NEITHER
THE ISSUANCE NOR SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.


 


	Principal
    Amount: $160,000.00	 	Issue
    Date: March 10 2017	 


 


CONVERTIBLE
PROMISSORY NOTE


 


FOR
VALUE RECEIVED, MGT CAPITAL INVESTMENTS, INC., a Delaware corporation (hereinafter called the “Borrower”),
hereby promises to pay to the order of L2 CAPITAL, LLC, a Kansas limited liability company, or registered assigns (the
“Holder”) the principal sum of $160,000.00 (the “Principal Amount”), together with interest at the rate
of eight percent (8%) per annum, at maturity or upon acceleration or otherwise, as set forth herein (the “Note”).
The maturity date shall be six (6) months from the Issue Date (the “Maturity Date”), and is the date upon which the
principal sum, as well as any accrued and unpaid interest and other fees, shall be due and payable. This Note is being issued
by the Borrower to the Holder as a commitment fee, pursuant to that certain $5,000,000.00 equity purchase agreement of even date.
This Note may not be prepaid in whole or in part except as otherwise explicitly set forth herein. Any amount of principal
or interest on this Note, which is not paid by the Maturity Date, shall bear interest at the rate of the lesser of (i) twenty
four percent (24%) per annum or (ii) the maximum amount allowed by law, from the due date thereof until the same is paid (“Default
Interest”). Interest shall commence accruing on the date that the Note is fully paid and shall be computed on the basis
of a 365-day year and the actual number of days elapsed. All payments due hereunder (to the extent not converted into the Borrower’s
common stock (the “Common Stock”) in accordance with the terms hereof) shall be made in lawful money of the United
States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice
made in accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due
on any day which is not a business day, the same shall instead be due on the next succeeding day which is a business day and,
in the case of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date
thereof shall not be taken into account for purposes of determining the amount of interest due on such date. As used in this Note,
the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the
city of New York, New York are authorized or required by law or executive order to remain closed.


 




    	1 



     


    

 


This
Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive
rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.


 


The
following additional terms shall also apply to this Note:


 


ARTICLE
I. CONVERSION RIGHTS


 


1.1
Conversion Right. The Holder shall have the right at any time on or after an Event of Default (as defined herein) occurs
under the Note, to convert all or any part of the outstanding and unpaid principal amount and accrued and unpaid interest of this
Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of
capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified at the
conversion price (the “Conversion Price”) determined as provided herein (a “Conversion”); provided,
however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of
this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its
affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted
portion of the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on
conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon
the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result
in beneficial ownership by the Holder and its affiliates of more than 9.99% of the outstanding shares of Common Stock. For purposes
of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder, except
as otherwise provided in clause (1) of such proviso. The number of shares of Common Stock to be issued upon each conversion of
this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in
effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A (the “Notice of Conversion”),
delivered to the Borrower by the Holder in accordance with Section 1.4 below; provided that the Notice of Conversion is submitted
by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 6:00
p.m., New York, New York time on such conversion date (the “Conversion Date”). The term “Conversion Amount”
means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion
plus (2) at the Holder’s option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided
in this Note to the Conversion Date, plus (3) at the Holder’s option, Default Interest, if any, on the amounts referred
to in the immediately preceding clauses (1) and/or (2) plus (4) at the Holder’s option, any amounts owed to the Holder pursuant
to Sections 1.3 and 1.4(g) hereof.


 




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1.2
Conversion Price.


 


(a)
Calculation of Conversion Price. The Conversion Price shall be the Variable Conversion Price (as defined herein) (subject
to adjustment as further described herein). The “Variable Conversion Price” shall mean 75% multiplied by the Market
Price (as defined herein) (representing a discount rate of 25%). “Market Price” means the lowest one (1) Trading Prices
(as defined below) for the Common Stock during the thirty (30) Trading Day period ending on the last complete Trading Day prior
to the Conversion Date. “Trading Prices” means, for any security as of any date, the lowest traded price on the Over-the-
Counter Pink Marketplace, OTCQB, or applicable trading market (the “OTCQB”) as reported by a reliable reporting service
(“Reporting Service”) designated by the Holder (i.e. www.Nasdaq.com) or, if the OTCQB is not the principal trading
market for such security, on the principal securities exchange or trading market where such security is listed or traded or, if
the lowest intraday trading price of such security is not available in any of the foregoing manners, the lowest intraday price
of any market makers for such security that are quoted on the OTC Markets. If the Trading Prices cannot be calculated for such
security on such date in the manner provided above, the Trading Prices shall be the fair market value as mutually determined by
the Borrower and the holders of a majority in interest of the Notes being converted for which the calculation of the Trading Prices
are required in order to determine the Conversion Price of such Notes. “Trading Day” shall mean any day on which the
Common Stock is tradable for any period on the OTCQB, or on the principal securities exchange or other securities market on which
the Common Stock is then being traded. If at any time while this Note is outstanding, an Event of Default (as defined herein)
occurs, then an additional discount of five percent (5%) for each Event of Default shall be factored into the Variable Conversion
Price until this Note is no longer outstanding.


 


Each
time, while this Note is outstanding, the Borrower enters into a Section 3(a)(9) Transaction (as defined herein) (including but
not limited to the issuance of new promissory notes or of a replacement promissory note), or Section 3(a)(10) Transaction (as
defined herein), in which any 3rd party has the right to convert monies owed to that 3rd party (or receive shares pursuant to
a settlement or otherwise) at a discount to market greater than the Variable Conversion Price in effect at that time (prior to
all other applicable adjustments in the Note), then the Variable Conversion Price shall be automatically adjusted to such greater
discount percentage (prior to all applicable adjustments in this Note) until this Note is no longer outstanding. Each time, while
this Note is outstanding, the Borrower enters into a Section 3(a)(9) Transaction (including but not limited to the issuance of
new promissory notes or of a replacement promissory note), or Section 3(a)(10) Transaction, in which any 3rd party has a look
back period greater than the look back period in effect under the Note at that time (currently a thirty (30) Trading Day look
back period as described in this Section 1.2(a) applies), then the Holder’s look back period shall automatically be adjusted
to such greater number of days until this Note is no longer outstanding. The Borrower shall give written notice to the Holder,
with the adjusted Variable Conversion Price and/or adjusted look back period (each adjustment that is applicable due to the triggering
event), within one (1) business day of an event that requires any adjustment described in the two immediately preceding sentences.
So long as this Note is outstanding, if any security of the Borrower contains any term more favorable to the holder of such security
or with a term in favor of the holder of such security that was not similarly provided to the Holder in this Note, then the Borrower
shall notify the Holder of such additional or more favorable term and such term, at Holder’s option, shall become a part
of the transaction documents with the Holder.


 




    	3 



     


    

 


(b)
Authorized Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve
from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance
of Common Stock upon the full conversion of this Note. The Borrower is required at all times to have authorized and reserved three
times the number of shares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Notes
in effect from time to time)(the “Reserved Amount”). The Reserved Amount shall be increased from time to time in accordance
with the Borrower’s obligations hereunder. The Borrower represents that upon issuance, such shares will be duly and validly
issued, fully paid and non- assessable. In addition, if the Borrower shall issue any securities or make any change to its capital
structure which would change the number of shares of Common Stock into which the Notes shall be convertible at the then current
Conversion Price, the Borrower shall at the same time make proper provision so that thereafter there shall be a sufficient number
of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Notes. The Borrower
(i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon
conversion of this Note, and agrees that its issuance of this Note shall constitute full authority to its officers and agents
who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common
Stock in accordance with the terms and conditions of this Note.


 


If,
at any time the Borrower does not maintain the Reserved Amount it will be considered an Event of Default under Section 3.2 of
the Note.


 


1.3
Method of Conversion.


 


(a)
Mechanics of Conversion. Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time
on or after an Event of Default occurs under the Note, by submitting to the Borrower a Notice of Conversion (by facsimile, e-mail
or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and
(B) subject to Section 1.4(b), surrendering this Note at the principal office of the Borrower.


 


(b)
Surrender of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note
in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless
the entire unpaid principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the
principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the
Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute
or discrepancy, such records of the Borrower shall, prima facie, be controlling and determinative in the absence of manifest
error. Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this
Note unless the Holder first physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and
deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable
transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount of this Note. The Holder and
any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following
conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be
less than the amount stated on the face hereof.


 




    	4 



     


    

 


(c)
Payment of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other
than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other
securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such
shares are to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Borrower the amount
of any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.


 


(d)
Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail
(or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in
this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder
certificates for the Common Stock issuable upon such conversion within two (2) business days after such receipt (the “Deadline”)
(and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with
the terms hereof.


 


(e)
Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall
be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the
amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults
on its obligations under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith
terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such
conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue
and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by
the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against
any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower
to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by
the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation
of the Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall
be the Conversion Date so long as the Notice of Conversion is received by the Borrower before 6:00 p.m., New York, New York time,
on such date.


 




    	5 



     


    

 


(f)
Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock
issuable upon conversion, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated
Securities Transfer (“FAST”) program, upon request of the Holder and its compliance with the provisions contained
in Section 1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer agent to electronically
transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with
DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system.


 


(g)
Failure to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder’s right to pursue other
remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon
conversion of this Note is not delivered by the Deadline (other than a failure due to the circumstances described in Section 1.3
above, which failure shall be governed by such Section) the Borrower shall pay to the Holder $3,000 per day in cash, for each
day beyond the Deadline that the Borrower fails to deliver such Common Stock (unless such failure results from war, acts of terrorism,
an epidemic, or natural disaster). Such cash amount shall be paid to Holder by the fifth day of the month following the month
in which it has accrued or, at the option of the Holder (by written notice to the Borrower by the first day of the month following
the month in which it has accrued), shall be added to the principal amount of this Note, in which event interest shall accrue
thereon in accordance with the terms of this Note and such additional principal amount shall be convertible into Common Stock
in accordance with the terms of this Note. The Borrower agrees that the right to convert is a valuable right to the Holder. The
damages resulting from a failure, attempt to frustrate, interference with such conversion right are difficult if not impossible
to qualify. Accordingly the parties acknowledge that the liquidated damages provision contained in this Section 1.4(g) are justified.


 


1.4
Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred
unless (i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer
agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for
opinions of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act
(or a successor rule) (“Rule 144”) or (iv) such shares are transferred to an “affiliate” (as defined in
Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who
is an Accredited Investor. Except as otherwise provided (and subject to the removal provisions set forth below), until such time
as the shares of Common Stock issuable upon conversion of this Note have been registered under the Act or otherwise may be sold
pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately
sold, each certificate for shares of Common Stock issuable upon conversion of this Note that has not been so included in an effective
registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits
removal of the legend, shall bear a legend substantially in the following form, as appropriate:


 




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“NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”


 


The
legend set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer
legend if (i) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made
without registration under the Act, which opinion shall be accepted by the Borrower so that the sale or transfer is effected or
(ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder
under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 without any restriction
as to the number of securities as of a particular date that can then be immediately sold. In the event that the Borrower does
not accept the opinion of counsel provided by the Holder with respect to the transfer of Securities pursuant to an exemption from
registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to Section
3.2 of the Note.


 


1.5
[Intentionally Omitted].


 


1.6
Status as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than
the shares, if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved
Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a
Holder of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for
such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because
of a failure by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received
certificates for all shares of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect
to a conversion of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a
holder of Common Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with respect
to such unconverted portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the
Holder or, if the Note has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted.
In all cases, the Holder shall retain all of its rights and remedies (including, without limitation, (i) the right to receive
Conversion Default Payments pursuant to Section 1.3 to the extent required thereby for such Conversion Default and any subsequent
Conversion Default and (ii) the right to have the Conversion Price with respect to subsequent conversions determined in accordance
with Section 1.3) for the Borrower’s failure to convert this Note.


 




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ARTICLE
II. CERTAIN COVENANTS


 


2.1
Distributions on Capital Stock. So long as the Borrower shall have any obligation under this Note, the Borrower shall not
without the Holder’s written consent


(a)
pay, declare or set apart for such payment, any dividend or other distribution (whether in cash, property or other securities)
on shares of capital stock other than dividends on shares of Common Stock solely in the form of additional shares of Common Stock
or (b) directly or indirectly or through any subsidiary make any other payment or distribution in respect of its capital stock
except for distributions pursuant to any shareholders’ rights plan which is approved by a majority of the Borrower’s
disinterested directors.


 


2.2
Restriction on Stock Repurchases. So long as the Borrower shall have any obligation under this Note, the Borrower shall
not without the Holder’s written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property
or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of the
Borrower or any warrants, rights or options to purchase or acquire any such shares.


 


ARTICLE
III. EVENTS OF DEFAULT


 


If
any of the following events of default (each, an “Event of Default”) shall occur:


 


3.1
Failure to Pay Principal or Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this
Note, whether at maturity, upon acceleration or otherwise, and such breach continues for a period of five (5) days.


 




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3.2
Conversion and the Shares. The Borrower fails to reserve a sufficient amount of shares of common stock as required under
the terms of this Note (including Section 1.3 of this Note)(and such breach continues for a period of five (5) days from the time
the Borrower should have known about the breach), fails to issue shares of Common Stock to the Holder (or announces or threatens
in writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder
in accordance with the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically or
in certificated form) shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and
when required by this Note, the Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer
agent in transferring (or issuing) (electronically or in certificated form) shares of Common Stock to be issued to the Holder
upon conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer
agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw
any stop transfer instructions in respect thereof) on any shares of Common Stock issued to the Holder upon conversion of or otherwise
pursuant to this Note as and when required by this Note (or makes any written announcement, statement or threat that it does not
intend to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any written announcement,
statement or threat not to honor its obligations shall not be rescinded in writing) for two (2) business days after the Holder
shall have delivered a Notice of Conversion. It is an obligation of the Borrower to remain current in its obligations to its transfer
agent. It shall be an event of default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to a
balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower’s
transfer agent in order to process a conversion, such advanced funds shall be paid by the Borrower to the Holder within five (5)
business days, either in cash or as an addition to the balance of the Note, and such choice of payment method is at the discretion
of the Borrower.


 


3.3
Breach of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this
Note and any collateral documents and such breach continues for a period of three (3) days after written notice thereof to the
Borrower from the Holder or after five (5) days after the Borrower should have been aware of the breach.


 


3.4
Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement,
statement or certificate given in writing pursuant hereto or in connection herewith, shall be false or misleading in any material
respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights
of the Holder with respect to this Note.


 


3.5
Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors,
or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business,
or such a receiver or trustee shall otherwise be appointed.


 


3.6
Judgments. Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary
of the Borrower or any of its property or other assets for more than $100,000, and shall remain unvacated, unbonded or unstayed
for a period of ten (10) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.


 




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3.7
Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary,
for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any
subsidiary of the Borrower.


 


3.8
Delisting of Common Stock. The Borrower shall fail to maintain the listing or quotation of the Common Stock on the OTCQB
or an equivalent replacement exchange, the Nasdaq Global Market, the Nasdaq Capital Market, the New York Stock Exchange, or the
NYSE MKT.


 


3.9
Failure to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange
Act (including but not limited to becoming delinquent in its filings), and/or the Borrower shall cease to be subject to the reporting
requirements of the Exchange Act.


 


3.10
Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.


 


3.11
Cessation of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to
pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as
a “going concern” shall not be an admission that the Borrower cannot pay its debts as they become due.


 


3.12
Financial Statement Restatement. The Borrower replaces its auditor, or any restatement of any financial statements filed
by the Borrower with the SEC for any date or period from two years prior to the Issue Date of this Note and until this Note is
no longer outstanding, if the result of such restatement would, by comparison to the unrestated financial statement, have constituted
a material adverse effect on the rights of the Holder with respect to this Note.


 


3.13
Reverse Splits. The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice
to the Holder.


 


3.14
Replacement of Transfer Agent. In the event that the Borrower replaces its transfer agent, and the Borrower fails to provide
prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions (including but not limited
to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent
to Borrower and the Borrower that reserves the total amount of shares previously held in reserve for the Note with the Borrower’s
immediately preceding transfer agent.


 




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3.15
Cross-Default. Notwithstanding anything to the contrary contained in this Note or the other related or companion documents,
a breach or default by the Borrower of any covenant or other term or condition contained in any of the other financial instrument,
including but not limited to all convertible promissory notes, currently issued, or hereafter issued, by the Borrower, to the
Holder or other 3rd party (the “Other Agreements”), after the passage of all applicable notice and cure
or grace periods, shall, at the option of the Holder, be considered a default under this Note, in which event the Holder shall
be entitled to apply all rights and remedies of the Holder under the terms of this Note by reason of a default under said Other
Agreement or hereunder.


 


3.16
Inside Information. Any attempt by the Borrower or its officers, directors, and/or affiliates to transmit, convey, disclose,
or any actual transmittal, conveyance, or disclosure by the Borrower or its officers, directors, and/or affiliates of, material
non-public information concerning the Borrower, to the Holder or its successors and assigns, which is not immediately cured by
Borrower’s filing of a Form 8-K pursuant to Regulation FD on that same date.


 


3.17
No bid. At any time while this Note is outstanding, the lowest Trading Prices on the OTCQB or other applicable principal
trading market for the Common Stock is equal to or less than $0.0001.


 


3.18
No shop. So long as this Note is outstanding, the Borrower shall not enter into any transaction or arrangement with any
party other than the Holder, structured in accordance with, based upon, or related or pursuant to, in whole or in part, Section
3(a)(9) of the Securities Act (a “3(a)(9) Transaction”), without prior written consent of the Holder.


 


3.19
Failure to Repay Upon Qualified Offering. The Borrower fails to repay the Note, in its entirety, pursuant to the terms
of the Note, with funds received from its next completed offering of $1,000,000.00 or more (consummated on or after the Issue
Date).


 


UPON
THE OCCURRENCE AND DURING THE CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, THE NOTE SHALL BECOME IMMEDIATELY
DUE AND PAYABLE AND THE BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO:
(Y) THE DEFAULT SUM (AS DEFINED HEREIN); MULTIPLIED BY (Z) TWO (2). Upon the occurrence and during the continuation of any Event
of Default specified in Sections 3.1, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 3.16, 3.17, 3.18
and/or 3.19, the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction
of its obligations hereunder, an amount equal to 150% multiplied by the then outstanding entire balance of the Note (including
principal and accrued and unpaid interest) plus Default Interest, if any, plus any amounts owed to the Holder pursuant
to Sections 1.4(g) hereof (collectively, in the aggregate of all of the above, the “Default Sum”), and all other amounts
payable hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which hereby are
expressly waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder
shall be entitled to exercise all other rights and remedies available at law or in equity.


 




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If
the Borrower fails to pay the Default Sum within five (5) business days of written notice that such amount is due and payable,
then the Holder shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that
there are sufficient authorized shares), to require the Borrower, upon written notice, to immediately issue, in lieu of the Default
Sum, the number of shares of Common Stock of the Borrower equal to the Default Sum divided by the Conversion Price then in effect,
subject to issuance in tranches due to the beneficial ownership limitations contained in this Note.


 


ARTICLE
IV. MISCELLANEOUS


 


4.1
Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or
privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder
are cumulative to, and not exclusive of, any rights or remedies otherwise available.


 


4.2
Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder
shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered
or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid,
or (iv) transmitted by hand delivery, telegram, facsimile, or electronic mail addressed as set forth below or to such other address
as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to
be given hereunder shall be deemed effective (a) upon hand delivery, upon electronic mail delivery, or delivery by facsimile,
with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered
on a business day during normal business hours where such notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on
the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or
upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:


 


If
to the Borrower, to:


 


MGT
CAPITAL INVESTMENTS, INC.


512
S. Mangum Street, Suite 408


Durham,
NC 27701


e-mail:
tmadison@mgtci.com


 




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If
to the Holder:


 


L2
CAPITAL, LLC


8900
State Line Rd., Suite 410


Leawood, KS 66206


e-mail:
investments@ltwocapital.com


 


4.3
Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and
the Holder. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument
as originally executed, or if later amended or supplemented, then as so amended or supplemented.


 


4.4
Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit
of the Holder and its successors and assigns. Each transferee of this Note must be an “accredited investor” (as defined
in Rule 501(a) of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral
in connection with a bona fide margin account or other lending arrangement.


 


4.5
Cost of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection,
including reasonable attorneys’ fees.


 


4.6
Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Kansas without
regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated
by this Note shall be brought only in the state and/or federal courts of Johnson County, Kansas. The parties to this Note hereby
irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense
based on lack of jurisdiction or venue or based upon forum non conveniens. The Borrower and Holder waive trial by jury.
The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. In the
event that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable under
any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith
and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably
waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this
Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any other manner permitted by law.


 




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4.7
Certain Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding
principal amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest
on such interest, the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on
this Note may be difficult to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty
and is intended to compensate the Holder in part for loss of the opportunity to convert this Note and to earn a return from the
sale of shares of Common Stock acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant
to this Note. The Borrower and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate
to the possible loss to the Holder from the receipt of a cash payment without the opportunity to convert this Note into shares
of Common Stock.


 


4.8
Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the
Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that
the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened
breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies
at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing
or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing
economic loss and without any bond or other security being required.


 


4.9
Prepayment. Notwithstanding anything to the contrary contained in this Note, the Borrower may prepay any amount outstanding
under this Note, at any time, by making a payment to the Holder of an amount in cash equal to 150% multiplied the amount that
the Borrower is prepaying. In order to prepay this Note, the Borrower shall provide notice to the Holder ten (10) business days
prior to such respective prepayment date, and the Holder must receive such prepayment within twelve (12) business days of the
Holder’s receipt of the respective prepayment notice, but not sooner than ten (10) business days from the date of notice
(the “Prepayment Period”). The Holder may convert the Note in whole or in part at any time during the Prepayment Period,
subject to the terms and conditions of this Note.


 


4.10
Section 3(a)(10) Transactions. If at any time while this Note is outstanding, the Borrower enters into a transaction structured
in accordance with, based upon, or related or pursuant to, in whole or in part, Section 3(a)(10) of the Securities Act (a “3(a)(10)
Transaction”), then a liquidated damages charge of 100% of the outstanding principal balance of this Note at that time,
will be assessed and will become immediately due and payable to the Holder, either in the form of cash payment, an addition to
the balance of the Note, or a combination of both forms of payment, as determined by the Holder.


 




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4.11
Reverse Split Penalty. If at any time while this Note is outstanding, the Borrower effectuates a reverse split with respect
to the Common Stock, then a liquidated damages charge of 30% of the outstanding principal balance of this Note at that time, will
be assessed and will become immediately due and payable to the Holder, either in the form of cash payment, an addition to the
balance of the Note, or a combination of both forms of payment, as determined by the Holder.


 


4.12
Right of First Refusal. If at any time while this Note is outstanding, the Borrower has a bona fide offer of capital or
financing from any 3rd party, that the Borrower intends to act upon, then the Borrower must first offer such opportunity to the
Holder to provide such capital or financing to the Borrower on the same terms as each respective 3rd party’s terms. Should
the Holder be unwilling or unable to provide such capital or financing to the Borrower within 10 trading days from Holder’s
receipt of written notice of the offer (the “Offer Notice”) from the Borrower, then the Borrower may obtain such capital
or financing from that respective 3rd party upon the exact same terms and conditions offered by the Borrower to the
Holder, which transaction must be completed within 30 days after the date of the Offer Notice. Borrower shall, within two (2)
business days of the respective closing, utilize 25% of all proceeds received by Borrower by each respective 3rd party
that provides capital or financing to the Borrower, to prepay this Note. If the Borrower does not receive the capital or financing
from the respective 3rd party within 30 days after the date of the respective Offer Notice, then the Borrower must
again offer the capital or financing opportunity to the Holder as described above, and the process detailed above shall be repeated.
The Offer Notice must be sent via electronic mail to investments@ltwocapital.com.


 


4.13
Terms of Future Financings. So long as this Note is outstanding, upon any issuance by the Borrower or any of its subsidiaries
of any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security
that was not similarly provided to the Holder in this Note, then the Borrower shall notify the Holder of such additional or more
favorable term and such term, at Holder’s option, shall become a part of the transaction documents with the Holder. The
types of terms contained in another security that may be more favorable to the holder of such security include, but are not limited
to, terms addressing conversion discounts, prepayment rate, conversion look back periods, interest rates, original issue discounts,
stock sale price, private placement price per share, and warrant coverage.


 




    	15 



     


    

 


IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer this March 10, 2017.


 


MGT
CAPITAL INVESTMENTS, INC.


 


	By:	 	 
	Name:	Robert
    Ladd	 
	Title:	Chief
    Executive Officer	 


 


 




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EXHIBIT
A — NOTICE OF CONVERSION


 


The
undersigned hereby elects to convert $_____________principal amount of the Note (defined below) into that number of shares of Common Stock
to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth below, of MGT CAPITAL INVESTMENTS,
INC., a Delaware corporation (the “Borrower”) according to the conditions of the convertible note of the Borrower
dated as of March 10, 2017 (the “Note”), as of the date written below. No fee will be charged to the Holder for any
conversion, except for transfer taxes, if any.


 


Box
Checked as to applicable instructions:


 


	 	[  ]	The Borrower shall electronically transmit the Common
Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit
Withdrawal Agent Commission system (“DWAC Transfer”).




 


Name
of DTC Prime Broker:


Account Number:


 


	 	[  ]	The undersigned hereby requests that the Borrower issue
a certificate or certificates for the number of shares of Common Stock set forth below (which numbers are based on the Holder’s
calculation attached hereto) in the name(s) specified immediately below or, if additional space is necessary, on an attachment
hereto:




 


L2
CAPITAL, LLC


8900
State Line Rd., Suite 410


Leawood, KS 66206


e-mail:
investments@ltwocapital.com


 


	Date
    of Conversion:	 	 
	Applicable
    Conversion Price: 	$
    	 
	Number of Shares of Common Stock to be Issued

                                                         Pursuant to Conversion of the Notes:
	 	 
	Amount of Principal Balance Due remaining

                                                         Under the Note after this conversion:
		 


 





L2
CAPITAL, LLC


 


	By:	 	 
	Name:	 	 
	Title:	 	 
	Date:	 	 


 




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