06 12 2006 EDA MIN - Laserfiche WebLink

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Economic Development Authority Minutes June 72, 2006 Page 3 President Gongoll provided background information regarding the purpose of the stock option component of the Business Incubator program. He suggested that the Corrnnission consider retaining the stock, as it may become more valuable. Commissioner I{linzing agreed that it should be taken into consideration. Commissioner Gumphrey stated he would support holding K-Netica to the location commitment clause. He stated the EDA is not in the business to make money by investing in stock. Cotrunissionex Tveite stated he also did not feel it was right fox a public entity to speculate in a private compan}-. Commissioner biotin stated that he concurred with Commissioners Gumphrey and Tyeite's comments. He felt the ED~Ys job is to protect the Citds assets and conserve their investment. Commissioner Dwper stated he also felt they should enforce the clause and sell the stocks, and would then be able to recoup their investment back to the EDA. Comnussionex Klinzing questioned whether ox not K-Netica had the funds to pay the EDA, and if legal counsel was required, how much would that cost. She suggested that the EDA inform K-Netica of their intention to enforce the commitment clause and remind the company that they would hate 30 days to respond per the clause. Ms. Steinmetz noted that the amount of stock the EDA owns will need to be recalculated, since K-Netica may have overpaid, and the number is likely 17,000 rather than 26,452. Commissioner Tveite stated that he felt that K-Nedca should be put on notice of die EDA's intent to enforce the clause as soon as possible. MOTION BY COMMISSIONER KLINZING, SECONDED BY COMMISSIONER TVEITE TO ENFORCE THE LOCATION COMMITMENT CLAUSE OF THE MEMO OF UNDERSTANDING DOCUMENT HELD BETWEEN THE EDA AND K-NETICA, WHICH STATES AS FOLLOWS: °°LOCATION COMMITMENT: MANDATORY REPURCHASE; PUT OPTIONS. SO LONG AS EDA IS OWNER OF ANY SHARES OF COMPANY STOCK, THE COMPANY'S HEADQUARTERS AND ADMINISTRATIVE FACILITIES SHALL BE LOCATED WITHIN THE CITY OF ELK RIVER. IN THE EVENT THAT THE COMPANY NO LONGER MAINTAINS ALL SUCH FACILITIES WITHIN THE CITY OF ELK RIVER, THE EDA SHALL HAVE THE OPTION TO REQUIRE THE COMPANY TO REPURCHASE THE SHARES OWNED BY EDA WITHIN 30 DAYS OF WRITTEN DEMAND. THE REPURCHASE PRICE SHALL BE THE LAST PRICE PER SHARE OFFERED IN ANY PRIVATE OR PUBLIC OFFERING AUTHORIZED BY THE BOARD OF DIRECTORS OF THE COMPANY, BUT NOT LESS THAN TWICE THE PRICE USED TO CALCULATE SHARES PROVIDED TO THE EDA UNDER 2.1.(A) OF THIS AGREEMENT." MOTION CARRIED 6-1. President Gongoll opposed. Discuss EDA Business Incubator Program Analysis