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STATE OF OKLAHOMA
1st Session of the 59th Legislature (2023)
COMMITTEE SUBSTITUTE
FOR
SENATE BILL 209 By: Bergstrom
COMMITTEE SUBSTITUTE
An Act relating to capital investments of the
Oklahoma Center for the Advancement of Science and
Technology; amending 74 O.S. 2021, Section 5060.21,
which relates to the Seed -Capital Revolving Fund;
requiring certain data reporting to be in cluded in
certain binding commitments; providing certain
exception; updating statutory language; and providing
an effective date.
BE IT ENACTED BY THE PEOPLE OF TH E STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 74 O.S. 2021, Section 5060.21, is
amended to read as follows:
Section 5060.21. A. There is hereby created in the State
Treasury a revolving fund for the Oklahoma Center for the
Advancement of Science and Technology to be designated the “Seed-
Capital Revolving Fund ”. The fund shall be a continuing fund, not
subject to fiscal year limitations. The fund shall consist of all
monies authorized by law for deposit in the fund including but not
limited to gifts, grants, priv ate donations, and funds by government
entities authorized to provide funding for the purposes authorized
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for use of the fund and with payments on loan s made from the fund,
rents, dividends paid on shares of stock purchased with monies from
the fund, royalty proceeds, or any other form of return on
authorized investments made by the Center. All monies accruing to
the credit of said the fund are hereby appro priated and may be
budgeted and expended by the Oklahoma Center for the Advancement of
Science and Technology for use as seed -capital for enterprises and
for the purposes set forth in this section, and shall not be used
for administrative, management, or o perating expenses of the Center.
Expenditures from said the fund shall be made upon warrants issued
by the State Treasurer against cla ims filed as prescribed by law
with the Director of the Office of Management and Enterprise
Services for approval and payment .
B. The Seed-Capital Revolving Fund shall be managed consistent
with the long-term goal that revenues e arned from investment of t he
fund be used to cover administrative costs of the fund. The Center
may contract with the Commercialization Center or anot her entity to
manage the Seed-Capital Revolving Fund and to carry out the
activities set forth in this se ction.
C. The Center may use the Seed-Capital Revolving Fund to
provide seed-capital to enterprises and to carry out the purposes of
the Oklahoma Science and Technology Research and Developm ent Act
through authorized investments, including:
1. Loans, loans convertible to equity, and equity;
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2. Leaseholds;
3. Management or consultant service agreements;
4. Loans with stock subscription or similar war rants that are
beneficially owned by the Center;
5. Loans with stock subscription or similar warrants th at are
beneficially owned by a party other than the Center;
6. Any other contractual arrangement in which the Center is
providing scientific and techn ological services to any federal,
state, county, or municipal agency, or to any individual,
corporation, enterprise, association , or any other entity involving
science and technology. The Center, in connection with the
provision of any form of financial a ssistance, may enter into
royalty agreements with an enterprise;
7. Participation as a general or limite d partner in other seed -
capital funds or participation as a limited partner in individual
cases as authorized by the board of directors;
8. Royalty or other interests in patents, licenses, t rade
secrets, or other technology; and
9. All other seed-capital investments and qualified s ecurities
as defined in the Oklahoma Science and Technology Research and
Development Act.
D. The Center may use the Seed -Capital Revolving Fund to
purchase qualified securities issued by enterprises engaged in new
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product or process innovations subject to the conditions set forth
in this section.
E. The Center may use the Seed -Capital Revolving Fund to make
loans for business incubator facilities in exchange for i nterests in
the enterprises.
F. The Center shall make authorized seed-capital investments in
enterprises engaged in new product or process innovations only
after:
1. Receipt of an application from the enterprise wh ich
contains:
a. a business plan includi ng a description of the
enterprise and its management, product , and market,
b. a statement of the amount, timing, and projected use
of the capital required,
c. a statement of the potential economic impact of the
enterprise, including the number, location, and types
of jobs expected to be created, and
d. such other information as the Center board of
directors shall request; and
2. Approval of the investment by the Center. Such approval may
be made after the board of directors finds, based upon the
application submitted by the enterprise and such additional
investigation as the staff of the Center sha ll make and incorporate
in its minutes, or based on the recommendation of the fund manager,
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if the Center contracts with the Commercialization Center or another
entity to manage the Seed-Capital Revolving Fund, that:
a. the proceeds of the investment or fi nancial assistance
will be used only to cover the seed -capital needs of
the enterprise except as authorized by this sect ion,
b. the enterprise has a reasonable chance of success,
c. the Center’s participation is instrumental to the
success of the enterpris e and will assist in its
retention within the state,
d. the Center’s investment is leveraged by at least one
additional equity or near-equity investor,
e. the enterprise has the reasonable potential to enhance
employment opportunities within the state,
f. the entrepreneur and other founders of the enterprise
have already made or are contractually committed to
make an appropriate financial and time commitment to
the enterprise,
g. any securities to be purchased are qualified
securities,
h. there is a reasonable possibility that the Center will
recoup at least its initial investment or financial
commitment, and
i. binding commitments have been made to the Center by
the enterprise for adequate reporting of financial
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data to the Center, which shall include a req uirement
for an annual report, or if required by the board, an
annual audit of the financial and operational records
of the enterprise, and for such control on the part of
the Center as the board of directors shall consider
prudent over the management of t he enterprise, so as
to protect the investment or financial commitment of
the Center, including in the discretion of the board
and without limitation, right of access to financial
and other records of the enterprise, and memb ership or
representation on the board of directors of the
enterprise. The binding commitments made pursuant to
this subparagraph for adequate reporting of financial
data shall include data that exhibit the growth rate
of employment, wages, revenues, and a provided measure
of profitability reported consistently among the
enterprises. The growth rates shall be reported both
on an annual basis and to reflect the growth that has
occurred since investments were made pursuant to this
section. The Oklahoma Tax Commission shall
collaborate with the Center for the reporting of
financial data. The Center may provide an exception
to the commitment required pursuant to this
subparagraph for certain circumstances that make the
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providing of data unfeasible, including but not
limited to the death of own ers or management,
dissolution of the enterprise, or abandonment of
projects.
G. The board of directors shall create an investment committee
to assist in evaluating potential investments in qualified
securities and provision of other forms of authorized f inancial
assistance. The membership of this investment committee shall serve
at the pleasure of the board and shall con sist of:
1. No more than two members of the board of directors, neither
of whom serves on any a dvisory committee to the Center; and
2. Persons drawn from sources other than the Center who meet
standards similar to those applying t o the board of directors and
who are recognized by their peers for outstanding knowledge and
leadership in their fields, all of whom shall serve at the pleasure
of the board.
H. The Center shall not make investments in qualified
securities issued by enter prises in excess of the amount necessary
to own more than forty -nine percent (49%) of qualified securities in
any one enterprise at the time such securities are purchased by the
Center, after giving effect to the conversion of all outstanding
convertible qualified securities of t he enterprise; however, in the
event of severe financial difficulty of the enterprise, threateni ng,
in the judgment of the board of dire ctors, the investment of the
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Center therein, a greater percentage of such securities may be owne d
by the Center.
SECTION 2. This act shall become effective November 1, 2023.
59-1-1739 QD 2/13/2023 4:17:32 PM