Item 1.01. Entry into a Material Definitive Agreement.
As previously announced, IKONICS Corporation ("IKONICS") and TeraWulf Inc.
("TeraWulf") have entered into an Agreement and Plan of Merger, dated as of June
24, 2021, as amended (the "merger agreement"), with respect to a strategic
business combination involving IKONICS and TeraWulf. Pursuant to the terms of
the merger agreement, (i) Telluride Merger Sub I, Inc. ("Merger Sub I"), a
wholly owned subsidiary of Telluride Holdco, Inc. ("Holdco"), which is a wholly
owned subsidiary of IKONICS, will merge with and into IKONICS, (the "First
Merger"), with IKONICS surviving the First Merger, and (ii) Telluride Merger Sub
II, Inc. ("Merger Sub II"), a wholly owned subsidiary of Holdco, will merge with
and into TeraWulf (the "Second Merger"), with TeraWulf surviving the Second
Merger.
On December 8, 2021, IKONICS entered into a fourth amendment (the "Amendment")
to the merger agreement to specifically reference its full legal entity name.
The foregoing description of the Amendment does not purport to be complete and
is subject to, and qualified by, the full text of the Amendment, a copy of which
is attached hereto as Exhibit 2.1 and is incorporated herein by reference.
Item 8.01. Other Events.
On December 7, 2021, Lake Mariner Data LLC ("Lake Mariner"), a Delaware limited
liability company and a wholly-owned, indirect subsidiary of TeraWulf, executed
a non-fixed price sales and purchase agreement (the "Bitmain Equipment Supply
Agreement") with Bitmain Technologies Limited ("Bitmain") to purchase 3,000 S19
XP pro miners with a hash rate of approximately 140 Th/s and power consumption
of approximately 3,010 W/unit, with 500 units to be delivered on a monthly basis
from July 2022 through December 2022. The estimated aggregate purchase price of
the miners under the Bitmain Equipment Supply Agreement is approximately $32.6
million. The actual purchase price of the miners will be determined one month
prior to the respective batch of the miners is shipped and with reference to the
market circumstances, provided that the actual purchase price of the miners will
not be higher than the estimated purchase price. Upon receipt of notification of
the actual purchase price provided by Bitmain, Lake Mariner is entitled to (i)
continue the order of the respective batch of the miners with the original hash
rate and pay the remaining amount at the actual purchase price, (ii) request
Bitmain to increase the hash rate by an amount that would equate to the dollar
difference by when the estimated purchase price exceeds the actual purchase
price (if any) or (iii) partially or wholly cancel the respective batch of the
miners; provided, however, that, prior to Bitmain's notification of the actual
price, Lake Mariner shall make timely payments based on the estimated purchase
price as specified in the Bitmain Equipment Supply Agreement. The purchase price
for the miners will be paid as follows: (x) at least 35% within two days after
signing the Bitmain Equipment Supply Agreement; (y) at least 35% six months
prior to the shipment of the miners; and (z) the remaining 30% one month prior
to the shipment of the miners. If Bitmain fails to deliver the miners after
thirty days after the respective deadline, Lake Mariner will be entitled to
cancel the order of such batch of the miners and request Bitmain to refund the
purchase price of such undelivered batch of the miners together with interest of
0.0333% per day for the period beginning from the date immediately after which
payment for such batch of the miners was made to the date immediately prior to
Lake Mariner's request for refund. If Lake Mariner does not cancel the order and
requests Bitmain to deliver such batch of the miners, Bitmain is required to
compensate Lake Mariner a daily amount equal to 0.0333% of the price for such
undelivered batch of the miners to be paid in the form of delivery of more rated
hash rate. Bitmain has the right to discontinue the sale of the miners and to
make changes to the miners at any time, without prior approval from or notice to
Lake Mariner.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibit.
Exhibit Number Description
2.1 Amendment No. 4 to Agreement and Plan of Merger, dated December 8,
2021, by and among IKONICS Corporation, Telluride Holdco, Inc.,
Telluride Merger Sub I, Inc., Telluride Merger Sub II, Inc., and
TeraWulf Inc.
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document)
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Additional Information and Where to Find It; Participants in the Solicitation
In connection with the proposed business combination between IKONICS and
TeraWulf, Holdco has filed an effective registration statement on Form S-4 with
the SEC that includes a proxy statement/prospectus. The proxy
statement/prospectus and a proxy card has also been sent or given to IKONICS
shareholders entitled to vote at the special meeting relating to the proposed
transaction. The proxy statement/prospectus, any other relevant documents, and
all other materials filed with the SEC concerning IKONICS are (or, when filed,
will be) available free of charge at http://www.sec.gov and
http:/www.ikonics.com/investor-relations. Shareholders should read carefully the
proxy statement and any other relevant documents that IKONICS files with the SEC
when they become available before making any voting decision because they will
contain important information.
This current report on Form 8-K does not constitute a solicitation of proxy, an
offer to purchase, or a solicitation of an offer to sell any securities. IKONICS
and its directors and executive officers are deemed to be participants in the
solicitation of proxies from shareholders in connection with the proposed
transaction. Information regarding the names of such persons and their
respective interests in the transaction, by securities holdings or otherwise,
will be set forth in the definitive proxy statement when it is filed with the
SEC. Additional information regarding these individuals is set forth in the
proxy statement/prospectus. To the extent IKONICS' directors and executive
officers or their holdings of IKONICS' securities have changed from the amounts
disclosed in the Proxy Statement, to IKONICS' knowledge, such changes have been
reflected on initial statements of beneficial ownership on Form 3 or statements
of change in ownership on Form 4 on file with the SEC. These materials are (or,
when filed, will be) available free of charge at
http://www.ikonics.com/investor-relations.
Forward Looking Statements
This current report on Form 8-K contains "forward-looking statements" within the
meaning of the U.S. federal securities laws. Such statements include statements
concerning anticipated future events and expectations that are not historical
facts. All statements other than statements of historical fact are statements
that could be deemed forward-looking statements. Actual results may vary
materially from those expressed or implied by forward-looking statements based
on a number of factors, including, without limitation: (1) risks related to the
consummation of the mergers, including the risks that (a) the mergers may not be
consummated within the anticipated time period, or at all, (b) the parties may
fail to obtain shareholder approval of the merger agreement, (c) other
conditions to the consummation of the mergers under the merger agreement may not
be satisfied, (d) all or part of TeraWulf's contemplated financing may not
become available, and (e) the significant limitations on remedies contained in
the merger agreement may limit or entirely prevent a party from specifically
enforcing another party's obligations under the merger agreement or recovering
damages for any breach; (2) approval of the combined company's application to
list its shares on The Nasdaq Stock Market LLC, (3) the effects that any
termination of the merger agreement may have on a party or its business,
including the risks that (a) the price of IKONICS' common stock may decline
significantly if the mergers are not completed, (b) the merger agreement may be
terminated in circumstances requiring IKONICS to pay TeraWulf a termination fee
of $1.2 million, or (c) the circumstances of the termination, may have a
chilling effect on alternatives to the mergers; (4) the effects that the
announcement or pendency of the mergers may have on IKONICS and its business,
including the risks that as a result (a) the business, operating results or
stock price of IKONICS' common stock may suffer, (b) its current plans and
operations may be disrupted, (c) the ability of IKONICS to retain or recruit key
employees may be adversely affected, (d) its business relationships (including,
customers, franchisees and suppliers) may be adversely affected, or (e)
management and employee attention may be diverted from other important matters;
(5) the effect of limitations that the merger agreement places on IKONICS'
ability to operate its business, return capital to shareholders or engage in
alternative transactions; (6) the nature, cost and outcome of pending and future
litigation and other legal proceedings, including any such proceedings related
to the transactions and instituted against IKONICS and others; (7) the risk that
the transaction may involve unexpected costs, liabilities or delays; (8) other
economic, business, competitive, legal, regulatory, and/or tax factors; (9) the
possibility that less than all or none of IKONICS' historical business will be
sold prior to the expiration of the CVRs; and (10) other factors described under
the heading "Risk Factors" in the proxy statement/prospectus contained in the
Registration Statement, as updated or supplemented by subsequent reports that
IKONICS has filed or files with the SEC. Potential investors, shareholders and
other readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date on which they are made. None of
Holdco, IKONICS or TeraWulf assumes any obligation to publicly update any
forward-looking statement after it is made, whether as a result of new
information, future events or otherwise, except as required by law.
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