Execution Copy 


 


 


 


 


 


SECURITIES
PURCHASE AGREEMENT


 


 


by and among


 


FANTD LLC


 


MGT CAPITAL INVESTMENTS, INC.


 


MGT SPORTS, INC.


 


and


 


CERTAIN MEMBERS OF FANTD LLC, as Sellers


 


 


April 22, 2013


 


 


 


 




    	 



    	 



    

Table of
Contents


 


Page





	1.	DEFINITIONS; INTERPRETATION	1
	 	1.1	Definitions	1
	 	1.2	Interpretation	4
	2.	PRE-CLOSING AGREEMENTS; SECURITIES PURCHASE	5
	 	2.1	Conduct of the Business	5
	 	2.2	Additional Listing Application	5
	 	2.3	The Sale of the Transferred Interests	5
	 	2.4	Payment of Cash; Issuance of Common Stock	5
	 	2.5	Closing	5
	 	2.6	Closing Deliverables and Actions	6
	 	2.7	Additional Conditions to Obligations of the Sellers	6
	 	2.8	Additional Conditions to Obligations of the MGT Parties	7
	 	2.9	Termination	7
	 	2.10	Effect of Termination	8
	3.	REPRESENTATIONS
AND WARRANTIES REGARDING THE SELLERS	8
	 	3.1	Capacity	8
	 	3.2	Execution; Validity of Agreement	8
	 	3.3	Ownership of Transferred Interests	8
	 	3.4	Consents and Approvals; No Violations	9
	 	3.5	Litigation	9
	 	3.6	Brokers and Finders	9
	 	3.7	Investment Representations	9
	4.	REPRESENTATIONS
AND WARRANTIES REGARDING THE COMPANY	10
	 	4.1	Incorporation; Authority	10
	 	4.2	Execution; Validity of Agreement; Due Authorization	11
	 	4.3	Consents and Approvals; No Violations	11
	 	4.4	Capitalization	11
	 	4.5	Financial Statements	11
	 	4.6	Compliance with Laws; Restrictions; Permits	12
	 	4.7	Litigation	12
	 	4.8	Employees; Contractors	12
	 	4.9	Contracts	12
	 	4.10	Intellectual Property	13
	 	4.11	Tangible Personal Property	14



 



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	 	4.12	Real Estate	15
	 	4.13	Insurance	15
	 	4.14	Taxes	15
	 	4.15	Environmental Matters	16
	 	4.16	Books and Records	16
	 	4.17	Interested-Party Transactions	16
	 	4.18	Bankruptcy	17
	 	4.19	Broker’s Fee	17
	 	4.20	Material Disclosure; No Omission	17
	5.	REPRESENTATIONS
AND WARRANTIES OF THE MGT PARTIES	17
	 	5.1	Organization	17
	 	5.2	No Conflicts	17
	 	5.3	Due Authorization and Binding Effect	17
	 	5.4	MGT Shares	18
	6.	ADDITIONAL
AGREEMENTS	18
	 	6.1	Public Announcements	18
	 	6.2	Confidentiality	18
	 	6.3	Further Assurances	18
	 	6.4	Seller Noncompete and Non-Solicit	18
	7.	SURVIVAL
OF REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION	18
	 	7.1	Survival of Representations, Warranties and Covenants	18
	 	7.2	Indemnification Obligations of the Sellers	19
	 	7.3	Indemnification Obligations of the Purchaser	19
	 	7.4	Notification of Claims	19
	 	7.5	Investigation	20
	 	7.6	Third-Party Claims	20
	8.	MISCELLANEOUS	20
	 	8.1	Costs and Attorney’s Fees	20
	 	8.2	Notices	20
	 	8.3	Entire Agreement	21
	 	8.4	Governing law; Consent to Jurisdiction	21
	 	8.5	Binding effect	22
	 	8.6	Waivers and Amendments	22
	 	8.7	Recitals, Exhibits and Schedules	22
	 	8.8	Headings	22
	 	8.9	Severability	22
	 	8.10	Specific Performance	22
	 	8.11	Fees and Expenses	23
	 	8.12	Legal Representation of the Parties	23







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	 	8.13	Payment of Transfer Costs and Expenses	23
	 	8.14	No Third Party Beneficiaries	23
	 	8.15	Counterparts; Signatures	23
	 	 	 	 







 





 




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SECURITIES PURCHASE AGREEMENT


 


SECURITIES PURCHASE
AGREEMENT (this “Agreement”) is dated as of April 22, 2013 (the “Agreement Date”),
by and among FanTD LLC, a New York limited liability company d/b/a FanThrowdown.com (the “Company”), MGT Capital
Investments, Inc., a Delaware corporation (“MGT”), MGT Sports, Inc., a Delaware corporation, (the “Purchaser”,
and together with MGT, the “MGT Parties”), the several sellers listed as founders on Exhibit A hereto
(the “Founders”), and the other sellers listed on Exhibit A hereto (the “Other Sellers”,
and together with the Founders, the “Sellers”). The Sellers, the Company and the MGT Parties are collectively
referred to as the “Parties”).


 


RECITALS


 


WHEREAS, the Company
operates a website that offers daily fantasy gameplay for the NFL, MLB, NCAA basketball, NCAA football, NHL, NBA, Nascar, and professional
golf;


 


WHEREAS, the Founders
and the Other Sellers are the owners of all of the units of the Company;


 


WHEREAS, the Sellers
desire to transfer 1,335 units, representing 63.12% of the outstanding membership interests of the Company, to the Purchaser (the
“Transferred Interests”), and the Purchaser desires to purchase the Transferred Interests from the Sellers (the
“Securities Purchase”), in exchange for cash and shares of common stock, $0.001 par value, in MGT (the “Common
Stock”);


 


WHEREAS, as an inducement
to cause the Purchaser to make the investment contemplated hereby, the Founders and the Purchaser desire to enter into an Escrow
Agreement, in form satisfactory to the Purchaser, whereby the Founders will pledge 50% of their MGT Shares to secure the indemnification
obligations of the Founders hereunder for a period of 6 months from the Closing Date (the “Escrow Agreement”);


 


WHEREAS, on the Closing
Date, certain of the Parties will execute and deliver the Amended and Restated Limited Liability Company Agreement of the Company
(the “Operating Agreement”) to set forth certain rights and obligations of each of them as members of the Company.


 


NOW, THEREFORE, in
consideration of the promises, covenants and other agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:


 


1.                 
DEFINITIONS; INTERPRETATION.


 


1.1             
Definitions. For purposes of this Agreement, the following terms are defined as follows:


 


“Action”
means any action (including declaratory judgment actions), suit, litigation, controversy, mediation, hearing, claim, charge, complaint,
arbitration, reexamination, interference, reissue, investigation, pending inquiry, audit or other proceeding at law or in equity
or of, in, by or before any Governmental Authority, mediator or arbitrator.


 


“Affiliate”
means, with respect to any Person, a Person that directly or indirectly through one or more intermediaries, controls, is controlled
by, or is under common control with such Person; and “control” (including the terms “controlled by”
and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract
or otherwise.


 



    	 



    	 



    




“Applicable
Law” means, with respect to any Person, any federal, state, local, municipal, foreign or other Law, enacted, adopted,
passed, approved, promulgated, made, implemented or otherwise put into effect, in each case as of the date of this Agreement, by
any Governmental Authority that applies to such Person, its business and its properties.


 


“Consents”
means the consents of any third parties or any Governmental Authorities necessary to transfer the Transferred Interests to the
Purchaser or to otherwise consummate the transactions contemplated by this Agreement.


 


“Governmental
Authority” means any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision or similar
governing entity.


 


“Intellectual
Property” means any and all patents, ideas, inventions, designs, expressions and works of authorship, copyrights, copyrightable
works (including without limitation all software, middleware and firmware), semiconductor topography, source code of any software
or program, trademarks, trade names, moral rights, database rights, mask works, applications therefor, registrations thereof and
licenses thereof, royalty rights, goodwill, proprietary and/or confidential information (including technical information relating
to development, design, manufacture, scheduling, installation, assembly or testing, Trade Secrets, secret processes and procedures,
know how, business and financial information, and all confidential information of any nature, and any other similar property, whether
or not embodied in tangible form (including technical drawings and specifications, shop drawings, manuals, forms, working notes
and memos, market studies, consultants’ reports, technical and laboratory data, notebooks, samples and prototypes).


 


“Knowledge”
or words of similar import (e.g. “knowledge,” “known,” or “aware”) with respect to: (i) any
individual, shall mean the actual knowledge of such individual; and (ii) the Company, shall mean the actual knowledge of Jonathan
Licata, Michael Mosiello, Christopher Hutter and George Licata after reasonable inquiry.


 


“Laws”
means all laws, statutes, rules, regulations, ordinances and orders of any Governmental Authority.


 


“Lien”
means any mortgage, lien, claim, pledge, charge, security interest, preemptive right, right of first refusal, option, judgment,
restriction or encumbrance of any kind, or any exceptions, reservations, restrictions, rights-of-way, easements or other matters
affecting title, whether arising by contract, law or otherwise.


 



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“Material
Adverse Effect” means, when used in connection with any Person, any change, event, circumstance or effect that is materially
adverse to the business, operations, assets (including intangible assets), financial condition, results of operations of such person
taken as a whole.


 


“Person”
means and includes any individual, partnership, corporation, limited liability company, association, joint stock company, trust,
joint venture, unincorporated organization or any Governmental Authority or any department, agency or political subdivision thereof.


 


“Software”
means any and all (i) computer programs, including any and all software implementations of algorithms, models and methodologies,
whether in source code or object code form, (ii) databases, compilations, and any other electronic data files, including any and
all collections of data, whether machine readable or otherwise, (iii) descriptions, flow-charts, technical and functional specifications,
and other work product used to design, plan, organize, develop, test, troubleshoot and maintain any of the foregoing, (iv) without
limitation to the foregoing, the software technology supporting any functionality contained on all Internet website(s), owned and
operated by the Company, (v) all computer-aided design software, including the underlying data, and (vi) all documentation, including
technical, end-user, training and troubleshooting manuals and materials, relating to any of the foregoing.


 


“Trade Secrets”
means all product specifications, data, know-how, formulae, compositions, processes, designs, sketches, photographs, graphs, drawings,
samples, inventions and ideas, research and development, manufacturing or distribution methods and processes, customer lists, current
and anticipated customer requirements, price lists, market studies, business plans, computer software and programs (including both
source code and object code), databases, interfaces, computer software and database technologies, systems, structures and architectures
(and related processes, formulae, composition, improvements, devices, know-how, inventions, discoveries, concepts, ideas, designs,
methods and information), and any other information, however documented, that is a trade secret within the meaning of the applicable
trade-secret protection law.


 


“Transaction
Agreements” shall mean and include this Agreement, the Operating Agreement, the Escrow Agreement and all instruments
of transfer necessary to transfer the Transferred Interests to the Purchaser.


 


The following terms
are defined in the following sections of this Agreement:


 





	Term	Section
	Agreement Date	Preamble
	Cash Payment	2.3 

	Closing	2.5
	Closing Date	2.5
	Common Stock	Recitals
	Company	Preamble
	Company Intellectual
Property	4.10(c)
	Company Licensed Intellectual
Property	4.10(c)
	DreamCo	2.6(b)(i)



 



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	Employees	4.7(a)
	Escrow Agreement	Recitals
	Founders	Preamble
	FTD S-Corp	6.3
	GAAP	4.5(b)
	Indemnification
Notice	7.4
	Indemnifying
Party	7.4
	Indemnitees	7.3
	Losses	7.2
	Leased Improvements	4.12(a)
	Leased Property	4.12(a)
	License Agreements	4.10(c)
	Licensed Intellectual
Property	4.10(c)
	MGT	Preamble
	MGT Common Stock	3.4(a)
	MGT Indemnitees	7.2
	MGT Parties	Preamble
	MGT Shares	3.2
	NYSE MKT	2.2
	Operating Agreement	Recitals
	Other Sellers	Preamble
	Owned Intellectual
Property	4.10(b)
	Parties	Preamble
	Permits	4.6
	Purchaser	Preamble
	Securities
Act	3.7(b)
	Securities Purchase	Recitals
	Seller Indemnitees	7.3
	Sellers	Preamble
	Termination Date	2.9(b)
	Transferred Interests	Recitals
	Third Party Claim	7.6
	Third Party Licensed
Intellectual Property	4.10(c)
	Units	4.4



 





1.2             
Interpretation. Unless the context otherwise requires, the terms defined in Section 1.1 shall have
the meanings herein specified for all purposes of this Agreement, applicable to both the singular and plural forms of any of the
terms defined herein. Whenever the words “include,” “includes” or “including” are used in this
Agreement, they shall be deemed to be followed by the words “without limitation.” The use of the neuter gender herein
shall be deemed to include the masculine and feminine genders wherever necessary or appropriate, the use of the masculine gender
herein shall be deemed to include the neuter and feminine gender wherever necessary or appropriate and the use of the feminine
gender herein shall be deemed to include the neuter and masculine genders wherever necessary or appropriate.


 



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2.                 
PRE-CLOSING AGREEMENTS; SECURITIES PURCHASE.


 


2.1             
Conduct of the Business. During the period from the Agreement Date and continuing until the earlier of the
termination of this Agreement and the Closing:


 


(a)               
The Company will conduct its business in the usual, regular and ordinary course in substantially the same manner as heretofore
conducted and in material compliance with all Applicable Law (except to the extent expressly provided otherwise in this Agreement
or as consented to in writing by the Purchaser).


 


(b)              
The Company will not engage in any practice, take any action, fail to take any action, or enter into any transaction as
a result of which a Material Adverse Effect is likely to occur.


 


(c)               
The Company will confer with the Purchaser concerning matters of a material nature to its business.


 


2.2             
Additional Listing Application. The Purchaser shall promptly, and in any event no later than April 26, 2013,
file an Additional Listing Application with the NYSE MKT (the “NYSE MKT”) with respect to the MGT Shares.


 


2.3             
The Sale of the Transferred Interests. Subject to the terms and provisions set forth herein, at the Closing
the Sellers are selling to the Purchaser, and the Purchaser is purchasing from the Sellers, all of the Sellers’ right, title
and interest in and to the Transferred Interests set forth adjacent to each Seller’s name on Schedule 2.3. At the
Closing, each Seller shall assign and transfer to the Purchaser all right, title and interest to such Seller’s Transferred
Interests referenced on Schedule 2.3, free and clear of any and all Liens, together with all accrued benefits and rights
attaching thereto.


 


2.4             
Payment of Cash; Issuance of Common Stock. As consideration for the Securities Purchase described in Section
2.3 above, (i) the Purchaser shall pay to each Seller the amount set forth adjacent to such Seller’s name on Schedule
2.3 hereof (the “Cash Payment”), and (ii) MGT shall issue to each Seller the number of MGT Shares set forth
adjacent to such Seller’s name on Schedule 2.3 hereof.


 


2.5             
Closing. Unless this Agreement is earlier terminated in accordance with Section 2.9, the closing of
the transactions contemplated by this Agreement (the “Closing”) shall take place on May 6, 2013, or on such
earlier date when each of the conditions set forth in this Article 2 have been satisfied or waived (other than those conditions
that by their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of those conditions), or at such
other time as the Parties may agree (the “Closing Date”). The Closing shall take place at the offices of Dickstein
Shapiro LLP located at 1633 Broadway, New York, NY or at such other location as the Parties hereto agree.


 



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2.6             
Closing Deliverables and Actions. At the Closing:


 


(a)               
The Sellers shall deliver to the Purchaser evidence that all required Consents, if any, have been obtained;


 


(b)              
MGT shall deliver to the Sellers evidence that the listing of the MGT Shares has been approved by the NYSE MKT;


 


(c)               
The Purchaser shall pay the Cash Payment to the Sellers by wire transfer of immediately available funds to the accounts
designated in writing by the Sellers to the Purchaser;


 


(d)              
MGT shall issue certificates representing the MGT Shares to the Sellers;


 


(e)               
The MGT Parties, the Company and the Sellers shall execute and deliver each Transaction Agreement to which it is a party
(including the Operating Agreement in form and substance satisfactory to the Purchaser);


 


(f)               
The Company shall deliver to the Purchaser a certificate, dated within ten (10) days of the the Closing Date, issued by
the Secretary of State of the State of New York (i) evidencing the good standing of the Company in the State of New York, and (ii)
certifying the Articles of Organization of the Company, as amended through such date;


 


(g)              
The Company shall deliver to the Purchaser a certificate signed by an Officer of the Purchaser, dated the Closing Date,
certifying as to its (i) Articles of Organization, (ii) Operating Agreement and (iii) resolutions approving the execution and delivery
of this Agreement and the other Transaction Agreements; and


 


(h)              
The Company and the Sellers shall execute and deliver such other customary closing documents as the Purchaser may reasonably
request in connection with the transactions contemplated hereby.


 


2.7             
Additional Conditions to Obligations of the Sellers. The obligations of the Sellers to consummate the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the Closing of each of the following conditions (it being
understood that each such condition is solely for the benefit of the Sellers and may be waived by the Sellers in writing in their
sole discretion without notice, liability or obligation to any Person):


 


(a)               
The representations and warranties of the MGT Parties in this Agreement shall be true and correct in all material respects
(except for such representations and warranties that are qualified by their terms by a reference to materiality, which representations
and warranties as so qualified shall be true and correct in all respects) on and as of the Agreement Date and on and as of the
Closing Date as though such representations and warranties were made on and as of such date (except for representations and warranties
which address matters only as to a specified date, which representations and warranties shall be true and correct with respect
to such specified date). The MGT Parties shall have performed and complied in all material respects with all covenants, obligations
and conditions of this Agreement required to be performed and complied with by them at or prior to the Closing.


 



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(b)              
The Sellers shall have received each of the deliveries required to by made by the MGT Parties to the Sellers pursuant to
Section 2.6.


 


2.8             
Additional Conditions to Obligations of the MGT Parties. The obligations of the the MGT Parties to consummate
the transactions contemplated hereby shall be subject to the satisfaction at or prior to the Closing of each of the following conditions
(it being understood that each such condition is solely for the benefit of the MGT Parties and may be waived by the MGT Parties
in writing in their sole discretion without notice, liability or obligation to any Person):


 


(a)               
 The representations and warranties of the Sellers in this Agreement shall be true and correct in all material respects
(except for such representations and warranties that are qualified by their terms by a reference to materiality, which representations
and warranties as so qualified shall be true and correct in all respects) on and as of the Agreement Date and on and as of the
Closing Date as though such representations and warranties were made on and as of such date (except for representations and warranties
which address matters only as to a specified date, which representations and warranties shall be true and correct with respect
to such specified date). The Sellers and the Company shall have performed and complied in all material respects with all covenants,
obligations and conditions of this Agreement required to be performed and complied with by them at or prior to the Closing.


 


(b)              
The MGT Parties shall have received each of the deliveries required to be made by the Sellers and the Company to the MGT
Parties pursuant to Section 2.6.


 


2.9             
Termination. At any time prior to the Closing, this Agreement may be terminated and the transactions contemplated
hereby abandoned by authorized action taken by the terminating Party:


 


(a)               
by mutual written consent duly authorized by the Company and MGT;


 


(b)              
by either MGT or the Company, if the Closing shall not have occurred on or before May 31, 2013 or such other date that MGT
and the Company may agree upon in writing (the “Termination Date”); provided, however, that the
right to terminate this Agreement under this Section 2.9(b) shall not be available to any Party whose breach of this Agreement
has resulted in the failure of the Closing to occur on or before the Termination Date.


 


(c)               
by either MGT or the Company, if any permanent injunction or other order of a Governmental Authority preventing the consummation
of the transactions contemplated hereby shall have become final and nonappealable;


 


(d)              
by MGT, if the Company or the Sellers shall have breached any representation, warranty, covenant or agreement contained
herein and such breach shall not have been cured within five business days after receipt by the Sellers of written notice of such
breach (provided, however, that no such cure period shall be available or applicable to any such breach which by its nature cannot
be cured) and if not cured within the timeframe above and at or prior to the Closing, such breach would result in the failure of
any of the conditions set forth in Section 2.6 to be satisfied; or


 


(e)               
by the Sellers, if the MGT Parties shall have breached any representation, warranty, covenant or agreement contained herein
and such breach shall not have been cured within five business days after receipt by MGT of written notice of such breach (provided,
however, that no such cure period shall be available or applicable to any such breach which by its nature cannot be cured) and
if not cured within the timeframe above and at or prior to the Closing, such breach would result in the failure of any of the conditions
set forth in Section 2.6 to be satisfied.


 



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2.10         
Effect of Termination. In the event of termination of this Agreement as provided in Section 2.9, this
Agreement shall forthwith become void and there shall be no liability or obligation on the part of the Sellers, the MGT Parties,
the Company, or their respective officers, directors, stockholders or Affiliates; provided, however, that (a) the
provisions of this Section 2.10 (Effect of Termination), Section 6.1 (Public Announcements), Section 6.2 (Confidentiality),
and Article 8 (Miscellaneous) shall remain in full force and effect and survive any termination of this Agreement, (b) nothing
herein shall relieve any Party hereto from liability in connection with any breach of such Party’s representations, warranties
or covenants contained herein, and (c) if the Company or the Sellers shall terminate this Agreement for any reason other than pursuant
to Section 2.9(a), 2.9(c) or 2.9(e), then the Company and the Sellers shall be obligated to pay to MGT all
expenses incurred by the MGT Parties in connection with the Securities Purchase.


 


3.                 
REPRESENTATIONS AND WARRANTIES REGARDING THE SELLERS. Each Seller, severally and not jointly, represents and
warrants to Purchaser as follows:


 


3.1             
Capacity. Such Seller is a natural person of legal age and capacity and has all requisite power and authority
to execute and deliver this Agreement and each other Transaction Agreement to which it is a party and to consummate the transactions
contemplated hereby and thereby. Such Seller’s true and complete principal residential address is set forth on Schedule
3.1 hereto and such Seller is not a “foreign person” within the meaning of Section 1445 of the Code.


 


3.2             
Execution; Validity of Agreement. This Agreement and each other Transaction Agreement to which a Seller is
a party has been duly executed and delivered by such Seller and this Agreement and each other Transaction Agreement to which a
Seller is a party constitutes a legal, valid and binding obligation of such Seller, enforceable against such Seller in accordance
with its respective terms.


 


3.3             
Ownership of Transferred Interests. The Transferred Interests of the Company listed on Schedule 2.3
opposite such Seller’s name are owned legally, beneficially and of record by such Seller and there are no other equity interests
in the Company that are owned by such Seller except as set forth on Schedule 2.3. All of such Transferred Interests are
owned by such Seller free and clear of all Liens and free of any other restriction, except for restrictions imposed by applicable
securities Laws and such Seller has good and marketable title to such Transferred Interests. Such Seller has not granted or acknowledged
to any Person any rights with respect to any Units owned by such Seller and such Seller has sole voting powe, sole power of disposition
and sole power to agree to all of the matters set forth in this Agreement with respect to such Seller’s Transferred Interests,
with no limitations, qualifications or restrictions on such rights. Such Seller does not have a claim against the Company or any
of its officers, directors, members, managers or any other Person with respect to the issuance of any equity interests of the Company.
Such Seller has not commenced nor does it intend to commence a voluntary case or other proceeding, and no involuntary case or other
proceeding has been commenced against such Seller, seeking liquidation or other relief with respect to its debts under any bankruptcy,
insolvency or other similar Law.


 



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3.4             
Consents and Approvals; No Violations. The execution, delivery and performance of this Agreement by each Seller
does not require, with respect to such Seller, any consent from, action by or in respect of, or filing with, any court or Governmental
Authority. Neither the execution and delivery of this Agreement nor any of the Transaction Agreements to which such Seller is a
party, nor the performance by such Seller of its obligations contemplated hereby or thereby, will (i) violate or constitute a default,
or require notice and/or consent under, any contract or other instrument, permit, concession, franchise or order to which such
Seller is a party or by which such Seller’s assets or properties are or may be subject or bound; (ii) violate any Applicable
Laws applicable to such Seller; or (iii) result in the creation of any Lien upon any Transferred Interests that are owned by such
Seller.


 


3.5             
Litigation. There is no Action pending, or to the knowledge of each Seller, threatened, before any Governmental
Authority or arbitrator which seeks to delay or prevent the consummation of the transactions contemplated by this Agreement by
such Seller or could, if successful, be reasonably expected to materially and adversely affect the ability of such Seller to perform
its obligations under this Agreement.


 


3.6             
Brokers and Finders. Other than Persons that will be paid in full at or prior to the Closing, no broker, finder,
agent or similar intermediary has acted on such Seller’s behalf in connection with this Agreement or the transactions contemplated
hereby, and there are no brokerage commissions, finders’ fees or similar fees or commissions payable in connection therewith.


 


3.7             
Investment Representations. Each Seller hereby represents and warrants as follows:


 


(a)               
Such Seller is acquiring the MGT Shares for investment purposes and not with a view to, or for resale in connection with,
any distribution;


 


(b)              
Such Seller is either (i) an “accredited investor” as such term is defined in Rule 501(a) under the Securities
Act of 1933, as amended (the “Securities Act”), or (ii) has such knowledge and experience in financial and business
matters that he is capable of evaluating the merits and risks of an investment in MGT and of protecting such Seller’s own
interest in connection with such investment;


 


(c)               
Such Seller understands that the issuance of the MGT Shares hereunder are not being registered under the Securities Act
or any state securities laws by reason of specific exemptions under the provisions thereof, the availability of which depend in
part on the accuracy of its representations in this Section 3.7;


 


(d)              
Such Seller understands that (i) the MGT Shares are “restricted securities” under applicable securities laws
which provide, in substance, that the shares of Common Stock may only be sold, transferred or otherwise disposed of pursuant to
an effective registration statement under the Securities Act and applicable state securities laws or an exemption from such registration,
(ii) MGT has no obligation or intention to effect any registration of the shares of Common Stock, and (iii) MGT will endorse any
certificates representing the shares of Common Stock with a legend describing the restrictions referenced in clause (i) of this
Section 3.7(d);


 



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(e)               
Such Seller is aware that an investment in MGT is highly speculative and subject to substantial risks. Such Seller is capable
of bearing the economic risks of an investment in MGT, including, but not limited to, the possibility of a complete loss of his
or her investment;


 


(f)               
Such Seller has had an opportunity to meet with, to obtain information from, to ask questions of, and to receive answers
from MGT and its management (including regarding the terms and conditions of the MGT Shares). Such Seller has been furnished with
all such information regarding MGT (including copies of the MGT’s financial statements and information regarding MGT’s
past and current operations and financial condition and its future plans) as he or she has deemed necessary to make an informed
investment decision with respect to the MGT Shares;


 


(g)              
Such Seller confirms that he or she has had the opportunity to obtain such independent legal and tax advice and financial
planning services as he has deemed appropriate prior to making a decision to invest in MGT and understands the tax consequences
of the transactions contemplated hereby; and


 


(h)              
Such Seller has been provided with (i) MGT’s most recent annual report on Form 10-K filed with the SEC, (ii) the information
contained in any reports or documents required to be filed by MGT with the SEC since its most recent annual report on Form 10-K,
and (iii) a brief description of the MGT Shares, the use of the proceeds from the sale of the MGT Shares, and any material changes
in MGT’s affairs that are not disclosed in the documents furnished.


 


4.                 
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY. The Founders hereby represent and warrant to the MGT
Parties as follows, and the MGT Parties, in agreeing to consummate the transactions contemplated by this Agreement, have relied
upon such representations and warranties:


 


4.1             
Incorporation; Authority. The Company (i) is a duly organized and validly existing limited liability company
in good standing under the laws of the State of New York and is duly qualified as a foreign limited liability company in any other
jurisdiction in which it does business; and (ii) has all requisite power and authority to own, lease and operate its property and
to carry on its business as presently conducted and to execute, deliver and perform its obligations under this Agreement and each
other Transaction Agreement to which the Company is a party. A true and correct copy of the Articles of Organization of the Company,
as amended to date, has been delivered to the Purchaser and is in full force and effect as of the date hereof.


 



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4.2             
Execution; Validity of Agreement; Due Authorization. This Agreement and each other Transaction Agreement to
which the Company is a party has been duly executed and delivered by the Company and this Agreement and each other Transaction
Agreement to which the Company is a party constitutes a legal, valid and binding obligation of the Company, enforceable against
the Company in accordance with their respective terms. The execution and delivery of this Agreement by the Company and the performance
by the Company of its obligations hereunder have been duly authorized by all necessary corporate action on the part of the Company.


 


4.3             
Consents and Approvals; No Violations. None of the execution, delivery or performance of this Agreement or
any other Transaction Agreement by the Company, the consummation by the Company of the transactions contemplated hereby or thereby,
or the compliance by the Company with any of the provisions hereof or thereof will (a) require (i) any filing with or notice to
any Governmental Authority or other Person, (ii) the obtaining of any Permit or (iii) the expiration or termination of any statutory
or regulatory waiting period, (b) result in a violation or breach of, or constitute (with or without due notice or lapse of time
or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration or require any payment) under,
any of the terms, conditions or provisions of any material note, bond, mortgage, indenture, lease, license, contract, agreement
or other instrument or obligation to which the Company is a party or by which the Company or any of the Company’s properties
or assets is bound, or (c) violate any Applicable Laws.


 


4.4             
Capitalization. The Company has issued 2,115 units (the “Units”), which constitute all
of the issued and outstanding equity interests of the Company. The Units have been duly authorized and are validly issued, fully
paid and nonassessable. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights or other contracts or commitments that could require the Company to issue, sell or otherwise cause to become
outstanding any of its equity interests. The Units were issued in compliance with all applicable securities laws, the Operating
Agreement, and any preemptive rights. The Company does not own or have any right to acquire any outstanding capital stock or other
equity interests in any Person nor is the Company subject to any obligation or requirement to purchase debt or equity securities
of, or otherwise provide funding of any type to, any other Person.


 


4.5             
Financial Statements.


 


(a)               
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles as
applied in the United States of America (“GAAP”) applied on a consistent basis during the periods involved and
fairly present in all material respects the financial position and results of operations and cash flows of the Company as at the
dates and for the periods presented therein.


 


(b)              
The Company has no liabilities, except (i) those liabilities reflected, disclosed or reserved against on the balance sheet
of the Company, (ii) liabilities resulting from the obligations set forth in this Agreement and the other Transaction Agreements,
and (iii) liabilities set forth on Schedule 4.5(b).






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(c)               
Since December 31, 2012, no event or condition of any character has had, or is reasonably likely to result in, a Material
Adverse Effect on the Company.


 


(d)              
All existing accounts receivable of the Company: (i) represent valid obligations of customers of the Company arising from
bona fide transactions entered into in the ordinary course of business, and (ii) are current and are not subject to any counterclaim
or set off.


 


4.6             
Compliance with Laws; Restrictions; Permits. The Company has complied with, is not in violation of, and has
not received any written notices of violation with respect to, any foreign, federal, state, or local statute, law or regulation.
There is no agreement (noncompete or otherwise), commitment, judgment, injunction, order or decree to which the Company is bound
which has or reasonably could be expected to have the effect of prohibiting or impairing the Company’s business. The Company
has provided the Purchaser with each consent, license, permit, grant or other authorization issued to the Company by a Governmental
Authority (i) pursuant to which the Company currently operates or holds any interest in any of its properties or (ii) which is
required for the operation of its business or the holding of any such interest (herein collectively called “Permits”),
which Permits are in full force and effect and constitute all Permits required to permit the Company to operate or conduct its
business or hold any interest in its properties or assets. The Company is in compliance with the terms of the Permits. No suspension
or cancellation of the Permits is threatened and the Company is not aware of any basis for believing that the Permits will not
be renewable upon expiration.


 


4.7             
Litigation. Except as set forth on Schedule 4.7 hereto, there are no Actions, pending or threatened
against the Company. There is no judgment, order, injunction, decree or award (whether rendered by a court, administrative agency
or by arbitration) to which the Company is a party.


 


4.8            
Employees; Contractors. 


 


(a)               
The Company does not employ, nor has it employed, any employees. The Company has never maintained any employee benefit plans.


 


(b)              
The names, compensation, and services provided of any contractors or other service providers of the Company are listed on
Schedule 4.8. No contractor or any other Person is in violation of any term of any confidentiality or other proprietary
information disclosure agreement or any other contract relating to the right or obligation of any such Person to perform services
for the Company.


 


4.9            
Contracts. Schedule 4.9 contains a complete and correct list of all contracts, agreements and commitments,
whether written or oral, of the Company. The Company has previously delivered to the Purchaser a correct and complete copy of each
written agreement and contract of the Company (as amended to date) and a written summary setting forth the material terms and conditions
of each oral agreement of the Company. Each such agreement is legal, valid, binding, enforceable, and in full force and effect;
no party is in breach or default under such agreements, and no event has occurred which with notice or lapse of time would constitute
a breach or default of such agreements, or permit termination, modification, or acceleration, under such agreements. Each such
agreement will continue to be legal, valid and binding, enforceable and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby.






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4.10        
Intellectual Property.


 


(a)               
The Company owns or possesses valid and binding licenses or other rights to use, whether or not registered, all Intellectual
Property necessary to carry out the business of the Company as presently conducted or anticipated to be conducted.


 


(b)              
Set forth on Schedule 4.10(b) is a complete and accurate list (showing in each case, the registered owner, title,
mark or name, applicable jurisdiction, application number or registration number and date of application or expiration, if any)
of all United States, foreign and state: (i) patents; (ii) trademark registrations and applications and material common law trademarks;
(iii) Internet domain names; and (iv) copyright registrations and applications owned by the Company. The Intellectual Property
set forth on Schedule 4.10(b) is herein referred to as the “Owned Intellectual Property.”


 


(c)               
Set forth on Schedule 4.10(c) is a complete and accurate list of (i) each contract (other than “click-through”
contracts for off-the-shelf Software entered into in the ordinary course of business) that is in effect pursuant to which the Company
uses the Intellectual Property of another Person in any manner that is material to the conduct of the business of the Company (the
“Company Licensed Intellectual Property”) and (ii) each contract that is in effect pursuant to which the Company
grants to another Person the right to use any Intellectual Property (the “Third Party Licensed Intellectual Property”,
and collectively with the Company Licensed Intellectual Property, the “Licensed Intellectual Property”; the
Licensed Intellectual Property and the Company Owned Intellectual Property shall be collectively referred to as the “Company
Intellectual Property”); all contracts set forth on, or required to be set forth on, Schedule 4.10(c) are herein
referred to as the “License Agreements”).


 


(d)              
The Owned Intellectual Property is solely and exclusively owned by the Company, as applicable, free and clear of all Liens.
None of the Owned Intellectual Property has been cancelled, expired, or abandoned and all mandatory fees required for the maintenance
of such rights have been paid on time, there are no circumstances which could give rise to an abandonment of any of Owned Intellectual
Property. The Company has not received any notification of any pending or threatened opposition, interference, re-examination or
cancellation proceeding before any court or registration authority in any jurisdiction against any Owned Intellectual Property.


 


(e)               
There are no settlements, injunctions, forbearances to sue, consents, consents to use, judgments, or orders or similar obligations
to which the Company is a party which (i) restrict the rights of the Company to use any Intellectual Property necessary to carry
out the business of the Company, or (ii) permit third parties to use any Intellectual Property which could otherwise infringe any
of the Owned Intellectual Property. No royalties, honoraria or other fees are payable by the Company for the use of or right to
use any Company Intellectual Property in connection with its business as currently conducted, except pursuant to the License Agreements.


 



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(f)               
 The conduct of the business of the Company, including, but not limited to, the operation of its Internet websites, as presently
conducted or intended to be conducted, does not infringe, dilute or misappropriate the Intellectual Property rights of any Person.
The Company has not received written notice that the conduct of the business of the Company, as currently conducted, infringes,
dilutes, misappropriates or constitutes the unauthorized use of any Intellectual Property rights owned or controlled by any third
party, or challenges the ownership, use, validity or enforceability of any Company Intellectual Property.


 


(g)              
No third party is misappropriating, infringing, diluting, or otherwise violating any Owned Intellectual Property, and no
such claims are pending against a third party by the Company relating to such matters.


 


(h)              
All Owned Intellectual Property was either (i) developed by an employee of the Company within the scope of employment of
the employee and pursuant to an invention assignment or subject to the work for hire doctrine, (ii) developed by a third party
under a work for hire and/or assignment agreement, or (iii) developed by a third party and transferred and assigned to the Company
under a transfer and assignment agreement. Neither the Sellers nor any current or former officer, director or employee of the Company
(or any family member thereof) retains any rights of ownership or use with respect to the Owned Intellectual Property.


 


(i)                
The Company owns or has the right to use all Software material to its business, including, but not limited to, the operation
of its Internet websites. No unlicensed copies of any mass market software that is available in consumer retail stores or otherwise
commercially available and subject to “shrink wrap” or “click through” license agreements have been installed
or maintained on any Company’s computers or computer systems by, or at the direction or with the express permission of a
manager, division head or similarly credentialed agent of, the Company, and no such unlicensed copies used for the business of
the Company are installed on the computers of the Company.


 


(j)                
The ownership in all Software and related Intellectual Property rights thereof, and any and all other Intellectual Property,
which has been developed by a past or current employee or consultant of the Company within the scope of that Person’s engagement,
has been assigned or otherwise transferred to the Company and is owned by the Company without limitation. Neither the Sellers nor
any current or former officer, director, employee or consultant of the Company (or any family member thereof) retains any rights
of ownership or use with respect to such Software and/or Intellectual Property.


 


(k)              
The Company takes commercially reasonable measures to protect the confidentiality of its Trade Secrets. No Trade Secret
of the Company has been improperly disclosed or has been misappropriated by another Person.


 


4.11        
Tangible Personal Property. Schedule 4.11 lists all of the fixed assets of the Company and each item
of tangible personal property having a book value of at least $1,000. The Company has good and legal title to all of the items
required to be listed on Schedule 4.11, free and clear of all Liens. Schedule 4.11 lists all leases of tangible personal
property leased by the Company and the location thereof. Except as set forth on Schedule 4.11, none of such leases contains
any covenant or restriction preventing or limiting the consummation of the transactions contemplated hereunder. All of the personal
property listed on Schedule 4.11 and the assets leased pursuant to the leases listed on Schedule 4.11 are suitable
for the uses for which they are employed, are in good operating condition and repair (ordinary wear and tear excepted) and have
been maintained in accordance with best industry practice.


 



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4.12        
Real Estate.


 


(a)               
The Company does not own any real property. Schedule 4.12 contains a complete and correct list of all the real property
that is leased by the Company or that the Company has agreed (or has an option) to lease, or may be obligated to lease in connection
with the conduct of the Company’s business and a correct and complete description of each lease pursuant to which such real
property is leased. Such real property is hereinafter referred to as the “Leased Property,” and the improvements
and fixtures thereon are hereinafter referred to as the “Leased Improvements.”


 


(b)              
Except as set forth on Schedule 4.12, the Company is the sole legal and equitable owner of the leasehold interest
in the Leased Property and the Leased Improvements and possesses good and marketable, indefeasible title thereto, free and clear
of all conditions, exceptions, reservations, Liens and other matters affecting title to such leasehold.


 


4.13        
Insurance. Schedule 4.13 lists each insurance policy maintained as of the date of this Agreement by,
at the expense of or for the benefit of, the Company and identifies any claims made thereunder. The Company has delivered to Purchaser
accurate and complete copies of the insurance policies identified in Schedule 4.13. Each of the insurance policies identified
in Schedule 4.13 is in full force and effect. The Company is not in default with respect to its obligations under any of
such insurance policies. The Company has not received any written notice or other written communication regarding any actual or
possible (a) cancellation or invalidation of any insurance policy, (b) refusal of any coverage or rejection of any claim under
any insurance policy, or (c) adjustment in the amount of the premiums payable with respect to any insurance policy.


 


4.14        
Taxes.


 


(a)               
There have been timely filed by the Company with the appropriate Taxing Authority all Tax Returns required to be filed on
or before the Closing Date. An extension of time within which to file any Tax Return which has not been filed has not been requested
or granted.


 


(b)              
The Company has timely paid in full all Taxes, which have become due and payable (whether or not shown on any Tax Return)
and has paid or reserved for all Taxes allocable to periods or portions thereof ending on or before the Closing Date.


 


(c)               
There are no Liens for Taxes upon any of the assets of the Company, except Liens for current Taxes not yet due and payable.


 


(d)              
There is no action, suit, proceeding, investigation, audit or claim now pending, proposed or, to the knowledge of the Company,
threatened against the Company in respect of any Tax.


 



    	15



    	 



    




(e)               
All Taxes that are required to be withheld or collected have been duly withheld and collected and, to the extent required,
have been properly paid or deposited as required by applicable laws.


 


(f)               
As used in this Agreement, “Tax” means any of the Taxes and “Taxes” means all income
taxes (including any tax on or based upon net income, or gross income, or income as specially defined, or earnings, or profits,
or selected items of income, earnings or profits) and all gross receipts, estimated, sales, use, ad valorem, transfer, franchise,
license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property or windfall profits taxes, environment,
alternative or add on minimum taxes, custom duties or other taxes, fees, assessments or charges of any kind whatsoever, together
with any interest and any penalties, additions to tax or additional amounts imposed by any Taxing Authority, whether disputed or
not.


 


(g)              
As used in this Agreement, “Tax Return” is defined as any return, report, information return or other
document (including any related or supporting information) filed or required to be filed with any federal, state, local or foreign
governmental entity or other authority (individually or collectively a “Taxing Authority”) in connection with
the determination, assessment or collection of any Tax (whether or not such Tax is imposed on the Company) or the administration
of any laws, regulations or administrative requirements relating to any Tax.


 


4.15        
Environmental Matters. The Company is, and has been, in compliance with all environmental laws. Neither the
Company nor any Seller has received any notice, report, or other information regarding any actual or alleged violation of environmental
laws by the Company, or any potential or actual liabilities arising under environmental laws.


 


4.16        
Books and Records. All books and records of the Company, including but not limited to records and lists of
past, present or prospective customers, suppliers, or personnel, marketing plans, sales literature and promotional literature and
other books, ledgers, files, reports, operating records are materially accurate and have been maintained in a manner consistent
with customary industry practices and in compliance with Applicable Law. All financial and accounting books, ledgers and accounts
of the Company have been properly and accurately kept and completed in all material respects, and do not contain any material inaccuracies
or discrepancies of any kind.


 


4.17        
Interested-Party Transactions.


 


(a)               
Except as set forth on Schedule 4.17, no officer, director, employee or member (nor any family member thereof) of
the Company has directly or indirectly, (i) an interest in any entity which provides services or products that the Company provides
or proposes to provide, (ii) an interest in any entity that purchases from or sells or furnishes to, the Company any goods or services,
or (iii) a beneficial interest in any Contract.


 


(b)              
Schedule 4.17 contains an accurate and complete list as of the date of this Agreement of all outstanding loans and
advances made by Company to any employee, director, consultant or independent contractor, other than routine travel advances made
to employees in the ordinary course of business.


 



    	16



    	 



    




4.18         
Bankruptcy. None of the Company or any Affiliate of the Company has committed or currently intends to commit
any act of bankruptcy, is insolvent, has proposed or currently intends to propose a compromise or arrangement to its creditors
generally, has had or currently intends to have any petition for a receiving order in bankruptcy filed against it, has made or
currently intends to make a voluntary assignment in bankruptcy, has initiated or currently intends to initiate any proceeding with
respect to a compromise or arrangement, has initiated or intends to initiate any proceeding to have itself declared bankrupt or
wound-up, has initiated or intends to initiate any proceeding to have a receiver appointed to any part of its assets, has had any
creditor take or currently anticipates that any creditor will take possession of any of its property, or has had any of the foregoing
become enforceable or currently anticipates that any of the foregoing will become enforceable upon any of its property.


 


4.19         
Broker’s Fee. No agent, broker, investment banker, firm, or other Person, acting on behalf of the Company
or any of its Affiliates, or under the authority of the Company or any of its Affiliates, is or will be entitled to any broker’s
or finder’s fee or any other commission or similar fee or expense, directly or indirectly, in connection with any of the
transactions contemplated by this Agreement or any of the other Transaction Agreements.


 


4.20         
Material Disclosure; No Omission. No representation or warranty of the Company contained in this Agreement
or in any other Transaction Agreement and no statement by or on behalf of the Company contained in any exhibit, certificate, schedule,
attachment or other instrument specified in this Agreement or in any other Transaction Agreement contains any untrue statement
of a material fact or omits to state any material fact necessary to make the statements contained herein or therein not misleading.


 


5.                 
REPRESENTATIONS AND WARRANTIES OF THE MGT PARTIES. Each MGT Party hereby represents and warrants to the Sellers
as follows:


 


5.1             
Organization. Each MGT Party is a duly organized and validly existing corporation in good standing under the
laws of the State of Delaware.


 


5.2             
No Conflicts. Neither the execution and delivery of this Agreement and each other Transaction Agreement to
which each MGT Party is a party, nor the performance by each MGT Party of its respective obligations hereunder and thereunder will:
(i) constitute a violation of any Applicable Law; (ii) violate or breach such MGT Party’s certificate of incorporation or
bylaws, in each case as amended to date; or (iii) violate any order, writ, injunction or decree applicable to such MGT Party.


 


5.3             
Due Authorization and Binding Effect. The execution and delivery of this Agreement by each MGT Party and the
performance by each MGT Party of its respective obligations hereunder have been duly authorized by all necessary corporate action
on the part of such MGT Party. This Agreement and each other Transaction Agreement to which each MGT Party is a party has been
duly executed and delivered by such MGT Party and constitutes the legal and binding obligation of such MGT Party enforceable against
it in accordance with their respective terms.


 



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5.4             
MGT Shares. The MGT Shares, when issued and paid for in accordance with the terms of this Agreement, will
be duly authorized, validly issued, fully paid and nonassessable securities of MGT.


 


6.                 
ADDITIONAL AGREEMENTS.


 


6.1             
Public Announcements. The Company shall not issue any press release or other public statement with respect
to this Agreement or the transactions contemplated hereby without the prior approval of MGT. The MGT Parties shall use commercially
reasonable efforts to consult with the Company before issuing any press release or other public statement with respect to this
Agreement or the transactions, except as may be required by Applicable Law.


 


6.2             
Confidentiality. Except for any press release or public announcement previously issued or issued in accordance
with Section 6.1, all terms of this Agreement, the other Transaction Agreements and the transactions contemplated hereby
and thereby shall remain confidential. No Party hereto shall disclose to anyone the negotiations, any information concerning the
contemplated transactions, or anything contained herein, except to their accountants, employees, bankers and attorneys in connection
with the transactions contemplated by this Agreement, without the approval of the other Parties.


 


6.3             
Further Assurances. The MGT Parties, the Company and the Sellers shall, at any time and from time to time
after the date hereof, do or cause to be done all such further acts, and to execute, acknowledge, deliver and file, or cause to
be executed, acknowledged, delivered or filed, all such deeds, transfers, conveyances, assignments or assurances as may be reasonably
requested by another Party for: (i) transferring, conveying and assigning the Transferred Interests to the Purchaser; and (ii)
otherwise effectuating the transactions contemplated by this Agreement. The Sellers shall (a) cause Fanthrowdown.com Inc. (the
“FTD S-Corp”) to transfer any rights or assets owned or held by the FTD S-Corp that are used in or related to
the business of the Company, and (b) at MGT’s request, either (x) cause the dissolution of the FTD S-Corp or (y) change the
name of the FTD S-Corp to a name that is reasonably acceptable to MGT.


 


6.4            
Seller Noncompete and Non-Solicit. From and for four (4) years after the Closing Date, other than through
the Company (whether as a member, employee, consultant, manager or otherwise), each Seller will not, directly or indirectly: (a)
own, manage, operate, join, control, or be connected in any manner with any business or activity which is competitive with the
Company Business (and as such business may evolve in the ordinary course after the Closing Date), or (b) cause or encourage any
Person or to discontinue their relationship with the Company.


 


7.                 
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION.


 


7.1             
Survival of Representations, Warranties and Covenants. Each statement contained in any exhibit, schedule,
or certificate delivered pursuant to this Agreement constitutes a representation and warranty by the Person who delivered it or
on whose behalf it was delivered. All representations and warranties set forth or made in this Agreement and any other Transaction
Agreement shall survive the Closing indefinitely. All covenants and agreements of the Parties set forth in this Agreement and the
other Transaction Agreements to be performed after the Closing shall survive the Closing in accordance with their respective terms.
Any claim pending on the expiration date of any applicable survival period for which a notification of claim has been made pursuant
to Section 7.4 below on or before such expiration date may continue to be asserted and indemnified against until finally
resolved.


 



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7.2             
Indemnification Obligations of the Sellers. The Founders and, in the case of (i) and (iii) below, the Other
Sellers, agree to indemnify, defend and hold harmless the MGT Parties and their respective shareholders, officers, directors, managers,
representatives, agents, employees and Affiliates (collectively, the “MGT Indemnitees”) from and against any
claim, suit, action, liability, loss, damage, deficiency, fee, cost or expense of any nature whatsoever (including, without limitation,
any diminution in value of any shares of Common Stock and any interest, penalties, investigation expenses and fees through trial
and appeals, and disbursements of counsel and accountants, but excluding incidental, consequential, special, or punitive and treble
damages) (collectively, “Losses”) arising out of, based upon or resulting from: (i) the breach of any representation
or warranty of the Sellers which is contained in Article 3 of this Agreement; (ii) the breach of any representation or warranty
regarding the Company which is contained in this Agreement, any other Transaction Agreement or any exhibits or schedules hereto
or thereto; (iii) any breach or failure to perform any of the covenants, agreements or undertakings of the Sellers contained in
this Agreement, any other Transaction Agreement or any exhibit or schedule hereto or thereto; (iv) the matters set forth on any
Schedules delivered pursuant to this Agreement; and (v) any and all costs and expenses (including reasonable legal and accounting
fees) incident to the enforcement of the indemnification rights of the MGT Indemnitees under this Section 7.2.


 


7.3             
Indemnification Obligations of the Purchaser(a)               
.  The Purchaser agrees to indemnify, defend and hold harmless the Sellers and their respective shareholders, officers,
directors, managers, representatives, agents, employees and Affiliates (collectively, the “Seller Indemnitees”,
and, together with the MGT Indemnitees, the “Indemnitees”) from and against any Losses arising out of, based
upon or resulting from: (i) the breach of any representation or warranty of the MGT Parties which is contained in this Agreement,
any other Transaction Agreement or any exhibits or schedules hereto or thereto; (ii) any breach or failure to perform any of the
covenants, agreements or undertakings of the MGT Parties contained in this Agreement, any other Transaction Agreement or any exhibits
or schedules hereto or thereto; and (iii) any and all costs and expenses (including reasonable legal and accounting fees) incident
to the enforcement of the indemnification rights of the Seller Indemnitees under this Section 7.3.


 


7.4             
Notification of Claims. In the event that any Party asserts a claim for indemnification hereunder, such Party
shall (a) provide the indemnifying Party (“Indemnifying Party”) with prompt written notice of the nature of
such claim (an “Indemnification Notice”), (b) make available to the Indemnifying Party all relevant information
which is material to the claim and which is in the possession of the Indemnitee and (c) otherwise reasonably cooperate with the
Indemnifying Party with respect to such claim; provided, however, that the failure of an Indemnitee to deliver an
Indemnification Notice under this Section 7.4 shall not relieve the Indemnifying Party of its indemnification obligations
under this Article 7 unless and only to the extent that such Indemnifying Party is materially prejudiced by such failure.


 



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7.5             
Investigation. The right to indemnification, payment of Losses or any other remedy based on the representations,
warranties and the covenants hereunder will not be affected by any investigation conducted with respect to, or any knowledge acquired,
or capable of being acquired at any time, whether before or after the Closing Date, with respect to the accuracy or inaccuracy
of, or compliance with, any such representation, warranty or covenant. Furthermore, no information or knowledge obtained in any
investigation pursuant this Agreement or any other Transaction Agreement shall affect or be deemed to modify any representation,
warranty or covenant contained herein or therein.


 


7.6             
Third-Party Claims.The obligations and liabilities of an Indemnifying Party under this Article 7,
with respect to Losses resulting from a claim brought by any third party (a “Third-Party Claim”) shall be subject
to the following terms and conditions:


 


(a)               
Promptly after delivery of an Indemnification Notice in respect of a Third-Party Claim, the Indemnifying Party may elect,
by written notice to the Indemnitee within ten (10) days of an Indemnification Notice, to undertake the investigation and defense
thereof with counsel reasonably satisfactory to the Indemnitee, at the sole cost and expense of the Indemnifying Party. If the
Indemnifying Party chooses to defend any Third-Party Claim, the Indemnitee shall cooperate with all reasonable requests of the
Indemnifying Party and shall make available to the Indemnifying Party any books, records or other documents within its control
that are necessary or appropriate for such defense.


 


(b)              
In the event that the Indemnifying Party, within ten (10) days after receipt of an Indemnification Notice, does not so elect
to defend such Third-Party Claim, the Indemnitee will have the right to undertake the investigation and defense of such Third-Party
Claim for the account of the Indemnifying Party. The Indemnitee shall not settle or compromise any Third-Party Claim, or consent
to the entry of a judgment, whether or not the Indemnifying Party shall elect to defend such Third-Party Claim, without the written
consent of the Indemnifying Party (which consent may not be unreasonably withheld).


 


8.                 
MISCELLANEOUS.


 


8.1             
Costs and Attorney’s Fees. The Parties agree that in the event it becomes necessary for any Party to
institute litigation or obtain the services of an attorney in order to enforce its rights under the provisions of this Agreement,
then, in that event, the prevailing Party as determined by a court of competent jurisdiction, may be awarded reasonable attorney’s
fees and costs expended in pursuit of such litigation, including appellate litigation.


 


8.2             
Notices. All notices, requests, claims, demands, waivers, instructions, documents and other communications
to be given pursuant to this Agreement shall be in writing and shall be delivered personally, faxed, or sent by nationally-recognized
overnight courier to a Party at the address set forth below for such Party or to such other address as the Party to whom notice
is to be given may have furnished to the other Parties hereto in writing in accordance herewith. Any such notice or communication
shall be deemed to have been delivered and received (a) in the case of personal delivery, on the date of such delivery, (b) in
the case of faxing, on the date sent (or on the first Business Day following the date sent if the date sent is not a Business Day)
if confirmation of successful transmission is received, and (c) in the case of a nationally-recognized overnight courier, on the
first Business Day after the date when sent for overnight delivery:


 



    	20



    	 



    




If to the MGT Parties,
to:


 


MGT Capital Investments,
Inc.


500 Mamaroneck Avenue
– Suite 204


Harrison, NY 10528


Attention: Robert B.
Ladd CFA


Fax: (914) 630-7532


 


with a copy (which will
not constitute notice) to:


 


Dickstein Shapiro LLP


1633 Broadway


New York, NY 10019


Attention: Barry Seidel


Fax: (917) 677-8183


 


If to the Company, to:


 


FanTD LLC


384 Broadway,
2nd Floor


Saratoga Springs,
NY 12866


Attention:
George Licata


 


If to a Seller, to such
Seller’s address on Schedule 3.1 hereto


 


                        with
a copy (which will not constitute notice) to


 


The Law Offices of
Philip J. Mellea


399 Knollwood Road
#111


White Plains, NY 10603


Attention: Philip J.
Mellea, Esq.


Fax: (914) 997-1778


 


8.3             
Entire Agreement. This Agreement (including the exhibits and schedules hereto), and the other Transaction
Agreements constitute the entire agreement among the Parties with respect to the subject matter hereto and supersede all prior
agreements and understandings, both oral and written, among the Parties with respect to the subject matter of this Agreement.


 


8.4             
Governing law; Consent to Jurisdiction.


 


(a)               
This Agreement shall be governed and construed in accordance with the laws of the State of New York, without regard to the
conflict of laws rules thereof.


 


(b)              
The Parties hereto irrevocably: (a) agree that any suit, action or other legal proceeding arising out of this Agreement
shall be brought in the United States District Court for the Southern District of New York or in the Borough of Manhattan, New
York Supreme Court, (b) consent to the jurisdiction of each such court in any suit, action or proceeding, (c) waive any objection
which they, or any of them, may have to the laying of venue of any such suit, action or proceeding in any of such courts, and (d)
agree that service of process by overnight courier or registered or certified mail, at the addresses listed in Section 8.2
shall be good and sufficient service of process. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.


 



    	21



    	 



    




8.5             
Binding effect. This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto
and their respective heirs, personal representatives, successors and permitted assigns. This Agreement may not be assigned by any
Party hereto without the prior written consent of the other Parties, which consent may be withheld at the discretion of each Party
whose consent is requested and any purported assignment, unless so consented to, shall be void and without effect.


 


8.6             
Waivers and Amendments. This Agreement may be amended, superseded, cancelled, renewed or extended, and the
terms hereof may be waived, only by a written instrument signed by the Parties hereto or, in the case of a waiver, by the Party
waiving compliance. Any Party may waive any misrepresentation by any other Party, or any breach of warranty by, or failure to perform
any covenant, obligation or agreement by any other Party, provided that mere inaction or failure to exercise any right,
remedy or option under this Agreement, or any delay in exercising the same, will not operate as nor shall be construed as a waiver,
and no waiver will be effective unless set forth in writing and only to the extent specifically stated therein, and no single or
partial exercise of any such right, power or privilege will preclude any further exercise thereof or the exercise of any such right,
power or privilege will preclude any further exercise thereof or the exercise of any other such right, power or privilege.


 


8.7             
Recitals, Exhibits and Schedules. The recitals to this Agreement and all exhibits and schedules attached hereto
are hereby incorporated by reference into, and made a part of, this Agreement.


 


8.8             
Headings. The descriptive headings in this Agreement are inserted for convenience only and do not constitute
a part of this Agreement.


 


8.9             
Severability. If any provision of this Agreement is determined to be illegal or unenforceable, such provision
will be deemed amended to the extent necessary to conform to Applicable Law, or, if it cannot be so amended without materially
altering the intention of the Parties, it will be deemed stricken and the remainder of this Agreement will remain in full force
and effect.


 


8.10         
Specific Performance. Each of the Parties hereto acknowledges and agrees that the other Parties hereto would
be irreparably damaged in the event any of the provisions of this Agreement were not performed in accordance with their specific
terms or were otherwise breached and that there would be no adequate remedy at law or in monetary damages to compensate for any
such breach. Accordingly, each Party hereto agrees that, in addition to any remedy to which such Party may be entitled at law or
in equity, they each shall be entitled to injunctive relief to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof, in each case without being required to post a bond or other security.


 



    	22



    	 



    




8.11         
Fees and Expenses. Subject to Section 8.2, the Sellers, the Company and the MGT Parties shall each
pay their own expenses incidental to the preparation and negotiation of this Agreement and the consummation of the transactions
contemplated hereby.


 


8.12         
Legal Representation of the Parties. Each of the Parties hereto has had the opportunity to have its own legal
counsel independently advise such Party with respect to the transactions contemplated by this Agreement and the other Transaction
Agreements. The Parties expressly agree that the language used in this Agreement shall be deemed to be the language chosen by the
Parties hereto to express their mutual intent, and no provision of this Agreement should be construed against or interpreted to
the advantage of any Party hereto by reason of such Party or its legal counsel having drafted or participated in the drafting thereof.


 


8.13         
Payment of Transfer Costs and Expenses. All stamp, transfer, documentary, sales, use, bulk, registration and
other such Taxes and fees (including penalties and interest) which may be imposed in any jurisdiction in connection with, or arising
from any of the transactions set forth herein shall be paid by the Sellers.


 


8.14         
No Third Party Beneficiaries. This Agreement is solely for the benefit of the Parties hereto and their successors
and permitted assigns and, except with respect to the rights of the MGT Indemnitees and the Seller Indemnitees under Article
7, this Agreement shall not be deemed to confer upon any third party any remedy, claim, reimbursement or other right in addition
to those which may exist without regard to this Agreement.


 


8.15         
Counterparts; Signatures. This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original and all of which together will constitute one and the same instrument. This Agreement and any amendments
hereto, to the extent executed and delivered by means of a facsimile machine or e-mail of a PDF file containing a copy of an executed
agreement (or signature page thereto), shall be treated in all respects and for all purposes as an original agreement or instrument
and shall have the same binding legal effect as if it were the original signed version thereof.


 


[Remainder of Page
Intentionally Blank; Signature Page Follows]


 




    	23



    	 



    

IN WITNESS WHEREOF,
the Parties have executed this Agreement as of the day and year first above written.


 


	 	PURCHASER:
	 	
        MGT SPORTS, INC.

         

         

        By: /s/ Robert
        B. Ladd                   

        Name: Robert B. Ladd

        Title: President and
        CEO

         

	 	
        MGT:

         

        MGT CAPITAL INVESTMENTS,
        INC.

         

         

        By: /s/ Robert
        B. Ladd                   

        Name: Robert B. Ladd

        Title: President and
        CEO

	 	 
	 	COMPANY:
	 	
        FANTD LLC

         

         

        By: _____________________________

        Name:

        Title:

         

	 	 
	 	FOUNDERS:
	 	
         

        /s/ Michael L. Mosiello                  

        Michael L. Mosiello

         

	 	/s/ Jonathan Licata                         

        Jonathan Licata

         

	 	/s/ George Licata                            

        George Licata

         

	 	/s/
Christopher Hutter                   

        Christopher Hutter

         

         

         

         



[Signature Page 1 to Securities Purchase
Agreement]


 



    	



    	 



    




	 	
        OTHER SELLERS:

         

	 	
        PROSTAR ENTERPRISES,
        INC.

         

         

        By: /s/ Matthew
        Probert_____________ 

        Name: Matthew Probert

        Title: Treasurer

         

	 	
        E & R POLISHING CORP.

         

         

        By: /s/ Rafael
        Abramov______________ 

        Name: Rafael Abramov

        Title: President

         

	 	/s/ Louis Venturino                                 

        Louis Venturino

         

	 	
        /s/ Brian
        L. Mosiello                                

        

        Brian L. Mosiello

         

	 	
        /s/ Kenneth
        Hutter                                  

        

        Kenneth Hutter

	 	
         

        /s/ Nicholas
        Costa                                   

        

        Nicholas Costa

         

	 	
        /s/ Frank
        Mongero Jr.                              

        

        Frank Mongero Jr.

         



 


  


[Signature Page 2 to Securities Purchase
Agreement]