Item 1.01 Entry into a Material Definitive Agreement
Effective October 4,
2022, NextPlay Technologies, Inc., a Nevada corporation (the “Company”), through its wholly owned subsidiary, NextBank
International, Inc., a Puerto Rico corporation licensed as an Act 273-2012 international financial entity (“NextBank”), entered
into a revolving credit line facility with Savi Capital Partners, LLC, a Delaware limited liability company (the “Lender”),
pursuant to which Lender had provided a $200,000,000 revolving line of credit facility to NextBank to be used to fund loans secured by
domestic US commercial real estate properties in accordance with underwriting guidelines established by NextBank.
Loan and Security
Agreement, as amended
Previously, on May 31,
2022, NextBank and the Lender entered into that certain Loan and Security Agreement that was not utilized or drawn down upon. The Loan
and Security Agreement provided for only a $50,000,000 revolving line of credit, required lender approval of all lending decisions and
contained other conditions in the facility that NextBank could not, at the time, comply with.
Effective October 4,
2022, NextBank and the Lender entered into additional agreements and amendments to allow for the viability of the revolving line of credit.
Specifically, effective October 4, 2022, NextBank and the Lender entered into that certain First Amendment to Loan and Security Agreement
(the “Amendment” and together with the original Loan and Security Agreement, the “Agreement”), dated as of September
27, 2022, which, among other things:
| (i) | Increased the commitment amount to $200,000,000, with the maximum loan amount available in stages as follows: |
| a. | from November 15, 2022, through December 14, 2022, $30,000,000; |
| b. | from December 15, 2022, through January 14, 2023, $70,000,000; |
| c. | from January 15, 2023, through February 14, 2023, $100,000,000; |
| d. | from February 15, 2023, through March 14, 2023, $150,000,000*; and |
| e. | from March 15, 2023, through maturity of May 31, 2027, up to the full commitment amount of $200,000,000*. |
| (ii) | Adjusted the stated interest rates per annum to be: |
| a. | Fixed rate of 5.5% for Tranche A loans; |
| b. | Fixed rate of 7.5% for Tranche B loans; and |
| c. | Fixed rate of 9.5% for Tranche C loans. |
| (iii) | Modified the advance procedures; and |
| (iv) | Obligated NextBank to deposit $32,500,000 into a cash collateral account*. |
*Note: To date,
NextBank has only deposited $20,000,000 in deposits into a cash collateral accounts. In order to obtain commitment amounts in excess of
$100,000,000, NextBank will need to obtain an additional $12,500,000 in deposits which NextBank expects to do on or before the time at
which such amounts become available as per the schedule in (i) above.
In sum, the Agreement
provides that loans drawn from the revolving line of credit facility by NextBank will be used to fund loans secured by domestic US commercial
real estate properties in accordance with underwriting guidelines established by NextBank. These loans, when drawn down, will generate
interest spread and fee income, increasing NextBank’s loan portfolio, and are expected to favorably impact revenues and cashflows
at NextBank thereby benefiting the consolidated financial statements of the Company.
Accrued but unpaid interest
shall be due and payable, in arrears, on the third business day of each calendar month. NextBank may, at any time, prepay the loans without
premium or penalty and amounts prepaid may be reborrowed prior to the maturity date.
In the event of a default,
an additional 5.0% per annum default rate is payable in excess of the stated interest rate on such loan, which election may be retroactive
to the date of occurrence of such event of default.
Events of default include,
among other things, (i) failure to pay any principal, interest or any other amount when due and payable, (ii) NextBank failure to perform
terms, provisions, covenants or representations and warranties in any material respect, (iii) failure of liens on the loan collateral
to be first-priority, perfected security interests, (iv) judgments in excess of $250,000 against NextBank, (v) material adverse changes
or effects in NextBank and more.
Upon an event of default,
at the election of Lender, Lender may, in addition to all other rights and remedies it may have, including as a secured party under the
UCC, terminate the commitment, accelerate the outstanding amounts owed, charge default interest and cease financing under the Agreement.
Revolving Line
of Credit Note, as amended and restated
Concurrently with the
effectiveness of the Amendment, the parties entered into an amended and restated revolving line of credit note (the “Revolving Credit
Note”) documenting the revolving loans and replacing the prior revolving credit note that was not utilized.
Specifically, the Revolving
Credit Note has a principal sum of $200,000,000 (or so much thereof as may be advanced and outstanding from time to time and owed by NextBank
to Lender due to the revolving nature of the loans) with a maturity date of May 31, 2027. The principal outstanding under the Revolving
Credit Note is immediately due and payable upon the earliest to occur of (i) the maturity date, (ii) the acceleration of obligations as
provided in the Agreement, or (iii) the termination of the Agreement in accordance with its terms. The Revolving Credit Note bears interest
as provided in the Agreement and such interest shall be payable as described in the Agreement.
All payments on account
of indebtedness evidenced by the Revolving Credit Note shall first be applied to interest on unpaid balance and the remainder to principal,
unless otherwise specified in the Loan Agreement.
The
foregoing descriptions of the material terms of the Loan and Security Agreement, the Amendment and the Revolving Credit Note are qualified
in their entirety by the full text of such documents, copies of which are attached as Exhibits 10.1, 10.2 and 10.3, respectively, to this
Report, and are incorporated herein by reference.