Item 1.01 Entry into a Material Definitive Agreement.
As previously
disclosed, on November 7, 2022, Hall of Fame Resort & Entertainment Company (the “Company”) entered into a letter agreement
(the “IRG Letter Agreement”) with Industrial Realty Group, LLC (“IRGLLC”), pursuant to which IRGLLC agreed that
IRGLLC and certain IRGLLC affiliates and related parties, which include CH Capital Lending, LLC (“CHCL”), IRG, LLC and JKP
Financial, LLC (collectively, “IRG Affiliate Lenders”), will provide the Company and its subsidiaries, in exchange for certain
specified consideration described below, the following financial support (the “IRG Financial
Support”):
| (i) | certain financial support for an indoor waterpark and a commitment for the financing of the ground-up
development of a 180-room family hotel, |
| (ii) | an extension to March 31, 2024 of the maturity of the promissory note dated June 16, 2022, issued by the
Company, HOF Village Retail I, LLC and HOF Village Retail II, LLC, as borrowers, to CHCL, as lender (the “Bridge Loan”), and |
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(iii) |
amendment of all lending arrangements from IRG Affiliate Lenders, as lenders, to provide for an optional one-year extension of their maturity until March 31, 2025 for a one percent extension fee, which is payable if and when an IRG Affiliate Lender loan is extended. |
Stuart Lichter, a director
of the Company, is President and Chairman of the Board of IRGLLC.
On March 17, 2023, pursuant to
the IRG Letter Agreement, the Company and certain of its subsidiaries signed amendments to (a) certain IRG Affiliate Lender credit arrangements
(and entered into backup notes for two credit arrangements) and (b) warrants issued by the Company held by IRG Affiliate Lenders (collectively,
defined as Transaction Documents below), effective as of November 7, 2022 (unless otherwise noted), as consideration for the IRG Financial
Support. In particular, the Company amended the Series C through Series F warrants issued by the Company held by IRG Affiliate Lenders
and, upon approval of the Company’s stockholders under Nasdaq Listing Rule 5635(c), will amend the Series G warrant, as follows:
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(i) |
the exercise price of the Series C through Series G warrants held by IRG Affiliate Lenders is reset to a price equal to 105% of the average Nasdaq official closing price of the Company’s Common Stock for the five trading days immediately preceding the date of the Oak Street closing of November 7, 2022, which price is $0.58 per share prior to the Company’s 1-for-22 reverse stock split effective December 27, 2022 (the “Market Price”); and |
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(ii) |
the warrant expiration dates of the Series C through Series G warrants held by IRG Affiliate Lenders are extended by two years from their current expiration dates. |
In addition, the Company amended certain IRG Affiliate
Lender credit arrangements (and entered into backup notes for two credit arrangements) that are Transaction Documents, as follows:
| (i) | all IRG Affiliate Lender loans bear interest at 12.5% per annum, compounded monthly, with payment required
monthly at 8% per annum, and with the remaining interest accrued and deferred until maturity; |
| (ii) | the price at which the principal and accumulated and unpaid interest under the IRG Affiliated Lender loans
is convertible into shares of Common Stock is reset to a price equal to Market Price, subject in the case of loans to which Midwest Lender
Fund, LLC is a party to approval of the Company’s stockholders under Nasdaq 5635(c); |
| (iii) | the Company and certain subsidiaries entered into a backup promissory note with each of JKP Financial,
LLC and Midwest Lender Fund, LLC that provide benefits incremental to and offset by existing notes with such lenders; |
| (iv) | the Company agreed to acknowledge an existing pledge of the Company’s 100% membership interest in
HOF Village Newco, LLC and reflect that such pledge secures all amounts due under the IRG Affiliate Lender loans; |
| (v) | certain IRG Affiliate Lender loans were cross-collateralized and cross-defaulted; |
| (vi) | the Company and its subsidiaries covenanted not to assign, pledge, mortgage, encumber or hypothecate any
of the underlying assets, membership interests in affiliated entities or intellectual property rights without the written consent of IRG
Affiliate Lenders; |
| (vii) | prior development fees owed by the Company to IRG Affiliate Lenders were accrued and added to the Bridge
Loan, and future development fees owed by the Company to IRG Affiliate Lenders will be paid as when due; and |
| (viii) | the Company agreed to pay to IRG Affiliate Lenders 25% of all contractual dispute cash settlements collected
by the Company with regard to existing contractual disputes in settlement discussions, which shall be applied to outstanding IRG Affiliate
Lender loans, first against accrued interest and other charges and then against principal. |
The amendment and restatement
of the Series C through Series F warrants held by IRG Affiliate Lenders and the IRG Affiliate Lender loans (and entering into the two
backup notes) and, upon approval of the Company’s stockholders under Nasdaq Listing Rule 5635(c), the Series G warrant and the effectiveness
of the conversion provision in the backup promissory note issued to Midwest Lender Fund, LLC, are transactions exempt from registration
pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). Each of the IRG Affiliate Lenders
has represented to the Company that it is an “accredited investor” as defined in Rule 501 of the Securities Act.
Notwithstanding anything to the
contrary contained in the Transaction Documents (defined below), the Company and the IRG Affiliate Lenders agreed that the total cumulative
number of additional shares of Common Stock that may be issued to the IRG Affiliate Lenders under the Transaction Documents may not exceed
the requirements of Nasdaq Listing Rule 5635(d) (“Nasdaq 19.99% Cap”), except that such limitation will not apply following
Approval (defined below). If the number of shares of Common Stock issued to the IRG Affiliate Lenders under the Transaction Documents
reaches the Nasdaq 19.99% Cap, so as not to violate the 20% limit established in Listing Rule 5635(d), the Company, at its election, will
use reasonable commercial efforts to obtain stockholder approval of the Transaction Documents and the issuance of additional shares of
Common Stock thereunder, if necessary, in accordance with the requirements of Nasdaq Listing Rule 5635(d) (the “Approval”).
For purposes hereof, “Transaction Documents” means the second amended and restated Series C warrant, the second amended
and restated Series D Warrant, the two amended and restated Series E warrants, the two amended and restated Series F warrants, the amended
and restated Series G warrant, the joinder and second amended and restated secured cognovit promissory note issued to JKP Financial, LLC,
the joinder and second amended and restated secured cognovit promissory note issued to IRG, LLC, the backup secured cognovit promissory
note with JKP Financial, LLC, the amendment number 8 to term loan agreement, the second amended and restated secured cognovit promissory
note issued to CHCL in connection with the term loan agreement, the fourth amendment to and spreader of the pledge and security agreement
under the term loan agreement, the second amendment to and spreader of the mortgage under the term loan agreement, the joinder and first
amended and restated secured cognovit bridge promissory note issued to CHCL, and the backup secured cognovit promissory note issued to
Midwest Lender Fund, LLC.
Under
Nasdaq Listing Rule 5635(c), stockholder approval is required prior to the issuance of Common Stock in connection with certain non-public
offerings involving the sale, issuance or potential issuance by a listed company of equity compensation. For this purpose, “equity
compensation” includes Common Stock (and/or securities convertible into or exercisable for Common Stock) issued to our officers,
directors, employees or consultants at a discount to the market value of the Common Stock, and “market value” is the closing
bid price immediately preceding the time that the listed company enters into a binding agreement with such officer, director, employee
or consultant to issue the equity compensation. Midwest Lender Fund, LLC is wholly-owned by our director Stuart Lichter. The amended and
restated Series G warrant issued to Midwest Lender Fund, LLC and the backup promissory note issued to Midwest Lender Fund, LLC do not
become effective unless and until approved by stockholders of the Company under Nasdaq Listing Rule 5635(c).
The foregoing descriptions of
the second amended and restated Series C warrant, the second amended and restated Series D Warrant, the two amended and restated Series
E warrants, the two amended and restated Series F warrants, the amended and restated Series G warrant, the joinder and second amended
and restated secured cognovit promissory note issued to JKP Financial, LLC, the joinder and second amended and restated secured cognovit
promissory note issued to IRG, LLC, the backup secured cognovit promissory note with JKP Financial, LLC, the amendment number 8 to term
loan agreement, the joinder and first amended and restated secured cognovit bridge promissory note issued to CHCL, and the backup secured
cognovit promissory note issued to Midwest Lender Fund, LLC do not purport to be complete and are subject to, and qualified in their entirety
by, the full text of such documents, which are attached as Exhibits 10.1-10.13, respectively, to this Current Report on Form 8-K, and
are incorporated herein by reference.