(11)
| Each of IRG Canton Village Member, LLC and IRG Canton Village Manager, LLC may be deemed to beneficially own 15,027,837 shares of Common Stock held by HOF Village, LLC through the former’s indirect (approximately 74.9%) ownership interest therein and the latter’s role as manager of it. For similar reasons, each may also be deemed to beneficially own 3,457,393 shares of Common Stock issuable upon the exercise of 2,432,500 warrants held by HOF Village, LLC with an exercise price of $11.50 per share. The warrants are exercisable within 60 days. Each of IRG Canton Village Member, LLC and IRG Canton Village Manager, LLC disclaims beneficial ownership of all shares held by HOF Village, LLC, except to the extent of any actual pecuniary interest. For purposes of calculating their percentage ownership, the shares outstanding of the Company include the shares of Common Stock issuable upon the exercise of the warrants. The business address of IRG Canton Village Member, LLC and IRG Canton Village Manager, LLC is 11111 Santa Monica Boulevard, Suite 800, Los Angeles, CA 90025.(12)
| Each of IRG Canton Village Member, LLC and IRG Canton Village Manager, LLC may be deemed to beneficially own 15,027,837 shares of Common Stock held by HOF Village, LLC through the former’s indirect (approximately 74.9%) ownership interest therein and the latter’s role as manager of it. For similar reasons, each |
(12)
| National Football Museum, Inc. beneficially owns 3,679,850 shares of Common Stock. National Football Museum, Inc. may also be deemed to beneficially own 2,629,871 shares of Common Stock as a result of its ownership of membership interests in HOF Village, LLC. National Football Museum, Inc. disclaims beneficial ownership of all shares held by HOF Village, LLC, except to the extent of any actual pecuniary interest. National Football Museum, Inc. is not deemed to beneficially own 3,457,393 shares of Common Stock issuable upon the exercise of 2,432,500 warrants held by HOF Village, LLC with an exercise price of $11.50 per share. The warrants are exercisable within 60 days. Each of IRG Canton Village Member, LLC and IRG Canton Village Manager, LLC disclaims beneficial ownership of all shares held by HOF Village, LLC, except to the extent of any actual pecuniary interest. For purposes of calculating their percentage ownership, the shares outstanding of the Company include the shares of Common Stock issuable upon the exercise of the warrants. The business address of IRG Canton Village Member, LLC and IRG Canton Village Manager, LLC is 11111 Santa Monica Boulevard, Suite 800, Los Angeles, CA 90025. |
(13)
| National Football Museum, Inc. beneficially owns 3,679,850 shares of Common Stock. National Football Museum, Inc. may also be deemed to beneficially own 2,629,871 shares of Common Stock as a result of its ownership of membership interests in HOF Village, LLC. National Football Museum, Inc. disclaims beneficial ownership of all shares held by HOF Village, LLC, except to the extent of any actual pecuniary interest. The business address of National Football Museum, Inc. is 2121 George Halas Dr. NW, Canton, OH 44708. |
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires directors, executive officers, and persons owning more than 10% of any class of a company’s equity securities registered under Section 12 of the Exchange Act to file reports on a timely basis on the initiation of their status as a reporting person and any changes with respect to their beneficial ownership of such equity securities with the SEC. Executive officers, directors and greater than 10% stockholders are required by SEC regulations to furnish those companies copies of all Section 16(a) forms they file.
Our records reflect that all reports which were required to be filed pursuant to Section 16(a) of the Exchange Act were filed on a timely basis during the year ended December 31, 2021, except that Mr. Lichter did not timely report two transactions on one Form 4. All of these transactions were subsequently reported. In addition, CH Capital Lending LLC did not timely obtain SEC filing codes and thus was not listed as a reporting person on the Form 3, 4 and 5 filings by Stuart Lichter; however, CH Capital Lending LLC’s ownership was reported on Mr. Lichter’s Form 4 and 5 filings.
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CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONSRelated Person Transaction Policy
The Company’s Board of Directors has adopted a written related person transaction policy that sets forth the following policies and procedures for the review and approval or ratification of related person transactions.
A “Related Person Transaction” is a transaction, arrangement or relationship in which the Company or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. A “Related Person” means:
any person who is, or at any time during the applicable period was, one of the Company’s executive officers or a member of the Board of Directors;
any person who is known by the Company to be the beneficial owner of more than five percent (5%) of our voting stock;
any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, officer or a beneficial owner of more than five percent (5%) of our voting stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than five percent (5%) of our voting stock; and
any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a ten percent (10%) or greater beneficial ownership interest.
In addition, we have in place policies and procedures designed to minimize potential conflicts of interest arising from any dealings the Company may have with its affiliates and to provide appropriate procedures for the disclosure of any real or potential conflicts of interest that may exist from time to time. Specifically, pursuant to the Audit Committee charter, the Audit Committee has the responsibility to review related person transactions.
All of the transactions described in this section that occurred prior to the closing of the Business Combination on July 1, 2020, occurred prior to the adoption of this policy. The disclosure below covers related person transactions that have occurred since January 1, 2020.
Gordon Pointe Acquisition Corp. Pre-Business Combination Related Persons Transactions
Promissory Note — Related Party
Through June 30, 2020, GPAQ issued promissory notes to the Sponsor, pursuant to which GPAQ could borrow up to an aggregate amount of $1,500,000, of which $600,000 of the promissory notes was issued during the six months ended June 30, 2020, to finance transaction costs in connection with the Business Combination. During the six months ended June 30, 2020, GPAQ borrowed $572,735 under the notes and an aggregate of $1,390,730 was outstanding under these notes.
In addition, through June 30, 2020, GPAQ issued unsecured promissory notes to the Sponsor, pursuant to which GPAQ borrowed an aggregate principal amount of $3,354,228, of which $972,573 was borrowed during the six months ended June 30, 2020, to fund the extension loans into the trust account in which the net proceeds of the GPAQ IPO were placed (the “Trust Account”).
These notes were non-interest bearing, unsecured and were paid upon the completion of the Business Combination. Up to $1,500,000 of the loans were convertible into warrants at a price of $1.00 per warrant. The warrants would be identical to the private placement warrants, including as to exercise price, exercisability and exercise period.
As of June 30, 2020, there was an aggregate of $4,744,958 outstanding under the promissory notes. Upon completion of the Business Combination, the notes were converted into the Company’s Common Stock.
Administrative Services Agreement
GPAQ entered into an agreement whereby, commencing on January 30, 2018, through the earlier of the consummation of a business combination or GPAQ liquidation, GPAQ paid an affiliate of the Sponsor a monthly fee of $10,000 for office space, utilities and administrative support. For each of the six months ended June 30,
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2020 and 2019, GPAQ incurred $60,000 in fees for these services. At June 30, 2020, and December 31, 2019, an aggregate of $90,000 and $30,000, respectively, in administrative fees were included in accounts payable and accrued expenses in the condensed consolidated balance sheets.
Related Party Loans
In order to finance transaction costs in connection with the Business Combination, the Sponsor and GPAQ’s officers and directors were permitted to loan GPAQ funds from time to time or at any time, as may be required (the “Working Capital Loans”). Each Working Capital Loan was evidenced by a promissory note. The Working Capital Loans would either be paid upon consummation of the Business Combination, without interest, or, at the holder’s discretion, up to $1,500,000 of the Working Capital Loans were convertible into warrants at a price of $1.00 per warrant.
The Sponsor committed to provide an aggregate of $900,000 in loans to the Company to finance transaction costs in connection with the Business Combination. To the extent advanced, the loans were evidenced by a promissory note, were non-interest bearing, unsecured and were repaid upon the completion of the Business Combination. The loans were convertible into Common Stock purchase warrants at a purchase price of $1.00 per warrant. The warrants would be identical to the private placement warrants, including as to exercise price, exercisability and exercise period. As of June 30, 2020, there were no amounts outstanding under the loans.
Contributions
On January 24, 2020, GPAQ held a special meeting of the stockholders of GPAQ at which the stockholders approved, among other things, a proposal to amend GPAQ’s amended and restated certificate of incorporation to further extend the deadline to complete a business combination from January 29, 2020, to February 29, 2020, plus an option for GPAQ to further extend such date for an additional 30 days. In connection with the extension from January 29, 2020, to February 29, 2020, the Sponsor contributed to GPAQ $0.033 for each of GPAQ’s public shares outstanding, for an aggregate Contribution of $265,404, which amount was deposited into the Trust Account. Further, the Sponsor agreed that it or its affiliates would contribute to GPAQ as a loan an additional $0.033 for each public share that was not redeemed if GPAQ elected to further extend the deadline to complete a business combination beyond February 29, 2020, for an additional 30 days.
HOF Village, LLC Pre-Business Combination Related Persons Transactions
License Agreement
Newco, as assignee of HOF Village, is party to the License Agreement with PFHOF that was entered into in September 2019 (the “License Agreement”) and modified the terms of a prior License Agreement that was entered into in December 2018 (the “2018 License Agreement”) (which replaced an earlier License Agreement that was entered into in March 2016). PFHOF is a member of HOF Village and an affiliate of then director and officer of HOF Village David Baker. Pursuant to this agreement, Newco licenses certain marks from PFHOF, and the parties agreed upon terms for sponsorships and Newco’s ability to sublicense PFHOF’s marks to sponsors. The agreement provides for Newco to pay license fees to PFHOF based on a percentage of sponsorship revenue. Both the License Agreement and the 2018 License Agreement were approved by unanimous consent of HOF Village’s board of directors prior to the closing of the Business Combination.
Retail Merchandise Agreement
Newco, as assignee of HOF Village, and PFHOF are parties to a Retail Merchandise Agreement that was entered into in December 2018. Under the Retail Merchandise Agreement, PFHOF agrees to operate onsite retail services at certain locations within the Hall of Fame Village complex, subject to certain performance targets and product requirements. In exchange for these services, Newco will pay PFHOF recurring royalty payments on a monthly basis representing a certain percentage of gross sales. The Retail Merchandise Agreement was approved by unanimous consent of HOF Village’s board of directors prior to the Business Combination, when HOF Village assigned the agreement to Newco. The Retail Merchandise Agreement was amended and restated on June 30, 2020, prior to the closing of the Business Combination.
Branding License Agreement
Newco’s subsidiary, Youth Sports Management, LLC (“YSM”), and PFHOF (a HOF Village member and affiliate of then director and officer of HOF Village David Baker) are parties to a Branding License Agreement from December 2015. PFHOF is currently a related person as a security holder covered by Item 403(a) of
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Regulation S-K. Under the Branding License Agreement, PFHOF licenses certain of its marks to YSM for use in connection with youth sporting events held at the Hall of Fame Village complex. The agreement provides for YSM to pay a fee of $1,000,000 to PFHOF over a five-year term. This fee was reduced to an annual fee of $225,000 (subject to a 3% annual increase over five years) in connection with entry into the Media License Agreement discussed below. Newco, as assignee of HOF Village, previously owned 50% of the equity interests of YSM along with a joint venture partner who owned the remaining 50% of YSM; however, Newco, as assignee of HOF Village, bought out its joint venture partner’s entire interest in YSM in May 2020 and became sole owner of YSM.
Agreement to Provide Insurance
Newco, as assignee of HOF Village, and its wholly-owned subsidiary HOF Village Stadium, LLC are parties to an Agreement to Provide Insurance with PFHOF (a HOF Village member and affiliate of then director and officer of HOF Village David Baker) dated March 2016. PFHOF is currently a related person as a security holder covered by Item 403(a) of Regulation S-K. Under the agreement, HOF Village Stadium, LLC is required to carry and maintain certain insurance coverage in connection with various agreements related to the development of the Hall of Fame Village project, and Newco, as assignee of HOF Village, has guaranteed the performance of HOF Village Stadium, LLC under the agreement. Such insurance coverage must name PFHOF as an additional insured or loss payee on each policy.
Other Transactions Involving HOF Village Members and their Affiliates
Certain members of HOF Village and/or their affiliates have loaned money or made payments on behalf of HOF Village.
Certain affiliates of IRG Member and of HOF Village directors Stuart Lichter and John Mase have made certain loans to HOF Village. CH Capital Lending, LLC has loaned money to HOF Village in the form of convertible notes with outstanding principal amounts totaling $3,695,000, American Capital Center, LLC has made debt commitments to HOF Village with an original principal amount of $8,550,000, and IRG, LLC has made debt commitments to HOF Village with an original principal amount of $15,000,000. Under the Merger Agreement, such outstanding debt owed to American Capital Center, LLC and IRG, LLC would be converted into equity of the Company, and such outstanding debt owed to CH Capital Lending, LLC may or may not be converted, at CH Capital Lending LLC’s election. An affiliate of Industrial Realty Group, LLC made a guaranty in favor of GACP Finance Co., LLC, as administrative agent (“GACP Finance”), under which it guaranteed to pay all or a portion of amounts due under the Bridge Loan at the closing of the Business Combination on HOF Village’s behalf, to the extent that HOF Village did not have sufficient funds to pay such amounts. This Bridge Loan was refinanced and replaced by a loan from Aquarian Credit Funding LLC, and a new IRG guaranty was put in place. See “IRG Guarantee of Refinancing Term Loan” below. Industrial Realty Group, LLC and HOF Village are parties to the IRG November Note (as defined below), under which Industrial Realty Group, LLC may loan HOF Village an amount up to $30,000,000.
PFHOF has made loans to HOF Village and advanced payments on behalf of HOF Village for its business. Outstanding amounts owed to PFHOF under such arrangements previously totaled approximately $10.2 million. Under the Merger Agreement, $5.8 million of the outstanding amounts owed to PFHOF were converted into equity of the Company in satisfaction of such amount. Under the Shared Services Agreement (discussed in greater detail below) entered into by HOF Village and PFHOF on June 30, 2020, PFHOF forgave $5.15 million of outstanding amounts owed by HOF Village, and HOF Village forgave $1.2 million of outstanding amounts owed by PFHOF.
M. Klein and Company, LLC, an affiliate of member M. Klein Associates, Inc. and of then HOF Village directors Mark Klein and Michael Klein, loaned money to HOF Village in the form of HOF Village Convertible Notes with original principal amounts totaling $3,935,000 (of which, convertible notes with a principal amount of $260,000 were transferred to a third party) and outstanding principal amounts totaling $3,675,000. In connection with the Business Combination, M. Klein and Company, LLC converted such outstanding debt into Company Common Stock.
On January 13, 2020, HOF Village announced that it had secured $9.9 million in financing from Constellation NewEnergy, Inc. through its Efficiency Made Easy (“EME”) program to implement energy efficient measures and to finance the construction of the Constellation Center for Excellence and other
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enhancements, as part of Phase II development. The Hanover Insurance Company provided a guarantee bond to guarantee HOF Village’s payment obligations under the financing, and Stuart Lichter and two trusts affiliated with Mr. Lichter agreed to indemnify The Hanover Insurance Company for payments made under the guarantee bond.
Related Person Transactions Occurring in Connection With or After the Business Combination
IRG Side Letter
On June 25, 2020, HOF Village entered into a Letter Agreement re Payment Terms (the “IRG Side Letter”) amending and restating a Letter Agreement re Payment Terms entered into on January 21, 2020, (the “January Letter”). The IRG Side Letter was entered into with respect to (i) the $65 million secured term loan agreement (as amended, the “Bridge Loan Agreement”) entered into on March 20, 2018, by HOF Village, the other borrowers party thereto (together with HOF Village, the “Borrowers”), the various lenders party thereto (the “Lenders”) and GACP Finance, (ii) the subordinated promissory note entered into on February 7, 2020, effective as of November 27, 2019, (as amended, the “IRG November Note”) between HOF Village, as borrower, and payable to the order of Industrial Realty Group, LLC, in an amount up to $30,000,000, (iii) the Guaranty dated November 16, 2019, by IRG Master Holdings, LLC, a Delaware limited liability company (“IRGMH” and together with Industrial Realty Group, LLC and their respective affiliates, the “IRG Entities”) in favor of GACP Finance (the “IRGMH Guaranty”) and (iv) the Loan Purchase and Assumption Agreement (which was not agreed upon or executed by any party) by and among the Lenders, GACP Finance, the Borrowers and the purchasing lender party thereto (the “LPAA”, and together with the IRG November Note and the IRGMH Guaranty, the “Advancement Documents”).
Pursuant to the IRG Side Letter, if any IRG Entity advanced funds pursuant to the Advancement Documents, the Bridge Loan Agreement, or any other instrument to pay certain specified lenders under the Bridge Loan Agreement, as a result of such advancement of funds, any IRG Entity becomes a Lender or has the rights of a Lender under the Bridge Loan Agreement, then (i) certain mandatory prepayment provisions would be deleted and no longer be applicable, (ii) the maturity date of the Bridge Loan Agreement would be extended to August 31, 2021, and (iii) HOF Village would not be required to pay to any IRG Entity any principal, interest, or other obligations due under the Bridge Loan Agreement if payment of such amounts would cause Borrowers to violate applicable Nasdaq or securities-law requirements. HOF Village assigned the IRG Side Letter and the Bridge Loan Agreement to Newco in connection with the Business Combination.
On December 1, 2020, the Company refinanced the Bridge Loan Agreement with the Term Loan Agreement, which is discussed below.
Hall of Fantasy League Investment
On June 11, 2020, HOF Village acquired 60% of the equity interests of Mountaineer GM, LLC (“Mountaineer”) from Michael Klein & Associates, Inc., an affiliate of then HOF Village director Michael Klein (“MKA”), for a purchase price of $100.00 pursuant to membership interest purchase agreement (the “Membership Purchase Agreement”). Mountaineer is party to an asset purchase agreement, dated June 5, 2020, (the “Crown APA”), with CrownThrown, Inc. (“Crown”), pursuant to which Mountaineer acquired the assets of, and assumed certain liabilities of, Crown, which consist of The Crown League (renamed Hall of Fantasy League), a professionalized fantasy sports league (the “Hall of Fantasy League Business”). HOF Village entered into a services agreement, dated as of June 16, 2020 (the “Services Agreement”), with Mountaineer and BXPG LLC (“Brand X”), as amended, whereby Mountaineer and HOF Village retained Brand X to provide services with regard to the Hall of Fantasy League. Pursuant to an amended and restated limited liability company agreement of Mountaineer that HOF Village and MKA entered into in connection with HOF Village’s purchase of the 60% interest in Mountaineer under the Membership Purchase Agreement, MKA agreed to provide the consideration for Mountaineer to complete the acquisition of Crown as a capital contribution to Mountaineer, consisting of 90,287 shares of the Company’s Common Stock, and HOF Village agreed to provide the consideration owed to Brand X under the Services Agreement as a capital contribution to Mountaineer, consisting of $30,000 per month for 18 months plus 100,000 shares of the Company’s Common Stock, 25,000 shares of which were issued on August 6, 2020, and 25,000 shares of which are issuable on each of July 1, 2021, January 1, 2022, and July 1, 2022, until such capital contributions of HOF Village equal 60% of the total capital contributions to Mountaineer. HOF Village assigned its interest in Mountaineer and the Services Agreement to
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Newco in connection with the Business Combination. The Services Agreement may be extended for an additional six months. Compensation during the extension period would be $30,000 per month and 25,000 shares of the Company’s Common Stock. Mountaineer completed the acquisition of Crown assets under the Crown APA on July 22, 2020.
Director Nominating Agreement
Upon the closing of the Business Combination, the Company, HOF Village, the Sponsor and PFHOF entered into a Director Nominating Agreement (the “Director Nominating Agreement”), which provides that the Company shall take all necessary action to set the size of its Board of Directors at 11 members, a majority of whom shall be independent directors in accordance with Nasdaq requirements. Pursuant to the Company’s amended and restated certificate of incorporation as currently in effect, the Company’s Board of Directors is made up of three classes: Class A Directors who shall serve for an initial one-year term, Class B Directors who shall serve for an initial two-year term, and Class C Directors who shall serve for an initial three-year term. The Director Nominating Agreement set forth the directors who were to serve as of the Business Combination and specified the respective classes of each director.
Pursuant to the Director Nominating Agreement and its current voting power, the Sponsor no longer has the right to designate a person to serve on the Board, HOF Village has the right to designate four designees to serve on the Board, and PFHOF has the right to designate one designee to serve on the Board. The shares of Common Stock owned by the Sponsor decreased due to the redemption of certain member interests in the Sponsor, the recipients of which remain bound by the same lock-up agreement applicable to the Sponsor.
HOF Village and PFHOF may each designate one individual to serve as a Company board of directors non-voting observer (in the case of HOF Village, so long as HOF Village beneficially owns at least 15% of the total number of shares of the Company’s Common Stock held by it as of the Business Combination Effective Time and, in the case of PFHOF, so long as PFHOF beneficially owns at least 85% of the total number of shares of the Company’s Common Stock held by it as of the Business Combination Effective Time). The parties to the Director Nominating Agreement agreed to take certain actions to support those nominees for election and include the nominees in the proxy statements for the stockholders’ meetings at which directors are to be elected.
Release Agreement
At the closing of the Business Combination, each of the members of HOF Village and PFHOF (each, a “Holder”) entered into a Release Agreement with the Company, GPAQ and Newco (the “Release Agreement”), pursuant to which (i) each Holder generally released all claims against the Company, GPAQ, the merger subsidiaries, Newco and their affiliates that such Holder may have had prior to the Business Combination Effective Time, except for certain retained claims specifically enumerated in the Release Agreement, and (ii) each Holder consented to the termination of certain contracts to which it was a party with HOF Village and its affiliates effective immediately prior to the Business Combination Effective Time without any cost or other liability to Newco, the Company or its subsidiaries.
2020 Shared Services Agreement
On June 30, 2020, HOF Village entered into a Shared Services Agreement with PFHOF, which we refer to as the 2020 Shared Services Agreement. Under the agreement, PFHOF and HOF Village mutually reduced certain outstanding amounts owed between the parties, with PFHOF forgiving $5.15 million owed by HOF Village and HOF Village forgiving $1.2 million owed by PFHOF, which effectively resulted in no outstanding amounts owed between the parties as of March 31, 2020. Additionally, the parties agreed to coordinate with each other on certain business services and expenses. The 2020 Shared Services Agreement was approved by unanimous consent of HOF Village’s board of directors prior to the Business Combination. The 2020 Shared Services Agreement has an initial term of one year, subject to automatic renewal for successive one-year terms; however, it may be terminated by either party upon 90 days’ written notice, by mutual agreement, or by either party for failure by the other party to timely pay expenses. HOF Village assigned the 2020 Shared Services Agreement to Newco in connection with the Business Combination.
Master Development and Project Management Agreement
On June 30, 2020, HOF Village, IRG Member and IRG Manager entered into a Master Development and Project Management Agreement. The Master Development and Project Management Agreement was entered into as a standalone agreement to govern the master developer and project management services arrangement that was
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previously provided for in the operating agreement of HOF Village. Pursuant to the Master Development and Project Management Agreement, IRG Manager serves as the master developer for the Hall of Fame Village project and IRG Member serves as the project manager for the Hall of Fame Village project. Under the agreement, IRG Manager will receive a master developer fee of 4% of the total development costs of the project, and IRG Member will receive a project management fee, which will not exceed 5% of the gross receipts from the project. The terms of the Master Development and Project Management Agreement remained materially similar to the prior arrangement documented in the operating agreement of HOF Village, which previously had been unanimously approved by the members of HOF Village prior to the Business Combination. HOF Village assigned the Master Development and Project Management Agreement to Newco in connection with the Business Combination.
Media License Agreement
On July 1, 2020, in connection with the closing of the Business Combination, PFHOF (a HOF Village member), HOF Village, and HOF Village Media Group, LLC (a wholly-owned subsidiary of HOF Village) amended and restated the Media License Agreement (which amended and restated entirely the original media license agreement between the parties, dated November 12, 2019). PFHOF is a related party because it is a security holder covered by Item 403(a) of Regulation S-K. This agreement provides for the sharing of media-related opportunities between Hall of Fame Media Group, LLC (a wholly-owned subsidiary of PFHOF) and HOF Village Media Group, LLC and sets forth the terms under which PFHOF licenses certain marks to HOF Village Media Group to exploit existing PFHOF works and to create new works. The Media License Agreement acknowledges the existence of agreements in effect between PFHOF and certain third parties that provide for certain restrictions on the rights of PFHOF, which affects the rights that can be granted to HOF Village Media Group under the Media License Agreement. These restrictions include, but are not limited to, such third parties having co-exclusive rights to exploit content based on the PFHOF Enshrinement ceremonies and other Enshrinement events. The agreement provides for HOF Village Media Group or HOF Village to pay annual license fees to PFHOF of at least $1,250,000, subject to adjustment, and fees may vary based on the particular PFHOF works licensed. The Media License Agreement has an initial term of 15 years (subject to earlier termination for material breach), subject to automatic renewal for successive five-year terms, unless timely notice of non-renewal is provided by either party. HOF Village assigned the Media License Agreement to Newco in connection with the Business Combination.
Note Purchase Agreement; Registration Rights Agreement and Note Redemption Warrant Agreement
Note Purchase Agreement. On July 1, 2020, concurrently with the closing of the Business Combination, the Company entered into the Note Purchase Agreement with the purchasers listed on the signature pages thereto, pursuant to which the Company agreed to issue and sell to the purchasers in a private placement (the “Private Placement”) $20,721,293 in aggregate principal amount of the Company’s 8.00% Convertible Notes due 2025 (the “PIPE Notes”). Each of CH Capital Lending, LLC, which is controlled by our director Stuart Lichter, and Gordon Pointe Management, LLC, which is controlled by our director James J. Dolan, are related persons because they were security holders covered by Item 403(a) of Regulation S-K at the time of the transaction. Pursuant to the terms of the Note Purchase Agreement, the Notes may be converted into shares of Common Stock at the option of the holders of the PIPE Notes, and the Company may, at its option, redeem the PIPE Notes in exchange for cash and warrants to purchase shares of Common Stock (the “Note Redemption Warrants”).
The Private Placement was conducted in reliance upon an exemption from the registration requirements of the Securities Act, pursuant to Section 4(a)(2) thereof, as a transaction by an issuer not involving any public offering. The offer and sale of the PIPE Notes have not been registered under the Securities Act or applicable state securities laws, and consequently, the PIPE Notes may not be offered or sold in the United States absent registration under the Securities Act or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.
The Note Purchase Agreement contains representations and warranties by the Company and the purchasers, and each of the Company and the purchasers have agreed to indemnify the other for losses resulting from a breach of any of their respective representations or warranties.
Closing of the Private Placement and delivery of the PIPE Notes pursuant to the Note Purchase Agreement occurred on July 1, 2020. Industrial Realty Group, LLC exchanged $9 million of the amount outstanding under
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the IRG November Note for PIPE Notes in the principal amount of $9 million, and, at present, the outstanding balance of the IRG November Notes is $13.3 million. The Sponsor exchanged $500,000 of the principal component of the indebtedness owed to such purchaser by GPAQ under loan agreements and related promissory notes for PIPE Notes in the principal amount of $500,000. Seven other purchasers exchanged a total of $4,221,293 in GPAQ founder notes held by such purchasers for PIPE Notes in the aggregate principal amount of $4,221,293. Consequently, the Company received cash proceeds from the issuance and sale of the PIPE Notes of approximately $7 million. The Company used proceeds of the Private Placement to fund the Company’s obligations related to the Merger Agreement and to pay transaction fees and expenses and used the remaining proceeds of the Private Placement to satisfy the Company’s working capital obligations.
Registration Rights Agreement. On July 1, 2020, in connection with the Note Purchase Agreement and the closing of the Private Placement, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”), by and among the Company and the purchasers of the PIPE Notes.
Pursuant to the Registration Rights Agreement, the Company is required to prepare and file a registration statement (the “Registration Statement”) to permit the public resale of (i) the shares of Common Stock issued or issuable upon the exercise of the Note Redemption Warrants and (ii) the shares of Common Stock that are issuable pursuant to the terms of the Note Purchase Agreement upon conversion of the PIPE Notes. The Company is required to use its commercially reasonable efforts to cause the Registration Statement to become effective no later than 365 days after the Closing Date (the “Registration Statement Deadline”).
The Registration Rights Agreement provides that if the Registration Statement is not declared effective on or prior to the Registration Statement Deadline, the Company will be liable to the purchasers for liquidated damages in accordance2,432,500 warrants held by HOF Village, LLC with a formula, subject to the limitations set forth in the Registration Rights Agreement. Such liquidated damages would be payable in cash. In addition, the Registration Rights Agreement grants the purchasers piggyback registration rights. These registration rights are transferable to affiliates of the purchasers and, in certain circumstances, to third parties.
Note Redemption Warrant Agreement. On July 1, 2020, pursuant to the Note Purchase Agreement, the Company entered into a Note Redemption Warrant Agreement by and among the Company and the purchasers listed on the signature pages thereto (the “Note Redemption Warrant Agreement”). The terms of the Note Redemption Warrant Agreement set forth the terms of the Note Redemption Warrants that may be issued pursuant to the Note Purchase Agreement upon redemption of PIPE Notes.
Issuance of 7.00% Series A Cumulative Redeemable Preferred Stock
During October 2020, the Company issued to American Capital Center, LLC (the “Preferred Investor”), a company controlled by our director Stuart Lichter, an aggregate of 1,800 shares of 7.00% Series A Cumulative Redeemable Preferred Stock (“Series A Preferred Stock”) at $1,000 per share for an aggregate purchase price of $1,800,000. The Company paid the Preferred Investor an origination fee of 2%. The issuance and sale of the Series A Preferred Stock to the Preferred Investor was exempt from registration pursuant to Section 4(a)(2) of the Securities Act. The Company used half of the proceeds from the sale of the Series A Preferred Stock to pay down outstanding amounts under its bridge loan, dated March 20, 2018, among the Company, various lenders party thereto and GACP Finance (“Bridge Loan”).
IRG Guarantee of Refinancing Term Loan
On December 1, 2020 (the “Effective Date”), we entered into a term loan agreement (the “Term Loan Agreement”) among the Company, Newco, and certain of Newco’s subsidiaries, as borrowers (collectively, the “Borrowers”), and Aquarian Credit Funding LLC (“Aquarian”), as lead arranger, administrative agent, collateral agent and representative of the lenders party thereto (the “Lenders”), pursuant to which we borrowed $40 million from the Lenders (the “Term Loan”). The term of the Term Loan Agreement is 12 months from the Effective Date (the “Term”). The Term Loan will bear interest at a fixed rate equal to 10.0% per annum, payable monthly in advance on the outstanding amount of the Term Loan during the Term.
On the Effective Date, we used approximately $4.04 million from the Term Loan to prefund an amount equal to the cash interest on the Term Loan for the entire Term into an account controlled by Aquarian. We used approximately $23.3 million from the Term Loan to pay the outstanding balance and fees under the Company’s bridge loan, dated March 20, 2018, among the Company, various lenders party thereto and GACP Finance Co.,
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LLC (“Bridge Loan”). The remaining proceeds of the Term Loan, after payment of various fees and expenses, and subject to the Liquidity Covenant (defined below), are available for general corporate purposes.
The Term Loan is guaranteed up to $22.3 million (the “Guaranty”) by IRG Master Holding, Inc. (the “Guarantor”), an affiliate of Industrial Realty Group, LLC, a Nevada limited liability company (“IRG”), that is controlled by one of our directors, Stuart Lichter. The Guaranty will terminate upon the occurrence of certain events, including the payment in full of all obligations under the Term Loan Agreement, the purchase of $22.3 million of the principal amount of the Term Loan by the Guarantor or any of its affiliates, or the deposit by the Borrowers in the Proceeds Account net cash proceeds from additional permitted equity issuances and/or permitted indebtedness in an amount equal to or greater than $25 million.
December 2020 Private Placement of Common Stock and Series C Warrants
On December 29, 2020, (the “Closing Date”), we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Industrial Realty Group, LLC, and CH Capital Lending, LLC, pursuant to which we sold to CH Capital Lending, LLC in a private placement (the “December 2020 Private Placement”) 10,813,774 shares (the “Shares”) of the Company’s Common Stock and warrants to purchase 10,036,925 shares of Common Stock (the “Series C Warrants”). CH Capital Lending, LLC is a related person because it is a security holder covered by Item 403(a) of Regulation S-K. In addition, Industrial Realty Group, LLC and CH Capital Lending, LLC are both controlled by our director Stuart Lichter. The aggregate purchase price for the Shares and Series C Warrants was $15,239,653 (the “Purchase Price”). The Purchase Price was paid in the form of the cancellation in full of certain financial obligations owed by the Company and its affiliates to Industrial Realty Group, LLC and its affiliates in the amount of the Purchase Price. The December 2020 Private Placement was made in reliance upon an exemption from the registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof, as a transaction by an issuer not involving any public offering. The Series C Warrants are exercisable for, in the aggregate, 10,036,925 shares of Common Stock at an exercise price of $1.40$11.50 per shareshare. The business address of Common Stock (subject to customary adjustments). The Series C Warrants may be exercised from and after June 29, 2021, subject to certain terms and conditions set forth in the Series C Warrants. Unexercised Series C Warrants will expire on the fifth anniversary of the Closing Date.
Purchase of Real Property from PFHOF
On February 3, 2021, the Company purchased for $1.75 million certain parcels of real property from PFHOF located at the site of the Hall of Fame Village powered by Johnson Controls. PFHOFNational Football Museum, Inc. is a related person because it is a security holder covered by Item 403(a) of Regulation S-K. In connection with the purchase, the Company granted certain easements to PFHOF to ensure accessibility to the PFHOF museum.
2021 Shared Services Agreement
On March 9, 2021, the Company entered into an additional Shared Services Agreement with PFHOF, which supplements the existing 2020 Shared Services Agreement by, among other things, providing for the sharing of costs for activities relating to shared services (the “2021 Shared Services Agreement”), including 50% of the cost of compensation of a PFHOF representative. PFHOF is a related person because it is a security holder covered by Item 403(a) of Regulation S-K. The total annual compensation of such PFHOF representative is approximately $250,000. The 2021 Shared Services Agreement was approved by unanimous consent of the Company’s Board of Directors. The 2021 Shared Services Agreement has an initial term of three years, subject to automatic renewal for successive one-year terms; however, it may be terminated by either party upon 90 days’ written notice, by mutual agreement, or by either party for failure by the other party to timely pay expenses.
Private Placement of Series B Preferred Stock and Warrants
On June 4, 2021, in accordance with the previously announced Securities Purchase Agreement, dated May 13, 2021, between the Company and IRG, LLC, as assigned by IRG, LLC to CH Capital Lending, LLC, and the binding term sheet dated January 28, 2021, the Company issued and sold to CH Capital Lending, LLC for a purchase price of $15 million in a private placement (the “New Private Placement”) (i) 15,000 shares of Series B Preferred Stock, which are convertible into shares of Common Stock, having an aggregate liquidation preference of $15 million plus any accrued but unpaid dividends to the date of payment, and
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(ii) 2,450,980 Series D Warrants, with a term of three years, exercisable six months after issuance, each exercisable for one share of Common Stock at an exercise price of $6.90 per share, subject to certain adjustments. IRG, LLC and CH Capital Lending, LLC are controlled by our director, Stuart Lichter.
General Services Agreement
On November 15, 2021, the Company entered into the General Services Agreement with IRG Realty Advisors, LLC (“IRG Realty Advisors”), which is an affiliate of our director Stuart Lichter. Under the General Services Agreement, IRG Realty Advisors provides certain corporate support services to the Company at various hourly rates, including accounts payable services, property accounting services, and information technology support. IRG Realty Advisors invoices the Company quarterly for the cost of services under the General Services Agreement. The Company may terminate the General Services Agreement upon ten days written notice to IRG Realty Advisors.
Amendment Number 6 to Term Loan
On March 1, 2022, CH Capital Lending, LLC, which is an affiliate of our director Stuart Lichter (“CH Capital Lending”), purchased and acquired, as administrative agent and lender, pursuant to an Assignment of Loan and Loan Documents (the “Assignment of Loan and Loan Documents”) with Aquarian Credit Funding LLC (“Aquarian”), as existing administrative agent, and Investors Heritage Life Insurance Company (“IHLIC”), as existing lender, our $7.4 million term loan (the “Term Loan”) and related loan documents under term loan agreement, dated as of December 1, 2020 (as amended, the “Term Loan Agreement”).
On March 1, 2022, immediately after CH Capital Lending became the lender and administrative agent under the Term Loan Agreement, the Company entered into Amendment Number 6 to Term Loan Agreement (“Amendment Number 6”) by and among the Company, Newco, and certain of Newco’s subsidiaries, as borrowers, and CH Capital Lending, as administrative agent and lender. Under Amendment Number 6, the maturity date of the Term Loan was extended to March 31, 2024. Also under Amendment Number 6, the Term Loan was made convertible into shares of the Company’s Common Stock at a conversion price of $1.50, subject to adjustment. The conversion price is subject to a weighted-average antidilution adjustment. Certain current and historical fees and expenses were added to the principal amount of the Term Loan. Amendment Number 6 increased the interest rate from 10% to 12%. Of such 12% per annum interest: (i) 8% per annum is payable monthly and (ii) 4% per annum accumulates and is payable on the maturity date.
As part of the consideration for Amendment Number 6: (i) the Company issued in a transaction exempt from registration pursuant to Section 4(a)(2) of the Securities Act: (A) 330,000 shares of Common Stock to CH Capital Lending, and (B) a Series E warrant to purchase 1,000,000 shares of Common Stock to CH Capital Lending (the “Term Loan Warrants”), (ii) the Company agreed, subject to approval of its board of directors, to create a series of preferred stock, to be known as 7.00% Series C Convertible Preferred Stock (“Series C Preferred Stock”), and, upon the request of CH Capital Lending, exchange each share of the Company’s 7.00% Series B Convertible Preferred Stock, par value $0.0001 per share (“Series B Preferred Stock”), that is held by CH Capital Lending for one share of Series C Preferred Stock, and (iii) the Company and CH Capital Lending amended and restated the Series C Warrants and Series D Warrants that the Company issued to CH Capital Lending to extend the term to March 1, 2027 and subject the exercise price to a weighted-average antidilution adjustment.
The Term Loan Warrants have an exercise price of $1.50 per share, subject to adjustment. The exercise price is subject to a weighted-average antidilution adjustment. The Term Loan Warrants may be exercised from and after March 1, 2023, subject to certain terms and conditions set forth in the Term Loan Warrants. Unexercised Term Loan Warrants will expire on March 1, 2027. The Term Loan Warrants shall be cancelled without any further action on the part of the Company or the holder, in the event that the Company repays in full on or before March 1, 2023, the Term Loan.
First Amended and Restated Promissory Note with IRG, LLC
On November 23, 2021, the Company issued to Industrial Realty Group, LLC (“Original Lender”) a promissory note in the original principal amount of $8,500,000 (the “Original Note”). Pursuant to an Assignment of Promissory Note, dated March 1, 2022, Original Lender assigned (a) a one-half (½) interest in the Original Note to IRG, LLC (the “IRG Split Note”) and (b) a one-half (½) interest in the Original Note to JKP Financial, LLC (the “JKP Split Note”).
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On March 1, 2022, the Company entered into a First Amended and Restated Promissory Note with IRG, LLC, which amends and restates the IRG Split Note (the “Amended Assigned IRG Note”). The Amended Assigned IRG Note extended the maturity to March 31, 2024. Under the Amended Assigned IRG Note, the principal and accrued interest are convertible into shares of Common Stock at a conversion price of $1.50, subject to adjustment. The conversion price is subject to a weighted-average antidilution adjustment.
As part of the consideration for the Amended Assigned IRG Note, the Company issued in a transaction exempt from registration pursuant to Section 4(a)(2) of the Securities Act: (i) 125,000 shares of Common Stock to IRG, LLC, and (ii) a Series E Warrant to purchase 500,000 shares of Common Stock to IRG, LLC (the “IRG Split Note Warrants”).
The IRG Split Note Warrants have an exercise price of $1.50 per share, subject to adjustment. The exercise price is subject to a weighted-average antidilution adjustment. The IRG Split Note Warrants may be exercised from and after March 1, 2023, subject to certain terms and conditions set forth in the IRG Split Note Warrants. Unexercised IRG Split Note Warrants will expire on March 1, 2027. The IRG Split Note Warrants shall be cancelled without any further action on the part of the Company or the holder, in the event that the Company repays in full, on or before March 1, 2023, the Amended Assigned IRG Note.
Private Placement of Series C Preferred Stock in Exchange for Series B Preferred Stock
On March 28, 2022, in accordance with the previously announced Amendment Number 6 to Term Loan Agreement by and among the Company and certain of its subsidiaries, as borrowers, and CH Capital Lending, as administrative agent and lender, the Company entered into a Securities Exchange Agreement (the “Exchange Agreement”) with CH Capital Lending, pursuant to which the Company exchanged in a private placement (the “Private Placement”) each share of the Company’s 7.00% Series B Convertible Preferred Stock, par value $0.0001 per share (“Series B Preferred Stock”), that is held by CH Capital Lending for one share of the Company’s 7.00% Series C Convertible Preferred Stock, par value $0.0001 per share (“Series C Preferred Stock”), resulting in the issuance of 15,000 shares of Series C Preferred Stock to CH Capital Lending. The Series C Preferred Stock is convertible into shares of Common Stock. The shares of Series B Preferred Stock exchanged, and the Series C Preferred Stock acquired, have an aggregate liquidation preference of $15 million plus any accrued but unpaid dividends to the date of payment. CH Capital Lending, LLC is controlled by our director, Stuart Lichter.
The Private Placement was made in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof, as a transaction by an issuer not involving any public offering. CH Capital Lending has represented to the Company that it is an “accredited investor” as defined in Rule 501 of the Securities Act and that the Series C Preferred Stock will be acquired for investment purposes and not with a view to, or for sale in connection with, any distribution thereof.
Global License Agreement with PFHOF
Effective April 8, 2022, Newco and PFHOF entered into a Global License Agreement. PFHOF is a related party because it is a security holder covered by Item 403(a) of Regulation S-K. The Global License Agreement consolidates and replaces the previous First Amended and Restated License Agreement, the Amended and Restated Media License Agreement, and the Branding Agreement discussed above. The Global License Agreement sets forth the terms under which PFHOF licenses certain marks and works to Newco and its affiliates to exploit existing PFHOF works and to create new works. The Global License Agreement grants Newco and its affiliates an exclusive right and license to use the PFHOF marks in conjunction with theme-based entertainment and attractions within the City of Canton, Ohio; youth sports programs, subject to certain exclusions; e-gaming and video games; and sports betting. The Global License Agreement also grants Newco and its affiliates a non-exclusive license to use the PFHOF marks and works in other areas of use, with a right of first refusal, subject to specified exclusions. The Global License Agreement acknowledges the existence of agreements in effect between PFHOF and certain third parties that provide for certain restrictions on the rights of PFHOF, which affects the rights that can be granted to Newco and its affiliates. These restrictions include, but are not limited to, such third parties having co-exclusive rights to exploit content based on the PFHOF Enshrinement ceremonies and other Enshrinement events. The Global License Agreement requires Newco to pay PFHOF an annual license fee of $900,000 in the first contract year, inclusive of calendar years 2021 and 2022; an annual license fee of $600,000 in each of contract years two through six; and an annual license fee of $750,000 per year
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starting in contract year seven through the end of the initial term. The Global License Agreement also provides for an additional license royalty payment for certain usage above specified financial thresholds, as well as a commitment to support PFHOF museum attendance through Newco’s and its affiliates’ ticket sales for certain concerts and youth sports tournaments. The Global License Agreement has an initial term through December 31, 2036 (subject to earlier termination for material breach), subject to automatic renewal for successive five-year terms, unless timely notice of non-renewal is provided by either party.
Promissory Note with Midwest Lender Fund, LLC
On March 1, 2022, the Company entered into a letter agreement with our director Stuart Lichter, which was amended April 14, 2022, and assigned by Mr. Lichter to his wholly owned entity Midwest Lender Fund, LLC (“Lender”) and amended April 26, 2022 (as assigned and amended, the “Letter Agreement”). Pursuant to the Letter Agreement, when Lender makes a new loan to the Company of $4 million evidenced by a promissory note (the “New Loan”), the Company agrees to issue to Lender the following on the later of (such date, the “Issuance Date”) (i) the closing date of the New Loan and (ii) the date stockholders of the Company approve such issuance in accordance with Nasdaq Listing Rule 5635(c), in a transaction exempt from registration pursuant to Section 4(a)(2) of the Securities Act: (a) 125,000 shares (the “Commitment Fee Shares”) of Common Stock; and (b) Series G warrants (the “Series G Warrants”) to purchase 125,000 shares of Common Stock (the “Warrant Shares”) at an exercise price equal to the greater of $1.50 per share or $.02 more than the average Nasdaq Official Closing Price of Common Stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the closing date of the New Loan, with a term of five (5) years. The New Loan closed on April 27, 2022. The Series G Warrants are exercisable beginning one year after such warrants are issued. The exercise price of the Series G Warrants will be subject to a weighted-average antidilution adjustment. Pursuant to a Registration Rights Agreement, the Company has agreed to provide to the Lender certain customary resale registration rights with respect to the Commitment Fee Shares and the Warrant Shares.
HOUSEHOLDING OF PROXY MATERIALSThe SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for Annual Meeting materials with respect to two or more stockholders sharing the same address by delivering a single set of Annual Meeting materials addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
For this meeting, a number of brokers with account holders who are the Company’s stockholders will be “householding” the Company’s proxy materials. A single set of Annual Meeting materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate set of Annual Meeting materials, please notify your broker or the Company. Direct your written request to the attention of the Secretary of Hall of Fame Resort & Entertainment Company, 2626 Fulton Drive2121 George Halas Dr. NW, Canton, OH 44718 or call us at (330) 458-9176. Stockholders who currently receive multiple copies of the Annual Meeting materials at their addresses and would like to request “householding” of their communications should contact their brokers.
The Board knows of no other matters that will be presented for consideration at the Annual Meeting. If other matters are properly brought before44708.
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