Item 1.01 Entry into a Material Definitive Agreement.
On March 16, 2023 MGT Capital Investments, Inc (the "Company" or "MGT") entered
into a Partnership Agreement (the "Partnership Agreement") and a Property Lease
Agreement (the "Lease Agreement, and together with the Partnership Agreement,
collectively, the "Agreement") with another cryptocurrency mining company
("Tenant"). The terms of the Agreement are summarized as follows.
Pursuant to the Lease Agreement, the Company agreed to lease to Tenant portions
of the Company's six acre mining facility in Lafayette, GA in increments of up
to 10 spaces that are 40 feet in length and eight feet in height each
("Spaces"), together with related utilities access including electricity of up
to one megawatt ("MW") per Space, for deploying mining equipment, in exchange
for rental payments of $5,000 per Space per month (provided the Spaces are
powered) and payment of the electricity costs and deposit requirements arising
from the Spaces. In connection with the Lease Agreement, Tenant agreed to make
an initial deposit of $228,913 for the initial electricity deployment for five
MW. In the event of electricity rate escalations in excess of an enumerated
threshold, rental obligations will be suspended for up to a 30-day period
wherein Tenant may determine whether to continue leasing the Space(s). Under the
Lease Agreement, Tenant is also required to maintain insurance for the Space(s).
The Lease Agreement provides certain other provisions that are standard or
common of agreements of its type, including representations and warranties,
limitations on liability, and indemnification, and force majeure, among others.
Pursuant to the Partnership Agreement, the Company agreed to issue Tenant
500,000 shares its common stock per month for each rented Space (the "Monthly
Issuances"), and to also issue an additional number of shares of common stock
annually equal to 100% of the Monthly Issuances for the applicable year (the
"Annual Issuances," and together with the Monthly Issuances, collectively, the
"Issuances"). Further, pursuant to the Partnership Agreement, the Company
provided Tenant with the option (the "Option") to lend MGT up to $1 million
evidenced by a convertible promissory note that is convertible into 25% of the
Company's outstanding common stock, assuming all $1 million is lent, on a
pro-forma, post-issuance basis (the "Note"), together with an accompanying
warrant to purchase 60% of the shares of common stock underlying the Note (the
"Warrant"). The terms of the Note and Warrant would be substantially similar to
the Original Issue Discount Secured Convertible Promissory Note and accompanying
Warrant that were issued by the Company on or about September 12, 2022, as are
disclosed in and filed as exhibits to the Company's Current Report on Form 8-K
filed on September 14, 2022. If the Option is exercised, the parties may elect
to substitute the $1 million purchase price, in whole or in part, with equipment
and infrastructure improvements to enable the Company to have access to up to an
additional 10 MWs of electricity to the facility's currently available
electrical power capacity. The Company's facility currently has electrical
capacity of up to 10 MW. The Agreement has a term of 24 months.
The foregoing description of the Lease Agreement and the Partnership Agreement
does not purport to be completed and is qualified in its entirety by the full
text of such agreements, forms of which are filed herewith as Exhibits 10.1 and
Item 3.02. Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 of this Current Report on Form 8-K with
respect to the Issuances and the Options is incorporated by reference into this
Item 3.02 in its entirety. The execution of the Agreement and the transactions
contemplated thereby were exempt from registration pursuant to Section 4(a)(2)
of the Securities Act of 1933 as a transaction not involving a public offering.
Item 9.01 Financial Statements and Exhibits
Exhibit Number Description
10.1 Form of Lease Agreement
10.2 Form of Partnership Agreement
104 Cover Page Interactive Data File (embedded within the Inline XBRL
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