NextPlay Technologies, Inc. 8-K


Exhibit 10.2 



 

 


SECURED
PROMISSORY
NOTE


 


	Effective Date: October 22, 2021	U.S. $1,665,000.00




 


FORVALUERECEIVED,NEXTPLAY
 TECHNOLOGIES, INC.,aNevadacorporation (“Borrower”),
promises to pay to STREETERVILLE CAPITAL, LLC, a Utah limited
liability company, or its successors or assigns (“Lender”), $1,665,000.00 and any interest, fees, charges, and late
fees accrued hereunder on the date that is twelve (12) months after the Purchase Price Date (the “Maturity Date”)
in accordance with the terms set forth herein and to pay interest on the Outstanding Balance at the rate of ten percent (10%) per annum
from the Purchase Price Date until the same is paid in full. All interest calculations hereunder shall be computed on the basis of a
360-day year comprised of twelve (12) thirty (30) day months, shall compound daily and shall be payable in accordance with the terms
of this Note. This Secured Promissory Note (this “Note”) is issued and made effective as of October 22, 2021 (the
“Effective Date”). This Note is issued pursuant to that certain Note Purchase Agreement dated October 22, 2021, as
the same may be amended from time to time, by and between Borrower and Lender (the “Purchase Agreement”). Certain
capitalized terms used herein are defined in Attachment 1 attached hereto and incorporated herein by this reference.


 


This
Note carries an OID of $150,000.00. In addition, Borrower agrees to pay $15,000.00 to Lender to cover Lender’s legal fees,
accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the purchase and sale of this Note
(the “Transaction Expense Amount”), all of the Transaction Expense Amount and the OID are fully earned and included
in the initial principal balance of this Note as of the Purchase Price Date. The purchase price for this Note shall be $1,500,000.00
(the “Purchase Price”), computed as follows: $1,665,000.00 original principal balance, less the OID, less the Transaction
Expense Amount. The Purchase Price shall be payable by Lender by wire transfer of immediately available funds.


 


		1.	Payments; Etc.



 


1.1. 
Payment. All payments owing hereunder shall be in lawful money of the United States of America and delivered to Lender
at the address or bank account furnished by Lender to Borrower for that purpose. All payments shall be applied first to (a) Lender’s
reasonable costs of collection, if any, then to (b) fees and charges hereunder, if any, then to (c) accrued and unpaid interest hereunder,
and thereafter, to (d) principal hereunder.


 


1.2. 
Prepayment. Borrower may pay all or any portion of the Outstanding Balance earlier than it is due; provided that
in the event Borrower elects to prepay all or any portion of the Outstanding Balance it shall pay to Lender 110% of the portion of the
Outstanding Balance Borrower elects to prepay. Early payments of less than all principal, fees and interest outstanding will not, unless
agreed to by Lender in writing, relieve Borrower of Borrower’s remaining obligations hereunder. For the avoidance of doubt, Equity
Payments shall be considered prepayments under this Section 1.2.


 


1.3. 
Equity Payment Failure. Upon the occurrence of each Equity Payment Failure, the Outstanding Balance shall automatically
be increased by an amount equal to ten percent (10%) of the then- current Outstanding Balance. 


 


1.4.  Transaction
Condition. No later than thirty (30) days after the Closing Date (the “Deadline”), HotPlay must have become a
co-borrower on this Note, that certain Secured Promissory Note given by Borrower for the benefit of Lender dated November 23, 2020
(the “November 2020 Note”), and that certain Secured Promissory Note given by Borrower for the benefit of Lender
dated March 23, 2021 (the “March 2021 Note,” and together with the November 2020 Note, the
“Notes”). In the event that HotPlay has not become a co-borrower on the Notes by the Deadline, the Outstanding
Balance shall automatically increase by an amount equal to twenty-five percent (25%) of the then-current outstanding balance, but,
for the avoidance of doubt, such failure will not be considered an Event of Default (as defined below) hereunder.


 






     


     


    




 


2. 
Security. This Note is secured by the Security Agreement (as defined in the Purchase Agreement), executed by Borrower in
favor of Lender encumbering the collateral set forth therein, as more specifically set forth in the Security Agreement, all the terms
and conditions of which are hereby incorporated into and made a part of this Note.


 


3. 
 Redemption. Beginning on the date that is six (6) months after the Purchase Price Date, Lender
shall have the right, exercisable at any time in its sole and absolute discretion, to redeem any amount of this Note up to the
Maximum Monthly Redemption Amount (such amount, the “Redemption Amount”) per calendar month by providing written notice
to Borrower (each, a “Redemption Notice”). For the avoidance of doubt, Lender may submit to Borrower one (1) or more
Redemption Notices in any given calendar month so long as the aggregate amount being redeemed in such month does not exceed the Maximum
Monthly Redemption Amount. Upon receipt of any Redemption Notice, Borrower shall pay the applicable Redemption Amount in cash to Lender
within seven (7) Trading Days of Borrower’s receipt of such Redemption Notice. Notwithstanding the foregoing, if Borrower does
not pay the applicable Redemption Amount in cash to Lender within three (3) Trading Days of Borrower’s
receipt of a Redemption Notice, then an amount equal to twenty-five percent (25%) of such Redemption Amount will be added to the
Outstanding Balance. Borrower shall have the right to defer up to three (3) separate redemptions for up to thirty (30) days each by providing
written notice to Lender within three (3) Trading Days of its receipt of a Redemption Notice. In the event Borrower elects to exercise
its deferral right, the Outstanding Balance shall automatically be increased by two percent (2%) of the Outstanding Balance as of the
date Borrower exercises such deferral right. 


 


		4.	Defaults and Remedies.






 


4.1.  Defaults.
The following are events of default under this Note (each, an “Event of Default”): (a) Borrower fails to pay any
principal, interest, fees, charges, or any other amount when due and payable hereunder (other than an Equity Payment Failure); (b) a
receiver, trustee or other similar official shall be appointed over Borrower or a material part of its assets and such appointment
shall remain uncontested for twenty (20) days or shall not be dismissed or discharged within sixty (60) days; (c) Borrower becomes
insolvent or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable
grace periods, if any; (d) Borrower makes a general assignment for the benefit of creditors; (e) Borrower files a petition for
relief under any bankruptcy, insolvency or similar law (domestic or foreign); (f) an involuntary bankruptcy proceeding is commenced
or filed against Borrower and is not dismissed or stayed within sixty (60) days; (g) Borrower or any pledgor, trustor, or guarantor
of this Note defaults or otherwise fails to observe or perform any covenant, obligation, condition or
agreement of Borrower or such pledgor, trustor, or guarantor contained herein or in any other Transaction Document (as
defined in the Purchase Agreement), other than those specifically set forth in this Section 4.1 and Section 4 of the Purchase
Agreement; (h) any representation, warranty or other statement made or furnished by or on behalf of Borrower or any pledgor,
trustor, or guarantor of this Note to Lender herein, in any Transaction Document, or otherwise in connection with the issuance of
this Note is false, incorrect, incomplete or misleading in any material respect when made or furnished; (i) the occurrence of a
Fundamental Transaction without Lender’s prior written consent; (j) any United States money judgment, writ or similar process
is entered or filed against Borrower or any subsidiary of Borrower or any of its property or other assets for more than
$1,000,000.00, and shall remain unvacated, unbonded or unstayed for a period of twenty (20) calendar days unless otherwise consented
to by Lender; and (k) Borrower fails to observe or perform any covenant set forth in Section 4 of the Purchase Agreement (other than
the covenant with respect to Equity Payment Failures). The occurrence of any event set forth in Section 4.1(g) – (k) above
shall not be considered an Event of Default if such event is cured within fifteen (15) days of the occurrence thereof. No
“Event of Default” shall be deemed to have occurred hereunder until the end of any applicable cure period
relating thereto, assuming such event which would have otherwise caused an Event of Default at the end of the applicable cure
period, is not cured by the end of such applicable cure period.


 






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4.2. 
Remedies. At any time and from time to time after Lender becomes aware of the occurrence of any Event of Default, Lender
may accelerate this Note by written notice to Borrower, with the Outstanding Balance becoming
immediately due and payable in cash at the Mandatory Default Amount. Notwithstanding the foregoing, at any time following the occurrence
of any Event of Default, Lender may, at its option, elect to increase the Outstanding Balance by applying the Default Effect (subject
to the limitation set forth below) via written notice to Borrower without accelerating the Outstanding Balance, in which event the Outstanding
Balance shall be increased as of the date of the occurrence of the applicable Event of Default pursuant to the Default Effect, but the
Outstanding Balance shall not be immediately due and payable unless so declared by Lender (for the avoidance of doubt, if Lender elects
to apply the Default Effect pursuant to this sentence, it shall reserve the right to declare the Outstanding Balance immediately due
and payable at any time and no such election by Lender shall be deemed to be a waiver of its right to declare the Outstanding Balance
immediately due and payable as set forth herein unless otherwise agreed to by Lender in writing). Notwithstanding the foregoing, upon
the occurrence of any Event of Default described in clauses (b), (c), (d), (e) or (f) of Section 4.1, the Outstanding Balance as of the
date of acceleration shall become immediately and automatically due and payable in cash at the
Mandatory Default Amount, without any written notice required by Lender. At any time following the occurrence of any Event of
Default, upon written notice given by Lender to Borrower, interest shall accrue on the Outstanding Balance beginning on the date the
applicable Event of Default occurred at an interest rate equal to the lesser of twenty-two percent (22%) per annum or the maximum rate
permitted under applicable law (“Default Interest”).
In connection with acceleration described herein, Lender need not provide, and Borrower hereby waives, any presentment, demand,
protest or other notice of any kind, and Lender may immediately and without expiration of any grace period enforce any and all of its
rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled
by Lender at any time prior to payment hereunder and Lender shall have all rights as a holder of the Note until such time, if any, as
Lender receives full payment pursuant to this Section 4.2. No such rescission or annulment shall affect any subsequent Event of Default
or impair any right consequent thereon. Nothing herein shall limit Lender’s right to pursue any other remedies available to it
at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.


 


5. 
Unconditional Obligation; No Offset. Borrower acknowledges that this Note is an unconditional, valid, binding and enforceable
obligation of Borrower not subject to offset, deduction or counterclaim of any kind. Borrower hereby waives any rights of offset it now
has or may have hereafter against Lender, its successors and assigns, and agrees to make the payments called for herein in accordance
with the terms of this Note. 


 


6. Waiver. No waiver of any provision of
this Note shall be effective unless it is in the form of a writing signed by the party
granting the waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other
provision or consent to any other prohibited action, whether or not similar. No waiver or consent shall constitute a continuing
waiver or consent or commit a party to provide a waiver or consent in the future except to the extent specifically set forth in
writing.


  






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7. Right
of First Refusal. In the event Borrower desires to make a Restricted Issuance, it must first provide notice of such proposed
Restricted Issuance to Lender, which notice must include all of the material terms of the Restricted Issuance. Lender shall then have
a period of ten (10) days to provide financing to the Company on the same terms as outlined in the notice of the potential Restricted
Issuance. If Lender elects to not provide such financing, then Borrower may elect to make the Restricted Issuance on the same terms that
were offered to Lender. In the event Borrower makes such Restricted Issuance, the Outstanding Balance will automatically be increased
by three percent (3%) for each time Borrower makes a Restricted Issuance after Lender has refused to provide financing on the same terms,
which increase will be effective as of the date of each Restricted Issuance; provided, however, the foregoing three percent (3%)
fee will not apply if the funds raised in such Restricted Issuance are used to repay this Note in full. In the event Borrower fails to
notify Lender of a potential Restricted Issuance and offer Lender a right of first refusal with respect to such Restricted Issuance,
the Outstanding Balance will automatically be increased by ten percent (10%) for each time Borrower makes a Restricted Issuance without
first offering Lender the right of first refusal to match the terms of the Restricted Issuance, which increase will be effective as of
the date of each Restricted Issuance. For the avoidance of doubt, in the event Borrower offers Lender the right to match a potential
Restricted Issuance, but subsequently changes the terms of such potential Restricted Issuance after Lender has refused to match the terms
originally offered to it, Borrower must again comply with the terms of this Section as the alteration of the terms of such potential
Restricted Issuance shall constitute a new Restricted Issuance. It is understood and agreed that there are outstanding accrued dividends
on Series A Preferred Stock that at the board’s direction may be converted into a promissory note or a convertible promissory note
and that such conversion will be recognized as an outstanding obligation and not result in an Event of Default or result in an increase
in the Outstanding Balance. 








 


8. 
Opinion of Counsel. In the event that an opinion of counsel is needed for any matter related to this Note, Lender has the
right to have any such opinion provided by its counsel. 


 


9. Governing
Law; Venue. This Note shall be construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of Utah, without giving
effect to any choice of law or conflict of law provision or rule (whether of the State of Utah
or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Utah. The
provisions set forth in the Purchase Agreement to determine the proper venue for any disputes are incorporated herein by this
reference.





 


10. 
Arbitration of Disputes. By its issuance or acceptance of this Note, each party agrees to be bound by the Arbitration Provisions
(as defined in the Purchase Agreement) set forth as an exhibit to the Purchase Agreement.


 


11. 
Cancellation. After repayment of the entire Outstanding Balance, this Note
shall be deemed paid in full, shall automatically be deemed canceled, and shall not be reissued.


 


12. 
Amendments. The prior written consent of both parties hereto shall be required for any change or amendment to this Note.


 


13. 
Assignments. Borrower may not assign this Note without the prior written consent of Lender. This Note may be offered, sold,
assigned or transferred by Lender to any of its affiliates without the consent of Borrower, so
long as such transfer is in accordance with applicable federal and state securities laws and written notice is provided to Borrower. 


 


14. 
Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be
given in accordance with the subsection of the Purchase Agreement titled “Notices.” 


 




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15. 
Liquidated Damages. Lender and Borrower agree that in the event Borrower fails to comply with any of the terms or provisions
of this Note, Lender’s damages would be uncertain and difficult (if not impossible) to accurately estimate because of the
parties’ inability to predict future interest rates, future share prices, future trading volumes and other relevant factors. Accordingly,
Lender and Borrower agree that any fees, balance adjustments, Default Interest or other charges assessed under this Note are not penalties
but instead are intended by the parties to be, and shall be deemed, liquidated damages. 


 


16. 
Severability. If any part of this Note is construed to be in violation of any law, such part shall be modified to achieve
the objective of Borrower and Lender to the fullest extent permitted by law and the balance of this Note shall remain in full force and
effect. 


 


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IN WITNESS WHEREOF, Borrower has caused this Note to be duly
executed as of the Effective Date.


 





	 	BORROWER:
	 	 
	 	Nextplay Technologies, INC. 
	 	 	 
	 	By:	/s/ Bill Kerby
			Bill Kerby, CEO





 


ACKNOWLEDGED, ACCEPTED AND AGREED:


 


LENDER:


 


Streeterville
Capital, LLC


 


	By:	/s/ John M. Fife	 
	 	John M. Fife, President	 



 


[Signature Page to Secured
Promissory Note]


 




     


     


    

 


ATTACHMENT 1


DEFINITIONS 


 


For purposes of this Note, the following
terms shall have the following meanings: 


 


A1. “Default Effect”
means multiplying the Outstanding Balance as of the date the applicable Event of Default occurred by (a) fifteen percent (15%) for each
occurrence of any Major Default, or (b) five percent (5%) for each occurrence of any Minor Default, and then adding the resulting product
to the Outstanding Balance as of the date the applicable Event of Default occurred, with the sum of the foregoing then becoming the Outstanding
Balance under this Note as of the date the applicable Event of Default occurred; provided that the Default Effect may only be applied
three (3) times hereunder with respect to Major Defaults and three (3) times hereunder with respect to Minor Defaults. Notwithstanding
the foregoing, in no event shall the foregoing balance increases exceed a maximum of thirty percent (30%) of the Outstanding Balance immediately
prior to the first occurrence of an Event of Default in the aggregate.


 


A2. “Equity Payment”
means a payment that is required to be made by Borrower to Lender pursuant to Section 4(iv) of the Purchase Agreement.


 


A3. “Equity Payment Failure”
means the failure by Borrower to make any Equity Payment within ten (10) days of the consummation of the applicable financing.


 


A4. “Fundamental
Transaction” means that (a) (i) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related
transactions, consolidate or merge with or into (whether or not Borrower or any of its subsidiaries is the surviving corporation)
any other person or entity, or (ii) Borrower or any of its subsidiaries shall, directly or
indirectly, in one or more related transactions, sell, lease, license, assign, transfer, convey or otherwise dispose of all
or substantially all of its respective properties or assets to any other person or entity, or (iii) Borrower or any of its
subsidiaries shall, directly or indirectly, in one or more related transactions, allow any other person or entity to make a
purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of voting stock of
Borrower (not including any shares of voting stock of Borrower held by the person or persons making or party to, or associated or
affiliated with the persons or entities making or party to, such purchase, tender or exchange offer), or (iv) Borrower or any of its
subsidiaries shall, directly or indirectly, in one or more related transactions, consummate a stock or share purchase agreement or
other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement)
with any other person or entity whereby such other person or entity acquires more than 50% of the outstanding shares of voting stock
of Borrower (not including any shares of voting stock of Borrower held by the other persons or entities making or party to, or
associated or affiliated with the other persons or entities making or party to, such stock or share purchase agreement or other
business combination), or (v) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related
transactions, reorganize, recapitalize or reclassify the Common Stock, other than an increase in the number of authorized shares of
Borrower’s Common Stock, or reverse splits of its outstanding and authorized shares of Common Stock to meet Nasdaq listing
requirements or (b) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and
14(d) of the 1934 Act and the rules and regulations promulgated thereunder) is or shall become the “beneficial owner”
(as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by
issued and outstanding voting stock of Borrower.


 


A5. “HotPlay” means
HotPlay Enterprises Limited.


 


A6. “Major Default”
means any Event of Default occurring under Sections 4.1(a) or 4.1(k).


 


A7. “Mandatory Default Amount”
means the Outstanding Balance following the application of the Default Effect.


 


A8. “Maximum Monthly Redemption Amount”
means $375,000.


 


A9. “Minor Default” means any
Event of Default that is not a Major Default. A10. “OID” means an original issue discount.


 


A11. “Outstanding Balance”
means as of any date of determination, the Purchase Price, as reduced or increased, as the case may be, pursuant to the terms hereof
for payment, offset, or otherwise, plus the OID, the Transaction Expense Amount, accrued but unpaid interest, collection and
enforcements costs (including attorneys’ fees) incurred by Lender, transfer, stamp, issuance and similar taxes and fees
incurred under this Note.


 






     


     


    

 


A12. “Purchase Price Date” means the
date the Purchase Price is delivered by Lender to Borrower.


 


A13. “Restricted Issuance”
means the issuance of any promissory note, debenture, or other instrument that evidences a debt obligation of Borrower to any person or
entity who is not an officer or director of the Company, or which is not HotPlay or any affiliate of HotPlay or the Company. The term
“Restricted Issuance” shall also not include any promissory note, debenture, or other instrument that evidences a debt obligation
of Borrower which is offered to be sold, or which is sold, to any governmental (local, state or federal) agency or entity, nor shall it
include any governmental (local, state or federal) grants.


 


A14. “Trading Day”
means any day on which the New York Stock Exchange (or such other principal market for the Common Stock) is open for trading.


 


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