Item 5.02.
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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On April 16, 2021, the
Board of Directors (the “Board”) of CleanSpark, Inc., a Nevada corporation (the “Company”), upon recommendation
of the compensation committee of the Board (the “Compensation Committee”), approved (i) amendments to the executive
employment agreements of Zachary Bradford, the Company’s Chief Executive Officer and President, Lori Love, the Company’s
Chief Financial Officer, and S. Matthew Schultz, the Company’s Executive Chairman (collectively, the “Executives”),
as more particularly described below, (ii) certain one-time cash and equity incentive grants to the Executives and (iii) adjusted
certain company-wide equity incentive milestone targets. The Executives’ Employment Agreements, all of which were executed
on October 26, 2020, were filed as exhibits to the Current Report on Form 8-K filed by the Company on October 28, 2020.
Amendment to Zachary
Bradford’s Employment Agreement
Mr. Bradford’s Employment
Agreement was amended to add an additional non-cash component to his base salary, retroactive to April 1, 2021, which shall consist
of the payment of 0.6 Bitcoin per month of employment, or 7.2 Bitcoin per year. In the event that the Company ceases to mine Bitcoin
for any reason, this addition shall automatically terminate, and the Company shall have no obligation to pay Mr. Bradford any additional
Bitcoin pursuant to the amendment.
In addition to the incentive
compensation that Mr. Bradford is entitled to under his Employment Agreement, for the fiscal year ended September 30, 2021, Mr.
Bradford shall be also be entitled to receive the following based on certain milestones approved by the Board at the recommendation
of the Compensation Committee for the current fiscal year: (i) an additional cash bonus in the amount of $100,000 based on the
Company achieving certain annual gross revenues plus realized gains/losses, (ii) an additional cash bonus of $250,000 and the grant
an aggregate of 150,000 restricted stock units based on certain Company market capitalization targets, (iii) and an additional
cash bonus of $500,000 and the grant of an aggregate of 300,000 restricted stock units based on certain additional Company market
capitalization targets.
The amendment to Mr. Bradford’s
Employment Agreement does not alter, amend or supersede any other terms of his Employment Agreement, all of which shall continue
in full force and effect.
Amendment to Lori Love’s
Employment Agreement
Ms. Love’s Employment
Agreement was amended to provide that, in addition to the incentive compensation that Ms. Love is entitled to under her Employment
Agreement, for the fiscal year ended September 30, 2021, an additional cash bonus in the amount of $40,000 based on the Company
achieving certain annual gross revenues plus realized gains/losses for the current fiscal year.
The amendment to Ms. Love’s
Employment Agreement does not alter, amend or supersede any other terms of her Employment Agreement, all of which shall continue
in full force and effect.
Amendment
to S. Matthew Schultz’s Employment Agreement
Mr. Schultz’s Employment
Agreement was amended to add an additional non-cash component to this base salary, retroactive to April 1, 2021, which shall consist
of the payment of 0.5 Bitcoin per month of employment, or 6.0 Bitcoin per year. In the event that the Company ceases to mine Bitcoin
for any reason, this addition shall automatically terminate, and the Company shall have no obligation to pay Mr. Schultz any additional
Bitcoin pursuant to the amendment.
In addition to the incentive
compensation that Mr. Schultz is entitled to under his Employment Agreement, for the fiscal year ended September 30, 2021, Mr.
Schultz shall be also be entitled to receive the following based on certain milestones approved by the Board at the recommendation
of the Compensation Committee for the current fiscal year: (i) an additional cash bonus in the amount of $80,000 based on the Company
achieving certain annual gross revenues plus realized gains/losses, (ii) an additional cash bonus of $200,000 and the grant an
aggregate of 100,000 restricted stock units based on certain Company market capitalization targets, (iii) and an additional cash
bonus of $400,000 and the grant of an aggregate of 200,000 restricted stock units based on certain additional Company market capitalization
targets.
The amendment to Mr. Schultz’s
Employment Agreement does not alter, amend or supersede any other terms of his Employment Agreement, all of which shall continue
in full force and effect.
One-time Cash and Equity
Incentive Bonuses; Compensation Committee Benchmark Adjustments
In addition to the foregoing, the Board, at
the recommendation of the Compensation Committee, (i) approved certain changes to company-wide corporate milestones to better align
w/ corporate goals for the fiscal year ending September 30, 2021 and (ii) approved additional one-time cash and equity incentive
bonuses for their performance between October 1, 2020 and April 2021 as follows:
Zachary Bradford received a one-time cash incentive
bonus of $2,350,000, a one-time grant of 50,000 fully-vested RSUs and 500,000 options to acquire shares of the Company’s
common stock valued at $23.00 per share which vests monthly over 36 months.
Lori Love received a one-time cash incentive
bonus of $470,000, a one-time grant of 15,000 fully-vested RSUs and 50,000 options to acquire shares of the Company’s common
stock valued at $23.00 per share which vests monthly over 36 months.
S. Matthew Schultz received a one-time cash
incentive bonus of $1,880,000, a one-time grant of 40,000 fully-vested RSUs and 400,000 options to acquire shares of the Company’s
common stock valued at $23.00 per share which vests monthly over 36 months.
The additional equity incentive grants set
forth above will be granted to the extent there are available shares under the Company’s 2017 Equity Incentive Plan (the
“Plan”) with any remaining equity grants to be granted when the Company obtains shareholder approval to increase the
shares available under the Plan.
The foregoing descriptions of the amendments
to the Employment Agreements of Mr. Bradford, Ms. Love and Mr. Schultz do not purport to be complete, and are qualified in their
entirety by reference to the complete text of such amendments, which will be filed as exhibits to the Company’s next periodic
report.