PROMISSORY
NOTE


 


 


	U.S.
    $3,600,000.00	June
    1, 2018


 


FOR
VALUE RECEIVED, MGT Capital Investments, Inc., a Delaware corporation (“Borrower”),
promises to pay in lawful money of the United States of America to the order of Iliad Research
and Trading, L.P., a Utah limited partnership, or its successors or assigns (“Lender”), the principal
sum of $3,600,000.00, together with all other amounts due under this Promissory Note (this “Note”). This Note
is issued pursuant to that certain Note Purchase Agreement of even date herewith between Borrower and Lender (the “Purchase
Agreement”).


 


1.
PAYMENT. Beginning on the date that is two (2) months from the date hereof and continuing on the same day of each month
thereafter until this Note is paid in full, Borrower shall make monthly installment payments to Lender each in the amount of $400,000.00
(the “Installment Payments”). Borrower shall pay the entire outstanding balance of this Note to Lender on or
before the date that is ten (10) months from the date hereof. Borrower will make the Installment Payments and all other payments
of sums due hereunder to Lender at Lender’s address set forth in the Purchase Agreement, or at such other place as Lender
may designate in writing. Unless otherwise agreed or required by applicable law, payments will be applied first to any unpaid
collection costs and late charges, then to accrued interest and finally to principal.


 


2.
INTEREST. Interest shall not accrue on the unpaid principal balance of this Note unless an Event of Default (as defined
below) occurs. Upon the occurrence of an Event of Default, the outstanding balance of this Note shall bear interest at the lesser
of the rate of twelve (12%) per annum or the maximum rate permitted by applicable law, compounding daily and calculated on the
basis of a 360-day year, from the date the applicable Event of Default occurred until paid.


 


3.
ORIGINAL ISSUE DISCOUNT. This Note carries an original issue discount of $600,000.00, all of which amount is included in
the initial principal balance of this Note and is fully earned and payable as of the date hereof.


 


4.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments
of less than all principal, fees and interest outstanding will not, unless agreed to by Lender in writing, relieve Borrower of
any of Borrower’s obligations hereunder.


 


5.
SECURITY. This Note is unsecured.


 


6.
EVENT OF DEFAULT. The occurrence and continuance of any of the following shall constitute an “Event of Default”
under this Note:


 


6.1.
Failure to Pay. Borrower shall fail to pay when due, whether at stated maturity, upon acceleration or otherwise, any Installment
Payment, or any other payment required under the terms of this Note on the date due.


 


6.2.
Breaches of Covenants. Borrower or any other person or entity fails to comply with or to perform when due any other term,
obligation, covenant, or condition contained in this Note, in the Purchase Agreement, any other Transaction Document (as defined
in the Purchase Agreement), or in any other agreement securing payment of this Note.


 


6.3.
Representations and Warranties. Any representation or warranty made by Borrower to Lender in this Note, the Purchase Agreement,
any other Transaction Document, or any related agreement shall be false, incorrect, incomplete or misleading in any material respect
when made or furnished.


 




    	 



    	 



    

 


6.4.
Voluntary Bankruptcy or Insolvency Proceedings. Borrower shall (i) apply for or consent to the appointment of a receiver,
trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) be unable, or admit in writing
its inability, to pay its debts generally as they mature, (iii) make a general assignment for the benefit of itself or any of
its creditors, (iv) be dissolved or liquidated, or (v) commence a voluntary case or other proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in
effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary
case or other proceeding commenced against it.


 


6.5.
Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator, or
custodian of Borrower or of all or a substantial part of its property, or an involuntary case or other proceedings seeking liquidation,
reorganization, or other relief with respect to Borrower or its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect shall be commenced and an order for relief entered or such proceeding shall not be dismissed or discharged
within sixty (60) days of commencement.


 


6.6.
Government Action. If any governmental or regulatory authority takes or institutes any action that will materially affect
Borrower’s financial condition, operations or ability to pay or perform Borrower’s obligations under this Note.


 


6.7.
Judgment. A judgment or judgments for the payment of money in excess of the sum of $100,000.00 in the aggregate shall be
rendered against Borrower and either (i) the judgment creditor executes on such judgment or (ii) such judgment remains unpaid
or undischarged for more than sixty (60) days from the date of entry thereof or such longer period during which execution of such
judgment shall be stayed during an appeal from such judgment.


 


6.8.
Attachment. Any execution or attachment shall be issued whereby any substantial part of the property of Borrower shall
be taken or attempted to be taken and the same shall not have been vacated or stayed within thirty (30) days after the issuance
thereof.


 


6.9.
Cross Default. Borrower breaches or any event of default occurs under any term or provision of any Other Agreement (as
defined hereafter). For purposes hereof, “Other Agreement” means collectively, (i) all existing and future
agreements and instruments between, among or by Borrower (or an affiliate), on the one hand, and Lender (or an affiliate), on
the other hand, and (ii) any financing agreement or a material agreement that affects Borrower’s ongoing business operations.


 


7.
ACCELERATION; REMEDIES.


 


7.1.
At any time following the occurrence of an Event of Default (other than an Event of Default referred to in Sections 6.4 and 6.5),
Lender may, by written notice to Borrower, declare all unpaid principal, plus all accrued interest and other amounts due hereunder
to be immediately due and payable at the Mandatory Default Amount (as defined below) without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived, anything contained herein to the contrary notwithstanding.
Upon the occurrence or existence of any Event of Default described in Sections 6.4 and 6.5, immediately and without notice, all
outstanding unpaid principal, plus all accrued interest and other amounts due hereunder shall automatically become immediately
due and payable at the Mandatory Default Amount, without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived, anything contained herein to the contrary notwithstanding. In addition to the foregoing remedies,
upon the occurrence or existence of any Event of Default, Lender may exercise any other right, power or remedy permitted to it
by law, either by suit in equity or by action at law, or both. For purposes hereof, the term “Mandatory Default Amount”
means an amount equal to 120% of the outstanding balance of this Note as of the date the applicable Event of Default occurred,
plus all interest, fees, and charges that may accrue on such outstanding balance thereafter.


 




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7.2.
Upon the occurrence of a Change in Control (as defined below), and without further notice to Borrower, all unpaid principal, plus
all accrued interest and other amounts due hereunder, shall become immediately due and payable. For purposes hereof, a “Change
in Control” means a sale of all or substantially all of a Borrower’s assets, or a merger, consolidation, significant
equity financing, or other capital reorganization of Borrower with or into another company; provided however that a merger,
consolidation, significant equity financing, or other capital reorganization in which the holders of more than fifty percent (50%)
of the equity of Borrower outstanding immediately prior to such transaction continue to hold (either by the voting securities
remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the
total voting power represented by the voting securities of Borrower, or such surviving entity, outstanding immediately after such
transaction shall not constitute a Change in Control.


 


8.
UNCONDITIONAL OBLIGATION; NO OFFSET. Borrower acknowledges that this Note is an unconditional, valid, binding and enforceable
obligation of Borrower not subject to offset, deduction or counterclaim of any kind. Borrower hereby waives any rights of offset
it now has or may have hereafter against Lender, its successors and assigns, and agrees to make all payments due hereunder in
accordance with the terms of this Note.


 


9.
NO USURY. Notwithstanding any other provision contained in this Note or in any instrument given to evidence the obligations
evidenced hereby: (a) the rates of interest and charges provided for herein and therein shall in no event exceed the rates and
charges which result in interest being charged at a rate equaling the maximum allowed by law; and (b) if, for any reason whatsoever,
Lender ever receives as interest in connection with the transaction of which this Note is a part an amount which would result
in interest being charged at a rate exceeding the maximum allowed by law, such amount or portion thereof as would otherwise be
excessive interest shall automatically be applied toward reduction of the unpaid principal balance then outstanding hereunder
and not toward payment of interest.


 


10.
ATTORNEYS’ FEES. If this Note is placed in the hands of an attorney for collection or enforcement prior to commencing
arbitration or legal proceedings, or is collected or enforced through any arbitration or legal proceeding, or Lender otherwise
takes action to collect amounts due under this Note or to enforce the provisions of this Note, then Borrower shall pay the costs
incurred by Lender for such collection, enforcement or action including, without limitation, attorneys’ fees and disbursements.


 


11.
GOVERNING LAW; VENUE. This Note shall be construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of Utah, without giving
effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State of Utah. The provisions set forth in the Purchase
Agreement to determine the proper venue for any disputes are incorporated herein by this reference.


 


12.
ARBITRATION OF DISPUTES. Borrower agrees that any dispute arising under this Note shall be subject to the Arbitration Provisions
(as defined in the Purchase Agreement) set forth as an exhibit to the Purchase Agreement.


 




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13.
WAIVERS. Borrower hereby waives presentment, notice of nonpayment, notice of dishonor, protest, demand and diligence.


 


14.
LOSS OR MUTILATION. On receipt by Borrower of evidence reasonably satisfactory to Borrower of the loss, theft, destruction
or mutilation of this Note and, in the case of any such loss, theft or destruction of this Note, on delivery of an indemnity agreement
reasonably satisfactory in form and amount to Borrower or, in the case of any such mutilation, on surrender and cancellation of
such Note, Borrower at its expense will execute and deliver, in lieu thereof, a new Note of like tenor.


 


15.
NOTICES. Any notice required or permitted hereunder shall be given in the manner provided in the subsection titled “Notices”
in the Purchase Agreement, the terms of which are incorporated herein by this reference.


 


16.
AMENDMENT AND WAIVER. This Note and its terms and conditions may be amended, waived or modified only in writing by Borrower
and Lender.


 


17.
SEVERABILITY. If any part of this Note is construed to be in violation of any law, such part shall be modified to achieve
the objective of the parties to the fullest extent permitted and the balance of this Note shall remain in full force and effect.


 


18.
ASSIGNMENTS. Borrower may not assign this Note without the prior written consent of Lender. This Note may be offered, sold,
assigned or transferred by Lender without the consent of Borrower.


 


19.
FINAL NOTE. This Note, together with the other Transaction Documents, contains the complete understanding and agreement
of Borrower and Lender and supersedes all prior representations, warranties, agreements, arrangements, understandings, and negotiations.
THIS NOTE, TOGETHER WITH THE OTHER TRANSACTION DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF ANY ALLEGED PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.


 


20.
Waiver of Jury Trial. BORROWER IRREVOCABLY WAIVES ANY AND ALL RIGHTS IT
MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS NOTE OR THE RELATIONSHIPS
OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON
LAW OR ANY APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER, BORROWER ACKNOWLEDGES THAT IT KNOWINGLY AND VOLUNTARILY IS WAIVING
SUCH PARTY’S RIGHT TO DEMAND TRIAL BY JURY.


 


21.
TIME IS OF THE ESSENCE. Time is of the essence of this Note and each and every provision hereof in which time is an element.


 


22.
LIQUIDATED DAMAGES. Lender and Borrower agree that in the event Borrower fails to comply with any of the terms or provisions
of this Note, Lender’s damages would be uncertain and difficult (if not impossible) to accurately estimate because of the
parties’ inability to predict future interest rates and other relevant factors. Accordingly, Lender and Borrower agree that
any fees, balance adjustments, default interest or other charges assessed under this Note are not penalties but instead are intended
by the parties to be, and shall be deemed, liquidated damages.


 


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IN
WITNESS WHEREOF, Borrower has caused this Note to be issued as of the date first set forth above.


 


	 	BORROWER:
	 	MGT
    Capital Investments, Inc.
	 	 	 
	 	By:       	/s/ Robert
                                         Ladd




	 	Name:	Robert Ladd




	 	Title:	President
                                         and CEO






 





[Signature
Page to Promissory Note]




 







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