UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Amendment No. 1)
CURRENT REPORT
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EXPLANATORY NOTE
Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers
As previously reported, the Company announced that its former Chief Administrative Officer, David Rench, is transitioning to a consulting role with the Company, effective January 31, 2025, and that its former Chief Technology Officer, Michael Maniscalco, resigned, effective January 31, 2025, to pursue other opportunities.
On February 18, 2025, the Company entered into the Transition Agreement with David Rench setting forth the terms of his transition to consultant. The following summary is a description of the terms of the Transition Agreement that the Company deems to be material:
| ● | Mr. Rench will transition from all positions he held with the Company and its subsidiaries and affiliates as of January 31, 2025 (the “Transition Date”), to the role of consultant for the Company, beginning on the Transition Date and continuing until the fifteen (15)-month anniversary of the Transition Date, or such earlier date as may be determined by the Company at any time in its sole and absolute discretion (the “Transition Period”). | |
| ● | In exchange for his consulting services, the Company has agreed to: (i) pay Mr. Rench an amount equal to $593,750, less applicable withholdings and deductions, if any, payable in substantially monthly or semi-monthly installments for the duration of the Transition Period, and (ii) offer continued coverage under the Company’s group health plan at active employee rates, conditioned upon Mr. Rench’s timely election of COBRA under the Company’s group health plan (subject to one or more “gross-up” payments if Mr. Rench is subject to federal, state or local taxes in connection with such payments). | |
| ● | The Company has agreed to provide for continued vesting of Mr. Rench’s outstanding restricted stock units (“RSUs”) throughout the Transition Period, subject to the terms of the applicable award agreement and the terms of the Applied Blockchain, Inc. 2022 Incentive Plan (the “2022 Plan”) under which the RSUs were granted. | |
| ● | The Company has also agreed to provide for continued vesting of Mr. Rench’s outstanding performance stock units (“PSUs”) throughout the Transition Period, subject to the terms of the applicable award agreement and the terms of the 2022 Plan. In the event the vesting conditions applicable to the PSUs are not satisfied by April 30, 2026, 306,250 of the PSUs held by Mr. Rench will be forfeited and 306,250 will remain outstanding and eligible to vest in the event such vesting conditions are satisfied on or prior to December 31, 2027. | |
| ● | The Transition Agreement contains additional provisions which are customary for agreements of this type. These include, among others, confidentiality, non-disparagement and cooperation provisions, as well as a general release of claims against the Company, which Mr. Rench will be required to reaffirm at the end of the Transition Period. |
On February 20, 2025, the Company entered into the Separation Agreement with Mr. Maniscalco confirming the final terms of his resignation from his position as Chief Technology Officer of the Company. Set forth below is a description of the terms of the Separation Agreement that the Company deems to be material:
| ● | The Company has agreed to pay Mr. Maniscalco as severance $200,000, payable in substantially equal installments in accordance with the Company’s regular payroll practices over a period of six (6) months following January 31, 2024, the separation date. | |
| ● | Mr. Maniscalco will receive accelerated vesting of (i) 26,979 of the 75,000 shares subject to the restricted stock unit award previously granted to him by the Company on April 4, 2023, and (ii) 133,000 of the 200,000 shares subject to the restricted stock unit award previously granted to him by the Company on January 31, 2024, each, in accordance with the terms of the award agreement evidencing such award. | |
| ● | The Separation Agreement contains additional provisions which are customary for agreements of this type. These include, among others, confidentiality, non-disparagement and cooperation provisions, as well as a general release of claims against the Company |
The foregoing descriptions of the Transition Agreement and the Separation Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of such agreements, copies of which are attached hereto as Exhibits 10.1 and 10.2, respectively, and are incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |
| 10.1 | Transition Agreement, dated February 18, 2025, by and between the Company and David Rench. | |
| 10.2 | Separation Agreement, dated February 20, 2025, by and between the Company and Michael Maniscalco. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| APPLIED DIGITAL CORPORATION | |||
| Date: | February 21, 2025 | By: | /s/ Saidal L. Mohmand |
| Name: | Saidal L. Mohmand | ||
| Title: | Chief Financial Officer | ||