SRZ Comments: 10/21/2012

 

MGT CAPITAL INVESTMENTS, INC.

 

CERTIFICATE OF DESIGNATION OF PREFERENCES,

RIGHTS AND LIMITATIONS

OF

6% SERIES A CONVERTIBLE PREFERRED STOCK

 

PURSUANT TO SECTION 151 OF THE

DELAWARE GENERAL CORPORATION LAW

 

The undersigned, President of MGT Capital Investments, Inc. (the “Corporation”),
a corporation organized and existing under the Delaware General Corporation Law
(the “DGCL”), DOES HEREBY CERTIFY that the following resolutions were duly
adopted by the Board of Directors of the Corporation by unanimous written
consent on October ___, 2012 (the Effective Date”);

 

WHEREAS, the Board of Directors is authorized within the limitations and
restrictions stated in the Certificate of Incorporation of the Corporation, as
amended to date, to provide by resolution or resolutions for the issuance of
10,000,000 shares of Preferred Stock, par value $0.001 per share, of the
Corporation, in such series and with such designations, preferences and
relative, participating, optional or other special rights and qualifications,
limitations or restrictions as the Corporation’s Board of Directors shall fix by
resolution or resolutions providing for the issuance thereof duly adopted by the
Board of Directors; and

 

WHEREAS, it is the desire of the Board of Directors, pursuant to its authority
as aforesaid, to authorize and fix the terms of a series of Preferred Stock and
the number of shares constituting such series;

 

NOW, THEREFORE, BE IT RESOLVED:

 

Section 1.          Designation and Authorized Shares. The Corporation shall be
authorized to issue one million five hundred thousand (1,500,000) shares of 6%
Series A Cumulative Convertible Preferred Stock, par value $0.001 per share (the
“Series A Preferred Stock”).

 

Section 2.          Stated Value. Each share of Series A Preferred Stock shall
have a stated value of $3.26 per share (the “Stated Value”).

 

Section 3.          Liquidation.

 

(a)       Upon the liquidation, dissolution or winding up of the business of the
Corporation, whether voluntary or involuntary, each holder of Series A Preferred
Stock shall be entitled to receive, for each share thereof, out of assets of the
Corporation legally available therefor, a preferential amount in cash equal to
(and not more than) the Stated Value (the “Liquidation Amount”) plus all accrued
and unpaid dividends. All preferential amounts to be paid to the holders of
Series A Preferred Stock in connection with such liquidation, dissolution or
winding up shall be paid before the payment or setting apart for payment of any
amount for, or the distribution of any assets of the Corporation to the holders
of (i) any other class or series of capital stock and (ii) the Corporation's
Common Stock. If upon any such distribution the assets of the Corporation shall
be insufficient to pay the holders of the outstanding shares of Series A
Preferred Stock (or the holders of any class or series of capital stock ranking
on a parity with the Series A Preferred Stock as to distributions in the event
of a liquidation, dissolution or winding up of the Corporation) the full amounts
to which they shall be entitled, such holders shall share ratably in any
distribution of assets in accordance with the sums which would be payable on
such distribution if all sums payable thereon were paid in full.

 

(b)       Any distribution in connection with the liquidation, dissolution or
winding up of the Corporation, or any bankruptcy or insolvency proceeding, shall
be made in cash to the extent possible. Whenever any such distribution shall be
paid in property other than cash, the value of such distribution shall be the
Fair Market Value of such property.

 

 

 

 

Section 4.            Rank.         The Series A Preferred Stock shall, with
respect to dividend distributions and distributions upon liquidation, winding up
or dissolution of the Corporation, rank senior to all classes of Common Stock
and to each other class of Capital Stock of the Corporation or series of
Preferred Stock of the Corporation existing or hereafter created (collectively
referred to, together with all classes of Common Stock, as “Junior Securities”).

 

Section 5.             Dividends; Purchase Rights.

 

(a)           The Series A Preferred Stock shall pay a six percent (6%) annual
dividend on the outstanding Series A Preferred Stock, payable quarterly on March
31, June 30, September 30 and December 31 of each year (the “Dividend Date”),
with the first dividend payable for the period commencing on the Issuance Date.
Each quarterly dividend shall be payable in cash; provided, that if the
Corporation (i) so chooses, or (ii) is prohibited from paying dividends pursuant
to the terms of the instruments governing any senior debt obligations then owed,
the quarterly dividend shall be paid on such Dividend Date in additional shares
of Series A Preferred Stock (the "Dividend Shares"). In the event and to the
extent that dividends shall be paid in Dividend Shares, such Dividend Shares to
be determined on each quarterly Dividend Date (i) as to each outstanding share
of Series A Preferred Stock on the Dividend Date, by multiplying (A) $0.045, by
(B) the $3.26 per share Stated Value of each share of Preferred Stock, and (ii)
as to all outstanding shares of Series A Preferred Stock on the Dividend Date,
by multiplying (A) the aggregate number of such outstanding shares, by (B) the
product of multiplying (A) $0.045 by (B) the $3.26 per share Stated Value of
each share of Preferred Stock. For purposes of this Certificate, the term
dividend will mean either a cash dividend or Dividend Shares as appropriate.

 

(b)          In the event that the Corporation shall at any time declare and pay
a dividend or distribution of assets on any pari passu or junior shares of
capital stock of the Corporation (other than a dividend or distribution payable
solely in shares of Common Stock), it shall, at the same time, declare and pay
to each holder of Series A Preferred Stock a dividend equal to the dividend that
would have been payable to such holder as if the shares of Series A Preferred
Stock held by such holder had been converted pursuant to Section 6(a) hereof
into Common Stock on the date of determination of Holders of Common Stock
entitled to receive such dividend (provided, however, to the extent that the
right of a holder of Series A Preferred Stock to participate in any such
dividend would result in such holder exceeding such holder’s ownership
limitations as set forth in Section 6(d) herein, then such holder shall not be
entitled to participate in such dividend to such extent (or in the beneficial
ownership of any shares of Common Stock as a result of such dividend to such
extent) and the portion of such dividend shall be held in abeyance for the
benefit of such holder until such time, if ever, as its right thereto would not
result in such holder exceeding the maximum limitations of such holder’s
ownership, as set forth in Section 6(d) herein, at which time such holder shall
be granted such right to the same extent as if there had been no such
limitation). For purposes hereof the Series A Preferred Stock shall participate
in all dividends (ordinary and special) declared on shares of Common Stock.

 

(c)           The Corporation may not declare or pay any dividend or make any
distribution of assets on, or redeem, purchase or otherwise acquire, shares of
capital stock of the Corporation ranking pari passu or junior to the Series A
Preferred Stock as to the payment of dividends or the distribution of assets
upon liquidation, dissolution or winding up, unless all declared and unpaid
dividends on the Series A Preferred Stock have been or are contemporaneously
paid.

 

(d)           If at any time the Corporation grants, issues or sells any
options, convertible securities or rights to purchase stock, warrants,
securities or other property pro rata to all of the record holders of any class
of Common Stock (the “Purchase Rights”), then each Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which such Holder could have acquired if such Holder had held
the number of shares of Common Stock acquirable upon complete conversion of such
Holder’s shares of Series A Preferred Stock (without taking into account any
limitations or restrictions on the conversion of the Series A Preferred Stock)
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 (provided, however, to the extent
that such Holder’s right to participate in any such Purchase Right would result
in such Holder exceeding such Holder’s ownership limitations as set forth in
Section 6(d) herein, then such Holder shall not be entitled to participate in
such Purchase Right to such extent (or in the beneficial ownership of any shares
of Common Stock as a result of such Purchase Right to such extent) and the
portion of such Purchase Right shall be held in abeyance for the benefit of such
Holder until such time, if ever, as its right thereto would not result in such
Holder exceeding the maximum limitations of such Holder’s ownership, as set
forth in Section 6(d) herein, at which time such Holder shall be granted such
right to the same extent as if there had been no such limitation).

 

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Section 6.            Conversion.

 

(a)          Conversion Option. At any time and from time to time on or after
the Effective Date, the Series A Preferred Stock shall be convertible (in whole
or in part), at the option of the Holder (the “Conversion Option”), into such
number of fully paid and non-assessable shares of Common Stock (the “Conversion
Rate”) as is determined by dividing (x) the aggregate Stated Value of the shares
of Series A Preferred Stock that are being converted plus any accrued but unpaid
dividends thereon as of such date that the Holder elects to convert by (y) the
Conversion Price (as defined in Section 6(b) hereof) then in effect on the date
(the “Conversion Date”) on which the Holder faxes a notice of conversion (the
“Conversion Notice”), substantially in the form of Exhibit A attached hereto,
duly executed, to the Corporation (facsimile number: (____) _________, Attn.:
Robert Ladd (or current CEO, President or CFO), provided, however, that the
Conversion Price shall be subject to adjustment as described in Section 10
below. The Holder shall deliver the stock certificate representing the Series A
Preferred Stock to be converted to the Corporation at the at such time that the
Series A Preferred Stock is fully converted. With respect to partial conversions
of the Series A Preferred Stock, the Corporation shall keep written records of
the number of shares of Series A Preferred Stock converted as of each Conversion
Date. No Conversion Notice shall be required for Conversion upon a change of
control.

 

(b)           Conversion Price. The term “Conversion Price” shall mean $3.26,
subject to adjustment under Section 10 hereof for all circumstances and in all
cases set forth in such section since the Effective Date.

 

(c)           Mechanics of Conversion

 

(i)          Not later than three (3) Trading Days after any Conversion Date,
the Corporation or its designated transfer agent, as applicable, shall issue and
deliver to the Depository Trust Company (“DTC”) account on the Holder’s behalf
via the Deposit Withdrawal Agent Commission System (“DWAC”) as specified in the
Conversion Notice, registered in the name of the Holder or its designee, for the
number of shares of Common Stock to which the Holder shall be entitled. In the
alternative, not later than three (3) Trading Days after any Conversion Date,
the Corporation shall deliver to the Holder by express courier a certificate or
certificates which shall be free of restrictive legends and trading restrictions
representing the number of shares of Common Stock being acquired upon the
conversion of the Series A Preferred Stock (the “Delivery Date”).
Notwithstanding the foregoing to the contrary, the Corporation or its transfer
agent shall only be obligated to issue and deliver the shares to the DTC on the
Holder’s behalf via DWAC (or certificates free of restrictive legends) if such
conversion is in connection with a sale and the Holder has complied with the
applicable prospectus delivery requirements (as evidenced by documentation
furnished to and reasonably satisfactory to the Corporation) or such shares may
be sold pursuant to Rule 144 or an exemption from the registration requirements
of the Securities Act of 1933, as amended. In the event the Corporation shall
not electronically deliver to the Holders upon conversion of Series A Preferred
Stock shares of Common Stock through DTC pursuant to the immediately preceding
sentence, then the Corporation shall not later than three (3) Trading Days after
any Conversion Date issue and dispatch to such Holder by overnight courier to
the address as specified in the Notice of Conversion, a certificate, registered
in the Corporation’s share register in the name of such Holder or its designee,
for the number of shares of Common Stock to which such Holder is entitled
pursuant to such conversion. If in the case of any Conversion Notice such
certificate or certificates are not delivered to or as directed by the Holder by
the Delivery Date, the Holder shall be entitled by written notice to the
Corporation at any time on or before its receipt of such certificate or
certificates thereafter, to rescind such conversion, in which event the
Corporation shall immediately return the shares of Series A Preferred Stock
tendered for conversion (if applicable), and whereupon the Corporation and the
Holder shall each be restored to their respective positions immediately prior to
the delivery of such notice of revocation, except that any amounts described in
Sections 6(c)(ii) and 6(c)(iii) shall be payable through the date notice of
rescission is given to the Corporation.

 

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(ii)         The Corporation understands that a delay in the delivery of the
shares of Common Stock upon conversion of the Series A Preferred Stock beyond
the Delivery Date could result in economic loss to the Holder. If the
Corporation fails to deliver to the Holder such shares via DWAC (or, if
applicable, certificates) by the Delivery Date, the Corporation shall pay to the
Holder, in cash, an amount per Trading Day for each Trading Day until such
shares are delivered via DWAC or certificates are delivered (if applicable),
together with interest on such amount at a rate of 10% per annum, accruing until
such amount and any accrued interest thereon is paid in full, equal to the
greater of: (A) (i) 1% of the aggregate Stated Value of the Series A Preferred
Stock requested to be converted for the first five (5) Trading Days after the
Delivery Date and (ii) 2% of the aggregate Stated Value of the Series A
Preferred Stock requested to be converted for each Trading Day thereafter; and
(B) $1,000 per day (which amount shall be paid as liquidated damages and not as
a penalty). Nothing herein shall limit the Holder’s right to pursue actual
damages for the Corporation’s failure to deliver certificates representing
shares of Common Stock upon conversion within the period specified herein and
the Holder shall have the right to pursue all remedies available to it at law or
in equity (including, without limitation, a decree of specific performance
and/or injunctive relief). Notwithstanding anything to the contrary contained
herein, the Holder shall be entitled to withdraw a Conversion Notice, and upon
such withdrawal the Corporation shall only be obligated to pay the liquidated
damages accrued in accordance with this Section 6(c)(ii) through the date the
Conversion Notice is withdrawn.

 

(iii)         In addition to any other rights available to the Holder, if the
Corporation fails to cause its transfer agent to transmit via DWAC or transmit
to the Holder a certificate or certificates representing the shares of Common
Stock issuable upon conversion of the Series A Preferred Stock on or before the
Delivery Date, and if after such date the Holder is required by its broker to
purchase (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Holder of the shares of Common Stock
issuable upon conversion of the Series A Preferred Stock which the Holder
anticipated receiving upon such conversion (a “Buy-In”), then the Corporation
shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total
purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of shares of Common Stock issuable upon conversion of the Series A
Preferred Stock that the Corporation was required to deliver to the Holder in
connection with the conversion at issue times (B) the price at which the sell
order giving rise to such purchase obligation was executed, and (2) at the
option of the Holder, either reinstate the portion of the Series A Preferred
Stock and equivalent number of shares of Common Stock for which such conversion
was not honored or deliver to the Holder the number of shares of Common Stock
that would have been issued had the Corporation timely complied with its
conversion and delivery obligations hereunder. For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of shares of Common Stock with an
aggregate sale price giving rise to such purchase obligation of $10,000, under
clause (1) of the immediately preceding sentence the Corporation shall be
required to pay the Holder $1,000. The Holder shall provide the Corporation
written notice indicating the amounts payable to the Holder in respect of the
Buy-In, together with applicable confirmations and other evidence reasonably
requested by the Corporation. Nothing herein shall limit a Holder’s right to
pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Corporation’s failure to timely deliver
certificates representing shares of Common Stock upon conversion of the Series A
Preferred Stock as required pursuant to the terms hereof.

 

(d)          Ownership Cap and Certain Conversion Restrictions.

 

(i)          Notwithstanding anything to the contrary set forth in this
Certificate of Designation, at no time may all or a portion of the Series A
Preferred Stock be converted if the number of shares of Common Stock to be
issued pursuant to such conversion would exceed, when aggregated with all other
shares of Common Stock owned by the Holder at such time, the number of shares of
Common Stock which would result in the Holder beneficially owning (as determined
in accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) and the rules thereunder) more than 4.99% of all of
the Common Stock outstanding at such time (the “4.99% Beneficial Ownership
Limitation”); provided, however, that upon the Holder providing the Corporation
with sixty-one (61) days’ advance notice (the “4.99% Waiver Notice”) that the
Holder would like to waive this Section 6(d)(i) with regard to any or all shares
of Common Stock issuable upon conversion of the Series A Preferred Stock, this
Section 6(d)(i) will be of no force or effect with regard to all or a portion of
the Series A Preferred Stock referenced in the 4.99% Waiver Notice.

 

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(ii)         Notwithstanding anything to the contrary set forth in this
Certificate of Designation, at no time may all or a portion of the Series A
Preferred Stock be converted if the number of shares of Common Stock to be
issued pursuant to such conversion, when aggregated with all other shares of
Common Stock owned by the Holder at such time, would result in the Holder
beneficially owning (as determined in accordance with Section 13(d) of the
Exchange Act and the rules thereunder) in excess of 9.99% of the then issued and
outstanding shares of Common Stock outstanding at such time (the “9.99%
Beneficial Ownership Limitation” and the lower of the 9.99% Beneficial Ownership
Limitation and the 4.99% Beneficial Ownership Limitation then in effect, the
“Maximum Percentage”)).

 

(iii)        By written notice to the Corporation, a holder of Series A
Preferred Stock may from time to time decrease the Maximum Percentage to any
other percentage specified in such notice.

 

(iv)        For purposes hereof, in determining the number of outstanding shares
of Common Stock, the Holder may rely on the number of outstanding shares of
Common Stock as reflected in (1) the Corporation’s most recent Form 10-K, Form
10-Q, Current Report on Form 8-K or other public filing with the Securities and
Exchange Commission, as the case may be, (2) a more recent public announcement
by the Corporation or (3) any other notice by the Corporation setting forth the
number of shares of Common Stock outstanding. For any reason at any time, upon
the written or oral request of a holder of Series A Preferred Stock, the
Corporation shall within three (3) business days confirm orally and in writing
to such holder the number of shares of Common Stock then outstanding. In any
case, the number of outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the Corporation,
including the Series A Preferred Stock, by the Holder and its affiliates since
the date as of which such number of outstanding shares of Common Stock was
reported, which in any event are convertible or exercisable, as the case may be,
into shares of the Corporation’s Common Stock within 60 days’ of such
calculation and which are not subject to a limitation on conversion or exercise
analogous to the limitation contained herein. The provisions of this paragraph
shall be construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 6(d) to correct this paragraph (or any
portion hereof) which may be defective or inconsistent with the intended
beneficial ownership limitation herein contained or to make changes or
supplements necessary or desirable to properly give effect to such limitation.

 

(e)          Inability to Fully Convert.

 

(i)          Holder’s Option if the Corporation Cannot Fully Convert. In
addition to the Holder’s other remedies hereunder, if, upon the Corporation’s
receipt of a Conversion Notice, the Corporation cannot issue shares of Common
Stock because the Corporation does not have a sufficient number of shares of
Common Stock authorized and available or cannot or does not issue shares of
Common Stock for any other reason within the Company's control, then the
Corporation shall issue as many shares of Common Stock as it is able to issue in
accordance with the Holder’s Conversion Notice and, with respect to the
unconverted portion of the Series A Preferred Stock, the Holder, solely at
Holder’s option, can elect to:

 

(A)         If the Corporation’s inability to honor any conversion fully is
pursuant to Section 6(e)(i) above, require the Corporation to redeem such
Holder’s then outstanding shares of Series A Preferred Stock (the “Mandatory
Redemption”) at a price per share equal to the greater of (1) one hundred and
ten percent (110%) of the aggregate Stated Value of such Holder’s then
outstanding shares of Series A Preferred Stock plus all accrued and unpaid
dividends thereon and (2) the product of (I) 100% of such Holder’s then
outstanding shares of Series A Preferred Stock plus all accrued and unpaid
dividends thereon and (II) the quotient determined by dividing (A) the greatest
Closing Bid Price of the shares of Common Stock during the period beginning on
the date immediately preceding the Corporation’s failure to honor any conversion
fully pursuant to Section 6(e)(i) and ending on the date such Holder requests a
Mandatory Redemption, by (B) the lowest Conversion Price in effect during such
period (the “Mandatory Redemption Price”);

 

(B)         void its Conversion Notice and retain or have returned, as the case
may be, the shares of Series A Preferred Stock that was to be converted pursuant
to the Conversion Notice (provided that the Holder’s voiding its Conversion
Notice shall not affect the Corporation’s obligations to make any payments which
have accrued prior to the date of such notice);

 

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(C)         exercise its Buy-In rights pursuant to and in accordance with the
terms and provisions of Section 6(c)(iii) above.

 

In the event that the Holder shall elect to convert any portion of the Series A
Preferred Stock as provided herein, the Corporation cannot refuse conversion
based on any claim that the Holder or anyone associated or affiliated with the
Holder has been engaged in any violation of law, violation of an agreement to
which the Holder is a party or for any reason whatsoever, unless, an injunction
from a court, on notice, restraining and or adjoining conversion of all or of
the Series A Preferred Stock shall have been issued and the Corporation posts a
surety bond for the benefit of the Holder in an amount equal to 130% of the
aggregate Stated Value of the Series A Preferred Stock the Holder has elected to
convert, which bond shall remain in effect until the completion of
arbitration/litigation of the dispute and the proceeds of which shall be payable
to such Holder in the event it obtains judgment.

 

(ii)         Mechanics of Fulfilling Holder’s Election. The Corporation shall
immediately send via facsimile to the Holder, upon receipt of a facsimile copy
of a Conversion Notice from the Holder which cannot be fully satisfied as
described in Section 6(e) above, a notice of the Corporation’s inability to
fully satisfy the Conversion Notice (the “Inability to Fully Convert Notice”).
Such Inability to Fully Convert Notice shall indicate (x) the reason why the
Corporation is unable to fully satisfy such holder’s Conversion Notice, (y) the
aggregate Stated Value of Series A Preferred Stock the for which conversion has
been requested and which cannot be converted and (z) the applicable Mandatory
Redemption Price. The Holder shall notify the Corporation of its election
pursuant to Section 6(e) above by delivering written notice via facsimile to the
Corporation (“Notice in Response to Inability to Convert”).

 

(iii)        Payment of the Mandatory Redemption Price. If the Holder shall
elect to have its Series A Preferred Stock redeemed pursuant to Section 6 (e)(i)
above, the Corporation shall pay the Mandatory Redemption Price to the Holder
within ten (10) days of the Corporation’s receipt of the Holder’s Notice in
Response to Inability to Convert, provided, that, prior to the Corporation’s
receipt of the Holder’s Notice in Response to Inability to Convert the
Corporation has not delivered a notice to the Holder stating, to the
satisfaction of the Holder, that the event or condition resulting in the
Mandatory Redemption has been cured and all Conversion Shares issuable to the
Holder can and actually are delivered to the Holder in accordance with the terms
set forth herein. If the Corporation shall fail to pay the applicable Mandatory
Redemption Price to the Holder on the date that is five (5) Business Days
following the Corporation’s receipt of the Holder’s Notice in Response to
Inability to Convert (other than pursuant to a dispute as to the determination
of the arithmetic calculation of the Mandatory Redemption Price), in addition to
any remedy the Holder may have hereunder, such unpaid amount shall bear interest
at the rate of two percent (2%) per month (prorated for partial months) until
paid in full (or, if less, the highest rate permitted by law). Until the full
Mandatory Redemption Price is paid in full to the Holder, the Holder may (i)
void the Mandatory Redemption with respect to that portion of the Series A
Preferred Stock for which the full Mandatory Redemption Price has not been paid,
(ii) receive back such shares of Series A Preferred Stock, and (iii) require
that the Conversion Price of such returned shares of Series A Preferred Stock be
adjusted to the lesser of (A) the Conversion Price as in effect on the date on
which the Holder voided the Mandatory Redemption and (B) the lowest Closing Bid
Price during the period beginning on the Conversion Date and ending on the date
the Holder voided the Mandatory Redemption.

 

Section 7.            Other Provisions.

 

(a)          Reservation of Common Stock. The Corporation shall at all times
reserve from its authorized Common Stock a sufficient number of shares to
provide for conversion of all Series A Preferred Stock from time to time
outstanding.

 

(b)          Record Holders. The Corporation and its transfer agent, if any, for
the Series A Preferred Stock may deem and treat the record holder of any shares
of Series A Preferred Stock as reflected on the books and records of the
Corporation as the sole true and lawful owner thereof for all purposes, and
neither the Corporation nor any such transfer agent shall be affected by any
notice to the contrary.

 

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Section 8.            Restriction and Limitations. Except as expressly provided
herein or as required by law so long as any shares of Series A Preferred Stock
remain outstanding, the Corporation shall not, without the vote or written
consent of the holders of at least sixty percent (60%) of the then outstanding
shares of the Series A Preferred Stock, take any action which would adversely
and materially affect any of the preferences, limitations or relative rights of
the Series A Preferred Stock.

 

Section 9.            Voting Rights.

 

(a)          Generally. The Holders shall have the right to receive notice of
any meeting of holders of Common Stock or Series A Preferred Stock and to vote
upon any matter submitted to a vote of the holders of Common Stock or Series A
Preferred Stock. Except as otherwise expressly set forth in the Certificate of
Incorporation (including this Certificate of Designation), the Holders shall
vote on each matter submitted to them with the holders of Common Stock and all
other classes and series of Capital Stock entitled to vote on such matter, taken
together as a single class, if any.

 

(b)          Number of Votes. In any case in which the holders of the Series A
Preferred Stock shall be entitled to vote pursuant to this Certificate of
Designation or pursuant to the DGCL or other applicable law, each Holder
entitled to vote with respect to such matter shall be entitled to vote, with
respect to each share of such Series A Preferred Stock, the number of votes that
equals the number of shares of Common Stock into which such share of Series A
Preferred Stock is then convertible.

 

Section 10.          Certain Adjustments.

 

(a)          So long as any Series A Preferred Stock shall be outstanding, from
and after the Effective Date, the Conversion Price shall be subject to
adjustment from time to time as follows (but shall not be increased, other than
pursuant to Section 10(a)(i) hereof):

 

(i)           Adjustments for Stock Splits and Combinations. If the Corporation
shall at any time or from time to time after the Effective Date, effect a stock
split of the outstanding Common Stock, the applicable Conversion Price in effect
immediately prior to the stock split shall be proportionately decreased. If the
Corporation shall at any time or from time to time after the Effective Date,
combine the outstanding shares of Common Stock, the applicable Conversion Price
in effect immediately prior to the combination shall be proportionately
increased. Any adjustments under this Section 10(a)(i) shall be effective at the
close of business on the date the stock split or combination occurs.

 

(ii)          Adjustments for Certain Dividends and Distributions. If the
Corporation shall at any time or from time to time after the Effective Date,
make or issue or set a record date for the determination of holders of Common
Stock entitled to receive a dividend or other distribution payable in shares of
Common Stock, then, and in each event, the applicable Conversion Price in effect
immediately prior to such event shall be decreased as of the time of such
issuance or, in the event such record date shall have been fixed, as of the
close of business on such record date, by multiplying, the applicable Conversion
Price then in effect by a fraction:

 

(1)          the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date; and

 

(2)          the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution.

 

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(iii)         Adjustment for Other Dividends and Distributions. If the
Corporation shall at any time or from time to time after the Effective Date,
make or issue or set a record date for the determination of holders of Common
Stock entitled to receive a dividend or other distribution payable in other than
shares of Common Stock, then, and in each event, an appropriate revision to the
applicable Conversion Price shall be made and provision shall be made (by
adjustments of the Conversion Price or otherwise) so that the Holders of the
Series A Preferred Stock shall receive upon conversions thereof, in addition to
the number of shares of Common Stock receivable thereon, the number of
securities of the Corporation which they would have received had the Series A
Preferred Stock been converted into Common Stock on the date of such event and
had thereafter, during the period from the date of such event to and including
the Conversion Date, retained such securities (together with any distributions
payable thereon during such period), giving application to all adjustments
called for during such period under this Section 10(a)(iii) with respect to the
rights of the Holder; provided, however, that if such record date shall have
been fixed and such dividend is not fully paid or if such distribution is not
fully made on the date fixed therefor, the Conversion Price shall be adjusted
pursuant to this Section 10(a)(iii) as of the time of actual payment of such
dividends or distributions.

 

(iv)         Adjustments for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon conversion of the Series A Preferred Stock at any
time or from time to time after the Effective Date shall be changed to the same
or different number of shares of any class or classes of stock, whether by
reclassification, exchange, substitution or otherwise (other than by way of a
stock split or combination of shares or stock dividends provided for in Sections
10(a)(i), 10(a)(ii) and 10(a)(iii), or a Fundamental Transaction provided for in
Section 10(a)(v)), then, and in each event, an appropriate revision to the
Conversion Price shall be made and provisions shall be made (by adjustments of
the Conversion Price or otherwise) so that the Holder shall have the right
thereafter to convert the Series A Preferred Stock into the kind and amount of
shares of stock and other securities receivable upon reclassification, exchange,
substitution or other change, by holders of the number of shares of Common Stock
into which such Series A Preferred Stock might have been converted immediately
prior to such reclassification, exchange, substitution or other change, all
subject to further adjustment as provided herein.

 

(v)          Adjustments for Reorganization, Merger, Consolidation or Sales of
Assets. If at any time or from time to time after the Effective Date there shall
be a Fundamental Transaction, then as a part of such Fundamental Transaction,
(A) if the surviving entity in any such Fundamental Transaction is a public
company that is registered pursuant to the Exchange Act, its common stock is
listed or quoted on a national exchange or the OTC Bulletin Board and the
surviving entity’s publicly traded common stock is issued to the holders of
Common Stock of the Corporation pursuant to such Fundamental Transaction, an
appropriate revision to the Conversion Price shall be made and provision shall
be made (by adjustments of the Conversion Price or otherwise) so that the Holder
shall have the right thereafter to convert the Series A Preferred Stock into the
kind and amount of shares of stock and other securities or property of the
Corporation or any successor corporation resulting from such Fundamental
Transaction, and (B) if the surviving entity in any such Fundamental Transaction
is not a public company that is registered pursuant to the Exchange Act, or its
common stock is not listed or quoted on a national exchange or the OTC Bulletin
Board or the publicly traded common stock of the surviving entity is not issued
to holders of Common Stock of the Corporation pursuant to such Fundamental
Transaction, each Holder shall have the right to receive (a “Fundamental
Transaction Redemption”) the greater of (1) one hundred and ten percent (110%)
of the aggregate Stated Value of such Holder’s then outstanding shares of Series
A Preferred Stock plus all accrued and unpaid dividends thereon and (2) the
product of (I) 100% of such Holder’s then outstanding shares of Series A
Preferred Stock plus all accrued and unpaid dividends thereon and (II) the
quotient determined by dividing (A) the greatest Closing Bid Price of the shares
of Common Stock during the period beginning on the date immediately preceding
the earlier to occur of (I) the consummation of such Fundamental Transaction and
(II) the public announcement of such Fundamental Transaction and ending on the
date the Holder requests in writing a Fundamental Transaction Redemption, by (B)
the lowest Conversion Price in effect during such period. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 10 (a)(v) with respect to the rights of the Holder after the
Fundamental Transaction to the end that the provisions of this Section 10 (a)(v)
(including any adjustment in the applicable Conversion Price then in effect and
the number of shares of stock or other securities deliverable upon conversion of
the Series A Preferred Stock) shall be applied after that event in as nearly an
equivalent manner as may be practicable.

 

(vi)        Consideration for Stock. In case any shares of Common Stock or any
Common Stock Equivalents shall be issued or sold, at any time, from time to time
after the Effective Date:

 

(A)         in connection with any merger or consolidation in which the
Corporation is the surviving corporation (other than any consolidation or merger
in which the previously outstanding shares of Common Stock of the Corporation
shall be changed to or exchanged for the stock or other securities of another
corporation), the amount of consideration therefor shall be, deemed to be the
fair value, as determined reasonably and in good faith by the Board of Directors
of the Corporation, of such portion of the assets and business of the
non-surviving corporation as such Board of Directors of the Corporation may
determine to be attributable to such shares of Common Stock, rights or warrants
or options, as the case may be; or

 

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(B)         in the event of any consolidation or merger of the Corporation in
which the Corporation is not the surviving corporation or in which the
previously outstanding shares of Common Stock of the Corporation shall be
changed into or exchanged for the stock or other securities of another
corporation, or in the event of any sale of all or substantially all of the
assets of the Corporation for stock or other securities of any corporation, the
Corporation shall be deemed to have issued a number of shares of its Common
Stock for stock or securities or other property of the other corporation
computed on the basis of the actual exchange ratio on which the transaction was
predicated, and for a consideration equal to the Fair Market Value on the date
of such transaction of all such stock or securities or other property of the
other corporation. If any such calculation results in adjustment of the
applicable Conversion Price, or the number of shares of Common Stock issuable
upon conversion of the Series A Preferred Stock, the determination of the
applicable Conversion Price or the number of shares of Common Stock issuable
upon conversion of the Series A Preferred Stock immediately prior to such
merger, consolidation or sale, shall be made after giving effect to such
adjustment of the number of shares of Common Stock issuable upon conversion of
the Series A Preferred Stock. In the event Common Stock is issued with other
shares or securities or other assets of the Corporation for consideration which
covers both, the consideration computed as provided in this Section 10 (a)(vi)
shall be allocated among such securities and assets as determined in good faith
by the Board of Directors of the Corporation; or

 

(C)         for services, other than as permitted pursuant to Section 10(c)
hereof, the amount of consideration therefor shall be deemed to be the par value
of the Common Stock.

 

(b)          Record Date. In case the Corporation shall take record of the
holders of its Common Stock for the purpose of entitling them to subscribe for
or purchase Common Stock or Common Stock Equivalents, then the date of the issue
or sale of the shares of Common Stock shall be deemed to be such record date.

 

(c)          No Impairment. The Corporation shall not, by amendment of its
Certificate of Incorporation, Bylaws or other constitutional documents, 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 to be observed
or performed hereunder by the Corporation, but will at all times in good faith,
assist in the carrying out of all the provisions of this Section 10 and in the
taking of all such action as may be necessary or appropriate in order to protect
the Conversion Rights of the Holder against impairment. In the event a Holder
shall elect to convert any portion of the Series A Preferred Stock as provided
herein, the Corporation cannot refuse conversion based on any claim that such
Holder or anyone associated or affiliated with such Holder has been engaged in
any violation of law, violation of an agreement to which such Holder is a party
or for any reason whatsoever, unless, an injunction from a court, or notice,
restraining and or adjoining conversion of all or of the Series A Preferred
Stock shall have issued and the Corporation posts a surety bond for the benefit
of such Holder in an amount equal to one hundred thirty percent (130%) of the
aggregate Stated Value of the Series A Preferred Stock that the Holder has
elected to convert, which bond shall remain in effect until the completion of
arbitration/litigation of the dispute and the proceeds of which shall be payable
to such Holder (as liquidated damages) in the event it obtains judgment.

 

(d)          Certificates as to Adjustments. Upon occurrence of each adjustment
or readjustment of the Conversion Price or number of shares of Common Stock
issuable upon conversion of the Series A Preferred Stock pursuant to this
Section 10, the Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and furnish to
the Holder a certificate setting forth such adjustment and readjustment, showing
in detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon written request of the Holder, at any time, furnish or
cause to be furnished to the Holder a like certificate setting forth such
adjustments and readjustments, the applicable Conversion Price in effect at the
time, and the number of shares of Common Stock and the amount, if any, of other
securities or property which at the time would be received upon the conversion
of the Series A Preferred Stock. Notwithstanding the foregoing, the Corporation
shall not be obligated to deliver a certificate unless such certificate would
reflect an increase or decrease of at least one percent (1%) of such adjusted
amount.

 

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(e)          Issue Taxes. The Corporation shall pay any and all issue and other
taxes, excluding federal, state or local income taxes, that may be payable in
respect of any issue or delivery of shares of Common Stock on conversion of the
Series A Preferred Stock pursuant thereto; provided, however, that the
Corporation shall not be obligated to pay any transfer taxes resulting from any
transfer requested by the Holder in connection with any such conversion.

 

(f)          Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of the Series A Preferred Stock. All fractional shares
shall be rounded up to the nearest whole share.

 

(g)          Reservation of Common Stock. The Corporation shall at all times
when the Series A Preferred Stock shall be outstanding, reserve and keep
available out of its authorized but unissued Common Stock, such number of shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of the Series A Preferred Stock and all dividends accrued thereon;
provided that the number of shares of Common Stock so reserved shall at no time
be less than one hundred twenty percent (120%) of the number of shares of Common
Stock for which the Series A Preferred Stock and all dividends accrued thereon
are at any time convertible. The Corporation shall, from time to time in
accordance with Nevada law, increase the authorized number of shares of Common
Stock if at any time the unissued number of authorized shares shall not be
sufficient to satisfy the Corporation’s obligations under this Section 10(g).

 

(h)          Regulatory Compliance. If any shares of Common Stock to be reserved
for the purpose of conversion of the Series A Preferred Stock or any dividends
accrued thereon require registration or listing with or approval of any
governmental authority, stock exchange or other regulatory body under any
federal or state law or regulation or otherwise before such shares may be
validly issued or delivered upon conversion, the Corporation shall, at its sole
cost and expense, in good faith and as expeditiously as possible, endeavor to
secure such registration, listing or approval, as the case may be.

 

Section 11.          If the Corporations fails to pay to any Holder any
Liquidation Amount, Dividends, interest or other amounts, whether in cash or
otherwise, when and as due under this Certificate of Designation (including,
without limitation, the Corporation's failure to pay any redemption amounts
hereunder), such Holder may require the Corporation to redeem such Holder’s then
outstanding Series A Preferred Stock (the “Payment Failure Redemption”) at a
price per share equal to the greater of (1) one hundred and ten percent (110%)
of the aggregate Stated Value of such Holder’s then outstanding shares of Series
A Preferred Stock plus all accrued and unpaid dividends thereon and (2) the
product of (I) 100% of such Holder’s then outstanding shares of Series A
Preferred Stock plus all accrued and unpaid dividends thereon and (II) the
quotient determined by dividing (A) the greatest Closing Bid Price of the shares
of Common Stock during the period beginning on the date immediately preceding
the Corporation’s failure to make any such payment and ending on the date such
Holder requests a Payment Failure Redemption, by (B) the lowest Conversion Price
in effect during such period (the “Payment Failure Redemption Price”). If the
Holder shall elect to have its Series A Preferred Stock redeemed pursuant to
this Section 11, the Corporation shall pay the Payment Failure Redemption Price
to the Holder within ten (10) days of the Corporation’s receipt of the Holder’s
written request for a Payment Failure Redemption. If the Corporation shall fail
to pay the applicable Payment Failure Redemption Price to the Holder on the date
that is five (5) Business Days following the Corporation’s receipt of the
Holder’s request for a Payment Failure Redemption (other than pursuant to a
dispute as to the determination of the arithmetic calculation of the Payment
Failure Redemption Price), in addition to any remedy the Holder may have
hereunder, such unpaid amount shall bear interest at the rate of two percent
(2%) per month (prorated for partial months) until paid in full (or, if less,
the highest rate permitted by law). Until the full Payment Failure Redemption
Price is paid in full to the Holder, the Holder may (i) void the Payment Failure
Redemption with respect to that portion of the Series A Preferred Stock for
which the full Payment Failure Redemption Price has not been paid, (ii) receive
back such shares of Series A Preferred Stock, and (iii) require that the
Conversion Price of such returned shares of Series A Preferred Stock be adjusted
to the lesser of (A) the Conversion Price as in effect on the date on which the
Holder voided the Payment Failure Redemption and (B) the lowest Closing Bid
Price during the period beginning on the date such payment was due and ending on
the date the Holder voided the Payment Failure Redemption.

 

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Section 12.         Definitions. As used in this Certificate of Designation, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:

 

“Affiliate” as applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, “control” (including, with
correlative meanings, the terms “controlling”, “controlled by” and “under common
control with”), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise. For purposes of this definition, a Person shall be
deemed to be “controlled by” a Person if such latter Person possesses, directly
or indirectly, power to vote 10% or more of the securities having ordinary
voting power for the election of directors of such former Person.

 

“Board of Directors” shall have the meaning provided in the first paragraph of
this Certificate of Designation.

 

“Business Day” means any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of New York or is a day on which
banking institutions located in such state are authorized or required by law or
other governmental action to close.

 

“Capital Stock” means any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interest in
(however designated) capital stock.

 

“Certificate of Designation” means this Certificate of Designation creating the
Series A Preferred Stock.

 

“Closing Bid Price” shall mean, on any particular date (i) the last trading
price per share of the Common Stock on such date on the OTC Bulletin Board or
another registered national stock exchange on which the Common Stock is then
listed, or if there is no such price on such date, then the last trading price
on such exchange or quotation system on the date nearest preceding such date, or
(ii) if the Common Stock is not then listed or traded on a registered national
securities exchange or quoted on the OTC Bulletin Board, then the average of the
“Pink Sheet” quotes for the relevant conversion period, as determined in good
faith by the Holder, or (iii) if the Common Stock is not then publicly traded
the Fair Market Value of a share of Common Stock as determined by the Holder and
reasonably acceptable to the Corporation.

 

“Commission” means the Securities and Exchange Commission, as from time to time
constituted, created under the Exchange Act or, if at any time after the
Effective Date such Commission is not existing and performing the duties now
assigned to it under the Exchange Act, the body performing such duties at such
time.

 

“Common Stock” means the Corporation’s Common Stock, par value $0.001 per share.

 

“Conversion Price” shall have the meaning set forth in Section 6(b) above.

 

“Corporation” shall have the meaning provided in the first paragraph of this
Certificate of Designation.

 

“Effective Date” shall have the meaning provided in the first paragraph of this
Certificate of Designation.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder.

 

“Fair Market Value” means, with respect to any asset or property, the price
which would be negotiated in an arm’s-length transaction, for cash, between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy. Fair Market Value shall be mutually
determined by (i) the legally adopted vote or consent of the Board of Directors
and certified in a board resolution and (ii) the Required Holders (as defined in
the Subscription Agreement).

 

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“Fundamental Transaction” means that (A) the Corporation shall, directly or
indirectly, in one or more related transactions, (i) consolidate or merge with
or into (whether or not the Corporation is the surviving corporation) another
Person or Persons, or (ii) sell, assign, transfer, convey or otherwise dispose
of all or substantially all of the properties or assets of the Corporation or
any of its Subsidiaries to another Person, or (iii) allow another Person 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 the Corporation (not
including any shares of Voting Stock of the Corporation held by the Person or
Persons making or party to, or associated or affiliated with the Persons making
or party to, such purchase, tender or exchange offer), or (iv) consummate a
stock purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme of
arrangement) with another Person whereby such other Person acquires more than
50% of the outstanding shares of Voting Stock of the Corporation (not including
any shares of Voting Stock of the Corporation held by the other Person or other
Persons making or party to, or associated or affiliated with the other Persons
making or party to, such stock purchase agreement or other business combination,
or any Person who is a holder of the Corporation’s securities on the date hereof
or who is a Holder), or (v) reorganize, recapitalize or reclassify its Common
Stock or (B) any “person” or “group” (as these terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act ), directly or
indirectly, of either (x) 50% of the aggregate ordinary voting power represented
by issued and outstanding shares of Common Stock (other than any Person who is a
holder of the Corporation’s securities on the date hereof or who is a Holder) or
(y) 50% or more of the shares of Voting Stock of the Corporation not held by
such Person or Persons as of the date hereof (other than any Person who is a
holder of the Corporation’s securities on the date hereof or who is a Holder).

 

“Holder” means a holder of shares of Series A Preferred Stock as reflected in
the register maintained by the Corporation or the transfer agent for the Series
A Preferred Stock.

 

“Issuance Date” means the Closing Date under various Subscription Agreements
pursuant to which the Corporation shall issue, and certain initial Holders shall
purchase, shares of Series A Preferred Stock.

 

“Junior Securities” shall have the meaning provided in Section 4

 

“Liquidation Amount” shall have the meaning provided in Section 3(a).

 

“Person” means an individual, corporation, partnership, limited liability
company, trust or trustee thereof, estate or executor thereof, unincorporated
organization or joint venture, court or governmental unit or any agency or
subdivision thereof, or any other legally recognizable entity.

 

“Preferred Stock” means, with respect to any Person, Capital Stock of any class
or classes (however designated) of such Person which is preferred as to the
payment of dividends or distributions, or as to the distribution of assets upon
any voluntary or involuntary liquidation or dissolution of such Person, over
Capital Stock of any other class of such Person.

 

“Series A Preferred Stock” shall have the meaning provided in Section 1.

 

“Subsidiary” means any entity in which the Corporation, directly or indirectly,
owns any of the capital stock or holds an equity or similar interest.

 

“Trading Day” means (a) a day on which the Common Stock is traded on the OTC
Bulletin Board or a registered national securities exchange, or (b) if the
Common Stock is not traded on the OTC Bulletin Board or a registered national
securities exchange, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding its functions of
reporting prices); provided, however, that in the event that the Common Stock is
not listed or quoted as set forth in (a) or (b) hereof, then Trading Day shall
mean any day except Saturday, Sunday and any day which shall be a legal holiday
or a day on which banking institutions in the State of New York are authorized
or required by law or other government action to close.

 

12

 

 

“Trading Market” means the Over the Counter Bulletin Board, the OTC QB, the OTC
QX, the New York Stock Exchange, the Nasdaq Capital Markets, the Nasdaq Global
Markets, the Nasdaq Global Select Market or the NYSE MKT.

 

“Voting Stock” of a Person means capital stock of such Person of the class or
classes pursuant to which the holders thereof have the general voting power to
elect, or the general power to appoint, at least a majority of the board of
directors, managers or trustees of such Person (irrespective of whether or not
at the time capital stock of any other class or classes shall have or might have
voting power by reason of the happening of any contingency).

 

“VWAP” means, for any date, (i) the daily volume weighted average price of the
Common Stock for such date on the OTC Bulletin Board or other Trading Market as
reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m.
Eastern Time to 4:02 p.m. Eastern Time); (ii) if the Common Stock is not then
listed or quoted on a Trading Market for which the daily volume weighted average
price of the Common Stock is available on Bloomberg L.P., or if prices for the
Common Stock are then reported in the “Pink Sheets” published by the Pink
Sheets, LLC (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 (iii) 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 Holder and reasonably acceptable to the Corporation.

 

13

 

 

IN WITNESS WHEREOF, the undersigned has executed this Certificate this ___st day
of October 2012.

 

  MGT Capital Investments, Inc.         By: Robert Ladd   Name: Robert Ladd  
Title: President

 

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EXHIBIT A

 

NOTICE OF CONVERSION

 

SERIES A CONVERTIBLE PREFERRED STOCK

 

The undersigned hereby elects to convert the number of shares of Series A
Convertible Preferred Stock indicated below into shares of common stock, $.001
par value per share (the “Common Stock”), of MGT Capital Investments, Inc., a
Delaware corporation (the “Corporation”), according to the conditions hereof, as
of the date written below. If shares of Common Stock are to be issued in the
name of a Person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto. No fee will be charged to the
Holders for any conversion, except for any such transfer taxes.

 

Conversion calculations:

 

Date to Effect Conversion:    

 

Number of shares of Series A Preferred Stock owned prior to Conversion:      

 

Number of shares of Series A Preferred Stock to be Converted:    

 

Stated Value of shares of  Series A Preferred Stock to be Converted:    

 

Number of shares of Common Stock to be issued upon Conversion:    

 

Number of shares of Series A Preferred Stock subsequent to Conversion:    

 

HOLDER

 

        Name:     Title:  

 

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