UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2020

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______________ to ______________

 

Commission file number: 001-38363

 

HALL OF FAME RESORT & ENTERTAINMENT COMPANY

(Exact name of registrant as specified in its charter)

 

Delaware   84-3235695
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)

 

2626 Fulton Drive NW

Canton, OH 44718

(Address of principal executive offices)

 

(330) 458-9176

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on
which registered
Common Stock, $0.0001 par value per share   HOFV   Nasdaq Capital Market
Warrants to purchase 1.421333 shares of Common Stock   HOFVW   Nasdaq Capital Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S–T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non–accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b–2 of the Exchange Act.

 

Large accelerated filer ☐ Accelerated filer ☒
Non–accelerated filer ☐ Smaller reporting company ☒
  Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b–2 of the Exchange Act).

 

Yes ☐ No ☒

 

As of November 3, 2020, there were 32,741,778 shares of the registrant’s Common stock, $0.0001 par value per share, issued and outstanding.

 

 

 

 

 

  

HALL OF FAME RESORT & ENTERTAINMENT COMPANY

 

FORM 10-Q

 

TABLE OF CONTENTS

 

  Page
PART I. FINANCIAL INFORMATION 1
Item 1. Financial statements 1
Condensed Consolidated Balance Sheets as of September 30, 2020 (Unaudited) and December 31, 2019 1
Condensed Consolidated Statements of Operations (Unaudited) for the three and nine months ended September 30, 2020 and 2019 2
Condensed Consolidated Statement of Changes in Stockholders’ Equity (Unaudited) for the three and nine months ended September 30, 2020 3
Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2020 and 2019 4
Notes to the Unaudited Condensed Consolidated Financial Statements 6
Item 2. Management’s discussion and analysis of financial condition and results of operations 40
Item 3. Quantitative and qualitative disclosures about market risk 45
Item 4. Controls and procedures 46
PART II. OTHER INFORMATION 47
Item 1. Legal proceedings 47
Item 1A. Risk factors 47
Item 2. Unregistered sales of equity securities and use of proceeds 67
Item 3. Defaults upon senior securities 68
Item 4. Mine safety disclosures 68
Item 5. Other information 68
Item 6. Exhibits 69
Signatures 70

 

i

 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

HALL OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

    As of :  
    September 30,     December 31,  
    2020     2019  
    (unaudited)        
Assets            
Cash   $ 7,924,636     $ 2,818,194  
Restricted cash     15,917,555       5,796,398  
Accounts receivable, net     1,252,447       1,355,369  
Prepaid expenses and other assets     6,817,916       2,292,859  
Property and equipment, net     126,868,808       134,910,887  
Project development costs     122,011,617       88,587,699  
Total assets   $ 280,792,979     $ 235,761,406  
                 
Liabilities and stockholders’ equity                
Liabilities                
Notes payable, net   $ 108,127,273     $ 164,922,714  
Accounts payable and accrued expenses     15,554,157       12,871,487  
Due to affiliate     2,241,106       19,333,590  
Other liabilities     4,857,949       3,684,276  
Total liabilities     130,780,485       200,812,067  
                 
Commitments and contingencies    
 
     
 
 
                 
Stockholders’ equity                
Preferred stock, $0.0001 par value; 5,000,000 shares authorized;
   
-
     
-
 
No shares issued or outstanding at September 30, 2020 and December 31, 2019                
Common stock, $0.0001 par value; 100,000,000 shares authorized;
    3,275       544  
32,741,778 and 5,436,000 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively                
Additional paid-in capital     168,134,414      
-
 
Accumulated (deficit) earnings     (18,089,195 )     34,948,795  
Total equity attributable to HOFRE     150,048,494       34,949,339  
Non-controlling interest     (36,000 )    
-
 
Total equity     150,012,494       -  
Total liabilities and stockholders’ equity   $ 280,792,979     $ 235,761,406  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

1

 

 

HALL OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

    For the Three Months Ended September 30,     For the Nine Months Ended September 30,  
    2020     2019     2020     2019  
                         
Revenues                        
Sponsorships, net of activation costs   $ 1,564,250     $ 1,820,293     $ 4,886,106     $ 5,457,785  
Rents and cost recoveries     103,244       348,900       420,681       657,106  
Event revenues     9,613       4,690       37,446       54,533  
Total revenues   $ 1,677,107     $ 2,173,883     $ 5,344,233     $ 6,169,424  
                                 
Operating expenses                                
Property operating expenses     8,987,167       3,995,624       18,099,436       10,025,750  
Commission expense     199,668       228,961       1,257,648       798,788  
Depreciation expense     2,753,046       2,751,229       8,198,469       8,163,962  
Loss on abandonment of project development costs     -       -       -       12,194,783  
Total operating expenses   $ 11,939,881     $ 6,975,814     $ 27,555,553     $ 31,183,283  
                                 
Loss from operations     (10,262,774 )     (4,801,931 )     (22,211,320 )     (25,013,859 )
                                 
Other expense                                
Interest expense     (615,250 )     (2,160,210 )     (4,825,045 )     (6,734,735 )
Amortization of discount on note payable     (3,043,738 )     (3,400,514 )     (9,721,484 )     (10,302,822 )
Total interest expense   $ (3,658,988 )   $ (5,560,724 )   $ (14,546,529 )   $ (17,037,557 )
                                 
Loss in joint venture     -       (275,564 )     -       (252,576 )
Business combination costs     (19,137,165 )     -       (19,137,165 )     -  
Loss on extinguishment of debt     (877,976 )     -       (877,976 )     -  
Total other expense   $ (23,674,129 )   $ (5,836,288 )   $ (34,561,670 )   $ (17,290,133 )
                                 
Loss before taxes   $ (33,936,903 )   $ (10,638,219 )   $ (56,772,990 )   $ (42,303,992 )
                                 
Income tax benefit   $
-
    $
-
    $
-
    $
-
 
                                 
Net loss   $ (33,936,903 )   $ (10,638,219 )   $ (56,772,990 )   $ (42,303,992 )
                                 
Non-controlling interest     36,000       -       36,000       -  
                                 
Net loss attributable to HOFRE stockholders   $ (33,900,903 )   $ (10,638,219 )   $ (56,736,990 )   $ (42,303,992 )
                                 
Net loss per share – basic and diluted   $ (1.04 )   $ (1.96 )   $ (3.90 )   $ (7.78 )
                                 
Weighted average shares outstanding, basic and diluted     32,576,553       5,436,000       14,548,887       5,436,000  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

2

 

 

HALL OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

 

    Common Stock     Additional Paid-In     Accumulated (Deficit)     Total Equity Attributable to HOFRE     Non-controlling     Total Stockholders’  
    Shares     Amount     Capital     Earnings     Stockholders     Interest     Equity  
                                           
Balance as of January 1, 2020     5,436,000     $ 544     $
-
    $ 34,948,795     $ 34,949,339     $
   -
    $ 34,949,339  
                                                         
Net loss     -      
-
      -       (13,137,842 )     (13,137,842 )    
-
      (13,137,842 )
                                                         
Balance as of March 31, 2020     5,436,000     $ 544     $
-
    $ 21,810,953     $ 21,811,497     $
-
    $ 21,811,497  
                                                         
Contribution from shareholders     -      
-
     
-
      3,699,000       3,699,000      
-
      3,699,000  
Net loss     -      
-
     
-
      (9,698,245 )     (9,698,245 )    
-
      (9,698,245 )
                                                         
Balance as of June 30, 2020     5,436,000     $ 544     $
-
    $ 15,811,708     $ 15,812,252     $
-
    $ 15,812,252  
                                                         
Conversion of the preferred equity loan     12,277,428       1,228       58,438,397     $
-
    $ 58,439,625     $
-
    $ 58,439,625  
Shares of common stock issued for accounts payable     2,803,396       280       23,425,881      
-
      23,426,161      
-
      23,426,161  
Business combination with GPAQ on July 1, 2020     6,027,428       602       30,534,179      
-
      30,534,781      
-
      30,534,781  
Shares of common stock issued in exchange of debt     5,280,083       528       38,007,218      
-
      38,007,746      
-
      38,007,746  
Stock-based compensation on restricted stock awards     715,929       72       2,772,733      
-
      2,772,805      
-
      2,772,805  
Stock-based compensation on restricted stock units     -      
-
      593,688      
-
      593,688      
-
      593,688  
Vesting of restricted stock units     176,514       18       (18 )    
-
     
-
     
-
     
-
 
Stock-based compensation - common stock awards     25,000       3       195,997      
-
      196,000      
-
      196,000  
Contingent beneficial conversion feature on PIPE Notes     -       -       14,166,339       -       14,166,339       -       14,166,339  
Net loss     -      
-
     
-
      (33,900,903 )     (33,900,903 )     (36,000 )     (33,936,903 )
                                                         
Balance as of September 30, 2020     32,741,778     $ 3,275     $ 168,134,414     $ (18,089,195 )   $ 150,048,494     $ (36,000 )   $ 150,012,494  
                                                         
                                                         
Balance as of January 1, 2019     5,436,000     $ 544     $
-
    $ 90,852,675     $ 90,853,219     $
-
    $ 90,853,219  
                                                         
Net loss     -      
-
     
-
      (21,667,509 )     (21,667,509 )    
-
      (21,667,509 )
                                                         
Balance as of March 31, 2019     5,436,000     $ 544     $
-
    $ 69,185,166     $ 69,185,710     $
-
    $ 69,185,710  
                                                         
Net loss            
-
     
-
      (9,998,264 )     (9,998,264 )    
-
      (9,998,264 )
                                                         
Balance as of June 30, 2019     5,436,000     $ 544     $
-
    $ 59,186,902     $ 59,187,446     $
-
    $ 59,187,446  
                                                         
Net loss     -      
-
     
-
      (10,638,219 )     (10,638,219 )    
-
      (10,638,219 )
                                                         
Balance as of September 30, 2019     5,436,000     $ 544     $
-
    $ 48,548,683     $ 48,549,227     $
-
    $ 48,549,227  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

3

 

 

HALL OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

    For the Nine Months Ended September 30,  
    2020     2019  
Cash Flows From Operating Activities            
Net loss   $ (56,772,990 )   $ (42,303,992 )
Adjustments to reconcile net loss to cash flows (used in) provided by operating activities                
Depreciation expense     8,198,469       8,163,962  
Amortization of note discounts     9,721,484       10,302,822  
Bad debt expense     -       135,666  
Loss on abandonment of project development costs     -       12,194,783  
Loss from equity method investment     -       252,576  
Deferred rent expense     -       (572,843 )
Interest paid in kind     3,135,035       693,144  
Loss on extinguishment of debt     877,976       -  
Stock based compensation expense     3,562,493       -  
Changes in operating assets and liabilities:                
Accounts receivable     102,922       324,792  
Prepaid expenses and other assets     (4,525,057 )     1,046,025  
Accounts payable and accrued expenses     15,517,286       5,211,233  
Due to affiliates     (9,126,691 )     5,556,646  
Other liabilities     4,090,150       4,368,407  
Net cash (used in) provided by operating activities     (25,218,923 )     5,373,221  
                 
Cash Flows From Investing Activities                
Additions to project development costs and property and equipment     (28,085,048 )     (8,975,957 )
Proceeds from business combination     31,034,781       -  
Net cash provided by (used in) investing activities     2,949,733       (8,975,957 )
                 
Cash Flows From Financing Activities                
Proceeds from notes payable     65,039,642       8,380,000  
Repayments of notes payable     (26,113,861 )     (5,216,560 )
Payment of financing costs     (1,428,992 )     (576,741 )
Net cash provided by financing activities     37,496,789       2,586,699  
                 
Net increase (decrease) in cash and restricted cash     15,227,599       (1,016,037 )
                 
Cash and restricted cash, beginning of period     8,614,592       8,417,950  
                 
Cash and restricted cash, end of period   $ 23,842,191     $ 7,401,913  
                 
Cash   $ 7,924,636     $ 911,089  
Restricted Cash     15,917,555       6,490,824  
Total cash and restricted cash   $ 23,842,191     $ 7,401,913  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4

 

 

HALL OF FAME RESORT & ENTERTAINMENT COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

    For the Nine Months Ended September 30,  
    2020     2019  
Supplemental disclosure of cash flow information            
Cash paid during the year for interest   $ 4,878,254     $ 1,097,139  
Cash paid for income taxes   $
-
    $
-
 
                 
Non-cash investing and financing activities                
Project development cost acquired through accounts payable and accrued expenses, net   $ 5,495,260     $ 2,527,943  
Conversion of the preferred equity loan to common equity   $ 58,439,625     $ -  
Shares of common stock issued for accounts payable   $ 23,426,161     $ -  
Non-cash contribution from PFHOF in shared services agreement   $ 3,699,000     $ -  
Shares of common stock issued in exchange of debt   $ 38,007,746     $ -  
Conversion of GPAQ Sponsor Loan into Convertible PIPE debt   $ 500,000     $ -  
Contingent beneficial conversion feature on PIPE Notes   $ 14,166,339       -  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

5

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 1: Organization and Nature of Business

 

Organization and Nature of Business

 

Hall of Fame Resort & Entertainment Company, a Delaware corporation (together with its subsidiaries, unless the context indicates otherwise, the “Company” or “HOFRE”), was incorporated in Delaware as GPAQ Acquisition Holdings, Inc., a wholly owned subsidiary of our legal predecessor, Gordon Pointe Acquisition Corp. (“GPAQ”), a special purpose acquisition company.

 

On July 1, 2020, the Company consummated a business combination with HOF Village, LLC, a Delaware limited liability company (“HOF Village”), pursuant to an Agreement and Plan of Merger dated September 16, 2019 (as amended on November 6, 2019, March 10, 2020 and May 22, 2020, the “Merger Agreement”), by and among the Company, GPAQ, GPAQ Acquiror Merger Sub, Inc., a Delaware corporation (“Acquiror Merger Sub”), GPAQ Company Merger Sub, LLC, a Delaware limited liability company (“Company Merger Sub”), HOF Village and HOF Village Newco, LLC, a Delaware limited liability company (“Newco”). The transactions contemplated by the Merger Agreement are referred to in this Form 10-Q as the “Business Combination.”

 

Upon the consummation of the Business Combination: (i) Acquiror Merger Sub merged with and into GPAQ, with GPAQ continuing as the surviving entity (the “Acquiror Merger”) and (ii) Company Merger Sub merged with and into Newco, with Newco continuing as the surviving entity (the “Company Merger”). In advance of the Company Merger, HOF Village transferred all of its assets, liabilities and obligations to Newco pursuant to a contribution agreement. In connection with the closing of the Business Combination, the Company changed its name from “GPAQ Acquisition Holdings, Inc.” to “Hall of Fame Resort & Entertainment Company.” As a result of the Business Combination, GPAQ and Newco continue as the Company’s wholly owned subsidiaries. Upon consummation of the Business Combination and, in connection therewith, HOFRE became a successor issuer to GPAQ by operation of Rule 12g-3(a) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Business Combination is, in substance, a reverse merger recapitalization and accordingly, the historical financials prior to the date of the Business Combination in these condensed consolidated financial statements are those of HOF Village LLC and its subsidiaries. The Business Combination is further described in Note 11.

 

The Company is a resort and entertainment company leveraging the power and popularity of professional football and its legendary players in partnership with the National Football Museum, Inc., doing business as the Pro Football Hall of Fame (“PFHOF”). Headquartered in Canton, Ohio, the Company owns the Hall of Fame Village powered by Johnson Controls, a multi-use sports, entertainment and media destination centered around the PFHOF’s campus. The Company is creating a diversified set of revenue streams through developing themed attractions, premier entertainment programming, sponsorships and media.

 

The Company has entered into several agreements with PFHOF, an affiliate of HOFRE, and certain government entities, which outline the rights and obligations of each of the parties with regard to the property on which the Hall of Fame Village powered by Johnson Controls sits, portions of which are owned by the Company and portions of which are net leased to the Company by the government entities (see Note 7). Under these agreements, the PFHOF and the government entities are entitled to use portions of the Hall of Fame Village powered by Johnson Controls on a direct-cost basis.

 

On December 11, 2018, the HOF Village entered into the Master Transaction Agreement (the “Master Transaction Agreement”), whereby, among other things, it amended the HOF Village LLC Agreement (see Note 4).

 

6

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 1: Organization and Nature of Business (continued)

 

Liquidity and Going Concern

 

The Company has sustained recurring losses and negative cash flows from operations through September 30, 2020. In addition, its Bridge Loan (defined below) matures on November 30, 2020, which is within 12 months from the issuance of these condensed consolidated financial statements. Since inception, the Company’s operations have been funded principally through the issuance of debt. As of September 30, 2020, the Company had approximately $16 million of restricted cash. On July 1, 2020, the Company consummated the Business Combination, whereby the Company’s then outstanding convertible notes were converted into shares of common stock in HOFRE, $15.0 million of the Bridge Loan was converted into equity and $15.5 million of the Bridge Loan was repaid with proceeds from the Business Combination. The balance of the Bridge Loan of approximately $34.5 million as of September 30, 2020, and has been guaranteed by Industrial Realty Group, LLC (“Industrial Realty Group”). In the event that Industrial Realty Group advances funds to the Company to pay off the Bridge Loan, under the terms of the guarantee, Industrial Realty Group will become a lender to the Company with a new maturity date of August 2021. These factors raise doubt about the Company’s ability to continue operations as a going concern.

 

The Company expects that it will need to raise additional financing to accomplish its development plan over the next several years. The Company is seeking to obtain additional funding through debt, construction lending, and equity financing. There are no assurances that the Company will be able to raise capital on terms acceptable to the Company or at all, or that cash flows generated from its operations will be sufficient to meet its current operating costs. If the Company is unable to obtain sufficient amounts of additional capital, it may be required to reduce the scope of its planned development, which could harm its financial condition and operating results, or it may not be able to continue to fund its ongoing operations. If management is unable to execute its planned debt and equity financing initiatives, these conditions raise substantial doubt about the Company’s ability to continue as a going concern to sustain operations for at least one year from the issuance of these consolidated financial statements. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements of the Company for the three and nine months ended September 30, 2020 and 2019 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and Rule 10 of Securities and Exchange commission (“SEC”) Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for audited financial statements. However, in the opinion of management of the Company, all adjustments (consisting solely of normal recurring adjustments) necessary for the fair presentation of the financial position and operating results have been included in these statements. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2019, filed with the SEC on March 10, 2020 in GPAQ Acquisition Holdings, Inc.’s Registration Statement on Form S-4 (Registration No. 333-234655).

 

Operating results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for any subsequent quarters or for the year ending December 31, 2020.

 

7

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 2: Summary of Significant Accounting Policies

 

Consolidation

 

The unaudited condensed consolidated financial statements include the accounts and activity of the Company, and its wholly owned subsidiaries. Investments in a variable interest entity in which the Company is not the primary beneficiary, or where the Company does not own a majority interest but has the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method. All intercompany profits, transactions and balances have been eliminated in consolidation.

 

The Company owns a 60% interest in Mountaineer GM, LLC (“Mountaineer”), whose results are consolidated into the Company’s results of operations. The Company acquired 60% of the equity interests in Mountaineer for a purchase price of $100 from one of its related parties. See Note 9 for additional information on the terms of the agreement. The portion of Mountaineer’s net loss that is not attributable to the Company is included in non-controlling interest.

 

Emerging Growth Company

 

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

 

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

 

Use of Estimates

 

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates and assumptions for the Company relate to bad debt, depreciation, costs capitalized to project development costs, useful lives of assets, fair value of financial instruments, and estimates and assumptions used to measure impairment. Management adjusts such estimates when facts and circumstances dictate. Actual results could differ from those estimates.

 

8

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 2: Summary of Significant Accounting Policies (continued)

 

Property and Equipment and Project Development Costs

 

Property and equipment are recorded at historical cost and are depreciated using the straight-line method over the estimated useful lives of the assets. During the construction period, the Company capitalizes all costs related to the development of the Hall of Fame Village powered by Johnson Controls. Project development costs include predevelopment costs, amortization of finance costs, real estate taxes, insurance, and other project costs incurred during the period of development. The capitalization of costs began during the preconstruction period, which the Company defines as activities that are necessary to the development of the project. The Company ceases cost capitalization when a portion of the project is held available for occupancy and placed into service. This usually occurs upon substantial completion of all costs necessary to bring a portion of the project to the condition needed for its intended use, but no later than one year from the completion of major construction activity. The Company will continue to capitalize only those costs associated with the portion still under construction. Capitalization will also cease if activities necessary for the development of the project have been suspended. As of September 30, 2020, the second two phases of the project remained subject to such capitalization.

 

The Company reviews its property and equipment and projects under development for impairment whenever events or changes indicate that the carrying value of the long-lived assets may not be fully recoverable. In cases where the Company does not expect to recover its carrying costs, an impairment charge is recorded.

 

The Company measures and records impairment losses on its long-lived assets when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than their carrying amount. Considerable judgment by management is necessary to estimate undiscounted future operating cash flows and fair values and, accordingly, actual results could vary significantly from such estimates. On January 18, 2019, management determined that previously capitalized costs for the development of a hotel should be written off because plans for this particular hotel and site location have been abandoned and will not benefit the current plans for another hotel elsewhere on the site. Management reviewed its capitalized costs and identified the costs that had no future benefit. The Company recorded a $12,194,783 charge as a loss on abandonment of project development costs within the accompanying statement of operations.

 

Cash and Restricted Cash

 

The Company considers all highly liquid investments with an original maturity of three months or less when purchased, to be cash equivalents. There were no cash equivalents at September 30, 2020 and December 31, 2019, respectively. The Company maintains its cash and escrow accounts at national financial institutions. The balances, at times, may exceed federally insured limits.

 

Restricted cash includes escrow reserve accounts for capital improvements and debt service as required under certain of the Company’s debt agreements. The balances at September 30, 2020 and December 31, 2019 were $15,917,555 and $5,796,398, respectively.

 

9

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 2: Summary of Significant Accounting Policies (continued)

 

Accounts Receivable

 

Accounts receivable are generally amounts due under sponsorship and other agreements. Accounts receivable are reviewed for delinquencies on a case by case basis and are considered delinquent when the sponsor or debtor has missed a scheduled payment. Interest is not charged on delinquencies.

 

The carrying amount of accounts receivable is reduced by an allowance that reflects management’s best estimate of the amounts that will not be collected. Management individually reviews all delinquent accounts receivable balances and based on an assessment of current creditworthiness, estimates the portion, if any, of the balance that will not be collected. At September 30, 2020 and December 31, 2019, the Company had an allowance for doubtful accounts of $0 and $1,306,047, respectively, which related to the Company’s receivable from Youth Sports Management, LLC (“Youth Sports”). See Note 7 for additional information on Youth Sports.

 

Deferred Financing Costs

 

Costs incurred in obtaining financing are capitalized and amortized to additions in project development costs during the construction period over the term of the related loans, without regard for any extension options until the project or portion thereof is considered substantially complete. Upon substantial completion of the project or portion thereof, such costs are amortized as interest expense over the term of the related loan. Any unamortized costs are shown as an offset to Notes Payable on the accompanying unaudited condensed consolidated balance sheet.

 

Investment in Joint Venture

 

The Company previously used the equity method to record the activities of its 50% owned joint venture in Youth Sports. The equity method of accounting required that the Company recognize its initial capital investment at cost and subsequently, its share of the earnings or losses in the joint venture. The joint venture agreement was structured whereby the Company was not at risk for losses above its original capital investment. Therefore, the Company did not record a deficit that would have resulted in the equity being negative from the investment in joint venture.

 

The maximum exposure to loss represented the potential loss of assets which may have been recognized by the Company relating to its investment in the joint venture. On May 29, 2020, the Company acquired the remaining 50% in Youth Sports for the accounts receivable amounts due from them, which was fully reserved as of the date of the transaction. The results of this non-cash transaction increased the Company’s interest to 100%. Upon acquisition, the Company consolidated the Youth Sports joint venture, an inactive voting interest entity. The Company accounted for the transaction as an asset acquisition under a cost accumulation model, and no gain on the change of control of interest was recognized in the consolidation, resulting in no consolidated assets or liabilities.

 

10

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 2: Summary of Significant Accounting Policies (continued)

 

Income Taxes

 

The Company utilizes an asset and liability approach for financial accounting and reporting for income taxes. The provision for income taxes is based upon income or loss after adjustment for those permanent items that are not considered in the determination of taxable income. Deferred income taxes represent the tax effects of differences between the financial reporting and tax basis of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse.

 

The Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than not that some portion or all the deferred tax assets will not be realized. Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In management’s opinion, adequate provisions for income taxes have been made. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.

 

Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. As of September 30, 2020 and December 31, 2019, no liability for unrecognized tax benefits was required to be reported.

 

The Company’s policy for recording interest and penalties associated with tax audits is to record such items as a component of general and administrative expense. There were no amounts accrued for penalties and interest for the periods September 30, 2020 and 2019. The Company does not expect its uncertain tax position to change during the next twelve months. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position. The Company’s effective tax rates of zero differ from the statutory rate for the periods presented primarily due to the Company’s net operating loss, which was fully reserved for all periods presented.

 

The Company has identified its United States tax return and its state tax return in Ohio as its “major” tax jurisdictions, and such returns for the years 2016 through 2019 remain subject to examination.

 

Net Loss Per Common Share

 

Net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. The Company has not considered the effect of warrants sold in the Private Placement to purchase 17,400,000 shares of Class A common stock in the calculation of diluted net loss per share, since the exercise of the warrants is contingent upon the occurrence of future events. As a result, diluted net loss per common share is the same as basic net loss per common share for the periods presented.

 

Revenue Recognition

 

The Company has adopted ASC 606, Revenue with Contracts with Customers, with a date of initial application of January 1, 2019. As a result, the Company has updated its accounting policy for revenue recognition to reflect the new standard. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

 

11

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 2: Summary of Significant Accounting Policies (continued)

 

Revenue Recognition (continued)

 

The Company generates revenues from various streams such as sponsorship agreements, rents, cost recoveries and events. The sponsorship arrangements, in which the customer sponsors a play area or event and receives specified brand recognition and other benefits over a set period of time, recognized revenue on a straight-line basis over the time period specified in the contract. Refer to Note 6 for more details. Revenue for rents, cost recoveries and events are recognized at the time the respective event or service has been performed.

 

A performance obligation is a promise in a contract to transfer a distinct good or service to a customer. If the contract does not specify the revenue by performance obligation, the Company allocates the transaction price to each performance obligation based on its relative standalone selling price. Such prices are generally determined using prices charged to customers or using the Company’s expected cost plus margin. Revenue is recognized as the Company’s performance obligations are satisfied. If consideration is received in advance of the Company’s performance, including amounts which are refundable, recognition of revenue is deferred until the performance obligation is satisfied or amounts are no longer refundable.

 

Advertising

 

The Company expenses all advertising and marketing costs as they are incurred. Total advertising and marketing costs for the three months ended September 30, 2020 and 2019 were $45,976 and $244,057, respectively, and for the nine months ended September 30, 2020 and 2019 were $313,571 and $285,831, respectively, which are recorded as property operating expenses on the Company’s unaudited condensed consolidated statements of operations.

 

The Company received a grant of $100,000 from Visit Canton on April 3, 2020, which grant is to be used to generate visitors to the Canton area through the Company’s events. This grant will be used to offset future marketing and tourism expenses. The grant is recorded in other liabilities on the Company’s unaudited condensed balance sheet.

 

Ground Rent Expense

 

Ground rent expense is recognized on a straight-line basis over the life of the related operating lease.

 

 

12

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 2: Summary of Significant Accounting Policies (continued)

  

Stock-Based Compensation

 

The Company recognizes compensation expense for all equity-based payments in accordance with ASC 718 “Compensation – Stock Compensation.” Under fair value recognition provisions, the Company recognizes equity-based compensation net of an estimated forfeiture rate and recognizes compensation cost only for those shares expected to vest over the requisite service period of the award.

 

Restricted stock awards are granted at the discretion of the Compensation Committee of the Company’s board of directors (the “Board of Directors”). These awards are restricted as to the transfer of ownership and generally vest over the requisite service periods, typically over a 12 to 36-month period.

 

Recent Accounting Standards

 

In February 2016, FASB issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), as modified by subsequently issued ASU Nos. 2018-01, 2018-10, 2018-11, 2018-20 and 2019-01 (collectively “ASU 2016-02”). This ASU is effective for private companies beginning after December 15, 2021. ASU 2016-02 requires recognition of right-of-use assets and lease liabilities on the balance sheet. Most prominent among the changes in ASU 2016-02 is the lessees’ recognition of a right-of-use asset and a lease liability for operating leases. The right-of-use asset and lease liability are initially measured based on the present value of committed lease payments. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition. Expenses related to operating leases are recognized on a straight-line basis, while those related to financing leases are recognized under a front-loaded approach in which interest expense and amortization of the right-of-use asset are presented separately in the statement of operations. As the Company is an emerging growth company and following private company deadlines, the Company has an additional deferral under this ASU to adopt beginning after December 15, 2021. Similarly, lessors are required to classify leases as sales-type, finance or operating with classification affecting the pattern of income recognition. Classification for both lessees and lessors is based on an assessment of whether risks and rewards as well as substantive control have been transferred through a lease contract. ASU 2016-02 also requires qualitative and quantitative disclosures to assess the amount, timing and uncertainty of cash flows arising from leases. The Company is currently evaluating the impact of the pending adoption of this new standard on its unaudited condensed consolidated financial statements.

 

13

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 2: Summary of Significant Accounting Policies (continued)

 

Recent Accounting Standards (continued)

  

In December 2019, the FASB issued ASU 2019-12, Income Taxes (“Topic 740”): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. ASU 2019-12 also simplifies aspects of accounting for franchise taxes and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for annual and interim financial statement periods beginning after December 15, 2021, with early adoption permitted. The Company is currently evaluating the impact of the pending adoption of this new standard on its unaudited condensed consolidated financial statements.

 

In January 2020, the FASB issued ASU No. 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint-Ventures (Topic 323), and Derivatives and Hedging (Topic 815), clarifying the Interactions between Topic 321, Topic 323, and Topic 815. This ASU is effective for private companies beginning after December 15, 2021. Early application is permitted, including early adoption in an interim period for public business entities for periods for which financial statements have not yet been issued. An entity should apply ASU No. 2020-01 prospectively at the beginning of the interim period that includes the adoption date. This ASU among other things clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, Investments—Equity Method and Joint Ventures, for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The new ASU clarifies that, when determining the accounting for certain forward contracts and purchased options a company should not consider, whether upon settlement or exercise, if the underlying securities would be accounted for under the equity method or fair value option. The Company is currently evaluating the impact of the pending adoption of this new standard on its unaudited condensed consolidated financial statements.

 

14

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 2: Summary of Significant Accounting Policies (continued)

 

Recent Accounting Standards (continued)

 

In March 2019, the FASB issued ASU 2019-01, “Leases (Topic 842): Codification Improvements,” which requires an entity (a lessee or lessor) to provide transition disclosures under Topic 250 upon adoption of Topic 842. In February 2020, the FASB issued ASU 2020-02, “Financial Instruments – Credit Losses (Topic 326): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases.” The ASU adds and amends SEC paragraphs in the ASC to reflect the issuance of SEC Staff Accounting Bulletin No. 119 related to the new credit losses standard and comments by the SEC staff related to the revised effective date of the new leases standard. This new standard is effective for fiscal years beginning after December 15, 2021, including interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is currently evaluating the impact of the pending adoption of this new standard on its unaudited condensed consolidated financial statements.

 

Subsequent Events

 

Subsequent events have been evaluated through November 4, 2020, the date the unaudited condensed consolidated financial statements were issued. Other than what has been disclosed in the unaudited condensed consolidated financial statements, no other events have been identified requiring disclosure or recording.

 

Note 3: Property and Equipment and Project Development Costs

 

Property and equipment consists of the following:

 

    Useful Life   September 30,
2020
    December 31,
2019
 
Land       $ 278,556     $ 278,556  
Land improvements   25 years     31,078,211       31,078,211  
Building and improvements   15 to 39 years     128,756,221       128,599,831  
Equipment   5 to 10 years     1,313,488       1,313,488  
Property and equipment, gross         161,426,476       161,270,086  
                     
Less: accumulated depreciation         (34,557,668 )     (26,359,199 )
Property and equipment, net       $ 126,868,808     $ 134,910,887  
                     
Project development costs       $ 122,011,617     $ 88,587,699  

 

15

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 3: Property and Equipment and Project Development Costs (continued)

 

For the three months ended September 30, 2020 and 2019, the Company recorded depreciation expense of $2,753,046 and $2,751,229, respectively, and for the nine months ended September 30, 2020 and 2019, of $8,198,469 and $8,163,962, respectively. Additionally, the Company recorded a charge of $12,194,783 for the nine months ended September 30, 2019 for a loss on abandonment of project development costs for previously capitalized development costs within the accompanying unaudited condensed consolidated statement of operations. For the nine months ended September 30, 2020 and 2019, the Company incurred $33,423,918 and $11,503,900 of capitalized project development costs, respectively.

 

Note 4: Notes Payable, net

 

Notes payable, net consisted of the following at September 30, 2020:

 

    Gross     Discount     Net  
Bridge loan   $ 34,500,000     $ -     $ 34,500,000  
TIF loan     9,752,000       (1,680,594 )     8,071,406  
Syndicated unsecured term loan     167,980       -       167,980  
Naming rights securitization loan     3,703,260       (227,762 )     3,475,498  
City of Canton Loan     3,500,000       (7,976 )     3,492,024  
New Market/SCF     2,862,980       -       2,862,980  
Constellation EME     9,900,000       -       9,900,000  
IRG November Note     13,770,681       (7,095 )     13,763,586  
Paycheck protection plan loan     390,400       -       390,400  
JKP Capital loan     6,953,831       (19,133 )     6,934,698  
Convertible PIPE Notes     21,249,506       (13,897,581 )     7,351,925  
MKG DoubleTree Loan     15,300,000       (570,501 )     14,729,499  
Canton Cooperative Agreement     2,670,000       (182,723 )     2,487,277  
Total   $ 124,720,638     $ (16,593,365 )   $ 108,127,273  

  

16

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 4: Notes Payable, net (continued)

 

Notes payable, net consisted of the following at December 31, 2019:

 

    Gross     Discount     Net  
Bridge loan   $ 65,000,000     $ (361,655 )   $ 64,638,345  
TIF loan     9,847,000       (1,721,761 )     8,125,239  
Syndicated unsecured term loan     6,803,530       (2,838,067 )     3,965,463  
Preferred equity loan     99,603,847       (53,365,911 )     46,237,936  
Land loan with affiliate     1,273,888       -       1,273,888  
Naming rights securitization loan     9,235,845       (566,096 )     8,669,749  
McKinley Grand Mortgage     1,900,000       (51,787 )     1,848,213  
CH capital lending     1,807,339       -       1,807,339  
Convertible notes     17,310,252       (471,965 )     16,838,287  
IRG November note     11,585,792       (67,537 )     11,518,255  
Total   $ 224,367,493     $ (59,444,779 )   $ 164,922,714  

 

During the three months ended September 30, 2020 and 2019, the Company recorded amortization of note discounts of $3,043,738 and $3,400,514, respectively. During the nine months ended September 30, 2020 and 2019, the Company recorded amortization of note discounts of $9,721,484 and $10,302,822, respectively.

 

Accrued Interest on Notes Payable

 

As of September 30, 2020 and December 31, 2019, accrued interest on notes payable, were as follows:

 

    September 30,
2020
    December 31,
2019
 
Bridge loan   $ 3,599,976     $ 2,084,711  
Preferred equity loan    
-
      717,286  
Land loan with affiliate    
-
      101,662  
Constellation EME     259,229      
-
 
New Market/SCF     51,352      
-
 
Naming rights securitization loan    
-
      30,786  
Mortgage McKinley Grand    
-
      41,821  
Paycheck Protection Program Loan     1,722      
-
 
JKP Capital Note     208,221      
-
 
SCF Subordinated Note     1,111      
-
 
Convertible notes    
-
      269,271  
MKG Doubletree loan     35,630      
-
 
Total   $ 4,157,241     $ 3,245,537  

 

17

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 4: Notes Payable, net (continued)

 

Accrued Interest on Notes Payable (continued)

 

The amounts above were included in accounts payable and accrued expenses and other liabilities on the Company’s unaudited condensed consolidated balance sheet, as follows:

 

    September 30,
2020
    December 31,
2019
 
Accounts payable and accrued expenses   $ 4,157,241     $ 2,528,251  
Other liabilities    
-
      717,286  
    $ 4,157,241     $ 3,245,537  

 

Bridge Loan

 

On June 30, 2020, the Company entered into an amendment to the $65 million bridge loan (the “Bridge Loan”) dated March 20, 2018 among us, various lenders party thereto (“Lenders”) and GACP Finance Co., LLC (“GACP”), as administrative agent (the “Term Loan Agreement”), which further extended the maturity date to November 30, 2020, updated certain defined terms to align with the final transaction structure resulting from the Business Combination, specified the amount of proceeds from the Business Combination and Private Placement (defined below) that were required to be paid towards amounts outstanding under the Term Loan Agreement (the “Gordon Pointe Transaction Prepayment Amount”), added a fee payable to certain Lenders relative to the amounts owed after giving effect to the Gordon Pointe Transaction Prepayment Amount, amended various provisions related to mandatory prepayments of outstanding amounts owed under the Term Loan Agreement (including, but not limited to, prepayments due in connection with future equity and debt raises), and other minor amendments regarding HOF Village Hotel II, LLC (“HOF Village Hotel II”) and Mountaineer to facilitate their planned operations. The Bridge Loan has an exit fee of 1% on the balance due at the maturity of the loan, which the Company is accreting over the term of the Bridge Loan.

 

At the date of the Business Combination, on July 1, 2020, the Company used proceeds from the Business Combination to pay $15,500,000 on the Bridge Loan, while an additional $15,000,000 converted into equity in the newly formed HOFRE. The remaining balance following the Business Combination was approximately $34,500,000. The maturity date on the remaining balance has been extended one month to November 30, 2020. Should the Company be unable to pay off the principal balance at maturity, Industrial Realty Group has agreed to advance funds to the Company to pay off the Bridge Loan, under the terms of the guarantee. As a result, Industrial Realty Group would become a lender to the Company with a maturity date of August 2021.

 

TIF Loan

 

For the Company, the Development Finance Authority of Summit County (“DFA Summit”) offered a private placement of $10,030,000 in taxable development revenue bonds, Series 2018. The bond proceeds are to reimburse the developer for costs of certain public improvements at the Hall of Fame Village powered by Johnson Controls, which are eligible uses of tax-incremental funding (“TIF”) proceeds.

 

18

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 4: Notes payable, Net (continued)

 

TIF Loan (continued)

 

Under the cooperative agreement entered into by the Company, two subsidiaries, the City of Canton, DFA Summit, Stark County Port Authority, and the bank trustee, the Company and certain subsidiaries have been exempted from certain real estate taxes. However, the Company must make real estate tax payments on the TIF parcels sufficient to cover future required payments on the bond debt service until the 2018 bonds are no longer outstanding. This is a significant commitment made by the Company and is guaranteed by an individual’s trust, an individual, and two subsidiaries of the Company.

 

Since the bond debt service is fixed and determinable, a liability has been recorded as of September 30, 2020 and December 31, 2019, representing the present value of the future bond debt service payments. The term of the TIF requires the Company to make installment payments through July 31, 2048. The current imputed interest rate is 5.2%, which runs through July 31, 2028. The imputed interest rate then increases to 6.6% through July 31, 2038 and finally increases to 7.7% through the remainder of the TIF. The Company is required to make payments on the TIF semi-annually in June and December each year. During the nine months ended September 30, 2020 and 2019, the Company made principal payments on this loan totaling $95,000 and $90,000, respectively.

 

Syndicated Unsecured Term Loan and Preferred Equity Loan

 

On January 1, 2016, as amended and restated on October 15, 2017, the Company entered into a financing agreement with a syndicate of lenders, including affiliates of IRG Canton Village Member, LLC, a member of HOF Village (the “IRG Member”), for a loan amount up to $150,000,000 as an unsecured promissory note (the “Syndicated Unsecured Term Loan”). The Syndicated Unsecured Term Loan may not be prepaid either in whole or in part until the initial maturity date without the express consent of the lender. Proceeds from the Syndicated Unsecured Term Loan are intended to cover working capital and the construction costs for venues including the Tom Benson Hall of Fame Stadium, youth fields, and campus infrastructure projects. The maturity date is February 26, 2021, and the Syndicated Unsecured Term Loan accrues interest at a rate of 12% per annum.

 

On December 11, 2018, the Company and various parties signed the Master Transaction Agreement setting forth various terms and conditions for the development of the Hall of Fame Village powered by Johnson Controls. As part of the Master Transaction Agreement, American Capital Center, LLC (“ACC”), an affiliate of the Company, exchanged $106,450,000 of the Company’s debt and $24,470,142 of accrued interest and origination fees, as well as $336,579 of amounts due to PFHOF, by converting it to preferred equity instruments with a face value of $95,500,000 and an amended subordinated debt agreement with a face value of $6,450,000. In accordance with the Extinguishment of Liabilities subtopic of the FASB ASC 470-50, given that ACC was a related party, the Company treated the Master Transaction Agreement as a capital transaction and recapitalized the debt to equity in the amount of $96,076,120, net of discounts and unamortized deferred financing costs.

 

19

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 4: Notes payable, Net (continued)

 

Syndicated Unsecured Term Loan and Preferred Equity Loan (continued)

 

The subordinated debt accrues interest at a rate of 5% and the balance is due February 26, 2021. The remaining subordinated debt is subordinate to the Bridge Loan. Additionally, the subordinated debt contains a payment-in-kind (“PIK”) interest provision, which represents contractually deferred interest added to the subordinated debt outstanding balance that is due at maturity. For the three months ended September 30, 2020 and 2019, the Company incurred PIK interest of $2,074 and $85,107, respectively. For the nine months ended September 30, 2020 and 2019, the Company incurred PIK interest of $254,333 and $249,415, respectively. As part of the Business Combination, on July 1, 2020, the entire balance of the Preferred Equity Loan’s and all but $167,980 of the Syndicated Unsecured Term Loan outstanding were converted into and aggregate of 13,762,039 shares of common stock.

 

Land Loan with Affiliate

 

On July 10, 2017, the Company entered into a promissory note with the PFHOF, an affiliate of HOFRE, for purpose of the acquisition of land at the Hall of Fame Village powered by Johnson Controls. The promissory note had an outstanding balance of $1,273,888 at June 30, 2020 and December 31, 2019, which bore interest at a rate of 1.22% per annum. The loan may be prepaid in whole or in part without penalty. For any unpaid balance after December 31, 2017, the interest rate was increased by 5%. The loan was subordinate to the Bridge Loan and had a maturity date of February 26, 2023. On July 2, 2020, the Company issued 580,000 shares in exchange of (a) full satisfaction of the promissory note in the amount of $1,273,888, (b) accrued interest in the amount of $50,158, and (c) other amounts due to PFHOF in the amount of $4,266,793. The Company determined that the issuance of shares for full satisfaction of the note resulted in a loss on extinguishment of debt of $209,160.

 

Naming Rights Securitization Loan

 

On November 9, 2017, the Company, through a subsidiary, JCIHOFV Financing, LLC, entered into a secured loan with a financial institution for $22,800,000, collateralized by the entire payment stream of the Johnson Controls Naming Rights Agreement, dated November 17, 2016 (see Note 6). Monthly payments include principal and interest at 4% per annum with the remaining principal balance due on March 31, 2021. The loan may not be prepaid, in whole or in part, without paying the prepayment premium, which is equal to the present value of the remaining interest payments.

 

City of Canton Loan

 

On December 30, 2019, the Company entered into a loan facility with the City of Canton, OH, whereby it may borrow up to $3,500,000. The loan accrues interest at a rate of one-half percent (0.5%) per annum. Upon an event of default, the interest rate will increase to five percent (5%) per annum on the outstanding balance at the time of default. The loan shall mature on July 1, 2027. During the three months ended September 30, 2020, the Company borrowed $903,765 on the loan and for the nine months ended September 30, 2020, the Company borrowed the maximum amount of $3,500,000 on the loan. The Company has the option to extend the loan’s maturity date for three years, to July 1, 2030 if the Company meets certain criteria in terms of the hotel occupancy level and maintaining certain financial ratios.

 

20

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 4: Notes payable, Net (continued)

 

New Market/SCF

 

On December 30, 2019, the Company entered into a loan facility with New Market Project, Inc., whereby it may borrow up to $3,000,000, of which the proceeds are to be used for the development of McKinley Grand Hotel, as described below. During the three months ended September 30, 2020, the Company borrowed $651,667 and during the nine months ended September 30, 2020 the Company borrowed $2,862,980 on this facility. The loan has a maturity date of December 30, 2024 and accrues interest at a rate of 4% per annum. In the event of default, including failure to pay upon final maturity, the interest rate shall increase by adding a 5% fee that applies to each succeeding interest rate change that would have applied had there been no default.

 

McKinley Grand Mortgage

 

On October 22, 2019, the Company purchased the McKinley Grand Hotel in Canton, Ohio for $3.9 million, which was partially financed by separate notes payable of $1,900,000 and $1,807,339.

 

The $1,807,339 note payable, in favor of CH Capital Lending, LLC (the “CH Capital Note”), accrued interest at a fixed rate equal to 10% per annum. The Company was required to make payments commencing on or prior to December 30, 2019. The maturity date of the CH Capital Note was April 30, 2020 and interest was payable quarterly. The Company was previously in default on the CH Capital Note, however the CH Capital Note was paid in full on June 24, 2020, as discussed below.

 

The $1,900,000 note payable had a maturity date of October 22, 2021. Interest accrued at a rate equal to the greater of (i) 3.75% or (ii) the sum of the LIBOR rate plus 2.75%. The Company was required to make interest payments commencing on November 1, 2019, and on the first day of each successive month until the note was repaid. In September 2020, the Company paid off the full outstanding $1,900,000 principal and interest owed, using proceeds from the MKG Double Tree Loan.

 

Constellation EME

 

On December 30, 2019, the Company entered into a loan facility with Constellation NewEnergy, Inc. (“Constellation”) whereby it may borrow up to $9,900,000 (the “Constellation Loan Facility”). The proceeds of the Constellation Loan Facility are to be held in escrow by a custodian to fund future development costs. The proceeds will be released from escrow as development costs are incurred. The Constellation Loan Facility was amended on April 13, 2020 to modify the payment schedule and maturity date, reflecting current project timetables. The maturity date is December 31, 2022 and payments are due in 29 monthly installments totaling $11,075,000, with an effective interest rate of 6.1%. Beginning in August 2020 through December 2020, the monthly installment amount is $55,000, which increases in January 2021 to $450,000 through December 2022. During the nine months ended September 30, 2020, the Company borrowed the full amount under the Constellation Loan Facility.

 

As of September 30, 2020, $2,779,153 of such funds had been released from the custodial accounts to the Company under the Constellation Loan Facility.

 

The Company also has a sponsorship agreement with Constellation. Refer to Note 6 for additional information.

 

21

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 4: Notes payable, Net (continued)

 

Convertible Notes

 

On December 24, 2018, the Company issued a series of convertible notes totaling $7,750,000 (the “Convertible Notes”). The notes accrued interest at a rate of 10%, with payments due semi-annually in arrears. The principal and all accrued interest amounts were due November 5, 2025. The Company was able to redeem the Convertible Notes after December 24, 2023, subject to terms defined in the individual notes. Convertible Notes redeemed between December 24, 2023 and December 24, 2024 would have been redeemed at 105% of face value. Convertible Notes redeemed after December 24, 2024 would have been redeemed at 102.5% of face value. Additionally, the Convertible Notes contained a PIK interest provision, which represented contractually deferred interest added to the Convertible Notes outstanding balance that was due at maturity. For the three months ended September 30, 2020 and 2019, the Company incurred PIK interest of $0 and $0, respectively. For the nine months ended September 30, 202 and 2019, the Company incurred PIK interest of $875,129 and $424,722, respectively. On July 1, 2020, upon consummation of the Business Combination, all outstanding Convertible Notes were exchanged for PIPE Notes (defined below).

 

IRG November Note

 

On February 7, 2020, as effective on November 27, 2019, HOF Village, as borrower, entered into a subordinated promissory note with Industrial Realty Group, as lender, in an amount up to $30,000,000 (the “IRG November Note”). As of September 30, 2020 and December 31, 2019, the aggregate principal amounts, excluding PIK interest, borrowed under the IRG November Note were $13,770,681 and $11,585,792, respectively. The IRG November Note accrues interest at a rate of 12% per annum and has a maturity date of November 1, 2020. Additionally, the IRG November Note contains a PIK interest provision, which represents contractually deferred interest added to the IRG November Note outstanding balance that is due at maturity. For the three months ended September 30, 2020, the Company incurred PIK interest of $405,036, and for the nine months ended September 30, 2020 incurred, $1,477,362, respectively. On July 1, 2020, upon consummation of the Business Combination, Industrial Realty Group exchanged $9,000,000 of the outstanding balance under the IRG November Note for PIPE Notes.

 

Paycheck Protection Program Loan

 

On April 22, 2020, the Company obtained a Paycheck Protection Program Loan (“PPP Loan”) for $390,400. The PPP Loan has a fixed interest rate of 1%, requires the Company to make 18 monthly payments beginning on November 22, 2020, with a maturity date of April 22, 2022, subject to debt forgiveness provisions from the Small Business Association.

 

JKP Capital Loan

 

On June 24, 2020, HOF Village and HOFV Hotel II executed a loan evidenced by a promissory note (the “JKP Capital Loan”) in favor of JKP Financial, LLC for the principal sum of $7,000,000. The JKP Capital Loan bears interest at a rate of 12% per annum and matures on August 31, 2021, on which date all unpaid principal and accrued and unpaid interest is due. The JKP Capital Loan is secured by the membership interests in HOFV Hotel II held by HOF Village.

 

On June 24, 2020, $1,928,831 ($1,807,339 in principal plus $121,492 in accrued interest) was advanced to CH Capital out of the $7,000,000 principal amount of the JKP Capital Loan in full satisfaction of the outstanding obligations under the CH Capital Note. HOF Village loaned the JKP Capital Loan to Newco in connection with the Business Combination. The Company will use the remaining proceeds of the JKP Capital Loan to fund its Phase II and Phase III construction costs.

 

22

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 4: Notes payable, Net (continued)

 

SCF Subordinated Note

 

On June 22, 2020, the Company entered into a loan facility with Stark Community Foundation (the “SCF Subordinated Note”) for $1,000,000. The SCF Subordinated Note has a fixed interest rate of 5% per annum, has a PIK interest provision that was payable semi-annually in arrears on each July 22 and January 22 commencing July 22, 2020, and with a maturity date of on June 22, 2023. On July 1, 2020, the SCF Subordinated Note was exchanged for PIPE Notes, described in greater detail below, under “PIPE Notes”.

 

Convertible PIPE Notes

 

On July 1, 2020, concurrently with the closing of the Business Combination, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with certain funds managed by Magnetar Financial, LLC and other purchasers (together, the “Purchasers”), 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”). Pursuant to the terms of the Note Purchase Agreement, the PIPE Notes may be converted into shares of Common Stock at a conversion price initially equal to $11.50 per share, subject to customary adjustment. Accordingly, the aggregate amount of PIPE Notes issued and sold in the Private Placement is convertible into 1,801,851 shares of Common Stock based on the conversion rate applicable on July 1, 2020. The conversion rate will convert at a conversion price of $11.50 per share. There are also Note Redemption Warrants that may be issued pursuant to the Note Purchase Agreement that will be exercisable for a number of shares of common stock to be determined at the time any such warrant is issued. The exercise price per share of common stock of any warrant will be set at the time such warrant is issued pursuant to the Note Purchase Agreement.

 

The PIPE Notes provide for a conversion price reset such that, if the last reported sale price of the common stock is less than or equal to $6.00 for any ten trading days within any 30 trading day period preceding the maturity date, then the conversion price is adjusted down $6.90 per share. On July 28, 2020, the conversion price reset was triggered. On this date, the Company recorded a beneficial conversion feature of $14,166,339, which will be amortized over the remaining term of the PIPE Notes using the effective interest method. For the three months ended September 30, 2020 and 2019, the Company incurred PIK interest of $0 for both periods. For the nine months ended September 30, 2020 and 2019, the Company incurred PIK interest of $528,213 and $0, respectively. The Company recorded $268,758 on amortization of debt discount related to the contingent beneficial conversion feature for the three and nine months ended September 30, 2020 in the Company’s condensed consolidated statements of operations.

 

Industrial Realty Group exchanged $9.0 million of the amount outstanding under the IRG November Note for PIPE Notes in the principal amount of $9.0 million and, at present, the outstanding balance of the IRG November Notes is $13.3 million. Gordon Pointe Management, LLC 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 intends to use the remaining proceeds of the Private Placement to satisfy the Company’s working capital obligations. The PIPE Notes began to accrue interest on October 1, 2020, but the Company has elected to apply the PIK interest provision, thereby increasing the outstanding balance of the PIPE Notes by the amount of accrued interest each month. 

 

23

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 4: Notes payable, Net (continued)

 

MKG DoubleTree Loan

 

On September 14, 2020, the Company entered into a construction loan agreement with Erie Bank, a wholly owned subsidiary of CNB Financial Corporation, a Pennsylvania corporation, as lender. The Company has applied and been approved for a first mortgage loan for $15.3 million (“Erie Construction Loan”) with a variable interest rate of 1.75% plus the prime commercial rate, at which no time can it drop below 5%, for the purpose of renovating the McKinley Grand Hotel in the City of Canton, Ohio. The initial maturity date is 18 months after the exercised loan date, March 13, 2022, and the agreement includes an extended maturity date of September 13, 2022, should HOFRE need more time with an extension fee of 0.1% of the then outstanding principal balance. The Company intends to use the proceeds of the Erie Construction Loan for building acquisition costs and costs incurred for material and labor in connection with the improvements, which make up just under 75% of the Erie Construction Loan. The remaining portion of the Erie Construction Loan will be used for administrative, legal, operational, and environmental costs. A bank account has been created with Erie Bank and the balance must be maintained between $1 and $2 million within the account as collateral, which will promptly be refunded to the Company upon complete payment of the Erie Construction Loan on the maturity date. The Erie Construction Loan has certain financial covenants whereby the Company must maintain a minimum tangible net worth of $5,000,000 and minimum liquidity of not less than $2,000,000. These covenants are to be tested annually based upon the financial statements at the end of each fiscal year. As of September 30, 2020, the amount of restricted cash related to the Erie Construction Loan was $3,093,305.

 

Canton Cooperative Agreement

 

On September 1, 2020, HOFRE entered into a Cooperative Agreement with DFA Summit, the City of Canton, Ohio (“Canton”), the Canton Regional Energy Special Improvement District, Inc. (the “District”), and U.S Bank National Association for the construction of the Series 2020C Project. The Series 2020C Project constitutes a port authority facility and a special energy improvement project under the Special Improvement District Act. HOFRE applied and received approval from the District and Canton for the aforementioned project. The loan amount is $2,670,000, with a discount of $182,723, which will be amortized over the life of the loan using the effective interest method.

 

In order to pay for the costs of the Series 2020C Project, the District and HOFRE have requested and been approved by DFA Summit, to issue and sell the Series 2020C Bonds pursuant to an Indenture and make a portion of the proceeds of the Series 2020C Bonds available to the developer to undertake the provision of the Series 2020C Project.

 

While the Series 2020C Bonds are outstanding, HOFRE shall pay the special assessment and the service payments semi-annually to the Canton County Treasurer pursuant to and in accordance with the Assessing Ordinance, the TIF Act, and the TIF Ordinance. The service payments shall be in the same amount as the real property taxes that would have been charged and payable against the Improvements had the TIF Exemption not been granted. The special assessment payments will be made on January 31st and July 31st over the course of 17 years, commencing on January 31, 2022. For the first eight years, each payment will consist of $188,188 and decrease to $161,567 in 2030.

 

24

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 4: Notes payable, Net (continued)

 

Future Minimum Principal Payments

 

The minimum required principal payments on notes payable outstanding as of September 30, 2020 are as follows:

 

For the year ended December 31,   Amount  
2020 (three months)   $ 50,282,340  
2021     14,023,994  
2022     21,044,820  
2023     455,000  
2024     3,384,980  
Thereafter     35,529,504  
Total Gross Principal Payments   $ 124,720,638  
         
Less: Discount     (16,593,365 )
         
Total Net Principal Payments   $ 108,127,273  

 

 

Note 5: Stockholders’ Equity

 

Authorized Capital

 

On November 3, 2020, the Company’s stockholders approved an amendment to the Company’s charter to increase the authorized shares of common stock from 100,000,000 to 300,000,000. Consequently, the Company’s charter allows the Company to issue up to 300,000,000 shares of common stock and to issue and designate its rights of, without stockholder approval, up to 5,000,000 shares of preferred stock, par value $0.0001. To raise additional capital, the Company may in the future sell additional shares of its common stock or other securities convertible into or exchangeable for common stock at prices that are lower than the prices paid by existing stockholders, and investors purchasing shares or other securities in the future could have rights superior to existing stockholders, which could result in substantial dilution to the interests of existing stockholders. The Company intends to issue up to $25 million aggregate principal amount of units, each consisting of one share of common stock and one warrant to purchase one share of common stock.

 

2020 Omnibus Incentive Plan

 

On July 1, 2020, in connection with the closing of the Business Combination, the Company’s omnibus incentive plan (the “2020 Omnibus Incentive Plan”) became effective immediately upon the closing of the Business Combination. The 2020 Omnibus Incentive Plan was previously approved by the Company’s stockholders and Board of Directors. Subject to adjustment, the maximum number of shares of common stock to be authorized for issuance under the 2020 Omnibus Incentive Plan is 1,812,728 shares. As of September 30, 2020, 522,256 shares remained available for issuance under the 2020 Omnibus Incentive Plan.

 

25

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 5: Stockholders’ Equity (continued)

 

Issuance of Restricted Stock Awards

 

On July 2, 2020, the Company granted 715,929 shares of the Company’s restricted stock to the Company’s Chief Executive Officer under the 2020 Omnibus Incentive Plan. The shares will vest at three separate dates, 238,643 on July 2, 2020, 238,643 on July 2, 2021, and fully vest on July 2, 2022 with a final installment of 238,643.

 

The Company’s activity in restricted common stock was as follows for nine months ended September 30, 2020:

 

    Number of shares     Weighted
average
grant date
fair
value
 
Non–vested at January 1, 2020    
-
    $
-
 
Granted     715,929     $ 9.30  
Vested     (238,643 )   $ 9.30  
Non–vested at September 30, 2020     477,286     $ 9.30  

 

For the nine months ended September 30, 2020 and 2019, the Company recorded $2,772,733 and $0, in employee and director stock-based compensation expense. Of this amount, $2,218,187 is included as a component of business combination costs on the Company’s condensed consolidated statement of operations, as the initial vesting of the restricted stock award was directly related to the completion of the Company’s Business Combination. The remaining stock-based compensation expense is included as a component of property operating expenses. As of September 30, 2020, unamortized stock-based compensation costs related to restricted share arrangements was $3,881,827 and will be recognized over a weighted average period of 1.75 years.

 

Issuance of Restricted Stock Units

 

On August 31, 2020, the Company granted 138,568 restricted stock units (“RSUs”) to an employee. The RSUs will vest at three separate dates, 46,189 on August 31, 2021, 46,189 on August 31, 2022, and fully vest on August 31, 2023 with a final installment of 46,190.

 

On September 1, 2020, the Company granted 64,240 RSUs to an employee. The RSUs will vest at three separate dates, 21,413 on September 1, 2021, 21,413 on September 1, 2022, and fully vest on September 1, 2023 with a final installment of 21,414.

 

On September 14, 2020, the Company granted 148,883 RSUs to an employee. The RSUs will vest at three separate dates, 49,628 on September 14, 2021, 49,628 on September 14, 2022, and fully vest on September 14, 2023 with a final installment of 49,267.

 

On September 22, 2020, the Company granted 83,612 RSUs to an employee under the 2020 Omnibus Incentive Plan. The RSUs will vest at three separate dates, 27,871 on September 22, 2020, 27,871 on July 1, 2021, and fully vest on July 1, 2022 with a final installment of 27,870.

 

On September 22, 2020, the Company granted 167,224 RSUs to an employee under the 2020 Omnibus Incentive Plan. The RSUs will vest at three separate dates, 55,741 on September 22, 2020, 55,741 on July 1, 2021, and fully vest on July 1, 2022 with a final installment of 55,742.

 

On September 22, 2020, the Company granted 278,707 RSUs to the Company’s Chief Financial Officer under the 2020 Omnibus Incentive Plan. The RSUs will vest at three separate dates, 92,902 on September 22, 2020, 92,902 on July 1, 2021, and fully vest on July 1, 2022 with a final installment of 92,903.

 

On September 22, 2020, the Company granted an aggregate of 45,000 RSUs to its independent directors under the 2020 Omnibus Incentive Plan. The RSUs vest in full on September 22, 2021. 

 

26

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 5: Stockholders’ Equity (continued)

 

The Company’s activity in restricted stock units was as follows for nine months ended September 30, 2020:

 

   

Number of

shares

   

Weighted average
grant date

fair
value

 
Non–vested at January 1, 2020    
-
    $
-
 
Granted     926,234     $ 3.22  
Vested     (176,514 )   $ 2.80  
Non–vested at September 30, 2020     749,720     $ 3.32  

 

For the nine months ended September 30, 2020 and 2019, the Company recorded $593,760 and $0, respectively, in employee and director stock-based compensation expense, which is a component of property operating expenses in the consolidated statement of operations. As of September 30, 2020, unamortized stock-based compensation costs related to restricted stock units was $2,514,958 and will be recognized over a weighted average period of 2.25 years.

 

Warrants

 

The Company’s warrant activity was as follows for the nine months ended September 30, 2020:

 

    Number of Shares     Weighted Average Exercise Price (USD)     Weighted Average Contractual Life (years)     Intrinsic Value (USD)  
Outstanding - January 1, 2020    
-
    $
-
                 
Issued in connection with Business Combination     17,400,000     $ 11.50       5.00          
Outstanding – September 30, 2020     17,400,000     $ 11.50       4.75     $
-
 
Exercisable – September 30, 2020     17,400,000     $ 11.50       4.75     $
-
 

 

Shared Services Agreement

 

On June 30, 2020, HOF Village entered into a Shared Services Agreement with PFHOF (the “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 Company wrote-off the Tom Benson statue, which was valued as of the date of the Shared Services Agreement at $251,000 while the Company had valued it at $300,000. As this is a related party transaction, the Company recorded the resulting difference of $3,699,000 as a contribution from one of its members in the Company’s condensed consolidated balance sheet.

 

27

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 6: Sponsorship Revenue and Associated Commitments

 

Johnson Controls, Inc.

 

On July 2, 2020, Newco entered into an Amended and Restated Sponsorship and Naming Rights Agreement (the “Amended Sponsorship Agreement”) among Newco, PFHOF and Johnson Controls, Inc. (“JCI”), that amended and restated the Sponsorship and Naming Rights Agreement, dated as of November 17, 2016 (the “Original Sponsorship Agreement”). Among other things, the Amended Sponsorship Agreement: (i) reduced the total amount of fees payable to Newco during the term of the Amended Sponsorship Agreement from $135 million to $99 million; (ii) restricted the activation proceeds from rolling over from year to year with a maximum amount of activation proceeds in one agreement year to be $750,000; and (iii) renamed the “Johnson Controls Hall of Fame Village” to “Hall of Fame Village powered by Johnson Controls”. This is a prospective change, which the Company reflected beginning in the third quarter of 2020.

 

JCI has the right to terminate the agreement if the project is not substantially complete by December 31, 2021.

 

As amended, as of September 30, 2020, scheduled future cash to be received and required activation spend under the non-cancellable period of the agreement are as follows:

 

    Unrestricted     Activation     Total  
Remainder of 2020 (three months)   $ 1,906,250     $
-
    $ 1,906,250  
2021     3,968,750       750,000       4,718,750  
Total   $ 5,875,000     $ 750,000     $ 6,625,000  

 

As services are provided, the Company is recognizing revenue on a straight-line basis over the expected term of the Amended Sponsorship Agreement. During the three months ended September 30, 2020 and 2019, the Company recognized $1,133,708 and $1,250,944 of net sponsorship revenue related to this deal, respectively. During the nine months ended September 30, 2020 and 2019, the Company recognized $3,608,402 and $3,712,041 of net sponsorship revenue related to this deal, respectively. Accounts receivable from JCI totaled $0 and $84,164 at September 30, 2020 and December 31, 2019, respectively.

 

Aultman Health Foundation

 

In 2016, the Company entered into a 10-year licensing agreement with Aultman Health Foundation (“Aultman”) allowing Aultman use of the HOF Village and PFHOF marks and logos. Under terms of the agreement, the Company will receive $2.5 million in cash sponsorship funds. Of those funds, the Company is contractually obligated to spend $700,000 as activation expenses for the benefit of Aultman.

 

28

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 6: Sponsorship Revenue and Associated Commitments (continued)

 

Aultman Health Foundation (continued)

 

As of September 30, 2020, scheduled future cash to be received and required activation spend under the agreement are as follows:

 

    Unrestricted     Activation     Total  
Remainder of 2020 (three months)   $ 35,000     $ 37,579     $ 72,579  
2021     175,000       75,000       250,000  
2022     175,000       75,000       250,000  
2023     175,000       75,000       250,000  
2024     200,000       75,000       275,000  
Thereafter     375,000       175,000       550,000  
                         
Total   $ 1,135,000     $ 512,579     $ 1,647,579  

 

As services are provided, the Company is recognizing revenue on a straight-line basis over the expected term of the agreement. During the three months ended September 30, 2020 and 2019, the Company recognized $45,345 of net sponsorship revenue related to this deal. During the nine months ended September 30, 2020 and 2019, the Company recognized $135,049 and $134,556 of net sponsorship revenue related to this deal, respectively. Accounts receivable from Aultman totaled $160,164 and $165,115 at September 30, 2020 and December 31, 2019, respectively.

 

First Data Merchant Services LLC

 

In December 2018, the Company entered into an 8-year licensing agreement with First Data Merchant Services LLC (“First Data”) and Santander Bank. As of September 30, 2020, scheduled future cash to be received under the agreement are as follows:

 

Year ending December 31:

 

Remainder of 2020 (three months)   $ 50,000  
2021     150,000  
2022     150,000  
2023     150,000  
2024     150,000  
Thereafter     300,000  
         
Total   $ 950,000  

 

29

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 6: Sponsorship Revenue and Associated Commitments (continued)

 

First Data Merchant Services LLC (continued)

 

As services are provided, the Company is recognizing revenue on a straight-line basis over the expected term of the agreement. During the three months ended September 30, 2020 and 2019, the Company recognized $37,449 of net sponsorship revenue related to this deal. During the nine months ended September 30, 2020 and 2019, the Company recognized $111,533 and $111,126 of net sponsorship revenue related to this deal, respectively. As of September 30, 2020 and December 31, 2019, accounts receivable from First Data totaled $20,692 and $0, respectively.

 

Constellation NewEnergy, Inc.

 

On December 19, 2018 the Company entered into a sponsorship and services agreement with Constellation (the “Constellation Sponsorship Agreement”) whereby Constellation and its affiliates will provide the gas and electric needs of the Company in exchange for certain sponsorship rights. The original term of the Constellation Sponsorship Agreement was through December 31, 2028, however, in June 2020, the Company entered into an amended contract with Constellation which extended the term of the Constellation Sponsorship Agreement through December 31, 2029.

 

The Constellation Sponsorship Agreement provides for certain rights to Constellation and its employees, to benefit from the relationship with the Company from discounted pricing, marketing efforts, and other benefits as detailed in the agreement. The Constellation Sponsorship Agreement also provides for Constellation to pay sponsorship income and to provide activation fee funds. Activation fee funds are to be used in the year received and do not roll forward for future years as unspent funds. The amounts are due by March 31 of the year to which they apply, which is represented in the chart below.

 

The Constellation Sponsorship Agreement includes certain contingencies reducing the sponsorship fee amount owed by Constellation if construction is not on pace with the timeframe noted in the Constellation Sponsorship Agreement.

 

The Company also has a note payable with Constellation. Refer to Note 4 for additional information.

 

As of September 30, 2020, scheduled future cash to be received and required activation spend under the Constellation Sponsorship Agreement were as follows:

 

    Unrestricted     Activation     Total  
Remainder of 2020 (three months)   $
-
    $
-
    $
-
 
2021     1,300,000       187,193       1,487,193  
2022     1,396,000       200,000       1,596,000  
2023     1,423,220       200,000       1,623,220  
2024     1,257,265       166,000       1,423,265  
2025     1,257,265       166,000       1,423,265  
Thereafter     5,029,057       664,000       5,693,057  
                         
Total   $ 11,662,807     $ 1,583,193     $ 13,246,000  

 

30

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 6: Sponsorship Revenue and Associated Commitments (continued)

 

Constellation NewEnergy, Inc. (continued)

 

As services are provided, the Company is recognizing revenue on a straight-line basis over the expected term of the Constellation Sponsorship Agreement. During the three months ended September 30, 2020 and 2019, the Company recognized $295,591 and $330,327 of net sponsorship revenue related to this deal, respectively. During the nine months ended September 30, 2020 and 2019, the Company recognized $949,064 and $980,209 of net sponsorship revenue related to this deal, respectively. Accounts receivable from Constellation totaled $806,276 and $857,213 at September 30, 2020 and December 31, 2019, respectively.

 

Turf Nation, Inc.

 

During October 2018, the Company entered into a 5-year sponsorship agreement with Turf Nation, Inc. (“Turf Nation”). Under the terms of the agreement, the Company will receive payments over the term based on the sale of Turf Nation products based on rates defined in the sponsorship agreement. The minimum guaranteed fee per year beginning in 2020 is $50,000 per year.

 

As services are provided, the Company is recognizing revenue on a straight-line basis over the expected term of the agreement. During the three months ended September 30, 2020 and 2019, the Company recognized $15,115 of net sponsorship revenue related to this deal. During the nine months ended September 30, 2020 and 2019, the Company recognized $45,016 and $44,852 of net sponsorship revenue related to this deal, respectively. Accounts receivable from Turf Nation totaled $116,977 and $171,961 at September 30, 2020 and December 31, 2019, respectively.

 

Note 7: Other Commitments

 

Canton City School District

 

The Company has entered into cooperative agreements with certain governmental entities that support the development of the project overall, where the Company is an active participant in the agreement activity, and the Company would benefit from the success of the activity.

 

The Company had a commitment to the Canton City School District (“CCSD”) to provide a replacement for their Football Operations Center (“FOC”) and to construct a Heritage Project (“Heritage”). The commitment was defined in the Operations and Use Agreement for HOF Village Complex dated as of February 26, 2016.

 

On March 20, 2018, a Letter of Representations was entered into by both parties whereby the Company has agreed to put money into escrow. The escrow balance at September 30, 2020 and December 31, 2019 of $0 and $2,604,318, respectively, is included in restricted cash on the Company’s unaudited condensed consolidated balance sheets.

 

31

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 7: Other Commitments (continued)

 

Project and Ground Leases

 

Three wholly owned subsidiaries of the Company have project leases with the Stark County Port Authority to lease project improvements and ground leased property at the Tom Benson Hall of Fame Stadium, youth fields, and parking areas. Rent is comprised of certain fees and generally escalating ground rent over the term of the leases which run until January 31, 2056. Future minimum lease commitments under non-cancellable operating leases, excluding the amounts yet to be paid from escrow for the FOC noted above, are as follows:

 

For the years ended December 31:

 

Remainder of 2020 (three months)   $ 3,591  
2021     119,118  
2022     119,118  
2023     119,118  
2024     119,118  
Thereafter     9,521,586  
         
Total   $ 10,001,649  

 

Rent expense on operating leases totaled $104,366 and $104,366 for the three months ended September 30, 2020 and 2019, respectively, and $310,829 and $309,695 during the nine months ended September 30, 2020 and 2019, and is recorded as a component of property operating expenses on the Company’s unaudited condensed consolidated statement of operations.

 

QREM Management Agreement

 

On August 15, 2018, the Company entered into an Interim Services Agreement with Q Real Estate Management (QREM) to manage the Tom Benson Hall of Fame Stadium operations. Under that agreement, the Company incurs a monthly management fee to QREM. The interim agreement ended March 1, 2019 and the agreement was not renewed between the parties.

 

SMG Management Agreement

 

On September 1, 2019, the Company entered into a Service Agreement with SMG to manage the Tom Benson Hall of Fame Stadium operations. Under that agreement, the Company incurs an annual management fee of $200,000. Management fee expense for the three months ended September 30, 2020 and 2019 was, $50,000 and $16,667, and for the nine months ended September 30, 2020 and 2019 was $150,000 and $16,667, respectively, which is included in property operating expenses on the Company’s unaudited condensed consolidated statements of operations. The agreement term shall end on December 31, 2022.

 

32

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 7: Other Commitments (continued)

 

Employment Agreements

 

The Company has an employment agreement with its chief financial officer, the terms of which expire in December 2021, with an automatic one-year extension. Such agreement provides for minimum salary levels and incentive bonus that is payable if specified management goals are attained as well as profits interest of 1.0% of future profits vesting over the terms of the agreement.

 

In addition, the Company has employment agreements with certain of its executives, the terms of which expire through December 2022. Such agreements provide for minimum salary levels and incentive bonuses that are payable if specified management goals are attained as well as restricted stock units and restricted share awards with grant date values ranging from $300,000 to $1,000,000.

 

DoubleTree Canton Downtown Hotel

 

On January 2, 2020, the Company entered into a franchise agreement with Hilton Franchise Holding, LLC (“Hilton”) in order to obtain a license to use the Hilton brand in the operation of the DoubleTree Canton Downtown Hotel in Canton, Ohio. The Company will be responsible for operating the hotel full-time, complying with industry and brand standards, and using the reservation service provided by Hilton. While possessing exclusive control of day to day operations, the Company is required to display and maintain signage displaying Hilton’s brand name. The Company is also required to publish and make available to the traveling public, a directory that includes the Hilton brand. The monthly fee will be used for advertising, promotions, publicity, public relations, market research, and other marketing programs. The hotel is projected to open in November 2020.

 

Management Agreement with Crestline Hotels & Resorts

 

On October 22, 2019, the Company entered into a management agreement with Crestline Hotels & Resorts (“Crestline”). The Company appointed and engaged Crestline as the Company’s exclusive agent to supervise, direct and control management and operation of the Hilton to assist the Company in preparing the Hilton for re-opening. In consideration of the services performed by Crestline, the Company agreed to the greater of: 2% of gross revenues or $10,000 per month in base management fees. The agreement will be terminated on the fifth anniversary of the commencement date, or October 22, 2024.

 

Note 8: Contingencies

 

During the normal course of its business, the Company is subject to occasional legal proceedings and claims.

 

The Company’s wholly owned subsidiary, HOF Village Stadium, LLC, is a defendant in a lawsuit “National Football Museum, Inc. dba Pro Football Hall of Fame v. Welty Building Company Ltd., et al;” filed in the Stark County Court of Common Pleas. PFHOF, an affiliate, filed this suit for monetary damages as a result of the cancellation of the 2016 Hall of Fame Game. Plaintiff alleges that the game was cancelled as a result of negligent acts of subcontractors who were hired to perform field painting services.

 

33

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 8: Contingencies (continued)

 

The Plaintiff alleged that HOF Village Stadium, LLC was contractually liable for damages Plaintiff sustained because it guaranteed the performance of Defendant Welty Building Company Ltd. (“Welty”) for the Tom Benson Hall of Fame Stadium renovation.

 

Potential damages claimed by Plaintiff included the refunds of ticket sales, lost commissions on food and beverage sales, and lost profits on merchandise sales. The parties involved have reached a global settlement, subject to final documentation and filing of a dismissal with prejudice.

 

Note 9: Related-Party Transactions

 

Due to Affiliates

 

Due to (from) affiliates consisted of the following at September 30, 2020 and December 31, 2019:

 

    September 30,
2020
    December 31,
2019
 
Due to IRG Member   $ 986,089     $ 6,257,840  
Due to IRG Affiliate     140,116       145,445  
Due to M. Klein    
-
      500,000  
Due to Related Party Advances    
-
      5,800,000  
Due to PFHOF     1,114,901       6,630,305  
Total   $ 2,241,106     $ 19,333,590  

 

The IRG Member and an affiliate provide certain supporting services to the Company. As noted in the Operating Agreement of HOF Village, LLC, an affiliate of the IRG Member, IRG Canton Village Manager, LLC, may earn a master developer fee calculated as 4.0% of development costs incurred for the Hall of Fame Village powered by Johnson Controls, including, but not limited to site assembly, construction supervision, and project financing. These development costs incurred are netted against certain costs incurred for general project management.

 

For the three months ended September 30, 2020 and 2019, costs incurred under these arrangements were $677,359 and $107,698, respectively, and for the nine months ended September 30, 2020 and 2019, costs incurred were $886,305 and $1,214,580, under these arrangements, which were included in Project Development Costs.

 

The IRG Member also provides certain general administrative support to the Company. For the three months ended September 30, 2020 and 2019, expenses of $0 and $327,948, respectively, were included in Property Operating Expenses. For the nine months ended September 30, 2020 and 2019, expenses of $211 and $344,425 related to this support were incurred.

 

The amounts due to the IRG Member above are for development fees, human resources support, and the Company’s engagement with them to identify and obtain naming rights sponsorships and other entitlement partners for the Company. The Company and IRG Member have an arrangement whereby the Company pays IRG Member $15,000 per month plus commissions. For both the three months ended September 30, 2020 and 2019 the Company incurred $45,000 in costs to this affiliate, respectively, and $90,000 for both the nine months ended September 30, 2020 and 2019, respectively.

 

34

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 9: Related-Party Transactions (continued)

 

Due to Affiliates (continued)

 

The amounts above due to M. Klein relate to advisory services provided to the Company. The Company engages a company owned by an investor for advisory services. The Company has not incurred any advisory costs under this arrangement in any of the reported periods presented.

 

The amounts above due to related party advances are non-interest bearing advances from an affiliate of IRG Member due on demand. The Company is currently in discussions with this affiliate to establish repayment terms of these advances, however, there could be no assurance that the Company and IRG Member will come to terms acceptable to both parties.

 

On January 13, 2020, the Company secured $9.9 million in financing from Constellation 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 enhancements, as part of Phase II development. The Hanover Insurance Company provided a guarantee bond to guarantee the Company’s payment obligations under the financing, and Stuart Lichter and two trusts affiliated with Mr. Lichter have agreed to indemnify The Hanover Insurance Company for payments made under the guarantee bond.

 

The amounts above due to PFHOF relate to advances to and from PFHOF, including costs for onsite sponsorship activation, sponsorship sales support, shared services, event tickets, and expense reimbursements.

 

License Agreement

 

On March 10, 2016, the Company entered into a license agreement with PFHOF, whereby the Company has the ability to license and use certain intellectual property from PFHOF in exchange for the Company paying a fee based on certain sponsorship revenue and expenses. On December 11, 2018, the license agreement was amended to change the calculation of the fee to be 20% of eligible sponsorship revenue. The license agreement expires on December 31, 2033. During the three months ended September 30, 2020 and 2019, the Company recognized expenses of $525,733 and $309,745, respectively, and for the nine months ended September 30, 2020 and 2019, the Company recognized $1,991,955 and $1,239,033, respectively, which are included in property operating expenses on the Company’s unaudited condensed consolidated statements of operations.

 

35

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 9: Related-Party Transactions (continued)

 

Media License Agreement

 

On November 11, 2019, the Company entered into a Media License Agreement with PFHOF that terminates on December 31, 2034. In consideration of any license granted to the Company, the Company agreed to pay to PFHOF a license fee that will be agreed upon between the Company and PFHOF. The license fee will be $225,000 for each license that will increase by 3% on a year-over-year basis after the first five years of the Media License Agreement. The Company must pay to PFHOF minimum guaranteed license fees of $1,250,000 each year during the term. After the first five years of the agreement, the minimum guarantee shall increase by 3% on a year-over-year basis. There were no license fees incurred during the three months and nine months ended September 30, 2020 and 2019.

 

PFHOF Shared Services Agreement

  

On June 30, 2020, the HOF Village entered into the Shared Services Agreement with PFHOF. 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 Company wrote-off the Tom Benson statue, which was valued as of the date of the Shared Services Agreement at $251,000 while the Company had valued it at $300,000. As this is a related party transaction, the Company recorded the resulting difference of $3,699,000 as a contribution from one of its members in the Company’s condensed consolidated balance sheet.

 

Other Liabilities

 

Other liabilities consisted of the following at September 30, 2020 and December 31, 2019:

 

    September 30,
2020
    December 31,
2019
 
Activation fund reserves   $ 4,212,101     $ 2,876,149  
Deferred revenue     645,848       90,841  
Preferred stock dividend payable    
-
      717,286  
Total   $ 4,857,949     $ 3,684,276  

 

36

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 10: Concentrations

 

For the nine months ended September 30, 2020, two customers represented approximately 74% and 19% of the Company’s sponsorship revenue. For the nine months ended September 30, 2019, two customers represented approximately 68% and 18% of the Company’s sponsorship revenue. At September 30, 2020, three customers represented approximately 64%, 17%, and 13% of the Company’s accounts receivable. At December 31, 2019, two customers represented approximately 43% and 33% of the Company’s accounts receivable.

 

At any point in time, the Company can have funds in their operating accounts and restricted cash accounts that are with third party financial institutions. These balances in the U.S. may exceed the Federal Deposit Insurance Corporation insurance limits. While the Company monitors the cash balances in their operating accounts, these cash and restricted cash balances could be impacted if the underlying financial institutions fail or could be subject to other adverse conditions in the financial markets.

 

Note 11: Business Combination

 

On July 1, 2020, the Company (formerly known as GPAQ Acquisition Holdings, Inc.) consummated the previously announced Business Combination with HOF Village, pursuant to the Merger Agreement, by and among GPAQ, Acquiror Merger Sub, Company Merger Sub, HOF Village and Newco.

 

Upon the consummation of the Business Combination: (i) Acquiror Merger Sub merged with and into GPAQ, with GPAQ continuing as the surviving entity (the “Acquiror Merger”) and (ii) Company Merger Sub merged with and into Newco, with Newco continuing as the surviving entity (the “Company Merger”). In advance of the Company Merger, HOF Village transferred all of its assets, liabilities and obligations to Newco pursuant to a contribution agreement. In connection with the closing of the Business Combination, the Company changed its name from “GPAQ Acquisition Holdings, Inc.” to “Hall of Fame Resort & Entertainment Company.” As a result of the Business Combination, GPAQ and Newco continue as our wholly owned subsidiaries.

 

In connection with the consummation of the Business Combination and pursuant to the Merger Agreement, (a) each issued and outstanding unit of GPAQ, if not already detached, was detached and each holder of such a unit was deemed to hold one share of GPAQ Class A common stock and one GPAQ warrant (“GPAQ Warrant”), (b) each issued and outstanding share of GPAQ Class A common stock (excluding any shares held by a GPAQ stockholder that elected to have its shares redeemed pursuant to GPAQ’s organizational documents) was converted automatically into the right to receive 1.421333 shares of our common stock, following which all shares of GPAQ Class A common stock ceased to be outstanding and were automatically canceled and cease to exist; (c) each issued and outstanding share of GPAQ Class F common stock was converted automatically into the right to receive one share of our common stock, following which all shares of GPAQ Class F common stock ceased to be outstanding and were automatically canceled and cease to exist; (d) each issued and outstanding GPAQ Warrant (including GPAQ private placement warrants) was automatically converted into one warrant to purchase 1.421333 shares of our common stock per warrant, following which all GPAQ Warrants ceased to be outstanding and were automatically canceled and retired and cease to exist; and (e) each issued and outstanding membership interest in Newco converted automatically into the right to receive a pro rata portion of the Company Merger Consideration (as defined in the Merger Agreement), which was payable in shares of our common stock. Our common stock is traded on The Nasdaq Capital Market, or Nasdaq, under the symbol “HOFV” and our outstanding series of warrants (the “Existing Warrants”) are traded on Nasdaq under the symbol “HOFVW”.

 

37

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 11: Business Combination (continued)

 

The rights of holders of the Company’s common stock and Existing Warrants are governed by its amended and restated certificate of incorporation (the “Certificate of Incorporation”), its amended and restated bylaws (the “Bylaws’) and the Delaware General Corporation Law (the “DGCL”), and in the case of the Existing Warrants, the Warrant Agreement, dated January 24, 2018, between GPAQ and the Continental Stock Transfer & Trust Company.

 

The Company’s net assets acquired through the consummation of the Business Combination consisted of:

 

Cash   $ 31,034,781  
Sponsor loan     (500,000 )
Net assets acquired   $ 30,534,781  

 

Immediately following the acquisition, the sponsor loan above was converted into the PIPE Notes. At the date of the Business Combination, on July 1, 2020, the Company used proceeds from the Business Combination to pay $15,500,000 on the Bridge Loan, while an additional $15,000,000 converted into equity in the newly formed Hall of Fame Entertainment & Resort entity. The remaining balance following the Business Combination was approximately $34,500,000. The maturity date on the remaining balance has been extended one month to November 30, 2020. Should the Company be unable to pay off the principal balance at maturity, Industrial Realty Group agreed to advance funds to the Company to pay off the Bridge Loan, under the terms of the guarantee. As a result, Industrial Realty Group would become a lender to the Company with a maturity date of August 2021.

 

On July 1, 2020, concurrently with the closing of the Business Combination, the Company completed the Private Placement of $20,721,293 in aggregate principal amount of PIPE Notes with certain funds managed by Magnetar Financial, LLC and the Purchasers. Pursuant to the terms of the Note Purchase Agreement, at the option of the holders thereof the PIPE Notes may be converted into shares of Common Stock at a conversion price initially equal to $11.50 per share, subject to formula-based adjustment based on specified events. Accordingly, the aggregate amount of PIPE Notes issued and sold in the Private Placement is convertible into 1,801,851 shares of Common Stock based on the conversion rate applicable on July 1, 2020.

 

On July 1, 2020, in connection with the closing of the Business Combination, holders of Newco’s membership interests as of immediately prior to the closing date entered into a lock-up agreement (the “Lock-Up Agreement”). Under the Lock-Up Agreement, each party thereto agreed not to sell, offer to sell, contract or agree to sell, hypothecate, pledge, sell any option or contract to purchase, grant any option, right or warrant, make any short sale or otherwise transfer or dispose of or lend its portion of any shares of common stock for a period after closing ending on the date that is the later of (i) 180 days after July 1, 2020 and (ii) the expiration of the Founder Shares Lock-Up Period under, dated January 24, 2018 among GPAQ, its officers and directors and initial shareholders.

 

The Company incurred $19,137,165 in costs related to the Business Combination. Of these costs, $16,718,978 were legal and professional fees, $2,218,187 was related to a restricted stock award to the Company’s Chief Executive Officer, and $200,000 was related to a cash bonus to the Company’s Chief Executive Officer.

 

38

 

 

Hall of Fame Resort & Entertainment Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 12: COVID-19 Coronavirus

 

In December 2019, a novel strain of coronavirus, COVID-19, was reported to have surfaced in Wuhan, China. Since then, the COVID-19 coronavirus has spread to multiple countries, including the United States. As the COVID-19 coronavirus continues to spread in the United States, the Company may experience disruptions that could severely impact the Company. The global outbreak of the COVID-19 coronavirus continues to rapidly evolve. The extent to which the COVID-19 coronavirus may impact the Company’s business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States to contain and treat the disease. The Company has had to cancel events due to COVID-19 and is in process of monitoring COVID-19’s potential impact on the Company’s operations. The Company has taken several steps to minimize COVID-19’s impact on the Company’s business by furloughing some of its employees, deferring payments from certain of its vendors and lenders, and re-negotiating various agreements with third parties.

 

Note 13: Subsequent Events

 

Refinancing Loan

 

On October 6, 2020, our subsidiary, Newco, signed a nonbinding term sheet with a new lender (the “New Lender”) pursuant to which the New Lender has proposed to provide Newco and its subsidiaries a loan (the “Refinancing Loan”) of up to $45 million with a term of 12 months (the “Initial Term”) plus a potential 12-month optional extension (the “Extension”) and an interest rate of 10.0% per annum during the Initial Term and no less than 12.5% during the Extension, in each case payable monthly in advance. The Refinancing Loan would be secured by a first lien on all of our property. The closing of the Refinancing Loan is conditioned upon, among other things, HOFRE receiving funds through the sale of our equity securities in an amount equal to the greater of (i) $30 million and (ii) an amount sufficient to receive a construction loan. The New Lender would have the right of first offer to provide construction loan financing. The Company intends to use the proceeds of the Refinancing Loan to prepay the outstanding balance of its Bridge Loan. The current outstanding balance of the Bridge Loan is approximately $34 million, which matures and is payable in full on November 30, 2020.

 

TAAS Agreement

 

On October 9, 2020, Newco, entered into a Technology as a Service Agreement (the “TAAS Agreement”) with Johnson Controls, Inc. (“Johnson Controls”). Pursuant to the TAAS Agreement, Johnson Controls will provide certain services related to the construction and development of the Hall of Fame Village powered by Johnson Controls (the “Project”), including, but not limited to, (i) design assist consulting, equipment sales and turn-key installation services in respect of specified systems to be constructed as part of Phase 2 and Phase 3 of the Project and (ii) maintenance and lifecycle services in respect of certain systems constructed as part of Phase 1, and to be constructed as part of Phase 2 and Phase 3, of the Project. Under the terms of the TAAS Agreement, Newco has agreed to pay Johnson Controls up to an aggregate $217,934,637 for services rendered by Johnson Controls over the term of the TAAS Agreement.

 

Issuance of 7.00% Series A Cumulative Redeemable Preferred Stock

 

During October, 2020, the Company issued to American Capital Center, LLC (the “Preferred Investor”) 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. HOFRE used half of the proceeds from the sale of the Series A Preferred Stock to pay down outstanding amounts under its Bridge Loan.

 

39

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (the “Report”). Unless otherwise indicated, the terms “HOFRE,” “we,” “us,” or “our” refer to Hall of Fame Resort & Entertainment Company, a Delaware corporation, together with its consolidated subsidiaries.

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Report may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are generally identified by use of words such as “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “believe,” “intend,” “plan,” “projection,” “outlook,” “target,” “seek,” or words of similar meaning. These forward-looking statements include, but are not limited to, statements regarding future opportunities for the Company and the Company’s estimated future results. Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control. Actual results and the timing of events may differ materially from the results anticipated in these forward-looking statements.

 

In addition to factors identified elsewhere in this Report, the following risks, among others, could cause actual results and the timing of events to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: the benefits of the Business Combination; the future financial performance of the Company and its subsidiaries, including Newco (as defined below); changes in the market in which the Company competes; expansion and other plans and opportunities; the effect of the COVID-19 pandemic on the Company’s business; the Company’s ability to raise financing in the future; the Company’s ability to maintain the listing of its Common Stock on Nasdaq; other factors detailed under the section titled “Risk Factors” in this Report.

 

Actual results, performance or achievements may differ materially, and potentially adversely, from any projections and forward-looking statements and the assumptions on which those forward-looking statements are based. There can be no assurance that the data contained herein is reflective of future performance to any degree. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance. All information set forth herein speaks only as of the date hereof, in the case of information about the Company, or as of the date of such information, in the case of information from persons other than the Company, and we disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this Report. Forecasts and estimates regarding the Company’s industry and end markets are based on sources we believe to be reliable, however there can be no assurance these forecasts and estimates will prove accurate in whole or in part. Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.

 

Business Overview

 

We are a resort and entertainment company located in Canton, Ohio, leveraging the power and popularity of professional football and its legendary players in partnership with the National Football Museum, Inc., doing business as the Pro Football Hall of Fame (“PFHOF”). Headquartered in Canton, Ohio, we own the Hall of Fame Village powered by Johnson Controls, a multi-use sports, entertainment and media destination centered around the PFHOF’s campus. We expect to create a diversified set of revenue streams through developing themed attractions, premier entertainment programming, sponsorships and media. The strategic plan has been developed in three phases of growth.

 

Phase I of the Hall of Fame Village powered by Johnson Controls is operational, consisting of the Tom Benson Hall of Fame Stadium, the National Youth Football & Sports Complex, and HOF Village Media Group, LLC (“Hall of Fame Village Media”). In 2016, HOF Village completed the Tom Benson Hall of Fame Stadium, a sports and entertainment venue with a seating capacity of approximately 23,000. The Tom Benson Hall of Fame Stadium hosts multiple sports and entertainment events, including the NFL Hall of Fame Game, Enshrinement and Concert for Legends during the annual Pro Football Hall of Fame Enshrinement Week. In 2016, HOF Village opened the National Youth Football & Sports Complex, which will consist of eight full-sized, multi-use regulation football fields, five of which have been completed in Phase I. The facility hosts camps and tournaments for football players, as well as athletes from across the country in other sports such as lacrosse, rugby and soccer. In 2017, HOF Village formed a sports and entertainment media company, Hall of Fame Village Media, leveraging the sport of professional football to produce exclusive programming by licensing the extensive content controlled by the PFHOF as well as new programming assets developed from live events such as youth tournaments, camps and sporting events held at the National Youth Football & Sports Complex and the Tom Benson Hall of Fame Stadium.

 

We are developing new hospitality, attraction and corporate assets surrounding the Pro Football Hall of Fame Museum as part of a Phase II development plan. Plans for future components of the Hall of Fame Village powered by Johnson Controls include two hotels (one on campus and one in downtown Canton about five minutes from campus), the Hall of Fame Indoor Waterpark, the Constellation Center for Excellence (an office building including retail and dining establishments), the Center for Performance (a convention center/field house), and the Hall of Fame Retail Promenade. We are pursuing a differentiation strategy across three pillars, including Destination-Based Assets, the Media Company, and Gaming (including the Fantasy Football League we acquired a majority stake in). Phase III expansion plans include the addition of the Hall of Fame Experience (an immersive VR/AR attraction), a hotel with retail space, a performance center/arena, and multi-family housing. 

 

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Business Combination

 

On July 1, 2020, we (formerly known as GPAQ Acquisition Holdings, Inc.) consummated the previously announced business combination with HOF Village, LLC, a Delaware limited liability company (“HOF Village”), pursuant to an Agreement and Plan of Merger dated September 16, 2019 (as amended on November 6, 2019, March 10, 2020 and May 22, 2020, the “Merger Agreement”), by and among the Company, Gordon Pointe Acquisition Corp., a Delaware corporation (“GPAQ”), GPAQ Acquiror Merger Sub, Inc., a Delaware corporation (“Acquiror Merger Sub”), GPAQ Company Merger Sub, LLC, a Delaware limited liability company (“Company Merger Sub”), HOF Village and HOF Village Newco, LLC, a Delaware limited liability company (“Newco”). The transactions contemplated by the Merger Agreement are referred to in this prospectus as the “Business Combination.”

 

Upon the consummation of the Business Combination: (i) Acquiror Merger Sub merged with and into GPAQ, with GPAQ continuing as the surviving entity (the “Acquiror Merger”) and (ii) Company Merger Sub merged with and into Newco, with Newco continuing as the surviving entity (the “Company Merger”). In advance of the Company Merger, HOF Village transferred all of its assets, liabilities and obligations to Newco pursuant to a contribution agreement. In connection with the closing of the Business Combination, the Company changed its name from “GPAQ Acquisition Holdings, Inc.” to “Hall of Fame Resort & Entertainment Company.” As a result of the Business Combination, GPAQ and Newco continue as our wholly owned subsidiaries.

 

In connection with the consummation of the Business Combination and pursuant to the Merger Agreement, (a) each issued and outstanding unit of GPAQ, if not already detached, was detached and each holder of such a unit was deemed to hold one share of GPAQ Class A common stock and one GPAQ warrant (“GPAQ Warrant”), (b) each issued and outstanding share of GPAQ Class A common stock (excluding any shares held by a GPAQ stockholder that elected to have its shares redeemed pursuant to GPAQ’s organizational documents) was converted automatically into the right to receive 1.421333 shares of our Common Stock, following which all shares of GPAQ Class A common stock ceased to be outstanding and were automatically canceled and cease to exist; (c) each issued and outstanding share of GPAQ Class F common stock was converted automatically into the right to receive one share of Common Stock, following which all shares of GPAQ Class F common stock ceased to be outstanding and were automatically canceled and cease to exist; (d) each issued and outstanding GPAQ Warrant (including GPAQ private placement warrants) was automatically converted into one Warrant to purchase 1.421333 shares of Common Stock per warrant, following which all GPAQ Warrants ceased to be outstanding and were automatically canceled and retired and cease to exist; and (e) each issued and outstanding membership interest in Newco converted automatically into the right to receive a pro rata portion of the Company Merger Consideration (as defined in the Merger Agreement), which was payable in shares of Common Stock. Our Common Stock is traded on The Nasdaq Capital Market, or Nasdaq, under the symbol “HOFV” and our outstanding series of warrants (the “Existing Warrants”) are traded on Nasdaq under the symbol “HOFVW”.

 

The rights of holders of our Common Stock and Existing Warrants are governed by our amended and restated certificate of incorporation (the “Certificate of Incorporation”), our amended and restated bylaws (the “Bylaws’) and the Delaware General Corporation Law (the “DGCL”), and in the case of our Existing Warrants, the Warrant Agreement, dated January 24, 2018, between GPAQ and the Continental Stock Transfer & Trust Company (the “Existing Warrant Agreement”).

 

Key Components of the Company’s Results of Operations

 

Revenue

 

The Company’s sponsorship revenue is derived from its agreements with third parties such as Johnson Controls, Inc. (“JCI”) and Constellation NewEnergy, Inc. (“Constellation”). These sponsorship agreements are generally multi-year agreements to provide cash or some other type of benefit to the Company. Some agreements require the Company to use a portion of the sponsorship revenue to incur marketing and other activation costs associated with the agreement, and this revenue is shown net of those associated costs. Additionally, the Company’s Tom Benson Hall of Fame Stadium is used to host premier entertainment and sports events to generate event revenues. In addition to top entertainers, the stadium is used to host a variety of sporting events, including high school, college and professional football games throughout the year. The Company plans to continue to expand programming where applicable for its live event business. The Company’s other revenue is derived primarily from rents and cost reimbursement.

 

The Company also entered into agreements with the NFL Alumni Association and the Hall of Fame Fantasy League earlier in 2020. The Company expects to recognize revenue from the NFL Alumni Association in the fourth quarter of 2020 and recognizing revenue from the Hall of Fame Fantasy League in the first half of 2021.

 

Operating Expenses

 

The Company’s operating expenses include property operating expenses, depreciation expense and other operating expenses. These expenses have increased in connection with putting the Company’s first phase into operation and the Company expects these expenses to continue to increase with the Company’s growth.

 

The Company’s property operating expenses include the costs associated with running its operational entertainment and destination assets such as the Tom Benson Hall of Fame Stadium and the Youth Sports Complex. As more of the Company’s Phase II assets become operational and additional events for top performers and sporting events are held, the Company expects these expenses to continue to increase with the Company’s development.

 

Other operating expenses include items such as management fees, commission expense and professional fees. The Company expects these expenses to continue to increase with the Company’s growth.

 

The Company’s depreciation expense includes the related costs to owning and operating significant property and entertainment assets. These expenses have grown as the Company completed Phase I development and the assets associated with Phase I became operational. The Company expects these expenses to continue to grow as Phase II and III assets are developed and become operational.

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Results of Operations

 

The following table sets forth information comparing the components of net loss for the periods ended September 30, 2020 and the comparable period in 2019:

 

    For the Three Months Ended September 30,     For the Nine Months Ended September 30,  
    2020     2019     2020     2019  
                         
Revenues                        
Sponsorships, net of activation costs   $ 1,564,250     $ 1,820,293     $ 4,886,106     $ 5,457,785  
Rents and cost recoveries     103,244       348,900       420,681       657,106  
Event revenues     9,613       4,690       37,446       54,533  
Total revenues   $ 1,677,107     $ 2,173,883     $ 5,344,233     $ 6,169,424  
                                 
Operating expenses                                
Property operating expenses     8,987,167       3,995,624       18,099,436       10,025,750  
Commission expense     199,668       228,961       1,257,648       798,788  
Depreciation expense     2,753,046       2,751,229       8,198,469       8,163,962  
Loss on abandonment of project development costs     -       -       -       12,194,783  
Total operating expenses   $ 11,939,881     $ 6,975,814     $ 27,555,553     $ 31,183,283  
                                 
Loss from operations     (10,262,774 )     (4,801,931 )     (22,211,320 )     (25,013,859 )
                                 
Other expense                                
Interest expense     (615,250 )     (2,160,210 )     (4,825,045 )     (6,734,735 )
Amortization of discount on note payable     (3,043,738 )     (3,400,514 )     (9,721,484 )     (10,302,822 )
Total interest expense   $ (3,658,988 )   $ (5,560,724 )   $ (14,546,529 )   $ (17,037,557 )
                                 
Loss in joint venture     -       (275,564 )     -       (252,576 )
Business combination costs     (19,137,165 )     -       (19,137,165 )     -  
Loss on forgiveness of debt     (877,976 )     -       (877,976 )     -  
Total other expense   $ (23,674,129 )   $ (5,836,288 )   $ (34,561,670 )   $ (17,290,133 )
                                 
Loss before taxes   $ (33,936,903 )   $ (10,638,219 )   $ (56,772,990 )   $ (42,303,992 )
                                 
Income tax benefit   $ -     $ -     $ -     $ -  
                                 
Net loss   $ (33,936,903 )   $ (10,638,219 )   $ (56,772,990 )   $ (42,303,992 )
                                 
Non-controlling interest     36,000       -       36,000       -  
                                 
Net loss attributable to HOFRE stockholders   $ (33,900,903 )   $ (10,638,219 )   $ (56,736,990 )   $ (42,303,992 )
                                 
Net loss per share – basic and diluted   $ (1.04 )   $ (1.96 )   $ (3.90 )   $ (7.78 )
                                 
Weighted average shares outstanding, basic and diluted     32,576,553       5,436,000       14,548,887       5,436,000  

  

Three Months Ended September 30, 2020 as Compared to the Three Months Ended September 30, 2019

 

Sponsorship Revenues

 

The Company’s sponsorship revenues for the three months ended September 30, 2020 decreased by $256,043, or 14.07%, to $1,564,250 as compared to $1,820,293 for the three months ended September 30, 2019. This change was primarily driven by revisions to sponsorship agreements that took effect in the third quarter of 2020 in addition to recognition of deferred revenue for sponsorship agreements in place at June 30, 2019.

 

Rents and cost recoveries

 

The Company’s revenue from rents and cost recoveries for the three months ended September 30, 2020 decreased to $103,244 from $348,900 for the three months ended September 30, 2019, for a decrease of $245,656, or 70.41%. This change was primarily driven by the impact of COVID-19 on youth sports events which were only permitted to commence in late August in Ohio.

 

Event Revenues

 

The Company’s event revenue for the three months ended September 30, 2020 was $9,613 compared to $4,690 from the three months ended September 30, 2019, for an increase of $4,923. This was primarily driven by youth sports events and stadium events in the third quarter of 2020.

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Property Operating Expenses

 

The Company’s property operating expenses were $8,987,167 for the three months ended September 30, 2020, as compared to $3,995,624 for the three months ended September 30, 2019, an increase of $4,991,543, or 124,93%. This increase was driven by the Company’s recording of $1,248,306 in stock based compensation for restricted stock issued to select HOFRE leadership, increased headcount year over year resulting in additional payroll and related expenses of $1,734,304, $1,050,000 in increased legal fees in conjunction with the Company’s registration statements, and $1,002,910 in increased insurance premiums and new Directors and Officers insurance policies entered into during the three months ended September 30, 2020.

 

Commission Expense

 

The Company’s commission expense was $199,668 for the three months ended September 30, 2020 as compared to $228,961 for the three months ended September 30, 2019, for a decrease of $29,293, or 12.79%. The decrease in commission expense is primarily the result of certain unbilled commission payables being forgiven in exchange for stock in consummation with the Business Combination.

 

Depreciation Expense

 

The Company’s depreciation expense of $2,753,046 for the three months ended September 30, 2020 was essentially flat as compared to $2,751,229 for the three months ended September 30, 2019.

 

Interest Expense

 

The Company’s total interest expense was $615,250 for the three months ended September 30, 2020, as compared to $2,160,210 for the three months ended September 30, 2019, for a decrease of $1,544,960, or 71.52%. The decrease in total interest expense is primarily due to a decrease in the interest rate paid on one of the Company’s debt instruments as well as partial extinguishment of debt following the Business Combination.

 

Business Combination Costs

 

The Company’s Business Combination costs were $19,137,165 for the three months ended September 30, 2020, as compared to $0 for the three months ended September 30, 2019. The Business Combination costs consisted of $2,218,187 related to our CEO’s restricted stock award in which one-third vested on July 2, 2020 in conjunction with the closing of the Business Combination, a $200,000 cash bonus to our CEO, and other legal and professional fees incurred in the Business Combination.

 

Nine Months Ended September 30, 2020 as Compared to the Nine Months Ended September 30, 2019

 

Sponsorship Revenues

 

The Company’s sponsorship revenues for the nine months ended September 30, 2020 decreased by $571,679, or 10.47%, to $4,886,106 as compared to $5,457,785 for the nine months ended September 30, 2019. This change was primarily driven by the recognition of deferred revenue for the sponsorship agreements in place at June 30, 2019 as well as the impact of revisions to two sponsorship agreements effective in the third quarter of 2020.

 

Rents and cost recoveries

 

The Company’s revenue from rents and cost recoveries for the nine months ended September 30, 2020 decreased to $420,681 from $657,106 for the nine months ended September 30, 2019, for a decrease of $236,425, or 35.98%. This change was primarily driven by the cancellation of youth sports events due to the COVID-19 pandemic between March and August 2020.

 

Event Revenues

 

The Company’s event revenue for the nine months ended September 30, 2020 was $37,446 compared to $54,533 from the nine months ended September 30, 2019, for a decrease of $17,087, or 31.33%. This was primarily driven by the cancellation and reduced capacity of private events that were to be held in the stadium during the COVID-19 pandemic.

 

Property Operating Expenses

 

The Company’s property operating expense was $18,099,436 for the nine months ended September 30, 2020 as compared to $10,025,750 for the nine months ended September 30, 2019, for an increase of $8,073,686, or 44.61%. This increase was driven by the Company’s recording of $1,248,306 in stock based compensation for restricted stock issued to select HOFRE leadership, increased headcount year over year resulting in additional payroll and related expenses of $3,289,288, $1,815,578 in increased legal fees and an increase of $1,857,018 in consulting fees for the nine months ended September 30, 2020.

 

Commission Expense

 

The Company’s commission expense was $1,257,648 for the nine months ended September 30, 2020, as compared to $798,788 for the nine months ended September 30, 2019, for an increase of $458,860, or 57.44%. The increase in commission expense is primarily the result of final prior year commissions fees paid per the agreements in place.

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Depreciation Expense

 

The Company’s depreciation expense was $8,198,469 for the nine months ended September 30, 2020 as compared to $8,163,962 for the nine months ended September 30, 2019, for an increase of $34,507, or 0.42%. The increase in depreciation expense is primarily the result of additional depreciation expense incurred in the first half of 2020 on assets whose costs basis was adjusted in the third quarter of 2019.

 

Interest Expense

 

The Company’s total interest expense was $4,825,045 for the nine months ended September 30, 2020, as compared to $6,734,735 for the nine months ended September 30, 2019, for a decrease of $1,909,690, or 28.36%. The decrease in total interest expense is primarily due to extinguishment of select debt instruments at the close of the business combination with Gordon Pointe, changes in interest rates and certain interest expense due to affiliate that was waived under a revised agreement at June 30, 2020.

 

Business Combination Costs

 

The Company’s Business Combination costs were $19,137,165 for the nine months ended September 30, 2020, as compared to $0 for the nine months ended September 30, 2019. The Business Combination costs consisted of $2,218,187 related to our CEO’s restricted stock award in which one-third vested on July 2, 2020 in conjunction with the closing of the Business Combination, a $200,000 cash bonus to our CEO, and other legal and professional fees incurred in the Business Combination.

 

Liquidity and Capital Resources

 

The Company is an early stage development company that has invested approximately $250 million to date to fund its Phase I development, which includes the Tom Benson Hall of Fame Stadium, Youth Sports Complex and infrastructure to support the Phase II and III expansion plans. The Company expects to need continued capital investment to fund the construction of its Phase II and III assets and anticipates the need for future funding requirements to supplement its own cash and cash equivalents generated from the Company’s operations.

 

The Company has sustained recurring losses and negative cash flows from operations through September 30, 2020. In addition, its Bridge Loan matures on November 30, 2020, which is within 12 months from the issuance of these condensed consolidated financial statements. Since inception, the Company’s operations have been funded principally through the issuance of debt. As of September 30, 2020, the Company had approximately $16 million of restricted cash. On July 1, 2020, the Company consummated the Business Combination, whereby the Company’s then outstanding convertible notes were converted into shares of common stock in HOFRE, $15.0 million of the Bridge Loan was converted into equity and $15.5 million of the Bridge Loan was repaid with proceeds from the Business Combination. The balance of the Bridge Loan of approximately $34.5 million as of September 30, 2020, and has been guaranteed by Industrial Realty Group, LLC (“Industrial Realty Group”). In the event that Industrial Realty Group advances funds to the Company to pay off the Bridge Loan, under the terms of the guarantee, Industrial Realty Group will become a lender to the Company with a new maturity date of August 2021. These factors raise doubt about the Company’s ability to continue operations as a going concern.

 

The Company expects that it will need to raise additional financing to accomplish its development plan over the next several years. The Company is seeking to obtain additional funding through debt, construction lending, and equity financing. There are no assurances that the Company will be able to raise capital on terms acceptable to the Company or at all, or that cash flows generated from its operations will be sufficient to meet its current operating costs. If the Company is unable to obtain sufficient amounts of additional capital, it may be required to reduce the scope of its planned development, which could harm its financial condition and operating results, or it may not be able to continue to fund its ongoing operations. If management is unable to execute its planned debt and equity financing initiatives, these conditions raise substantial doubt about the Company’s ability to continue as a going concern to sustain operations for at least one year from the issuance of these consolidated financial statements. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 

Cash Flows

 

Since inception, the Company has primarily used its available cash to fund its project development expenditures. The following table sets forth a summary of cash flows for the periods presented:

  

    For the Nine Months Ended 
September 30
 
    2020     2019  
Cash (used in) provided by:            
Operating Activities   $ (25,218,923 )   $ 5,373,221  
Investing Activities     2,949,733       (8,975,957 )
Financing Activities     37,496,789       2,586,699  
Net increase (decrease) in cash and cash equivalents   $ 15,227,599     $ (1,016,037 )

  

Cash Flows for the Nine Months Ended September 30, 2020 and 2019

 

Operating Activities

 

Net cash used in operating activities was $25,218,931 during the nine months ended September 30, 2020, which consisted primarily of a net loss of $56,772,990, offset by non-cash depreciation expense of $8,198,469, amortization of note discounts of $9,721,484, payment-in-kind interest rolled into debt of $3,135,035, an increase in loss on extinguishment of $877,976, an increase in stock-based compensation expense of $3,562,493, a decrease in prepaid expenses and other assets of $4,525,057, an increase in accounts payable and accrued expenses of $15,517,281, a decrease in due to affiliates of $9,126,691, and an increase in other liabilities of $4,090,150.

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Net cash provided by operating activities was $5,373,221 during the nine months ended September 30, 2019, which consisted primarily of a net loss of $42,303,992, offset by non-cash depreciation expense of $8,163,962, amortization of note discounts of $10,302,822, an increase on loss on abandonment of project development costs of $12,194,783, an increase in accounts receivable of $324,792, an increase in prepaid expenses and other assets of $1,046,025, an increase in accounts payable and accrued expenses of $5,211,233, an increase in due to affiliates of $5,556,646, and an increase in other liabilities of $4,368,407.

 

Investing Activities

 

Net cash provided by investing activities was $2,949,733 during the nine months ended September 30, 2020, and consisted of $28,085,048 of cash used for project development costs and $31,034,781 of proceeds from the Business Combination. During the nine months ended September 30, 2019, net cash used in investing activities was $8,975,957, which consisted solely of cash used for project development costs.

 

Financing Activities

 

Net cash provided by financing activities was $37,496,789 during the nine months ended September 30, 2020, which consisted primarily of $65,039,642 in proceeds from notes payable, offset by $26,113,861 in repayments of notes payable, and $1,428,992 in payment of financing costs.

 

Net cash provided by financing activities was $2,586,699 during the nine months ended September 30, 2019, which consisted primarily of $8,380,000 in proceeds from notes payable, offset by $5,216,560 in repayments of notes payable and $576,741 in payment of financing costs.

 

Subsequent Financing Activity since September 30, 2020

 

During October, 2020, the Company issued to American Capital Center, LLC (the “Preferred Investor”) 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. HOFRE used half of the proceeds from the sale of the Series A Preferred Stock to pay down outstanding amounts under its Bridge Loan.

 

Contractual Obligations and Commitments

 

The following is a summary of the contractual obligations as of September 30, 2020 and the effect of such obligations are expected to have on the liquidity and cash flows in future periods:

  

    Total     Less than
1 Year
    1-3 Years     3-5 Years     More than
5 Years
 
Notes payable commitments   $ 124,720,639     $ 50,282,340     $ 35,523,813     $ 3,384,980     $ 35,529,506  
Project and ground leases   $ 10,001,649     $ 3,591     $ 357,354     $ 238,236     $ 9,402,468  
Total   $ 134,722,288     $ 50,285,931     $ 35,881,167     $ 3,623,216     $ 44,931,974  

  

Off-Balance Sheet Arrangements

 

The Company did not have any off-balance sheet arrangements as of September 30, 2020.

 

Critical Accounting Policies and Significant Judgments and Estimates

 

This discussion and analysis of the Company’s financial condition and results of operations is based on the Company’s unaudited condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods. In accordance with U.S. GAAP, the Company base its estimates on historical experience and on various other assumptions the Company believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

 

For information on the Company’s significant accounting policies please refer to Note 2 to the Company’s accompanying unaudited condensed consolidated financial statements.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

The Company is not exposed to market risk related to interest rates on foreign currencies.

 

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Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures designed to ensure that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified under the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures. As required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer (our principal executive) and Chief Financial Officer (our principal financial officer and principal accounting officer) carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2020. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in paragraph (e) of Rules 13a-15 and 15d-15 under the Exchange Act) were not effective as September 30, 2020 due to a material weakness in our internal control over financial reporting as described below. 

 

Limitations on Internal Control over Financial Reporting

 

An internal control system over financial reporting has inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

 

Management’s Quarterly Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f) and 15d-15(f). Internal control over financial reporting is a process used to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles in the United States. Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with generally accepted accounting principles in the United States, and that our receipts and expenditures are being made only in accordance with the authorization of our board of directors and management; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

 

Under the supervision and with the participation of our management, including our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer and principal accounting officer), we performed an assessment of the Company’s significant processes and key controls. Based on this assessment, management concluded that our internal control over financial reporting was not effective as of September 30, 2020 due to the material weaknesses described below.

 

A material weakness is defined within the Public Company Accounting Oversight Board’s Auditing Standard No. 5 as a deficiency or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. We determined that our internal control over financial reporting had the following material weaknesses:

 

  Due to the small size of the Company, the Company does not maintain sufficient segregation of duties to ensure the processing, review and authorization of all transactions including non-routine transactions.
     
 

Our processes lacked timely and complete reviews and analysis of information used to prepare our financial statements and disclosures in accordance with accounting principles generally accepted in the United States of America.

 

The Company is evaluating these weaknesses to determine the appropriate remedy. Because disclosure controls and procedures include those components of internal control over financial reporting that provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, management also determined that its disclosure controls and procedures were not effective as a result of the foregoing material weaknesses in its internal control over financial reporting.

 

Changes in Internal Control over Financial Reporting

 

During the quarter ended September 30, 2020, the Company engaged a consultant and began to develop a plan to remediate its material weaknesses and to design an effective internal control environment.

 

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PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

During the normal course of its business, the Company is subject to occasional legal proceedings and claims.

 

The Company’s wholly owned subsidiary, HOF Village Stadium, LLC, is a defendant in a lawsuit “National Football Museum, Inc. dba Pro Football Hall of Fame v. Welty Building Company Ltd., et al;” filed in the Stark County Court of Common Pleas. PFHOF, an affiliate, filed this suit for monetary damages as a result of the cancellation of the 2016 Hall of Fame Game. Plaintiff alleges that the game was cancelled as a result of negligent acts of subcontractors who were hired to perform field painting services.

 

The Plaintiff alleged that HOF Village Stadium, LLC was contractually liable for damages Plaintiff sustained because it guaranteed the performance of Defendant Welty Building Company Ltd. (“Welty”) for the Tom Benson Hall of Fame Stadium renovation.

 

Potential damages claimed by Plaintiff included the refunds of ticket sales, lost commissions on food and beverage sales, and lost profits on merchandise sales. The parties involved have reached a global settlement, subject to final documentation and filing of a dismissal with prejudice.

 

Item 1A. Risk Factors

 

Investing in our securities involves a high degree of risk. Before you make a decision to buy our securities, you should carefully consider the risks described in this prospectus. If any of these risks actually occur, it may materially harm our business, financial condition, liquidity and results of operations. As a result, the market price of our securities could decline, and you could lose all or part of your investment. Additionally, the risks and uncertainties described in this prospectus are not the only risks and uncertainties that we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may become material and adversely affect our business.

 

Unless the context otherwise indicates or requires, as used in this section, the term “HOF Village” shall refer to HOF Village, LLC prior to the Business Combination and Newco following the consummation of the Business Combination.

 

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Risk Related to Our Business

 

We are an early stage company with a minimal track record and limited historical financial information available, and an investment in the offering is highly speculative.

 

HOF Village was formed as a limited liability company on December 16, 2015 by certain affiliates of Industrial Realty Group and a subsidiary of PFHOF, to own and operate the Hall of Fame Village powered by Johnson Controls in Canton, Ohio, as a premiere destination resort and entertainment company leveraging the expansive popularity of professional football and the PFHOF. As a result of the Business Combination, HOF Village became a wholly owned subsidiary of HOFRE. As of the date hereof, we anticipate that the Hall of Fame Village powered by Johnson Controls will have the following major components:

 

Phase I:

 

Tom Benson Hall of Fame Stadium

 

National Youth Football & Sports Complex

 

Hall of Fame Village Media

 

Phase II:

 

Hall of Fame Indoor Waterpark (“Hall of Fame Indoor Waterpark”)

 

Two hotels

 

Constellation Center for Excellence (Office Building, Auditorium and Dining)

 

Center for Performance (Field House and Convention Center)

 

Hall of Fame retail promenade

 

Phase III:

 

Hall of Fame Experience (an immersive VR/AR experience)

 

Hotel including retail space

 

Multi-family housing

 

While the components in Phase I are substantially complete and the DoubleTree by Hilton Canton Downtown Hotel is projected to open in November 2020, to date most components of Phase II and Phase III are still in the planning stage, and have not commenced operations or generated any revenues. The components of the Hall of Fame Village powered by Johnson Controls that have been developed in Phase I have limited operating history and business track record. In addition, our business strategy is broad and may be subject to significant modifications in the future. Our current strategy may not be successful, and if not successful, we may be unable to modify it in a timely and successful manner. A company with this extent of operations still in the planning stage, and thus your investment in the offering, is highly speculative and subject to an unusually high degree of risk. Prior to investing in the offering, you should understand that there is a significant possibility of the loss of your entire investment.

 

Because we are in the early stages of executing our business strategy, we cannot assure you that, or when, we will be profitable. We will need to make significant investments to develop and operate the Hall of Fame Village powered by Johnson Controls and expect to incur significant expenses in connection with operating components of the Hall of Fame Village powered by Johnson Controls, including costs for entertainment, talent fees, marketing, salaries and maintenance of properties and equipment. We expect to incur significant capital, operational and marketing expenses for a number of years in connection with our planned activities. Any failure to achieve or sustain profitability may have a material adverse impact on the value of the shares of our Common Stock.

 

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We may not be able to continue as a going concern.

 

The Company has sustained recurring losses and negative cash flows from operations through September 30, 2020. In addition, its Bridge Loan (defined below) matures on November 30, 2020, which is within 12 months from the issuance of these condensed consolidated financial statements. Since inception, the Company’s operations have been funded principally through the issuance of debt. As of September 30, 2020, the Company had approximately $16 million of restricted cash. On July 1, 2020, the Company consummated the Business Combination, whereby the Company’s then outstanding convertible notes were converted into shares of common stock in HOFRE, $15.0 million of the Bridge Loan was converted into equity and $15.5 million of the Bridge Loan was repaid with proceeds from the Business Combination. The balance of the Bridge Loan of approximately $34.5 million as of September 30, 2020, and has been guaranteed by Industrial Realty Group, LLC (“Industrial Realty Group”). In the event that Industrial Realty Group advances funds to the Company to pay off the Bridge Loan, under the terms of the guarantee, Industrial Realty Group will become a lender to the Company with a new maturity date of August 2021. These factors raise doubt about the Company’s ability to continue operations as a going concern. The Company expects that it will need to raise additional financing to accomplish its development plan over the next several years. The Company is seeking to obtain additional funding through debt, construction lending, and equity financing. There are no assurances that the Company will be able to raise capital on terms acceptable to the Company or at all, or that cash flows generated from its operations will be sufficient to meet its current operating costs. If the Company is unable to obtain sufficient amounts of additional capital, it may be required to reduce the scope of its planned development, which could harm its financial condition and operating results, or it may not be able to continue to fund its ongoing operations. If management is unable to execute its planned debt and equity financing initiatives, these conditions raise substantial doubt about the Company’s ability to continue as a going concern to sustain operations for at least one year from the issuance of these consolidated financial statements. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. Furthermore, HOF Village’s independent auditor included an explanatory paragraph in their audit opinion as of December 31, 2019 concluding that there was substantial doubt about HOF Village’s ability to continue as a going concern. If we are unable to continue as a going concern, we may have to liquidate our assets, or be foreclosed upon, and may receive less than the value at which those assets are carried on our consolidated financial statements, and it is likely that investors in our Common Stock will lose all or a part of their investment. 

 

Our ability to implement our proposed business strategy may be materially and adversely affected by many known and unknown factors.

 

Our business strategy relies upon our future ability to successfully develop and operate the Hall of Fame Village powered by Johnson Controls. Our strategy assumes that we will be able to, among other things: secure sufficient capital to repay our indebtedness; continue to lease or to acquire additional property in Canton, Ohio at attractive prices and develop such property into efficient and profitable operations; and maintain our relationships with key partners, including PFHOF, the general contractors for the Hall of Fame Village powered by Johnson Controls, and various other design firms, technology consultants, managers and operators and vendors that we are relying on for the successful development and operation of the Hall of Fame Village powered by Johnson Controls, as well as to develop new relationships and partnerships with third parties that will be necessary for the success of the Hall of Fame Village powered by Johnson Controls. These assumptions, which are critical to our prospects for success, are subject to significant economic, competitive, regulatory and operational uncertainties, contingencies and risks, many of which are beyond our control. These uncertainties are particularly heightened by the fact that we have significantly limited historical financial results or data on which financial projections might be based.

 

Our future ability to execute our business strategy and develop the various components of the Hall of Fame Village powered by Johnson Controls is uncertain, and it can be expected that one or more of our assumptions will prove to be incorrect and that we will face unanticipated events and circumstances that may adversely affect our proposed business. Any one or more of the following factors, or other factors which may be beyond our control, may have a material adverse effect on our ability to implement our proposed strategy:

 

the impact of the pandemic involving the novel strain of coronavirus, COVID-19, governmental reactions thereto, and economic conditions resulting from such governmental reactions to the pandemic on our business strategy, operations, financial results, as well as on our future ability to access debt or equity financing;

 

inability to secure short-term liquidity in order to meet operating capital requirements and to secure capital to make principal payments on our Bridge Loan, together with any interest due thereunder, which would result in a default under the Bridge Loan and a likely suspension of development and construction for the Hall of Fame Village powered by Johnson Controls. We previously received notices of default under the Bridge Loan, which is secured by substantially all of our assets. Although the loan documents were amended to extend the time within which we must make principal payments and bring the loan back into performing status and an affiliate of Industrial Realty Group has guaranteed certain payment obligations under the Bridge Loan, there can be no assurance that we will be able to repay the obligation upon maturity or otherwise avoid a future default;

 

failure to continue to lease or acquire additional property in Canton, Ohio at the level of prices estimated;

 

inability to complete development and construction on schedule, on budget or otherwise in a timely and cost-effective manner;

 

issues impacting the brand of the PFHOF;

 

inability to secure and maintain relationships and sponsorships with key partners, or a failure by key partners to fulfill their obligations;

 

failure to manage rapidly expanding operations in the projected time frame;

 

our or our partners’ ability to provide innovative entertainment that competes favorably against other entertainment parks and similar enterprises on the basis of price, quality, design, appeal, reliability and performance;

 

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failure of investments in technology and machinery, including our investments in virtual reality in connection with the proposed Hall of Fame Experience, to perform as expected;

 

increases in operating costs, including capital improvements, insurance premiums, general taxes, real estate taxes and utilities, affecting our profit margins;

 

general economic, political and business conditions in the United States and, in particular, in the Midwest and the geographic area around Canton, Ohio;

 

inflation, appreciation of the real estate and fluctuations in interest rates; or

 

existing and future governmental laws and regulations, including changes in our ability to use or receive Tourism Development District (“TDD”) funds, tax-increment financing (“TIF”) funds or other grants and tax credits (including Ohio Film Tax Credits).

 

We are relying on various forms of public financing to finance the Company.

 

We currently expect to obtain a portion of the capital required for the development and operations of the Hall of Fame Village powered by Johnson Controls from various forms of public financing, including TDD funds, TIF funds, grants and tax credits (including Ohio Film Tax Credits), which depend, in part, on factors outside of our control. The concept of a TDD was created under state law specifically for Canton, Ohio and the Hall of Fame Village powered by Johnson Controls. Canton City Council was permitted to designate up to 200 acres as a TDD and to prove the collection of additional taxes within that acreage to be used to foster tourism development. Canton City Council passed legislation allowing the collection of a 5% admissions tax and an additional 2% gross receipts tax and agreed to give the revenue from its 3% municipal lodging tax collected at any hotels built in the TDD to the Hall of Fame Village powered by Johnson Controls for 30 years. Our ability to obtain funds from TDD depends on, among other things, ticket sales (including parking lots, garages, stadiums, auditoriums, museums, athletic parks, swimming pools and theaters), wholesale, retail and some food sales within the TDD and revenues from our hotels within the TDD. For TIF funds, the amount of property tax that a specific district generates is set at a base amount and as property values increase, property tax growth above that base amount, net of property taxes retained by the school districts, can be used to fund redevelopment projects within the district. Our ability to obtain TIF funds is dependent on the value of developed property in the specific district, the collection of general property taxes from property owners in the specific district, the time it takes the tax assessor to update the tax rolls and market interest rates at the time the tax increment bonds are issued.

 

If we are unable to realize the expected benefits from these various forms of public financing, we may need to obtain alternative financing through other means, including private transactions. If we are required to obtain alternative financing, such alternative financing may not be available at all or may not be available in a timely manner or on terms substantially similar or as favorable to public financing, which could significantly affect our ability to develop the Hall of Fame Village powered by Johnson Controls, increase our cost of capital and have a material adverse effect on our results of operations, cash flows and financial position.

 

If we were to obtain financing through private investment in public equity investments or other alternative financing, it could subject us to risks that, if realized, would adversely affect us, including the following:

 

our cash flows from operations could be insufficient to make required payments of principal of and interest on any debt financing, and a failure to pay would likely result in acceleration of such debt and could result in cross accelerations or cross defaults on other debt;

 

such debt may increase our vulnerability to adverse economic and industry conditions;

 

to the extent that we generate and use any cash flow from operations to make payments on such debt, it will reduce our funds available for operations, development, capital expenditures and future investment opportunities or other purposes;

 

debt covenants may limit our ability to borrow additional amounts, including for working capital, capital expenditures, debt service requirements, executing our development plan and other purposes;

 

restrictive debt covenants may limit our flexibility in operating our business, including limitations on our ability to make certain investments; incur additional indebtedness; create certain liens; incur obligations that restrict the ability of our subsidiaries to make payments to us; consolidate, merge or transfer all or substantially all of our assets; or enter into transactions with affiliates; and

 

to the extent that such debt bears interest at a variable rate, we would be exposed to the risk of increased interest rates.

 

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We are still assembling our management team and our leadership may change significantly.

 

The success of our business depends on our ability to hire and retain key employees and members of management who have extensive experience in project development and relationships with key partners. In late 2018, we hired CEO, Michael Crawford, to lead HOF Village and in September 2019, we hired a new Chief Financial Officer, Jason Krom. In December 2019, we hired an Executive Vice President for Public Affairs, Anne Graffice, to oversee community, investor, media and government relations, and manage all corporate social responsibility initiatives for the Company. In June 2020, we hired a President of Operations, Mike Levy, to be responsible for day-to-day operations of all on- and off-site assets owned by the Company. Moving forward, Mr. Levy will provide key operational input for all new construction development as the Company continues to execute Phase II of its project. In August 2020, we hired a Vice President, Human Resources, Lisa Gould and at the end of August 2020, we hired a General Counsel, Tara Charnes. In September 2020, we hired an Executive Vice President of New Business Development/Marketing and Sales, Erica Muhleman.

 

The ability of new members of our management team to quickly expand their knowledge of the Company, our business plans, operations, strategies and challenges will be critical to their ability to make informed decisions about our strategy and operations. If our management team is not sufficiently informed to make such decisions, our ability to compete effectively and profitably could be adversely affected. In addition, changes in our management team may be disruptive to, or cause uncertainty in, our business and the vision of the Company, and could have a negative impact on our ability to complete the construction and development components of the Hall of Fame Village powered by Johnson Controls in a timely and cost-effective manner and to manage and grow our business effectively. Any such disruption or uncertainty or difficulty in efficiently and effectively filling key management roles could have a material adverse impact on our business and results of operations.

  

The success of our business is substantially dependent upon the continued success of the Pro Football Hall of Fame (“PFHOF”) brand and our ability to continue to secure favorable contracts with and maintain a good working relationship with PFHOF and its management team.

 

The success of our business is substantially dependent upon the continued success of the PFHOF brand and our ability to continue to secure favorable contracts with and maintain a good working relationship with PFHOF and its management team. PFHOF’s support and cooperation – through agreements, alliances, opportunities and otherwise – is of critical importance to our long-term success.

 

PFHOF is a 501(c)(3) not-for-profit organization that owns and operates the Pro Football Hall of Fame in Canton, Ohio. We are geographically located adjacent to PFHOF, and the local community and broader public generally view the Company and PFHOF as closely-connected affiliates. While PFHOF currently beneficially owns 19.3% of the Company’s outstanding Common Stock, the Company is neither a subsidiary of nor controlled by PFHOF. PFHOF is a party to the Director Nominating Agreement, which among other things provides PFHOF with the right to designate one individual to be appointed or nominated for election to the Company’s Board, subject to certain conditions. Our director Ed Roth was designated by PFHOF pursuant to the Director Nominating Agreement.

 

We have entered into several agreements with PFHOF that are of significance to our business, including: (i) a First Amended and Restated License Agreement, dated September 16, 2019 (the “License Agreement”), (ii) an Amended and Restated Media License Agreement, dated July 1, 2020 (the “Media License Agreement”), and (iii) a Shared Services Agreement, dated June 30, 2020 (the “Shared Services Agreement”). These agreements address topics that include, but are not limited to, the following:

 

License to use PFHOF marks. Under the License Agreement, PFHOF grants to our Company a non-transferable, non-exclusive right and license to use PFHOF marks in conjunction with the Hall of Fame Village complex (the “Village”), Legends Landing, any theme park, water park, theater, sports arena, sports facility, hotel, sports bar, general or specific location-based entertainment, youth sports programs (excluding certain NFL-sponsored youth sports programs) (“Exclusive Fields of Use”). The license is exclusive for the Exclusive Fields of Use only within the municipal boundary of the City of Canton, Ohio. Under the License Agreement, PFHOF agreed that it will not grant any third party a license to use PFHOF marks outside of Canton, Ohio, in connection with the themed entertainment industry without giving us a right of first refusal to accept such third-party offer. In addition, the License Agreement provides that, subject to certain exceptions, all communications with the National Football League (the “NFL”), its 32 member clubs and its Hall of Famers must be made exclusively through PFHOF rather than from the Company. Many of the Company’s events involve the participation of the NFL’s Hall of Famers. The Company therefore must rely on PFHOF’s cooperation and support to a significant extent in coordinating events and other activities involving any of these parties.

 

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Sponsorships. The License Agreement provides that PFHOF and our Company have the right to jointly seek sponsorships from third parties in conjunction with the Village and to sublicense PFHOF marks to such sponsors. The License Agreement provides that PFHOF and our Company have the right to enter into exclusive sponsorships for their individually owned and operated assets. The License Agreement provides that our Company and PFHOF will use their best efforts to coordinate the marketing, sales and activation of sponsorships so as to maximize the revenue of both organizations and minimize any potential negative impact to either organization. We and PFHOF are both parties to sponsorship agreements that are important to our business, such as the Naming Rights Agreement and the Constellation Sponsorship Agreement. We also rely on a collaborative approach with PFHOF to pursue other joint sponsorship agreements with third parties. Our success in obtaining those sponsorship agreements is highly dependent on the maintenance of a good working relationship with PFHOF and its management team. In addition, once these sponsorships are obtained, the Company must rely on PFHOF’s cooperation in performing the obligations relating to PFHOF required by the sponsorship agreements. See “Risk Factors – Risk Related to Our Business – We rely on sponsorship contracts to generate revenues.”

 

Use of PFHOF media assets. The Media License Agreement provides for the sharing of media-related opportunities between PFHOF and our Company and sets forth the terms under which PFHOF enables our Company to exploit existing PFHOF works and create new works. Our ability to successfully monetize PFHOF assets (e.g., photographs, videos, memorabilia and other historically significant football-related assets) under the Media License Agreement depends upon PFHOF’s providing access to such media assets as contemplated by the terms of the Media License Agreement.

 

Shared Services. Under the Shared Services Agreement, our Company and PFHOF agree to act in good faith to coordinate with each other on certain services, including, without limitation, community relations, government relations, marketing and public relations, new business development, sponsorship activities and youth programming. Our success in these endeavors depends to a significant extent on PFHOF’s cooperation in coordinating these services and events.

 

In the past, we have had to renegotiate payment terms and other provisions in certain of our agreements with PFHOF as part of improving the Company’s financial position. If we were to lose or be required to renegotiate any of these agreements or if PFHOF failed to perform any of these agreements, our business may be adversely affected.

  

Changes in consumer tastes and preferences for sports and entertainment products could reduce demand for our offerings and products and adversely affect the profitability of our business.

 

The success of our business depends on our ability to consistently provide, maintain and expand attractions and events as well as create and distribute media programming, online material and consumer products that meet changing consumer preferences. Consumers who are fans of professional football will likely constitute a substantial majority of the attendance to Hall of Fame Village powered by Johnson Controls, and our success depends in part on the continued popularity of professional football and on our ability to successfully predict and adapt to tastes and preferences of this consumer group. If our sports and entertainment offerings and products do not achieve sufficient consumer acceptance or if consumer preferences change or consumers are drawn to other spectator sports and entertainment options, our business, financial condition or results of operations could be materially adversely affected. In the past, we have hosted major professional football events, as well as other musical and live entertainment events, and we can provide no assurance that we will be able to continue to host such events.

 

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Incidents or adverse publicity concerning Hall of Fame Village powered by Johnson Controls could harm our reputation as well as negatively impact our revenues and profitability.

 

Our reputation is an important factor in the success of our business. Our ability to attract and retain guests depends, in part, upon the external perceptions of our Company, the brands we are associated with, the quality of Hall of Fame Village powered by Johnson Controls and its services and our corporate and management integrity. If market recognition or the perception of Hall of Fame Village powered by Johnson Controls diminishes, there may be a material adverse effect on our revenues, profits and cash flow. In addition, the operations of Hall of Fame Village powered by Johnson Controls, particularly the Hall of Fame Indoor Waterpark, involve the risk of accidents, illnesses, environmental incidents and other incidents which may negatively affect the perception of guest and employee safety, health, security and guest satisfaction and which could negatively impact our reputation, reduce attendance at our facilities and negatively impact our business and results of operations.

 

We rely on sponsorship contracts to generate revenues.

 

We will receive a portion of our annual revenues from sponsorship agreements, including the amended and restated sponsorship and naming rights agreement, dated as of July 2, 2020 (the “Naming Rights Agreement”), by and among HOF Village, PFHOF and Johnson Controls, the sponsorship and services agreement, dated as of December 19, 2018, as amended (the “Constellation Sponsorship Agreement”), by and among HOF Village, PFHOF and Constellation NewEnergy, Inc., a Delaware corporation (“Constellation”), and other sponsorship agreements for various content, media and live events produced at Hall of Fame Village powered by Johnson Controls such as title, official product and promotional partner sponsorships, billboards, signs and other media. We are continuously in negotiations with existing sponsors and actively seeking new sponsors as there is significant competition for sponsorships. Some of our live events may not secure a title sponsor, may not secure a sufficient number of sponsorships on favorable terms, or may not secure sponsorships sufficiently enough in advance of an event, which may lead to event cancellations or otherwise adversely affect the revenue generated from such events.

 

The Naming Rights Agreement is scheduled to expire on December 31, 2034, but provides termination rights both to (a) HOF Village and PFHOF and (b) Johnson Controls, which may be exercised in the event the other party breaches any of its covenants and agreements under the Naming Rights Agreement beyond certain notice and cure periods, applies for or consents to the appointment of a custodian of any kind with respect to all or substantially all of its assets, becomes insolvent or is unable to pay its debts generally as they become due, makes a general assignment for the benefit of its creditors, files a voluntary petition seeking relief under any bankruptcy law, or an involuntary petition is filed by a creditor under any bankruptcy law and is approved by a court of competent jurisdiction. Additionally, Johnson Controls has a right to terminate the Naming Rights Agreement if Phase II is not open for business by January 2, 2024 and if HOF Village is in default beyond applicable notice and cure periods under certain agreements, such as the Technology as a Service Agreement, any loan document evidencing or securing any construction loan with respect to the Hall of Fame Village powered by Johnson Controls and any agreement with its general contractor with respect to the construction of the Hall of Fame Village powered by Johnson Controls, among others.

 

The Constellation Sponsorship Agreement is scheduled to expire on December 31, 2029, but provides termination rights both to (a) HOF Village and PFHOF and (b) Constellation, which may be exercised if a party would suffer material damage to its reputation by association with the other party or if there is an event of default. An event of default under the Constellation Sponsorship Agreement includes a party’s failure to perform its material obligations for 60 days after receiving written notice from the other party and failure to cure such default; a party’s becoming insolvent or filing a voluntary petition in bankruptcy; a party’s being adjudged bankrupt; an involuntary petition under any bankruptcy or insolvency law being filed against a party; a party’s sale, assignment or transfer of all or substantially all of its assets (other than to an affiliate in the case of HOF Village or PFHOF). Additionally, Constellation has a right to terminate the Constellation Sponsorship Agreement effective as of December 31, 2023 for failure to recover its investment in the form of new business, if it provides written notice on or prior to December 1, 2022.

 

Loss of our existing title sponsors or other major sponsorship agreements, including the Naming Rights Agreement and Constellation Sponsorship Agreement, or failure to secure sponsorship agreements in the future on favorable terms, could have a material adverse effect on our business, financial condition and results of operations.

 

We could be adversely affected by declines in discretionary consumer spending, consumer confidence and general and regional economic conditions.

 

Our success depends to a significant extent on discretionary consumer spending, which is heavily influenced by general economic conditions and the availability of discretionary income. The current economic downturn as a result of COVID-19, coupled with high volatility and uncertainty as to the future global economic landscape, has had an adverse effect on consumers’ discretionary income and consumer confidence. Future volatile, negative or uncertain economic conditions and recessionary periods or periods of significant inflation may adversely impact attendance and guest spending levels at Hall of Fame Village powered by Johnson Controls, which would materially adversely affect our business, financial condition and results of operations.

 

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Hall of Fame Village powered by Johnson Controls will be located in Canton, Ohio. The concentration of our operations in this market exposes us to greater risks than if our operations were more geographically diverse. As a result, negative developments in the local economic conditions in the Midwest region, particularly those impacting travel, hotel or other real estate operations, could reduce guest attendance, negatively impact consumer spending, increase tenant defaults and otherwise have a material adverse effect on our profitability.

 

Other factors that can affect consumer spending and confidence include severe weather, hurricanes, flooding, earthquakes and other natural disasters, elevated terrorism alerts, terrorist attacks, military actions, air travel concerns, outbreaks of disease, and geopolitical events, as well as various industry and other business conditions, including an ever increasing number of sporting and entertainment options that compete for discretionary spending. Such factors or incidents, even if not directly impacting us, can disrupt or otherwise adversely impact the spending sentiment and interest of our present or potential customers and sponsors.

 

Hall of Fame Village powered by Johnson Controls will operate in highly competitive industries and our revenues, profits or market share could be harmed if we are unable to compete effectively.

 

We will face substantial competition in each of our businesses. For example:

 

Tom Benson Hall of Fame Stadium, the National Youth Football & Sports Complex and the Center for Performance will compete with other facilities and venues across the region and country for hosting concerts, athletic events (including professional sports events, sports camps and tournaments) and other major conventions;

 

Hall of Fame Village Media will compete (i) with other media and content producers to obtain creative and performing talent, sports and other programming content, story properties, advertiser support, distribution channels and market share and (ii) for viewers with other broadcast, cable and satellite services as well as with home entertainment products, new sources of broadband and mobile delivered content and internet usage;

 

The Hall of Fame Indoor Waterpark, the Hall of Fame hotels, and the Hall of Fame retail promenade, if and when completed, will compete for guests with other theme parks and resorts, such as Cedar Point, located in Sandusky, Ohio, and other theme parks, retail and tourist destinations in Ohio and around the country, and with other forms of entertainment, lodging, tourism and recreation activities; and

 

The planned Constellation Center for Excellence will compete for tenants with other suppliers of commercial and/or retail space.

 

Competition in each of these areas may increase as a result of technological developments, changes in consumer preferences, economic conditions, changes in market structure and other factors that affect the recreation, entertainment, vacation, retail, tourism and leisure industries generally. Increased competition may divert consumers from Hall of Fame Village powered by Johnson Controls to other forms of entertainment, which could reduce our revenue or increase our marketing costs. Our competitors may have substantially greater financial resources than we do, and they may be able to adapt more quickly to changes in consumer preferences or devote greater resources to promotion of their offerings and services or to development or acquisition of offerings and services that are perceived to be of a higher quality or value than our offerings and services. As a result, we may not be able to compete successfully against such competitors.

 

We may not be able to fund capital expenditures and investment in future attractions and projects.

 

A principal competitive factor for Hall of Fame Village powered by Johnson Controls is the originality and perceived quality of its events, attractions and offerings. Even after completion of the various components of the Hall of Fame Village powered by Johnson Controls, we will need to make continued capital investments through maintenance and the regular addition of new events, attractions and offerings. Our ability to fund capital expenditures will depend on our ability to generate sufficient cash flow from operations and to raise capital from third parties. We cannot assure you that our operations will be able to generate sufficient cash flow to fund such costs, or that we will be able to obtain sufficient financing on adequate terms, or at all, which could cause us to delay or abandon certain projects or plans.

  

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The high fixed cost structure of the Company’s operations may result in significantly lower margins if revenues decline.

 

We expect a large portion of our operating expenses to be relatively fixed because the costs for full-time employees, maintenance, utilities, advertising and insurance will not vary significantly with attendance. These fixed costs may increase at a greater rate than our revenues and may not be able to be reduced at the same rate as declining revenues. If cost-cutting efforts are insufficient to offset declines in revenues or are impracticable, we could experience a material decline in margins, revenues, profitability and reduced or negative cash flows. Such effects can be especially pronounced during periods of economic contraction or slow economic growth.

 

Increased labor costs, labor shortages or labor disruptions could reduce our profitability.

 

Because labor costs are and will continue to be a major component of our operating expenses, higher labor costs could reduce our profitability. Higher labor costs could result from, among other things, labor shortages that require us to raise labor rates in order to attract employees, and increases in minimum wage rates. Higher employee health insurance costs could also adversely affect our profitability. Additionally, increased labor costs, labor shortages or labor disruptions by employees of our third-party contractors and subcontractors could disrupt our operations, increase our costs and affect our profitability.

 

Cyber security risks and the failure to maintain the integrity of internal or guest data could result in damages to our reputation, the disruption of operations and/or subject us to costs, fines or lawsuits.

 

We anticipate that we will collect and retain large volumes of internal and guest data, including credit card numbers and other personally identifiable information, for business purposes, including for transactional or target marketing and promotional purposes, and our various information technology systems enter, process, summarize and report such data. We also expect to maintain personally identifiable information about our employees. The integrity and protection of our guest, employee and company data will be critical to our business and our guests and employees are likely to have a high expectation that we will adequately protect their personal information. The regulatory environment, as well as the requirements imposed on us by the credit card industry, governing information, security and privacy laws is increasingly demanding and continues to evolve. Maintaining compliance with applicable security and privacy regulations may increase our operating costs and/or adversely impact our ability to market our theme parks, products and services to our guests.

 

We also expect to rely on accounting, financial and operational management information technology systems to conduct our operations. If these information technology systems suffer severe damage, disruption or shutdown and our business continuity plans do not effectively resolve the issues in a timely manner, our business, financial condition and results of operations could be materially adversely affected.

 

We may face various security threats, including cyber security attacks on our data (including our vendors’ and guests’ data) and/or information technology infrastructure. Although we will utilize various procedures and controls to monitor and mitigate these threats, there can be no assurance that these procedures and controls will be sufficient to prevent penetrations or disruptions to our systems. Furthermore, a penetrated or compromised data system or the intentional, inadvertent or negligent release or disclosure of data could result in theft, loss, fraudulent or unlawful use of guest, employee or company data which could harm our reputation or result in remedial and other costs, fines or lawsuits and require significant management attention and resources to be spent. In addition, our insurance coverage and indemnification arrangements that we enter into, if any, may not be adequate to cover all the costs related to cyber security attacks or disruptions resulting from such events. To date, cyber security attacks directed at us have not had a material impact on our financial results. Due to the evolving nature of security threats, however, the impact of any future incident cannot be predicted.

  

Investors are subject to litigation risk and their respective investments in the shares of our Common Stock may be lost as a result of our legal liabilities or the legal liabilities of our affiliates.

 

We or our affiliates may from time to time be subject to claims by third parties and may be plaintiffs or defendants in civil proceedings, including in connection with the development and operations of Hall of Fame Village powered by Johnson Controls. In January 2018, several subcontractors who helped construct the Tom Benson Hall of Fame Stadium filed mechanics’ liens against the stadium. Although we have settled these particular claims, there can be no assurance that similar claims will not be brought in the future if we cannot generate the revenue that we forecast or raise sufficient capital to pay contractors in connection with constructing other components of the project. The expense of prosecuting claims, for which there is no guarantee of success, and/or the expense of defending against claims by third parties and paying any amounts pursuant to settlements or judgments, would generally be borne by the Company and could result in the reduction or complete loss of all of the assets of the Company, which could result in the loss of your entire investment.

 

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Our business may be adversely affected by tenant defaults or bankruptcy.

 

Our business may be adversely affected if any future tenants at the Constellation Center for Excellence or Hall of Fame retail promenade default on their obligations to us. A default by a tenant may result in the inability of such tenant to re-lease space from us on economically favorable terms, or at all. In the event of a default by a tenant, we may experience delays in payments and incur substantial costs in recovering our losses. In addition, our tenants may file for bankruptcy or be involved in insolvency proceedings and we may be required to expense costs associated with leases of bankrupt tenants and may not be able to replace future rents for tenant space rejected in bankruptcy proceedings, which could adversely affect our properties. Any bankruptcies of our tenants could make it difficult for us to enforce our rights as lessor and protect our investment.

 

Fluctuations in real estate values may require us to write down the carrying value of our real estate assets or investments.

 

Real estate valuations are subject to significant variability and fluctuation. The valuation of our real estate assets or real estate investments is inherently subjective and based on the individual characteristics of each asset. Factors such as competitive market supply and demand for inventory, changes in laws and regulations, political and economic conditions and interest and inflation rate fluctuations subject our valuations to uncertainty. Our valuations are or will be made on the basis of assumptions that may not prove to reflect economic or demographic reality. If the real estate market deteriorates, we may reevaluate the assumptions used in our analyses. As a result, adverse market conditions may require us to write down the book value of certain real estate assets or real estate investments and some of those write-downs could be material. Any material write-downs of assets could have a material adverse effect on our financial condition and results of operations.

 

Our property taxes could increase due to rate increases or reassessments or the imposition of new taxes or assessments or loss of tax credits, which may adversely impact our financial condition and results of operations.

 

We are required to pay state and local real property taxes and assessments on our properties. The real property taxes and assessments on our properties may increase as property or special tax rates increase or if our properties are assessed or reassessed at a higher value by taxing authorities. In addition, if we are obligated to pay new taxes or if there are increases in the property taxes and assessments that we currently pay, our financial condition and results of operations could be adversely affected. We are relying on various forms of public financing to finance the development and operations of the Company.

 

Our insurance coverage may not be adequate to cover all possible losses that we could suffer and our insurance costs may increase.

 

We seek to maintain comprehensive insurance coverage at commercially reasonable rates. Although we maintain various safety and loss prevention programs and carry property and casualty insurance to cover certain risks, our insurance policies do not cover all types of losses and liabilities. There can be no assurance that our insurance will be sufficient to cover the full extent of all losses or liabilities for which we are insured, and we cannot guarantee that we will be able to renew our current insurance policies on favorable terms, or at all. In addition, if we or other theme park operators sustain significant losses or make significant insurance claims, then our ability to obtain future insurance coverage at commercially reasonable rates could be materially adversely affected.

 

Our operations and our ownership of property subject us to environmental requirements, and to environmental expenditures and liabilities.

 

We incur costs to comply with environmental requirements, such as those relating to water use, wastewater and storm water management and disposal, air emissions control, hazardous materials management, solid and hazardous waste disposal, and the clean-up of properties affected by regulated materials.

 

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We may be required to investigate and clean-up hazardous or toxic substances or chemical releases, and other releases, from current or formerly owned or operated facilities. In addition, in the ordinary course of our business, we generate, use and dispose of large volumes of water, which requires us to comply with a number of federal, state and local regulations and to incur significant expenses. Failure to comply with such regulations could subject us to fines and penalties and/or require us to incur additional expenses.

 

We cannot assure you that we will not incur substantial costs to comply with new or expanded environmental requirements in the future or to investigate or clean-up new or newly identified environmental conditions, which could also impair our ability to use or transfer the affected properties and to obtain financing.

 

Our planned sports betting, fantasy sports and eSports operations are subject to a variety of U.S. and foreign laws, many of which are unsettled and still developing and which could subject us to claims or otherwise harm our business. Any change in existing regulations or their interpretation, or the regulatory climate applicable to our products and services, or changes in tax rules and regulations or interpretation thereof related to our products and services, could adversely impact our ability to operate our business as currently conducted or as we seek to operate in the future, which could have a material adverse effect on our financial condition and results of operations.

 

Our planned sports betting, fantasy sports and eSports operations are generally subject to laws and regulations relating to sports betting, fantasy sports and eSports in the jurisdictions in which we are planning to conduct such operations or in some circumstances, in those jurisdictions in which we offer our services or they are available, as well as the general laws and regulations that apply to all e-commerce businesses, such as those related to privacy and personal information, tax and consumer protection. These laws and regulations vary from one jurisdiction to another and future legislative and regulatory action, court decisions or other governmental action, which may be affected by, among other things, political pressures, attitudes and climates, as well as personal biases, may have a material impact on our operations and financial results. In particular, some jurisdictions have introduced regulations attempting to restrict or prohibit online gaming, while others have taken the position that online gaming should be licensed and regulated and have adopted or are in the process of considering legislation and regulations to enable that to happen. Additionally some jurisdictions in which we may operate could presently be unregulated or partially regulated and therefore more susceptible to the enactment or change of laws and regulations.

 

In May 2018, the U.S. Supreme Court struck down as unconstitutional the Professional and Amateur Sports Protection Act of 1992 (“PASPA”). This decision has the effect of lifting federal restrictions on sports betting and thus allows states to determine by themselves the legality of sports betting. Since the repeal of PASPA, several states (including Washington D.C.) have legalized online sports betting. To the extent new real money gaming or sports betting jurisdictions are established or expanded, we cannot guarantee that we will be successful in penetrating such new jurisdictions. If we are unable to effectively develop and operate directly or indirectly within existing or new jurisdictions or if our competitors are able to successfully penetrate geographic jurisdictions that we cannot access or where we face other restrictions, there could be a material adverse effect on our sports betting, fantasy sports and eSports operations. Our failure to obtain or maintain the necessary regulatory approvals in jurisdictions, whether individually or collectively, would have a material adverse effect on our business. To operate in any jurisdiction, we may need to be licensed and obtain approvals of our product offerings. This is a time-consuming process that can be extremely costly. Any delays in obtaining or difficulty in maintaining regulatory approvals needed for expansion within existing jurisdictions or into new jurisdictions can negatively affect our opportunities for growth, including the growth of our customer base, or delay our ability to recognize revenue from our offerings in any such jurisdictions.

 

Future legislative and regulatory action, and court decisions or other governmental action, may have a material impact on our planned sports betting, fantasy sports and eSports operations. Governmental authorities could view us as having violated local laws, despite our efforts to obtain all applicable licenses or approvals. There is also a risk that civil and criminal proceedings, including class actions brought by or on behalf of prosecutors or public entities or incumbent monopoly providers, or private individuals, could be initiated against us, Internet service providers, credit card and other payment processors, advertisers and others involved in the sports betting industry. Such potential proceedings could involve substantial litigation expense, penalties, fines, seizure of assets, injunctions or other restrictions being imposed upon us or our licensees or other business partners, while diverting the attention of key executives. Such proceedings could have a material adverse effect on our business, financial condition, results of operations and prospects, as well as impact our reputation.

 

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The growth prospects of our planned sports betting operations depend on the legal status of real-money gaming in various jurisdictions, predominantly within the United States, which is an initial area of focus, and legalization may not occur in as many states as we expect, or may occur at a slower pace than we anticipate. Additionally, even if jurisdictions legalize real money gaming, this may be accompanied by legislative or regulatory restrictions and/or taxes that make it impracticable or less attractive to operate in those jurisdictions, or the process of implementing regulations or securing the necessary licenses to operate in a particular jurisdiction may take longer than we anticipate, which could adversely affect our future results of sports betting operations and make it more difficult to meet our expectations for financial performance.

 

A number of states have legalized, or are currently considering legalizing, real money gaming, and the growth prospects of our planned sports betting operations are significantly dependent upon such legalization. The legalization of real money gaming may not occur as we have anticipated. Additionally, if a large number of additional states or the federal government enact real money gaming legislation and we are unable to obtain, or are otherwise delayed in obtaining the necessary licenses to operate online sports betting websites in U.S. jurisdictions where such games are legalized, our future growth in online sports betting could be materially impaired.

 

As we enter into new jurisdictions, states or the federal government may legalize real money gaming in a manner that is unfavorable to us. As a result, we may encounter legal, regulatory and political challenges that are difficult or impossible to foresee and which could result in an unforeseen adverse impact on planned revenues or costs associated with the new opportunity. For example, certain states require a relationship with a land-based, licensed casino for online Sportsbook access. States that have established state-run monopolies may limit opportunities for private sector participants like us. States also impose substantial tax rates on online sports betting revenue, in addition to sales taxes in certain jurisdictions and a federal excise tax of 25 basis points on the amount of each wager.

 

Therefore, even in cases in which a jurisdiction purports to license and regulate sports betting, the licensing and regulatory regimes can vary considerably in terms of their business-friendliness and at times may be intended to provide incumbent operators with advantages over new licensees. Therefore, some “liberalized” regulatory regimes are considerably more commercially attractive than others.

 

Failure to comply with regulatory requirements in a particular jurisdiction, or the failure to successfully obtain a license or permit applied for in a particular jurisdiction, could impact our ability to comply with licensing and regulatory requirements in other jurisdictions, or could cause the rejection of license applications or cancelation of existing licenses in other jurisdictions, or could cause financial institutions, online and mobile platforms, advertisers and distributors to stop providing services to us which we rely upon to receive payments from, or distribute amounts to, our users, or otherwise to deliver and promote our services. 

 

Compliance with the various regulations applicable to fantasy sports and real money gaming is costly and time-consuming. Regulatory authorities at the non-U.S., U.S. federal, state and local levels have broad powers with respect to the regulation and licensing of fantasy sports and real money gaming operations and may revoke, suspend, condition or limit our fantasy sports or real money gaming licenses, impose substantial fines on us and take other actions, any one of which could have a material adverse effect on our business, financial condition, results of operations and prospects. These laws and regulations are dynamic and subject to potentially differing interpretations, and various legislative and regulatory bodies may expand current laws or regulations or enact new laws and regulations regarding these matters. We will strive to comply with all applicable laws and regulations relating to our business. It is possible, however, that these requirements may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules. Non-compliance with any such law or regulations could expose us to claims, proceedings, litigation and investigations by private parties and regulatory authorities, as well as substantial fines and negative publicity, each of which may materially and adversely affect our business.

 

Any fantasy sports or real money gaming license obtained could be revoked, suspended or conditioned at any time. The loss of a license in one jurisdiction could trigger the loss of a license or affect our eligibility for such a license in another jurisdiction, and any of such losses, or potential for such loss, could cause us to cease offering some or all of our offerings in the impacted jurisdictions. We may be unable to obtain or maintain all necessary registrations, licenses, permits or approvals, and could incur fines or experience delays related to the licensing process, which could adversely affect our operations. Our delay or failure to obtain or maintain licenses in any jurisdiction may prevent us from distributing our offerings, increasing our customer base and/or generating revenues. We cannot assure you that we will be able to obtain and maintain the licenses and related approvals necessary to conduct our planned sports betting operations. Any failure to maintain or renew our licenses, registrations, permits or approvals could have a material adverse effect on our business, financial condition, results of operations and prospects.

 

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Our growth prospects and market potential for our proposed sports betting, fantasy sports and eSports operations will depend on our ability to obtain licenses to operate in a number of jurisdictions and if we fail to obtain such licenses our business, financial condition, results of operations and prospects could be impaired.

 

Our ability to grow our proposed sports betting, fantasy sports and eSports operations will depend on our ability to obtain and maintain licenses to offer our product offerings in a large number of jurisdictions or in heavily populated jurisdictions. If we fail to obtain and maintain licenses in large jurisdictions or in a greater number of mid-market jurisdictions, this may prevent us from expanding the footprint of our product offerings, increasing our user base and/or generating revenues. We cannot be certain that we will be able to obtain and maintain licenses and related approvals necessary to conduct our proposed sports betting, fantasy sports and eSports operations. Any failure to obtain and maintain licenses, registrations, permits or approvals could have a material adverse effect on our business, financial condition, results of operations and prospects.

 

Negative events or negative media coverage relating to, or a declining popularity of, fantasy sports, sports betting, the underlying sports or athletes, or online sports betting in particular, or other negative coverage may adversely impact our ability to retain or attract users, which could have an adverse impact on our proposed sports betting, fantasy sports and eSports operations.

 

Public opinion can significantly influence our business. Unfavorable publicity regarding us, for example, our product changes, product quality, litigation, or regulatory activity, or regarding the actions of third parties with whom we have relationships or the underlying sports (including declining popularity of the sports or athletes) could seriously harm our reputation. In addition, a negative shift in the perception of sports betting by the public or by politicians, lobbyists or others could affect future legislation of sports betting, which could cause jurisdictions to abandon proposals to legalize sports betting, thereby limiting the number of jurisdictions in which we can operate such operations. Furthermore, illegal betting activity by athletes could result in negative publicity for our industry and could harm our brand reputation. Negative public perception could also lead to new restrictions on or to the prohibition of sports betting in jurisdictions in which such operations are currently legal. Such negative publicity could also adversely affect the size, demographics, engagement, and loyalty of our customer base and result in decreased revenue or slower user growth rates, which could seriously harm our business.

 

The suspension or termination of, or the failure to obtain, any business or other licenses may have a negative impact on our business.

 

We maintain a variety of business licenses issued by federal, state and local authorities that are renewable on a periodic basis. We cannot guarantee that we will be successful in renewing all of our licenses on a periodic basis. The suspension, termination or expiration of one or more of these licenses could materially adversely affect our revenues and profits. Any changes to the licensing requirements for any of our licenses could affect our ability to maintain the licenses. In addition, we do not yet have all of the appropriate licenses required for our operations, including liquor licenses. The failure to obtain liquor or other licenses may negatively impact our business.

 

Delays or restrictions in obtaining permits for capital investments could impair our business.

 

Our capital investments require regulatory permits from one or more governmental agencies in order to build new theme parks, attractions and shows. Such permits are typically issued by state agencies, but federal and local governmental permits may also be required. The requirements for such permits vary depending on the location of such capital investments. As with all governmental permitting processes, there is a degree of uncertainty as to whether a permit will be granted, the time it will take for a permit to be issued, and the conditions that may be imposed in connection with the granting of the permit. Therefore, our capital investments in certain areas may be delayed, interrupted or suspended for varying lengths of time, causing a loss of revenue to us and adversely affecting our results of operations.

 

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We received a subpoena request from the Auditor of the State of Ohio requesting documents related to the funding of the Tom Benson Hall of Fame Stadium, and we could in the future receive other subpoenas or requests related to this or other matters.

 

On March 26, 2019, we received an administrative subpoena (the “Subpoena”) from the Auditor of the State of Ohio (the “Ohio Auditor”). The Subpoena required us to furnish a broad range of documents related to the funding sources and disbursements relating to the construction of the Tom Benson Hall of Fame Stadium and related youth fields to the Ohio Auditor by April 30, 2019. We believe we have provided copies of all of the requested documents in our files on the compliance date in a timely manner, and we intend to continue to cooperate with the Ohio Auditor in its investigation of this matter. We believe the investigation is in its preliminary stages, however, we cannot predict the ultimate scope, duration or outcome or any findings the Ohio Auditor may make as part of its investigation. We could in the future receive other regulatory or governmental information requests or subpoenas, or be subject to other actions, investigations or proceedings, the outcome of which could materially adversely affect our business or prospects.

 

The maturity date of the Bridge Loan, which is secured by substantially all of our assets, was extended to November 30, 2020; however, we have previously received notices of default under this agreement (which previous defaults were waived). While this agreement was amended to extend the time within which we must repay the debt in full to November 30, 2020, there can be no assurance that we will be able to repay the obligation upon maturity to avoid a future default.

 

HOF Village entered into the $65 million Bridge Loan on March 20, 2018 with the Lenders and GACP, as administrative agent (the “Term Loan Agreement”). On August 17, 2018, we received a notice of default from GACP (which default was waived) due to our failure to receive cash proceeds from the issuance to us of a permitted loan, or the issuance by us of equity, in an aggregate net amount of not less than $75 million by August 15, 2018 (the “Fundraising Obligation”). Pursuant to an amendment entered into on September 14, 2018, the deadline for the Fundraising Obligation was extended to December 31, 2018 and the interest rate paid to the Lenders was increased to 11% per annum above the prime rate from August 1, 2018 onwards. Pursuant to an amendment entered into on February 19, 2019, the terms of the Fundraising Obligations were further revised, the deadline for the fulfilment of the Fundraising Obligations was extended to March 1, 2019 (or the maturity date, if certain requirements have been met), and the Fundraising Obligation covenant was fully and permanently waived in connection with the deadline extension. We entered into another amendment to the Bridge Loan on August 15, 2019, which extended the maturity date of the Bridge Loan to September 13, 2019. On September 17, 2019, we received a notice of default from GACP due to our failure to pay the principal balance of the Bridge Loan together with interest, fees and other costs in full. We entered into another amendment to the Bridge Loan on November 16, 2019, which further extended the maturity date of the Bridge Loan to October 31, 2020, and required a $25 million principal payment on April 30, 2020, and the applicable interest rate paid to the Lenders was increased to 12% per annum. We did not make the required $25 million principal payment on April 30, 2020. On June 30, 2020, we entered into another amendment to the Bridge Loan, which further extended the maturity date to November 30, 2020, updated certain defined terms to align with the final transaction structure resulting from the Business Combination, specified the Gordon Pointe Transaction Prepayment Amount, added a fee payable to certain Lenders relative to the amounts owed after giving effect to the Gordon Pointe Transaction Prepayment Amount, amended various provisions related to mandatory prepayments of outstanding amounts owed under the Term Loan Agreement (including, but not limited to, prepayments cue in connection with future equity and debt raises) and other minor amendment regarding HOF Village Hotel II, LLC and Mountaineer GM LLC to facilitate their planned operations.

 

On July 1, 2020, we used proceeds from the Business Combination to pay $15.5 million on the Bridge Loan, while an additional $15.0 million converted into equity in HOFRE. The remaining balance of the Bridge Loan following the Business Combination was approximately $34.5 million. While we expect to secure sufficient capital to repay our indebtedness under our Bridge Loan, currently, we do not have the capital to repay the Bridge Loan in full upon maturity and we cannot provide any assurance that we will be able to source such capital by the Bridge Loan maturity date. Our inability to repay the obligations under the Bridge Loan when due would result in another default under the Bridge Loan, which, if enforced, would (a) cause all obligations under the Bridge Loan to become immediately due and payable and (b) grant GACP, as administrative agent, the right to take any or all actions and exercise any remedies available to a secured party under the relevant documents or applicable law or in equity, including commencing foreclosure proceedings on our properties. To the extent we do not have sufficient funds to pay the outstanding balance at maturity, an affiliate of Industrial Realty Group has agreed to advance funds to the Company to pay off the Bridge Loan, under the terms of the guarantee. As a result, Industrial Realty Group would become a lender to the Company with a maturity date of August 2021. As of June 30, 2020, Industrial Realty Group had advanced $22.3 million to HOF Village under IRG November Note. Any other future advances under the IRG November Note require the approval of both HOF Village and Industrial Realty Group (each in their sole discretion), except for advances required to prevent a default under the Bridge Loan (which advances Industrial Realty Group may make without HOF Village’s consent). Additionally, we have reached an agreement with Industrial Realty Group that in the event that Industrial Realty Group or any of its affiliates or related entities advance funds to pay off the Bridge Loan under the guaranty or otherwise and assume the role of Lender, (i) certain mandatory prepayment provisions will be deleted and no longer be applicable, (ii) the maturity date of the Term Loan Agreement will be extended to August 31, 2021 and (iii) we will not be required to pay to any IRG Entity any principal, interest, or other obligations due under the Term Loan Agreement if payment of such amounts would cause the borrowers to violate applicable Nasdaq or securities-law requirements. The IRG November Note is intended to provide us with available funding that can help prevent a default under the Bridge Loan and, if approved by Industrial Realty Group and HOF Village and not otherwise depleted, to provide additional working capital to the Company and/or to pay all or some portion of the remaining balance of the Bridge Loan. Industrial Realty Group exchanged $9.0 million of the amount outstanding under the IRG November Note for the PIPE Notes issued by HOFRE at the time of the closing of the Business Combination and, at present, the outstanding balance of the IRG November Note is $13.3 million.

 

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In addition to amounts advanced under the IRG November Note, various affiliates of Industrial Realty Group have advanced other funds to us and our subsidiaries, of which approximately $2.2 million is classified as “New ACC Funded Debt”, approximately $3.5 million is classified as IRG “preferred equity”, and approximately $0.1 million is classified as “ACC Funded Debt”. These figures include four advances totaling $1.1 million made under the IRG November Note since March 31, 2020, but do not include the PIK interest which has accrued on all advances from date of funding.

 

There can be no assurance that we will be able to meet certain construction deadlines under a Letter of Representations, which could cause a cross-default under the Bridge Loan.

 

If construction is delayed for any reason and we do not meet certain construction deadlines, we could be in breach of a letter of representations agreement with the Canton City School District and Stark County Port Authority (the “Letter of Representations”). A breach of the Letter of Representations would cause a cross-default under the Bridge Loan. If we default on our obligations under the Bridge Loan, GACP could accelerate the entire amount of the Bridge Loan, declare the unpaid balance (plus interest, fees and expenses) immediately due and payable and take other action to enforce the Bridge Loan, including foreclosure of substantially all of our assets that secure the Bridge Loan. An affiliate of Industrial Realty Group has guaranteed certain payment obligations under the Bridge Loan in the event of a default. Additionally, we have reached an agreement with Industrial Realty Group that in the event that Industrial Realty Group or any of its affiliates or related entities advance funds to pay off the Bridge Loan under the guaranty or otherwise and assume the role of Lender (as defined in the Term Loan Agreement), (i) certain mandatory prepayment provisions will be deleted and no longer be applicable, (ii) the maturity date of the Term Loan Agreement will be extended to August 31, 2021 and (iii) we will not be required to pay to any IRG Entity any principal, interest, or other obligations due under the Term Loan Agreement if payment of such amounts would cause Borrowers to violate applicable Nasdaq or securities-law requirements.

 

In connection with the Bridge Loan, HOF Village entered into a mortgage granting a security interest in its rights to certain premises that HOF Village leases from the Canton City School District and Stark County Port Authority. The Letter of Representations provides that any lien created by the mortgage or any other security interest granted in such premises in connection with the Bridge Loan will attach only to HOF Village’s and the other Borrowers’ interest in such premises and would remain subordinate to and not disturb the rights and interests of the City of Canton, Ohio, the Canton City School District, Stark County Port Authority, PFHOF, the State of Ohio, Plain Local School District, the Canton Symphony Orchestra, and persons identified as benefitted parties under any TIF revenue bond declaration. Additionally, the Letter of Representations provides that HOF Village and its relevant affiliates will remain bound to fulfill their respective obligations under the existing ground leases, project leases and certain other agreements with the Canton City School District and Stark County Port Authority and that HOF Village will cause certain payments to be made to Canton City School District and Stark County Port Authority.

 

If we do not receive sufficient capital to substantially repay our indebtedness, our indebtedness may have a material adverse effect on our business, our financial condition and results of operations and our ability to secure additional financing in the future, and we may not be able to raise sufficient funds to repay our indebtedness.

 

As of September 30, 2020, the Company’s capital structure includes debt and debt-like obligations consisting of the following principal amounts:

 

approximately $34.5 million of secured indebtedness outstanding under the Bridge Loan (approximately $15.0 million of which is the principal portion of what is referred to in the Merger Agreement as the IRG, LLC Funded Debt Commitments);

 

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approximately $3.7 million of indebtedness to Development Finance Authority of Summit County, Ohio, representing tax-increment financing proceeds;

 

approximately $5.6 million of indebtedness outstanding pursuant to a loan and security agreement by and among JCIHOFV Financing, LLC (a wholly-owned subsidiary of the Company), HOF Village, PFHOF, other lenders and Wilmington Trust, National Association, as agent, collateralized by the Naming Rights Agreement;

 

approximately $0.2 million of 10.0% unsecured subordinated convertible notes, of which approximately $7 million are classified as “Company Convertible Notes” and $13.7 million are classified as “New Company Convertible Notes” under the Merger Agreement;

 

approximately $1.9 million of indebtedness to Home Federal Savings and Loan Association of Niles;

 

approximately $13.8 million of indebtedness outstanding pursuant to the IRG November Note;

 

approximately $2.9 million drawn on a loan facility of up to $3.0 million with New Market Project, Inc., the proceeds of which are to be used for the development of the McKinley Grand Hotel;

 

approximately $3.5 million drawn on a loan facility of up to $3.5 million with the City of Canton, Ohio;

 

approximately $9.9 million in financing from Constellation through its Efficiency Made Easy (“EME”) program;

 

$390,400 of indebtedness outstanding representing a federal paycheck protection program loan to HOF Village;

 

approximately $7.0 million of indebtedness outstanding pursuant to a promissory note, by HOF Village in favor of JKP Financial, LLC; and

 

Approximately $21.2 million of 8.0% convertible PIPE Notes concurrent with the closing of the Business Combination

 

  Approximately $15.3 million of indebtedness outstanding pursuant to a construction loan agreement with Erie Bank, the proceeds of which are to be used for the development of the McKinley Grand Hotel

 

  Approximately $2.7 million of indebtedness representing a cooperating agreement with DFA Summit, the City of Canton, Ohio, the Canton Regional Special Improvement District, Inc. and the U.S. Bank National Association for the construction of the Series 2020C Project.

 

If we do not have sufficient funds to repay our debt at maturity, our indebtedness could subject us to many risks that, if realized, would adversely affect us, including the following:

 

our cash flows from operations are currently insufficient to make required payments of principal of and interest on the debt, and a failure to pay would likely result in acceleration of such debt and could result in cross accelerations or cross defaults on other debt;

 

our debt may increase our vulnerability to adverse economic and industry conditions;

 

to the extent that we generate and use any cash flow from operations to make payments on our debt, it will reduce our funds available for operations, development, capital expenditures and future investment opportunities or other purposes;

 

debt covenants limit our ability to borrow additional amounts, including for working capital, capital expenditures, debt service requirements, executing our development plan and other purposes;

 

restrictive debt covenants may limit our flexibility in operating our business, including limitations on our ability to make certain investments; incur additional indebtedness; create certain liens; incur obligations that restrict the ability of our subsidiaries to make payments to us; consolidate, merge or transfer all or substantially all of our assets; or enter into transactions with affiliates;

 

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to the extent that our indebtedness bears interest at a variable rate, we are exposed to the risk of increased interest rates;

 

debt covenants may limit our subsidiaries’ ability to make distributions to us;

 

causing an event of default under the Bridge Loan if it is not repaid in full at maturity; and

 

if any debt is refinanced, the terms of any refinancing may not be as favorable as the terms of the debt being refinanced.

 

If we do not have sufficient funds to repay our debt at maturity, it may be necessary to refinance the debt through additional debt or equity financings. If, at the time of any refinancing, prevailing interest rates or other factors result in a higher interest rate on such refinancing, increases in interest expense could adversely affect our cash flows and results of operations. If we are unable to refinance our debt on acceptable terms or at all, we may be forced to dispose of uncollateralized assets on disadvantageous terms, postpone investments in the development of our properties or the Hall of Fame Village powered by Johnson Controls or default on our debt. In addition, to the extent we cannot meet any future debt service obligations, we will risk losing some or all of our assets that are pledged to secure such obligations.

 

Our business plan requires additional liquidity and capital resources that might not be available on terms that are favorable to us, or at all.

 

While our strategy assumes that we will receive sufficient capital to have sufficient working capital, we currently do not have available cash and cash flows from operations to provide us with adequate liquidity for the near-term or foreseeable future. Our current projected liabilities exceed our current cash projections and we have very limited cash flow from current operations. We therefore will require additional capital and/or cash flow from future operations to fund the Company, our debt service obligations and our ongoing business. There is no assurance that we will be able to raise sufficient additional capital or generate sufficient future cash flow from our future operations to fund the Hall of Fame Village powered by Johnson Controls, our debt service obligations or our ongoing business. If the amount of capital we are able to raise, together with any income from future operations, is not sufficient to satisfy our liquidity and capital needs, including funding our current debt obligations, we may be required to abandon or alter our plans for the Company. If we are unable to continue as a going concern, we may have to liquidate our assets, or be foreclosed upon, and may receive less than the value at which those assets are carried on our consolidated financial statements, and it is likely that investors in our Common Stock will lose all or a part of their investment. As discussed in greater detail above, we have previously received notices of default under our Bridge Loan, which is secured by substantially all of our assets (which previous defaults were waived). While we have entered into an amendment to the Term Loan Agreement to extend the maturity date of the Bridge Loan by one month to November 30, 2020 and an affiliate of Industrial Realty Group has guaranteed certain payment obligations of the Company under the Bridge Loan, there can be no assurance that we will be able to repay the obligation upon maturity or otherwise avoid a future default.

 

Our ability to obtain necessary financing may be impaired by factors such as the health of and access to capital markets, our limited track record and the limited historical financial information available, or the substantial doubt about our ability to continue as a going concern. Any additional capital raised through the sale of additional shares of our capital stock, convertible debt or other equity may dilute the ownership percentage of our stockholders.

 

We will have to increase leverage to develop the Company, which could further exacerbate the risks associated with our substantial indebtedness.

 

While we used proceeds from the Business Combination to pay down certain outstanding debt, we will have to take on substantially more debt to complete the construction of the Hall of Fame Village powered by Johnson Controls. We may incur additional indebtedness from time to time in the future to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If and when we incur additional indebtedness, the risks related to our indebtedness could intensify.

 

We may not be able to generate sufficient cash flow from operations to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

 

Our ability to make scheduled payments on or refinance our debt obligations depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond our control. We may be unable to generate a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness. Until such time as we can service our indebtedness with cash flow from operations, we intend to service our indebtedness from other sources.

 

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If our cash flows, cash on hand and other capital resources are insufficient to fund our debt service obligations, we could face continued and future liquidity concerns and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional indebtedness or equity capital, or restructure or refinance our indebtedness. We may not be able to effect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations. The Bridge Loan restricts our ability to dispose of assets and use the proceeds from those dispositions and may also restrict our ability to raise indebtedness or equity capital to be used to repay other indebtedness when it becomes due. We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due.

 

Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our financial position and results of operations.

 

An affiliate of Industrial Realty Group has guaranteed certain payment obligations of HOF Village under the Bridge Loan in the event of a default by HOF Village. Additionally, we have reached an agreement with Industrial Realty Group that in the event that Industrial Realty Group or any of its affiliates or related entities advance funds to pay off the Bridge Loan under the guaranty or otherwise and assume the role of Lender, (i) certain mandatory prepayment provisions will be deleted and no longer be applicable, (ii) the maturity date of the Term Loan Agreement will be extended to August 31, 2021 and (iii) we will not be required to pay to any IRG Entity any principal, interest, or other obligations due under the Term Loan Agreement if payment of such amounts would cause borrowers to violate applicable Nasdaq or securities-law requirements. If we cannot make scheduled payments on our indebtedness, we will be in default and holders of such indebtedness could declare all outstanding principal and interest to be due and payable, the lenders under the Bridge Loan could terminate their commitments to loan money, other indebtedness could be accelerated and we could be forced into bankruptcy or liquidation.

 

If we fail to comply with the reporting obligations of the Exchange Act and Section 404 of the Sarbanes-Oxley Act, or if we fail to maintain adequate internal control over financial reporting, our business, financial condition, and results of operations, and investors’ confidence in us, could be materially and adversely affected.

 

As a public company, we are required to comply with the periodic reporting obligations of the Exchange Act, including preparing annual reports, quarterly reports, and current reports. Our failure to prepare and disclose this information in a timely manner and meet our reporting obligations in their entirety could subject us to penalties under federal securities laws and regulations of the Nasdaq, expose us to lawsuits, and restrict our ability to access financing on favorable terms, or at all.

 

In addition, pursuant to Section 404 of the Sarbanes-Oxley Act, we are required to develop. evaluate and provide a management report of our systems of internal control over financial reporting. During the course of the evaluation of our internal control over financial reporting, we could identify areas requiring improvement and could be required to design enhanced processes and controls to address issues identified through this review. This could result in significant delays and costs to us and require us to divert substantial resources, including management time, from other activities.

 

If we fail to comply with the requirements of Section 404 on a timely basis this could result in the loss of investor confidence in the reliability of our financial statements, which in turn could, negatively impact the trading price of our stock, and adversely affect investors’ confidence in the Company and our ability to access capital markets for financing.

 

The requirements of being a public company may strain our resources and distract management

 

We expect to incur significant costs associated with our public company reporting requirements and costs associated with applicable corporate governance requirements. These applicable rules and regulations are expected to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly than those for privately owned companies that are not registrants with the Commission. Compliance with these rules and regulations may divert management’s attention from other business concerns.

 

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The COVID-19 pandemic could have a material adverse effect on our business.

 

We are closely monitoring the outbreak of respiratory illness caused by a novel strain of coronavirus, COVID-19. The World Health Organization has declared COVID-19 a “pandemic” and the federal, state and local governments have implemented mandatory closures and other restrictive measures in response to the outbreak. Most large-scale events in the United States have been cancelled, including in the sports industry. These closures, restrictions on travel, stay-at-home orders and other mitigation measures, in addition to the greater public’s concern regarding the spread of coronavirus, have significantly impacted all facets of the economy, and will likely have an adverse impact on our business operations and financial results. The continued spread of coronavirus, or fear thereof, may also delay the implementation of our business strategy. The impact of COVID-19 on the capital markets may impact our future ability to access debt or equity financing.

 

Disruptions to the supply chain and limitations on large gatherings due to COVID-19 may delay the completion of the construction of the Hall of Fame Village powered by Johnson Controls. Any long term fear of the spread of COVID-19, as well as government shut-down orders, could also affect future attendance at the Hall of Fame Village powered by Johnson Controls. Our Tom Benson Hall of Fame Stadium is used for sports and entertainment events. Attendance at events that we schedule in the stadium could decrease or be restricted, which would further disrupt business operations and likely have an adverse impact on our business and financial results. For example, if the National Football League delayed, suspended or limited attendance for the 2020 football season or future seasons due to the continued spread of COVID-19, consumer interest in football, the Hall of Fame Village powered by Johnson Controls or events at Tom Benson Hall of Fame Stadium may decline.

 

Even after restrictions loosen, the demand for sports and entertainment events may decrease as fears over travel or attending large-scale events linger due to concerns over the spread of COVID-19. If unemployment levels persist and economic disruption continues, the demand for entertainment activities, travel and other discretionary consumer spending may also decline as consumers have less money to spend. We may be unable to recruit and train employees in sufficient numbers to fully staff our facilities. We may be required to enforce social distancing measures within our facilities by, among other things, limiting the number of people admitted or standing in lines at any time, or adding social distancing signage and markers. We may incur additional costs associated with maintaining the health and safety of our guests and employees, including facility improvements such as additional sanitization stations or requiring the broad use of personal protective equipment. If it is alleged or determined that illness associated with COVID-19 was contracted at one of our facilities, we may suffer reputational damage that could adversely affect attendance and future ticket sales.

 

Even after we are able to open our facilities, we may elect or be required to close them in the future in response to the continued impact of COVID-19 or outbreaks involving other epidemics. Any decrease in demand for the sports and entertainment industry would likely affect our business and financial results. The extent and duration of the long-term impact of COVID-19 remains uncertain and the full impact on our business operations cannot be predicted.

 

Risk Related to Our Common Stock

 

We currently do not intend to pay dividends on our Common Stock. Consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our Common Stock.

 

We do not expect to pay cash dividends on our Common Stock. Any future dividend payments are within the absolute discretion of our board of directors and will depend on, among other things, our results of operations, working capital requirements, capital expenditure requirements, financial condition, level of indebtedness, contractual restrictions with respect to payment of dividends, business opportunities, anticipated cash needs, provisions of applicable law and other factors that our board of directors may deem relevant.

 

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We may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our stock price, which could cause you to lose some or all of your investment.

 

We may be forced to write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject. Accordingly, a stockholder could suffer a reduction in the value of their shares of Common Stock.

 

An active market for our securities may not develop, which would adversely affect the liquidity and price of our securities.

 

The price of our securities may fluctuate significantly due to the market’s continued reaction to the Business Combination and general market and economic conditions. An active trading market for our securities may never develop or, if developed, it may not be sustained. You may be unable to sell your securities unless a market can be established or sustained.

 

In addition, the price of our securities could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control, including but not limited to our general business condition, the release of our financial reports and general economic conditions and forecasts. Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general, and Nasdaq, have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities, may not be predictable. A loss of investor confidence in the market for the stocks of other companies which investors perceive to be similar to us could depress our stock price regardless of our business, prospects, financial conditions or results of operations. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future. Any of these factors could have a material adverse effect on your investment in our securities, and our securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline.

 

Anti-takeover provisions contained in our Certificate of Incorporation and Bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

 

Our Certificate of Incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together, these provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities. These provisions include:

 

no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;

 

a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors;

 

the right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director in certain circumstances, which prevents stockholders from being able to fill vacancies on our board of directors;

 

a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; and

 

the requirement that a meeting of stockholders may only be called by members of our board of directors or the stockholders holding a majority of our shares, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors.

 

66

 

 

Our Certificate of Incorporation provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.

 

Our Certificate of Incorporation requires, to the fullest extent permitted by law, that derivative actions brought in HOFRE’s name, actions against directors, officers, stockholders and employees for breach of fiduciary duty, actions under the Delaware general corporation law or under our Certificate of Incorporation, or actions asserting a claim governed by the internal affairs doctrine may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel. This choice of forum provision does not preclude or contract the scope of exclusive federal or concurrent jurisdiction for any actions brought under the Securities Act or the Exchange Act. Accordingly, such exclusive forum provision will not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder, and our stockholders will not be deemed to have waived its compliance with these laws, rules and regulations.

 

Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our Certificate of Incorporation. This choice of forum provision does not exclude stockholders from suing in federal court for claims under the federal securities laws but may limit a stockholder’s ability to bring such claims in a judicial forum that it finds favorable for disputes with HOFRE or any of its directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims.

 

Alternatively, if a court were to find the choice of forum provision contained in our Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.

  

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline

 

The trading market for our securities will depend in part on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research on our company. If no securities or industry analysts commence coverage of our Company, the trading price for our securities would likely be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who covers us downgrades our stock or publishes unfavorable research about our business, our stock price may decline. If one or more of these analysts ceases coverage of our Company or fails to publish reports on us regularly, demand for our securities could decrease, which might cause our stock price and trading volume to decline.

 

Our executive officers and directors, and their affiliated entities, along with our six other largest stockholders, own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.

  

Our executive officers and directors, together with entities affiliated with such individuals, along with our six other largest stockholders, will beneficially own approximately 89% of our Common Stock. Accordingly, these stockholders are able to control the election of a majority of our directors and the determination of all corporate actions. This concentration of ownership could delay or prevent a change in control of the Company.

 

Item 2. Unregistered sales of equity securities and use of proceeds

 

Convertible Notes

 

On July 1, 2020, concurrently with the closing of the Business Combination, the Company completed the Private Placement of $20,721,293 in aggregate principal amount of PIPE Notes with certain funds managed by Magnetar Financial, LLC and the Purchasers. Pursuant to the terms of the Note Purchase Agreement, at the option of the holders thereof the PIPE Notes may be converted into shares of Common Stock at a conversion price initially equal to $11.50 per share, subject to formula-based adjustment based on specified events. Accordingly, the aggregate amount of PIPE Notes issued and sold in the Private Placement is convertible into 1,801,851 shares of Common Stock based on the conversion rate applicable on July 1, 2020. On July 28, 2020, the Company’s stock price was trading below the $6.00 conversion price for any ten trading days preceding the maturity date. As such, the Company accounted for this transaction by recording a deemed dividend of $4,760,066, which is reflected in the Company’s consolidated statement of operations for the three and nine months ended September 30, 2020.

 

Note Redemption Warrants

 

The Note Redemption Warrants that may be issued pursuant to the Note Purchase Agreement will be exercisable for a number of shares of Common Stock to be determined at the time any such Note Purchase Warrant is issued. The exercise price per share of Common Stock of any Note Purchase Warrant will be set at the time such Note Purchase Warrant is issued pursuant to the terms of the Note Purchase Agreement and the Note Redemption Warrant Agreement. The Note Redemption Warrants may be exercised from and after the date of issuance, subject to certain terms and conditions set forth in the Note Redemption Warrant Agreement. Unexercised Note Redemption Warrants will expire on the maturity date of the PIPE Notes. The Note Redemption Warrants will not participate in cash distributions by the Company. If issued upon redemption of PIPE Notes, the Note Redemption Warrants will be issued 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.

 

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Crown League Services Agreement

 

HOF Village entered into a services agreement, dated as of June 16, 2020 (the “Crown League Services Agreement”), with Mountaineer GM, LLC (“Mountaineer”) and BXPG LLC (“Brand X”), whereby Mountaineer and HOF Village retain Brand X to provide services with regard to The Crown League, a professionalized fantasy sports league (the “Crown Business”). Mountaineer completed the acquisition of Crown assets under the Crown APA on July 22, 2020. Pursuant to an amended and restated limited liability company agreement of Mountaineer that HOF Village and Michael Klein & Associates, Inc., an affiliate of Michael Klein (“MKA”), entered into in connection with HOF Village’s purchase of the 60% interest in Mountaineer, 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 HOFRE’s Common Stock, and HOF Village agreed to provide the consideration owed to Brand X under the Crown League Services Agreement as a capital contribution to Mountaineer, consisting of $30,000 per month for 18 months plus 100,000 shares of HOFRE’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. 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 HOFRE’s Common Stock.

 

The sales of the above issued securities discussed in this Item 2. “Unregistered sales of equity securities and use of proceeds,” were exempt from the registration requirements of the Securities Act in reliance on the exemptions afforded by Section 4(a)(2) of the Securities Act. No sales involved underwriters, underwriting discounts or commissions or public offerings of securities of the registrant.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None.

  

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Item 6. Exhibits

 

3.1   Certificate of Designations of 7.00% Series A Cumulative Redeemable Preferred Stock of Hall of Fame Resort & Entertainment Company (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K (001-38363), filed with the Commission on October 15, 2020)
10.1   Employment Agreement, dated July 1, 2020, by and between Michael Crawford, HOFV Newco, LLC and Hall of Fame Resort & Entertainment Company (incorporated by reference to Exhibit 10.5 of the Company’s Form 8-K (001-38363), filed with the Commission on July 8, 2020)
10.2   Employment Agreement, dated August 31, 2020, by and between Tara Charnes and Hall of Fame Resort  & Entertainment Company (incorporated by reference to Exhibit 10.9 of the Company’s Amendment No. 1 to Form S-3 on Form S-1 (File No. 333-240045), filed with the Commission on September 2, 2020)
10.3   Employment Agreement dated September 14, 2020, between Erica Muhleman and Hall of Fame Resort & Entertainment Company (incorporated by reference to Exhibit 10.10 of the Company’s Amendment No. 2 to Form S-3 on Form S-1 (File No. 333-240045), filed with the Commission on September 22, 2020)
10.4+   Note Purchase Agreement, dated July 1, 2020, by and among Hall of Fame Resort & Entertainment Company and certain funds managed by Magnetar Financial, LLC and the purchasers listed on the signature pages thereto (incorporated by reference to Exhibit 10.7 of the Company’s Form 8-K (001-38363), filed with the Commission on July 8, 2020)
10.5   Registration Rights Agreement, dated July 1, 2020, by and among Hall of Fame Resort & Entertainment Company and certain funds managed by Magnetar Financial, LLC and the purchasers listed on the signature pages thereto (incorporated by reference to Exhibit 10.8 of the Company’s Form 8-K (001-38363), filed with the Commission on July 8, 2020)
10.6   Note Redemption and Warrant Agreement, dated July 1, 2020, by and among Hall of Fame Resort & Entertainment Company and certain funds managed by Magnetar Financial, LLC and the purchasers listed on the signature pages thereto (incorporated by reference to Exhibit 10.9 of the Company’s Form 8-K (001-38363), filed with the Commission on July 8, 2020)
10.7+   Amended and Restated Media License Agreement, dated July 1, 2020, among National Football Museum, Inc., HOF Village Media Group, LLC and HOF Village, LLC (incorporated by reference to Exhibit 10.30 of the Company’s Amendment No. 1 to Form S-1 (File No. 333-249133), filed with the Commission on October 19, 2020)
10.8+   Amended and Restated Sponsorship and Naming Rights Agreement, dated July 2, 2020, by and among HOF Village, LLC, National Football Museum, Inc. and Johnson Controls, Inc. (incorporated by reference to Exhibit 10.10 of the Company’s Form 8-K (001-38363), filed with the Commission on July 8, 2020)
10.9+   Technology as a Service Agreement, dated October 9, 2020, by and between HOF Village NEWCO, LLC and Johnson Controls, Inc.*
31.1   Certification pursuant to Section 302 of the Sarbanes–Oxley Act of 2002 of Principal Executive Officer*
31.2   Certification pursuant to Section 302 of the Sarbanes–Oxley Act of 2002 of Principal Financial Officer*
32   Certification pursuant to Section 906 of the Sarbanes–Oxley Act of 2002 of Principal Executive Officer and Principal Financial Officer*
101.INS   XBRL Instance Document*
101.SCH   XBRL Taxonomy Extension Schema*
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB   XBRL Taxonomy Extension Labels Linkbase Document*
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document*
104   Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 

* Filed herewith
+ Schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Registration S-K. The registrant hereby agrees to furnish a copy of any omitted schedules to the Commission upon request.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  HALL OF FAME RESORT & ENTERTAINMENT COMPANY
     
Date: November 4, 2020 By: /s/ Michael Crawford
    Michael Crawford
    Chief Executive Officer
    (Principal Executive Officer)

 

 

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Exhibit 10.9

 

CERTAIN INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED. [***] or [Redacted] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

TECHNOLOGY AS A SERVICE AGREEMENT

 

Between

 

HOF Village NEWCO, LLC

 

as Customer

 

- and -

 

Johnson Controls, Inc.

 

as Provider

 

October 9, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

Technology as a Service Agreement

EXECUTION VERSION

 

 

 

 

TABLE OF CONTENTS

 

Article 1 AGREEMENT DOCUMENTS AND DEFINITIONS

2
1.1 Agreement Documents 2
1.2 Principles of Interpretation 3
1.3 Schedules, Annexes and Attachments. 4
1.4 Definition; Recitals 5
     
Article 2 PERFORMANCE of THE Project WORK 5
2.1 Provider’s Obligation to Perform the Phase 2 Work 5
2.2 Provider’s Obligation to Perform the Phase 3 Work 6
2.3 Provider Subcontracted Work 7
2.4 Project Labor Agreement 7
2.5 Project Diversity Goals 7
     
Article 3 Support of Project Work and Project Services 8
3.1 Customer’s Obligation to Support Project Work and Project Services. 8
3.2 Provider Additional Obligations 9
3.3 Communications 9
3.4 Co-ordination with General Contractor(s) 10
     
Article 4 maintenance and lifecycle obligations 10
4.1 Interim Services 10
4.2 General 10
4.3 Key Performance Indicators 10
4.4 KPI Remedy Limitation 12
4.5 Monthly Performance Report. 12
4.6 Planned and Emergency Maintenance or Replacement. Annual Scheduled Maintenance Plan. 12
4.7 KPI Remedy Not Applicable 13
4.8 Phase 1 Planned Services Agreement 13
     
Article 5 TERM 14
5.1 Overall Term of Agreement 14
     
Article 6 Payment 14
6.1 Payments. 14
6.2 Taxes 15
6.3 Overdue Amounts 15
     
Article 7 COMPLIANCE WITH LAWS/CHANGES 15
7.1 Compliance With Law. 16
7.2 Change in Law/Customer Policies. 16
7.3 Changes. 16
7.4 Excused Failure. 16

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

Technology as a Service Agreement

EXECUTION VERSION

 

 

Article 8 WARRANTY DISCLAIMER 16
8.1 No Implied Warranty 16
8.2 Tax Treatment 16
     
Article 9 insurance 16
9.1 Insurance 16
9.2 Damage or Destruction. 17
9.3 Net Proceeds. 17
9.4 Liability for Property Damage. 17
     
Article 10 CONFIDENTIALITY 17
10.1 Confidentiality 17
10.2 Disclaimer 18
10.3 Return of Materials 18
10.4 Patent or Copyright Infringement 18
10.5 Term 18
10.6 Remedies 19
10.7 Press Releases 19
     
Article 11 Representations 19
11.1 Customer Representations 19
11.2 Provider Representations 20
     
Article 12 EVENTS OF DEFAULT; REMEDIES; LIMITATION OF LIABILITY 20
12.1 Default by Provider 20
12.2 Default by Customer 23
12.3 Limitation of Liability. 25
12.4 Force Majeure Event; Termination. 26
     
Article 13 INDEMNITY 26
13.1 General Indemnity 26
13.2 Notice. 27
13.3 Indemnifying Party’s Right to Dispute Direct Claim by Indemnified Party. 27
13.4 Indemnifying Party’s Right to Assume Defense of Third Party Claims. 27
13.5 Compromise and Settlement of Third Party Claims. 27
13.6 Insurance Proceeds. 28
     
Article 14 ENVIRONMENTAL 28
14.1 Provider’s Environmental Obligations 28
14.2 Customer’s Environmental Duties 28
     
Article 15 intellectual property 29
15.1 Intellectual Property. 29
15.2 Intellectual Property Indemnity. 29
15.3 Intellectual Property Indemnity Limitation 29
15.4 Naming Rights and Sponsorship Agreement 29
     
Article 16 Assignment 29
16.1 Assignment by Provider 29
16.2 Assignment by Customer 29

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

Technology as a Service Agreement

EXECUTION VERSION

 

 

Article 17 notices and change of address 30
17.1 Notices and Change of Address 30
     
Article 18 MISCELLANEOUS 31
18.1 Time of the Essence; Effect of Waiver; Remedies 31
18.2 Governing Law; Venue 31
18.3 Further Assurances 31
18.4 Severability 31
18.5 Joint and Several 31
18.6 Counterparts and Electronic Signature 32
18.7 Independent Contractor 32
18.8 Final Agreement; Amendments; Binding Nature 32
18.9 Survival 32

 

Schedule 1 Definitions
Schedule 2 Maintenance and Lifecycle
Schedule 3 Payment and Deductions
Schedule 4 Insurance
Schedule 5 Dispute Resolution Procedure
Schedule 6 Customer Support Services
Schedule 7 Changes
Schedule 8 Customer Policies
Schedule 9 Reliance Documents
Schedule 10 Construction Additional General Terms and Conditions
Schedule 11 Design Assist Services Agreement
Schedule 12 Project Labor Agreement
Schedule 13 Planned Services Agreement

 

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TECHNOLOGY AS A SERVICE AGREEMENT

 

This Technology as a Service Agreement is entered into as of October 9, 2020 (the “Effective Date”), by and between:

 

HOF VILLAGE NEWCO, LLC, a Delaware limited liability corporation

 

(hereinafter referred to as “Customer”)

 

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JOHNSON CONTROLS, INC., a Wisconsin corporation

 

(hereinafter referred to as “Provider”)

 

Hereinafter, each of the foregoing may be individually referred to as a “Party” and collectively as the “Parties”.

 

RECITALS:

 

A. WHEREAS Customer owns, directly or indirectly, a controlling ownership interest in the “HOF Village Complex”, which is a commercial, educational, retail and recreational complex being developed by, or on behalf of, Customer and anchored by The Tom Benson Hall of Fame Stadium (the “Stadium”) and the Pro Football Hall of Fame, all of which is collectively referred to herein as the “Project”.

 

B. AND WHEREAS the Project is comprised of three phases (“Phase 1”, “Phase 2” and “Phase 3” as defined in this TAAS Agreement) which, collectively include but are not limited to: (i) extensive redevelopment of, and improvements to, the Stadium, (ii) construction of numerous turf playing fields and related improvements for youth sporting events, (iii) construction of a Hotel and Conference Center, (iv) construction of the Center For Excellence, (v) construction of the NFL Experience, (vi) construction of parking facilities, both structured and surface parking lots, and (vii) construction of other retail, entertainment, and residential improvements within the HOF Village Complex;

 

C. AND WHEREAS in connection with the development of the Project, Customer has engaged the following parties, each pursuant to separate written agreements: (i) each of Turner Construction Company and Welty Building Company has been engaged to serve as a Construction Manager for the HOF Village Complex; (ii) DuSoul Company Inc. dba TSAV has been engaged to serve as technology program manager with respect to the technology, and other related systems for the Project; and (iii) Prime AE Group Inc has been engaged as the lead architect for the Project;

 

D. AND WHEREAS Provider and HOF Village, LLC negotiated and entered into an amended and restated sponsorship and naming rights agreement dated July 02, 2020 whereby HOF Village, LLC granted Provider certain naming and sponsorship rights with respect to the Project, as more fully described therein, which agreement was assigned to the Customer by a contribution agreement dated June 30, 2020 (“the amended and restated sponsorship and naming rights agreement, as assigned, the “Naming Rights and Sponsorship Agreement”).

 

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E. AND WHEREAS Customer and Provider entered into a design assist services agreement dated October 20, 2016 pertaining to certain design assistance and performance of certain scopes of work in respect of the Project, a copy of which is attached as Schedule 11 [Design Assist Services Agreement];

 

F. AND WHEREAS Customer desires to engage, cause related entities of Customer who are tenants of the Facilities to engage, or cause unrelated entities of the Customer who are involved in Phase 2 or Phase 3 to engage Provider directly to provide certain design assist consulting, equipment sales and turn-key installation services in respect of specified systems, as more particularly described herein, to be constructed as part of Phase 2 and Phase 3 of the Project;

 

G. AND WHEREAS the Phase 2 scope of work is intended to be valued at approximately [***] and the Phase 3 scope of work is intended to be valued at approximately [***];

 

H. AND WHEREAS Customer desires to engage Provider to provide certain maintenance and lifecycle services in respect of certain systems constructed as part of Phase 1, and to be constructed as part of Phase 2 and Phase 3, of the Project, as more particularly described herein.

 

NOW THEREFORE in consideration of the mutual promises and undertakings set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

Article 1
AGREEMENT DOCUMENTS AND DEFINITIONS

 

1.1 Agreement Documents. This Technology as a Service Agreement and the Schedules listed below and attachments hereto or thereto (collectively, the “Agreement” or the “TAAS Agreement”) constitute the entire agreement between the Parties hereto with respect to the subject matter hereof and shall supersede and take the place of any and all agreements, negotiations or understandings (whether written or oral) including without limitation documents, minutes of meetings, letters, emails, texts, requests for proposals, proposals and any other materials on the subject matter which may, prior to the Effective Date, be in existence. For the avoidance of doubt, the foregoing sentence does not apply to: (a) the Naming Rights and Sponsorship Agreement and, to the extent of any conflict between this Agreement and the Naming Rights and Sponsorship Agreement, the Naming Rights and Sponsorship Agreement shall prevail; and (b) the Design Assist Services Agreement and documents delivered or created pursuant to the Design Assist Services Agreement, and, to the extent of any conflict between this Agreement and the Design Assist Services Agreement, this Agreement shall prevail. Specifically, in respect of the Naming Rights and Sponsorship Agreement, the Parties intend, acknowledge and understand that: (i) Customer’s performance under the Agreement is essential to, and a condition to Provider’s performance under, the Naming rights and Sponsorship Agreement and (ii) Provider’s performance under the Naming Rights and Sponsorship Agreement is essential to, and a condition to Customer’s performance under, the Agreement. The Parties represent, warrant and agree that the transactions, agreements and obligations contemplated under the Agreement and the Naming Rights and Sponsorship Agreement are intended to be, and shall be, interrelated, integrated and indivisible, together being essential to consummating a single underlying transaction necessary for the Project.

 

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1.2 Principles of Interpretation. In this Agreement, unless the context otherwise requires:

 

(a) any table of contents, titles, captions, headings, the rendering of text in bold and italics and similar items contained in this Agreement or any Schedule or Annex or attachments hereto or thereto are for convenience and reference only and shall not affect the interpretation of this Agreement;

 

(b) words importing the singular include the plural and vice versa and the masculine, feminine and neuter genders include all genders;

 

(c) the words “hereof”, “herein”, and “hereunder” and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement;

 

(d) a reference to a Section, paragraph, clause, Party, exhibit, Annex, Attachment or Schedule is a reference to that Section, paragraph, clause of, or that Party, exhibit, Annex, attachment or Schedule to, this Agreement unless otherwise specified;

 

(e) a reference to this Agreement shall mean this Agreement including any amendment or supplement to, or replacement, novation or modification of this Agreement, but disregarding any amendment, supplement, replacement, novation or modification made in breach of this Agreement;

 

(f) a reference to a person or entity includes that person’s or entity’s successors and permitted assigns;

 

(g) the term “including” means “including without limitation” and any list of examples following such term shall in no way restrict or limit the generality of the word or provision in respect of which such examples are provided;

 

(h) references to any amount of money shall mean a reference to the amount in US Dollars;

 

(i) the expression “and/or” when used as a conjunction shall connote “and any or all of”; and

 

(j) any inconsistency in or conflict between the terms and conditions of this Agreement including the main body of this Agreement, any Schedule, Annex, exhibit or attachment hereto or thereto, shall be resolved by giving precedence first to the main body of this Agreement, second to Schedule 10 [Construction Additional General Terms and Conditions], third to Schedule 2 [Maintenance and Lifecycle], fourth to Schedule 3 [Payment and Deductions] and then to all other Schedules to this Agreement in numerical order. Subject to the foregoing sentence, in the event of a conflict, a mathematical formula describing a concept or defining a term shall prevail over words describing a concept or defining a term.

 

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1.3 Schedules, Annexes and Attachments.

 

(a) This Agreement has the following Schedules, Annexes, Attachments and Exhibits, which hereby are incorporated as part of this Agreement:

 

Schedule 1     Definitions

Attachment 1.1 – In-Scope Systems

Attachment 1.2 – Project Facilities

Attachment 1.3 – Intentionally Deleted

Attachment 1.4 - Labor Costs for Provider’s Personnel for Phase 2

 

Schedule 2     Maintenance and Lifecycle

Exhibit A – O&M Plans and O&M Reports

Exhibit B – Excluded O&M Services

Attachment 1 – Key Performance Indicators & Deductions

Attachment 2 – Key Personnel

Attachment 3 – Handback and Useful Life Requirements

 

Schedule 3     Payment and Deductions

Appendix A – Pro Forma

 

Schedule 4     Insurance

 

Schedule 5     Dispute Resolution Procedure

Appendix A – Form of Retainer Agreement

 

Schedule 6     Customer Support Services

 

Schedule 7     Changes

 

Schedule 8     Customer Policies

 

Schedule 9     Reliance Documents

 

Schedule 10   Construction Additional General Terms and Conditions

Attachment 1A – Construction Payments—Phase 2

Attachment 1B – Construction Payments—Phase 3

Attachment 1C – Progress Payment Provisions

Attachment 2A – Customer Schedule Phase 2

Attachment 2B – Customer Schedule Phase 3

Attachment 3A – Design Documentation Phase 2

Attachment 3B – Design Documentation Phase 3

Attachment 4 – Modified AIA Document A201-2007

Attachment 5 – Extended Warranties

 

Schedule 11   Design Assist Services Agreement

 

Schedule 12   Project Labor Agreement

 

Schedule 13   Planned Services Agreement

 

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1.4 Definition; Recitals. Capitalized terms used in this Agreement are defined in Schedule 1 [Definitions] or shall have the meanings given them when first defined. The recitals are incorporated into this Agreement by reference.

 

Article 2
PERFORMANCE of THE Project WORK

 

2.1 Provider’s Obligation to Perform the Phase 2 Work.

 

(a) Phase 2 Work. Provider shall perform the Phase 2 Work in accordance with the terms and conditions stated in this Agreement and consistent with the applicable Design Documentation. For clarity, any Phase 2 Work performed prior to the date of this Agreement shall be deemed to have been performed in accordance with the terms of this Agreement

 

(b) Additional Phase 2 Work Conditions. The additional conditions specified in Schedule 10 [Construction Additional General Terms and Conditions] hereto shall be applicable to the performance of the Phase 2 Work, to the extent of any Phase 2 Work that Provider is retained directly by Customer to perform. Each of Provider and Customer shall perform, to the extent of any Phase 2 Work that Provider is retained directly by Customer to perform, all of its obligations in respect of the Phase 2 Work in accordance with the terms of Schedule 10 [Construction Additional General Terms and Conditions].

 

(c) Tenant Fit-Out Work. While the Parties understand and agree that decisions regarding tenant fit-out work for Phase 2 will be made by each tenant, the Customer will make best efforts to facilitate Provider’s involvement in tenant fit-outs. For clarity, tenant fit-out work shall not form part of Project Work and Provider shall not be responsible to provide Project Services in respect of any tenant’s equipment and technologies unless such work and/or services are incorporated into this Agreement by Change Order. The Customer shall incorporate in all tenant leases a covenant from each tenant that, if such tenant elects to use In-Scope Systems which are not Provider products, and such In-Scope Systems are public facing in any of the Project Facilities, the tenant shall remove the template identifying, or white out the name of, the provider of such In-Scope Systems. Customer shall use commercially reasonable efforts to enforce such covenant provided that Customer shall not be required to terminate the lease or evict such tenant. The provisions of this Section 2.1 shall not apply to entities related to Customer and the Parties agree that fit-outs of tenants related to Customer shall form part of the Project Work and Project Services.

 

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2.2 Provider’s Obligation to Perform the Phase 3 Work

 

(a) Phase 3 Work. Provider shall perform the Phase 3 Work in accordance with the terms and conditions stated in this Agreement and consistent with the applicable Design Documentation.

 

(b) Additional Project Work Conditions. The additional conditions specified in Schedule 10 [Construction Additional General Terms and Conditions] hereto shall be applicable to the performance of the Phase 3 Work, to the extent of any Phase 3 Work that Provider is retained directly by Customer to perform. Each of Provider and Customer shall perform, to the extent of any Phase 3 Work that Provider is retained directly by Customer to perform, all of its obligations in respect of the Phase 3 Work in accordance with the terms of Schedule 10 [Construction Additional General Terms and Conditions].

 

(c) Adjustment to Phase 3 Work. Customer and Provider acknowledge that there is a greater certainty regarding the Phase 2 Work then the Phase 3 Work (and the cost of the Phase 3 Work). As a result, Provider’s and Customer’s expectations regarding the Phase 3 Work may require reasonable adjustments as the Phase 3 development evolves. Customer shall nonetheless award Provider all work associated with the supply and installation of all of the Phase 3 Equipment / Technology that is under control of the Customer

 

(d) Liquidated Damages. Customer and Provider have estimated the value of the Phase 3 Work (the “Provider Phase 3 Work”) to be [***] (Index Linked) pending final design. If due to Customer’s development decisions (including not proceeding with the Provider Phase 3 Work, terminating the Provider Phase 3 Work, or electing to reduce the scope of the Provider Phase 3 Work or changing the mix of the Project Facilities for Phase 3), the value of the Provider Phase 3 Work is reduced by [***] or more from the expected amount of [***] (Index Linked), then Customer shall pay to Provider, as Provider’s sole remedy for the reduction in the Provider Phase 3 Work, the Phase 3 Work Liquidated Damages. Any Phase 3 Work Liquidated Damages shall be paid by Customer to Provider as follows:

 

(i) 50% upon Provider achieving Substantial Completion of the Phase 3 Work; and

 

(ii) 50% upon completion of all Phase 3 construction work (as evidenced by the issuance of certificates of occupancy (or other equivalent) for all Project Facilities comprising Phase 3),

 

provided that, if the Phase 3 construction work has not been completed by December 31, 2025 any outstanding Phase 3 Work Liquidated Damages shall be paid by Customer to Provider within thirty (30) days of such date.

 

It is acknowledged that the failure by Customer to award Provider the Provider Phase 3 Work in an amount that materially comports with the expected amount stated above will cause Provider to incur substantial economic damages and losses of types and in amounts which are impossible to compute and ascertain with certainty as a basis for recovery by Provider of actual damages, and that the Phase 3 Work Liquidated Damages represent a fair, reasonable and appropriate estimate thereof. Such Phase 3 Liquidated Damages are intended to represent estimated actual damages and are not intended as a penalty.

 

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(e) Tenant Fit-Out Work. While the Parties understand and agree that decisions regarding tenant fit-out work for Phase 3 will be made by each tenant, the Customer will make best efforts to facilitate Provider’s involvement in tenant fit-outs. For clarity, tenant fit-out work shall not form part of Project Work and Provider shall not be responsible to provide Project Services in respect of any tenant’s equipment and technologies unless such work and/or services are incorporated into this Agreement by Change Order. The Customer shall incorporate in all tenant leases a covenant from each tenant that, if such tenant elects to use In-Scope Systems which are not Provider products, and such In-Scope Systems are public facing in any of the Project Facilities, the tenant shall remove the template identifying, or white out the name of, the provider of such In-Scope Systems. Customer shall use commercially reasonable efforts to enforce such covenant provided that Customer shall not be required to terminate the lease or evict such tenant. The provisions of this Section 2.2 shall not apply to entities related to Customer and the Parties agree that fit-outs of tenants related to Customer shall form part of the Project Work and Project Services.

 

Provider Subcontracted Work. Customer shall contract directly with Provider for all In-Scope Systems which previously were to be subcontracted to Provider through Turner and Welty.

 

2.3 Project Labor Agreement. Provider acknowledges that Customer has entered into a Project Labor Agreement (“PLA”) with the East Central Trades Council (a copy of which is set forth in Schedule 12 [Project Labor Agreement] hereto) and that, if the Phase 2 Work or the Phase 3 Work includes work governed by the PLA, Provider shall comply with all of Customer’s obligations set forth in the PLA to the extent they relate to the scopes of the Phase 2 Work or the Phase 3 Work, as applicable, which Provider is required to carry out pursuant to the terms of this Agreement. For clarity, Provider shall not be required to comply with the PLA in respect of any Project Services (being the maintenance and lifecycle services).

 

2.4 Project Diversity Goals. Customer and Provider agree that the diversity goals of the Project include the following:

 

(a) a minimum of [***] of the Project Work subcontracted for the Project will be subcontracted to MBE, WBE, DBE and VBE; and,

 

(b) the workforce for the Project Work will comprise [***] residents of Stark County, Ohio and adjacent communities.

 

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Provider shall use commercially reasonable efforts to assist Customer to achieve these goals, including:

 

(a) requesting all sub-contract pricing to include diversity goals;

 

(b) introducing various minority contractors to Customer and general contractor(s) with its preferred sub-contractors;

 

(c) maintaining an organized sub-contractor/supplier list broken out by DBE type and specialty; and

 

(d) participating in Diversity events as they are scheduled by Customer.

 

Article 3
Support of Project Work and Project Services

 

3.1 Customer’s Obligation to Support Project Work and Project Services. 

 

(a) Access. Customer shall provide Provider, its employees, independent contractors and subcontractors such access to the Premises as is necessary for Provider to perform the Project Work (including the Phase 2 Work and the Phase 3 Work) and deliver the Project Services to Customer in accordance with the terms and condition of this Agreement. Customer shall ensure that Provider has access to any portion of the Premises as required by Provider to complete the Project Work including in accordance with the schedule for each of Phase 2 and Phase 3 of the Project Work and to perform the Project Services in accordance with the requirements of this Agreement. Customer shall provide such access to Provider effective as of the Effective Date for the Term. Such access shall be at Customer’s cost and expense.

 

(b) License. Accordingly, Customer does hereby grant and convey to Provider and its employees, agents, independent contractors and subcontractors, a non-exclusive license for the purpose of performing the Project Work and delivering the Project Services over, across and upon the Premises, for the Term of this Agreement. Such license shall include a right of ingress and egress to the Premises and the right to access, use, construct, supply, test, commission, operate, maintain, repair, replace and to perform any other act as required to perform the Project Work in accordance with the terms and conditions of this Agreement and deliver the Project Services during the Term of this Agreement.

 

(c) Customer Support Services. In conjunction with Provider’s performance of the Project Work, Customer shall provide the Customer Support Services. Notwithstanding the foregoing, Customer shall be excused from its obligation to provide the Customer Support Services for the duration of a Force Majeure Event if a Force Majeure Event occurs and Customer is prevented from providing the Customer Support Services by such Force Majeure Event.

 

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(d) Customer Representative. Within 10 (ten) days following the Effective Date, Customer shall designate an authorized representative (“Customer Representative”), who shall meet regularly, at a time set by the Parties, with Provider’s Representative to schedule and facilitate each Phase of the Project Work. Customer shall provide Provider with at least ten (10) days prior written notice in the event it elects to designate a new authorized representative.

 

(e) Permits. Subject to the terms hereof, Provider shall be responsible to obtain the Provider Permits and Customer shall be responsible to obtain the Customer Permits.

 

(f) Provider Permits. Customer shall provide all assistance as Provider may reasonably request in order for Provider to obtain the Provider Permits, including entering into or applying for Permits where reasonably required to be entered into or applied for in the name of Customer. Notwithstanding the foregoing, to the extent related to any Project Work or Project Services, Provider shall retain the risk of performance of the Provider Permits.

 

(g) Permits Information. Customer shall apply for and deliver or otherwise make available to Provider such information as required and reasonably requested by Provider to facilitate Provider’s timely procurement of the Provider Permits. Customer shall provide such information that is within its possession to Provider within 10 (ten) Business Days of request by Provider and shall provide such information that is not within its possession to Provider as soon as reasonably practicable.

 

3.2 Provider Additional Obligations

 

(a) Provider Representative. Within ten (10) Business Days following the Effective Date, Provider shall designate an authorized representative (“Provider Representative”). Provider shall provide Customer with at least ten (10) days prior written notice in the event it elects to designate a new authorized representative.

 

3.3 Communications

 

(a) Meetings. Provider Representative and Customer Representative shall meet regularly to schedule and facilitate the Project Work, and as soon as practicable after a request of either of them, throughout the Term.

 

(b) Executive Meetings. At the request of either Provider Representative or Customer Representative for an executive meeting, executives of Customer (or the designees of such executives) and the Customer Representative shall meet with the Provider Representative and executives of Provider (or the designees of such executives); provided such designees have the requisite authority to make decisions or otherwise bind Provider and Customer.

 

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3.4 Coordination with General Contractor(s)

 

(a) General. Provider acknowledges that Customer has or will be hiring one or more general contractors to design and construct the Project. Provider shall, and Customer shall cause its general contractor(s) to, cooperate and coordinate their respective activities on the Premises so as to promote the proper and timely construction of the Project and so as to minimize any delay and/or interference with the other party’s respective scope of work.

 

(b) Coordination Agreement. Provider shall, and Customer shall cause its general contractor(s), to enter into a coordination agreement by and among Provider, Customer, and each of the general contractor(s) in respect of Phase 2 and Phase 3, as applicable, providing for the cooperation and coordination contemplated in Section 3.4(a) above, including specific rights and obligations in respect of access to the Premises, health and safety and coordination of installations and connections by November 15, 2020, in a form to be mutually agreed to by the parties thereto.

 

Article 4
maintenance and lifecycle obligations

 

4.1 Interim Services

 

Provider shall provide the Interim Project Services for each Project Facility from the commencement of the Interim Project Services Period for such Project Facility until the start of the Project Services Period for Phase 2 or Phase 3, as applicable, in accordance with the terms and conditions set forth in this Agreement. Interim Project Services shall be paid for by Transition Fees, invoiced and paid as Allowable Costs, during the performance of the Phase 2 Work and the Phase 3 Work. Transition Fees for Phase 2 will be paid monthly in advance on the first day of each month commencing January 1, 2021 until the start of the Project Services Period for Phase 2. Transition Fees for Phase 3 will be paid monthly in advance on the first day of each month commencing on the commencement of the Interim Project Services for the first Project Facility in Phase 3 until the start of the Project Services Period for Phase 3.

 

4.2 General

 

Provider shall provide the Project Services for all Project Facilities comprising each Phase from the commencement of the Project Services Period, in respect of the respective Phase, until the end of the Term, in accordance with the terms and conditions set forth in this Agreement.

 

4.3 Key Performance Indicators

 

(a) KPIs. With respect to certain of the maintenance and repair obligations set forth in Part 2 [Project Services] of Schedule 2 [Maintenance and Lifecycle], this Agreement sets forth corresponding key performance indicators (collectively, “KPIs” and singularly “KPI”) that Provider shall achieve, subject to the occurrence of an Excused Failure. Provider shall measure its performance against each KPI for the applicable measurement periods specified in the KPI List, and report such performance to Customer in accordance with Section 4.4. If Provider fails to meet one or more KPI, Provider shall:

 

(i) promptly investigate, assemble, and preserve pertinent information with respect to, and report on the causes of, the problem, including performing a root cause analysis of the problem;

 

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(ii) advise Customer of the failure and the status of remedial efforts being undertaken with respect to such problem;

 

(iii) minimize the impact of and correct the problem(s) causing such KPI not to be met;

 

(iv) take appropriate preventive measures so that the problem does not recur; and

 

(v) be subject to the Deductions set out in the KPI Deductions List, to the extent applicable, up to a maximum of the Service Payment - Monthly, in each case, in the respective Contract Month.

 

(b) The Customer shall have the right, no more frequently then quarterly, to audit, at Customer’s cost, the Provider’s performance against each KPI provided that the Provider may participate in such audit during the course of any walk-throughs of the Project Facilities. Provider shall provide, at least annually, at Provider’s cost, an audit of Provider’s performance against each KPI.

 

(c) Without prejudice to any other rights Customer may have under this Agreement, if a KPI Increased Monitoring Trigger occurs, Customer may, upon written notice to Provider, increase the level of its monitoring, inspection, testing and auditing of the Project Services and Provider’s compliance with this Agreement to such level as Customer determines, acting reasonably. Customer may continue to exercise its rights under this Section 4.3(c) until such time as Provider has demonstrated to the reasonable satisfaction of Customer that Provider intends to diligently perform and is capable of performing its obligations under this Agreement. Provider shall reimburse Customer for any reasonable increased or additional costs incurred by Customer in exercising its rights under this Section 4.3(c) within thirty (30) days of receiving an invoice from Customer with respect to such costs.

 

(d) Without prejudice to any other rights Customer may have under this Agreement, if a KPI Remedial Plan Trigger occurs, Provider shall within fourteen (14) days of such occurrence submit to Customer a remedial plan (“KPI Remedial Plan”) for Customer’s review and approval. A KPI Remedial Plan must set out specific actions and an associated scheduled to be followed by Provider to improve its performance and reduce the number and frequency of Provider’s failure to meet KPIs in the future. Such actions may include: (i) changes in organizational and management structure; (ii) revising and restating management plans and procedures; (iii) improvements to quality control practices; (iv) increased monitoring and inspections; (v) changes in key personnel; (vi) replacement of Subcontractors; and (vii) other reasonable measures. Provider shall implement any approved KPI Remedial Plan in accordance with its terms.

 

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(e) Without prejudice to any other rights Customer may have under this Agreement, if the KPI Default Trigger occurs, Customer may terminate this Agreement in accordance with Section 12.1.

 

4.4 KPI Remedy Limitation. Customer’s remedies for any breach by Provider of any KPI, whether asserted pursuant to contract, tort or other law, are limited solely to the recovery of Deductions and remedies set forth in Sections 4.3(c), (d) and (e) (including termination of this Agreement in accordance with the provisions of Section 12.1) below. In each Contract Year, the maximum aggregate amount of all Deductions that Customer is entitled to shall be equal to [***] of the Escalated Maintenance Payment - Annual, in respect of Phase 1, Phase 2 and Phase 3, as applicable.

 

4.5 Monthly Performance Report. Provider shall provide Customer with a monthly performance report, within fifteen (15) days after the end of each month, describing performance of the Project Services in such month in respect of the applicable Phase (the “Monthly Performance Report”), in a form to be agreed by Customer and Provider, each acting reasonably.

 

4.6 Planned and Emergency Maintenance or Replacement. Annual Scheduled Maintenance Plan.

 

(a) Prior to the commencement of the Project Services Period for each Phase and prior to the last day of the eleventh (11th) month of each Contract Year after commencement of the Project Services Period for each Phase, Provider shall advise Customer as to any planned Maintenance or Replacement Work that is expected to cause an In-Scope System in respect of such Phase to be unable or unavailable to perform its function such that any applicable KPI will not be met. Provider and Customer shall jointly review and approve such Maintenance or Replacement Work plan and agree to the schedule for such work, during times that minimize the negative impact of the planned Maintenance or Replacement Work upon Customer. Customer agrees not to unreasonably withhold or delay its agreement to Provider’s planned schedule (the “Annual Scheduled Maintenance Plan”).

 

(b) Changes to Annual Scheduled Maintenance Plan. Each of Provider and Customer (the “Notifying Party”) may notify the other of a need for a change to the Annual Scheduled Maintenance Plan for each Phase on at least five (5) Business Days’ prior written notice. Provider and Customer shall jointly review such requested change or update and agree to use commercially reasonable efforts to schedule such work during times that minimize the negative impact of the change upon the party which received the request for the change (the “Notified Party”). Each of Provider and Customer shall use all reasonable commercial efforts to promptly agree to any such change within the timeframe requested by the Notifying Party.

 

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(c) Ordinary Maintenance. Provider may, from time to time, in its reasonable discretion and upon at least five (5) Business Days’ prior written notice to Customer, perform Maintenance or Replacement Work that is not included on the Annual Scheduled Maintenance Plan for the relevant Phase, if considered appropriate or necessary by Provider or manufacturer’s guidelines or specifications, or if done in accordance with Provider’s standard operating procedures and practices (“Ordinary Maintenance”), unless Customer has objected to the performance of such Ordinary Maintenance on the basis that the performance of the Ordinary Maintenance at the time and date selected by Provider will cause material disruption to the regular operations of Customer and performance of such Ordinary Maintenance at a different time or date would cause substantially less disruption to Customer’s regular operations. Provider shall use commercially reasonable efforts to schedule Ordinary Maintenance during periods that will minimize the amount of disruption to the regular operations of Customer caused by Ordinary Maintenance.

 

(d) Emergencies. Provider may, upon the occurrence of an Emergency, perform Maintenance and Replacement Work for the purpose of responding to the Emergency. In addition, Provider shall promptly notify Customer and all appropriate Governmental Authorities of the nature of the Emergency and Provider’s response thereto.

 

4.7 KPI Remedy Not Applicable

 

(a) KPI Remedy Not Applicable. Provider shall not be liable for any breach or noncompliance with this Agreement, and shall not be liable for any breach of any KPI in respect of or resulting from:

 

(i) Provider’s performance of Scheduled Maintenance or Ordinary Maintenance in accordance with the terms of this Agreement;

 

(ii) Emergency Maintenance, except to the extent the Emergency which caused the requirement for Emergency Maintenance was caused or contributed to by Provider or Provider Person; or

 

(iii) any Excused Failure.

 

4.8 Phase 1 Planned Services Agreement. Customer and Provider acknowledge that they entered into a planned services agreement with respect to Phase 1 (the “Original PSA”). The Parties shall concurrently, with the execution of this Agreement, enter into a new planned services agreement (the “PSA”) substantially on the terms and conditions set forth in Schedule 13 [Planned Services Agreement]. The PSA shall provide that Provider shall be paid by Customer a not to exceed sum of [***] to bring the In-Scope Systems in respect of Phase 1 into good working order in three installments of [***] payable on October 15. 2020, November 15, 2020 and December 15, 2020, subject to adjustment once the final amount is agreed between the Parties. The PSA shall continue in full force and effect until the commencement of the start of the Project Services Period for Phase 2, after which, the Project Services for In-Scope Systems in respect of Phase 1 shall become part of the Project Services for In-Scope Systems in respect of Phase 2. The Customer shall pay the Provider, pursuant to the PSA, [***] in fourteen equal monthly installments in advance on the first day of each month commencing November 1, 2020; provided that if the Project Services Period for Phase 2 has not commenced by January 1, 2022, the term of the PSA shall continue until the Project Services Period for Phase 2 has commenced and the Provider shall be paid a monthly amount of [***] in advance on the first day of each month commencing on January 1, 2022. The amounts payable under the PSA shall be Index-Linked.] On-Site Work Space for Project Services. Customer will furnish Provider with defined office space throughout the Term of the Agreement in respect of the Project Services. Such space shall be located within the grounds of the Hall of Fame Village campus and shall be adequate to support the day to day activities of Provider staff. Provider will provide all equipment and furnishings.

 

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ALL RIGHTS RESERVED.

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Article 5
TERM

 

5.1 Overall Term of Agreement. The term of this Agreement shall commence on the Effective Date and, subject to earlier termination as provided herein, shall continue until expiry of the Term.

 

Article 6
Payment

 

6.1 Payments.

 

(a) Project Work Payments. Customer shall pay Provider for the Project Work in accordance with the requirements of Schedule 10 [Construction Additional General Terms and Conditions], including Attachment 1A [Construction Payments – Phase 2], Attachment 1B [Construction Payments – Phase 3], and Attachment 1C [Progress Payment Provisions] thereto, and the provisions of this Article 6, provided that the amount paid by Customer to Provider for the Project Work for Phase 2 and Phase 3 shall not exceed the GMP - Phase 2 or the GMP - Phase 3, as applicable.

 

(b) Project Services Payments. From and after the commencement of the Project Services Period for a specific Phase, Customer shall, on a monthly basis, pay to Provider, in advance, the Indexed Payments for such Phase as set forth in Part 2 [Project Services Period Payments] to Schedule 3 [Payment and Deductions] hereto.

 

(c) Project Services Payment Dates. The Indexed Payments shall be due and payable monthly in advance on the tenth (10th) day of each month respecting the Interim Project Services Period and the Project Services Period for each Project Facility or Phase, as applicable (the “Payment Dates”).

 

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(d) Method of Payment. All Indexed Payments and other amounts owed hereunder, including without limitation, in respect of the Project Work (collectively, “Payments”) shall be in United States Dollars and shall be made by wire transfer of immediately available funds to Provider’s Payment Bank Account, or to such other account as Provider may specify by written notice to Customer from time to time.

 

(e) Taxes Payable by Customer. Taxes, to the extent payable by Customer pursuant to the provisions of Section 6.2, shall be paid by Customer on the date when such taxes are due or, if invoiced to Customer by Provider, on the next occurring Payment Date. Customer represents that the Project Work is tax exempt and Customer shall provide to Provider the associated sales tax certificate.

 

6.2 Taxes. Customer has the responsibility for paying all applicable taxes pertaining to the provision of the Project Services, Project Work and all Indexed Payments and other payments, including but not limited to payment and discharge when due, or reimbursement of Provider on demand for all sales, use, property, employment and other taxes (excluding however, all taxes on or measured by Provider’s net income) (collectively, “Value Added Taxes”), together with any penalties or interest applicable thereto, now or hereafter imposed by any Governmental Authority upon the Payments and other amounts payable to Provider hereunder, whether the same be payable by or assessed to Provider or Customer.

 

6.3 Overdue Amounts. Any amount owed by one Party hereunder and not received by the other on the date due shall bear interest, payable on written demand, at the rate of [***] per month (or such lesser rate as is the maximum rate allowable under Applicable Law) from the date due to the date of receipt. Payment of such interest is not the limit of the paying Party’s liability for any breach by it of any provision of this Agreement. The paying Party’s liability shall include, without limitation, payment of late payment, penalty, fee, assessment or other charges incurred by a non-failing Party as a result of the other Party’s failure to make one or more Payments on time. The failing Party shall pay on demand any and all late payment, penalty, fee, assessment and other charges so incurred by the non-failing Party.

 

Article 7
COMPLIANCE WITH LAWS/CHANGES

 

7.1 Compliance With Law. Customer shall perform each and every one of its obligations under this Agreement in compliance with Applicable Law. Provider shall perform, each and every one of its obligations under this Agreement in compliance with Applicable Law.

 

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7.2 Change in Law/Customer Policies. Upon the occurrence of a Change in Law or a change in Customer Policies that Provider reasonably believes will materially affect the delivery or cost of, including any modification to, the Project Work or the Project Services, Provider shall notify Customer and shall submit a report that: (a) describes the potential effect of the Change in Law or change in Customer Policies; (b) identifies alternatives for complying with, and mitigating the effects of, the Change in Law or change in Customer Policies; (c) estimates the cost of each alternative and the potential impact of each alternative on the Payments; and (d) sets forth Provider’s recommended alternative and its reason for such recommendation. The Parties shall then cooperate to identify the most commercially reasonable alternative to mitigate the Change in Law or change in Customer Policies and to negotiate amendments to this Agreement (including but not limited to, an increase or decrease in any Payment and extensions of any time periods for the performance of Provider’s obligations hereunder) necessary to implement such alternative. If the Parties are unable to agree to the foregoing, the Change in Law or change in Customer Policies shall be treated as a Change Directive and governed by Schedule 7 [Changes].

 

7.3 Changes. If during the Term there is any change to the obligations of the Parties hereunder, not contemplated and dealt with elsewhere under this Agreement, the Parties shall follow the procedures outlined in Schedule 7 [Changes].

 

7.4 Excused Failure. Provider shall be entitled to a Change in accordance with Schedule 7 [Changes] in the case of the occurrence of an Excused Failure and, in the event that the Parties are unable to agree to a Change Order in respect thereof, such shall be treated as a Change Directive.

 

Article 8
WARRANTY DISCLAIMER

 

8.1 No Implied Warranty. Without limiting Provider’s obligations and Customer’s remedies in respect of KPIs, and except for any warranties in respect of the Project Work explicitly provided for in Schedule 10 [Construction Additional General Terms and Conditions], Provider hereby disclaims any and all warranties, whether express or implied, including without limitation, any implied warranty of fitness for any purpose, in respect of the Project Services, the Project Work, the Project Facilities or any other matter addressed in this Agreement.

 

8.2 Tax Treatment. The Parties acknowledge and agree that each Party makes no representation or warranty as to how this Agreement and its Annexes, Schedules and any attachments and exhibits hereto or thereto should be or will be treated or classified on the books and records of the other Party for accounting, tax, credit rating agency or regulatory purposes.

 

Article 9
insurance

 

9.1 Insurance. Throughout the Term, each Party shall maintain the insurance and comply with the provisions applicable to it in respect of insurance specified in Schedule 4 [Insurance] hereto.

 

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9.2 Damage or Destruction. If the Project Facilities or any portion thereof are destroyed (in whole or in part) or damaged by fire or other casualty, such that the Project Services cannot be delivered in accordance with the requirements of this Agreement, Customer shall have the rights specified in this Section 9.2 with respect to the Net Proceeds of any insurance or condemnation award. All Net Proceeds shall be applied to the prompt repair, restoration, modification, improvement or replacement of the Project Facilities by Customer and this Agreement shall continue in effect, or if Customer elects not to repair or rebuild, all Net Proceeds shall belong to Customer and this Agreement shall terminate and such termination shall be treated as if the Agreement was terminated pursuant to Section 12.2(b)(i), provided that any payment shall be reduced by any proceeds received by Provider in cash from Customer or any insurance required to be maintained by Provider hereunder in respect of such event.

 

9.3 Net Proceeds. Provider shall have no liability to Customer to the extent that the Net Proceeds are insufficient to repair, restore, modify, improve or replace the Project Facilities.

 

9.4 Liability for Property Damage. From the Effective Date, Provider shall have no liability hereunder for any property damage howsoever caused, except to the extent caused by Provider’s breach of this Agreement or the negligence or willful misconduct of Provider or any Provider Person. Customer specifically acknowledges and accepts this provision and allocation of risk.

 

Article 10
CONFIDENTIALITY

 

10.1 Confidentiality. All information and data furnished or obtained hereunder by any Party, the “Receiving Party”, respecting the operations or property of another Party, the “Disclosing Party” shall be held strictly confidential and shall not be disclosed to third parties without written authorization of the Disclosing Party (“Confidential Information”). The confidentiality obligations stated herein shall not apply to:

 

(a) information in the public domain other than due to a breach of an obligation of confidentiality of the Receiving Party;

 

(b) information that at the time of disclosure or acquisition was already known to the Receiving Party;

 

(c) information that the Receiving Party is bound to disclose under Applicable Law; and

 

(d) disclosures to the Receiving Party’s auditors, bankers, tax or legal advisors, contractors, subcontractors or consultants who are required to have access to this Agreement and the said information in the provision of their professional advice or services, provided that such auditors, bankers, tax or legal advisors, contractors, subcontractors or consultants are made to be bound by similar confidentiality obligations as those herein.

 

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10.2 Disclaimer. No representation, warranty, assurance or guarantee is being made by the Disclosing Party with respect to the accuracy or completeness of the Confidential Information it provides, subject (i) to the representation that such Disclosing Party will not knowingly provide any Confidential Information that is inaccurate or incomplete and (ii) to any specific representation or warranty provided in respect of information provided by one Party to the other Party under this Agreement.

 

10.3 Return of Materials. Except with regard to records and information that Provider must provide Customer at the expiration or termination of this Agreement, at the expiration or termination of this Agreement, any Confidential Information which has been furnished in tangible form to the Receiving Party, or otherwise obtained by the Receiving Party in connection with this Agreement, will be promptly returned or destroyed by the Receiving Party, at its sole discretion, accompanied by all copies of such documentation. With respect to Confidential Information that has been stored electronically, the Receiving Party shall provide written assurance to the Disclosing Party that all such material has been rendered inaccessible, deleted, or destroyed by the Receiving Party. The return or destruction of all Confidential Information shall occur within ten (10) Business Days after a written request of Disclosing Party. Notwithstanding the foregoing, the Receiving Party may keep archival copies of the Confidential Information (in whatever form) for regulatory, legal and compliance purposes in accordance with its document retention policies or as otherwise required by Applicable Law or its regulators’ policies.

 

10.4 Patent or Copyright Infringement. Nothing in this Agreement is intended to or shall grant any rights under any patent, copyright, trademark, trade secret or other Intellectual Property of Disclosing Party, nor shall this Agreement grant Receiving Party any rights in the Disclosing Party’s Confidential Information, except the limited right to review such Confidential Information in connection with the Project Facilities and the obligations of the parties as set forth in this Agreement. Further, Receiving Party agrees not to reverse engineer, attempt to reverse engineer, decompile or disassemble any computer software programs or devices supplied by the other Party.

 

10.5 Term. The obligations under this Article 10 shall continue in full force and effect for a period of two (2) years from the termination of this Agreement, or a longer period if required by Applicable Law, however, nothing set forth herein shall be deemed to obligate any Party with respect to continuation of its other obligations in connection with this Agreement. Notwithstanding the foregoing, the obligations of confidentiality under this Agreement shall remain in effect during the time that any Confidential Information is considered to be secret or confidential or to otherwise qualify for protection under any Law of the United States providing or creating Intellectual Property rights.

 

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10.6 Remedies. Each Party agrees that its obligations as a Receiving Party in respect of Confidential Information as provided in this Agreement are necessary and reasonable in order to protect the Disclosing Party and its business, and each Party expressly agrees that monetary damages may be inadequate to compensate the Disclosing Party for any breach by the Receiving Party of its covenants and agreements in respect of Confidential Information set forth in this Agreement. Accordingly, the Receiving Party agrees and acknowledges that: (a) any such violation or threatened violation may well cause irreparable injury to the Disclosing Party; (b) the rights and remedies provided to the Disclosing Party herein in respect of Confidential Information are cumulative such that, in addition to any other remedies that may be available to the Disclosing Party, in law, in equity or otherwise, the Disclosing Party shall be entitled to seek injunctive relief against the threatened breach of this Agreement or the continuation of any such breach by the Receiving Party, regardless of whether monetary damages may be an adequate remedy.

 

10.7 Press Releases. Each Party shall be entitled to make public announcements or disclosure, in the press, radio, television or any other medium, of details of the Project and each Party’s involvement therein (including disclosure on each Party’s website), provided that the Party seeking to make such announcement or disclosure shall have first obtained the prior written consent of the other Party, such consent not to be unreasonably withheld.

 

Article 11
Representations

 

11.1 Customer Representations. Customer hereby represents, warrants and covenants to Provider that:

 

(a) Customer: (i) is duly organized and existing and in good standing, under the laws of the state of Delaware; (ii) has the power to own its property and to carry on its business as now being conducted and is duly qualified to do business in the state of Delaware and Ohio; and (iii) is in good standing in the states of Delaware and Ohio.

 

(b) Customer has full power and authority to enter into this Agreement, to execute and deliver this Agreement and to incur its obligations provided for herein, all of which have been duly authorized by all proper and necessary corporate action. No additional consent or approval is required as a condition to the validity of this Agreement.

 

(c) This Agreement constitutes the legal, valid and binding obligation of Customer, enforceable against it in accordance with its terms, subject to general principles of equity and the effect of bankruptcy, moratorium and insolvency laws.

 

(d) There are no proceedings pending or, to Customer’s knowledge, threatened before any court or administrative agency which would materially adversely affect the financial condition or results of operation of Customer or its performance of this Agreement.

 

(e) There is no charter, bylaw or provision of any other organizational document of Customer and no provision of any existing mortgage, indenture, contract or agreement binding on Customer or affecting its property that conflicts with or prohibits Customer’s execution, delivery or performance of its obligations under this Agreement except as would not have a material adverse effect on Customer’s ability to perform its obligations hereunder.

 

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(f) Customer shall pay all real estate taxes, special assessments and other governmental charges of any kind which are at any time lawfully assessed or levied against or with respect to the Premises, Project Facilities or Project during the Term of this Agreement.

 

11.2 Provider Representations. Provider hereby represents and warrants to Customer that:

 

(a) Provider: (i) is duly organized and existing under the laws of the state of Wisconsin; (ii) has the power to own its property and to carry on its business as now being conducted and is duly qualified to do business in the states of Wisconsin and Ohio; and (iii) is in good standing in the states of Wisconsin and Ohio.

 

(b) Provider has full power and authority to enter into this Agreement, to execute and deliver this Agreement and to incur the obligations provided for herein, all of which have been duly authorized by all proper and necessary corporate action. No additional consent or approval is required as a condition to the validity of this Agreement.

 

(c) This Agreement constitutes the legal, valid and binding obligation of Provider, enforceable against it in accordance with its terms, subject to general principles of equity and the effect of bankruptcy, moratorium and insolvency laws.

 

(d) There are no proceedings pending or, to Provider’s knowledge, threatened before any court or administrative agency which would materially adversely affect Provider’s ability to perform its obligations under this Agreement.

 

(e) There is no charter, bylaw or provision of any other organizational document of Provider and no provision of any existing mortgage, indenture, contract or agreement binding on Provider or affecting its property that would conflict with or in any way prevent the execution, delivery or carrying out of the terms of this Agreement except as would not have a material adverse effect on Provider’s ability to perform its obligations hereunder.

 

Article 12
EVENTS OF DEFAULT; REMEDIES; LIMITATION OF LIABILITY

 

12.1 Default by Provider

 

(a) Provider Events of Default. The occurrence of any one of the following events or conditions, unless caused by and except to the extent contributed to by an Excused Failure, shall constitute an event of default by Provider (“Provider Event of Default”) under this Agreement:

 

(i) Provider fails to pay any amount payable to Customer under this Agreement within thirty (30) days following the date such payment was due;

 

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(ii) Provider fails to perform or observe any material covenant, condition or agreement to be performed or observed by Provider hereunder and such failure is not cured within sixty (60) days after Customer provides written notice of such failure, or, if such failure cannot reasonably be cured within such sixty (60) day; provided that if such failure is of a nature that cure cannot with diligence be completed within such sixty (60) -day period, such period shall be extended by such additional time, as is reasonably necessary to diligently effect cure;

 

(iii) A KPI Default Trigger occurs;

 

(iv) Any representation or warranty made by Provider in this Agreement proves to be false or misleading in any material respect when made or reaffirmed by Provider in writing which prejudices the benefit of this Agreement to Customer in any material respect if not cured within ten (10) Business Days;

 

(v) Any insolvency or inability of Provider to pay its debts as they become due or any assignment by Provider for the benefit of its creditors or a voluntary commencement by Provider of any proceeding in bankruptcy, receivership or insolvency or the institution of any proceeding in bankruptcy, receivership or insolvency against Provider or the appointment of a trustee or receiver for Provider, unless such proceedings are discharged within sixty (60) days after their date of filing, provided, however, that none of the events specified in this Section 12.1(a)(iv) shall constitute a Provider Event of Default at any time at which Customer shall be in default of payment of any amount owed by Customer to Provider pursuant to this Agreement; and

 

(vi) Failure to provide and maintain the insurance required to be provided and maintained by Provider in accordance with the terms of this Agreement if not cured within five (5) Business Days of notice of such failure received from Customer.

 

(b) Customer’s Remedies Upon a Provider Event of Default. Upon the occurrence of a Provider Event of Default, and for so long as the Provider Event of Default is continuing, Customer may, at its option, exercise any one or more of the following remedies, but in all events subject to the provisions of Section 4.3(a)(v), Section 4.4 and Section 12.3 hereof:

 

(i) terminate this Agreement by written notice to Provider, provided that Customer pays to Provider the amounts specified in Section 12.1(c) below;

 

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(ii) bring and maintain any action at law or in equity to recover any payment required to be made by Provider to Customer pursuant to the terms of this Agreement;

 

(iii) pursue any other right, remedy or privilege available to Customer under this Agreement, at law or in equity, provided however, that termination of this Agreement may only be pursued pursuant to clause (i) above; or

 

(iv) suspend all payments to Provider.

 

(c) Payments on Default.

 

(i) After termination of this Agreement pursuant to Section 12.1(b)(i) and notwithstanding anything to the contrary contained herein, Customer shall pay to Provider or Provider shall pay to Customer, as the case may be, the following amount:

 

(A) if the termination occurs prior to the commencement of the Project Services Period for all Project Facilities in a Phase, all commercially reasonable and documented Allowable Costs incurred by Provider up to the date of termination in connection with the construction, supply, testing and commissioning of the Project Work for such Phase together with the Provider’s Fee - Phase 2 and/or Provider’s Fee - Phase 3, as applicable, on such Allowable Costs (subject to the GMP - Phase 2 or the GMP - Phase 3, as applicable and except to the extent such costs, expenses and fees have already been compensated in accordance with Section 6.1(a)), less the commercially reasonable and documented costs and expenses incurred by Customer directly resulting from the Provider Event of Default and the exercise of Customer’s rights and remedies in respect thereof, including, without limitation, costs to complete the construction, supply, testing and commissioning of the Project Work for such Phase and reasonable attorney fees; plus

 

(B) If the termination occurs on or after the commencement of the Interim Project Services Period for a Project Facility or the Project Services Period for a Phase, the sum of all past due Payments and any other amounts owed to Provider under this Agreement (except to the extent such costs, expenses and fees have already been compensated in accordance with Section 6.1(b) or Section 6.1(c)), less (i) any Deductions owing from Provider to Customer and (ii) all commercially reasonable and documented costs and expenses incurred by Customer directly resulting from the Provider Event of Default and the exercise of Customer’s rights and remedies in respect thereof, including, without limitation, reasonable attorney fees.

 

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(ii) For the avoidance of doubt, in calculating the amount in accordance with Section 12.1(c)(i) such amount shall be calculated without any duplication or double counting of amounts.

 

(iii) Customer hereby agrees that the amount determined under Section 12.1(c)(i) shall constitute a reasonable estimation of damages suffered by Provider and shall not constitute or be deemed a penalty;

 

12.2 Default by Customer. 

 

(a) Customer Events of Default. The occurrence of any one of the following events or conditions shall constitute an event of default by Customer (“Customer Event of Default”) under this Agreement:

 

(i) Customer fails to pay any Payment or any other amount payable to Provider or its assignees under this Agreement within thirty (30) days following the date such payment was due;

 

(ii) Customer fails to perform or observe any other material covenant, condition or agreement to be performed or observed by Customer hereunder and such failure is not cured within sixty (60) days after Provider provides written notice of such failure; provided that if such failure is of a nature that cure cannot with diligence be completed within such sixty (60) -day period, such period shall be extended by such additional time, as is reasonably necessary to diligently effect cure;

 

(iii) Any representation or warranty made by Customer in this Agreement proves to be false or misleading in any material respect when made or reaffirmed by Customer in writing which prejudices the benefit of this Agreement to Provider in any material respect if not cured within ten (10) Business Days;

 

(iv) Any insolvency or inability of Customer to pay its debts as they become due or any assignment by Customer for the benefit of its creditors or a voluntary commencement by Customer of any proceeding in bankruptcy, receivership or insolvency or the institution of any proceeding in bankruptcy, receivership or insolvency against Customer or the appointment of a trustee or receiver for Customer, unless such proceedings are discharged within sixty (60) days after their date of filing; and

 

(v) Failure to provide the insurance required to be provided by Customer in accordance with the terms of this Agreement if not cured within five (5) Business Days of notice of such failure received from Provider.

 

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(b) Provider’s Remedies upon Customer Default. Upon the occurrence of a Customer Event of Default, and for so long as the Customer Event of Default is continuing, Provider may, at its option, exercise any one or more of the following remedies, but in all events subject to Section 12.3 hereof:

 

(i) Terminate this Agreement by written notice to Customer and declare due the following amounts:

 

(A) if the termination occurs prior to the commencement of the Project Services Period for all Project Facilities in a Phase, the sum of: (1) all commercially reasonable and documented Direct Losses incurred by Provider as of the date of termination in connection with the construction, supply, testing and commissioning of the Project Work in a Phase or mobilization in respect of the Interim Project Services Period or Project Services Period (except to the extent such costs have already been compensated in accordance with Section 6.1(a) or Section 6.1(c)); (2) all commercially reasonable and documented subcontractor breakage and demobilization costs; and (3) all commercially reasonable and documented costs, losses and expenses incurred by Provider directly resulting from the Customer Event of Default and the exercise of Provider’s rights and remedies in respect thereof including reasonable attorney fees; and

 

(B) if the termination occurs on or after the commencement of the Interim Project Services Period for one or more Project Facilities or the Project Services Period for a Phase, the sum of: (1) all past due Payments and any other amounts owed under this Agreement; (2) all commercially reasonable and documented subcontractor breakage and demobilization costs; and (3) all commercially reasonable and documented Direct Losses incurred by Provider directly resulting from the Customer Event of Default and the exercise of Provider’s rights and remedies in respect thereof, including reasonable attorney fees.

 

(C) For the avoidance of doubt, in calculating the amount in accordance with this Section 12.2(b)(i) such amount shall be calculated without any duplication or double counting of amounts.

 

(D) Customer hereby agrees that the amount determined under this Section 12.2(b)(i) shall constitute a reasonable estimation of damages suffered by Provider and shall not constitute or be deemed a penalty;

 

(ii) Suspend the provision of Interim Project Services or Project Services hereunder, in which event Provider may also, if it so elects, extend the Term by a number of days equal to the number of days of such suspension; provided, that Provider shall give Customer at least five (5) Business Days’ advance written notice of any such suspension;

 

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(iii) Set-off against any payments or other amounts owing by Provider to Customer under the Naming Rights and Sponsorship Agreement any payments or other amounts owing by Customer to Provider under this Agreement; or

 

(iv) Pursue any other right, remedy or privilege which may be available to Provider pursuant to law or in equity.

 

12.3 Limitation of Liability.

 

(a) To the extent allowed under Applicable Law, neither Party, nor any of their respective successors and assignees nor any affiliates, subsidiaries, partners, shareholders, directors, officers, agents, employees or representatives of any of them, shall have any liability with respect to, and each Party hereby waives, releases and agrees not to sue any other Party or its respective successors and assignees or affiliates, subsidiaries, subcontractors, partners, shareholders, directors, officers, agents, employees or representatives for, in any action at law or in equity, whether based on contract, tort, strict liability or otherwise, any special, consequential, indirect, incidental, punitive or exemplary damages or for loss of profits or revenues, loss of use or loss of business opportunity, whether or not a Party shall have been advised of the possibility of the same (“Indirect Losses”). Notwithstanding the foregoing, no payments, nor any other amount or cost or expense reimbursements due or to become due and owing by Customer to Provider or Provider to Customer under Article 4, Article 6, Section 12.1(c)(i), 12.2(b)(i), 12.4, 13.1, Schedule 7 [Changes] or Attachment 1 [Construction Payments] of Schedule 10 [Construction Additional General Terms and Conditions] of this Agreement shall fail by virtue of this Section 12.3 to be recoverable.

 

(b) Notwithstanding any other term of this Agreement (save and except for Section 12.3(c)), to the extent allowed under Applicable Law, the liability of Provider to Customer hereunder whether such liability arises in contract, tort, strict liability or otherwise, or before or after termination of this Agreement, shall not exceed:

 

(i) in the period beginning on the Effective Date and ending when all of the Phase 2 Work has achieved Substantial Completion and solely in respect of Provider, the Limit of Liability – Phase 2 Construction;

 

(ii) in the period beginning on the Commencement of Phase 3 Work and ending when all of the Phase 3 Work has achieved Substantial Completion and solely in respect of Provider, the Limit of Liability – Phase 3 Construction;

 

(iii) from the beginning of the Interim Project Services Period for a Phase until the expiry of the Term or earlier termination of this Agreement and solely in respect of the performance of the Interim Project Services for such Phase, the Interim Limit of Liability – Operating for such Phase; but subject to a cap in any one Contract Year in the amount of the Interim Limit of Liability – Yearly Operating for Phase 2 or Phase 3, as applicable; and,

 

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(iv) from the beginning of the Project Services Period for a Phase until the expiry of the Term or earlier termination of this Agreement and solely in respect of the performance of the Project Services for such Phase the Limit of Liability – Operating for such Phase, but subject to a cap in any one Contract Year in the amount of the Limit of Liability – Operating for Phase 1, Phase 2 or Phase 3, as applicable.

 

(c) The limitations of liability set forth in Section 12.3(b) do not apply to, nor shall the calculation thereof include:

 

(i) any liabilities or obligations to the extent that: (x) the amount thereof is paid from the proceeds of insurance required to be maintained by Provider under this Agreement; (y) an amount is paid by Provider but subsequently recovered by Provider from the proceeds of insurance required to be maintained by Provider under this Agreement; or (z) the same would have been recovered through such insurance if Provider had maintained the coverage required to be maintained by it under this Agreement or if Provider had otherwise complied with its obligations under, and the limitations of, such insurance policies and diligently pursued the relevant insurance claim; or

 

(ii) liabilities that arise out of the fraudulent conduct of Provider.

 

12.4 Force Majeure Event; Termination. 

 

(a) If a Party asserting an excuse for nonperformance of any of its obligations under this Agreement as the result of a Force Majeure Event is unable, despite its commercially reasonable efforts, to restore full performance of this Agreement or provide alternative performance within one hundred eighty (180) days from the time the nonperformance first occurs, then such Party shall be entitled to terminate this Agreement upon thirty (30) days’ written notice, in which event, such termination shall be treated as if this Agreement was terminated pursuant to Section 12.2(b)(i), provided that any Payment shall be reduced by any insurance proceeds received by Provider in cash in respect of such Force Majeure Event.

 

Article 13
INDEMNITY

 

13.1 General Indemnity. Each Party (the “Indemnifying Party”) expressly agrees to indemnify the other Party, and its affiliates, trustees, agents, officers, employees, directors, members and permitted assigns (collectively, the “Indemnified Party”) against (a) all claims, liability, fines, costs or expenses imposed by any Governmental Authority and (b) loss, damage or injury to the person or property of third parties, in each case caused by (i) the failure on the part of the Indemnifying Party to perform its obligations under this Agreement or (ii) the negligent acts or omissions or willful misconduct on the part of the Indemnifying Party, its subcontractors, affiliates, trustees, agents, officers, employees, directors, members.

 

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13.2 Notice. The Indemnified Party shall promptly notify the Indemnifying Party in writing of any claim, event, or fact that may give rise to the Indemnifying Party’s obligation to indemnify under Section 13.1, stating the nature and basis of the claim, event, or fact and the amount, to the extent known.

 

13.3 Indemnifying Party’s Right to Dispute Direct Claim by Indemnified Party. The Indemnifying Party shall notify the Indemnified Party within ten (10) Business Days following receipt of the Indemnified Party’s notice pursuant to Section 13.2 to dispute its liability to the Indemnified Party with respect to the claim. The Parties shall negotiate in good faith to resolve this dispute and if such negotiations are unsuccessful, shall implement the dispute resolution process set forth in Schedule 5 [Dispute Resolution Procedure].

 

13.4 Indemnifying Party’s Right to Assume Defense of Third Party Claims. If the Indemnifying Party wishes to assume the defense of any claim by a third party or Governmental Authority, it shall do so by notifying the Indemnified Party of such assumption. The Indemnifying Party’s assumption of the defense acknowledges its obligation to indemnify. The Indemnified Party may participate in the defense of the claim and may retain counsel of its own choosing without the Indemnifying Party’s participation provided (a) the Indemnifying Party fails or refuses to defend the claim within ten (10) Business Days following its receipt of the Indemnified Party’s notice pursuant to Section 13.2; or (b) representation of both Parties would, in the opinion of counsel, constitute a conflict of interest. The Indemnifying Party shall not be responsible for the fees and costs of the Indemnified Party’s counsel unless either of these conditions is met or the Indemnifying Party otherwise consents.

 

13.5 Compromise and Settlement of Third Party Claims. If an Indemnifying Party assumes the defense of a claim by a third party or a Governmental Authority, it may not compromise or settle such claim without the consent of the Indemnified Party and the Indemnified Party shall have no liability with respect to any compromise or settlement of any such claim effected without its consent. The Indemnifying Party, however, may compromise or settle a claim by a third party or a Governmental Authority without the Indemnified Party’s consent if the following four conditions are met: (a) there is no finding or admission of any violation of Law or violation of the rights of any person and no effect on any other claim that may be made against the Indemnified Party; (b) the sole relief provided is monetary damages that are paid in full by the Indemnifying Party; (c) the compromise or settlement includes, as an unconditional term, the release of the Indemnified Party by the claimant or the Governmental Authority in form and substance satisfactory to the Indemnified Party, from all liability in respect of the claim acting reasonably; and (d) the compromise or settlement will not significantly adversely impact the reputation of the Indemnified Party.

 

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13.6 Insurance Proceeds. If a Party is obligated to indemnify and hold the other Party harmless under Section 13.1, the amount owing to the Indemnified Party will be the amount of the Indemnified Party’s actual loss net of any insurance proceeds received by the Indemnified Party following a reasonable effort by the Indemnified Party to obtain such insurance proceeds.

 

Article 14
ENVIRONMENTAL

 

14.1 Provider’s Environmental Obligations. Notwithstanding any other provision of this Agreement to the contrary, Provider shall not be responsible for environmental damage or the existence of any Hazardous Materials on the Premises or in respect of the Project Facilities, Project Work, Interim Project Services or Project Services, save and except that Provider shall be responsible for the identification, clean-up, control, removal, and disposal and all related costs and expenses of environmental damage to the Premises, Project Facilities, Project Work caused by any negligent acts or omissions of Provider resulting from Hazardous Materials brought onto the Premises by Provider, or any of its agents, affiliates, consultants, subcontractors or other parties for whom Provider is in law or contract responsible.

 

14.2 Customer’s Environmental Duties. Customer shall be responsible for, or shall address, all environmental damage and the existence of Hazardous Materials in respect of the Project Facilities, the Project Work, Interim Project Services, Interim Project Services, the Project Services or any other matter in connection with this Agreement, including without limitation found in, on or under the Premises or in relation to the Project Facilities, Project Work, Interim Project Services or Project Services (including any matters discovered in annual insurance risk assessments performed by Customer), save for Provider’s obligations set forth in Section 14.1. Customer shall supply Provider with any information in its possession relating to the presence of Hazardous Materials at or underneath the Premises or in the Project Facilities, including copies of the relevant portions of any annual risk assessment describing the presence of Hazardous Materials. If either Customer or Provider becomes aware of or suspects any environmental damage or the presence of Hazardous Materials, at or underneath the Premises or in the Project Facilities or otherwise in connection with the Project Facilities, the Project Work, Interim Project Services, the Project Services or any other matter in connection with this Agreement, it shall promptly notify the other Party and the appropriate Governmental Authority (if required by Applicable Law) and such shall constitute an Excused Failure and Provider shall be entitled to suspend performance any Project Work or the provision of the Interim Project Services or the Project Services to the extent necessary to prevent any further contamination or as necessary to protect the health and safety of any person.

 

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Article 15
intellectual property

 

15.1 Intellectual Property. Each Party shall retain ownership of its respective Intellectual Property and the rights therein.

 

15.2 Intellectual Property Indemnity. Provider shall indemnify Customer and its employees, directors and officers from and against any all third party claims that the Project Materials infringe, misappropriate or violate a valid United States patent, trademark, copyright or other intellectual property right of such third party and shall pay all amounts awarded by a court of competent jurisdiction or agreed to in settlement by Provider, provided that, Customer shall: (a) promptly provide Provider with written notice of the claim, (b) give Provider sole control over the defense and settlement of the claim, provided that no such settlement will obligate Customer to take any action other than pay money that is paid in full by Provider on behalf of Customer, without the prior written consent of Customer; and (c) reasonably cooperate in Provider’s defense of the claim.

 

15.3 Intellectual Property Indemnity Limitation. Provider’s obligations set forth in Section 15.2 shall not apply to the extent any claim arises out of information, materials, or specifications that were provided to Provider by or on behalf of Customer.

 

15.4 Naming Rights and Sponsorship Agreement. Without limiting Section 1.1, in the event of a conflict or inconsistency between the terms of this Article 15 and the terms of the Naming Rights and Sponsorship Agreement, the terms of the Naming Rights and Sponsorship Agreement shall prevail.

 

Article 16
Assignment

 

16.1 Assignment by Provider. Provider may sell, delegate, transfer or assign this Agreement, Payments, or any other sums due or to become due hereunder, in whole or in part, to any person or entity, provided that other than in respect of an assignment to an affiliate of Johnson Controls, Inc., Customer shall have first provided its prior written consent, not to be unreasonably withheld or delayed.

 

16.2 Assignment by Customer. Customer shall not, without the prior written consent of Provider, which consent shall not be unreasonably withheld or delayed, transfer or assign all or any part of its rights and obligations herein to any party other than an affiliate of Customer. Customer shall continue to be liable for all obligations of this Agreement after an assignment, unless Provider, in its sole discretion, expressly releases Customer from its obligations.

 

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Article 17
notices and change of address

 

17.1 Notices and Change of Address. All notices to be given by either Party to the other shall be in writing and mailed by certified mail, return receipt requested, or sent by a courier service which renders a receipt upon delivery, or sent by electronic mail, addressed as set forth below, or at such other addresses as either Party may hereinafter designate by a notice to the other. Notices are deemed delivered upon actual receipt and the signed return receipt or courier receipt shall be prime facie proof thereof.

 

If to Customer, for all purposes:

 

HOF Village NEWCO, LLC

2626 Fulton Avenue NW

Canton, OH 44718

Attention: Michael Crawford, CEO

Email: Michael.Crawford@hofvillage.com

 

With copy to:

 

Hunton Andrews Kurth

2200 Pennsylvania Ave., NW

Washington, DC 20037

Attention: J. Steven Patterson, Partner

E-Mail: spatterson@HuntonAK.com

 

If to Provider:

 

Johnson Controls, Inc.

835 Greencrest Drive

Westerville, OH 43081

 

Attention: Bill Schumacher

Email: William.l.schumacher@jci.com

 

-and-

 

Attention: Michael McKenna

E-mail: Michael.K.McKenna@jci.com

 

with a copy to:

 

Building Technologies and Solutions Business Unit

Johnson Controls, Inc.

507 E. Michigan

Milwaukee, Wisconsin 53202


Attention: General Counsel

Fax: 414-524-5520

 

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Article 18
MISCELLANEOUS

 

18.1 Time of the Essence; Effect of Waiver; Remedies. Time shall be the essence of this Agreement. No failure on the part of a Party hereto to exercise, and no delay in exercising, any right or remedy shall operate as a waiver thereof or modify the terms of this Agreement. A waiver of any one default shall not be deemed to be a waiver of any other or subsequent default or a waiver of any of a Party’s rights hereunder. Any waiver, permit, consent or approval on the part of a Party of any breach or default under this Agreement, or any Schedule, or any Annex or attachment or exhibit hereto or thereto, or of any provision or condition hereof, must be in writing specifically setting forth the extent of such waiver, consent or approval. All remedies of a Party under this Agreement may, to the extent permitted by law, be exercised by such Party or its assignees concurrently or separately.

 

18.2 Governing Law; Venue. This Agreement and the construction and enforceability thereof shall be interpreted under the laws of the State of Ohio determined without regard to its conflict of laws principles. Any action, suit, or proceeding by either of the Parties and which arises from a dispute or claim under this Agreement or is brought to enforce any of this Agreement’s terms or provisions shall be referred to the dispute resolution procedure in accordance with Schedule 5 [Dispute Resolution Procedure]. Proceedings under Schedule 5 [Dispute Resolution Procedure] are barred unless commenced within the earlier of the applicable Ohio statute of limitations or repose for commencing actions and one (1) year from the date on which the injury in respect of which the proceeding is being made occurred.

 

18.3 Further Assurances. The Parties hereto shall execute and deliver all documents and take such further actions that may be reasonably necessary to more effectively carry out the intent and purposes of the provisions of this Agreement.

 

18.4 Severability. In the event that any provision of this Agreement or any Schedule, Annex or attachment hereto or thereto shall be prohibited by, or invalid or unenforceable under, Applicable Law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without affecting the validity or enforceability of the remaining portions of this Agreement, Schedules, Annexes or attachments hereto or thereto.

 

18.5 Joint and Several. Where this Agreement has been executed by more than one corporation as Customer, then each covenant and agreement of Customer hereunder shall be deemed, for all purposes, to be a covenant or agreement of the corporations who comprise Customer and each of them, and the provisions hereof shall be read with all grammatical changes thereby rendered necessary and each reference to Customer shall include each corporation severally and all covenants and agreements herein contained on the part of Customer shall be deemed to be joint and several covenants and agreements of each such corporation, respectively.

 

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18.6 Counterparts and Electronic Signature. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but collectively shall constitute one and the same instrument. This Agreement may be delivered by the Parties by email, facsimile or other electronic transmission to the other Party. When such signature pages so executed and delivered are attached to this Agreement, this Agreement shall be deemed executed and delivered.

 

18.7 Independent Contractor. The relationship of Provider to Customer shall be that of independent contractor, and Provider is not and will not become an employee, partner, principal or agent of Customer or its affiliates or customers for any purpose. Nothing in this Agreement shall be construed as granting to Customer any right to exercise any control over or to direct in any respect the actions of the employees of Provider.

 

18.8 Final Agreement; Amendments; Binding Nature. This Agreement may not be amended, modified or terminated, except in a writing signed by the Parties hereto. This Agreement (inclusive of all Schedules, Annexes and attachments hereto and thereto) shall inure to the benefit of and is binding upon the heirs, legatees, personal representatives, successors and permitted assignees of the Parties hereto. This Agreement shall become binding when accepted in writing by Provider.

 

18.9 Survival. Section 4.4, Article 6, Article 7, Section 8.1, Article 10, Section 12.3, Article 13, Article 14, Article 15, Section 18.2, Section 18.4, Section 18.7, Section 18.8 and Schedule 5 [Dispute Resolution Procedure] shall survive the termination or earlier expiry of this Agreement.

 

[The remainder of this page is intentionally blank.
The signature page next follows.]

 

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IN WITNESS WHEREOF, and intending to be legally bound, the parties hereto subscribe their names to this instrument on the date first above written.

 

Customer:

HOFV VILLAGE NEWCO, LLC

 

Provider:

JOHNSON CONTROLS, INC.

     
By:   By:
  Name: MICHAEL CRAWFORD     Name:  LISA ROY
  Title: CEO     Title:

 

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Schedule 1
DEFINITIONS

 

In the TAAS Agreement, unless the context otherwise requires, the following terms have the following meanings:

 

1.1 7/24/365(6)” means 24 hours per day 7 days per week, 365(6) days per year.

 

1.2 Allowable Costs” means costs necessarily incurred by Provider in the proper performance of the Project Work and the Transition Fees payable by Customer in respect of the performance of Transition Services and the Interim Project Services. The Allowable Costs Agreement shall include only the items set forth below and is limited to the actual cost of the following.

 

(a) Where, pursuant to the Agreement, any cost is subject to the Customer’s prior approval, Provider shall obtain such approval in writing prior to incurring the cost.

 

(b) Costs shall be at rates not higher than the standard paid at the place of the Project, except with prior approval of Customer.

 

(c) Labor Costs:

 

(i) Wages or salaries of construction workers directly employed by Provider to perform the construction of the Project Work at the site or, with Customer’s prior approval, at off-site workshop.

 

(ii) Wages or salaries of Provider’s supervisory and administrative personnel when stationed at the site and performing Project Work, with Customer’s prior approval.

 

(iii) Wages or salaries of Provider’s supervisory and administrative personnel when performing Project Work and stationed at a location other than the site, but only for that portion of time required for the Project Work, and limited to the personnel and activities listed below:

 

(Provider has identified the personnel and their rates as well as type of activity for Phase 2 in Attachment 1.4. If applicable, any agreed upon percentage of time to be devoted to the Project Work shall be agreed to by the Parties and recorded as a Change Order.)

 

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(iv) Wages or salaries of Provider’s supervisory or administrative personnel engaged at factories, or while traveling, in expediting the production or transportation of materials or equipment required for the Project Work, but only for that portion of their time required for the Project Work.

 

(v) Costs paid or incurred by Provider, as required by law or collective bargaining agreements, for taxes, insurance, contributions, assessments, and benefits and, for personnel not covered by collective bargaining agreements, customary benefits such as sick leave, medical and health benefits, holidays, vacations and pensions, provided such costs are based on wages and salaries included in the Allowable Costs under Sections (c)(i) through (c)(iii).

 

(vi) Labor costs for Provider’s personnel for Phase 2 shall be as per the rate schedule attached as Attachment 1.4 including any future mutually agreed upon changes therein with both parties acting reasonably in lieu of actual costs.

 

(d) Subcontract Costs:

 

(i) Payments made by Provider to Subcontractors in accordance with the requirements of the subcontracts and this Agreement. For clarity, Project Work performed by Customer’s branch level personnel shall be considered Project Work provided by a Subcontractor.

 

(e) Costs of Materials and Equipment Incorporated in the Completed Construction:

 

(i) Costs, including transportation and storage at the site, of materials and equipment incorporated, or to be incorporated, in the completed construction where such costs are related to the Project Work.

 

(ii) Costs of materials described in the preceding Section (i) in excess of those actually installed to allow for reasonable waste and spoilage. Unused excess materials, if any, shall become Customer’s property at the completion of the Project Work or, at Customer’s option, shall be sold by Provider. Any amounts realized from such sales shall be credited to Customer as a deduction from the Allowable Costs.

 

(f) Costs of Other Materials and Equipment, Temporary Facilities and Related Items:

 

(i) Costs of transportation, storage, installation, dismantling, maintenance, and removal of materials, supplies, temporary facilities, machinery equipment and hand tools not customarily owned by construction workers that are provided by Provider at the site and fully consumed in the performance of the Project Work. Costs of materials, supplies, temporary facilities, machinery, equipment, and tools, that are not fully consumed, shall be based on the cost or value of the item at the time it is first used on the Project site less the value of the item when it is no longer used at the Project site. Costs for items not fully consumed by Provider shall meet fair market value.

 

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(ii) Rental charges for temporary facilities, machinery, equipment, and hand tools not customarily owned by construction workers that are provided by Provider at the site, and the costs of transportation, installation, dismantling, minor repairs, and removal of such temporary facilities, machinery, equipment, and hand tools. Rates and quantifies of equipment owned by Provider, or a related party as defined in Section (i) below, shall be subject to Customer’s prior approval. The total cost of any such equipment may not exceed the purchase price of any comparable item.

 

(iii) Costs of removal of debris from the site of the Project Work and its proper and legal disposal.

 

(iv) Costs of materials and equipment suitably stored off the site at a mutually acceptable location, subject to Customer’s prior approval.

 

(g) Miscellaneous Costs:

 

(i) Premiums for that portion of Provider’s project specific insurance and bonds (and Provider’s Subcontractor’s insurance and bonds) required by the Agreement that can be directly attributed to this Agreement.

 

(ii) Costs for self-insurance, for either full or partial amounts of the project specific or Subcontractor coverages required by the Agreement, with Customer’s prior approval.

 

(iii) Costs for project specific or Subcontractor insurance through a captive insurer owned or controlled by Provider or Subcontractor, as applicable, with Customer’s prior approval.

 

(iv) Sales, use, or similar taxes, imposed by a governmental authority, that are related to the Project Work and for which Provider is liable.

 

(v) Fees and assessments for the building permit, and for other permits, licenses, and inspections, for which Provider is required by the Agreement to pay related specifically to the Project Work.

 

(vi) Fees of laboratories for tests required by the Agreement; except those related to defective or non-conforming Project Work for which reimbursement is excluded under the provisions of the Agreement, and which do not fall within the scope of Section (h)(iii), subject to prior Customer approval.

 

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(vii) That portion of royalties and license fees attributable to the Project Work which are paid for the use of a particular design, process, or product, required by the Agreement.

 

(viii) (A) The cost of defending suits or claims for infringement of patent rights arising from requirements of the Agreement, payments made in accordance with legal judgments against Provider resulting from such suits or claims, and payments of settlements made with Customer’s consent, unless Provider had reason to believe that the required design, process or product was an infringement of a copyright or a patent, and Provider failed to promptly furnish such information to the lead architect. (B) The costs of legal defenses, judgments, and settlements, shall not be included in the Allowable Costs used to calculate Provider’s Fee - Phase 2 or Provider’s Fee - Phase 3, as applicable, or subject to GMP - Phase 2 or GMP - Phase 3, as applicable.

 

(ix) Deposits lost for causes other than Provider’s negligence or failure to fulfill a specific responsibility in the Agreement.

 

(x) Legal, mediation and arbitration costs, including attorneys’ fees, other than those arising from disputes between Customer and Provider, reasonably incurred by Provider after the execution of this Agreement in the performance of the Project Work, provided that they are not caused by negligent acts or omissions of the Provider and with Customer’s prior approval, which shall not be unreasonably withheld.

 

(xi) Intentionally Deleted.

 

(xii) Intentionally Deleted.

 

(h) Other Costs and Emergencies:

 

(i) Other costs incurred in the performance of the Project Work, with Customer’s prior approval.

 

(ii) Costs incurred in taking action to prevent threatened damage, injury, or loss, in case of an emergency affecting the safety of persons and property, as provided in the Agreement.

 

(iii) Costs of repairing or correcting damages or nonconforming Project Work executed by Provider, Subcontractors, or suppliers, provided that such damaged or nonconforming Project Work was not caused by the negligence of, or failure to fulfill a specific responsibility by, Provider, and only to the extent that the cost of repair or correction is not recovered by Provider from insurance, sureties, Subcontractors, suppliers, or others.

 

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(i) Related Party Transactions:

 

(i) For purposes of this Section (i), the term “related party” shall mean: (1) a parent, subsidiary, affiliate, or other entity having common ownership of, or sharing common management with, Provider; (2) any entity in which any stockholder in, or management employee of, Provider holds an equity interest in excess of ten percent in the aggregate; (3) any entity which has the right to control the business or affairs of Provider; or (4) any person, or any member of the immediate family of any person, who has the right to control the business or affairs of Provider.

 

(ii) If any of the costs to be reimbursed arise from a transaction between Provider and a related party, Provider shall notify Customer of the specific nature of the contemplated transaction, including the identity of the related party and the anticipated cost to be incurred, before any such transaction is consummated or cost incurred. If Customer, after such notification, authorizes the proposed transaction in writing, then the cost incurred shall be included as a cost to be reimbursed, and Provider shall procure the Project Work, equipment, goods, or service, from the related party, as a Subcontractor, according to the terms of the Agreement. If Customer fails to authorize the transaction in writing, Provider shall procure the Project Work, equipment, goods, or service from some person or entity other than a related party according to the terms of the Agreement,

 

(j) Transition Costs,

 

provided that Allowable Costs shall not include the items listed below:

 

(A) salaries and other compensation of Provider’s personnel stationed at Provider’s principal office or offices other than the site office, except as specifically provided in Section (c) above, or as otherwise provided in the Agreement;

 

(B) Provider’s Project Executive and Safety Manager;

 

(C) bonuses, profit sharing, incentive compensation, and any other discretionary payments, paid to anyone hired by Provider or paid to any Subcontractor or vendor, unless Customer has provided prior approval;

 

(D) expenses of Provider’s principal office and offices, including the site office.

 

(E) overhead and general expenses, except as may be expressly included in the definition of “Allowable Costs”;

 

(F) the Contractor’s capital expenses, including interest on Provider’s capital employed for the Project Work;

 

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(G) except as provided in Section (h)(iii) above, costs due to the negligence of, or failure to fulfill a specific responsibility of the Agreement by Provider, Subcontractors, and suppliers, or anyone directly or indirectly employed by any of them or for whose acts any of them may be liable;

 

(H) any cost not specifically and expressly described in in the definition of “Allowable Costs”; and

 

(I) costs, other than costs included in Change Orders approved by Customer, that would cause the GMP - Phase 2 or the GMP - Phase 3 to be exceeded.

 

1.3 Annual Scheduled Maintenance Plan” has the meaning ascribed to it in Section 4.6(a) to the TAAS Agreement.

 

1.4 Applicable Law” means all Laws which are applicable to Provider, Customer and/or the Project.

 

1.5 Applicable Standards” means Applicable Law and manufacturers’ recommended maintenance and operations activities and maintenance and operations activities that would normally be undertaken in accordance with Good Industry Practices, provided that in the event of a conflict the more stringent standard shall apply.

 

1.6 Arbitration Notice” has the meaning ascribed to it in Section 5.4 of Schedule 5 [Dispute Resolution Procedure].

 

1.7 Arbitration Notice Response” has the meaning ascribed to it in Section 5.5 of Schedule 5 [Dispute Resolution Procedure].

 

1.8 Arbitrator” has the meaning ascribed to it Section 5.8 of Schedule 5 [Dispute Resolution Procedure].

 

1.9 As Built Drawings” means as built drawings in respect of the Project Work for Phase 2 or Phase 3, as applicable.

 

1.10 Assisting Party” has the meaning ascribed to it in Article 12 of Schedule 4 [Insurance].

 

1.11 Base Date” means January 1, 2020.

 

1.12 Builder’s Risk Policies” has the meaning ascribed to it in Section 7.1(a) of Schedule 4 [Insurance].

 

1.13 Building Occupants” means:

 

(a) Customer’s students, users, guests, customers, staff, employees, contractors and other invited occupants;

 

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(b) Customer’s visitors; and

 

(c) Provider Parties.

 

1.14 Business Days” means any day other than a Saturday, Sunday or statutory holiday in the State of Ohio.

 

1.15 Change” has the meaning ascribed to it in Section 1.1 of Schedule 7 [Changes].

 

1.16 Change Directive” has the meaning ascribed to it in Section 3.1 of Schedule 7 [Changes].

 

1.17 Change in Law” means either of the following events or conditions which have, or which may reasonably be expected to have, an effect on the performance by either Party of its obligations under this Agreement: (i) the adoption of a new Law or change in any Law (or the interpretation thereof) from its status on the Effective Date, which adoption or change occurs after the Effective Date or (ii) a suspension, termination, interruption, denial, failure to renew, or imposition of a new condition in connection with, any Law.

 

1.18 Change Order” has the meaning ascribed to it in Section 2.1 of Schedule 7 [Changes].

 

1.19 Confidential Information” has the meaning ascribed to it in Section 10.1 of the TAAS Agreement.

 

1.20 Construction Documents” means the drawings, specifications and documents prepared by or on behalf of Customer, and provided to Provider by or on behalf of Customer for the Project, Phase 2 or Phase 3, as applicable, based on the Design Documents (including the Design-Documentation-Phase 2 and the Design-Documentation-Phase 3).

 

1.21 Construction Payments” has the meaning ascribed to it in Section 5.1 [Construction Payments] of Schedule 10 [Construction Additional General Terms and Conditions].

 

1.22 Construction Price – Phase 2” means the sum of the Provider’s Fee - Phase 2 and the Allowable Costs for Phase 2.

 

1.23 Construction Price – Phase 3” means the sum of the Provider’s Fee - Phase 3 and the Allowable Costs for Phase 3.

 

1.24 Contract Month” means a calendar month.

 

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1.25 Contract Year” means each year of the Term beginning on January 1st and ending on December 31st except that the first Contract Year shall begin on the Effective Date and end on December 31st immediately following the Effective Date and the last Contract Year will begin on January 1st and end on the last day of the Term.

 

1.26 CPI” means the All Urban Consumers Data Index for Cleveland-Akron Ohio published by the United States Department of Labor, Bureau of Labor Statistics or, if no longer published by the United States Department of Labor, Bureau of Labor Statistics an equivalent index published by any successor organization, or if no longer published, an equivalent index agreed to by the Parties which approximates the same.

 

1.27 “Critical Spaces” means:

 

(i) within Phase 1 scope including existing stadium: Customer Experience: Locker Rooms, Club Level Area, VIP Lounge and VIP Club; and, (ii) Critical Space - Infrastructure: (1) Event Level: IDF 166, FIRE PUMP 108, WATER ENTRANCE 109, PIPE CHASE Not labeled; (2) Second Level: AV IDF 227; ELECTRICAL 225; AV IDF 208; (3) Third Level: AV IDF 302; (4) Fourth Level: ELECTRICAL 407; (5) Mezzanine Level: MDF; DAS ROOM; and (6) Club Level: IDF 615; IDF 616;

 

(ii) within Phases 2 and 3 Project Facilities:

 

Critical & Key Personnel/Guest spaces typical including VIP and exclusive recreation and refuge areas (Equivalent to VIP, Club Level as identified in existing Phase 1 facilities),

 

Emergency services and associated provider spaces (including any spaces, provided they are designated as such as mutually agreed upon, for use by first responders during a first-responders-active events),

 

Customer Executive Offices & assigned meeting room (“War Room”),

 

Communications infrastructure spaces typical (including IDF, MDF, Electrical, Telecom rooms, DAS rooms, Network Operations Center (NOC) and Security Operations Center (SOC), etc.),

 

Critical infrastructure spaces typical (including Fire Pump, Water Entrance, Pipe Chases, etc.),

 

Guest Egress areas; and,

 

Other mutually agreed upon spaces which are designated as such and documented via addendum to this Agreement.

 

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1.28 Customer” has the meaning ascribed to it in the preamble to the TAAS Agreement.

 

1.29 Customer Event of Default” has the meaning ascribed to it in Section 12.2(a) of the TAAS Agreement.

 

1.30 Customer Permit” means all Permits specific to Customer business requirements and not any that are specific to Provider to perform the Project Work or Project Services.

 

1.31 Customer Persons” means Customer’s contractors, subcontractors or any tier, agents, representatives, employees, directors, officers, affiliates and advisors in each case acting directly or indirectly for Customer in respect of this Agreement, or acting in respect of the Project Facility, Project Work, Interim Project Services or Project Services.

 

1.32 Customer Policies” means the policies, rules and regulations of the Customer identified in Schedule 8 [Customer Policies], as the same may be amended from time to time.

 

1.33 Customer Representative” has the meaning ascribed to it in Section 3.1(d) of the TAAS Agreement.

 

1.34 Customer Schedule – Phase 2” is the construction schedule for Phase 2 attached to Schedule 10 [Construction Additional General Terms and Conditions] as Attachment 2A [Customer Schedule – Phase 2], being the Customer’s detailed current construction schedule for Phase 2 of the Project.

 

1.35 Customer Schedule – Phase 3” is the construction schedule for Phase 3 attached to Schedule 10 [Construction Additional General Terms and Conditions] as Attachment 2B [Customer Schedule – Phase 3], being the Customer’s detailed current construction schedule for Phase 3 of the Project.

 

1.36 Customer Support Services” means those obligations of the Customer identified in Schedule 6 [Customer Support Services].

 

1.37 DBE” means disadvantaged business enterprise.

 

1.38 Deductions” means the reductions to the Indexed Payments otherwise due to Provider from Customer for Project Services performed if KPIs are not achieved as set out in Attachment 1 of Schedule 2 [Maintenance and Lifecycle].

 

1.39 Demand Maintenance” means Maintenance or Replacement Work performed by Provider in response to Service Requests made by the Customer.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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1.40 Design Documentation – Phase 2” means the documents listed on Attachment 3A [Design Documentation] to Schedule 10 [Construction Additional General Terms and Conditions].

 

1.41 Design Documentation – Phase 3” means the documents listed on Attachment 3B [Design Documentation] to Schedule 10 [Construction Additional General Terms and Conditions].

 

1.42 Design Documents” means the Design Documentation-Phase 2 and the Design Documentation-Phase 3.

 

1.43 Direct Losses” means any and all claims, demands, losses, liabilities, damages, obligations, payments, fines, penalties and reasonable costs and expenses whatsoever excluding Indirect Losses.

 

1.44 Disclosing Party” has the meaning ascribed to it in Section 10.1 of the TAAS Agreement.

 

1.45 Dispute” means any disagreement between the Customer and the Provider in respect of any matter related to any of the TAAS Agreement, the Project Work, the Project Facilities or the Project Services.

 

1.46 Dispute Notice” has the meaning ascribed to it in Section 2.1 of Schedule 5 [Dispute Resolution Procedure].

 

1.47 Dispute Resolution Procedure” means the various dispute resolution procedures described in Schedule 5 [Dispute Resolution Procedure].

 

1.48 Effective Date” has the meaning ascribed to it in the preamble to this Agreement.

 

1.49 Emergency” means an event or act that imminently threatens to harm persons and/or damage, destroy, or cause a material loss of all or any material portion of the Project Facilities or any part of the Premises.

 

1.50 Emergency Maintenance” means Maintenance or Replacement Work performed upon the occurrence of an Emergency in accordance with Section 4.6 of the TAAS Agreement.

 

1.51 Escalation Factor” means the amount calculated in accordance with Section 4 of Part A of Schedule 3 [Payment and Deductions] for each Phase, as applicable.

 

1.52 Escalated Operations and Maintenance Payment – Annual” means the amount calculated in accordance Section 2.1 of Part A of Schedule 3 [Payment and Deductions] for each Phase, as applicable.

 

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ALL RIGHTS RESERVED.

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1.53 Excused Failure” means (x) an event of Provider’s breach or noncompliance with any of the terms or conditions of this Agreement, or (y) any increase in the cost to Provider in performing its obligations in accordance with the terms of this Agreement, in each case, that results directly from:

 

(a) the occurrence of an Emergency, except to the extent caused by Provider or any Provider Person;

 

(b) any breach of an obligation under this Agreement by Customer (provided such breach is not attributable to the occurrence of a Force Majeure Event), or any negligent act or omission by Customer or any Customer Person or any third party under the supervision or control of Customer or any Customer Person (other than Provider or any Provider Person) including:

 

(i) any event relating to the Project Facilities such as construction, alteration, misuse, or repair by or on behalf of the Customer or any Customer Person of any part of portion of the Project Facilities;

 

(ii) any failure to provide Customer Support Services in accordance with the requirements of this Agreement;

 

(iii) failure by the Customer to apply for and execute in its name, or jointly with Provider any Permit; or

 

(iv) failure by the Customer to deliver information that Provider requires to obtain Permits in accordance with this Agreement;

 

(v) performance or non-performance by Customer of any Customer obligation in connection with Section 15.2, except to the extent that such is the responsibility of Provider in accordance with Section 15.1;

 

(vi) any representation or warranty by Customer in this Agreement that proves to be have been untrue; or

 

(vii) any other breach of Customer’s obligations under this Agreement;

 

(c) the occurrence of a Force Majeure Event;

 

(d) the absence of or delay in procuring any Permit, except to the extent that such Permit is a Provider Permit and Provider failed to act diligently and in accordance with Good Industry Practice in pursuing such Permit;

 

(e) in respect of the determination of Deductions, the actions of any third party and, in all other respects, the actions of any third party user of the Project Facilities and any subcontractor of the Customer (excluding actions in the normal course of using the Project Facilities), which materially adversely affects performance of the Project Work or delivery of the Interim Project Services or the Project Services;

 

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(f) the discovery of:

 

(i) subsurface or otherwise concealed physical conditions that differ materially from the reports identified in Schedule 9 [Reliance Documents];

 

(ii) unknown physical conditions of an unusual nature that differ materially from those ordinarily found to exist and generally recognized as inherent in construction activities of the character provided under this Agreement;

 

(iii) any other feature of, in or under the Premises which differs materially from the reports identified in Schedule 9 [Reliance Documents];

 

(iv) human remains, or the existence of burial markers, archaeological sites, or wetlands, not indicated in Schedule 9 – [Reliance Documents]; or

 

(v) any element of any Permit as issued, being different from the version of the permit identified in Schedule 9 [Reliance Documents];

 

(g) any damage or destruction to the Project Facilities, except to the extent caused by Provider or any Provider Party;

 

(h) any limitation on Provider’s access to the Premises; or

 

(i) any defect or deficiency or latent defect or deficiency in the Project Facilities except for any defect or deficiency or latent defect or deficiency in an In-Scope System, but excluding a defect or deficiency or latent defect or deficiency caused by any defect or deficiency or latent defect or deficiency in the design of the Project Facility or, unless installed, tested and commissioned the In-Scope System, the installation, testing or commissioning of the In-Scope System.

 

1.54 Excluded O&M Services has the meaning ascribed to it in Schedule 2, Part 2, Article 1, Section 3 of this Agreement.

 

1.55 Fast Track Dispute Resolution Procedure” means the fast track dispute resolution procedure described in Article 3 of Schedule 5 [Dispute Resolution Procedure].

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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1.56 Force Majeure Event” shall mean an event, casualty, occurrence, condition or circumstance of any kind or nature reasonably beyond the control of the Party contending the occurrence of the same, having a direct and substantial adverse effect on such Party’s ability or cost to perform any of its obligations under this Agreement, in full or in part. “Force Majeure Event” includes: compliance in good faith with any applicable Change in Law whether or not it proves to be invalid; acts of God; acts or omissions of any Governmental Authority (including any act which renders it commercially impracticable for Provider or Customer to perform all or a material part of its obligations under this Agreement, other than as a consequence of a breach by the Party contending that the event occurred); war; blockade; insurrection; riot; sabotage; terrorist activity; strike; slow-down or labor dispute (even if such difficulties could be resolved by conceding to the demands of a labor group) other than a labor dispute that only affects the Party itself; shortage or unavailability of equipment, parts, materials, natural gas, fuel oil or transportation; or fire, explosion, flood, nuclear emergency, epidemic, pandemic, landslide, earthquake, hurricane, tornado, storm, adverse weather or similar occurrence.

 

1.57 GAAP” shall mean generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, which are in effect from time to time.

 

1.58 Good Industry Practice” means the exercise of that degree of skill, care, diligence, prudence and foresight that would reasonably and ordinarily be expected from a good and prudent provider of Interim Project Services, Project Services or Project Work in the United States, engaged in the same type of undertaking under the same or similar circumstances.

 

1.59 Governmental Authority” means the federal government, or any state or other political subdivision thereof, or any agency, court or body of the federal government, any state or other political subdivision thereof, exercising executive, legislative, judicial, regulatory or administrative functions.

 

1.60 GMP - Phase 2” is the amount determined in accordance with Section 5.3 of Article 5 of Schedule 10 [Construction Additional General Terms and Conditions], as the same may be adjusted in accordance with the terms of the TAAS Agreement. In the event that no amount is determined pursuant to Section 5.3 of Article 5 of Schedule 10 [Construction Additional General Terms and Conditions], the provisions pertinent to the GMP-Phase 2, whenever they appear in the TAAS Agreement, shall be individually inoperative and considered deleted from the TAAS Agreement.

 

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ALL RIGHTS RESERVED.

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EXECUTION VERSION

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1.61 GMP - Phase 3” is the amount determined in accordance with Section 5.3 of Article 5 of Schedule 10 [Construction Additional General Terms and Conditions], as the same may be adjusted in accordance with the terms of the TAAS Agreement. In the event that no amount is determined pursuant to Section 5.3 of Article 5 of Schedule 10 [Construction Additional General Terms and Conditions], the provisions pertinent to the GMP-Phase 3, whenever they appear in the TAAS Agreement, shall be individually inoperative and considered deleted from the TAAS Agreement.

 

1.62 Handback Requirements” has the meaning ascribed to it in Section 4 of Article 4 of Part 2 of Schedule 2 [Maintenance and Lifecycle].

 

1.63 Hazardous Materials” means any material or substance that, whether by its nature or use, is now or hereinafter defined or regulated as hazardous waste, hazardous substance, pollutant or contaminant under Applicable Laws, relating to or addressing public or employee health and safety or protection of the environment, or which is toxic, explosive, corrosive, flammable, radioactive, carcinogenic, mutagenic or otherwise hazardous, or which is or contains petroleum gasoline, diesel, fuel or other petroleum hydrocarbon products or polychlorinated biphenyls.

 

1.64 Help Desk” means the service established by the Provider where Customer, Customer Persons, users of the Project Facilities and Provider can submit Service Requests via telephone, web, email and SMS.

 

1.65 Indemnified Party” has the meaning ascribed to it in Section 13.1 of the TAAS Agreement.

 

1.66 Indemnifying Party” has the meaning ascribed to it in Section 13.1 of the TAAS Agreement.

 

1.67 Indexation Date” has the meaning ascribed to it in Section 4 of Part A of Schedule 3 [Payment and Deductions].

 

1.68 Index Linked” when an amount is stated to be Index Linked, such amount shall be increased annually at the beginning of each Contract Year in accordance with the following formula:

 

[Amount1] = [Amount0] * Escalation Factor

 

where

 

[Amount1] is the relevant amount stated to be Index Linked after the first Contract Year.

 

[Amount0] is the relevant amount as stated in this TAAS Agreement.

 

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1.69 Indexed Payment” means the Service Payment – Monthly for a Contract Month for each Phase and is the sum payable monthly by Customer to Provider in accordance with the provisions of Article 6 of this TAAS Agreement.

 

1.70 Indirect Losses” has the meaning ascribed to it in Section 12.3(a) of the TAAS Agreement.

 

1.71 In-Scope System” means each of the systems listed in Attachment 1.1 [In-Scope Systems] to this Schedule 1 [Definitions].

 

1.72 Intellectual Property” means in connection with a specified subject matter, on a worldwide basis to the extent protected, all registered or unregistered trade-marks, trade names, patents, copyrights, trade secrets, designs, rights of publicity, mask work rights, utility models and other industrial or intangible property rights of a similar nature.

 

1.73 Interim Limit of Liability – Operating” means the amount of [***] (Index Linked) for Phase 2 and for Phase 3 the amount of the Transition Fees for Phase 3 as agreed between the Parties (Index Linked)

 

1.74 Interim Project Services” means the Services described in Part 1 of Schedule 2 [Maintenance and Lifecycle].

 

1.75 Interim Project Services Period” means in respect of a Project Facility, the period beginning on Substantial Completion in respect of the Project Facility and ending the day before the commencement of the Project Services Period.

 

1.76 KPI” and “KPIs” has the meaning ascribed to it in Section 4.3(a) of the TAAS Agreement.

 

1.77 KPI Deductions List” means the list of KPIs attached as Attachment 1 [KPI Penalty List] to Schedule 2 [Maintenance and Lifecycle].

 

1.78 KPI Default Trigger” means (i) the cumulative amount of Deductions assessed during any rolling three (3) -month calendar period equals or exceeds [***] (Indexed Linked) or (ii) the cumulative amount of Deductions assessed during any rolling twelve (12) -month calendar period equals or exceeds [***] (Indexed Linked).

 

1.79 KPI Increased Monitoring Trigger” means (i) the cumulative amount of Deductions assessed during any rolling three (3) -month calendar period equals or exceeds [***] (Indexed Linked) or (ii) the cumulative amount of Deductions assessed during any rolling twelve (12) -month calendar period equals or exceeds [***] (Indexed Linked).

 

1.80 KPI List” means the list of KPIs attached as Attachment 1 [KPI List] to Schedule 2 [Maintenance and Lifecycle].

 

1.81 KPI Remedial Plan” has the meaning ascribed to it in Section 4.3(d) of the TAAS Agreement.

 

PROPRIETARY AND CONFIDENTIAL.

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EXECUTION VERSION

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1.82 KPI Remedial Plan Trigger” means (i) the cumulative amount of Deductions assessed during any rolling three (3) -month calendar period equals or exceeds [***] (Indexed Linked) or (ii) the cumulative amount of Deductions assessed during any rolling twelve (12) -month calendar period equals or exceeds [***] (Indexed Linked).

 

1.83 Lawor Laws” means federal, state and local laws, rules, regulations, ordinances, codes, common law, licenses, permits, decrees, judgments, directives or the equivalent of or by any Governmental Authority.

 

1.84 LC Periodical Aggregation” shall be the aggregate of Lifecycle Payments, as stated in the Pro Forma, for the following periods of time: (i) the three (3) years commencing on the third (3rd) Calendar Year following the commencement of the Project Services for Phase 2 [***] (Index Linked), (ii) the three (3) years commencing on the sixth (6th) Calendar Year following the commencement of the Project Services for Phase 2 [***] (Index Linked); and (iii) the four (4) years commencing on the ninth (9th) Calendar Year following the commencement of the Project Services for Phase 2 [***] (Index Linked).

 

1.85 Lifecycle Payment” means the annual amounts as set out in Appendix B [Lifecycle Payment Amount] to Schedule 3 [Payment and Deductions] in respect of the replacement, refreshment and/or refurbishment of building systems, equipment and fixtures.

 

1.86 Lifecycle Services” has the meaning ascribed to it in Schedule 2, Part 2, Article 2, Section 1(a).

 

1.87 Limit of Liability – Phase 2 Construction” means the amount of [***] until the GMP-Phase 2 is established and, thereafter, the GMP-Phase 2.

 

1.88 Limit of Liability – Phase 3 Construction” means the amount of [***] until the GMP-Phase 3 is established and, thereafter, the GMP-Phase 3.

 

1.89 Limit of Liability – Operating” means the amount of [***] (Index Linked) for Phase 2 and [***] (Index Linked) for Phase 3.

 

1.90 MBE” means minority business enterprise.

 

1.91 Maintenance or Replacement Work” means work to maintain, replace, lifecycle or refurbish any In-Scope Systems as more particularly described in Schedule 2.

 

1.92 “Manual” or “Manuals” means policies, procedures, practices, guidelines, plans, checklists, deliverables, etc. that are developed, implemented and updated by Provider.

 

1.93 Monthly Performance Report” has the meaning ascribed to it in Section 4.5(a) of the TAAS Agreement.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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1.94 Net Proceeds” means any insurance proceeds or condemnation award, paid with respect to the Project Facilities, remaining after payment therefrom of all expenses incurred in the collection thereof and payment of Provider’s costs and losses in connection therewith.

 

1.95 Normal Hours of Operations” means 8 a.m. to 5 p.m., Monday to Friday excluding non-Business Days.

 

1.96 O&M Reports” has the meaning ascribed to it in Section 7 of Article 3 of Part 2 of Schedule 2 [Maintenance and Lifecycle].

 

1.97 O&M Requirements” means the requirements of Provider to perform the [O&M Services] set forth in Schedule 2 [Maintenance and Lifecycle].

 

1.98 O&M Services” has the meaning ascribed to it in Section 1.1(a) of Article 1 of Part 2 of Schedule 2 [Maintenance and Lifecycle].

 

1.99 Ordinary Maintenance” means Maintenance or Replacement Work performed in accordance with Section 4.6(c) to the TAAS Agreement.

 

1.100 Original PSA” has the meaning ascribed to it in Section 4.8 [Phase 1 Planned Services Agreement] of the TAAS Agreement.

 

1.101 Party” or “Parties” has the meaning ascribed to it in the preamble to the TAAS Agreement.

 

1.102 Payment Bank Account” means the bank account identified by Provider in any invoice submitted to Customer.

 

1.103 Payment Dates” has the meaning ascribed to it in Section 6.1(d) of the TAAS Agreement.

 

1.104 Payments” has the meaning ascribed to it in Section 6.1(e) of the TAAS Agreement.

 

1.105 Permits” means all agreements, approvals, authorization, certificates, consents, licenses, permits, statutory necessary in connection with the Project, including to permit the design, construction, operation and maintenance of the Project Facilities and performance of the Project Work, Interim Project Services and Project Services.

 

1.106 Phase” means Phase 1, Phase 2 or Phase 3 and “Phases” means Phase 1, Phase 2 and Phase 3.

 

1.107 Phase 1” means the redevelopment, improvement, design and/or construction of the Phase  1 Project Facilities within the HOF Village Complex.

 

PROPRIETARY AND CONFIDENTIAL.

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1.108 Phase 1 Equipment / Technology” means the In-Scope Systems for Phase 1 identified in subsection (a) of Attachment 1.1 [In-Scope Systems] to this Schedule 1 [Definitions].

 

1.109 Phase 1 In-Scope Systems” has the meaning ascribed to it in subsection (a) of Attachment 1.1 [In-Scope Systems] to this Schedule 1 [Definitions].

 

1.110 Phase 1 Project Facilities” means the Project Facilities listed in Part 1 of Attachment 1.2 [Project Facilities] to this Schedule 1 [Definitions].

 

1.111 Phase 2” means the redevelopment, improvement, design and/or construction of the Phase  2 Project Facilities within the HOF Village Complex.

 

1.112 Phase 2 Equipment / Technology” means the In-Scope Systems for Phase 2 identified in subsection (b) of Attachment 1.1 [In-Scope Systems] to this Schedule 1 [Definitions].

 

1.113 Phase 2 In-Scope Systems” has the meaning ascribed to it in subsection (b) of Attachment 1.1 [In-Scope Systems] to this Schedule 1 [Definitions].

 

1.114 Phase 2 Project Facilities” means the Project Facilities listed in Part 2 of Attachment 1.2 [Project Facilities] to this Schedule 1 [Definitions].

 

1.115 Phase 2 Work” means the supply and/or installation of the Phase 2 Equipment/Technology.

 

1.116 Phase 3” means the redevelopment, improvement, design and/or construction of the Phase 3 Project Facilities within the HOF Village Complex.

 

1.117 Phase 3 Equipment / Technology” means the In-Scope Systems for Phase 3 identified in subsection (c) of Attachment 1.1 [In-Scope Systems] to this Schedule 1 [Definitions].

 

1.118 Phase 3 In-Scope Systems” has the meaning ascribed to it subsection (c) of Attachment 1.1 [In-Scope Systems] to this Schedule 1 [Definitions].

 

1.119 Phase 3 Project Facilities” means the Project Facilities listed in Part 3 of Attachment 1.2 [Project Facilities] to this Schedule 1 [Definitions].

 

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1.120 Phase 3 Work” means the supply and/or installation of the Phase 3 Equipment/Technology.

 

1.121 Phase 3 Work Liquidated Damages” means an amount equal to (i) [***] of (ii) the amount by which the value of the Phase 3 Work is less than [***] (Index Linked).

 

1.122 PLA” means the Project Labor Agreement to be entered into by the Customer, which agreement shall apply to the Phase 2 Work and the Phase 3 Work but not the Project Services.

 

1.123 Planned Maintenance” means Maintenance or Replacement Work performed in accordance with the Annual Scheduled Maintenance Plan as modified from time to time in accordance with this Agreement.

 

1.124 Pollution Liability Policy” has the meaning ascribed to it in Section 6.1(e) of Schedule 4 [Insurance].

 

1.125 Premises” means the Customer’s land, buildings, improvements, and facilities and includes the Project Facilities.

 

1.126 Pro Forma” has the meaning ascribed to it in Part 2, Article 1, Section 1(a).

 

1.127 Project” has the meaning ascribed to it in the Recitals to the TAAS Agreement.

 

1.128 Project Facility” means each of the Phase 1 Project Facilities, Phase 2 Project Facilities and Phase 3 Project Facilities listed on Attachment 1.2 [Project Facilities] to this Schedule 1 [Definitions].

 

1.129 Project Materials” means all drawings, reports, documents, plans, formulae, calculations and other data used in relation to the Project Work but expressly excludes any source codes for any software (but excluding un-compiled source code for Project-specific applications or editable versions of third party software application files, including CAD/BIM files). and any Intellectual Property of third parties, such as CAD software, that is used in the process of the Project Work or Project Services.

 

1.130 Project Services” means the services to be provided by Provider to Customer in respect of In-Scope Systems as described in Schedule 2 [Maintenance and Lifecycle] other than the Interim Project Services.

 

1.131 Project Services Period” means, in respect of each Phase the period beginning when the Project Work for such Phase has achieved Substantial Completion and ending on expiry of the Term, or earlier termination, of this Agreement.

 

1.132 Project Work” means, collectively, the Phase 2 Work and the Phase 3 Work.

 

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1.133 Project Work Schedule” has the meaning ascribed to it in Section 6.1 [Project Work Schedule] of Schedule 10 [Construction Additional General Terms and Conditions] and refers to the Phase 2 Project Work Schedule and the Phase 3 Project Work Schedule, as applicable.

 

1.134 Provider” has the meaning ascribed to it in the preamble to the TAAS Agreement.

 

1.135 Provider Event of Default” has the meaning ascribed to it in Section 12.1(a) of the TAAS Agreement.

 

1.136 Provider Intellectual Property Rights” means all Intellectual Property, in or associated with the Project Materials, required for the Project Work or Project Services with the express exception of source codes.

 

1.137 Provider Permits” means all permits, if any, required to be obtained by Provider in order to conduct its business in the normal course.

 

1.138 Provider Person” means Provider’s subcontractors or any tier, agents, representatives, employees, directors, officers, affiliates and advisors in each case acting directly or indirectly for Customer in respect of this Agreement, or acting in respect of the Project Facility, Project Work, Interim Project Services or Project Services.

 

1.139 Provider Phase 3 Work” has the meaning ascribed to it in Section 2.2(d) of the TAAS Agreement.

 

1.140 Provider Representative” has the meaning ascribed to it in Section 3.2(a) of the TAAS Agreement.

 

1.141 Provider’s Fee - Phase 2” means a percentage fee of [***] of the Allowable Costs for Phase 2 earned as the Allowable Costs for Phase 2 accrue.

 

1.142 Provider’s Fee - Phase 3” means a percentage fee of [***] of the Allowable Costs for Phase 3 earned as the Allowable Costs for Phase 3 accrue.

 

1.143 Provider Staff” means all Provider human resources and/or subcontractor resources, including employees and any other Persons providing Project Services.

 

1.144 PSA” means the Planned Services Agreement as described in Section 4.8 of this Agreement, a summary of which is attached hereto as Schedule 13 [Planned Services Agreement].

 

1.145 Receiving Party” has the meaning ascribed to it in Section 10.1 of the TAAS Agreement.

 

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1.146 Rectification Times” means the time to rectify a Service Request set forth in Section 1b of Attachment 1 [Key Performance Indicators & Deductions] of Schedule 2 [Maintenance and Lifecycle] under the heading “KPI Notes and Clarifications”.

 

1.147 Referee” has the meaning ascribed to it in Section 3.1 of Schedule 5 [Dispute Resolution Procedure].

 

1.148 Referee Agreement” has the meaning ascribed to it in Section 3.1(b) of Schedule 5 [Dispute Resolution Procedure].

 

1.149 Referee Notice” has the meaning ascribed to it in Section 3.1 of Schedule 5 [Dispute Resolution Procedure].

 

1.150 Remaining Useful Life” means the remaining lifecycle, expressed in years, for which each In-Scope System is expected to remain in good condition and, if applicable, operating order, normal wear and tear (which shall not include the Provider’s failure to maintain in accordance with the requirements of this Agreement) excluded, before requiring complete replacement.

 

1.151 Requesting Party” has the meaning ascribed to it in Article 12 of Schedule 4 [Insurance].

 

1.152 Respondent” has the meaning ascribed to it in Section 5.5 of Schedule 5 [Dispute Resolution Procedure].

 

1.153 Response Times” means the times to respond to a Service Request set forth in Section 1 of Attachment 1 [Key Performance Indicators & Deductions] of Schedule 2 [Maintenance and Lifecycle] under the heading “KPI Notes and Clarifications”.

 

1.154 Safety Officer” means the individual appointed by the Customer as its representative in respect of safety matters in respect of the Project.

 

1.155 Scheduled Maintenance” means Maintenance or Replacement Work performed in accordance with the Annual Scheduled Maintenance Plan.

 

1.156 Service Payment – Annual” means the annual service payment in respect of Phase 1, Phase 2 or Phase 3, as applicable, calculated, in the case of Phase 1, in accordance with the PSA, and, in the case of Phase 2 and Phase 3, in accordance with Section 3.1 of Part A of Schedule 3 [Payment and Deductions].

 

1.157 Service Payment – Monthly” means the monthly service payment in respect of Phase 1, Phase 2 or Phase 3, as applicable, calculated, in the case of Phase 1, in accordance with the PSA, and, in the case of Phase 2 and Phase 3, in accordance with Section 1.1 of Article 1 of Schedule 3 [Payment and Deductions].

 

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1.158 Service Requests” means requests made to the Help Desk or directly to Provider’s on-site employees by an employee of the Customer for the Provider to perform Maintenance or Replacement Work.

 

1.159 Settlement Meeting” has the meaning ascribed to it in Section 4.1 of Schedule 5 [Dispute Resolution Procedure].

 

1.160 SP Subcontractor” means suppliers, vendors, subcontractors engaged by Provider to perform any part of the Project Services.

 

1.161 Special Events” means scheduled events or meetings identified by the Customer.

 

1.162 Subcontractor” means any person or entity performing all or a portion of the Project Work, for Provider.

 

1.163 Submittal Schedule” has the meaning ascribed to in in Section 7.1 [Submittal Schedule] of Schedule 10 [Construction Additional General Terms and Conditions] and refers to the Submittal Schedule in respect of Phase 2 and the Submittal Schedule in respect of Phase 3, as applicable.

 

1.164 Substantial Completion” means the Project Work to be completed at each Project Facility or in respect of each Phase, that such Project Facility or Phase has received a temporary certificate of occupancy or would have received, but for the negligent act or omission of Customer or those for whom it is responsible (including contractors, consultants and subcontractors) has achieved Substantial Completion in accordance with the requirements of this Agreement in respect of such Project Work or Project Facility or Phase.

 

1.165 TAAS Agreement” or “Agreement” has the meaning ascribed to it in Section 1.1 of the TAAS Agreement.

 

1.166 Term” means the period that begins on the Effective Date and ends December 31, 2034, as extended in accordance with the terms of this Agreement.

 

1.167 Transition Fees” means the fees payable by Customer to Provider in respect of Transition Services and the Interim Project Services as set forth in, Attachment 1.5 - Transition Fees.”

 

1.168 Transition Services” means the development and transition activities and services undertaken by the Provider for the purpose of enabling the Provider to provide to the Customer the Interim Project Services and the Project Services.

 

1.169 Value Added Taxes” has the meaning ascribed thereto in Section 6.2 of the TAAS Agreement.

 

1.170 VBE” means veterans business enterprise.

 

1.171 Warranty Period” means the period of time identified in the AIA Documents (as defined in Schedule 10) that the Provider is obligated to honor the warranties described in the AIA Document.

 

1.172 WBE” means women business enterprise.

 

PROPRIETARY AND CONFIDENTIAL.

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Attachment 1.1 – In-Scope Systems

 

(a) Phase 1 In-Scope Systems

 

1. JCI Core Business: As described in the PSA.

 

2. Technology: As described in the PSA

 

The following are the current anticipated In-Scope Systems for Phase 2 and Phase 3:

 

(b) Phase 2 In-Scope Systems

 

1. JCI Core Business: Chillers; chiller controls; boilers; cooling towers; VAV fans & boxes; FCUs, UHs & CUHs; RTUs; EFs; BAS; DOAs, MAU & blowers; heat exchangers; CRAC units & duct split units; access control and CCTV; lighting controls; and fire alarm systems; and

 

2. Technology: Structured cabling systems; converged network infrastructure; audio/visual to the extent procured by Customer in respect of Phase 2; sound masking to the extent procured by Customer in respect of Phase 2; mass notification system; emergency stations; emergency responder system; time clocks to the extent procured by Customer in respect of Phase 2; overhead paging system; and POS systems to the extent procured by Customer for Phase 1 , Active network components such as switches and servers are not in scope but may be added to scope at HOFV discretion,

 

(c) Phase 3 In-Scope Systems

 

1. JCI Core Business: Chillers; chiller controls; boilers; cooling towers; VAV fans & boxes; FCUs, UHs & CUHs; RTUs; EFs; BAS; DOAs, MAU & blowers; heat exchangers; CRAC units & duct split units; access control and CCTV; lighting controls; and fire alarm systems; and

 

2. Technology: Structured cabling systems; converged network infrastructure; audio/visual to the extent procured by Customer in respect of Phase 3; sound masking to the extent procured by Customer in respect of Phase 3; mass notification system; emergency stations; emergency responder system; time clocks to the extent procured by Customer in respect of Phase 3; overhead paging system; and POS systems to the extent procured by Customer for Phase 3; Active network components such as switches and servers are not in scope but may be added to scope at HOFV discretion.

 

The Parties acknowledge and agree that the In-Scope Systems for Phase 2 and Phase 3 will be modified as the Design Documents for each Phase are evolved. The In-Scope Systems for Phase 2 and Phase 3 will be finalized at the same time the GMP-Phase 2 and the GMP-Phase 3 are finalized in accordance with Section 5.3 of Article 5 of Schedule 10 [Construction Additional Terms and Conditions] and the revised In-Scope Systems for Phase 2 and Phase 3 will be incorporated into this Attachment 1.1 by Change Order.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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Attachment 1.2 – Project Facilities

 

Part 1 - Phase 1 Project Facilities:

 

Ø The Tom Benson Hall of Fame Stadium

 

Ø Playing Fields - Phase 1 and Related Improvements

 

Part 2 - Phase 2 Project Facilities:

 

Ø Tapestry by Hilton (on-site hotel)

 

Ø Constellation Center For Excellence

 

Ø Center For Performance

 

Ø HOFV Retail Promenade

 

Ø HOFV Waterpark

 

Ø Tom Benson Stadium East End Zone

 

Ø Youth Fields - Phase II

 

Part 3 - Phase 3 Project Facilities:

 

Ø Hall of Fame Experience

 

Ø Luxury Hotel (including retail)

 

Ø Multi-Family Housing

 

Ø Legends Landing

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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Attachment 1.3 – Responsibility Matrix

 

See Attached

 

Intentionally Deleted

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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Attachment 1.4 – Labor Costs for Provider’s Personnel for Phase 2

 

[Redacted]

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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Attachment 1.5 - Transition Fees

 

[Redacted]

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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SCHEDULE 2

 

MAINTENANCE AND LIFECYCLE

 

PROPRIETARY AND CONFIDENTIAL.

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PART 1

 

INTERIM PROJECT SERVICES

 

1. General Requirements:

 

Provider shall, in respect of each of Phase 2 and Phase 3, provide the O&M Services and the other services and obligations described in Part 2 of this Schedule 2 [Maintenance and Lifecycle] for each Project Facility, commencing on Substantial Completion of such Project Facility and continuing until Substantial Completion of all Project Facilities in the applicable Phase. Customer acknowledges that certain Project Services described in Part 2 of Schedule 2 [Maintenance and Lifecycle], such as Lifecycle Services and certain reporting, will not be able to be provided until all Project Facilities in a particular Phase have achieved Substantial Completion and such Lifecycle Services and reporting requirements shall not form part of the Interim Project Services In addition, there shall be no Deductions, including in respect of KPI failures, in respect of Interim Project Services and the provisions of Attachment 1 to this Schedule 2 shall not apply. 

 

PROPRIETARY AND CONFIDENTIAL.

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PART 2

 

PROJECT SERVICES

 

Article 1 o&m services

 

1. GENERAL REQUIREMENTS:

 

(a) Provider shall provide operation and maintenance services (“O&M Services”) (including warranty, software licensing, and other associated services) for the In-Scope Systems for each of Phase 1, Phase 2 and Phase 3, as more particularly described below). Upon commencement of the Project Services Period for Phase 2, the O&M Services shall include the O&M Services for the In-Scope Systems for Phase 1 and the In-Scope Systems for Phase 2. Upon commencement of the Project Services Period for Phase 3, the O&M Services shall include the O&M Services for the In-Scope Systems for Phase 1, the In-Scope Systems for Phase 2 and the In-Scope Systems for Phase 3. Provider’s Service Payment - Annual for such O&M Services are preliminarily priced pursuant to the pro forma financial model attached hereto as Exhibit 1 to Schedule 3 (“Pro Forma”). The Service Payment - Annual for each of Phase 2 and Phase 3 may vary by up to [***] of the amounts set forth in the Pro Forma (Index Linked), but the aggregate of all Service Payment - Annual for all Phases at the end of the Term shall be equal to the aggregate amount set forth in the Pro Forma (Index Linked). O&M Services will satisfy the Key Performance Indicators (KPIs) identified in Attachment 1.

 

(b) Provider shall provide O&M Services 24/7/365(6) on a scheduled and unscheduled basis as may be required to meet the KPIs and shall:

 

(i) provide safe, efficient, responsive, continuous, reliable, comprehensive and effective plant services, including maintenance activities of all In-Scope Systems, including those associated with buildings, building services, infrastructure, mechanical and electrical systems, water, building and property management, which are based on sound technical and operational requirements and Applicable Standards in accordance with Good Industry Practices, in order to meet the operational needs of Customer;

 

(ii) ensure that the O&M Services do not cause or create any safety or environmental hazards at the Project Facilities or on the Premises or surrounding area;

 

(iii) minimize disruption to Customer’s activities, and at a minimum:

 

A. present the Annual Scheduled Maintenance Plan to Customer one month in advance; and

 

B. provide adequate prior notice to Customer for all Scheduled Maintenance;

 

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(iv) where Provider is requesting or relaying third-party shut-down requests, clearly provide a written description and justification for such requests within requested timeframe;

 

(v) maintain a safe, compliant, functional, working, barrier-free environment, applying the necessary available safe working practices, including the use of recognized Provider reviewed risk assessment/management systems to ensure that standards are maintained and that any adverse variance is recognized and corrected; and

 

(vi) develop and keep up-to-date sets of instructions related to O&M Services on In-Scope Systems in order to minimize potential human error.

 

(c) Provider shall exercise supervision, by a duly qualified competent resource, of the O&M Services at all times.

 

(d) Provider shall ensure that all Service Requests for Maintenance or Replacement Work may be completed in accordance to the Response Times and Rectification Times and via the Help Desk.

 

(e) Provider shall provide delivery functions (e.g., movement of equipment) as it relates to O&M Services.

 

(f) Provider shall have sufficient inventory of spare parts in order to meet the Response Times and Rectification Times. Provider shall maintain a record of critical spare parts inventory levels accessible by Customer upon request.

 

(g) Provider shall re-commission equipment on a regular cycle as per the manufacturers’ specifications. Provider shall initially witness the commissioning of In-Scope Systems and subsequently re-commission on a regular cycle as per the manufacturers’ specifications.

 

(h) Provide compliance inspections, reviews and certification to meet all Applicable Standards for In-Scope Systems, as applicable.

 

(i) Provider shall provide all testing and Maintenance or Replacement Work as required by Applicable Law, as appropriate to meet Good Industry Practices and, as required, to ensure compliance with the performance requirements of this Agreement.

 

(j) Provider shall provide a report which will, at minimum, include the following:

 

(i) copies of inspection reports, studies, analysis and tests that demonstrate that the In-Scope Systems, including building systems and equipment provided as part of the Project Work, are operating in accordance with the requirements of the Agreement;

 

(ii) copies of inspection reports, studies, analysis and tests that demonstrate that the In-Scope Systems are operating in accordance with the commissioning program undertaken in connection with the Project Work;

 

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(iii) comparison and variation analysis of the results that were measured during commissioning against the results that were measured at the time of the one year performance review, including a recommendation on how any variance will be rectified.

 

2. SPECIFIC REQUIREMENTS:

 

(a) Provider shall provide:

 

(i) full operation, maintenance and equipment repair services (including warranty, software licensing, and other associated services, including firmware upgrades, end of life upgrades and updates to documentation) for all of the In-Scope Systems included in the scope of work for all three Phases of the Project;

 

(ii) use of the full suite of Provider’s digital solutions, inclusive of remote monitoring, help desk, computerized maintenance management system, predictive diagnostics and the Johnson Enterprise Management system;

 

(iii) all equipment and tools required (computers, CMMS, supplies, consumables, uniforms, etc.);

 

(iv) truck-based personnel to supplement on-site staff as needed to perform higher-level service work (chiller, fire alarms, BAS, etc.);

 

(v) full Project reporting] throughout the term; and,

 

(vi) on-site staffing. 8:00AM – 5:00PM Monday through Friday with Demand Maintenance 24 hours per day, 7 days per week.

 

(b) Provider's O&M Services responsibilities include the following, as further described in this Schedule 2 [Maintenance and Lifecycle]:

 

(i) Operations Management Services:

 

(A) Service Requests services

 

(B) Emergency and Incident Management Services

 

(C) Environmental Management Services to the extent they pertain to the Services being delivered by the Provider

 

(ii) In-Scope Systems Maintenance and Renewal Services:

 

(A) Planned Maintenance

 

(B) Demand Maintenance

 

(C) Replacement Work

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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(c) Provider shall also be responsible for additional O&M Services, as required and agreed between the Parties, each acting reasonably, and such additional O&M Services shall be treated as Changes.

 

(d) From the commencement of O&M Services for the In-Scope Systems, Provider shall maintain and renew such In-Scope Systems, including all associated elements and improvements. At a minimum, Provider shall:

 

(i) Adhere to, update and maintain as current the version of the Annual Scheduled Maintenance Plan as approved by Customer;

 

(ii) Properly operate, maintain and renew the In-Scope Systems and each element of the In-Scope Systems to ensure that the In-Scope Systems and all areas of the In-Scope Systems:

 

(A) meet the Applicable Standards;

 

(B) function, operate safely and perform in accordance with the O&M Requirements and the final Design Documents;

 

(C) remain in compliance with Applicable Laws and manuals and guidelines; and

 

(D) meet the Handback Requirements upon expiration of the Term.

 

(e) Ensure that properly trained, licensed, and certified personnel address the range of Planned Maintenance, Demand Maintenance and Replacement Work;

 

(f) Ensure that security, fire suppression and detection, emergency power supply, and mechanical systems are available for operation 7/24/365(6), as well as any other Critical Systems unless specifically authorized by Customer, the local or state authority having jurisdiction, and Safety Officer;

 

(g) Unless otherwise provided in the O&M Requirements or TAAS Agreement, maintain all In-Scope Systems and all applicable equipment in accordance with manufacturer’s requirements and frequencies; and

 

(h) In addition to the foregoing, Provider shall perform the following obligations, set out in Table 1 below, in respect of O&M Services:

 

PROPRIETARY AND CONFIDENTIAL.

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TABLE 1

 

1.

Staffing, Operations and Maintenance

 

In-Scope Systems will be maintained by a combination of on-site staff, truck-based service providers and remote monitoring and management services via the BMS.

 

(a) Premium 24x7 Coverage of ALL In-Scope Systems within Phase 1, Phase 2 and Phase 3 projects. This means that all preventative maintenance, all repairs, troubleshooting, parts and labor on repairs will be covered for Phases 1, 2 and 3.
(b) Provide HVAC technician(s) on site five (5) days a week. These technicians will have training on all mechanical equipment and be able to access and troubleshoot all HVAC equipment on site. Typically this will be Monday-Friday normal business hours.

2

 

Heating, Ventilation and Air Conditioning Systems (HVAC) Requirements.

 

The HVAC equipment and system includes all In-Scope Systems pumps, air handlers, computer room AC (CRAC) units, server room A/C units, exhaust systems, fan coil units, fresh air and return air fan systems, air compressors, pumps, VAV boxes, VFDs, thermostats, piping, duct work, air and water distribution devices, pressure valves, fire dampers and associated mechanical equipment within the Project Facilities

 

(a) Operate, maintain and renew HVAC equipment and systems to ensure the areas served by the systems comply with applicable standards including ASHRAE Standard 62, ASHRAE Standard 55, and addendums to the standards;
(b) Operate, maintain and renew HVAC equipment and systems to provide maximum efficiency for energy conservation in accordance with the Agreement without compromising the comfort of the Building Occupants.
(c) Operate, maintain and renew HVAC equipment and systems to provide continuous operations with no controllable interruptions that affect Customer activities during Normal Hours of Operation;
(d) Ensure flexibility to allow area set points to be adjusted during the Term as agreed to by Provider and Customer;
(e) Test for bacteria, legionella and like contaminants on an ASHRAE approved frequency
(f) Test and maintain building hydronic chemistry and report the rate of metal erosion and share results with the Customer upon request
(h) Ensure that interior areas maintain an interior temperature of 72 degrees Fahrenheit DB, +/- 3 degrees

 

PROPRIETARY AND CONFIDENTIAL.

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3.

 

Fire Protection and Life Safety Systems. Fire protection and life safety systems include devices that support the safety of users of the Project Facilities (the “Fire Protection and Life Safety Systems”) excluding sprinklers and their associated devices.. Typical devices include, without limitation, fire alarm system, mass notification system, emergency, fire and smoke dampers, fire dampers, opening protective systems, and all devices as adopted by Governmental Authorities.
(a) Inspect, test, maintain and renew Fire Protection and Life Safety Systems to ensure continuous operation and availability;
(b) Conduct all fire and life safety specific inspections, testing and maintenance of all Fire Protection and Life Safety Systems and components consistent with and at the frequencies required by the Applicable Law and the requirements set forth in NFPA Standards. Provide a written report to the Customer within one (1) month of such test or inspection performed describing the results of the inspections, testing and maintenance (if any) required;
(c) Conduct all fire and life safety specific maintenance and testing of all fire doors and other opening protective devices consistent with and at the frequencies required by Good Industry Practices, Applicable Law and the requirements set forth in NFPA 80;
(d) Submit the results of all inspections and testing of Fire Protection and Life Safety Systems and components, including fire doors and opening protective devices, to the appropriate governmental official, within one (1) month of such test or inspection being performed, and submit records relating to any other aspect of the Fire Protection and Life Safety Systems and components to the appropriate governmental official, upon request by the appropriate governmental official;
(e) Provide immediate verbal and written notification to the appropriate governmental official of any impairment to or interruption of the Fire Protection and Life Safety Systems;
4.

Communication Systems and IT Infrastructure

 

Includes for all In-Scope Systems within Provider’s scope of work, all infrastructure cabling including telecommunications, audio visual, ERRS/First Responder DAS, video mesh wall, and data cabling as well as public address systems. Also, with respect to all structured cabling and all passive related equipment, includes all network infrastructure including Route/Switch Network (LAN), Wireless Network (WLAN) and Voice Network (VoIP/Analog) and all structured cabling. Integrations include Lighting Control Unit, Simplex Fire Alarm Control Unit, SNE Controller for Emergency Generator, Mecho Shade Network.

(a) The communications systems shall be maintained in accordance with all relevant codes and standards.
(b) All electrical communications and data transmission installations to comply with Applicable Standards
(c) Access to all telecommunication rooms/closets shall be strictly controlled to authorized parties only in accordance with Customer direction
(d) All electrical communications and data transmission installations to comply with relevant codes and standards
(e) Shall function as intended.
5. Building Management System (“BMS”),  Building Technologies and Integrations
  Provider shall maintain and renew all components of the BMS. Building Technologies and software integrations to ensure connectivity and control of the mechanical and electrical equipment in the In-Scope Systems. Includes but not limited to all BMS sensors, actuator, elements, meters and controllers. Network infrastructure including Route/Switch Network (LAN), Wireless Network (WLAN) and Voice Network (VoIP/Analog) and all structured cabling. Integrations include Lighting Control Unit, Simplex Fire Alarm Control Unit, SNE Controller for Emergency Generator, Mecho Shade Network.  

6.

 

Access Control

Includes all Software House software and components, CCTV cameras, wiring, controllers, door strikes, door locks, card readers, video management equipment, software and systems.

 

(a) component replacement on the central processing unit, including reprogramming of system due to failure, replacement of circuit boards, and components in the control panels, annunciator panels, transponders, printers, keyboards monitors, and peripheral devices (Motion sensors, access control readers, closed circuit television cameras, monitors, audible/ visible units, door contacts.) associated with system. Replacement of faulty wiring, batteries, and/or ground faults are not covered.
(b) trained technicians will perform inspections and diagnostic tests for the accessible peripheral devices listed and currently connected to the facility life safety system. Tests will be scheduled in advance.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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3. EXCLUDED O&M SERVICES:

 

Provider shall not be responsible for providing any of the services described in Exhibit B [Excluded O&M Services] of this Schedule 2 [Maintenance and Lifecycle] hereto (collectively, the “Excluded O&M Services”), which Excluded O&M Services shall be the sole responsibility of Customer

 

Article 2 LIFECYCLE services

 

1. GENERAL REQUIREMENTS:

 

(a) Provider will provide equipment upgrades and refreshes during the Term relating to the In-Scope Systems (the “Lifecycle Services”). Provider’s preliminary pricing for yearly and aggregate Lifecycle Payments is as set forth in the Pro Forma, with the understanding that for each of the LC Periodical Aggregation: the Parties may, upon mutual agreement, adjust the yearly amount of Lifecycle Payments by up to [***] of the annual amounts stated in the Pro Forma, but only so long as the aggregate amount of actual Lifecycle Payments in any such LC Periodical Aggregation period equals the aggregate Lifecycle Payments stated in the Pro Forma for such LC Periodical Aggregation period.

 

(b) A function of Provider is to ensure the long-term integrity, operational efficiency and ongoing operational integrity and serviceability of the In-Scope Systems through the delivery of the Lifecycle Services in accordance with the Annual Scheduled Maintenance Plan which defines the estimated design life of the In-Scope Systems (being the period of time during which an In-Scope System is expected to work within its specified parameters), specific replacement/refurbishment strategies, key assumptions, annual cost provisions for all types of In-Scope Systems. Provider shall be responsible to maintain and renew the In-Scope Systems and all equipment, components and systems/software described herein as required, such that, at termination or expiry of the Agreement, the In-Scope Systems are fully functional and capable of performing to the standards set out in the original Design Documentation.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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2. SPECIFIC REQUIREMENTS:

 

(a) Lifecycle Services will include but not be limited to:

 

(i) turnkey replacement of In-Scope Systems that are failing or operating incorrectly or inefficiently;

 

(ii) major repairs as required to meet KPIs;

 

(iii) component repair and replacement as required to meet KPIs; and,

 

(iv) all work will be done with off-site staff to ensure smooth operations of O&M Services;

 

(b) Provider responsibilities shall include:

 

(i) provision of Lifecycle Services that minimize disruption to Customer. Customer reserves the right to limit replacement/renewal or other project related activities to outside of the Normal Hours of Operation if they are deemed to be disruptive to Customer operations;

 

(ii) initiation of an emergency procurement procedure (which will be documented in the O&M plan, which shall be presented to Customer its review and approval, acting reasonably) to enable timely replacement response in the event of unexpected or premature elements failure;

 

(iii) competent supervision of the work at all times and of all Provider staff and/or Subcontractors performing Lifecycle Services;

 

(iv) provision of advice, guidance and recommendations on lifecycle replacement and/or refurbishment of out-of-scope additions to the In-Scope Systems; and

 

(v) Reporting and quality monitoring.

 

Article 3 GENERAL

 

1. GENERAL PROVIDER RESPONSIBILITIES:

 

Provider shall operate, maintain, repair, replace and manage the In-Scope Systems on a 7/24/365(6) basis during the Project Services Period for each Phase in accordance with the requirements of this Schedule 2 [Maintenance and Lifecycle]. Provider shall provide all personnel, equipment, tools, materials, vehicles, supervision, and other items and services necessary to perform all services, tasks, and functions as set out herein and maintain a level of operations consistent with the Applicable Standards and Good Industry Practice.

 

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2. OPERATING AND SERVICE HOURS:

 

Provider shall ensure the In-Scope Systems are fully accessible within the Normal Hours of Operation, except for public holidays officially observed by Customer and Special Events.

 

The Parties acknowledge and agree that the timeframes set out in Attachment 1 of Schedule 2 [Maintenance and Lifecycle] of this Agreement are intended to be applied during Normal Hours of Operation.

 

3. DATA:

 

As part of the O&M Services and Lifecycle Services, Provider will collect facility data and information from In-Scope Systems. Customer will collect data from non-In-Scope Systems. Provider shall have the right to use such data and information on a de-identified basis in connection with its efforts to analyze and understand building efficiency and performance and the development of technology and tools relating thereto. Provider shall not, however, have rights associated with data that is restricted by Applicable Law or other governmental requirements. Furthermore, Provider acknowledges that (i) ownership of such data shall remain with Customer and license to collect and/or use such data does not constitute ownership thereof and (ii) such data collected and analysis thereof shall be made available to Customer in the same frequency and format as collected by Provider.

 

4. RESPONSE PERIOD:

 

Provider shall respond to and cure all Service Requests within the times indicated in Attachment 1 of Schedule 2 [Maintenance and Lifecycle], as applicable.

 

Failure to meet KPIs outlined in Attachment 1 of Schedule 2 [Maintenance and Lifecycle] will result in Deductions to the Monthly Service Payment in respect of each Phase as set forth in this Agreement.

 

5. HUMAN RESOURCES:

 

(a) Provider shall:

 

(i) to the extent applicable, adhere to prevailing wage requirements as defined by the Ohio Labor Code;

 

(ii) provide qualified personnel to perform all of the Project Services during the Project Services Period for each applicable Phase (the job descriptions of Provider’s on-site personnel are attached as Attachment 2 to this Schedule 2); and

 

(iii) ensure that employees have all required professional certifications, current, valid, and on file, before starting work.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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6. MATERIAL, EQUIPMENT, AND SUBCONTRACT PURCHASES:

 

(a) Provider shall:

 

(i) purchase and manage, as applicable, all materials, equipment, and subcontracts to be used in the performance of these Provider Services; and

 

(ii) maintain and manage sufficient materials and equipment to perform the Provider Services.

 

7. O&M MONITORING AND REPORTING:

 

The Provider shall be responsible for periodic operation and maintenance reporting requirements (the “O&M Reports”) as set out in Exhibit A [O&M Plans and O&M Reports] of this Schedule 2 [Maintenance and Lifecycle]. The format of the O&M Reports will be subject to approval by Customer prior to the Substantial Completion of the first Project Facility in a Phase (except in respect of Phase 1, which shall be approved prior to the commencement of the Project Services in respect of Phase 1). The format of such O&M Reports will be amended and changed during the Term as agreed by Provider and Customer, both acting reasonably.

 

8. COMPUTERIZED MAINTENANCE MANAGEMENT SYSTEM:

 

Provider shall utilize a CMMS and provide Customer with the ability to read, download and print data from the CMMS.  The CMMS shall be web-enabled. The CMMS shall, at a minimum, be used to track Planned Maintenance and Demand Maintenance, Service Requests made to the Help Desk, Maintenance or Replacement Work, and time to complete Maintenance or Replacement Work, Service Request Response Time and Rectification Time, vendor work, asset and equipment histories, cost data, space utilization and other relevant documentation required to actively manage the In-Scope System’s environment as required to meet the Applicable Standards.  All data and documentation contained in the CMMS shall be the property of Customer.

 

Article 4 OPERATIONS MANAGEMENT SERVICES

 

1. SERVICE ORDER REQUESTS SERVICES:

 

(a) Provider shall:

 

(i) provide sufficient resources to address all Service Requests from the time they are received at the Help Desk through their completion in a manner that is consistent with the O&M Requirements and this Agreement;

 

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(ii) respond to all Service Requests through deployment of the correct level of support to resolve all matters in accordance with the O&M Requirements and this TAAS Agreement;

 

(iii) establish with the Customer a system for receiving and processing Service Requests submitted by the Help Desk via telephone, web, e-mail and SMS and provide CMMS training to Customer representatives for purpose of work order entry. For clarity, Customer will be able to initiate Service Requests via web, mobile device, telephone or CMMS, or in person;

 

(iv) comply with all relevant notification and reporting procedures set out in this Agreement;

 

(v) ensure that all data relating to a Provider initiated Service Request is promptly reported and transferred to the Help Desk. Such data shall include the following, at a minimum, to the extent that such information is provided:

 

(A) Requestor’s name;

 

(B) Date and time of request;

 

(C) Phone number;

 

(D) Email address;

 

(E) Location of requested service;

 

(F) Asset type; and

 

(G) Asset number.

 

(vi) All notes, correspondence, and any other documentation provided by the requestor, if any, in each case, unaltered.

 

2. EMERGENCY AND INCIDENT MANAGEMENT SERVICES:

 

(a) At the request of Customer, Provider shall assign one (1) representative (acceptable to Customer, acting reasonably) to Customer’s emergency operations committee. In addition, Provider shall:

 

(i) adhere to, update, and maintain as current, an emergency management and disaster recovery plan as approved by Customer;

 

(ii) continue to provide critical O&M Services during an emergency (as defined in Provider’s emergency plan, which shall be consistent with and otherwise in compliance with Customer’s emergency plans). All In-Scope Systems related to such critical O&M Services shall be identified within the CMMS;

 

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ALL RIGHTS RESERVED.

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(iii) ensure forty-eight (48) hour fuel supply at a minimum for auxiliary backup systems;

 

(iv) work with the Safety Officer to develop and conduct fire and life safety training programs for all Provider and Customer personnel at the In-Scope Systems. Provider shall provide training to new personnel within their first sixty (60) days at the In-Scope Systems, and shall provide refresher sessions to all personnel every twelve (12) months;

 

(v) assist Customer and the Safety Officer in the Customer’s performance of the annual fire drill and evacuation procedures at the In-Scope Systems and document attendance, in coordination with Customer and the Safety Officer;

 

(vi) participate in Customer disaster back-up and recovery program development and effectively address assigned action steps in the event disaster recovery plans are activated; and

 

(vii) establish emergency response escalation programs in accordance with Customer guidelines to ensure the appropriate Customer personnel are notified of emergency conditions,

 

(collectively, the “Emergency and Incident Management Services”).

 

3. O&M INTERFACE OBLIGATIONS

 

(a) Coordination with Excluded O&M Services

 

Customer and Provider acknowledge that there is interface between the O&M Services and the Excluded O&M Services. Provider and Customer shall coordinate the O&M Services and the Excluded O&M Services so that Provider can perform the O&M Services and Customer can perform, or cause to be performed, the Excluded O&M Services without material obstruction or limitation to either Party. Provider and Customer shall each adhere to, and Provider shall update, and maintain as current, the Co-Ordination Plan as approved by Customer.

 

(b) Customer Activities and the Coordination of O&M Services

 

Provider shall coordinate the O&M Services to support and avoid disruption to the Customer activities. Customer shall coordinate the Excluded O&M Services to support and avoid disruption to Provider’s performance of the O&M Services.

 

(c) Key Management

 

Provider shall ensure that keys and key cards assigned to Provider by Customer are not lost or misplaced and are not used by unauthorized persons. Provider shall immediately report lost or duplicate keys to Customer. Only Provider or Provider Persons engaged in the performance of O&M Services, or personnel authorized for entrance by Customer, shall be granted access to locked areas. Keys lock(s), locksets, and key cards provided to Provider are property of Customer. Lost keys or keycards assigned to Provider or Provider Persons shall be replaced at Provider’s expense. In order to maintain security, locksets requiring repining and the replacement of lock(s) or locksets as a result of lost or stolen keys assigned to Provider will be provided by Customer at Provider’s expense.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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(d) Replacement Work Notifications to Customer

 

In addition to complying with the notice and reporting obligations in the TAAS Agreement and O&M Requirements, Provider shall, seven (7) day prior to the commencement of any Replacement Work, notify the Customer Representative of such Replacement Work so as to minimize disruptions to Customer’s activities. In the event Customer requests a reschedule of Replacement Work, Provider shall make all reasonable efforts to accommodate such request.

 

(e) O&M Services During Special Events

 

(i) Provider shall not perform Lifecycle Work or Planned Maintenance during Special Events. Customer shall provide Provider due notice of the Special Event seven (7) days in advance of its occurrence.

 

(ii) Provider shall only test fire alarms with advanced notification and approval by Customer and not at night, on weekends, holidays, or during any Special Event.

 

(iii) Notwithstanding the restrictions set forth in this Agreement, Provider shall continuously provide all other O&M Services during Special Events;

 

Any additional Provider staff requested by the Customer during Special Events shall be treated as a Change.

 

4. HANDBACK REQUIREMENTS AND PROCEDURES

 

(a) Handback Requirements

 

Provider shall:

 

(i) draft and submit to Customer for approval within 24 months following the date of this Agreement, the Handback Renewal Work Plan (which may include analysis from a third party, to be paid for equally by the Parties) for joint development by Customer and Provider;

 

(ii) upon receipt of approval by Customer, implement and comply with the Handback Renewal Work Plan;

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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(iii) perform the work identified in the Annual Handback Evaluation Reports in accordance with the Handback Renewal Work Plan and the TAAS Agreement (the “Handback Renewal Work”) and ensure that:

 

(A) the In-Scope Systems and elements within the In-Scope Systems are in compliance with Applicable Law and performing in accordance with the O&M Requirements at the expiry of the Term; and

 

(B) the In-Scope Systems and elements within the In-Scope Systems are in the condition required to achieve the Remaining Useful Life requirements set out in (c)(ii) below;

 

(iv) transfer Replacement Parts to Customer. Customer and Provider shall create an inventory of Replacement Parts onsite at the commencement of the Project Services Period for each of Phase 2 and Phase 3 and shall transfer Replacement Parts in similar quality and quantity to Customer at the end of the Term, Critical, high-frequency (daily or weekly) materials/items will be stocked to a 3 month run rate at the end of the Term. In addition, Provider shall transfer to Customer all other Replacement Parts it has in stock at the end of the Term.

 

(b) Inspections Prior to Handback

 

Prior to the expiry of the Term, Provider shall perform three (3) inspections of the In-Scope Systems as follows (the “Handback Inspections”):

 

(i) The first Handback Inspection shall take place no earlier than forty (40) calendar months and be completed no later than thirty seven (37) calendar months prior to the expiry of the Term;

 

(ii) The second Handback Inspection shall take place no earlier than sixteen (16) calendar months and be completed no later than thirteen (13) calendar months prior to the expiry of the Term; and

 

(iii) The final Handback Inspection shall take place no earlier than four (4) calendar months and be completed no later than two (2) calendar months prior to the expiry of the Term.

 

Customer may participate in all aspects of the Handback Inspections. Provider shall provide Customer with reasonable notice of all inspection activities and tests to allow Customer or any Customer Person to fully participate in the Handback Inspections.

 

(c) In-Scope Systems Condition and Remaining Useful Life

 

On the expiry of the Term:

 

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ALL RIGHTS RESERVED.

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(i) The In-Scope Systems and each of the elements comprising the In-Scope Systems shall be in a condition consistent with such In-Scope Systems and elements:

 

(A) having been designed and constructed in accordance with the applicable industry minimum design life requirements; and

 

(B) having been operated, maintained and renewed in accordance with this Agreement.

 

(ii) The elements identified in Attachment 3 shall have, at a minimum, the Remaining Useful Life identified in Attachment 3.

 

(d) Turnover or Replacement Parts

 

At the expiry of the Term, Provider shall transfer to Customer all spare fixed components and replacement parts (the “Replacement Parts”), at no cost to Customer, that Provider has in its inventory and possession for purposes of the maintenance of the In-Scope Systems. For further certainty, at the expiry of the Term, Provider shall have an inventory of Replacement Parts which is reasonably in accordance with the amount and type of inventory maintained throughout the Term. Provider shall ensure that all Replacement Parts are stored at the In-Scope Systems at locations previously approved by Customer as of the expiry of the Term. At the expiry of the Term, Provider shall release and transfer to Customer all its right, title and interest in any and all such Replacement Parts, free and clear of all liens and encumbrances. Customer reserves the right not to accept obsolete, damaged or any other Replacement Parts from Provider’s inventory the use of which Customer deems not to be in the best interest of Customer.

 

(e) Handback Deliverables

 

(i) Asset Inventory Report. Provider shall provide an up-to-date final Asset Inventory Report, including all records of warranties, as well as an inventory of spare parts and other infrastructure to be handed over to the Customer no later than one (1) calendar month prior to the expiry of the Term.

 

(ii) Project Records. Provider shall provide to Customer the most current and up-to-date versions of all project records prepared in connection with the Project Work, including In-Scope Systems, systems manuals, and all instruction manuals, warranties and documents related to the In-Scope Systems.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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(iii) Electronic Documents. Electronic files containing schedule information shall be compatible with the latest version of the scheduling software utilized by Customer at the expiry of the Term, be submitted in native format, and be editable by Customer. Electronic files containing computer aided design (“CAD”) drawing information shall be compatible with the latest version of CAD software used by Customer at the expiry of the Term, be submitted in native format, and be editable by Customer. Other electronic files shall be compatible with the most recent version of the corresponding software suite utilized by Customer at the expiry of the Term and be editable. Upon request by Customer, selected documents may be submitted in PDF format or another format as otherwise agreed by Customer and Provider. All electronic files shall be made available to Customer on a secure web-based portal managed by Customer or via other means specified by Customer and agreed to by Provider.

 

Article 5 ANNUAL REVIEW

 

1. GENERAL REQUIREMENTS:

 

The Parties acknowledge and agree that the scope of the Project Services identified in this Schedule 2 has been developed before all Project Facilities for Phase 2 and Phase 3 have been fully designed or constructed. The Parties agreed to meet on an annual basis, commencing on the first anniversary of the commencement of the Project Services for Phase 2, to review the scope of the Project Services for the purpose of ensuring the intent of the Parties set out in this Agreement is being met with respect to the services intended to be provided and the services required in respect of the Project Facilities. If the Parties determine and agree acting reasonably that amendments are required to this Agreement the Parties shall work in good faith to negotiate fair and equitable amendments to this Agreement provided that the risk profile and the compensation payable in respect of the services to be provided following each review are consistent with the risk profile and compensation payable for the services provided by the Provider prior to each such review.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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Exhibit A: O&M Plans and O&M Reports

 

Provider shall be responsible for preparing each of the plans referenced in Table 1 – Work Plans below (collectively, the “Work Plans”) for submission to Customer for review and approval, acting reasonably.

 

Unless otherwise stated:

 

(a) Provider and Customer will agree upon a schedule for review and approval at delivery of the initial Work Plans (which delivery shall not be less than 90 days in advance of the commencement of the Project Services Period for Phase 2 or Phase 3, as applicable), ensuring the Project Work Plans are approved by Customer upon Substantial Completion of each Phase (excluding Phase 1, which such Plans shall be approved as soon as reasonably possible following the execution of this Agreement); and

 

(b) from time to time, Provider shall have the right to update the Project Work Plans, as required to reflect material changes, subject to prior notification to and approval by Customer in respect of such updates.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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Table 1 – Work Plans

 

Plan # Name of Plan Description

Frequency

 

  Collaboration Plan

Provider shall prepare and submit to the Customer for review and approval, acting reasonably, a Collaboration Plan (“CP”) which review will include review by the Customer’s operations team and collaboration between the Parties including defining response/feedback time and deliverables for Customer’s review. The CP shall, at a minimum:

 

(a)   For the period prior to Substantial Completion of each Project Facility, include a plan and framework for meetings with Customer, other interested stakeholders, and Provider to collaborate on Project issues, access issues, coordination issues, and any other issues arising prior to Substantial Completion of the In-Scope Systems during the Project Work period, with a view towards streamlining the satisfactory resolution of issues arising during the Project Work.

 

(b)   For the Project Services Period, include a plan and framework for Provider to participate with the Customer to discuss O&M Services performance issues, custodial interface services, general communication with stakeholders, and any other matters arising in connection with the O&M Services at the In-Scope Systems, with a view toward fostering cooperation and better services by all during the Project Services Period;

 

(c)    Establish communication protocols to communicate key environmental commitments; compliance, noncompliance, and/or violations of environmental commitments; and any permitting issues and/or approvals to Customer;

 

(d)    Describe Provider’s approach to performance of O&M Interface Obligations described herein;

 

(e)    Describe the procedures for communication of Project information between Provider and Customer;

 

(f)    Describe the frequency of coordination meetings with Customer to discuss Project progress and issues;

 

(g)    Provide the names and contact information for the Provider Representative; and

 

(h)    Describe how Provider will respond to unexpected requests for information and communicate changes to Provider personnel, including the notification of affected stakeholders before and after changes are made to the O&M Requirements and/or the TAAS Agreement.

 

(a) Established 6 months following execution of this Agreement in respect of Phase 2 and months following commencement of the Project Work for Phase 3.

 

(b) – (h) Initially, 3 months prior to Substantial Completion of each Project Facility or in the case of Phase 1 as soon as reasonably possible following execution of this Agreement.

  O&M Plan

Provider shall prepare and submit an Operations and Management Plan (“OMP”) that describes Provider’s approach to the O&M Services throughout the Project Service Period for each Phase. The OMP shall, at a minimum, include the following:

 

(a)   A SMP following the general requirements of the Staffing Management Plan), and as applicable only to the performance of the O&M Services;

 

(b)   A reporting structure following the general requirements of this Agreement, and as applicable only to the O&M Services;

 

(c)   An O&M Quality Management Plan (“O&M QMP”) following the general requirements of this Agreement.

 

Initially, 4 months prior to Substantial Completion of each Project Facility or in the case of Phase 1 as soon as reasonably possible following execution of this Agreement.

 

 

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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Plan # Name of Plan Description

Frequency

 

  O&M Quality Management Plan

The O&M QMP shall, at a minimum:

 

(a)   Clearly outline the roles, rights, and responsibilities of Customer and Provider, as applicable, and consistent with the requirements of the O&M Services, Excluded O&M Services and O&M Interface Obligations;

 

(b)   Include procedures to report the status and closeout of all nonconforming work and instances of noncompliance throughout the Term. The QMP shall also include procedures for investigations and surveys undertaken by Provider as part of the monitoring process;

 

(c)   Encompass all O&M Services performed by Provider, and Provider Persons; and

 

(d)   Assign an overall Quality Manager that shall supervise and coordinate all the quality management activities and procedures set forth in the O&M QMP.

 

Initially, 4 months prior to Substantial Completion of each Project Facility or in the case of Phase 1 as soon as reasonably possible following execution of this Agreement.
  Master Maintenance Plan and Renewal Work Plan

Provider shall prepare and submit a Master Maintenance Plan and a Renewal Work Plan in accordance with the general requirements set forth directly below.

 

 
   

Master Maintenance Plan

 

Provider shall submit an initial Master Maintenance Plan for Customer’s review and approval, acting reasonably, thirty (30) days prior to Substantial Completion for the In-Scope Systems. Thereafter, Provider shall adhere to, update, and maintain as current, on an annual basis, the Master Maintenance Plan (“MMP”), as approved by Customer, acting reasonably. Provider shall submit an updated Master Maintenance Plan annually for Customer’s review and approval, acting reasonably, and Customer shall have a minimum of 60 days to review and approve, acting reasonably, such updated Master Maintenance Plan, acting reasonably. Provider shall ensure that the initial MMP sets forth O&M practices that are designed to reduce life cycle costs and to reflect Good Industry Practices. The initial MMP and all subsequent updates to the MMP must, at a minimum:

 

(a)   Account for the current condition of the In-Scope Systems;

 

(b)   Describe how Provider will perform Planned Maintenance and Demand Maintenance and provide metrics to track maintenance performance;

 

(c)    Describe how the In-Scope Systems will be assessed to determine both Planned Maintenance and Renewal Work; and

 

(d)   Include service plans, schedules, and replacement activities for the In-Scope Systems and associated equipment. Provider will schedule O&M Services so as to minimize negative impacts on the Customer activities. O&M Services that, due to the nature of work, would have a negative impact on the Customer activities shall be scheduled outside of Normal Hours of Operation.

Initially, thirty (30) days prior to Substantial Completion (subject to annual updates) of each Project Facility or in the case of Phase 1 as soon as reasonably possible following execution of this Agreement.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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Plan # Name of Plan Description

Frequency

 

   

Renewal Work Plan

 

●     Provider shall adhere to, update, and maintain as current, the Renewal Work Plan (“RWP”) as approved by Customer, acting reasonably. The RWP shall address all elements of the In-Scope Systems to be renewed in accordance with the TAAS Agreement, including all In-Scope Systems, including the Building Management System (“BMS”).

 

●     Provider shall submit the initial Renewal Work Plan for the Customer’s review and approval, acting reasonably, thirty (30) days prior to Substantial Completion for the In-Scope Systems of each Phase or in the case of Phase 1 as soon as reasonably possible following execution of this Agreement. Thereafter, Provider shall submit an updated Renewal Work Plan annually for the Customer’s review and approval, acting reasonably, concurrently with the Annual O&M Report, except that Customer shall have a minimum of sixty (60) days to review and provide comments, acting reasonably, the updated Renewal Work Plans.

 

●    The initial Renewal Work Plan and all subsequent updates to the plan must, at a minimum:

 

(a)          Be aligned with the obligations described in this Schedule 2;

 

(b)          Identify and describe Provider’s management approach with respect to integrating and aligning the Planned Maintenance, Demand Maintenance, the Lifecycle Work and the Handback Renewal Work;

 

(c)          Describe the approach for the In-Scope Systems condition inspection consistent with this Agreement;

 

(d)          Describe the process for asset preservation, work identification and prioritization;

 

(e)          Detail the maintenance and repair requirements to remedy any identified defects;

 

(f)          Identify any areas of risk and describe appropriate mitigation measures;

 

(g)          Identify aspects of Lifecycle Work that may require environmental review, and that does not qualify as Demand Maintenance work, and a minimum of twelve (12) months prior to commencement of such Lifecycle Work;

 

(h)         Describe the approach for completing the annual Renewal Work Schedule including the resources, materials and equipment required;

 

(i)          Provide a detailed description of the Lifecycle Work completed during the previous twelve (12) month period and a detailed description of the Lifecycle Work planned for the upcoming twelve (12) month period;

 

(j)           Provide for the development, submission and review of the Renewal Work Schedule in accordance with the TAAS Agreement; and

 

(k)          The Renewal Work Schedule shall provide a rolling, forward-looking, five (5) -year schedule that describes the timing and nature of all planned Lifecycle Work.

Initially, thirty (30) days prior to Substantial Completion (subject to annual updates) of each Phase or in the case of Phase 1 as soon as reasonably possible following execution of this Agreement.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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Plan # Name of Plan Description

Frequency

 

  Help Desk

Provider shall prepare and submit a Help Desk Plan that addresses, at a minimum:

 

(a)  The interface between Provider and Customer in association with the Help Desk, incorporating customer interface procedures and protocols, work reception, scheduling, and dispatch.

 

(b)   Provider responsibilities as detailed in this Agreement), as well as operational processes related to planned and unplanned inspections and maintenance, In-Scope Systems modifications, and renewal work;

 

(c)   Provider establishment and maintenance of an effective building management program and how it will interface with Customer to ensure the highest level of attention is given to In-Scope System’s maintenance requirements. This plan shall outline communication protocols and contacts between Provider and Customer;

 

(d)   Provider management and response to Service Requests, managing the scheduling of maintenance and repair work by field personnel, and completion of reporting and data entry relating to Service Requests. The plan shall include a description of Provider’s processes for tracking start, stop and pause times, materials expended, equipment and asset data, technician comments, root cause analysis and failure data, and customer satisfaction information. The plan shall include processes for self-monitoring of performance by Provider and plans for meeting Provider’s reporting obligations during the Project Services Period.

Initially, 4 months prior to Substantial Completion in respect of each Phase or in the case of Phase 1 as soon as reasonable possibly following execution of this Agreement.
  Transition and Training Plan

(a)    Provider shall provide a comprehensive Transition and Training Plan to Customer for the Customer’s review and approval, acting reasonably, at least twelve (12) months prior to the end of the Term.

 

(b)    Additionally, at least six (6) months prior to the end of the Term, Provider shall provide a comprehensive O&M training session for Customer’s staff. The training session shall include a review of certain In-Scope Systems records as well as all O&M manuals, and other plans and procedures. The complete curriculum for this training session shall be contained in the Transition and Training Plan.

At least:

(a) twelve (12) months prior to the end of the Term

 

(b) six (6) months prior to the end of the Term

 

Provider shall be responsible for preparing and submitting to Customer each of the following the O&M Reports:

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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Table 2 – O&M Reports

Report #

Name of Report Description Frequency
  Monthly O&M Report

Provider shall submit to Customer a report containing information on Provider’s performance of the O&M Services during the previous calendar month including identifying all Service Requests for such calendar month (a “Monthly O&M Report”).] The Monthly O&M Report shall contain:

 

(a)  The number of Service Requests logged by number, title and description;

 

(b)  The number of Service Requests open by number, title and description;

 

(c)   The number of Service Requests closed by number, title and description;

 

(d)   A list of all Service Requests, along with an explanation of the issue, discovery time and date, and actual Response and Rectification Periods versus required Response Times and Rectifications Times;

 

(e)   A description of the Planned Maintenance and Lifecycle Work performed, including dates and tasks performed;

 

(f)    A comparison of actual performance metrics for Demand Maintenance and Planned Maintenance to the target performance metrics identified in the Annual Scheduled Maintenance Plan;

 

(g)   A description of the Planned Maintenance and Lifecycle Work that is scheduled or forecasted to be performed in the upcoming six (6) week period, with scheduled or forecasted dates for each activity;

 

(h)   Any environmental issues that occurred within the In-Scope Systems or on the Premises and the resolution;

 

(i)   Any safety issues that occurred and the resolution;

 

(j)   The Quality Inspection Report in accordance with this Schedule 2, Exhibit A, (Table 2) (Quality Inspection Report); and

 

(k)  Any other information specifically required for Customer to measure and assess Provider’s performance of the O&M Services relative to the applicable Standards, Response Periods and Rectification Periods set forth in the TAAS Agreement.

 

By the final day of each month, starting the month after the Project Services commence, for the prior month.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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Report #

Name of Report Description Frequency
  Annual O&M Report

Provider shall submit to the Customer a report containing information on Provider’s performance of the O&M Services during the previous calendar year (an “Annual O&M Report”). The Annual O&M Report shall contain:

 

(a)   A summary of the data provided in each Monthly O&M Report for that year;

 

(b)   The Annual Scheduled Maintenance Plan for the next year;

 

(c)   Provider’s Renewal Work Plan for the next five (5) years;

 

(d)   An Asset Inventory Report in accordance with this Schedule 1, Exhibit A, Table 2 (Asset Inventory Report); and

 

(e)   A Quality Inspection Report that details Provider’s conformance with its O&M QMP

By the end of the first month of every calendar year during the Term for the prior calendar year.

Subject to amendment of the Annual Scheduled Maintenance Plan and the Renewal Work Plan by written notice to Customer from Provider.

  Every 5 Years during Term As part of the Annual O&M Report, Provider shall submit to Customer a report that contains an inventory of systems, components, spare parts and other items or elements required for the ongoing operation and maintenance of the In-Scope Systems (an “Asset Inventory Report”). By the end of the first month of every calendar year during the Term for the prior month.
  Annual Handback Evaluation Report

Beginning five (5) years prior to the end of the Term, Provider shall prepare and deliver to Customer a report of the condition of the In-Scope Systems (the “Annual Handback Evaluation Report”). The Annual Handback Evaluation Report shall:

 

(a)   identify the condition of the In-Scope Systems, and each element of the In-Scope Systems in relation to the Handback Requirements;

 

(b)  identify the Handback Renewal Work required to ensure that the In-Scope Systems meets the Handback Requirements;

 

(c)   include Provider’s detailed written plan for completing the Handback Renewal Work, including the calendar year in which each aspect of the Handback Renewal Work would be required;

 

(d)  specify Provider’s estimate of the Renewal Amount; and

 

(e)   detail how Provider’s estimated Renewal Amount was calculated.

 

After the preparation of the first Annual Handback Evaluation Report and prior to the commencement of each year remaining in the Term, Provider, upon consultation with Customer, shall update the Handback Renewal Work Plan, as needed, to reflect changes in conditions of the In-Scope Systems or evaluation methodology determined following an inspection of the In-Scope Systems by Customer or its designee. Each subsequent Handback Renewal Work Plan prepared after the first plan shall be subject to the approval of Customer. As well as including the results from the last Annual Handback Evaluation Report, the Handback Renewal Work Plan shall include the estimated cost and schedule of implementation of the remaining Handback Renewal Work.

Within forty-five (45) days following each Handback Inspection.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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Exhibit B: Excluded O&M Services

 

The following services constitute the Excluded O&M Services: Operation, maintenance, renewal and replacement of any and all interior Furniture, Fixtures and Equipment (“FF&E”)

 

a) Operation, maintenance, renewal and replacement of the IT systems and devices (other than those expressly specified elsewhere in this Agreement);

 

b) Operation, maintenance, renewal and replacement of kitchen equipment inclusive of grease traps and provision of dining food preparation services;

 

c) Operation, maintenance, renewal and replacement of building fabric and flooring including roofs, facades, hardscaping and roads, windows, interior and exterior architecture, walls and wall coverings, ceilings and ceiling coverings. For clarity, this does not extend to the coverings for AV/IT items;

 

d) Collection of exterior waste (except for Project Waste) in all areas within the Premises, and transport and disposal of such waste;

 

e) Collection of interior and exterior hazardous waste (except for Project Waste) in all areas within the Premises, and transport and disposal of such waste;

 

f) Exterior grounds services, meaning:

 

i. Operation, maintenance, renewal and replacement of the irrigation system, weeding, mowing and grass cutting;

 

ii. Maintaining and cleaning and, as applicable, maintenance, renewal and replacement of, roadside ditches, circulation roadways (including curbs and gutters along circulation roadways) and parking lots, and keeping them free of debris (except for Project Waste), litter, and excess vegetation;

 

iii. Maintaining and cleaning and, as applicable, maintenance, renewal and replacement of, sidewalks, roadways and parking structures including snow removal; and

 

iv. Operation, maintenance, renewal and replacement of, all exterior lighting not attached to the Project Facility.

 

g) Security services, meaning:

 

i. Physical security (Provider remains responsible for maintenance of the security systems excluding x-ray or similar weapons screening systems );

 

ii. Managing and maintaining, and as applicable, operation, renewal and replacement of, a hard master key inventory and a key control program for all controlled areas and containers; and

 

iii. Operation, maintenance, renewal and replacement of key card creation and assignment.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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h) Occupant support services, meaning arranging for seating, desks or exterior movable furniture and equipment;

 

i) Parking Garage services meaning:

 

i. Maintaining and cleaning of Parking Garage Areas;

 

ii. Painting;

 

iii. Elevators; and

 

iv. Trash removal;

 

j) Parking services management;

 

k) Routing all Service Requests that are not initiated by Provider, and that come in to the HELP DESK and are not in scope, to the appropriate entity.

 

l) Cleaning Exterior Furniture or spaces;

 

m) Custodial Services for interior (excluding those required due to Provider’s work), meaning:

 

i. Trash collection;

 

ii. Cleaning entry glass;

 

iii. Sweeping, dusting and mopping;

 

iv. Sanitizing, restroom care, and locker room care; and

 

v. Specialized cleaning of labs, evidence, and drying rooms;

 

n) Shipping, receiving and distribution functions for mail and parcels;

 

o) Maintenance and renewal of all exterior utilities connected to the In-Scope Systems, including:

 

i. Domestic Water, Sewer, and Storm Water up to the building;

 

ii. Natural Gas up to and including the meter;

 

iii. Customer Electrical up to and including transformer and meter; and

 

iv. Water;

 

p) Integrated Pest Control Management Services (Customer shall be responsible for providing Integrated Pest Control Management Services for the interior and exterior of the In-Scope Systems); and

 

q) Maintain and renew power distribution units from the main switch to the outlet or connections to an occupant device, to ensure continuous operations.

 

Equipment required for the Excluded O&M Services that is not included in the FF&E will be supplied by Customer.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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ATTACHMENT 1

 

KEY PERFORMANCE INDICATORS & DEDUCTIONS

 

KPI Deductions:

 

In each instance where a percentage applies to the Deduction calculation, (i) in the case of the emergency and urgent categories; or, (ii) in the case of the routine category, a minimum of ten (10) Service Requests in the respective category(ies), must have occurred within the applicable time frame measured. In the event ten (10) Service Requests in the respective category(ies) do not occur within the applicable time the Deduction amount applied will be [***] for all KPI failures except for KPI failures in System Disruptions in Critical Spaces in which event the Deduction will be [***]. Deductions will be capped so as not to exceed the monthly Project Services Payment.

 

The amount of the Deduction in respect of each KPI failure will be as follows: for KPIs measured with a percentage performance metric as set out in the KPI Schedule below, the Deduction for each percentage point or part thereof below the minimum acceptable performance (MAP) level of the KPI will be as shown in the table below, subject to an Index Linked adjustment during the Term, and will be applied according to the frequency of measurement specified in the KPI Schedule:

 

[Redacted]

 

For the General Premises Inspection KPI, the Deduction for each percentage point above the lower limit in the KPI will be as shown in the table below, subject to an Index Linked adjustment, and will be applied according to the frequency of measurement specified in the KPI Schedule:

 

[Redacted]

 

For KPIs measured by inspection criteria, as set out in KPI Schedule, where the average score of the relevant criterion is less than two (2), the Deduction will be as shown in the table below, subject to an Index Linked adjustment, for each inspection and will be applied according to the frequency of measurement specified in KPI Schedule:

 

[Redacted]

 

For unapproved disruptions in Critical Spaces, as set out in the KPI Schedule, the Deduction will be as shown in the table below, subject to an Index Linked adjustment, for each unapproved disruption over the lower limit, and will be applied according to the frequency of measurement specified in the KPI Schedule:

 

[Redacted]

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS - Schedule 2 [Maintenance and Lifecycle]

EXECUTION VERSION

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KPIs:

 

Cat. Report Type Frequency How Reported? Metric
1.

Service Request Responsiveness – Customer Service

 

Activities:

·   Emergency

·   Urgent

·   Routine

Monthly (Total number of Service Requests that are within acceptable response timeframes divided by total Service Requests) x 100 (to arrive at a percentage)

Emergency / Urgent:

Minimum Acceptable Performance (MAP) - [***]

 

Routine:

MAP – [***]

2.

Service Request Completion by Type – Customer Service

 

Activities:

·   Emergency

·   Urgent

·   Routine

Monthly (Total number of Service Requests completed/rectified on time divided by the total number of Service Requests) x 100

MAP:

 

Emergency / Urgent: [***]

 

Routine: [***]

3. Preventative Maintenance (PM) Service Requests – Customer Service Activities

Quarterly

(Total number of preventative maintenance Service Requests scheduled for the current month divided by the total number of open PM Service Requests) x 100

 

MAP – [***]
4. Contract Requirement Documents Quarterly

Review of documentation and plan submittals to validate delivery of contractually required reports, documentation and data. Satisfaction measured based on document content, accuracy, completeness and timeliness of delivery.

 

MAP: [***]
5.

General Premises Inspection

Random, but not more than 6 times annually

Inspection by Customer of all aspects of this Agreement using an agreed upon inspection checklist to review compliance with standards and contractual obligations.

 

Use 5-point "Likert" scales where 1 is bad service and 5 is outstanding service (approximately 20-25 inspection criteria).

 

MAP – inspection criteria = [***]
6. System Disruption Quarterly Metric is unapproved disruptions per quarter.

MAP – [***] times per quarter.

 

7. Employee Certification Annually

Employees shall be properly trained and certified for assigned roles and responsibilities.

 

MAP – [***]
8. Space Temperature Management Quarterly

Conditions Space temperature will be reviewed based on Space Temperature Trending Report as generated by the BAS Monitoring System. A Baseline will be set in Year 1 of Operations and this metric will be applied to the Baseline in all subsequent years.

 

MAP – [***]
9. Refresh & Renew Program Annually

Annual completion of projected refresh & renew projects. Satisfaction based upon percentage of projects planned compared to projects completed.

 

Formula % = Projected refresh & renew projects / completed refresh & renew projects.

MAP – [***]

 

 

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS - Schedule 2 [Maintenance and Lifecycle]

EXECUTION VERSION

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KPI Notes and Clarifications:

 

1. For KPIs 1, 2 and 3:

 

a. Definitions:

 

i. Response – Dispatch of work order. Acknowledgement documented for Emergency and Urgent Calls.

 

ii. Rectification – Completion of the Service Requests noted in the Computerized Maintenance Management System within the required time. Temporary repairs are acceptable, provided a full completion plan and deadline is established and documented

 

iii. Emergency – Immediate response required; situations requiring immediate action to return the Project Facilities to normal operations, stopping accelerated deterioration, or correcting a safety hazard that imminently threatens life or serious injury.

 

iv. Urgent – necessary but not yet critical; situations that will imminently become critical, if not corrected expeditiously, includes intermittent interruptions and/or potential safety hazards.

 

v. Routine – Conditions requiring appropriate attention to preclude deterioration or potential downtime and associated damage or higher costs if deferred further. Items representing a practical improvement to existing conditions. These items are not required for the most basic functions of the Project Facilities, but will improve the overall usability, accessibility, and/or reduce long term maintenance.

 

b. Rectification Timeframe

 

Severity Emergency Urgent Routine
Priority 1 2 3

 

Normal Hours of Operation (8 am – 5pm; M-F, excepting non-Business Days)

Response Time [***] [***] [***]
Completion Time [***] [***] [***]
Outside Normal Hours of Operation
Response Time [***] [***] [***]
Completion Time [***] [***] [***]

 

2. For KPI 5 – Inspection form to be jointly developed by Customer and Provider.

 

3. For KPI 6 – “System Disruption” means Emergency or Urgent Service Requests was not rectified in the Rectification Timeframe and Customer was required to modify some aspect of its operations to accommodate the disruption.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS - Schedule 2 [Maintenance and Lifecycle]

EXECUTION VERSION

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ATTACHMENT 2
KEY PERSONNEL

 

Operations & Maintenance Team

Personnel Title/Name

 

Responsibilities Qualifications Availability
O&M Manager

●   Represent Johnson Controls as Service Provider, ensure the delivery of all services in accordance with the Project Agreement 

●   Manage the Johnson Controls staff promoting professionalism, responsiveness and customer service  

●   Support the Operating Period Representative in preparing reports as required by the Project Agreement including Operating Period Plans and Performance Monitoring Reports 

●   Represent Service Provider as member of the Operating Period Joint Committee and participate in monthly meetings 

●   Oversee and manage Service Provider in the areas of Human Resource Management, Training and skills Development, Contingency Planning, Communication Protocols, and Supporting Health Services Accreditation 

●   Has the full authority to represent Johnson Controls

●   An experienced manager with 10 years of experience managing a team of maintenance and operations staff in a critical environment. 

●   This experience will include a minimum of eight years of experience in a healthcare environment. 

●   Has a minimum of 5 years of experience working on DBFM/P3 type Contracts in a similar role. 

Assigned full time to the Project from Financial and prior to commencement of O&M Work.
Maintenance Technician

●   Responsible to deliver Preventative maintenance and demand maintenance. 

●   The technician’s primary responsibility will be to attend to demand maintenance within the response and rectification times. 

●   Duties include the following: Responds to routine and on-demand service requests and performs preventative and Corrective maintenance on mechanical and electrical equipment and systems. 

●   Assists in implementing preventative maintenance program. 

●   Ensures that deficiencies are identified, recorded and escalated, and that related documentations are maintained. 

●   Provides troubleshooting and repairs to Fire Protection Systems, and BMS. 

●   Responds to elevator entrapment and follows approved training to release occupants.

●   Has a minimum of three to five years of experience in a healthcare environment with preference given to experience working in a performance based contract such as a DBFM or outsourcing contract. 

●   Strong ability to adhere and to properly apply policies and procedures to facility operations and maintenance. 

●   Proven experience in troubleshooting and repair of mechanical and electrical building systems and equipment. 

●   Strong building mechanical and electrical equipment and system troubleshooting and repair/rectification skills. 

●   Knowledge of fire, life, safety and building codes and standards and ability to research, interpret and apply related codes and standards. 

●   Possesses a commitment to environmental, health and safety. Consistently performs work in a safe manner. 

●   Strong client-focused commitment and sense of urgency. 

●   Effective communication skills for information sharing, feedback, and clarification. 

 
Controls Technician

●   Day-to-day monitoring, reporting and system review of the PA System, Electronic door hardware, Access control (Station public and retail spaces), Structured Cabling, Project Co IT Infrastructure. 

●   Perform the scheduled maintenance activities on the systems. 

●   Respond and resolve user reported problems. 

●   Coordinate resources to perform repairs, including warranty repair work. 

●   Participate in all design changes or enchantments. 

●   Provide monthly system up-time reports. 

●   Assist in planning and forecasting yearly hardware and software for budgeting.

●   Proficiency in working on and around different types of computer and electronic equipment is required. 

●   Computer keyboarding skills and proficiency in Microsoft Suite Applications (Word, Excel, Access, and PowerPoint), Internet Explorer and E-mail is required. 

●   Possesses excellent troubleshooting and problem solving skills. 

●   Knowledge of MS Windows Server Environment. 

●   Knowledge of MS Windows Workstation Environment. 

●   Experience working in an enterprise information and technology environment. 

●   General network and IP expertise. 

●   Access Control and PA system expertise.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS - Schedule 2 [Maintenance and Lifecycle]

EXECUTION VERSION

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ATTACHMENT 3
HANDBACK USEFUL LIFE REQUIREMENTS

 

Provider will perform the Project Services in such a manner that upon the expiration of the Term, the minimum Remaining Useful Life of the components shall be at least:

 

Project Component

Minimum Remaining
Useful Life

Security/Audio Visual [***]
High Voltage Distribution and Secondary Distribution Equipment [***]
Emergency Electrical System [***]
Emergency Power Source [***]
Plumbing System [***]
Fire Suppression System [***]
Communication Systems, IT [***]
Heating Ventilation and Air Conditioning System [***]
Conveying Equipment [***]
Building Management System [***]

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS - Schedule 2 [Maintenance and Lifecycle]

EXECUTION VERSION

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Schedule 3

 

PAYMENT AND DEDUCTIONS

 

[Redacted]

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS - Schedule 3 [Payment and Deductions]

EXECUTION VERSION

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Appendix A

 

Pro-Forma

 

[Redacted]

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS - Schedule 3 [Payment and Deductions]

EXECUTION VERSION

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SCHEDULE 4

 

INSURANCE

 

Article 1
Provider Insurance Required During the Term

 

1.1 Provider shall secure and keep in force, or cause to be secured and kept in force, from the Effective Date until the expiry or termination of the TAAS Agreement the following insurance coverages:

 

(a) Commercial General Liability shall include coverage for Products & Completed Operations, Advertising Injury, Personal Injury, 3rd party bodily injury and property damage. CGL Limits shall be a $5,000,000 per occurrence, $5,000,000 annual aggregate and $5,000,000 annual products completed operations, including a per location aggregate endorsement per policy period shared by all insureds and additional insureds. Policy shall be written on an occurrence form and include a primary non-contributory endorsement in favor of Customer. Coverage shall also include a per-location aggregate endorsement.

 

(i) Customer shall be listed as an additional insured for both ongoing operations, and completed operations, through the issuance of an additional insured policy endorsement to Provider’s commercial general liability policy in with respect of any liability arising out of the negligent acts or omissions of Provider.

 

(b) Automobile liability, including Owned (if any), Hired, and Non-Owned automobiles, with liability limits of $1,000,000 per occurrence and in the aggregate per policy period shared by all insureds and additional insureds. Policy shall also include coverage for underinsured and uninsured motorists, as well as remove the fellow employee exclusion.

 

(i) Customer shall be listed as an additional insured through the issuance of an additional insured policy endorsement to Provider’s automobile liability policy in respect of any liability arising out of the negligent acts or omissions of Provider.

 

(c) Workers compensation coverage meeting all statutory requirements. The policy shall provide coverage for all states of operation that apply to the performance of the TAAS Agreement.

 

(d) Employer's liability or “stop gap” insurance of $1,000,000 as an endorsement on the workers compensation or commercial general liability insurance, including a primary non-contributory endorsement in favor of Customer.

 

(e) Umbrella/Excess policies, with coverage limits of $10,000,000, shall be procured and maintained by Provider, and schedule the General Liability, Employer’s Liability, Commercial Auto as underlying. Policy shall not include any exclusions or endorsements that reduce or eliminated underlying coverages. Umbrella/Excess shall include a primary non-contributory endorsement in favor of Customer.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 4 [Insurance]

EXECUTION VERSION

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(f) Crime Insurance, including Employee Theft, Theft of Client Property, Funds Transfer Fraud, Forgery, Alteration, Computer Fraud, and Social Engineering, written on a loss discovery basis, with a limit of $1,000,000

 

(g) Professional Liability and Cybersecurity Insurance, providing coverage for third party damages as a result of all services by Provider included in this Agreement, or future amendments of this Agreement, including technology services, construction management services, fire and security products and services performed by Provider or by others acting under their direction including any such services that are performed electronically utilizing the internet or a network of two or more computers (including but not limited to network extortion, data/record recovery and restoration, and phishing), with a limit of $2,000,000.  The Professional Liability policy shall also include coverage for contingent bodily injury and property damage.

 

(h) Property coverage for owned or rented equipment, and owned or rented property located in, on or about the premises and in your care, custody and control.

 

(i) If Provider engages a sub-contractor, that sub-contractor should be subject to the same terms as Provider as provided in this Schedule 4.

 

Article 2
RESERVED

 

Article 3
Provider Construction Period Insurance

 

3.1 Intentionally Omitted

 

Article 4
Provider Subcontractor Insurance for Project Work, Project Services and Interim Project Services

 

4.1 Provider shall require that each of its subcontractors secure, prior to commencement of any Project Work, Project Services or Interim Project Services pursuant to an agreement between Provider and each relevant subcontractor, and keep in force from the date on which the relevant subcontractor begins Project Work, Project Services or Interim Project Services until completion of the relevant subcontractor’s Project Work, Project Services or Interim Project Services the following insurance coverages:

 

(a) Automobile liability, including Owned (if any), Hired, and Non-Owned automobiles, with liability limits of $1,000,000 per occurrence and in the aggregate per policy period shared by all insureds and additional insureds.

 

(i) Customer and Provider shall be listed as an additional insured through the issuance of an additional insured policy endorsement to subcontractor’s automobile liability policy in respect of any liability arising out of the negligent acts or omissions of such subcontractor.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 4 [Insurance]

EXECUTION VERSION

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(b) Workers compensation coverage meeting all statutory requirements. The policy shall provide coverage for all states of operation that apply to the performance of the subcontractor’s Work.

 

(c) Employer's liability or "stop gap" insurance of $1,000,000 as an endorsement on the workers compensation or commercial general liability insurance.

 

(d) Commercial general liability insurance shall be written on an occurrence form and include coverage for Products & Completed operations, Advertising Injury, Personal Injury, 3rd party bodily injury and property damage. CGL limits of $2,000,000 per occurrence, and in the aggregate, and $2,000,000 products completed operations per policy period shared by all insureds and additional insureds. Coverage shall also include a per-location aggregate endorsement, primary non-contributory endorsement, waiver of subrogation endorsements.

 

(i) Customer and Provider shall be listed as an additional insured through the issuance of an additional insured policy endorsement to subcontractor’s commercial general liability policy in respect of any liability arising out of the negligent acts or omissions of such subcontractor.

 

(e) In the event a sub-contractor does not maintain required insurance coverages, and/or in the event of a claim that would otherwise be covered had the sub-contractor complied, Provider’s insurance will drop down to assume and act as the primary source of coverage.

 

Article 5
RESERVED

 

Article 6
Customer Insurance Required DURING TERM

 

6.1 Customer shall secure and keep in force, or cause to be secured and kept in force, from the Effective Date until the expiry or termination of the TAAS Agreement the following insurance coverages:

 

(a) Commercial general liability, insuring Customer and its subcontractors, including premises or operations, contractual, and products or completed operations coverages (if applicable), with liability limits of $5,000,000 per occurrence shared by all insureds and additional insureds.

 

(i) Provider shall be listed as an additional insured.

 

(b) Automobile liability, including Owned (if any), Hired, and Non-Owned automobiles, with liability limits of $1,000,000 per occurrence shared by all insureds and additional insureds.

 

(i) Provider shall be listed as an additional insured.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 4 [Insurance]

EXECUTION VERSION

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(c) Workers compensation coverage meeting all statutory requirements. The policy shall provide coverage for all states of operation that apply to the performance of the TAAS Agreement.

 

(d) Employer's liability or "stop gap" insurance of $1,000,000 as an endorsement on the workers compensation or commercial general liability insurance.

 

(e) Pollution Liability coverage for Personal Injury, Property Damage and Cleanup Cost (“Pollution Liability Policy”) insuring the Customer and its subcontractor arising from sudden and accidental pollution conditions caused by Customer’s operations with limits of $5,000,000 in the aggregate shared by all insureds and additional insureds. Occurrence coverage is preferred but coverage may be provided on a claims-made form.

 

(i) Provider shall be named on Customer’s Pollution Liability Policy as an additional insured in respect of any liability arising out of the acts or omissions of Customer.

 

(f) Commercial General Liability. Project specific commercial general liability, insuring Customer and its subcontractors, including premises or operations, contractual, and products or completed operations coverages (if applicable), with liability limits of $5,000,000 per occurrence shared by all insureds and additional insureds.

 

(i) Provider shall be listed as an additional insured.

 

Article 7
BUILDER’S RISK AND PROFESSIONAL LIABILITY INSURANCE

 

7.1 Customer shall secure and keep in force, or cause to be secured and kept in force, from the Effective Date until the commencement of the Project Service Period the following insurance coverage:

 

(a) Builder’s Risk. Project specific builder’s risk insurance insuring the interest of Customer, Provider, contractor(s) and subcontractor(s) of all tiers including coverage on an All Risk basis, including but not limited to, coverage against fire, lightning, wind damage, hail, explosion, riot or civil commotions, aircraft and other vehicles, collapse, flood, earth movement, and coverage available under the so-called Installation Floater (the “Builder’s Risk Policy(ies)”).

 

(i) The policy(ies) for such coverage shall be secured and maintained by Customer in an amount equal to the full completed value of the project and shall provide coverage per occurrence up the full replacement cost of the Project Facilities.

 

(b) To the extent available, the Builder’s Risk Policy(ies) shall include coverage for:

 

(i) foundations, including pilings, but excluding normal settling, shrinkage, or expansion;

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 4 [Insurance]

EXECUTION VERSION

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(ii) physical damage resulting from machinery accidents but excluding normal and natural wear and tear, corrosion, erosion, inherent vice or latent defect in the machinery;

 

(iii) plans, blueprints and specifications;

 

(iv) physical damage resulting from faulty work or faulty materials, but excluding the cost of making good such faulty work or faulty materials;

 

(v) physical damage resulting from design error or omission but excluding the cost of making good such design error or omission;

 

(vi) physical damage resulting from mechanical breakdown or electrical apparatus breakdown;

 

(vii) demolition and debris removal coverage insuring the buildings, structures, machinery, equipment, materials, facilities, fixtures and all other properties constituting a part of the Project Facilities;

 

(viii) the increased replacement cost due to any change in Applicable Laws;

 

(ix) expense to reduce loss;

 

(x) building ordinance compliance, with the building ordinance exclusion deleted; and

 

(xi) full collapse, including collapse resulting from design error.

 

(c) Professional Liability Insurance. At all times during the Term that professional services are rendered respecting design and construction of the Project Facilities, Customer shall or shall cause its designer to carry errors and omissions insurance with a limit of not less than $2,000,000 per claim and in the aggregate.

 

(d) Customer shall be the named insured on the Builder’s Risk Policy(ies). Provider shall be named on the Builder’s Risk Policy(ies) as an additional insured. The policies shall provide for separation of insureds. The proceeds of the Builder’s Risk Policy(ies) shall be held by Customer and timely applied to the cleanup, repair and reconstruction of the Project Facilities.

 

Article 8
Customer INSURANCE During the Interim Project Services Period and Project Services Period

 

8.1 Customer shall secure and keep in force, or cause to be secured and kept in force, from the commencement of the Interim Project Services Period until the expiry or termination of the TAAS Agreement the following insurance coverages:

 

(a) all risks property insurance (the “All Risks O&M Property Insurance”).

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 4 [Insurance]

EXECUTION VERSION

- 100 -

 

(i) The All Risks O&M Property Insurance Policy shall cover all risks scheduled under Section 8.1(a)(ii) of direct physical loss or damage to the property of the insured or property over which it exercises a power of management or supervision, and which forms part of or is associated with the Project Facilities, whether or not the property is on the premises of the Project Facilities or in transit and regardless of the mode of ground transport, including materials and supplies destined for the Project Facilities

 

(ii) The All Risks O&M Property Insurance shall cover but is not limited to:

 

(A) the Project Facilities, including the Project Work, including their footings, foundations and underground structures, temporary structures and work camps, scaffolding, temporary works, formwork, fencing, excavations, preparation, landscaping and other similar works;

 

(B) flood and ice conditions;

 

(C) natural or man-made earth movement, including earthquakes, earth slides and subsidence;

 

(D) damage resulting from maintenance of roads and contiguous property so long as damage is not resulting from failure to perform maintenance.;

 

(E) demolition and increased cost of construction, in particular the costs to satisfy the requirements of the enforcement of any law or ordinance regulating the demolition, construction, repair, replacement or use of buildings or structures;

 

(F) data processing and media equipment and media, including the costs of data restoration and recreation. This coverage may also be secured through a Cyber policy;

 

(G) boilers and pressurized equipment, and mechanical or electrical failure unless they are covered by a separate Insurance Policy for equipment breakdown;

 

(H) expenses related to fighting fires;

 

(I) property while in transit, including loading and unloading and while in temporary storage;

 

(J) removal of debris when the loss is caused by an insured peril; and

 

(K) valuable papers and records.

 

(b) Customer shall be the named insured on the All Risks O&M Property Insurance and the Provider shall be named as a loss payee as its interest may appear on the All Risks O&M Property Insurance. The proceeds of the Builder’s Risk Policy(ies) shall be held by Customer and timely applied to the cleanup, repair and reconstruction of the Project Facilities.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 4 [Insurance]

EXECUTION VERSION

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Article 9
The insurance coverages listed above must meet the following additional requirements:

 

9.1 The insurance required to be provided by this Schedule 4 [Insurance] should be written on an occurrence form with the exception of Pollution, Professional, and Executive Risk coverages. In order to meet required limits, multiple carriers may be used to layer limits. Property policies shall be written on a Special Cause or All Risk Loss Form and must be placed with insurers rated "A-" or better by A.M. Best Company, Inc. authorized to do business in Ohio and a minimum financial size of VIII. A rating of less than "A-" by A.M. Best Company, Inc. for any insurance company proposed by one Party to provide insurance required hereunder must be approved by the other Party.

 

9.2 The insolvency or bankruptcy of a party responsible to procure insurance hereunder shall not release the insurer from payment under the policy, even when such insolvency or bankruptcy prevents such party from meeting the retention limit under the policy.

 

9.3 Each Party shall furnish a certificate of insurance in respect of the insurance required to be procured by it hereunder, prior to commencement of Project Work. The Customer shall provide copies of project specific policies to Provider promptly on the request of Provider.

 

9.4 Each Party shall endeavor to provide at least 30 days’ notice of any cancellation to the policies or endorsements it is responsible for hereunder. Each Party shall provide on an ongoing basis, current certificates of insurance or other evidence of coverage in respect of the insurance or coverage it is responsible to procure during the Term of the Agreement. A renewal certificate will be provided 10 days prior to coverage expiration.

 

9.5 Provider and Customer shall each cause their property damage and liability-based insurance policies hereunder to include a waiver of subrogation clause.

 

9.6 Coverages terms, conditions and limits may be revisited from time to time to ensure both parties are adequately protected and contemplating current and future risk trends that may pose risk or threat for the nature of this agreement.

 

Article 10
Deductibles

 

10.1 The Party responsible for the matter giving rise to a claim, to the extent responsible therefor, shall be responsible and liable for the payment of deductibles under any policy of insurance under which it is an insured party or under any policy of insurance required to be maintained under this Schedule 4 [Insurance] or the TAAS Agreement. In the event that responsibility for the matter giving rise to the claim is indeterminable, the first named insured under the policy of insurance is responsible and liable for the payment of deductibles.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 4 [Insurance]

EXECUTION VERSION

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Article 11
Provider Corporate Policies

 

11.1 Provider shall be permitted to provide any of the insurance it is required to procure hereunder, or which it is required to have others procure, through its or their blanket general corporate policy or policies.

 

Article 12
Cooperation

 

At a Party’s request (the “Requesting Party”) the other Party (the “Assisting Party”) shall cooperate fully with the Requesting Party, at the expense of the Requesting Party, in filing any proof of loss with respect to any insurance policy covering the casualties described in this Schedule 5 [Insurance] and in the prosecution or defense of any prospective or pending condemnation proceeding with respect to the Project Facilities or any part thereof and will, to the extent it may lawfully do so and subject to the next following sentence, permit the Requesting Party to litigate, subject to the approval of carrier’s panel counsel, in any proceeding resulting therefrom in the name of and on behalf of the Assisting Party. At the Assisting Party’s request, the Requesting Party shall provide the Assisting Party with security, acceptable to the Assisting Party, acting reasonably, for payment of Assisting Party’s costs and in respect of any such cooperation or claim and any potential losses of the Assisting Party directly related to such cooperation or claim. Subject to the foregoing, in no event will a Party voluntarily settle, or consent to the settlement of, any proceeding arising out of any insurance claim or any prospective or pending condemnation proceeding with respect to the Project Facilities which could reasonably be expected to have a material adverse effect on the other Party without the written consent of the other Party, acting reasonably.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 4 [Insurance]

EXECUTION VERSION

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SCHEDULE 5

 

DISPUTE RESOLUTION PROCEDURES

 

Article 1
Procedure

 

1.1 Subject to Section 18.2 of the TAAS Agreement, Parties agree to resolve all Disputes in accordance with the terms of this Schedule 5 [Dispute Resolution Procedure].

 

Article 2
Dispute Notice

 

2.1 The Dispute Resolution Procedure may be commenced by either Party by giving notice to the other Party (the “Dispute Notice”) briefly setting out the pertinent facts and the remedy or relief sought.

 

Article 3
Fast Track Dispute Resolution Procedure

 

3.1 If the Dispute is not resolved to the mutual satisfaction of the Parties within fifteen (15) Business Days following the delivery of the Dispute Notice, either Party may by notice to the other (a “Referee Notice”), request the appointment of a referee (“Referee”) as provided under the terms of this Section 3.1. The Referee will be appointed and will participate in resolution of the Dispute as follows:

 

(a) unless the Parties otherwise agree, the Parties will appoint a Referee as follows:

 

(i) within five (5) Business Days of the delivery of the Referee Notice, each Party will submit in writing to the other Party, the names of no more than two (2) candidates for Referee each of whom are (1) independent of the Parties, (2) experienced in the resolution of disputes, (3) a professional with technical and/or legal experience relating to projects similar to the Project and (4) immediately available to perform the role of Referee in respect of the Dispute at hand;

 

(ii) if a Party has an objection to a candidate, it will give written notice of such objection with reasons to the other Party;

 

(iii) if the Parties name the same candidate, the Parties shall select that candidate as the Referee. In all other circumstances the Parties shall use reasonable commercial efforts to agree on the candidate who will be appointed as Referee within five (5) Business Days of the delivery of a Referee Notice;

 

(iv) if for any reason within five (5) Business Days of the delivery of a Referee Notice, a Referee meeting the criteria set forth in Section 3.1(a)(i) has not been appointed, then either Party may request the American Arbitration Society to promptly choose the Referee.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 5 [Dispute Resolution Procedures]

EXECUTION VERSION

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(b) no later than three (3) Business Days after the Referee’s appointment, the Parties will enter into an agreement with the Referee to act as Referee generally in the form attached as Appendix A to this Schedule 5 (the “Referee Agreement”). The Referee’s fees and expenses will be shared equally by Provider and Customer;

 

(c) the Referee will conduct an impartial review of the Dispute in such manner as the Referee thinks fit, including carrying out onsite inspections and interviews with any persons that the Referee thinks fit. The Parties will comply with all reasonable requests from the Referee for additional information, documents and access to personnel which the Referee considers necessary for the review. Each Party shall have a right to submit a reasonable volume of documents it believes are relevant to the Dispute to the Referee. Any submission or documentation in respect of the Dispute provided to the Referee by a Party will also be provided to the other Party;

 

(d) the Referee may, with the written approval of both Parties, retain other professional persons or experts to assist with the review and each Party shall have the right to request that the Referee retain other professional persons or experts as such Party believes is appropriate given the nature of the Dispute and the Referee will pay due regard to any request by either Party for it to retain such other professional persons or experts;

 

(e) except as otherwise explicitly provided herein, the Referee will not be obliged to conduct its inquiries in the presence of the Parties or receive submissions from the Parties, except to the extent that the Referee thinks fit, and may render its decision notwithstanding the failure of a Party to participate in the proceedings;

 

(f) the Referee will render a brief, written, reasoned and impartial decision of the Parties rights in respect of the Dispute and the resolution of the Dispute, with copies to both Parties within five (5) Business Days of the signing by the Referee and both Parties of the Referee Agreement referred to in Section 3.1(b), or such longer period as agreed to in writing by both Parties. The Referee’s decision will be in the form of a proposed determination of the rights of the Parties having regard to the Referee’s understanding of the relevant contractual provisions, the applicable law and the facts as agreed by the Parties or as best the Referee is able to determine them;

 

(g) each Party acknowledges the value of having the Referee render a timely decision regarding the Dispute. If the Referee is unable to render its decision within the time set or as extended by mutual agreement of the Parties, then the Parties will grant the Referee up to an additional thirty (30) days to complete its review and make its determination. If the Referee is unable to make a determination within such period, the Parties shall request that the Referee provide to the Parties within such time such analysis of the Dispute as the Referee is able to make within that time and describe the further work the Referee recommends would be required in order to arrive at a reasoned decision;

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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EXECUTION VERSION

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(h) a person who has acted as a Referee under this Section may be retained by either party, or both parties, to assist in any Settlement Meeting with respect to the Dispute. Neither Party will be entitled to refer to or enter into evidence the decision of the Referee or anything contained therein in any such proceedings;

 

(i) to the extent permitted by Law, the Parties will agree to release and save harmless the Referee from any liability arising from the Referee’s actions, made in good faith, in carrying out the duties of the Referee as described in this Schedule 5 [Dispute Resolution Procedure] or as may be described in the Referee Agreement referred to in Section 3.1(b);

 

(j) to the extent permitted by Law, the proceedings under this Section 3.1 will be confidential and all information, data or documentation disclosed or delivered by either Party to the Referee as a result or in connection with its duties as Referee will be treated as confidential and to the extent permitted by Law, neither the Parties nor the Referee will disclose to any Person any such information, data or documentation unless the Parties otherwise agree in writing. Nothing contained in this provision will prevent the submission in any subsequent proceedings of any factual evidence other than factual evidence that came into existence for the express purpose of submission to, or assistance of, the Referee and such factual evidence that came into existence for the express purpose of submission to, or assistance of, the Referee and any argument, pleading or similar document interpreting factual evidence shall not be submitted or referred to in any subsequent proceeding;

 

(k) the decision of the Referee will be final in respect to Disputes relating to Deductions and in respect of all other Disputes unless a Party gives notice to the other Party (i) to request a Settlement Meeting (without prejudice to any further proceedings it may commence in accordance with this Schedule) in accordance Section 4.1, or (ii) to commence proceedings in accordance with Section 5.1;

 

(l) Unless or until the decision of the Referee on the Dispute is revised cancelled or varied by agreement of the Parties, or by arbitration (if proceedings are taken under Article 5) or by litigation (if proceedings are taken under Article 6) the Referee’s decision on the Dispute will when rendered be binding on both parties who will forthwith give effect to the decision; and

 

(m) should compliance with the Referee process under this Section 3.1 prove impracticable for any reason, a party not at fault for the failure in compliance, and which has made all reasonable efforts to ensure compliance, may forthwith request a Settlement Meeting as though the requirements of this Section 3.1 had been fully satisfied.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 5 [Dispute Resolution Procedures]

EXECUTION VERSION

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Article 4
Settlement Meeting Negotiations

 

4.1 Within ten (10) Business Days of the date on which the Referee’s decision is rendered in accordance with Section 3.1(f) or 3.1(g), either party may (save and except in respect of Disputes in respect of Deductions which shall be final and binding) give notice to the other party requesting a settlement meeting (a “Settlement Meeting”). A Settlement Meeting will be a meeting of at least two (2) senior representatives of each party at which those representatives will make good faith efforts to resolve the Dispute by without prejudice negotiations. At least one of the representatives of each Party will not have been previously involved in prior negotiations concerning the Dispute. The procedure for a Settlement Meeting will be as follows:

 

(a) the Parties’ representatives will convene the Settlement Meeting within ten (10) Business Days of delivery of the written notice for a Settlement Meeting, or such longer period as the Parties may agree; and

 

(b) the Settlement Meeting may, with the agreement of both parties, be in the form of mediation conducted in accordance with the meditation provisions of the American Arbitration Society Commercial Arbitration Rules and Mediation Procedures, as modified by the agreement of the parties.

 

Article 5
Arbitration

 

5.1 If a Dispute is not finally settled by agreement of the parties by the earlier of:

 

(a) twenty (20) Business Days after receipt of the Referee’s decision; and

 

(b) sixty (60) Business Days after giving of the Dispute Notice,

 

then either party may commence proceedings to have the Dispute finally settled by binding arbitration under this Article 5, pursuant to the American Arbitration Society Commercial Arbitration Rules and Mediation Procedures with the consent of the other party or by litigation as contemplated in Article 6. In any such proceedings the scope of issues will not be limited strictly to the terms of the Dispute Notice but may extend to include directly related matters for the purpose of completely settling the Dispute.

 

5.2 The Parties agree that the Arbitrator shall not have the power and jurisdiction to:

 

(a) issue judgments for exemplary or punitive damages;

 

(b) rule on a ground that has not been raised by either Party. Should the Arbitrator rule that the solution to the Dispute comes, in whole or in part, under such ground, it shall reopen the case and summon the Parties to a hearing so that they may present their observations and, where applicable, adduce further evidence in respect of said ground.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 5 [Dispute Resolution Procedures]

EXECUTION VERSION

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5.3 The place of arbitration is Akron, Arbitration shall be conducted in English.

 

5.4 Any Party that wants to refer a Dispute to arbitration (such Party, the “Applicant”) shall send an Arbitration Notice to the other Party (in this Schedule the “Arbitration Notice”), which shall contain, inter alia, the following:

 

(a) a demand that the Dispute be referred to arbitration;

 

(b) a brief description of the claim and an indication of the amount involved, if any;

 

(c) the relief or remedy sought; and

 

(d) a proposal for the arbitrator designation by that Party.

 

5.5 Within a period of ten (10) Business Days, the party receiving the Arbitration Notice (the “Respondent”) shall provide a response to the Arbitration Notice indicating whether or not it agrees to arbitration (“Arbitration Notice Response”) failing which the Respondent shall be deemed to agree to arbitration.

 

5.6 If the Respondent does not agree to arbitration, either party may commence proceedings to have the Dispute finally settled by litigation in accordance with Article 6.

 

5.7 If the Respondent does agree to arbitration, thirty (30) days after the Arbitration Notice has been served, the Respondent shall serve its response containing the following elements:

 

(a) its comments on the claim and the amount involved;

 

(b) its position as to the relief or remedy sought;

 

(c) a proposal for the arbitrator designator by the Respondent; and

 

(d) any counterclaim formulated in accordance with the requirements that apply to the Arbitration Notice, if applicable.

 

5.8 The arbitrator designator put forward by the Applicant in accordance with Section 5.4(d) and the arbitrator designator put forward by the Respondent in accordance with Section 5.7(c) shall be independent third parties experienced in the arbitration of disputes. The arbitrator designators shall within a period of ten (10) Business Days following delivery of the Respondent’s Response to the Arbitration Notice appoint an arbitrator for the dispute who shall be an arbitrator experienced with disputes in the nature of the Dispute and be an independent third party with no pre-existing relationship to either Party. In the event that, for any reason, an Arbitrator has not been appointed within such ten (10) Business Day period, either party may apply to the American Arbitration Society for the appointment of an arbitrator. The person appointed as arbitrator pursuant to this Section 5.8 shall be the “Arbitrator”.

 

5.9 The Applicant shall present its response to the counterclaim within a period of 30 days after the counterclaim has been served, if applicable.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 5 [Dispute Resolution Procedures]

EXECUTION VERSION

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5.10 Unless otherwise agreed by the Parties, either Party may amend or supplement its Claim or defense during the course of the arbitral proceedings, unless the Arbitrator considers it inappropriate to allow such amendment having regard to the delay in making it.

 

5.11 Within 30 days of its appointment the Arbitrator shall summon the Parties to a preliminary conference for the purposes of drafting and executing the terms of reference, which shall include:

 

(a) the names, full corporate names and nature of the Parties;

 

(b) the addresses of the Parties, for service of procedures purposes;

 

(c) a presentation of the Parties’ allegations and conclusions sought in the principal and counterclaim;

 

(d) a list of the issues under dispute;

 

(e) the timetable, including deadlines for serving the declaration, the defense and, eventually, the counterclaim, the reply and defense to the counterclaim, and the preliminary arguments, the examinations before and after the defense, the objection proceedings, the disclosure of exhibits, the disclosure of expert reports, the submission of “prehearing” briefs, the prehearing conferences, the date of hearing, and the “post-hearing” briefs, as applicable; and

 

(f) the amounts to be paid by the Parties as provisions for arbitration fees.

 

5.12 The terms of reference shall be executed by the Parties and the members of the Arbitrator. Refusal by either Party to participate in the prehearing conference or execute the terms of reference shall not hamper the conduct of the arbitration procedure. The terms of reference may be amended for the specific purpose of taking into account any new principal or counterclaim instituted by the Parties, or any change to the timetable of the procedures.

 

5.13 The Arbitrator may take any measure to protect the business or trade secrets and Confidential Information of the Parties.

 

5.14 The Arbitrator shall establish rules of procedure, which shall under no circumstances be open to individuals not Party to the proceedings. The Arbitrator may specifically order the exclusion of witnesses. The Parties shall appear in person or through a duly mandated representative, including their counsel.

 

5.15 Upon adjournment of the hearings or, where applicable, after receipt of the written arguments, the Arbitrator shall declare the proceedings closed and, after that date, no further proceeding, argument or evidence may be presented, unless so requested or authorized by the Arbitrator.

 

5.16 Any arbitration award shall be rendered in writing and reasons be given therefor. The award shall be deemed to have been rendered in the location of the arbitration and on the date stipulated therein.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 5 [Dispute Resolution Procedures]

EXECUTION VERSION

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5.17 The arbitration award shall be final, without appeal and binding on the Parties.

 

5.18 The Parties and the Arbitrator shall treat all meetings and communications, the proceedings, documents disclosed during the proceedings and the award as confidential, except:

 

(a) to the extent that disclosure may be required of a Party to fulfil a legal duty, protect or pursue a legal right, or enforce or challenge an award in bona fide legal proceedings before a court or other judicial authority;

 

(b) with the consent of the Parties;

 

(c) where needed for the preparation or presentation of a claim or defense between the Parties pursuant to the TAAS Agreement;

 

(d) where such information is already in the public domain other than as a result of a breach of this clause; or,

 

(e) by order of the Arbitrator(s) upon application of a Party.

 

5.19 The Parties undertake to pay the arbitration fees established by the Arbitrator within the timeframe determined by the Arbitrator. In its final arbitration award, the Arbitrator shall determine the arbitration fees, including the fees and expenses of the Arbitrators as well as the cost of experts, and shall decide which Party shall assume the payment thereof or in what proportion they shall be shared by the Parties.

 

Article 6
Judicial Proceedings

 

6.1 To the extent that the provisions of this Schedule 5 [Dispute Resolution Procedure] authorize the Parties to seek recourses from the courts of law, including any request to quash an arbitration award, the Parties are permitted to proceed with any such suit, action, or other proceeding in the State of Ohio.

 

Article 7
Miscellaneous

 

7.1 Customer and Provider shall diligently carry out their respective obligations under this TAAS Agreement during the pendency of any Disputes, including, without limitation, arbitration proceedings or litigation proceedings. If during the pendency of any Dispute it is considered necessary by either Party to proceed in respect of the matter that is in Dispute, then without prejudice to Provider’s rights in respect of the Dispute (including in respect of Excused Failures or Changes), Provider shall proceed in accordance with the instructions of Customer, and Customer shall pay the Provider for such work as if such work was being performed on the basis of a Change Directive, and in the event the matter in dispute is determined in favor of Customer, Provider shall repay to the Customer any amounts received in respect of such matter.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 5 [Dispute Resolution Procedures]

EXECUTION VERSION

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7.2 For greater certainty, in respect of any Dispute relating to the Project Work or the Project Services or the Interim Project Services, the Referee shall be the decision maker of the first instance and the Parties shall comply with the decision of the Referee unless and until is overturned in a subsequent arbitration or litigation proceeding.

 

7.3 Nothing contained in this Schedule 5 [Dispute Resolution Procedure] will prevent the Parties from seeking interim protection from the courts referred to in Section 6.1, including seeking an interlocutory injunction where available pursuant to Law, if necessary to prevent irreparable harm to a Party.

 

7.4 Customer shall ensure that any and all documents in the possession or control of any Customer Person that are available to Customer and that may be necessary for the resolution of a Dispute on an informed basis pursuant to negotiations, Article 3 [Fast Track Dispute Resolution Procedure], mediation, arbitration, or judicial proceedings, are made available in a timely manner to Provider. Provider shall ensure that any and all documents in the possession or control of any Provider Party that are available to Provider and that may be necessary for the resolution of a Dispute on an informed basis pursuant to negotiations, Article 3 [Fast Track Dispute Resolution Procedure], mediation, arbitration, or judicial proceedings, are made available in a timely manner to Customer.

 

7.5 The Parties can, by written agreement, on a Dispute by Dispute basis:

 

(a) extend any or all timelines set out in this Schedule 5 [Dispute Resolution Procedure];

 

(b) agree to waive or by-pass any one or more of the Dispute resolution processes in this Schedule 5 [Dispute Resolution Procedure]; and/or

 

(c) agree to resolve a Dispute by Referee rather than arbitration or litigation.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 5 [Dispute Resolution Procedures]

EXECUTION VERSION

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Appendix A
FORM OF REFEREE RETAINER AGREEMENT

 

This Agreement is made this ____ day of __________ 20___, by ___________ (the “Referee Appointee”) and [Customer Name] and [Provider Name] (each a “Client”).

 

1. Each Client wishes to retain Referee Appointee to act as the referee in accordance with Schedule 5 [Dispute Resolution Procedure] to the TAAS Agreement entered into between the Clients on or about [DATE] (the “TAAS Agreement”). A copy of Schedule 5 [Dispute Resolution Procedure] to the TAAS Agreement has been provided to the Referee Appointee.

 

2. Referee Appointee agrees to act honestly, independently and in good faith as Referee, as defined in TAAS Agreement. Referee Appointee confirms and warrants that except as disclosed to each Party, it has no relationship with any Client which could be perceived as a conflict of interest in respect of its impartiality or role as Referee under the TAAS Agreement. The Referee Appointee agrees to keep all matters related to its appointment hereunder, the TAAS Agreement and all matters related to this retainer strictly confidential and not to disclose any information or documents which it receives in respect of this retainer.

 

3. The Referee Appointee shall be entitled to be paid by the Clients its reasonable out of pocket expenses and a fee of $_______ per hour (“Referee Amounts”). Each Client shall be responsible to pay 50% of all of Referee Amounts, invoiced monthly in arears within 30 days of receipt of a detailed invoice from the Referee Appointee. Each Client shall not be responsible to pay any amount which is not paid by the other Client.

 

4. To the extent permitted by Applicable Law, the Referee Appointee shall not be liable to either Client for any loss, claim or damage which results from the actions of the Referee Appointee or arises out of or relates to this Referee Retainer Agreement or the matters in respect of which the Referee is being retained except in the event of a breach of Section 2 of this Referee Appointment Agreement and except to the extent of the Referee Appointee’s wilful misconduct or fraud.

 

5. This Agreement may be terminated by agreement of the Clients on 30 days prior written notice and shall terminate at the time that the Referee Appointee renders its decision in accordance with the requirements of the TAAS Agreement. The payment obligations of the Clients and the provisions of Section 4 shall survive termination.

 

6. The laws of the State of Ohio shall govern the construction and interpretation of this Agreement.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 5 [Dispute Resolution Procedures]

EXECUTION VERSION

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7. Any notices required under this Agreement shall be in writing and shall be deemed to have been duly served if delivered in person to the party for whom it is intended or if delivered at or sent by registered or certified mail to the address indicated below:

 

Referee:

 

[ADDRESS FOR SERVICE]

 

[Customer Name]:

 

[ADDRESS FOR SERVICE]

 

[Provider Name]:

 

[ADDRESS FOR SERVICE]

 

8. This Agreement may be executed in one or more counterparts. Any single counterpart or a set of counterparts executed, in either case, by all of the Parties will constitute a full, original and binding agreement for all purposes. Counterparts may be executed either in original, faxed or electronic mail form.

 

  [REFEREE]  
     
     
  Name:  
  Title:  
     
  [CUSTOMER NAME]  
     
     
  Name:  
  Title:  
     
  [PROVIDER NAME]  
     
     
  Name:  
  Title:  

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 5 [Dispute Resolution Procedures]

EXECUTION VERSION

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SCHEDULE 6

 

Customer Support Services

 

In addition to any other obligations of Customer pursuant to the TAAS Agreement, Customer shall perform any additional obligations identified and agreed to by the Parties as being the responsibility of the Customer and, once identified, all such obligations shall be at Customer’s sole risk, cost and expense, including in respect of payment.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 7 [Changes]

EXECUTION VERSION

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SCHEDULE 7

 

Article 1
general

 

1.1 Changes in the Project Work (including changes in the GMP - Phase 2 or the GMP - Phase 3, as applicable) or the Project Services (including, without limitation, changes caused by an Excused Failure as provided in Section 7.4 of the TAAS Agreement or a Change in Law or a change in Customer Policies as provided in Section 7.2 of the TAAS Agreement) may be accomplished after execution of the Agreement, and without invalidating the Agreement, by Change Order or Change Directive (collectively, a “Change”), subject to the limitations stated in this Schedule 7 [Changes] and elsewhere in the TAAS Agreement.

 

1.2 A Change Order shall be based upon agreement between Provider and Customer. Subject to Section 3.2, Customer may issue a Change Directive without agreement of Provider.

 

1.3 Changes in the Project Work or the Project Services shall be performed under applicable provisions of the TAAS Agreement, and Provider shall proceed promptly, unless otherwise provided in the Change Order or Change Directive.

 

1.4 Provider shall be entitled to a Change Order in respect of an Excused Failure, a Change in Law or a change in Customer Policies, provided that, in the absence of agreement on the terms of a Change Order in respect of an Excused Failure or Change in Law or change in Customer Policies, Customer shall issue a Change Directive.

 

1.5 Any failure of Provider to provide the Project Services in accordance with the requirements of Article 3 of the TAAS Agreement as a result of implementing a Change shall be deemed to be an Excused Failure and no Deductions shall apply in respect thereof.

 

Article 2
CHANGE ORDERS

 

2.1 A change order is a written instrument signed by Provider and Customer (a “Change Order”) stating their agreement upon all of the following:

 

(a) the change in the Project Work (including changes in the GMP - Phase 2 or the GMP - Phase 3, as applicable) or the Project Services;

 

(b) the method of adjustment or the amount of the adjustment, if any, in the GMP - Phase 2, GMP - Phase 3, the Indexed Payments (or any component thereof), or other method of payment for the change; provided that if Provider elects not to finance the capital cost of any change in the Project Work or the Project Services, such capital cost shall be paid by Customer to Provider on a lump sum or on an agreed progress basis as the capital work is performed;

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 7 [Changes]

EXECUTION VERSION

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(c) the extent of the adjustment, if any, in the scheduled Phase 2 Project Work substantial completion date, scheduled Phase 3 Project Work substantial completion date and the Term; and

 

(d) any other changes to the TAAS Agreement agreed by Provider and Customer.

 

Article 3
CHANGE DIRECTIVES

 

3.1 A change directive is a written order signed by Customer directing a change in the Project Work (including changes in the GMP - Phase 2 or the GMP - Phase 3, as applicable) or the Project Services prior to agreement on a Change Order (a “Change Directive”). Customer may by Change Directive, without invalidating the Agreement, order changes in the Project Work or the Project Services within the general scope of the TAAS Agreement consisting of additions, deletions or other revisions, with consequent changes to the scheduled Phase 2 Project Work substantial completion date, scheduled Phase 3 Project Work substantial completion date, the Term and/or the Indexed Payments (or any component thereof) or another method of payment as contemplated in Section 2.1 above and in accordance with Sections 3.4 and 3.8 below.

 

3.2 Provider shall not be required to comply with a Change Directive issued by Customer in following circumstances:

 

(a) Provider, acting reasonably, determines that complying with the Change Directive would result in a violation of Applicable Law or create a danger to the health or safety of any person;

 

(b) Provider, acting reasonably, is not satisfied that Customer is able to pay for or finance the Change Directive;

 

(c) Provider, acting reasonably, determines that the requirements of the Change Directive are not within the general scope of the TAAS Agreement;

 

(d) Provider, acting reasonably, determines that the Change Directive relates to any environmental damage or Hazardous Materials; or

 

(e) after the Phase 2 Project Work substantial completion date or the Phase 3 Project Work substantial completion date, Provider, acting reasonably, determines that the Change Directive involves material change to the Project Facilities.

 

3.3 A Change Directive shall be used in the absence of total agreement on the terms of a Change Order.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 7 [Changes]

EXECUTION VERSION

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3.4 Provider’s compensation for a Change Directive shall be paid by Customer to Provider as agreed between them in accordance with the following and failing agreement as provided in Section 3.8:

 

(a) mutual acceptance of a lump sum properly itemized and supported by sufficient substantiating data to permit evaluation;

 

(b) unit prices stated in the Design Documentation or subsequently agreed upon by the Parties; or

 

(c) cost to be determined in a manner agreed upon by the parties and a mutually acceptable fixed or percentage fee.

 

3.5 If unit prices are stated in the Design Documentation or subsequently agreed upon, and if quantities originally contemplated are materially changed in a proposed Change Order or Change Directive so that application of such unit prices to quantities of Project Work proposed will cause substantial inequity to Provider or Customer, the applicable unit prices shall be equitably adjusted.

 

3.6 Subject to Section 3.2, upon receipt of a Change Directive, Provider shall promptly proceed with the change in the Project Work or the Project Services involved and advise Customer of Provider’s agreement or disagreement with the method, if any, provided in the Change Directive for determining the proposed adjustment in the Project Work or the Project Services, the GMP - Phase 2, the GMP - Phase 3, the Indexed Payments (or any component thereof), or other payment method or in the scheduled Phase 2 Project Work substantial completion date, the scheduled Phase 3 Project Work substantial completion date or Term.

 

3.7 A Change Directive signed by Provider indicates Provider’s agreement to proceed therewith. In the event that Provider agrees with Customer’s proposed method of payment for the Change Directive, Provider shall state so explicitly in writing to Customer and such method of adjustment shall then be binding on Provider.

 

3.8 Subject to Section 3.7, the adjustment to Provider’s payment resulting from a Change Directive will be the change in Provider’s reasonable costs, expenditures and savings for the performance of the Project Work or the Project Services attributable to the change, including, in case of an increase, an amount for overhead and profit of sixteen (16) percent in respect of the Project Work and, in respect of the Project Services, a reasonable and equitable amount having regard to the risk being undertaken by the Provider and the margins for public private partnership transactions generally. In such case, and also under Section 3.4, the Provider shall keep and present, in such form as Customer may reasonably prescribe, an itemized accounting of its costs related to the Change Directive together with appropriate supporting data. In respect of the Project Work, unless otherwise provided in the Design Documentation, costs for the purposes of this Section 3.8 shall be limited to Allowable Costs.

 

3.9 The amount of credit to be allowed by the Provider to the Customer for a deletion or change that results in a net decrease in the Indexed Payments or other charges shall be the actual net decrease in Provider’s cost. The amount of the Change Order or the Change Directive shall include all costs arising from, or related to, the change including, without limitation, any debt and/or financing costs, but only to the extent that such costs are incurred by Provider.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 7 [Changes]

EXECUTION VERSION

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3.10 Pending final determination of the total cost of a Change Directive, Provider may require payment for Project Work or the Project Services completed under the Change Directive in a monthly invoice delivered by Provider to Customer. Customer will make an interim determination for purposes of payment or certification of payment for those costs deemed to be reasonably justified. Customer’s interim determination of cost shall adjust the Indexed Payments (or any component thereof) or other payment method as contemplated in Section 2.1(b) above, on the same basis as a Change Order, subject to the right of Provider to disagree and assert a claim in accordance with Schedule 5 [Dispute Resolution Procedure].

 

3.11 Payments by Customer to Provider in respect of invoices delivered pursuant to Section 3.10 shall be, prior to the Phase 2 Project Work substantial completion date or the Phase 3 Project Work substantial completion date, as applicable, be paid at the same time as the construction draw for the relevant month and after the Phase 2 Project Work substantial completion date or the Phase 3 Project Work substantial completion date, as applicable, at the time the Indexed Payment is made in respect of the relevant month.

 

3.12 When Provider and Customer agree with a determination concerning the adjustments in the Project Work or the Project Services; the GMP - Phase 2; the GMP - Phase 3 and the Indexed Payments (or any component thereof) or other payment method and in the scheduled Phase 2 Project Work substantial completion date, the Phase 3 Project Work substantial completion date or Term, if applicable, or otherwise reach agreement upon the adjustments, such agreement shall be reduced to writing and Provider and Customer shall execute a Change Order. Change Orders may be issued for all or any part of a Change Directive.

 

3.13 If a Change Order or Change Directive requires Project Work or the Project Services to be provided on a time and material basis, Customer shall have the right to review all records (including time logs and daily work tickets) to verify the Project Work or the Project Services being performed and the cost thereof.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 7 [Changes]

EXECUTION VERSION

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SCHEDULE 8

 

CUSTOMER policies

 

See Attached

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 8 [Customer Policies]

EXECUTION VERSION

- 119 -

 

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 7 [Changes]

EXECUTION VERSION

- 120 -

 

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 7 [Changes]

EXECUTION VERSION

- 121 -

 

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 7 [Changes]

EXECUTION VERSION

- 122 -

 

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 7 [Changes]

EXECUTION VERSION

- 123 -

 

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 7 [Changes]

EXECUTION VERSION

- 124 -

 

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 7 [Changes]

EXECUTION VERSION

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SCHEDULE 9

 

RELIANCE DOCUMENTS

 

None.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 09 [Reliance Documents]

EXECUTION VERSION

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Schedule 10

 

Construction Additional General Terms and Conditions

 

Article 1
Design Documentation, Construction Documentation and Shop Drawings

 

1.1 References. The provisions of this Schedule 10 (including all attachments) shall apply to both the Phase 2 Work and the Phase 3 Work. All references to Project Work shall mean the Phase 2 Work or the Phase 3 Work, as applicable. All references to Construction Price shall mean the Construction Price - Phase 2 and the Construction Price - Phase 3, as applicable, all references to GMP shall mean the GMP - Phase 2 and the GMP - Phase 3, as applicable, all references to Customer Schedule shall mean Customer Schedule – Phase 2 and Customer Schedule – Phase 3, as applicable.

 

1.2 Modified AIA Document Customer and Provider acknowledge that a modified version of AIA Document A201-2007 is attached as Attachment 4 and that such modified version together with AIA Document A102-2017 is herein referred to as the “AIA Document”. The Parties shall, in good faith, settle the terms and conditions of the AIA Document, having regard to the terms and conditions of this Agreement, by November 15, 2020 and, once settled, the terms and conditions therein shall be incorporated in this Agreement by reference and shall apply to the Project Work. In the event of any conflict or inconsistency between the AIA Document and any term or condition of this Agreement, the terms and conditions of this Agreement shall govern. For purposes of the AIA Document, all references to Owner shall mean Customer, all references to Contractor shall mean Provider, all references to Work shall mean the Project Work (and, as applicable, the Phase 2 Work or Phase 3 Work).

 

1.3 Design Documentation and Construction Documentation. The Design Documentation reflects the expected scope of the Project Work and will serve as the basis of the preparation of the Construction Documentation by Customer and serve as the basis for the pricing of the Project Work by Provider. Customer shall prepare the Construction Documentation on the basis of the Design Documentation. The Construction Documentation may vary from the Design Documentation, provided that the Construction Documentation shall be consistent with and generally have the same scope as shown in the Design Documentation.

 

1.4 Shop Drawings. Provider shall be responsible for preparing shop drawings corresponding to the Construction Documentation provided by Customer to Provider (“Project Shop Drawings”).

 

1.5 Documentation Changes. To the extent that there is any material difference between the Design Documentation and the Construction Documentation, Provider shall be entitled to a Change in respect thereof. To the extent that the Parties cannot agree on the terms of a Change Order in respect of such difference, such difference shall be treated as a Change Directive.

 

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Article 2
General

 

2.1 Construction in Accordance with Construction Documentation. Provider shall construct, supply, commission and test the Project Work in accordance with the Construction Documentation, as the same may be prepared by Customer and provided to Provider in accordance with the terms of this Agreement.

 

2.2 Licensing. Provider shall comply with any applicable licensing requirements in the jurisdiction where the Project is located.

 

2.3 No Relief. Provider shall not be relieved of the obligation to perform the Project Work in accordance with the Construction Documentation by the tests, inspections or approvals of Customer, except as expressly provided in this Agreement.

 

2.4 Compliance With Law. Provider shall perform the Project Work in compliance with Applicable Law. If Provider performs Project Work contrary to Applicable Law, Provider shall assume responsibility for all such Project Work and shall bear the costs attributable to correction, except to the extent such Project Work was completed based on instructions received from Customer.

 

2.5 Limitation on Performance Obligation. Neither Provider, Customer nor any Subcontractor shall be obligated to perform any act which they believe will violate Applicable Law. If Provider determines that implementation of any instruction received from Customer would cause a violation of Applicable Law, Provider shall as soon as reasonably practicable notify Customer in writing. Upon verification by Customer that a change to Customer’s instruction is required to remedy the violation, Customer and Provider shall execute a Change Order, or Customer shall issue a Change Directive, in accordance with Schedule 7 [Changes], as applicable.

 

2.6 Provider Person. Provider shall be responsible to Customer for acts and omissions of any Provider Person performing any portion of the Project Work.

 

Article 3
General Consultation

 

3.1 Consultation and Meetings. Provider shall schedule and conduct periodic meetings with Customer to review matters such as procedures, progress, coordination, and scheduling of the Project Work.

 

Article 4
Progress Reports

 

4.1 Monthly Reporting. Provider shall keep Customer informed of the progress and quality of the Project Work. On a monthly basis or as otherwise agreed to by Customer and Provider, Provider shall submit written progress reports to Customer, showing estimated percentages of completion and other information identified below:

 

(a) Project Work completed for the period;

 

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(b) Project Work Schedule status;

 

(c) Submittal Schedule and status report, including a summary of outstanding Project Shop Drawings;

 

(d) Responses to requests for information to be provided by Provider;

 

(e) Approved Change Orders and Change Directives;

 

(f) Pending Change Order and Change Directive status reports;

 

(g) Tests and inspection reports;

 

(h) Status report of Project Work rejected by Customer;

 

(i) Status of claims previously submitted in accordance with Schedule 5 – [Dispute Resolution Procedure];

 

(j) Scheduled draws as compared to Schedule of Values; and,

 

(k) Additional information as agreed to by Customer and Provider, each acting reasonably.

 

Article 5
Construction Period Payments

 

5.1 Construction Payments. Customer shall pay Provider the Construction Price, up to the GMP set forth in Attachment 1 [Construction Payments] to this Schedule 10 - [Construction Additional General Terms and Conditions], and any other amounts owed hereunder by Customer to Provider (collectively, the “Construction Payments”) on a progress payment basis in accordance with Attachment 1C.

 

5.2 Additional Payment Conditions. The provisions of Sections 6.1(a) [Project Work Payments], 6.1(d) [Method of Payment], 6.1(e) [Taxes Payable by Customer], 6.2 [Taxes] and 6.3 [Overdue Amounts] of the main body of this TAAS Agreement shall apply to all Construction Payments.

 

5.3 Guaranteed Maximum Price. Customer and Provider have established an indicative guaranteed maximum price (“GMP”) for the Project Work as set out in Attachment 1A or 1B, as applicable. At the request of the Customer for a Customer supplied date, a firm GMP shall be agreed to by the Parties, acting reasonably. At the conclusion of the Project Work, any amount of the Construction Price in excess of the GMP will be paid by Provider without reimbursement by Customer.

 

Article 6
Provider’s Schedules

 

6.1 Project Work Schedule. Provider, within sixty (60) days after execution of this Agreement, shall prepare and submit for Customer’s review and approval, a resource loaded schedule for the Project Work which shall conform to the requirements of the Customer Schedule (the “Project Work Schedule”). The Project Work Schedule, including the commencement date, the time required for construction, supply testing and commissioning, shall show Substantial Completion of the Project Work required for each Project Facility or Phase by the Scheduled Project Work Substantial Completion Date for such Project Facility or Phase, shall be revised at appropriate intervals as required by Change Orders, Excusing Events, the conditions of the Project Work and the Project, shall be related to the entire Project Work, and shall include and identify, as separate items, allowances for reasonable periods of time required for Customer’s review. Provider shall take due account of any comments received from Customer in respect of the schedule.

 

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6.2 Performance to Schedule. Provider shall perform the Project Work in general accordance with the most recent schedule submitted to Customer and Customer and Provider shall coordinate their activities to facilitate performance of the Project Work in accordance with the Project Work Schedule.

 

6.3 Updated Schedules. Customer shall provide to Provider an updated Customer Schedule for the Project at regular intervals and no less than monthly. Provider shall update the Project Work Schedule to the extent required to coordinate with the Customer Schedule, and shall be entitled to an Excusing Cause to the extent that the time for performance of the Project Work is extended or the order of the Project Work is required to be revised as a result of changes to the Customer Schedule.

 

Article 7
Provider’s Submittals

 

7.1 Submittal Schedule. Prior to submission of any Project Shop Drawings, Provider shall prepare a Project Shop Drawing schedule, and shall submit the schedule for Customer’s approval (the “Submittal Schedule”). Customer’s approval and/or comments shall be returned to Provider within ten (10) Business Days. The Submittal Schedule shall (i) be coordinated with the Project Work Schedule, (ii) allow Customer reasonable time to review Project Shop Drawings (ten (10) Business Days for each Project Shop Drawing), and (iii) be periodically updated to reflect the progress of the Project Work.

 

7.2 Performance at Risk. If Provider shall perform any portion of the Project Work for which the Construction Documentation requires Project Shop Drawings before Customer has approved the respective Project Shop Drawing, Provider shall be deemed to be proceeding at risk and to the extent any Project Work must be removed, added or revised as a result of Provider proceeding at risk, Provider shall bear the risk of such removal, addition or revision.

 

7.3 Professional Services. All Project Shop Drawings requiring professional design services or certifications to be provided by Provider, including all drawings, calculations, specifications, certifications, shall contain the signature and seal of the licensed design professional preparing them, when required by Applicable Law. Customer understands and agrees that the services of Provider’s consultants are performed in the sole interest of, and for the exclusive benefit of, Provider.

 

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Article 8
Customer Review of Submittals

 

8.1 Customer Approval Limitation. Customer shall review and approve or take other appropriate action on Project Shop Drawings. Review of Project Shop Drawings is not conducted for the purpose of (i) determining the accuracy and completeness or other details, such as dimensions and quantities or (ii) for substantiating instructions for installation or performance of equipment or systems, all of which remain the responsibility of Provider. Customer’s review shall not constitute approval of safety precautions or, unless otherwise specifically stated by Customer, of any construction means, methods, techniques, sequences or procedures.

 

8.2 Customer Approval. Customer review and approval of Project Shop Drawings is conducted for the purpose of determining that the Project Shop Drawings are in conformance with the Construction Documentation, which is the responsibility of Customer.

 

8.3 Deemed Approval. Customer’s action will be taken in accordance with the Submittal Schedule approved by Customer, in the absence of an approved Submittal Schedule, with reasonable promptness while allowing sufficient time to permit adequate review and in a timely manner to allow Provider to proceed in accordance with the then current Project Work Schedule. Customer’s approval of a specific item shall not indicate approval of an assembly of which the item is a component.

 

8.4 Customer Response to Submittal. Customer shall respond to each such Project Shop Drawing within the time allowed by the Submittal Schedule either approving the Project Shop Drawing and confirming that the Project Shop Drawing is in conformance with the requirements of the Construction Documentation or by rejecting the Project Shop Drawing and providing a reasonably detailed explanation of the reasons that the Project Shop Drawing was rejected. Customer’s failure to respond to a Project Shop Drawing within the time permitted by Section 8.3 shall be deemed to be an approval of such Project Shop Drawing, including that such Project Shop Drawing is in accordance with the Construction Documentation.

 

Article 9
Construction

 

9.1 Provider’s Responsibility for Construction. Provider shall supervise and direct the Project Work, using the skill and attention of a prudent Provider. Provider shall be solely responsible for, and have control over, construction means, methods, techniques, sequences and procedures (except as expressly provided otherwise in this Agreement), and for coordinating all portions of the Project Work under this TAAS Agreement, unless the Design Documentation gives other specific instructions concerning these matters.

 

9.2 Provider’s Inspections. Provider shall be responsible for inspection of portions of the Project Work already performed to determine that such portions are in proper condition to receive subsequent Project Work.

 

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Article 10
Labor and Materials

 

10.1 Provider’s Responsibility For Labor and Materials. Subject to Section 10.2, unless otherwise provided in the Design Documentation, Provider shall provide and pay for labor, supplies, materials, equipment, tools, construction equipment and machinery, transportation, and other facilities and services, necessary for proper execution and completion of the Project Work, whether temporary or permanent, and whether or not incorporated or to be incorporated in the Project Work.

 

10.2 Owner’s Responsibility For Utilities Materials. Unless otherwise provided in the Design Documentation, Customer shall provide and pay for all utilities required in connection with the Project Work, including without limitation all water, heat, electricity, gas, garbage disposal and sewage.

 

10.3 Substitutions and Limitation on Substitutions. When a particular material or system is specifically specified in the Design Documentation, except to the extent specifically permitted in the Design Documentation, Customer may make substitutions only in accordance with Schedule 7 [Changes] to the TAAS Agreement, provided that Customer may not make any changes to the Provider In-Scope Systems without the prior written consent of Provider.

 

10.4 Responsibility for Labor. Provider shall enforce strict discipline and good order among Provider Persons carrying out the Project Work. Provider shall not permit employment of unfit persons or persons not properly skilled in tasks assigned to them and shall ensure that Provider’s safety standards are applied to all Project Work.

 

10.5 Parking. Construction parking passes will be issued to Provider by Customer as needed for access to the Project Work at Provider’s cost.

 

Article 11
Concealed or Unknown Conditions

 

11.1 Concealed or Unknown Conditions. If during the performance of the Project Work Provider encounters conditions described in Section (f) of the definition of Excused Failure, including for the avoidance of doubt any of the subsections of Section (f), Provider shall promptly provide notice to Customer before such conditions are disturbed and in no event later than five (5) Business Days after first observance of the conditions. Customer shall promptly investigate such conditions and report to Provider in respect thereof. If Customer agrees that the conditions constitute an Excused Failure, Customer shall recommend an equitable adjustment in the Construction Price, Project Work Schedule and Scheduled Project Work Substantial Completion Date, as applicable. If Customer does not so agree, Customer shall promptly notify Provider in writing, stating the reasons. If Provider disputes Customer’s determination or recommendation, Provider may proceed as provided in Schedule 5 [Dispute Resolution Procedure].

 

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11.2 Damage to Customer’s Property. Where Provider is performing Project Work, on the Premises, Provider shall be responsible for any damage to Customer’s property resulting from the Project Work. Notwithstanding the foregoing, Provider shall not be liable for damage to any property which was previously damaged, improperly installed, weakened items, or items not suitable for the purpose that they are performing.

 

Article 12
Human Remains and Archaeological Premisess

 

12.1 Archeological Materials. In addition to the obligations of Provider and Customer described above in Section 11.1, if during the performance of the Project Work Provider encounters an Excused Failure described in Section (f)(iv) of the definition of Excused Failure, Provider shall suspend any Project Work which would disturb such conditions until otherwise instructed by Customer and Customer shall promptly take any action necessary to allow Provider to proceed with any part of the Project Work so suspended including obtaining any governmental authorization required to resume such part of the Project Work.

 

Article 13
Documents and Submittals

 

13.1 Customer shall maintain at the Premises one copy of the Design Documentation and a current set of the Construction Documents, in good order and marked currently to indicate field changes and selections made during construction. Provider shall maintain at the Premises one copy of the approved Project Shop Drawings.

 

Article 14
Cleaning Up

 

14.1 Provider shall keep the Premises and surrounding area free from accumulation of waste materials or rubbish caused by Project Work. At completion of the Project Work at each Project Facility, Provider shall remove waste materials, rubbish, Provider’s tools, construction equipment, machinery and surplus materials from and about such Project Facility.

 

Article 15
Health and Safety

 

15.1 Customer shall notify and train Provider regarding Project safety criteria and programs, which Provider and the Provider Person’s performing any part of the Project Work, shall comply with while at the location of the Project Work.

 

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Article 16
Provider Rights

 

16.1 Visits to the Project Work by Customer shall not be construed to create an obligation on the part of Customer to make on-site inspections to check the quality or quantity of the Project Work. Customer shall neither have control over or charge of, nor be responsible for, the construction means, methods, techniques, sequences or procedures, or for Provider’s compliance with the safety precautions and programs in connection with the Project, because these are solely Provider’s responsibility.

 

16.2 Customer shall not be responsible for Provider’s failure to perform the Project Work in accordance with the requirements of the Project Shop Drawings approved by Customer. Customer shall not have control over or charge of, and will not be responsible for acts or omissions of Provider, or its Subcontractors.

 

16.3 Customer has the authority to reject Project Work that does not conform to the Project Shop Drawings approved by Customer. Customer shall have authority to require inspection or testing of the Project Work in accordance with the Design Documentation, whether or not such Project Work is fabricated, installed or completed. However, neither this authority of Customer nor a decision made in good faith either to exercise or not to exercise such authority shall give rise to a duty or responsibility of Customer to Provider or any Subcontractor, or other persons or entities performing portions of the Project Work.

 

Article 17
Substantial Completion

 

17.1 If Provider considers that the Project Work has achieved Substantial Completion, Provider shall prepare a deficiency list and submit same to Customer. Failure to include an item on the deficiency list does not alter the responsibility of Provider to complete all Project Work in accordance with the Project Shop Drawings.

 

17.2 Upon receipt of Provider’s list, Customer shall make an inspection to determine whether the Project Work has achieved Substantial Completion. If Customer’s inspection discloses any item, whether or not included on Provider’s list, which is not sufficiently complete in accordance with the Project Shop Drawings so as to be considered to have achieved Substantial Completion, Provider shall, before issuance of a Certificate of Substantial Completion in respect of the Project Work, complete or correct such item upon notification by Customer. In such case, Provider shall then submit a request for another inspection by Customer to determine whether the Project Work has achieved Substantial Completion.

 

17.3 When the Project Work has achieved Substantial Completion, Provider will prepare for Customer’s signature a Certificate of Substantial Completion. Subject to compliance with Section 17.2, Customer shall sign and return such Certificate of Substantial Completion within two (2) Business Days. Unless otherwise specified in the Project Shop Drawings, Warranties required by the Design Documentation shall commence on the date Substantial Completion in respect of that portion of the Project Work which has achieved Substantial Completion unless otherwise provided in the Certificate of Substantial Completion.

 

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ALL RIGHTS RESERVED.

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Article 18
Uncovering of Work

 

18.1 If Customer has reasonable grounds to believe that Project Work which has been covered has not been performed in accordance with the Project Shop Drawings, Customer may request to examine such portion of the Project Work that Provider has covered to determine if the Project Work has been performed in accordance with the Project Shop Drawings approved by Customer. If such Project Work is in accordance with the Project Shop Drawings approved by Customer, or if Customer was provided with an opportunity to inspect before such Project Work was covered, Provider shall be entitled to a Change Order or Change Directive and adjustment of the Project Work Schedule and Scheduled Project Work Substantial Completion Date to compensate it for the cost and time required in respect of the uncovering, recovering and ancillary work required as a result of Customer’s request. If such Project Work is not in accordance with the Project Shop Drawings approved by Customer and if Customer was not provided with an opportunity to inspect such Project Work before it was covered, the costs of uncovering and correcting the Project Work shall be at Provider’s expense and Provider shall not be entitled to a change in the Project Work Schedule and Scheduled Project Work Substantial Completion Date unless the condition was caused or contributed to by Customer or a Customer Person in which event Provider shall be entitled to a Change Order or Change Directive and adjustment of the Project Work Schedule and Scheduled Project Work Substantial Completion Date to compensate it for the cost and time required in respect of the uncovering, recovering and ancillary work required as a result of Customer’s request.

 

Article 19
Correction of Work

 

19.1 Before the commencement of the Project Services Period or Interim Project Services Period for each Project Facility for each Phase, as applicable, Provider shall promptly correct Project Work rejected by Customer or failing to conform to the requirements of the Project Shop Drawings, discovered before commencement of the Project Services Period or Interim Project Services Period for each Project Facility for each Phase, as applicable, whether or not fabricated, installed or completed. Costs of correcting such rejected Project Work, including additional testing and inspections, the cost of uncovering and replacement, and compensation for any design consultant employed by Customer whose expenses and compensation were made necessary thereby, shall be at Provider’s expense. For the avoidance of doubt, the determinations of Customer in respect of the need for any such work shall be subject to dispute by Provider in accordance with Schedule 5 [Dispute Resolution Procedure].

 

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Article 20
Acceptance of Nonconforming Work

 

20.1 If Customer elects in its discretion to accept Project Work that is not in accordance with the requirements of the Project Shop Drawings approved by Customer, Customer may do so instead of requiring its removal and correction, in which case Customer shall issue a Change Order or Change Directive, as the case may be, with an appropriate and equitable adjustment to the Project Work. Such adjustment shall be effected whether or not final payment has been made. For the avoidance of doubt, the determinations of Customer in respect of the need for any adjustment and the quantum of any such adjustment shall be subject to dispute by Provider in accordance with Schedule 5 [Dispute Resolution Procedure].

 

Article 21
Tests and Inspections

 

21.1 Tests, inspections and approvals of portions of the Project Work shall be made as required by the Design Documentation and by Applicable Law. Unless otherwise provided, Customer shall make arrangements for all third party tests, inspections and approvals with an independent testing laboratory or entity acceptable to Provider acting reasonably, or with the appropriate public authority, and shall bear all related costs of tests, inspections and approvals except for the costs of Provider. Customer shall give Provider reasonable prior written notice of when and where tests and inspections are to be made so that Provider may be present for such procedures. Tests, inspections or approvals that do not become requirements until after the Effective Date shall be deemed to have resulted from a Change in Law. For clarity, Provider shall bear the cost of all third party tests, inspections or approvals which are required to be performed in conjunction with the permits issued in respect of the Project Work..

 

21.2 If such procedures for testing, inspection or approval under Sections 21.1 hereof reveal failure of the portions of the Project Work to comply with requirements established by the Design Documentation, all costs made necessary by such failure shall be at Provider’s expense.

 

21.3 Subject to Section 3.1(e) [Permits] of the main body of this TAAS Agreement, required certificates of testing, inspection or approval shall, unless otherwise required by the Design Documentation, be secured by Provider and promptly delivered to Customer.

 

21.4 If Customer is to observe tests, inspections or approvals required by the Design Documentation, Customer will do so promptly and, where practicable, at the normal place of testing.

 

21.5 Tests or inspections conducted pursuant to the Design Documentation shall be made promptly to avoid unreasonable delay in the Project Work.

 

Article 22
WARRANTIES

 

22.1 Provider shall provide in respect of the Project Work, the general warranties contemplated in the AIA Document together with the extended warranties set forth in Attachment 5.

 

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ATTACHMENT 1A
CONSTRUCTION PAYMENTS – PHASE 2

 

[Redacted]

 

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ATTACHMENT 1B
CONSTRUCTION PAYMENTS – PHASE 3

 

[Redacted]

  

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ATTACHMENT 1c
progress payment provisions

 

1.1 Payment Schedule

 

A Payment Schedule for each of Phase 2 and Phase 3 allocating the entire Construction Price for the respective Phase to the various portions of the Project Work shall be prepared and agreed by the Provider and Customer prior to the commencement of the Project Work for such Phase. The Provider shall amend the Payment Schedule from time to time, supported by such data to substantiate its accuracy as the Customer may require, such amendment to be agreed by the parties, acting reasonably. The Payment Schedule for each Phase, shall be used as a basis for reviewing the Provider’s Applications for Payment.

 

1.2 Applications for Payment

 

1.2.1 Provider shall submit to Customer by the 25th day of each month, a draft (pencil copy) of the Application for Payment and by no later than the 1st day of the following month Provider shall submit to Customer (or any construction manager appointed on behalf of Customer) an itemized Application for Payment for completed portions of the Project Work. The application shall be supported by data substantiating Provider’s right to payment as Customer may require, such as detailed back-up for Allowable Costs, line item break-out of any Subcontractor costs provided by the detailed back-up from the Subcontractor’s Application for Payment as well as conditional waivers for payments to be made (and the following month the unconditional waivers for payments made the previous month), together with copies of requisitions from consultants, Subcontractors, and material suppliers, and the Application for Payment shall reflect retainage as required.

 

1.2.1.1 Applications for Payment may include requests for payment on account of Allowable Costs and the Provider’s Fee, as well as Changes that have been properly authorized in accordance with the Agreement, or by interim determinations of Customer, but not yet properly authorized.

 

1.2.1.2 Applications for Payment shall not include requests for payment for portions of the Project Work for which Provider does not intend to pay the consultants, Subcontractors, material suppliers, or other persons or entities providing services or work for Provider, unless such Project Work has been performed by others whom Provider intends to pay.

 

1.2.2 Unless otherwise provided in the Agreement, payments shall be made for services provided as well as materials and equipment delivered and suitably stored at the site for subsequent incorporation in the Project Work and which constitute Allowable Costs. If approved in advance by Customer, payment may similarly be made for materials and equipment suitably stored off the site at a location agreed upon in writing and which constitute Allowable Costs. Payment for materials and equipment stored on or off the Premises shall be conditioned upon compliance by Provider with procedures satisfactory to Customer to establish the Customer’s title to such materials and equipment or otherwise protect Customer’s interest, and shall include the costs of applicable insurance, storage and transportation to the site for such materials and equipment stored off the site.

 

1.2.3 Provider warrants that title to all Project Work covered by an Application for Payment will pass to Customer no later than the time of payment. Provider further warrants that, upon submittal of an Application for Payment, all Project Work for which Certificates for Payment have been previously issued and payments received from Customer shall, to the best of Provider’s knowledge, information and belief, be free and clear of liens, claims, security interests or encumbrances in favor of Provider, consultants, Subcontractors, material suppliers, or other persons or entities entitled to make a claim by reason of having provided labor, materials and equipment relating to the Project Work.

 

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1.3 Certificates for Payment

 

The Customer shall, within seven (7) days after receipt of the Provider’s Application for Payment, issue to Provider a Certificate for Payment.

 

1.4 Decisions to Withhold Certification

 

1.4.1 Customer may withhold a Certificate for Payment in whole or in part to the extent reasonably necessary to protect Customer due to Customer’s determination that the Project Work has not progressed to the point indicated in Provider’s Application for Payment, or the quality of the Project Work is not in accordance with the Design Documentation. If Customer is unable to certify payment in the amount of the Application for Payment, Customer will notify Provider. If Provider and Customer cannot agree on a revised amount, Customer will promptly issue a Certificate for Payment for the amount that Customer deems to be due and owing to Provider. Customer may also withhold a Certificate for Payment or, because of subsequently discovered evidence, may nullify the whole or a part of a Certificate for Payment previously issued to such extent as may be necessary to protect Customer from loss for which Provider is responsible because of:

 

.1 defective Project Work, including design and construction, not remedied;

 

.2 third party claims filed or reasonable evidence indicating probable filing of such claims unless security acceptable to Customer is provided by Provider;

 

.3 failure of Provider to make payments properly to the consultants, Subcontractors or others, for services, labor, materials or equipment;

 

.4 damage to Customer or a separate contractor;

 

1.4.2 When the above reasons for withholding certification are removed, certification will be made for amounts previously withheld.

 

1.5 Progress Payments

 

1.5.1 After Customer has issued a Certificate for Payment, Customer shall, subject to Section 1.7 of this Attachment 1C, make payment to Provider within 10 days of receipt of funds from Lender but in no event later than 45 days following the issuance of the Provider’s Application for Payment to the Customer or to any construction manager on behalf of the Customer.

 

1.5.2 Provider shall pay each consultant, Subcontractor, and other person or entity providing services or work for Provider no later than the time period required by Applicable Law, but in no event more than ten (10) days after receipt of payment from Customer the amount to which the consultant, Subcontractor, and other person or entity providing services or work for Provider is entitled, reflecting percentages actually retained from payments to Provider on account of the portion of the Project Work performed by the consultant, Subcontractor, or other person or entity. Provider shall, by appropriate agreement with each consultant, Subcontractor, and other person or entity providing services or work for Provider, require each consultant, Subcontractor, and other person or entity providing services or work for Provider to make payments to subconsultants and subcontractors in a similar manner.

 

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1.5.3 Provider will, on request and if practicable, furnish to a consultant, Subcontractor, or other person or entity providing services or work for Provider, information regarding percentages of completion or amounts applied for by Provider and action taken thereon by Customer on account of portions of the Project Work done by such consultant, Subcontractor or other person or entity providing services or work for Provider.

 

1.5.4 Customer has the right to request written evidence from Provider that Provider has properly paid the consultants, Subcontractors, or other person or entity providing services or work for Provider, amounts paid by Customer to Provider for the Project Work. If Provider fails to furnish such evidence within fifteen (15) days, Customer shall have the right to contact the consultants, and Subcontractors to ascertain whether they have been properly paid. Customer shall have no obligation to pay or to see to the payment of money to a consultant or Subcontractor, except as may otherwise be required by Applicable Law.

 

1.5.5 Provider payments to material and equipment suppliers shall be treated in a manner similar to that provided in Sections 1.5.2, 1.5.3 and 1.5.4.

 

1.5.6 A Certificate for Payment, a progress payment, or partial or entire use or occupancy of the Project by Customer shall not constitute acceptance of Project Work not in accordance with the Agreement.

 

1.6 Failure of Payment

 

If Customer does not issue a Certificate for Payment, through no fault of Provider, within the time required hereunder, then Provider may, upon 30 additional days’ written notice to Customer, stop the Project Work until payment of the amount owing has been received. The time periods for performance of the Project Work shall be extended appropriately and the GMP for the applicable Phase shall be increased by the amount of Provider’s reasonable costs of shut-down, delay and start-up, plus interest as provided for in the Design Documentation.

 

1.7 Lien Indemnification.

 

Should any Subcontractor or any other person acting through or under Provider or any subcontractor file a lien or other encumbrance against all or any portion of the Project Work, the Premises or the Project, Provider shall, at its sole cost and expense, remove and discharge, by payment, bond or otherwise, that lien or encumbrance within ten (10) business days of the filing of that lien or encumbrance.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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ATTACHMENT 2A
CUSTOMER SCHEDULE PHASE 2

 

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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ATTACHMENT 2B
CUSTOMER SCHEDULE PHASE 3

 

Phase 3 detailed construction schedule is yet to be developed. Phase 3 Project Work is planned to begin in 2024 and end in 2025. Detailed schedule to be provided at least 6 months prior to Project Work starting on Phase III.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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ATTACHMENT 3A
DESIGN DOCUMENTATION PHASE 2

 

All drawings, plans and specifications provided by Customer to Provider as of the date of this Agreement.

 

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ALL RIGHTS RESERVED.

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ATTACHMENT 3B
DESIGN DOCUMENTATION PHASE 3

 

To be added to Agreement by Change Order once such Design Documentation are prepared.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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ATTACHMENT 4
MODIFIED AIA DOCUMENT A201-2007

 

See Attached

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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ATTACHMENT 5
EXTENDED WARRANTIES

 

All manufacturer warranties which are in excess of Provider’s warranties under this Agreement.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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Schedule 11

 

Design Assist Services Agreement

 

See Attached

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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DESIGN ASSIST SERVICES AGREEMENT

 

THIS DESIGN ASSIST SERVICES AGREEMENT (“Agreement”) is dated as of ___________, 2016 (the “Effective Date”) by and between HOF VILLAGE, LLC, a Delaware limited liability company ("HOFV"), and JOHNSON CONTROLS, INC., a Wisconsin corporation (“JCI”, and together with HOFV, sometimes collectively referred to as the “Parties”).

 

RECITALS

 

WHEREAS, HOFV owns, directly or indirectly, a controlling ownership interest in the “HOF Village Complex”, which is a commercial, educational, retail and recreational complex being developed by, or on behalf of, HOFV and anchored by The Tom Benson Hall of Fame Stadium (the “Stadium”) and the Pro Football Hall of Fame (the “HOF Facility”) (hereinafter, sometimes referred to as the “Project”);

 

WHEREAS, the Project is comprised of several aspects, including but not limited to: (i) extensive redevelopment of, and improvements to, the Stadium, (ii) construction of numerous turf playing fields and related improvements for youth sporting events, (iii) construction of a Hotel and Conference Center, (iv) construction of the Center For Excellence, (v) construction of the NFL Experience, (vi) construction of parking facilities, both structured and surface parking lots, and (vii) construction of other retail, entertainment, and residential improvements within the HOF Village Complex (each, a “Project Location”).

 

WHEREAS, in connection with the development of the HOF Village Complex, HOFV has engaged the following parties, each pursuant to separate written agreements containing the parties’ respective roles and responsibilities: (i) Welty Building Company, Ltd. (“Welty”) has been engaged to serve as Construction Manager for the HOF Village Complex; (ii) Technical Services (“TSAV”) has been engaged to serve as Construction Manager with respect to the technology, and other related systems for the Project; and (iii) HKS, Inc. (“HKS”) has been engaged as the lead architect for the Project;

 

WHEREAS, HOFV desires to engage JCI to provide design assistance and related services, with respect to the certain potential scopes of work relating to the technology and building systems aspects of the Project, as identified in more detail in Exhibit B attached hereto (such scopes of work shall be referred to herein as the “Building Systems”), pursuant to the terms herein;

 

WHEREAS, the Parties are simultaneously negotiating the terms of a Binding Short-Form Sponsorship and Naming Rights Agreement (“Sponsorship Agreement”) whereby HOFV will grant JCI certain naming and sponsorship rights with respect to the Project, as more fully described therein;

 

WHEREAS, upon execution of the Sponsorship Agreement, the Parties shall negotiate in good faith to enter into the Long From Agreement, as such term is defined in the Sponsorship Agreement, which Long Form Agreement would replace and supersede the Sponsorship Agreement. If any of the terms herein conflict with the terms of the Sponsorship Agreement, or the Long Form Agreement, the terms of the Sponsorship Agreement or Long Form Agreement, as applicable, shall control.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are mutually acknowledged, the Parties hereby covenant and agree as follows:

 

1. Term: This Agreement shall be effective as of the Effective Date and shall continue in effect until the earlier to occur of (i) JCI’s completion of the Services (as herein defined) contemplated herein, or (ii) the termination of this Agreement pursuant to the terms herein (the “Term”). If one or more subcontracts between either Welty or TSAV, on one hand, and JCI, on the other hand, are executed whereby JCI is engaged to provide work on the Project relating to the Building Systems (such subcontract to be referred to herein as a “JCI Subcontract”), then in any such event, the terms and conditions of said JCI Subcontract shall govern and control over this Agreement with respect to the scopes of work and Project Location (as herein defined) contemplated in said JCI Subcontract(s).

 

2. Services.

 

a. During the Term, JCI shall provide to HOFV, or its designee, agent, representative, or contractor, the services set forth on Exhibit A attached hereto and incorporated herein (“Services”). JCI shall make itself available during such hours and at such locations as are reasonably necessary to complete the Services.

 

b. As directed by HOFV, JCI shall work directly with either TSAV or Welty, depending on the scope of work, to provide the Services contemplated herein. JCI shall report directly to TSAV or Welty, as applicable, regarding all design assist and planning review matters associated with the Building Systems and corresponding infrastructure aspects of the Project and shall do so within the timeframes and deadlines contained in the Project schedule.

 

c. JCI shall provide the Services in accordance with applicable standards of professional skill and care. When applicable law requires that the Services be performed by licensed professionals, JCI shall provide said Services (hereinafter “Professional Services”) through the performance of qualified persons or entities duly licensed to practice their professions. It is recognized, however, that, except for Professional Services, JCI’s review and assistance hereunder is made in JCI’s capacity as a contractor and not as a licensed design professional.

 

d. Except with HOFV’s prior knowledge and written consent, JCI shall not engage in any activity, or accept any employment, interest or contribution that would reasonably appear to compromise JCI’s professional judgment with respect to the Services being performed or the Project in general.

 

e. JCI shall be entitled to rely on the accuracy, timeliness and completeness of services and information furnished by HOFV, HKS, and their respective agents, representatives, and contractors. JCI shall provide written notice to HOFV within a reasonable time frame of JCI becoming aware of any errors, omissions or inconsistencies in such services or information.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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3. Technology Contracting and Equipment.

 

a. With respect to the Building Systems, and subject to the terms and conditions set forth in this Agreement, HOFV hereby acknowledges and agrees that JCI shall implement and/or manage the implementation of such Building Systems, including the categories and scopes of work associated therewith to the extent such categories and scopes are included within the final design of the Project. In furtherance of such management and implementation services, HOFV agrees as follows:

 

i. In circumstances where JCI OEM products are appropriate and consistent with the final design of the Project, JCI shall self-perform (subject to HOFV’s approval, not to be unreasonably withheld, conditioned or delayed) said portions of the Building Systems scopes of work and related integration work, to provide a turn-key solution for such scopes, provided such categories and scopes are included within the final design of the Project. For purposes of clarity, the term “self-perform” shall mean JCI has the in-house capabilities to perform such work without subcontracting said work, or any portions thereof;

 

ii. If JCI desires to self-perform any of the Building Systems scopes of work, the Parties, along with TSAV and Welty, as applicable, shall work in good faith to execute JCI Subcontract(s) whereby the respective rights, duties and obligations of the parties shall be more fully defined. The Parties hereby acknowledge and agree that the JCI Subcontract(s) shall reflect the following: (i) the pricing for OEM products shall be fixed according to published MSRP pricing, plus a reduction of no less than [***] off the MSRP; (ii) the pricing for OEM services shall be set at JCI’s actual cost of installation, plus a fee of [***] of the actual installation cost, but excluding any other mark-up for profit, overhead expenses or general conditions. Notwithstanding the foregoing, in no event shall the cumulative costs of the products and services described in (i) and (ii) above exceed the approved GMP for the applicable Project Location.

 

b. If JCI desires to subcontract any of the Building Systems scopes of work, the Parties hereby acknowledge and agree that the JCI Subcontract(s) shall provide that JCI shall competitively bid the approved scopes of work to qualified subcontractors and provide recommendations to TSAV or Welty (according to impending delineations cited in Section 2(b) above) for award thereof. The JCI Subcontract(s) shall provide that JCI’s fee structure for subcontractor bid awards approved by HOFV shall be based on JCI’s “direct cost” (said direct cost shall be inclusive of any sub-subcontractor fees), plus a reasonable contingency that is approved by HOF, in its sole discretion and subject to HOFV’s control, for any unforeseen expenses, plus a fee equal to [***] of the GMP associated with the applicable Project Location (said fee shall be inclusive of JCI’s direct personnel, expenses, general conditions and insurance).

 

c. For Building Systems scopes where JCI desires to provide equipment only, such equipment shall be competitively bid to qualified vendors for award thereof and all such awards shall be approved by HOFV, in its sole discretion. JCI’s fee structure for vendor bids approved by HOFV shall be based on the direct cost of the materials, plus a fee equal to [***], plus a reasonable contingency that is approved by HOFV, in its sole discretion and subject to HOFV’s control, for any unforeseen conditions (collectively, the “Supplier Fee”). For clarity, the Supplier Fee shall not include any additional mark-ups for profit, overhead expenses, or general conditions.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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d. JCI shall participate in the development of Building Systems scopes where certain JCI OEM products and services are to be utilized. For purposes of clarity, some scopes described on Exhibit B may require that they are designed according to a HOFV designated budget. Should JCI desire to incorporate certain OEM products where costs exceed a HOFV designated budget, JCI may pay for said “upgrades” provided that they are approved in writing by HOFV. JCI funded upgrades shall not be eligible for an additional fee payable to JCI.

 

e. The terms and conditions associated with JCI’s performance of the work described in Sections 3(a)(i), 3(a)(ii), and Sections 3(b) – (d), including the binding terms regarding pricing, insurance, expenses, milestones and timeliness for completion, etc., shall be further defined in a JCI Subcontract executed between TSAV or Welty, as construction manager, and JCI, as subcontractor, at the appropriate time. Such JCI Subcontract(s) shall also further define the parties’ rights and obligations regarding the topics provided in Exhibit C attached hereto. The Parties agree to use a standard AIA A401-2007 Contractor/Subcontractor Agreement as the starting point of the JCI Subcontract, subject to such modifications and revisions as mutually agreed upon by the applicable parties.

 

f. Subject to the terms set forth in this Agreement, in the event that the aggregate subcontract value of work awarded to JCI prior to December 31, 2019 (the “Expiration Date”) pursuant to one or more JCI Subcontract(s) is less than [***] (the “Subcontract Target Amount”), then HOFV shall, within 60 days after the Expiration Date, pay to JCI the amount of Liquidated Damages (as defined herein) as follows.  As used herein, the term “Liquidated Damages” shall mean or refer to an amount equal to (i) [***] of (ii) the amount by which the aggregate subcontract value of work awarded to JCI pursuant to JCI Subcontract(s) prior to the Expiration Date is less than the Subcontract Target Amount. It is acknowledged that, except as provided in Section 3(j) herein, the failure by HOFV to award JCI an aggregate subcontract value of work prior to the Expiration Date equal to the Subcontract Target Amount will cause JCI to incur substantial economic damages and losses of types and in amounts which are impossible to compute and ascertain with certainty as a basis for recovery by JCI of actual damages, and that the Liquidated Damages identified herein represent a fair, reasonable and appropriate estimate thereof. Such Liquidated Damages are intended to represent estimated actual damages and are not intended as a penalty. Notwithstanding the foregoing, in no event shall Liquidated Damages under this Section 3(f) exceed [***].  The Liquidated Damages shall be offset by an amount equal to (y) [***] of (z) any revenue received by JCI, or its affiliates or subsidiaries, through business dealings facilitated by HOFV or any of its affiliates (including without limitation Industrial Realty Group, LLC) during the period beginning on the Effective Date through the Expiration Date. The Parties shall work in good faith and reasonably cooperate with each other to determine any such offset amounts, including but not limited to, review by HOFV of JCI’s books and records with respect to such business dealings.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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g. The Parties acknowledge and agree that if the aggregate subcontract value of work awarded to JCI prior to the Expiration Date pursuant to one or more JCI Subcontracts exceeds the Subcontract Target Amount, then JCI will receive substantial economic gain and HOFV’s Project costs will significantly increase. Accordingly, in the event that the aggregate subcontract value of work awarded to JCI prior to the Expiration Date pursuant to one or more JCI Subcontracts exceeds [***] (the “Subcontract Ceiling”), then JCI’s fee, for all such work between the Subcontract Ceiling and the Fee Threshold Amount (as defined below), shall be equal to [***] (as compared to JCI’s aforementioned fee of [***]). Aside from said reduced fee, the other elements of JCI’s fee structure, as more fully described in Section 3, would remain applicable under these circumstances.

 

h. In the event the aggregate subcontract value of work awarded to JCI prior to the Expiration Date pursuant to one or more JCI Subcontracts is equal to or greater than [***] (“Fee Threshold Amount”), then the Parties shall negotiate in good faith to determine the appropriate fee percentage payable to JCI in connection with any such work over the Fee Threshold Amount; provided, however, that such fee shall not be less than [***] (“Fee Floor”) unless otherwise mutually agreed upon in writing by the Parties. Notwithstanding anything herein to the contrary, but subject to the Fee Floor in the preceding sentence, HOFV shall not be obligated in any way to award any work to JCI over and above the Fee Threshold Amount unless and until the Parties mutually agree upon the fee percentage applicable to said work. The Parties acknowledge and agree that JCI will, through its supply chain management and other efficiencies unique to JCI, use its best efforts to reduce Project costs and that any corresponding value related to such efforts shall factor into the negotiations for JCI’s fee percentage for work over and above the Fee Threshold Amount.

 

i. Notwithstanding the foregoing, (i) in the event general economic conditions decline such that the active development of the Project must be suspended, terminated or reduced in scope temporarily or permanently as determined by HOFV in the exercise of its reasonable discretion, then HOFV shall have the right to extend the Expiration Date from time to time until general economic conditions recover and the Project is again in the active phase of development; and (ii) at all times JCI shall ensure that the costs and prices charged to TASV or Welty or any other counterpart to a JCI Subcontract are competitive in the marketplace, and HOFV shall have no obligation for payment of Liquidated Damages to the extent it arises out of, is connected with, or results from rejection of a JCI Subcontract which proposes costs and prices which are not competitive in the marketplace. Notwithstanding the foregoing, the maximum extension of the Expiration Date as provided above shall be Twenty-Four (24) months.

 

j. The Parties acknowledge and agree that the estimated top end budget for the costs related to the Building Systems scopes of work contemplated in this Agreement is [***] (“Top End Budget”). Notwithstanding anything herein to the contrary, HOFV shall not be obligated in any way to engage JCI, whether through self-performance, as a supplier, subcontractor or otherwise, for any work related to the Project where the aggregate subcontract value of work awarded to JCI hereunder exceeds the Top End Budget.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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4. Relationship of the Parties. JCI accepts the relationship of trust and confidence established by this Agreement and covenants with HOFV to cooperate with Welty, TSAV, and HKS, as the case may be, and to exercise JCI’s skill and judgment in furthering the interests of HOFV; to efficiently furnish the Services; to furnish at all times an adequate supply of personnel and materials; and to perform the Services in an expeditious and economical manner consistent with HOFV’s interests.

 

5. Notices and Compliance with Laws. JCI shall comply with all applicable laws, statutes, ordinances, codes, rules and regulations, and lawful orders of public authorities applicable to its performance under this Agreement, and with equal employment opportunity programs, and other programs as may be required by governmental and quasi-governmental authorities.

 

6. Confidentiality. The Parties’ acknowledge and agree that the terms of this Agreement shall be subject to the same confidentiality provisions as described in the Sponsorship Agreement, and the Parties agree to abide by such confidentiality provisions as if those provisions were fully restated herein.

 

7. Termination or Suspension of this Agreement. This Agreement may be terminated prior to the expiration of the Term only by written agreement of all Parties or as follows:

 

a. This Agreement may be terminated by JCI immediately upon written notice to HOFV in the event of fraud or gross or willful misconduct by HOFV and this Agreement may be terminated by HOFV immediately upon written notice to JCI in the event of fraud or gross or willful misconduct by JCI.

 

b. This Agreement may be terminated by the JCI on ten (10) days’ written notice to HOFV if HOFV (a) materially breaches this Agreement and fails to cure such breach within sixty (60) days of notice of such breach, or (b) makes a general assignment for the benefit of creditors or is insolvent, bankrupt, or the subject of receivership.

 

c. This Agreement may be terminated by HOFV on ten (10) days’ written notice to JCI if JCI (a) materially breaches this Agreement and fails to cure such breach within sixty (60) days of notice of such breach, or (b) makes a general assignment for the benefit of creditors or is insolvent, bankrupt, or the subject of receivership.

 

d. Notwithstanding anything herein to the contrary, if the Long Form Agreement is not executed on or before November 15, 2016, or such other date as may be mutually agreed between the Parties, then either party may terminate this Agreement upon ten (10) days’ written notice to the other.

 

8. Indemnification. JCI agrees to indemnify and hold HOFV, its employees, agents, and representatives, including but not limited to Welty, TSAV and HKS, harmless from any damage, liability or cost (including liability to third parties and reasonable attorney’s fees) to the extent caused by JCI’s negligent acts, errors or omissions in the performance of the Services under this Agreement. HOFV agrees to indemnify and hold JCI, its employees, agents and representatives harmless from any damage, liability or cost (including liability to third parties and reasonable attorney’s fees) to the extent caused by HOFV’s negligent acts, errors or omissions in the performance or receipt of the Services under this Agreement.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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9. Dispute Resolution.

 

a. Mediation. Any claim, dispute or other matter in question arising out of or related to this Agreement (“Claims”) shall be subject to mediation as a condition precedent to the institution of legal, equitable or other proceedings by either party. If such matter relates to or is the subject of a lien arising out of JCI’s services, JCI may proceed in accordance with applicable law to comply with the lien notice or filing deadlines prior to conclusion of mediation.

 

i. The Parties shall endeavor to resolve claims, disputes and other matters in question between them by mediation, which, unless the Parties mutually agree otherwise, shall be in accordance with the Construction Industry Mediation Rules of the American Arbitration Association currently in effect at the time of the mediation. Request for mediation shall be filed in writing with the other Party to this Agreement and with the American Arbitration Association. The request may be made concurrently with the institution of legal, equitable or other proceedings but, in such event, mediation shall proceed in advance of such proceedings, which shall be stayed pending mediation for a period of 60 days from the date of filing, unless stayed for a longer period by agreement of the parties or court order.

 

ii. The Parties shall share the mediator's fee and any filing fees equally. The mediation shall be held in the place where the Project is located unless another location is mutually agreed upon. Agreements reached in mediation shall be enforceable as settlement agreements in any court having jurisdiction thereof.

 

b. Litigation. If the parties do not resolve their dispute through mediation pursuant to Section 9(a), the method of binding dispute resolution shall be litigation in a court of competent jurisdiction.

 

c. Waiver of Consequential Damages. HOFV and JCI each waive Claims against one another for consequential damages arising out of or relating to this Agreement, including without limitation expenses relating to rental expenses; losses of use, income, profit, financing, business and reputation; and for loss of management or employee productivity.

 

10. Insurance. If JCI performs any work as a subcontractor for the Project, JCI’s corresponding insurance obligations shall be as set forth in the JCI Subcontract. The JCI Subcontract shall include a provision whereby upon HOFV’s request, JCI shall enroll in the Owner’s Controlled Insurance Program for the Project and the Construction Manager’s Subcontractor Default Insurance Program. At all times during the Term of this Agreement, and in connection with the Services being provided by JCI hereunder, JCI shall maintain the following insurance policies.

 

a. General Liability – $1,000,000 per occurrence, $5,000,000 excess. JCI shall provide an endorsement to their policy naming HOFV, and its designees, as additional insureds. The additional insured endorsement(s) shall be at least as broad as the CB 2010 04/13 and the CG2037 04/13 or their equivalent.

 

b. Automobile Liability – $1,000,000 per occurrence, $5,000,000 excess.

 

c. Workers’ Compensation – $500,000 or as required by Ohio law as may be applicable. A waiver of subrogation endorsement shall be required, issued in favor of HOFV.

 

d. Professional Liability – $5,000,000 per claim, $7,000,000 annual aggregate. Said “claims-made” coverage shall be capable of being renewed for a period of five (5) years.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

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EXECUTION VERSION

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11. Instruments of Service. Drawings, specifications, and other documents, including those in electronic form, prepared by JCI and its sub-consultants are Instruments of Service for use solely with respect to the Project. JCI and its sub-consultants shall be deemed the authors and owners of their respective Instruments of Service and shall retain all common law, statutory and other reserved rights, including copyrights. Upon execution of this Agreement, JCI grants to HOFV, its agents, representatives and contractors (including but not limited to Welty, TSAV, and HKS), a non-exclusive license to reproduce and use JCI's Instruments of Service solely in connection with the Project, including the Project's further development by HOFV and others retained by HOFV for such purposes, including Welty, TSAV, and HKS. Such license shall also extend to any other persons or entities retained by HOFV for such purposes. JCI shall obtain similar non-exclusive licenses from its sub-consultants consistent with this Agreement. No other license or right shall be deemed granted or implied under this Agreement. HOFV shall not otherwise assign or transfer any license herein to another party without the prior written agreement of JCI. Any unauthorized reproduction or use of the Instruments of Service by HOFV or others shall be at HOFV's sole risk and expense and without liability to JCI and its sub-consultants.

 

12. Excluded Sponsors. The Sponsorship Agreement contains a list of excluded sponsors for the Project (the term “Excluded Sponsors” is more specifically defined in the Sponsorship Agreement and the use of that phrase herein shall have the same meaning ascribed to it in the Sponsorship Agreement and/or Long Form Agreement, as applicable). It is understood between the Parties that some products and services of Excluded Sponsors may already be integrated into the infrastructure of the HOF Facility and/or Stadium and that JCI has the opportunity to replace the Excluded Sponsor’s existing infrastructure; the cost of the replacement (including the cost of any lost sponsorship fees) would be borne by JCI.

 

13. Miscellaneous.

 

a. Governing Law. This Agreement shall be governed by the laws of the State of Ohio.

 

b. Entire Agreement; Sponsorship Agreement. With the exception of the Sponsorship Agreement, and any long form sponsorship agreement of like tenor, this Agreement replaces any and all other agreements in effect on the Effective Date, whether written or oral and is the sole agreement between the Parties regarding the Services. In the event any of the terms or provisions of this Agreement conflict with the Sponsorship Agreement, the terms of the Sponsorship Agreement shall govern and control.

 

c. Severability. All of the covenants and provisions herein contained are severable; in the event that any of said covenants or provisions shall be held invalid by any court of competent jurisdiction; this Agreement shall be construed as if such invalid covenant or provision were not herein contained.

 

d. Counterparts. This Agreement may be executed in two or more counterparts, each of which should be an original but all of which together shall constitute a single agreement.

 

e. Binding Agreement. HOFV and JCI, respectively, bind themselves, their partners, successors, assigns and legal representatives to the other party to this Agreement and to the partners, successors, assigns and legal representatives of such other party with respect to all covenants of this Agreement. Neither HOFV, nor JCI shall assign this Agreement without the written consent of the other, not to be unreasonably withheld, conditioned or delayed; provided, however, HOFV may assign this Agreement to a lender providing financing for the Project. In such event, the lender shall assume HOFV’s rights and obligations under this Agreement, and JCI shall execute all reasonable consents facilitating such assignment, conditioned upon JCI’s receipt of all amounts due, if any, as provided in this Agreement.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 11 [Design Assist Services Agreement]

EXECUTION VERSION

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f. Notices. All notices arising out of, or from, provisions of this Agreement shall be in writing and delivered to the parties at the addresses below, either by certified mail, FedEx or other overnight delivery service. All notices sent via the U.S. Postal Service are deemed effective on the date of postmark. Notices mailed through another carrier such as FedEx or UPS shall be effective upon receipt.

 

i. If to HOFV: c/o IRG Realty Advisors, LLC

4020 Kinross Lakes Parkway, Suite 200

Richfield, Ohio 44286

Attn: Carol Smith

 

ii. If to JCI: Johnson Controls

9797 Midwest Ave.

Cleveland, OH 44125

Attn: Todd Grabowski, Branch General Manager

 

g. Recitals. The Recitals stated above are hereby incorporated by reference into this Agreement.

 

[Signature page follows]

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 11 [Design Assist Services Agreement]

EXECUTION VERSION

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of Effective Date.

 

HOFV:

HOF VILLAGE, LLC,

a Delaware limited liability company

 

By: IRG Canton Village Manager, LLC,  
  a Delaware limited liability company, its Manager
     
By:      
Name:     
Title:    
     
JCI:  
JOHNSON CONTROLS, INC., a Wisconsin corporation
     
By:      
Name:    
Title:    

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 11 [Design Assist Services Agreement]

EXECUTION VERSION

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Exhibit A

 

Design Assist and Related Services to be performed by JCI

 

· JCI shall perform the following services, and/or advise HOFV, and its designees, agents, representatives, and contractors, as directed by HOFV from time to time, regarding the following:

 

o Assist and advise relating to the overall scope, approach, costs, efficiency analysis, construction and performance of the Project’s Building Systems scope(s) of work, based on the conceptual budget target of [***] in construction costs for such Building Systems, plus approved ongoing maintenance and support services during the term of the Sponsorship Agreement.

 

o Provide detailed plan review for the Project, including but not limited to:

 

§ working closely with the TSAV and Welty to review applicable Building Systems options for the Project, which could enhance the overall business performance of the Project and its end users and consumers.

 

§ Providing insight, benchmarking, and access (where available) to other similar facilities for illustrating best practices.

 

o Provide design assistance for the Project’s Building Systems, including but not limited to:

 

§ Overlay construction documents to identify design duplications in system infrastructures.

 

§ Identify infrastructure efficiencies by the use of a single infrastructure/vendor doing multiple tasks in lieu of multiple infrastructures/subcontractors doing single tasks where appropriate.

 

§ Conduct constructability reviews of the overall technology systems in unison with Welty’s Project Schedule (Closet Details, Schedules, Construction details).

 

§ Coordinate with HOFV provided equipment

 

§ Perform cost vs. life cycle cost reviews based on take-offs from the preliminary plans and specifications (provided by others) as each Project asset is programmed or designed. The cost reviews will be comprised of a base cost (minimum requirements for an operational system that meets the defined criteria) and an optimum cost (requirements for an operations system that exceeds the defined criteria, but increases operational efficiencies) for each technology system in scope.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 11 [Design Assist Services Agreement]

EXECUTION VERSION

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§ Assistance with design management and coordination between applicable technology systems, designers, construction trades and TSAV and Welty.

 

§ Develop a comprehensive technology procurement, installation, and implementation schedule based on the project team’s schedule.

 

§ Prepare a master commissioning schedule to coordinate and facilitate all commissioning programs for applicable technology systems.

 

o Provide assistance and consultation regarding Building Systems related construction services, including but not limited to the following:

 

§ Outlining the Construction Expectations and Deliverables for all approved subcontracts.

 

§ If requested by HOFV, serve as the single point of responsibility for procurement, installation, and management of technology systems included in the scope of work.

 

§ Continuously communicate and coordinate with TSAV, Welty and HOFV, and their respective team members, regarding all relevant technology and building systems design and construction issues.

 

§ Attend Construction Coordination meetings representing all technology systems under scope.

 

§ Within a 60 days after HKS’ issuance of the Construction Drawings for an applicable Project Location, develop a final GMP in conjunction with TSAV based on actual cost from selected technology vendors (such GMP pricing shall be good for a period of 90 days from issuance).

 

§ Except for scopes of work where JCI will be competitively bidding and/or self-performing:

 

· Assist TSAV and Welty in development and administration of Request for Proposals (RFP) for all technology system bid packages that makeup the overall technology system outcome under scope

 

· Qualify and review prospective bidders with TSAV and Welty

 

· Assist in preparation of instructions to bidders, identifying bid dates, quantities of proposals, contact points, and other bidding information

 

· Assist in preparation of Project Manuals and Project General Conditions to accompany system specific RFPs, including short and long-term service agreements to ensure fair market pricing for the life of the system.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 11 [Design Assist Services Agreement]

EXECUTION VERSION

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· Participate in hosting of onsite pre-bid meetings for each system bid package release in scope, including onsite walk-thrus

 

· Assist in collection and facilitation of responses to bidder’s Request for Information (RFI) in conjunction with TSAV

 

· Assist in conduction of interviews with TSAV, Welty and others designated by HOFV for the awarding of all technology systems in scope

 

· Assist in conduction of interviews and "No Gaps" meetings to verify completeness of scope and introduction of project delivery team

 

· Announce and document contract awards

 

§ Host construction kick off meeting to establish project implementation team, lines of communication, specific meeting attendance, and project team reporting lines.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 11 [Design Assist Services Agreement]

EXECUTION VERSION

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Exhibit B

 

Product Categories

 

1. Fire Suppression (Division 21)
a. Operation and Maintenance of Fire Suppression
b. 21 05 05 Selective Demolition for Fire Suppression
c. 21 05 13 Common Motor Reg. for Fire Suppression Equipment
d. 21 05 16 Expansion Fittings & Loops for Fire-Suppression Piping
e. 21 06 17 Sleeves & Sleeve Seals for Fire-Suppression Piping
f. 21 05 19 Meters & Gages for Fire- Suppression System
g. 21 05 23 General Duty Valves for Water based Fire-Suppression Pipe
h. 21 05 29 Hangers & Supports for Fire-Suppression P & E
i. Seismic Controls for Fire-Suppression Piping & Equipment
j. 21 05 53 Identification for Fire Suppression Piping & Equipment
k. Schedule for Fire Suppression
l. Commissioning of Fire Suppression
m. Instrumentation & Control for Fire-Suppression Systems
n. Fire Suppression Standpipes
o. Fire- Suppression Sprinkler System
p. Fire-Suppression Pressure Maintenance Pumps
q. Fire- Extinguishing Systems
r. Carbon-Dioxide Fire-Extinguishing Systems
s. 1Clean-Agent Fire-Extinguishing Systems
t. Wet-Chemical Fire-Extinguishing Systems
u. Dry-Chemical Fire-Extinguishing Systems
v. Centrifugal Fire Pumps
w. Vertical-Turbine Fire Pumps
x. Positive-Displacement Fire Pumps
y. Fire Pump Accessories

 

2. Plumbing Systems (Division 22) Subsystems
a. Division 22 05 19 Meters and Gages for Plumbing Piping
b. Division 22 09 00 Instrumentation & Control for Plumbing
c. Division 22 51 23 Swimming Pool Equipment Controls
d. Division 22 52 23 Fountain Equipment Controls

 

3. Heating, Ventilating and Air Conditioning (Division 23) Subsystems
a. Metasys Building Automation
b. Air Handling Units
c. Chillers
d. Terminal Equipment (VAV, FCU, etc..)
e. Fans
f. Grills, Registers & Diffusers
g. Variable Refrigerant Flow
h. Chilled Beams
i. Underfloor air distribution systems
j. 23 08 00 Commissioning of HVAC
k. 23 09 00 Instrumentation and Control for HVAC Division
l. 23 01 90 Diagnostic Systems for HVAC

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 11 [Design Assist Services Agreement]

EXECUTION VERSION

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4. Integrated Automation (Division 25)

 

5. Electrical (Division 26) Subsystems
a. Simplex Fire Alarm and Detection
b. Mass Notification
c. Distributed Energy Storage (DES)
d. Housekeeping Controls
e. Command/Control Room Infrastructure/Connectivity
f. Lighting Controls
g. Credentialing
h. Shades Controls
i. Parking/Valet Controls
j. 26 05 19 Low-Voltage Electrical Power Conductors and Cables
k. 26 05 23 Control-Voltage Electrical Power Cables
l. 26 09 17 Programmable Controllers
m. 26 09 19 Enclosed Contactors
n. 26 09 23 Lighting Control Devices
o. 26 09 43 Network Lighting Controls
p. 26 09 43.13 Digital-Network Lighting Controls
q. 26 09 43.16 Addressable Luminaire Lighting Controls
r. 26 09 43.19 Wireless Network Lighting Controls
s. 26 09 43.23 Relay-Based Lighting Controls
t. 26 29 00 Low-Voltage Controllers
u. 26 33 00 Battery Equipment

 

6. Communications (Division 27) Subsystems
a. Village Infrastructure/Connectivity to Support AV
b. Stadium and COP LED Displays and Scoreboards
c. Infrastructure to Support League Specialty Technology Requirements
d. Campus Radio and Repeater Systems
e. Infrastructure (Data/Voice/Video)
f. Wi-Fi (HD)
g. Data Center Infrastructure/Connectivity
h. DAS – Cell and Radio
i. RF/RTLS
j. Village specialty technology “FFE” Systems
i. IPTV Infrastructure/Connectivity
ii. Digital Signage Infrastructure/Connectivity
iii. Broadcast/Control Room Infrastructure/Connectivity
iv. PoS Infrastructure/Connectivity
v. Ticketing Infrastructure/Connectivity
vi. Exhibit Lighting Controls
vii. Bluetooth Beacon Technology
viii. Wayfinding Infrastructure/Connectivity
ix. Room Access
x. NOC Infrastructure/Connectivity
xi. Patient Wanders

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 11 [Design Assist Services Agreement]

EXECUTION VERSION

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k. 27 10 00 Structured Cabling
l. 27 42 13 Point of Sale Systems
m. 27 42 16 Transportation Information Display Systems
n. 27 42 19 Public Information Systems
o. 27 53 16 Infrared and Radio Frequency Tracking Systems
p. 27 53 19 Internal Cellular, Paging, and Antenna Systems

 

7. Electronic Safety and Security (Division 28) Subsystems
a. Village Security and Access Controls
b. Village Life Safety
c. 28 00 00 Electronic Safety and Security
d. 28 10 00 Access Control
e. 28 20 00 Video Surveillance
f. 28 30 00 Security Detection, Alarm, and Monitoring
g. 28 40 00 Life Safety

 

8. Process Heating, Cooling and Drying Equipment (Division 42)

 

9. Water and Wastewater Equipment (Division 46)

 

10. Electrical Power Generation (Division 48) Subsystems
a. 48 17 13 Electrical Power Generation Batteries
b. 48 19 13 Electrical Power Generation Battery Charging Equipment
c. 48 19 16 Electrical Power Generation Inverters
d. 48 19 23 Electrical Power Generation Transformers
e. 48 19 26 Electrical Power Generation Voltage Regulators
f. 48 70 00 Electrical Power Generation Testing
g. 48 71 00 Electrical Power Generation Test Equipment

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 11 [Design Assist Services Agreement]

EXECUTION VERSION

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PRODUCT CATEGORY EXCLUSIONS

 

The following sub-categories are excluded from the list of categories where JCI shall be entitled to manage, competitively bid or provide equipment, with respect to the Project:

 

§ Tenant provided technologies in tenant spaces
§ Village or Museum website and application(s)
§ Medical systems
§ Software systems outside of JCI’s OEM systems where specified
§ Telecommunications/VOIP and directly related systems
§ Low Voltage pathways, conduits, cable supports, innerducts, and line voltage power systems.
§ Other technology sub-categories that are not a core business to JCI
§ Categories not listed in the preceding section

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 11 [Design Assist Services Agreement]

EXECUTION VERSION

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Exhibit C

 

Additional Terms and Conditions to Be Governed in the JCI Subcontract(s)

 

JCI’s obligations thereunder may include:

 

o Construction:

 

§ Facilitate weekly and monthly construction meetings that must be attended by the technology vendors & subcontractors

 

§ Perform work designated as approved for self-performance.

 

§ Coordinate storage, onsite trailer, and other pre-construction coordination items

 

§ Identify bonded warehouse and delivery locations onsite

 

§ Define document control practices and expectations (submittal, O&M, As-built, & Commissioning)

 

§ Verify power and mechanical infrastructures support technology systems and infrastructures; "Post-Award". Make solution recommendations for revisions to Technology systems.

 

§ Assist in management of construction RFI’s through-out construction for all technology systems.

 

§ Assist in management of contingency spending and change orders for all technology systems.

 

§ Provide TSAV and Welty a monthly report tracking JCI’s identified savings, alternative savings, and project cost to date.

 

§ Prepare and execute pre and final commissioning.

 

§ Assist in coordination of all owner training sessions, recording of training as requested.

 

§ Prepare a composite as-built and O&M package for all technology systems in JCI’s scope of work.

 

o Post-Construction

 

§ Value Reporting – a customer satisfaction report based on key performance indicators (KPI) giving feedback to JCI on meeting the outcome expectations of VREA. These KPI’s were developed during the ideation process during the preconstruction phase of services. This feedback will allow JCI to ensure Owner’s outcomes have been meet or exceeded.

 

§ Provide a single point of contact through-out warranty for all technology systems in scope.

 

§ Prepare post-construction service agreements with technology vendors and subcontractors in scope. Review and make recommendations to Owner based on the information/costing gathered during the bid process and need of Owner.

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 11 [Design Assist Services Agreement]

EXECUTION VERSION

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Schedule 12

 

Project Labor Agreement

 

PARTIES AGREE THAT ONCE PROJECT LABOR AGREEMENT FINALIZED AND EXECUTED IT SHALL BE ADDED TO THE AGREEMENT BY CHANGE ORDER

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 12 [Project Labor Agreement]

EXECUTION VERSION

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SCHEDULE 13

 

PLANNED SERVICES AGREEMENT

 

[Redacted]

 

 

 

 

 

 

 

 

 

 

 

 

PROPRIETARY AND CONFIDENTIAL.

ALL RIGHTS RESERVED.

TAAS – Schedule 13 [Planned Services Agreement]

EXECUTION VERSION

 

Exhibit 31.1

 

CERTIFICATION PURSUANT TO SARBANES–OXLEY ACT OF 2002

 

I, Michael Crawford, certify that:

 

1. I have reviewed this quarterly report on Form 10–Q of Hall of Fame Resort & Entertainment Company;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 4, 2020 By: /s/ Michael Crawford
    Michael Crawford
    Chief Executive Officer
    (Principal Executive Officer)

 

 

Exhibit 31.2

 

CERTIFICATION PURSUANT TO SARBANES–OXLEY ACT OF 2002

 

I, Jason Krom, certify that:

 

1. I have reviewed this quarterly report on Form 10–Q of Hall of Fame Resort & Entertainment Company;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 4, 2020 By: /s/ Jason Krom
    Jason Krom
    Chief Financial Officer
    (Principal Financial Officer)

 

 

Exhibit 32

 

CERTIFICATION PURSUANT TO SECTION 906
OF THE SARBANES–OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Hall of Fame Resort & Entertainment Company (the “Company”) on Form 10-Q for the quarter ended September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

     

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: November 4, 2020 By: /s/ Michael Crawford
    Michael Crawford
    Chief Executive Officer
    (Principal Executive Officer)

 

Date: November 4, 2020 By: /s/ Jason Krom
    Jason Krom
    Chief Financial Officer
    (Principal Financial Officer)