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53	53	STATE OF OKLAHOMA
54	54
55	55	1st Session of the 59th Legislature (2023)
56	56
57	57	SENATE BILL 309 By: Rader
58	58
59	59
60	60
61	61
62	62
63	63	AS INTRODUCED
64	64
65	65	An Act relating to capital investments of the
66	66	Oklahoma Center for the Advancement of Sc ience and
67	67	Technology; amending 74 O.S. 2021, Sectio n 5060.21,
68	68	which relates to the Seed-Capital Revolving Fund ;
69	69	requiring certain data reporting to be includ ed in
70	70	certain binding commitments; and providing an
71	71	effective date.
72	72
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77	77	BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
78	78	SECTION 1. AMENDATORY 74 O.S. 2021, Section 5060.21, is
79	79	amended to read as follows:
80	80	Section 5060.21. A. There is hereby created in the State
81	81	Treasury a revolving fund for the Oklahoma Center f or the
82	82	Advancement of Science and Technology to be designated the “Seed-
83	83	Capital Revolving Fund ”. The fund shall be a continuing fund, not
84	84	subject to fiscal year limitations. The fund shall consist of all
85	85	monies authorized by law for deposit in the fund i ncluding but not
86	86	limited to gifts, grants, private donations, and funds by government
87	87	entities authorized to provide funding for the purposes authorized
88	88	for use of the fund and with payments on loans made from the fund,
89	89
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140	140	rents, dividends paid on shares of s tock purchased with monies from
141	141	the fund, royalty proceeds, or any other form of return on
142	142	authorized investments made by the Center. All monies accruing to
143	143	the credit of said fund are hereby appropriated and may be bu dgeted
144	144	and expended by the Oklahoma C enter for the Advancement of Science
145	145	and Technology for use as seed-capital for enterprises and for the
146	146	purposes set forth in this section, and shall not be used for
147	147	administrative, management, or operating expenses of the Center.
148	148	Expenditures from said f und shall be made upon warrants issued by
149	149	the State Treasurer against cla ims filed as prescribed by law with
150	150	the Director of the Office of Management and Enterprise Services for
151	151	approval and payment.
152	152	B. The Seed-Capital Revolving Fund shall be managed con sistent
153	153	with the long-term goal that revenues earne d from investment of t he
154	154	fund be used to cover administrative costs of the fund. The Center
155	155	may contract with the Commercialization Center or another entity to
156	156	manage the Seed-Capital Revolving Fund and t o carry out the
157	157	activities set forth in this sectio n.
158	158	C. The Center may use the Seed-Capital Revolving Fund to
159	159	provide seed-capital to enterprises and to carry out the purposes of
160	160	the Oklahoma Science and Technology R esearch and Development Act
161	161	through authorized investments, including:
162	162	1. Loans, loans convertible to equity, and equity;
163	163	2. Leaseholds;
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215	215	3. Management or consultant service agreements;
216	216	4. Loans with stock subscription or similar warrants that are
217	217	beneficially owned by the Center;
218	218	5. Loans with stock subscription or similar warrants that a re
219	219	beneficially owned by a party other than the Center;
220	220	6. Any other contractual arrangement in which the Center is
221	221	providing scientific and technological services to any federal,
222	222	state, county, or municipal agency, or to any individual,
223	223	corporation, enterprise, association, or any other entity involving
224	224	science and technology. The Center, in connection with the
225	225	provision of any form of financial assistance, may enter into
226	226	royalty agreements with an enter prise;
227	227	7. Participation as a general or limited pa rtner in other seed-
228	228	capital funds or participation as a limited partner in individual
229	229	cases as authorized by the board of directors;
230	230	8. Royalty or other interests in patents, licenses, trade
231	231	secrets, or other technology; and
232	232	9. All other seed-capital investments and qualified s ecurities
233	233	as defined in the Oklahoma Science and Technology Research and
234	234	Development Act.
235	235	D. The Center may use the Seed -Capital Revolving Fun d to
236	236	purchase qualified securities iss ued by enterprises engaged in new
237	237	product or process innovations subject to the conditions set forth
238	238	in this section.
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290	290	E. The Center may use the Seed -Capital Revolving Fund to make
291	291	loans for business incubator faciliti es in exchange for interests in
292	292	the enterprises.
293	293	F. The Center shall make authorized see d-capital investments in
294	294	enterprises engaged in new product or process innovations only
295	295	after:
296	296	1. Receipt of an application from the enterprise which
297	297	contains:
298	298	a. a business plan including a description o f the
299	299	enterprise and its management, product , and market,
300	300	b. a statement of the amount, timing, and projected use
301	301	of the capital required,
302	302	c. a statement of the potential economic impact of the
303	303	enterprise, including th e number, location, and types
304	304	of jobs expected to be created, and
305	305	d. such other informati on as the Center board of
306	306	directors shall request; and
307	307	2. Approval of the investment by the Center. Such approval may
308	308	be made after the board of directors finds, bas ed upon the
309	309	application submitted by t he enterprise and such additional
310	310	investigation as the staff of the Center sha ll make and incorporate
311	311	in its minutes, or based on the recommendation of the fund manager,
312	312	if the Center contracts with the Commercializati on Center or another
313	313	entity to manage the Seed-Capital Revolving Fund, that:
314	314
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365	365	a. the proceeds of the investment or fi nancial assistance
366	366	will be used only to cover the seed -capital needs of
367	367	the enterprise except as authorized by this section,
368	368	b. the enterprise has a reasonable chance of success,
369	369	c. the Center’s participation is instrumental to t he
370	370	success of the enterpris e and will assist in its
371	371	retention within the state,
372	372	d. the Center’s investment is leveraged by at least one
373	373	additional equity or near -equity investor,
374	374	e. the enterprise has the reasonable potential to enhance
375	375	employment opportunities within the state,
376	376	f. the entrepreneur and other founders of the enterprise
377	377	have already made or are contractually committed to
378	378	make an appropriate financial and time commitment to
379	379	the enterprise,
380	380	g. any securities to be purchased are qualified
381	381	securities,
382	382	h. there is a reasonable possibility that the Center will
383	383	recoup at least its initial investment or financial
384	384	commitment, and
385	385	i. binding commitments have been ma de to the Center by
386	386	the enterprise for adequate reporting of financial
387	387	data to the Center, which shall include a req uirement
388	388	for an annual report, or if required by the board, an
389	389
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440	440	annual audit of the financial and operational records
441	441	of the enterprise, and for such control on the part of
442	442	the Center as the board of directors shall consider
443	443	prudent over the management of t he enterprise, so as
444	444	to protect the investment or financial commitment of
445	445	the Center, including in the discretion of the board
446	446	and without limitation, right of access to financia l
447	447	and other records of the enterprise, and membersh ip or
448	448	representation on the board of directors of the
449	449	enterprise. The binding commitments made pursuant to
450	450	this subparagraph for adequate reporting of financial
451	451	data shall include data that exhibit the growth rate
452	452	of employment, wages, revenues, and a provided measure
453	453	of profitability reported consistently among the
454	454	enterprises. The growth rates shall be reported both
455	455	on an annual basis and to reflect the growth that has
456	456	occurred since investments were ma de pursuant to this
457	457	section.
458	458	G. The board of direc tors shall create an investment committee
459	459	to assist in evaluating potential investments in qualified
460	460	securities and provision of other forms of authorized financial
461	461	assistance. The membership of this investment committee shall serve
462	462	at the pleasure of the board and shall consist of:
463	463
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514	514	1. No more than two members of the board of directors, neither
515	515	of whom serves on any advisory committee to the Center; and
516	516	2. Persons drawn from sources other than the Center who meet
517	517	standards similar to those applying to th e board of directors and
518	518	who are recognized by their peers for outstanding knowledge and
519	519	leadership in their fields, all of whom shall serve at the pleasure
520	520	of the board.
521	521	H. The Center shall not make investments in qualified
522	522	securities issued by enterpris es in excess of the amount necessary
523	523	to own more than forty -nine percent (49%) of qualified securities in
524	524	any one enterprise at the time such securities are purchased by the
525	525	Center, after giving effect to the conversion of all outstanding
526	526	convertible qualified securities of the enterprise; however, in the
527	527	event of severe financial difficulty of the enterprise, threatening,
528	528	in the judgment of the board of directors, the investment of the
529	529	Center therein, a greater percentage of such securities may be owned
530	530	by the Center.
531	531	SECTION 2. This act shall become effective November 1, 2023.
532	532
533	533	59-1-154 QD 1/12/2023 6:22:27 PM

Oklahoma 2024 Regular Session

Oklahoma Senate Bill SB309 Compare Versions