Okla. Stat. tit. 68, § 68-2357.72

As used in the Rural Venture Capital Formation Incentive Act:

1. "Acquisition" means the use of capital by an Oklahoma rural

small business venture within six (6) months after obtaining the

capital to purchase fifty-one percent (51%) or more of the voting

interest entitled to elect the governing board, or its equivalent,

of any other legal entity, regardless of the legal form of the

entity. As used in the Rural Venture Capital Formation Incentive

Act, "acquisition" does not mean the right to participate in the

proceeds from sale of goods or services, whether denominated a

royalty, royalty interest or otherwise, and does not mean the right

Oklahoma Statutes - Title 68. Revenue and Taxation Page 848

to intellectual property, whether the rights arise from copyright,

trademark or patent law;

2. "Capitalization" means the amount of:

a. any funds that have actually been contributed to the

qualified rural small business capital company,

b. any contractual commitment to provide funds to the

qualified rural small business capital company to the

extent that such commitment is payable on demand and

has substantial economic penalties for breach of the

commitment to provide such funds,

c. any allocation of tax credit authority awarded to the

qualified rural small business capital company by the

Community Development Financial Institutions Fund

pursuant to Section 45D of the Internal Revenue Code

of 1986, as amended, to the extent such allocation has

not been previously designated by the qualified rural

small business capital company as contemplated by

Section 45D(b)(1)(C) of the Internal Revenue Code of

1986, as amended, and

d. any funds loaned to the qualified rural small business

capital company, which is licensed as a rural business

investment company under 7 U.S.C., Section 2009cc et

seq., or any successor statute, by the U.S. Small

Business Administration or U.S. Department of

Agriculture;

3. "Equity and near-equity security" means common stock,

preferred stock, warrants or other rights to subscribe to stock or

its equivalent, or an interest in a limited liability company,

partnership, or subordinated debt that is convertible into, or

entitles the holder to receive upon its exercise, common stock,

preferred stock, a royalty or net profits interest, or an interest

in a limited liability company or partnership;

4. "Financial lending institution" means a bank, credit union,

savings and loan, commercial finance company or other entity

principally engaged in the extension of credit;

5. “Nonmetropolitan area” means all areas of the state except a

county having a population in excess of one hundred thousand

(100,000) persons according to the most recent Federal Decennial

Census;

6. "Oklahoma rural small business venture" means a business,

incorporated or unincorporated, which:

a. has or will have, within one hundred eighty (180) days

after a qualified investment is made by a qualified

rural small business capital company, at least fifty

percent (50%) of its employees or assets located in

Oklahoma,

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b. needs financial assistance in order to commence or

expand such business which provides or intends to

provide goods or services,

c. has its principal place of business within a

nonmetropolitan area of the state and conducts the

activity resulting in at least seventy-five percent

(75%) of its gross annual revenue from a

nonmetropolitan area of the state,

d. except as otherwise provided by this subparagraph, is

engaged in a lawful business activity under any

Industry Number appearing under any Major Group Number

of Divisions A, C, D, E, F or I of the Standard

Industrial Classification Manual, 1987 revision with

the following exceptions:

(1) Major Group 1 of Division A, and
f its gross annual revenue from a

nonmetropolitan area of the state,

d. except as otherwise provided by this subparagraph, is

engaged in a lawful business activity under any

Industry Number appearing under any Major Group Number

of Divisions A, C, D, E, F or I of the Standard

Industrial Classification Manual, 1987 revision with

the following exceptions:

(1) Major Group 1 of Division A, and

(2) Major Group 2 of Division A,

e. qualifies as a small business as defined by the

federal Small Business Administration, and

f. expends within eighteen (18) months after the date of

the qualified investment at least fifty percent (50%)

of the proceeds of the qualified investment for the

acquisition of tangible or intangible assets which are

used in the active conduct of the trade or business or

for working capital for the active conduct of such

trade or business for which the determination of the

small business qualification pursuant to subparagraph

e of this paragraph was made. For purposes of this

subparagraph, “working capital” shall not include

consulting, brokerage or transaction fees. Provided,

that the Oklahoma Tax Commission, upon request and

demonstration by a qualified rural small business

capital company or an Oklahoma rural small business

venture, or an investor or an authorized agent of any

such entities, may extend the 18-month period

otherwise required by this subparagraph for a period

not to exceed six (6) months. Provided, the

expenditure of the invested funds by the Oklahoma

rural small business shall otherwise comply with the

requirements applicable to the usage of tax credits

for qualified investment in the Oklahoma rural small

business venture. As used in this subparagraph,

“tangible assets” shall include the acquisition of

real property and the construction of improvements

upon real property if such acquisition and

construction otherwise comply with the requirements

applicable to the usage of tax credits for qualified

investment in the Oklahoma rural small business

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venture, and “intangible assets” shall be limited to

computer software, licenses, patents, copyrights and

similar items;

7. "Qualified investment" means an investment of funds in the

form of "equity" and "near-equity" as defined in paragraph 3 of this

section or "subordinated debt" as defined in paragraph 9 of this

section; provided, an investment which is contingent upon the

occurrence of an event or which is subject to being refunded or

returned in the absence of such event shall only be deemed to have

been made upon the occurrence of the event;

8. "Qualified rural small business capital company" means a C

corporation or a subchapter S corporation, as defined by the

Internal Revenue Code of 1986, as amended, incorporated pursuant to

the laws of Oklahoma, limited liability company or a registered

business partnership with a certificate of partnership filed as

required by law, which meets the following criteria:

a. the corporation, limited liability company or

partnership is organized to provide the direct

investment of equity and near-equity funds to

companies within this state,

b. the principal place of business of the corporation,

limited liability company or partnership is located

within this state,

c. the capitalization of the corporation, limited

liability company or partnership is not less than Five

Hundred Thousand Dollars ($500,000.00), and

d. the corporation, limited liability company or

partnership has investment of not more than twenty-

five percent (25%) of its capitalization in any one

company at any time during the calendar year of the

corporation, limited liability company or partnership;

and

9. "Subordinated debt" means indebtedness with a maturity date

of not less than five (5) years that is subordinated to all other

indebtedness of the issuer that has been issued or is to be issued
nvestment of not more than twenty-

five percent (25%) of its capitalization in any one

company at any time during the calendar year of the

corporation, limited liability company or partnership;

and

9. "Subordinated debt" means indebtedness with a maturity date

of not less than five (5) years that is subordinated to all other

indebtedness of the issuer that has been issued or is to be issued

to a financial lending institution. The indebtedness shall not have

a repayment schedule that is faster than a level principal

amortization over five (5) years.