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MINUTES/GROWTH FUND AUTHORITY (JDA)
Tuesday, May 29, 2001 - 6:45 p.m._______________

The city council of the City of Grand Forks sitting as the Growth Fund Authority met in the council chambers in City Hall on Tuesday, May 29, 2001 at the hour of 6:45 p.m. with Council Member Glassheim presiding. Present at roll call were Council Members Bjerke, Stevens, Hamerlik, Burke, Christensen, Kerian, Bakken, Kreun, Brown, Glassheim - 10; absent: Council Members Brooks, Gershman, Lunak, Klave, Martinson - 5.

HOLD PUBLIC HEARAING ON APPLICATION
FOR FUNDING ASSISTANCE

a) Peragon Enterprises, Inc.

Council Member Bjerke stated that he personally knows Mr. Heath Copp and requested to be allowed to abstain from voting on this issue, and it was so moved by Council Member Kerian and seconded by Council Member Bakken. Carried 9 votes affirmative.

Terry Hanson, Urban Development, reported they were here to request approval of a project for Peragon Enterprises, Inc., that they are requesting a loan from the Growth Fund for $75,000 with a deferred payment for one year and payments to be repaid over a five year period; that the Growth Fund Committee reviewed their application on April 24 and made the recommendations presented this evening.

The city auditor read the committee’s recommendation relating to the public hearing for Peragon Enterprises, Inc., with recommendation to approve the Growth Fund Committee’s recommenda-tion for funding as outlined in the Peragon Enterprises, Inc. Project Summary.

Council Member Glassheim called for the public hearing on the application and asked for comments. There were no comments and the public hearing was closed.

Council Member Burke asked if all of the changes in the original plan that the Growth Fund Committee requested actually carried out; Mr. Hanson stated Mr. Copp has agreed to all of the conditions of the loan.

Council Member Hamerlik asked how many total jobs will be involved in this, and if there is any competition so they would be given an unfair advantage; Mr. Hanson stated that by the end of the second year there will be 12 total jobs; 6 at end of the current year and includes 2 principals as well as 4 additional employees. He stated in discussions with the company there is no other competitive product such as this on the market today locally or within this region.

There was some discussion as to conditions for the loan and it was noted by committee members that conditions were included in the project summary:

1. Approve the request of a $75,000 loan, amortized over 5 years at 6% interest, with a one-year deferral of interest and principal payments. Peragon Enterprises, Inc. would have the option to pay off the loan prior to maturity with advance written notice and the understanding that the Growth Fund would be given the option to convert the loan to equity at that time if desired. The amount of past due rent not collected to date, will be directed to the landlord at closing, with the following terms to be met for the loan:

MINUTES/GROWTH FUND AUTHORITY
May 29, 2001 - Page 2____________________

a) The Growth Fund will be the last money in after other sources identified in the loan application have been obtained.
b) The loan will be a multiple advance loan.
c) The loan will be convertible to equity, at the Growth Fund’s option, any time there remains an outstanding principal balance, at the same rate ($/share) as the present new investor indicated in d) below, and with anti-dilution rights. The Growth Fund’s ownership would not exceed a maximum of 19%.
d) The Growth Fund requires new additional equity investment of $100,000.
e) The Growth Fund requires first security interest on the patent obtained via subordination from Alerus Financial and a second position security interest in equipment, inventory and furniture and fixtures. Any future need for the patent could be presented to the Growth Fund and subordination would not be unreasonably withheld if the need were shown to be in the best interest of the Company.
f) A Personal Guaranty will be required of principals Heath Copp and Mathew Johnson.
g) Peragon returns with a progress report in 90 days and upon request in the future.
h) Peragon Enterprises, Inc. will be required to sign a Developers Agreement.

It was moved by Council Member Burke and seconded by Council Member Stevens to approve the committee’s recommendation, including items a) through h) as noted. Upon roll call the following voted “aye”: Council Members Stevens, Hamerlik, Burke, Christensen, Kerian, Kreun, Brown, Glassheim - 9; Council Member Bjerke abstaining. Council Member Glassheim declared the motion carried.

ADJOURN

It was moved by Council Member Burke and seconded by Council Member Stevens to adjourn. Carried 10 votes affirmative.

Respectfully submitted,



John M. Schmisek
City Auditor