EXCHANGE
AGREEMENT


 


THIS
EXCHANGE AGREEMENT (the “Agreement”), dated as of September 1, 2016, is made by and between MGT Capital Investments,
Inc., a Delaware corporation (the “Company”), and the holder of certain Notes and Warrants (as defined herein) set
forth on the signature page hereof (the “Holder”).


 


WHEREAS,
pursuant to that certain Securities Purchase Agreement (the “Purchase Agreement”) dated as of August 1, 2016, by and
between the Company and the Holder, the Holder purchased from the Company a 12% Senior Unsecured Promissory Note (the “Note”)
and warrants (the “Warrants”) to purchase shares of the Company’s common stock;


 


WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to Section 3(a)(9) of the Securities Act of 1933,
as amended (the “Securities Act”), the Company desires to exchange with the Holder, and the Holder desires to exchange
with the Company, the entire Note including accrued but unpaid interest thereon, in the amount of One Million Six Hundred Fifty
Thousand dollars ($1,650,000), for shares of the Company’s common stock (the “Exchange Note”) at an exchange
price of Three dollars ($3.00) per share;


 


WHEREAS,
as inducement for the Holder to exchange the Note, the Company has agreed to also exchange Warrants to purchase Three Hundred
Thousand (300,000) shares of common stock issued to the Holder under the Purchase Agreement, into shares of the Company’s
common stock (such Warrant and the Exchange Note shall be referred to herein as the “Exchange Securities”).


 


NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration
the receipt and adequacy of which are hereby acknowledged, the Company and Holder agree as follows:


 


1.Terms
of the Exchange. The Company and Holder agree that the Holder will exchange the Exchange Securities and will relinquish any
and all other rights he may have under the Exchange Securities in exchange for Eight Hundred Fifty Thousand (850,000) shares of
common stock (the “Securities”).


 


2.Closing.
Upon satisfaction of the conditions set forth herein, a closing shall occur at the principal offices of the Company, or such
other location as the parties shall mutually agree. At closing, Holder shall deliver certificates representing the Exchange Securities
to the Company and the Company shall deliver to such Holder a certificate evidencing the Securities, in the name(s) and amount(s)
as requested by the Holder. Upon closing, and except as set forth herein, any and all obligations of the Company to the Holder
under the Exchange Securities shall be fully satisfied, the certificates evidencing the Exchange Securities shall be cancelled
and Holder will have no remaining rights, powers, privileges, remedies or interests under the Exchange Securities.


 




    	 	 	 



    	 	 	 



    


 


3.
Further Assurances




 


Each
party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.


 


4.Representations
and Warranties of the Holder. The Holder represents and warrants, as of the date hereof and as of the closing, to the Company
as follows:


 


a.Authorization;
Enforcement. The Holder has the requisite power and authority to enter into and to consummate the transactions contemplated
by this Agreement and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement
by the Holder and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Holder and no further action is required by the Holder. This Agreement has been (or upon delivery
will have been) duly executed by the Holder and, when delivered in accordance with the terms hereof, will constitute the valid
and binding obligation of the Holder enforceable against the Holder in accordance with its terms, except: (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited
by applicable law.


 


b.Tax
Advisors. The Holder has reviewed with its own tax advisors the U.S. federal, state, local and foreign tax consequences of
this investment and the transactions contemplated by this Agreement. With respect to such matters, the Holder relies solely on
such advisors and not on any statements or representations of the Company or any of its agents, written or oral. The Holder understands
that it (and not the Company) shall be responsible for its own tax liability that may arise as a result of this investment or
the transactions contemplated by this Agreement.


 


c.Information
Regarding Holder. Holder is an “accredited investor”, as such term is defined in Rule 501 of Regulation D promulgated
by the United States Securities and Exchange Commission (the “Commission”) under the Securities Act, is experienced
in investments and business matters, has made investments of a speculative nature and has purchased securities of companies in
private placements in the past and, with its representatives, has such knowledge and experience in financial, tax and other business
matters as to enable the Holder to utilize the information made available by the Company to evaluate the merits and risks of and
to make an informed investment decision with respect to the proposed purchase, which represents a speculative investment. Holder
has the authority and is duly and legally qualified to purchase and own the Securities. Holder is able to bear the risk of such
investment for an indefinite period and to afford a complete loss thereof.


 


d.Legend.
The Holder understands that the Securities have been issued pursuant to an exemption from registration or qualification under
the Securities Act and applicable state securities laws, and except as set forth below, the Securities shall bear any legend as
required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of such stock certificates):


 




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THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT 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
TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE 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.


 


e.Removal
of Legends. Certificates evidencing the Securities shall not be required to contain the legend set forth in Section 4(d) above
or any other legend (i) while a registration statement covering the resale of such Securities is effective under the Securities
Act, (ii) following any sale of such Securities pursuant to Rule 144 (as defined herein) (assuming the transferor is not an affiliate
of the Company), (iii) if such Securities are eligible to be sold, assigned or transferred under Rule 144 and the subscriber is
not an affiliate of the Company (provided that the Holder provides the Company with reasonable assurances that such Securities
are eligible for sale, assignment or transfer under Rule 144 which shall not include an opinion of the Holder’s counsel),
(iv) in connection with a sale, assignment or other transfer (other than under Rule 144), provided that the Holder provides the
Company with an opinion of counsel to the Holder, in a generally acceptable form, to the effect that such sale, assignment or
transfer of the Securities may be made without registration under the applicable requirements of the Securities Act or (v) if
such legend is not required under applicable requirements of the Securities Act (including, without limitation, controlling judicial
interpretations and pronouncements issued by the Commission). If a legend is not required pursuant to the foregoing, the Company
shall no later than three (3) business days following the delivery by the Holder to the Company or the transfer agent (with notice
to the Company) of a legended certificate representing such Securities (endorsed or with stock powers attached, signatures guaranteed,
and otherwise in form necessary to affect the reissuance and/or transfer, if applicable), together with any other deliveries from
the Holder as may be required above in this Section 4(e), as directed by the Holder, either: (A) provided that the Company’s
transfer agent is participating in the DTC Fast Automated Securities Transfer Program and such Securities are Conversion Shares,
credit the aggregate number of shares of common stock to which the Holder shall be entitled to the Holder’s or its designee’s
balance account with DTC through its Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is not
participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier) to the
Holder, a certificate representing such Securities that is free from all restrictive and other legends, registered in the name
of the Holder or its designee. The Company shall be responsible for any transfer agent fees or DTC fees with respect to any issuance
of Securities or the removal of any legends with respect to any Securities in accordance herewith, including, but not limited
to, fees for the opinions of counsel rendered to the transfer agent in connection with the removal of any legends.


 


f.Restricted
Securities. The Holder understands that: (i) the Securities have not been and are not being registered under the Securities
Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered
thereunder, (B) the Holder shall have delivered to the Company (if requested by the Company) an opinion of counsel to the Holder,
in a form reasonably acceptable to the Company, to the effect that such Securities to be sold, assigned or transferred may be
sold, assigned or transferred pursuant to an exemption from such registration, or (C) the Holder provides the Company with reasonable
assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the Securities
Act (or a successor rule thereto) (collectively, “Rule 144”); and (ii) any sale of the Securities made in reliance
on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale
of the Securities under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities
Act or the rules and regulations of the SEC promulgated thereunder.


 




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5.Representations
and Warranties of the Company. The Company hereby makes the following representations and warranties to the Holder:


 


a.Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other agreements entered into by the parties hereto in connection with the transactions
contemplated by this Agreement (collectively, the “Exchange Documents”) and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action
is required by the Company, the Board of Directors of the Company or the Company’s stockholders in connection therewith.
This Agreement have been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with
the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance
with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by
laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.


 


b.Organization
and Qualification. Each of the Company and its subsidiaries (the “Subsidiaries”) are entities duly organized and
validly existing and in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power
and authorization to own their properties and to carry on their business as now being conducted and as presently proposed to be
conducted. Each of the Company and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good
standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect.
As used in this Agreement, “Material Adverse Effect” means any material adverse effect on (i) the business, properties,
assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the Company or
any Subsidiary, individually or taken as a whole, (ii) the transactions contemplated hereby or in any of the other Exchange Documents
or (iii) the authority or ability of the Company to perform any of its obligations under any of the Exchange Documents. Other
than its Subsidiaries, there is no Person (as defined below) in which the Company, directly or indirectly, owns capital stock
or holds an equity or similar interest. “Person” means an individual, a limited liability company, a partnership,
a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any governmental entity or any department
or agency thereof.


 




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c.No
Conflict. The execution, delivery and performance of the Exchange Documents by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby will not (i) result in a violation of the Articles of Incorporation (as defined
below) or other organizational documents of the Company or any of its Subsidiaries, any capital stock of the Company or any of
its Subsidiaries or Bylaws (as defined below) of the Company or any of its Subsidiaries, (ii) conflict with, or constitute a default
(or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries
is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including foreign, federal
and state securities laws and regulations and the rules and regulations of principal market in which the Company’s securities
are listed (the “Principal Market”) applicable to the Company or any of its Subsidiaries or by which any property
or asset of the Company or any of its Subsidiaries is bound or affected except, in the case of clause (ii) or (iii) above, to
the extent such violations that could not reasonably be expected to have a Material Adverse Effect.


 


d.No
Consents. Neither the Company nor any Subsidiary is required to obtain any consent from, authorization or order of, or make
any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other Person
in order for it to execute, deliver or perform any of its respective obligations under or contemplated by the Exchange Documents,
in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations
which the Company or any Subsidiary is required to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date of this Agreement, and neither the Company nor any of its Subsidiaries is aware of any facts or circumstances
which might prevent the Company or any of its Subsidiaries from obtaining or effecting any of the registration, application or
filings contemplated by the Exchange Documents. 


 


e.Securities
Law Exemptions. Assuming the accuracy of the representations and warranties of the Holder contained herein, the offer and
issuance by the Company of the Securities is exempt from registration under the Securities Act. The Company covenants and represents
to the Holder that neither the Company nor any of its Subsidiaries has received, anticipates receiving, has any agreement to receive
or has been given any promise to receive any consideration from the Holder or any other Person in connection with the transactions
contemplated by the Exchange Documents.


 


f.Issuance
of Securities. The issuance of the Securities is duly authorized and upon issuance in accordance with the terms of the Exchange
Documents shall be validly issued, fully paid and non-assessable and free from all taxes, liens, charges and other encumbrances
with respect to the issue thereof.


 




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g.Equity
Capitalization. Except as disclosed in the SEC Documents (as defined below): (i) none of the Company’s or any Subsidiary’s
capital stock is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by
the Company or any Subsidiary; (ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital
stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to issue additional capital stock of the Company or any of its Subsidiaries
or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of its Subsidiaries; (iii)
there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments
evidencing indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may
become bound; (iv) there are no financing statements securing obligations in any amounts filed in connection with the Company
or any of its Subsidiaries; (v) there are no agreements or arrangements under which the Company or any of its Subsidiaries is
obligated to register the sale of any of their securities under the Securities Act; (vi) there are no outstanding securities or
instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a
security of the Company or any of its Subsidiaries; (vii) there are no securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the Securities; (viii) neither the Company nor any Subsidiary has any stock
appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement; and (ix) neither the
Company nor any of its Subsidiaries have any liabilities or obligations required to be disclosed in the in the Company’s
filings with the Commission (the “SEC Documents”) which are not so disclosed in the SEC Documents, other than those
incurred in the ordinary course of the Company’s or its Subsidiaries’ respective businesses and which, individually
or in the aggregate, do not or could not have a Material Adverse Effect. True, correct and complete copies of the Company’s
Articles of Incorporation, as amended and as in effect on the date hereof (the “Articles of Incorporation”), and the
Company’s bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the terms of all securities
convertible into, or exercisable or exchangeable for, shares of common stock and the material rights of the holders thereof in
respect thereto are incorporated in, or have been disclosed in, the SEC Documents.


 


(h)
Shell Company Status. The Company is not an issuer identified in Rule 144(i)(1) of the Securities Act. The Company is,
and has been for a period of at least 90 days, subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange
Act.


 




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		6.	Miscellaneous.



 


a.Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors
and assigns.


 


b.Governing
Law; Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed by and construed under the laws of the State of
New York without regard to the choice of law principles thereof. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in the State of New York located in The City of New York, Borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or therewith or with any transaction contemplated hereby or thereby,
and hereby irrevocably waives any objection that such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to
serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST,
A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.


 


c.Severability.
If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability
shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability
of any provision of this Agreement in any other jurisdiction.


 


d.Counterparts/Execution.
This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that
any signature is delivered by facsimile transmission or by an e-mail which contains an electronic file of an executed signature
page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature
is executed) with the same force and effect as if such facsimile or electronic file signature page (as the case may be) were an
original thereof.


 


e.Notices.
Any notice or communication permitted or required hereunder shall be in writing and shall be deemed sufficiently given if
hand-delivered or sent (i) postage prepaid by registered mail, return receipt requested, or (ii) by facsimile, to the respective
parties as set forth below, or to such other address as either party may notify the other in writing.


 


	If
    to the Company, to:	MGT
    Capital Investments
	 	500
    Mamaroneck Avenue, Suite 320
	 	Attention:
    Robert Ladd, 
	 	Chief
    Executive Officer


 


If
to Holder, to the address set forth on the signature page of the Holder


 


f.Expenses.The
parties hereto shall pay their own costs and expenses in connection herewith.


 




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g.Entire
Agreement; Amendments. This Agreement constitutes the entire agreement between the parties with regard to the subject matter
hereof and thereof, superseding all prior agreements or understandings, whether written or oral, between or among the parties.
This Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms and conditions hereof may be
waived, only by a written instrument signed by all parties, or, in the case of a waiver, by the party waiving compliance. Except
as expressly stated herein, no delay on the part of any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege hereunder preclude any other
or future exercise of any other right, power or privilege hereunder.


 


h.Headings.
The headings used in this Agreement are used for convenience only and are not to be considered in construing or interpreting
this Agreement.


 


i.Reporting
Status. For a period of two (2) years from the date hereof, the Company shall timely file all reports required to be filed
with the Commission pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Company
shall continue to timely file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder
would otherwise no longer require or permit such filings. 


 


j.Pledge
of Securities. The Company acknowledges and agrees that the Securities may be pledged by the Holder in connection with a bona
fide margin agreement or other loan or financing arrangement that is secured by the Securities. The pledge of Securities shall
not be deemed to be a transfer, sale or assignment of the Securities hereunder, and if the Holder effects a pledge of Securities
it shall not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant
to this Agreement. The Company hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably
request in connection with a pledge of the Securities to such pledgee by the Holder.


 


(Signature
Pages Follow)


 




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IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the day and year first above written.


 


	MGT
CAPITAL INVESTMENT, INC.	 
	 	 	 
	By:	                                  	 
	Name:
    	 	 
	Title:	 	 


 


HOLDER:
[ ]


 


	By:
    	                                      	 


 


Address
for Notices:


 


Address
for delivery of Securities: