INFORMATION #1 EDSR 03-13-2006 - Laserfiche WebLink

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The company CEO responded with the following update: • I{-Netica will more than likely sign a short-teen lease next week in the Twin Cities at a significantly reduced rent with great expansion potential. • The company has toured six Elk River locations. • The main factor of the relocation is the term, cost, space size, or the expansion oppartunity issues. • The secondary factor is that the company is having trouble getting J2EE axchitectaral programmers/developers to commute ox xe-locate to Elk River. • The third factor is that the company's customers axe in the metro and the company virtually "lives" with them as solutions axe integrated. An 80-mile round trip in traffic at any time in the day really impacts their efficiency. It is important that the EDA know that there is a location commitment clause in the Memo of Understanding document held between the EDA and K-Netica. The clause reads 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." Staff will provide the EDA with a recommendation regarding K-Netica's relocation upon formal written notification from the company.