UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 1, 2022
HALL OF FAME RESORT & ENTERTAINMENT COMPANY
(Exact name of registrant as specified in its charter)
Delaware | 001-38363 | 84-3235695 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
2626 Fulton Drive NW
Canton, OH 44718
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (330) 458-9176
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) |
Name of each exchange on which registered | ||
Capital Market | ||||
Warrants to purchase 1.421333 shares of Common Stock | HOFVW | Nasdaq Capital Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
Item 1.01 Entry into a Material Definitive Agreement.
Amendment Number 6 to Term Loan
On March 1, 2022, CH Capital Lending, LLC (“CH Capital Lending”), as assignee, entered into an Assignment of Loan and Loan Documents (the “Assignment of Loan and Loan Documents”) with Aquarian Credit Funding LLC (“Aquarian”), as administrative agent, Investors Heritage Life Insurance Company (“IHLIC”), as a lender, pursuant to which Aquarian and IHLIC sold and assigned to CH Capital Lending their respective interests in the $7.4 million term loan (the “Term Loan”) and related loan documents under term loan agreement, dated as of December 1, 2020 (as amended, the “Term Loan Agreement”), among Hall of Fame Resort & Entertainment Company (the “Company”), HOF Village Newco, LLC (“Newco”), and certain of Newco’s subsidiaries, as borrowers, and the lenders party thereto, and Aquarian Credit Funding LLC (“Aquarian”), as lead arranger, administrative agent, collateral agent and representative of the lenders, as amended by (i) Amendment Number 1 to Term Loan Agreement, dated as January 28, 2021; (ii) Amendment Number 2 to Term Loan Agreement, dated as of February 15, 2021; (iii) Amendment Number 3 to Term Loan Agreement, dated as of August 30, 2021; (iv) Amendment Number 4 to Term Loan Agreement, dated as of August 30, 2021; and (v) Amendment Number 5 to Term Loan Agreement, dated as of December 15, 2021.
On March 1, 2022, the Company entered into Amendment Number 6 to Term Loan Agreement (“Amendment Number 6”) by and among the Company, Newco, HOF Village Stadium, LLC (“HOF Stadium”), and HOF Village Youth Fields, LLC (“HOF Youth Fields”), as borrowers, and CH Capital Lending, as administrative agent and lender. Under Amendment Number 6, the maturity date of the Term Loan was extended to March 31, 2024. Also under Amendment Number 6, the Term Loan was made convertible into shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”), at a conversion price of $1.50, subject to adjustment. The conversion price is subject to a weighted-average antidilution adjustment. Certain current and historical fees and expenses were added to the principal amount of the Term Loan so that the new principal amount is $8,347,839. Amendment Number 6 increased the interest rate from 10% to 12%. Of such 12% per annum interest: (i) 8% per annum shall be payable monthly and (ii) 4% per annum shall be deferred and payable on the maturity date.
Prior to Amendment Number 6, the Term Loan was secured by the Tom Benson Hall of Fame Stadium on the Company’s campus, the Company’s membership interests in Newco, and Newco’s membership interests in HOF Stadium and Uniform Commercial Code property related to the Stadium along with bank accounts related to the Stadium and the Loan Proceeds. Amendment Number 6 added to the collateral for the Term Loan (i) the youth fields on the Company’s campus, (ii) Newco’s membership interests in HOF Youth Fields, and (iii) Uniform Commercial Code property related to the Youth Fields. All such collateral also now secures not only the Term Loan under the Term Loan Agreement but also the loans under the Amended Assigned IRG Note , the Amended Assigned JKP Note and the JKP Promissory Note (as such terms are defined below).
As part of the consideration for Amendment Number 6: (i) the Company issued in a transaction exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”): (A) 330,000 shares of Common Stock to CH Capital Lending (“Term Loan Commitment Fee Shares”), and (B) a Series E warrant to purchase 1,000,000 shares of Common Stock to CH Capital Lending (the “Term Loan Warrants”), (ii) the Company shall, subject to approval of its board of directors, create a series of preferred stock, to be known as 7.00% Series C Convertible Preferred Stock (“Series C Preferred Stock”), and, upon the request of CH Capital Lending, exchange each share of the Company’s 7.00% Series B Convertible Preferred Stock, par value $0.0001 per share (“Series B Preferred Stock”), that is held by CH Capital Lending for one share of Series C Preferred Stock, and (iii) the Company and CH Capital Lending are amending and restating Series C Warrants and Series D Warrants that the Company issued to CH Capital Lending, all as set forth in Amendment Number 6.
Term Loan Warrants
The Term Loan Warrants have an exercise price of $1.50 per share, subject to adjustment. The exercise price is subject to a weighted-average antidilution adjustment. The Term Loan Warrants may be exercised from and after March 1, 2023, subject to certain terms and conditions set forth in the Term Loan Warrants. Unexercised Term Loan Warrants will expire on March 1, 2027. The Term Loan Warrants shall be cancelled without any further action on the part of the Company or the holder, in the event that the Company repays in full on or before March 1, 2023, the Term Loan.
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Amended and Restated Series C Warrants
The Amended and Restated Series C Warrants extend the term of the Series C Warrants to March 1, 2027. The exercise price of $1.40 per share doesn’t change, but the amendments subject the exercise price to a weighted-average antidilution adjustment. The amendments also remove provisions that previously caused the Series C Warrants to be accounted for as a liability. The Amended and Restated Series C Warrants can be accounted for as equity.
Amended and Restated Series D Warrants issue to CH Capital Lending
The Amended and Restated Series D Warrants issued to CH Capital Lending extend the term of such Series D Warrants to March 1, 2027. The exercise price of $6.90 per share doesn’t change, but the amendments subject the exercise price to a weighted-average antidilution adjustment.
First Amended and Restated Promissory Note with IRG, LLC
On November 23, 2021, the Company issued to Industrial Realty Group, LLC (“Original Lender”) a promissory note in the original principal amount of $8,500,000 (the “Original Note”). Pursuant to an Assignment of Promissory Note, dated March 1, 2022, Original Lender assigned (a) a one-half (½) interest in the Original Note to IRG, LLC (the “IRG Split Note”) and (b) a one-half (½) interest in the Original Note to JKP Financial, LLC (the “JKP Split Note”).
On March 1, 2022, the Company entered into a First Amended and Restated Promissory Note with IRG, LLC, which amends and restates the IRG Split Note (the “Amended Assigned IRG Note”). The Amended Assigned IRG Note extended the maturity to March 31, 2024. Under the Amended Assigned IRG Note, the principal and accrued interest are convertible into shares of Common Stock at a conversion price of $1.50, subject to adjustment. The conversion price is subject to a weighted-average antidilution adjustment. The principal amount of the Amended Assigned IRG Note is $4,273,543.46.
As part of the consideration for the Amended Assigned IRG Note, the Company issued in a transaction exempt from registration pursuant to Section 4(a)(2) of the Securities Act: (i) 125,000 shares of Common Stock to IRG, LLC (“IRG Split Note Commitment Fee Shares”), and (ii) a Series E Warrant to purchase 500,000 shares of Common Stock to IRG, LLC (the “IRG Split Note Warrants”).
IRG Split Note Warrants
The IRG Split Note Warrants have an exercise price of $1.50 per share, subject to adjustment. The exercise price is subject to a weighted-average antidilution adjustment. The IRG Split Note Warrants may be exercised from and after March 1, 2023, subject to certain terms and conditions set forth in the IRG Split Note Warrants. Unexercised IRG Split Note Warrants will expire on March 1, 2027. The IRG Split Note Warrants shall be cancelled without any further action on the part of the Company or the holder, in the event that the Company repays in full, on or before March 1, 2023, the Amended Assigned IRG Note.
First Amended and Restated Promissory Note with JKP Financial, LLC
On March 1, 2022, the Company entered into a First Amended and Restated Promissory Note with JKP Financial, LLC, which amends and restates the JKP Split Note (the “Amended Assigned JKP Note”). The Amended Assigned JKP Note extended the maturity to March 31, 2024. Under the Amended Assigned JKP Note, the principal and accrued interest are convertible into shares of Common Stock at a conversion price of $1.09, subject to adjustment. The conversion price is subject to a weighted-average antidilution adjustment. The principal amount of the Amended Assigned IRG Note is $4,273,543.46.
As part of the consideration for the Amended Assigned JKP Note, the Company issued in a transaction exempt from registration pursuant to Section 4(a)(2) of the Securities Act: (i) 125,000 shares of Common Stock to JKP Financial, LLC (“JKP Split Note Commitment Fee Shares”), and (ii) a Series F Warrant to purchase 500,000 shares of Common Stock to JKP Financial, LLC (the “JKP Split Note Warrants”).
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JKP Split Note Warrants
The JKP Split Note Warrants have an exercise price of $1.09 per share, subject to adjustment. The exercise price is subject to a weighted-average antidilution adjustment. The JKP Split Note Warrants may be exercised from and after March 1, 2022, subject to certain terms and conditions set forth in the JKP Split Note Warrants. Unexercised JKP Split Note Warrants will expire on March 1, 2027.
Second Amendment to JKP Promissory Note
On March 1, 2022, the Company entered into the Joinder and Second Amendment to Secured Cognovit Promissory Note (the “Second Amendment to JKP Promissory Note”), by and among (a) Newco, and HOF Village Hotel II, LLC (“Hotel II”), the makers (b) the Company; and (c) JKP Financial, LLC, which amends the Secured Cognovit Promissory Note, dated as of June 19, 2020, originally executed by Hotel II and by HOF Village, LLC (“HOF Village”), in favor of JKP Financial, LLC, as assigned by HOF Village to Newco pursuant to that certain Contribution Agreement dated as of June 30, 2020, by and between HOF Village and Newco, and as amended by that certain First Amendment to Secured Promissory Note, dated as of December 1, 2020 (as so assigned and amended, the “JKP Promissory Note”).
The Second Amendment to JKP Promissory Note (i) revises the outstanding principal balance (the “JKP Promissory Loan”) of the JKP Promissory Note to include interest thereunder that has accrued and has not been paid as of March 1, 2022, and (ii) extends the maturity of the JKP Promissory Note to March 31, 2024. The Second Amendment to JKP Promissory Note amends the JKP Promissory Note to be convertible into shares of Common Stock at a conversion price of $1.09, subject to adjustment. The conversion price is subject to a weighted-average antidilution adjustment.
As part of the consideration for the Second Amendment to JKP Promissory Note, the Company issued in a transaction exempt from registration pursuant to Section 4(a)(2) of the Securities Act: (i) 280,000 shares of Common Stock to JKP Financial, LLC (“JKP Note Commitment Fee Shares”), and (ii) a Series F Warrant to purchase 1,000,000 shares of Common Stock to JKP Financial, LLC (the “JKP Promissory Note Warrants”).
JKP Promissory Note Warrants
The JKP Promissory Note Warrants have an exercise price of $1.09 per share, subject to adjustment. The exercise price is subject to a weighted-average antidilution adjustment. The JKP Promissory Note Warrants may be exercised from and after March 1, 2022, subject to certain terms and conditions set forth in the JKP Promissory Note Warrants. Unexercised JKP Promissory Note Warrants will expire on March 1, 2027.
Letter Agreement
On March 1, 2022, the Company entered into a letter agreement with Stuart Lichter (the “Letter Agreement”). Under the Letter Agreement, when Mr. Lichter provides a guaranty for a new loan up to $4 million (the “New Loan”), the Company will issue to Mr. Lichter in a transaction exempt from registration pursuant to Section 4(a)(2) of the Securities Act, (i) 125,000 shares of Common Stock (“Letter Agreement Commitment Fee Shares” and, together with the Term Loan Commitment Fee Shares, the JKP Split Note Commitment Fee Shares, JKP Split Note Commitment Fee Shares and the JKP Note Commitment Fee Shares, the “Commitment Fee Shares”), and (ii) a Series G Warrant to purchase 125,000 shares of Common Stock (the “Letter Agreement Warrants”). The exercise price of the Letter Agreement Warrants will be set in connection with the closing of the New Loan. The exercise price of the Letter Agreement Warrants is subject to a weighted-average antidilution adjustment.
Registration Rights Agreement
On March 1, 2022, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with CH Capital Lending, IRG, LLC, JKP Financial, LLC and Stuart Lichter (the “Investors”). Pursuant to the Registration Rights Agreement, the Company has agreed to provide to the Investors certain customary resale registration rights with respect to (i) Commitment Fee Shares, (ii) the shares of Common Stock issuable upon exercise of the Term Loan Warrants, the IRG Split Note Warrants, the JKP Split Note Warrants, the JKP Promissory Note Warrants, and the Letter Agreement Warrants, (iii) the shares of Common Stock issuable upon conversion of the principal and accumulated but unpaid interest under the Term Loan Agreement, the Amended Assigned IRG Note, the Amended Assigned JKP Note, and the JKP Promissory Note, and (iv) the shares of Common Stock issuable upon conversion of the Series C Preferred Stock.
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Nasdaq 19.99% Cap
Notwithstanding anything to the contrary contained in the Transaction Documents (defined below), as set forth in the Transaction Documents, the total cumulative number of shares of Common Stock that may be issued to CH Capital Lending, LLC, IRG, LLC, JKP Financial, LLC and Stuart Lichter under the other Transaction Documents may not exceed the requirements of Nasdaq Listing Rule 5635(d) (“Nasdaq 19.99% Cap”), except that such limitation will not apply following Approval (defined below). If the number of shares of Common Stock issued to CH Capital Lending, LLC, IRG, LLC, JKP Financial, LLC and Stuart Lichter under the Transaction Documents reaches the Nasdaq 19.99% Cap, so as not to violate the 20% limit established in Listing Rule 5635(d), the Company, at its election, will use reasonable commercial efforts to obtain stockholder approval of the Transaction Documents and the shares of Common Stock to be issued thereunder, if necessary, in accordance with the requirements of Nasdaq Listing Rule 5635(d) (the “Approval”). “Transaction Documents” means (i) Amendment Number 6, (ii) Amended Assigned IRG Note, (iii) Amended Assigned JKP Note, (iv) Second Amendment to JKP Promissory Note, (v) Letter Agreement, (vi) Term Loan Warrants, (vii) Amended and Restated Series C Warrants, (viii) Amended and Restated Series D Warrants, (ix) the Certificate of Designations of 7.00% Series C Convertible Preferred Stock, par value $0.0001 per share, of the Company, (x) IRG Split Note Warrants, (xi) JKP Split Note Warrants, (xii) JKP Promissory Note Warrants, and (xiii) Letter Agreement Warrants.
In connection with the execution of Amendment Number 6, Amended Assigned IRG Note, Amended Assigned JKP Note, and Second Amendment to JKP Promissory Note, the Company paid customary fees and expenses.
The foregoing descriptions of (i) Amendment Number 6, (ii) Amended Assigned IRG Note, (iii) Amended Assigned JKP Note, (iv) the Second Amendment to JKP Promissory Note, (v) the Term Loan Warrants and the IRG Split Note Warrants, (vi) the JKP Split Note Warrants and the JKP Promissory Note Warrants, (vii), the Amended and Restated Series C Warrants, (viii) the Amended and Restated Series D Warrants, and (ix) the Registration Rights Agreement do not purport to be complete and are subject to, and qualified in their entirety by, the full text of such documents, which are attached as Exhibits 10.1-10.9, respectively, to this Current Report on Form 8-K, and are incorporated herein by reference.
First Amendment to Construction Loan
On March 1, 2022, HOF Village Hotel II, LLC, a subsidiary of the Company, entered into First Amendment to Loan Documents (“First Amendment to Construction Loan”) with Stuart Lichter, as guarantor, and ErieBank, a division of CNB Bank, a wholly owned subsidiary of CNB Financial Corporation, as lender (“ErieBank”). First Amendment to Construction Loan amended the Construction Loan Agreement dated September 14, 2020. First Amendment to Construction Loan extended the maturity to September 13, 2023.
The foregoing description of First Amendment to Construction Loan does not purport to be complete and is subject to, and qualified in its entirety by, the full text of First Amendment to Construction Loan, which is attached as Exhibit 10.10 to this Current Report on Form 8-K, and is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 regarding Amendment Number 6, Amended Assigned IRG Note, Amended Assigned JKP Note, Second Amendment to JKP Promissory Note and First Amendment to Construction Loan is incorporated herein by reference.
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Item 3.02 Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
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SIGNATURE
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 hereunto duly authorized.
HALL OF FAME RESORT & ENTERTAINMENT COMPANY | ||
By: | /s/ Michael Crawford | |
Name: Michael Crawford | ||
Title: President and Chief Executive Officer | ||
Dated: March 2, 2022 |
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Exhibit 10.1
AMENDMENT NUMBER 6 TO TERM LOAN AGREEMENT
among
HALL OF FAME RESORT & ENTERTAINMENT COMPANY AND THE OTHER PERSONS SIGNATORY HERETO AS BORROWERS
as Borrowers
and
CH CAPITAL LENDING, LLC,
as Administrative Agent
and
CH CAPITAL LENDING, LLC,
as Lender
dated as of March 1, 2022
AMENDMENT NUMBER 6 TO TERM LOAN AGREEMENT
This AMENDMENT NUMBER 6 TO TERM LOAN AGREEMENT (this “Amendment”) dated as of March 1, 2022 (the “Effective Date”) is made by and among HALL OF FAME RESORT & ENTERTAINMENT COMPANY, a Delaware corporation (“HOF Resort & Entertainment”), HOF VILLAGE NEWCO, LLC, a Delaware limited liability company (“Newco”), HOF VILLAGE STADIUM, LLC, a Delaware limited liability company (“HOF Stadium”), and HOF VILLAGE YOUTH FIELDS, LLC, a Delaware limited liability company (“HOF Youth Fields”; each of HOF Resort & Entertainment, Newco, HOF Stadium, and HOF Youth Fields is individually referred to herein as a “Borrower,” and they are collectively referred to herein as “Borrowers”), CH CAPITAL LENDING, LLC, a Delaware limited liability company, as the current Administrative Agent for the current Lender (in such capacity, “Administrative Agent”) and CH CAPITAL LENDING, LLC, a Delaware limited liability company, as the current Lender (in such capacity, “Lender”).
PRELIMINARY STATEMENTS:
A. Borrowers, Administrative Agent, and Lender are parties to the Term Loan Agreement, dated as of December 1, 2020, as amended by the Amendment Number 1 to Term Loan Agreement dated January 28, 2021, Amendment Number 2 to Term Loan Agreement dated February 15, 2021, Amendment Number 3 to Term Loan Agreement dated August 30, 2021, Amendment Number 4 to Term Loan Agreement dated August 30, 2021, and Amendment Number 5 to Term Loan Agreement dated December 15, 2021, as assigned to Administrative Agent and Lender on the Effective Date pursuant to that certain Assignment of Loan and Loan Documents, dated as of the Effective Date, by and among Aquarian Credit Funding LLC, as the previous Administrative Agent, Investors Heritage Life Insurance Company, as the previous Lender, and CH Capital Lending, LLC, as Administrative Agent and Lender, as affected by that certain Assumption and Joinder Agreement, dated as of the Effective Date, executed and delivered by HOF Youth Fields to Administrative Agent and Lender (all of the foregoing, collectively, the “Existing Loan Agreement”). The Existing Loan Agreement, as amended by this Amendment, and as it may be further amended, restated, supplemented, waived, assigned, or otherwise modified from time to time is referred to herein as the “Loan Agreement. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Loan Agreement.
B. The outstanding principal balance of the Loan, as of the date prior to this Amendment, was $7,400,000.00.
C. Administrative Agent, Borrowers, and Lender desire to amend the Loan Agreement as set forth below.
D. As part of the consideration for this Amendment, (i) 330,000 shares of HOF Resort & Entertainment’s common stock, par value $0.0001 per share (the “HOFREC Common Stock”), shall be issued to Lender, (ii) Series E Warrants to purchase 1,000,000 shares of HOFREC Common Stock shall be issued to Lender, (iii) HOF Resort & Entertainment shall, subject to approval of its board of directors, create a series of preferred stock, to be known as 7.00% Series C Convertible Preferred Stock (“Series C Preferred Stock”), and, upon the request of Lender, exchange each share of 7.00% Series B Convertible Preferred Stock, par value $0.0001 per share (“Series B Preferred Stock”), of HOF Resort & Entertainment that is held by Lender for one share of Series C Preferred Stock, (iv) HOF Resort & Entertainment and Lender are amending and restating Series C Warrants and Series D Warrants , all as set forth in this Amendment.
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NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and subject to the conditions set forth herein, the parties hereto hereby agree as follows:
SECTION 1. Definitions Restated. Section 1.01 of the Loan Agreement is hereby amended by deleting the following terms in their entirety and replacing them with the following:
“Existing Warrants” shall mean warrants issued by Lead Borrower pursuant to (a) the terms of the Note Purchase Agreement in which Lead Borrower issued to the noteholders listed on the signature pages thereto an aggregate principal amount of $20,721,293 of 8.00% convertible notes due 2025, by and between Lead Borrower and the noteholders listed on the signature pages thereto, exercisable for shares of Lead Borrower’s HOFREC Common Stock on or prior to March 31, 2025 upon payment of the then-effective exercise price, (b) the Series C Warrants, (c) the Series D Warrants, (d) the Series E Warrants, and (e) the Series F Warrants.
“IRG 2021 Note” shall mean that certain Promissory Note, dated November 23, 2021, in the original principal amount of $8,500,000, from Lead Borrower payable to the order of Industrial Realty Group, LLC, a Nevada limited liability company. Effective as of March 1, 2022, such Promissory Note (a) has been assigned to IRG, LLC (as to a one-half (½) interest) and to JKP (as to a one-half (½) interest), pursuant to that certain Assignment of Promissory Note by and among Industrial Realty Group, LLC, JKP, and IRG, LLC, and (b) has been replaced, amended, and restated by the IRG Split Note and the JKP Split Note. For the avoidance of doubt, effective as of March 1, 2022, any references in the Loan Documents to the “IRG 2021 Note” shall be deemed to refer to the IRG Split Note and the JKP Split Note, collectively.
“JKP Note” shall mean, collectively, that certain Secured Cognovit Promissory Note, dated June 19, 2020, in the original principal amount of $7,000,000, (a) originally executed by HOFV Hotel II and HOFV (as makers) and payable to the order of JKP (as holder), (b) as assigned by HOFV to Newco pursuant to that certain Contribution Agreement dated as of June 30, 2020, by and between HOFV and Newco, (c) as amended by that certain First Amendment to Secured Promissory Note, dated as of December 1, 2020, by and among Newco, HOFV Hotel II, and JKP, (d) as amended by the Second Amendment to JKP Note).
“Loan Commitment” shall mean the commitment of a Lender to make or otherwise fund Loans, and “Loan Commitments” shall mean such commitments of all of Lenders in the aggregate. The amount of each Lender’s Loan Commitment, if any, is set forth on Schedule 2.01 or in the applicable Assignment and Acceptance (or the Affiliated Lender Assignment and Acceptance), subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Loan Commitment, as of March 1, 2022 is $8,347,838.59.
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“Maturity Date” shall mean the earlier of (i) March 31, 2024 (the “Stated Maturity Date”) or (ii) the date that the Loan shall become due and payable hereunder, whether by acceleration or otherwise.
“Mortgaged Properties” shall mean (a) the subleasehold estate in those certain parcels of real property described on Exhibit A attached to Amendment Number 6 and made a part hereof, and (b) all other collateral encumbered by the Mortgages.
“Mortgages” shall mean, that certain first priority Fee and Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing, recorded in the real property records of Stark County, Ohio on December 1, 2021 as Instrument Number 202012020063155, (a) as modified by that certain Partial Release of Mortgage, recorded in the real property records of Stark County, Ohio on December 17, 2021 as Instrument Number 202112170065680, (b) as assigned to CH Capital Lending, LLC, as Administrative Agent, by that certain Assignment of Open-End Fee and Leasehold Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated as of March 1, 2022, to be recorded in the real property records of Stark County, Ohio, (c) as amended by that certain First Amendment to and Spreader of Open-End Fee and Leasehold Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated as of March 1, 2022, substantially in the form of Exhibit B attached to Amendment Number 6, to be recorded in the real property records of Stark County, Ohio, and (d) as it may be further amended, restated, supplemented, waived, assigned, or otherwise modified from time to time, as it may be further amended, restated, supplemented, waived, assigned, or otherwise modified from time to time, encumbering the Mortgaged Properties as security for the Loan and other Obligations.
“Permitted Dividends/Distributions” shall mean all dividends, distributions and payments due to holders of Capital Stock of Lead Borrower pursuant to any Permitted Equity Issuance, including but not limited to Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock.
“Permitted Equity Issuance” means any Equity Issuance of (a) up to 24,731,195 shares of HOFREC Common Stock issuable upon the exercise of Existing Warrants, (b) up to 5,812,727 shares of HOFREC Common Stock under the 2020 Omnibus Incentive Plan provided that the number of shares of HOFREC Common Stock for such purpose may be increased (if the 2020 Omnibus Incentive Plan is modified to allow it) by up to 2,500,000 additional shares of common stock, (c) up to 10,645,000 shares of HOFREC Common Stock for future issuance upon conversion or redemption of the PIPE Notes, including approximately 3,000,000 shares of such common stock issuable upon exercise of warrants that would be issued in connection with such redemption pursuant to the PIPE Note Redemption Warrant Agreement and PIPE Note Purchase Agreement, (d) up to 10,036,925 shares of HOFREC Common Stock issuable upon the exercise of Series C Warrants, (e) up to 75,000 shares of common stock reserved for future issuance as payment to Brand X under the Brand X Services Agreement, (f) any Equity Issuance required pursuant to the terms of the Employment Agreements or employment offer letters, if any, (g) up to 2,450,980 shares of HOFREC Common Stock issuable upon the exercise of Series D Warrants, (h) the Nov 2020 Equity Raise, (i) any PEIC Raise, (j) up to 52,800 shares of Series A Preferred Stock, (k) up to 15,200 shares of Series B Preferred Stock and up to 4,901,961 shares of HOFREC Common Stock issuable upon conversion of Series B Preferred Stock, (l) 330,000 shares of HOFREC Common Stock issued to Lender as of March 1, 2022, (m) up to 15,000 shares of Series C Preferred Stock and up to 10,000,000 shares of HOFREC Common Stock issuable upon conversion of Series B Preferred Stock, (n) up to 1,500,000 shares of HOFREC Common Stock issuable upon the exercise of Series E Warrants, (o) up to 1,500,000 shares of HOFREC Common Stock issuable upon the exercise of Series F Warrants, (p) up to 125,000 shares of HOFREC Common Stock issuable upon the exercise of Series G Warrants, (q) 125,000 shares of HOFREC Common Stock issued to IRG, LLC as of March 1, 2022, (r) 405,000 shares of HOFREC Common Stock issued to JKP Financial, LLC as of March 1, 2022, (s) 125,000 shares of HOFREC Common Stock to be issued to Stuart Lichter pursuant to a letter agreement dated March 1, 2022, between the Lead Borrower and Stuart Lichter, (t) HOFREC Common Stock issuable upon conversion of the Loan, (u) HOFREC Common Stock issuable upon conversion of the IRG Split Note, (v) HOFREC Common Stock issuable upon conversion of the JKP Split Note, (w) HOFREC Common Stock issuable upon conversion of the JKP Note, (x) up to $50 million in shares of HOFREC Common Stock issued under Lead Borrower’s “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act and (y) any Equity Issuance expressly approved by Administrative Agent in writing, in its sole and absolute discretion.
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“Permitted Indebtedness” shall mean (a) the PIPE Notes, (b) any Indebtedness pursuant to the EME Customer Contract to make EME Installment Payments, (c) the Existing Guarantees, (d) the TDD BANs (and any Guarantee issued by any Borrower required in connection with the TDD BANs), (e) the TIF Bonds, (f) all Indebtedness pursuant to Permitted Redemption Rights, (g) the JKP Note, (h) the Mezzanine (IRG) Note, (i) the IRG Split Note, (j) the JKP Split Note, (k) the ErieBank Loan, (l) the PACE Funds, (m) the EB-5 Guaranty, (n) the Buckeye Loan, and (o) any other Indebtedness expressly approved by Administrative Agent in writing, in its sole and absolute discretion.
SECTION 2. New Definitions. Section 1.01 of the Loan Agreement is hereby amended by adding the following terms:
“Amendment Number 6” means that certain Amendment Number 6 to Term Loan Agreement, dated as of March 1, 2022, by and among Borrowers, Administrative Agent, and Lender (amending this Agreement).
“Buckeye Loan” shall mean the loan from Buckeye Community Bank to HOF Center for Performance, LLC and potentially Lead Borrower or Newco in some capacity, in the approximate amount of $4,000,000 to be secured by the project commonly known as the Center for Performance.
“Certificate of Designations of Series B Convertible Preferred Stock” shall mean Lead Borrower’s Certificate of Designations of 7.00% Series B Convertible Preferred Stock, par value $0.0001 per share, as amended and/or restated from time to time.
“Certificate of Designations of Series C Convertible Preferred Stock” shall mean Lead Borrower’s Certificate of Designations of 7.00% Series C Convertible Preferred Stock, par value $0.0001 per share, as amended and/or restated from time to time.
“EB-5 Guaranty” shall mean the guaranty, dated January 15, 2022, made by Newco in favor of the EB-5 investing members of ADC LCR Hall of Fame II, LLC, in connection with subscriptions by ADC LCR Hall of Fame II, LLC for shares of Lead Borrower’s 7.00% Series A Cumulative Redeemable Preferred Stock.
“HOFV Hotel II” means HOF Village Hotel II, LLC, a Delaware limited liability company.
“IRG, LLC” means IRG, LLC, a Nevada limited liability company.
“IRG Split Note” means that certain First Amended and Restated Promissory Note, dated March 1, 2022, in the original principal amount of $4,273,543.46, executed and delivered by Lead Borrower (as borrower) and IRG, LLC (as lender).
“JKP Split Note” means that certain First Amended and Restated Promissory Note, dated March 1, 2022, in the original principal amount of $4,273,543.4, executed and delivered by Lead Borrower (as borrower) and JKP (as lender).
“Letter Agreement” shall mean the letter agreement, dated March 1, 2022, between Lead Borrower and Stuart Lichter.
“PACE Funds” shall mean the funds advanced under Energy Project Cooperative Agreement among the City of Canton, Ohio, the Canton Regional Energy Special Improvement District, Inc., CFE and PACE EQUITY LLC dated December 15, 2021.
“Second Amendment to JKP Note” shall mean that certain Joinder and Second Amendment to Promissory Note, dated March 1, 2022, by and among Newco, HOFV Hotel II, Lead Borrower, and JKP. Among other things, the Second Amendment to JKP Note increased the outstanding principal balance of the JKP Note to $8,394,836, as of March 1, 2022.
“Series B Preferred Stock” means Lead Borrower’s 7.00% Series B Convertible Preferred Stock, par value $0.0001 per share.
“Series C Preferred Stock” means Lead Borrower’s 7.00% Series C Convertible Preferred Stock, par value $0.0001 per share.
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“Series C Warrants” shall mean the amended and restated Series C warrant, dated March 1, 2022, to purchase 10,036,925 shares of HOFREC Common Stock, issued by Lead Borrower to CH Capital Lending, LLC.
“Series D Warrants” shall mean the amended and restated Series D warrant, dated March 1, 2022, to purchase 2,450,980 shares of HOFREC Common Stock, issued by Lead Borrower to CH Capital Lending, LLC.
“Series E Warrants” shall mean (i) the Series E warrant dated March 1, 2022, to purchase 1,000,000 shares of HOFREC Common Stock, issued by the Company to CH Capital Lending, LLC; and (ii) the Series E warrant, dated March 1, 2022, to purchase 500,000 shares of HOFREC Common Stock, issued by the Company to IRG, LLC.
“Series F Warrants” shall mean (i) the Series F warrant, dated March 1, 2022, to purchase 1,000,000 shares of HOFREC Common Stock, issued by the Company to JKP; and (ii) the Series F warrant, dated March 1, 2022, to purchase 500,000 shares of HOFREC Common Stock, issued by the Company to JKP.
“Series G Warrant” shall mean the Series G warrant to purchase 125,000 shares of HOFREC Common Stock to be issued by the Company to Stuart Lichter.
“Youth Fields Project Lease” shall mean that certain Project Lease, dated as of February 26, 2016, by and between the Stark County Port Authority, as it may be amended, restated, replaced, supplemented or otherwise modified from time to time solely with the prior written consent of Administrative Agent, in its sole and absolute discretion.
SECTION 3. Deleted Terms. The following terms defined in Section 1.01 of the Loan Agreement and all references thereto are hereby deleted: “Administrative Fee,” “Budget and Schedule,” “Control Agreements,” “Interest Reserve Account,” “Interest Reserve Account Control Agreement,” and “Yield Maintenance Premium.”
SECTION 4. Interest. Section 2.04(a) of the Loan Agreement is hereby deleted and replaced with the following:
“(a) Except as otherwise set forth herein, the Loans shall bear interest on the unpaid principal amount thereof from the date made through repayment (whether by acceleration or otherwise) thereof at 12% per annum, compounded monthly (the “Interest Rate”). Of such 12%-per-annum interest, (i) 8% per annum shall be payable monthly, in accordance with Section 2.04(e) of this Agreement, and (ii) 4% per annum shall be deferred and payable on the Maturity Date.”
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SECTION 5. Proceeds and Revenue. Sections 5.13 of the Loan Agreement are hereby deleted and replaced with the following:
“Borrowers shall deposit in the Proceeds Account any and all Net Cash Proceeds received by or on behalf of any Borrower as the result of any Asset Sale (other than any Excluded Asset Sale) or Recovery Event. Notwithstanding the foregoing, with respect to any cash proceeds received by any Borrower after the Closing Date in connection with any new Permitted Indebtedness, Permitted Equity Issuance, Sponsorship Collateral Loan or Series A Preferred Stock, as applicable, once the Required Repayment Percentage in respect of the same has been remitted to Administrative Agent, Borrowers shall not be required to deposit any of the remaining funds in the Proceeds Account.”
SECTION 6. Governing Law. Section 10.07 of the Loan Agreement is hereby deleted and replaced with the following:
“10.07 Governing Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF OHIO (WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS THAT WOULD RESULT IN THE APPLICATION OF LAWS OTHER THAN THE LAW OF THE STATE OF OHIO).”
SECTION 7. Jurisdiction; Consent to Service of Process. Sections 10.15(a) and 10.15(b) of the Loan Agreement is hereby deleted and replaced with the following:
“10.15 Jurisdiction; Consent to Service of Process.
(a) Borrowers hereby irrevocably and unconditionally submit, for themselves and their property, to the nonexclusive jurisdiction of any Ohio court or Federal court of the United States of America sitting in the County of Stark, City of Canton, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such State of Ohio or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against Borrowers or their properties in the courts of any jurisdiction.
(b) Borrowers hereby irrevocably and unconditionally waive, to the fullest extent they may legally and effectively do so, any objection which they may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any such State of Ohio or Federal court referenced in clause (a) above. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.”
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SECTION 8. Conversion Option. A new Section 11 shall be added to the Loan Agreement stating the following:
“11. Optional Conversion. At any time following the date of amendment number 6 to the Agreement, and from time to time prior to the Maturity Date, Lender shall have the right, but not the obligation, to elect to convert all or any portion of the principal amount of the Loan into shares of common stock, par value $0.0001 per share (“HOFREC Common Stock”), of Lead Borrower, on the terms and conditions in this Section 11 (any such conversion, an “Optional Conversion”).
(a) Lender may elect to convert all or any portion of the principal amount of the Loan into that number of shares of HOFREC Common Stock equal to the quotient of (A) the sum of (x) the principal amount of the Loan being converted specified in the Conversion Notice (defined below), plus (y) all accrued and unpaid interest on such principal amount of the Loan as of the applicable Conversion Election Effective Date (defined below), divided by (B) the Conversion Price (defined below) as of the applicable Conversion Election Effective Date, with fractional shares of HOFREC Common Stock rounded up or down as provided in Section 11(g) hereof. “Conversion Price” means $1.50, as appropriately adjusted for stock splits, stock dividends, combinations, and subdivisions of HOFREC Common Stock and as provided in Section 11(h) below.
(b) In order to effectuate an Optional Conversion of all or any portion of the principal amount of the Loan, Lender shall submit a written notice to Lead Borrower, duly executed by Lender (a “Conversion Notice”), accompanied by the Loan, stating that Lender irrevocably elects to convert the principal amount of the Loan specified in such Conversion Notice. An election to convert all or any portion of the principal amount of the Loan pursuant to an Optional Conversion shall be deemed to have been made as of the following dates (the “Conversion Election Effective Date”): (A) on the date of receipt, with respect to any Conversion Notice received by Lead Borrower at or prior to 5:00 p.m., New York City time, on any Business Day, and (B) on the next Business Day following such receipt, with respect to any Conversion Notice received by Lead Borrower on a non-Business Day or after 5:00 p.m., New York City time, on any Business Day. The conversion of the principal amount of the Loan with respect to which an Optional Conversion election is made, and the issuance of all shares of HOFREC Common Stock to be issued pursuant to such conversion, shall become effective as of the applicable Conversion Election Effective Date. Within three (3) Business Days after the applicable Conversion Election Effective Date, Lead Borrower shall deliver to Lender (or, if applicable, in the name of Lender’s designee as stated in the Conversion Notice), by book-entry delivery, a number of shares of HOFREC Common Stock equal to the number of shares to which such holder is entitled pursuant to such Optional Conversion.
(c) Upon any conversion of this Loan, the rights of Lender with respect to the unpaid principal amount hereunder converted into shares of HOFREC Common Stock shall cease and Lender shall be deemed to have become the owner of the shares of HOFREC Common Stock into which such principal amount of the Loan shall have been converted and such converted principal amount shall be extinguished and deemed to have been forgiven or repaid and shall no longer be outstanding and no future interest shall accrue on any such amount.
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(d) All shares of HOFREC Common Stock delivered upon any Optional Conversion will, upon such conversion, be duly and validly authorized and issued, fully paid and nonassessable, free from all preemptive rights, free from all taxes, liens, security interests, charges and encumbrances (other than liens, security interests, charges or encumbrances created by or imposed upon the holder or taxes in respect of any transfer occurring contemporaneously therewith).
(e) The issuance of shares of HOFREC Common Stock upon conversion of all or any portion of the principal amount of the Loan pursuant to any Optional Conversion shall be made without payment of additional consideration by, or other charge, cost or tax to, Lender in respect thereof; provided, however, that no Borrower shall be required to pay any tax or other governmental charge that may be payable with respect to the issuance or delivery of any shares of HOFREC Common Stock in the name of any person other than Lender, and no such delivery shall be made unless and until the person requesting such issuance has paid to Lead Borrower the amount of any such tax or charge, or has established to the satisfaction of Lead Borrower that such tax or charge has been paid or that no such tax or charge is due.
(f) Lead Borrower shall at all times reserve and keep available out of its authorized but unissued shares of HOFREC Common Stock, solely for the purpose of issuance upon conversion of the principal amount of the Loan in accordance with this Section 11, such number of shares of HOFREC Common Stock issuable upon the conversion of all outstanding principal amount of the Loan pursuant to any Optional Conversion at the Conversion Price. Lead Borrower shall take all such actions as may be necessary to assure that all such shares of HOFREC Common Stock may be so issued without violation of any applicable law or governmental regulation applicable to any Borrower or any requirements of any securities exchange upon which shares of HOFREC Common Stock may be listed (except for official notice of issuance, which shall be immediately delivered by Lead Borrower upon each such issuance). Lead Borrower shall not take any action which would cause the number of authorized but unissued shares of HOFREC Common Stock to be less than the number of such shares required to be reserved hereunder for issuance upon conversion of the principal amount of the Loan.
(g) No fractional shares of HOFREC Common Stock shall be issued upon any Optional Conversion of all or any portion of the principal amount of the Loan. In lieu of delivering a fractional share of HOFREC Common Stock to any holder in connection with an Optional Conversion, any fractional share of HOFREC Common Stock shall be rounded up or down to the next whole number or zero, as applicable (with one-half being closer to the next lower whole number for this purpose).
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(h) The Conversion Price shall be subject to a weighted average anti-dilution adjustment from time to time as follows:
(i) If Lead Borrower shall at any time or from time to time during the period from the date of amendment number 6 to the Agreement to the Maturity Date, issue any additional shares of HOFREC Common Stock (or be deemed to have issued any shares of HOFREC Common Stock as provided herein), other than Excluded Securities (as defined in Section 11(h)(iii)) and Excluded Transactions (as defined in Section 11(h)(iv)) (such additional shares, “Additional Shares”), without consideration or for a consideration per share less than the Conversion Price in effect immediately prior to the issuance of HOFREC Common Stock, the Conversion Price in effect immediately prior to such issuance shall forthwith be lowered to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:
CP2 = CP1 * (A + B) ÷ (A + C)
For purposes of the foregoing formula, the following definitions shall apply:
● | “CP2” shall mean the Conversion Price in effect immediately after such issue of Additional Shares of HOFREC Common Stock; |
● | “CP1” shall mean the Conversion Price in effect immediately prior to such issue of Additional Shares of HOFREC Common Stock; |
● | “A” shall mean the number of shares of HOFREC Common Stock outstanding immediately prior to such issue of Additional Shares of HOFREC Common Stock (including any shares of HOFREC Common Stock deemed to have been issued pursuant to Section 11(h)(ii)(D)); |
● | “B” shall mean the number of shares of HOFREC Common Stock that would have been issued if such Additional Shares of HOFREC Common Stock had been issued at the price per share equal to CP1 (determined by dividing the aggregate consideration received by Lead Borrower in respect of such issue by CP1); and |
● | “C” shall mean the number of such Additional Shares of HOFREC Common Stock issued in such transaction. |
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(ii) For the purposes of any adjustment of the Conversion Price pursuant to Section 11(h)(i), the following provisions shall be applicable:
(A) In the case of the issuance of HOFREC Common Stock for cash, the consideration shall be deemed to be the amount of cash paid therefor before deducting therefrom any discounts, commissions or other expenses allowed, paid or incurred by Lead Borrower for any underwriting or otherwise in connection with the issuance and sale thereof.
(B) In the case of the issuance of HOFREC Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined in good faith by the Board of Directors of Lead Borrower, irrespective of any accounting treatment.
(C) In the case of the issuance of HOFREC Common Stock without consideration, the consideration shall be deemed to be $0.01 per share.
(D) In the case of the issuance of (x) options or warrants to purchase or rights to subscribe for HOFREC Common Stock, (y) debt or securities by their terms convertible into or exchangeable for HOFREC Common Stock or (z) options to purchase rights to subscribe for such convertible or exchangeable securities:
(1) the aggregate maximum number of shares of HOFREC Common Stock deliverable upon exercise of such options or warrants to purchase or rights to subscribe for HOFREC Common Stock shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in subdivisions (A), (B) and (C) above), if any, received by Lead Borrower upon the issuance of such options, warrants or rights plus the minimum purchase price provided in such options, warrants or rights for the HOFREC Common Stock covered thereby; and
(2) the aggregate maximum number of shares of HOFREC Common Stock deliverable upon conversion of or in exchange for any such convertible or exchangeable debt or securities or upon the exercise of options or warrants to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities were issued or such options or warrants or rights were issued and for a consideration equal to the consideration received by Lead Borrower for any such securities and related options or warrants or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the additional consideration, if any, to be received by Lead Borrower upon the conversion or exchange of such securities or the exercise of any related options or warrants or rights (the consideration in each case to be determined in the manner provided in subdivisions (A), (B) and (C) above).
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(iii) For purposes of Section 11(h), the term “Excluded Securities” shall mean (i) shares of HOFREC Common Stock issued to officers, employees, directors or consultants of Lead Borrower and its subsidiaries, pursuant to any agreement, plan or arrangement approved by the Board of Directors of Lead Borrower, or options or warrants to purchase or rights to subscribe for such HOFREC Common Stock, or debt or securities by their terms convertible into or exchangeable for such HOFREC Common Stock, or options or warrants to purchase or rights to subscribe for such convertible or exchangeable securities pursuant to such agreement, plan or arrangement; (ii) shares of HOFREC Common Stock issued as a stock dividend or upon any stock split or other subdivision or combination of shares of HOFREC Common Stock; or (iii) securities issued pursuant to the acquisition of another corporation or other entity by Lead Borrower by merger or purchase of stock or purchase of all or substantially all of such other corporation’s or other entity’s assets whereby Lead Borrower owns not less than a majority of the voting power of such other corporation or other entity following such acquisition or purchase.
(iv) For purposes of Section 11(h), the term “Excluded Transactions” shall mean sales of shares of HOFREC Common Stock issued under Lead Borrower’s “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act; provided, however, that each financial quarter during which Lead Borrower’s sales of such shares reaches a multiple of $5 million aggregate consideration beginning with sales occurring after March 1, 2022 for an average consideration per share for such multiple of $5 million aggregate consideration that is less than the Exercise Price then in effect at the end of such financial quarter, the Exercise Price in effect at the end of such financial quarter shall forthwith be lowered to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the formula set forth in Section 11(h)(i), with the following adjustments: (A) “A” shall mean the difference of (1) the number of shares of HOFREC Common Stock outstanding immediately following the sale of a share under Lead Borrower’s “at the market offering” that reaches a multiple of $5 million (including any shares of HOFREC Common Stock deemed to have been issued pursuant to Section 3(e)(ii)(D)), minus (2) the number of shares of HOFREC Common Stock issued under Lead Borrower’s “at the market offering” for such multiple of $5 million and (B) “C” shall mean the number of such shares of HOFREC Common Stock issued under Lead Borrower’s “at the market offering” for such multiple of $5 million.
(i) Nasdaq 19.99% Cap. Notwithstanding anything to the contrary contained in this Agreement or the other Transaction Documents, Lead Borrower and Lender agree that the total cumulative number of shares of HOFREC Common Stock that may be issued to Lender and its affiliates hereunder and under the other Transaction Documents may not exceed the requirements of Nasdaq Listing Rule 5635(d) (“Nasdaq 19.99% Cap”), except that such limitation will not apply following Approval (defined below). If the number of shares of HOFREC Common Stock issued to Lender and its affiliates under this Agreement and the other Transaction Documents reaches the Nasdaq 19.99% Cap, so as not to violate the 20% limit established in Listing Rule 5635(d), Lead Borrower, at its election, will use reasonable commercial efforts to obtain stockholder approval of this Agreement and the issuance of additional shares of HOFREC Common Stock upon the conversion of the portion of the Loan under this Agreement, if necessary, in accordance with the requirements of Nasdaq Listing Rule 5635(d) (the “Approval”). “Transaction Documents” shall mean this Agreement, the Certificate of Designations of Series C Convertible Preferred Stock, the Series C Warrant, the Series D Warrant, the Series E Warrants, the Series F Warrants, the Series G Warrant, the Letter Agreement, the IRG Split Note, the JKP Split Note, and the Second Amendment to JKP Note.
(j) Prepayment Notice. Prior to the prepayment of the Loan in accordance with this Agreement, Lead Borrower shall provide a ten (10) day notice to Lender who then shall have the right to convert any portion or all of the Loan within twenty (20) business days after notice of any planned prepayment at the Conversion Price then in effect.
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SECTION 9. Cross-Collateralization. The Obligations shall be cross-collateralized with all obligations under the JKP Note, the IRG Split Note, and the JKP Split Note. Such cross-collateralization of the obligations under the Loan Agreement, the JKP Note, the IRG Split Note, and the JKP Split Note shall be reflected in (i) the Mortgages, (ii) an amendment to the Security Agreement, to be executed and delivered in accordance with Section 11(c) of this Amendment, (iii) the JKP Note, (iv) the IRG Split Note, (v) the JKP Split Note, and/or (vi) appropriate instruments that amend, supplement, and/or assign any of the foregoing instruments or which provide collateral for such obligations.
SECTION 10. Commitment Fee Shares; Warrants; Representations and Warranties.
(a) As consideration for the transactions contemplated by this Amendment, HOF Resort & Entertainment shall issue to Lender in a transaction exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and that shall benefit from, and be subject to, that certain Registration Rights Agreement, dated as of the date hereof, by and among HOFREC, Holder and the other parties thereto:
(i) 330,000 shares of HOFREC Common Stock (“Commitment Fee Shares”); and
(ii) warrants to purchase 1,000,000 shares of HOFREC Common Stock in the form of the Warrant Agreement attached hereto as Exhibit C (the “Series E Warrants”). As set forth in the Series E Warrants, the Series E Warrants (i) have an exercise price of $1.50 per share, subject to adjustment, (ii) are exercisable, at Holder’s option, from March 1, 2023 through and including March 1, 2027, and (iii) shall be cancelled without any further action on the part of Lead Borrower or Lender or Administrative Agent, in the event that the Borrowers repay in full on or before March 1, 2023, the Loan under the Loan Agreement.
A fully completed copy of the Accredited Investor Questionnaire attached hereto as Exhibit D (the “Questionnaire”) is being delivered by Lender to HOF Resort & Entertainment.
(b) Lender makes the following representations and warranties to Borrowers:
(i) Economic Loss and Sophistication. Lender is able to bear the economic risk of losing its entire investment in the Commitment Fee Shares and Warrants. In making this statement, consideration has been given to whether Lender can afford to hold the investment for an indefinite period of time and whether Lender can afford a complete loss of its investment. Lender has such knowledge and experience in financial and business matters that it is capable of evaluating the risks and merits of this investment.
(ii) Accredited Investor Determination. Lender is an “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities Act, as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act, as certified in the Questionnaire.
(iii) Access. Lender acknowledges that (i) Lead Borrower has made all documents available to it including, but not limited to, this Amendment and any and all additional agreements, documents, records and books that Lender (or its representatives) has requested relating to an investment in the Commitment Fee Shares and Warrants, (ii) Lender has had an opportunity to ask questions of, and receive answers from, Lead Borrower or a person acting on behalf of Lead Borrower concerning the terms and conditions of an investment in the Commitment Fee Shares and Warrants, and (iii) all questions asked by Lender have been adequately answered to its satisfaction. Lender represents that it has had access to all information that it deems material to an investment decision with respect to an investment in the Commitment Fee Shares and Warrants.
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(iv) Reliance. Lender has relied solely on independent investigations conducted by Lender or its advisors in making a decision to subscribe for the Commitment Fee Shares and Warrants and acknowledges that no representations or agreements have been made to Lender other than those specifically set forth in this Amendment. Lender is not relying on any oral representation of any officer or manager of Lead Borrower or any person purported to be acting on behalf of Lead Borrower. Lender is not relying on Lead Borrower with respect to the tax and other economic considerations of an investment and have consulted Lender’s own attorneys, accountants or investment advisors with respect to an investment in the Commitment Fee Shares and Warrants.
(v) Speculative Investment. Lender is aware that (i) an investment in the Commitment Fee Shares and Warrants involves numerous risks, which Lender has carefully considered, (ii) no federal or state agency has passed upon the merits of the sale of the Commitment Fee Shares and Warrants of any of the information provided in connection with the offering, and (iii) the Commitment Fee Shares and Warrants are a speculative investment involving a significant degree of risk for which there is no guarantee that Lender will realize any gain from any investment. Lender acknowledges and agrees that Lender is able to hold the Commitment Fee Shares and Warrants indefinitely and to afford a complete loss of Lender’s investment in the Commitment Fee Shares and Warrants.
(vi) Exempt Transaction. Lender understands that the Commitment Fee Shares and Warrants are being issued in reliance upon an exemption from federal securities registration.
(vii) No Registration of Interests; Book-Entry Form. Lender acknowledges and agrees that, based in part upon Lender’s representations contained herein and in reliance upon applicable exemptions, no interest in the Commitment Fee Shares and Warrants has been registered under the Securities Act or the securities laws of any other domestic or foreign jurisdiction. Lender agrees not to offer, sell, pledge or otherwise dispose of all or any portion of the Commitment Fee Shares and Warrants without registration or qualification except pursuant to an offering duly registered or qualified under the Securities Act and any applicable state securities laws, unless (i) in the opinion of counsel for, or counsel satisfactory to, Lead Borrower, registration or qualification under the Securities Act and any applicable state securities laws is not required and (ii) if required, Lender has received any necessary regulatory approvals. Lender understands that the Commitment Fee Shares and Warrants will be subject to a legend this effect and that, as applicable, stop transfer instructions will be issued by Lead Borrower to its transfer agent. Lender understands that the Commitment Fee Shares and Warrants will be issued in book-entry, meaning uncertificated form.
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(viii) Investment Intent. Lender is acquiring the Commitment Fee Shares and Warrants for its own account for investment, and not with a view to any distribution, resale, subdivision or fractionalization thereof in violation of the Securities Act or any other applicable domestic or foreign securities laws, and Lender has no present plans to enter into any contract, undertaking, agreement or arrangement for any such distribution, resale, subdivision or fractionalization. The Commitment Fee Shares and Warrants are not being acquired, directly or indirectly, as nominee, trustee or representative of or for any other person or persons.
(ix) Power and Authority. Lender is authorized to enter into this Amendment, the Questionnaire, and such other agreements, certificates, instruments or other documents as are executed by or on Lender’s behalf in connection with Lender’s obligations under this Amendment or in connection with this subscription (collectively, the “Second Amendment Documents”), to perform Subscriber’s obligations under the Second Amendment Documents, and to consummate the transactions that are the subjects of the Second Amendment Documents.
(x) Compliance with Laws and Other Instruments. The execution and delivery of the Second Amendment Documents by, or on behalf of, Lender and the consummation of the transactions contemplated by the Second Amendment Documents do not and will not conflict with or result in any violation of or default under any provision of any charter, bylaws, trust agreement or other organizational document, as the case may be, of Lender, or any agreement, certificate or other instrument to which Lender is a party or by which Lender or any of Lender’s properties is bound, or any permit, franchise, judgment, decree, statute, rule, regulation or other law applicable to Lender or the business or properties of Lender.
(xi) Reliance on Representations. Lender acknowledges that Lead Borrower has relied and will rely upon Lender’s representations, warranties and agreements in this Amendment and that all such representations and agreements shall survive the issuance and delivery of the Commitment Fee Shares and Warrants hereunder and shall remain in effect thereafter.
SECTION 11. Series C Preferred Stock. As consideration in part for the transactions contemplated by this Amendment, HOF Resort & Entertainment shall, subject to approval of its board of directors: (i) create a series of preferred stock to be known as Series C Preferred Stock, substantially in the form of the Certificate of Designations of 7.00% Series C Convertible Preferred Stock of HOF Resort & Entertainment attached hereto as Exhibit E (“Certificate of Designations of Series C Preferred Stock”) and (ii) promptly after obtaining such approval of its board of directors, upon the request of Lender, exchange each share of Series B Preferred Stock that is held by Lender for one share of Series C Preferred Stock in a transaction exempt from registration pursuant to Section 4(a)(2) of the Securities Act on a date to be agreed to by HOF Resort & Entertainment and Lender and pursuant to a form of securities exchange agreement prepared by HOF Resort & Entertainment that is reasonably acceptable to Lender.
14
SECTION 12. Post-Closing; Further Assurances.
(a) Within ten (10) days after the Effective Date, the parties agree to work in good faith with Huntington Bank to (i) terminate the Deposit Control Account Agreements for the Interest Reserve Account, with any amounts remaining in the Interest Reserve Account to be disbursed pursuant to mutual agreement of the parties, (ii) amend the Deposit Control Account Agreements for the Proceeds Account to properly reference Administrative Agent’s accounts and notice information, (iii) add springing Control Agreement(s) for accounts related to the Stadium Project Lease, and (iv) add springing Control Agreement(s) for accounts related to the Youth Fields Project Lease.
(b) Within forty-five (45) days after the Effective Date, the parties shall enter into an appropriate amendment to the Security Agreement in order to (i) include a pledge by Newco of its membership interests in HOFV Youth Fields, as collateral for the Obligations, and (ii) if appropriate, effectuate the cross-collateralization described in Section 9 of this Amendment.
(c) Within forty-five (45) days after the Effective Date, Borrowers, Administrative Agent, and Lender shall enter into appropriate agreements to increase the principal amount of the Loan to reflect advances made by Lender to pay the legal fees and costs incurred by Administrative Agent, Lender, JKP, IRG, LLC, and their respective affiliates in connection with the transactions related to this Amendment (including (A) the assignment of the loan from the previous Administrative Agent and the previous Lender to Administrative Agent and to Lender, (B) the IRG Split Note, (C) the JKP Split Note, and (D) the Second Amendment to JKP Note). Such amounts will include the amounts payable to the law firms of (i) Fainsbert Mase Brown & Sussman, LLP, (ii) Mitchell Silberberg & Knupp LLP, and (iii) Walter Haverfield, in connection with the transactions related to this Amendment.
(d) Each of the parties hereto shall, from time to time at the request of another party: furnish the other party such further information or assurances; execute and deliver such additional documents, instruments, and conveyances; and take such other actions and do such other things, as may be reasonably necessary to carry out the provisions of this Amendment and give effect to the transactions contemplated hereby, including filing an amendment to Delaware UCC Initial Filing Number 20208405476 against Hall of Fame Resort & Entertainment which included the Interest Reserve Account.
SECTION 13. Electronic Signatures. Transmission of a signature by facsimile or email or in .pdf format shall bind the signing party to the same degree as the delivery of a signed original or electronic signature. This Amendment may be executed by way of electronic signatures (including, but not limited to, by way of electronic signatures generated by “DocuSign,” “Adobe Sign” or similar programs or replacements thereto) and that neither this Amendment, nor any part or provision of this Amendment, shall be challenged or denied any legal effect, validity and/or enforceability solely on the grounds that it is in the form of an electronic record.
SECTION 14. No Other Changes; Ratification. Except as specifically amended hereby, the terms, provisions and conditions of the Loan Agreement and the other Loan Documents shall remain unmodified and continue in full force and effect and, except as amended hereby, all of the terms, provisions and conditions of the Loan Agreement and the Loan Documents are hereby ratified and confirmed in all respects.
SECTION 15. Counterparts. This Amendment may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract.
SECTION 16. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of Ohio without regard to any conflicts of law principles that would direct the application of the laws of any jurisdiction.
[Signatures follow]
15
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.
Borrowers: | |||
HALL OF FAME RESORT & ENTERTAINMENT COMPANY, | |||
a Delaware corporation | |||
HOF VILLAGE NEWCO, LLC | |||
HOF VILLAGE STADIUM, LLC | |||
HOF VILLAGE YOUTH FIELDS, LLC | |||
each, a Delaware limited liability company | |||
By: | /s/ Michael Crawford | ||
Name: | Michael Crawford | ||
Title: | President and Chief Executive Officer |
[Signatures Continue on Next Page]
[Signature Page to Amendment Number 6 to Term Loan Agreement]
Administrative Agent: | ||
CH CAPITAL LENDING, LLC, | ||
By: | Holdings SPE Manager, LLC, a Delaware limited liability company, its Manager |
By: | John A. Mase | |||
Name: | John A. Mase | |||
Title: | Chief Executive Officer |
Lender: | ||
CH CAPITAL LENDING, LLC, | ||
a Delaware limited liability company | ||
By: | Holdings SPE Manager, LLC, | |
a Delaware limited liability company, | ||
its Manager |
By: | John A. Mase | |||
Name: | John A. Mase | |||
Title: | Chief Executive Officer |
[Signature Page to Amendment Number 6 to Term Loan Agreement]
Exhibit A
YOUTH FIELDS AND STADIUM LEGAL DESCRIPTIONS
[See attached]
Exhibit B
FORM OF
FIRST AMENDMENT TO AND SPREADER OF
OPEN-END FEE AND LEASEHOLD DEED OF TRUST,
ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
[See attached]
Exhibit C
FORM OF
SERIES E WARRANT
[See attached]
Exhibit D
ACCREDITED INVESTOR QUESTIONNAIRE
(ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)
This Accredited Investor Questionnaire (“Questionnaire”), dated as of __ _, 2022 , is to being delivered by the undersigned (“Subscriber”) in connection with Subscriber’s receipt of shares (the “Subscribed Shares”) of common stock , par value $0.0001 per share (“HOFREC Common Stock”), of Hall of Fame Resort & Entertainment Company, a Delaware corporation (the “Company”), and warrants (the “Warrants”) as contemplated by Amendment Number 6 to Term Loan Agreement dated as of March 1, 2022 (the “Effective Date”) by and among the Company, HOF Village Newco, LLC, and HOF Village Stadium, LLC (collectively, the “Borrowers”), in favor of CH Capital Lending, LLC (the “Administrative Agent”) and CH Capital Lending, LL] (the “Lender”) (the “Amendment”). The Subscribed Shares and Warrants are being issued without registration under the Securities Act of 1933, as amended (the “Securities Act”), and the securities laws of certain states, in reliance on the exemptions contained in the Securities Act and in reliance on similar exemptions under applicable state laws. The purpose of this Questionnaire is to provide assurance that Subscriber meets the applicable suitability requirements. The information supplied by Subscriber will be used in determining whether Subscriber meets such requirements, and reliance upon the private offering exemptions from registration is based in part on the information herein supplied.
This Questionnaire does not constitute an offer to sell or a solicitation of an offer to buy any security. Subscriber’s answers will be kept strictly confidential. However, by signing this Questionnaire, Subscriber authorizes the Company to provide a completed copy of this Questionnaire to such parties as the Company deems appropriate in order to ensure that the purchase and sale of the Subscribed Shares and Warrants will not result in a violation of the Securities Act or the securities laws of any state. Subscriber must answer all applicable questions and complete and sign this Questionnaire. Please print or type the responses and attach additional sheets of paper if necessary to complete the answers to any item.
PART A. BACKGROUND INFORMATION
Name of Subscriber: | CH Capital Lending, LLC |
If a corporation, partnership, limited liability company, trust or other entity:
Type of entity: | Delaware limited liability company |
Business Address:
(Number and Street) | ||
(City, State, and Zip Code) |
Telephone Number: |
Employer or Taxpayer Identification No.: |
Accredited Investor Questionnaire – page 1
Was Subscriber formed for the purpose of investing in the securities being offered?
Yes ☐ No ☒
PART B. ACCREDITED INVESTOR QUESTIONNAIRE
In connection with the purchase and sale of the Subscribed Shares and Warrants pursuant to the Amendment, the following information must be obtained regarding Subscriber’s investor status. Please initial each category applicable to Subscriber as a purchaser of the Subscribed Shares and Warrants.
[Signature Page Follows]
Accredited Investor Questionnaire – page 2
IN WITNESS WHEREOF, Subscriber has executed this Questionnaire as of the date set forth above and hereby certifies that the information contained herein is true and correct as of such date.
Subscriber: | ||
CH CAPITAL LENDING, LLC, a Delaware limited liability company | ||
By: | Holdings SPE Manager, LLC, a Delaware limited liability company, its Manager |
By: | |||
Name: | |||
Title: |
Accredited Investor Questionnaire – page 3
Exhibit E
CERTIFICATE OF DESIGNATIONS
OF
7.00% SERIES C CONVERTIBLE PREFERRED STOCK
OF
HALL OF FAME RESORT & ENTERTAINMENT COMPANY
Pursuant to the General Corporation Law of the State of Delaware
Hall of Fame Resort & Entertainment Company, a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), hereby certifies that, pursuant to authority conferred upon the Board of Directors of the Corporation (the “Board of Directors”) by the provisions of the Amended and Restated Certificate of Incorporation of the Corporation, which authorize the issuance of not more than 5,000,000 shares of preferred stock, par value $0.0001 per share, the following resolutions were duly adopted by the Board of Directors on March [●], 2022, in accordance with the General Corporation Law of the State of Delaware (the “General Corporation Law”):
RESOLVED, that, in accordance with the provisions of the Amended and Restated Certificate of Incorporation of the Corporation, the Bylaws of the Corporation, and applicable law, a series of Preferred Stock, par value $0.0001 per share, of the Corporation be, and hereby is, created, and that the designation and number of shares of such series, and the voting and other powers, designations, preferences and relative, participating, optional or other rights, and the qualifications, limitations and restrictions thereof, of the shares of such series, are as follows:
Section 1. Designation. The designation of the series of preferred stock shall be “7.00% Series C Convertible Preferred Stock” (the “Series C Preferred Stock”). Each share of Series C Preferred Stock shall be identical in all respects to every other share of Series C Preferred Stock. Series C Preferred Stock will rank equally with Parity Stock (if any), will rank senior to Junior Stock and will rank junior to Senior Stock (if any), with respect to the payment of dividends and the distribution of assets in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.
Section 2. Number of Shares. The number of authorized shares of Series C Preferred Stock shall be 15,000. That number from time to time may be increased (but not in excess of the total number of authorized shares of preferred stock) by further resolution duly adopted by the Board of Directors or any duly authorized committee of the Board of Directors and by the filing of a certificate pursuant to the provisions of the General Corporation Law stating that such increase has been so authorized. The Corporation shall have the authority to issue fractional shares of Series C Preferred Stock.
Section 3. Definitions. As used herein with respect to Series C Preferred Stock:
“Additional Shares” shall have the meaning set forth in Section 8(a).
Certificate of Designations – page 1
“Amended and Restated Assigned IRG Note” means the $4,273,543.46 principal amount First Amended and Restated Promissory Note, dated March 1, 2022, issued by the Corporation to Industrial Realty Group, LLC.
“Amended and Restated Assigned JKP Note” means the $4,273,543.46 principal amount First Amended and Restated Promissory Note, dated March 1, 2022, issued by the Corporation to JKP Financial, LLC.
“Amended and Restated Series C Warrant” means the Amended and Restated Series C Warrant to purchase 10,036,925 shares of Common Stock, dated as of March 1, 2022, issued by the Corporation to CH Capital Lending, LLC.
“Amended and Restated Series D Warrant” means the Amended and Restated Series D Warrant to purchase 2,450,980 shares of Common Stock, dated as of March 1, 2022, issued by the Corporation to CH Capital Lending, LLC.
“Approval” shall have the meaning set forth in Section 6(d) hereof.
“Business Combination Transaction” shall have the meaning set forth in Section 5(d)(ii) hereof.
“Business Day” means each Monday, Tuesday, Wednesday, Thursday or Friday on which banking institutions are not authorized or obligated by law, regulation or executive order to close in New York, New York or in Canton, Ohio.
“Certificate of Designations” means this Certificate of Designations of Series C Preferred Stock of the Corporation, as it may be amended from time to time.
“Common Stock” means the Corporation’s common stock, par value $0.0001 per share.
“Conversion Election Effective Date” shall have the meaning set forth in Section 6(b)(ii) hereof.
“Conversion Notice” shall have the meaning set forth in Section 6(b)(ii) hereof.
“Conversion Price” means $[●]1, as appropriately adjusted for stock splits, stock dividends, combinations, and subdivisions of Common Stock, and as adjusted pursuant to Section 8 hereof.
“Dividend Rate” shall have the meaning set forth in Section 4(a)(i) hereof.
“Dividend Record Date” shall have the meaning set forth in Section 4(b)(v) hereof.
“Election Deadline” shall have the meaning set forth in Section 4(a)(ii) hereof.
1 | Conversion Price to be set to the greater of $1.50 per share or $.02 more than the average Nasdaq Official Closing Price of the Common Stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the approval of the board of directors creating Series C Preferred Stock. |
Certificate of Designations – page 2
“Election Notice” shall have the meaning set forth in Section 4(a)(ii) hereof.
“Elective Cash Dividend” shall have the meaning set forth in Section 4(a)(i) hereof.
“Elective PIK Dividend” shall have the meaning set forth in Section 4(a)(i) hereof.
“Excluded Securities” shall have the meaning set forth in Section 8(c) hereof.
“Junior Stock” means the Corporation’s common stock and any other class or series of stock of the Corporation hereafter authorized over which Series C Preferred Stock has preference or priority in the payment of dividends or in the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the Corporation.
“Letter Agreement” means the Agreement, dated March 1, 2022, between the Corporation and Stuart Lichter.
“Liquidation Event” shall have the meaning set forth in Section 5(d) hereof.
“Mandatory Cash Dividend” shall have the meaning set forth in Section 4(a)(i) hereof.
“Mandatory Cash Dividend Payment Date” shall have the meaning set forth in Section 4(b)(i) hereof.
“Nasdaq 19.99% Cap” shall have the meaning set forth in Section 6(d) hereof.
“Optional Conversion” shall have the meaning set forth in Section 6(b) hereof.
“Original Issue Date” means the date on which shares of Series C Preferred Stock are first issued.
“Original Issue Date Price” means $1,000.00 per share of Series C Preferred Stock, as appropriately adjusted for stock splits, stock dividends, combinations, and subdivisions of Series C Preferred Stock.
“Parity Stock” means the Series A Preferred Stock, Series B Preferred Stock and any other class or series of stock of the Corporation hereafter authorized that ranks on a par with the Series C Preferred Stock in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of the Corporation.
“Quarter” means the three-month period ending on each of March 31, June 30, September 30 and December 31 of each year, provided that, with respect to the first period following the Original Issue Date, such Quarter shall be deemed to include solely the portion of such period after the Original Issue Date.
“Second Amendment to JKP Note” means the Joinder and Second Amendment to Secured Cognovit Promissory Note, dated as of March 1, 2022, by and among HOF Village Newco, LLC, HOF Village Hotel II, LLC, as makers, the Company, and JKP Financial, LLC, as holder, which agreement amends that certain Secured Cognovit Promissory Note, dated as of June 19, 2020, originally executed by Hotel II and by HOF Village, LLC, in favor of JKP Financial, LLC, as assigned by HOF Village, LLC to HOF Village Newco, LLC pursuant to the Contribution Agreement dated as of June 30, 2020, by and between HOF Village, LLC and HOF Village Newco, LLC, as amended by the First Amendment to Secured Cognovit Promissory Note dated December 1, 2020.
Certificate of Designations – page 3
“Senior Stock” means any class or series of stock of the Corporation hereafter authorized which has preference or priority over the Series C Preferred Stock as to the payment of dividends or in the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the Corporation.
“Series A Preferred Stock” means the Corporation’s 7.00% Series A Cumulative Redeemable Preferred Stock, par value $0.0001 per share.
“Series B Preferred Stock” means the Corporation’s 7.00% Series B Convertible Preferred Stock, par value $0.0001 per share.
“Series C Preferred Stock” shall have the meaning set forth in Section 1 hereof.
“Series E Warrants” mean (i) the Series E Warrant to purchase 1,000,000 shares of Common Stock, dated March 1, 2022, issued by the Corporation to CH Capital Lending, LLC, and (ii) the Series E Warrant to purchase 500,000 shares of Common Stock, dated March 1, 2022, issued by the Corporation to Industrial Realty Group, LLC.
“Series F Warrants” mean (i) the Series F Warrant to purchase 1,000,000 shares of Common Stock, dated March 1, 2022, issued by the Corporation to JKP Financial, LLC, and (ii) the Series F Warrant to purchase 500,000 shares of Common Stock, dated March 1, 2022, issued by the Corporation to JKP Financial, LLC.
“Series G Warrant” means the Series G Warrant to purchase 125,000 shares of Common Stock to be issued by the Corporation to Stuart Lichter.
“Sixth Amendment to Term Loan Agreement” means Amendment Number 6 to Term Loan Agreement, dated as of March 1, 2022, among the Corporation, HOF Village Newco, LLC and HOF Village Stadium, LLC, as borrower, in favor of CH Capital Lending, LLC, as administrative agent and lender, which agreement amends that certain Term Loan Agreement, dated as of December 1, 2020, as amended by (i) Amendment Number 1 to Term Loan Agreement, dated as January 28, 2021; (ii) Amendment Number 2 to Term Loan Agreement, dated as of February 15, 2021; (iii) Amendment Number 3 to Term Loan Agreement, dated as of August 30, 2021; (iv) Amendment Number 4 to Term Loan Agreement, dated as of August 30, 2021; and (v) Amendment Number 5 to Term Loan Agreement, dated as of December 15, 2021.
“Transaction Documents” shall have the meaning set forth in Section 6(d) hereof.
“Unpaid Series C Dividends” shall have the meaning set forth in Section 5(a) hereof.
Certificate of Designations – page 4
Section 4. Dividends.
(a) Dividend Rate; Election by Holders.
(i) Each holder of a share of Series C Preferred Stock is entitled to receive, with respect to each such share, for each Quarter (or for the portion of such Quarter for which such share is outstanding), to and including the last day of such Quarter, and the Corporation is mandatorily obligated to declare, out of funds of the Corporation legally available for the payment of dividends, cumulative preferential dividends, at the rate of 7.00% per annum (the “Dividend Rate”), on the Original Issue Date Price of such share. Dividends on any share of Series C Preferred Stock shall be cumulative from the Original Issue Date of such share but shall not be compounding. For each share of Series C Preferred Stock, the Dividend Rate is payable (A) 4.00% per annum in cash (the “Mandatory Cash Dividend”), plus (B) at the election of the holder of such share of Series C Preferred Stock (pursuant to an Election Notice delivered in accordance with Section 4(a)(ii) hereof), either (A) 3.00% per annum in cash (the “Elective Cash Dividend”), or (B) 3.00% per annum in shares of Common Stock, calculated in accordance with Section 4(b)(iv) hereof (the “Elective PIK Dividend”).
(ii) In connection with any Optional Conversion, the holder of each share of Series C Preferred Stock then being converted shall notify the Corporation, in writing (such notice, an “Election Notice”), no later than fifteen (15) days before the applicable Conversion Election Effective Date (as the case may be) (the “Election Deadline”), as to whether (A) such holder wishes to receive the Elective Cash Dividend for such holder’s shares of Series C Preferred Stock then being converted, or (B) such holder wishes to receive the Elective PIK Dividend for such holder’s shares of Series C Preferred Stock then being converted. If a holder of Series C Preferred Stock fails to deliver an Election Notice to the Corporation by the applicable Election Deadline, then such holder shall be deemed to have elected to receive the Elective Cash Dividend in connection with such conversion of shares of Series C Preferred Stock.
(b) Payment of Dividends.
(i) Mandatory Cash Dividends shall be payable quarterly in arrears on or before the 15th day of January, April, July and October of each year, or on the next succeeding Business Day if such day is not a Business Day (each, a “Mandatory Cash Dividend Payment Date”). The first Mandatory Cash Dividend Payment Pate for the Series C Preferred Stock is scheduled to occur on April 15, 2022.
(ii) In connection with any Optional Conversion, elective Cash Dividends with respect to such conversion shall be payable in cash within three (3) Business Days after the date all outstanding shares of Series C Preferred Stock have converted into shares of Common Stock.
(iii) In connection with any Optional Conversion, shares of Common Stock issuable to a holder of Series C Preferred Stock on account of Elective PIK Dividends with respect to such conversion shall be issued within three (3) Business Days after the date all outstanding shares of Series C Preferred Stock have converted into shares of Common Stock.
Certificate of Designations – page 5
(iv) If a holder of Series C Preferred Stock elects to receive an Elective PIK Dividend in connection with any Optional Conversion, then the number of shares of Common Stock issuable on account of such Elective PIK Dividend shall be equal to the quotient of (A) the amount of the Elective Cash Dividend that would otherwise have been paid to such holder on account of the shares of Series C Preferred Stock then being converted, divided by (B) the Conversion Price as of the applicable Conversion Election Effective Date (as the case may be), with fractional shares of Common Stock rounded up or down as provided in Section 6(c)(v) hereof.
(v) Any dividend payable on the Series C Preferred Stock will be computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends will be payable to holders of record as they appear in the stock records of the Corporation at the close of business on the applicable record date, which shall be the last day of the calendar month first preceding the applicable Mandatory Cash Dividend Payment Date (each, a “Dividend Record Date”).
(c) Cumulative Dividends. No dividends on shares of Series C Preferred Stock shall be paid or set apart for payment by the Corporation if such payment is restricted or prohibited by law or by a contract that has been approved in accordance with Section 4(e) hereof. If payment of any dividend on the Series C Preferred Stock is restricted or prohibited by law or by contract, then the Corporation shall notify the holders of record of the Series C Preferred Stock of such fact. Notwithstanding the foregoing, dividends on each share of Series C Preferred Stock will accrue, in accordance with Section 4(a) hereof, whether or not the Corporation has earnings, whether or not there are funds legally available for the payment of such dividends, whether or not payment is restricted or prohibited by law or by contract, and whether or not such dividends are declared. Any dividend payment made on any share of Series C Preferred Stock shall first be credited against the earliest accrued and unpaid dividend due with respect to such share.
(d) Priority of Dividends. So long as any share of Series C Preferred Stock remains outstanding, (i) no dividend shall be declared or paid or set aside for payment, and no distribution shall be declared or made or set aside for payment, on any Junior Stock, other than a dividend payable solely in shares of Junior Stock; (ii) no shares of Junior Stock shall be repurchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly (other than as a result of a reclassification of Junior Stock for or into other Junior Stock, or the exchange or conversion of one share of Junior Stock for or into another share of Junior Stock, and other than through the use of the proceeds of a substantially contemporaneous sale of other shares of Junior Stock), nor shall any monies be paid to or made available for a sinking fund for the redemption of any such Junior Stock by the Corporation; and (iii) except as set forth in the succeeding sentence, no shares of Parity Stock shall be repurchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly, other than pursuant to pro rata offers to purchase all, or a pro rata portion, of the Series C Preferred Stock and such Parity Stock, except by conversion into or exchange for Junior Stock, in each case, unless all accrued Mandatory Cash Dividends on all outstanding shares of Series C Preferred Stock have been paid in full. The foregoing limitations do not apply to (A) purchases or acquisitions of the Corporation’s Junior Stock pursuant to any employee or director incentive or benefit plan or arrangement (including any employment, severance or consulting agreement) of the Corporation or any subsidiary of the Corporation heretofore or hereafter adopted, or (B) any mandatory redemption of the Series A Preferred Stock pursuant to the Certificate of Designations for the Series A Preferred Stock. Subject to the succeeding sentence, for so long as any shares of Series C Preferred Stock remain outstanding, no dividends shall be declared or paid or set aside for payment on any Parity Stock for any period unless all accrued Mandatory Cash Dividends on all outstanding shares of Series C Preferred Stock have been paid in full. To the extent the Corporation cannot make full payment of any Mandatory Cash Dividends on the Series C Preferred Stock and any cash dividends on any Parity Stock, the Corporation will allocate the dividend payments on a pro rata basis among the holders of the shares of Series C Preferred Stock and the holders of any Parity Stock then outstanding. For purposes of calculating the pro rata allocation of partial dividend payments, the Corporation will allocate dividend payments based on the ratio between the total Mandatory Cash Dividend payments then due on the outstanding shares of Series C Preferred Stock and the total cash dividend payments then due on the outstanding shares of Parity Stock. Subject to the foregoing, and not otherwise, such dividends (payable in cash, stock or otherwise) as may be determined by the Board of Directors or any duly authorized committee of the Board of Directors may be declared and paid on any Junior Stock from time to time out of any funds legally available therefor, and the shares of Series C Preferred Stock shall not be entitled to participate in any such dividend.
Certificate of Designations – page 6
(e) Restrictions on Dividends Require Consent. The Corporation shall not enter into or permit to exist any contract, agreement, or arrangement that prohibits or restricts the Corporation from paying dividends on the Series C Preferred Stock, unless such contract, agreement, or arrangement has been approved in writing, in advance, by the holders of a majority of the then-outstanding shares of Series C Preferred Stock.
Section 5. Liquidation Preference.
(a) Liquidation. Upon the occurrence of any Liquidation Event (as defined in Section 5(d) hereof), the holders of the Series C Preferred Stock shall be entitled to be paid, out of the assets of the Corporation legally available for distribution to its stockholders, a liquidation preference of the Original Issue Date Price per share plus an amount equal to any accrued and unpaid dividends to the date of payment (calculated in accordance with Section 4 hereof), before any distribution of assets is made to holders of any Junior Stock. Any accrued and unpaid dividends on the Series C Preferred Stock, calculated in accordance with Section 4 hereof, are referred to as “Unpaid Series C Dividends.”
(b) Partial Payment. If the assets of the Corporation are not sufficient to pay in full the liquidation preference (including any Unpaid Series C Dividends) to all holders of Series C Preferred Stock and all holders of any Parity Stock, the amounts paid to the holders of Series C Preferred Stock and to the holders of Parity Stock shall be pro rata in accordance with the respective aggregate liquidation preferences (including any Unpaid Series C Dividends) of Series C Preferred Stock and Parity Stock. For purposes of calculating the pro rata allocation of such liquidation preferences, the Corporation will allocate such liquidation preferences (including any Unpaid Series C Dividends) based on the ratio between the total liquidation preferences (including any Unpaid Series C Dividends) then due on the outstanding shares of Series C Preferred Stock and the total liquidation preferences (including any accrued and unpaid dividends) then due on the outstanding shares of Parity Stock.
Certificate of Designations – page 7
(c) Residual Distributions. If the liquidation preference (including any Unpaid Series C Dividends) has been paid in full to all holders of Series C Preferred Stock and all holders of any Parity Stock, the holders of Junior Stock shall be entitled to receive all remaining assets of the Corporation according to their respective rights and preferences.
(d) Merger, Consolidation and Sale of Assets. For purposes of this Section 5, a “Liquidation Event” shall include any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation. For purposes of clarification:
(i) The sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property and assets of the Corporation shall be deemed a Liquidation Event, unless the holders of a majority of the then-outstanding shares of Series C Preferred Stock agree in writing, prior to the closing of any such transaction, that such transaction will not be considered a Liquidation Event for purposes hereof.
(ii) A merger, consolidation or any other business combination transaction of the Corporation into or with any other corporation or person, or the merger, consolidation or any other business combination transaction of any other corporation or person into or with the Corporation (any of the foregoing, a “Business Combination Transaction”) shall not be deemed a Liquidation Event, so long as either (A) the holders of a majority of the then-outstanding shares of Series C Preferred Stock agree in writing, prior to the closing of any such Business Combination Transaction, that such Business Combination Transaction will not be considered a Liquidation Event for purposes hereof, or (B) such Business Combination Transaction would not adversely affect the holders of the Series C Preferred Stock or the powers, designations, preferences and other rights of the Series C Preferred Stock. Any Business Combination Transaction that does not satisfy the requirements of the immediately preceding sentence shall be deemed a Liquidation Event.
Section 6. Conversion.
(a) [INTENTIONALLY OMITTED].
(b) Optional Conversion. At any time following the Original Issue Date, each holder of Series C Preferred Stock shall have the right, but not the obligation, to elect to convert all or any portion of such holder’s shares of Series C Preferred Stock into shares of Common Stock, on the following terms and conditions (any such conversion, an “Optional Conversion”).
(i) Any holder of Series C Preferred Stock may elect to convert all or any portion of its shares of Series C Preferred Stock into that number of shares of Common Stock for each share of Series C Preferred Stock equal to the quotient of (A) the sum of (x) the Original Issue Date Price of such share of Series C Preferred Stock, plus (y) all accrued and unpaid Mandatory Cash Dividends on such share of Series C Preferred Stock as of the applicable Conversion Election Effective Date, divided by (B) the Conversion Price as of the applicable Conversion Election Effective Date, with fractional shares of Common Stock rounded up or down as provided in Section 6(c)(v) hereof.
Certificate of Designations – page 8
(ii) In order to effectuate an Optional Conversion of shares of Series C Preferred Stock, the holder of such shares shall submit a written notice to the Corporation, duly executed by such holder (a “Conversion Notice”), stating that such holder irrevocably elects to convert the number of shares of Series C Preferred Stock specified in such Conversion Notice. An election to convert shares of Series C Preferred Stock pursuant to an Optional Conversion shall be deemed to have been made as of the following dates (the “Conversion Election Effective Date”): (A) on the date of receipt, with respect to any Conversion Notice received by the Corporation at or prior to 5:00 p.m., New York City time, on any Business Day, and (B) on the next Business Day following such receipt, with respect to any Conversion Notice received by the Corporation on a non-Business Day or after 5:00 p.m., New York City time, on any Business Day. The conversion of all shares of Series C Preferred Stock with respect to which an Optional Conversion election is made, and the issuance of all shares of Common Stock to be issued pursuant to such conversion, shall become effective as of the applicable Conversion Election Effective Date. Within three (3) Business Days after the applicable Conversion Election Effective Date, the Corporation shall deliver to the applicable holder (or, if applicable, in the name of such holder’s designee as stated in the Conversion Notice), by book-entry delivery, a number of shares of Common Stock equal to the number of shares to which such holder is entitled pursuant to such Optional Conversion.
(c) General Conversion Provisions.
(i) All shares of Series C Preferred Stock that are converted pursuant to any Optional Conversion shall automatically, upon such conversion, be cancelled and retired and cease to exist, shall not thereafter be reissued or sold, and shall return to the status of authorized but unissued shares of preferred stock undesignated as to series. Upon the conversion of shares of Series C Preferred Stock pursuant to any Optional Conversion, all such shares shall thereupon cease to confer upon the holder thereof any rights (other than the right to receive the shares of Common Stock that such holder is entitled to receive pursuant to such Optional Conversion) of a holder of shares of Series C Preferred Stock, and the person(s) in whose name the shares of Common Stock are to be issued upon such Optional Conversion shall be deemed to have become the holder(s) of record of such shares of Common Stock.
(ii) All shares of Common Stock delivered upon any Optional Conversion of shares will, upon such conversion, be duly and validly authorized and issued, fully paid and nonassessable, free from all preemptive rights, free from all taxes, liens, security interests, charges and encumbrances (other than liens, security interests, charges or encumbrances created by or imposed upon the holder or taxes in respect of any transfer occurring contemporaneously therewith).
(iii) The issuance of shares of Common Stock upon conversion of shares of Series C Preferred Stock pursuant to any Optional Conversion shall be made without payment of additional consideration by, or other charge, cost or tax to, the holder in respect thereof; provided, however, that the Corporation shall not be required to pay any tax or other governmental charge that may be payable with respect to the issuance or delivery of any shares of Common Stock in the name of any person other than the holder of the converted shares, and no such delivery shall be made unless and until the person requesting such issuance has paid to the Corporation the amount of any such tax or charge, or has established to the satisfaction of the Corporation that such tax or charge has been paid or that no such tax or charge is due.
Certificate of Designations – page 9
(iv) The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, (A) solely for the purpose of issuance in accordance with Section 4 hereof, such number of shares of Common Stock issuable as Elective PIK Dividends at the Conversion Price, and (B) solely for the purpose of issuance upon conversion of the shares of Series C Preferred Stock in accordance with this Section 6, such number of shares of Common Stock issuable upon the conversion of all outstanding shares of Series C Preferred Stock pursuant to any Optional Conversion at the Conversion Price. The Corporation shall take all such actions as may be necessary to assure that all such shares of Common Stock may be so issued without violation of any applicable law or governmental regulation applicable to the Corporation or any requirements of any securities exchange upon which shares of Common Stock may be listed (except for official notice of issuance, which shall be immediately delivered by the Corporation upon each such issuance). The Corporation shall not take any action which would cause the number of authorized but unissued shares of Common Stock to be less than the sum of (x) the number of such shares required to be reserved hereunder for issuance as Elective PIK Dividends, plus (y) the number of such shares required to be reserved hereunder for issuance upon conversion of the shares of Series C Preferred Stock.
(v) No fractional shares of Common Stock shall be issued in connection with an Elective PIK Dividend, nor upon any Optional Conversion of shares of Series C Preferred Stock. In lieu of delivering a fractional share of Common Stock to any holder in connection with an Elective PIK Dividend, or in connection with an Optional Conversion, any fractional share of Common Stock shall be rounded up or down to the next whole number or zero, as applicable (with one-half being closer to the next lower whole number for this purpose).
(d) Nasdaq 19.99% Cap. Notwithstanding anything to the contrary contained in this Certificate of Designations or the other Transaction Documents (defined below), the total cumulative number of shares of Common Stock that may be issued to a holder of Series C Preferred Stock and its Affiliates hereunder and under the other Transaction Documents may not exceed the requirements of Nasdaq Listing Rule 5635(d) (“Nasdaq 19.99% Cap”), except that such limitation will not apply following Approval (defined below). If the number of shares of Common Stock issued to a holder of Series C Preferred Stock and its Affiliates under this Certificate of Designations and the other Transaction Documents reaches the Nasdaq 19.99% Cap, so as not to violate the 20% limit established in Listing Rule 5635(d), the Corporation, at its election, will use reasonable commercial efforts to obtain stockholder approval of this Certificate of Designations and the issuance of shares of Common Stock issuable upon the conversion of shares of Series C Preferred Stock in excess of the Nasdaq 19.99% Cap in accordance with the requirements of Nasdaq Listing Rule 5635(d) (the “Approval”). “Transaction Documents” shall mean this Certificate of Designations, the Amended and Restated Series C Warrant, the Amended and Restated Series D Warrant, the Series E Warrants, the Series F Warrants, the Series G Warrant, the Letter Agreement, the Amended and Restated Assigned JKP Note, the Amended and Restated Assigned IRG Note, the Second Amendment to JKP Note, and the Sixth Amendment to Term Loan Agreement.
Certificate of Designations – page 10
Section 7. Voting Rights.
(a) No Voting Rights. Holders of the Series C Preferred Stock shall not have any voting rights except as required by law. To the extent that voting rights otherwise required by law can be waived or released, such voting rights are hereby waived and released.
(b) Procedures for Voting and Consents. As to all matters for which voting by class is specifically required by law and such voting rights cannot be waived or released, each outstanding share of Series C Preferred Stock shall be entitled to one vote. The rules and procedures for calling and conducting any meeting of the holders of Series C Preferred Stock (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such meeting, the obtaining of written consents and any other aspect or matter with regard to such a meeting or such consents shall be governed by any rules the Board of Directors or any duly authorized committee of the Board of Directors, in its reasonable discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the Certificate of Incorporation and Bylaws of the Corporation and to applicable law.
Section 8. Weighted Average Anti-Dilution Adjustment. The Conversion Price shall be subject to a weighted average anti-dilution adjustment from time to time as follows:
(a) If the Corporation shall at any time or from time to time issue any additional shares of Common Stock (or be deemed to have issued any shares of Common Stock as provided herein), other than Excluded Securities (as defined in Section 8(c)) and Excluded Transactions (as defined in Section 8(d))(such additional shares, “Additional Shares”), without consideration or for a consideration per share less than the Conversion Price in effect immediately prior to the issuance of Common Stock, the Conversion Price in effect immediately prior to such issuance shall forthwith be lowered to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:
CP2 = CP1 * (A + B) ÷ (A + C)
For purposes of the foregoing formula, the following definitions shall apply:
● | “CP2” shall mean the Conversion Price in effect immediately after such issue of Additional Shares of Common Stock; |
● | “CP1” shall mean the Conversion Price in effect immediately prior to such issue of Additional Shares of Common Stock; |
● | “A” shall mean the number of shares of Common Stock outstanding immediately prior to such issue of Additional Shares of Common Stock (including any shares of Common Stock deemed to have been issued pursuant to Section 8(b)(iv)); |
● | “B” shall mean the number of shares of Common Stock that would have been issued if such Additional Shares of Common Stock had been issued at the price per share equal to CP1 (determined by dividing the aggregate consideration received by the Corporation in respect of such issue by CP1); and |
Certificate of Designations – page 11
● | “C” shall mean the number of such Additional Shares of Common Stock issued in such transaction. |
(b) For the purposes of any adjustment of the Conversion Price pursuant to Section 8(a), the following provisions shall be applicable:
(i) In the case of the issuance of Common Stock for cash, the consideration shall be deemed to be the amount of cash paid therefor before deducting therefrom any discounts, commissions or other expenses allowed, paid or incurred by the Corporation for any underwriting or otherwise in connection with the issuance and sale thereof.
(ii) In the case of the issuance of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined in good faith by the Board of Directors of the Corporation, irrespective of any accounting treatment.
(iii) In the case of the issuance of Common Stock without consideration, the consideration shall be deemed to be $0.01 per share.
(iv) In the case of the issuance of (x) options or warrants to purchase or rights to subscribe for Common Stock, (y) debt or securities by their terms convertible into or exchangeable for Common Stock or (z) options to purchase rights to subscribe for such convertible or exchangeable securities:
(A) the aggregate maximum number of shares of Common Stock deliverable upon exercise of such options or warrants to purchase or rights to subscribe for Common Stock shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in subdivisions (i), (ii) and (iii) above), if any, received by the Corporation upon the issuance of such options, warrants or rights plus the minimum purchase price provided in such options, warrants or rights for the Common Stock covered thereby; and
(B) the aggregate maximum number of shares of Common Stock deliverable upon conversion of or in exchange for any such convertible or exchangeable debt or securities or upon the exercise of options or warrants to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities were issued or such options or warrants or rights were issued and for a consideration equal to the consideration received by the Corporation for any such securities and related options or warrants or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the additional consideration, if any, to be received by the Corporation upon the conversion or exchange of such securities or the exercise of any related options or warrants or rights (the consideration in each case to be determined in the manner provided in subdivisions (i), (ii) and (iii) above).
Certificate of Designations – page 12
(c) For purposes of Section 8, the term “Excluded Securities” shall mean (i) shares of Common Stock issued to officers, employees, directors or consultants of Corporation and its subsidiaries, pursuant to any agreement, plan or arrangement approved by the Board of Directors of the Corporation, or options or warrants to purchase or rights to subscribe for such Common Stock, or debt or securities by their terms convertible into or exchangeable for such Common Stock, or options or warrants to purchase or rights to subscribe for such convertible or exchangeable securities pursuant to such agreement, plan or arrangement; (ii) shares of Common Stock issued as a stock dividend or upon any stock split or other subdivision or combination of shares of Common Stock; or (iii) securities issued pursuant to the acquisition of another corporation or other entity by the Corporation by merger or purchase of stock or purchase of all or substantially all of such other corporation’s or other entity’s assets whereby the Corporation owns not less than a majority of the voting power of such other corporation or other entity following such acquisition or purchase.
(d) For purposes of Section 8, the term “Excluded Transactions” shall mean sales of shares of Common Stock issued under the Company’s “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act; provided, however, that each financial quarter during which the Company’s sales of such shares reaches a multiple of $5 million aggregate consideration beginning with sales occurring after March 1, 2022 for an average consideration per share for such multiple of $5 million aggregate consideration that is less than the Exercise Price then in effect at the end of such financial quarter, the Exercise Price in effect at the end of such financial quarter shall forthwith be lowered to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the formula set forth in Section 8(a), with the following adjustments: (i) “A” shall mean the difference of (A) the number of shares of Common Stock outstanding immediately following the sale of a share under the Company’s “at the market offering” that reaches a multiple of $5 million (including any shares of Common Stock deemed to have been issued pursuant to Section 8(b)(iv)), minus (B) the number of shares of Common Stock issued under the Company’s “at the market offering” for such multiple of $5 million and (ii) “C” shall mean the number of such shares of Common Stock issued under the Company’s “at the market offering” for such multiple of $5 million.
Certificate of Designations – page 13
Section 9. Sinking Fund. The Series C Preferred Stock shall not be subject to any sinking fund.
Section 10. Preemption. The holders of Series C Preferred Stock shall not have any rights of preemption.
Section 11. Rank. Notwithstanding anything set forth in the Certificate of Incorporation or this Certificate of Designations to the contrary, the Board of Directors or any authorized committee of the Board of Directors, without the vote of the holders of the Series C Preferred Stock, may authorize and issue additional shares of Junior Stock or Parity Stock. The Corporation shall not issue any Senior Stock that prohibits or restricts the Corporation from paying dividends on the Series C Preferred Stock, without the vote of the holders of a majority of the then-outstanding shares of Series C Preferred Stock.
Section 12. Repurchase or Sale. Except as specifically permitted herein, the Corporation (a) shall not purchase or sell Series C Preferred Stock from time to time without the prior written consent of holders of a majority of the then-outstanding shares of Series C Preferred Stock, and (b) shall not use any of its funds for any such purchase when there are reasonable grounds to believe that the Corporation is, or by such purchase would be, rendered insolvent.
Section 13. Unissued or Reacquired Shares. Shares of Series C Preferred Stock (a) not issued within four (4) years after the date the first share of Series C Preferred Stock is issued, or (b) which have been issued and converted or redeemed or otherwise purchased or acquired by the Corporation, shall be restored to the status of authorized but unissued shares of preferred stock without designation as to series.
Section 14. Attorneys’ Fees. In the event any suit, action, or proceeding is instituted by the holder of Series C Preferred Stock and the Corporation, in connection with the breach, enforcement, or interpretation of the terms and provisions of this Certificate of Designations, the prevailing party therein shall be entitled to the award of reasonable attorneys’ fees and related costs, in addition to any other relief to which the prevailing party may be entitled.
Section 15. Amendment. This Certificate of Designations shall not, without the affirmative consent or vote of the holders of a majority of the then-outstanding shares of Series C Preferred Stock, be amended in any manner that would adversely affect the holders of the Series C Preferred Stock or the powers, designations, preferences and other rights of the Series C Preferred Stock.
[Signature page follows]
Certificate of Designations – page 14
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designations to be executed by its duly authorized officer on this ____ day of ______, 2022.
HALL OF FAME RESORT & | |
ENTERTAINMENT COMPANY | |
Name: | |
Title: |
Certificate of Designations – page 15
Exhibit 10.2
FIRST AMENDED AND RESTATED PROMISSORY NOTE
$4,273,543.46 | March 1, 2022 |
FOR VALUE RECEIVED, Hall of Fame Resort & Entertainment Company, a Delaware corporation (“Borrower”), as maker, hereby unconditionally promises to pay to IRG, LLC, a Nevada limited liability company (together with its successors and assigns, “Lender”), or order, the principal sum of Four Million Two Hundred Seventy Three Thousand Five Hundred Forty Three and 46/100 Dollars ($4,273,543.46) (the “Maximum Principal Amount”), or so much thereof as may be advanced by Lender to Borrower pursuant to the terms of this First Amended and Restated Promissory Note (as amended, restated, supplemented, waived, or otherwise modified from time to time, this “Note”), in lawful money of the United States of America, with interest thereon computed in accordance with Paragraph 1(b), all to be paid in accordance with the terms of this Note.
WHEREAS, on November 23, 2021, Borrower executed and delivered to Industrial Realty Group, LLC, a Nevada limited liability company (“Original Lender”), that certain Promissory Note in the original principal amount of $8,500,000 (the “Original Note”); and
WHEREAS, pursuant to that certain Assignment of Promissory Note, dated as of the date hereof (the “Note Assignment”), Original Lender assigned (a) a one-half (½) interest in the Original Note to Lender and (b) a one-half (½) interest in the Original Note to JKP Financial, LLC, a Delaware limited liability company (the “JKP Split Note”).
WHEREAS, Lender and Borrower wish to amend and restate, in its entirety, the Original Note, as partially assigned to Lender pursuant to the Note Assignment, in accordance with the terms and provisions hereof;
NOW, THEREFORE, in consideration of the foregoing premises and the other agreements and obligations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Payment Terms; Advances; Interest; Commitment Fee.
(a) Borrower agrees to pay the principal sum of this Note, interest on the unpaid principal sum of this Note, and all other amounts due under this Note from time to time outstanding, in accordance with the terms of this Note.
(b) Interest shall accrue on the outstanding balance of this Note at the greater of (i) eight percent (8.0%) per annum, compounded monthly, or (ii) if applicable, the Default Rate (as defined in Paragraph 4(f)(v)) (such greater rate, the “Interest Rate”). Interest on the outstanding principal balance of this Note shall accrue from the date hereof. Interest payable pursuant to this Note shall be computed on the basis of a 360-day year and the actual number of days elapsed in any portion of a month in which interest is due. Interest shall be paid by Borrower to Lender on the first day of each month, in arrears, during the Term (as defined in Paragraph 4(f)(ix)). Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day (as defined in Paragraph 4(f)(ii)), such payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the interest due hereunder.
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(c) The outstanding principal balance of this Note, all accrued and unpaid interest thereon, and all other amounts due under this Note shall be due and payable on or before March 31, 2024 (the “Note Maturity Date”).
(d) All payments under this Note shall be made to Lender at the following address, or at such other place as Lender may from time to time designate in writing: 11111 Santa Monica Blvd., Suite 800, Los Angeles, California 90025.
(e) Principal and interest shall be paid without deduction or offset in lawful money of the United States. Borrower shall have the right to prepay all or any portion of the principal amount of this Note at any time before the Note Maturity Date without penalty or premium for prepayment. Payments shall be applied first to interest, Late Charges (as defined in Paragraph 4(c)), and other costs due to Lender hereunder, and the balance to principal.
(f) In addition to the other payments required hereunder, Borrower shall issue to Lender, as a commitment fee in consideration of the transactions contemplated by this Note, the Commitment Fee Shares (as defined in Paragraph 1(f)(i)) and the Warrants (as defined in Paragraph 1(f)(ii)). The Commitment Fee Shares and the Warrants shall be issued in a transaction exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). A fully completed copy of the Accredited Investor Questionnaire attached hereto as Exhibit B (the “Questionnaire”) is being delivered by Lender to Borrower.
(i) 125,000 restricted shares of Borrower’s common stock, par value $0.0001 per share (the “HOFREC Common Stock”). Such shares of HOFREC Common Stock issued to Lender (the “Commitment Fee Shares”) shall benefit from, and be subject to, that certain Registration Rights Agreement, dated as of the date hereof, by and among Borrower, Lender, and the other parties thereto.
(ii) Warrants to purchase 500,000 shares of HOFREC Common Stock at an exercise price the price of $1.50 per share (the “Warrants”). Such Warrants (A) shall be exercisable, at Lender’s option, at any time from the one (1)-year anniversary of the date hereof through and including the five (5)-year anniversary of the date hereof, and (B) shall be in the form of Exhibit A attached hereto.
(g) Lender makes the following representations and warranties to Borrower:
(i) Economic Loss and Sophistication. Lender is able to bear the economic risk of losing its entire investment in the Commitment Fee Shares and Warrants. In making this statement, consideration has been given to whether Lender can afford to hold the investment for an indefinite period of time and whether Lender can afford a complete loss of its investment. Lender has such knowledge and experience in financial and business matters that it is capable of evaluating the risks and merits of this investment.
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(ii) Accredited Investor Determination. Lender is an “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities Act, as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act, as certified in the Questionnaire.
(iii) Access. Lender acknowledges that (i) Borrower has made all documents available to it including, but not limited to, this Note and any and all additional agreements, documents, records and books that Lender (or its representatives) has requested relating to an investment in the Commitment Fee Shares and Warrants, (ii) Lender has had an opportunity to ask questions of, and receive answers from, Borrower or a person acting on behalf of Borrower concerning the terms and conditions of an investment in the Commitment Fee Shares and Warrants, and (iii) all questions asked by Lender have been adequately answered to its satisfaction. Lender represents that it has had access to all information that it deems material to an investment decision with respect to an investment in the Commitment Fee Shares and Warrants.
(iv) Reliance. Lender has relied solely on independent investigations conducted by Lender or its advisors in making a decision to subscribe for the Commitment Fee Shares and Warrants and acknowledges that no representations or agreements have been made to Lender other than those specifically set forth in this Note. Lender is not relying on any oral representation of any officer or manager of Borrower or any person purported to be acting on behalf of Borrower. Lender is not relying on Borrower with respect to the tax and other economic considerations of an investment and have consulted Lender’s own attorneys, accountants or investment advisors with respect to an investment in the Commitment Fee Shares and Warrants.
(v) Speculative Investment. Lender is aware that (i) an investment in the Commitment Fee Shares and Warrants involves numerous risks, which Lender has carefully considered, (ii) no federal or state agency has passed upon the merits of the sale of the Commitment Fee Shares and Warrants of any of the information provided in connection with the offering, and (iii) the Commitment Fee Shares and Warrants are a speculative investment involving a significant degree of risk for which there is no guarantee that Lender will realize any gain from any investment. Lender acknowledges and agrees that Lender is able to hold the Commitment Fee Shares and Warrants indefinitely and to afford a complete loss of Lender’s investment in the Commitment Fee Shares and Warrants.
(vi) Exempt Transaction. Lender understands that the Commitment Fee Shares and Warrants are being issued in reliance upon an exemption from federal securities registration.
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(vii) No Registration of Interests; Book-Entry Form. Lender acknowledges and agrees that, based in part upon Lender’s representations contained herein and in reliance upon applicable exemptions, no interest in the Commitment Fee Shares and Warrants has been registered under the Securities Act or the securities laws of any other domestic or foreign jurisdiction. Lender agrees not to offer, sell, pledge or otherwise dispose of all or any portion of the Commitment Fee Shares and Warrants without registration or qualification except pursuant to an offering duly registered or qualified under the Securities Act and any applicable state securities laws, unless (i) in the opinion of counsel for, or counsel satisfactory to, Borrower, registration or qualification under the Securities Act and any applicable state securities laws is not required and (ii) if required, Lender has received any necessary regulatory approvals. Lender understands that the Commitment Fee Shares and Warrants will be subject to a legend this effect and that, as applicable, stop transfer instructions will be issued by Borrower to its transfer agent. Lender understands that the Commitment Fee Shares and Warrants will be issued in book-entry, meaning uncertificated form.
(viii) Investment Intent. Lender is acquiring the Commitment Fee Shares and Warrants for its own account for investment, and not with a view to any distribution, resale, subdivision or fractionalization thereof in violation of the Securities Act or any other applicable domestic or foreign securities laws, and Lender has no present plans to enter into any contract, undertaking, agreement or arrangement for any such distribution, resale, subdivision or fractionalization. The Commitment Fee Shares and Warrants are not being acquired, directly or indirectly, as nominee, trustee or representative of or for any other person or persons.
(ix) Power and Authority. Lender is authorized to enter into this Note, the Questionnaire, and such other agreements, certificates, instruments or other documents as are executed by or on Lender’s behalf in connection with Lender’s obligations under this Note or in connection with this subscription (collectively, the “Note Documents”), to perform Subscriber’s obligations under the Note Documents, and to consummate the transactions that are the subjects of the Note Documents.
(x) Compliance with Laws and Other Instruments. The execution and delivery of the Note Documents by, or on behalf of, Lender and the consummation of the transactions contemplated by the Note Documents do not and will not conflict with or result in any violation of or default under any provision of any charter, bylaws, trust agreement or other organizational document, as the case may be, of Lender, or any agreement, certificate or other instrument to which Lender is a party or by which Lender or any of Lender’s properties is bound, or any permit, franchise, judgment, decree, statute, rule, regulation or other law applicable to Lender or the business or properties of Lender.
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(xi) Reliance on Representations. Lender acknowledges that Borrower has relied and will rely upon Lender’s representations, warranties and agreements in this Second Amendment and that all such representations and agreements shall survive the issuance and delivery of the Commitment Fee Shares and Warrants hereunder and shall remain in effect thereafter.
2. Cross-Collateralization. The obligations under this Note shall be secured by collateral granted to secure cross collateralized with all obligations under (i) the term loan agreement (as amended, the “Term Loan Agreement”), dated as of December 1, 2020, among Borrower, HOF Village Newco, LLC (“Newco”), and certain of Newco’s subsidiaries, as borrowers, and Aquarian Credit Funding LLC , as lead arranger, administrative agent, collateral agent and representative of the lenders party thereto, as assigned to CH Capital Lending, LLC on March 1, 2022, (ii) the Secured Cognovit Promissory Note, dated June 19, 2020, in the original principal amount of $7,000,000, (a) originally executed by HOFV Hotel II, LLC and HOF Village, LLC (as makers) and payable to the order of JKP (as holder), (b) as assigned by HOF Village, LLC to Newco pursuant to that certain Contribution Agreement dated as of June 30, 2020, by and between HOF Village, LLC and Newco, (c) as amended by that certain First Amendment to Secured Promissory Note, dated as of December 1, 2020, by and among Newco, HOFV Hotel II, LLC and JKP, (d) as further amended by Joinder and Second Amendment to Promissory Note, dated March 1, 2022, by and among Newco, HOFV Hotel II, LLC, Borrower, and JKP (the “JKP Amended Note”), and (iii) the JKP Split Note. Such cross-collateralization of the obligations of Borrower and others under the Term Loan Agreement, the JKP Amended Note, the IRG Split Note, and this Note shall be reflected in (i) the Mortgage granted in connection with under the Term Loan Agreement, (iii) the JKP Amended Note, (iv) the JKP Split Note, (v) this Note, and/or (vi) appropriate instruments that amend, supplement, and/or assign any of the foregoing instruments or which provide collateral for the payment of any obligations arising under the foregoing instruments.
3. Expenses; Indemnification.
(a) Borrower agrees to pay promptly: (i) all the actual and reasonable documented costs and expenses of Lender, including attorneys’ fees, in connection with the negotiation, preparation, and execution of this Note and the transactions contemplated hereby, (ii) all fees, costs, and expenses incurred by Lender (including during the pendency of any bankruptcy, insolvency, receivership, or other similar proceeding, regardless of whether allowed or allowable in such proceeding) to maintain, protect, or preserve Lender’s rights under this Note or with respect to any collateral that secures this Note, (iii) all the actual and reasonable costs and expenses of creating and perfecting liens on any collateral that secures this Note in favor of Lender, including filing and recording fees, expenses, and taxes, stamp or documentary taxes, search fees, title insurance premiums, and reasonable fees, expenses, and disbursements of counsel to Lender, (iv) all the actual and reasonable costs and fees, expenses, and disbursements of any auditors, accountants, consultants, or appraisers engaged by Lender in connection with the transactions contemplated by this Note, (v) all the actual and reasonable costs and expenses (including the reasonable fees, expenses, and disbursements of any appraisers, consultants, advisors, and agents employed or retained by Lender) in connection with the custody or preservation of any of collateral that secures this Note, and (vi) after the occurrence of a Default (as defined in Paragraph 4(f)(iv)) or an Event of Default (as defined in Paragraph 4(f)(vi)), all documented costs and expenses, including attorneys’ fees and costs of settlement, incurred by Lender in enforcing any obligations under this Note or under any other agreement executed in connection with or securing this Note, or in collecting any payments due from Borrower under this Note or under any other agreement executed in connection with or securing this Note by reason of such Default or Event of Default (including in connection with the sale of, collection from, or other realization upon any of collateral securing this Note) or in connection with any refinancing or restructuring of the credit arrangements provided hereunder in the nature of a “work-out” or pursuant to any insolvency or bankruptcy cases or proceedings.
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(b) Borrower agrees to indemnify Lender and each of Lender’s members, managers, officers, employees, agents, and representatives, and their respective successors and assigns (each of the foregoing Persons (as defined in Paragraph 4(f)(viii)), an “Indemnitee”) against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related costs and expenses, including reasonable counsel fees, disbursements and other charges, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or delivery of this Note or any other agreement executed in connection with or securing this Note, the performance by the parties thereto of their respective obligations thereunder, or the consummation of the transactions contemplated thereby, (ii) the use of the proceeds of this Note, (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto, or (iv) any actual or alleged presence or Release of Hazardous Materials (as defined in the Term Loan Agreement) on any property owned or operated by Borrower (or by and direct or indirect subsidiary of Borrower), or any Environmental Liability (as defined in the Term Loan Agreement) related in any way to Borrower (or related in any way to any direct or indirect subsidiary of Borrower); provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related costs and expenses are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted primarily from the gross negligence or willful misconduct of such Indemnitee (and, upon any such determination, any indemnification payments with respect to such losses, claims, damages, liabilities or related costs and expenses previously received by such Indemnitee shall be subject to reimbursement by such Indemnitee). To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth in this Paragraph 3(b) may be unenforceable in whole or in part because they are violative of any law or public policy, Borrower shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all indemnified liabilities incurred by Indemnitees or any of them.
(c) To the extent permitted by applicable law, Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential, or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Note or any other agreement executed in connection with or securing this Note or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, or the use of the proceeds of this Note.
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(d) Any amounts payable to Lender under this Paragraph 3 shall accrue interest at the Interest Rate, calculated from the date of payment or disbursement by Lender, until repaid in full.
4. Default and Acceleration.
(a) Upon the occurrence and during the continuance of any Event of Default, and at any time and from time to time thereafter, in addition to any other rights or remedies available to Lender under this Note, at law, or in equity:
(i) Borrower shall pay interest on the outstanding principal and interest at an interest rate equal to the Default Rate.
(ii) Lender may, at its option, take such action, without notice or demand, that Lender deems advisable to protect and enforce its rights against Borrower and/or in and to any collateral that secures this Note; including, without limitation, declaring Borrower’s obligations under this Note to be immediately due and payable (including any accrued and unpaid interest and any other amounts owing by Borrower under this Note).
(b) Upon the occurrence of any Insolvency Event (as defined in Paragraph 4(f)(vii)), all of Borrower’s obligations under this Note (including any accrued and unpaid interest and any other amounts owing by Borrower under this Note) shall immediately and automatically become due and payable, without notice or demand, and Borrower hereby expressly waives any such notice or demand, notwithstanding anything to the contrary contained herein.
(c) If any payment owing from Borrower to Lender under this Note is not received by Lender within five (5) days following its due date, Borrower shall pay to Lender an additional sum equal to four percent (4%) of the overdue amount as a late charge (the “Late Charge”). The Late Charge shall be paid to Lender within five (5) days after the date incurred, and any failure to pay the Late Charge within thirty (30) days after the date incurred shall be an Event of Default hereunder.
(d) Borrower recognizes that any failure by Borrower to timely make the payments provided for herein, or any other Event of Default hereunder, will cause Lender to incur costs not contemplated by this Note (including, without limitation, processing and accounting charges, loss of use of funds, and frustration to Lender in meeting its other financial commitments), and that the damages caused thereby would be extremely difficult and impractical to ascertain. Borrower hereby agrees that, if any such event should occur, the Default Rate (if applicable) and the Late Charge (if applicable), represent a fair and reasonable estimate of the damages and costs to Lender, considering all the circumstances existing on the date of this Note. The parties further agree that proof of actual damages would be costly or inconvenient. Acceptance of the Late Charge (if applicable) will not be deemed a waiver of any Default or Event of Default (unless such Default or Event of Default is cured in accordance with the provisions of this Note), and shall not prevent Lender from exercising any other rights and remedies available to Lender.
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(e) No failure or delay on the part of Lender in exercising any right or remedy under this Note or under any other agreement executed in connection with or securing this Note shall operate as a waiver of any such right or remedy. No right, power, or remedy given to Lender by the terms of this Note or by the terms of any other agreement executed in connection with or securing this Note is intended to be exclusive of any other right, power, or remedy, and each and every such right, power, or remedy shall be cumulative and in addition to every other right, power, or remedy given to Lender by the terms of any instrument or by any statute or otherwise against Borrower or any other Person. No single or partial exercise by Lender of any power hereunder, or under any other document executed in connection with or securing this Note, shall preclude other or further exercise thereof or the exercising of any other power.
(f) For purposes of this Note:
(i) “Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any successor statute.
(ii) “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in Los Angeles, California are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority, so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in Los Angeles, California are generally are open for use by customers on such day.
(iii) “Debtor Relief Laws” means the Bankruptcy Code and all other liquidation, compromise, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect.
(iv) “Default” means any event or condition that, upon notice, lapse of time, or both, would constitute an Event of Default.
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(v) “Default Rate” means the lesser of (A) sixteen percent (16%) per annum and (B) the Maximum Legal Rate (as defined in Paragraph 6(a)).
(vi) “Event of Default” means (A) Borrower’s failure to pay, on or before the due date thereof (subject to Paragraph 4(c) with respect to Late Charges only and subject to Paragraph 4(d)), any amount owing to Lender under this Note or under any other agreement executed in connection with this Note, or (B) Borrower’s failure, within five (5) days after written notice from Lender to Borrower, to comply with any non-monetary covenant contained in this Note or in any other agreement executed in connection with or securing this Note.
(vii) “Insolvency Event” means a proceeding under any Debtor Relief Law with respect to Borrower or any direct or indirect subsidiary of Borrower.
(viii) “Person” means any individual, partnership, limited liability company, corporation, joint venture, association, trust, or other entity
(ix) “Term” means the period commencing on the date hereof and ending on the Note Maturity Date.
5. [Reserved]
6. Savings Clause. Notwithstanding anything to the contrary contained herein
(a) All agreements and communications between Borrower and Lender are hereby, and shall, automatically be limited so that, after taking into account all amounts deemed to constitute interest, the interest contracted for, charged, or received by Lender shall never exceed the maximum non-usurious interest rate (if any), that at any time or from time to time may be contracted for, taken, reserved, charged, or received on the indebtedness evidenced by this Note, under the laws of any state whose laws are held by any court of competent jurisdiction to govern the interest rate provisions of this Note (the “Maximum Legal Rate”).
(b) In calculating whether any interest exceeds the Maximum Legal Rate, all such interest shall be amortized, prorated, allocated, and spread over the full amount and term of all principal indebtedness of Borrower to Lender.
(c) If, through any contingency or event, Lender receives or is deemed to receive interest in excess of the Maximum Legal Rate, any such excess shall be deemed to have been applied toward the payment of the principal of any and all then outstanding indebtedness of Borrower to Lender, or if there is no such indebtedness, shall immediately be returned to Borrower.
7. No Oral Change. This Note may not be modified, amended, waived, extended, changed, discharged, or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge, or termination is sought.
8. Waivers. Borrower and all others who may become liable for the payment of all or any part of the obligations evidenced by this Note do hereby jointly and severally waive presentment and demand for payment, notice of dishonor, notice of intention to accelerate, notice of acceleration, protest and notice of protest and non-payment, and all other notices of any kind, except as expressly provided herein. No release of any security for the obligations evidenced by this Note, nor any extension of time for payment of this Note or any installment hereof, and no alteration, amendment, or waiver of any provision of this Note or of any other agreement between Lender (on one hand) and any other Person (on the other hand), shall release, modify, amend, waive, extend, change, discharge, terminate, or affect the liability of Borrower or any other Person who may become liable for the payment of all or any part of the obligations evidenced by this Note. No notice to or demand on Borrower shall be deemed to be a waiver of the obligation of Borrower or of the right of Lender to take further action without further notice or demand, as provided for in this Note or in any other agreement executed in connection with or securing this Note. If Borrower is a corporation, the agreements contained herein shall remain in full force and be applicable, notwithstanding any changes in the shareholders comprising, or the officers and directors relating to, such corporation, and the term “Borrower,” as used herein, shall include any alternative or successor corporation, but any predecessor corporation shall not be relieved of liability hereunder. Nothing in the foregoing two sentences shall be construed as a consent to, or a waiver of, any prohibition or restriction on transfers of interests in such partnership, limited liability company or corporation which may be set forth in this Note or in any other agreement executed in connection with or securing this Note.
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9. Transfer; Successors and Assigns.
(a) This Note and any of Lender’s rights hereunder may be assigned by Lender, at any time, to any entity that is directly or indirectly controlling, controlled by, or under common control with Lender. Any such assignee or transferee of Lender shall be entitled to all the benefits afforded to Lender under this Note. Upon any such transfer of this Note by Lender, Lender may deliver its rights to all the collateral (if any) mortgaged, granted, pledged, or assigned as security for this Note (or any part thereof) to the transferee, who shall thereupon become vested with all the rights and obligations herein or under applicable law given to Lender with respect thereto, and Lender shall thereafter forever be relieved and fully discharged from any liability or responsibility in the matter; but Lender shall retain all rights and obligations hereby given to it with respect to any liabilities and the collateral not so transferred.
(b) Borrower shall not have the right to assign or transfer Borrower’s rights or obligations under this Note without Lender’s the prior written consent (which consent may be granted or withheld in Lender’s sole discretion). Any attempted assignment or transfer by Borrower of Borrower’s rights or obligations under this Note without Lender’s prior written consent shall be null and void.
(c) Subject to the foregoing, this Note shall be binding upon, and shall inure to the benefit of, Borrower and Lender and their respective successors and permitted assigns.
10. Governing Law; Jurisdiction; Service of Process.
(a) IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE, THIS NOTE AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA. NOTWITHSTANDING THE FOREGOING, AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF ANY LIENS SECURING THE OBLIGATIONS EVIDENCED BY THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE STATE IN WHICH THE RELEVANT PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAWS OF SUCH STATE, THE LAWS OF THE STATE OF DELAWARE SHALL GOVERN THE VALIDITY AND THE ENFORCEABILITY OF THIS NOTE AND THE OBLIGATIONS EVIDENCED BY THIS NOTE. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS NOTE.
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(b) ANY LEGAL SUIT, ACTION, OR PROCEEDING AGAINST BORROWER ARISING OUT OF OR RELATING TO THIS NOTE SHALL BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN LOS ANGELES COUNTY, CALIFORNIA (APPLYING THE LAWS OF THE STATE OF DELAWARE). BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION, OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION, OR PROCEEDING. BORROWER AGREES THAT SERVICE OF PROCESS UPON BORROWER AT THE ADDRESS FOR BORROWER SET FORTH IN PARAGRAPH 12, AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED IN PARAGRAPH 12, SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT, ACTION, OR PROCEEDING. BORROWER SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGE IN THE ADDRESS FOR BORROWER SET FORTH IN PARAGRAPH 12. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. NOTWITHSTANDING THE FOREGOING, LENDER SHALL HAVE THE RIGHT TO INSTITUTE ANY LEGAL SUIT, ACTION, OR PROCEEDING FOR THE ENFORCEMENT OR FORECLOSURE OF ANY LIEN ON ANY COLLATERAL FOR THIS NOTE AND THE OBLIGATIONS EVIDENCED BY THIS NOTE IN ANY FEDERAL OR STATE COURT IN ANY JURISDICTION THAT LENDER MAY ELECT, IN ITS SOLE AND ABSOLUTE DISCRETION. BORROWER WAIVES ANY OBJECTION WHICH BORROWER MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION, OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION, OR PROCEEDING.
11. Waiver of Jury Trial. BORROWER (AND LENDER, BY ITS ACCEPTANCE HEREOF) HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS NOTE, THE OBLIGATIONS EVIDENCED BY THIS NOTE, OR ANY CLAIM, COUNTERCLAIM, OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND BY LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER OR BORROWER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.
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12. Notices. Any notice, demand, consent, approval, or document that Borrower or Lender is required or may desire to give or deliver to the other party shall be given in writing by (a) personal delivery; (b) certified mail, return receipt requested, postage prepaid; (c) a national overnight courier service that provides written evidence of delivery; or (d) electronic mail transmission and addressed as to such other party at its notice address set forth below:
(a) If to Lender:
IRG, LLC
11111 Santa Monica Blvd., Suite 800
Los Angeles, CA 90025
Attention: Richard Klein
Email: RKlein@industrialrealtygroup.com
With a copy to (which shall not constitute notice):
Fainsbert Mase Brown & Sussman, LLP
11111 Santa Monica Blvd., Suite 810
Los Angeles, CA 90025
Attention: Dean Sussman, Esq.
Email: DSussman@fms-law.com
(b) If to Borrower:
Hall of Fame Resort & Entertainment Company
2626 Fulton Dr. NW
Canton, OH 44718
Attention: Michael Crawford
Email: Michael.Crawford@HOFVillage.com
and
Hall of Fame Resort & Entertainment Company
2626 Fulton Dr. NW
Canton, OH 44718
Attention: Tara Charnes
Email: tara.charnes@HOFVillage.com
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With a copy to (which shall not constitute notice):
Hunton Andrews Kurth LLP
2200 Pennsylvania Ave., N.W.
Washington, DC 20037
Attention: Steve Patterson
Email: spatterson@hunton.com
Any party may change its notice address (or any portion thereof) by giving written notice thereof in accordance with this paragraph. All notices hereunder shall be deemed given: (i) if delivered personally, when delivered; (ii) if sent by certified mail, return receipt requested, postage prepaid, on the third day after deposit in the U.S. mail; (iii) if sent by overnight courier, on the first Business Day after delivery to the courier; and (iv) if sent by electronic mail, on the date of transmission if sent on a Business Day before 5:00 p.m. Eastern time, or on the next Business Day, if sent on a day other than a Business Day or if sent after 5:00 p.m. Eastern time; provided that a hard copy of any notice sent by electronic mail must also be sent by either a nationally recognized overnight courier or by U.S. mail, first class, postage prepaid.
13. Time of the Essence. Time is of the essence with respect to Borrower’s obligations under this Note.
14. Severability. In the event any term or provision of this Note is held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Note, which terms and provision shall remain binding and enforceable.
15. Optional Conversion. At any time following the date hereof, and from time to time prior to the Note Maturity Date, Lender shall have the right, but not the obligation, to elect to convert all or any portion of the principal amount of this Note into shares of HOFREC Common Stock on the terms and conditions in this Paragraph 15 (any such conversion, an “Optional Conversion”).
(a) Lender may elect to convert all or any portion of the principal amount of this Note into that number of shares of HOFREC Common Stock equal to the quotient of (A) the sum of (x) the principal amount of this Note being converted specified in the Conversion Notice (defined below), plus (y) all accrued and unpaid interest on such principal amount of this Note as of the applicable Conversion Election Effective Date (defined below), divided by (B) the Conversion Price (defined below) as of the applicable Conversion Election Effective Date, with fractional shares of HOFREC Common Stock rounded up or down as provided in Paragraph 15(g) hereof. “Conversion Price” means $1.50, as appropriately adjusted for stock splits, stock dividends, combinations, and subdivisions of HOFREC Common Stock.
(b) In order to effectuate an Optional Conversion of all or any portion of the principal amount of this Note, Lender shall submit a written notice to Borrower, duly executed by Lender (a “Conversion Notice”), accompanied by this Note, stating that Lender irrevocably elects to convert the principal amount of this Note specified in such Conversion Notice. In the event that only a portion of this Note is being converted, Borrower shall issue a replacement Note representing the remaining principal amount of this Note that has not been converted. An election to convert all or any portion of the principal amount of this Note pursuant to an Optional Conversion shall be deemed to have been made as of the following dates (the “Conversion Election Effective Date”): (A) on the date of receipt, with respect to any Conversion Notice received by Borrower at or prior to 5:00 p.m., New York City time, on any Business Day, and (B) on the next Business Day following such receipt, with respect to any Conversion Notice received by Borrower on a non-Business Day or after 5:00 p.m., New York City time, on any Business Day. The conversion of the principal amount of this Note with respect to which an Optional Conversion election is made, and the issuance of all shares of HOFREC Common Stock to be issued pursuant to such conversion, shall become effective as of the applicable Conversion Election Effective Date. Within three (3) Business Days after the applicable Conversion Election Effective Date, Borrower shall deliver to Lender (or, if applicable, in the name of Lender’s designee as stated in the Conversion Notice), by book-entry delivery, a number of shares of HOFREC Common Stock equal to the number of shares to which such holder is entitled pursuant to such Optional Conversion.
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(c) Upon any conversion of this Note, the rights of Lender with respect to the unpaid principal amount hereunder converted into shares of HOFREC Common Stock shall cease and Lender shall be deemed to have become the owner of the shares of HOFREC Common Stock into which such principal amount of this Note shall have been converted and such converted principal amount shall be extinguished and deemed to have been forgiven or repaid and shall no longer be outstanding and no future interest shall accrue on any such amount.
(d) All shares of HOFREC Common Stock delivered upon any Optional Conversion will, upon such conversion, be duly and validly authorized and issued, fully paid and nonassessable, free from all preemptive rights, free from all taxes, liens, security interests, charges and encumbrances (other than liens, security interests, charges or encumbrances created by or imposed upon the holder or taxes in respect of any transfer occurring contemporaneously therewith).
(e) The issuance of shares of HOFREC Common Stock upon conversion of all or any portion of the principal amount of this Note pursuant to any Optional Conversion shall be made without payment of additional consideration by, or other charge, cost or tax to, Lender in respect thereof; provided, however, that Borrower shall not be required to pay any tax or other governmental charge that may be payable with respect to the issuance or delivery of any shares of HOFREC Common Stock in the name of any person other than Lender, and no such delivery shall be made unless and until the person requesting such issuance has paid to Borrower the amount of any such tax or charge, or has established to the satisfaction of Borrower that such tax or charge has been paid or that no such tax or charge is due.
(f) Borrower shall at all times reserve and keep available out of its authorized but unissued shares of HOFREC Common Stock, solely for the purpose of issuance upon conversion of the principal amount of this Note in accordance with this Paragraph 15, such number of shares of HOFREC Common Stock issuable upon the conversion of all outstanding principal amount of this Note pursuant to any Optional Conversion at the Conversion Price. Borrower shall take all such actions as may be necessary to assure that all such shares of HOFREC Common Stock may be so issued without violation of any applicable law or governmental regulation applicable to Borrower or any requirements of any securities exchange upon which shares of HOFREC Common Stock may be listed (except for official notice of issuance, which shall be immediately delivered by Borrower upon each such issuance). Borrower shall not take any action which would cause the number of authorized but unissued shares of HOFREC Common Stock to be less than the number of such shares required to be reserved hereunder for issuance upon conversion of the principal amount of this Note.
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(g) No fractional shares of HOFREC Common Stock shall be issued upon any Optional Conversion of all or any portion of the principal amount of this Note. In lieu of delivering a fractional share of HOFREC Common Stock to any holder in connection with an Optional Conversion, any fractional share of HOFREC Common Stock shall be rounded up or down to the next whole number or zero, as applicable (with one-half being closer to the next lower whole number for this purpose).
(h) The Conversion Price shall be subject to a weighted average anti-dilution adjustment from time to time as follows:
(i) If Borrower shall at any time or from time to time during the period from the date of this Note to the Note Maturity Date, issue any additional shares of HOFREC Common Stock (or be deemed to have issued any shares of HOFREC Common Stock as provided herein), other than Excluded Securities (as defined in Paragraph 15(h)(iii)) and Excluded Transactions (as defined in Paragraph 15(h)(iv)) (such additional shares, “Additional Shares”), without consideration or for a consideration per share less than the Conversion Price in effect immediately prior to the issuance of HOFREC Common Stock, the Conversion Price in effect immediately prior to such issuance shall forthwith be lowered to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:
CP2 = CP1 * (A + B) ÷ (A + C)
For purposes of the foregoing formula, the following definitions shall apply:
· | “CP2” shall mean the Conversion Price in effect immediately after such issue of Additional Shares of HOFREC Common Stock; |
· | “CP1” shall mean the Conversion Price in effect immediately prior to such issue of Additional Shares of HOFREC Common Stock; |
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· | “A” shall mean the number of shares of HOFREC Common Stock outstanding immediately prior to such issue of Additional Shares of HOFREC Common Stock (including any shares of HOFREC Common Stock deemed to have been issued pursuant to Paragraph 15(h)(ii)(D)); |
· | “B” shall mean the number of shares of HOFREC Common Stock that would have been issued if such Additional Shares of HOFREC Common Stock had been issued at the price per share equal to CP1 (determined by dividing the aggregate consideration received by Borrower in respect of such issue by CP1); and |
· | “C” shall mean the number of such Additional Shares of HOFREC Common Stock issued in such transaction. |
(ii) For the purposes of any adjustment of the Conversion Price pursuant to Paragraph 15(h)(i), the following provisions shall be applicable:
(A) In the case of the issuance of HOFREC Common Stock for cash, the consideration shall be deemed to be the amount of cash paid therefor before deducting therefrom any discounts, commissions or other expenses allowed, paid or incurred by Borrower for any underwriting or otherwise in connection with the issuance and sale thereof.
(B) In the case of the issuance of HOFREC Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined in good faith by the Board of Directors of Borrower, irrespective of any accounting treatment.
(C) In the case of the issuance of HOFREC Common Stock without consideration, the consideration shall be deemed to be $0.01 per share.
(D) In the case of the issuance of (x) options or warrants to purchase or rights to subscribe for HOFREC Common Stock, (y) debt or securities by their terms convertible into or exchangeable for HOFREC Common Stock or (z) options to purchase rights to subscribe for such convertible or exchangeable securities:
(1) the aggregate maximum number of shares of HOFREC Common Stock deliverable upon exercise of such options or warrants to purchase or rights to subscribe for HOFREC Common Stock shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in subdivisions (A), (B) and (C) above), if any, received by Borrower upon the issuance of such options, warrants or rights plus the minimum purchase price provided in such options, warrants or rights for the HOFREC Common Stock covered thereby; and
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(2) the aggregate maximum number of shares of HOFREC Common Stock deliverable upon conversion of or in exchange for any such convertible or exchangeable debt or securities or upon the exercise of options or warrants to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities were issued or such options or warrants or rights were issued and for a consideration equal to the consideration received by Borrower for any such securities and related options or warrants or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the additional consideration, if any, to be received by Borrower upon the conversion or exchange of such securities or the exercise of any related options or warrants or rights (the consideration in each case to be determined in the manner provided in subdivisions (A), (B) and (C) above).
(iii) For purposes of this Paragraph 15(h), the term “Excluded Securities” shall mean (i) shares of HOFREC Common Stock issued to officers, employees, directors or consultants of Borrower and its subsidiaries, pursuant to any agreement, plan or arrangement approved by the Board of Directors of Borrower, or options or warrants to purchase or rights to subscribe for such HOFREC Common Stock, or debt or securities by their terms convertible into or exchangeable for such HOFREC Common Stock, or options or warrants to purchase or rights to subscribe for such convertible or exchangeable securities pursuant to such agreement, plan or arrangement; (ii) shares of HOFREC Common Stock issued as a stock dividend or upon any stock split or other subdivision or combination of shares of HOFREC Common Stock; or (iii) securities issued pursuant to the acquisition of another corporation or other entity by Borrower by merger or purchase of stock or purchase of all or substantially all of such other corporation’s or other entity’s assets whereby Borrower owns not less than a majority of the voting power of such other corporation or other entity following such acquisition or purchase.
(iv) For purposes of this Paragraph 15(h), the term “Excluded Transactions” shall mean sales of shares of Common Stock issued under the Company’s “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act; provided, however, that each financial quarter during which the Company’s sales of such shares reaches a multiple of $5 million aggregate consideration beginning with sales occurring after March 1, 2022 for an average consideration per share for such multiple of $5 million aggregate consideration that is less than the Exercise Price then in effect at the end of such financial quarter, the Exercise Price in effect at the end of such financial quarter shall forthwith be lowered to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the formula set forth in Paragraph 15(h)(i), with the following adjustments: (A) “A” shall mean the difference of (1) the number of shares of Common Stock outstanding immediately following the sale of a share under the Company’s “at the market offering” that reaches a multiple of $5 million (including any shares of Common Stock deemed to have been issued pursuant to Section 15(h)(ii)(D)), minus (2) the number of shares of Common Stock issued under the Company’s “at the market offering” for such multiple of $5 million and (B) “C” shall mean the number of such shares of Common Stock issued under the Company’s “at the market offering” for such multiple of $5 million.
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(i) Nasdaq 19.99% Cap. Notwithstanding anything to the contrary contained in this Note or the other Transaction Documents, Borrower and Lender agree that the total cumulative number of shares of HOFREC Common Stock that may be issued to Lender and its affiliates hereunder and under the other Transaction Documents may not exceed the requirements of Nasdaq Listing Rule 5635(d) (“Nasdaq 19.99% Cap”), except that such limitation will not apply following Approval (defined below). If the number of shares of HOFREC Common Stock issued to Lender and its affiliates under this Note and the other Transaction Documents reaches the Nasdaq 19.99% Cap, so as not to violate the 20% limit established in Listing Rule 5635(d), Borrower, at its election, will use reasonable commercial efforts to obtain stockholder approval of this Note and the issuance of additional shares of HOFREC Common Stock upon the conversion of the portion of the Loan under this Note, if necessary, in accordance with the requirements of Nasdaq Listing Rule 5635(d) (the “Approval”). “Transaction Documents” shall mean (A) this Note, (B) the Certificate of Designations of 7.00% Series C Convertible Preferred Stock, par value $0.0001 per share, of Borrower, (C) the amended and restated Series C Warrant, dated March 1, 2022, issued Borrower to CH Capital Lending, LLC, (D) the amended and Series D Warrant to purchase HOFREC Common Stock, dated March 1, 2022, issued by Borrower to CH Capital Lending, LLC, (E) the Series E Warrant to purchase HOFREC Common Stock, dated March 1, 2022, issued by Borrower to CH Capital Lending, LLC, (F) the Series E Warrant to purchase HOFREC Common Stocks, dated March 1, 2022, issued by Borrower to IRG, LLC, (G) the two Series F Warrants to purchase HOFREC Common Stock, dated March 1, 2022, issued by Borrower to JKP Financial, LLC, (H) the Series G Warrant to purchase HOFREC Common Stock to be issued by the Borrower to Stuart Lichter, (I) the Letter Agreement, dated March 1, 2022, between Borrower and Stuart Lichter, (J) the $4,273,543.46 First Amended and Restated Promissory Note, dated March 1, 2022, issued by Borrower to JKP Financial, LLC, and (K) the Joinder and Second Amendment to Secured Cognovit Promissory Note, dated as of March 1, 2022, by and between HOF Village Newco, LLC, HOF Village Hotel II, LLC, as makers, Borrower, and JKP Financial, LLC, as holder.
(j) Prepayment Notice. Prior to the prepayment of the Loan in accordance with this Note, Borrower shall provide a ten (10) day notice to Lender who then shall have the right to convert any portion or all of the Loan within twenty (20) business days after notice of any planned prepayment at the Conversion Price then in effect.
16. Entire Agreement. This Note is deemed to amend, modify, restate, the Original Note and the Original Note is hereby amended, modified, and restated in its entirety. This Note and any other documents incorporated by reference constitutes the sole and entire agreement of the parties with respect to the subject matter of this Note, and supersedes all prior and contemporaneous understandings, agreements, representations, and warranties, both written and oral, with respect to the subject matter.
(Remainder of page intentionally left blank; signature page follows)
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IN WITNESS WHEREOF, Borrower and Lender have duly executed this First Amended and Restated Promissory Note as of the day and year first above written.
Borrower:
HALL OF FAME RESORT &
ENTERTAINMENT COMPANY,
a Delaware corporation | ||
By: | /s/ Michael Crawford | |
Name: Michael Crawford | ||
Title: President and Chief Executive Officer | ||
Lender: |
IRG, LLC,
a Nevada limited liability company
By: | S.L. Properties, Inc., | |
a Delaware corporation, | ||
its Manager |
By: | /s/ John A. Mase | |||
Name: | John A. Mase | |||
Title: | Chief Executive Officer |
Exhibit A
FORM OF WARRANT AGREEMENT
[See attached]
Exhibit B]
ACCREDITED INVESTOR QUESTIONNAIRE
(ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)
This Accredited Investor Questionnaire (“Questionnaire”), dated as of __ _, 2022 , is to being delivered by the undersigned (“Subscriber”) in connection with Subscriber’s receipt of shares (the “Subscribed Shares”) of common stock , par value $0.0001 per share (“Common Stock”), of Hall of Fame Resort & Entertainment Company, a Delaware corporation (the “Company”), and warrants (the “Warrants”) as contemplated by Amended and Restated Promissory Note, dated as of March 1, 2022, issued by the Company to IRG, LLC (the “Note”). The Subscribed Shares are being issued without registration under the Securities Act of 1933, as amended (the “Securities Act”), and the securities laws of certain states, in reliance on the exemptions contained in the Securities Act and in reliance on similar exemptions under applicable state laws. The purpose of this Questionnaire is to provide assurance that Subscriber meets the applicable suitability requirements. The information supplied by Subscriber will be used in determining whether Subscriber meets such requirements, and reliance upon the private offering exemptions from registration is based in part on the information herein supplied.
This Questionnaire does not constitute an offer to sell or a solicitation of an offer to buy any security. Subscriber’s answers will be kept strictly confidential. However, by signing this Questionnaire, Subscriber authorizes the Company to provide a completed copy of this Questionnaire to such parties as the Company deems appropriate in order to ensure that the purchase and sale of the Subscribed Shares and Warrants will not result in a violation of the Securities Act or the securities laws of any state. Subscriber must answer all applicable questions and complete and sign this Questionnaire. Please print or type the responses and attach additional sheets of paper if necessary to complete the answers to any item.
PART A. BACKGROUND INFORMATION
Name of Subscriber: | IRG, LLC |
If a corporation, partnership, limited liability company, trust or other entity:
Type of entity: | Nevada limited liability company |
Business Address:
(Number and Street) | ||
(City, State, and Zip Code) |
Telephone Number: |
Employer or Taxpayer Identification No.: |
Was Subscriber formed for the purpose of investing in the securities being offered?
Yes ☐ No ☒
PART B. ACCREDITED INVESTOR QUESTIONNAIRE
In connection with the purchase and sale of the Subscribed Shares and Warrants pursuant to the Note, the following information must be obtained regarding Subscriber’s investor status. Please initial each category applicable to Subscriber as a purchaser of the Subscribed Shares and Warrants.
_____ | (i) | A natural person whose individual net worth, or joint net worth with such person’s spouse, at the time of his or her purchase exceeds $1,000,000. | |
Note: The term “net worth” means the excess of total assets at fair market value over total liabilities, except that (i) the person’s primary residence shall not be included as an asset; (ii) indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of the sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (iii) indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability. |
_____ | (ii) | A natural person who had an individual income in excess of $200,000 in each of the two most recent years, or joint income with such person’s spouse in excess of $300,000 in each of those years, and who has a reasonable expectation of reaching the same income level in the current calendar year. |
_____ | (iii) | A trust with total assets in excess of $5,000,000 not formed for the specific purpose of acquiring the Subscribed Shares and Warrants, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) (i.e., a person who has such knowledge and experience in financial and business matters that such person is capable of evaluating the merits and risks of the prospective investment). |
____ | (iv) | An entity in which all of the equity owners are accredited investors. (If Subscriber has checked this alternative, Subscriber shall provide statements signed by each equity owner demonstrating how each is qualified as an accredited investor.) |
_____ | (v) | A bank as defined in Section 3(a)(2) of the Securities Act, or a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended; an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Company Act of 1940 (the “Investment Company Act”), or a business development company as defined in Section 2(a)(48) of the Investment Company Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, as amended; a plan established and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (“ERISA”), if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which fiduciary is either a bank, a savings and loan association, an insurance company, or a registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors. |
_____ | (vi) | A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended. |
☐____ | (vii) | An organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, a corporation, limited liability company, Massachusetts or similar business trust, or a partnership, that was not formed for the specific purpose of acquiring the Subscribed Shares and Warrants, with total assets in excess of $5,000,000. |
_____ | (viii) | A director or executive officer of the Company. |
_____ | (ix) | None of the above. |
[Signature Page Follows]
IN WITNESS WHEREOF, Subscriber has executed this Questionnaire as of the date set forth above and hereby certifies that the information contained herein is true and correct as of such date.
Subscriber:
IRG, LLC,
a Nevada limited liability company
By: | S.L. Properties, Inc., | |
a Delaware corporation, | ||
its Manager |
By: | ||||
Name: | ||||
Title: |
Exhibit 10.3
FIRST AMENDED AND RESTATED PROMISSORY NOTE
$4,273,543.46 | March 1, 2022 |
FOR VALUE RECEIVED, Hall of Fame Resort & Entertainment Company, a Delaware corporation (“Borrower”), as maker, hereby unconditionally promises to pay to JKP Financial, LLC, a Delaware limited liability company JKP Financial, LLC, a Delaware limited liability company (together with its successors and assigns, “Lender”), or order, the principal sum of Four Million Two Hundred Seventy Three Thousand Five Hundred Forty Three and 46/100 Dollars ($4,273,543.46) (the “Maximum Principal Amount”), or so much thereof as may be advanced by Lender to Borrower pursuant to the terms of this First Amended and Restated Promissory Note (as amended, restated, supplemented, waived, or otherwise modified from time to time, this “Note”), in lawful money of the United States of America, with interest thereon computed in accordance with Paragraph 1(b), all to be paid in accordance with the terms of this Note.
WHEREAS, on November 23, 2021, Borrower executed and delivered to Industrial Realty Group, LLC, a Nevada limited liability company (“Original Lender”), that certain Promissory Note in the original principal amount of $8,500,000 (the “Original Note”); and
WHEREAS, pursuant to that certain Assignment of Promissory Note, dated as of the date hereof (the “Note Assignment”), Original Lender assigned (a) a one-half (½) interest in the Original Note to Lender and (b) a one-half (½) interest in the Original Note to IRG, LLC, a Nevada limited liability company (the “IRG Split Note”).
WHEREAS, Lender and Borrower wish to amend and restate, in its entirety, the Original Note, as partially assigned to Lender pursuant to the Note Assignment, in accordance with the terms and provisions hereof;
NOW, THEREFORE, in consideration of the foregoing premises and the other agreements and obligations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Payment Terms; Advances; Interest; Commitment Fee.
(a) Borrower agrees to pay the principal sum of this Note, interest on the unpaid principal sum of this Note, and all other amounts due under this Note from time to time outstanding, in accordance with the terms of this Note.
(b) Interest shall accrue on the outstanding balance of this Note at the greater of (i) eight percent (8.0%) per annum, compounded monthly, or (ii) if applicable, the Default Rate (as defined in Paragraph 4(f)(v)) (such greater rate, the “Interest Rate”). Interest on the outstanding principal balance of this Note shall accrue from the date hereof. Interest payable pursuant to this Note shall be computed on the basis of a 360-day year and the actual number of days elapsed in any portion of a month in which interest is due. Interest shall be paid by Borrower to Lender on the first day of each month, in arrears, during the Term (as defined in Paragraph 4(f)(ix)). Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day (as defined in Paragraph 4(f)(ii)), such payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the interest due hereunder.
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(c) The outstanding principal balance of this Note, all accrued and unpaid interest thereon, and all other amounts due under this Note shall be due and payable on or before March 31, 2024 (the “Note Maturity Date”).
(d) All payments under this Note shall be made to Lender at the following address, or at such other place as Lender may from time to time designate in writing: 11111 Santa Monica Blvd., Suite 800, Los Angeles, California 90025.
(e) Principal and interest shall be paid without deduction or offset in lawful money of the United States. Borrower shall have the right to prepay all or any portion of the principal amount of this Note at any time before the Note Maturity Date without penalty or premium for prepayment. Payments shall be applied first to interest, Late Charges (as defined in Paragraph 4(c)), and other costs due to Lender hereunder, and the balance to principal.
(f) In addition to the other payments required hereunder, Borrower shall issue to Lender, as a commitment fee in consideration of the transactions contemplated by this Note, the Commitment Fee Shares (as defined in Paragraph 1(f)(i)) and the Warrants (as defined in Paragraph 1(f)(ii)). The Commitment Fee Shares and the Warrants shall be issued in a transaction exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). A fully completed copy of the Accredited Investor Questionnaire attached hereto as Exhibit B (the “Questionnaire”) is being delivered by Lender to Borrower.
(i) 125,000 restricted shares of Borrower’s common stock, par value $0.0001 per share (the “HOFREC Common Stock”). Such shares of HOFREC Common Stock issued to Lender (the “Commitment Fee Shares”) shall benefit from, and be subject to, that certain Registration Rights Agreement, dated as of the date hereof, by and among Borrower, Lender, and the other parties thereto.
(ii) Warrants to purchase 500,000 shares of HOFREC Common Stock at an exercise price the price of $1.09 per share (the “Warrants”). Such Warrants (A) shall be exercisable, at Lender’s option, at any time from the date hereof through and including the five (5)-year anniversary of the date hereof, and (B) shall be in the form of Exhibit A attached hereto.
(g) Lender makes the following representations and warranties to Borrower:
(i) Economic Loss and Sophistication. Lender is able to bear the economic risk of losing its entire investment in the Commitment Fee Shares and Warrants. In making this statement, consideration has been given to whether Lender can afford to hold the investment for an indefinite period of time and whether Lender can afford a complete loss of its investment. Lender has such knowledge and experience in financial and business matters that it is capable of evaluating the risks and merits of this investment.
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(ii) Accredited Investor Determination. Lender is an “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities Act, as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act, as certified in the Questionnaire.
(iii) Access. Lender acknowledges that (i) Borrower has made all documents available to it including, but not limited to, this Note and any and all additional agreements, documents, records and books that Lender (or its representatives) has requested relating to an investment in the Commitment Fee Shares and Warrants, (ii) Lender has had an opportunity to ask questions of, and receive answers from, Borrower or a person acting on behalf of Borrower concerning the terms and conditions of an investment in the Commitment Fee Shares and Warrants, and (iii) all questions asked by Lender have been adequately answered to its satisfaction. Lender represents that it has had access to all information that it deems material to an investment decision with respect to an investment in the Commitment Fee Shares and Warrants.
(iv) Reliance. Lender has relied solely on independent investigations conducted by Lender or its advisors in making a decision to subscribe for the Commitment Fee Shares and Warrants and acknowledges that no representations or agreements have been made to Lender other than those specifically set forth in this Note. Lender is not relying on any oral representation of any officer or manager of Borrower or any person purported to be acting on behalf of Borrower. Lender is not relying on Borrower with respect to the tax and other economic considerations of an investment and have consulted Lender’s own attorneys, accountants or investment advisors with respect to an investment in the Commitment Fee Shares and Warrants.
(v) Speculative Investment. Lender is aware that (i) an investment in the Commitment Fee Shares and Warrants involves numerous risks, which Lender has carefully considered, (ii) no federal or state agency has passed upon the merits of the sale of the Commitment Fee Shares and Warrants of any of the information provided in connection with the offering, and (iii) the Commitment Fee Shares and Warrants are a speculative investment involving a significant degree of risk for which there is no guarantee that Lender will realize any gain from any investment. Lender acknowledges and agrees that Lender is able to hold the Commitment Fee Shares and Warrants indefinitely and to afford a complete loss of Lender’s investment in the Commitment Fee Shares and Warrants.
(vi) Exempt Transaction. Lender understands that the Commitment Fee Shares and Warrants are being issued in reliance upon an exemption from federal securities registration.
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(vii) No Registration of Interests; Book-Entry Form. Lender acknowledges and agrees that, based in part upon Lender’s representations contained herein and in reliance upon applicable exemptions, no interest in the Commitment Fee Shares and Warrants has been registered under the Securities Act or the securities laws of any other domestic or foreign jurisdiction. Lender agrees not to offer, sell, pledge or otherwise dispose of all or any portion of the Commitment Fee Shares and Warrants without registration or qualification except pursuant to an offering duly registered or qualified under the Securities Act and any applicable state securities laws, unless (i) in the opinion of counsel for, or counsel satisfactory to, Borrower, registration or qualification under the Securities Act and any applicable state securities laws is not required and (ii) if required, Lender has received any necessary regulatory approvals. Lender understands that the Commitment Fee Shares and Warrants will be subject to a legend this effect and that, as applicable, stop transfer instructions will be issued by Borrower to its transfer agent. Lender understands that the Commitment Fee Shares and Warrants will be issued in book-entry, meaning uncertificated form.
(viii) Investment Intent. Lender is acquiring the Commitment Fee Shares and Warrants for its own account for investment, and not with a view to any distribution, resale, subdivision or fractionalization thereof in violation of the Securities Act or any other applicable domestic or foreign securities laws, and Lender has no present plans to enter into any contract, undertaking, agreement or arrangement for any such distribution, resale, subdivision or fractionalization. The Commitment Fee Shares and Warrants are not being acquired, directly or indirectly, as nominee, trustee or representative of or for any other person or persons.
(ix) Power and Authority. Lender is authorized to enter into this Note, the Questionnaire, and such other agreements, certificates, instruments or other documents as are executed by or on Lender’s behalf in connection with Lender’s obligations under this Note or in connection with this subscription (collectively, the “Note Documents”), to perform Subscriber’s obligations under the Note Documents, and to consummate the transactions that are the subjects of the Note Documents.
(x) Compliance with Laws and Other Instruments. The execution and delivery of the Note Documents by, or on behalf of, Lender and the consummation of the transactions contemplated by the Note Documents do not and will not conflict with or result in any violation of or default under any provision of any charter, bylaws, trust agreement or other organizational document, as the case may be, of Lender, or any agreement, certificate or other instrument to which Lender is a party or by which Lender or any of Lender’s properties is bound, or any permit, franchise, judgment, decree, statute, rule, regulation or other law applicable to Lender or the business or properties of Lender.
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(xi) Reliance on Representations. Lender acknowledges that Borrower has relied and will rely upon Lender’s representations, warranties and agreements in this Second Amendment and that all such representations and agreements shall survive the issuance and delivery of the Commitment Fee Shares and Warrants hereunder and shall remain in effect thereafter.
2. Cross-Collateralization. The obligations under this Note shall be secured by collateral granted to secure all obligations under (i) the term loan agreement (as amended, the “Term Loan Agreement”), dated as of December 1, 2020, among Borrower, HOF Village Newco, LLC (“Newco”), and certain of Newco’s subsidiaries, as borrowers, and Aquarian Credit Funding LLC , as lead arranger, administrative agent, collateral agent and representative of the lenders party thereto, as assigned to CH Capital Lending, LLC on March 1, 2022, (ii) the Secured Cognovit Promissory Note, dated June 19, 2020, in the original principal amount of $7,000,000, (a) originally executed by HOFV Hotel II, LLC and HOF Village, LLC (as makers) and payable to the order of JKP (as holder), (b) as assigned by HOF Village, LLC to Newco pursuant to that certain Contribution Agreement dated as of June 30, 2020, by and between HOF Village, LLC and Newco, (c) as amended by that certain First Amendment to Secured Promissory Note, dated as of December 1, 2020, by and among Newco, HOFV Hotel II, LLC and JKP, (d) as further amended by Joinder and Second Amendment to Promissory Note, dated March 1, 2022, by and among Newco, HOFV Hotel II, LLC, Borrower, and JKP (the “JKP Amended Note”), and (iii) the IRG Split Note. Such cross-collateralization of the obligations of Borrower and others under the Term Loan Agreement, the JKP Amended Note, the IRG Split Note, and this Note shall be reflected in (i) the Mortgage granted in connection with under the Term Loan Agreement, (iii) the JKP Amended Note, (iv) the IRG Split Note, (v) this Note, and/or (vi) appropriate instruments that amend, supplement, and/or assign any of the foregoing instruments or which provide collateral for the payment of any obligations arising under the foregoing instruments.
3. Expenses; Indemnification.
(a) Borrower agrees to pay promptly: (i) all the actual and reasonable documented costs and expenses of Lender, including attorneys’ fees, in connection with the negotiation, preparation, and execution of this Note and the transactions contemplated hereby, (ii) all fees, costs, and expenses incurred by Lender (including during the pendency of any bankruptcy, insolvency, receivership, or other similar proceeding, regardless of whether allowed or allowable in such proceeding) to maintain, protect, or preserve Lender’s rights under this Note or with respect to any collateral that secures this Note, (iii) all the actual and reasonable costs and expenses of creating and perfecting liens on any collateral that secures this Note in favor of Lender, including filing and recording fees, expenses, and taxes, stamp or documentary taxes, search fees, title insurance premiums, and reasonable fees, expenses, and disbursements of counsel to Lender, (iv) all the actual and reasonable costs and fees, expenses, and disbursements of any auditors, accountants, consultants, or appraisers engaged by Lender in connection with the transactions contemplated by this Note, (v) all the actual and reasonable costs and expenses (including the reasonable fees, expenses, and disbursements of any appraisers, consultants, advisors, and agents employed or retained by Lender) in connection with the custody or preservation of any of collateral that secures this Note, and (vi) after the occurrence of a Default (as defined in Paragraph 4(f)(iv)) or an Event of Default (as defined in Paragraph 4(f)(vi)), all documented costs and expenses, including attorneys’ fees and costs of settlement, incurred by Lender in enforcing any obligations under this Note or under any other agreement executed in connection with or securing this Note, or in collecting any payments due from Borrower under this Note or under any other agreement executed in connection with or securing this Note by reason of such Default or Event of Default (including in connection with the sale of, collection from, or other realization upon any of collateral securing this Note) or in connection with any refinancing or restructuring of the credit arrangements provided hereunder in the nature of a “work-out” or pursuant to any insolvency or bankruptcy cases or proceedings.
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(b) Borrower agrees to indemnify Lender and each of Lender’s members, managers, officers, employees, agents, and representatives, and their respective successors and assigns (each of the foregoing Persons (as defined in Paragraph 4(f)(viii)), an “Indemnitee”) against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related costs and expenses, including reasonable counsel fees, disbursements and other charges, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or delivery of this Note or any other agreement executed in connection with or securing this Note, the performance by the parties thereto of their respective obligations thereunder, or the consummation of the transactions contemplated thereby, (ii) the use of the proceeds of this Note, (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto, or (iv) any actual or alleged presence or Release of Hazardous Materials (as defined in the Term Loan Agreement) on any property owned or operated by Borrower (or by and direct or indirect subsidiary of Borrower), or any Environmental Liability (as defined in the Term Loan Agreement) related in any way to Borrower (or related in any way to any direct or indirect subsidiary of Borrower); provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related costs and expenses are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted primarily from the gross negligence or willful misconduct of such Indemnitee (and, upon any such determination, any indemnification payments with respect to such losses, claims, damages, liabilities or related costs and expenses previously received by such Indemnitee shall be subject to reimbursement by such Indemnitee). To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth in this Paragraph 3(b) may be unenforceable in whole or in part because they are violative of any law or public policy, Borrower shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all indemnified liabilities incurred by Indemnitees or any of them.
(c) To the extent permitted by applicable law, Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential, or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Note or any other agreement executed in connection with or securing this Note or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, or the use of the proceeds of this Note.
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(d) Any amounts payable to Lender under this Paragraph 3 shall accrue interest at the Interest Rate, calculated from the date of payment or disbursement by Lender, until repaid in full.
4. Default and Acceleration.
(a) Upon the occurrence and during the continuance of any Event of Default, and at any time and from time to time thereafter, in addition to any other rights or remedies available to Lender under this Note, at law, or in equity:
(i) Borrower shall pay interest on the outstanding principal and interest at an interest rate equal to the Default Rate.
(ii) Lender may, at its option, take such action, without notice or demand, that Lender deems advisable to protect and enforce its rights against Borrower and/or in and to any collateral that secures this Note; including, without limitation, declaring Borrower’s obligations under this Note to be immediately due and payable (including any accrued and unpaid interest and any other amounts owing by Borrower under this Note).
(b) Upon the occurrence of any Insolvency Event (as defined in Paragraph 4(f)(vii)), all of Borrower’s obligations under this Note (including any accrued and unpaid interest and any other amounts owing by Borrower under this Note) shall immediately and automatically become due and payable, without notice or demand, and Borrower hereby expressly waives any such notice or demand, notwithstanding anything to the contrary contained herein.
(c) If any payment owing from Borrower to Lender under this Note is not received by Lender within five (5) days following its due date, Borrower shall pay to Lender an additional sum equal to four percent (4%) of the overdue amount as a late charge (the “Late Charge”). The Late Charge shall be paid to Lender within five (5) days after the date incurred, and any failure to pay the Late Charge within thirty (30) days after the date incurred shall be an Event of Default hereunder.
(d) Borrower recognizes that any failure by Borrower to timely make the payments provided for herein, or any other Event of Default hereunder, will cause Lender to incur costs not contemplated by this Note (including, without limitation, processing and accounting charges, loss of use of funds, and frustration to Lender in meeting its other financial commitments), and that the damages caused thereby would be extremely difficult and impractical to ascertain. Borrower hereby agrees that, if any such event should occur, the Default Rate (if applicable) and the Late Charge (if applicable), represent a fair and reasonable estimate of the damages and costs to Lender, considering all the circumstances existing on the date of this Note. The parties further agree that proof of actual damages would be costly or inconvenient. Acceptance of the Late Charge (if applicable) will not be deemed a waiver of any Default or Event of Default (unless such Default or Event of Default is cured in accordance with the provisions of this Note), and shall not prevent Lender from exercising any other rights and remedies available to Lender.
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(e) No failure or delay on the part of Lender in exercising any right or remedy under this Note or under any other agreement executed in connection with or securing this Note shall operate as a waiver of any such right or remedy. No right, power, or remedy given to Lender by the terms of this Note or by the terms of any other agreement executed in connection with or securing this Note is intended to be exclusive of any other right, power, or remedy, and each and every such right, power, or remedy shall be cumulative and in addition to every other right, power, or remedy given to Lender by the terms of any instrument or by any statute or otherwise against Borrower or any other Person. No single or partial exercise by Lender of any power hereunder, or under any other document executed in connection with or securing this Note, shall preclude other or further exercise thereof or the exercising of any other power.
(f) For purposes of this Note:
(i) “Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any successor statute.
(ii) “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in Los Angeles, California are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority, so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in Los Angeles, California are generally are open for use by customers on such day.
(iii) “Debtor Relief Laws” means the Bankruptcy Code and all other liquidation, compromise, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect.
(iv) “Default” means any event or condition that, upon notice, lapse of time, or both, would constitute an Event of Default.
(v) “Default Rate” means the lesser of (A) sixteen percent (16%) per annum and (B) the Maximum Legal Rate (as defined in Paragraph 6(a)).
(vi) “Event of Default” means (A) Borrower’s failure to pay, on or before the due date thereof (subject to Paragraph 4(c) with respect to Late Charges only and subject to Paragraph 4(d)), any amount owing to Lender under this Note or under any other agreement executed in connection with this Note, or (B) Borrower’s failure, within five (5) days after written notice from Lender to Borrower, to comply with any non-monetary covenant contained in this Note or in any other agreement executed in connection with or securing this Note.
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(vii) “Insolvency Event” means a proceeding under any Debtor Relief Law with respect to Borrower or any direct or indirect subsidiary of Borrower.
(viii) “Person” means any individual, partnership, limited liability company, corporation, joint venture, association, trust, or other entity
(ix) “Term” means the period commencing on the date hereof and ending on the Note Maturity Date.
5. [Reserved]
6. Savings Clause. Notwithstanding anything to the contrary contained herein
(a) All agreements and communications between Borrower and Lender are hereby, and shall, automatically be limited so that, after taking into account all amounts deemed to constitute interest, the interest contracted for, charged, or received by Lender shall never exceed the maximum non-usurious interest rate (if any), that at any time or from time to time may be contracted for, taken, reserved, charged, or received on the indebtedness evidenced by this Note, under the laws of any state whose laws are held by any court of competent jurisdiction to govern the interest rate provisions of this Note (the “Maximum Legal Rate”).
(b) In calculating whether any interest exceeds the Maximum Legal Rate, all such interest shall be amortized, prorated, allocated, and spread over the full amount and term of all principal indebtedness of Borrower to Lender.
(c) If, through any contingency or event, Lender receives or is deemed to receive interest in excess of the Maximum Legal Rate, any such excess shall be deemed to have been applied toward the payment of the principal of any and all then outstanding indebtedness of Borrower to Lender, or if there is no such indebtedness, shall immediately be returned to Borrower.
7. No Oral Change. This Note may not be modified, amended, waived, extended, changed, discharged, or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge, or termination is sought.
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8. Waivers. Borrower and all others who may become liable for the payment of all or any part of the obligations evidenced by this Note do hereby jointly and severally waive presentment and demand for payment, notice of dishonor, notice of intention to accelerate, notice of acceleration, protest and notice of protest and non-payment, and all other notices of any kind, except as expressly provided herein. No release of any security for the obligations evidenced by this Note, nor any extension of time for payment of this Note or any installment hereof, and no alteration, amendment, or waiver of any provision of this Note or of any other agreement between Lender (on one hand) and any other Person (on the other hand), shall release, modify, amend, waive, extend, change, discharge, terminate, or affect the liability of Borrower or any other Person who may become liable for the payment of all or any part of the obligations evidenced by this Note. No notice to or demand on Borrower shall be deemed to be a waiver of the obligation of Borrower or of the right of Lender to take further action without further notice or demand, as provided for in this Note or in any other agreement executed in connection with or securing this Note. If Borrower is a corporation, the agreements contained herein shall remain in full force and be applicable, notwithstanding any changes in the shareholders comprising, or the officers and directors relating to, such corporation, and the term “Borrower,” as used herein, shall include any alternative or successor corporation, but any predecessor corporation shall not be relieved of liability hereunder. Nothing in the foregoing two sentences shall be construed as a consent to, or a waiver of, any prohibition or restriction on transfers of interests in such partnership, limited liability company or corporation which may be set forth in this Note or in any other agreement executed in connection with or securing this Note.
9. Transfer; Successors and Assigns.
(a) This Note and any of Lender’s rights hereunder may be assigned by Lender, at any time, to any entity that is directly or indirectly controlling, controlled by, or under common control with Lender. Any such assignee or transferee of Lender shall be entitled to all the benefits afforded to Lender under this Note. Upon any such transfer of this Note by Lender, Lender may deliver its rights to all the collateral (if any) mortgaged, granted, pledged, or assigned as security for this Note (or any part thereof) to the transferee, who shall thereupon become vested with all the rights and obligations herein or under applicable law given to Lender with respect thereto, and Lender shall thereafter forever be relieved and fully discharged from any liability or responsibility in the matter; but Lender shall retain all rights and obligations hereby given to it with respect to any liabilities and the collateral not so transferred.
(b) Borrower shall not have the right to assign or transfer Borrower’s rights or obligations under this Note without Lender’s the prior written consent (which consent may be granted or withheld in Lender’s sole discretion). Any attempted assignment or transfer by Borrower of Borrower’s rights or obligations under this Note without Lender’s prior written consent shall be null and void.
(c) Subject to the foregoing, this Note shall be binding upon, and shall inure to the benefit of, Borrower and Lender and their respective successors and permitted assigns.
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10. Governing Law; Jurisdiction; Service of Process.
(a) IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE, THIS NOTE AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA. NOTWITHSTANDING THE FOREGOING, AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF ANY LIENS SECURING THE OBLIGATIONS EVIDENCED BY THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE STATE IN WHICH THE RELEVANT PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAWS OF SUCH STATE, THE LAWS OF THE STATE OF DELAWARE SHALL GOVERN THE VALIDITY AND THE ENFORCEABILITY OF THIS NOTE AND THE OBLIGATIONS EVIDENCED BY THIS NOTE. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS NOTE.
(b) ANY LEGAL SUIT, ACTION, OR PROCEEDING AGAINST BORROWER ARISING OUT OF OR RELATING TO THIS NOTE SHALL BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN LOS ANGELES COUNTY, CALIFORNIA (APPLYING THE LAWS OF THE STATE OF DELAWARE). BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION, OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION, OR PROCEEDING. BORROWER AGREES THAT SERVICE OF PROCESS UPON BORROWER AT THE ADDRESS FOR BORROWER SET FORTH IN PARAGRAPH 12, AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED IN PARAGRAPH 12, SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT, ACTION, OR PROCEEDING. BORROWER SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGE IN THE ADDRESS FOR BORROWER SET FORTH IN PARAGRAPH 12. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. NOTWITHSTANDING THE FOREGOING, LENDER SHALL HAVE THE RIGHT TO INSTITUTE ANY LEGAL SUIT, ACTION, OR PROCEEDING FOR THE ENFORCEMENT OR FORECLOSURE OF ANY LIEN ON ANY COLLATERAL FOR THIS NOTE AND THE OBLIGATIONS EVIDENCED BY THIS NOTE IN ANY FEDERAL OR STATE COURT IN ANY JURISDICTION THAT LENDER MAY ELECT, IN ITS SOLE AND ABSOLUTE DISCRETION. BORROWER WAIVES ANY OBJECTION WHICH BORROWER MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION, OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION, OR PROCEEDING.
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11. Waiver of Jury Trial. BORROWER (AND LENDER, BY ITS ACCEPTANCE HEREOF) HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS NOTE, THE OBLIGATIONS EVIDENCED BY THIS NOTE, OR ANY CLAIM, COUNTERCLAIM, OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND BY LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER OR BORROWER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.
12. Notices. Any notice, demand, consent, approval, or document that Borrower or Lender is required or may desire to give or deliver to the other party shall be given in writing by (a) personal delivery; (b) certified mail, return receipt requested, postage prepaid; (c) a national overnight courier service that provides written evidence of delivery; or (d) electronic mail transmission and addressed as to such other party at its notice address set forth below:
(a) If to Lender:
JKP Financial, LLC
11111 Santa Monica Blvd., Suite 800
Los Angeles, CA 90025
Attention: Richard Klein
Email: RKlein@industrialrealtygroup.com
With a copy to (which shall not constitute notice):
Fainsbert Mase Brown & Sussman, LLP
11111 Santa Monica Blvd., Suite 810
Los Angeles, CA 90025
Attention: Dean Sussman, Esq.
Email: DSussman@fms-law.com
(b) If to Borrower:
Hall of Fame Resort & Entertainment Company
2626 Fulton Dr. NW
Canton, OH 44718
Attention: Michael Crawford
Email: Michael.Crawford@HOFVillage.com
and
Hall of Fame Resort & Entertainment Company
2626 Fulton Dr. NW
Canton, OH 44718
Attention: Tara Charnes
Email: tara.charnes@HOFVillage.com
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With a copy to (which shall not constitute notice):
Hunton Andrews Kurth LLP
2200 Pennsylvania Ave., N.W.
Washington, DC 20037
Attention: Steve Patterson
Email: spatterson@hunton.com
Any party may change its notice address (or any portion thereof) by giving written notice thereof in accordance with this paragraph. All notices hereunder shall be deemed given: (i) if delivered personally, when delivered; (ii) if sent by certified mail, return receipt requested, postage prepaid, on the third day after deposit in the U.S. mail; (iii) if sent by overnight courier, on the first Business Day after delivery to the courier; and (iv) if sent by electronic mail, on the date of transmission if sent on a Business Day before 5:00 p.m. Eastern time, or on the next Business Day, if sent on a day other than a Business Day or if sent after 5:00 p.m. Eastern time; provided that a hard copy of any notice sent by electronic mail must also be sent by either a nationally recognized overnight courier or by U.S. mail, first class, postage prepaid.
13. Time of the Essence. Time is of the essence with respect to Borrower’s obligations under this Note.
14. Severability. In the event any term or provision of this Note is held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Note, which terms and provision shall remain binding and enforceable.
15. Optional Conversion. At any time following the date hereof, and from time to time prior to the Note Maturity Date, Lender shall have the right, but not the obligation, to elect to convert all or any portion of the principal amount of this Note into shares of HOFREC Common Stock on the terms and conditions in this Paragraph 15 (any such conversion, an “Optional Conversion”).
(a) Lender may elect to convert all or any portion of the principal amount of this Note into that number of shares of HOFREC Common Stock equal to the quotient of (A) the sum of (x) the principal amount of this Note being converted specified in the Conversion Notice (defined below), plus (y) all accrued and unpaid interest on such principal amount of this Note as of the applicable Conversion Election Effective Date (defined below), divided by (B) the Conversion Price (defined below) as of the applicable Conversion Election Effective Date, with fractional shares of HOFREC Common Stock rounded up or down as provided in Paragraph 15(g) hereof. “Conversion Price” means $1.09 as appropriately adjusted for stock splits, stock dividends, combinations, and subdivisions of HOFREC Common Stock.
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(b) In order to effectuate an Optional Conversion of all or any portion of the principal amount of this Note, Lender shall submit a written notice to Borrower, duly executed by Lender (a “Conversion Notice”), accompanied by this Note, stating that Lender irrevocably elects to convert the principal amount of this Note specified in such Conversion Notice. In the event that only a portion of this Note is being converted, Borrower shall issue a replacement Note representing the remaining principal amount of this Note that has not been converted. An election to convert all or any portion of the principal amount of this Note pursuant to an Optional Conversion shall be deemed to have been made as of the following dates (the “Conversion Election Effective Date”): (A) on the date of receipt, with respect to any Conversion Notice received by Borrower at or prior to 5:00 p.m., New York City time, on any Business Day, and (B) on the next Business Day following such receipt, with respect to any Conversion Notice received by Borrower on a non-Business Day or after 5:00 p.m., New York City time, on any Business Day. The conversion of the principal amount of this Note with respect to which an Optional Conversion election is made, and the issuance of all shares of HOFREC Common Stock to be issued pursuant to such conversion, shall become effective as of the applicable Conversion Election Effective Date. Within three (3) Business Days after the applicable Conversion Election Effective Date, Borrower shall deliver to Lender (or, if applicable, in the name of Lender’s designee as stated in the Conversion Notice), by book-entry delivery, a number of shares of HOFREC Common Stock equal to the number of shares to which such holder is entitled pursuant to such Optional Conversion.
(c) Upon any conversion of this Note, the rights of Lender with respect to the unpaid principal amount hereunder converted into shares of HOFREC Common Stock shall cease and Lender shall be deemed to have become the owner of the shares of HOFREC Common Stock into which such principal amount of this Note shall have been converted and such converted principal amount shall be extinguished and deemed to have been forgiven or repaid and shall no longer be outstanding and no future interest shall accrue on any such amount.
(d) All shares of HOFREC Common Stock delivered upon any Optional Conversion will, upon such conversion, be duly and validly authorized and issued, fully paid and nonassessable, free from all preemptive rights, free from all taxes, liens, security interests, charges and encumbrances (other than liens, security interests, charges or encumbrances created by or imposed upon the holder or taxes in respect of any transfer occurring contemporaneously therewith).
(e) The issuance of shares of HOFREC Common Stock upon conversion of all or any portion of the principal amount of this Note pursuant to any Optional Conversion shall be made without payment of additional consideration by, or other charge, cost or tax to, Lender in respect thereof; provided, however, that Borrower shall not be required to pay any tax or other governmental charge that may be payable with respect to the issuance or delivery of any shares of HOFREC Common Stock in the name of any person other than Lender, and no such delivery shall be made unless and until the person requesting such issuance has paid to Borrower the amount of any such tax or charge, or has established to the satisfaction of Borrower that such tax or charge has been paid or that no such tax or charge is due.
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(f) Borrower shall at all times reserve and keep available out of its authorized but unissued shares of HOFREC Common Stock, solely for the purpose of issuance upon conversion of the principal amount of this Note in accordance with this Paragraph 15, such number of shares of HOFREC Common Stock issuable upon the conversion of all outstanding principal amount of this Note pursuant to any Optional Conversion at the Conversion Price. Borrower shall take all such actions as may be necessary to assure that all such shares of HOFREC Common Stock may be so issued without violation of any applicable law or governmental regulation applicable to Borrower or any requirements of any securities exchange upon which shares of HOFREC Common Stock may be listed (except for official notice of issuance, which shall be immediately delivered by Borrower upon each such issuance). Borrower shall not take any action which would cause the number of authorized but unissued shares of HOFREC Common Stock to be less than the number of such shares required to be reserved hereunder for issuance upon conversion of the principal amount of this Note.
(g) No fractional shares of HOFREC Common Stock shall be issued upon any Optional Conversion of all or any portion of the principal amount of this Note. In lieu of delivering a fractional share of HOFREC Common Stock to any holder in connection with an Optional Conversion, any fractional share of HOFREC Common Stock shall be rounded up or down to the next whole number or zero, as applicable (with one-half being closer to the next lower whole number for this purpose).
(h) The Conversion Price shall be subject to a weighted average anti-dilution adjustment from time to time as follows:
(i) If Borrower shall at any time or from time to time during the period from the date of this Note to the Note Maturity Date, issue any additional shares of HOFREC Common Stock (or be deemed to have issued any shares of HOFREC Common Stock as provided herein), other than Excluded Securities (as defined in Paragraph 15(h)(iii)) and Excluded Transactions (as defined in Paragraph 15(h)(iv)) (such additional shares, “Additional Shares”), without consideration or for a consideration per share less than the Conversion Price in effect immediately prior to the issuance of HOFREC Common Stock, the Conversion Price in effect immediately prior to such issuance shall forthwith be lowered to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:
CP2 = CP1 * (A + B) ÷ (A + C)
For purposes of the foregoing formula, the following definitions shall apply:
● | “CP2” shall mean the Conversion Price in effect immediately after such issue of Additional Shares of HOFREC Common Stock; |
● | “CP1” shall mean the Conversion Price in effect immediately prior to such issue of Additional Shares of HOFREC Common Stock; |
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● | “A” shall mean the number of shares of HOFREC Common Stock outstanding immediately prior to such issue of Additional Shares of HOFREC Common Stock (including any shares of HOFREC Common Stock deemed to have been issued pursuant to Paragraph 15(h)(ii)(D)); |
● | “B” shall mean the number of shares of HOFREC Common Stock that would have been issued if such Additional Shares of HOFREC Common Stock had been issued at the price per share equal to CP1 (determined by dividing the aggregate consideration received by Borrower in respect of such issue by CP1); and |
● | “C” shall mean the number of such Additional Shares of HOFREC Common Stock issued in such transaction. |
(ii) For the purposes of any adjustment of the Conversion Price pursuant to Paragraph 15(h)(i), the following provisions shall be applicable:
(A) In the case of the issuance of HOFREC Common Stock for cash, the consideration shall be deemed to be the amount of cash paid therefor before deducting therefrom any discounts, commissions or other expenses allowed, paid or incurred by Borrower for any underwriting or otherwise in connection with the issuance and sale thereof.
(B) In the case of the issuance of HOFREC Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined in good faith by the Board of Directors of Borrower, irrespective of any accounting treatment.
(C) In the case of the issuance of HOFREC Common Stock without consideration, the consideration shall be deemed to be $0.01 per share.
(D) In the case of the issuance of (x) options or warrants to purchase or rights to subscribe for HOFREC Common Stock, (y) debt or securities by their terms convertible into or exchangeable for HOFREC Common Stock or (z) options to purchase rights to subscribe for such convertible or exchangeable securities:
(1) the aggregate maximum number of shares of HOFREC Common Stock deliverable upon exercise of such options or warrants to purchase or rights to subscribe for HOFREC Common Stock shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in subdivisions (A), (B) and (C) above), if any, received by Borrower upon the issuance of such options, warrants or rights plus the minimum purchase price provided in such options, warrants or rights for the HOFREC Common Stock covered thereby; and
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(2) the aggregate maximum number of shares of HOFREC Common Stock deliverable upon conversion of or in exchange for any such convertible or exchangeable debt or securities or upon the exercise of options or warrants to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities were issued or such options or warrants or rights were issued and for a consideration equal to the consideration received by Borrower for any such securities and related options or warrants or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the additional consideration, if any, to be received by Borrower upon the conversion or exchange of such securities or the exercise of any related options or warrants or rights (the consideration in each case to be determined in the manner provided in subdivisions (A), (B) and (C) above).
(iii) For purposes of this Paragraph 15(h), the term “Excluded Securities” shall mean (i) shares of HOFREC Common Stock issued to officers, employees, directors or consultants of Borrower and its subsidiaries, pursuant to any agreement, plan or arrangement approved by the Board of Directors of Borrower, or options or warrants to purchase or rights to subscribe for such HOFREC Common Stock, or debt or securities by their terms convertible into or exchangeable for such HOFREC Common Stock, or options or warrants to purchase or rights to subscribe for such convertible or exchangeable securities pursuant to such agreement, plan or arrangement; (ii) shares of HOFREC Common Stock issued as a stock dividend or upon any stock split or other subdivision or combination of shares of HOFREC Common Stock; or (iii) securities issued pursuant to the acquisition of another corporation or other entity by Borrower by merger or purchase of stock or purchase of all or substantially all of such other corporation’s or other entity’s assets whereby Borrower owns not less than a majority of the voting power of such other corporation or other entity following such acquisition or purchase.
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(iv) For purposes of this Paragraph 15(h), the term “Excluded Transactions” shall mean sales of shares of Common Stock issued under the Company’s “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act; provided, however, that each financial quarter during which the Company’s sales of such shares reaches a multiple of $5 million aggregate consideration beginning with sales occurring after March 1, 2022 for an average consideration per share for such multiple of $5 million aggregate consideration that is less than the Exercise Price then in effect at the end of such financial quarter, the Exercise Price in effect at the end of such financial quarter shall forthwith be lowered to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the formula set forth in Paragraph 15(h)(i), with the following adjustments: (A) “A” shall mean the difference of (1) the number of shares of Common Stock outstanding immediately following the sale of a share under the Company’s “at the market offering” that reaches a multiple of $5 million (including any shares of Common Stock deemed to have been issued pursuant to Section 15(h)(ii)(D)), minus (2) the number of shares of Common Stock issued under the Company’s “at the market offering” for such multiple of $5 million and (B) “C” shall mean the number of such shares of Common Stock issued under the Company’s “at the market offering” for such multiple of $5 million.
(i) Nasdaq 19.99% Cap. Notwithstanding anything to the contrary contained in this Note or the other Transaction Documents, Borrower and Lender agree that the total cumulative number of shares of HOFREC Common Stock that may be issued to Lender and its affiliates hereunder and under the other Transaction Documents may not exceed the requirements of Nasdaq Listing Rule 5635(d) (“Nasdaq 19.99% Cap”), except that such limitation will not apply following Approval (defined below). If the number of shares of HOFREC Common Stock issued to Lender and its affiliates under this Note and the other Transaction Documents reaches the Nasdaq 19.99% Cap, so as not to violate the 20% limit established in Listing Rule 5635(d), Borrower, at its election, will use reasonable commercial efforts to obtain stockholder approval of this Note and the issuance of additional shares of HOFREC Common Stock upon the conversion of the portion of the Loan under this Note, if necessary, in accordance with the requirements of Nasdaq Listing Rule 5635(d) (the “Approval”). “Transaction Documents” shall mean (A) this Note, (B) the Certificate of Designations of 7.00% Series C Convertible Preferred Stock, par value $0.0001 per share, of Borrower, (C) the amended and restated Series C Warrant, dated March 1, 2022, issued Borrower to CH Capital Lending, LLC, (D) the amended and Series D Warrant to purchase HOFREC Common Stock, dated March 1, 2022, issued by Borrower to CH Capital Lending, LLC, (E) the Series E Warrant to purchase HOFREC Common Stock, dated March 1, 2022, issued by Borrower to CH Capital Lending, LLC, (F) the Series E Warrant to purchase HOFREC Common Stocks, dated March 1, 2022, issued by Borrower to IRG, LLC, (G) the two Series F Warrants to purchase HOFREC Common Stock, dated March 1, 2022, issued by Borrower to JKP Financial, LLC, (H) the Series G Warrant to purchase HOFREC Common Stock to be issued by the Borrower to Stuart Lichter, (I) the Letter Agreement, dated March 1, 2022, between Borrower and Stuart Lichter, (J) the $4,273,543.46 First Amended and Restated Promissory Note, dated March 1, 2022, issued by Borrower to IRG, LLC, and (K) the Joinder and Second Amendment to Secured Cognovit Promissory Note, dated as of March 1, 2022, by and between HOF Village Newco, LLC, HOF Village Hotel II, LLC, as makers, Borrower, and JKP Financial, LLC, as holder.
(j) Prepayment Notice. Prior to the prepayment of the Loan in accordance with this Note, Borrower shall provide a ten (10) day notice to Lender who then shall have the right to convert any portion or all of the Loan within twenty (20) business days after notice of any planned prepayment at the Conversion Price then in effect.
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16. Entire Agreement. This Note is deemed to amend, modify, restate, the Original Note and the Original Note is hereby amended, modified, and restated in its entirety. This Note and any other documents incorporated by reference constitutes the sole and entire agreement of the parties with respect to the subject matter of this Note, and supersedes all prior and contemporaneous understandings, agreements, representations, and warranties, both written and oral, with respect to the subject matter.
(Remainder of page intentionally left blank; signature page follows)
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IN WITNESS WHEREOF, Borrower and Lender have duly executed this First Amended and Restated Promissory Note as of the day and year first above written.
Borrower:
HALL OF FAME RESORT &
ENTERTAINMENT COMPANY,
a Delaware corporation
By: | /s/ Michael Crawford | |
Name: Michael Crawford | ||
Title: President and Chief Executive Officer |
Lender:
JKP FINANCIAL, LLC,
a Delaware limited liability company
By: | /s/ John A. Mase | |
Name: | John A. Mase | |
Title: | Chief Executive Officer |
Exhibit A
FORM OF WARRANT AGREEMENT
[See attached]
Exhibit B]
ACCREDITED INVESTOR QUESTIONNAIRE
(ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)
This Accredited Investor Questionnaire (“Questionnaire”), dated as of __ _, 2022 , is to being delivered by the undersigned (“Subscriber”) in connection with Subscriber’s receipt of shares (the “Subscribed Shares”) of common stock , par value $0.0001 per share (“Common Stock”), of Hall of Fame Resort & Entertainment Company, a Delaware corporation (the “Company”), and warrants (the “Warrants”) as contemplated by First Amended and Restated Promissory Note, dated as of March 1, 2022, issued by the Company to JKP Financial, LLC (the “Note”). The Subscribed Shares are being issued without registration under the Securities Act of 1933, as amended (the “Securities Act”), and the securities laws of certain states, in reliance on the exemptions contained in the Securities Act and in reliance on similar exemptions under applicable state laws. The purpose of this Questionnaire is to provide assurance that Subscriber meets the applicable suitability requirements. The information supplied by Subscriber will be used in determining whether Subscriber meets such requirements, and reliance upon the private offering exemptions from registration is based in part on the information herein supplied.
This Questionnaire does not constitute an offer to sell or a solicitation of an offer to buy any security. Subscriber’s answers will be kept strictly confidential. However, by signing this Questionnaire, Subscriber authorizes the Company to provide a completed copy of this Questionnaire to such parties as the Company deems appropriate in order to ensure that the purchase and sale of the Subscribed Shares and Warrants will not result in a violation of the Securities Act or the securities laws of any state. Subscriber must answer all applicable questions and complete and sign this Questionnaire. Please print or type the responses and attach additional sheets of paper if necessary to complete the answers to any item.
PART A. BACKGROUND INFORMATION
Name of Subscriber: | JKP Financial, LLC |
If a corporation, partnership, limited liability company, trust or other entity:
Type of entity: | Delaware limited liability company |
Business Address:
(Number and Street) | ||
(City, State, and Zip Code) |
Telephone Number: |
Employer or Taxpayer Identification No.: |
Was Subscriber formed for the purpose of investing in the securities being offered?
Yes ☐ No ☒
PART B. ACCREDITED INVESTOR QUESTIONNAIRE
In connection with the purchase and sale of the Subscribed Shares and Warrants pursuant to the Note, the following information must be obtained regarding Subscriber’s investor status. Please initial each category applicable to Subscriber as a purchaser of the Subscribed Shares and Warrants.
_____ (i) | A natural person whose individual net worth, or joint net worth with such person’s spouse, at the time of his or her purchase exceeds $1,000,000. | ||
Note: The term “net worth” means the excess of total assets at fair market value over total liabilities, except that (i) the person’s primary residence shall not be included as an asset; (ii) indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of the sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (iii) indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability. | |||
_____ (ii) | A natural person who had an individual income in excess of $200,000 in each of the two most recent years, or joint income with such person’s spouse in excess of $300,000 in each of those years, and who has a reasonable expectation of reaching the same income level in the current calendar year. | ||
_____ (iii) | A trust with total assets in excess of $5,000,000 not formed for the specific purpose of acquiring the Subscribed Shares and Warrants, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) (i.e., a person who has such knowledge and experience in financial and business matters that such person is capable of evaluating the merits and risks of the prospective investment). | ||
____ (iv) | An entity in which all of the equity owners are accredited investors. (If Subscriber has checked this alternative, Subscriber shall provide statements signed by each equity owner demonstrating how each is qualified as an accredited investor.) |
20
_____ (v) | A bank as defined in Section 3(a)(2) of the Securities Act, or a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended; an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Company Act of 1940 (the “Investment Company Act”), or a business development company as defined in Section 2(a)(48) of the Investment Company Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, as amended; a plan established and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (“ERISA”), if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which fiduciary is either a bank, a savings and loan association, an insurance company, or a registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors. | ||
_____ (vi) | A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended. | ||
☒____ (vii) | An organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, a corporation, limited liability company, Massachusetts or similar business trust, or a partnership, that was not formed for the specific purpose of acquiring the Subscribed Shares and Warrants, with total assets in excess of $5,000,000. | ||
_____ (viii) | A director or executive officer of the Company. | ||
_____ (ix) | None of the above. |
[Signature Page Follows]
IN WITNESS WHEREOF, Subscriber has executed this Questionnaire as of the date set forth above and hereby certifies that the information contained herein is true and correct as of such date.
Subscriber:
JKP FINANCIAL, LLC,
a Delaware limited liability company
By: | ||
Name: | ||
Title: |
Exhibit 10.4
JOINDER AND
SECOND AMENDMENT TO
SECURED COGNOVIT PROMISSORY NOTE
This Joinder and Second Amendment to Secured Cognovit Promissory Note (this “Second Amendment”), dated as of March 1, 2022 (the “Second Amendment Date”), is entered into by and among (a) HOF Village Newco, LLC, a Delaware limited liability company (“Newco”), and HOF Village Hotel II, LLC, a Delaware limited liability company (“Hotel II”; each of Newco and Hotel II is referred to herein as a “Maker,” and they are together referred to herein as “Makers”), (b) Hall of Fame Resort & Entertainment Company, a Delaware corporation (“HOFREC”); and (c) JKP Financial, LLC, a Delaware limited liability company (together with its successors and assigns, “Holder”).
RECITALS
A. Hotel II and Newco are indebted to Holder pursuant to that certain Secured Cognovit Promissory Note, dated as of June 19, 2020, originally executed by Hotel II and by HOF Village, LLC, a Delaware limited liability company (“HOFV”), in favor of Holder, as assigned by HOFV to Newco pursuant to that certain Contribution Agreement dated as of June 30, 2020, by and between HOFV and Newco (the “HOFV-Newco Contribution Agreement”), and as amended by that certain First Amendment to Secured Promissory Note, dated as of December 1, 2020 (as so assigned and amended, and as it may further be amended, restated, supplemented or otherwise modified from time to time, the “JKP Promissory Note”). Capitalized terms used in this Second Amendment and not otherwise defined herein shall have the meanings ascribed to such terms in the JKP Promissory Note.
B. HOFREC is the sole member of Newco, and thus derives direct and indirect benefits from the loan evidenced by the JKP Promissory Note and from the transactions contemplated by this Second Amendment.
C. The JKP Promissory Note is currently secured by that certain Pledge Agreement, dated as of June 19, 2020, originally executed by HOFV in favor of Holder, as assigned by HOFV to Newco pursuant to the HOFV-Newco Contribution Agreement (as so assigned, the “Pledge Agreement”).
D. Makers and Holder wish to make certain revisions to the JKP Promissory Note in accordance with the terms of this Second Amendment. Among other things, as set forth in this Second Amendment: (i) Maker and Holder wish to revise the outstanding principal balance of the JKP Promissory Note to include interest thereunder that has accrued and has not been paid as of the Second Amendment Date; (ii) Maker and Holder wish to extend the Maturity of the JKP Promissory Note; (iii) Maker, HOFREC, and Holder wish to allow for the JKP Promissory Note to be converted, at Holder’s option, into shares of HOFREC’s common stock, par value $0.001 per share (the “HOFREC Common Stock”); and (iv) Maker, HOFREC, and Holder wish to provide for the issuance by HOFREC to Holder of certain restricted shares of HOFREC Common Stock and certain warrants to purchase HOFREC Common Stock.
NOW, THEREFORE, in consideration of the foregoing premises and the other agreements and obligations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Incorporation of Recitals. The foregoing Recitals are hereby incorporated into and made a part of this Second Amendment by this reference.
2. Principal Amount of JKP Promissory Note. The heading at the top of the first page of the JKP Promissory Note is hereby amended by deleting “$7,000,000” and replacing such amount with “$8,394,836.” The introductory paragraph of the JKP Promissory Note is hereby amended by deleting “Seven Million Dollars ($7,000,000)” and replacing such amount with “Eight Million Three Hundred Ninety-Four Thousand Eight Hundred Thirty-Six Dollars ($8,394,836).” Makers and Holder agree that such revised amount reflects the outstanding principal balance of the JKP Promissory Note as of the Second Amendment Date, after giving effect to the provisions of this Second Amendment.
3. Term of JKP Promissory Note. Paragraph 1 of the JKP Promissory Note shall be deleted in its entirety and replaced with the following:
“1. Term. The term (the “Term”) of this Secured Cognovit Promissory Note (as it may be modified, amended, renewed, extended, restated, and/or replaced time to time, this “Note”) shall commence on the date set forth above and shall terminate on March 31, 2024 (the “Maturity”). At Maturity, the entire unpaid principal balance of this Note, together with any accrued and unpaid interest thereon, shall be all due and payable. Interest payable pursuant to this Note shall be computed on the basis of a 360-day year and the actual number of days elapsed in any portion of any month in which interest is due.”
4. Waivers. Holder agrees to waive (a) any default under the JKP Promissory Note resulting from Makers’ failure to repay principal and/or interest under the JKP Promissory Note on or prior to the Second Amendment Date, (b) any default interest rate penalties and/or late charges (i.e., above the 12%-per-annum Interest Rate set forth in the JKP Promissory Note) associated with Makers’ failure to repay any amounts due under the JKP Promissory Note on or prior to the Second Amendment Date. For purposes of clarification, the foregoing waivers shall not apply to any failure to pay, any other default, or any other event or circumstance that may occur or arise after the Second Amendment Date.
5. Conversion. A new Paragraph 21 shall be added to the JKP Promissory Note stating the following:
“21. Optional Conversion. At any time following March 31, 2022, and from time to time prior to the full repayment (and/or conversion, if applicable) of all amounts owing under this Note, Holder shall have the right, but not the obligation, to elect to convert all or any portion of the principal amount of this Note into shares of common stock, par value $0.0001 per share (“HOFREC Common Stock”), of Hall of Fame Resort & Entertainment Company, a Delaware corporation (“HOFREC”), on the terms and conditions in this Paragraph 21 (any such conversion, an “Optional Conversion”).
(a) Holder may elect to convert all or any portion of the principal amount of this Note into that number of shares of HOFREC Common Stock equal to the quotient of (A) the sum of (x) the principal amount of this being converted specified in the Conversion Notice (defined below), plus (y) all accrued and unpaid interest on such principal amount of this Note as of the applicable Conversion Election Effective Date (defined below), divided by (B) the Conversion Price (defined below) as of the applicable Conversion Election Effective Date, with fractional shares of HOFREC Common Stock rounded up or down as provided in Paragraph 21(g) hereof. “Conversion Price” means $1.09, as appropriately adjusted for stock splits, stock dividends, combinations, and subdivisions of HOFREC Common Stock.
(b) In order to effectuate an Optional Conversion of all or any portion of the principal amount of this Note, Holder shall submit a written notice to HOFREC, duly executed by Holder (a “Conversion Notice”), accompanied by this, stating that Holder irrevocably elects to convert the principal amount of this Note specified in such Conversion Notice. In the event that only a portion of this Note is being converted, HOFREC shall issue a replacement Note representing the remaining principal amount of this Note that has not been converted. An election to convert all or any portion of the principal amount of this Note pursuant to an Optional Conversion shall be deemed to have been made as of the following dates (the “Conversion Election Effective Date”): (A) on the date of receipt, with respect to any Conversion Notice received by HOFREC at or prior to 5:00 p.m., New York City time, on any Business Day, and (B) on the next Business Day following such receipt, with respect to any Conversion Notice received by HOFREC on a non-Business Day or after 5:00 p.m., New York City time, on any Business Day. The conversion of the principal amount of this Note with respect to which an Optional Conversion election is made, and the issuance of all shares of HOFREC Common Stock to be issued pursuant to such conversion, shall become effective as of the applicable Conversion Election Effective Date. Within three (3) Business Days after the applicable Conversion Election Effective Date, HOFREC shall deliver to Holder (or, if applicable, in the name of Holder’s designee as stated in the Conversion Notice), by book-entry delivery, a number of shares of HOFREC Common Stock equal to the number of shares to which such holder is entitled pursuant to such Optional Conversion.
(c) Upon any conversion of this Note, (i) the rights of Holder with respect to the unpaid principal amount hereunder converted into shares of HOFREC Common Stock shall cease, (ii) Holder shall be deemed to have become the owner of the shares of HOFREC Common Stock into which such principal amount of this Note shall have been converted, (iii) such converted principal amount shall be extinguished and deemed to have been forgiven or repaid, (iv) such amount shall no longer be outstanding and (v) no future interest shall accrue on any such amount.
(d) All shares of HOFREC Common Stock delivered upon any Optional Conversion will, upon such conversion, be duly and validly authorized and issued, fully paid and nonassessable, free from all preemptive rights, free from all taxes, liens, security interests, charges and encumbrances (other than liens, security interests, charges or encumbrances created by or imposed upon Holder or taxes in respect of any transfer occurring contemporaneously therewith).
(e) The issuance of shares of HOFREC Common Stock upon conversion of all or any portion of the principal amount of this Note pursuant to any Optional Conversion shall be made without payment of additional consideration by, or other charge, cost or tax to, Holder in respect thereof; provided, however, that HOFREC shall not be required to pay any tax or other governmental charge that may be payable with respect to the issuance or delivery of any shares of HOFREC Common Stock in the name of any person other than Holder, and no such delivery shall be made unless and until the person requesting such issuance has paid to HOFREC the amount of any such tax or charge, or has established to the satisfaction of HOFREC that such tax or charge has been paid or that no such tax or charge is due.
(f) HOFREC shall at all times reserve and keep available out of its authorized but unissued shares of HOFREC Common Stock, solely for the purpose of issuance upon conversion of the principal amount of this Note in accordance with this Paragraph 21, such number of shares of HOFREC Common Stock issuable upon the conversion of all outstanding principal amount of this Note pursuant to any Optional Conversion at the Conversion Price. HOFREC shall take all such actions as may be necessary to assure that all such shares of HOFREC Common Stock may be so issued without violation of any applicable law or governmental regulation applicable to HOFREC or any requirements of any securities exchange upon which shares of HOFREC Common Stock may be listed (except for official notice of issuance, which shall be immediately delivered by HOFREC upon each such issuance). HOFREC shall not take any action which would cause the number of authorized but unissued shares of HOFREC Common Stock to be less than the number of such shares required to be reserved hereunder for issuance upon conversion of the principal amount of this Note.
(g) No fractional shares of HOFREC Common Stock shall be issued upon any Optional Conversion of all or any portion of the principal amount of this. In lieu of delivering a fractional share of HOFREC Common Stock to any holder in connection with an Optional Conversion, any fractional share of HOFREC Common Stock shall be rounded up or down to the next whole number or zero, as applicable (with one-half being closer to the next lower whole number for this purpose).
(h) The Conversion Price shall be subject to a weighted average anti-dilution adjustment from time to time as follows:
(i) If HOFREC shall at any time or from time to time during the period from the Second Amendment Date to the Maturity, issue any additional shares of HOFREC Common Stock (or be deemed to have issued any shares of HOFREC Common Stock as provided herein), other than Excluded Securities (as defined in Paragraph 21(h)(iii)) and Excluded Transactions (as defined in Paragraph 21(h)(iv)) (such additional shares, “Additional Shares”), without consideration or for a consideration per share less than the Conversion Price in effect immediately prior to the issuance of HOFREC Common Stock, the Conversion Price in effect immediately prior to such issuance shall forthwith be lowered to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:
CP2 = CP1 * (A + B) ÷ (A + C)
For purposes of the foregoing formula, the following definitions shall apply:
● | “CP2” shall mean the Conversion Price in effect immediately after such issue of Additional Shares of HOFREC Common Stock; | |
● | “CP1” shall mean the Conversion Price in effect immediately prior to such issue of Additional Shares of HOFREC Common Stock; | |
● | “A” shall mean the number of shares of HOFREC Common Stock outstanding immediately prior to such issue of Additional Shares of HOFREC Common Stock (including any shares of HOFREC Common Stock deemed to have been issued pursuant to Paragraph 21(h)(ii)(D)); | |
● | “B” shall mean the number of shares of HOFREC Common Stock that would have been issued if such Additional Shares of HOFREC Common Stock had been issued at the price per share equal to CP1 (determined by dividing the aggregate consideration received by HOFREC in respect of such issue by CP1); and | |
● | “C” shall mean the number of such Additional Shares of HOFREC Common Stock issued in such transaction. |
(ii) For the purposes of any adjustment of the Conversion Price pursuant to Paragraph 21(h)(i), the following provisions shall be applicable:
(A) In the case of the issuance of HOFREC Common Stock for cash, the consideration shall be deemed to be the amount of cash paid therefor before deducting therefrom any discounts, commissions or other expenses allowed, paid or incurred by HOFREC for any underwriting or otherwise in connection with the issuance and sale thereof.
(B) In the case of the issuance of HOFREC Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined in good faith by the Board of Directors of HOFREC, irrespective of any accounting treatment.
(C) In the case of the issuance of HOFREC Common Stock without consideration, the consideration shall be deemed to be $0.01 per share.
(D) In the case of the issuance of (x) options or warrants to purchase or rights to subscribe for HOFREC Common Stock, (y) debt or securities by their terms convertible into or exchangeable for HOFREC Common Stock or (z) options to purchase rights to subscribe for such convertible or exchangeable securities:
(1) the aggregate maximum number of shares of HOFREC Common Stock deliverable upon exercise of such options or warrants to purchase or rights to subscribe for HOFREC Common Stock shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in subdivisions (A), (B) and (C) above), if any, received by HOFREC upon the issuance of such options, warrants or rights plus the minimum purchase price provided in such options, warrants or rights for the HOFREC Common Stock covered thereby; and
(2) the aggregate maximum number of shares of HOFREC Common Stock deliverable upon conversion of or in exchange for any such convertible or exchangeable debt or securities or upon the exercise of options or warrants to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities were issued or such options or warrants or rights were issued and for a consideration equal to the consideration received by HOFREC for any such securities and related options or warrants or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the additional consideration, if any, to be received by HOFREC upon the conversion or exchange of such securities or the exercise of any related options or warrants or rights (the consideration in each case to be determined in the manner provided in subdivisions (A), (B) and (C) above).
(iii) For purposes of Paragraph 21(h), the term “Excluded Securities” shall mean (i) shares of HOFREC Common Stock issued to officers, employees, directors or consultants of HOFREC and its subsidiaries, pursuant to any agreement, plan or arrangement approved by the Board of Directors of HOFREC, or options or warrants to purchase or rights to subscribe for such HOFREC Common Stock, or debt or securities by their terms convertible into or exchangeable for such HOFREC Common Stock, or options or warrants to purchase or rights to subscribe for such convertible or exchangeable securities pursuant to such agreement, plan or arrangement; (ii) shares of HOFREC Common Stock issued as a stock dividend or upon any stock split or other subdivision or combination of shares of HOFREC Common Stock; or (iii) securities issued pursuant to the acquisition of another corporation or other entity by HOFREC by merger or purchase of stock or purchase of all or substantially all of such other corporation's or other entity's assets whereby HOFREC owns not less than a majority of the voting power of such other corporation or other entity following such acquisition or purchase.
(iv) For purposes of Paragraph 21(h), the term “Excluded Transactions” shall mean sales of shares of HOFREC Common Stock issued under HOFREC’s “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act; provided, however, that each financial quarter during which HOFREC’s sales of such shares reaches a multiple of $5 million aggregate consideration beginning with sales occurring after March 1, 2022 for an average consideration per share for such multiple of $5 million aggregate consideration that is less than the Exercise Price then in effect at the end of such financial quarter, the Exercise Price in effect at the end of such financial quarter shall forthwith be lowered to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the formula set forth in Paragraph 21(h)(i), with the following adjustments: (A) “A” shall mean the difference of (1) the number of shares of HOFREC Common Stock outstanding immediately following the sale of a share under HOFREC’s “at the market offering” that reaches a multiple of $5 million (including any shares of HOFREC Common Stock deemed to have been issued pursuant to Paragraph 21(h)(ii)(D)), minus (2) the number of shares of HOFREC Common Stock issued under HOFREC’s “at the market offering” for such multiple of $5 million and (B) “C” shall mean the number of such shares of HOFREC Common Stock issued under HOFREC’s “at the market offering” for such multiple of $5 million.
(i) Nasdaq 19.99% Cap. Notwithstanding anything to the contrary contained in this Note or the other Transaction Documents, HOFREC and Holder agree that the total cumulative number of shares of HOFREC Common Stock that may be issued to Holder and its affiliates hereunder and under the other Transaction Documents may not exceed the requirements of Nasdaq Listing Rule 5635(d) (“Nasdaq 19.99% Cap”), except that such limitation will not apply following Approval (defined below). If the number of shares of HOFREC Common Stock issued to Holder and its affiliates under this Note and the other Transaction Documents reaches the Nasdaq 19.99% Cap, so as not to violate the 20% limit established in Listing Rule 5635(d), HOFREC, at its election, will use reasonable commercial efforts to obtain stockholder approval of this Note and the issuance of additional shares of HOFREC Common Stock upon the conversion of the portion of this under this Note, if necessary, in accordance with the requirements of Nasdaq Listing Rule 5635(d) (the “Approval”). “Transaction Documents” shall mean (A) this Note, (B) the Certificate of Designations of 7.00% Series C Convertible Preferred Stock, par value $0.0001 per share, of HOFREC, (C) the amended and restated Series C Warrant, dated March 1, 2022, issued by HOFREC to CH Capital Lending, LLC, (D) the amended and Series D Warrant to purchase HOFREC Common Stock, dated March 1, 2022, issued by HOFREC to CH Capital Lending, LLC, (E) the Series E Warrant to purchase HOFREC Common Stock, dated March 1, 2022, issued by HOFREC to CH Capital Lending, LLC, (F) the Series E Warrant to purchase HOFREC Common Stocks, dated March 1, 2022, issued by HOFREC to IRG, LLC, (G) the Series F Warrant to purchase HOFREC Common Stock, dated March 1, 2022, issued by HOFREC to Holder, (H) the Series G Warrant to purchase HOFREC Common Stock to be issued by HOFREC to Stuart Lichter, (I) the Letter Agreement, dated March 1, 2022, between HOFREC and Stuart Lichter, (J) the [$4,273,543.46] First Amended and Restated Promissory Note, dated as of March 1, 2022, issued by HOFREC to IRG, LLC, and (K) the $4,273,543.46 First Amended and Restated Promissory Note, dated March 1, 2022, issued by HOFREC to Holder.
(j) Prepayment Notice. Prior to the prepayment of this in accordance with this Note, HOFREC shall provide a ten (10) day notice to the Lender who then shall have the right to convert any portion or all of this within twenty (20) business days after notice of any planned prepayment at the Conversion Price then in effect.
6. Issuance of HOFREC Common Stock and Warrants. As consideration for the transactions contemplated by this Second Amendment, HOFREC shall issue to Holder in a transaction exempt from registration pursuant to Section 4(a)(2) of the Securities Act:
(a) 280,000 shares of HOFREC Common Stock (“Commitment Fee Shares”), which shall benefit from, and be subject to, that certain Registration Rights Agreement, dated as of the Second Amendment Date, by and among HOFREC, Holder and the other parties thereto.
(b) Warrants to purchase 1,000,000 shares of HOFREC Common Stock in the form of Exhibit A attached hereto (the “Warrants”). The Warrants (i) have an exercise price of $1.09 per share, subject to adjustment, and (ii) are exercisable, at Holder’s option, from March 1, 2022 through and including March 1, 2027.
A fully completed copy of the Accredited Investor Questionnaire attached hereto as Exhibit B (the “Questionnaire”) is being delivered by Holder to HOFREC.
7. Representations and Warranties.
(a) Holder makes the following representations and warranties to HOFREC and Makers:
(i) Economic Loss and Sophistication. Holder is able to bear the economic risk of losing its entire investment in the Commitment Fee Shares and Warrants. In making this statement, consideration has been given to whether Holder can afford to hold the investment for an indefinite period of time and whether Holder can afford a complete loss of its investment. Holder has such knowledge and experience in financial and business matters that it is capable of evaluating the risks and merits of this investment.
(ii) Accredited Investor Determination. Holder is an “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities Act, as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act, as certified in the Questionnaire.
(iii) Access. Holder acknowledges that (i) HOFREC has made all documents available to it including, but not limited to, this Second Amendment and any and all additional agreements, documents, records and books that Holder (or its representatives) has requested relating to an investment in the Commitment Fee Shares and Warrants, (ii) Holder has had an opportunity to ask questions of, and receive answers from, HOFREC or a person acting on behalf of HOFREC concerning the terms and conditions of an investment in the Commitment Fee Shares and Warrants, and (iii) all questions asked by Holder have been adequately answered to its satisfaction. Holder represents that it has had access to all information that it deems material to an investment decision with respect to an investment in the Commitment Fee Shares and Warrants.
(iv) Reliance. Holder has relied solely on independent investigations conducted by Holder or its advisors in making a decision to subscribe for the Commitment Fee Shares and Warrants and acknowledges that no representations or agreements have been made to Holder other than those specifically set forth in this Second Amendment. Holder is not relying on any oral representation of any officer or manager of HOFREC or any person purported to be acting on behalf of HOFREC. Holder is not relying on HOFREC with respect to the tax and other economic considerations of an investment and have consulted Holder’s own attorneys, accountants or investment advisors with respect to an investment in the Commitment Fee Shares and Warrants.
(v) Speculative Investment. Holder is aware that (i) an investment in the Commitment Fee Shares and Warrants involves numerous risks, which Holder has carefully considered, (ii) no federal or state agency has passed upon the merits of the sale of the Commitment Fee Shares and Warrants of any of the information provided in connection with the offering, and (iii) the Commitment Fee Shares and Warrants are a speculative investment involving a significant degree of risk for which there is no guarantee that Holder will realize any gain from any investment. Holder acknowledges and agrees that Holder is able to hold the Commitment Fee Shares and Warrants indefinitely and to afford a complete loss of Holder’s investment in the Commitment Fee Shares and Warrants.
(vi) Exempt Transaction. Holder understands that the Commitment Fee Shares and Warrants are being issued in reliance upon an exemption from federal securities registration.
(vii) No Registration of Interests; Book-Entry Form. Holder acknowledges and agrees that, based in part upon Holder’s representations contained herein and in reliance upon applicable exemptions, no interest in the Commitment Fee Shares and Warrants has been registered under the Securities Act or the securities laws of any other domestic or foreign jurisdiction. Holder agrees not to offer, sell, pledge or otherwise dispose of all or any portion of the Commitment Fee Shares and Warrants without registration or qualification except pursuant to an offering duly registered or qualified under the Securities Act and any applicable state securities laws, unless (i) in the opinion of counsel for, or counsel satisfactory to, HOFREC, registration or qualification under the Securities Act and any applicable state securities laws is not required and (ii) if required, Holder has received any necessary regulatory approvals. Holder understands that the Commitment Fee Shares and Warrants will be subject to a legend this effect and that, as applicable, stop transfer instructions will be issued by HOFREC to its transfer agent. Holder understands that the Commitment Fee Shares and Warrants will be issued in book-entry, meaning uncertificated form.
(viii) Investment Intent. Holder is acquiring the Commitment Fee Shares and Warrants for its own account for investment, and not with a view to any distribution, resale, subdivision or fractionalization thereof in violation of the Securities Act or any other applicable domestic or foreign securities laws, and Holder has no present plans to enter into any contract, undertaking, agreement or arrangement for any such distribution, resale, subdivision or fractionalization. The Commitment Fee Shares and Warrants are not being acquired, directly or indirectly, as nominee, trustee or representative of or for any other person or persons.
(ix) Power and Authority. Holder is authorized to enter into this Second Amendment, the Questionnaire, and such other agreements, certificates, instruments or other documents as are executed by or on Holder’s behalf in connection with Holder’s obligations under this Second Amendment or in connection with this subscription (collectively, the “Second Amendment Documents”), to perform Subscriber’s obligations under the Second Amendment Documents, and to consummate the transactions that are the subjects of the Second Amendment Documents.
(x) Compliance with Laws and Other Instruments. The execution and delivery of the Second Amendment Documents by, or on behalf of, Holder and the consummation of the transactions contemplated by the Second Amendment Documents do not and will not conflict with or result in any violation of or default under any provision of any charter, bylaws, trust agreement or other organizational document, as the case may be, of Holder, or any agreement, certificate or other instrument to which Holder is a party or by which Holder or any of Holder’s properties is bound, or any permit, franchise, judgment, decree, statute, rule, regulation or other law applicable to Holder or the business or properties of Holder.
(xi) Reliance on Representations. Holder acknowledges that HOFREC has relied and will rely upon Holder’s representations, warranties and agreements in this Second Amendment and that all such representations and agreements shall survive the issuance and delivery of the Commitment Fee Shares and Warrants hereunder and shall remain in effect thereafter.
8. Joinder of HOFREC. HOFREC hereby irrevocably, absolutely and unconditionally (a) becomes a party to the JKP Promissory Note (to the extent of its obligations thereunder, for example under Paragraph 21 thereof), and (b) agrees to be bound by, to perform and observe all the terms, conditions, covenants, obligations, liabilities, agreements and undertakings of HOFREC as stated in this Second Amendment.
9. Security; Cross-Collateralization.
(a) The JKP Promissory Note, as amended by this Second Amendment, shall be secured by all of the same collateral (collectively, the “Shared Collateral”) that secures the obligations of the borrowers under the Aquarian Loan Agreement (as defined in Paragraph 9(b)). The JKP Promissory Note, as amended by this Second Amendment, shall also continue to be secured by the Pledge Agreement, which remains in full force and effect.
(b) The JKP Promissory Note, as amended by this Second Amendment, shall be cross-collateralized with all obligations under (i) that certain Term Loan Agreement, dated as of December 1, 2020, by and among HOFREC, Newco, and certain other entities (as initial Borrowers), Aquarian Credit Funding LLC, a Delaware limited liability company (as the initial Administrative Agent), and Investors Heritage Life Insurance Company and Lincoln Benefit Life Company (as the initial Lenders), as amended by Amendment Number 1 to Term Loan Agreement dated January 28, 2021, Amendment Number 2 to Term Loan Agreement dated February 15, 2021, Amendment Number 3 to Term Loan Agreement dated August 30, 2021, Amendment Number 4 to Term Loan Agreement dated August 30, 2021, and Amendment Number 5 to Term Loan Agreement dated December 15, 2021, as assigned on the Second Amendment Date to CH Capital Lending, LLC, a Delaware limited liability company, as the new Administrative Agent and the new Lender, and as further amended by Amendment Number 6 to Term Loan Agreement, dated as of the Second Amendment Date (as so amended and assigned, and as further amended, restated, supplemented, waived or otherwise modified from time to time, the “Aquarian Loan Agreement”); (b) that certain First Amended and Restated Promissory Note, dated as of the Second Amendment Date, in the original principal amount of $4,273,543.46, from HOFREC, payable to the order of IRG, LLC, a Nevada limited liability company (the “IRG Split Note”); and (c) that certain First Amended and Restated Promissory Note, dated as of the Second Amendment Date, in the original principal amount of $4,273,543.46, from HOFREC, payable to the order of Holder (the “JKP Split Note”). Such cross-collateralization of the JKP Promissory Note (as amended by this Second Amendment), the Aquarian Loan Agreement, the IRG Split Note, and the JKP Split Note shall be reflected in (i) the Aquarian Loan Agreement and the agreements executed in connection therewith, (ii) the IRG Split Note, (iii) the JKP Split Note, and/or (iv) appropriate instruments that amend, supplement, and/or assign the JKP Promissory Note or any of the other the foregoing instruments.
(c) Makers, HOFREC, and Holder agree that, for purposes of effectuating the cross-collateralization described in this Paragraph 9, (i) CH Capital Lending, LLC, a Delaware limited liability company (which is also the Administrative Agent under the Aquarian Loan Agreement) shall have the right and authority to act as Administrative Agent/Collateral Agent with respect to all of the Shared Collateral, and (ii) the parties that have a security interest in the Shared Collateral (including Holder) shall have the right to appoint a replacement Administrative Agent/Collateral Agent at any time, without the consent of Makers or of HOFREC (and in such event, Holder shall send written notice to Makers and to HOFREC, informing them of the name and address of such replacement Administrative Agent/Collateral Agent).
10. Effect of Second Amendment. Except as specifically amended by this Second Amendment, all of the terms and conditions of the JKP Promissory Note are ratified and affirmed, and remain in full force and effect. In the event of any conflict between the terms of this Second Amendment and the terms of the JKP Promissory Note, the terms of this Second Amendment shall prevail.
11. Counterparts and Electronic Signatures. This Second Amendment may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, and such counterparts shall together constitute but one and the same Second Amendment. Any party shall be entitled to sign and transmit an electronic signature of this Second Amendment (by facsimile, email, .pdf file, or other electronic transmission). This Second Amendment will be binding upon full execution by Makers, HOFREC, and Holder. Any party that provides an electronic signature to this Second Amendment agrees to promptly execute and deliver to the other parties, upon request, an original signed Second Amendment.
12. Entire Agreement. This Second Amendment contains the entire understanding and agreement between the parties relating to the matters covered hereby and supersedes all prior or contemporaneous negotiations, arrangements, agreements, understandings, representations, and statements, whether oral or written, with respect to the matters covered hereby, all of which are merged herein and shall be of no further force or effect.
13. Authority. Each of Makers, HOFREC, and Holder hereby represents and warrants to the other parties that (a) such party has the legal right, power and authority to enter into this Second Amendment, (b) the execution, delivery, and performance of this Second Amendment have been duly authorized by such party, (c) the person signing this Second Amendment on behalf of such party has obtained the requisite corporate, limited liability company, or other authority to execute this Second Amendment on behalf of such party, and (d) no other action is requisite to the valid and binding execution, delivery, and performance of the JKP Promissory Note (as modified by this Second Amendment) by such party.
14. Confession of Judgment. To the extent permitted by applicable law, Makers, HOFREC, and any endorser of the JKP Promissory Note, authorize any attorney-at-law to appear in any state or federal court of record in the State of Ohio or any other state of the United States at any time after the JKP Promissory Note is due, whether by acceleration or otherwise, and to waive the issuing and service of process and confess a judgment in favor of the legal holder of the JKP Promissory Note against Makers, HOFREC (to the extent of its obligations thereunder), and any endorsers, or either or any one or more of them, for the amount then due under the JKP Promissory Note, together with costs of suit and to release all errors and waive all right of appeal.
[Remainder of page intentionally left blank; signature pages follow]
IN WITNESS WHEREOF, Makers and Holder have duly executed this Second Amendment at Canton, Stark County, Ohio as of the Second Amendment Date first above written.
Makers:
WARNING--BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.
HOF VILLAGE NEWCO, LLC,
a Delaware limited liability company
By: | |||
Name: | Michael Crawford | ||
Title: | President and Chief Executive Officer |
WARNING--BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.
HOF VILLAGE HOTEL II, LLC,
a Delaware limited liability company
By: | |||
Name: | Michael Crawford | ||
Title: | President and Chief Executive Officer |
HOFREC:
WARNING--BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.
HALL OF FAME RESORT & ENTERTAINMENT COMPANY,
a Delaware corporation
By: | /s/ Michael Crawford | ||
Name: | Michael Crawford | ||
Title: | President and Chief Executive Officer |
Holder:
JKP FINANCIAL, LLC,
a Delaware limited liability company
By: | /s/ John A. Mase | ||
Name: | John A. Mase | ||
Title: | Chief Executive Officer |
[End of signatures]
Exhibit A
WARRANT AGREEMENT
See attached.
Exhibit B
ACCREDITED INVESTOR QUESTIONNAIRE
(ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)
This Accredited Investor Questionnaire (“Questionnaire”), dated as of __ _, 2022 , is to being delivered by the undersigned (“Subscriber”) in connection with Subscriber’s receipt of shares (the “Subscribed Shares”) of common stock , par value $0.0001 per share (“Common Stock”), of Hall of Fame Resort & Entertainment Company, a Delaware corporation (the “Company”) and warrants (“Warrants”), as contemplated by Second Amendment to Secured Cognovit Promissory Note (the “Second Amendment”), dated as of March 1, 2022, by and between HOF Village Newco, LLC (“Newco”), HOF Village Hotel II, LLC (“Hotel II”; each of Newco and Hotel II is referred to herein as a “Maker,” and they are together referred to herein as “Makers”), and JKP Financial, LLC (“Holder”). The Subscribed Shares and Warrants are being issued without registration under the Securities Act of 1933, as amended (the “Securities Act”), and the securities laws of certain states, in reliance on the exemptions contained in the Securities Act and in reliance on similar exemptions under applicable state laws. The purpose of this Questionnaire is to provide assurance that Subscriber meets the applicable suitability requirements. The information supplied by Subscriber will be used in determining whether Subscriber meets such requirements, and reliance upon the private offering exemptions from registration is based in part on the information herein supplied.
This Questionnaire does not constitute an offer to sell or a solicitation of an offer to buy any security. Subscriber’s answers will be kept strictly confidential. However, by signing this Questionnaire, Subscriber authorizes the Company to provide a completed copy of this Questionnaire to such parties as the Company deems appropriate in order to ensure that the purchase and sale of the Subscribed Shares and Warrants will not result in a violation of the Securities Act or the securities laws of any state. Subscriber must answer all applicable questions and complete and sign this Questionnaire. Please print or type the responses and attach additional sheets of paper if necessary to complete the answers to any item.
PART A. BACKGROUND INFORMATION
Name of Subscriber: | JKP Financial LLC |
If a corporation, partnership, limited liability company, trust or other entity: | |
Type of entity: | Delaware limited liability company |
Business Address: | |
(Number and Street) | |
(City, State, and Zip Code) | |
Telephone Number: | |
Employer or Taxpayer Identification No.: |
Accredited Investor Questionnaire – page 1
|
|
Was Subscriber formed for the purpose of investing in the securities being offered? | |
Yes ☐ No ☒ |
PART B. ACCREDITED INVESTOR QUESTIONNAIRE
In connection with the purchase and sale of the Subscribed Shares and Warrants pursuant to the Second Amendment, the following information must be obtained regarding Subscriber’s investor status. Please initial each category applicable to Subscriber as a purchaser of the Subscribed Shares and Warrants.
_____ | (i) | A natural person whose individual net worth, or joint net worth with such person’s spouse, at the time of his or her purchase exceeds $1,000,000. | |
Note: The term “net worth” means the excess of total assets at fair market value over total liabilities, except that (i) the person’s primary residence shall not be included as an asset; (ii) indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of the sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (iii) indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability. |
_____ | (ii) | A natural person who had an individual income in excess of $200,000 in each of the two most recent years, or joint income with such person’s spouse in excess of $300,000 in each of those years, and who has a reasonable expectation of reaching the same income level in the current calendar year. |
Accredited Investor Questionnaire – page 2
_____ | (iii) | A trust with total assets in excess of $5,000,000 not formed for the specific purpose of acquiring the Subscribed Shares and Warrants, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) (i.e., a person who has such knowledge and experience in financial and business matters that such person is capable of evaluating the merits and risks of the prospective investment). | |
_____ | (iv) | An entity in which all of the equity owners are accredited investors. (If Subscriber has checked this alternative, Subscriber shall provide statements signed by each equity owner demonstrating how each is qualified as an accredited investor.) |
_____ | (v) | A bank as defined in Section 3(a)(2) of the Securities Act, or a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended; an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Company Act of 1940 (the “Investment Company Act”), or a business development company as defined in Section 2(a)(48) of the Investment Company Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, as amended; a plan established and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (“ERISA”), if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which fiduciary is either a bank, a savings and loan association, an insurance company, or a registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors. |
_____ | (vi) | A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended. |
☒____ | (vii) | An organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, a corporation, limited liability company, Massachusetts or similar business trust, or a partnership, that was not formed for the specific purpose of acquiring the Subscribed Shares and Warrants, with total assets in excess of $5,000,000. |
_____ | (viii) | A director or executive officer of the Company. |
_____ | (ix) | None of the above. |
[Signature Page Follows]
Accredited Investor Questionnaire – page 3
IN WITNESS WHEREOF, Subscriber has executed this Questionnaire as of the date set forth above and hereby certifies that the information contained herein is true and correct as of such date.
Subscriber:
JKP Financial, LLC,
a Delaware limited liability company
By, | ||
a Delaware limited liability company, its Manager |
By: | ||
Name: | ||
Title |
Accredited Investor Questionnaire – page 4
Exhibit 10.5
FORM OF SERIES E
COMMON STOCK PURCHASE WARRANT
HALL OF FAME RESORT & ENTERTAINMENT COMPANY
Series E No. W-__
Warrant Shares: ______ | Initial Exercise Date: March 1, 2023 |
THIS SERIES E COMMON STOCK PURCHASE WARRANT (this “Warrant”), dated as of March 1, 2022 (the “Warrant Date”), certifies that, for value received, __________, or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time from the Initial Exercise Date set forth above, through and until 5:00 p.m. (New York City time) on the date which is five years after the Warrant Date, subject to Section 5(o) (such date, the “Termination Date”), but not thereafter, to subscribe for and purchase from Hall of Fame Resort & Entertainment Company, a company incorporated under the laws of the State of Delaware (the “Company”), up to _______ shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock (as defined in Section 1). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price (as defined in Section 2(b)). This Warrant shall be issued and maintained in the form of a certificate held by the Holder.
Section 1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Amended and Restated Assigned IRG Note” means the $4,273,543.46 principal amount First Amended and Restated Promissory Note, dated March 1, 2022, issued by the Company to IRG, LLC.
“Amended and Restated Assigned JKP Note” means the $4,273,543.46 principal amount First Amended and Restated Promissory Note, dated March 1, 2022, issued by the Company to JKP Financial, LLC.
“Amended and Restated Series C Warrant” means the Amended and Restated Series C Warrant to purchase 10,036,925 shares of Common Stock, dated as of March 1, 2022, issued by the Company to CH Capital Lending, LLC.
“Amended and Restated Series D Warrant” means the Amended and Restated Series D Warrant to purchase 2,450,980 shares of Common Stock, dated as of March 1, 2022, issued by the Company to CH Capital Lending, LLC.
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“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“Board of Directors” means the board of directors of the Company.
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York are generally are open for use by customers on such day.
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.
“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Letter Agreement” means the Agreement, dated March 1, 2022, between the Company and Stuart Lichter.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
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“Second Amendment to JKP Note” means the Joinder and Second Amendment to Secured Cognovit Promissory Note, dated as of March 1, 2022, by and among HOF Village Newco, LLC, HOF Village Hotel II, LLC, as makers, the Company, and JKP Financial, LLC, as holder, which agreement amends that certain Secured Cognovit Promissory Note, dated as of June 19, 2020, originally executed by Hotel II and by HOF Village, LLC, in favor of JKP Financial, LLC, as assigned by HOF Village, LLC to HOF Village Newco, LLC pursuant to the Contribution Agreement dated as of June 30, 2020, by and between HOF Village, LLC and HOF Village Newco, LLC, as amended by the First Amendment to Secured Cognovit Promissory Note dated December 1, 2020.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Series E Warrants” mean (i) the Series E Warrant to purchase 1,000,000 shares of Common Stock, dated March 1, 2022, issued by the Company to CH Capital Lending, LLC, and (ii) the Series E Warrant to purchase 500,000 shares of Common Stock, dated March 1, 2022, issued by the Company to IRG, LLC.
“Series F Warrants” means (i) the Series F Warrant to purchase 1,000,000 shares of Common Stock, dated March 1, 2022, issued by the Company to JKP Financial, LLC; and (ii) this Warrant.
“Series G Warrant” means the Series G Warrant to purchase 125,000 shares of Common Stock to be issued by the Company to Stuart Lichter.
“Sixth Amendment to Term Loan Agreement” means Amendment Number 6 to Term Loan Agreement, dated as of March 1, 2022, among the Company, HOF Village Newco, LLC and HOF Village Stadium, LLC, as borrower, in favor of CH Capital Lending, LLC, as administrative agent and lender, which agreement amends that certain Term Loan Agreement, dated as of December 1, 2020, as amended by (i) Amendment Number 1 to Term Loan Agreement, dated as January 28, 2021; (ii) Amendment Number 2 to Term Loan Agreement, dated as of February 15, 2021; (iii) Amendment Number 3 to Term Loan Agreement, dated as of August 30, 2021; (iv) Amendment Number 4 to Term Loan Agreement, dated as of August 30, 2021; and (v) Amendment Number 5 to Term Loan Agreement, dated as of December 15, 2021.
“Trading Day” means a day on which the Common Stock is traded on a Trading Market.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).
“Transfer Agent” means Continental Stock Transfer and Trust Company, the current transfer agent of the Company, with a mailing address of One State Street, 30th Floor, New York, NY 10004 and a facsimile number of 212-616-7615, and any successor transfer agent of the Company.
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“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“Warrants” means this Warrant and other Common Stock purchase warrants of the same series issued by the Company.
Section 2. Exercise.
a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date, by delivery to the Company of a duly executed e-mail attachment of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and this Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall use its reasonable best efforts to deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
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b) Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $1.50, subject to adjustment hereunder (the “Exercise Price”).
c) Cashless Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained therein is not current and available for the issuance of the Warrant Shares to the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing ((A-B)(X)) by (A), where:
(A) = as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(68) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;
(B) = the Exercise Price of this Warrant, as adjusted hereunder; and (X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.
In connection with clause (ii) in (A) above, upon written request of the Company, the Holder will promptly provide evidence reasonably acceptable to the Company of the Bid Price of the Common Stock on the principal Trading Market that was reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise provided that failure to provide such evidence shall not reduce or otherwise toll the Company’s obligation to deliver the Warrant Shares on or before the Warrant Share Delivery Date.
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If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees not to take any position contrary to this Section 2(c).
d) Mechanics of Exercise.
i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.
ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
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iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise by notifying the Company of such rescission within ten (10) days of delivering the Notice of Exercise.
iv. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
v. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vi. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
e) Nasdaq 19.99% Cap. Notwithstanding anything to the contrary contained in this Warrant or the other Transaction Documents (defined below), the Company and Holder agree that the total cumulative number of shares of Common Stock that may be issued to Holder and its Affiliates hereunder and under the other Transaction Documents may not exceed the requirements of Nasdaq Listing Rule 5635(d) (“Nasdaq 19.99% Cap”), except that such limitation will not apply following Approval (defined below). If the number of shares of Common Stock issued to Holder and its Affiliates under this Warrant and the other Transaction Documents reaches the Nasdaq 19.99% Cap, so as not to violate the 20% limit established in Listing Rule 5635(d), the Company, at its election, will use reasonable commercial efforts to obtain stockholder approval of this Warrant and the issuance of shares of Common Stock issuable upon the exercise of this Warrant in excess of the Nasdaq 19.99% Cap in accordance with the requirements of Nasdaq Listing Rule 5635(d) (the “Approval”). “Transaction Documents” shall mean this Warrant, the Certificate of Designations of 7.00% Series C Convertible Preferred Stock of the Company, the Amended and Restated Series C Warrant, the Amended and Restated Series D Warrant, the other Series E Warrant, the Series F Warrants, the Series G Warrant, the Letter Agreement, the Amended and Restated Assigned JKP Note, the Amended and Restated Assigned IRG Note, the Second Amendment to JKP Note, and the Sixth Amendment to Term Loan Agreement.
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Section 3. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
c) Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution.
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d) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, or (iii) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property(each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 3(d) pursuant to written agreements (without unreasonable delay) prior to such Fundamental Transaction and shall deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction). Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein.
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e) Weighted Average Anti-Dilution Adjustment. The Exercise Price shall be subject to a weighted average anti-dilution adjustment from time to time as follows:
i. If the Company shall at any time or from time to time during the period from the Warrant Date to the Termination Date, issue any additional shares of Common Stock (or be deemed to have issued any shares of Common Stock as provided herein), other than Excluded Securities (as defined in Section 3(e)(iii)) and Excluded Transactions (as defined in Section 3(e)(iv)) (such additional shares, “Additional Shares”), without consideration or for a consideration per share less than the Exercise Price in effect immediately prior to the issuance of Common Stock, the Exercise Price in effect immediately prior to such issuance shall forthwith be lowered to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:
EP2 = EP1 * (A + B) ÷ (A + C)
For purposes of the foregoing formula, the following definitions shall apply:
● | “EP2” shall mean the Exercise Price in effect immediately after such issue of Additional Shares of Common Stock; |
● | “EP1” shall mean the Exercise Price in effect immediately prior to such issue of Additional Shares of Common Stock; |
● | “A” shall mean the number of shares of Common Stock outstanding immediately prior to such issue of Additional Shares of Common Stock (including any shares of Common Stock deemed to have been issued pursuant to Section 3(e)(ii)(D)); |
● | “B” shall mean the number of shares of Common Stock that would have been issued if such Additional Shares of Common Stock had been issued at the price per share equal to EP1 (determined by dividing the aggregate consideration received by the Company in respect of such issue by EP1); and |
● | “C” shall mean the number of such Additional Shares of Common Stock issued in such transaction. |
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ii. For the purposes of any adjustment of the Exercise Price pursuant to Section 3(e)(i), the following provisions shall be applicable:
(A) In the case of the issuance of Common Stock for cash, the consideration shall be deemed to be the amount of cash paid therefor before deducting therefrom any discounts, commissions or other expenses allowed, paid or incurred by the Company for any underwriting or otherwise in connection with the issuance and sale thereof.
(B) In the case of the issuance of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined in good faith by the Board of Directors of the Company, irrespective of any accounting treatment.
(C) In the case of the issuance of Common Stock without consideration, the consideration shall be deemed to be $0.01 per share.
(D) In the case of the issuance of (x) options or warrants to purchase or rights to subscribe for Common Stock, (y) debt or securities by their terms convertible into or exchangeable for Common Stock or (z) options to purchase rights to subscribe for such convertible or exchangeable securities:
a. the aggregate maximum number of shares of Common Stock deliverable upon exercise of such options or warrants to purchase or rights to subscribe for Common Stock shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in subdivisions (A), (B) and (C) above), if any, received by the Company upon the issuance of such options, warrants or rights plus the minimum purchase price provided in such options, warrants or rights for the Common Stock covered thereby; and
b. the aggregate maximum number of shares of Common Stock deliverable upon conversion of or in exchange for any such convertible or exchangeable debt or securities or upon the exercise of options or warrants to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities were issued or such options or warrants or rights were issued and for a consideration equal to the consideration received by the Company for any such securities and related options or warrants or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the additional consideration, if any, to be received by the Company upon the conversion or exchange of such securities or the exercise of any related options or warrants or rights (the consideration in each case to be determined in the manner provided in subdivisions (A), (B) and (C) above).
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iii. For purposes of Section 3(e), the term “Excluded Securities” shall mean (i) shares of Common Stock issued to officers, employees, directors or consultants of Company and its subsidiaries, pursuant to any agreement, plan or arrangement approved by the Board of Directors of the Company, or options or warrants to purchase or rights to subscribe for such Common Stock, or debt or securities by their terms convertible into or exchangeable for such Common Stock, or options or warrants to purchase or rights to subscribe for such convertible or exchangeable securities pursuant to such agreement, plan or arrangement; (ii) shares of Common Stock issued as a stock dividend or upon any stock split or other subdivision or combination of shares of Common Stock; or (iii) securities issued pursuant to the acquisition of another corporation or other entity by the Company by merger or purchase of stock or purchase of all or substantially all of such other corporation’s or other entity’s assets whereby the Company owns not less than a majority of the voting power of such other corporation or other entity following such acquisition or purchase.
iv. For purposes of Section 3(e), the term “Excluded Transactions” shall mean sales of shares of Common Stock issued under the Company’s “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act; provided, however, that each financial quarter during which the Company’s sales of such shares reaches a multiple of $5 million aggregate consideration beginning with sales occurring after March 1, 2022 for an average consideration per share for such multiple of $5 million aggregate consideration that is less than the Exercise Price then in effect at the end of such financial quarter, the Exercise Price in effect at the end of such financial quarter shall forthwith be lowered to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the formula set forth in Section 3(e)(i), with the following adjustments: (A) “A” shall mean the difference of (1) the number of shares of Common Stock outstanding immediately following the sale of a share under the Company’s “at the market offering” that reaches a multiple of $5 million (including any shares of Common Stock deemed to have been issued pursuant to Section 3(e)(ii)(D)), minus (2) the number of shares of Common Stock issued under the Company’s “at the market offering” for such multiple of $5 million and (B) “C” shall mean the number of such shares of Common Stock issued under the Company’s “at the market offering” for such multiple of $5 million..
f) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Notice to Holder.
i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
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ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
h) Voluntary Adjustment By Company. Subject to the rules and regulations of the Trading Market, the Company may at any time during the term of this Warrant, subject to the prior written consent of the Holder, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company.
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Section 4. Transfer of Warrant.
a) Transferability. This Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning this Warrant in full. This Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated as of the Warrant Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
Section 5. Miscellaneous.
a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.
b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of this Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
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c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
d) Authorized Shares.
The Company covenants that, during the period this Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
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Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
e) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof (other than Section 5-1401 of the General Obligations law). Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
h) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder to the Company shall be in writing and delivered personally, or e-mail, or sent by a nationally recognized overnight courier service, addressed to the Company, at 2626 Fulton Drive, NW, Canton, OH 44718, Attention: (i) Chief Executive Officer, email address: michael.crawford@HOFvillage.com and (ii) General Counsel, email address: Tara.Charnes@HOFVILLAGE.com, or such other email address or address as the Company may specify for such purposes by notice to the Holders. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile or electronic transmission, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number, email address or address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered via facsimile at the facsimile number or via email at the email address set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or via email at the email address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any subsidiaries, the Company shall file such notice with the Commission pursuant to a Current Report on Form 8-K as soon as practicable and no later than 4 Business Days after providing such notice hereunder.
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i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and the Holder or the beneficial owner of this Warrant, on the other hand.
m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
o) Cancellation. This Warrant shall be cancelled without any further action on the part of Holder or the Company, in the event that the Company repays in full on or before March 1, 2023, the amended and restated promissory note, dated as of March 1, 2022, issued by the Company to IRG, LLC.
[Signature page follows]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the Warrant Date first above indicated.
HALL OF FAME RESORT & ENTERTAINMENT COMPANY | ||
By: | ||
Name: | ||
Title: |
NOTICE OF EXERCISE
To: | HALL OF FAME RESORT & ENTERTAINMENT COMPANY |
(1) The undersigned hereby elects to purchase ________ Warrant Shares of Hall of Fame Resort & Entertainment Company (the “Company”) pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
☐ in lawful money of the United States; or
☐ if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________.
The Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE OF HOLDER]
Name of Investing Entity: ___________________________________
Signature of Authorized Signatory of Investing Entity: _________________________________
Name of Authorized Signatory: _______________________________
Title of Authorized Signatory: ________________________________
Date: ___________________________
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
Name: | |||
(Please Print) | |||
Address: | |||
(Please Print) | |||
Phone Number: | |||
Email Address: | |||
Dated: | _______________ __, ______ | ||
Holder’s Signature: | |||
Holder’s Address: |
Exhibit 10.6
SERIES F
COMMON STOCK PURCHASE WARRANT
HALL OF FAME RESORT & ENTERTAINMENT COMPANY
Series F No. W-__
Warrant Shares: _________ | Initial Exercise Date: March 1, 2022 |
THIS SERIES F COMMON STOCK PURCHASE WARRANT (this “Warrant”), dated as of March 1, 2022 (the “Warrant Date”), certifies that, for value received, __________________, or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time from the Initial Exercise Date set forth above, through and until 5:00 p.m. (New York City time) on the date which is five years after the Warrant Date (such date, the “Termination Date”), but not thereafter, to subscribe for and purchase from Hall of Fame Resort & Entertainment Company, a company incorporated under the laws of the State of Delaware (the “Company”), up to _________ shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock (as defined in Section 1). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price (as defined in Section 2(b)). This Warrant shall be issued and maintained in the form of a certificate held by the Holder.
Section 1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Amended and Restated Assigned IRG Note” means the $4,273,543.46 principal amount First Amended and Restated Promissory Note, dated March 1, 2022, issued by the Company to IRG, LLC.
“Amended and Restated Assigned JKP Note” means the $4,273,543.46 principal amount First Amended and Restated Promissory Note, dated March 1, 2022, issued by the Company to JKP Financial, LLC.
“Amended and Restated Series C Warrant” means the Amended and Restated Series C Warrant to purchase 10,036,925 shares of Common Stock, dated as of March 1, 2022, issued by the Company to CH Capital Lending, LLC.
“Amended and Restated Series D Warrant” means the Amended and Restated Series D Warrant to purchase 2,450,980 shares of Common Stock, dated as of March 1, 2022, issued by the Company to CH Capital Lending, LLC.
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“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“Board of Directors” means the board of directors of the Company.
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York are generally are open for use by customers on such day.
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.
“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Letter Agreement” means the Agreement, dated March 1, 2022, between the Company and Stuart Lichter.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
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“Second Amendment to JKP Note” means the Joinder and Second Amendment to Secured Cognovit Promissory Note, dated as of March 1, 2022, by and among HOF Village Newco, LLC, HOF Village Hotel II, LLC, as makers, the Company, and JKP Financial, LLC, as holder, which agreement amends that certain Secured Cognovit Promissory Note, dated as of June 19, 2020, originally executed by Hotel II and by HOF Village, LLC, in favor of JKP Financial, LLC, as assigned by HOF Village, LLC to HOF Village Newco, LLC pursuant to the Contribution Agreement dated as of June 30, 2020, by and between HOF Village, LLC and HOF Village Newco, LLC, as amended by the First Amendment to Secured Cognovit Promissory Note dated December 1, 2020.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Series E Warrants” mean (i) the Series E Warrant to purchase 1,000,000 shares of Common Stock, dated March 1, 2022, issued by the Company to CH Capital Lending, LLC, and (ii) the Series E Warrant to purchase 500,000 shares of Common Stock, dated March 1, 2022, issued by the Company to IRG, LLC.
“Series F Warrants” means (i) this Warrant, and (ii) the Series F Warrant to purchase 1,000,000 shares of Common Stock, dated March 1, 2022, issued by the Company to Holder.
“Series G Warrant” means the Series G Warrant to purchase 125,000 shares of Common Stock to be issued by the Company to Stuart Lichter.
“Sixth Amendment to Term Loan Agreement” means Amendment Number 6 to Term Loan Agreement, dated as of March 1, 2022, among the Company, HOF Village Newco, LLC and HOF Village Stadium, LLC, as borrower, in favor of CH Capital Lending, LLC, as administrative agent and lender, which agreement amends that certain the Term Loan Agreement, dated as of December 1, 2020, as amended by (i) Amendment Number 1 to Term Loan Agreement, dated as January 28, 2021; (ii) Amendment Number 2 to Term Loan Agreement, dated as of February 15, 2021; (iii) Amendment Number 3 to Term Loan Agreement, dated as of August 30, 2021; (iv) Amendment Number 4 to Term Loan Agreement, dated as of August 30, 2021; and (v) Amendment Number 5 to Term Loan Agreement, dated as of December 15, 2021.
“Trading Day” means a day on which the Common Stock is traded on a Trading Market.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).
“Transfer Agent” means Continental Stock Transfer and Trust Company, the current transfer agent of the Company, with a mailing address of One State Street, 30th Floor, New York, NY 10004 and a facsimile number of 212-616-7615, and any successor transfer agent of the Company.
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“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“Warrants” means this Warrant and other Common Stock purchase warrants of the same series issued by the Company.
Section 2. Exercise.
a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date, by delivery to the Company of a duly executed e-mail attachment of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and this Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall use its reasonable best efforts to deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
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b) Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $1.09, subject to adjustment hereunder (the “Exercise Price”).
c) Cashless Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained therein is not current and available for the issuance of the Warrant Shares to the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing ((A-B)(X)) by (A), where:
(A) = as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(68) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;
(B) = the Exercise Price of this Warrant, as adjusted hereunder; and (X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.
In connection with clause (ii) in (A) above, upon written request of the Company, the Holder will promptly provide evidence reasonably acceptable to the Company of the Bid Price of the Common Stock on the principal Trading Market that was reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise provided that failure to provide such evidence shall not reduce or otherwise toll the Company’s obligation to deliver the Warrant Shares on or before the Warrant Share Delivery Date.
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If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees not to take any position contrary to this Section 2(c).
d) Mechanics of Exercise.
i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.
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ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise by notifying the Company of such rescission within ten (10) days of delivering the Notice of Exercise.
iv. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
v. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vi. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
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e) Nasdaq 19.99% Cap. Notwithstanding anything to the contrary contained in this Warrant or the other Transaction Documents (defined below), the Company and Holder agree that the total cumulative number of shares of Common Stock that may be issued to Holder and its Affiliates hereunder and under the other Transaction Documents may not exceed the requirements of Nasdaq Listing Rule 5635(d) (“Nasdaq 19.99% Cap”), except that such limitation will not apply following Approval (defined below). If the number of shares of Common Stock issued to Holder and its Affiliates under this Warrant and the other Transaction Documents reaches the Nasdaq 19.99% Cap, so as not to violate the 20% limit established in Listing Rule 5635(d), the Company, at its election, will use reasonable commercial efforts to obtain stockholder approval of this Warrant and the issuance of shares of Common Stock issuable upon the exercise of this Warrant in excess of the Nasdaq 19.99% Cap in accordance with the requirements of Nasdaq Listing Rule 5635(d) (the “Approval”). “Transaction Documents” shall mean this Warrant, the Certificate of Designations of 7.00% Series C Convertible Preferred Stock of the Company, the Amended and Restated Series C Warrant, the Amended and Restated Series D Warrant, the Series E Warrants, the other Series F Warrant, the Series G Warrant, the Letter Agreement, the Amended and Restated Assigned JKP Note, the Amended and Restated Assigned IRG Note, the Second Amendment to JKP Note, and the Sixth Amendment to Term Loan Agreement.
Section 3. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
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c) Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution.
d) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, or (iii) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property(each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 3(d) pursuant to written agreements (without unreasonable delay) prior to such Fundamental Transaction and shall deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction). Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein.
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e) Weighted Average Anti-Dilution Adjustment. The Exercise Price shall be subject to a weighted average anti-dilution adjustment from time to time as follows:
i. If the Company shall at any time or from time to time during the period from the Warrant Date to the Termination Date, issue any additional shares of Common Stock (or be deemed to have issued any shares of Common Stock as provided herein), other than Excluded Securities (as defined in Section 3(e)(iii)) and Excluded Transactions (as defined in Section 3(e)(iv)) (such additional shares, “Additional Shares”), without consideration or for a consideration per share less than the Exercise Price in effect immediately prior to the issuance of Common Stock, the Exercise Price in effect immediately prior to such issuance shall forthwith be lowered to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:
EP2 = EP1 * (A + B) ÷ (A + C)
For purposes of the foregoing formula, the following definitions shall apply:
● | “EP2” shall mean the Exercise Price in effect immediately after such issue of Additional Shares of Common Stock; |
● | “EP1” shall mean the Exercise Price in effect immediately prior to such issue of Additional Shares of Common Stock; |
● | “A” shall mean the number of shares of Common Stock outstanding immediately prior to such issue of Additional Shares of Common Stock (including any shares of Common Stock deemed to have been issued pursuant to Section 3(e)(ii)(D)); |
● | “B” shall mean the number of shares of Common Stock that would have been issued if such Additional Shares of Common Stock had been issued at the price per share equal to EP1 (determined by dividing the aggregate consideration received by the Company in respect of such issue by EP1); and |
● | “C” shall mean the number of such Additional Shares of Common Stock issued in such transaction. |
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ii. For the purposes of any adjustment of the Exercise Price pursuant to Section 3(e)(i), the following provisions shall be applicable:
(A) In the case of the issuance of Common Stock for cash, the consideration shall be deemed to be the amount of cash paid therefor before deducting therefrom any discounts, commissions or other expenses allowed, paid or incurred by the Company for any underwriting or otherwise in connection with the issuance and sale thereof.
(B) In the case of the issuance of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined in good faith by the Board of Directors of the Company, irrespective of any accounting treatment.
(C) In the case of the issuance of Common Stock without consideration, the consideration shall be deemed to be $0.01 per share.
(D) In the case of the issuance of (x) options or warrants to purchase or rights to subscribe for Common Stock, (y) debt or securities by their terms convertible into or exchangeable for Common Stock or (z) options to purchase rights to subscribe for such convertible or exchangeable securities:
a. the aggregate maximum number of shares of Common Stock deliverable upon exercise of such options or warrants to purchase or rights to subscribe for Common Stock shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in subdivisions (A), (B) and (C) above), if any, received by the Company upon the issuance of such options, warrants or rights plus the minimum purchase price provided in such options, warrants or rights for the Common Stock covered thereby; and
b. the aggregate maximum number of shares of Common Stock deliverable upon conversion of or in exchange for any such convertible or exchangeable debt or securities or upon the exercise of options or warrants to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities were issued or such options or warrants or rights were issued and for a consideration equal to the consideration received by the Company for any such securities and related options or warrants or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the additional consideration, if any, to be received by the Company upon the conversion or exchange of such securities or the exercise of any related options or warrants or rights (the consideration in each case to be determined in the manner provided in subdivisions (A), (B) and (C) above).
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iii. For purposes of Section 3(e), the term “Excluded Securities” shall mean (i) shares of Common Stock issued to officers, employees, directors or consultants of Company and its subsidiaries, pursuant to any agreement, plan or arrangement approved by the Board of Directors of the Company, or options or warrants to purchase or rights to subscribe for such Common Stock, or debt or securities by their terms convertible into or exchangeable for such Common Stock, or options or warrants to purchase or rights to subscribe for such convertible or exchangeable securities pursuant to such agreement, plan or arrangement; (ii) shares of Common Stock issued as a stock dividend or upon any stock split or other subdivision or combination of shares of Common Stock; or (iii) securities issued pursuant to the acquisition of another corporation or other entity by the Company by merger or purchase of stock or purchase of all or substantially all of such other corporation’s or other entity'’ assets whereby the Company owns not less than a majority of the voting power of such other corporation or other entity following such acquisition or purchase.
iv. For purposes of Section 3(e), the term “Excluded Transactions” shall mean sales of shares of Common Stock issued under the Company’s “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act; provided, however, that each financial quarter during which the Company’s sales of such shares reaches a multiple of $5 million aggregate consideration beginning with sales occurring after March 1, 2022 for an average consideration per share for such multiple of $5 million aggregate consideration that is less than the Exercise Price then in effect at the end of such financial quarter, the Exercise Price in effect at the end of such financial quarter shall forthwith be lowered to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the formula set forth in Section 3(e)(i), with the following adjustments: (A) “A” shall mean the difference of (1) the number of shares of Common Stock outstanding immediately following the sale of a share under the Company’s “at the market offering” that reaches a multiple of $5 million (including any shares of Common Stock deemed to have been issued pursuant to Section 3(e)(ii)(D)), minus (2) the number of shares of Common Stock issued under the Company’s “at the market offering” for such multiple of $5 million and (B) “C” shall mean the number of such shares of Common Stock issued under the Company’s “at the market offering” for such multiple of $5 million.
f) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
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g) Notice to Holder.
i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
h) Voluntary Adjustment By Company. Subject to the rules and regulations of the Trading Market, the Company may at any time during the term of this Warrant, subject to the prior written consent of the Holder, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company.
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Section 4. Transfer of Warrant.
a) Transferability. This Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning this Warrant in full. This Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated as of the Warrant Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
Section 5. Miscellaneous.
a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.
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b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of this Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
d) Authorized Shares.
The Company covenants that, during the period this Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
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Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
e) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof (other than Section 5-1401 of the General Obligations law). Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
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h) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder to the Company shall be in writing and delivered personally, or e-mail, or sent by a nationally recognized overnight courier service, addressed to the Company, at 2626 Fulton Drive, NW, Canton, OH 44718, Attention: (i) Chief Executive Officer, email address: michael.crawford@HOFvillage.com and (ii) General Counsel, email address: Tara.Charnes@HOFVILLAGE.com, or such other email address or address as the Company may specify for such purposes by notice to the Holders. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile or electronic transmission, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number, email address or address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered via facsimile at the facsimile number or via email at the email address set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or via email at the email address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any subsidiaries, the Company shall file such notice with the Commission pursuant to a Current Report on Form 8-K as soon as practicable and no later than 4 Business Days after providing such notice hereunder.
i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and the Holder or the beneficial owner of this Warrant, on the other hand.
m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
[Signature page follows]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the Warrant Date first above indicated.
HALL OF FAME RESORT & ENTERTAINMENT | |||
COMPANY | |||
By: | |||
Name: | |||
Title: |
NOTICE OF EXERCISE
To: HALL OF FAME RESORT & ENTERTAINMENT COMPANY
(1) The undersigned hereby elects to purchase ________ Warrant Shares of Hall of Fame Resort & Entertainment Company (the “Company”) pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
☐ in lawful money of the United States; or
☐ if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________.
The Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE OF HOLDER]
Name of Investing Entity: ___________________________________
Signature of Authorized Signatory of Investing Entity: _________________________________
Name of Authorized Signatory: _______________________________
Title of Authorized Signatory: ________________________________
Date: ___________________________
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
Name: |
||
(Please Print) | ||
Address: | ||
(Please Print) | ||
Phone Number: | ||
Email Address: | ||
Dated: _______________ __, ______ | ||
Holder’s Signature:__________________________ | ||
Holder’s Address:__________________________ |
Exhibit 10.7
Execution Copy
AMENDED
AND RESTATED
SERIES C
COMMON STOCK PURCHASE WARRANT
HALL OF FAME RESORT & ENTERTAINMENT COMPANY
No. 2020 W-1 | Initial Exercise Date: June 29, 2021 |
Issue Date: December 29, 2020 | |
Warrant Shares: 10,036,925 | Amended and Restated as of: March 1, 2022 |
THIS AMENDED AND RESTATED COMMON STOCK PURCHASE WARRANT (the “Warrant”) dated as of as of March 1, 2022 to the Common Stock Purchase Warrant dated December 29, 2020, certifies that, for value received, CH Capital Lending, LLC or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after June 29, 2021 (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on March 1, 2027 (the “Termination Date”) but not thereafter, to subscribe for and purchase from Hall of Fame Resort & Entertainment Company, a company incorporated under the laws of the State of Delaware (the “Company”), up to 10,036,925 shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock (as defined in Section 1). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price (as defined in Section 2(b)). This Warrant shall be issued and maintained in the form of a certificate held by the Holder. This Warrant amends, restates and supersedes in its entirety in all respects as of March 1, 2022 that certain Common Stock Purchase Warrant of the Company issued by the Company to the Holder as of December 29, 2020.
Section 1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Amended and Restated Assigned IRG Note” means the $4,273,543.46 principal amount First Amended and Restated Promissory Note, dated March 1, 2022, issued by the Company to IRG, LLC.
“Amended and Restated Assigned JKP Note” means the $4,273,543.46 principal amount First Amended and Restated Promissory Note, dated March 1, 2022, issued by the Company to JKP Financial, LLC.
“Amended and Restated Series D Warrant” means the Amended and Restated Series D Warrant to purchase 2,450,980 shares of Common Stock, dated as of March 1, 2022, issued by the Company to CH Capital Lending, LLC.
“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“Board of Directors” means the board of directors of the Company.
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York are generally are open for use by customers on such day.
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.
“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Letter Agreement” means the Agreement, dated March 1, 2022, between the Company and Stuart Lichter.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Second Amendment to JKP Note” means the Joinder and Second Amendment to Secured Cognovit Promissory Note, dated as of March 1, 2022, by and among HOF Village Newco, LLC, HOF Village Hotel II, LLC, as makers, the Company, and JKP Financial, LLC, as holder, which agreement amends that certain Secured Cognovit Promissory Note, dated as of June 19, 2020, originally executed by Hotel II and by HOF Village, LLC, in favor of JKP Financial, LLC, as assigned by HOF Village, LLC to HOF Village Newco, LLC pursuant to the Contribution Agreement dated as of June 30, 2020, by and between HOF Village, LLC and HOF Village Newco, LLC, as amended by the First Amendment to Secured Cognovit Promissory Note dated December 1, 2020.
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“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Trading Day” means a day on which the Common Stock is traded on a Trading Market.
“Series E Warrants” mean (i) the Series E Warrant to purchase 1,000,000 shares of Common Stock, dated March 1, 2022, issued by the Company to CH Capital Lending, LLC, and (ii) the Series E Warrant to purchase 500,000 shares of Common Stock, dated March 1, 2022, issued by the Company to IRG, LLC.
“Series F Warrants” mean (i) the Series F Warrant to purchase 1,000,000 shares of Common Stock, dated March 1, 2022, issued by the Company to JKP Financial, LLC, and (ii) the Series F Warrant to purchase 500,000 shares of Common Stock, dated March 1, 2022, issued by the Company to JKP Financial, LLC.
“Series G Warrant” means the Series G Warrant to purchase 125,000 shares of Common Stock to be issued by the Company to Stuart Lichter.
“Sixth Amendment to Term Loan Agreement” means Amendment Number 6 to Term Loan Agreement, dated as of March 1, 2022, among the Company, HOF Village Newco, LLC and HOF Village Stadium, LLC, as borrower, in favor of CH Capital Lending, LLC, as administrative agent and lender, which agreement amends that certain Term Loan Agreement, dated as of December 1, 2020, as amended by (i) Amendment Number 1 to Term Loan Agreement, dated as January 28, 2021; (ii) Amendment Number 2 to Term Loan Agreement, dated as of February 15, 2021; (iii) Amendment Number 3 to Term Loan Agreement, dated as of August 30, 2021; (iv) Amendment Number 4 to Term Loan Agreement, dated as of August 30, 2021; and (v) Amendment Number 5 to Term Loan Agreement, dated as of December 15, 2021.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).
“Transfer Agent” means Continental Stock Transfer and Trust Company, the current transfer agent of the Company, with a mailing address of One State Street, 30th Floor, New York, NY 10004 and a facsimile number of 212-616-7615, and any successor transfer agent of the Company.
“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
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“Warrants” means this Warrant and other Common Stock purchase warrants issued by the Company contemporaneously with the issuance of this Warrant.
Section 2. Exercise.
a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed e-mail attachment of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall use its reasonable best efforts to deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
b) Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $1.40, subject to adjustment hereunder (the “Exercise Price”).
c) Cashless Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained therein is not current and available for the issuance of the Warrant Shares to the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing ((A-B)(X)) by (A), where:
(A) | = | as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(68) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day; |
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(B) | = | the Exercise Price of this Warrant, as adjusted hereunder; and | |
(X) | = | the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise. |
In connection with clause (ii) in (A) above, upon written request of the Company, the Holder will promptly provide evidence reasonably acceptable to the Company of the Bid Price of the Common Stock on the principal Trading Market that was reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise provided that failure to provide such evidence shall not reduce or otherwise toll the Company’s obligation to deliver the Warrant Shares on or before the Warrant Share Delivery Date.
If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees not to take any position contrary to this Section 2(c).
d) Mechanics of Exercise.
i. | Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise. |
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ii. | Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant. |
iii. | Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise by notifying the Company of such rescission within ten (10) days of delivering the Notice of Exercise. |
iv. | No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share. |
v. | Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares. |
vi. | Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof. |
e) Nasdaq 19.99% Cap. Notwithstanding anything to the contrary contained in this Warrant or the other Transaction Documents (defined below), the Company and Holder agree that the total cumulative number of shares of Common Stock that may be issued to Holder and its Affiliates hereunder and under the other Transaction Documents may not exceed the requirements of Nasdaq Listing Rule 5635(d) (“Nasdaq 19.99% Cap”), except that such limitation will not apply following Approval (defined below). If the number of shares of Common Stock issued to Holder and its Affiliates under this Warrant and the other Transaction Documents reaches the Nasdaq 19.99% Cap, so as not to violate the 20% limit established in Listing Rule 5635(d), the Company, at its election, will use reasonable commercial efforts to obtain stockholder approval of this Warrant and the issuance of shares of Common Stock issuable upon the exercise of this Warrant in excess of the Nasdaq 19.99% Cap in accordance with the requirements of Nasdaq Listing Rule 5635(d) (the “Approval”). “Transaction Documents” shall mean this Warrant, the Certificate of Designations of 7.00% Series C Convertible Preferred Stock of the Company, the Amended and Restated Series D Warrant, the Series E Warrants, the Series F Warrants, the Series G Warrant, the Letter Agreement, the Amended and Restated Assigned JKP Note, the Amended and Restated Assigned IRG Note, the Second Amendment to JKP Note, and the Sixth Amendment to Term Loan Agreement.
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Section 3. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
c) Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution.
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d) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, or (iii) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 3(d) pursuant to written agreements (without unreasonable delay) prior to such Fundamental Transaction and shall deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction). Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein.
e) Weighted Average Anti-Dilution Adjustment. The Exercise Price shall be subject to a weighted average anti-dilution adjustment from time to time as follows:
i. If the Company shall at any time or from time to time during the period from the Warrant Date to the Termination Date, issue any additional shares of Common Stock (or be deemed to have issued any shares of Common Stock as provided herein), other than Excluded Securities (as defined in Section 3(e)(iii)) and Excluded Transactions (as defined in Section 3(e)(iv)) (such additional shares, “Additional Shares”), without consideration or for a consideration per share less than the Exercise Price in effect immediately prior to the issuance of Common Stock, the Exercise Price in effect immediately prior to such issuance shall forthwith be lowered to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:
EP2 = EP1 * (A + B) ÷ (A + C)
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For purposes of the foregoing formula, the following definitions shall apply:
● | “EP2” shall mean the Exercise Price in effect immediately after such issue of Additional Shares of Common Stock; |
● | “EP1” shall mean the Exercise Price in effect immediately prior to such issue of Additional Shares of Common Stock; |
● | “A” shall mean the number of shares of Common Stock outstanding immediately prior to such issue of Additional Shares of Common Stock (including any shares of Common Stock deemed to have been issued pursuant to Section 3(e)(ii)(D)); |
● | “B” shall mean the number of shares of Common Stock that would have been issued if such Additional Shares of Common Stock had been issued at the price per share equal to EP1 (determined by dividing the aggregate consideration received by the Company in respect of such issue by EP1); and |
● | “C” shall mean the number of such Additional Shares of Common Stock issued in such transaction. |
ii. For the purposes of any adjustment of the Exercise Price pursuant to Section 3(e)(i), the following provisions shall be applicable:
(A) In the case of the issuance of Common Stock for cash, the consideration shall be deemed to be the amount of cash paid therefor before deducting therefrom any discounts, commissions or other expenses allowed, paid or incurred by the Company for any underwriting or otherwise in connection with the issuance and sale thereof.
(B) In the case of the issuance of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined in good faith by the Board of Directors of the Company, irrespective of any accounting treatment.
(C) In the case of the issuance of Common Stock without consideration, the consideration shall be deemed to be $0.01 per share.
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(D) In the case of the issuance of (x) options or warrants to purchase or rights to subscribe for Common Stock, (y) debt or securities by their terms convertible into or exchangeable for Common Stock or (z) options to purchase rights to subscribe for such convertible or exchangeable securities:
a. the aggregate maximum number of shares of Common Stock deliverable upon exercise of such options or warrants to purchase or rights to subscribe for Common Stock shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in subdivisions (A), (B) and (C) above), if any, received by the Company upon the issuance of such options, warrants or rights plus the minimum purchase price provided in such options, warrants or rights for the Common Stock covered thereby; and
b. the aggregate maximum number of shares of Common Stock deliverable upon conversion of or in exchange for any such convertible or exchangeable debt or securities or upon the exercise of options or warrants to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities were issued or such options or warrants or rights were issued and for a consideration equal to the consideration received by the Company for any such securities and related options or warrants or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the additional consideration, if any, to be received by the Company upon the conversion or exchange of such securities or the exercise of any related options or warrants or rights (the consideration in each case to be determined in the manner provided in subdivisions (A), (B) and (C) above).
iii. For purposes of Section 3(e), the term “Excluded Securities” shall mean (i) shares of Common Stock issued to officers, employees, directors or consultants of Company and its subsidiaries, pursuant to any agreement, plan or arrangement approved by the Board of Directors of the Company, or options or warrants to purchase or rights to subscribe for such Common Stock, or debt or securities by their terms convertible into or exchangeable for such Common Stock, or options or warrants to purchase or rights to subscribe for such convertible or exchangeable securities pursuant to such agreement, plan or arrangement; (ii) shares of Common Stock issued as a stock dividend or upon any stock split or other subdivision or combination of shares of Common Stock; or (iii) securities issued pursuant to the acquisition of another corporation or other entity by the Company by merger or purchase of stock or purchase of all or substantially all of such other corporation’s or other entity’s assets whereby the Company owns not less than a majority of the voting power of such other corporation or other entity following such acquisition or purchase.
iv. For purposes of Section 3(e), the term “Excluded Transactions” shall mean sales of shares of Common Stock issued under the Company’s “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act; provided, however, that each financial quarter during which the Company’s sales of such shares reaches a multiple of $5 million aggregate consideration beginning with sales occurring after March 1, 2022 for an average consideration per share for such multiple of $5 million aggregate consideration that is less than the Exercise Price then in effect at the end of such financial quarter, the Exercise Price in effect at the end of such financial quarter shall forthwith be lowered to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the formula set forth in Section 3(e)(i), with the following adjustments: (A) “A” shall mean the difference of (1) the number of shares of Common Stock outstanding immediately following the sale of a share under the Company’s “at the market offering” that reaches a multiple of $5 million (including any shares of Common Stock deemed to have been issued pursuant to Section 3(e)(ii)(D)), minus (2) the number of shares of Common Stock issued under the Company’s “at the market offering” for such multiple of $5 million and (B) “C” shall mean the number of such shares of Common Stock issued under the Company’s “at the market offering” for such multiple of $5 million.
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f) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Notice to Holder.
i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
h) Voluntary Adjustment By Company. Subject to the rules and regulations of the Trading Market, the Company may at any time during the term of this Warrant, subject to the prior written consent of the Holder, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company.
Section 4. Transfer of Warrant.
a) Transferability. This Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
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b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
Section 5. Miscellaneous.
a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.
b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
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d) Authorized Shares.
The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
e) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof (other than Section 5-1401 of the General Obligations law). Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
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h) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder to the Company shall be in writing and delivered personally, or e-mail, or sent by a nationally recognized overnight courier service, addressed to the Company, at 2626 Fulton Drive, NW, Canton, OH 44718, Attention: (i) Chief Executive Officer, email address: michael.crawford@HOFvillage.com and (ii) General Counsel, email address: Tara.Charnes@HOFVILLAGE.com, or such other email address or address as the Company may specify for such purposes by notice to the Holders. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile or electronic transmission, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number, email address or address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered via facsimile at the facsimile number or via email at the email address set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or via email at the email address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any subsidiaries, the Company shall file such notice with the Commission pursuant to a Current Report on Form 8-K as soon as practicable and no later than 4 Business Days after providing such notice hereunder.
i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and the Holder or the beneficial owner of this Warrant, on the other hand.
m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
[Signature page follows]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
HALL OF FAME RESORT & ENTERTAINMENT COMPANY | ||
By: | /s/ Michael Crawford | |
Name: | Michael Crawford | |
Title: | President and Chief Executive Officer |
[Signature Page to Amended and Restated Common Stock Purchase Warrant]
Accepted and agreed by the Holder as of the date first above indicated:
CH Capital Lending, LLC | ||
By: | /s/ John A. Mase | |
Name: | John A. Mase | |
Title: | Chief Executive Officer | |
[Signature Page to Amended and Restated Common Stock Purchase Warrant]
NOTICE OF EXERCISE
To: | HALL OF FAME RESORT & ENTERTAINMENT COMPANY |
(1) The undersigned hereby elects to purchase ________ Warrant Shares of Hall of Fame Resort & Entertainment Company (the “Company”) pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
☐ in lawful money of the United States; or
☐ if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE OF HOLDER]
Name of Investing Entity: ________________________________________________________________________
Signature of Authorized Signatory of Investing Entity: _________________________________________________
Name of Authorized Signatory: ___________________________________________________________________
Title of Authorized Signatory: ____________________________________________________________________
Date: ________________________________________________________________________________________
[Signature Page to Amended and Restated Common Stock Purchase Warrant]
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
Name: | |||
(Please Print) | |||
Address: | |||
(Please Print) | |||
Phone Number: | |||
Email Address: | |||
Dated: | _______________ __, ______ | ||
Holder’s Signature: | |||
Holder’s Address: |
Exhibit 10.8
AMENDED AND RESTATED
SERIES D
COMMON STOCK PURCHASE WARRANT
HALL OF FAME RESORT & ENTERTAINMENT COMPANY
Series D No. W-1 | Initial Exercise Date: December 4, 2021 |
Issue Date: June 4, 2021 | |
Warrant Shares: 2,450,980 | Amended and Restated as of: March 1, 2022 |
THIS SERIES D COMMON STOCK PURCHASE WARRANT (this “Warrant”), dated as of June 4, 2021 (the “Warrant Date”), certifies that, for value received, CH Capital Lending, LLC, a Delaware limited liability company, or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time from the Initial Exercise Date set forth above, through and until 5:00 p.m. (New York City time) March 1, 2027(such date, the “Termination Date”), but not thereafter, to subscribe for and purchase from Hall of Fame Resort & Entertainment Company, a company incorporated under the laws of the State of Delaware (the “Company”), up to 2,450,980 shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock (as defined in Section 1). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price (as defined in Section 2(b)). This Warrant shall be issued and maintained in the form of a certificate held by the Holder. This Warrant amends, restates and supersedes in its entirety in all respects as of March 1, 2022 that certain Common Stock Purchase Warrant of the Company issued by the Company to the Holder as of June 4, 2021.
Section 1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Amended and Restated Assigned IRG Note” means the $4,273,543.46 principal amount First Amended and Restated Promissory Note, dated March 1, 2022, issued by the Company to IRG, LLC.
“Amended and Restated Assigned JKP Note” means the $4,273,543.46 principal amount First Amended and Restated Promissory Note, dated March 1, 2022, issued by the Company to JKP Financial, LLC.
“Amended and Restated Series C Warrant” means the Amended and Restated Series C Warrant to purchase 10,036,925 shares of Common Stock, dated as of March 1, 2022, issued by the Company to CH Capital Lending, LLC.
“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
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“Board of Directors” means the board of directors of the Company.
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York are generally are open for use by customers on such day.
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.
“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Letter Agreement” means the Agreement, dated March 1, 2022, between the Company and Stuart Lichter.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Second Amendment to JKP Note” means the Joinder and Second Amendment to Secured Cognovit Promissory Note, dated as of March 1, 2022, by and among HOF Village Newco, LLC, HOF Village Hotel II, LLC, as makers, the Company, and JKP Financial, LLC, as holder, which agreement amends that certain Secured Cognovit Promissory Note, dated as of June 19, 2020, originally executed by Hotel II and by HOF Village, LLC, in favor of JKP Financial, LLC, as assigned by HOF Village, LLC to HOF Village Newco, LLC pursuant to the Contribution Agreement dated as of June 30, 2020, by and between HOF Village, LLC and HOF Village Newco, LLC, as amended by the First Amendment to Secured Cognovit Promissory Note dated December 1, 2020.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
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“Series E Warrants” mean (i) the Series E Warrant to purchase 1,000,000 shares of Common Stock, dated March 1, 2022, issued by the Company to CH Capital Lending, LLC, and (ii) the Series E Warrant to purchase 500,000 shares of Common Stock, dated March 1, 2022, issued by the Company to IRG, LLC.
“Series F Warrants” means (i) the Series F Warrant to purchase 1,000,000 shares of Common Stock, dated March 1, 2022, issued by the Company to JKP Financial, LLC, and (ii) the Series F Warrant to purchase 500,000 shares of Common Stock, dated March 1, 2022, issued by the Company to JKP Financial, LLC.
“Series G Warrant” means the Series G Warrant to purchase 125,000 shares of Common Stock to be issued by the Company to Stuart Lichter.
“Sixth Amendment to Term Loan Agreement” means Amendment Number 6 to Term Loan Agreement, dated as of March 1, 2022, among the Company, HOF Village Newco, LLC and HOF Village Stadium, LLC, as borrower, in favor of CH Capital Lending, LLC, as administrative agent and lender, which agreement amends that certain Term Loan Agreement, dated as of December 1, 2020, as amended by (i) Amendment Number 1 to Term Loan Agreement, dated as January 28, 2021; (ii) Amendment Number 2 to Term Loan Agreement, dated as of February 15, 2021; (iii) Amendment Number 3 to Term Loan Agreement, dated as of August 30, 2021; (iv) Amendment Number 4 to Term Loan Agreement, dated as of August 30, 2021; and (v) Amendment Number 5 to Term Loan Agreement, dated as of December 15, 2021.
“Trading Day” means a day on which the Common Stock is traded on a Trading Market.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).
“Transfer Agent” means Continental Stock Transfer and Trust Company, the current transfer agent of the Company, with a mailing address of One State Street, 30th Floor, New York, NY 10004 and a facsimile number of 212-616-7615, and any successor transfer agent of the Company.
“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
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“Warrants” means this Warrant and other Common Stock purchase warrants of the same series issued by the Company.
Section 2. Exercise.
a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date, by delivery to the Company of a duly executed e-mail attachment of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and this Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall use its reasonable best efforts to deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
b) Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $6.90, subject to adjustment hereunder (the “Exercise Price”).
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c) Cashless Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained therein is not current and available for the issuance of the Warrant Shares to the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing ((A-B)(X)) by (A), where:
(A) | = | as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(68) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day; | |
(B) | = | the Exercise Price of this Warrant, as adjusted hereunder; and (X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise. |
In connection with clause (ii) in (A) above, upon written request of the Company, the Holder will promptly provide evidence reasonably acceptable to the Company of the Bid Price of the Common Stock on the principal Trading Market that was reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise provided that failure to provide such evidence shall not reduce or otherwise toll the Company’s obligation to deliver the Warrant Shares on or before the Warrant Share Delivery Date.
If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees not to take any position contrary to this Section 2(c).
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d) Mechanics of Exercise.
i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.
ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
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iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise by notifying the Company of such rescission within ten (10) days of delivering the Notice of Exercise.
iv. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
v. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vi. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
e) Nasdaq 19.99% Cap. Notwithstanding anything to the contrary contained in this Warrant or the other Transaction Documents (defined below), the Company and Holder agree that the total cumulative number of shares of Common Stock that may be issued to Holder and its Affiliates hereunder and under the other Transaction Documents may not exceed the requirements of Nasdaq Listing Rule 5635(d) (“Nasdaq 19.99% Cap”), except that such limitation will not apply following Approval (defined below). If the number of shares of Common Stock issued to Holder and its Affiliates under this Warrant and the other Transaction Documents reaches the Nasdaq 19.99% Cap, so as not to violate the 20% limit established in Listing Rule 5635(d), the Company, at its election, will use reasonable commercial efforts to obtain stockholder approval of this Warrant and the issuance of shares of Common Stock issuable upon the exercise of this Warrant in excess of the Nasdaq 19.99% Cap in accordance with the requirements of Nasdaq Listing Rule 5635(d) (the “Approval”). “Transaction Documents” shall mean this Warrant, the Certificate of Designations of 7.00% Series C Convertible Preferred Stock of the Company, the Amended and Restated Series C Warrant, the Series E Warrants, the Series F Warrants, the Series G Warrant, the Letter Agreement, the Amended and Restated Assigned JKP Note, the Amended and Restated Assigned IRG Note, the Second Amendment to JKP Note, and the Sixth Amendment to Term Loan Agreement.
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Section 3. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
c) Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution.
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d) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, or (iii) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property(each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 3(d) pursuant to written agreements (without unreasonable delay) prior to such Fundamental Transaction and shall deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction). Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein.
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e) Weighted Average Anti-Dilution Adjustment. The Exercise Price shall be subject to a weighted average anti-dilution adjustment from time to time as follows:
i. If the Company shall at any time or from time to time during the period from the Warrant Date to the Termination Date, issue any additional shares of Common Stock (or be deemed to have issued any shares of Common Stock as provided herein), other than Excluded Securities (as defined in Section 3(e)(iii)) and Excluded Transactions (as defined in Section 3(e)(iv)) (such additional shares, “Additional Shares”), without consideration or for a consideration per share less than the Exercise Price in effect immediately prior to the issuance of Common Stock, the Exercise Price in effect immediately prior to such issuance shall forthwith be lowered to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:
EP2 = EP1 * (A + B) ÷ (A + C)
For purposes of the foregoing formula, the following definitions shall apply:
● | “EP2” shall mean the Exercise Price in effect immediately after such issue of Additional Shares of Common Stock; |
● | “EP1” shall mean the Exercise Price in effect immediately prior to such issue of Additional Shares of Common Stock; |
● | “A” shall mean the number of shares of Common Stock outstanding immediately prior to such issue of Additional Shares of Common Stock (including any shares of Common Stock deemed to have been issued pursuant to Section 3(e)(ii)(D)); |
· | “B” shall mean the number of shares of Common Stock that would have been issued if such Additional Shares of Common Stock had been issued at the price per share equal to EP1 (determined by dividing the aggregate consideration received by the Company in respect of such issue by EP1); and |
· | “C” shall mean the number of such Additional Shares of Common Stock issued in such transaction. |
ii. For the purposes of any adjustment of the Exercise Price pursuant to Section 3(e)(i), the following provisions shall be applicable:
(A) In the case of the issuance of Common Stock for cash, the consideration shall be deemed to be the amount of cash paid therefor before deducting therefrom any discounts, commissions or other expenses allowed, paid or incurred by the Company for any underwriting or otherwise in connection with the issuance and sale thereof.
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(B) In the case of the issuance of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined in good faith by the Board of Directors of the Company, irrespective of any accounting treatment.
(C) In the case of the issuance of Common Stock without consideration, the consideration shall be deemed to be $0.01 per share.
(D) In the case of the issuance of (x) options or warrants to purchase or rights to subscribe for Common Stock, (y) debt or securities by their terms convertible into or exchangeable for Common Stock or (z) options to purchase rights to subscribe for such convertible or exchangeable securities:
a. the aggregate maximum number of shares of Common Stock deliverable upon exercise of such options or warrants to purchase or rights to subscribe for Common Stock shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in subdivisions (A), (B) and (C) above), if any, received by the Company upon the issuance of such options, warrants or rights plus the minimum purchase price provided in such options, warrants or rights for the Common Stock covered thereby; and
b. the aggregate maximum number of shares of Common Stock deliverable upon conversion of or in exchange for any such convertible or exchangeable debt or securities or upon the exercise of options or warrants to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities were issued or such options or warrants or rights were issued and for a consideration equal to the consideration received by the Company for any such securities and related options or warrants or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the additional consideration, if any, to be received by the Company upon the conversion or exchange of such securities or the exercise of any related options or warrants or rights (the consideration in each case to be determined in the manner provided in subdivisions (A), (B) and (C) above).
iii. For purposes of Section 3(e), the term “Excluded Securities” shall mean (i) shares of Common Stock issued to officers, employees, directors or consultants of Company and its subsidiaries, pursuant to any agreement, plan or arrangement approved by the Board of Directors of the Company, or options or warrants to purchase or rights to subscribe for such Common Stock, or debt or securities by their terms convertible into or exchangeable for such Common Stock, or options or warrants to purchase or rights to subscribe for such convertible or exchangeable securities pursuant to such agreement, plan or arrangement; (ii) shares of Common Stock issued as a stock dividend or upon any stock split or other subdivision or combination of shares of Common Stock; or (iii) securities issued pursuant to the acquisition of another corporation or other entity by the Company by merger or purchase of stock or purchase of all or substantially all of such other corporation’s or other entity’s assets whereby the Company owns not less than a majority of the voting power of such other corporation or other entity following such acquisition or purchase.
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iv. For purposes of Section 3(e), the term “Excluded Transactions” shall mean sales of shares of Common Stock issued under the Company’s “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act; provided, however, that each financial quarter during which the Company’s sales of such shares reaches a multiple of $5 million aggregate consideration beginning with sales occurring after March 1, 2022 for an average consideration per share for such multiple of $5 million aggregate consideration that is less than the Exercise Price then in effect at the end of such financial quarter, the Exercise Price in effect at the end of such financial quarter shall forthwith be lowered to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the formula set forth in Section 3(e)(i), with the following adjustments: (A) “A” shall mean the difference of (1) the number of shares of Common Stock outstanding immediately following the sale of a share under the Company’s “at the market offering” that reaches a multiple of $5 million (including any shares of Common Stock deemed to have been issued pursuant to Section 3(e)(ii)(D)), minus (2) the number of shares of Common Stock issued under the Company’s “at the market offering” for such multiple of $5 million and (B) “C” shall mean the number of such shares of Common Stock issued under the Company’s “at the market offering” for such multiple of $5 million.
f) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Notice to Holder.
i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
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h) Voluntary Adjustment By Company. Subject to the rules and regulations of the Trading Market, the Company may at any time during the term of this Warrant, subject to the prior written consent of the Holder, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company.
Section 4. Transfer of Warrant.
a) Transferability. This Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning this Warrant in full. This Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated as of the Warrant Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
Section 5. Miscellaneous.
a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.
b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of this Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
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c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
d) Authorized Shares.
The Company covenants that, during the period this Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
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e) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof (other than Section 5-1401 of the General Obligations law). Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
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h) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder to the Company shall be in writing and delivered personally, or e-mail, or sent by a nationally recognized overnight courier service, addressed to the Company, at 2626 Fulton Drive, NW, Canton, OH 44718, Attention: (i) Chief Executive Officer, email address: michael.crawford@HOFvillage.com and (ii) General Counsel, email address: Tara.Charnes@HOFVILLAGE.com, or such other email address or address as the Company may specify for such purposes by notice to the Holders. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile or electronic transmission, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number, email address or address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered via facsimile at the facsimile number or via email at the email address set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or via email at the email address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any subsidiaries, the Company shall file such notice with the Commission pursuant to a Current Report on Form 8-K as soon as practicable and no later than 4 Business Days after providing such notice hereunder.
i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and the Holder or the beneficial owner of this Warrant, on the other hand.
m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
[Signature page follows]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the Warrant Date first above indicated.
HALL OF FAME RESORT & ENTERTAINMENT | ||
COMPANY | ||
By: | /s/ Michael Crawford | |
Name: | Michael Crawford | |
Title: | President and Chief Executive Officer |
Accepted and agreed by the Holder as of the date first above indicated:
CH Capital Lending, LLC | ||
By: | /s/ John A. Mase | |
Name: | John A. Mase | |
Title: | Chief Executive Officer |
NOTICE OF EXERCISE
To: | HALL OF FAME RESORT & ENTERTAINMENT COMPANY |
(1) The undersigned hereby elects to purchase ________ Warrant Shares of Hall of Fame Resort & Entertainment Company (the “Company”) pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
☐ in lawful money of the United States; or
☐ if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________.
The Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE OF HOLDER]
Name of Investing Entity: ___________________________________
Signature of Authorized Signatory of Investing Entity: _________________________________
Name of Authorized Signatory: _______________________________
Title of Authorized Signatory: ________________________________
Date: ___________________________
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
Name: | |||
(Please Print) | |||
Address: | |||
(Please Print) | |||
Phone Number: | |||
Email Address: | |||
Dated: | _______________ __, ______ | ||
Holder’s Signature: | |||
Holder’s Address: |
Exhibit 10.9
Execution Copy
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement dated as of March 1, 2022 (this “Agreement”), is made and entered into by and between Hall of Fame Resort & Entertainment Company, a Delaware corporation (the “Company”), and each of the purchasers set forth on the signature pages hereto (each, a “Investor” and collectively, the “Investors”).
WHEREAS, this Agreement is being entered into pursuant to (i) Amendment Number 6 to Term Loan Agreement, dated as of March 1, 2022 (“Term Loan Amendment Number 6”), among the Company, HOF Village Newco, LLC (“Newco”) and HOF Village Stadium, LLC, in favor of CH Capital Lending LLC, an Investor; (ii) First Amended and Restated Promissory Note, dated as of March 1, 2022 (“Amended Assigned IRG Note”), by the Company in favor IRG, LLC, an Investor; (iii) First Amended and Restated Promissory Note, dated as of March 1, 2022 (“Amended Assigned JKP Note”), by the Company in favor JKP Financial, LLC, an Investor; (iv) Joinder and Second Amendment to Secured Cognovit Promissory Note, dated as of March 1, 2022, by and among Newco and HOF Village Hotel II, LLC, the Company, and JKP Financial, LLC, an Investor (“Amended JKP Note”); and (v) Letter Agreement, dated as of March 1, 2022, between the Company and Stuart Lichter (“Letter Agreement” and together with Term Loan Agreement Number 6, Amended Assigned IRG Note, Amended Assigned JKP Note and Amended JKP Note, the “Transaction Agreements”);
WHEREAS, under Transaction Agreements (i)-(iv) above, the principal balance of the loan thereunder, and accumulated and unpaid interest on such principal balance, is convertible into shares (the “Debt Conversion Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) on the terms and subject to the conditions set forth in such agreements;
WHEREAS, pursuant to the Transaction Agreements the Company is (i) issuing to Investors as commitment fees shares of Common Stock (“Commitment Fee Shares”) and New Common Stock Purchase Warrants (defined in Section 1 below) exercisable for shares of Common Stock (“New Warrant Shares”), (ii) amending and restating Existing Common Stock Purchase Warrants (defined in Section 1 below) exercisable for shares of Common Stock (“Existing Warrant Shares” and, together with New Warrant Shares, the “Warrant Shares”), and (iii) subject to approval of its board of directors, creating Series C Preferred Stock and exchanging each share of Series B Preferred Stock held by CH Capital Lending, LLC for one share of Series C Preferred Stock, which is convertible into shares of Common Stock (“Equity Conversion Shares” and, together with the Debt Conversion Shares, the “Conversion Shares”), all on the terms and subject to the conditions set forth in the Transaction Agreements;
WHEREAS, in connection with each Investor’s acquisition of Conversion Shares, Commitment Fee Shares, and Warrant Shares, as applicable, in accordance with the Transaction Agreements, the Investors wish to receive certain registration rights related to resale of such shares of Common Stock, and the Company desires to grant such rights on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. Definitions. As used herein, the following terms have the indicated meanings, unless the context otherwise requires:
“Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including without limitation any general partner, managing member, officer or director of such Person.
“Agreement” has the meaning given to such term in the preamble hereto.
“Amended Assigned IRG Note” has the meaning given to such term in the recitals hereto.
“Amended Assigned JKP Note” has the meaning given to such term in the recitals hereto.
“Amended JKP Note” has the meaning given to such term in the recitals hereto.
“Beneficially Own,” “Beneficially Owned,” “Beneficial Ownership” and “Beneficial Owner” with respect to any securities means a Holder having such ownership, control or power to direct the voting with respect to, or which otherwise enables a Holder to legally act with respect to, such securities as contemplated hereby, including without limitation pursuant to any agreement, arrangement or understanding, regardless of whether in writing. Securities “Beneficially Owned” shall include securities Beneficially Owned by all other persons with whom a Holder would constitute a “group” as within the meaning of Section 13(d) of the Exchange Act.
“Blackout Period” means, with respect to a Registration Statement, a period in each case commencing on the day immediately after the Company notifies the Holders pursuant to Section 3(e) that they are required to suspend offers and sales of Registrable Securities because the Company, in the good faith judgment of the Board, determines that the registration and distribution of (and/or the registration of the offer and sale of) the Registrable Securities covered or to be covered by such Registration Statement would be seriously detrimental to the Company and its stockholders (by requiring disclosure of material non-public information) and ending on the earlier of (x) the date upon which the material non-public information to which the Blackout Period relates is disclosed to the public or ceases to be material and (y) such time as the Company notifies the selling Holders that the Company will no longer delay such filing of such Registration Statement, recommence taking steps to make such Registration Statement effective, or allow sales pursuant to such Registration Statement to resume; provided that no Blackout Period may last for more than 90 consecutive days; and provided, further, that during any period of 365 consecutive days, Blackout Periods may not, in the aggregate, last for more than the result of 120 days minus the number of days that Holders were previously required pursuant to Section 3(e) to discontinue and suspend disposition of Registrable Securities because of the happening of any event described in Section 3(d)(vi).
“Board” means the board of directors of the Company.
“Business Day” means any day of the year, other than a Saturday, Sunday, or other day on which the SEC is required or authorized to close.
“Commitment Fee Shares” has the meaning given to such term in the recitals hereto.
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“Common Stock” has the meaning given to such term in the recitals hereto.
“Company” has the meaning given to such term in the preamble hereto.
“Conversion Shares” has the meaning given to such term in the recitals hereto.
“Debt Conversion Shares” has the meaning given to such term in the recitals hereto.
“Effectiveness Deadline” means September 1, 2022.
“Effectiveness Period” has the meaning given to such term in Section 3(d)(i).
“Equity Conversion Shares” has the meaning given to such term in the recitals hereto.
“Equity Securities Offering” means any underwritten registered offering of Relevant Securities, and any offering or placement of any Relevant Securities pursuant to Rule 144A under the Securities Act.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.
“Existing Common Stock Purchase Warrants” means, as amended and restated: (i) Amended and Restated Series C Warrant to purchase 10,036,925 shares of Common Stock, dated March 1, 2022, issued by the Company to CH Capital Lending, LLC; and (ii) Amended and Restated Series D Warrant to purchase 2,450,980 shares of Common Stock, dated March 1, 2022, issued by the Company to CH Capital Lending, LLC;
“Existing Warrant Shares” has the meaning given to such term in the recitals hereto.
“Family Member” means (a) with respect to any individual, such individual’s spouse, any descendants (whether natural or adopted), any trust all of the beneficial interests of which are owned by any of such individuals or by any of such individuals together with any organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, the estate of any such individual, and any corporation, association, partnership, limited liability company or other entity all of the equity interests of which are owned by those above described individuals, trusts or organizations and (b) with respect to any trust, the owners of the beneficial interests of such trust.
“FINRA” means the Financial Industry Regulatory Authority.
“Form S-1” means such form under the Securities Act as in effect on the date of this Agreement or any successor registration form thereto under the Securities Act subsequently adopted by the SEC.
“Form S-3” means such form under the Securities Act as in effect on the date of this Agreement or any successor registration form thereto under the Securities Act subsequently adopted by the SEC.
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“Form S-4” means such form under the Securities Act as in effect on the date of this Agreement or any successor registration form thereto under the Securities Act subsequently adopted by the SEC.
“Form S-8” means such form under the Securities Act as in effect on the date of this Agreement or any successor registration form thereto under the Securities Act subsequently adopted by the SEC.
“Holder” means the Investors or any Investor’s successors and Permitted Assignees who acquire rights in accordance with this Agreement with respect to the Registrable Securities directly or indirectly from a Investor or another Holder (including from any Permitted Assignee) and “Holders” means all of the foregoing individuals or entities.
“Inspector” means any attorney, accountant or other agent retained by a Holder or any underwriter for the purposes provided in Section 3(d)(x).
“Investor” has the meaning given to such term in the preamble hereto.
“Letter Agreement” has the meaning given to such term in the recitals hereto.
“Market Standoff Period” means, with respect to each Equity Securities Offering, the period beginning on the date of first sale of securities pursuant to such Equity Securities Offering and ending on the date that shall be requested by the Company or the underwriters or initial purchasers retained by the Company to facilitate such Equity Securities Offering; provided, however, that each such period shall not be more than 120 days; and provided further that (a) such period shall be no longer than the shortest period imposed by the Company or the underwriters or initial purchasers upon any other person or entity (including any lockup period imposed upon the Company) and (b) if any other person or entity receives a waiver with respect to any such matters, the Holders shall be given a waiver with respect to their Relevant Securities as well.
“New Common Stock Purchase Warrants” means (i) Series E Warrant to purchase 1,000,000 shares of Common Stock issued March 1, 2022 by the Company to CH Capital Lending, LLC; (ii) Series E Warrant to purchase 500,000 shares of Common Stock issued March 1, 2022 by the Company to IRG, LLC; (iii) Series F Warrant to purchase 1,000,000 shares of Common Stock issued March 1, 2022 by the Company to JKP financial, LLC; (iv) Series F Warrant to purchase 500,000 shares of Common Stock issued March 1, 2022 by the Company to JKP financial, LLC; and (v) Series G Warrant to purchase 125,000 shares of Common Stock to be issued by the Company to Stuart Lichter.
“New Warrant Shares” has the meaning given to such term in the recitals hereto.
“Newco” has the meaning given to such term in the recitals hereto.
“Permitted Assignee” means any person or entity holding Registrable Securities, to whom rights to cause the Company to register the resale of Registrable Securities granted to the Investors by the Company under Section 3 have been assigned in compliance with Section 4(a).
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“Person” means any individual, corporation, partnership, trust, limited liability company, association or other entity.
“Piggyback Offering” has the meaning given to such term in Section 3(b)(i).
“Piggyback Registration Statement” has the meaning given to such term in Section 3(b)(i).
“Piggyback Supplement” has the meaning given to such term in Section 3(b)(i).
“register,” “registered,” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness, or automatic effectiveness, of such registration statement.
“Registrable Securities” means the Conversion Shares, the Commitment Fee Shares and Warrant Shares received by any Investor in accordance with the Transaction Agreements. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (w) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement, (x) such securities shall have been otherwise transferred (other than to a Permitted Assignee who becomes a Holder in accordance with this Agreement), new certificates for such securities that do not bear a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of them shall not require registration under the Securities Act, (y) such securities are held by the Company or shall have ceased to be outstanding, or (z) such securities are sold under Rule 144 or may be sold under Rule 144 free from volume limitations under such rule.
“Registration Expenses” has the meaning given to such term in Section 3(f).
“Registration Statement” means any Piggyback Registration Statement, the Shelf Registration Statement and, if offers of Registrable Securities are included in any other registration statement filed by the Company by means of a Piggyback Supplement, such other registration statement, and “Registration Statements” means all such registration statements collectively.
“Relevant Security” means the Shares, any other equity security of the Company or any of its subsidiaries and any security convertible into, or exercisable or exchangeable for, any Shares or other such equity security.
“Rule 144” means Rule 144 under the Securities Act.
“SEC” means the United States Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.
“SEC Effective Date” means, with respect to a Registration Statement, the date as of which such Registration Statement is originally declared effective by the SEC or otherwise becomes effective in accordance with the Securities Act.
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“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute promulgated in replacement thereof, and the rules and regulations of the SEC thereunder, all as the same shall be in effect from time to time.
“Selling Expenses” has the meaning given to such term in Section 3(f).
“Shares” means the Conversion Shares, the Commitment Fee Shares and the Warrant Shares received by any Investor in accordance with the Transaction Agreements and (a) any and all shares of capital stock or other equity securities of the Company that are added to or exchanged or substituted for such shares of Common Stock by reason of the declaration of any stock dividend or stock split, the issuance of any distribution or the reclassification, readjustment, recapitalization or other such modification of the capital structure of the Company; and (b) any and all shares of capital stock or other equity securities of any other corporation (now or hereafter organized under the laws of any state or other governmental authority) with which the Company is merged, which results from any consolidation or reorganization to which the Company is a party, or to which is sold all or substantially all of the shares or assets of the Company, for which such shares of Common Stock are exchanged or substituted in connection with such merger, consolidation, reorganization or sale, if immediately after such merger, consolidation, reorganization or sale, the Company or the stockholders of the Company own equity securities having in the aggregate more than 50% of the total voting power of such other corporation.
“Shelf Registration Statement” has the meaning given to such term in Section 3(a)(i).
“Term Loan Amendment Number 6” has the meaning given to such term in the recitals hereto.
“Transaction Agreements” has the meaning given to such term in the recitals hereto.
“Transfer” has the meaning given to such term in Section 2(a).
“VWAP Price” means, for any period of measurement, the volume weighted average closing price of a share of Common Stock on the national securities exchange on which the Common Stock is then listed (or admitted to trading).
“Warrant Shares” has the meaning given to such term in the recitals hereto.
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Section 2. Market Standoff. Notwithstanding anything to the contrary set forth in this Agreement, with respect to each Equity Securities Offering conducted after the date hereof, the following provisions of this Section 2 shall apply, if and only if (x) the underwriters or initial purchasers retained by the Company to facilitate such offering request, in connection with such offering, that the officers or directors or significant stockholders of the Company refrain from selling any Relevant Security during any period, and (y) the Holders Beneficially Own shares of Common Stock representing at least 5% of the fully diluted equity interests in the Company (calculated giving effect to the exercise of all outstanding options, warrants and other rights to purchase or acquire any Common Stock of the Company):
(a) Following notice of the applicability of this Section 2, during the Market Standoff Period applicable to such Equity Securities Offering, each Holder will not, without the prior written consent of the Company, (i) directly or indirectly offer, sell, agree to offer or sell, solicit offers to purchase, grant any call option or purchase any put option with respect to, pledge, borrow or otherwise dispose of any Relevant Security, or (ii) establish or increase any “put equivalent position” or liquidate or decrease any “call equivalent position” (in each case within the meaning of Section 16 of the Exchange Act) with respect to any Relevant Security, or otherwise enter into any swap, derivative or other transaction or arrangement that transfers to another, in whole or in part, any economic consequence of ownership of a Relevant Security (each of the transactions described in the immediately preceding clauses (i) and (ii), being referred to as a “Transfer”), regardless of whether such transaction is to be settled by delivery of Relevant Securities, other securities, cash or other consideration; provided, however, that a transfer to a Permitted Assignee will not be subject to this Section 2 and provided, further, that this Section 2(a) will not prohibit transfers of Relevant Securities included in such Equity Securities Offering.
(b) Furthermore, each Holder hereby authorizes the Company during the Market Standoff Period to cause any transfer agent for the Relevant Securities to decline to transfer, and to note stop transfer restrictions on the stock register and other records relating to, any Relevant Securities for which such Holder is the record holder and, in the case of Relevant Securities for which such Holder is the Beneficial Owner but not the record holder, agrees during the Market Standoff Period to cause the record holder thereof to cause the relevant transfer agent to decline to transfer, and to note stop transfer restrictions on the stock register and other records relating to, such Relevant Securities.
(c) Subject to the provisions of Section 3(b), without the prior written consent of the Company, during the Market Standoff Period such Holder (i) will not participate in the filing with the SEC of any registration statement, or circulate or participate in the circulation of any preliminary or final prospectus or other disclosure document with respect to any proposed offering or sale of a Relevant Security and (ii) will not exercise any rights the undersigned may have to require registration with the SEC of any proposed offering or sale of a Relevant Security (including without limitation pursuant to this Agreement).
Section 3. Registration Rights.
(a) Shelf Registration Statement.
(i) Registration of Resales. The Company shall (i) file with the SEC a shelf registration statement on Form S-1 (or, if the Company is eligible to use such form, Form S-3) relating to the registration of the offer and resale by the Holders of all of the Registrable Securities (the “Shelf Registration Statement”) and (ii) use its commercially reasonable efforts to cause the Shelf Registration Statement to be declared effective by the SEC no later than the Effectiveness Deadline; provided, however, that the Company shall not be obligated to effect any such registration pursuant to this Section 3(a), or keep such registration or the Shelf Registration Statement effective pursuant to Section 3(d)(i), during any Blackout Period. Any such Shelf Registration Statement on Form S-1 may be converted to Form S-3 upon or after the Company becoming eligible to use Form S-3.
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(ii) Liquidated Damages. If the Shelf Registration Statement is not declared effective on or prior to the Effectiveness Deadline, then each Holder shall be entitled to a payment (with respect to each outstanding Registrable Security held by the Holder), as liquidated damages and not as a penalty, of 0.25% of the Liquidated Damages Multiplier per 30-calendar-day period, which shall accrue daily, for the first 60 calendar days immediately following the Effectiveness Deadline, increasing by an additional 0.25% of the Liquidated Damages Multiplier per 30-calendar-day period, which shall accrue daily, for each subsequent 30-calendar-day period (i.e., 0.50% for 61-90 calendar days, 0.75% for 91-120 calendar days and 1.00% thereafter), up to a maximum of 1.00% of the Liquidated Damages Multiplier per 30-calendar-day period, until such time as such Shelf Registration Statement is declared effective or when the Registrable Securities covered by such Shelf Registration Statement cease to be Registrable Securities (the “Liquidated Damages”). As used herein, the term “Liquidated Damages Multiplier” means the product of the VWAP Price calculated for the consecutive 5 trading day period ending on and including March 1, 2022 times the number of issued and outstanding Shares held by such Holder. The Liquidated Damages payable pursuant to the first sentence of this Section 3(a)(ii) shall be payable within 10 Business Days after the end of each such 30-calendar-day period. Any Liquidated Damages shall be paid to each Holder in immediately available funds. The accrual of Liquidated Damages to a Holder shall cease (an “LD Termination Date,” and, each such period beginning on an Effectiveness Deadline and ending on an LD Termination Date being, an “LD Period”) at the earlier of (1) the Shelf Registration Statement being declared effective and (2) when the Holder’s Registrable Securities covered by the Shelf Registration Statement cease to be Registrable Securities. Any amount of Liquidated Damages shall be prorated for any period of less than 30 calendar days accruing during an LD Period. If the Company is unable to cause a Shelf Registration Statement to be declared effective on or prior to the Effectiveness Deadline as a result of an acquisition, merger, reorganization, disposition or other similar transaction, then the Company may request a waiver of the Liquidated Damages, and each Holder may individually grant or withhold its consent to such request in its discretion.
(b) Piggyback Registration Rights.
(i) Piggyback Registration. If after the date hereof, the Company shall determine to (A) file a registration statement to register the offer and sale for cash of any of its Common Stock for its own account in an underwritten offering, other than (i) a registration relating solely to employee benefit plans or securities issued or issuable to employees, directors or consultants (to the extent the securities owned or to be owned by such consultants could be registered on Form S-8) or any of their Family Members (including a registration on Form S-8), and (ii) a registration on Form S-4 in connection with a merger, acquisition, divestiture, reorganization, exchange offer or similar event, or (B) file a prospectus supplement to an effective shelf registration statement with respect to an underwritten public offering in which Holders may be included (either by inclusion in the registration statement without the filing of a post-effective amendment thereto or because the Shelf Registration Statement is effective) (an offering pursuant to clause (A) or (B), a “Piggyback Offering”), then the Company shall promptly give to the Holders written notice thereof, and in no event shall such notice be given less than (X) twenty (20) calendar days prior to the filing of a registration statement contemplated by clause (A) (a “Piggyback Registration Statement”) or (Y) five (5) calendar days prior to the filing of a prospectus supplement contemplated by clause (B) ( a “Piggyback Supplement”) and the Company shall, subject to Section 3(b)(ii), include in such Piggyback Offering all of the Registrable Securities specified in a written request or requests, made within ten (10) calendar days (three (3) calendar days in the case of a Piggyback Supplement) after receipt of such written notice from the Company, by any Holder or Holders. However, the Company may, without the consent of the Holders, abandon such Piggyback Offering and withdraw such Piggyback Registration Statement or Piggyback Supplement.
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(ii) Underwriting Procedures. The right of any Holder to be included in a Piggyback Offering pursuant to Section 3(b)(i) shall be conditioned upon such Holder’s participation in, and the inclusion of such Holder’s Registrable Securities in, the underwriting arrangements with respect to such Piggyback Offering to the extent provided herein. All Holders proposing to sell their securities through such Piggyback Offering shall (together with the Company) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such Piggyback Offering by the Company. No Holder may participate in such Piggyback Offering unless such Holder agrees to sell its Registrable Securities on the basis provided in such underwriting agreement and completes and executes all questionnaires, powers of attorney, indemnities and other documents reasonably required under the terms of such underwriting agreement. No Holder shall be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Holder and its ownership of the securities being registered on its behalf, its intended method of distribution and any other representation required by law, and no Holder shall be required to agree to indemnify any person beyond the scope of the indemnification provided to the Company under Section 3(h). Notwithstanding any other provision of this Section 3(b)(ii), if the managing underwriter or the Company determines that marketing factors require a limitation of the number of shares to be underwritten, the underwriters may exclude from such Piggyback Offering the number of shares in excess of such limitation. The Company shall so advise all Holders (except those Holders who failed to timely elect to sell their Registrable Securities through such Piggyback Offering or have indicated to the Company their decision not to do so), and the number of shares that may be included in the underwriting shall be allocated:
(A) first, to the Company;
(B) second, to the Holders who have requested to sell their Registrable Securities in the Piggyback Offering and all other selling stockholders who have rights of registration on parity with the Holders and have requested to sell securities in the Piggyback Offering, on a pro rata basis according to the number of shares requested to be included; and
(C) then, to any other selling stockholders who have registration rights and have requested to sell securities in the Piggyback Offering.
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No Registrable Securities excluded from the underwriting by reason of the underwriters’ marketing limitation shall be included in the Piggyback Offering. If any Holder disapproves of the terms of the underwriting arrangements with respect to a Piggyback Offering, such Holder may elect to withdraw therefrom by written notice to the Company and the managing underwriter; provided, however, that such withdrawal must be made at a time prior to the time of the pricing of the Piggyback Offering. The Registrable Securities and/or other securities so withdrawn from such underwriting shall also be withdrawn from such Piggyback Offering; provided, however, that, if by the withdrawal of such Registrable Securities a greater number of Registrable Securities held by other Holders may be included in such Piggyback Offering (up to the maximum of any limitation imposed by the underwriters), then the Company shall offer to all Holders who have included Registrable Securities in the Piggyback Offering the right to include additional Registrable Securities pursuant to the terms and limitations set forth herein in the same proportions described above.
(iii) Notwithstanding anything to the contrary set forth in this Agreement, the Company shall not be obligated to effect, or take any action to effect, any Piggyback Offering pursuant to Section 3(b) after the Company has initiated two (2) such Piggyback Offerings (counting for this purpose only Piggyback Offerings pursuant to which securities have been sold).
(c) Requested Underwritings.
(i) In the event that one or more Holders elects to sell $1 million or more of Registrable Securities pursuant to an underwritten public offering under the Shelf Registration Statement, the Company shall, upon request by such Holders, retain underwriters in order to permit such Holders to effect such offering. The obligation of the Company to retain underwriters shall include entering into an underwriting agreement in customary form with the underwriters or initial purchasers, which shall include, among other provisions, indemnities to the effect and to the extent provided in Section 3(h) and taking all reasonable actions as are requested by the underwriters or initial purchaser to expedite or facilitate the disposition of such Registrable Securities. The Company shall, upon request of the Holders, cause its management to participate in a roadshow or similar marketing effort on behalf of the Holders.
(ii) In no event shall the Company be required to participate in more than one underwritten offering requested by the Holders.
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(iii) In connection with an underwritten offering pursuant to this Section 3(b)(iii), (A) Holders holding a majority of the Registrable Securities being sold in such underwritten offering shall be entitled to select the managing underwriter or initial purchaser, subject to the approval of the Company, which approval shall not be unreasonably withheld and (B) each Holder participating in the underwritten offering and the Company shall be obligated to enter into an underwriting agreement in customary form. No Holder may participate in such underwritten offering unless such Holder agrees to sell its Registrable Securities on the basis provided in such underwriting agreement and completes and executes all questionnaires, powers of attorney, indemnities and other documents reasonably required under the terms of such underwriting agreement. No Holder shall be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Holder and its ownership of the securities being registered on its behalf, its intended method of distribution and any other representation required by law, and no Holder shall be required to agree to indemnify any person beyond the scope of the indemnification provided to the Company under Section 3(h). If any Holder disapproves of the terms of the underwriting arrangements with respect to such underwritten offering, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter; provided, however, that such withdrawal must be made at a time prior to the time of pricing of such underwritten offering. Neither the Company nor any selling stockholders who have registration rights shall have any right to include securities in an underwritten offering by the Holders pursuant to this Section 3(b)(iii) and the Company shall not purport to grant any current or future shareholder such right.
(d) Registration Procedures. In the case of each registration, offering, qualification, or compliance effected by the Company pursuant to Section 3(a), Section 3(b) or Section 3(c), the Company will keep each Holder including securities therein reasonably advised in writing (which may include e-mail) as to the initiation of each registration, offering, qualification, and compliance and as to the completion thereof. In addition, the Company hereby agrees as follows:
(i) The Company will use its commercially reasonable efforts to cause the Shelf Registration Statement to become and remain effective at least for a period ending with the first to occur of (A) the sale by the Holders of all Registrable Securities covered by such Registration Statement, or (B) the date that is three years after the SEC Effective Date of the Shelf Registration Statement; provided, however, that if the Company files the Shelf Registration Statement on Form S-1, subsequently becomes eligible to use Form S-3, and files a post-effective amendment to such Form S-1 on Form S-3 prior to the end of such period, the Company will use its commercially reasonable efforts to cause such Shelf Registration Statement as amended to remain effective until the end of such period (in any such case, the “Effectiveness Period”).
(ii) If any Registration Statement becomes subject to review by the SEC, the Company will promptly respond to all comments and diligently pursue resolution of any comments to the satisfaction of the SEC.
(iii) The Company (A) will prepare and file with the SEC such amendments and supplements to each Shelf Registration Statement and any prospectus used in connection therewith as may be reasonably necessary to keep such Shelf Registration Statement effective during the applicable Effectiveness Period and (B) will comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Shelf Registration Statement during such period in accordance with the intended method(s) of disposition by the sellers thereof set forth in such Shelf Registration Statement.
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(iv) The Company will furnish, without charge, to each Holder (A) a reasonable number of copies of each Registration Statement (including any exhibits thereto other than exhibits incorporated by reference), each amendment and supplement thereto as such Holder may request, (B) such number of copies of the prospectus included in such Registration Statement (including each preliminary prospectus and any other prospectus filed under Rule 424 under the Securities Act) as each Holder may request, in conformity with the requirements of the Securities Act, and (C) such other documents as each Holder may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holder, but only during the applicable Effectiveness Period.
(v) The Company will use its commercially reasonable efforts to register or qualify the Registrable Securities under the applicable securities or blue sky laws of such jurisdictions as the Holders of a majority of the Registrable Securities reasonably requests as may be necessary for the marketability of the Registrable Securities (such request to be made by the time the relevant Registration Statement is deemed effective by the SEC) and do any and all other acts and things which may be reasonably necessary or advisable to enable the Holders to consummate the disposition in such jurisdictions of the Registrable Securities owned by the Holders; provided, however, that the Company shall not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (v), (B) subject itself to taxation in any such jurisdiction, or (C) consent to general service of process in any such jurisdiction.
(vi) As promptly as practicable after becoming aware of such event, the Company will notify each Holder of Registrable Securities being offered or sold pursuant to each Registration Statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event which comes to the Company’s attention if as a result of such event the prospectus included in such Registration Statement contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company shall promptly prepare and furnish to such Holder a supplement or amendment to such prospectus (or prepare and file appropriate reports under the Exchange Act) so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, unless suspension of the use of such prospectus otherwise is authorized herein or in the event of a Blackout Period, in which case no supplement or amendment need be furnished (or Exchange Act filing made) until the termination of such suspension or Blackout Period.
(vii) The Company will comply, and continue to comply during the period that each Registration Statement is effective under the Securities Act, in all material respects with the Securities Act and the Exchange Act and with all applicable rules and regulations of the SEC with respect to the disposition of all securities covered by such Registration Statement.
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(viii) As promptly as practicable after becoming aware of such event, the Company will notify each Holder of Registrable Securities being offered or sold pursuant to each Registration Statement of the issuance by the SEC of any stop order or other suspension of effectiveness of such Registration Statement.
(ix) The Company will permit the Holders of Registrable Securities being offered or sold pursuant to each Registration Statement and their legal counsel, at such Holders’ sole cost and expense, to review and have a reasonable opportunity to comment on such Registration Statement and all amendments and supplements thereto (unless such Registration Statement, amendments and supplements are filed without inclusion of any Registrable Securities therein) at least two (2) Business Days prior to their filing with the SEC.
(x) The Company will make available for inspection by the Holders and any Inspector retained by the Holders, at the Holders’ sole expense, all records as shall be reasonably necessary to enable the Holders and any underwriters to exercise their due diligence responsibility, and cause the Company’s officers, directors, and employees to supply all information which the Holders, any Inspector or any underwriter may reasonably request for purposes of such due diligence; provided, however, that the Holders shall hold in confidence and shall not make any disclosure of any information which the Company determines in good faith to be confidential, and of which determination the Holders are so notified at the time the Holders receive such information, unless (A) the Holders have, or obtained, knowledge of such information without violation of or protection under any agreements with the Company or, to its knowledge any third party, (B) the disclosure of such information is reasonably necessary to avoid or correct a misstatement or omission in each Registration Statement and a reasonable time prior to such disclosure the Holders shall have informed the Company of the need to so correct such misstatement or omission and the Company shall have failed to correct such misstatement of omission, (C) the release of such information is ordered pursuant to a subpoena or other order from a court or governmental body of competent jurisdiction or (D) the information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement. The Company shall not be required to disclose any confidential information to any Holder, Inspector or underwriter until and unless such Holder, Inspector or underwriter shall have entered into a confidentiality agreement with the Company with respect thereto, containing terms substantially similar to those set forth in this Section 3(d)(x), which agreement shall permit an Inspector retained by any Holder to disclose information to such Holder. Each Holder agrees that it shall, upon learning that disclosure of such information is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at the Company’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the information deemed confidential. The Company shall hold in confidence and shall not make any disclosure of information concerning the Holders provided to the Company pursuant to this Agreement unless (1) disclosure of such information is reasonably necessary to comply with federal or state securities laws, (2) disclosure of such information to the SEC’s Staff of the Division of Corporation Finance is reasonably necessary to respond to comments raised by such staff in its review of such Registration Statement, (3) disclosure of such information is reasonably necessary to avoid or correct a misstatement or omission in such Registration Statement, (4) release of such information is ordered pursuant to a subpoena or other order from a court or governmental body of competent jurisdiction, or (5) such information has been made generally available to the public other than by disclosure in violation of this or any other agreement. The Company agrees that it shall, upon learning that disclosure of such information concerning the Holders is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Holders and allow the Holders, at the Holders’ expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.
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(xi) The Company will use its commercially reasonable efforts to cause all the Registrable Securities covered by each Registration Statement to be listed or quoted on the principal securities market on which securities of the same class or series issued by the Company are then listed or traded.
(xii) The Company will provide a transfer agent and registrar, which may be a single entity, for the Registrable Securities at all times.
(xiii) The Company will cooperate with the Holders of Registrable Securities being offered pursuant to each Registration Statement to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing Registrable Securities to be offered pursuant to such Registration Statement and enable such certificates to be in such denominations or amounts as the Holders may reasonably request.
(xiv) The Company will take all other reasonable actions necessary to expedite and facilitate disposition by the Holders of the Registrable Securities pursuant to each Registration Statement, including without limitation making its chief executive officer, president, chief financial officer and other appropriate officers and personnel available to participate in marketing efforts with respect to any registered underwritten public offering.
(xv) In the case of an underwritten offering, the Company shall furnish to the participating Holders signed counterparts, addressed to such Holders, of (i) any opinion of counsel to the Company delivered to any underwriter and (ii) any comfort letter from the Company’s independent public accountants (or accountants for any entity acquired by the Company whose financial statements are included in a Registration Statement) delivered to any underwriter. In the event no legal opinion is delivered to any underwriter, or in non-underwritten transactions, the Company shall furnish to participating Holders, at any time that such Holders elect to use a prospectus, an opinion of counsel to the Company stating only that the Registration Statement containing such prospectus has been declared effective and that no stop order is in effect.
(xvi) The Company shall comply with all applicable rules and regulations of the SEC and the Securities Act.
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(e) Suspension of Offers and Sales. Each Holder of Registrable Securities agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(d)(vi) or of the commencement of a Blackout Period, such Holder shall discontinue and suspend disposition of Registrable Securities pursuant to any Registration Statement until the Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(d)(vi) or notice of the end of the Blackout Period, and, if so directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies (including, without limitation, any and all drafts), other than permanent file copies, then in such Holder’s possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice.
(f) Registration Expenses. All expenses incident to the Company’s performance of or compliance with this Agreement, including without limitation all registration and filing fees, messenger and delivery expenses, printing expenses, internal expenses (including without limitation all salaries and expenses of its officers and employees performing legal or accounting duties), all fees and expenses associated with filings required to be made with FINRA, as may be required by the rules and regulations of FINRA, fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities), rating agency fees, the fees and expenses incurred in connection with the listing of the securities to be registered on all securities exchanges on which similar securities issued by the Company are then quoted or listed, reasonable fees and disbursements of counsel for the Company and its independent certified public accountants, and the reasonable fees and expenses of any other persons retained by the Company, in connection with the registration hereunder (collectively, the “Registration Expenses”) will be borne by the Company, but not including any roadshow expenses of the Holders, fees and expenses of counsel for the Holders and any underwriting, broker or dealer discounts or commissions attributable to the sale of Registrable Securities (which are hereinafter referred to as “Selling Expenses”). All Selling Expenses shall be borne solely by the Holders.
(g) Information by the Holder. The Holder or Holders of Registrable Securities included in any Registration Statement shall furnish to the Company such information required under Regulation S-K under the Securities Act regarding such Holder or Holders and the distribution proposed by such Holder or Holders as the Company may request in writing. No Holder of Registrable Securities will be entitled to have such Registrable Securities included in a Registration Statement if such Holder does not furnish such information requested by the Company.
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(h) Indemnification.
(i) In the event of the offer and sale of Registrable Securities under the Securities Act, the Company shall, and hereby does, indemnify and hold harmless, to the fullest extent permitted by law, each Holder, its directors, officers and partners, each other person who participates as an underwriter in the offering or sale of such securities, and each other person, if any, who controls or is under common control with such Holder or any such underwriter within the meaning of Section 15 of the Securities Act, against any losses, claims, damages, liabilities (joint or several), and expenses to which such Holder or any such director, officer or partner, underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in (A) any Registration Statement, any preliminary prospectus, final prospectus, summary prospectus or free writing prospectus, or any amendment or supplement thereto, or (B) in any materials or information provided to investors by, or with the written approval of, the Company in connection with the marketing of the offering of the Registrable Securities, including any road show or investor presentations made to investors by the Company (whether in person or electronically), or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or free writing prospectus, in light of the circumstances in which they were made) not misleading, and the Company shall reimburse the Holder, and each such director, officer, partner, underwriter and controlling person for any legal or any other expenses reasonably incurred by them in connection with investigating, defending or settling any such loss, claim, damage, liability, action or proceeding; provided that the foregoing shall not apply, and the Company shall not be liable, in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding, whether commenced or threatened, in respect thereof) or expense arises out of or is based upon (X) an untrue statement or alleged untrue statement in or omission or alleged omission from such Registration Statement, any such preliminary prospectus, final prospectus, summary prospectus or free writing prospectus, or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by or on behalf of such Holder specifically stating that it is for use in the preparation thereof, or (Y) such Holder’s failure to comply with the terms of the plan of distribution mechanics described in the applicable prospectus. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Holders, or any such director, officer, partner, underwriter or controlling person, and shall survive the transfer of such shares by the Holders.
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(ii) As a condition to including any Registrable Securities to be offered by a Holder in any Registration Statement, such Holder agrees to be bound by the terms of this Section 3(h) and to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors and officers, each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, legal counsel and accountants for the Company, any underwriter, any other Holder selling securities in such Registration Statement (or any other registration statement filed by the Company to which a Piggyback Supplement relates) and any controlling person within the meaning of the Securities Act of any such underwriter or other Holder, against any losses, claims, damages, liabilities (joint or several), and expenses to which the Company, any of its directors, officers, controlling persons, legal counsel or accountants, any underwriter, any other Holder, or any controlling person of such underwriter or other Holder may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages, liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) or expenses arise out of or are based upon (A) an untrue statement or alleged untrue statement in or omission or alleged omission from any Registration Statement (or any other registration statement filed by the Company to which a Piggyback Supplement relates), any preliminary prospectus, final prospectus, summary prospectus or free writing prospectus, or any amendment or supplement thereto, if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by or on behalf of such Holder specifically stating that it is for use in the preparation thereof, or (B) such Holder’s failure to comply with the terms of the plan of distribution mechanics described in the applicable prospectus. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company, any such director, officer or controlling person, any such underwriter or other Holder, or any controlling person of any such underwriter or other Holder, and shall survive the transfer of such shares by the Holder, and such Holder shall reimburse the Company, any of its directors, officers, controlling persons, legal counsel or accountants, any underwriter, any other Holder, or any controlling person of such underwriter or other Holder for any legal or other expenses reasonably incurred by them in connection with investigating, defending, or settling such loss, claim, damage, liability, action, or proceeding; provided, however, that such indemnity agreement found in this Section 3(h)(ii) shall in no event exceed the gross proceeds from the offering received by such Holder.
(iii) Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding involving a claim referred to in Section 3(h)(i) or Section 3(h)(ii) (including any governmental action), such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the indemnifying party of the commencement of such action; provided, however, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under Section 3(h)(i) or Section 3(h)(ii), except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. If any such action is brought against an indemnified party, unless in the reasonable judgment of counsel to such indemnified party a conflict of interest between such indemnified and indemnifying parties may exist (including situations in which the indemnified party may have defenses not available to the indemnifying party) in respect of such claim, the indemnifying party shall be entitled to participate in and to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof, unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties arises in respect of such claim after the assumption of the defenses thereof or the indemnifying party fails to defend such claim in a diligent manner, other than reasonable costs of investigation. Neither an indemnified nor an indemnifying party shall be liable for any settlement of any action or proceeding effected without its consent. No indemnifying party shall, without the consent of the indemnified party, consent to entry of any judgment or enter into any settlement, which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. Notwithstanding anything to the contrary set forth herein, and without limiting any of the rights set forth above, in any event any party shall have the right to retain, at its own expense, counsel with respect to the defense of a claim.
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(iv) In the event that an indemnifying party does or is not permitted to assume the defense of an action pursuant to Section 3(h)(iii) or in the case of the expense reimbursement obligation set forth in Section 3(h)(i) and Section 3(h)(ii), the indemnification required by Section 3(h)(i) and Section 3(h)(ii) shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills received or expenses, losses, damages, or liabilities are incurred.
(v) If the indemnification provided for in this Section 3(h) is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall (A) contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense as is appropriate to reflect the proportionate relative fault of the indemnifying party on the one hand and the indemnified party on the other (determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission relates to information supplied by the indemnifying party or the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission), or (B) if the allocation provided by clause (A) above is not permitted by applicable law or provides a lesser sum to the indemnified party than the amount hereinafter calculated, not only the proportionate relative fault of the indemnifying party and the indemnified party, but also the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other, as well as any other relevant equitable considerations; provided, however, that in no event shall any Holder be required to contribute an aggregate amount in excess of the gross proceeds from the offering received by such Holder. No indemnified party guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any indemnifying party who was not guilty of such fraudulent misrepresentation.
(vi) Indemnification similar to that specified in the preceding subsections of this Section 3(h) (with appropriate modifications) shall be given by the Company and each Holder of Registrable Securities with respect to any required registration or other qualification of securities under any federal or state law or regulation or governmental authority other than the Securities Act.
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Section 4. Miscellaneous.
(a) Assignment of Rights; Successors and Assignees. The rights to cause the Company to register the resale of Registrable Securities granted to the Investors by the Company under Section 3 may be assigned by any Investor to one or more transferee(s) of such Registrable Securities; provided, however, that (i) such transfer of Registrable Securities is effected in accordance with applicable securities laws, (ii) unless such transferee of Registrable Securities is an Affiliate of such Investor, such transferee holds Registrable Securities representing at least $500,000 of the Registrable Securities (immediately after giving effect to such transfer), (iii) the Company is given written notice prior to any said transfer or assignment, stating the name and address of each such transferee and assignee and identifying the Registrable Securities with respect to which such registration rights are being assigned, and (iv) each such transferee and assignee assumes in writing responsibility for its portion of the obligations of such Investor under this Agreement and accordingly agrees in writing to become subject to the terms of this Agreement as a Holder. The Company may not assign any of its rights, or delegate any of its obligations, under this Agreement without the prior written consent of the Holders of the Registrable Securities outstanding as of the date of such assignment, and any such purported assignment by the Company without the written consent of such Holders shall be null and void ab initio and of no force or effect. This Agreement shall inure to the benefit of, and be binding upon, the successors and the assignees (permitted pursuant under this Section 4(a)) of each of the parties hereto, including subsequent Holders of Registrable Securities (to the extent permitted herein).
(b) Notices. All notices or other communications which are required or permitted under this Agreement shall be in writing and sufficient if delivered by hand, by facsimile transmission, by registered or certified mail, postage pre-paid, by electronic mail, or by courier or overnight carrier, to the persons at the addresses set forth below (or at such other address as may be provided hereunder), and shall be deemed to have been delivered as of the date so delivered:
If to the Company: | Hall of
Fame Resort & Entertainment Company 2626 Fulton Dr NW, Canton, OH 44718 Attn: Michael Crawford |
with a copy (which shall not constitute notice) to: |
Hunton
Andrews Kurth LLP 2200 Pennsylvania Avenue NW Washington, DC 20037 Attention: J. Steven Patterson Facsimile: (202) 778-2201 |
If to a Holder: | to such address specified on the signature page for such Holder attached hereto or in the notice required by Section 4(a) |
or at such other address as any party shall have furnished to the other party in writing.
(c) Rule 144. The Company covenants that it shall use its reasonable commercial efforts to file any and all reports required to be filed by it under the Securities Act and the Exchange Act and shall take such further action as the Holders may reasonably request, all to the extent required from time to time to enable the Holders to sell Registrable Securities without registration under the Securities Act within the limitations of the exemption provided by Rule 144, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.
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(d) Specific Performance. Each party to this Agreement agrees that any breach by it of any provision of this Agreement would irreparably injure the other party and that money damages would be an inadequate remedy therefor. Accordingly, each such party agrees that the other parties hereto shall be entitled to one or more injunctions enjoining any such breach and requiring specific performance of this Agreement and consents to the entry thereof, in addition to any other remedy to which such other party is entitled at law or in equity.
(e) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument.
(f) Amendments. The provisions of this Agreement may be amended at any time and from time to time, and particular provisions of this Agreement may be waived, with and only with an agreement or consent in writing signed by the Company and each Holders of the Registrable Securities outstanding as of the date of such amendment or waiver.
(g) Obligations Limited to Parties to Agreement. Each of the parties hereto covenants, agrees and acknowledges that no person other than the Company and the Holders shall have any obligation hereunder and that, notwithstanding that one or more of the Holders may be a corporation, partnership or limited liability company, no recourse under this Agreement or under any documents or instruments delivered in connection herewith shall be had against any former, current or future director, officer, general or limited partner, manager, member, stockholder or Affiliate of any of the Holders or any former, current or future director, officer, general or limited partner, manager, member, stockholder or Affiliate of any of the foregoing, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any applicable law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise by incurred by any former, current or future director, officer, general or limited partner, manager, member, stockholder or Affiliate of any of the Holders or any former, current or future director, officer, general or limited partner, manager, member, stockholder or Affiliate of any of the foregoing, as such, for any obligations of the Holders under this Agreement or any documents or instruments delivered in connection herewith or for any claim based on, in respect of or by reason of such obligation or its creation, except in each case for any assignee of a Holder hereunder.
(h) Headings and Cross References. The headings of the several sections and subsections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement. Unless the context requires otherwise, all cross references in this Agreement refer to sections and subsections of this Agreement.
(i) Severability. In the case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
(j) Entire Agreement. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subject matter of this Agreement.
(k) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.
(Remainder of Page Intentionally Left Blank)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.
THE COMPANY: | ||
HALL
OF FAME RESORT & ENTERTAINMENT COMPANY | ||
By: | /s/ Michael Crawford | |
Name: | Michael Crawford | |
Title: | Chief Executive Officer |
INVESTORS:
IRG,
LLC,
a Nevada limited liability company
By: | S.L. Properties, Inc., | |
a Delaware corporation, | ||
its Manager |
By: | /s/ John A. Mase | |||
Name: | John A. Mase | |||
Title: | Chief Executive Officer |
Address: | ||
CH CAPITAL LENDING, LLC
By: | Holdings SPE Manager, LLC, | |
A Delaware limited liability company, | ||
Its Manager |
By: | /s/ John A. Mase | |
Name: | John A. Mase | |
Title: | Chief Executive Officer |
Address: | ||
INVESTORS:
JKP FINANCIAL, LLC, | |||
a Delaware limited liability company | |||
By: | /s/ John A. Mase | ||
Name: | John A. Mase | ||
Title: | Chief Executive Officer |
Address: | ||
INVESTORS: | ||
Name: | Stuart Lichter |
Address: | ||
Exhibit 10.10
FIRST AMENDMENT TO LOAN DOCUMENTS
This First Amendment to Loan Documents (this “Amendment”) is dated as of March 1, 2022, by and between HOF Village Hotel II, LLC, a Delaware limited liability company (“Borrower”), Stuart Lichter, an individual (“Guarantor”), and ERIEBANK, a division of CNB Bank, a wholly owned subsidiary of CNB Financial Corporation, a Pennsylvania corporation, and its successors, participants, and assigns (“Lender”).
RECITALS
A. Borrower obtained a construction loan from Lender (the “Loan”) pursuant to the terms of a Construction Loan Agreement dated September 14, 2020 (together with any amendments or modifications thereto, the “Loan Agreement”). The Loan is also evidenced by a Promissory Note dated September 14, 2020, in the maximum principal amount of Fifteen Million Three Hundred Thousand and No/100 Dollars ($15,300,000.00) (together with any amendments or modifications thereto, the “Note”).
B. Borrower’s obligations under the Loan Agreement and the Note are secured by an Open-End Mortgage (Fee Simple and Leasehold), Assignment of Leases and Rents, and Security Agreement dated September 14, 2020 and recorded on September 16, 2020 in the Official Records of Stark County, Ohio, under Instrument No. 202009160039659 (together with any amendments or modifications thereto, the “Security Instrument”) encumbering the real property legally described therein (the “Property”).
C. The Loan Agreement, Note, Security Instrument, and all other documents evidencing, securing, or otherwise governing the Loan, as they may have been amended or modified, are referred to herein collectively as the “Loan Documents.”
D. Borrower’s obligations under the Loan Documents are guaranteed by Guarantor pursuant to a Guaranty of Payment dated September 14, 2020 (together with any amendments or modifications thereto, the “Payment Guaranty”). Borrower’s obligations under the Loan Documents with respect to construction are guaranteed by Guarantor pursuant to a Performance and Completion Guaranty dated September 14, 2020 (together with any amendments or modifications thereto, the “Completion Guaranty”).
E. Borrower has elected and qualified for the Extension Option which extended the Extended Maturity Date to September 13, 2022, provided, however, the Borrower has now requested and Lender has agreed, to extend the Extended Maturity Date to September 13, 2023.
F. Borrower has requested that Lender modify the terms of the Loan as set forth below. To accommodate Borrower’s request, Borrower and Lender desire to modify the Loan on the terms and conditions set forth in this Amendment.
AGREEMENTS
In consideration of the mutual promises, covenants, and conditions set forth herein, the parties hereto hereby agree as follows:
1. TERMINOLOGY. The terms used in this Amendment shall have the same meanings as in the Loan Agreement, unless a different meaning is assigned herein or is required by the context hereof.
2. AMENDMENTS TO LOAN DOCUMENTS. Upon satisfaction of all of the Conditions of Effectiveness (defined below), the following amendments shall take effect:
2.1 Extension of Loan Term. The Extended Maturity Date of the Loan shall be extended to September 13, 2023, unless Lender accelerates the Loan pursuant to an Event of Default, in which case the Loan shall mature on the date of acceleration (the applicable date being referred to as the “Extended Maturity Date”). The term “Extension Option” used in the Note, the Loan Agreement or any other Loan Document shall include the Extended Maturity Date set forth herein.
2.2 Monthly STAR Reports. As an additional reporting requirement, the Borrower shall furnish or cause to be furnished to Lender on a monthly basis Smith Travel Accommodations Reports (STAR Reports) which shall be delivered no later than thirty (30) days following the end of each month, beginning with the month ending March 31, 2022.
2.3 Quarterly Operating Statements. As an additional reporting requirement, within forty-five (45) days following the end of each fiscal quarter, beginning with fiscal quarter ending March 31, 2022, the Borrower shall provide a quarterly operating statement to Lender.
3. Conditions of effectiveness.
3.1 Notwithstanding its execution by all parties and except as otherwise set forth in Section 3.2 below, this Amendment shall become effective only upon satisfaction of all of the following “Conditions of Effectiveness”:
3.1.1 Modification Fee. 25 basis points of the outstanding principal balance of the Loan.
3.1.2 Execution and Recording of Documents. Borrower and Guarantor, as applicable, have executed any and all documents necessary to effectuate this Amendment or otherwise required by Lender, including any required amendment to the Security Instrument, restated or substituted note, or UCC financing statements, and such documents have been filed or recorded, where necessary.
3.1.3 Title Updates. Lender has obtained, at Borrower’s expense, confirmation of the continued validity of the Security Instrument and its first lien priority on the Property over all encumbrances not previously agreed to by Lender in writing in form reasonably satisfactory to Lender. Borrower and Guarantor understand that the amendments set forth herein shall not be effective or binding upon Lender in any respect until any required endorsements have been issued in a form satisfactory to Lender.
3.1.4 No Defaults. Borrower is in full compliance with all of its covenants and agreements under the Loan Documents, and there is no Default or Event of Default under the Loan Documents.
3.2 The Conditions of Effectiveness are intended solely for Lender’s benefit and may, at Lender’s election and in its sole discretion be enforced, fully or partially waived, or transformed into covenants of Borrower to be performed following effectiveness of this Amendment upon Lender’s subsequent written notice and demand. Lender acknowledges and agrees that Lender has ordered a title update to satisfy the condition set forth in Section 3.1.3, and Lender agrees that this Amendment is effective and binding upon Lender as of the date hereof, without in any manner waiving Lender’s rights to require removal of any lien or encumbrance not otherwise permitted under the terms of the Loan Agreement upon receipt of such update.
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4. Lien Priority. The Property shall remain and continue in all respects subject to the Security Instrument, and nothing in this Amendment or done pursuant to this Amendment shall affect or be construed to affect Lender’s first-lien priority with respect to the Property.
5. REPRESENTATIONS AND WARRANTIES. Borrower and Guarantor hereby acknowledge, represent, warrant, and agree as follows:
5.1 The Recitals set forth above are true and accurate in all material respects.
5.2 Borrower is the fee simple owner of the Property, and Lender has not assumed, and does not hereby assume, control of the Property.
5.3 To Borrower’s and Guarantor’s knowledge, there is no Default or Event of Default under the Loan Documents.
5.4 Except for the Permitted Encumbrances (as defined in the Security Instrument), to Borrower’s and Guarantor’s knowledge, there are no liens, charges, or encumbrances against the Property that are now or may hereafter become prior to the Security Instrument.
5.5 All documents and other information requested by Lender from Borrower and Guarantor as a condition to entering into this Amendment are true, complete, and accurate in all material respects.
5.6 Each of the Payment Guaranty and Completion Guaranty is and shall remain fully binding and enforceable against Guarantor in accordance with its terms as to Borrower’s obligations under the Loan, as amended hereby. Guarantor’s obligations under each such Guaranty are and shall continue to be entirely separate and independent from the obligations of Borrower under the Loan Documents. In addition, any separate indemnity agreement executed by Guarantor in connection with the Loan shall remain in full force and effect and shall continue to be separate and independent from any Guaranty and the Loan Documents.
5.7 Borrower and Guarantor acknowledge that Lender is relying on the warranties, representations, releases, and agreements of Borrower and Guarantor in this Amendment, and would not enter into this Amendment or agree to modify the Loan Documents without such warranties, representations, releases, and agreements.
6. RELEASE. Borrower and Guarantor agree that Lender has not breached any of its obligations under the Loan Documents, and Borrower and Guarantor have no claims against Lender, its predecessors, successors, assigns, or participants, or any of their officers, directors, agents, employees, and other affiliates (collectively, the “Released Parties”) for fraud, misrepresentation, lender misconduct, lender liability, breach of alleged fiduciary duty, or other tort or wrongdoing. Borrower and Guarantor hereby release and forever discharge the Released Parties of and from any and all claims, causes of action, rights of offset, and rights to damages that Borrower or any Guarantor has or may have, or may be entitled to assert, against the Released Parties for any reason whatsoever by reason of any actions, events, or occurrences prior to the date of this Amendment, except for Borrower’s rights to enforce Lender’s further obligations under the Loan Documents, as amended hereby. The provisions, waivers, and releases set forth in this section are binding upon Borrower and Guarantor and their respective agents, employees, representatives, officers, directors, partners, members, joint venturers, affiliates, assigns, heirs, successors-in-interest and shareholders. Neither Borrower nor Guarantor has any claims, defenses, counterclaims, or rights of offset against any of the Released Parties arising out of or in any way connected with the Loan.
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7. Payment of Lender’s Expenses. Borrower agrees to reimburse Lender for all out-of-pocket expenses incurred by Lender in connection with the drafting, negotiation, execution, delivery, and performance of this Amendment and all related documents, including, without limitation, reasonable attorneys’ fees and costs incurred by Lender, premiums for any endorsements to Lender’s existing Title Policy, appraisal fees, recording charges, escrow fees, and any other costs.
8. Effect on Loan Documents. This Amendment shall be sufficient to serve as an amendment to all of the Loan Documents, as appropriate. This Amendment supersedes and shall control over any inconsistent provisions of the Loan Documents, or any previous extensions or other amendments of the Loan Documents. Except as amended herein, the Loan Documents shall remain in full force and effect as written, and the provisions of the Loan Documents shall remain unaffected, unchanged, and unimpaired hereby.
9. AUTHORIZATION/BINDing Effect. Each person signing this Amendment on behalf of Borrower and Guarantor warrants and represents that this Amendment was duly authorized by all individuals or entities whose authorization was required for this Amendment to be effective. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors, and assigns.
10. Applicable Law. This Amendment shall be construed in all respects and enforced according to the laws of the State of Ohio, without regard to that state’s choice of law rules.
11. COUNTERPARTS. The parties may execute this Amendment in any number of counterparts, each of which shall be deemed an original instrument but all of which together shall constitute one and the same instrument.
12. POWER TO CONFESS JUDGMENT. Borrower and Guarantor each authorize any attorney at law to appear in any court of record in the State of Ohio or in any other state or territory of the United States of America after the loan evidenced by the Note becomes due, whether by acceleration or otherwise, to waive the issuing and service of process, and to confess judgment against Borrower and/or Guarantor in favor of Lender for the amount then appearing due on the Note, together with costs of suit, and thereupon to waive all errors and all rights of appeal and stays of execution. Borrower and Guarantor each waive any conflict of interest that an attorney hired by Lender may have in acting on Borrower’s and/or Guarantor’s behalf in confessing judgment against Borrower and/or Guarantor while such attorney is retained by Lender. Borrower and Guarantor each expressly consent to such attorney acting for Borrower and/or Guarantor in confessing judgment and to such attorney’s fee being paid by Lender or deducted from the proceeds of collection of the Note or collateral security therefor.
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IN WITNESS WHEREOF, Borrower has hereunto set their hands or caused this Amendment to be executed by their duly authorized officers as a document under seal as of the date first written above.
BORROWER:
WARNING – BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.
HOF VILLAGE HOTEL II, LLC, | ||
a Delaware limited liability company | ||
By: | /s/ Michael Crawford | |
Michael Crawford, Chief Executive Officer |
IN WITNESS WHEREOF, Lender has hereunto set their hands or caused this Amendment to be executed by their duly authorized officers as a document under seal as of the date first written above.
LENDER: | ||
ERIEBANK,
a division of CNB Bank, a wholly owned subsidiary of CNB Financial Corporation, a Pennsylvania corporation | ||
By: | /s/ Suzanne Hamilton | |
Suzanne Hamilton, Senior Vice President |
Signature Page to First Amendment to Loan Documents
IN WITNESS WHEREOF, Guarantor has hereunto set their hands or caused this Amendment to be executed by their duly authorized officers as a document under seal as of the date first written above.
GUARANTOR:
WARNING – BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.
/s/ Stuart Lichter | |
Stuart Lichter, an individual |
Signature Page to First Amendment to Loan Documents