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<br /> <br />ITEM 7. 1. <br /> <br />TO: <br /> <br />MAYOR AND CITY COUNCIL <br /> <br />FROM: <br /> <br />WILLIAM RUBIN, ECONOMI~/r~ <br />DEVELOPMENT COORDINATqR~Vt- <br /> <br />APRIL 22, 1993 <br /> <br />DATE: <br /> <br />SUBJECT: <br /> <br />LOAN AGREEMENT FOR DTED FUNDS <br />(TESCOM EXPANSION PROJECT) <br /> <br />INTRODUCTION <br /> <br />On October 15, 1992, the City of Elk River was awarded a <br />Minnesota Small Cities Economic Development Program Grant in <br />the amount of $250,000 to assist Tescom Corporation, 12616 <br />Industrial Boulevard, with its expansion project. A Grant <br />Agreement covering the terms and conditions of this award of <br />funds required a loan agreement, promissory note, and security <br />documents to be executed by the City of Elk River and Tescom <br />Corporation. <br /> <br />BACKGROUND <br /> <br />. <br /> <br />Larkin, Hoffman, Daly, and <br />above referenced documents and <br />of Small Cities Development <br />memo. This document has been <br />Daly, and Lindgren using a <br />model. <br /> <br />Lindgren, Ltd. has prepared the <br />a copy of the Agreement for Loan <br />Program Funds is attached to this <br />developed by Larkin, Hoffman, <br />DTED boilerplate agreement as a <br /> <br />The loan terms covering the repayment of the $250,000 principle <br />is as follows: <br /> <br />--Interest is paid at a rate of 4.5% for five (5) years; <br />thereafter, the interest rate is at 6% for the final five (5) <br />years. Prepayment of the loan may occur at any time without <br />penalty. <br /> <br />The agreement also addresses certain remedies <br />available to the City in the event of a default. <br /> <br />that <br /> <br />are <br /> <br />. <br /> <br />As collateral for repayment, the City is granted a first <br />security interest in all collateral, including machinery and <br />equipment items purchased with funds loaned by the City under <br />the agreement, up to an amount of $250,000. In addition, the <br />City is granted a mortgage on lots 2 and 3, block 2, Elk River <br />Industrial Park, Second Addition. This mortgage is <br />subordinated to a first mortgage (that is, the Industrial <br />Revenue Bonds) in favor of Norwest Bank. <br /> <br />The loan agreement also contains the provision for the creation <br />of new, permanent jobs. Tescom agrees to ensure that 45 new, <br /> <br />720 Dodge Avenue N.W., Elk River, Minnesota 55330 (612) 441-7420 <br />