By Sara Quam
Thanks to community and private support and a low-interest loan from the city of Luverne, Netbriefings has its first two employees at the new branch office.
The loan agreement met with no disagreement from residents and was signed Nov. 8. A well-attended open house followed at the new office space behind the Brandenburg Gallery.
The City Council and Luverne Economic Development Authority wholeheartedly supported the endeavor, even creating a revolving loan fund to accommodate the large loan amount - $250,000.
The Internet Webcasting company came up with more than $200,000 of its own equity.
Jeff Ernst will be the branch manager. He was employed by Gateway Computers in Sioux Falls before taking this position.
Amber Weinkauf is the marketing specialist for the office and will work on things such as press releases but will also branch into sales. Her job description will be broad since there's a small staff.
Weinkauf is a Luverne graduate who went on to get a marketing degree at Winona (Minn.) State University. She is training in St. Paul this week but will be back in Luverne soon.
"I know a lot of people in Luverne so it'll be nice to be there and see people even though I wonÕt be working directly with them," she said.
As a Webcasting company, Netbriefings streams live audio and video for corporations wanting to have meetings in different locations. The company can also archive the meetings for large companies that may have employees who need to catch up.
Netbriefings has some clients that Rock County may recognize. Embers America uses the company to archive versions of events for franchise employees to use for communications or training. In the city of St. Paul, Mayor Norm Coleman used Netbriefings' products and services to deliver the annual State of the City Address.
Most recently, Netbriefings held Web events for the chief executive of the NASDAQ stock market, U.S. Sen. John McCain and Hewlett-Packard.
Netbriefings first announced that it would locate to Luverne June 21 and started working on a loan agreement with the city of Luverne.
Final deal from the city
Amount: $250,000
Term: 120 months at $2,820 a month
Interest rate: 0% years 1 and 2 (payments deferred); 2% fixed over remaining life of the loan.
(The LEDA reasoned that because the first two years of a company's existence is so crucial, stopping interest accumulation would help ensure the business stays in Luverne.)
Payment Terms: Two years principal and interest deferred at no interest. Loan repayment beginning in the 25th month, continuing for 96 months
Collateral: Third position on accounts receivable; third position on equipment; first position on intellectual property/patent
Guarantees: Personal guarantees of $75,000
Warrants: LEDA receives 25-percent warrant coverage. In consideration for the terms of the loan, LEDA receives 62,500 warrants to purchase Netbriefings stock at $1 per share. LEDA can exercise the warrants at any point during the term of the loan, but the warrants expire 30 days after the date of pay-off of the loan.
Employment projections: Minimum expectations of five employees by the end of the first year and a target objective of 35 employees at the end of the fifth year to the 10th year.
If the company employment does not meet the minimum expectations, the interest rate will increase by 2 percent for the following year. The interest rate rise may be cumulative, such that if Netbriefings never meets its minimum annual employment expectation, the interest rate will rise to 12 percent at the end of the fifth year and remain at 12 percent until the loan is paid off.
If the company employment exceeds 35 employees, the interest rate will be reduced to 0 percent and stay at that rate as long as the company maintains 35 or more employees in Luverne.
Provided the company continues to be an employer in Luverne, an employment average will be conducted from the time the company reaches 35 employees until the end of the 10-year term. Based on the average, the company will be awarded a grant of $1,500 for each employee over the 35 mark.
If the company fails to employ the minimum expectations in Luverne, the LEDA shall have the right to declare default in the loan agreement, the balance of the loan shall become due and payable and the interest rate shall immediately rise to 12 percent until fully paid.
If the company is sold and the operation is eliminated in Luverne, the above loan default terms will apply and the company shall be liable for a penalty payment equal to 25 percent of the outstanding loan balance.