Item 1.01 Entry into a Material Definitive Agreement.
Loan Agreement
As previously disclosed,
on December 1, 2021 (the “Loan Agreement Closing Date”), TeraCub, as borrower, entered into a loan, guaranty
and security agreement (the “Loan Agreement”) with certain subsidiaries of TeraCub, as guarantors, the lenders
party thereto from time to time and Wilmington Trust, National Association, as administrative agent and collateral agent. Upon the consummation
of the Second Merger, TeraWulf assumed the obligations of TeraCub as the borrower under the Loan Agreement and the Term Loan (as defined
below), and TeraCub became a subsidiary guarantor. The Loan Agreement provides TeraWulf with a $123.5 million senior secured term loan
(the “Term Loan”), all of which was borrowed on December 2, 2021. The Term Loan has a scheduled maturity date
of December 1, 2024. NovaWulf Digital Master Fund, L.P., an investment fund in which Mr. Paul B. Prager, TeraWulf’s Chief Executive
Officer, and Mr. Nazar Khan, TeraWulf’s Chief Operating Officer and Chief Technology Officer, are minority investors, is one of
the lenders under the Loan Agreement.
The obligations under the
Loan Agreement and the Term Loan are guaranteed by TeraCub and each of TeraCub’s subsidiaries as of the Loan Agreement Closing Date
and any future subsidiaries of such subsidiary guarantors. The obligations under the Loan Agreement are secured by substantially all of
the assets of TeraWulf, TeraCub and the subsidiary guarantors, but excluding the equity interests of Nautilus Cryptomine LLC, IKONICS
and any future subsidiary of TeraWulf or TeraCub, in each case, that is not a subsidiary guarantor.
The Term Loan bears interest
at a rate of 11.5% per annum and amortizes in quarterly installments equal to 12.5% of the original principal amount, commencing after
the first anniversary of the Loan Agreement Closing Date. Any prepayment of the Term Loan made prior to the first anniversary of the Loan
Agreement Closing Date will be subject to a make-whole premium equal to the present value of interest that would have been payable through
the first anniversary of the Loan Agreement Closing Date plus 3.0% of the principal amount prepaid, and will be subject to a prepayment
fee of 3.0% if prepaid on or after such first anniversary and prior to the second anniversary of the Loan Agreement Closing Date, and
a prepayment fee of 2.0% if prepaid on or after such second anniversary and prior to the maturity date. Amounts prepaid or repaid under
the Term Loan may not be reborrowed.
The Loan Agreement does not
include any financial covenants. The Loan Agreement includes covenants that limit changes in business, liquidations and dissolutions,
mergers and consolidations, incurrence of debt and liens, asset sales, affiliate transactions, investments, restricted payments of TeraWulf,
violations of sanctions, anti-corruption and anti-money laundering laws and certain other legal and regulatory compliance matters, modifications
of certain agreements and reduction in ownership of, and certain other changes regarding, Nautilus Cryptomine LLC.
The Loan Agreement contains
events of default customary for financings of this type, including, among others, payment defaults, material inaccuracy of representations
and warranties, covenant defaults, cross-defaults to certain indebtedness, certain events of bankruptcy or insolvency, certain events
under the Employee Retirement Income Security Act of 1974, as amended, material judgments, actual or asserted failure of any loan
document to be in full force and effect and changes of control. If such an event of default occurs, the lenders under the Loan Agreement
would be entitled to take various actions, including, but not limited to, accelerating amounts outstanding under the Term Loan and exercising
rights and remedies with respect to the guaranties and collateral.
The description of the Loan
Agreement is qualified in its entirety by reference to the full text of the Loan Agreement, a copy of which will be filed with the next
periodic report of TeraWulf.
Registration Rights Agreement
On the Closing Date, TeraWulf entered into
a registration rights agreement (the “Registration Rights Agreement”) with TeraCub and certain initial stockholders
of TeraWulf, pursuant to which such initial stockholders of TeraWulf will have the right to require TeraWulf to have registered, in certain
circumstances, the resale under the Securities Act of 1933, as amended, of their shares of the TeraWulf Common Stock constituting registrable
securities (as defined in the Registration Rights Agreement), subject to certain conditions set forth in the Registration Rights Agreement.
In addition, pursuant to the Registration Rights Agreement, such initial stockholders of TeraWulf were granted customary demand and piggyback
registration rights, subject to blackout, cutback, lock-up, indemnification and other customary provisions.
The description of the Registration
Rights Agreement is qualified in its entirety by reference to the full text of the Registration Rights Agreement, a copy of which will
be filed with the next periodic report of TeraWulf.
Indemnification Agreement
Effective upon the completion
of the Mergers, TeraWulf expects to enter into indemnification agreements (collectively, the “Indemnification Agreements”)
with each of TeraWulf’s directors and executive officers. With specified exceptions, the Indemnification Agreements will provide
for indemnification and advancements by TeraWulf of certain expenses and costs relating to claims, suits or proceedings arising from the
director’s or executive officer’s service to TeraWulf or, at TeraWulf’s request, service to other entities, as directors
or executive officers, to the maximum extent permitted by applicable law.
The descriptions of the Indemnification
Agreements are qualified in their entirety by reference to the full text of the Indemnification Agreements, a form of which will be filed
with the next periodic report of TeraWulf.