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Investor Engagement

Investor Engagement – American Industrial Brands

By November 8, 2023No Comments

The NCE is providing an “I-526E Denial Refund” option. In the event that an EB-5 investor’s 526E petition is denied by USCIS (without appeal or following the denial of any appeal), or if the Project’s I-956F application is denied, the NCE will refund the Capital Contribution to the EB-5 investor (or instruct the Escrow Agent to do so), unless the denial resulted from certain actions by the EB-5 investor, such as fraud, deception, or criminal activity.

If an EB-5 investor is eligible for repayment due to USCIS’s denial of the I-526E Petition, the JCE is obligated to partially prepay the loan by the amount equivalent to the denied EB-5 investor’s Capital Contribution within 180 days of receiving the denial notice. The NCE will utilize the prepayment to reimburse the EB-5 investor within the 180-day timeframe. However, the NCE is required to make reasonable efforts to secure a replacement investor to fund the prepayment before the end of the 180-day period.

The Administrative Fees, typically utilized for covering offering expenses, are non-refundable.

The EB-5 investors will be entitled to receive a preferred return of up to 1% of their Capital Contribution annually, prior to any other distributions being made by the NCE. The accrual of Preferred Returns will commence six months after the date when the proceeds of the contribution are loaned to the JCE. These returns will be paid in arrears on a semi-annual basis. It is important to note that Preferred Returns are cumulative, meaning that if the NCE fails to distribute the full 1% per year during a specific period, it will make up for the shortfall in subsequent periods.

The NCE will make these distributions from available net cash flow, if available, but it does not guarantee the payment of any distributions to EB-5 Investors.

Each EB-5 investor is required to sustain their investment in the NCE for a minimum of two years from the investment date (the “At-Risk Period”), and until the creation of adequate jobs to fulfill the requirements of all EB-5 investors.

The NCE anticipates reimbursing each EB-5 investor’s Capital Contribution by utilizing the funds obtained from the JCE’s EB-5 Loan repayment upon the maturity of the EB-5 Loan.

The NCE’s Manager shall provide the following information to the EB-5 investors, per the Operating Agreement:

  • Unaudited annual financial statements of the NCE on an annual basis, within 120 days after the end of each calendar year (if requested by the investors); and

  • Information necessary for each investor to file their tax returns within 90 days after the close of each taxable year

The EB-5 investors have limited rights to engage in the management of the NCE and have limited voting privileges as outlined in the Operating Agreement. Members have the opportunity to serve on the NCE’s Policymaking Committee, which offers advisory opinions on the NCE’s policies.

As per the Operating Agreement, the NCE is prohibited from undertaking the following actions without the consent of the Class B Members, who vote independently as a class:

  • The dissolution and winding up of the Company.

  • The merger, consolidation, or any other business combination involving the Company.

  • The sale, exchange, lease, mortgage, pledge, or transfer of a significant portion or all of the Company’s assets, except for transactions within the ordinary course of business or as stipulated in the Operating Agreement.

  • Incurring any obligation or indebtedness that exceeds 50% of the Company’s asset value, excluding transactions conducted in the ordinary course of business.

  • Altering the fundamental nature of the Company’s business or its fundamental purpose.

  • The appointment of a Special Manager.

  • Utilizing the Capital Contributions of the EB-5 Members for any purpose other than investing in the Project Company and the Project, subject to specific exceptions.

  • Approval or amendment of any service or employment agreement concerning any Manager, requiring separate approval from the Class B Members if the Class A Member also serves as the Manager.

  • Admission of additional Class A or B Members, provided that such admission does not result in the total number of Class B Members exceeding 100.

When the Class B Members (which the EB-5 investors are a part of), vote as a distinct class, their voting rights are determined based on their “percentage interest.” This interest is calculated by dividing the capital account balance of each Class B Member by the total capital account balances of all Class B Members. In situations where both the Class A Member and Class B Members cast their votes collectively, the Class A Member is allocated 500 votes, while each Class B Member receives a number of votes equal to 100 times their respective “percentage interest”.

The NCE is exclusively offering the units to EB-5 investors who are not classified as “U.S. persons” as per the definition in Regulation S of the Securities and Exchange Act of 1933, as amended, or who qualify as “accredited investors” according to Rule 501(a) of Regulation D of the Securities and Exchange Act of 1933, as amended. Qualified funds will be accepted. Similar to all EB-5 investments, this offering involves significant speculation and carries certain investment risks and tax risks.

To verify the accreditation status, the NCE will utilize an online intermediary such as www.verifyinvestor.com.

To subscribe as a member of the NCE, an EB-5 investor will deliver the following documents to the NCE:

  • A fully executed copy of the Subscription Agreement.

  • A completed Investor Eligibility Questionnaire.

  • If the investor is married, the Spousal Consent and Intervention form.

  • The EB-5 Investor Anti-Money Laundering Information Form.

  • The EB-5 Job Allocation Addendum to the Operating Agreement.

  • An Acknowledgement of Receipt of Escrow Agreement.

  • A copy of the counterpart signature page of the Operating Agreement.

  • Copies of the unexpired biographic and validity page of the investor’s passport, as well as those of each accompanying family member.

  • A completed IRS Form W-8BEN or W9 (if applicable).

  • Proof of payment of the Capital Contribution to the account of the Escrow Agent and the Administration Fee to the account of the Company.

The Escrow Agent will release an EB-5 investor’s Capital Contribution to the NCE’s account once the escrow account has received the full capital contribution, the Escrow Agent has received evidence that the EB-5 investor has submitted Form I-526E to USCIS, and the Escrow Agent has received evidence that the Regional Center has submitted Form I-956F to USCIS.