Item
1.01 Entry into a Material Definitive Agreement
On
January 27, 2023,
Marathon Digital Holdings, Inc. (the “Company”) and FS Innovation, LLC (“FSI”) entered into a Shareholders’
Agreement (the “Agreement”) regarding formation of an Abu Dhabi Global Markets company (the “ADGM Entity”), whose
purpose shall be to jointly (a) establish and operate one or more mining facilities for digital assets; and (b) mine digital assets (collectively,
the “Business”). The initial project by the ADGM Entity shall consist of two digital asset mining sites comprising 250 MW
in Abu Dhabi, and the initial equity ownership in the ADGM Entity shall be 80% FSI and 20% the Company, and capital contributions will
be made, subject to the satisfaction or waiver of certain conditions, during the 2023 development period in those proportions, consisting
of both cash and in kind, in amounts of approximately $406 million in aggregate. FSI will appoint four directors to the board of the
ADGM Entity, and the Company will appoint one director.
Unless
otherwise not permitted by applicable law, the digital assets mined by the ADGM Entity will be distributed to the Company and FSI twice
a month in proportion to their respective equity interests in the ADGM Entity. There are market provisions in the Agreement with respect
to financial and tax matters.
The
Agreement shall terminate at the earlier of the mutual written agreement of the parties, winding up of the ADGM Entity or the ownership
by a shareholder of all of the outstanding equity interests in the ADGM Entity. The Agreement contains market terms on transfer of shares
by a shareholder, pre-emptive rights and certain tag along and drag along rights upon a sale of the ADGM Entity. Furthermore, there are
five year restrictive covenants which, inter alia, prevent Marathon from competing in the UAE with the Business or with the business
of FSI or any of certain related parties and prevent FSI from competing in the U.S. with the business of Marathon.
Item
9.01 Exhibits
FORWARD-LOOKING
STATEMENTS
This
Form 8-K and other reports filed by Registrant from time to time with the Securities and Exchange Commission (collectively, the “Filings”)
contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available
to, Registrant’s management as well as estimates and assumptions made by Registrant’s management. When used in the Filings
the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,”
“plan” or the negative of these terms and similar expressions as they relate to Registrant or Registrant’s management
identify forward-looking statements. Such statements reflect the current view of Registrant with respect to future events and are subject
to risks, uncertainties, assumptions and other factors relating to Registrant’s industry, Registrant’s operations and results
of operations and any businesses that may be acquired by Registrant. Should one or more of these risks or uncertainties materialize,
or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated,
expected, intended or planned.
Although
Registrant believes that the expectations reflected in the forward-looking statements are reasonable, Registrant cannot guarantee future
results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the
United States, Registrant does not intend to update any of the forward-looking statements to conform these statements to actual results.