MGT Capital Investments Inc.

11/04/2024 | Press release | Distributed by Public on 11/04/2024 05:07

Material Agreement Form 8 K

Item 1.01 Entry into a Material Definitive Agreement.

MGT Capital Investments, Inc. (the "Company") and Project Nickel LLC ("Project Nickel") have entered into three agreements: (i) a Convertible Note Exchange Agreement dated November 1, 2024 (the "Convertible Note Exchange Agreement"); (ii) a Warrant Exchange and Extinguishment Agreement dated November 1, 2024 (the "Warrant Exchange and Extinguishment Agreement"); and (iii) a Promissory Note Exchange Agreement dated November 1, 2024 (the "Promissory Note Exchange Agreement") (such three agreements are collectively referred to herein as the "Transactions").

Convertible Note Exchange Agreement and Issuance of New Secured Exchange Note

Pursuant to the Convertible Note Exchange Agreement, Project Nickel agreed to exchange the outstanding balance of an Original Issue Discount Secured Convertible Promissory Note dated December 19, 2023, issued in the principal amount of $1,578,840 with an interest rate of 6% per annum and a maturity date of December 31, 2024 (the "Original Secured Convertible Note") (as reported in the Company's Current Report on Form 8-K filed with the SEC on December 20, 2023), for (i) a new, nonconvertible Secured Exchange Note issued on November 1, 2024, in the principal amount of $1,620,240 with an interest rate of 8% per annum and a maturity date of December 31, 2025 (the "New Secured Exchange Note") and (ii) 750,000,000 duly authorized, non-assessable unregistered shares of common stock of the Company. 5. In case of an event of default under the New Secured Exchange Note, interest shall accrue at the lesser of (i) a rate of 12% per annum or (ii) the maximum amount permitted by law, and once the event of default is cured, the interest rate shall revert to 8% per annum. Furthermore, under the terms of the New Secured Exchange Note, an event of default may result, at the holder's election, in the accelerated maturity of the note, in which case 110% of the principal of and accrued and unpaid interest on the note will automatically become due and payable.

Warrant Exchange and Extinguishment Agreement and Issuance of Common Stock and Series D Preferred Stock

The Company previously issued to Project Nickel (i) a common stock purchase warrant dated September 12, 2022 (the "2022 Warrant") and (ii) in connection with certain convertible note conversions, an aggregate of 334,800,000 common stock purchase warrants pursuant to the 2022 Warrant (the "Conversion Warrants"). In addition, Project Nickel was the holder of warrants to purchase shares of common stock of the Company dated March 5, 2021 and July 21, 2021, which Project Nickel acquired from John Fife or entities affiliated with and controlled by John Fife (the "Fife Warrants" and together with the 2022 Warrants and the Conversion Warrants, collectively, the "Warrants"). Pursuant to the terms and conditions of the Warrant Exchange and Extinguishment Agreement, Project Nickel agreed to cancel and extinguish all of the Warrants outstanding and, in exchange, the Company agreed to issue to Project Nickel 600,000,000 shares of common stock of the Company and 650,000 shares of the Company's Series D Preferred Stock. Each share of the Company's Series D Preferred Stock is convertible at any time into 1,000 shares of common stock of the Company.

Promissory Note Exchange Agreement and Issuance of New Promissory Note

The Company previously issued to Project Nickel on November 20, 2023, March 6, 2024 and April 30, 2024 certain promissory notes with principal amounts of $25,000, $125,000, and $50,000, respectively, and such notes, including the default principal amount and interest thereon, had an aggregate outstanding balance of $241,590 (the "Existing Promissory Notes"). Pursuant to the Promissory Note Exchange Agreement, Project Nickel agreed to consolidate and exchange the Existing Promissory Notes for a new single, consolidated Promissory Note dated November 1, 2024, in the principal amount of $241,590 (the "New Promissory Note"). The New Promissory Note bears interest at a rate of 8% per annum, payable on a monthly basis, and matures on December 31, 2025. In case of an event of default under the New Promissory Note, interest shall accrue at the lesser of (i) a rate of 12% per annum or (ii) the maximum amount permitted by law, and once the event of default is cured, the interest rate shall revert to 8% per annum. Furthermore, under the terms of the New Promissory Note, an event of default may result, at the holder's election, in the accelerated maturity of the New Promissory Note, in which case 110% of the principal of and accrued and unpaid interest on the note will automatically become due and payable.

The foregoing descriptions of the Convertible Note Exchange Agreement, the Warrant Exchange and Extinguishment Agreement, the Promissory Note Exchange Agreement, the Original Secured Convertible Note, the New Secured Exchange Note, the Warrants, the New Promissory Note and other related documents are not complete and are qualified in their entirety by reference to the full text of the respective documents. Copies of the Convertible Note Exchange Agreement, the New Secured Exchange Note, the Warrant Exchange and Extinguishment Agreement, the Promissory Note Exchange Agreement, and the New Promissory Note are filed herewith as Exhibits 10.1, 4.1, 10.2, 10.3, 4.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.