SETTLEMENT AND TERMINATION AGREEMENT TO MANAGEMENT AGREEMENT

 

This SETTLEMENT AND TERMINATION AGREEMENT TO MANAGEMENT AGREEMENT (this
“Agreement”) dated August 31, 2019 (the “Effective Date”), is by and between MGT
Capital Investments, Inc. (the “Provider”), and Deep South Mining LLC (the
“User”).

 

WHEREAS, the Provider and the User are parties to that certain Management
Agreement, dated October 17, 2017, as modified by that certain Letter Agreement,
dated September 23, 2018 and as further modified by that certain Second Letter
Agreement dated May 2, 2019 (collectively, the “Management Agreement”);

 

WHEREAS, both parties desire to terminate the Management Agreement in exchange
for the consideration provided herein;

 

WHEREAS, Section 7(b)(1) of the Management Agreement provides for termination or
rescission at any time by mutual written agreement of User and Provider;

 

WHEREAS, both parties agree to be discharged from all rights and obligations
under the Management Agreement, including but not limited to Services, Term, and
Ownership; and,

 

WHEREAS, for the consideration exchanged hereunder, both parties agree to hold
harmless the other party for any actions or non-actions arising from the
Management Agreement;

 

NOW, THEREFORE, in consideration of the foregoing and the mutual promises of the
parties, and other good and valuable consideration, the undersigned agree as
follows:

 

1. The Management Agreement shall be terminated on the Effective Date.

 

2. Provider will receive ownership of User’s 1,000 Bitmain Antminer S9 pursuant
to a Bill of Sale, substantially in the form attached as Exhibit A.

 

3. The Provider shall pay User the following amounts on a monthly basis:

 

a.Beginning on the day following the Effective Date and continuing until the
earlier of December 31, 2019 or the date on which mining with the Bitmain
Antminer S9 results in a negative margin of Products minus the Electricity
Costs, the amount equaling Formula A as defined in Exhibit B.

 

b.Beginning immediately thereafter, and continuing for a period of twelve
months, the amount equaling Formula B as defined in Exhibit B; provided,
however, if the Provider has not commenced mining with the Bitmain Antimer S17
as of the beginning date of this Section 2(b), then either party may
unilaterally terminate this Agreement for a onetime payment of $150,000 to User
by Provider. If neither party elects to terminate, the amounts due under this
Section 2(b) will begin on such date that the Provider commences mining with the
Bitmain Antminer S17 and continuing for a period of twelve months.

 

c.Thereafter, zero.

 

4. Capitalized terms used but not defined herein shall have the meaning ascribed
to such terms in the Management Agreement.

 

5. This Agreement may be executed in counterparts (including by facsimile or pdf
signature pages or other means of electronic transmission) each of which shall
be deemed an original but all of which together will constitute one and the same
instrument.

 

[Signature Page Follows]

 

   

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Letter Agreement to be
duly executed as of the date first above written.

 

DEEP SOUTH MINING LLC   MGT CAPITAL INVESTMENTS, INC.           By: /s/ Adam
Finesilver     By: /s/ Robert B. Ladd Name: Adam Finesilver   Name:  Robert Ladd
Title: Managing Partner   Title: Chief Executive Officer

 

[Signature Page to Termination Agreement]

 

   

 

 

EXHIBIT A

 

Form of Bill of Sale

 

   

 

 

BILL OF SALE

 

KNOW ALL MEN BY THESE PRESENTS, that Deep South Mining LLC, a Delaware limited
liability company (the “Seller”), agrees to sell to MGT Capital Investments,
Inc., a Delaware corporation (the “Buyer”), certain assets (the “Assets”) as
described below for an aggregate amount of 5,000,000 (Five Million) restricted
shares of Buyer’s Common Stock (the “Purchase Price”) and other good and
valuable consideration.

 

Effective as of the last date stated below (the “Execution Date”), the Seller
hereby sells, transfers and conveys to the Buyer the title to the Assets as they
are and as where they are for a payment of the Purchase Price.

 

The Assets consist of 1,000 (One Thousand) Antminer S9 Bitcoin miners
manufactured by Bitmain Technologies, inclusive of associated power supplies and
cables, located at a hosted facility in Colorado Springs, CO. Simultaneously
with the execution of this Bill of Sale, the Buyer shall instruct its transfer
agent, VStock Transfer LLC to issue the shares representing the Purchase Price
in the name of Seller. Seller may anytime thereafter instruct VStock to reissue
all or part of the Purchase Price in one or more names.

 

Each party covenants and agrees that it will execute, deliver and acknowledge
(or cause to be executed, delivered and acknowledged), from time to time at the
request of the other party and without further consideration, all such further
instruments of conveyance, transfer and assignment, and perform or cause to be
performed all such further acts as may be necessary or appropriate to carry out
the provisions and intent of the Bill of Sale. In furtherance of the foregoing,
each of the Seller and Buyer agrees that each of them will, at any time and from
time to time, after the Execution Date, upon the reasonable request of the other
party, do, execute, acknowledge, and deliver or will cause to be done, executed,
acknowledged and delivered, all such further acts, deeds, assignments, transfers
and conveyances as may be required in order to the facilitate the transaction
contemplated herein.

 

All notices and communications between the parties with respect to this Bill of
Sale must be in writing. All communications shall be delivered by e-mail as
following:

 

(i)communications and notices to the Seller shall be sent to James Saxon at
jdsaxon77@gmail.com;

 

(ii)communications and notices to the Buyer shall be sent to Robert Ladd at
rladd@mgtci.com.

 

Notices shall be deemed to have been received at the time the e-mails are sent.

 

The provisions of this Bill of Sale shall be binding upon and inure to the
benefit of the heirs, personal representatives, successors, and assigns of the
Seller and Buyer.

 

This Bill of Sale shall be subject to and construed and enforced in accordance
with the laws of the State of Delaware without regard to principles of conflicts
of laws.

 

This Bill of Sale constitutes the entire agreement between the parties
pertaining to its subject matter and it supersedes all prior contemporaneous
agreements, representations, and understandings of the parties. No supplement,
modification, or amendment of this Bill of Sale shall be binding unless executed
in writing by both parties.

 

This Bill of Sale may be executed and delivered in two or more counterparts,
each of which, when so executed and delivered, shall be an original, and such
counterparts together shall constitute but one and the same instrument and
agreement, and the Bill of Sale shall not be binding on any party until both
parties have executed it. This Bill of Sale may be signed by a facsimile or
electronic signature, which shall have the same force and effect as an original
signature.

 

[SIGNATURE PAGE FOLLOWS

 

   

 

 

IN WITNESS WHEREOF, the Seller and Buyer have executed this Bill of Sale as of
August 31, 2019.

 

BUYER:         MGT CAPITAL INVESTMENTS, INC.         By:     Name:  Robert Ladd
  Title: President and CEO         SELLER:         DEEP SOUTH MINING LLC        
By:     Name:     Title:    

 

[SIGNATURE PAGE TO BILL OF SALE]

 

   

 

 

EXHIBIT B

 

Formula A

 

This Formula A provides for the amount of Bitcoin payable by Provider to User
monthly, defined as Bitcoin Production (BP) minus the Electricity Costs (EC) of
450 Bitmain Antminer S9 units, each running at a consistent 12.5 Th/s, adjusted
for changes in the Difficulty Rate (DR). Electricity Cost is calculated at 6.3
cents per kWh, with each S9 consuming 1500W. The computation follows:

 

5,625/DR = BP

 

EC = [1500/1000 x 24 hours x 30 days x $0.063 x 450 units = $30,618] /
[equal-weighted daily average price per Bitcoin for the calculation period
(Price)]

 

EC = $30,618/Price

 

Formula A = [5,625/DR] minus [$30,618/Price]

 

NOTE:

 

DR = amount of hash power in Th/s required by the network to mine one Bitcoin
per month. This number is 1,350 Th/s on the Effective Date and will change
approximately every 13 days.

 

Formula B

 

This Formula B provides for the amount of Bitcoin payable by Provider to User
monthly, defined as Bitcoin Production (BP) minus the Electricity Costs (EC) of
50 Bitmain Antminer S17 units, each running at a consistent 53 Th/s, adjusted
for changes in the Difficulty Rate (DR). Electricity cost is calculated at 4.2
cents per kWh, with each S17 consuming 2600W. The computation follows:

 

2,650/DR = BP

 

EC = [2600/1000 x 24 hours x 30 days x $0.042 x 50 units = $3,931] /
[equal-weighted daily average price per Bitcoin for the calculation period
(Price)]

 

EC = $3,931/Price

 

Formula B = [2,650/DR] minus [$3,931/Price]

 

NOTE:

 

DR = amount of hash power in Th/s required by the network to mine one Bitcoin
per month. This number is 1,350 Th/s on the Effective Date and will change
approximately every 13 days.