Approved Agreements and Contracts MANA Sports, LLC Revolving Loan 02-25-20

View the PDF version Google Docs PDF Viewer

                     Agenda Item Review Form
                                                  us                          GO
                        Muskegon City Commission

Commission Meeting Date: February 25, 2020            Title: MANA Sports, LLC Revolving Loan

Submitted By: Frank Peterson                          Department: City Manager

Brief Summary: Staff is seeking of the revolving loan fund application by MANA Sports, LLC in the
amount of $30,000. The loan would be repaid based on a 36-month amortization schedule and a
7.5% interest rate .

Detailed Summary: 2020 will mark the 5th season that Mercy Health Arena has hosted
professional indoor football. As part of our collective efforts to increase attendance, the West
Michigan lronmen are endeavoring to make significant upfront investments in marketing services,
equipment, and gameday operations. This will include purchasing goods and services in advance
of the team's opening date. The team has developed $305,000 operating budget for the 2020
season. Much of the income will be realized during the later portions of the season as the team
hosts home game events at Mercy Health Arena. Staff is recommending the $30,000 loan to
assist with those initial costs .

Amount Requested: $30,000                            Amount Budgeted: $0

Fund(s) or Account(s) : Revolving Loan Fund          Fund(s) or Account(s): N/A

Recommended Motion: Approve the agreements and authorize the Mayor and Clerk to sign.

Check if the following Departments need to approve the item first:
Police Dept.O        Fire Dept. D       IT Dept.O

For City Clerk Use Only:
Commission Action:
                                 TERM LOAN AGREEMENT

       This Agreement is made on      ? ,,. '? - ,     2020 ("Effective Date"), between MANA
Sports, LLC, a Michigan limited liability company, of 5906 Commerce Centre, Muskegon,
Michigan 49444 ("Borrower"), and the City of Muskegon, a Michigan municipal corporation, of
933 Terrace Street, Muskegon, Michigan 49440 ("City"), with reference to the following facts:


      A.     Borrower has requested a term loan of $30,000.00 for the purpose of purchasing
goods and services necessary for the start of the 2020 football season at Mercy Health Arena .

        B.     The City has agreed to make the loan subject to the terms and conditions set
forth below.

       Therefore, for good and valuable consideration, the parties agree as follows:

       1.      Conditions of loan.

              a.       The Loan. The City agrees to make a loan to Borrower of $30,000.00
       subject to the following conditions:

                       i.    Fulfillment of all conditions contained in Section 3;

                       ii.   The Loan Agreement must be closed on or before March 31,

                      iii.  Delivery to the City of a promissory note ("Note") in form and
               substance acceptable to the City, a copy of which is attached as Exhibit A; and

                       iv.    At the time of borrowing no Event of Default as defined in Section
               7 exists and no event exists which with notice and/or the passage of time could
               become an Event of Default.

               b.      Payments. The principal amount of the Note shall be payable in monthly
       installments of $933.19, each to be paid on the 1st of each month, beginning on April 1,
       2020, and continuing until March 1, 2023, when the entire balance of principal and
       interest shall be due and payable in full.

               c.     Interest. The Note shall bear interest on the outstanding balance at the
       rate of 7.50% per annum.

               d.     Prepayments. The Borrower may at any time prepay without penalty all
       or any portion of the principal, and any such payments shall be applied to the principal
       installments last coming due.

       2.      Security.

              a.     Security Agreement. To secure the full and timely performance of
       Borrower's covenants set out in this Agreement and to secure the repayment of the
       loans and advances made and to be made (the "Indebtedness"), Borrower agrees to


                                       -    ----
       execute and deliver to the City a security agreement ("Security Agreement") in form and
       substance satisfactory to the City, a copy of which is attached as Exhibit B, giving the
       City a valid lien and security interest in the personal property described in the Security

             b.      Personal Guaranty. As additional security, Mario Flores, and any other
       member of MANA SPORTS, LLC, will jointly and severally personally guarantee
       repayment of the Indebtedness, as well as any members of successor entities of MANA
       SPORTS, LLC.

        3.      Conditions Precedent to Obligations of City. The obligations of the City under
this Agreement are subject to the occurrence, prior to or simultaneously with the Borrower's
receipt of the loan of each of the following conditions, any or all of which may be waived in
whole or in part by the City in writing:

               a.      Documents Executed. Borrower shall have executed and delivered to
       the City all documents required to consummate this transaction.

               b.       Hazard Insurance. Borrower shall have furnished to the City, in a form
       satisfactory to the City, hazard insurance policies, with loss payable clauses in favor of
       the City as its interest appears, relating to the properties of Borrower described in
       Section 2, in an amount equal to the full replacement cost of such properties.

              c.     Personal Guarantee. Mario Flores shall execute and deliver to the City
       an agreement of guarantee of the Indebtedness ("Personal Guaranty") in form and
       substance satisfactory to the City, a copy of which is attached as Exhibit C.

               d.      Certified Resolutions. Borrower shall have furnished to the City a copy
       of the resolution of Borrower authorizing the execution, delivery, and performance of this
       Agreement, the borrowing of $30,000.00 from the City, the Note, and any other
       documents contemplated by this Agreement.

                e.      Certificate of Good Standing. Borrower shall have furnished to the City
       a certificate of good standing from the Michigan Department of Commerce with respect
       to the Borrower, as of a recent date.

        4.      Warranties and Representations. Borrower represents and warrants to the
City that, as of the date of the borrowing:

               a.     Corporate Existence and Power. Borrower represents and warrants

                      i.     Borrower is duly organized, validly existing, and in good standing
               under the laws of the State of Michigan;

                       ii.    Borrower has the power and authority to enter into and perform its
               obligations under this Agreement; and

                     iii.    The Agreement, the Note, the Security Agreement, the Personal
               Guaranty, and all other documents referred to in this Agreement, when executed

              on behalf of Borrower will be valid and binding obligations of Borrower, legally
              enforceable in accordance with their terms.

               b.     Actions, Suits, or Proceedings. There are no actions, suits, or
       proceedings, and no proceedings before any arbitrator or by or before any governmental
       commission, board, bureau or other administrative agency, pending, or, to the best of
       Borrower's knowledge, threatened, against or affecting Borrower or any properties or
       rights of Borrower which, if adversely determined, could materially impair the right of
       Borrower to carry on business substantially as now conducted or could have a materially
       adverse effect upon the financial condition of Borrower.

               c.       No Liens, Pledges, Mortgages or Security Interests. Except for liens
       of the City, none of Borrower's assets are subject to any mortgage, pledge, lien, security
       interest or other encumbrance of any kind or character, except the security interest of
       the parties listed on Exhibit B in the personal property of Borrower described in Section 2
       pursuant to the Security Agreement.

                d.       Accounting Principles. Balance sheets, earning statements, and other
       financial data are furnished to the City, for the purposes of, or in connection with this
       Agreement and the transactions contemplated by this Agreement have been prepared in
       accordance with generally accepted accounting principles, consistently applied and do
       or will fairly present the financial condition of the Borrower as of the dates, and the
       results of their operations for the period, for which the same are furnished to the City.

             e.      Conditions Precedent. As of the date of this Agreement, all conditions
       precedent referred to in Section 3 have been satisfied.

         5.     Affirmative Covenants. Until the principal and interest on the Note is paid in
full, Borrower covenants and agrees that it will:

               a.       Annual Financial Reports. Furnish to the City, in form satisfactory to
       the City, not later than 90 days after the close of each fiscal year of Borrower, beginning
       with Borrower's fiscal year ending December 31, 2020, a balance sheet as of the close
       of each such fiscal year, statements of income and retained earnings and changes in
       financial position for each such year, and such other comments and financial details as
       are usually included in similar reports. The reports shall be prepared in accordance with
       generally accepted accounting principles consistently applied.

               b.      Adverse Events. Promptly inform the City of the occurrence of any
       Event of Default or of any event which, with notice and/or the passage of time would
       become an Event of Default, or of any occurrence which has or could reasonably be
       expected to have a materially adverse effect upon Borrower's business, properties,
       financial condition or ability to comply with its obligations under this Agreement.

               c.     Other Information Upon Request. Promptly furnish to the City such
       other information regarding the operations, business affairs, and financial condition of
       Borrower as the City may reasonably request from time to time and permit the City and
       its employees, attorneys and agents, to inspect all of the books, records, and properties
       of Borrower at any reasonable time.

              d.      Non-Discrimination. Ensure that no person in the United States shall on
       the grounds of race, creed, color, national origin or sex be excluded from participating in,
       be denied the benefits of, or be otherwise subject to discrimination in connection with
       Borrower's activities as recipient of the financial assistance provided by this Loan.

               e.     Insurance. Keep its insurable properties adequately insured and

                      i.     insurance against fire and other risks customarily insured against
               by businesses engaged in the same or similar activities as that of Borrower;

                      ii.     necessary worker's compensation insurance;

                      iii.    public liability and product liability insurance; and

                     iv.     such other insurance as may be required by law or as may be
               reasonably required in writing by the City.

         All such insurance shall be in amounts, contain terms, in a form, for such purposes and
written by such companies as may be satisfactory to the City. Borrower will deliver to the City,
at its request, evidence satisfactory to the City that such insurance has been procured and
showing the City as additional insured or loss payee, as the case may be.

              f.     Affirmative Action Program. Comply with all applicable Affirmative
       Action Programs, if any, approved by the City of Muskegon.

               g.      Maintain Business Entity and Property. Do or cause to be done all
       things necessary to preserve and keep in full force and effect its own existence, rights
       and franchises and comply with all applicable laws; continue to conduct and operate its
       business substantially as conducted and operated during the present and preceding
       calendar year; at all times maintain and preserve all of the remainder of its property used
       or useful in the conduct of its business and keep the same in good repair, working order
       and condition, and from time to time make, or cause to be made, all needed and proper
       repairs, renewals, replacements, betterments and improvements thereto so that the
       Borrower's business may be properly and advantageously conducted at all times.

                h.      Use of Loan Proceeds. Use the proceeds of the loan for the purpose
       set forth in the Background to this Agreement.

         6.     Negative Covenants. From the date of this Agreement until the Note is paid in
full, Borrower covenants and agrees that Borrower will not, without the prior written consent of
the City:

                a.     Liens. Create, incur, assume, or allow to exist any mortgage, pledge,
       encumbrance, security interest, lien, or charge of any kind (including any charge upon
       property purchased under a conditional sale or other title retaining agreement) upon any
       of its property or assets, whether now owned or hereafter acquired, other than in favor of
       the City, except: (i) as required or permitted in this Agreement; (ii} liens for taxes not
       delinquent, or being contested in good faith, and, if requested by the City, bonded in a
       manner satisfactory to the City; and (iii) liens not delinquent created by statute in

connection with worker's compensation, unemployment insurance, social security, and
similar statutory obligations.

          b.      Indebtedness. Incur, create, assume, or permit to exist any
indebtedness or liability on account of deposits or advances or any indebtedness or
liability for borrowed money, or any other indebtedness or liability evidenced by notes,
bonds, debentures, or similar obligations, indebtedness required or permitted under this
Agreement or indebtedness subordinated to the prior payment in full of Borrower's
Indebtedness to the City upon the terms and conditions approved in writing by the City.

        c.        Extension of Credit. Make loans, advances or extensions of credit to
any Person, except for sales on open account and in the ordinary course of business.
For the purpose of this Agreement, the word "Person" means any individual, corporation,
limited liability company, partnership, trust, unincorporated association, joint stock
company, or other entity.

       d.      Guarantee Obligations. Guarantee or otherwise in any way become or
be responsible for obligations of any other Person, whether by agreement to purchase
the indebtedness of any other Person, or agreement for the furnishing of funds to any
other Person through the purchase of goods, supplies, or services (or by way of stock
purchase, capital contribution, advance, or loan) for the purpose of paying or discharging
the indebtedness of any other Person, or otherwise, except for the endorsement of
negotiable instruments by Borrower in the ordinary course of business for collection.

      e.      Subordinate Indebtedness. Subordinate any indebtedness due
Borrower from any Person to the indebtedness of other creditors of the obligor.

       f.      Sale of Assets. Sell, lease, or otherwise dispose of any of its assets
except in the ordinary course of business.

       g.       Merger. Enter into any merger, consolidation, reorganization, or
recapitalization or purchase or otherwise acquire all or substantially all of the assets of
any other Person.

        h.     Compensation. Without the prior written consent of the City, permit the
compensation of any manager, member, or proprietor to be excessive, taking into
consideration the financial circumstances of Borrower and the position and qualification
of the Person.

7.     Default.

        a.     Events of Default. Should any of the following events (an "Event of
Default") occur, Borrower shall be in default under this Agreement:

              i.      Misrepresentation. If any warranty or representation of Borrower
       in connection with or contained in this Agreement, or if any financial data or other
       information now or later furnished to the City by or on behalf of Borrower, shall
       prove to be false or misleading in any material respect;

               ii.    Failure to Pay Monies Due. If any principal of or interest on the
        Indebtedness shall not be paid within ten days after the same becomes due;

              iii.    Noncompliance with City Agreement. If Borrower shall fail to
       perform any of its obligations and covenants hereunder, or shall fail to comply
       with any of the provisions of this Agreement or any other agreement with the City
       to which it may be a party;

               iv.     Other Defaults. If Borrower shall default in the due payment of
       any of its indebtedness (other than the Indebtedness) or in the observance or
       performance of any term, covenant, or condition in any agreement or instrument
       evidencing, securing, or relating to such other indebtedness, and such default
       shall be continued for a period sufficient to permit acceleration of such

              v.       Judgments. If there shall be rendered against Borrower one or
       more judgments or decrees involving an aggregate liability of $10,000.00 or
       more, which has or have become nonappealable and shall remain undischarged,
       unsatisfied by insurance and unstayed for more than 20 days, whether or not
       consecutive; or if a writ of attachment or garnishment against the property of
       Borrower shall be issued and levied in an action claiming $10,000.00 or more,
       and not released or appealed and bonded in a manner satisfactory to the City;

                vi.     Business Suspension, Bankruptcy, Etc. If Borrower shall
       voluntarily suspend transaction of Borrower's business or make a general
       assignment for the benefit of creditors; or shall be adjudicated a bankrupt; or
       shall file a voluntary petition in bankruptcy or for a reorganization or to effect a
       plan or other arrangement with Borrower's creditors; or shall file an answer to a
       creditor's petition or other petition against Borrower (admitting the material
       allegations thereof) for an adjudication in bankruptcy or for a reorganization; or
       shall apply for or permit the appointment of a receiver, trustee, or custodian for
       any substantial portion of the properties or assets of Borrower; or if any order
       shall be entered by any court approving an involuntary petition seeking
       reorganization; or if a receiver, trustee, or custodian shall be appointed for
       Borrower or if any substantial bankruptcy, reorganization, or liquidation
       proceedings are instituted against Borrower and remain undismissed for 30 days;
       or if Borrower becomes unable to meet Borrower's obligations as they mature; or
       if Borrower commits an act of bankruptcy;

               vii.    Change of Control or Management. If Borrower or a controlling
       portion of its membership or a substantial portion of its assets comes under the
       practical, beneficial or effective control of one or more persons, whether by
       reason of death, merger, consolidation, sale or purchase of interest or assets or
       otherwise; and if any such change of control adversely impacts, in the sole
       judgment of the City, upon the ability of Borrower to carry on its business as
       previously conducted;

        b.       Acceleration of Indebtedness. Upon the occurrence of any of the
Events of Default described in Sections 7(a)(i) or 7(a)(ii) or upon the occurrence of any
of the Events of Default described in Sections 7(a)(iii) through 7(a)(vii) inclusive, which is
not cured by Borrower or waived by the City within 30 days after notice to Borrower by
the City, all Indebtedness shall be immediately due and payable in full at the option of

the City without presentation, demand, protest, notice of dishonor, or other notice of any
kind, all of which are expressly waived. Unless all of the Indebtedness is then fully paid,
the City shall have and may exercise any one or more of the rights and remedies for
which provision is made for a secured party under the Uniform Commercial Code or
under any mortgage, security agreement, pledge agreement, assignment or any other
related document, including, without limitation, the right to take possession and sell,
lease, or otherwise dispose of any or all of the Collateral. Borrower agrees, upon
request of the City, to assemble the Collateral and make it available to the City at any
place designated by the City which is reasonably convenient to the City and Borrower.

        c.       Cumulative Remedies. The remedies provided for by this Agreement
are cumulative to the remedies for collection of the Indebtedness as provided by law or
by any mortgage, security agreement, or any related document. Nothing in this
Agreement is intended, nor should it be construed, to preclude the City from pursuing
any other remedy for the recovery of any other sum to which the City may be or become
entitled for the breach of this Agreement by Borrower.

       d.     Written Waivers. No default shall be waived by the City except in writing
signed by an officer of the City, and no waiver of any default shall operate as a waiver of
any other default or of the same default on a future occasion.

8.     Miscellaneous.

       a.     Governing Law. This Agreement will be governed by and interpreted in
accordance with the laws of the state of Michigan.

        b.     Entire Agreement. This Agreement constitutes the entire agreement of
the parties and supersedes any other agreements, written or oral, that may have been
made by and between the parties with respect to the subject matter of this Agreement.
All contemporaneous or prior negotiations and representations have been merged into
this Agreement.

        c.    Amendment. This Agreement shall not be modified or amended except
in a subsequent writing signed by all parties.

       d.       Binding Effect. This Agreement shall be binding upon and enforceable
by the parties and their respective legal representatives, permitted successors, and

       e.      Counterparts. This Agreement may be executed in counterparts, and
each set of duly delivered identical counterparts which includes all signatories, shall be
deemed to be one original document.

         f.     Full Execution. This Agreement requires the signature of all parties.
Until fully executed, on a single copy or in counterparts, this Agreement is of no binding
force or effect and if not fully executed, this Agreement is void.

        g.      Non-Waiver. No waiver by any party of any provision of this Agreement
shall constitute a waiver by such party of any other provision of this Agreement.

               h.       Severability. Should any one or more of the provisions of this
      Agreement be determined to be invalid , unlawful, or unenforceable in any respect, the
      validity, legality, and enforceability of the remaining provisions of this Agreement shall
      not in any way be impaired or affected .

             i.       No Reliance. Each party acknowledges that it has had full opportunity to
      consult with legal and financial advisors as it has been deemed necessary or advisable
      in connection with its decision to knowingly enter into this Agreement. Neither party has
      executed this Agreement in reliance on any representations, warranties, or statements
      made by the other party other than those expressly set forth in this Agreement.

              j.      Assignment or Delegation. Except as otherwise specifically set forth in
      this Agreement, neither party shall assign all or any portion of its rights and obligations
      contained in this Agreement without the express or prior written approval of the other
      party, in which approval may be withheld in the other party's sole discretion.

             k.      Venue and Jurisdiction. The parties agree that for purposes of any
      dispute in connection with this Agreement, the Muskegon County Circuit Court shall
      have exclusive personal and subject matter jurisdiction and that Muskegon County is the
      exclusive venue.

                                                    MANA SPORTS, LLC

By:,,c_.!:..=:_~ ~ ~~ ~ ~     :..._:===---          By: ~            ~
Name: Ste
Title: Mayor
                                                    Name: M,wio Fl~      u
                                                    Title: Ld._ r s , , ~L_O WAI-JL
Dated: _ _ _ _ _ , 2020                             Dated: 2":J". -       , 2020
By: _ _ _ _ _ _ _ _ _ __
Name: Ann Meisch
Title: City Clerk
Dated : _ _ _ _ _ , 2020


   Exhibit A

Promissory Note
                                                     PROMISSORY NOTE

     $30,000.00                                                                       Muskegon, Michigan
                                                                                        February 25, 2020

     FOR VALUE RECEIVED, MANA SPORTS, LLC, a Michigan limited liability company, of 5906 Commerce Centre,
     Muskegon, Michigan 49444 ("Maker"), promises to pay to the City of Muskegon, a Michigan municipal
     corporation, at 933 Terrace Street, Muskegon, Michigan 49440 ("City"), or at such other place as directed by
     the City, the principal sum ofThirty Thousand and 00/100 Dollars ($30,000.00), together with interest from
     the date hereof at the rate of 7 .50% per annum on the unpaid balance remaining due from time to time .
     This Note shall be payable as follows:

          Equal and consecutive monthly installments of principal and interest of $933.19 shall be made
          from the Maker to the City commencing April 1, 2020 and continuing on the 1st of each month
          thereafter until March 1, 2023, when the entire balance of principal and interest shall be due
          and payable in full. An amortization schedule is attached as Exhibit A, for reference only.

      The Maker may prepay without penalty all or any portion of the principal at any time. Any partial
      prepayment shall not eliminate the obligation of the Maker to pay all subsequent installments on their
      normal due dates. All payment of any nature shall be applied first to accrued interest and the balance to
      principal. The Maker shall maintain their business location commonly known as Mercy Health Arena in the
      City of Muskegon. A move out of the City is a default under this Note.

      This Note is secured by a certain security agreement of even date between the Maker and the City ("Security
      Agreement"). This Note is personally guaranteed by Mario Flores, ("Personal Guaranty"). The terms of the
      Security Agreement and Personal Guaranty are incorporated in this Note by reference . The City shall have
      all of the rights and powers set forth in the Security Agreement and Personal Guaranty as though the same
      were set forth fully in this Note. A default in the Security Agreement or Personal Guaranty shall constitute a
      default of this Note.

      Upon any default, including, but not limited to, any failure to make payments when due, the City may, upon
      ten (10) days written notice to the Maker, declare the entire remaining balance of principal and interest to
      be immediately due and payable. No delay by the City in exercising any right hereunder shall be considered
      a waiver of such right.

      The Maker (i) waives protest, presentment, demand for payment, and notice of dishonor: (ii) agrees that any
      extension of the time for any payment, reduction of any payments, acceptance by the City of a renewal
      note, or release or non-enforcement of any security, whether with or without notice, shall not release or
      offset the obligations of the Maker; (iii) agrees to reimburse the City for any and all costs and expenses
      (including but not limited to, reasonable and actual attorney fees) incurred in attempting to collect any and
      all principal and interest on this Note.

                                                                 MAKER: MANA SPORTS, LLC

                                                                 By:_____.~ ~
                                                                 Name: Mario Flores
                                                                 Title : ~;t.,tr.,,A~rµ w,u,,,,
                                                                 Date: ~:7,....,_.       , 2020

-   --------                                    --   -------   ------------
                       Exhibit A

Date        Interest         Principal   Balance

Apr, 2020   $188             $746        $29,254

May, 2020   $183             $750        $28,504

Jun,2020    $178             $755        $27,749

Jul, 2020   $173             $760        $26,989

Aug, 2020   $169             $765        $26,225

Sep,2020    $164             $769        $25,455

Oct, 2020   $159             $774        $24,681

Nov, 2020   $154             $779        $23,902

Dec, 2020   $149             $784        $23,119

2020        $1,517           $6,881      $23,119

Jan,2021    $144             $789        $22,330

Feb,2021    $140             $794        $21,536

Mar, 2021   $135             $799        $20,738

Apr, 2021   $130             $804        $19,934

May, 2021   $125             $809        $19,125

Jun, 2021   $120             $814        $18,312

Jul, 2021   $114             $819        $17,493

Aug,2021    $109             $824        $16,669

Sep,2021    $104             $829        $15,840

Oct, 2021   $99              $834        $15,006

Nov, 2021   $94              $839        $14,167

Dec, 2021   $89              $845        $13,322

2021        $1,402           $9,797      $13,322

Jan,2022    $83              $850        $12,472

Feb,2022    $78              $855        $11,617

Mar, 2022   $73              $861        $10,756

Apr, 2022   $67              $866        $9,890
Date        Interest   Principal   Balance

May, 2022   $62        $871        $9,019
Jun,2022    $56        $877        $8,142
Jul, 2022   $51        $882        $7,260
Aug,2022    $45        $888        $6,372
Sep,2022    $40        $893        $5,479
Oct, 2022   $34        $899        $4,580
Nov, 2022   $29        $905        $3,675
Dec, 2022   $23        $910        $2,765
2022        $641       $10,557     $2,765

Jan,2023    $17        $916        $1,849
Feb,2023    $12        $922        $927
Mar, 2023   $6         $927        $0
2023        $35        $2,765      $0
    Exhibit C

Personal Guaranty
                                     PERSONAL GUARANTY

       This Personal Guaranty ("Guaranty") is given      5,,.

Top of Page

New Agenda Notifications

* indicates required