NXTP NextPlay Technologies Inc

Item 1.01. Entry into a Material Definitive Agreement.

On September 22, 2021, NextPlay Technologies, Inc. (the “Company”, “we” and “us”) entered into an Exchange Agreement (the “Exchange Agreement”) with Hudson Bay Master Fund Ltd. (the “Holder”), a holder of warrants to purchase 322,000 shares of the Company’s common stock with an exercise price $2.00 per share (the “Warrants”) originally purchased from the Company on September 28, 2018. Pursuant to the terms of the Warrants, the Holder had the right, upon closing of our acquisition of HotPlay Enterprise Limited, effective on June 30, 2021, to elect to require the redemption of the Warrants for a cash payment of the Black Scholes Value of the Warrants (the “Black Scholes Value”), which election was subsequently made by the Holder. Pursuant to the Exchange Agreement, the Holder agreed to exchange the Warrant (and thereby release the Company from the obligation to pay the Black Scholes Value) for a promissory note in the principal amount of $900,000 (the “Note”). The Exchange Agreement included customary representations and warranties of the parties; a restriction prohibiting the Company from undertaking a variable rate transaction for so long as the Note remains outstanding; and a favored nations provision, relating to subsequent amendments, modifications, waivers or exchanges of any warrant to purchase common stock of the Company, which applies until the first anniversary of the repayment of the Note. The Company also agreed to pay $15,000 of the legal fees of the Holder pursuant to the Exchange Agreement.

The Note is payable by the Company, in four equal payments of $225,000 each, with payments due on October 22, 2021, November 22, 2021, December 22, 2021, and on maturity, January 22, 2022. We can prepay any amount due under the Note without penalties, provided we provide the Holder five days prior written notice. The amount due under the Note does not accrue interest, unless an event of default occurs thereunder, at which time the amount owed under the Note will accrue interest at 18% per annum, until paid in full. The Note contains customary restrictions (including future payments of indebtedness while the Note is outstanding and in default), covenants and events of default, including if a change of control of the Company occurs, and upon the occurrence of an event of default, the Holder can declare the entire balance of the Note immediately due and payable, together with a redemption premium of 25% (i.e., can require the Company to pay 125% of the amount due under the Note). The Note also includes certain rights which accrue to the Holder upon a fundamental transaction.

The foregoing description of the Exchange Agreement and Note above is subject to, and qualified in its entirety by, the Exchange Agreement and Note, attached as Exhibits 10.1 and 10.2 hereto, which are incorporated in this Item 1.01 by reference in their entirety.