9. EDSR 08-14-2006 - Laserfiche WebLink

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ITEMi ~ 9. MEMORANDUM TO: Economic Development Authority FROM: Catherine Mehelich, Director of Economic Developmen~,/' C DATE: August 14, 2006 SUBJECT: Update on Incubator Location Commitment - K-Netica Attachments Letter sent to K-Netica from EDA staff dated July 3, 2006 Email coxxespondence from K-Netica CEO, Steve Peterson dated July 24, 2006 Email correspondence from Harlan Jacobs, Genesis Business Centers dated July 24, 2006 Background At its June 12, 2006 meeting the EDA was notified of former incubator tenant, K-Netica's relocation from Elk River to Brooklyn Centex. As a result of the relocation outside Elk River, and in accordance with the Location Commitment clause of the Memorandum of Understanding between the EDA and the company, the EDA directed staff to proceed with actions requiring the company to repurchase the shares owned by EDA within 30 days of written demand. Under the Memorandum of Understanding the shares of stock owned by the EDA axe equal to the rent value not paid in cash. Following is a breakdown of EDA shares and value EDA Shares: 17,758 ($1.00 per share value) Current repurchase price: $35,516 ($2.00 per share value minimum as stipulated in the Memorandum of Understanding) Issue In addition to a phone conversation with the company CEO, staff sent the attached letter dated July 3, 2006 to K-Netica notifying them of the EDA's interest in exercising its right to require the company to repurchase the shares owed by the EDA. The repurchase was required to be satisfied within 30-days of the letter, which would have been a deadline of August 3, 2006. On July 24, 2006 staff received the attached email coxxespondence from K-Netica CEO, Steve Pederson describing the company's situation and a request that the EDA reconsider its action.