90-9-317. Seed capital project loan agreement -- specific loan requirements -- payback. (1) In addition to the loan requirements of 90-9-316, a seed capital project loan must be structured as contracted debt, including but not limited to the following terms:
     (a) an interest rate set at a level that provides for a return to the council, from paybacks by all of its portfolio companies, an amount at least equal to the principal amount of the loan and that provides for a market rate of return when considering the overall benefit to the state derived from the projects;
     (b) a provision in the note that may defer debt service until maturity of the note, the term of which may not exceed 8 years;
     (c) a loan amount that may not exceed $50,000 in any one round of financing. Successive rounds of financing in which the council participates for any one company may not occur within a 9-month period. The total amount that may be loaned to any one company may not exceed $150,000.
     (d) a provision that the note becomes due in full upon dissolution or liquidation of the company;
     (e) a provision that the company will provide the council with a second priority security interest in all of the equipment used in the company's business, accounts receivable, and inventory to secure repayment of the loan;
     (f) a provision that the priority security interest in the company's assets referred to in subsection (1)(e) will be evidenced by appropriate forms required to secure the assets as provided in Title 30, chapter 9A.
     (2) In addition to the provisions in 90-9-316 and subsection (1) of this section, a seed capital project loan agreement may provide for any of the following:
     (a) a convertible debenture;
     (b) a warrant held by the council; or
     (c) a warrant held by a third party for the benefit of the council.

     History: En. Sec. 7, Ch. 284, L. 1989.