PRIOR PRINTER'S NOS. 2014, 2019 PRINTER'S NO. 2865
No. 1662 Session of 1979
INTRODUCED BY MESSRS. DORR, McCALL, L. E. SMITH, BENNETT, DeVERTER, DOMBROWSKI, BURD, SERAFINI AND HALVERSON, JULY 11, 1979
AS REPORTED FROM COMMITTEE ON BUSINESS AND COMMERCE, HOUSE OF REPRESENTATIVES, AS AMENDED, FEBRUARY 6, 1980
AN ACT 1 Establishing a State corporation to foster industrial and 2 commercial and technological development to develop 3 employment opportunities and making an appropriation. 4 TABLE OF CONTENTS 5 Section 1. Short title. 6 Section 2. Legislative purpose. 7 Section 3. Definitions. 8 Section 4. Corporation established. 9 Section 5. Operation of corporation. 10 Section 6. Powers and duties. 11 Section 7. Corporation president. 12 Section 8. Corporate purpose. 13 Section 9. Application for financial aid. 14 Section 10. Appropriation. 15 Section 11. Annual report. 16 Section 12. Nonintervention clause. 17 Section 13. Construction.
1 Section 14. Tax exempt. 2 Section 15. Effective date. 3 The General Assembly of the Commonwealth of Pennsylvania 4 hereby enacts as follows: 5 Section 1. Short title. 6 This act shall be known and may be cited as the "Pennsylvania 7 Employment Opportunities Improvement Act." 8 Section 2. Legislative purpose. 9 The General Assembly finds and declares that there exists in 10 Pennsylvania a significant need for industrial and commercial 11 development and activity in order to provide and increase 12 employment opportunities and tax revenues; that assistance and 13 encouragement of industrial and commercial development to 14 provide and increase such employment opportunities and revenues 15 is an important function of the State government that the 16 availability of financial assistance is an important inducement 17 to industrial and commercial enterprises to remain or locate in 18 this State; that there exists in the State a serious shortage of 19 venture capital to promote the development and exploitation of 20 invention and new products; that this shortage has resulted and 21 will result in a serious decrease in the development of new 22 business enterprise and job opportunities in Pennsylvania; and, 23 further, that providing State financial assistance for the 24 development of products, innovation and invention for industry 25 in this State will assist in the creation of new products and 26 industry in this State, resulting in increased employment and 27 public revenues; and, therefore, the necessity in the public 28 interest and for the public benefit and good for the provisions 29 of this act is hereby declared as a matter of legislative 30 determination. 19790H1662B2865 - 2 -
1 Section 3. Definitions. 2 The following words and phrases when used in this act shall 3 have, unless the context clearly indicates otherwise, the 4 meanings given to them in this section: 5 "Corporation." The Pennsylvania Product Development 6 Corporation as created under section 4. 7 "Financial aid." The infusion of risk capital to persons for 8 use in the development and exploitation of specific inventions 9 and products. 10 "INNOVATION." THE PROCESS BY WHICH AN INVENTION OR AN IDEA <-- 11 IS TRANSLATED INTO THE ECONOMY FOR UTILIZATION. 12 "Invention." Any new products, new process or new technique 13 without regard to whether a patent has or could be granted. 14 "Person." Any individual, partnership, corporation or joint 15 venture carrying on business, or proposing to carry on business, 16 within the State. 17 "Product." Any product, device, technique or process, which 18 is or may be exploitable commercially; such term shall not refer 19 to pure research but shall be construed to apply to such 20 products, devices, techniques or processes which have advanced 21 beyond the theoretic stage and are readily capable of being, or 22 has been, reduced to practice. 23 "Venture." Without limitation, any contractual arrangement 24 with any person whereby the corporation obtains rights from or 25 in an invention or product or proceeds therefrom in exchange for 26 the granting of financial aid to such person. 27 Section 4. Corporation established. 28 (a) There is hereby created a nonprofit body corporate to be 29 known as the "Pennsylvania Product Development Corporation." 30 Such corporation is constituted a quasi-public instrumentality 19790H1662B2865 - 3 -
1 and the exercise by the corporation of the powers conferred in 2 this act shall be deemed and held to be the performance of an 3 essential public function. 4 (b) The corporation shall be governed by a board of six <-- 5 SEVEN directors to be appointed by the Governor, at least four <-- 6 of whom shall be knowledgeable and have favorable reputations 7 for skill, knowledge and experience, in the areas of the 8 development of technological invention. On or before May 1, 9 1980, the Governor shall so appoint six SEVEN members of said <-- 10 board, two to serve for two years, two for four years and two <-- 11 THREE for six years from July 1, 1980. On or before May 1 of the <-- 12 even-numbered years thereafter, the Governor shall so appoint 13 directors to succeed those whose terms expire for terms of six 14 years from July 1 in the year of their appointment and until 15 their successors have been appointed. A director shall be 16 eligible for reappointment. The Governor shall fill any vacancy 17 for the unexpired term. 18 (c) The directors shall annually elect one of the number as 19 chairman and one as secretary. The board may elect such other 20 officers of the board as it deems proper. Members shall receive 21 no compensation for the performance of their duties hereunder 22 but shall be reimbursed for necessary expenses incurred in the 23 performance thereof. 24 (d) Each director of the corporation before entering upon 25 his duties shall take and subscribe the oath or affirmation 26 required by Article VI of the Constitution. A record of each 27 such oath of affirmation shall be filed in the office of the 28 Secretary of State. 29 (E) NO DIRECTOR SHALL BE PERSONALLY LIABLE FOR DAMAGE OR <-- 30 INJURY, NOT WANTON OR WILFUL, CAUSED IN THE PERFORMANCE OF HIS 19790H1662B2865 - 4 -
1 DUTIES AND WITHIN THE SCOPE OF HIS EMPLOYMENT. 2 Section 5. Operation of corporation. 3 The corporation shall have perpetual succession and shall 4 adopt, amend and repeal bylaws and regulations for the conduct 5 of its affairs. The operations of the corporation shall be 6 designed to accomplish the legislative purposes set forth in 7 this act. Such succession shall continue until the existence of 8 the corporation is terminated by law, provided no such 9 termination shall affect any outstanding contractual obligation 10 of the corporation to assist any person and the State shall 11 succeed to the obligations of the corporation under such 12 contract. Upon termination of the corporation its rights and 13 properties shall pass to the State. 14 Section 6. Powers and duties. 15 The powers of the corporation shall be vested in and 16 exercised by the board of directors. Four members of the board 17 shall constitute a quorum and the affirmative vote of a majority 18 of the members present at a meeting of the board shall be 19 necessary and sufficient for any action taken by the board. No 20 vacancy in the membership of the board shall impair the right of 21 a quorum to exercise all the rights and perform all the duties 22 of the board. Any action taken by the board may be authorized by 23 resolution at any regular or special meeting and shall take 24 effect immediately unless otherwise provided in the resolution. 25 Notice of any meeting, whether special or regular, shall be 26 given by telephone or orally, not less than 48 hours prior to 27 the meeting. The board may delegate to one or more of its 28 members, or its officers, agents and employees such powers and 29 duties as it may deem proper. 30 Section 7. Corporation president. 19790H1662B2865 - 5 -
1 The board shall appoint a president of the corporation who 2 shall not be a member of the board and who shall serve at the 3 pleasure of the board and shall receive such compensation as 4 shall be determined by the board. The president shall be the 5 chief administrative and operational officer of the corporation 6 and shall direct and supervise administrative affairs and the 7 general management of the corporation. The president may be a 8 State employee performing these functions part time for the 9 first two years of operation of the corporation. The president 10 may employ such other employees as shall be designated by the 11 board of directors; shall attend all meetings of the board; keep 12 a record of all proceedings and maintain and be custodian of all 13 books, documents and papers filed with the corporation and of 14 the minute book of the corporation and of its official seal. He 15 may cause copies to be made of all minutes and other records and 16 documents of the corporation and may give certificates under the 17 official seal of the corporation to the effect that such copies 18 are true copies and all persons dealing with the corporation may 19 rely upon such certificates. 20 Section 8. Corporate purpose. 21 The purpose of the corporation shall be to stimulate and 22 encourage the development AND COMMERCIALIZATION of new products <-- 23 within Pennsylvania by the infusion of financial aid for 24 invention and innovation in situations in which such financial 25 aid would not otherwise be reasonably available from commercial 26 sources and for this purpose the corporation shall have the 27 following powers: 28 (1) To have perpetual succession as a body corporate and 29 to adopt bylaws, policies and procedures for the regulation 30 of its affairs and conduct of its businesses as provided in 19790H1662B2865 - 6 -
1 section 5. 2 (2) To enter into venture agreements with persons doing 3 business in Pennsylvania, upon such terms and on such 4 conditions as are consistent with the purposes of this act, 5 for the advancement of financial aid to such persons for the 6 development of specific products, procedures and techniques, 7 to be developed and produced in this State and to condition 8 such agreements upon contractual assurances that the benefits 9 of increasing employment and tax revenues shall accrue to 10 this State and shall remain in it for a sufficient time 11 period to justify the State's involvement. 12 (3) To receive and accept loans, aid or contributions 13 from any source of money, property or labor or other things 14 of value, to be held, used and applied to carry out the 15 purposes of this act, subject to the conditions upon which 16 such grants and contributions may be made, including but not 17 limited to, gifts or grants from any department or agency of 18 the United States or the State. 19 (4) To acquire, lease, purchase, manage, hold and 20 dispose of real and personal property in the State of 21 Pennsylvania and lease, convey or deal in or enter into 22 contracts with respect to such property on any terms 23 necessary or incidental to the carrying out of these 24 purposes. 25 (5) To borrow money to the extent permitted under this 26 act. 27 (6) To hold patents, copyrights, trademarks or any other 28 evidences of protection of exclusivity as to any products as 29 defined herein, issued under the laws of the United States or 30 any state or any nation. 19790H1662B2865 - 7 -
1 (7) To employ such assistants, agents and other
2 employees, who shall be State employees in the unclassified
3 service and to engage consultants and appraisers as may be
4 necessary or desirable to carry out its purposes in
5 accordance with this act.
6 (8) To make and enter into all contracts and agreements
7 necessary or incidental to the performance of its duties and
8 the execution of its powers under this act.
9 (9) To sue and be sued, plead and be impleaded, adopt a
10 seal and alter the same at pleasure.
11 (10) To invest with the approval of the State Treasurer,
12 any funds not needed for immediate use or disbursement,
13 including any funds held in reserve, in obligations issued or
14 guaranteed by the United States of America or the
15 Commonwealth of Pennsylvania and in other obligations which
16 are legal investments for banks in this State.
17 (11) To procure insurance against any loss in connection
18 with its property and other assets in such amounts and from
19 such insurers as it deems desirable.
20 (12) To the extent permitted under its contract with
21 other persons, to consent to any termination, modification,
22 forgiveness or other change of any term of any contractual
23 right, payment, royalty, contract or agreement of any kind to
24 which the corporation is a party.
25 (13) To invest and reinvest the funds of the corporation
26 including the returns of prior investment in projects
27 furthering the purposes of this act.
28 (14) TO MAKE GRANTS TO BUSINESS DEVELOPMENT CREDIT <--
29 CORPORATIONS FOR PURPOSES OF PROVIDING VENTURE CAPITAL.
30 (14) (15) To do all acts and things necessary and <--
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1 convenient to carry out the purposes of this act. 2 Section 9. Application for financial aid. 3 All applications for financial aid shall be forwarded, 4 together with an application fee prescribed by the corporation, 5 to the president of the corporation. The president, after 6 preparing necessary records for the corporation, shall forward 7 each application to the staff of the corporation, for an 8 investigation and report concerning any other factors deemed 9 relevant by the corporation. Such investigation and report shall 10 include, but shall not be limited to, such facts about the 11 company under consideration as its history, wage standards, job 12 opportunities, stability of employment, past and present 13 financial condition and structure, pro forma income statements, 14 present and future markets and prospects, integrity of 15 management as well as the feasibility of the proposed product 16 and invention to be granted financial aid, including the state 17 of development of such product as well as the likelihood of its 18 commercial feasibility. After receipt and consideration of the 19 above report and after such other action as is deemed 20 appropriate, the corporation shall approve or deny the 21 application. The applicant shall be promptly notified of such 22 action by the corporation. Such approval shall be conditioned 23 upon payment to the corporation, within such reasonable time 24 after notification of approval as may be specified by the 25 corporation, of a commitment fee prescribed by the corporation. 26 Section 10. Appropriation. 27 (a) The sum of $1,000,000 is hereby specifically <-- 28 appropriated to the Pennsylvania Industrial Development <-- 29 Authority PRODUCT DEVELOPMENT CORPORATION for the sole and <-- 30 specific purpose of a loan to the nonprofit corporation PURPOSES <-- 19790H1662B2865 - 9 -
1 established by this act. 2 (b) The Pennsylvania Industrial Development Authority shall <-- 3 authorize this loan whereupon the corporation may requisition 4 such amount from the Industrial Development Fund as may be 5 necessary to provide adequate funds to carry out the purposes of 6 this act. It is the intent of this act that the funds hereby 7 appropriated shall be set aside as a separate revolving fund in 8 the Industrial Development Fund, and the repayment of the loans 9 made by the Pennsylvania Industrial Development Authority shall 10 be credited to such separate revolving fund and if available 11 under the terms of the loan, made available for further 12 investment pursuant to the terms of this act. 13 (c) The said loan by the Pennsylvania Industrial Development 14 Authority shall be without interest and shall not require 15 repayment until the operations of this corporation have produced 16 sufficient additional capital for this corporation to carry out 17 the purposes of this act without the use of the funds produced 18 by said loan. 19 Section 11. Annual report. 20 On September 1 of each year the corporation shall report on 21 its operations for the preceding fiscal year to the Governor. 22 Such report shall include a summary of the activities of the 23 corporation and a complete operating and financial statement. 24 The corporation shall be subject to examination by the 25 Department of the Auditor General. The accounts of the 26 corporation shall be subject to annual audits by the Department 27 of the Auditor General. 28 Section 12. Nonintervention clause. 29 The Commonwealth of Pennsylvania does hereby pledge to and 30 agree with any person with whom the corporation may enter into 19790H1662B2865 - 10 -
1 contracts pursuant to the provisions of this act, that the 2 Commonwealth will not limit or alter the rights hereby vested in 3 the corporation until such contracts and the obligations 4 thereunder are fully met and performed on the part of the 5 corporation, provided nothing herein contained shall preclude 6 such limitation or alteration if adequate provision shall be 7 made by law for the protection of such persons entering into 8 contracts with the corporation. 9 Section 13. Construction. 10 The powers enumerated in this act shall be interpreted 11 broadly to effectuate the purposes thereof and shall not be 12 construed as a limitation of powers. 13 Section 14. Tax exempt. 14 The corporation shall be and is hereby declared tax exempt 15 from all franchise, corporate business and income taxes levied 16 by the State, provided nothing herein shall be construed to 17 exempt from any such taxes, or from any taxes levied in 18 connection with the manufacture or sale of any products which 19 are the subject of any agreement made by the corporation, any 20 person entering into any agreement with the corporation. 21 Section 15. Effective date. 22 This act shall take effect in 60 days. G11L13RZ/19790H1662B2865 - 11 -