6. EDSR 06-12-2006 - Laserfiche WebLink

Home Browse Search

"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 ox 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." Based on K-Netica's 3 years and 11 months as an Incubator tenant, the EDA cuxrendy owns 26,451 shares of I{-Netica stock. These shares represent the portion of rent that was "paid" in the form of stock. The stock value will be determined by the price per share paid by the first equity investors. Recommendation Staff recommends that the EDA consider enforcing the location commitment clause due to the primary purpose of the Business Incubator Program. As stated in the Business Incubator Guidelines & Application document, the purpose of the program "is to provide inexpensive space and support fox higher technology, (start-up and existing) small companies whose success would add significantly to the growth and diversification of the City of Elk River's economic base." In the past this clause has not been enforced due to not having the ability to meet the company's space requirements at the time (e.g. Bixby Energy Systems). However, in this case the company was provided several space options. As the EDA discusses the future of the Incubator Program, the EDA may wish to reevaluate the stated purpose of the program ox discontinue the stock options and location commitment clause.