Management Change/Compensation Form 8 K

Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

Item 5.02(e)

Offer Letter

Applied Digital Corporation, a Nevada corporation (the "Company"), and David Rench, the Company's current Chief Administrative Officer, have entered into an Offer Letter, dated November 15, 2024 (the "Offer Letter"), as well as an Employee Non-Disclosure, Invention Assignment and Restrictive Covenants Agreement attached as Exhibit A to the Offer Letter (the "Covenants Agreement"). Pursuant to the terms of the Offer Letter, Mr. Rench will continue to serve as the Chief Administrative Officer of the Company and will be entitled to receive an annual base salary of $475,000 per annum, subject to review from time to time, and shall also be eligible for an annual performance bonus with a target amount of 100% of his annual base salary. The Offer Letter contemplates grants to Mr. Rench of an award of 490,000 restricted stock units subject to time-based vesting conditions (as discussed below), as set forth in the Offer Letter, and an additional 612,500 performance stock units subject to time- and performance-based vesting conditions (as discussed below), which awards have been granted to Mr. Rench as of November 15, 2024, as well as additional equity awards from time to time. If Mr. Rench's employment is terminated without Cause (as defined in the Offer Letter), Mr. Rench will receive, subject to execution, delivery, and non-revocation of a general release of claims against the Company, (i) an amount equal to twelve months' annual base salary (or in the event of a termination without Cause within eighteen months following a change in control, twenty-four months' annual base salary), payable in equal installments as salary continuation payments, and (ii) an amount equal to 100% of Mr. Rench's target annual bonus for the fiscal year in which the termination occurs.

Pursuant to the terms of the Covenants Agreement, Mr. Rench is bound by an indefinite confidentiality obligation, a non-competition covenant during employment and for 12 months post-termination, a non-solicitation covenant with respect to Company personnel and business partners during employment and for 12 months post-termination, assignment of intellectual property, and indefinite non-disparagement obligations.

The foregoing description of the Offer Letter, including Exhibit A thereto, is not complete and is subject to the full text of the Offer Letter, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.

Approval of Awards

On November 15, 2024, in connection with the Offer Letter, the Compensation Committee (the "Compensation Committee") of the Board of Directors of the Company (the "Board") approved the grant to Mr. Rench of 490,000 restricted stock units under the Company's 2022 Incentive Plan (the "2022 Plan") to Mr. Rench.

Also on November 15, 2024, the Compensation Committee approved the following grants, under the 2022 Plan, of performance stock units, subject to time- and performance-based vesting conditions, which will be subsequently disclosed in an amendment to this Current Report on Form 8-K/A once these award agreements have been executed: (i) 1,600,000 to Wes Cummins, the Company's Chief Executive Officer and Chairman of the Board, (ii) 490,000 to Saidal Mohmand, the Company's Chief Financial Officer, and (iii) 612,500 to Mr. Rench.

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