Section 457-307-3 - Eligibility - Direct Investments in Eligible BusinessesA. To be eligible under the Program, each business in which an investment is made must meet the following criteria: 1. The business must be a for-profit enterprise located within the State of Maine, which is: (a) a manufacturer, as determined by the Chief Executive Officer;(b) a seller of goods or a provider of services, 60% or more of the customers of which are located or are from out of the State and the employment functions are carried out predominantly within the State, as determined by the CEO;(c) engaged in the development or application of advanced technologies, as determined by the CEO;(d) a value-added natural resource enterprise, as determined by the CEO; or(e) certified as a visual media production company under 5 M.R.S.A. §13090-L.2. The business receiving the investment must have annual gross sales of $5,000,000 or less as of the date the application is received, as determined by the Chief Executive Officer based on the business's most recent annual financial statements, as well as its most recently available internally prepared interim statements.3. The principal owners of the business must be one or more individuals and the operation of the business must be a substantial professional activity of at least one of the principal owners. The principal owners and their spouses are not eligible for a credit for investment in that business. The principal owner's parents, brothers, sisters and children (and their spouses) are not eligible for a credit for investment in that business if they have any existing ownership in that business. Investors may participate in the operation of the business on a part time basis.4. The business must be formed as a corporation, partnership, limited liability company, joint venture, or other legal business entity, and, if applicable, must be in good standing and authorized to do business in the State of Maine.B. To be eligible under the Program, each investment must meet the following criteria: 1. The investment must be at-risk in the business and may not be secured by a lien on business assets or a personal guaranty of any principal owner. The investment must be provided to and used by the business for acquisition, improvement, or maintenance of real property or fixed assets, research and development or working capital, and not for repayment of equity investment. Other uses may be approved by the Chief Executive Officer on a case-by-case basis provided that the use is consistent with the purposes of the Program and is not intended to utilize the tax credit without a bona fide, corresponding benefit to the business.2. The investment must be made under an agreement whereby the investment may not be repaid to the investor during the five-year period beginning on the date the cash is received by the business, unless circumstances, such as the sale of the business, result in significant change in ownership or operations of the business, as determined in the discretion of the Chief Executive Officer. Any early repayment must be approved in advance by the Chief Executive Officer. The investor may receive a reasonable return on the investment from the business in the form of royalties, stock or other ownership interests, options or warrants for additional ownership interests, interest, dividends, distributions or other form of return not intended to be a repayment of principal during the five-year period. Whether and the extent to which any such return may be paid by the business shall be determined in the sole discretion of the Chief Executive Officer prior to the payment of any return. Nothing in this paragraph is intended to limit the ability of the applicant to sell or transfer his or her interest in the enterprise or investment to another person or entity (other than the business itself or a principal owner), at any time, provided prior written notice is given to the Authority, together with a signed acknowledgement by both the transferor and the transferee that the investment remains subject to the limitations of this Rule, and provided further that the Authority finds that the intent of the transfer is not the avoidance of the limitations of the Program.3. For investments made prior to January 1. 2012, the investment may not result in the investor, in conjunction with any other investors participating in the Program, owning 50% or more of the business in which the investment is made. For investments made on or after January 1, 2012, the investment may not result in the investor who applies for a tax credit owning 50% or more of the business in which the investment is made. For the purposes of this limitation, an investor's ownership interest in an eligible business shall include all interests held in the investor's personal name, and a pro rata share of all interests held jointly with other individuals or entities, or held by another legal entity in which the investor has an interest, including a private venture capital fund. Nothing in this subsection shall preclude an investor or private venture capital fund from making a later investment that results in its ownership interest equaling or exceeding 50% of an eligible business, so long as (i) neither the investor nor the private venture capital fund applies for a Program tax credit for such later investment, and (ii) there was no intent by the investor or the private venture capital fund to take such additional interests at the time of the original investment for which it received a Program tax credit.4. The business must certify, for each investment, that the amount of the investment is necessary to allow the business to create or retain jobs in the State.94-457 C.M.R. ch. 307, § 3