Item 1.01 Entry into a Material Definitive Agreement.
On February 2, 2023,
Hall of Fame Resort & Entertainment Company (the “Company”) received proceeds from the issuance on such date by Stark
County Port Authority (“Port Authority”) of $18,100,000 principal amount Tax Increment Financing (“TIF”) Revenue
Bonds, Series 2023 (“2023 Bonds”). Of the $18,100,000 principal amount, approximately $6,767,543 was used to reimburse the
Company for a portion of the cost of certain roadway improvements within the Hall of Fame Village grounds, approximately $8,628,502 was
used to pay off the Development Finance Authority of Summit County (“DFA”) Revenue Bonds, Series 2018 ( “2018 Bonds”)
that had been acquired by the Company in December 2022 pursuant to a previously disclosed arrangement (such that the Company received
the payoff of the 2018 Bonds), approximately $1,169,916 was used to pay costs of issuance of the 2023 Bonds, and approximately $905,000
was used to fund a debt service reserve held by The Huntington National Bank (“2023 Bond Trustee”), as trustee for the 2023
Bonds. The maturity date of the 2023 Bonds is December 30, 2048. The interest rate on the 2023 Bonds is 6.375%. Interest payments are
due on the 2023 Bonds semi-annually on June 30 and December 30 of each year, commencing June 30, 2023.
In connection with the
issuance of the 2023 Bonds by the Port Authority, the Company transferred ownership of a portion of the roadway and related improvements
within Hall of Fame Village grounds to the Port Authority. The Company maintains management rights and maintenance obligations with regard
to such roadway pursuant to a Maintenance and Management Agreement among the Port Authority, the Company and the Company’s subsidiary,
HOF Village Newco, LLC (“HOFV Newco”).
The 2023 Bonds will be
repaid by the Port Authority from statutory service payments in lieu of taxes paid by the Company in connection with the Company’s
Stadium, Youth Fields, Center for Excellence, Center for Performance, Retail I property, Retail II property, Play Action Plaza and an
interior private roadway, net of the portion payable to Canton City School District and Plain Local School District and net of administrative
fees of Stark County and the City of Canton, and from minimum service payments levied against those parcels excluding the Stadium and
Youth Fields. Net statutory service payments are assigned by the City of Canton to the Port Authority for payment of the 2023 Bonds pursuant
to a Cooperative Agreement among the Port Authority, City of Canton, the Company and HOFV Newco, and then pledged by the Port Authority
to the 2023 Bond Trustee for payment of the 2023 Bonds pursuant to a Trust Indenture between the Port Authority and the 2023 Bond Trustee.
Minimum service payments are a lien on the parcels under certain TIF declarations and supplements thereto, and are paid by the Company
to the 2023 Bond Trustee.
The Company and HOFV
Newco are required to make payments (“Developer Shortfall Payments”) to the extent the above described net statutory service
payments and minimum service payments actually paid are not sufficient to pay the scheduled debt service on the 2023 Bonds, and entered
into a guaranty of payment of minimum service payments under a Minimum Payment Guaranty until certain performance criteria (debt service
coverage of 1.05x for the 2023 Bonds for three consecutive years) are met. In addition, a member of the Company’s board of directors,
Stuart Lichter, individually and with his trust, guaranteed Developer Shortfall Payments until debt service coverage of 1.0x for the 2023
Bonds for three consecutive years are met.
To the extent statutory
service payments and minimum service payments exceed the amounts required for debt service on the 2023 Bonds, the excess paid will first
increase and/or restore the 2023 Bonds fund reserve to a maximum of 10% of the original principal amount of the 2023 Bonds (i.e. $1,810,000)
and then to redeem the 2023 Bonds, with the amount paid applied to the principal balance of the 2023 Bonds. The 2023 Bonds fund reserve
(initially 5% (i.e., $905,000) subject to increase up to 10%) mentioned above will be maintained to be used for payment of debt service
and administrative fees if there are insufficient funds generated from the statutory service payments, minimum service payments and Developer
Shortfall Payments, and, to the extent unused, make the final 2023 Bonds payment of debt service.
