MISSISSIPPI LEGISLATURE
2023 Regular Session
To: Ways and Means
By: Representative Guice
AN ACT TO AMEND SECTION 57-103-1, MISSISSIPPI CODE OF 1972, WHICH CREATES THE RESEARCH AND DEVELOPMENT PROGRAM, FOR THE PURPOSE OF REFLECTING THE CHANGE OF THE NAME OF THE MISSISSIPPI TECHNOLOGY ALLIANCE TO INNOVATE MISSISSIPPI; TO REVISE THE AMOUNT OF ASSISTANCE THAT MAY BE PROVIDED TO A BUSINESS UNDER THE RESEARCH AND DEVELOPMENT PROGRAM; TO AMEND SECTION 57-103-3, MISSISSIPPI CODE OF 1972, WHICH CREATES THE MISSISSIPPI NEW TECHNOLOGY BUSINESS PROGRAM-LEVEL 1, FOR THE PURPOSE OF REFLECTING THE CHANGE OF THE NAME OF THE MISSISSIPPI TECHNOLOGY ALLIANCE TO INNOVATE MISSISSIPPI; TO CHANGE THE NAME OF THE MISSISSIPPI NEW TECHNOLOGY BUSINESS PROGRAM-LEVEL 1 TO THE PROOF OF CONCEPT LOAN PROGRAM; TO REVISE THE AMOUNT OF ASSISTANCE THAT MAY BE PROVIDED TO A BUSINESS UNDER THE PROGRAM; TO CHANGE THE NAME OF THE MISSISSIPPI NEW TECHNOLOGY BUSINESS PROGRAM-LEVEL 1 FUND TO THE PROOF OF CONCEPT LOAN FUND; TO AMEND SECTION 57-103-7, MISSISSIPPI CODE OF 1972, WHICH CREATES THE RURAL INNOVATION PROGRAM-LEVEL 1, FOR THE PURPOSE OF REFLECTING THE CHANGE OF THE NAME OF THE MISSISSIPPI TECHNOLOGY ALLIANCE TO INNOVATE MISSISSIPPI; TO CHANGE THE NAME OF THE RURAL INNOVATION PROGRAM-LEVEL 1 TO THE PROOF OF CONCEPT GRANT PROGRAM; TO CHANGE THE PROGRAM FROM A LOAN PROGRAM TO A GRANT PROGRAM; TO CHANGE THE NAME OF THE RURAL INNOVATION PROGRAM-LEVEL 1 FUND TO THE PROOF OF CONCEPT GRANT FUND; TO AUTHORIZE THE ISSUANCE OF STATE GENERAL OBLIGATION BONDS FOR THE PURPOSES OF PROVIDING FUNDS FOR THE RESEARCH AND DEVELOPMENT PROGRAM, THE PROOF OF CONCEPT LOAN PROGRAM, THE MISSISSIPPI NEW TECHNOLOGY BUSINESS PROGRAM-LEVEL 2 PROGRAM AND THE PROOF OF CONCEPT GRANT PROGRAM; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Section 57-103-1, Mississippi Code of 1972, is amended as follows:
57-103-1. (1) There is
established under the direction of the * * *
Innovate Mississippi ("IMS") a program to be known as the
"Research and Development Program" for the purpose of making assistance
available for seed and early stage capital to small and medium sized
Mississippi businesses with high growth potential that are engaged in research
and development activities with a Mississippi university, college and/or community/junior
college.
(2) (a) In order to be eligible for assistance under the program, a business must: (i) have its principal place of business based in Mississippi, (ii) produce or provide a product and/or service that is science or technology related, (iii) have completed its product and/or service development planning, and (iv) develop technology-based business opportunity in partnership with a Mississippi university, college and/or community/junior college.
(b) Any business
desiring to participate in the program must submit an application to * * * IMS. The application must contain
a technical brief and project plan for the commercialization of the technology
developed or proposed for development by the business and any other information
requested by * * *
IMS. If * * *
IMS staff reviewing the application determines that an application
should be reviewed by the Seed Fund Investment Board appointed by the * * * IMS Board of Directors, the
application shall be forwarded to the Seed Fund Investment Board. If the Seed
Fund Investment Board approves the application, * * * IMS shall negotiate a contract
with the business regarding any assistance provided to the business under the
program, the expenditure of assistance provided to the business, repayment of
assistance by the business, and any other matters to which the parties may
agree. Any such contract must provide for at least the following: (i) that any
assistance provided to the business will be on a reimbursement basis in which
the business will expend funds according to the terms of the contract and
submit invoices, receipts and other applicable documentation and information to * * * IMS for reimbursement; (ii) that
no funds may be expended or used for patent prosecution, reorganization of the
business, or payment of any existing debt of the business outstanding or
otherwise incurred at the time the contract is entered into; (iii) that no
funds may be expended to reimburse expenses for work conducted or services
provided by the business, a university or a third-party consultant if those
expenses were incurred before the term of the contract; (iv) that at least
fifty-one percent (51%) of the funds received by the business must be expended
with a Mississippi university, college and/or community/junior college with
which the business has a contract for research and development or technology
development work or services; (v) that * * * IMS will pay not more than ten
percent (10%) of overhead expenses for the business and/or the university,
college and/or community/junior college; (vi) that the business will provide
matching funding of One Dollar ($1.00) for every One Dollar ($1.00) of assistance,
with at least fifty percent (50%) of the match being in cash and the remaining
amount being from in-kind services, all of which must be documented by time
sheets, payroll receipts, invoices and other documentation or information
required by * * *
IMS; and (vii) that the business receiving assistance will retain ownership
of any technology developed by the business before the start of the project for
which assistance is received, and that rights to new intellectual property
developed as a result of the project will be subject to mutually agreed upon
terms and conditions of the collaborative research agreement executed by the
business and the university, college and/or community/junior college before the
start of the project. Assistance received by a business and not expended for
purposes required in the contract between the business and * * * IMS may be expended for hiring
third-party consultants to assist the business, working capital, marketing,
prototype development and equipment. The amount of assistance that a business
may receive under the program shall not exceed * * *
Two Hundred Fifty Thousand Dollars ($250,000.00) in the aggregate.
(c) Except as
otherwise provided in this paragraph, a business receiving assistance under the
program shall be required to repay the assistance in the manner provided in this
paragraph. Repayment shall be made through the use of a convertible note in which
the business will repay one hundred percent (100%) of the amount of assistance
received if such repayment is made within thirty-six (36) months from the date
the assistance is received, with the amount to be repaid by the business increasing
at a rate determined by the parties in the contract up to an amount not to
exceed two hundred percent (200%) of the amount of assistance if such repayment
is made later than thirty-six (36) months from the date the assistance is
received but not later than sixty (60) months from the date the assistance is received.
* * * IMS
shall have the option of converting the amount of assistance awarded to the
business into common stock of the business or into a royalty in the gross sales
of the business. Amounts received as repayments shall be deposited into the
special fund created in subsection (3) of this section. Notwithstanding the
preceding provisions of this paragraph, if the business receiving assistance
fails to meet certain financial performance levels established in the contract
between the business and * * *the MTA IMS and the contract does not activate any
repayment provisions, then * * * IMS will deem the assistance
provided to be a loss and the business receiving assistance shall not be
required to repay the assistance received.
(3) There is created in the
State Treasury a special fund, to be designated as the "Research and
Development Program Fund," which shall consist of funds appropriated or otherwise
made available by the Legislature. The fund shall be maintained by the State
Treasurer as a separate and special fund, separate and apart from the General
Fund of the state. Unexpended amounts remaining in the fund at the end of a
fiscal year shall not lapse into the State General Fund, and any interest
earned or investment earnings on amounts in the fund shall be deposited into
such fund. Monies in the fund shall be disbursed, in the discretion of the
Mississippi Development Authority, to provide funds to * * * IMS for the purposes described
in this section, or for the purposes described in Sections 57-103-3, 57-103-5 * * * and/or 57-103-7 * * * if IMS determines that the funds are
not needed for the purposes described in this section.
SECTION 2. Section 57-103-3, Mississippi Code of 1972, is amended as follows:
57-103-3. (1) There is
established under the direction of the * * *
Innovate Mississippi ("IMS") a program to be known as the "Mississippi New Technology Business Program-Level
1" for the purpose of making assistance available to provide working
capital to support the initial capitalization of technology-based businesses in
Mississippi. From and after July 1, 2023, the "Mississippi
New Technology Business Program-Level 1" shall be known as the "Proof
of Concept Loan Program".
(2) (a) In order to be
eligible for assistance under the program, a business must: (i) have its principal
place of business based in Mississippi, and be a startup business, (ii) have
rights to the intellectual property supporting the venture opportunity for
which assistance is requested, (iii) demonstrate compelling evidence for rapid growth
and high performance potential, (iv) be invited by * * * IMS to apply for assistance
based upon an agreeable scope of work.
(b) Any business desiring
to participate in the program must submit an application to * * * IMS. The application must contain
a description of the purposes for which the assistance is requested, the amount
of assistance requested and any other information requested by * * * IMS. If * * * IMS staff reviewing the
application determines that an application should be reviewed by the Seed Fund
Investment Board appointed by the * * * IMS Board of Directors, the application
shall be forwarded to the Seed Fund Investment Board. If the Seed Fund
Investment Board approves the application, * * * IMS shall negotiate a contract
with the business regarding any assistance provided to the business under the
program, the expenditure of the assistance provided to the business, and any
other matters to which the parties may agree. Any such contract must provide
for at least the following: (i) that any assistance provided to the business
will be on a reimbursement basis in which the business will expend funds according
to the terms of the contract and submit invoices, receipts and other applicable
documentation and information to * * * IMS for reimbursement; (ii) that
no funds may be expended or used for patent prosecution, reorganization of the
business, or payment of any existing debt of the business outstanding or
otherwise incurred at the time the contract is entered into; (iii) that no
funds may be expended to reimburse expenses for work conducted or services provided
by the business, a university or a third-party consultant if those expenses
were incurred before the term of the contract; (iv) that the business receiving
assistance will retain ownership of any technology developed by the business
regardless of whether the technology is developed before or after the receipt
of assistance; and (v) that the business will provide matching funding of One
Dollar ($1.00) for every One Dollar ($1.00) of assistance, with at least twenty-five
percent (25%) of the match being in cash and the remaining amount being from in-kind
services, all of which must be documented by time sheets, payroll receipts,
invoices and other documentation or information required by * * * IMS. Assistance received by a
business may be expended for hiring third-party consultants to assist the
business and for equipment. The amount of assistance that a business may
receive under the program shall not exceed * * * Twenty-five
Thousand Dollars ($25,000.00) and any award of assistance shall be made on
a onetime basis.
(c) Except as otherwise
provided in this paragraph, a business receiving assistance under the program
shall be required to repay the assistance in the manner provided in this
paragraph. Repayment shall be made through the use of a nonrecourse loan in
which the business will repay the loan upon the successful commercialization of
the product or service. The business will repay one hundred percent (100%) of
the amount of assistance received if such repayment is made within thirty-six
(36) months from the date the assistance is received, with the amount to be
repaid by the business increasing at a rate determined by the parties in the
contract up to an amount not to exceed two hundred percent (200%) of the amount
of assistance if such repayment is made later than thirty-six (36) months from
the date the assistance is received but not later than sixty (60) months from
the date the assistance is received. Amounts received as repayments shall be
deposited into the special fund created in subsection (3) of this section.
Notwithstanding the preceding provisions of this paragraph, if the business
receiving assistance fails to meet certain financial performance levels
established in the contract between the business and * * * IMS and the contract does not
activate any repayment provisions, then * * * IMS will deem the assistance
provided to be a loss and the business receiving assistance shall not be
required to repay the assistance received.
(3) There is created in the
State Treasury a special fund, to be designated as the "Mississippi New
Technology Business Program-Level 1 Fund," which shall consist of funds
appropriated or otherwise made available by the Legislature. From and after
July 1, 2023, the "Mississippi New Technology Business Program-Level 1 Fund"
shall be known as the "Proof of Concept Loan Program Fund". The
fund shall be maintained by the State Treasurer as a separate and special fund,
separate and apart from the General Fund of the state. Unexpended amounts
remaining in the fund at the end of a fiscal year shall not lapse into the
State General Fund, and any interest earned or investment earnings on amounts
in the fund shall be deposited into such fund. Monies in the fund shall be
disbursed, in the discretion of the Mississippi Development Authority, to
provide funds to * * *
IMS for the purposes described in this section, or for the purposes
described in Sections 57-103-1, 57-103-5 * * * and/or 57-103-7 * * * if * * * IMS determines that the funds
are not needed for the purposes described in this section.
SECTION 3. Section 57-103-7, Mississippi Code of 1972, is amended as follows:
57-103-7. (1) There is
established under the direction of the * * *
Innovate Mississippi ("IMS") a program to be known as the "Rural Innovation Program-Level 1" for the
purpose of making assistance available to provide working capital to support the
initial capitalization of technology-based businesses in rural Mississippi. From
and after July 1, 2023, the "Rural Innovation Program-Level 1" shall be
known as the "Proof of Concept Grant Program".
(2) (a) In order to be
eligible for assistance under the program, a business must: (i) have its principal
place of business based in * * * Mississippi, (ii) produce or
provide a product and/or service that is science or technology related, (iii)
have fewer than one hundred fifty (150) employees, and (iv) have completed its
product and/or service development planning. * * *
(b) Any business
desiring to participate in the program must submit an application to * * * IMS. The application must
contain a description of the purposes for which the assistance is requested, the
amount of assistance requested and any other information requested by * * * IMS. If * * * IMS staff reviewing the
application determines that an application should be reviewed by the Seed Fund
Investment Board appointed by the * * * IMS Board of Directors, the application
shall be forwarded to the Seed Fund Investment Board. If the Seed Fund
Investment Board approves the application, * * * IMS shall negotiate a contract
with the business regarding any assistance provided to the business under the
program, the expenditure of the assistance provided to the business, and any
other matters to which the parties may agree. Any such contract must provide
for at least the following: (i) that any assistance provided to the business
will be on a reimbursement basis in which the business will expend funds
according to the terms of the contract and submit invoices, receipts and other
applicable documentation and information to * * * IMS for reimbursement; (ii) that
no funds may be expended or used for patent prosecution, reorganization of the
business, or payment of any existing debt of the business outstanding or
otherwise incurred at the time the contract is entered into; (iii) that no
funds may be expended to reimburse expenses for work conducted or services
provided by the business, a university or a third-party consultant if those
expenses were incurred before the term of the contract; (iv) that the business
receiving assistance will retain ownership of any technology developed by the
business regardless of whether the technology is developed before or after the
receipt of assistance; and (v) that the business will provide matching funding
of One Dollar ($1.00) for every One Dollar ($1.00) of assistance, with at least
twenty-five percent (25%) of the match being in cash and the remaining amount
being from in-kind services, all of which must be documented by time sheets,
payroll receipts, invoices and other documentation or information required by * * * IMS. Assistance received by a
business may be expended for hiring third-party consultants to assist the
business and for equipment. The amount of assistance that a business may receive
under the program shall not exceed Ten Thousand Dollars ($10,000.00) and any
award of assistance shall be made on a onetime basis.
(c) Except as otherwise
provided in this paragraph, a business receiving assistance under the program
shall not be required to repay the assistance * * * unless IMS determines that the business has violated significant terms
of their agreement, presented false information, or misrepresented facts in
their application. If it is determined the business violated terms or submitted
false or knowingly incorrect information, the business will be required to
repay one hundred percent (100%) of the amount of assistance received.
(3) There is created in the
State Treasury a special fund, to be designated as the "Rural Innovation Program-Level 1 Fund," which
shall consist of funds appropriated or otherwise made available by the
Legislature. From and after July 1, 2023, the "Rural Innovation
Program-Level 1 Fund" shall be known as the "Proof of Concept Grant Program
Fund". The fund shall be maintained by the State Treasurer as a
separate and special fund, separate and apart from the General Fund of the
state. Unexpended amounts remaining in the fund at the end of a fiscal year
shall not lapse into the State General Fund, and any interest earned or
investment earnings on amounts in the fund shall be deposited into such fund.
Monies in the fund shall be disbursed, in the discretion of the Mississippi
Development Authority, to provide funds to * * * IMS for the purposes described in
this section, or for the purposes described in Sections 57-103-1, 57-103-3, 57-103-5
and/or 57-103-9 if * * * IMS determines that the funds are not needed for the
purposes described in this section.
SECTION 4. (1) As used in this section, the following words shall have the meanings ascribed herein unless the context clearly requires otherwise:
(a) "Accreted value" of any bonds means, as of any date of computation, an amount equal to the sum of (i) the stated initial value of such bond, plus (ii) the interest accrued thereon from the issue date to the date of computation at the rate, compounded semiannually, that is necessary to produce the approximate yield to maturity shown for bonds of the same maturity.
(b) "State" means the State of Mississippi.
(c) "Commission" means the State Bond Commission.
(2) (a) The commission, at one time, or from time to time, may declare by resolution the necessity for issuance of general obligation bonds of the State of Mississippi to provide funds for the programs authorized in Sections 57-103-1, 57-103-3, 57-103-5 and 57-103-7. Upon the adoption of a resolution by the Mississippi Development Authority declaring the necessity for the issuance of any part or all of the general obligation bonds authorized by this section, the Mississippi Development Authority shall deliver a certified copy of its resolution or resolutions to the commission. Upon receipt of such resolution, the commission, in its discretion, may act as the issuing agent, prescribe the form of the bonds, determine the appropriate method for sale of the bonds, advertise for and accept bids or negotiate the sale of the bonds, issue and sell the bonds so authorized to be sold, and do any and all other things necessary and advisable in connection with the issuance and sale of such bonds. The total amount of bonds issued under this section shall not exceed Two Million Dollars ($2,000,000.00). No bonds authorized under this section shall be issued after July 1, 2027.
(b) The proceeds of bonds issued pursuant to this section shall be deposited into the following special funds in not more than the following amounts:
(i) The Research and Development Program Fund created pursuant to Section 57-103-1........................ $750,000.00.
(ii) The Proof of Concept Loan 1 Fund created pursuant to Section 57-103-3
................................................. $ 550,000.00.
(iii) The Mississippi New Technology Business Program-Level 2 Fund created pursuant to Section 57-103-5
................................................... $500,000.00.
(iv) The Proof of Concept Grant Fund created pursuant to Section 57-103-7.................................. $ 200,000.00.
(c) Any investment earnings on bonds issued pursuant to this section shall be used to pay debt service on bonds issued under this section, in accordance with the proceedings authorizing issuance of such bonds.
(3) The principal of and interest on the bonds authorized under this section shall be payable in the manner provided in this section. Such bonds shall bear such date or dates, be in such denomination or denominations, bear interest at such rate or rates (not to exceed the limits set forth in Section 75-17-101, Mississippi Code of 1972), be payable at such place or places within or without the State of Mississippi, shall mature absolutely at such time or times not to exceed twenty-five (25) years from date of issue, be redeemable before maturity at such time or times and upon such terms, with or without premium, shall bear such registration privileges, and shall be substantially in such form, all as shall be determined by resolution of the commission.
(4) The bonds authorized by this section shall be signed by the chairman of the commission, or by his facsimile signature, and the official seal of the commission shall be affixed thereto, attested by the secretary of the commission. The interest coupons, if any, to be attached to such bonds may be executed by the facsimile signatures of such officers. Whenever any such bonds shall have been signed by the officials designated to sign the bonds who were in office at the time of such signing but who may have ceased to be such officers before the sale and delivery of such bonds, or who may not have been in office on the date such bonds may bear, the signatures of such officers upon such bonds and coupons shall nevertheless be valid and sufficient for all purposes and have the same effect as if the person so officially signing such bonds had remained in office until their delivery to the purchaser, or had been in office on the date such bonds may bear. However, notwithstanding anything herein to the contrary, such bonds may be issued as provided in the Registered Bond Act of the State of Mississippi.
(5) All bonds and interest coupons issued under the provisions of this section have all the qualities and incidents of negotiable instruments under the provisions of the Uniform Commercial Code, and in exercising the powers granted by this section, the commission shall not be required to and need not comply with the provisions of the Uniform Commercial Code.
(6) The commission shall act as issuing agent for the bonds authorized under this section, prescribe the form of the bonds, determine the appropriate method for sale of the bonds, advertise for and accept bids or negotiate sale of the bonds, issue and sell the bonds so authorized to be sold, pay all fees and costs incurred in such issuance and sale, and do any and all other things necessary and advisable in connection with the issuance and sale of such bonds. The commission is authorized and empowered to pay the costs that are incident to the sale, issuance and delivery of the bonds authorized under this section from the proceeds derived from the sale of such bonds. The commission may sell such bonds on sealed bids at public sale or may negotiate the sale of the bonds for such price as it may determine to be for the best interest of the State of Mississippi. All interest accruing on such bonds so issued shall be payable semiannually or annually.
If such bonds are sold by sealed bids at public sale, notice of the sale shall be published at least one time, not less than ten (10) days before the date of sale, and shall be so published in one or more newspapers published or having a general circulation in the City of Jackson, Mississippi, selected by the commission.
The commission, when issuing any bonds under the authority of this section, may provide that bonds, at the option of the State of Mississippi, may be called in for payment and redemption at the call price named therein and accrued interest on such date or dates named therein.
(7) The bonds issued under the provisions of this section are general obligations of the State of Mississippi, and for the payment thereof the full faith and credit of the State of Mississippi is irrevocably pledged. If the funds appropriated by the Legislature are insufficient to pay the principal of and the interest on such bonds as they become due, then the deficiency shall be paid by the State Treasurer from any funds in the State Treasury not otherwise appropriated. All such bonds shall contain recitals on their faces substantially covering the provisions of this section.
(8) Upon the issuance and sale of bonds under the provisions of this section, the commission shall transfer the proceeds of any such sale or sales to the special funds created in Sections 57-103-1, 57-103-3, 57-103-5 and 57-103-7, in the amounts provided in subsection (2)(b) of this section. The proceeds of such bonds shall be disbursed for the purposes provided in Sections 57-103-1, 57-103-3, 57-103-5 and 57-103-7.
(9) The bonds authorized under this section may be issued without any other proceedings or the happening of any other conditions or things other than those proceedings, conditions and things which are specified or required by this section. Any resolution providing for the issuance of bonds under the provisions of this section shall become effective immediately upon its adoption by the commission, and any such resolution may be adopted at any regular or special meeting of the commission by a majority of its members.
(10) The bonds authorized under the authority of this section may be validated in the Chancery Court of the First Judicial District of Hinds County, Mississippi, in the manner and with the force and effect provided by Chapter 13, Title 31, Mississippi Code of 1972, for the validation of county, municipal, school district and other bonds. The notice to taxpayers required by such statutes shall be published in a newspaper published or having a general circulation in the City of Jackson, Mississippi.
(11) Any holder of bonds issued under the provisions of this section or of any of the interest coupons pertaining thereto may, either at law or in equity, by suit, action, mandamus or other proceeding, protect and enforce any and all rights granted under this section, or under such resolution, and may enforce and compel performance of all duties required by this section to be performed, in order to provide for the payment of bonds and interest thereon.
(12) All bonds issued under the provisions of this section shall be legal investments for trustees and other fiduciaries, and for savings banks, trust companies and insurance companies organized under the laws of the State of Mississippi, and such bonds shall be legal securities which may be deposited with and shall be received by all public officers and bodies of this state and all municipalities and political subdivisions for the purpose of securing the deposit of public funds.
(13) Bonds issued under the provisions of this section and income therefrom shall be exempt from all taxation in the State of Mississippi.
(14) The proceeds of the bonds issued under this section shall be used solely for the purposes therein provided, including the costs incident to the issuance and sale of such bonds.
(15) The State Treasurer is authorized, without further process of law, to certify to the Department of Finance and Administration the necessity for warrants, and the Department of Finance and Administration is authorized and directed to issue such warrants, in such amounts as may be necessary to pay when due the principal of, premium, if any, and interest on, or the accreted value of, all bonds issued under this section; and the State Treasurer shall forward the necessary amount to the designated place or places of payment of such bonds in ample time to discharge such bonds, or the interest thereon, on the due dates thereof.
(16) This section shall be deemed to be full and complete authority for the exercise of the powers therein granted, but this section shall not be deemed to repeal or to be in derogation of any existing law of this state.
SECTION 5. This act shall take effect and be in force from and after July 1, 2023.