUBRICATION TECHNOLOGIES INC 380.57 STR-DEGREASE 51131 207744 2050452 1630.6212 MOTOR FUELS/OILS STREET EQUIPMENT MAINTENANCE 1,159.72 STR-BULK OIL 51131 207745 2050593 1630.6212 MOTOR FUELS/OILS STREET EQUIPMENT MAINTENANCE 412.09 STR-BUIK OIL 51131 207746 2050593 1630.6212 MOTOR FUELS/OILS STREET EQUIPMENT MAINTENANCE 399.96 PK-BULK OIL 51131 207747 2050593 1765.6212 MOTOR FUELS/OILS PARK EQUIPMENT MAINTENANCE 399.96 FIRE-BULK OIL 51131 207748 2050593 1350.6212 MOTOR FUELS/OILS FIRE VEHICLE MAINTENANCE 75.00- SHOP-USED OIL PICK UP, CREDIT 68330 207749 1530.6212 MOTOR FUELS/OILS CMF SHOP EQUIP MNTC & REPAIR 2,677.30 247535 6H4/2012 142858 LUCID BREWING 240.00 BEER#3 51098 20�569 454 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 240.00 247536 6/74/2012 119353 MADISON NATIONAL LIFE INS CO I 227.50 STD FEES 207792 1020.6235 CONSULTANT SERVICES HUMAN RESOURCES 2,836.81 LTD INSURANCE 207792 9000.2113 ACCRUED LTD PAYROLL CLEARING BAL SHEET 3,064.31 247537 6/14/2012 100294 MAIL PACK 8 SHIP 97:44 PW-FED EX TO D. MAINS, MAGELLA68585 207673 AV025 4712.6399 2011107G OTHER CHARGES 147TH ST EXT FLAGSTF TO JCAKE 5.44 UTIL-SHIP FLOURIDE SAMPLES 67430 207674 AV025 5325.6238 POSTAGE/UPS/FEDEX WATER TREATMENT FCLTY MNTCIRPR 45.02 UTIL-SHIP LOCATOR FOR RPR, SCF67435 207675 AV025 5330.6238 POSTAGE/UPS/FEDEX WTR MAINIHYDRANT/CURB STOP MNT 147.90 24T538 6/14/2012 100601 MCFOA 35.00 CLERK DUES GACKSTETTER 207385 61312 1015.6280 DUES & SUBSCRIP710NS CITY CLERK/ELECT , R55CKREG Lvt,20000 CITY OF APF,, .ILEY 6/14 11:09:35 Council Check Register Page - 15 5/31/2012 —6/15/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 35.00 247539 6/14/2012 100302 MCNAMARA CONTRACTING INC 9,549.40 2012 STREET MAINT PROJECT 207784 4940.6810 2012101 R CONSTRUCTION IN PROGRESS 2007 GENERAL PARK IMPROVEMENTS 34,782.48 2012 STREET MAINT PROJECT 207784 2027.6810 2012101 R CONSTRUCTION IN PROGRESS ROAD ESCROW 49,258.55 2012 STREET MAINT PROJECT 207784 5360.6810 2012101 R CONSTRUCTION IN PROGRESS CONSTRUCTION PROJECTS 54,695J3 2012 STREET MAINT PROJECT 207784 2027.6810 2012101R CONSTRUCTION IN PROGRESS ROAD ESCROW 272,119.76 2012 STREET MAINT PROJECT 207784 2027.6810 2092901R CONSTRUCTION IN PROGRESS ROAD ESCROW 420,405.92 247540 6H4/2012 101749 MET-CON CONSTRUCTION, INC. 22,011.50 VW CLUBHOUSE-APPL #5 207771 5190.6810 2011137G CONSTRUCTION IN PROGRESS GOLF CLUBHOUSE CONSTRUCTION 22,011.50 247541 6/14/2012 700311 METRO COUNCIL ENVIRONMENTAL SV 192,329.00 WASTEWATER SVC-JULY 207716 990841 5365.6317 METRO WASTE CONTROL PAYMENT SEWER MGMT/REPORTS/DATA ENTRY 192,329.00 247542 6/74I2072 100334 MN DEPT OF HEALTH 24,07 5.00 WATER SVC CONNECT FEE-2ND QTR 207215 5300.2332 STATE WATER TESTING FEE WATER & SEWER FUND BAL SHEET 24,075.00 247643 6114/2012 100572 MPELRA 225.00 MPELRA SUMMER CONF DULUTH HAAS 207383 61312 1020.6276 SCHOOLS/CONFERENCES/EXP OTHERHUMAN RESOURCES 225.00 247544 6/14/2012 700348 MTI DISTRIBUTING CO 3,647.54 NR-FOUNTAIN 51115 207758 84431100 5505.6211 2010132G SMALL TOOLS 8 EQUIPMENT STORM DRAIN UTILITY 163.50 PK-MAINT, LABOR#218 35349 207759 84354300 1765.6265 REPAIftS-EQUIPMENT PARK EQUIPMENT MAINTENANCE 241.98 PK-MAINT, LABOR #218 35349 207760 84255100 1765.6265 REPAIRS-EQUIPMENT PARK EQUIPMENT MAINTENANCE 1,298.42 PK-IRRIG PARTS 35349 207761 84340000 1780.6215 EQUIPMENT-PARTS PARK HIGH SCHQOL #4 FfELDS 432.81 PK-IRRIG PARTS 35349 207762 84340000 1715.6215 EQUIPMENT-PARTS PARKATHLETIC FIELD MAINTENANC 120:11 PK-FITTING, PIVOT SHAFT 35349 207763 84145600 1765.6215 EQUIPMENT-PARTS PARK EQUIPMENT MAINTENANCE 100.42 PK-HOC PLATE ASM 35349 207764 84070900 1765.6215 EQUIPMENT-PARTS PARK EQUIPMENT MAINTENANCE 42,834.21 GOLF-'13 TORO REELMASTER #52700051110 207765 83925600 MACHINERY & EQUIP-8 YRS GOLF FUND BALANCE SHEET 5100.1740.096 48,838.99 247545 6I74/2012 120496 NATURE CALLS INC 1,405.07 PK CHEMICAL TOILETS-JUNE 50750 207723 15932 1770.6310 RENTAL EXPENSE PARK GENERAL MAINTENANCE 56.68 PK CHEMICAL TOILETS-JUNE 50750 207724 15932 1780.6310 RENTAL EXPENSE PARK HIGH SCHOOL #4 FIELDS 283.43 GOLF CHEMICAL TOILETS-JUNE 50750 207725 15933 5150.6310 RENTAL EXPENSE GOLF COURSE MAINTENANCE R55CKREG LOG20000 CITY OF APPLE VALLEY 6/14/2012 11:09:35 Council Check Register Page - 16 5/31/2012 -6/15/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 1,315.95 PK CHEMICAL TOILETS-JUNE 50750 207726 15933 1770.6310 RENTAL EXPENSE PARK GENERAL MAINTENANCE 3,061:13 247548 6/74/2012 100704 NOKOMIS SHOE SHOP 149.95 UTIL-BOOTS, JENSEN 00045231 207429 526941 5365.6281 UNIFORM/CLOTHING ALLOWANCE SEWER MGMT/REPORTS/DATA ENTRY 149.95 247547 6114/2012 100374 PEPSI-COLA COMPANY 315.20 TAX#1 2171 207563 72914146 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 300.00 TAX#1 2171 2Q7564 72914161 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 121.00- CMTAX#1 2171 207565 72914282 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 11920 TAX#2 2171 207566 63778600 5055.6540 TAXABLE MISC FOR RESALE LIQUOR #2 STOCK PURCHASES 153.10 TAX#2 2171 207567 63778638 5055.6540 TAXABLE MISC FOR RESALE LIQUOR #2 STOCK PURCHASES 766.50 247648 6H4�2012 100387 POSTMASTER ST PAUL 3,07523 REC CITY NEWSLETTER 207389 61312 1700.6238 POSTAGE/UPS/FEDEX PARK 8 RECREATION MANAGEMENT 190.00 FIN STANDARD MAIL FEE-2012 207718 1035.6238 POSTAGE/UPS/FEDEX FINANCE 3,265.23 247549 6I14/2072 700376 POWER PLAN 22.85 PK-FITTING 00068334 207690 P83997 1765.6215 EQUIPMENT-PARTS PARK EQUIPMENT MAINTENANCE 22.85 PK-FITTING 00068334 207691 P84116 1765.6215 EQUIPMENT-PARTS PARK EQUIPMENT MAINTENANCE 45.70 247b50 6N4/2012 700578 PROACT INC 637.73 REC HNDCP SVC-MAY 207714 43612 1810.6249 OTHER CONTRACTUAL SERVICES REC HANDICAPPED PROGRAMS 837.73 247551 6/14/2012 742875 REGAL CONTRACTORS INC. 49,414.25 VW CLUBHOUSE-APPL #4 207773 5190.6810 2011137G CONSTRUCTION IN PROGRESS GOLF CLUBHOUSE CONSTRUCTION 49,414.25 247662 6/74I2012 721657 REGIONS HOSPITAL 62.14 POL-MEDICAL RECORDS, JONES 00067582 207451 4933031 1215.6249 OTHER CONTRACTUAL SERVICES POLICE DETECTIVE UNIT 62.14 247553 6I14I2012 100420 SA-AG INC 409.11 PK-BUCKSHOT FOR AVCC PLAYGRm5Ltb3 207735 75457 4940.6229 GENERAL SUPPLIES 2007 GENERAL PARK IMPROVEMENTS 933.93 PK-BUCKSHOT FOR AVCC PLAYGRO5Ifb3 207736 75415 4940.6229 ("iENERAI SUPPLIES 2007 GENERAL PARK IMPROVEMENTS 271.63 PK-FILL SAND, MORTAR SAND 35353 207737 75297 1745.6229 GENERAL SUPPLIES PARK CRT/GAME AREA MAINTENANCE 138.62 PK-FILL SAND, MORTAR SAND 35353 207738 75269 1745.6229 GENERAL SUPPLIES PARK CRT/GAME P' '9AINTENANCE RSSCKREG CvG20000 CITY OF APF, cLLEY 6/1a i 1:09:35 Council Check Register Page - 17 5/31/2012 -6/15/2012 Check # Date Amount Supplier ! Explan PO # Doc No Inv No Account No Subledge Account Description Business Unit ^ 621.07 PK-MORTAR SAND, JCRP EAST, RED53523 207739 75320 1745.6229 GENERAL SUPPLIES PARK CRT/GAME AREA MAINTENANCE 37329 GOLF-MORTAR SAND 35395 207740 75157 5150.6229 GENERAL SUPPLIES GOLF COURSE MAINTENANCE 19.61 PK-FILL SAND FOR HAYES ARENA 35353 207741 75532 4940.6229 GENERAL SUPPLIES 2007 GENERAL PARK IMPROVEMENTS 24.30 PK-FILL SAND FOR HAYES ARENA 35353 207742 75506 4940.6229 GENERAL SUPPLIES 2007 GENERAL PARK IMPROVEMENTS 369.62 GOLF-MORTAR SAND 35395 207743 75238 5150.6229 GENERAL SUPPLIES GOLF COURSE MAINTENANCE 3,161.18 247554 6/14/2012 142899 SCHAMMEL ELECTRIC, INC. 38,494.00 VW CLUBHOUSE-APPL #3 207777 5190.6810 2011137G CONSTRUCTION IN PROGRESS GOLF CLUBHOUSE CONSTRUCTION 38,494.00 247555 6/14/2012 100432 SEH ENGINEERS 1,532.68 TRAFFIC SIGNAL 157TH/PIL07 KNO 207359 255919 2027.6235 2011140G CONSULTANT SERVICES ROAD ESCROW 216.59 GENERAL TRANSPORTATION SERVICE 20�360 255850 1510.6235 CONSULTANT SERVICES PW ENGINEERING & TECHNICAL 1,749.27 247566 6H4/2012 142823 SHORESH THERAPY AND CONSULTATI 468.75 HR-EAP SESSIONS, MAY 207432 1020.6235 CONSULTANT SERVICES HUMAN RESOURCES 468.75 247557 6114/2012 135157 SILENT KNIGHT SECURITY SYSTEMS 260.00 LIQ1-HARD DRIVE 00067766 207446 5025.6266 REPAIRS-BUILDING LIQUOR #1 OPERATIONS 260.00 247558 6114l2012 179875 SOUTH METRO REN7AL 277.88 STR-WEED TRIMMER 00069058 207437 1610.6211 SMALL TOOLS 8 EQUIPMENT STREET/BOULEVARD REPAIR & MNTC 1,156.39 STR-CNAINSAW 00051128 207781 42147 1610.6211 SMALL TOOLS & EQUIPMENT STREETIBOULEVARD REPAIR & MNTC 1,434.27 247559 6M4/2072 142440 SPRINT 50.00 POL-CELL PHONE TRACKING 00067584 207702 LCI140641 1215.6249 OTHER CONTRACTUAL SERVICES POLICE DETECTIVE UNIT 50.00 247560 B/14/2012 700457 STREICHERS INC 39.99 POL-SHIRT, RECHTZIGEL 00058629 207447 1929683 1200.6281 UNIFORM/CLOTHING ALLOWANCE POLICE MANAGEMENT 39.99 247661 6l14(2U12 125174 SURLY$REWtNG CQ 420.00 BEER#1 47806 207570 2002 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 680.00 BEER#1 47806 207571 2518 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 435.00 BEER#2 478D6 207572 2044 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 1,100.00 BEER#3 47806 207573 2045 5085.6530 BEER LIQUOR #3 STOCK PURCHASES R55CKREG LOG20000 CITY OF APPLE VALLEY 6/14/2012 11:0935 Councii Check Register Page - 18 5/31/2012 —6/15l2012 Check # Date " Amount Supplier / Explanation PO # Doc No Inv No Account No Subledger Account Description Business Unit 2,635.00 247562 6114I2012 101753 SYSCO MINNESOTA, INC 788.12 GOLF-KITCHEN FOOD 27785 207727 206050781 5120.6420 GOLF-FOOD GOLF KITCHEN 42.32 GOLF-KITCHEN SUPPLIES 27785 207728 206050781 5120.6422 GOLF-KITCHEN SUPPLIES GOLF KITCHEN 540.06 GOLF-KITCHEN FOOD 27785 207729 205290645 5120.6420 GOLF-FOOD GOLF KITCHEN 52.17 GOLF-KITCHEN SUPPLIES 27785 207730 205290645 5120.6422 GOLF-KITCHEN SUPPLIES GOLF KITCHEN 1,347.18 SWIM-RESALE 40384 207731 205311402 1940.6540 TAXABLE MISC FOR RESALE AQUATIC SWIM CENTER 386.79 REC-RESALE 40384 207732 205300613 1850.6540 TAXABLE MISC FOR RESALE REC SOFTBALL 96.70 QP-RESALE 40384 207733 205300613 1945.6540 TAXABLE MISC FOR RESAIE QUARRY POINTE 26.71- REC-CREDIT 40384 207734 205300613 1850.6540 TAXABLE MISC FOR RESALE REC SOFTBALL 3,226.63 247563 6I14/2012 100825 TARPS INC 81.61 SWIM-RPR FUNBRELLA 00069109 207701 8792 1940.6269 REPAIRS-OTHER AQUATIC SWIM CENTER 81.61 247564 6/14/2012 142737 THOMPSON CONSTRUCTION OF PRINC 16,823.55 VW CLUBHOUSE-APPL #2 207770 5190.6810 2011137G CONSTRUCTION IN PROGRESS GOLF CLUBHOUSE CONSTRUC710N 16,823.55 247565 6/14/2012 100780 THYSSEN KRUPP ELEVATOR CORPORA 1,401.42 CH-ELEVATOR MAINT-3RD QTR 00035286 207769 3000174136 1060.6266 REPAIRS-BUILDING MUNICIPAL BLDG 8 GROUNDS MNTC 1,401.42 247566 6/1412012 100470 TIMES SQUARE SHOPPING CENTER 1,410.64 LIQ1 TAX ESCROW JUNE 207388 61312 5025.6310 RENTAL EXPENSE LIQUOR #1 OPERATIONS 2,294.99 LIQ1 TAX ESCROW JUNE 207388 61312 5025.6310 RENTAL EXPENSE LIQUOR #1 OPERATIONS 10,000.00 LIQ1 LEASE JUNE 207388 61312 5025.6310 RENTAL EXPENSE LIQUOR #1 OPERATIONS 13,705.63 247567 6/1412012 700474 TOTAL ENTERTAINMENT PRODUCTION 100.00 REC DEPOSIT-DJ 7-3-12 00068954 207704 811 1820.6249 OTHER CONTRACTUAL SERVICES REC CULTURAL PROGRAMS 100.00 247568 6/7412012 141946 TWIN CITIES BOILER REPAIR INC 1,650.00 SVNM-RPR ON AVFAC BOILERS 207433 32354 1940.6265 REPAIRS-EQUIPMENT AQUATIC SWIM CENTER 1,650.00 247569 6I1412012 101587 TVIIIN CITY WATER CLINIC INC � 125.00 WATER SAMPLE-CEDAR & U 139TH 00048457 207705 2213 4702.6399 2010108C, OTHER CHARGES CEDAR AVENUE 125.00 RS5CKREG c..�20000 CITY OF APF iILEY 6/14 11:09:35 Council Check Register Page - 19 5/31/2012 -6/15/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledge Account Description Business Unit 247570 6/14/2072 143167 UNDERGROUND PIERCING, INC. 70,785.03 VW CLUBHOUSE SAN SWR EXTENSION 207787 5190.6810 2011145S CONSTRUCTION IN PROGRESS GOLF CLUBHOUSE CONSTRUCTION 70,785.03 247571 6/14/2012 126275 US BANK OPERATIONS CENTER 12,985.13 POL DCC-JULY 207713 1200.6249 OTHER CONTRACTUAL SERVICES POLICE MANAGEMENT 12,985.13 247572 6/14/2072 142614 USA SAFETY SUPPLY CORP 58.48 STR-YELLOW SAFETY VEST 51076 207665 69878 1600.6281 UNIFORM/CLOTHING ALLOWANCE STREET MANAGEMENT 4.38 ENG-YELLOW SAFTERY VEST 51076 207666 69878 1510.6281 UNIFORM/CLOTHING ALLOWANCE PW ENGINEERING & TECHNICAL 7.01 INSP-YELLOW SAFETY VEST 51076 207667 69878 1400.6281 UNIFORM/CLOTHING ALLOWANCE INSPECTIONS MANAGEMENT 8.77 SHOP-YELLOW SAFETY VEST 51076 207668 69878 1530.6281 UNIFORM/CLOTHING ALLOWANCE CMF SHOP EQUIP MNTC & REPAIR 7.02 NR-YELLOW SAFETY VEST 51076 207669 69878 1520.6281 UNIFORMlCLOTHING ALLOWANCE NATURAL RESOURCES 32.45 STR-YELLOW SAFETY VEST 51076 207670 69878 1600.6281 UNIFORM/CLOTHING ALLOWANCE STREET MANAGEMENT 14.05 UTIL-YELLOW SAFETY VEST 51076 207671 69878 5365.6281 UNIFORM/CLOTHING ALLOWANCE SEWER MGMTlREPORTS/DATA ENTRY 14.05 UTIL-YELLOW SAFETY VEST 51076 207672 69878 5305.6281 UNIFORM/CLOTHING ALLOWANCE WATER MGMTlREPORT/DATA ENTRY 146.21 247573 6l14/2012 700496 VALLEY POOLS & SPAS 12.80 SWIM-DIVERTER NOZZLE 00039278 207426 555628 7940.6229 GENERAI SUPPLIES AQUATIC SWIM CENTER 118.57 POOL-SKIMMER LID COVER 00039278 207426 555628 1930.6229 GENERAL SUPPLIES REDWOOD POOL 104.82 PK-CHLORINE, ANTIFOAMER 00039278 207427 555343 1770.6229 GENERAL SUPPLIES PARK GENERAL MAINTENANCE 145.71 POOL-HINGED WEIR DOOR 00039278 207427 555343 1930.6229 GENERAL SUPPLIES REDWOOD POOL 381.9D 247574 6H4/2012 100839 VALLEY-RICH COMPANY INC 7,808.65 UTIL-SWR RPR 102 CHAPP. CI,R. 00036805 207428 17751 5375.6269 REPAIRS-OTHER SEWER MAINTENANCE AND REPAIR 3,442.60 PK-HYDRANT REMOVAL, ALIMAG. 00036805 207696 17808 1730.6269 REPAIRS-OTHER PARK BUILDING MAINTENANCE 11,251.25 247575 6/14/2012 101012 WD LARSON COMPANIES LTD INC 40.40 PK-FILTERS 35819 207750 6221360276 1765.6215 EQUIPMENT-PARTS PARK EQUIPMENT MAINTENANCE 22.13 STR-FILTERS 35819 207751 6221360283 1630.6215 EQUIPMENT-PARTS STREET EQUIPMENT MAINTENANCE 4822 PK-FILTERS 35819 207752 6221280117 1765.6215 E4UIPMENT-PARTS PARK EQUIPMENT MAINTENANCE 25.22 STR-FILTERS 35819 207753 6221280117 1630.6215 EQUIPMENT-PARTS STREET EQUIPMENT MAINTENANCE 75.03 STR-FILTERS 35819 207754 6221290081 1630.6215 EQUIPMENT-PARTS STREET EQUIPMENT MAINTENANCE 217.00 247576 6/14/2012 137557 WESTERN FINANCE & LEASE 64.25 GOLF MOWER LEASE TO PURCHASE 207715 878366 5150.6323 INTEREST EXPENSE GOLF COURSE MAINTENANCE CITY OF APPLE VALLEY 6/14/2012 11:09:35 RSSCKREG LOG20000 Council Check Register Page - 20 5(31/2012 -6/15/2012 Check # Date Amount Supplier / Expianation PO # Doc No Inv No Account No Subledger Account Description Business Unit 68.41 GOLF MOWER LEASE TO PURCHASE 207715 878366 5150.6310 RENTAL EXPENSE GOLF COURSE MAINTENANCE 930.75 GOLF MOWER LEASE TO PURCHASE 207715 878366 5100.2715 CAPITAL LEASE-NONCURRENT GOLF FUND BALANCE SHEET 1,063.41 247577 6/14/2012 100296 WIRTZ BEVERAGE MIN - BEER INC 1,249.96 BEER#1 105 207574 893783 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 4,303.35 BEER#1 105 207575 894863 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 168.00 BEER#1 105 207576 894864 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 1,989.23 BEER#1 105 207577 896870 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 9,537.39 BEER#1 105 207578 897919 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 899.19 BEER#1 105 207579 900000 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 144.00 BEER#1 105 207580 897920 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 7,465.10 BEER#1 105 207581 901050 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 120.00 BEER#1 105 207582 901052 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 4,391.40 BEER#1 105 207583 903183 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 4,848.85 BEER#1 105 207584 904630 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 752.60 BEER#1 105 207585 906149 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 72.00 BEER#1 105 207586 906150 5015.6530 BEER LIQUOR #1 STOCK PURCHASES 136.70 TAX#1 105 207587 893784 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 78.00 TAX#1 105 207588 896871 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 26.10 TAX#1 105 207589 900001 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 21.50 TAX#1 105 207590 901051 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 31.00 TAX#1 105 207591 903184 5015.6540 TAXABLE MISC FOR RESALE LIQUOR #1 STOCK PURCHASES 2,232.25 BEER#2 105 207592 892322 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 76.50 BEER#2 105 207593 892323 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 2,958.50 BEER#2 105 207594 895384 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 22.50 BEER#2 105 207595 895363 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 72.00 BEER#2 105 207596 895386 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 4,477.30 BEER#2 105 207597 898466 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 48.00 BEER#2 105 207598 898467 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 152.00 BEER#2 105 207599 898468 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 5.20 BEER#2 105 207600 515 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 4,121.85 BEER#2 105 207601 901600 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 96.00 BEER#2 105 2D7602 901601 5055.6530 BEER L�QUOR #2 STOCK PURCHASES 106.00 BEER#2 105 207603 901602 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 1,233.30 BEER#2 105 207604 904544 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 24.00 BEER#2 105 207605 904545 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 76.00 BEER#2 105 207606 904546 5055.6530 BEER LIQUOR #2 STOCK PURCHASES 31.00 TAX#2 105 207607 895385 5055.6540 TAXABLE MISC FOR RESALE LIQUOR #2 STOCK PURCHASES 193.00 TAX#2 105 207608 904547 5055.6540 TAXABLE MISC FOR RESALE LIQUOR #2 STOCK PURCHASES 4,180.10 BEER#3 105 207609 893039 5085.6530 BEER LIQUOR #3 STOCK PURCHASES R55CKREG Lvv20000 CITY OF APF.. �LLEY 6/1•. `11:0935 Council Check Register Page - 21 5/31/2012 -6/15/2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledge Account Description Business Unit 3,418.24 BEER#3 105 207610 . 896107 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 120.00 BEER#3 105 2D�691 896109 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 5,025.75 BEER#3 105 20�612 899179 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 6,050.40 BEER#3 105. : 207613 902378 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 288.00 BEER#3 105 207614 902380 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 2,480.42 BEER#3 105 207615 905368 5085.6530 BEER LIQUOR #3 STOCK PURCHASES 30.40 TAX#3 105 . 207616 893040 5085.6540 TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 14.40 TAX#3 105 207617 896108 5085.6540 TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 36.70 TAX#3 105 207618 899180 5085.6540 TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 115.00 TAX#3 105 207619 899181 5085.6540 TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 30.40 TAX#3 105 207620 902379 5085.6540 TAXABLE MISG FOR RESALE LIQUOR #3 STOCK PURCHASES 23.50 TAX#3 105 207621 905369 5085.6540 TAXABLE MISC FOR RESALE LIQUOR #3 STOCK PURCHASES 73,973.08 247578 6/14/2012 125181 ZAYO ENTERPRISE NETWORKS 46.06 IT LD CALLS MAY 207766 115830004495 1030.6237 TELEPHONE/PAGERS INFORMATION TECHNOLOGY 989.79 IT PHONE ACCESS CHG JUNE 207766 115830004495 1030.6237 TELEPHONE/PAGERS iNFORMATION TECHNOLOGY 66.63- 207766 115830004495 1000.2330 DUE TO OTHER GOVERNMENT GENERAL FUND BALANCE SHEET 877.57 IT PHONE ACCESS CHG JUNE 207767 115830005483 1030.6237 TELEPHONE/PAGERS INFORMATION TECHNOLOGY 56.45- 207767 115830005483 10002330 DUE TO OTHER GOVERNMENT GENERAL FUND BALANCE SHEET 1,790.34 20120544 5/31/2012 142702 BLUE CROSS BWE SHIELD OF MINN 391.50 HSA ACCORD 2500/5000 207795 V3 9000.2115 ACCRUED MEDICAL INSURANCE PAYROLL CLEARING BAL SHEET 4,715.00 HSA ACCORD 4000/8000 207796 W1 9000.2115 ACCRUED MEDICAL INSURANCE PAYROLL CLEARING BAL SHEET 3,174.00 HSA AWARE 2500/5000 (RETIREE) 207797 K3 9000.2115 ACCRUED MEDICAL INSURANCE PAYROLL CLEARING BAL SHEET 45,376.50 HSA AWARE 2500/5000 207798 K1 9000.2115 ACCRUED MEDICAL INSURANCE PAYROLL CLEARING BAL SHEET 25,394.50 HSA ACCORD 2500/5000 207799 W 9000.2115 ACCRUED MEDICAL INSURANCE PAYROLL CLEARING BAL SHEET 792.00 HRA ACCORD 4000l8000 (RETIREE) 207800 U3 9000.2115 ACCRUED MEDICAL INSURANCE PAYROLL CLEARING BAL SHEET 855.00 HRA ACCORD 2500/5000 (RETIREE) 207801 S3 9000.2115 ACCRUED MEDICAL INSURANCE PAYROLL CLEARING BAL SHEET 339.00 HRA ACCORD 4000/8000 207802 U1 9000.2115 ACCRUED MEDICAL INSURANCE PAYROLL CLEARING BAL SHEET 1,019.50 HRA AWARE 4000/8000 207803 J1 9000.2115 ACCRUED MEDICAL INSURANCE PAYROLL CLEARING BAL SNEET 13,745.50 HRA AWARE 2500/5000 207804 F1 9000.2115 ACCRUED MEDICAL INSURANCE PAYROLL CLEARING BAL SHEET 7,267.50 HRA ACCORD 2500/5000 207805 S1 9000.2115 ACCRUED MEDICAL INSURANCE PAYROLL CLEARING BAL SHEET 3,144.50 30 COPAY AWARE (RETIREE) 207806 A3 9000.2115 ACCRUED MEDICAL INSURANCE PAYROLL CLEARING BAL SHEET 1,295.00 30 COPAY AWARE (RETIREE) 207807 A5 90002115 ACCRUED MEDICAL INSURANCE PAYROLL CLEARING BAL SHEET 21,701.00 30 COPAY AWARE 207808 A'I 90002115 ACCRUED MEDICAL INSURANCE PAYROLL CLEARING BAL SHEET 1,233.00 30 COPAY AWARE (RETIREE) 207809 A2 9000.2115 ACCRUED MEDICAL INSURANCE PAYROLL CLEARING BAL SHEET 4,565.00 30 COPAY ACCORD 207810 M1 9000.2175 ACCRUED MEDICAL INSURANCE PAYROLL CLEARING BAL SHEET 1,467.50 0/90% COINSURANCE ACCORD 207811 N1 9000.2115 ACCRUED MEDICAL INSURANCE PAYROLL CLEARING BAL SHEET 1,233.00 0/90% COINSURANCE AWARE 207812 61 9000.2115 ACCRUED MEDICAL INSURANCE PAYROLL CLEARING BAL SHEET CITY OF APPLE VALLEY 6/14/2012 11:09:35 R55CKREG LOG20000 Council Check Register Page - 22 5/3U2012 —6/15l2012 Check # Date Amount Supplier / Explanation PO # Doc No Inv No Account No Subledge Account Description Business Unit 137,709.00 20120610 6/4/2012 700873 HEALTHPARTNERS 4,264.11 DENTAL CLAIMS 5/24-5/30/12 207789 20120530 7105.6146 DENTAL INSURANCE �NSURANCE TRUST DENTAL 4,264.11 20120611 6/71/2012 100873 HEALTHPARTNERS 4,323.81 DENTAL CLAIMS 5/31-6/6/12 207790 20120606 7105.6146 DENTAL INSURANCE INSURANCE TRUST DENTAL 4,323.81 20720612 6/15/2072 130957 GENESIS EMPLOYEE BENEFITS INC 227.88 FLEX SPENDING MEDICAL 2012 207791 120603N 9000.2119 ACCRUED FLEX SPENDING PAYROLL CLEARING BAL SHEET 384.60 FLEX SPENDING DAYCARE 2012 207791 120603N 9000.2119 ACCRUED FLEX SPENDING PAYROLL CLEARING BAL SHEET 612.48 20120613 6/13/2012 729553 US BANK 1,289.19 HSA FUNDING-EMPLOYER 207813 120603C 9000.2125 ACCRUED HSA/HRA BENEFIT PAYROLL CLEARING BAL SHEET 1,289.19 20120614 6/71/2072 100657 MN DEPT OF REVENUE 22,991.45 PAYROLL STATE TAX 207814 120601G 9000.2112 ACCRUED STATE W/H PAYROLL CLEARING BAL SHEET 22,991.45 20120616 6/8/2012 702664 ANCHOR BANK 54,328.95 FEDERAL TAXES PR 207815 120601 B 9000.2111 ACCRUED FEDERAL/FICA PAYROLL CLEARING BAL SHEET 16,309.47 EMPLOYEE FICA 207815 120601 B 9000.2111 ACCRUED FEDERAUFICA PAYROLL CLEARING BAL SHEET 24,076.09 CITY SHARE FICA 207815 120601 B 9000.2111 ACCRUED FEDERAUFICA PAYROLL CLEARING BAL SHEET 7,803.13 EMPLOYEE MEDICARE 207815 1206018 9000.2111 ACCRUED FEDERAUFICA PAYROLL CLEARING BAL SHEET 7,803.13 CITY SHARE MEDICARE 207815 120601 B 9000.2111 ACCRUED FEDERAUFICA PAYROLL CLEARING BAL SHEET 110, 320.77 ' 2,480,598.38 Grand Total ' Payment Instrument Totals ,(� Check Total 2,061,613.37 v�� Transfer Total 281,510.81 6 �� y✓1 L Pay ModeX Total 137,474.20 Total Payments 2,480,598.38