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NOTE
6 – Subsequent Events
On
October 1, 2021, Marathon Digital Holdings, Inc. (the “Company”) entered into a Revolving Credit and Security Agreement (the
“Agreement”) with Silvergate Bank (the “Bank”) pursuant to which Silvergate has agreed to loan the Company up
to $100,000,000 on a revolving basis pursuant to the terms of the Agreement and the $100,000,000 principal amount revolving credit note
issued by the Company in favor of the Bank under the Agreement (“Note”). The terms of the facility (“RLOC”) set
forth in the Agreement and Note are as follows:
| Initial
Term: |
One
(1) Year |
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| Availability: |
The
RLOC shall be made available from time to time to the Company for periodic draws (provided no event of default then exists) from
its closing date up to and including the one- year anniversary of the loan date. |
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| Origination
Fee: |
0.25%
of the Loan Commitment to the Bank (or $250,000); due at RLOC closing. |
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| Unused
Commitment Fee: |
0.25%
per annum of the portion of the unused Loan Commitment, payable monthly in arrears. |
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| Renewal: |
The
RLOC may be renewed annually by agreement between the Bank and the Company, subject to (without limitation): (i) Company makes a
request for renewal, in writing, no less than sixty (60) days prior to the then current maturity date, (ii) no event of default then
exists, (iii) Company provides all necessary documentation to extend the RLOC, (iv) Company has paid all applicable fees related
to the loan renewal, and (v) the Bank has approved such extension request according to its internal credit policies as determined
by the Bank in its sole and absolute discretion.
If
the Bank approves a request by Company to renew the RLOC upon any maturity, then a Renewal Fee of 0.25% of the Loan Commitment (or
$250,000) shall be due and payable upon extension of the Loan Commitment.
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| Payments: |
Interest
only to be paid monthly, with principal all due at maturity. |
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| Collateral: |
The
RLOC will be secured by a pledge of a sufficient amount of Company’s right, title and interest in and to bitcoin and/or U.S.
Dollar (“USD”) stored in a custody account for the benefit of the Bank (the “Collateral Account”). the Bank
will establish a Collateral Account with a regulated custodial entity (the “Custodian”) that has been approved by the
Bank. the Bank and Custodian will have a custodial agreement to perfect the security interest in the pledged Collateral Account which,
among other things, allows for 1) the Bank to monitor the balance of the Collateral Account and 2) allows the Bank to have exclusive
control over the Collateral Account including liquidation of the collateral in the event of Company’s default under the terms
of the RLOC. the Bank may also file a UCC financing statement on the pledged collateral. |
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| Minimum
Advance Rate: |
At
origination, the Company must ensure the Collateral Account balance has sufficient bitcoin (and/or US$) to cause a Loan to Value
(the “LTV”) ratio of 65% (or less) (“Minimum Advance Rate”) on the unpaid principal balance of the RLOC. |
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| Covenants: |
The
Company must maintain a minimum debt to equity ratio of 0.5:1. The Company must maintain a minimum liquidity of $25,000,000. |
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