described in section 9(e)(4)(C) of the Small
Business Act (15 U.S.C. 638(e)(4)(C));
(B) the principal business of such company
is the development or application of a critical
technology;
(C) such company is eligible for assistance
under the Advanced Technology Program
(ATP) established under section 28 of the Na-
tional Institute of Standards and Technology
Act (15 U.S.C. 278n); or
(D) such company is principally engaged in
the development or exploitation of inventions,
technological improvements, new processes, or
products not previously generally available
(within the meaning of section 851(e)(1) of the
Internal Revenue Code of 1986);
(11) the term ‘‘State’’ means several States, the
District of Columbia, the Commonwealth of Puerto
Rico, the Virgin Islands, Guam, American Samoa,
and the Commonwealth of the Northern Mariana Is-
lands, and any other territory or possession of the
United States;
(12) the term ‘‘State sponsored licensee’’ means
a company licensed under section 345 in which a
State or instrumentality of a State has at least a 25
percent investment interest in the private equity cap-
ital of such licensee;
(13) the term ‘‘university sponsored licensee’’
means a company licensed under section 345 in
which a single university or consortium of univer-
sities has at least a 25 percent investment interest
in the private equity capital of such licensee; and
(14) the term ‘‘venture capital’’ means consid-
eration for such—
(A) common stock;
(B) preferred stock;
(C) debt with equity features which may
include equity warrants or rights to convert into
common stock and which provides for interest
payments contingent upon and limited to the
extent of earnings; or
(D) other financing,
as the Under Secretary determines to be substan-
tially similar to equity financing, issued by a quali-
fied business concern.
SEC. 343. ESTABLISHMENT AND PURPOSE.
(a) ESTABLISHMENT.—There is established within
the Technology Administration of the Department of Com-
merce a national program to stimulate and supplement the
availability of long-term investment capital for the forma-
tion, development, and growth of qualified business con-
cerns throughout the United States. The Secretary,
through the Under Secretary, shall, through such pro-
gram, provide for the selection, licensing, monitoring, and
financial and technical support of professionally managed
technology investment companies which in turn shall pro-
vide financial, management, and technical assistance to
qualified business concerns, with preference given to satis-
fying the seed and early-stage financing needs of such con-
cerns that are not being met by other sources on reason-
able terms.
(b) PURPOSES.—The purposes of this subtitle are—
(1) to contribute to United States economic
competitiveness, employment, and prosperity;
(2) to promote the advancement, maturation,
and application of critical and other advanced tech-
nologies;
(3) to supplement and stimulate long-term in-
vestment in qualified business concerns; and
(4) to encourage and facilitate the formation
and growth of professionally managed technology in-
vestment companies throughout the United States
that will give preference to satisfying the capital
needs of qualified business concerns, especially dur-
ing their early stages of development.
(c) RESPONSIBILITIES.—(1) In carrying out this sub-
title, the Secretary, acting through the Under Secretary,
and subject to the availability of appropriations, shall—
(A) consult with and, to the extent permitted by
law, utilize the capabilities of other executive agen-
cies, as appropriate, to ensure the efficient and ef-
fective implementation of this subtitle;
(B) explore, with other executive agencies, ways
to avoid duplication of effort by consolidating the
administration of the program established by this
subtitle with any other similar Federal program, and
as part of such consolidation may delegate adminis-
trative functions, as necessary and appropriate, to
another executive agency;
(C) consult with the Secretary of Energy, the
Secretary of Defense, and the Administrator of the
National Aeronautics and Space Administration, on
all policy matters related to the Civilian Technology
Development Program that deal with development or
utilization of technologies developed by those agen-
cies;
(D) consult with State governments to ensure
that the existing programs run by or chartered by
State governments which seek to accomplish pur-
poses similar to those stated in subsection (b) are
encouraged and not undermined by the implementa-
tion of this subtitle; and
(E) explore with State governments ways in
which programs currently run by or chartered by
State governments which seek to accomplish pur-
poses similar to those stated in subsection (b) can
serve as models for the Secretary or be used to en-
sure the efficient and effective implementation of
this subtitle.
(2) To the extent permitted by law, other executive
agencies shall cooperate with the Under Secretary in car-
rying out this subtitle.
(d) OPERATING
PLAN.—The Secretary, acting
through the Under Secretary, shall prepare (in consulta-
tion with the Advisory Committee established under sec-
tion 344, other appropriate executive agencies, the States,
United States companies, the financial community, and
other appropriate parties) and submit to the Congress on
or about November 1, 1993, an operating plan to carry
out this subtitle. In preparing such plan, the Secretary
shall consider and evaluate alternative approaches to
achieving the purposes of this subtitle and shall develop
recommendations, as appropriate, to fulfill the purposes
of this subtitle in the most effective and efficient manner
achievable. Such evaluations and recommendations shall
be included in the plan submitted under this subsection.
(e) OUTREACH
TO
ECONOMICALLY
DEPRESSED
AREAS.—The Secretary, acting through the Under Sec-
retary, shall seek to ensure that qualified business con-
cerns located in areas determined by the Secretary to have
a depressed economy, or a significant concentration of de-
fense-related industries, or chronically high unemploy-
ment, are notified of the availability of financial assistance
through the program established under this subtitle and,
to the extent practicable, to encourage and facilitate the
participation of such qualified business concerns in such
program.
(f) EFFECTIVE DATE.—Except as provided in sub-
section (d) and in sections 344 and 351(a), the provisions
of this subtitle shall take effect on October 1, 1994.
SEC. 344. ADVISORY COMMITTEE.
(a) ESTABLISHMENT.—There is established a Civil-
ian Technology Development Advisory Committee (in this
section referred to as the ‘‘CTD Advisory Committee’’).
(b) COMPOSITION.—The CTD Advisory Committee
shall be composed of 7 members, appointed by the Under
Secretary from among private individuals who, because of
their experience and accomplishments in technology devel-
opment, maturation, and adoption, business development,
venture capital, finance, or other relevant areas, are excep-
tionally qualified to perform the duties of the CTD Advi-
sory Committee. The Under Secretary shall designate 1
member to serve as chairman.
(c) DUTIES.—The duties of the CTD Advisory Com-
mittee shall include advising the Under Secretary on all
matters related to policy, planning, execution, and evalua-
tion of the program established under this subtitle.
(d) TERMINATION.—Section 14 of the Federal Advi-
sory Committee Act shall not apply to the CTD Advisory
Committee.
SEC. 345. ORGANIZATION AND LICENSING.
(a) IN GENERAL.—Any incorporated body, limited
partnership, or State instrumentality organized and char-
tered or otherwise existing under State law for the purpose
of performing the functions and conducting the activities
contemplated under this subtitle, that possesses the pow-
ers, capabilities, and expertise reasonably necessary to
perform such functions and conduct such activities, may
apply for a license under this subtitle in such form and
manner as the Under Secretary may prescribe.
(b) ARTICLES.—The articles of any applicant shall
specify in general terms the objects for which the applicant
is formed, the name assumed by such applicant, the area
or areas in which its operations are to be carried on, the
place where its principal office is to be located, and the
amount and classes of its shares of capital stock. Such
articles may contain any other provisions not inconsistent
with this subtitle that the applicant may see fit to adopt
for the regulation of its business and the conduct of its
affairs. Such articles and any amendments thereto adopt-
ed from time to time shall be subject to the approval of
the Under Secretary.
(c) BUSINESS PLAN.—The business plan of any ap-
plicant shall specify in general terms—
(1) how the applicant proposes to achieve the
objects for which it is formed, to operate and govern
its business, and to fulfill the purposes and satisfy
the requirements of this subtitle;
(2) the board members or general partners and
the management and professional staff of the appli-
cant, and the professional training, experience, rep-
utation, and investment performance record, if any,
of each such individual, along with a description of
the applicant’s current and proposed management
structure;
(3) all current or committed private investors in
the applicant, together with the amount, terms, con-
ditions, and conveyances associated with such invest-
ment, and appropriate background information on
each private investor; and
(4) such other information as the Under Sec-
retary may require.
Such business plan and any material amendments thereto
adopted from time to time shall be subject to the approval
of the Under Secretary.
(d) APPROVAL OF ARTICLES AND BUSINESS PLAN;
LICENSING.—The articles and business plan of an appli-
cant for a license shall be forwarded to the Under Sec-
retary for consideration and approval or disapproval. In
determining whether to approve a prospective licensee’s
articles and business plan and permit it to operate under
the provisions of this subtitle, the Under Secretary shall
give due regard, among other things, to the general busi-
ness reputation, character, suitability, and demonstrated
ability, experience, and performance in the development,
growth, and financing of qualified business concerns, of
the proposed owners and management of the prospective
licensee, and the likelihood of successful operations of the
prospective licensee including adequate profitability and fi-
nancial soundness. After consideration of all relevant fac-
tors, if the Under Secretary approves the company’s arti-
cles and business plan and determines that the applicant
satisfies or will satisfy the requirements of this subtitle,
the Under Secretary may approve the company to operate
under the provisions of this subtitle and issue the company
a license for such operation.
SEC. 346. CAPITAL AND MANAGEMENT REQUIREMENTS.
(a) CAPITAL.—(1) The private equity capital of a li-
censee shall be adequate to ensure a reasonable prospect
that the licensee will be operated soundly and profitably,
and managed actively and prudently in accordance with
its articles and business plan. Such private equity capital
shall not be less than $5,000,000, except that, in the case
of a State sponsored licensee or a university sponsored li-
censee, such private equity capital shall not be less than
$2,500,000. At the time of issuance of a license, not less
than 75 percent of the private equity capital of the licensee
shall be available or committed to be available for new in-
vestment in accordance with this subtitle.
(2) To the extent permitted by other law, including
the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1001 et seq.), private and public pension funds
may contribute to the private equity capital of a licensee
without restriction as to the amount of such contribution.
(3) State and local government entities may contrib-
ute not more than 40 percent of the total private equity
capital of a licensee.
(4) The aggregate amount of shares in any such li-
censee or licensees which may be owned or controlled by
any stockholder, or by any group or class of stockholders,
may be limited by the Under Secretary.
(b) MANAGEMENT.—The management and oper-
ational control of a licensee shall be carried out by suitable
private individuals who possess the professional training,
experience, and capabilities reasonably necessary to
achieve the purposes of this subtitle.
SEC. 347. FINANCING FOR LICENSEES.
(a) AUTHORITY TO PURCHASE
AND GUARANTEE
PREFERRED SECURITIES.—To encourage and facilitate
the formation and growth of licensees and qualified busi-
ness concerns, the Under Secretary may purchase or com-
mit to purchase nonvoting preferred securities, with or
without equity warrants, issued by a licensee, or guaran-
tee, or commit to guarantee, the payment of 100 percent
of the redemption price of and dividends on such preferred
securities, to the extent provided in appropriations Acts,
if the licensee has demonstrated to the satisfaction of the
Under Secretary that it is financially sound and that it
has complied with or will comply with the requirements
of this subtitle, the terms of its license, and any rule, regu-
lation, or order issued under this subtitle. Such purchases
and guarantees shall constitute direct loans and loan guar-
antees within the meaning of paragraphs (1) and (3) of
section 502 of the Federal Credit Reform Act of 1990,
respectively. A trust or pool acting on behalf of the Under
Secretary may purchase preferred securities that are guar-
anteed under this subsection.
(b) TERMS AND CONDITIONS OF PREFERRED SECU-
RITIES.—(1) Guarantees and purchases of preferred secu-
rities, or commitments to make such guarantees and pur-
chases, under this section may be made on such terms and
conditions as the Under Secretary shall establish by regu-
lation or set forth in contract to ensure compliance with
this subtitle and to protect the interests of taxpayers and
the United States in the event of default or otherwise. For
purposes of this paragraph, the Under Secretary shall by
regulation define the term ‘‘default’’.
(2)(A) Except as provided in subparagraph (B), pre-
ferred securities issued under this section shall be senior
in priority for all purposes to all non-Federal equity inter-
ests in a licensee unless the Under Secretary, in the exer-
cise of reasonable investment prudence and in considering
the financial soundness of the licensee, determines other-
wise.
(B) The equity interests of a university or consortium
of universities, or of a State or instrumentality of a State,
in a licensee shall be equal in priority to Federal equity
interests in such licensee for all purposes unless the Under
Secretary, in the exercise of reasonable investment pru-
dence and in considering the financial soundness of the
licensee, determines otherwise.
(3) Preferred securities issued under this section
shall be redeemed by the issuer not later than 10 years
after their date of issuance for an amount equal to 100
percent of the original issue price plus any accrued and
unpaid dividends. In order to facilitate the orderly liquida-
tion of a licensee’s investments, redemption of such pre-
ferred securities may be extended by mutual consent for
no more than 5 years beyond such expiration date.
(4) Preferred securities issued under this section
shall pay dividends at a rate determined by the Secretary
of the Treasury at the time of issuance to equal the then
current average market yield on outstanding marketable
debt obligations of the United States with remaining peri-
ods to maturity comparable to the time to required re-
demption of such preferred securities, plus such additional
charge, if any, toward covering expected defaults and rea-
sonable administrative costs of carrying out this subtitle
as the Under Secretary may determine to be reasonable
and appropriate. Such additional charge shall not exceed
2 percent.
(5) Dividends on preferred securities issued under
this section shall be cumulative and preferred and paid
out of net realized earnings and returns of capital avail-
able for distribution, as defined by the Under Secretary
by regulation.
(6) The payment of dividends on preferred securities
issued under this section may be deferred by the issuer
until such time as, and to the extent that, the issuer real-
izes earnings and returns of capital available for distribu-
tion. Accumulated and unpaid dividends on such preferred
securities shall be paid by the issuer before or at the time
of redemption of the preferred securities and before any
distribution of net realized earnings and returns of capital
of the issuer to its non-Federal equity investors, except
as provided in subsection (e)(2) (B) and (C). With respect
to preferred securities issued under this section to a party
other than the Under Secretary, during the time of any
deferral under this paragraph, the Under Secretary shall
make, on behalf of the issuer, required dividend payments
to the holder of the preferred securities, its agents or as-
signs, or the appropriate central registration agent, if any.
The authority to make dividend payments provided in this
paragraph shall be limited to the extent of amounts pro-
vided in advance in appropriations Acts for such purposes.
(7) For purposes of this subsection, the term ‘‘divi-
dends’’ means dividends on preferred stock and returns
on preferred limited partnership interests or other similar
securities, as defined by the Under Secretary by regula-
tion.
(c) LIMITATIONS AND RESTRICTIONS.—(1) The total
principal amount of debt, as evidenced by notes, bonds,
debentures, or certificates of indebtedness, plus the total
face amount of preferred securities purchased or guaran-
teed by the Under Secretary under subsection (a), issued
and outstanding from a licensee shall not exceed 200 per-
cent of the private equity capital of the licensee.
(2) The total face amount of preferred securities pur-
chased or guaranteed by the Under Secretary under sub-
section (a) and outstanding from a licensee or a combina-
tion of licensees which are commonly controlled, as defined
and determined by the Under Secretary, shall not exceed
$50,000,000.
(3)(A) If preferred securities issued under this sec-
tion are outstanding, then the issuing licensee shall be
subject to the following restrictions:
(i) The total principal amount of debt, as evi-
denced by notes, bonds, debentures, or certificates of
indebtedness, of a licensee issued and outstanding
may not exceed 50 percent of the private equity cap-
ital of the licensee.
(ii) The annual management expenses of a li-
censee shall not exceed an amount which the Under
Secretary determines to be reasonable and appro-
priate.
(iii) The aggregate amount of obligations and
securities acquired and for which commitments may
be issued by a licensee for any single qualified busi-
ness concern shall not exceed $2,000,000 or 20 per-
cent of the private equity capital of such licensee,
whichever is greater, unless the Under Secretary ap-
proves a greater amount.
(B) For purposes of this paragraph, the term ‘‘man-
agement expenses’’ includes expenses incurred in the nor-
mal course of operations, but shall not include the cost
of legal, accounting, and consulting services provided by
outside parties and by affiliates of the licensee which are
not normal practice in making and monitoring investments
consistent with the purposes of this subtitle.
(d) USE OF CAPITAL BY LICENSEES.—(1) A licensee
issuing preferred securities under this section shall invest
or commit to invest—
(A) an amount equal to the face value of such
preferred securities that are outstanding; plus
(B) an amount of its private equity capital
equal to 50 percent of the amount described in sub-
paragraph (A),
in the venture capital of qualified business concerns in ac-
cordance with section 349.
(2) At least 50 percent of the amount of investments
required under paragraph (1) shall be for seed and early
stage financing, as defined by the Under Secretary by reg-
ulation. The Under Secretary may alter the percentage re-
quirement under this paragraph to the extent necessary,
in the determination of the Under Secretary, to achieve
the purposes of this subtitle and maintain prudent invest-
ment diversification.
(3) Proceeds to a licensee derived from preferred se-
curities issued under this section may be used by the is-
suer to redeem any preferred securities issued under this
section that have been outstanding at least 5 years, as
provided in subsection (b)(3).
(4) Proceeds to a licensee derived from preferred se-
curities issued under this section that have not been in-
vested pursuant to paragraphs (1) and (2) or used for re-
demptions pursuant to paragraph (3) and are not reason-
ably needed for the operations of the licensee shall be in-
vested in direct obligations of, or obligations guaranteed
as to principal and interest by, the United States, or in
certificates of deposit maturing within one year or less,
issued by any institution the accounts of which are insured
by the Federal Deposit Insurance Corporation.
(e) PROFIT DISTRIBUTION BY LICENSEES.—(1) Any
distribution of net realized earnings and returns of capital
made by a licensee that exceeds amounts required for the
purposes stated in paragraph (2) shall be distributed pro
rata to all investors entitled to such distributions. The
United States shall receive no funds under this paragraph.
(2)(A) Except as provided in subparagraphs (B) and
(C), any distribution of net realized earnings and returns
of capital made by a licensee shall first be used to pay
accumulated and unpaid dividends owed on outstanding
preferred securities issued under this section and to satisfy
the redemption requirements of subsection (b)(3).
(B) For purposes of subparagraph (A), the redemp-
tion requirements of subsection (b)(3) shall be considered
to be satisfied if necessary and appropriate actions, as de-
termined by the Under Secretary, have been undertaken
by the licensee to ensure that such requirements will be
satisfied.
(C) If a licensee is operating as a limited partnership
or as a corporation described in subchapter S of chapter
1 of subtitle A of the Internal Revenue Code of 1986 or
an equivalent pass-through entity for tax purposes, it may
distribute to the partners or shareholders an amount equal
to the estimated amount of Federal, State, and local in-
come taxes due from such partners and shareholders on
their share of undistributed taxable income for the current
taxable year before payments described in subparagraph
(A) are made.
(f) USE OF PAYMENTS TO THE UNITED STATES.—
Amounts received by the United States from the payment
of dividends and the redemption of preferred securities
pursuant to this section, and fees paid to the United
States by a licensee pursuant to this subtitle, shall be de-
posited in an account established by the Under Secretary
and shall be available solely for carrying out this subtitle,
to the extent provided in advance in appropriations Acts.
SEC. 348. ISSUANCE AND GUARANTEE OF TRUST CERTIFI-
CATES.
(a) AUTHORITY TO ISSUE TRUST CERTIFICATES.—
The Under Secretary is authorized to issue trust certifi-
cates representing ownership of all or a fractional part of
preferred securities issued by licensees and guaranteed by
the Under Secretary under this subtitle. Such trust certifi-
cates shall be based on and backed by a trust or pool ap-
proved by the Under Secretary and composed of preferred
securities and such other contractual obligations as the
Under Secretary may undertake to facilitate the sale of
such trust certificates.
(b) GUARANTEE
OF TRUST CERTIFICATES.—The
Under Secretary is authorized, upon such terms and con-
ditions as are deemed appropriate, to guarantee the timely
payment of the principal of and interest on trust certifi-
cates issued by the Under Secretary or his agent for pur-
poses of this section. Such guarantee shall be limited to
the extent of the redemption price of and dividends on the
preferred securities, plus any related contractual obliga-
tions, which compose the trust or pool.
(c) PREPAYMENTS AND REDEMPTIONS.—In the event
that preferred securities or contractual obligations in such
trust or pool are redeemed or extinguished, either volun-
tarily or involuntarily, the guarantee of timely payment
of principal and interest on the trust certificates shall be
reduced in proportion to the amount of redemption price
and dividends such redeemed preferred security or extin-
guished contractual obligation represents in the trust or
pool. Dividends or partnership profit distributions on such
preferred securities and related contractual obligations,
shall accrue and be guaranteed by the Under Secretary
only through the date of payment on the guarantee. Dur-
ing the term of the trust certificate, it may be called for
redemption, whether voluntary or involuntary, of all pre-
ferred securities residing in the pool.
(d) FEES.—The Under Secretary may collect fees for
a guarantee under this section that are reasonable and
customary.
(e) PAYMENT
OF CLAIMS.—(1) In the event the
Under Secretary pays a claim under a guarantee issued
under this section, it shall be subrogated fully to the rights
satisfied by such payment.
(2) No State or local law, and no Federal law, shall
preclude or limit the exercise by the Under Secretary of
ownership rights in the preferred securities residing in a
trust or pool against which trust certificates are issued.
(f) REGISTRATION
AND
INTERMEDIARY
OPER-
ATIONS.—(1) The Under Secretary shall provide for a
central registration of all trust certificates sold pursuant
to this section. Such central registration shall include with
respect to each sale, identification of each licensee, the in-
terest rate or dividend rate paid by the licensee, commis-
sions, fees, or discounts paid to brokers and dealers in
trust certificates, identification of each purchaser of the
trust certificate, the price paid by the purchaser for the
trust certificate, the interest rate paid on the trust certifi-
cate, the fees of any agent for carrying out the functions
described in paragraph (2), and such other information
as the Under Secretary deems appropriate.
(2) The Under Secretary shall contract with an agent
or agents to carry out on behalf of the Under Secretary
the pooling and the central registration functions of this
section including, notwithstanding any other provision of
law, maintenance on behalf of and under the direction of
the Under Secretary, such commercial bank accounts as
may be necessary to facilitate trusts or pools backed by
securities guaranteed or purchased under this subtitle,
and the issuance of trust certificates to facilitate such
poolings. Such agent or agents shall provide a fidelity
bond or insurance in such amounts as the Under Secretary
determines to be necessary to fully protect the interests
of the Federal Government.
(3) Prior to any sale, the Under Secretary shall re-
quire the seller to disclose to a purchaser of a trust certifi-
cate issued pursuant to this section, information on the
terms, conditions, and yield of such instrument.
SEC. 349. VENTURE CAPITAL FOR QUALIFIED BUSINESS
CONCERNS.
Each licensee may provide venture capital to qualified
business concerns, in such manner and under such terms
as the licensee may fix in accordance with the regulations
of the Under Secretary.
SEC. 350. OPERATION.
(a) COOPERATION.—Wherever practicable the oper-
ations of a licensee, including the generation of business,
may be undertaken in cooperation with banks or other li-
censees, investors, or lenders, incorporated or unincor-
porated, and any servicing or initial investigation required
for loans or acquisitions of securities by the licensee under
the provisions of this subtitle may be handled through
such banks or other licensees, investors, or lenders on a
fee basis. Any licensee may receive fees for services ren-
dered to such banks and other licensees, investors, and
lenders.
(b) ADVISORY SERVICES.—Each licensee may make
use, wherever practicable, of the advisory services of the
Federal Reserve System and of the Department of Com-
merce which are available for and useful to industrial and
commercial businesses, and may provide consulting and
advisory services on a fee basis and have on its staff per-
sons competent to provide such services. A licensee may
not charge fees for such services that are provided to a
qualified business concern in which it has an investment.
SEC. 351. REGULATIONS; LIABILITY.
(a) REGULATIONS.—The Under Secretary is author-
ized to prescribe regulations governing the operations of
licensees, and to carry out the provisions of this subtitle,
in accordance with the purposes of this subtitle.
(b) LIABILITY OF THE UNITED STATES.—Nothing in
this subtitle or in any other provision of law imposes any
liability on the United States with respect to any obliga-
tions entered into, or stocks issued, or commitments made,
by any licensee operating under the provisions of this
subtitle.
SEC. 352. TECHNICAL ASSISTANCE FOR LICENSEES AND
QUALIFIED BUSINESS CONCERNS.
(a) TECHNICAL ASSISTANCE.—The Secretary shall,
upon request, provide technical assistance and services, as
appropriate and needed, to licensees and to qualified busi-
ness concerns receiving financial assistance under this
subtitle, and shall ensure that such qualified business con-
cerns have ready access to appropriate assistance available
under title III of the Stevenson-Wydler Technology Inno-
vation Act of 1980, or under any other Act, in order to
aid such qualified business concerns in their development
or utilization of critical or other advanced technologies.
Technical assistance and services under this subsection
shall include providing licensees and qualified business
concerns with—
(1) an assessment of the technological and sci-
entific feasibility of a project, or an analysis of a
specific field of technical or scientific endeavor;
(2) improved access to technology developed by
the Institute and assistance in obtaining access to
technology developed by other Federal agencies and
laboratories;
(3) expert analysis of the economics of tech-
nology development undertaken by a qualified busi-
ness concern; and
(4) any other assistance or service that the
Under Secretary determines, after consultation with
licensees and qualified business concerns, is nec-
essary and appropriate to enhance prospects for suc-
cess and to reduce technical risk for licensees and
qualified business concerns.
(b) FEES.—The Secretary may charge fees for serv-
ices and technical assistance provided under subsection (a)
in amounts sufficient to cover the reasonable cost of such
services and assistance. The Secretary may waive fees es-
tablished under this subsection.
SEC. 353. PERFORMANCE MEASURES; ANNUAL REPORT.
(a) PERFORMANCE MEASURES.—The performance of
the program established under this subtitle shall be evalu-
ated relative to progress made in achieving its purposes
and shall be measured in relevant and meaningful terms
such as significant accomplishments in advancing tech-
nology, businesses formed and financed, jobs created,
taxes generated, licenses granted and maintained, capital
invested, and other criteria the Under Secretary may deem
appropriate.
(b) ANNUAL REPORT.—The Under Secretary shall
prepare, in consultation with the advisory committee es-
tablished under section 344, and submit annually a report
to the Congress containing a full and detailed account of
operations under this subtitle. Such report shall include—
(1) an assessment of progress made in achiev-
ing the purposes of this subtitle;
(2) performance measures established under
subsection (a);
(3) a list of licensees along with their location,
area of operations, investment objectives, capitaliza-
tion, and net asset value, both at cost and at current
fair market value;
(4) an audit setting forth the amount, type, re-
cipient, and source of disbursements, receipts, and
losses sustained by the Federal Government as a re-
sult of operations under this subtitle during the pre-
ceding fiscal year and since inception of the pro-
gram;
(5) the Under Secretary’s plans to ensure the
provision of licensee financing to all areas of the
country and to all qualified business concerns, and
plans to notify and to encourage and facilitate the
participation of qualified business concerns as re-
quired by section 343(e), including steps taken to
accomplish those goals;
(6) steps taken by the Under Secretary to carry
out this subtitle and to ensure compliance with stat-
utory and regulatory standards relating thereto; and
(7) recommendations with respect to program
changes, statutory changes, and other matters, in-
cluding tax incentives, to improve and facilitate the
operations of licensees and to encourage the use of
their financing facilities by qualified business con-
cerns.
SEC. 354. REPORTS, INVESTIGATIONS, AND EXAMINATIONS.
(a) REPORTING REQUIREMENTS.—Each license is-
sued under this subtitle shall require a licensee with out-
standing preferred securities to provide the Under Sec-
retary such information, including companies financed,
disbursements made along with associated terms and con-
ditions, receipts, portfolio valuation and net asset value
at cost and at estimated fair market value, and other fi-
nancial statements, that the Under Secretary may require
to satisfy the requirements of section 353(b) and to deter-
mine, in a timely manner, compliance with this subtitle
and regulations promulgated under this subtitle. Such re-
porting shall be—
(1) except as otherwise provided in this sub-
section, consistent with the reporting practices and
standards of the venture capital industry;
(2) uniform for all licensees;
(3) submitted annually to the Under Secretary,
with valuation and other information provided more
frequently as the Under Secretary may require; and
(4) certified by the Board of Directors or the
General Partners of the licensee.
The Under Secretary may exempt from making such re-
ports any licensee which is registered under the Invest-
ment Company Act of 1940 only to the extent necessary
to avoid duplication in reporting requirements.
(b) VALUATIONS.—The Under Secretary shall, by
regulation, establish guidelines for estimating the fair
market value of investments held by a licensee as required
under subsection (a). The board of directors of a corporate
licensee and the general partners of a partnership licensee
shall have the sole responsibility for making a good faith
determination of the fair market value of investments held
by such licensee, based on guidelines established under
this subsection.
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(c) INVESTIGATIONS.—The Secretary may undertake
investigations to determine whether a licensee or any other
person has engaged or is about to engage in any acts or
practices which constitute or will constitute a violation of
any provision of this subtitle, or of any rule, regulation,
or order issued under this subtitle. The Secretary shall
permit any person to file a statement in writing, under
oath or otherwise as the Secretary shall determine, as to
all the facts and circumstances concerning the matter to
be investigated. For the purpose of any investigation, the
Secretary is empowered to administer oaths and affirma-
tions, subpoena witnesses, compel their attendance, take
evidence, and require the production of any books, papers,
and documents which are relevant to the inquiry.
(d) EXAMINATIONS.—Each licensee shall be subject
to examinations made at the discretion and direction of
the Under Secretary by examiners selected or approved
by, and under the supervision of, the Under Secretary.
The Under Secretary may enter into contracts with pri-
vate parties to perform such examinations. The cost of
such examinations, including the compensation of the ex-
aminers, may in the discretion of the Under Secretary be
assessed against the licensee examined and when so as-
sessed shall be paid by such licensee.
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SEC. 355. REVOCATION AND SUSPENSION OF LICENSES;
CEASE AND DESIST ORDERS.
(a) GROUNDS FOR REVOCATION OR SUSPENSION.—
A license may be revoked or suspended by the Secretary—
(1) for willful or repeated violation of any provi-
sion of this subtitle or any rule, regulation, or order
issued thereunder; or
(2) if the licensee no longer serves the purposes
for which it was granted a license.
(b) CEASE AND DESIST ORDERS.—Where a licensee
or any other person has not complied with any provision
of this subtitle, or of any rule, regulation, or order issued
thereunder, or is engaging or is about to engage in any
acts or practices which constitute or will constitute a viola-
tion of such provision, rule, regulation, or order, the Sec-
retary may order such licensee or other person to cease
and desist from such action or failure to act. The Sec-
retary may further order such licensee or other person to
take such action or to refrain from such action as the Sec-
retary considers necessary to ensure compliance with such
provisions, rules, regulations, or orders. The Secretary
may also suspend the license of a licensee, against whom
an order has been issued, until such licensee complies with
such order.
(c) SUBPOENAS.—The Secretary may require by sub-
poenas the attendance and testimony of witnesses and the
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production of all books, papers, and documents relating
to the hearing from any place in the United States.
(d) ENFORCEMENT.—If any licensee or other person
against which or against whom an order is issued under
this section fails to obey the order, the Secretary may
apply to the district court of the United States for the
district where the licensee has its principal place of busi-
ness, for the enforcement of the order.
SEC. 356. INJUNCTIVE RELIEF.
(a) IN GENERAL.—If the Secretary determines that
a licensee or any other person has engaged, or is about
to engage, in any acts or practices which constitute a vio-
lation of any provision of this subtitle, or of any rule, regu-
lation, or order issued under this subtitle, the Secretary
may apply to the appropriate district court of the United
States for injunctive relief.
(b) RECEIVERSHIP.—Whenever it is necessary in
order to achieve the purposes of injunctive relief granted
under subsection (a), and upon proper application by the
Secretary, the court may order the attachment of assets
of a licensee and may appoint a receiver to administer
such assets under the direction of the court.
SEC. 357. CONFLICTS OF INTEREST.
For the purpose of controlling conflicts of interest
which may be detrimental to qualified business concerns,