AppHarvest, Inc. (Form: 10-Q, Received: 11/10/2021 16:09:59)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________

FORM 10-Q

_____________________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-39288

AppHarvest, Inc.

_____________________________________________

(Exact name of registrant as specified in its charter)


Delaware			82-5042965
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

500 Appalachian Way

Morehead, KY 40351

(606) 653-6100

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.0001 par value per share	APPH	The Nasdaq Stock Market LLC
Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per share	APPHW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-2 of the Exchange Act) ☐

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Total shares of common stock, par value $0.0001, outstanding at November 5, 2021, were 100,698,194.

Table of Contents

APPHARVEST, INC AND SUBSIDIARIES

TABLE OF CONTENTS


			Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)			1
Condensed Consolidated Balance Sheets			1
Condensed Consolidated Statements of Operations and Comprehensive Loss			2
Condensed Consolidated Statements of Stockholders’ Equity			3
Condensed Consolidated Statements of Cash Flows			5
Notes to Condensed Consolidated Financial Statements			6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			23
Item 3. Quantitative and Qualitative Disclosures About Market Risk			34
Item 4. Controls and Procedures			34

PART II - OTHER INFORMATION
Item 1. Legal Proceedings			35
Item 1A. Risk Factors			35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			60
Item 3. Defaults Upon Senior Securities			60
Item 4. Mine Safety Disclosures			60
Item 5. Other Information			60
Item 6. Exhibits			61

Table of Contents

Part I - Financial Information

Item 1. Financial Statements

APPHARVEST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands except per share amounts)


	September 30, 2021		December 31, 2020
Assets
Current Assets
Cash and cash equivalents	$	221,574	$	21,909
Restricted cash	7,250		—

Inventories, net	4,187		3,387

Prepaid expenses and other current assets	3,410		481
Total current assets	236,421		25,777
Operating lease right-of-use assets, net	2,196		1,307
Property and equipment, net	288,610		152,645
Goodwill	50,863		—
Other intangible assets, net	9,321		—

Other assets, net	16,724		1,188
Total non-current assets	367,714		155,140
Total assets	$	604,135	$	180,917
Liabilities and stockholders’ equity
Current Liabilities:
Accounts payable	$	16,354	$	1,342
Accrued expenses	14,516		5,184
Current portion of lease liabilities with a related party	—		59,217
Current portion of lease liabilities	537		166
Current portion of financing obligation with a related party	—		58,795
Current portion of long-term debt	9,633		—

Note payable with a related party	—		30,000
Other current liabilities	960		77
Total current liabilities	42,000		154,781
Long-term debt, net of current portion	85,436		—
Lease liabilities, net of current portion	2,276		1,370
Deferred income tax liabilities	1,967		—
Private Warrant liabilities	4,337		—
Other liabilities	2,679		—
Total non-current liabilities	96,695		1,370
Total liabilities	138,695		156,151
Commitments and contingencies (Note 12)
Stockholders’ equity
Preferred stock, par value $0.0001, 10,000 shares authorized, 0 issued and outstanding, as of September 30, 2021 and December 31, 2020	—		—



Common stock, par value $0.0001, 750,000 shares authorized, 100,674 and 44,461 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively	10		4
Additional paid-in capital	566,935		45,890
Accumulated deficit	(98,927)		(21,128)
Accumulated other comprehensive loss	(2,578)		—
Total stockholders’ equity	465,440		24,766
Total liabilities and stockholders’ equity	$	604,135	$	180,917

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

APPHARVEST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS (Unaudited)

(In thousands except per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net sales	$	543	$	—	$	5,980	$	—
Cost of goods sold	7,482		—		30,001		—
	(6,939)		—		(24,021)		—
Operating expenses:
Selling, general and administrative expenses	25,401		5,742		84,357		8,435


Total operating expenses	25,401		5,742		84,357		8,435
Loss from operations	(32,340)		(5,742)		(108,378)		(8,435)
Other income (expense):
Development fee income from a related party	—		136		—		408

Interest expense from related parties	—		(64)		(658)		(90)
Interest expense	(805)		—		(893)		—
Change in fair value of Private Warrants	15,781		—		32,095		—
Other	113		(13)		574		(13)
Loss before income taxes	(17,251)		(5,683)		(77,260)		(8,130)
Income tax expense	(17)		—		(539)		—
Net loss	(17,268)		(5,683)		(77,799)		(8,130)

Other comprehensive loss:
Net unrealized losses on derivatives contracts, net of tax	(66)		—		(2,578)		—
Comprehensive loss	$	(17,334)	$	(5,683)	$	(80,377)	$	(8,130)

Net loss per common share:
Basic and diluted	$	(0.17)	$	(0.14)	$	(0.83)	$	(0.23)

Weighted average common shares outstanding:
Basic and diluted	100,437		41,558		93,823		35,960

See accompanying notes to the unaudited condensed consolidated financial statements.

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APPHARVEST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

(In thousands)


	Redeemable Convertible Preferred Stock											Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Equity
	Series A			Series A-1			Series B			Common Stock
	Shares	Amount		Shares	Amount		Shares	Amount			Shares					Amount
December 31, 2019	2,770	$	5,203	392	$	992	1,483	$	6,063		9,677		$	1		$	497		$	(3,680)	$	(3,182)
Retroactive application of recapitalization	(2,770)	(5,203)		(392)	(992)		(1,483)	(6,063)			21,123		2			12,256			—		12,258
Adjusted balance, December 31, 2019	—	—		—	—		—	—			30,800		3			12,753			(3,680)		9,076
Issuance of preferred shares, net	—	—		—	—		—	—			2,470		—			4,880			—		4,880
Stock-based compensation	—	—		—	—		—	—			—		—			19			—		19
Net loss	—	—		—	—		—	—			—		—			—			(818)		(818)
March 31, 2020	—	$	—	—	$	—	—	$	—		33,270		$	3		$	17,652		$	(4,498)	$	13,157

Stock options exercised	—	—		—	—		—	—			148		—			32			—		32
Stock-based compensation	—	—		—	—		—	—			—		—			40			—		40
Net loss	—	—		—	—		—	—			—		—			—			(1,629)		(1,629)
June 30, 2020	—	$	—	—	$	—	—	$	—		33,418		$	3		17,724			$	(6,127)	$	11,600
Issuance of preferred shares, net	—	—		—	—		—	—			11,033		1			28,068			—		28,069

Stock-based compensation	—	—		—	—		—	—			—		—			49			—		49
Net loss	—	—		—	—		—	—			—		—			—			(5,683)		(5,683)
September 30, 2020	—	$	—	—	$	—	—	$	—		44,451		$	4		$	45,841		$	(11,810)	$	34,035

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	Redeemable Convertible Preferred Stock															Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Series A			Series A-1			Series B			Series C			Common Stock
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
December 31, 2020	2,770	$	5,203	392	$	992	2,632	$	10,942	5,131	$	28,069	9,750	$	1	$	686	$	(21,128)	$	—	$	(20,441)
Retroactive application of recapitalization	(2,770)	(5,203)		(392)	(992)		(2,632)	(10,942)		(5,131)	(28,069)		34,711	3		45,204		—		—		45,207
Adjusted balance, December 31, 2020	—	—		—	—		—	—		—	—		44,461	4		45,890		(21,128)		—		24,766
Business Combination and PIPE Shares, net	—	—		—	—		—	—		—	—		53,361	6		433,521		—		—		433,527
Conversion of Private Warrants	—	—		—	—		—	—		—	—		—	—		5,819		—		—		5,819
Stock options exercised	—	—		—	—		—	—		—	—		103	—		35		—		—		35
Stock-based compensation	—	—		—	—		—	—		—	—		—	—		6,287		—		—		6,287
Net loss	—	—		—	—		—	—		—	—		—	—		—		(28,515)		—		(28,515)
Other comprehensive loss	—	—		—	—		—	—		—	—		—	—		—		—		(669)		(669)
March 31, 2021	—	$	—	—	$	—	—	$	—	—	$	—	97,925	$	10	$	491,552	$	(49,643)	$	(669)	$	441,250
Conversion of Private Warrants	—	—		—	—		—	—		—	—		—	—		3,114		—		—		3,114
Issuance of common stock for acquisition	—	—		—	—		—	—		—	—		2,329	—		48,991		—		—		48,991
Issuance of stock options for acquisition	—	—		—	—		—	—		—	—		—	—		361		—		—		361
Conversion of restricted stock units	—	—		—	—		—	—		—	—		21	—		(108)		—		—		(108)
Stock-based compensation	—	—		—	—		—	—		—	—		—	—		13,390		—		—		13,390
Net loss	—	—		—	—		—	—		—	—		—	—		—		(32,016)		—		(32,016)
Other comprehensive loss	—	—		—	—		—	—		—	—		—	—		—		—		(1,843)		(1,843)
June 30, 2021	—	$	—	—	$	—	—	$	—	—	$	—	100,275	$	10	$	557,300	$	(81,659)	$	(2,512)	$	473,139
Conversion of Private Warrants	—	—		—	—		—	—		—	—		—	—		201		—		—		201
Conversion of restricted stock units	—	—		—	—		—	—		—	—		391	—		(2,233)		—		—		(2,233)
Exercise of warrants	—	—		—	—		—	—		—	—		8	—		96		—		—		96
Stock-based compensation	—	—		—	—		—	—		—	—		—	—		11,571		—		—		11,571
Net loss	—	—		—	—		—	—		—	—		—	—		—		(17,268)		—		(17,268)
Other comprehensive loss	—	—		—	—		—	—		—	—		—	—		—		—		(66)		(66)
September 30, 2021	—	$	—	—	$	—	—	$	—	—	$	—	100,674	$	10	$	566,935	$	(98,927)	$	(2,578)	$	465,440

See accompanying notes to the unaudited condensed consolidated financial statements.

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APPHARVEST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)


	Nine Months Ended September 30,
	2021		2020
Operating Activities
Net loss	$	(77,799)	$	(8,130)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of Private Warrants	(32,095)		—
Deferred income tax provision	539		—
Depreciation and amortization	7,791		66

Stock-based compensation expense	31,248		108
Rent payments in excess of rent expense	(72)		—
Interest accrual with a related party	—		50
Amortization of development fee with a related party	—		(405)

Changes in operating assets and liabilities, net of acquisitions
Accounts receivable	259		—
Inventories, net	(800)		(277)
Prepaid expenses and other current assets	(2,752)		(292)
Other assets, net	(10,486)		(2)
Accounts payable	811		1,347
Accrued expenses	1,575		1,282

Other current liabilities	(178)		(4)
Other non-current liabilities	617		—
Net cash used in operating activities	(81,342)		(6,257)
Investing Activities
Purchases of property and equipment	(112,903)		(11,149)
Purchases of property and equipment from a related party	(122,911)		—
Cost of acquisition, net of cash acquired	(9,756)		—
Investment in unconsolidated entity	(5,000)		—
Advances on equipment	—		(15)
Net cash used in investing activities	(250,570)		(11,164)
Financing Activities
Proceeds from debt to a related party	—		32,000
Proceeds from Business Combination and PIPE shares, net	448,500		—
Proceeds from debt	95,709		—
Debt issuance costs	(1,046)		—
Payments on financing obligation to a related party	(2,088)		—
Proceeds from stock options exercised	35		32
Proceeds from exercise of warrants	95		—
Payments of withholding taxes on restricted stock unit conversions	(2,341)		—

Issuance of preferred stock, net	—		32,949

Other financing activities	(37)		—


Net cash provided by financing activities	538,827		64,981
Change in cash and cash equivalents	206,915		47,560
Cash and Cash Equivalents (including Restricted Cash)
Beginning of period	21,909		6,031
End of period	$	228,824	$	53,591
Non-cash Activities:
Fixed assets purchases in accounts payable	$	14,170	$	—
Fixed assets purchases in accrued liabilities	$	8,331	$	—
Operating lease right-of-use assets and liabilities	$	1,055	$	376

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

APPHARVEST, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

(amounts in thousands except per share amounts)

1. Description of Business

AppHarvest was founded on January 19, 2018 and, together with its subsidiaries, is an applied technology company in Appalachia developing and operating some of the world’s largest high-tech indoor farms, designed to grow non-GMO, chemical pesticide-free produce, using primarily rainwater while producing significantly higher yields than those of traditional agriculture on the same amount of land. AppHarvest combines conventional agricultural techniques with cutting-edge technology including artificial intelligence and robotics to improve access to nutritious food, farming more sustainably, building a domestic food supply, and increasing investment in Appalachia.

Prior to October 2020, AppHarvest’s operations were limited to organizing and staffing, business planning, raising capital, and acquiring and developing properties for Controlled Environment Agriculture (“CEA”). In October 2020, AppHarvest partially opened its first CEA facility in Morehead, Kentucky (the “Morehead CEA facility”). AppHarvest harvested its first crop of beefsteak tomatoes at the Morehead CEA facility in January 2021, began harvesting its first crop of tomatoes on the vine in March 2021 and opened production of the full 60 acres at the Morehead CEA facility in May 2021. The Morehead CEA facility concluded its first harvest in August 2021 and completed planting of its second crop in September 2021 in preparation for the second growing season. The harvest of the new crop will commence in the fourth quarter of 2021.

AppHarvest has started construction on four more CEA facilities. Two of the facilities under construction are in Berea, Kentucky (the “Berea leafy green facility”) and Richmond, Kentucky (the “Richmond tomato facility”)—the Berea leafy green facility is over 50% complete, and the Richmond tomato facility is over 50% complete. Both CEA facilities are expected to be fully operational by the end of 2022. Groundbreakings for two more CEA facilities occurred in June 2021 in Somerset, Kentucky (the “Somerset facility”) and Morehead, Kentucky (the “Morehead leafy green facility”). The Somerset facility is expected to grow berries and the Morehead leafy green facility, which is adjacent to the Morehead CEA facility, will grow leafy greens. The Somerset facility is approximately 30% complete and expected to be operational by the end of 2022. The Company temporarily has paused development of the 10-acre Morehead leafy green facility, with construction now expected to resume in 2022 for a 2023 delivery.

AppHarvest is organized as a single operating segment. Substantially all of the assets and operations of AppHarvest are located in the United States (“U.S.”).

Basis of Presentation

On January 29, 2021, (the “Closing Date”), Novus Capital Corporation (“Novus”), a special purpose acquisition company, consummated the business combination agreement and plan of reorganization (the “Business Combination Agreement”) dated September 2020, by and among ORGA, Inc., a wholly owned subsidiary of Novus (“Merger Sub”), and AppHarvest Operations, Inc., a Delaware corporation (f/k/a AppHarvest, Inc.) (“Legacy AppHarvest”).

Pursuant to the terms of the Business Combination Agreement, a business combination between Novus and Legacy AppHarvest was effected through the merger of Merger Sub with and into Legacy AppHarvest, with Legacy AppHarvest surviving the merger as a wholly-owned subsidiary of Novus (the “Merger” and, collectively with the other transactions described in the Business Combination Agreement, the “Business Combination”). On the Closing Date, Novus changed its name to AppHarvest, Inc. (the “Company”, “we”, “our” or “AppHarvest”).

Pursuant to the Business Combination Agreement, the Merger was accounted for as a reverse recapitalization (the “Reverse Recapitalization”) in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Under this method of accounting, Novus is treated as the “acquired” company and Legacy AppHarvest is treated as the acquirer for financial reporting purposes. The Reverse Recapitalization was treated as the equivalent of Legacy AppHarvest issuing stock for the net assets of Novus, accompanied by a recapitalization. The net assets of Novus are stated at historical cost, with no goodwill or other intangible assets recorded.

Legacy AppHarvest was determined to be the accounting acquirer based on the following predominant factors:

•Legacy AppHarvest stockholders have the largest portion of voting rights in the Company;

•The Board and Management are primarily composed of individuals associated with Legacy AppHarvest; and

Table of Contents

APPHARVEST, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

(amounts in thousands except per share amounts)

•Legacy AppHarvest was the larger entity based on historical operating activity and Legacy AppHarvest had the larger employee base at the time of the Business Combination.

The consolidated assets, liabilities and results of operations prior to the Reverse Recapitalization are those of Legacy AppHarvest. The shares and corresponding capital amounts and losses per share, prior to the Business Combination, have been retroactively restated based on shares reflecting the exchange ratio established in the Business Combination. Activity within the Statements of Stockholders’ Equity for the issuance and repurchases of Legacy AppHarvest redeemable convertible preferred stock were also retroactively converted to Legacy AppHarvest common stock.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial reporting and Securities and Exchange Commission (“SEC”) regulations. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year ending December 31, 2021. A description of the Company’s significant accounting policies is included in the Legacy AppHarvest’s audited consolidated financial statements, as of and for the year ended December 31, 2020. These unaudited condensed consolidated financial statements should be read in conjunction with the Legacy AppHarvest December 31, 2020 audited consolidated financial statements and the accompanying notes.

The unaudited condensed consolidated financial statements include the accounts of the Company and its controlled subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Certain prior period balances have been reclassified to conform to the current period presentation in the unaudited condensed consolidated financial statements and the accompanying notes.

All dollar and share amounts are in thousands, except per share amounts, unless otherwise noted. Share and per share amounts are presented on a post-conversion basis for all periods presented, unless otherwise specified.

2. Summary of Significant Accounting Policies

Use of Estimates in Condensed Consolidated Financial Statements

In preparing the condensed consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Although these estimates are based on the Company’s knowledge of current events and actions the Company may undertake in the future, actual results could differ from those estimates and assumptions. Significant items subject to such estimates and assumptions include the valuation of inventory, stock-based compensation, and private warrants.

The Company’s results can also be affected by economic, political, legislative, regulatory, legal actions, and the global volatility and general market disruption resulting from the global COVID-19 pandemic. Economic conditions, such as recessionary trends, inflation, interest and monetary exchange rates, and government fiscal policies, can have a significant effect on operations. While the Company maintains reserves for anticipated liabilities and carries various levels of insurance, the Company could be affected by civil, criminal, environmental, regulatory or administrative actions, claims, or proceedings.

Cash, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid, short-term investments with an original maturity date of three months or less to be cash equivalents.

The Company deposits its cash and cash equivalents in a commercial bank. From time to time, cash balances in these accounts exceed the Federal Deposit Insurance Corporation insured limits. The Company mitigates exposure to credit risk by placing cash and cash equivalents with highly rated financial institutions. To date, the Company has not experienced any losses in such accounts, and believes it is not exposed to any significant credit risk on its cash and cash equivalents.

Restricted cash represents collateral for a promissory note with JPMorgan Chase Bank, N.A. (the “JPM Note”) which requires 105% of the aggregate borrowings to be held as collateral. See Note 11 - Debt for more information on the JPM Note.

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APPHARVEST, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

(amounts in thousands except per share amounts)

Convertible Preferred Stock

Prior to the Business Combination, the Company recorded shares of redeemable convertible preferred stock at their respective fair values on the dates of issuance, net of issuance costs. The Company applied the guidance in Accounting Standards Codification (“ASC”) 480-10-S99-3A, Accounting for Redeemable Equity Instruments, and therefore classified all of its outstanding redeemable convertible preferred stock as temporary equity. The redeemable convertible preferred stock was recorded outside of stockholders’ equity because, in the event of certain deemed liquidation events considered not solely within the Company’s control, such as a merger, acquisition and sale of all or substantially all of the Company’s assets, the preferred stock would become redeemable at the option of the holders. In the event of a change of control of the Company, proceeds received from the sale of such shares would be distributed in accordance with the liquidation preferences set forth in the Company’s Amended and Restated Certificate of Incorporation then in effect.

All convertible preferred stock previously classified as temporary equity was retroactively adjusted and reclassified to permanent equity as a result of the Business Combination. As a result of the Business Combination, each share of redeemable convertible preferred stock that was then issued and outstanding was automatically converted into Legacy AppHarvest Common Stock, such that each converted share of preferred stock was no longer outstanding and ceased to exist. Each share of Legacy AppHarvest common stock, including the Legacy AppHarvest common stock issued upon conversion of Legacy AppHarvest preferred stock, was converted into and exchanged for 2.1504 (the “Exchange Ratio”) shares of the Company’s common stock (the “Common Stock”). The Exchange Ratio was established pursuant to the terms of the Business Combination Agreement.

During the three and nine months ended September 30, 2020, Legacy AppHarvest issued shares of Legacy AppHarvest Series B and Series C redeemable convertible preferred stock to new and existing investors for net proceeds of $28,069, and $32,949, respectively.

Warrants

At September 30, 2021, there were 13,242 warrants to purchase Common Stock outstanding, consisting of 10,907 public warrants (“Public Warrants”) and 2,335 private warrants (“Private Warrants” and together with Public Warrants, “Warrants”). The Private Warrants are held by the Novus initial stockholders. Each warrant entitles the registered holder to purchase one share of Common Stock at a price of $11.50 per share. The warrants expire on January 29, 2026, or earlier upon redemption or liquidation.

The Company may redeem the Public Warrants:

• In whole and not in part;

• At a price of $0.01 per Warrant;

• Upon not less than 30 days’ prior written notice of redemption;

• If, and only if, the reported last sale price of the shares of Common Stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30 trading day period commencing at any time after the warrants become exercisable and ending on the third business day prior to the notice of redemption to warrant holders; and

• if, and only if, there is a current registration statement in effect with respect to the shares of Common Stock underlying the warrants.

If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.

The Public Warrants were determined to be equity classified in accordance with U.S. GAAP.

The Private Warrants are identical to the Public Warrants except that the Private Warrants and the shares of Common Stock issuable upon the exercise of the Private Warrants were not transferable, assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Warrants will be exercisable for cash or on a cashless basis, at the holder’s option, and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted

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APPHARVEST, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

(amounts in thousands except per share amounts)

transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. As a result of the provisions in the warrant agreement that provide for differences in the mechanics of a cashless exercise dependent upon the characteristics of the warrant holder, and because the holder of a warrant is not an input into the pricing of a fixed-for-fixed option on equity shares, such provisions preclude the Private Warrant from being classified in equity. Accordingly, the Private Warrants are classified as a liability and remeasured at fair value at each reporting date. Changes in fair value of the Private Warrants are recognized in the Company’s condensed consolidated statement of operations and comprehensive loss. The fair value of the Private Warrants is estimated at each measurement date using a Black-Scholes option pricing model. See Note 5 - Fair Value Measurements for inputs used in calculating the estimated fair value.

Derivative Financial Instruments

Derivative financial instruments are used to manage foreign currency, exchange, and interest rate risks. The financial instruments used by the Company are straight-forward, non-leveraged instruments. The counterparties to these financial instruments are financial institutions with strong credit ratings. The Company maintains control over the size of positions entered into with any one counterparty and regularly monitors the credit ratings of these institutions. For all transactions designated as hedges, the hedging relationships are formally documented at the inception and on an ongoing basis in offsetting changes in cash flows of the hedged transaction.

The Company records derivative financial instruments on the condensed consolidated balance sheets as either an asset or liability measured at its fair value. Changes in a derivative's fair value (i.e. unrealized gains or losses) are recorded each period in earnings unless the derivative qualifies as a hedging instrument. Gains and losses related to a hedge are either recognized in income immediately to offset the gain or loss on the hedged item, or deferred and recorded in the stockholders’ equity section of the condensed consolidated balance sheets as a component of accumulated other comprehensive loss (“AOCL”) and subsequently recognized in the condensed consolidated statements of operations and comprehensive loss when the hedged item affects net income. The ineffective portion of the change in fair value of a hedge, if any, is recognized in net loss immediately. For derivative instruments that are not designated as hedges, the gain or loss related to the change in fair value is also recorded to net loss immediately.

Business Combinations

The Company allocates the purchase price of its acquisitions to the assets acquired and liabilities assumed based upon their respective fair values at the acquisition date. The Company utilizes management estimates and an independent third-party valuation firm to assist in determining these fair values. The excess of the acquisition price over the estimated fair value of the net assets acquired is recorded as goodwill. Goodwill is adjusted for any changes to acquisition date fair value amounts made within the measurement period. Acquisition-related transaction costs are recognized separately from the business combination and expensed as incurred.

Capitalization of Interest

The Company capitalizes interest on capital projects in accordance with ASC 835-20, Capitalization of Interest, which allows the capitalization of interest costs to get certain assets ready for their intended use. The Company capitalizes interest costs associated with major construction projects as part of the cost of the constructed assets. Capitalization of interest ceases when the project (or discernible portions of the project) is substantially complete. If substantially all of the construction activities of a project are suspended, capitalization of interest will cease until such activities are resumed. During the three and nine months ended September 30, 2021, $114 of interest expense has been capitalized. No interest was capitalized during the three and nine months ended September 30, 2020. See Note 11- Debt for more information regarding capitalized interest.

Debt Issuance Costs

Debt issuance costs are amortized into interest expense over the terms of the related loan agreements using the effective interest method or other methods which approximate the effective interest method. Debt issuance costs related to debt instruments other than lines of credit are presented on the consolidated balance sheets as a direct deduction from the carrying amount of that debt liability. Debt issuance costs associated with lines of credit are presented on the consolidated balance sheets as other current or non-current assets.

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APPHARVEST, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

(amounts in thousands except per share amounts)

Goodwill and Other Acquired Intangible Assets

Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Intangible assets are stated at their historical cost and amortized on a straight-line basis over their expected useful lives. Through the acquisition of Root AI, Inc. (“Root AI”) on April 7, 2021 (“Root AI Acquisition”) the Company has acquired goodwill as well as certain technology and intellectual property for which the Company has determined the useful life to be ten years. Amortization expense related to the intangible assets was $259 and $470 for the three and nine months ended September 30, 2021. See Note 3 - Business Combinations for more information on the Root AI Acquisition.

The Company conducts annual impairment tests of goodwill on the first day of the fourth quarter and additional impairment reviews when events and circumstances indicate it is more likely than not that an impairment may have occurred. The Company assesses goodwill for impairment at the consolidated level, which represents its single reporting unit. If the fair value of the reporting unit is less than its carrying amount, the Company would record an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, but the loss recognized should not exceed the amount of goodwill allocated to the reporting unit.

The Company reviews intangibles held and used for possible impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In evaluating the fair value and future benefits of its intangible assets, management performs an analysis of the anticipated undiscounted future net cash flow of the intangible assets over the remaining amortization period. The Company recognizes an impairment loss if the carrying value of the asset exceeds the expected future cash flows. There was no impairment during the nine months ended September 30, 2021.

New Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 is part of the FASB’s overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. ASU 2019-12 removes certain exceptions to the general principles of ASC 740, Income Taxes, (“ASU 740”) in order to reduce the cost and complexity of its application in the areas of intraperiod tax allocation, deferred tax liabilities related to outside basis differences, year-to-date losses in interim periods and other areas within ASC 740. The Company adopted ASU 2019-12 on January 1, 2021 and the adoption of ASU 2019-12 did not have a material impact on the Company’s condensed consolidated financial statements.

No other new accounting pronouncement recently issued or newly effective had or is expected to have a material impact on the condensed consolidated financial statements.

3. Business Combinations

Reverse Recapitalization

As discussed in Note 1 - Description of Business, on January 29, 2021, Novus completed the Business Combination with Legacy AppHarvest through the Merger, with Legacy AppHarvest surviving the Merger as a wholly-owned subsidiary of the Company. Upon the consummation of the Business Combination, each share of Legacy AppHarvest common stock issued and outstanding was canceled and converted into the right to receive 2.1504 shares of the Company’s Common Stock.

Upon the closing of the Business Combination, the Company’s certificate of incorporation was amended and restated to, among other things, increase the total number of authorized shares of all classes of capital stock to 760,000 shares, of which 750,000 shares were designated Common Stock, $0.0001 par value per share, and 10,000 shares designated Preferred Stock, $0.0001 par value per share.

Each option to purchase Legacy AppHarvest common stock that was outstanding immediately prior to the Business Combination, whether vested or unvested, was converted into an option to purchase a number of shares of the Company’s Common Stock equal to the product (rounded down to the nearest whole number) of (i) the number of shares of Legacy AppHarvest common stock subject to such Legacy AppHarvest option and (ii) the Exchange Ratio, at an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of such Legacy AppHarvest option, divided by (B) the Exchange Ratio.

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APPHARVEST, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

(amounts in thousands except per share amounts)

Each restricted stock unit awarded by Legacy AppHarvest that was outstanding immediately prior to the Business Combination, whether vested or unvested, was converted into an award of restricted stock units to acquire a number shares of the Company’s Common Stock equal to the product (rounded down to the nearest whole number) of (1) the number of shares of Legacy AppHarvest common stock subject to the Legacy AppHarvest restricted stock unit award and (2) the Exchange Ratio.

In connection with the execution of the Business Combination Agreement, the Company entered into separate subscription agreements (the “Subscription Agreements”) with certain investors (each a “Subscriber”), pursuant to which the Subscribers agreed to purchase, and the Company agreed to sell to the Subscribers, an aggregate of 37,500 shares of Common Stock (the “PIPE Shares”), for a purchase price of $10.00 per share and an aggregate purchase price of $375,000, in a private placement pursuant to the Subscription Agreements (the “PIPE”). The PIPE investment closed concurrently with the closing of the Business Combination.

Prior to the Business Combination, Novus had outstanding 10,000 Public Warrants and 3,250 Private Warrants which were listed on the Nasdaq Capital Market under the symbol “NOVSW.” Upon the closing of the Business Combination, they became listed on the Nasdaq Global Select Market under the symbol “APPHW.” The Warrants remain subject to the same terms and conditions as prior to the Business Combination.

Also immediately prior to the closing of the Business Combination, Novus assumed the Legacy AppHarvest convertible note (the “Convertible Note”). Upon completion of the Business Combination, the outstanding principal and unpaid accrued interest due on the Legacy AppHarvest Convertible Note was converted into an aggregate of 3,242 shares of Common Stock, and the converted note was no longer outstanding, and ceased to exist. See Note 10 - Note Payable with a Related Party.

Upon consummation of the Business Combination and the closing of the PIPE, the most significant change in Legacy AppHarvest’s financial position and results of operations was a total net increase in cash and cash equivalents of approximately $435,239, including $375,000 in gross proceeds from the PIPE.

The Business Combination is accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, Novus was treated as the “acquired” company for financial reporting purposes. See Note 1 - Description of Business for further details. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy AppHarvest issuing stock for the net assets of Novus, accompanied by a recapitalization. The net assets of Novus are stated at historical cost, with no goodwill or other intangible assets recorded.

The following table reconciles the elements of the Business Combination to the unaudited condensed consolidated statements of stockholders’ equity and cash flows for the nine months ended September 30, 2021:


	Recapitalization
Cash - Novus trust and cash, net of redemptions	$	99,896
Cash - PIPE financing	375,000
Non-cash Convertible Note conversion	30,808
Non-cash net liabilities assumed from Novus	(2,850)
Less: Fair value of assumed common stock Private Warrants	(45,565)
Less: transaction costs allocated to equity	(23,762)
Net impact on total stockholders’ equity	433,527
Less: cash payments for transaction costs at Closing	(2,634)
Less: non-cash Convertible Note conversion	(30,808)
Add: non-cash net liabilities assumed from Novus	2,850
Add: non-cash fair value of assumed common stock Private Warrants	45,565
Net impact on net cash provided by financing activities	448,500
Less: transaction costs included in net cash used in operating activities(a)	(13,261)
Total net increase in cash and cash equivalents on closing date	$	435,239

(a) Including transaction costs in the amount of $2,887 allocated to the Private Warrants.

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APPHARVEST, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

(amounts in thousands except per share amounts)

Root AI

On April 7, 2021, the Company completed the Root AI Acquisition.

Total consideration, net of cash acquired, is as follows:


Common Stock issued (2,329 shares at approximately $21.00 per share)	$	48,991
Stock options issued to replace unvested Root AI stock options	361
Total equity	49,352
Cash consideration paid for the settlement of vested Root AI stock options	230
Cash consideration paid to Root AI shareholders	9,512
Cash consideration paid to reimburse Root AI for seller transaction costs incurred	150
Cash acquired	(136)
Net cash	$	9,756
Net consideration paid	$	59,108

The Company accounted for Root AI using the acquisition method of accounting in accordance with U.S. GAAP whereby the total purchase price was preliminarily allocated to tangible and intangible assets acquired and liabilities assumed based on respective fair values.

The preliminary purchase price allocation for Root AI is as follows:


Goodwill	$	50,863
Intangibles	9,754
Deferred taxes	(1,420)
Net operating assets and liabilities	(89)
Net assets acquired	$	59,108

As of September 30, 2021, the purchase price allocation for the acquisition was preliminary and subject to completion. Adjustments to the current fair value estimates in the above table may occur as the process conducted for various valuations and assessments is finalized, including intangible assets, tax assets, liabilities and other attributes. Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The factors contributing to the recognition of goodwill are based on several strategic and synergistic benefits that are expected to be realized from the Root AI Acquisition.

The Root AI Acquisition is expected to provide the Company with a baseline for harvesting support while helping evaluate crop health, predict yield, and optimize overall operations in existing CEA facilities. The benefits include fully developed technology, in the form of software and hardware, that can be programmed for utilization and optimization and a skilled workforce to assist with ongoing upgrades of the artificial intelligence. None of the goodwill is expected to be deductible for income tax purposes and was entirely allocated to the Company’s sole consolidated reporting unit.

The preliminary fair value of the technology asset was determined using the income approach through a discounted cash flow analysis. The determination of the useful life was based upon consideration of market participant assumptions and transaction specific factors.

Transaction costs of $0 and $1,032 were included in selling, general and administrative expense (“SG&A”) within the unaudited condensed consolidated statement of operations and comprehensive loss for the three and nine months ended September 30, 2021, respectively.

4. Revenue Recognition

The Company recognized revenues of $543 and $5,980 for the three and nine months ended September 30, 2021, respectively and generated no revenues in the comparable prior year periods. Substantially all of the Company’s revenues are generated from the sale of tomatoes under an agreement with one customer, Mastronardi Produce Limited (“Mastronardi”).

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APPHARVEST, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

(amounts in thousands except per share amounts)

On March 28, 2019, the Company entered into a Purchase and Marketing Agreement (the “Mastronardi Morehead Agreement”) with Mastronardi pursuant to which Mastronardi agreed to be the sole and exclusive marketer and distributor of all tomatoes, cucumbers, peppers, berries and leafy greens produced at the Morehead CEA facility that meet certain quality standards (collectively, the “Products”). Under the terms of the Mastronardi Morehead Agreement, the Company is responsible for growing, producing, packing, and delivering the Products to Mastronardi, and Mastronardi is responsible for marketing, branding and distributing the Products to its customers. Mastronardi will pay the Company market prices for the Products that are consistent with the best and highest prices available during the duration of the applicable growing season for like kind U.S. Department of Agriculture (“USDA”) Grade No. 1 products. Mastronardi will set the market price for the Products and will pay the Company the gross sale price of the Product sold by Mastronardi, less a marketing fee and Mastronardi’s costs incurred in the sale and distribution of the Products. If Mastronardi rejects, returns or otherwise refuses Products for failure to meet certain quality standards, the Company has the right, at its cost and expense, to sell or otherwise dispose of the Products, subject to certain conditions.

The Mastronardi Morehead Agreement has a term of 10 years. With respect to the Company’s CEA facility in Morehead Kentucky, the Company has a limited, one-time right to terminate the Mastronardi Morehead Agreement if certain conditions are satisfied. During the term of the Mastronardi Morehead Agreement, Mastronardi has a right of first refusal to enter into similar arrangements with regard to any additional growing facilities the Company establishes in Kentucky or West Virginia.

The Company recognizes revenue at a point in time and at the amount it expects to be entitled to be paid when its performance obligation is complete, which is generally when control of the Products is transferred to its customers upon pick-up by the customer or the customer’s agent from the Company’s facilities. Prices for the Company’s Products are based on agreed upon rates with customers and do not include financing components or noncash consideration. Revenue is recorded net of variable consideration, such as commissions and other shipping, handling and marketing costs incurred as defined in the customer agreements. Revenue is also recorded net of provisions for returns and rejections for Products that do not meet quality specifications, with such provisions calculated using historical averages adjusted for any expected changes due to current business conditions. Payment terms are generally 30 days.

5. Fair Value Measurements

The company categorizes its assets and liabilities into one of three levels based on the assumptions (inputs) used in determining their values, as defined below:

•Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.

•Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3: Unobservable inputs reflecting management’s assumptions about the inputs used in pricing the asset or liability.

The table below presents the Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used for each measurement:


		Fair Value as of September 30, 2021
	Balance Sheet Account	Level 1		Level 2		Level 3		Total
Assets:
Foreign currency contracts	Other assets, net	$	—	$	46	$	—	$	46
Total assets		$	—	$	46	$	—	$	46
Liabilities:
Foreign currency contracts	Other current liabilities	$	—	$	645	$	—	$	645
Interest rate swap	Other liabilities	—		2,073		—		2,073
Private Warrants	Private Warrant liabilities	—		4,337		—		4,337
Total liabilities		$	—	$	7,055	$	—	$	7,055

The Company’s derivative contracts, including foreign currency forward and option contracts and an interest rate swap, are measured at fair value using valuations based upon quoted prices for similar assets and liabilities in active markets (Level 2)

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APPHARVEST, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

(amounts in thousands except per share amounts)

and are valued by reference to similar financial instruments, adjusted for terms specific to the contracts. See Note 13 - Derivative Financial Instruments and Note 11 - Debt for more information on the Company’s use of financial instruments.

The Private Warrant liabilities are determined using a Black-Scholes option pricing model, a Level 2 valuation. The significant inputs to the Private Warrant valuation are as follows:


	On the Closing Date of the Business Combination			September 30, 2021
Exercise price	$	11.50		$	11.50
Stock price	$	24.95		$	6.52
Volatility	25.0		%	54.6		%
Remaining term in years	5.00			4.33
Risk-free rate	0.45		%	0.94		%
Dividend yield	—			—

The following table summarizes the private warrant activity for the three and nine months ended September 30, 2021:


	(In thousands)
Fair value of Private Warrants on the Closing Date	$	45,565
Fair value of Private Warrants converted to Public Warrants	(5,819)
Change in fair value of Private Warrants	(9,826)
Fair value of Private Warrants outstanding as of March 31, 2021	$	29,920
Fair value of Private Warrants converted to Public Warrants	(3,113)
Change in fair value of Private Warrants	(6,488)
Fair value of Private Warrants outstanding as of June 30, 2021	$	20,319
Fair value of Private Warrants converted to Public Warrants	(201)
Change in fair value of Private Warrants	(15,781)
Fair value of Private Warrants outstanding as of September 30, 2021	$	4,337

The Company did not have any assets or liabilities subject to fair value measurements on a recurring basis as of December 31, 2020.

The Warrants are deemed equity instruments for income tax purposes, and accordingly, there is no tax accounting relating to changes in the fair value of the Private Warrants recognized. The changes in the fair value of the Private Warrants may be material to our future operating results.

The Company measures certain assets and liabilities at fair value on a non-recurring basis. Assets and liabilities that are measured at fair value on a non-recurring basis include long-lived assets which would generally be recorded at fair value as a result of an impairment charge. Assets acquired and liabilities assumed as part of a business combination are also measured at fair value on a non-recurring basis during the measurement period allowed by the ASC guidance for business combinations, when applicable, see Note 3 - Business Combinations.

Carrying values of cash and cash equivalents, accounts receivable, inventories, prepaid expenses and other current assets, accounts payable, accrued expenses, and other current liabilities approximate fair values because of their short-term nature.

6. Inventories

Inventories are valued at the lower of cost (first-in, first-out) or net realizable value. Finished goods inventories represent costs associated with boxed produce not yet sold. Growing crop inventories primarily represent the costs associated with growing produce within the Company’s CEA facilities. Materials and supplies primarily represent growing and packaging supplies. Inventory costs are comprised of the purchase and transportation cost plus production labor and overhead.

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APPHARVEST, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

(amounts in thousands except per share amounts)



	September 30, 2021		December 31, 2020
Raw materials	$	1,255	$	781
Growing crops	2,932		2,606
Finished goods	—		—
Total inventories, net	$	4,187	$	3,387

7. Property and Equipment



	September 30, 2021		December 31, 2020
Land	$	30,526	$	7,277
Buildings	77,949		57,362
Machinery and equipment	49,153		9,581
Construction in progress	133,666		78,174
Leasehold improvements	3,577		871
Less: accumulated depreciation	(6,261)		(620)
Total property and equipment, net	$	288,610	$	152,645

Depreciation expense was $2,752 and $6,887 for the three and nine months ended September 30, 2021, respectively, compared to $51 and $66 for the three and nine months ended September 30, 2020, respectively.

In March 2021 the Company acquired the Morehead CEA facility and related property from Equilibrium Controlled Environment Foods Fund, LLC and its affiliates (“Equilibrium”), a related party (See Note 12(a) - Commitments and Contingencies - Equilibrium Transaction). The purchase price for the Morehead CEA facility was $125,000 which was equal to a multiple of Equilibrium’s cost to acquire, develop and construct the Morehead CEA facility. The Morehead CEA facility was placed in service during the nine months ended September 30, 2021. As of December 31, 2020, the buildings asset class included $56,748 related to Morehead CEA facility right-to-use assets held under a finance lease with Equilibrium.

8. Other Assets


	September 30, 2021		December 31, 2020
Utility deposits	$	5,571	$	—
Investment in unconsolidated entity	5,000		—
Prepayments for fixed assets	2,567		—
Collateral for hedging program	2,480		—
Prepaid transaction costs for business combination	—		1,127
Other assets	1,106		61
Total other assets	$	16,724	$	1,188

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APPHARVEST, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

(amounts in thousands except per share amounts)

9. Accrued Expenses


	September 30, 2021		December 31, 2020
Payroll and related	$	1,576	$	563
Professional service fees	991		693
Construction costs	8,331		2,574
Other accrued liabilities	1,044		352
Incentive compensation	2,510		—
Utilities	64		384
Interest on convertible debt with a related party	—		618
Total accrued expenses	$	14,516	$	5,184

10. Note Payable with a Related Party

On September 28, 2020, the Company entered into a convertible promissory note with Inclusive Capital Partners Spring Master Fund, L.P., a related party, to finance capital investments and operating needs. The Convertible Note had a principal balance of $30,000 and interest at 8.0% per annum. The outstanding principal amount of the Convertible Note and unpaid accrued interest was extinguished at a conversion price equal to $9.50 per share upon the successful closing of the Business Combination. The note principal of $30,000 and accrued interest of $618 were included as current liabilities at December 31, 2020. In connection with the Business Combination on January 29, 2021, the outstanding principal and unpaid accrued interest due was converted into an aggregate 3,242 shares of the Company’s Common Stock, such that the Convertible Note was no longer outstanding and ceased to exist.

11. Debt

On June 15, 2021, the Company entered into a master credit agreement with Rabo AgriFinance LLC (the “Lender”) for a real estate term loan in the original principal amount of $75,000 (the “Rabo Loan”). The Rabo Loan matures on April 1, 2031, with quarterly interest payments commencing on July 1, 2021 and quarterly principal payments, commencing on January 1, 2022, with the remaining balance of principal and interest due upon maturity. Payments are based on one month LIBOR plus 2.500% per annum. The Rabo Loan is collateralized by the business assets of the first Morehead CEA facility and requires compliance with financial covenants. As of September 30, 2021, the Company was in compliance with all covenants.

On June 21, 2021, the Company entered into an interest rate swap with an affiliate of the Lender to make a series of payments based on a fixed rate of 1.602% and receive a series of payments based on LIBOR. Both the fixed and floating payment streams are based on the initial notional amount of $75,000 and require quarterly payments under a twenty-year amortization schedule. As of September 30, 2021, the net fixed interest rate on the combined Rabo Loan and related interest rate swap is 4.102%.

The Rabo Loan is recorded at cost, net of debt issuance costs of $656. During the three and nine months ended September 30, 2021, $887 and $889 of interest expense, respectively, was recognized on the Rabo Loan. The fair value of the Rabo Loan is estimated using Level 2 inputs based on observable inputs, including quoted market prices.

On July 23, 2021, the Company entered into a credit agreement with CEFF II AppHarvest Holdings, LLC, an affiliate of Equilibrium, for a construction loan with a principal amount of $91,000 (the “Construction Loan”) for the development of a CEA facility in Richmond, Kentucky (the “Project”). The Construction Loan provides monthly disbursements to fund capital costs of the Project in excess of the Company’s required equity contribution of 34.5% of the capital costs of the Project. The Construction Loan requires monthly interest payments based on drawn capital costs at an initial interest rate of 8.000% per annum, which will increase on a monthly basis by 0.2% per annum, beginning two years after closing of the Construction Loan through maturity, which is expected to be July 23, 2024, with no required principal payments until maturity. As of September 30, 2021, the Company had $13,832 outstanding on the Construction Loan, included in non-current liabilities at September 30, 2021, and had incurred interest expense of $114, which was all capitalized as part of the construction asset and included in property, plant and equipment in the Company’s unaudited condensed consolidated balance sheet. The Company incurred $389 of debt issuance costs related to the Construction Loan, which are included in current and non-current assets on the balance sheet.

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APPHARVEST, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

(amounts in thousands except per share amounts)

On September 27, 2021, the Company entered into the JPM Note with JPMorgan Chase Bank, N.A., (the “Bank”) providing for a line of credit facility in the maximum amount of $25,000 (the “JPM Loan”) for capital expenditures and CEA facility construction and improvements. The JPM Loan matures on September 24, 2022. The interest rate on the JPM Loan approximates one-month LIBOR plus 2.25%. As of September 30, 2021, the Company has borrowed $6,877 under the JPM Loan and the interest rate was 2.375%. The JPM Loan requires 105% of the aggregate borrowings to be held as cash collateral. At September 30, 2021 the Company had $7,250 of restricted cash on the unaudited condensed consolidated balance sheet to meet this requirement.

A summary of the carrying value of the debt is as follows:


	September 30, 2021
Rabo Loan	$	75,000
Construction Loan	13,832
JPM Loan	6,877
Unamortized debt issuance costs	(640)
Debt, net of issuance costs	95,069
Less current portion	(9,633)
Long term, net	$	85,436

The fair value of the Rabo Loan is estimated using Level 2 inputs based on observable inputs, including quoted market prices. As of September 30, 2021, the carrying value of debt under the Rabo Loan approximates fair value due to such borrowings bearing variable interest rates that correspond to current market rates. As the Construction Loan and JPM Loan are effectively lines of credit, their carrying values approximate fair value.

12. Commitments and Contingencies

(a)Equilibrium Transactions

On March 1, 2021, the Company closed on the Membership Interest Purchase and Sale Agreement (the “MIPSA”) with Equilibrium that was entered into in December 2020, pursuant to which it purchased from Equilibrium 100% of its membership interests in its subsidiary, Morehead Farm LLC. The purchase price for Morehead Farm LLC (“Morehead Farm”) was $125,000 which was equal to a multiple of Equilibrium’s cost to acquire, develop and construct the Morehead CEA Facility.

At closing, Morehead Farm LLC, which owns the Morehead CEA facility, became a wholly owned subsidiary of the Company. Concurrently with the closing of the MIPSA, the Master Lease Agreement dated May 13, 2019 with Morehead Farm LLC to lease the Morehead CEA facility and ancillary agreements related thereto, was terminated. As a result, the closing date balances of $66,504 for the financing obligation related to construction in progress assets and $58,496 for the finance lease liability related to the completed portion of the Morehead CEA facility were settled and de-recognized from the Company’s condensed consolidated balance sheet.

On May 12, 2020, the Company entered into a loan agreement with Equilibrium, a related party, at that time, to finance the purchase of equipment to be used in the Company’s operations in Morehead, Kentucky. The loan agreement had an original principal balance of $2,000 and an interest rate of 9.5% per year. Upon establishment of the finance lease liability for the Morehead CEA facility lease in October, 2020, the principal balance of the loan was extinguished and added to the future base rent calculation to be paid over the term of the lease liability, which was settled and de-recognized as described above. The original proceeds from the loan are included in the financing section of the statement of cash flows as of September 30, 2020.

(b)Other Leases

The Company’s other lease portfolio is primarily comprised of operating leases for offices. At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on whether the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. Leases are classified as operating or finance leases at the commencement date of the lease.

Operating lease right-of-use assets, net and liabilities are recognized within the condensed consolidated balance sheets based on the present value of lease payments over the lease term. As the implicit rate is generally not readily determinable for

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APPHARVEST, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

(amounts in thousands except per share amounts)

most leases, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate reflects the estimated rate of interest that the Company would pay to borrow on a collateralized basis over a similar term in a similar economic environment. Lease expense for operating leases is recognized on a straight-line basis over the lease term.

Leases may include renewal options, and the renewal option is included in the lease term if the Company concludes that it is reasonably certain that the option will be exercised. A certain number of the Company’s leases contain rent escalation clauses, either fixed or adjusted periodically for inflation of market rates, that are factored into the calculation of lease payments to the extent they are fixed and determinable at lease inception.

For the three and nine months ended September 30, 2021, the Company recognized $109 and $324, respectively, of operating lease expense in SG&A within the unaudited condensed consolidated statement of operations and comprehensive loss compared to $75 and $108 for the comparable prior year periods.

The future minimum rental payments required under the leases for each year of the next five years and in the aggregate thereafter are as follows:


	Operating leases
Remainder of 2021	$	175
2022	715
2023	647
2024	529
2025	448
2026 and thereafter	849
Total minimum payments required	3,363
Less: imputed interest costs(1)	(550)
Present value of net minimum lease payments(2)	$	2,813
Weighted-average imputed interest rate	6.33		%
Weighted-average remaining lease term	5.3

____________________________

(1)Represents the amount necessary to reduce net minimum lease payments to present value using actual rate in the lease agreement or the Company’s incremental borrowing rate at lease inception.

(2)Included in the unaudited condensed consolidated balance sheet as of September 30, 2021 as current and non-current lease liability of $537 and $2,276, respectively.


	Period Ended September 30,
	2021		2020
Cash paid for amounts included in the measurement of operating lease liabilities	$	378	$	54
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities	$	1,055	$	376

The Company entered into agreements with Dalsem Greenhouse Technology, B.V. (“Dalsem”) for the construction of new CEA facilities in Richmond, Kentucky and Berea, Kentucky on November 20, 2020 and December 11, 2020, respectively. Under terms of the agreements, Dalsem will provide certain services related to the design, engineering, procurement, construction, startup and testing of a greenhouse and certain ancillary facilities at each site. Total costs under the agreements are based on actual costs incurred by Dalsem and payments are due upon the completion of certain established project milestones, with a portion of each payment due in Euros and a portion due in U.S. dollars. Either party is entitled to terminate the agreements upon the occurrence of certain events of default and the Company is entitled to terminate the agreements if Dalsem fails to meet certain performance requirements. The Company may also terminate the agreements without cause with written notice and a termination payment to Dalsem.

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APPHARVEST, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

(amounts in thousands except per share amounts)

(d) Purchase Commitments

During the three and nine months ended September 30, 2021, the Company entered into an agreement with its natural gas supplier to purchase a portion of its anticipated future natural gas usage at fixed prices. The unrecorded purchase commitments as of September 30, 2021, were $364, within the next twelve months.

There were no purchase commitments that were unrecorded at December 31, 2020.

(e) Litigation

The Company is involved in various lawsuits, claims and other legal matters from time to time that arise in the ordinary course of business. The Company records a liability when a particular contingency is probable and estimable.

In September 2021, a putative securities class action complaint (captioned Ragan v. AppHarvest, Inc., Case No. 21-cv-07985) was filed in the United States District Court for the Southern District of New York on behalf of a proposed class consisting of those who acquired the Company’s securities between May 17, 2021 and August 10, 2021. The complaint names the Company and certain of its current officers as defendants, and alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, by making materially false and misleading statements regarding the Company’s business, operations, and prospects because they failed to disclose a purported lack of sufficient training, and inability to consistently produce USDA Grade No. 1 tomatoes. The complaint seeks unspecified monetary damages on behalf of the putative class and an award of costs and expenses, including reasonable attorneys’ fees. The deadline for investors to seek appointment as lead plaintiff in the lawsuit is November 23, 2021. After the Court appoints a lead plaintiff, defendants, including the Company, expect the lead plaintiff to file an amended complaint and expect the defendants, including the Company, to file a motion to dismiss the amended complaint. The Company does not believe the claims have merit, intends to defend the case vigorously, and has not recorded a liability related to this lawsuit because, at this time, the Company is unable to reasonably estimate possible losses or determine whether an unfavorable outcome is probable.

13. Derivative Financial Instruments

During the nine months ended September 30, 2021, the Company entered into foreign currency forward and option contracts to hedge certain cash flows related to anticipated expenditures related to the construction of its Berea, Kentucky and Richmond, Kentucky CEA facilities. These contracts, which have maturities ranging through December 2022, qualify as cash flow hedges and are used to hedge the Company’s foreign currency risk associated with the Euro denominated payments due upon the completion of established project milestones under the applicable CEA facility construction contracts. As of September 30, 2021, the total notional amount outstanding of foreign currency contracts designated as cash flow hedging instruments was €28,509. The Company maintains collateral of $2,480 for the hedge program which is included in other non-current assets and margin call deposits of $950 which are included in prepaid expenses and other current assets in the unaudited condensed consolidated balance sheet at September 30, 2021.

The Company has elected to measure hedge effectiveness using the “spot method” under which the hedging relationship is considered perfectly effective and changes in the fair value of the forward and options contracts attributable to changes in the spot rate are recorded as a component of other AOCL. As the hedged items are ultimately capitalized as part of the CEA facility fixed assets, the AOCL amounts will be reclassified into earnings over the same periods as the future depreciation expense related to those assets. Consistent with the allocation of CEA facility fixed asset depreciation, the AOCL reclassification will also be allocated between cost of goods sold (“COGS”) and SG&A within the unaudited condensed consolidated statement of operations and comprehensive loss.

Under the “spot method”, changes in the fair value of forward contracts attributable to changes in the difference between the forward rate and the spot rate (forward points) and the fair value of option contracts attributable to time and volatility values (up-front premium) will be excluded from the measure of hedge effectiveness and amortized as COGS and SG&A on a straight-line basis over the terms of the underlying contracts. During the three and nine months ended September 30, 2021, the Company recognized amortization expense of $149 and $405, respectively, related to its foreign currency hedge contracts within its unaudited condensed consolidated statement of operations and comprehensive loss.

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APPHARVEST, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

(amounts in thousands except per share amounts)

As of September 30, 2021, the Company had a net liability of $599 in foreign currency contracts designated as cash flow hedging instruments, which is included in other current and non-current liabilities according to the expected settlement dates of the related contracts.

On June 21, 2021, the Company entered into an interest rate swap which has been designated as an effective cash flow hedge and changes in the fair value are recorded as a component of AOCL in the condensed consolidated balance sheet and reclassified into earnings as interest expense over the life of the debt. See Note 11 - Debt for more information on the interest rate swap.

The following table summarizes the before and after tax amounts for the various components of other comprehensive loss for the periods presented:


	Three Months Ended September 30, 2021						Nine Months Ended September 30, 2021
	Before Tax		Tax (Expense) Benefit		After Tax		Before Tax		Tax (Expense) Benefit		After Tax
Foreign Currency	$	(414)	$	—	$	(414)	$	(504)	$	—	$	(504)
Interest Rate Swap	348		—		348		(2,074)		—		(2,074)
Total AOCL	$	(66)	$	—	$	(66)	$	(2,578)	$	—	$	(2,578)

The income tax benefit of $754 related to the $2,578 balance in AOCL at September 30, 2021 is fully offset by a valuation allowance established on the related deferred income tax asset. The Company will release the AOCL amounts, net of any tax impact, from the foreign currency contracts, and the interest rate swap in the periods that the underlying transactions impact earnings as described above.

14. Stock Compensation and Other Benefit Plans

Equity Incentive Plan

On January 29, 2021, stockholders approved the 2021 Equity Incentive Plan, (the “Plan”), replacing the 2018 Equity Incentive Plan, (the “2018 Plan”), pursuant to which the Company’s Board of Directors (the “Board”) may grant stock awards, including stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards, to officers, key employees, and directors. The Plan allows for non-employee director grants, which are accounted for in the same manner as employee awards. There are 10,027 registered shares of Common Stock reserved for issuance under the Plan. During the three and nine months ended September 30, 2021, 359 and 6,589 awards were granted under the Plan, including 6,541 restricted stock units (“RSU’s”) and 48 stock options granted as consideration in the Root AI Acquisition (see Note 3 - Business Combinations for more information). The RSU’s granted under the Plan include 2,937 executive awards with market and performance-based vesting requirements in addition to the typical service-based vesting requirements.

There are 5,371 registered shares of Common Stock reserved for issuance upon exercise or settlement, as applicable, of awards made under the 2018 Plan. While no further awards may be granted under the 2018 Plan, that plan continues to govern all outstanding awards previously issued under it.

Vesting of the restricted stock units issued under the 2018 Plan (“2018 RSUs”) was dependent on a liquidity event, the Business Combination, which occurred on January 29, 2021. Accordingly, the Company recognized a one-time stock-based compensation expense of $2,616 as of that date as a retroactive catch-up of cumulative stock-based compensation expense for such awards from their original grant dates. Total stock-based compensation expense related to 2018 RSU’s was $2,447 and $11,719 during the three and nine months ended September 30, 2021, respectively. As of September 30, 2021, the Company had 1,673 granted but unvested 2018 RSU’s with unrecognized stock-based compensation expense of $8,781 remaining.

Stock-based compensation is measured based on the grant date fair value of the Plan awards and subsequently recognized as expense ratably over their vesting periods. Stock-based compensation for awards with service or performance-based vesting requirements is adjusted to reflect actual vested awards, with forfeitures recorded as a reduction of expense at the time they occur. Stock-based compensation for unvested market-based awards is not reduced by forfeitures as the grant date fair value of such awards includes consideration that vesting of the awards may not occur.

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APPHARVEST, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

(amounts in thousands except per share amounts)

Total stock-based compensation expense was $11,571 and $31,248 for the three and nine months ended September 30, 2021, respectively, compared to $49 and $108 for the three and nine months ended September 30, 2020, respectively. Of these amounts, $11,211 and $29,583 were included in SG&A and $360 and $1,665 in COGS for the three and nine months ended September 30, 2021, respectively and $49 and $108 was recognized in SG&A and none in COGS for the three and nine months ended September 30, 2020, respectively.

Employee Stock Purchase Plan

On January 29, 2021, stockholders approved the 2021 Employee Stock Purchase Plan, (the “ESPP”). The ESPP provides eligible employees with a means of acquiring equity in the Company at a discounted price using their own accumulated payroll deductions. Under the terms of the ESPP employees can elect to have amounts of their annual compensation withheld, up to a maximum set by the board, to purchase shares of Company Common Stock for a purchase price equal to 85% of the lower of the fair market value per share (at the end of the offering period) of Company Common Stock on (i) the offering date or (ii) the respective purchase date. There are 2,005 shares of Common Stock reserved for issuance under the ESPP. During the three and nine month periods ending September 30, 2021, there were no shares purchased under the ESPP.

The ESPP grants participating employees the right to acquire Company Common Stock in increments of 1% to 15% of eligible pay, with a maximum contribution of $25 of eligible pay, subject to applicable annual Internal Revenue Service (“IRS”), limitations. The first offering period of the Company’s ESPP commenced on June 1, 2021 and is six months in duration.

The Company uses a Black-Scholes option pricing model to value the Common Stock purchased as part of the Company’s ESPP. The fair value estimated by the option pricing model are affected by the price of the Common Stock as well as subjective variables that include assumed interest rates, our expected dividend yield, and our expected share price volatility over the term of the award. The Company records stock-based compensation expense, within SG&A or COGS related to the discount given to our participating employees. Total stock-based compensation expense recorded for the ESPP during the three and nine month periods ending September 30, 2021 was $61.

15. Income Taxes

The Company’s effective income tax rate was 0.1% and 0.7% for the three and nine months ended September 30, 2021, respectively, and 0% for the three and nine months ended September 30, 2020. The variance from the U.S. federal statutory rate of 21% for the three and nine months ended September 30, 2021 was primarily attributable to a change in the Company’s valuation allowance.

The Company’s income tax provision is impacted by a valuation allowance on the Company’s net deferred tax assets, net of reversing taxable temporary differences and considering future annual limitations on net operating loss carryforward utilization enacted by U.S. tax reform legislation. The Company maintains a valuation allowance on its net deferred tax assets for all periods presented as the Company cannot be certain that future taxable income will be sufficient to realize its deferred tax assets. Valuation allowances are provided against deferred tax assets when, based on all available evidence, it is considered more likely than not that some portion or all the recorded deferred tax assets will not be realized in future periods. There was no income tax expense recognized in the three and nine months ended September 30, 2020.

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APPHARVEST, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

(amounts in thousands except per share amounts)

16. Net Loss Per Common Share

Diluted net loss per common share is the same as basic net loss per common share for all periods presented because the effects of potentially dilutive items were anti-dilutive given the Company’s net loss. The following common share equivalent securities have been excluded from the calculation of weighted-average common shares outstanding because the effect is anti-dilutive:


Anti-dilutive common share equivalents	September 30, 2021	September 30, 2020
Stock options	2,824	3,026
Restricted stock units	7,669	1,301

Warrants	13,242	—
Total anti-dilutive common share equivalents	23,735	4,327


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Numerator:
Net loss	$	(17,268)	$	(5,683)	$	(77,799)	$	(8,130)
Denominator:
Weighted-average common shares outstanding, basic and diluted	100,437		41,558		93,823		35,960
Net loss per common share, basic and diluted	$	(0.17)	$	(0.14)	$	(0.83)	$	(0.23)

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APPHARVEST MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains statements that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial risks and uncertainties. All statements contained in this Quarterly Report other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “believes,” “expects,” “intends,” “estimates,” “projects,” “anticipates,” “will,” “plan,” “design,” “may,” “should,” or similar language are intended to identify forward-looking statements.

It is routine for our internal projections and expectations to change throughout the year, and any forward-looking statements based upon these projections or expectations may change prior to the end of the next quarter or year. Readers of this Quarterly Report are cautioned not to place undue reliance on any such forward-looking statements. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Risks and uncertainties are identified under “Risk Factors” in Item 1A herein and in our other filings with the Securities and Exchange Commission (the “SEC”). The impact of COVID-19 and its variants may also exacerbate these risks, any of which could have a material effect on us. All forward-looking statements included herein are made only as of the date hereof. Unless otherwise required by law, we do not undertake, and specifically disclaim, any obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise after the date of such statement.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q, and our audited consolidated financial statements and related notes for the year ended December 31, 2020, as amended, included in our Current Reports on Form 8-K/A filed with the SEC on March 2, 2021 and on June 7, 2021. As used in this section, unless the context suggests otherwise, “we,” “us,” “our,” “Company,” and “AppHarvest” refer to AppHarvest, Inc. and its consolidated subsidiaries.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

AppHarvest was founded on January 19, 2018 and, together with its subsidiaries, is an applied technology company in Appalachia developing and operating some of the world’s largest high-tech indoor farms, designed to grow non-GMO, chemical pesticide-free produce, using primarily rainwater while producing significantly higher yields than those of traditional agriculture on the same amount of land. The Company combines conventional agricultural techniques with cutting-edge technology including artificial intelligence and robotics to improve access to nutritious food, farming more sustainably, building a domestic food supply, and increasing investment in Appalachia.

Prior to October 2020, our operations were limited to organizing and staffing, business planning, raising capital, and acquiring and developing properties for Controlled Environment Agriculture (“CEA”). In October 2020, we partially opened our first CEA facility in Morehead, Kentucky, (the “Morehead CEA facility”) which we estimate can cultivate approximately 720,000 tomato plants with an approximate yield of 40 million pounds per year. We harvested our first crop of beefsteak tomatoes at the Morehead CEA facility in January 2021 and we began harvesting our first crop of tomatoes on the vine in March 2021. Our Morehead CEA facility has been fully operational since March 2021 and production of the full 60 acres began in the first week of May 2021. The Morehead CEA facility concluded its first harvest in August 2021 and completed planting of its second crop in September 2021 in preparation for the second season of harvesting. Harvest of the second crop will commence in the fourth quarter of 2021.

We have started construction on four more CEA facilities. Two of the facilities under construction are in Berea, Kentucky (the “Berea leafy green facility”) and Richmond, Kentucky (the “Richmond tomato facility”)—the Berea leafy green facility is over 50% complete, and the Richmond tomato facility is over 50% complete. Both CEA facilities are expected to be fully operational by the end of 2022. Groundbreakings for two more CEA facilities occurred in June 2021 in Somerset, Kentucky (the “Somerset facility”) and Morehead, Kentucky (the “Morehead leafy green facility”). The Somerset facility is expected to grow berries and the Morehead CEA facility is expected to grow leafy greens. The Somerset facility is approximately 30% complete and expected to be operational by the end of 2022. To incorporate design and other insights from construction of the 15-acre Berea leafy green facility and to maintain flexibility in the allocation of capital resources, we have temporarily paused development of the 10-acre Morehead leafy green facility with construction now expected to resume in 2022 for a 2023 delivery.

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We expect to have four CEA facilities operational by the end of 2022, with approximately 165 acres under production. We anticipate that we will have nine operational CEA facilities in Appalachia with approximately 400 acres of aggregate production capacity by the end of 2025. We intend to continue to work toward a network of 12 CEA facilities by 2025. Our expectations assume that we are and will be able to obtain necessary capital when needed on acceptable terms.

For a discussion of our future funding requirements, please refer to Part II, Item 1A. Risk Factors, “We will require significant additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, may force us to delay, limit, reduce or terminate our operations and future growth.”

In April 2021, we acquired Root AI, Inc. (“Root AI”) (now AppHarvest Technology, Inc.), an artificial intelligence and robotics company, including their team with experience in CEA. The acquisition of Root AI is expected to provide us with a baseline for harvesting support while helping evaluate crop health, predict yield, and optimize overall operations in existing CEA facilities. The benefits include fully developed technology, in the form of software and hardware, that can be programmed for utilization and optimization and a skilled workforce to assist with ongoing upgrades of the artificial intelligence.

The Company is organized as a single operating segment. Substantially all of the assets and operations of the Company are located in the United States (“U.S.”).

Basis of Presentation

Currently, we conduct business through one operating segment. Prior to the nine months ended September 30, 2021 we were a pre-revenue company with no commercial sales. We began generating sales during the nine months ended September 30, 2021 and conduct our operations solely in the U.S.

For more information about our basis of presentation, refer to Note 1 - Description of Business of our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.

Environmental, Social and Governance (“ESG”)

AppHarvest is a new kind of company. We are both a public benefit corporation (“PBC”) and a certified B Corporation

because we believe in collective benefit over individual gain. We believe growing healthy fruits and vegetables are good business, and new technologies can deliver clean produce with safer growing methods, which we believe benefits all stakeholders. We are all in this together, for good.

Public benefit corporations are for-profit corporations and, under Delaware law, our directors have a duty to balance the financial interests of stockholders, the best interests of those materially affected by our conduct (including our stockholders, employees, communities, customers and suppliers), and the specific public benefits identified in our second amended and restated certificate of incorporation (the “amended and restated certificate of incorporation”) when making decisions. Our amended and restated certificate of incorporation includes three specific public benefit goals:

•Goal 1 Drive positive environmental change in agriculture

•Goal 2 Empower individuals in Appalachia

•Goal 3 Improve the lives of our employees and the communities in which we operate

In early 2021, we launched our first Materiality Assessment with Business for Social Responsibility (“BSR”) to further assess which ESG issues are most important to AppHarvest’s stakeholders and our business success. Our stakeholders include farmers, employees, regional economic development organizations, retailers, sustainability experts at BSR, suppliers, local communities, and our internal senior management and board members.

While our PBC charter-specific goals broadly relate to our corporate purpose and inform all other ESG efforts, our materiality assessment (which also incorporates Sustainability Accounting Standards Board standards, now the Value Reporting Foundation) and B Lab assessment will drive our specific ESG strategies. Our ESG key performance indicators (“KPIs”) will align with our material issues to measure our progress. Our first full year of operations ending on December 31, 2021 will serve as our baseline year for reporting ESG KPIs.

More information on our key ESG programs, goals and commitments, and key metrics can be found in our 2020 sustainability report, which is available on our website https://www.appharvest.com/. Website references throughout this document are provided for convenience only, and the content on the referenced websites is not incorporated by reference into this Quarterly Report.

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While we believe all of our ESG goals align with our long-term growth strategy and financial and operational priorities, they are aspirational and may change, and there is no guarantee or promise that they will be met.

Morehead Facility

On March 1, 2021, we closed on the Membership Interest Purchase and Sale Agreement (the “MIPSA”) with Equilibrium Controlled Environment Foods Fund, LLC and its affiliates (“Equilibrium”) that we entered into in December 2020, pursuant to which we purchased from Equilibrium 100% of the membership interests in Morehead Farm LLC (“Morehead Farm”). The purchase price for Morehead Farm was approximately $125 million, which was equal to a multiple of Equilibrium’s cost to acquire, develop and construct the Morehead CEA facility. At closing, Morehead Farm, a subsidiary of Equilibrium that owns the Morehead CEA facility, became our wholly owned subsidiary. Concurrent with the closing of the MIPSA, the Master Lease Agreement pursuant to which we leased the Morehead CEA facility from Equilibrium and ancillary agreements related thereto, were terminated.

Factors Affecting Our Financial Condition and Results of Operations

We have expended, and expect to continue to expend, substantial resources as we:

•continue the build-out of the four CEA facilities currently under construction in Richmond, Berea, Somerset and Morehead, Kentucky and invest in additional CEA facilities in the future;

•continue our 2021 growing season, which began in August 2021, and plant and harvest new crops in our future growing seasons;

•implement the Purchase and Marketing Agreement with Mastronardi Produce Limited (“Mastronardi”) and fulfill our obligations under that agreement;

•identify and invest in future growth opportunities, including new or expanded facilities and new product lines;

•invest in sales and marketing efforts to increase brand awareness, engage customers and drive sales of our products;

•invest in product innovation and development, including our acquisition of Root AI’s technologies in April 2021; and

•incur additional general and administrative expenses, including increased finance, legal and accounting expenses, associated with being a public company and expanding operations.

Business Combination and Public Company Costs

On January 29, 2021, Novus Capital Corporation (“Novus”), a special purpose acquisition company, consummated the business combination agreement and plan of reorganization (the “Business Combination Agreement” and the transactions contemplated thereby, the “Business Combination”) dated September 2020, by and among ORGA, Inc., a wholly owned subsidiary of Novus (“Merger Sub”), and AppHarvest Operations, Inc., a Delaware corporation (f/k/a AppHarvest, Inc.) (“Legacy AppHarvest”), pursuant to which Legacy AppHarvest was merged with and into Merger Sub, with Legacy AppHarvest surviving the merger as a wholly-owned subsidiary of Novus. On the closing date, Novus changed its name to AppHarvest, Inc.

While the legal acquirer in the Business Combination Agreement was AppHarvest, Inc. (formerly Novus), for financial accounting and reporting purposes under United States generally accepted accounting principles (“GAAP”), Legacy AppHarvest is the accounting acquirer as the Business Combination was accounted for as a “reverse recapitalization.” A reverse recapitalization (i.e., a capital transaction involving the issuance of stock by AppHarvest, Inc. (formerly Novus), for the stock of Legacy AppHarvest) does not result in a new basis of accounting, and the consolidated financial statements of the combined entity represent the continuation of the consolidated financial statements of Legacy AppHarvest in many respects. Accordingly, the consolidated assets, liabilities and results of operations of Legacy AppHarvest will become the historical consolidated financial statements of the combined company, and Novus’s assets, liabilities and results of operations will be consolidated with Legacy AppHarvest beginning on the acquisition date. Operations prior to the Business Combination will be presented as those of Legacy AppHarvest in future reports. The net assets of AppHarvest, Inc. have been recognized at historical cost (which was consistent with carrying value), with no goodwill or other intangible assets recorded upon execution of the Business Combination.

Upon consummation of the Business Combination and the closing of the concurrent private placement of the 37,500 shares of the Company’s Common Stock (the “PIPE”), the most significant change in our reported financial position and results of

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operations was an increase in cash and cash equivalents (as compared to Legacy AppHarvest’s consolidated balance sheet at December 31, 2020) of approximately $435.2 million, including $375.0 million in gross proceeds from the PIPE.

On September 28, 2020, we entered into a convertible promissory note with Inclusive Capital Partners Spring Master Fund, L.P., a related party, to finance capital investments and operating needs with a principal balance of $30.0 million. Upon completion of the Business Combination, the outstanding principal and unpaid accrued interest due on the convertible note was converted into an aggregate of 3.2 million shares of Common Stock in accordance with the terms of the agreement terms, and such converted convertible notes were no longer outstanding and ceased to exist, and any liens securing obligations under the convertible notes were released.

As a consequence of the Business Combination, we became the successor to an SEC-registered and Nasdaq-listed company, which requires us to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices. We expect to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting, legal and administrative resources, including increased audit and legal fees.

On April 7, 2021, we completed the acquisition of Root AI, an artificial intelligence farming startup that creates intelligent robots to help manage high-tech indoor farms for total consideration of $59.1 million including net cash of approximately $9.8 million, and equity worth approximately $49.4 million (the “Root AI Acquisition”). The equity consisted of 2.3 million shares of our Common Stock worth approximately $49.0 million on April 7, 2021 and $0.4 million in options.

The Root AI Acquisition is expected to provide us with a baseline for harvesting support while helping evaluate crop health, predict yield, and optimize overall operations in existing CEA facilities. The benefits include fully developed technology, in the form of software and hardware, that can be programmed for utilization and optimization and a skilled workforce to assist with ongoing upgrades of the artificial intelligence. None of the goodwill is expected to be deductible for income tax purposes and was entirely allocated to our sole reporting unit.

Our future results of consolidated operations and financial position may not be comparable to historical results as a result of the Business Combination and the Root AI Acquisition.

Key Components of Statement of Operations

Non-GAAP Financial Measures

To supplement our unaudited condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, we use certain non-GAAP measures, such as Adjusted EBITDA, to understand and evaluate our core operating performance. We define and calculate Adjusted EBITDA as net loss before the impact of interest income or expense, income tax expense or benefit, depreciation and amortization, adjusted to exclude: stock-based compensation, transaction-related costs, reorganization costs, remeasurement of warrant liabilities and certain other non-recurring, non-cash and non-core items. We believe this non-GAAP measure of financial results provides useful information to management and investors regarding certain financial and business trends relating to our financial condition and results of operations. Our management uses this non-GAAP measure for trend analyses and for budgeting and planning purposes.

We believe that the use of this non-GAAP financial measure provides an additional tool for investors to use in evaluating projected operating results and trends. Other similar companies may present different non-GAAP measures or calculate similar non-GAAP measures differently. Management does not consider this non-GAAP measure in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of this non-GAAP financial measure is that it excludes significant expenses that are required to be presented in our GAAP financial statements. Because of this limitation, you should consider Adjusted EBITDA alongside other financial performance measures, including net loss and our other financial results presented in accordance with GAAP.

Net sales

Prior to the nine months ended September 30, 2021, we had not yet generated sales. Substantially all of our net sales are generated from the sale of tomatoes under an agreement with one customer, Mastronardi. Net sales include revenues earned from the sale of our products, less commissions, shipping, distribution and other costs incurred as defined in our customer agreements.

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Cost of Goods Sold

Prior to the nine months ended September 30, 2021 we had not incurred cost of goods sold as we did not have operations prior to this period. Cost of goods sold consists of expenses incurred related to the production of inventory sold to customers.

Selling, General and Administrative Expenses

Selling, general and administrative expenses (“SG&A”) consist of payroll and payroll related expenses, stock-based compensation, professional services and legal fees, licenses and registration fees, insurance, depreciation, rent and various other personnel and office related costs. SG&A also includes start-up expenses related to pre-commencement commercial activities for tomatoes on the vine at the Morehead CEA facility.

Interest Expense

Interest expense for the three and nine months ended September 30, 2021 primarily relates to long-term debt to help finance the construction of our CEA facilities. Interest expense from related parties for the three and nine ended September 30, 2021 primarily relates to the finance lease and financing obligation for the Morehead CEA facility which were settled upon purchase of Morehead Farm on March 1, 2021 and the convertible note that was converted to Common Stock upon completion of the Business Combination on January 29, 2021. See Note 11- Debt to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.

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Results of Operations

Comparison of the Three and Nine Months Ended September 30, 2021 and September 30, 2020

The following table sets forth our historical operating results for the periods indicated:


	Three Months Ended							Nine Months Ended
(Dollars in thousands)	September 30, 2021			September 30, 2020		$ Change		September 30, 2021			September 30, 2020		$ Change
Net sales	$	543		$	—	$	543	$	5,980		$	—	$	5,980
Cost of goods sold	7,482			—		7,482		30,001			—		30,001
	(6,939)		—	—		(6,939)		(24,021)		—	—		(24,021)
Operating expenses:
Selling, general and administrative expenses	25,401			5,742		19,659		84,357			8,435		75,922


Total operating expenses	25,401			5,742		19,659		84,357			8,435		75,922
Operating loss	(32,340)			(5,742)		(26,598)		(108,378)			(8,435)		(99,943)
Development fee income from a related party	—			136		(136)		—			408		(408)

Interest expense from related parties	—			(64)		64		(658)			(90)		(568)
Interest expense	(805)			—		(805)		(893)			—		(893)
Change in fair value of Private Warrants	15,781			—		15,781		32,095			—		32,095
Other	113			(13)		126		574			(13)		587
Loss before income taxes	(17,251)			(5,683)		(11,568)		(77,260)			(8,130)		(69,130)
income tax expense	(17)			—		(17)		(539)			—		(539)
Net loss	$	(17,268)		$	(5,683)	$	(11,585)	$	(77,799)		$	(8,130)	$	(69,669)

Reconciliation of GAAP to Non-GAAP

The following table presents a reconciliation of net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted EBITDA:


	Three Months Ended				Nine Months Ended
(Dollars in thousands)	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Net loss	$	(17,268)	$	(5,683)	$	(77,799)	$	(8,130)
Interest expense from related parties	—		64		658		90
Interest expense	805		—		893		—
Interest income	(82)		—		(178)		(31)
Income tax expense	17		—		539		—
Depreciation and amortization expense	3,160		—		7,762		15
EBITDA	(13,368)		(5,619)		(68,125)		(8,056)
Change in fair value of Private Warrants	(15,781)		—		(32,095)		—
Stock-based compensation expense	11,571		49		31,248		108
Transaction success bonus on completion of Business Combination	—		—		1,500		—
Reorganization costs	946		—		946		—
Business Combination transaction costs	112		—		13,916		—
Root AI acquisition costs	—		—		1,032		—
Adjusted EBITDA	$	(16,520)	$	(5,570)	$	(51,578)	$	(7,948)

The following sections discuss and analyze the changes in the significant line items in our unaudited condensed consolidated statements of operations for the comparison periods identified.

Net Sales

Net sales for the three and nine months ended September 30, 2021 were $0.5 million and $6.0 million, respectively, compared to $0 for the comparable prior year periods, with the increase due to the sale of tomatoes produced in the abbreviated first planting season at our Morehead CEA facility, which concluded in August 2021. Net sales for the three and nine months ended September 30, 2021 were adversely impacted by labor and productivity investments associated with the training and development of the new workforce at the Morehead CEA facility. Net sales for the nine months ended September 30, 2021

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were also adversely impacted by low market prices for tomatoes. The labor and productivity challenges resulted in lower net sales due to lower overall No. 1-grade production yields, including the impact of higher related distribution and shipping fees. Net sales for the three months ended September 30, 2021 were also impacted by the lack of production during the tear-out of the first season crop and clean-up of the Morehead CEA facility upon conclusion of the first growing season, as well as planting of the new crop for the second growing season.

Cost of Goods Sold

Cost of goods sold for the three and nine months ended September 30, 2021 was $7.5 million and $30.0 million, respectively, compared to $0 for the comparable prior year periods. Cost of goods sold for the three and nine months ended September 30, 2021 was impacted by continued labor and productivity investments associated with the training and development of the new workforce at the Morehead CEA facility. Cost of goods sold for the three months ended September 30, 2021, also includes costs associated with the summer refresh and planting of the new crop to prepare for the second season.

Selling, General, and Administrative Expenses

SG&A for the three and nine months ended September 30, 2021 was $25.4 million and $84.4 million, respectively, compared to $5.7 million and $8.4 million for the comparable prior year periods. The $19.7 million and $75.9 million increases were primarily due to transaction costs related to the Business Combination, stock-based compensation expense, including a one-time charge due to the completion of the Business Combination, payroll and related costs due to higher headcount and professional services and legal fees including accounting and other consulting fees related to becoming a public company and the Root AI acquisition. These costs also include approximately $1.0 million of start-up costs related to the pre-commencement commercial activities for tomatoes on the vine at the Morehead CEA Facility.

Development Fee Income from a Related Party

We recognized development fee income of $0.1 million and $0.4 million during the three and nine months ended September 30, 2020, respectively, which represents the amortization of a one-time development fee we received for limited oversight services the Company performed at Equilibrium’s CEA facility construction site in Morehead, Kentucky. The fee was amortized on a straight-line basis, consistent with the timing of our services, from date of receipt through the project completion date in October 2020. We recognized no such income during the three and nine months ended September 30, 2021.

Interest Expense

Interest expense during the three and nine months ended September 30, 2021 was $0.8 million and $0.9 million, respectively and was primarily related to the long-term debt established during the three and nine months ended September 30, 2021 to help finance the construction of the CEA facilities. See Note 11 - Debt to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report. We had zero interest expense for the comparable prior year periods.

Income Taxes

Our effective income tax rate was 0.1% and 0.7% for the three and nine months ended September 30, 2021, respectively. We had zero tax expense for the comparable prior year periods. The variance from the U.S. federal statutory rate of 21% for the three and nine months ended September 30, 2021 was primarily attributable to a change in our valuation allowance. There was no income tax expense recognized in the three and nine months ended September 30, 2020.

Liquidity and Capital Resources

Cash and cash equivalents totaled $221.6 million as of September 30, 2021. Currently, our primary sources of liquidity are cash flows generated from the successful completion of the Business Combination, the proceeds from debt obtained as described below, and revenues from the sale of our tomatoes. We have incurred losses and generated negative cash flows from operations since our inception in 2018. At September 30, 2021, we had an accumulated deficit of $98.9 million.

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On June 15, 2021, we entered into a master credit agreement, as amended, with Rabo AgriFinance LLC (the “Lender”) for a real estate term loan in the principal amount of $75.0 million (the “Rabo Loan”). The collateral securing the payment and performance of the obligations under this Rabo Loan consists of a perfected first priority lien on, and security interest in, our Morehead CEA facility, together with associated personal property and fixtures. The Rabo Loan matures on April 1, 2031, with quarterly interest payments commencing on July 1, 2021 and quarterly principal payments, commencing on January 1, 2022, with the remaining balance of principal and interest due upon maturity. Payments are based on one month LIBOR plus 2.500% per annum, subject to adjustment on July 1, 2023 and at the end of each successive two year period. On March 5, 2021, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, confirmed that the publication of most LIBOR term rates will end on June 30, 2023 (excluding 1-week U.S. LIBOR and 2-month U.S. LIBOR, the publication of which will end on December 31, 2021). The Rabo Loan provides that in the event the Lender is unable to determine the applicable LIBOR rate, the Rabo Loan will otherwise bear interest at a rate, per annum, equal to a rate determined by the Lender in the Lender’s reasonable discretion. Management does not believe the anticipated discontinuation will have a material impact on the Company’s financial condition or results of operations.

On June 21, 2021, we entered into an interest rate swap with an affiliate of the Lender to make a series of payments based on a fixed rate of 1.602% and receive a series of payments based on LIBOR. Both the fixed and floating payment streams are based on the initial notional amount of $75.0 million and require quarterly payments under a twenty year amortization schedule.

On July 23, 2021, we entered into a credit agreement with CEFF II AppHarvest Holdings, LLC, an affiliate of Equilibrium for a construction loan in the original principal amount of $91.0 million (the “Construction Loan”) for the development of a CEA facility at our property in Richmond, Kentucky (the “Project”). The Construction Loan provides monthly disbursements to fund capital costs of the Project in excess of our required equity contribution of 34.5% of the capital costs of the Project. The Construction Loan requires monthly interest payments based on drawn capital at an initial interest rate of 8.000% per annum, which will increase by 0.2% per annum, beginning two years after closing of the Construction Loan through maturity, which is expected to be July 23, 2024, with no required principal payments until maturity. As of September 30, 2021, we had $13.8 million outstanding on the Construction Loan and had incurred interest expense of $0.1 million, which was all capitalized as part of the asset and included in property, plant and equipment in our unaudited condensed consolidated balance sheet.

On September 27, 2021, we entered into a promissory note with JPMorgan Chase Bank, N.A., providing for a line of credit facility up to $25.0 million (the “JPM Loan”) for capital expenditures and CEA facility construction and improvements. The JPM Loan matures on September 24, 2022 and has an interest rate that is equivalent to LIBOR plus 2.25%. Management does not believe the anticipated discontinuation of the publication of LIBOR term rates will have a material impact on the Company’s financial condition or results of operations. As of September 30, 2021 we had borrowed $6.9 million and the effective interest rate was 2.375%. The JPM Loan requires 105% of the aggregate borrowings to be held as cash collateral. At September 30, 2021 we had $7.3 million of restricted cash on the unaudited condensed consolidated balance sheet to meet this requirement.

The large-scale high-tech CEA business is capital-intensive, and we expect to continue to expend significant resources as we continue construction of our next four CEA facilities in Central Appalachia, which include 15 acres at the Berea leafy green facility, 60 acres at the Richmond tomato facility, 30 acres at the Somerset facility, where we will grow berries, and 10 acres at the Morehead leafy green facility. In addition to construction costs, these expenditures are expected to include working capital, costs associated with planting and harvesting, such as the purchase of seeds and growing supplies, and the cost of attracting, developing and retaining a skilled labor force, including local labor. A labor shortage or increased turnover rates within our labor force could lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees or contract laborers, and could negatively impact our ability to efficiently operate our CEA facility at full capacity. An overall labor shortage, lack of skilled labor, increased turnover or labor inflation could have a material adverse impact on our operations, results of operations, liquidity or cash flows. Other unanticipated costs may arise due to the unique nature of the high-tech CEA facilities, and the purchase and development of additional properties for future facilities. We also expect to expend significant resources as we invest in CEA technology, develop value-added products and pursue other strategic investments in the CEA industry.

We believe that our cash and cash equivalents on hand at September 30, 2021 are sufficient to meet our current payroll and working capital requirements for a period of at least 12 months from the date of this Quarterly Report, as well as our currently planned capital expenditure requirements as we continue to build out additional large-scale high-tech CEA facilities. The amount and timing of our future funding requirements, if any, will depend on many factors, including the timing and costs of completion of our large-scale high-tech CEA facilities. We will plan the timing of completion of our CEA facilities around available funding.

We could potentially use our available financial resources sooner than we currently expect and may incur additional indebtedness to meet future financing needs. Adequate additional funding may not be available to us on acceptable terms or at all. In addition, although we anticipate being able to obtain additional financing through non-dilutive means, we may be unable

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to do so. Our failure to raise capital as and when needed could have significant negative consequences for our business, financial condition and results of consolidated operations. Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth in the section titled “Risk Factors”.

Summary of Cash Flows

A summary of our cash flows from operating, investing and financing activities is presented in the following table:


(Dollars in thousands)	Nine Months Ended September 30,
		2021		2020
Net cash used in operating activities		$	(81,342)	$	(6,257)
Net cash used in investing activities		(250,570)		(11,164)
Net cash provided by financing activities		538,827		64,981
Cash and cash equivalents, beginning of year		21,909		6,031
Cash and cash equivalents (including restricted cash) end of period		$	228,824	$	53,591

Net Cash Used In Operating Activities

Net cash used in operating activities was $81.3 million for the nine months ended September 30, 2021, compared to $6.3 million for the nine months ended September 30, 2020. The change of $75.1 million was primarily due to $13.8 million for transaction costs related to the Business Combination, net losses incurred in the operation of our Morehead CEA facility through its first harvest, payment of utility and hedge program deposits, higher payroll and related costs driven by increased headcount, and professional services and legal fees including accounting and other consulting fees related to becoming a public company.

Net Cash Used In Investing Activities

Net cash used in investing activities was $250.6 million for the nine months ended September 30, 2021, compared to $11.2 million for the nine months ended September 30, 2020. The change of $239.4 million was primarily due to $123.0 million for the purchase of the Morehead CEA facility pursuant to the MIPSA with Equilibrium that we completed on March 1, 2021, $112.9 million for purchases of property and equipment primarily related to construction of our Richmond, Berea, and Somerset CEA facilities, $9.8 million for the Root AI Acquisition on April 7, 2021, and $5.0 million for an investment in an unconsolidated entity.

Net Cash Provided By Financing Activities

Net cash provided by financing activities was $538.8 million for the nine months ended September 30, 2021, compared to $65.0 million for the nine months ended September 30, 2020. The change of $473.8 million included proceeds of approximately $448.5 from the Business Combination and $94.7 million in net proceeds from short and long-term debt issuance, partially offset by a financing obligation payment of $2.1 million to Equilibrium as part of our purchase of the Morehead CEA facility.

Contractual Obligations

Our contractual obligations consist of debt, operating leases, and purchase commitments, which impact our short-term and long-term liquidity and capital needs. The table below is presented as of September 30, 2021.


	Payments Due by Period
(Dollars in thousands)	Total		Less than 1 Year		1 – 3 Years		3 – 5 Years		More than 5 Year
Contractual obligations
Operating leases	$	3,363	$	734	$	1,218	$	898	$	513
Long-term debt(1)	$	98,413	$	5,879	$	13,177	$	12,546	$	66,811
Line of credit debt(2)	$	23,986	$	8,147	$	15,839	$	—	$	—
Natural gas purchase commitments	$	364	$	364	$	—	$	—	$	—
Total contractual obligations	$	126,126	$	15,124	$	30,234	$	13,444	$	67,324

(1)Includes principal, projected interest and swap payments.

(2)Includes outstanding debt and interest at respective rates.

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The table above does not include the contractual obligations related to our Morehead financing obligation or Morehead lease, as concurrent with the closing of the MIPSA on March 1, 2021, the Master Lease Agreement and ancillary agreements related thereto were terminated. The table above also does not include amounts related to the construction of our Richmond and Berea CEA facilities, as the timing and amounts of future expenditures are currently unknown.

Off-Balance Sheet Arrangements

As of September 30, 2021, we had no material off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results could differ from those estimates and assumptions.

Stock-Based Compensation and Private Warrants

We recognize in our unaudited condensed consolidated statements of operations and comprehensive loss the grant-date fair value of stock options and restricted stock awards issued to employees and directors. Our stock options and RSU’s are subject to service-based vesting conditions. Our RSUs are also subject to performance-based vesting conditions that were satisfied upon completion of the Business Combination. Stock-based compensation expense is recognized on a straight- line basis over the associated service period of the award, which is generally the vesting term. We recognize forfeitures of awards as they occur.

We account for our private warrants (the “Private Warrants”) in accordance with ASC 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity, under which we have determined that the Private Warrants are recognized as liabilities at fair value and subject to re-measurement at each balance sheet date until exercised. Changes in fair value of the Private Warrants are recognized in our unaudited condensed consolidated statements of operations and comprehensive loss. The fair value of the Private Warrants is estimated at each measurement date using a Black-Scholes option pricing model.

We estimate the fair value of our stock option awards and Private Warrants using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including the fair value of the Common Stock, expected term, expected volatility, risk-free interest rate, and expected dividends.

Fair Value of Common Stock — Historically, as there had been no public market for our common stock, the fair value of the common stock for stock-based awards was determined by our Board of Directors (the “Board”) based in part on valuations of the common stock prepared by a third-party valuation firm. Since the closing of the Business Combination our Board will determine the fair value of each share of Common Stock underlying stock-based awards based on the closing price of our common stock as reported by Nasdaq on the date of the grant. For the Private Warrants, the fair value of the Common Stock is based upon historical values.

Expected Term — The expected term of the options represents the average period the stock options are expected to remain outstanding. As we do not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior, the expected term of options granted is derived from the average midpoint between the weighted average vesting and the contractual term, also known as the simplified method. For the Private Warrants, the expected term is the time from transaction date to expiration in years.

Expected Volatility — As we were not a public company before the closing of the Business Combination, and did not have any trading history for common stock, the expected volatility for the stock-based awards was based on the historical volatility of the common stock of comparable publicly traded companies. Since the closing of the Business Combination our expected volatility is based on the trading history for our Common Stock. For the Private Warrants, the volatility is based on the implied volatility of other comparable Special Purpose Acquisition Company warrants.

Risk-Free Interest Rate — The risk-free interest rate is based on the yield of zero-coupon U.S. Treasury notes as of the grant date with maturities commensurate with the expected term of the awards.

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Expected Dividends — The expected dividends assumption is based on the expectation of not paying dividends in the foreseeable future; therefore, we used an expected dividend yield of zero.

Assumptions used in applying the Black-Scholes option-pricing model to determine the estimated fair value of stock options granted and Private Warrants issued involve inherent uncertainties and the application of judgment. As a result, if factors or expected outcomes change and significantly different assumptions or estimates are used, our equity-based compensation and Private Warrant liabilities could be materially different.

Emerging Growth Company and Smaller Reporting Company Status

We are an “emerging growth company” as defined in Section 2(a) of the Securities Act, and have elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. We expect to remain an emerging growth company at least through the end of the 2021 fiscal year and expect to continue to take advantage of the benefits of the extended transition period, although we may decide to early adopt such new or revised accounting standards to the extent permitted by such standards. We expect to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and non-public companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). This may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.

In addition, we intend to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an emerging growth company, we intend to rely on such exemptions, we are not required to, among other things: (a) provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; (b) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act; (c) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis); and (d) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation.

We will remain an emerging growth company under the JOBS Act until the earliest of (a) December 31, 2025, (b) the last date of our fiscal year in which we have total annual gross revenue of at least $1.07 billion, (c) the date on which we are deemed to be a “large accelerated filer” under the rules of the SEC with at least $700.0 million of outstanding securities held by non-affiliates or (d) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years. As of June 30, 2021, our public float was greater than $700.0 million and therefore effective December 31, 2021, we will no longer qualify as an emerging growth company.

We are also a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as the market value of our voting and non-voting Common Stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our voting and non-voting Common Stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter. As of June 30, 2021, our public float was greater than $700.0 million and therefore effective December 31, 2021, we will no longer qualify as a smaller reporting company although we will continue to use the scaled disclosures permitted for a smaller reporting company through our annual report on Form 10-K for the fiscal year ending December 31, 2021 and plan to begin providing non-scaled larger company disclosure in our first Form 10-Q of the next fiscal year.

Recent Accounting Guidance

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that we adopt as of the specified effective date.

See Note 2 - Summary of Significant Accounting Policies to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for a discussion of recent accounting pronouncements and their effect on us.

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Item 3. Quantitative and Qualitative Disclosures about Market Risks

As a smaller reporting company, we are not required to provide the information required by this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the fiscal quarter ended September 30, 2021. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer and accounting officer have concluded that as of September 30, 2021, our disclosure controls and procedures were effective at a reasonable assurance level and, accordingly, provided reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Limitations on Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II - Other Information

Item 1. Legal Proceedings

From time to time, we may be subject to litigation and claims arising in the ordinary course of business. We do not currently; however, expect such claims to have a material adverse effect on our business, operating results, cash flows or financial condition. However, depending on the nature and timing of a given dispute, an unfavorable resolution could materially affect our current or future results of operations or cash flows. For a description of our legal proceedings, see Part I, Item 1, Note 12. Commitments and Contingencies for more information.

Item 1A. Risk Factors

Investing in our securities involves a high degree of risk. Before you make a decision to buy our securities, you should carefully consider the risks and uncertainties described below together with all of the other information contained in this Quarterly Report. If any of the events or developments described below were to occur, our business, prospects, operating results and financial condition could suffer materially, the trading price of our securities could decline, and you could lose all or part of your investment. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business.

Selected Risks Affecting Our Business

Our business is subject to a number of risks of which you should be aware before making a decision to invest in our securities. These risks include, among others, the following:

•We are an early-stage company with a history of losses and expect to incur significant expenses and continuing losses for the foreseeable future. Our business could be adversely affected if we fail to effectively manage our future growth.

•We will require significant additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, may force us to delay, limit, reduce or terminate our operations and future growth.

•We have an evolving business model, which increases the complexity of our business and makes it difficult to evaluate our future business prospects.

•We face risks inherent in the greenhouse agriculture business, including the risks of diseases and pests.

•We currently rely on a single facility for all of our operations.

•Any damage to or problems with our CEA facilities, or delays in construction, could severely impact our operations and financial condition.

•Mastronardi is currently our sole, exclusive marketing and distribution partner. We are highly dependent on this relationship, and impairment to or termination of this relationship could adversely affect our results of operations and financial condition.

•We depend on employing a skilled labor force, including local labor, and failure to attract and retain qualified employees could negatively impact our business, results of operations and financial condition.

•We could be adversely affected by a change in consumer preferences, perception and spending habits in the food industry, and failure to develop and expand our product offerings or gain market acceptance of our products could have a negative effect on our business.

•We may be unable to successfully execute on our growth strategy. Failure to adequately manage our planned growth strategy may harm our business or increase our risk of failure.

•We have agreed not to compete with Mastronardi outside of Kentucky and West Virginia, which may limit our business opportunities.

•We build CEA facilities which may be subject to unexpected costs and delays due to reliance on third parties for construction, material delivery, supply-chains and fluctuating material prices.

•We may not be able to compete successfully in the highly competitive natural food market.

•We recently concluded our first growing season and have only just begun our second, which makes it difficult to forecast future results of operations.

•Demand for our current and expected future products, which include tomatoes, leafy greens, berries, and other produce, is subject to seasonal fluctuations and may adversely impact our results of operations in certain quarters.

•Food safety and foodborne illness incidents or advertising or product mislabeling may materially adversely affect our business by exposing us to lawsuits, product recalls, regulatory enforcement actions, or changes in consumer demand increasing our operating costs and reducing demand for our product offerings.

•As a public benefit corporation, our duty to balance a variety of interests may result in actions that do not maximize stockholder value.

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•If we are unable to apply technology effectively in driving value for our clients through our technology-based platforms, our operating results, client relationships and growth could be adversely affected.

Risks Related to Our Business and Industry

We are an early-stage company with a history of losses, and expect to incur significant expenses and continuing losses for the foreseeable future. Our business could be adversely affected if we fail to effectively manage our future growth.

We incurred net losses of $17.3 million and $77.8 million and $5.7 million and $8.1 million for the three and nine months ended September 30, 2021 and 2020, respectively. We believe we will continue to incur net losses for the foreseeable future as we continue to invest in world-class technology to increase production and commercial sales of our products. We recently began our second growing season. There is no guarantee when, if ever, we will become profitable. We expect to expend substantial resources as we:

•complete the build-out of facilities for which building has commenced and begin construction on additional facilities;

•continue harvesting existing crops and plant and harvest new crops in our existing and future facilities;

•fulfill our obligations under our marketing and distribution agreement with Mastronardi;

•identify and invest in future growth opportunities, including the purchase or lease of new or expanded facilities and the development of new product lines;

•invest in sales and marketing efforts to increase brand awareness, engage customers and drive sales of our products;

•invest in product innovation and development; and

•incur additional general administration expenses, including increased finance, legal and accounting expenses, associated with being a public company and growing operations.

These investments may not result in the growth of our business. Even if these investments do result in the growth of our business, if we do not effectively manage our growth, we may not be able to execute on our business plan and vision, respond to competitive pressures, take advantage of market opportunities, satisfy customer requirements or maintain high-quality product offerings, any of which could adversely affect our business, financial condition and results of operations.

We will require significant additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, may force us to delay, limit, reduce or terminate our operations and future growth.

The high-tech greenhouse agriculture business is extremely capital-intensive and we expect to expend significant resources to complete the build-out of facilities under construction, continue harvesting existing crops and plant and harvest new crops in our existing and future CEA facilities. These expenditures are expected to include working capital, costs of acquiring and building out new facilities, costs associated with planting and harvesting, such as the purchase of seeds and growing supplies, and the cost of attracting, developing and retaining a skilled labor force, including local labor. In addition, other unanticipated costs may arise due to the unique nature of these CEA facilities and increased production in our single operating facility at full capacity. We currently import many of the supplies and materials for greenhouse operations from abroad, including the construction materials for our CEA facilities, and seeds for plants. Accordingly, we are subject to risk of fluctuation in exchange rates, which could cause unexpected increases in our costs and harm our financial position.

We expect that our existing cash and credit available under our loan agreements will be sufficient to fund our planned operating expenses, capital expenditure requirements and any debt service payments through at least the next 12 months. However, our operating plan may change because of factors currently unknown, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings or other sources, such as strategic collaborations. Such financings may result in dilution to stockholders, issuance of securities with priority as to liquidation and dividend and other rights more favorable than Common Stock, imposition of debt covenants and repayment obligations, or other restrictions that may adversely affect our business. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe that we have sufficient funds for current or future operating plans. There can be no assurance that financing will be available to us on favorable terms, or at all. The inability to obtain financing when needed may make it more difficult for us to operate our business or implement our growth plans.

We have an evolving business model, which increases the complexity of our business and makes it difficult to evaluate our future business prospects.

Our business model is continuing to evolve. We are primarily engaged in building a sustainable food company with a resilient and scalable ecosystem of applied technology greenhouses to serve the rapidly growing consumer demand for fresh,

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chemical-free, non-GMO fruits, vegetables and related value-added products in the U.S. We also intend to pursue additional CEA opportunities through partnerships with third parties, including opportunities outside of the U.S. With the Root AI Acquisition in April 2021, we are also engaged in building an applied technology company, which develops CEA technology solutions for internal use and for potential sale to customers in the global CEA industry. From time to time, we may continue to modify aspects of our business model relating to our products and services. We do not know whether these or any other modifications will be successful. The evolution of and modifications to our business model will continue to increase the complexity of our business and place significant strain on our management, personnel, operations, systems, technical performance and financial resources. Future additions to or modifications of our business model are likely to have similar effects. Further, any new products or services we offer that are not favorably received by the market could damage our reputation or our brand. The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.

We face risks inherent in the greenhouse agriculture business, including the risks of diseases and pests.

We are focused on building large-scale CEA facilities in Appalachia with the goal of providing quality domestic supply of fresh fruits and vegetables to nearly 70% of the U.S. population. We primarily grow two varieties of tomatoes at the Morehead CEA facility — tomatoes on the vine and beefsteak tomatoes — and expect to expand to other tomato varieties and other fruits and vegetables such as berries, peppers, cucumbers, and leafy greens in the future at other facilities. As such, we are subject to the risks inherent in an agricultural business, such as insects, plant and seed diseases and similar agricultural risks, which may include crop losses, for which we are not insured; production of non-saleable products; and rejection of products for quality or other reasons, all of which may materially affect our operational and financial performance.. Although our produce is grown in climate-controlled greenhouses, there can be no assurance that natural elements will not have an effect on the production of these products. In particular, plant diseases, such as root rot or tomato brown rugose fruit virus, or pest infestations, such as whiteflies, can destroy all or a significant portion of our produce and could eliminate or significantly reduce production at the greenhouse until we are able to disinfect the greenhouse and grow replacement tomatoes or other vegetables and fruits.

Although we have taken and continue to take precautions to guard against crop diseases and pests, these efforts may not be sufficient. For example, in June 2021, we experienced an outbreak of aphids and fruit flies in our Morehead greenhouse. In addition, diseases and pests can make their way into greenhouses from outside sources over which we have limited or no control. Diseases and pests can be inadvertently brought in by employees, from seeds and propagation vendors and from the trucks that transport supplies to the greenhouse. Once a disease or pest is introduced, we will need to quickly identify the problem and take remedial action in order to preserve the growing season. Failure to identify and remediate any diseases or pests in a timely manner could cause the loss of all or a portion of our crop and result in substantial time and resources to resume operations. Crop losses as a result of these agricultural risks could negatively impact our business, prospects, financial condition, results of operations and cash flows.

We currently rely on a single facility for all of our operations.

Our first CEA facility is a 2.76 million square foot CEA facility in Morehead, Kentucky, which partially opened in October 2020 and became fully operational in March 2021. For the immediate future, we will rely solely on the operations at the Morehead CEA facility. Adverse changes or developments affecting the Morehead CEA facility could impair our ability to produce our products and our business, prospects, financial condition and results of operations. Any shutdown or period of reduced production at the Morehead CEA facility, which may be caused by regulatory noncompliance or other issues, as well as other factors beyond our control, such as severe weather conditions, natural disaster, fire, power interruption, work stoppage, disease outbreaks or pandemics (such as COVID-19), equipment failure or delay in supply delivery, would significantly disrupt our ability to grow and deliver our produce in a timely manner, meet our contractual obligations and operate our business. Our greenhouse equipment is costly to replace or repair, and our equipment supply chains may be disrupted in connection with pandemics, such as COVID-19, trade wars, labor shortages, or other factors. If any material amount of our machinery were damaged, we would be unable to predict when, if at all, we could replace or repair such machinery or find co-manufacturers with suitable alternative machinery, which could adversely affect our business, financial condition and operating results. Any insurance coverage we have may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, or at all.

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Any damage to or problems with our CEA facilities, or delays in construction, could severely impact our operations and financial condition.

Any damage to or problems with the Morehead CEA facility or any other CEA facilities we build or use in the future, including defective construction, repairs, or maintenance, could have an adverse impact on our operations and business. We face risks including, but not limited to:

•Weather. Our operations may be adversely affected by severe weather including tornados, lightning strikes, wind, snow, hail and rain. A tornado, lightning strike, severe hailstorm or unusually large amount of precipitation could cause damage or destruction to all or part of our greenhouse. We may be required to expend significant resources and time in mitigating damage to our crops, and such damage may not be covered by insurance. The impact of a severe weather event or natural disaster could result in significant losses and seriously disrupt our entire business.

•Water Supply. We irrigate our plants with rainwater, collected in a 10-acre on-site retention pond, eliminating the need for city water or well water. The pond is constantly aerated with nanobubble technology, which combats harmful algae blooms and cyanotoxins. Once rainwater is pumped into the facility from the pond, it enters a closed-loop irrigation system. The water is processed through a sand filter and then sanitized with UV light. This destroys any viruses, bacteria and protozoa without the use of chemicals and with no unwanted disinfection by-products. Despite these precautions, there remains risk of contamination to our water supply from outside sources. Any contamination of the water in the retention pond could require significant resources to correct and could result in damage or interruption to our growing season.

•Energy Costs or Interruption. Although our plants primarily grow using natural sunlight, requiring less energy per plan than indoor warehouse farms, we do supplement the light our plants receive with LED lighting and high-pressure sodium lighting, which makes us vulnerable to rising energy costs. We have diesel generators to maintain energy supply in the case of an outage, but these generators would not be able to power the facility for any prolonged period of time and could result in reduced crop yield. Rising or volatile energy costs may adversely impact our business, and our operations could be significantly affected by a prolonged power outage.

In addition, we have and may experience unexpected delays in building our CEA facilities for a variety of reasons, including limited financing, limited labor due to COVID-19 or other factors, unexpected construction problems or severe weather. For example, to incorporate design and other insights from construction of the 15-acre Berea leafy green facility and to maintain flexibility in the allocation of capital resources, we temporarily paused development of the 10-acre Morehead leafy green facility with construction now expected to resume in 2022 for a 2023 delivery. If we experience significant unexpected delays in construction, we may have to limit or miss out on an entire growing season depending on the timing and extent of the delays, which could harm our business, financial condition and results of operations.

We depend on employing a skilled labor force, including local labor, and failure to attract and retain qualified employees could negatively impact our business, results of operations and financial condition.

Agricultural operations are labor intensive, and the growing season for greenhouses is year-round. In general, each year, we plan to begin planting in August or September, grow and harvest the produce into June, July, or August and then remove plants and clean the greenhouse in August. These year-round operations depend on the skills and regular availability of labor in Appalachia.

Central Appalachia’s labor force long powered America through its coal mining operations. Over the past decade, the coal industry’s precipitous decline and replacement by natural gas has left tens of thousands of skilled workers unemployed throughout the region. We have rapidly hired in the region as we prepared to open our CEA facility and benefited from a strong network of employer assistance programs ready to help companies interested in locating in the region to provide jobs for its ready workforce. However, there is competition for skilled agricultural labor in the region, particularly from the cannabis, food, and distribution industries, and even if we are able to identify, hire and train our labor force, there is no guarantee that we will be able to retain these employees. For example, while we have not experienced any material labor shortage to date, we have observed an overall tightening and increasingly competitive local labor market. In order to forestall any potential labor shortfall, we have hired contract laborers from outside of the region to help complete our next harvest. If we are unable to hire, train and retain a labor force capable of performing at a high-level, or if mitigation measures we take to respond to a decrease in local labor availability, such as overtime and contract laborers, have unintended negative effects, our business results of operations and financial condition could be adversely affected. Further, the operation of CEA facilities requires unique skills, which may not be widely available in the regions where we operate. Any shortage of labor, lack of training or skills, or lack of regular availability could restrict our ability to operate our greenhouses profitably, or at all.

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In addition, efforts by labor unions to organize our employees could divert management attention away from regular day-to-day operations and increase our operating expenses. Labor unions may make attempts to organize our non-unionized employees. We are not aware of any activities relating to union organizations at any of our facilities, but we cannot predict which, if any, groups of employees may seek union representation in the future or the outcome of any collective bargaining. If we are unable to negotiate acceptable collective bargaining agreements, we may have to wait through “cooling off” periods, which are often followed by union-initiated work stoppages, including strikes. Depending on the type and duration of our any work stoppage, our operating expenses could increase significantly, which could negatively impact our financial condition, results of operations and cash flows.

Our results of operations can be adversely affected by labor shortages, turnover and labor cost increases.

Labor is a primary component of operating our business. A number of factors may adversely affect the labor force available to us or increase labor costs, including high employment levels, federal unemployment subsidies, including unemployment benefits offered in response to the COVID‐19 pandemic, and other government regulations. Although we have not experienced any material labor shortage to date, we have recently observed an overall tightening and increasingly competitive local

labor market. A sustained labor shortage or increased turnover rates within our employee base, caused by COVID‐19, or measures taken to address COVID-19, or as a result of general macroeconomic factors, could lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees, and could negatively affect our ability to efficiently operate our greenhouse equipment and overall business.

If we are unable to hire and retain employees capable of performing at a high-level, or if mitigation measures we may take to respond to a decrease in labor availability, such as overtime and contract laborers, have unintended negative effects, our business could be adversely affected. An overall labor shortage, lack of skilled labor, increased turnover or labor inflation, caused by COVID‐19 or as a result of general macroeconomic factors, could have a material adverse impact on our operations, results of operations, liquidity or cash flows.

Our management has limited experience in operating a public company.

Our executive officers have limited experience in the management of a publicly traded company. Our management team may not successfully or effectively manage our significant regulatory oversight and reporting obligations as a public company under the federal securities laws of the U.S. Our management’s limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities, which will result in less time being devoted to the management and growth of our company. We may not have adequate personnel with the appropriate level of knowledge, experience, and training in the accounting policies, practices or internal controls over financial reporting required of public companies in the U.S. The development and implementation of the standards and controls necessary for us to achieve the level of accounting standards required of a public company in the U.S. may require costs greater than expected. It is possible that we will be required to expand our employee base and hire additional employees to support our operations as a public company, which will increase our operating costs in future periods.

Mastronardi is currently our sole, exclusive marketing and distribution partner. We are highly dependent on our relationship with Mastronardi, and impairment to or termination of this relationship could adversely affect our results of operations and financial condition.

Mastronardi is our exclusive marketing and distribution partner for all tomatoes, peppers, cucumbers, berries and leafy greens (collectively, the “Products”) pursuant to the Purchase and Marketing Agreement between Legacy AppHarvest and Mastronardi dated as of March 28, 2019, as amended on December 18, 2020 (the “Mastronardi Morehead Agreement”). Under the terms of the Mastronardi Morehead Agreement, we are responsible for growing, producing, packing and delivering all Products to Mastronardi, and Mastronardi is responsible for marketing, branding and distributing the Products to its customers. Mastronardi will sell the Products at market prices that are consistent with the best and highest prices available during the duration of the applicable growing season for like kind United States Department of Agriculture (“USDA”) Grade No. 1 products. Mastronardi will set the market price for the Products and will pay over to us the gross sale price of the Products sold by Mastronardi, less a marketing fee and Mastronardi’s costs incurred in the sale and distribution of the Products, which can fluctuate.

Mastronardi is only obligated to purchase our products that are at or above USDA Grade No. 1 standards and export quality standards within North America and of a quality required by Mastronardi’s customers, in Mastronardi’s sole determination. The Mastronardi Morehead Agreement provides for an inspection period during which Mastronardi will inspect our products to

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determine whether it meets the required quality standards, and Mastronardi may reject and return any of our products that do not meet these standards. Any significant or unexpected rejection of our products could negatively impact our results of operations, and we may be unable to sell the rejected products to other third parties. Further, because Mastronardi acts as an intermediary between us and the retail grocers or foodservice providers, we do not have short-term or long-term commitments or minimum purchase volumes with them that ensure future sales of our products.

If we expand our growing acreage or operations in Kentucky or West Virginia, Mastronardi has a right of first refusal to be the exclusive distributor of any produce arising as a result of such expansion for the greater of ten years from the date of first commercial production of the additional products or the remainder of the term of the Mastronardi Morehead Agreement. In the event we or our affiliates engage in the business of growing fresh produce in a greenhouse in Kentucky and West Virginia (in each case, a “New Grower Facility”), Mastronardi has the right to deem such New Grower Facility to be under an agreement with Mastronardi on the same material terms and conditions of the Mastronardi Morehead Agreement for a period of ten years. In December 2020, Mastronardi elected to deem our Richmond tomato facility and Berea leafy green facility to be New Grower Facilities.

Due to the exclusive nature of this long-term distribution relationship, we could also be adversely affected if Mastronardi experiences impairment to its brand and reputation or to its financial condition. Mastronardi and we are each entitled to terminate the Mastronardi Morehead Agreement in the case of the other party’s uncured breach of the contract or bankruptcy or insolvency. If the Mastronardi Morehead Agreement is terminated, we may experience difficulty or delay in finding a suitable replacement distributor in a timely manner or at all, and our business, financial condition and results of operations could be harmed.

We could be adversely affected by a change in consumer preferences, perception and spending habits in the food industry, and failure to develop and expand our product offerings or gain market acceptance of our products could have a negative effect on our business.

The market in which we operate is subject to changes in consumer preference, perception and spending habits. Our performance will depend significantly on factors that may affect the level and pattern of consumer spending in the U.S. food industry market in which we operate. Such factors include consumer preference, consumer income, consumer confidence in and perception of the safety and quality of our products and shifts in the perceived value for our products relative to alternatives.

•Consumer Preferences. We currently produce primarily tomatoes on the vine and beefsteak tomatoes. Although tomatoes are the second most popular fresh market vegetable per capita in the U.S., with per capita consumption increasing significantly in the past 40 years, there is no guarantee that tomatoes will continue to garner this popularity, that consumers will prefer the varieties of tomatoes grown by us, or that we will be successful in capturing a sufficient market share. If we are able to expand our product offerings to include other vegetables and fruits, such as cucumbers, peppers, leafy greens, and berries, we will similarly be impacted by consumer preferences for such vegetables and fruits.

•Safety and Quality Concerns. Media coverage regarding the safety or quality of, or diet or health issues relating to, our products or the processes involved in our manufacturing, may damage consumer confidence in our products. For example, manufacturers and regulatory authorities have issued recalls of tomatoes in the past due to issues such as salmonella contamination. Any widespread safety or quality issues involving tomatoes or other fresh fruits or vegetables — even if not involving us — could adversely affect consumer confidence in and demand for such tomatoes or other fresh produce.

•Consumer Income. A general decline in the consumption of our products could occur at any time as a result of change in consumer spending habits, including an unwillingness to pay a premium or an inability to purchase our products due to financial hardship, expectations of inflation, or increased price sensitivity, which may be exacerbated by the effects of the COVID-19 pandemic or other events.

The success of our products will depend on a number of factors including our ability to accurately anticipate changes in market demand and consumer preferences, our ability to differentiate the quality of our products from those of our competitors, and the effectiveness of marketing and advertising campaigns for our products. We may not be successful in identifying trends in consumer preferences and growing or developing products that respond to such trends in a timely manner. We or our partners also may not be able to effectively promote our products by marketing and advertising campaigns and gain market acceptance. If our products fail to gain market acceptance, are restricted by regulatory requirements, have quality problems, or are affected by consumer perceptions of safety and quality even arising from our competitors’ products, we may not be able to fully recover costs and expenses incurred in our operations, and our business, financial condition or results of operations could be materially and adversely affected.

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We may be unable to successfully execute on our growth strategy.

Our growth strategy includes the development of new controlled environment agriculture facilities and the expansion of our product line.

•New Controlled Agriculture Facilities. Our first CEA facility, which spans approximately 60 acres, opened its first 30 acres of growing space in Morehead, Kentucky in October 2020, with the remainder becoming operational in March 2021 and production beginning in May 2021. We have begun construction on our next four facilities in Berea, Richmond, Somerset and Morehead. In October 2020, we announced that we had broken ground at the facility in Richmond. The facilities will include 60 acres of growing space for tomatoes on the vine at the Richmond tomato facility and 15 acres of leafy greens at the Berea leafy green facility. Both new facilities are expected to be operational by the end of 2022. In the second quarter of 2021, we began construction of the 30 acre Somerset facility to grow berries and cucumbers and a 10 acre leafy green facility at the Morehead leafy green facility. For risks related to delays in construction of our CEA facilities, please see the risk factor “Any damage to or problems with our CEA facilities, or delays in construction, could severely impact our operations and financial condition.” We periodically enter into other agreements to purchase, or have an option to purchase, additional properties for potential development. We expect to have nine operational CEA facilities by the end of 2025, assuming, among other things, that we are able to obtain necessary capital when needed on acceptable terms. We intend to continue to work toward a network of 12 CEA facilities by 2025.

Identifying, planning, developing, constructing and finishing new CEA facilities in Central Appalachia has required and will continue to require substantial time, capital, and resources. Greenhouses, such as the Morehead CEA facility and other facilities, require a large amount of flat land with a maximum cut and fill area, the ability to obtain the appropriate permits and approvals, sufficient utilities and road access and adequate availability of skilled labor, among other things. We may be unsuccessful in identifying available sites in Central Appalachia that are conducive to our planned projects, and even if identified, we may ultimately be unable to lease, purchase, build or operate on the land for any number of reasons. Because of the capital-intensive nature of these projects, we will need to prioritize which sites we plan to develop, and there can be no guarantee that we will select or prioritize sites that will ultimately prove to be appropriate for construction. Further, we may spend time and resources developing sites at the expense of other appropriate sites, which may ultimately have been a better selection or more profitable location. On the other hand, if we overestimate market demand and expands into new locations too quickly, we may have significantly underutilized assets and may experience reduced profitability. If we do not accurately align capacity at our greenhouses with demand, our business, financial condition and results of operations could be adversely affected.

•New Product Lines. We aspire to develop a leading fruit and vegetable brand widely known for its sustainable practices. We plan to leverage our strong mission to build an iconic brand recognized and revered by a loyal customer base that values a sustainable homegrown food supplier. We also consider the development of value-added products to be key to our long-term growth strategy with value-added defined as being beyond the traditional fresh vegetable offerings of tomatoes on the vine, beefsteak tomatoes, and other produce, and which could include items such as tomato paste, salsa, beverages, tomato sauces and ketchup. We also plan to evaluate opportunities to develop lines of co-branded fresh food and snacking products.

We may not be successful in our efforts to expand into value-added and co-branded products, or may invest in product opportunities that are not ultimately successful or profitable. We have no experience in developing or manufacturing value- added products and may not be able to develop or hire the expertise needed to expand into this field in an efficient and profitable manner. By developing co-branded products, we also face risks around aligning our brand with that of a third party over which we may have limited or no control.

We may not be able to implement our growth strategy successfully. Our sales and operating results will be adversely affected if we fail to implement our growth strategy or if we invest resources in a growth strategy that ultimately proves unsuccessful.

Failure to adequately manage our planned growth strategy may harm our business or increase our risk of failure.

For the foreseeable future, we intend to pursue a growth strategy for the expansion of our operations through increased product development and marketing. Our ability to rapidly expand our operations will depend upon many factors, including our ability to work in a regulated environment, market value-added products effectively, establish and maintain strategic relationships with suppliers, and obtain adequate and necessary capital resources on acceptable terms. Any restrictions on our

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ability to expand may have a materially adverse effect on our business, results of operations, and financial condition. Accordingly, we may be unable to achieve our targets for sales growth, and our operations may not be successful or achieve anticipated operating results.

We have agreed not to compete with Mastronardi outside of Kentucky and West Virginia, which may limit our business opportunities.

We have agreed not to compete with Mastronardi outside of Kentucky and West Virginia, which includes the businesses of growing, harvesting, packaging, distributing or selling fresh produce, subject to certain exceptions for fresh produce that is grown in Kentucky or West Virginia. Although we are currently focused on building greenhouses in Central Appalachia, if we desired in the future to build or operate facilities outside of Kentucky or West Virginia that were competitive with Mastronardi, the Mastronardi Morehead Agreement requires us to obtain Mastronardi’s consent before doing so. If Mastronardi withholds such consent for any reason, this could have the effect of restricting certain business opportunities outside of Kentucky and West Virginia during the term of the non-compete provision. The non-compete provision runs for ten years from the date of a first commercial harvest from the Morehead CEA facility and also runs for ten years measured from the date of a first commercial harvest from a facility deemed to be a New Grower Facility by Mastronardi under the terms of the Mastronardi Morehead Agreement.

We build CEA facilities, which may be subject to unexpected costs and delays due to reliance on third parties for construction, material delivery, supply-chains and fluctuating material prices.

We build CEA facilities that are dependent on a number of key inputs and their related costs including materials such as steel and glass and other supplies, as well as electricity and other local utilities. Any significant interruption or negative change in the availability or economics of the supply chain for key inputs could materially impact our business, financial condition and operating results. We have entered into a direct contractual relationship with Dalsem Greenhouse Technology, B.V. (“Dalsem”) for the construction of our Richmond tomato facility and Berea leafy green facility and Dalsem also provides significant construction services for the Morehead CEA facility. If Dalsem encounters unexpected costs, delays or other problems in building these CEA facilities, our financial position and ability to execute on our growth strategy could be negatively affected. Any inability to secure required supplies and services or to do so on appropriate terms could have a materially adverse impact on our business, financial condition and operating results.

The price of production, sale and distribution of these goods may fluctuate widely based on the impact of numerous factors beyond our control including international, economic and political trends, transportation disruptions, expectations of inflation, global or regional consumptive patterns, speculative activities and increased production due to new production and distribution developments and improved production and distribution methods. In addition, we import substantially all of the construction materials used to build the CEA facilities. The use of third-party import services can cause logistical problems, unexpected costs and delays in facility construction, which we cannot directly control. Any prolonged disruption of third-party delivery and shipping services could negatively affect our facility building schedule. Rising costs associated with third-party transportation services used to ship materials may also adversely impact our building schedule and crop season planning, and more generally our business, financial condition, results of operations and prospects.

The COVID -19 pandemic continues to impact worldwide economic activity, and the governments of many countries, states, cities and other geographic regions have taken preventative or protective actions in response, such as closures or other restrictions on the conduct of business operations of manufacturers, suppliers and vendors, which are creating disruption in global supply chains. The increased global demand on shipping and transport services may cause us to experience delays in the future, which could impact our ability to obtain materials or build our greenhouses in a timely manner. These factors could otherwise disrupt our operations and could negatively impact our business, financial condition and results of operations.

If we experience significant unexpected delays in construction, we may have to limit or miss out on an entire growing season depending on the timing and extent of the delays, which could harm our business, financial condition and results of operations.

We may not be able to compete successfully in the highly competitive natural food market.

We operate in the highly competitive natural foods environment. With the importing of vine crops rapidly increasing, our competition includes large-scale operations in Mexico and to a lesser extent the southwestern U.S. In this market, competition is based on, among other things, product quality and taste, brand recognition and loyalty, product variety, product packaging and package design, shelf space, reputation, price, advertising, promotion and nutritional claims.

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We may not be able to compete successfully with imported goods, including from Mexico and Canada. A risk for high-tech producers in the U.S. is that lower-cost Mexican producers will be able to increasingly step up and meet emerging U.S. retail market preferences for higher quality, improved product safety, year-round availability, and product innovation. Mexican producers achieve this not by investing equivalent capital, but by leveraging climatic advantages at lower cost. Market leadership will accrue to the most efficient producers who are able to reliably meet the needs of large U.S. retailers and can demonstrate advantages in marketing strategy, geography, technology, and production learning curves sufficient to warrant the substantial long- term working capital required to fuel the expected sustained growth of this niche. Meanwhile, Canadian producers are beginning or expanding production in the U.S. The major factors driving this expansion are brand value of U.S. production and lower transportation and energy costs at U.S. facilities. The Canadian greenhouse industry is located primarily in Ontario in the east and British Columbia in the west. The Canadian greenhouse industry is supported by extensive government subsidies and financing that allows them to compete with the U.S. and Mexico on production cost.

We also face competition from traditional greenhouse operators both domestic and abroad, as well as from high-tech agricultural startups that are focused on development of farms either in or near major cities.

Each of these competitors may have substantially greater financial and other resources than us and some of whose products are well accepted in the marketplace today. We cannot be certain that we will successfully compete with larger competitors that have greater financial, sales and technical resources. They may also have lower operational costs, and as a result may be able to offer comparable or substitute products to customers at lower costs. This could put pressure on us to lower our prices, resulting in lower profitability or, in the alternative, cause us to lose market share if we fail to lower prices. Retailers may also market competitive products under their own private labels, which are generally sold at lower prices, and may change the merchandising of our products so we have less favorable placement.

The CEA agriculture business also has low barriers to entry, and we will not be able to prevent competitors from building and operating similar greenhouses. We rely heavily on the know-how of our employees and management team, our experience and our relationships with significant stakeholders in the agriculture industry and in Central Appalachia.

In addition, our ability to compete successfully in this market depends, in large part, on our ability to implement our growth strategy of building additional controlled environment facilities and expanding our product line. Our sales and operating results will be adversely affected if we fail to implement our growth strategy or if we invest resources in a growth strategy that ultimately proves unsuccessful.

We recently concluded our first growing season and have only just begun our second season, which makes it difficult to forecast future results of operations.

Our first CEA facility in Morehead, Kentucky partially opened in October 2020, marking the beginning of our first growing season. The Morehead CEA facility was completed in March 2021 and we concluded our first growing season in August 2021. We recently completed planting our second crop in September 2021 and the harvest of the new crop will commence in the fourth quarter of 2021. As a result, our ability to accurately forecast future results of operations is limited and subject to a number of uncertainties, including our ability to plan for and model future growth. In future periods, net sales growth could slow or net sales could decline for a number of reasons, including slowing demand for our products, increasing competition, a decrease in the growth of the overall market, or our failure, for any reason, to take advantage of growth opportunities. If our assumptions regarding these risks and uncertainties and future net sales growth are incorrect or change, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations, and our business could suffer.

If we fail to develop and maintain our brand, our business could suffer.

We plan to leverage our strong mission to build an iconic brand recognized and revered by a loyal customer base that values a sustainable homegrown food supplier. Our success depends on our ability to maintain and grow the value of our brand. Maintaining, promoting and positioning our brand and reputation will depend on, among other factors, the success of our product offerings, food safety, quality assurance, marketing and merchandising efforts, our continued focus on the environment and sustainability and ability to provide a consistent, high-quality consumer and customer experience. Any negative publicity, regardless of its accuracy, could impair our business.

With respect to our products that will be distributed by Mastronardi, Mastronardi controls the packaging, branding and marketing of these products. Although Mastronardi has agreed to use its best efforts to include the AppHarvest name and branding on our products, it is under no obligation to do so if such inclusion would conflict with instructions from a

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Mastronardi customer for the products or Mastronardi believes that we have suffered material impairment to our reputation or any of our brands. If Mastronardi does not include prominent AppHarvest branding on the packaging of our products we distribute, or if Mastronardi fails to effectively market our products, this could hamper our efforts to establish and grow our brand and reputation.

Further, the growing use of social and digital media by us, our consumers and third parties increases the speed and extent that information or misinformation and opinions can be shared. Negative publicity about us, our partners or our products on social or digital media could seriously damage our brand and reputation. Brand value is based on perceptions of subjective qualities, and any incident that erodes the loyalty of our consumers, customers or distributors, including adverse publicity or a governmental investigation, litigation, including securities class actions, or regulatory enforcement action, could significantly reduce the value of our brand and significantly damage our business. If we do not achieve and maintain favorable perception of our brand, our business, financial condition and results of operations could be adversely affected.

Our brand and reputation may be diminished due to real or perceived quality, food safety, or environmental issues with our products, which could negatively impact our business, reputation, operating results and financial condition.

Real or perceived quality, food safety, or environmental concerns or failures to comply with applicable food regulations and requirements, whether or not ultimately based on fact and whether or not involving our products (such as incidents involving Mastronardi or our competitors), could cause negative publicity and reduced confidence in our company, brand or products, which could in turn harm our reputation and sales, and could adversely affect our business, financial condition and operating results. Brand value is also based on perceptions of subjective qualities, such as appearance and taste, and any incident that erodes the loyalty of our consumers, including changes to product appearance, taste or packaging, could significantly reduce the value of our brand and significantly damage our business.

We also have no control over our products once Mastronardi or any other distributor takes possession of them. Distributors or consumers may store our products under conditions and for periods of time inconsistent with USDA, U.S. Food and Drug Administration (the “FDA”), and other governmental guidelines, which may adversely affect the quality and safety of our products.

If consumers do not perceive our products to be of high quality or safe, then the value of our brand would be diminished, and our business, results of operations and financial condition would be adversely affected. Any loss of confidence on the part of consumers in the quality and safety of our products would be difficult and costly to overcome. Any such negative effect could be exacerbated by our market positioning as a socially conscious grower of high-quality produce and may significantly reduce our brand value. Issues regarding the safety of any of our products, regardless of the cause, may harm our brand, reputation and operating results.

Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all.

Our market opportunity estimates and growth forecasts, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate, particularly in light of the ongoing COVID-19 pandemic and the related economic impact. The variables that go into the calculation of our market opportunity are subject to change over time, and there is no guarantee that any particular number or percentage of customers covered by these market opportunity estimates will purchase our products at all or generate any particular level of net sales for us. Any expansion in our market depends on a number of factors, including the cost and perceived value associated with our product and those of our competitors. Even if the market in which we compete meets our size estimates and growth forecast, our business could fail to grow at the rate we anticipate, if at all. Our growth is subject to many factors, including success in implementing our business strategy, which is subject to many risks and uncertainties. Accordingly, any forecasts of market growth should not be taken as indicative of our future net sales or growth prospects.

Demand for our current and expected future products, which include tomatoes, berries, peppers, cucumbers, other vine produce, and leafy greens is subject to seasonal fluctuations and may adversely impact our results of operations in certain quarters.

Demand for our current and expected future products, which include tomatoes berries, peppers, cucumbers, other vine produce, and leafy greens fluctuates and tends to be greater during the summer months. As a result, comparisons of our sales and operating results between different quarters within a single fiscal year may not necessarily be meaningful comparisons. If

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we are not correct in predicting demand and planning our growing seasons accordingly, we may experience a supply and demand imbalance, which could adversely impact our results of operations.

If we cannot maintain our company culture or focus on our vision as we grow, our business and competitive position may be harmed.

Our vision is to create America’s AgTech capital from within Appalachia and provide better produce, better farming practices and better jobs. Any failure to preserve our culture or focus on our vision could negatively affect our ability to retain and recruit personnel, which is critical to our growth, and to effectively focus on and pursue our corporate objectives. As we grow and develop the infrastructure of a public company, we may find it difficult to maintain these important values. If we fail to maintain our company culture or focus on our vision, our business and competitive position may be harmed.

Recent and future acquisitions could disrupt our business and adversely affect our business operations and financial results.

We have in the past acquired products, technologies and businesses from other parties, such as our recent Root AI Acquisition in April 2021, and we may choose to expand our current business by acquiring additional businesses or technologies in the future. Acquisitions, including the Root AI Acquisition, involve many risks, including the following:

•an acquisition may negatively affect our financial results because it may require us to incur charges or assume substantial debt or other liabilities, may cause adverse tax consequences or unfavorable accounting treatment, may expose us to claims and disputes by third parties, including intellectual property claims and disputes, or may not generate sufficient financial return to offset additional costs and expenses related to the acquisition;

•we may encounter difficulties or unforeseen expenditures in integrating the business, technologies, products, personnel or operations of any company that we acquire, particularly if key personnel of the acquired company decide not to work for us;

•an acquisition may disrupt our ongoing business, divert resources, increase our expenses and distract our management;

•an acquisition may result in uncertainty about continuity and effectiveness of service from either company;

•we may encounter difficulties in, or may be unable to, successfully integrate or sell any acquired solutions;

•an acquisition may involve the entry into geographic or business markets in which we have little or no prior experience or where competitors have stronger market positions;

•our use of cash to pay for an acquisition would limit other potential uses for our cash; and

•if we incur debt to fund such acquisition, such debt may subject us to material restrictions on our ability to conduct our business as well as financial maintenance covenants.

The occurrence of any of these risks could have an adverse effect on our business operations and financial results. In addition, we may only be able to conduct limited due diligence on an acquired company’s operations. Following an acquisition, we may be subject to unforeseen liabilities arising from an acquired company’s past or present operations and these liabilities may be greater than the warranty and indemnity limitations that we negotiate. Any unforeseen liability that is greater than these warranty and indemnity limitations could have a negative impact on our financial condition.

Food safety and foodborne illness incidents or advertising or product mislabeling may materially adversely affect our business by exposing us to lawsuits, product recalls, regulatory enforcement actions, or changes in consumer demand increasing our operating costs and reducing demand for our product offerings.

Selling food for human consumption involves inherent legal and other risks, and there is increasing governmental scrutiny of and public awareness regarding food safety. Unexpected side effects, illness, injury or death related to allergens, foodborne illnesses or other food safety incidents caused by products, or involving our suppliers, could result in the discontinuance of sales of these products or our relationships with such suppliers, or otherwise result in increased operating costs, regulatory enforcement actions, or harm to our reputation. Shipment of adulterated or misbranded products, even if inadvertent, can result in criminal or civil liability. Such incidents could also expose us to product liability, negligence, or other lawsuits, including consumer class action lawsuits. Any claims brought against us may exceed or be outside the scope of our existing or future insurance policy coverage or limits. Any judgment against us that is more than our policy limits or not covered by our policies or not subject to insurance would have to be paid from our cash reserves, which would reduce our capital resources.

The occurrence of foodborne illnesses or other food safety incidents could also adversely affect the price and availability of affected raw materials, resulting in higher costs, disruptions in supply and a reduction in sales. Furthermore, any instances of food contamination or regulatory noncompliance, whether or not caused by our actions, could compel us, our suppliers,

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distributors or customers, depending on the circumstances, to conduct a recall in accordance with FDA regulations, and comparable state laws. Food recalls could result in significant losses due to their costs, the destruction of product inventory, lost sales due to the unavailability of the product for a period of time and potential loss of existing distributors or customers and a potential negative impact on our ability to attract new customers due to negative consumer experiences or because of an adverse impact on our brand and reputation. The costs of a recall could be outside the scope of our existing or future insurance policy coverage or limits.

In addition, food companies have been subject to targeted, large-scale tampering as well as to opportunistic, individual product tampering, and we, like any food company, could be a target for product tampering. Forms of tampering could include the introduction of foreign material, chemical contaminants, and pathological organisms into consumer products as well as product substitution. FDA regulations require companies like us to analyze, prepare, and implement mitigation strategies specifically to address tampering designed to inflict widespread public health harm. If we do not adequately address the possibility, or any actual instance, of product tampering, we could face possible seizure or recall of our products, suspension of our facilities’ registrations, and/or the imposition of civil or criminal sanctions, which could materially adversely affect our business, financial condition, and operating results.

Our operations are subject to FDA and USDA governmental regulation and state regulation, and there is no assurance that we will be in compliance with all regulations.

Our operations are subject to extensive regulation by the FDA and other federal, state and local authorities. Specifically, we are subject to the requirements of the Federal Food, Drug and Cosmetic Act and regulations promulgated thereunder by the FDA. This comprehensive regulatory program governs, among other things, the manufacturing, composition and ingredients, packaging, labeling and safety of food. Under this program, the FDA requires that facilities that grow, pack, and/or process food products comply with a range of requirements, including standards for the growing, harvesting, packing, and holding of produce, hazard analysis and preventative controls regulations, current good manufacturing practices, or GMPs, and supplier verification requirements. Our processing facilities are subject to periodic inspection by federal, state and local authorities. If we cannot successfully manufacture products that conform to our specifications and the strict regulatory requirements of the FDA or others, we may be subject to adverse inspectional findings or enforcement actions, which could materially impact our ability to market our products or could result in a recall of our product that have already been distributed. If the FDA or a comparable foreign regulatory authority determines that we have not complied with the applicable regulatory requirements, our business may be materially impacted.

We seek to comply with applicable regulations through a combination of employing internal experience and expert personnel to ensure quality-assurance compliance (i.e., assuring that products are not adulterated or misbranded) and contracting with third-party laboratories that conduct analyses of products to ensure compliance with nutrition labeling requirements and to identify any potential contaminants before distribution. Failure by us to comply with applicable laws and regulations or maintain permits, licenses or registrations relating to our operations could subject us to civil remedies or penalties, including fines, injunctions, recalls or seizures, warning letters, restrictions on the marketing or manufacturing of products, or refusals to permit the import or export of products, as well as potential criminal sanctions, which could result in increased operating costs resulting in a material effect on our operating results and business.

Changes in existing laws or regulations, or the adoption of new laws or regulations, may increase our costs and otherwise adversely affect our business, results of operations and financial condition.

The manufacture and marketing of food products is highly regulated. We and our suppliers are subject to a variety of laws and regulations. These laws and regulations apply to many aspects of our business, including the manufacture, packaging, labeling, distribution, advertising, sale, quality, and safety of our products, as well as the health and safety of our employees and the protection of the environment.

In the U.S., we are subject to regulation by various government agencies, including the FDA, Federal Trade Commission (the “FTC”), Occupational Safety and Health Administration (“OSHA”), Environmental Protection Agency (the “EPA”), and USDA, as well as various state and local agencies. We are also regulated outside the U.S. by various international regulatory bodies. In addition, depending on customer specification, we may be subject to certain voluntary, third-party standards, such as Global Food Safety Initiative, standards and review by voluntary organizations, such as the Council of Better Business Bureaus’ National Advertising Division. We could incur costs, including fines, penalties and third-party claims, because of any violations of, or liabilities under, such requirements, including any competitor or consumer challenges relating to compliance with such requirements. The loss of third-party accreditation could result in lost sales and customers, and may adversely affect our business, results of operations, and financial condition. In connection with the marketing and advertisement of our products,

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we could be the target of claims relating to false or deceptive advertising, including under the auspices of the FTC and the consumer protection statutes of some states.

The regulatory environment in which we operate could change significantly and adversely in the future. Any change in manufacturing, labeling or packaging requirements for our products may lead to an increase in costs or interruptions in production, either of which could adversely affect our operations and financial condition. New or revised government laws and regulations could result in additional compliance costs and, in the event of non-compliance, civil remedies, including fines, injunctions, withdrawals, recalls, or seizures and confiscations, as well as potential criminal sanctions, any of which may adversely affect our business, results of operations, and financial condition.

Failure by any partner farms, suppliers of raw materials or co-manufacturers to comply with food safety, environmental or other laws and regulations, or with the specifications and requirements of our products, may disrupt our supply of products and adversely affect our business.

If our suppliers, or any partner farms or co-manufacturers that we engage or may engage in the future, fail to comply with food safety, environmental, or other laws and regulations, or face allegations of non-compliance, our operations may be disrupted. Additionally, such partner farms and co-manufacturers would be required to maintain the quality of our products and to comply with our standards and specifications. In the event of actual or alleged non-compliance, we might be forced to find alternative partner farms, suppliers or co-manufacturers and we may be subject to lawsuits related to such non-compliance by such partner farms, suppliers, and co-manufacturers. As a result, our supply of produce and finished inventory could be disrupted or our costs could increase, which would adversely affect our business, results of operations, and financial condition. The failure of any future co-manufacturer to produce products that conform to our standards could adversely affect our reputation in the marketplace and result in product recalls, product liability claims, and economic loss. Additionally, actions we may take to mitigate the impact of any disruption or potential disruption in our supply of produce, including increasing inventory in anticipation of a potential supply or production interruption, may adversely affect our business, results of operations, and financial condition.

We are subject to stringent environmental regulation and potentially subject to environmental litigation, proceedings, and investigations.

Our business operations and ownership and operation of real property are subject to stringent and complex federal, state, and local environmental laws and regulations pertaining to the discharge of materials into the environment, and the handling and disposition of hazardous materials (including pesticides) and wastes (including solid and hazardous wastes) or otherwise relating to protection of the environment and to occupational safety and health. In addition, we may be required to obtain and maintain environmental permits for our business operations under certain environmental laws and regulations. Compliance with these laws and regulations, and the ability to comply with any modifications to these laws and regulations, is material to our business. Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal penalties, imposition of investigatory and remedial obligations and the issuance of injunctions delaying or prohibiting our business operations. New matters or sites may be identified in the future that will require additional investigation, assessment, or expenditures. Future discovery of contamination of property underlying or in the vicinity of our present properties or facilities and/or waste disposal sites could require us to incur additional expenses. The occurrence of any of these events, the implementation of new laws and regulations, regulations, or stricter interpretation of existing laws or regulations, could adversely affect our financial results.

Climate change and the regulation of greenhouse gases emissions have the potential to affect our business operations. For example, the EPA has adopted regulations for the measurement and annual reporting of carbon dioxide, methane and other greenhouse gases emitted from certain large facilities. In addition, both houses of Congress have considered legislation to reduce emissions of greenhouse gases, and a number of states have taken, or are considering taking, legal measures to reduce emissions of greenhouse gases. In January 2021, President Biden issued the 2021 Climate Change Executive Order that, among other things, sets goals of a carbon pollution free power sector by 2035 and a net zero economy by 2050. This Executive Order also commenced the process for the U.S. reentering the Paris Climate Agreement. The Paris Climate Agreement provides for the cutting of carbon emissions every five years, beginning in 2023, and sets a goal of keeping global warming to a maximum limit of two degrees Celsius and a target limit of 1.5 degrees Celsius greater than pre-industrial levels. Federal and state regulatory agencies can impose administrative, civil and/or criminal penalties for non-compliance with greenhouse gas requirements. In addition, states and local governments are undertaking efforts to meet climate goals. Even if limits on greenhouse gas emissions are not directly applicable to us, they could result in increased electricity, fuel or other supply costs that may adversely affect our business. Moreover, some experts believe climate change poses potential physical risks, including

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an increase in sea level and changes in weather conditions, such as an increase in precipitation and extreme weather events. Our operations may be adversely affected by severe weather including tornados, lightning strikes, wind, snow, hail and rain.

We limit the use of chemical pesticides in accordance with our Chemical Pesticide Policy. Any use of chemical pesticides, as defined in our Chemical Pesticide Policy, to address any pests incidents will be disclosed, as stated in that policy, in our annual sustainability report. In any such circumstance we would use, to the extent practicable, the chemical pesticide with the lowest human toxicity, and apply such substance in a manner designed to eliminate or minimize pesticide residue on our products. Chemical pesticide use may cause reputational harm and could adversely affect our business, prospects, financial condition and operating results. We use biopesticides and biofungicides as a part of an integrated crop management program whereby cultural controls are used to limit pesticide intervention. Biopesticides and biofungicides are only used where no other control step is practicable. We use ethephon-based products, considered organophosphate pesticides by the United States EPA, as plant growth regulators to facilitate even ripening of tomatoes on the vine. The federal environmental laws to which our operations are, or may be, subject include the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) and regulations thereunder, which regulate pesticides; the Clean Air Act (CAA) and regulations thereunder, which regulate air emissions; the Clean Water Act (CWA) and regulations thereunder, which regulate the discharge of pollutants in industrial wastewater and storm water runoff; the Resource Conservation and Recovery Act (RCRA) and regulations thereunder, which regulate the management and disposal of hazardous and non-hazardous solid wastes; and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and regulations thereunder, known more commonly as “Superfund,” which impose liability for the remediation of releases of hazardous substances in the environment. We are also subject to regulation under OSHA and regulations thereunder, which regulate the protection of the safety and health of workers. Analogous state and local laws and regulations may also apply.

The unavailability, reduction or elimination of government and economic incentives could negatively impact our business, prospects, financial condition and operating results.

Any reduction, elimination or discriminatory application of government subsidies and economic incentives because of policy changes, the reduced need for such subsidies and incentives due to the perceived success of our operations or other reasons may result in the diminished competitiveness of the CEA facility industry generally or our products in particular. This could materially and adversely affect the growth of the CEA facility markets and our business, prospects, financial condition and operating results.

We rely on information technology systems and any inadequacy, failure, interruption or security breaches of those systems may harm our ability to effectively operate our business.

We are dependent on various information technology systems, including, but not limited to, networks, applications, operating systems, and outsourced services in connection with the current and planned operation of our business.

A failure of these information technology systems to perform as anticipated could cause our business to suffer. For example, our growers are aided in their work by climate and greenhouse operations software designed by Priva B.V. If this software does not perform as anticipated, our growers may receive inadequate or erroneous information about the condition of the plants being grown, which may result in increased mitigation expenses, waste, additional labor expenses and partial or full loss of the crop.

In addition, our information technology systems may be vulnerable to damage or interruption from circumstances beyond our control, including fire, natural disasters, systems failures, viruses and security breaches. Any such damage or interruption could negatively impact our business.

A cybersecurity incident or other technology disruptions could negatively impact our business.

We use or plan to use computers, software and technology in substantially all aspects of our business operations. We build and operate robotics which rely on these technologies. Our employees also use or plan to use mobile devices, social networking and other online activities to connect with crew members, distributors, customers and consumers. Such uses give rise to cybersecurity risks, including security breaches, espionage, system disruption, theft and inadvertent release of information. Cybersecurity incidents are increasing rapidly in their frequency, sophistication and intensity, with third-party phishing and social engineering attacks in particular increasing in connection with the COVID-19 pandemic. Our business involves sensitive information and intellectual property, including know-how, private information about crew members and financial and strategic information about us and our business partners.

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While we have implemented and plans to implement measures to prevent security breaches and cyber incidents, these preventative measures and incident response efforts may not be entirely effective. The theft, destruction, loss, misappropriation or release of sensitive information or intellectual property, or interference with our information technology systems or the technology systems of third parties on which we rely, could result in business disruption, negative publicity, brand damage, violation of privacy laws, loss of customers and distributors, potential liability and competitive disadvantage all of which could negatively impact our business, financial condition or results of operations.

If we are unable to apply technology effectively in driving value for our clients through our technology-based platforms, our operating results, client relationships and growth could be adversely affected.

Our future success depends, in part, on our ability to anticipate and respond effectively to the threat and opportunity presented by digital disruption and developments in technology. These may include new robotics and automation products which we seek to introduce as turnkey CEA technology solutions. We may be exposed to competitive risks related to the adoption and application of new technologies by established market participants (for example, through disintermediation) or new entrants such as technology companies and others. These new entrants are focused on using technology and innovation, including artificial intelligence, to simplify and improve the client experience, increase efficiencies, alter business models and effect other potentially disruptive changes in the industries in which we operate. If we fail to develop and implement technology solutions and technical expertise among our employees that anticipate and keep pace with rapid and continuing changes in technology, industry standards, client preferences and internal control standards, our value proposition and operating efficiency could be adversely affected. We may not be successful in anticipating or responding to these developments on a timely and cost-effective basis and our ideas may not be accepted in the marketplace. Additionally, the effort to gain technological expertise and develop new technologies in our business requires us to incur significant expenses. If we cannot offer new technologies as quickly as our competitors, or if our competitors develop more cost-effective technologies or product offerings, we could experience a material adverse effect on our operating results, client relationships, growth and compliance programs.

The loss of any intellectual property could enable other companies to compete more effectively with us.

We own trademarks and other proprietary rights that are important to our business, including our principal trademark, AppHarvest. Our trademarks are valuable assets that reinforce the distinctiveness of our brand to consumers. We believe that the protection of our trademarks, copyrights and domain names is important to our success. We have also invested a significant amount of money in establishing and promoting our trademarked brand. In connection with our acquisition of Root AI, (now AppHarvest Technology, Inc.), we acquired nine U.S. patent applications, which, if issued, are expected to expire in 2039 to 2041, without taking into account any possible patent term adjustment. We also rely on unpatented proprietary expertise and copyright protection to develop and maintain our competitive position. Our continued success depends, to a significant degree, upon our ability to protect and preserve our intellectual property, including trademarks and copyrights.

We rely on confidentiality agreements and trademark and copyright law to protect our intellectual property rights. These confidentiality agreements with our employees and certain of our consultants, contract employees, suppliers and independent contractors generally require that all confidential information be kept strictly confidential.

We cannot assure you that the steps we have taken to protect our intellectual property rights are adequate, that our intellectual property rights can be successfully defended and asserted in the future or that third parties will not infringe upon or misappropriate any such rights. In addition, our trademark rights and related registrations may be challenged in the future and could be canceled or narrowed. Failure to protect our trademark rights could prevent us in the future from challenging third parties who use names and logos similar to our trademarks, which may in turn cause consumer confusion or negatively affect consumers’ perception of our brand and products. We also cannot offer any assurances about which of our patent applications will issue, the breadth of any resulting patent or whether any of the issued patents will be found invalid and unenforceable or will be threatened by third parties. We cannot offer any assurances that the breadth of our granted patents will be sufficient to stop a competitor from developing and commercializing robots, gripping tools and arms, and sensors that would be competitive with one or more of the technologies we are developing. Moreover, intellectual property disputes and proceedings and infringement claims may result in a significant distraction for management and significant expense, which may not be recoverable regardless of whether we are successful. Such proceedings may be protracted with no certainty of success, and an adverse outcome could subject us to liabilities, force us to cease use of certain trademarks or other intellectual property or force us to enter into licenses with others. Any one of these occurrences may negatively impact our business, financial condition and results of operations.

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We may be unable to obtain or qualify for government grants and incentives in the future.

We have applied for and received various government grants and incentives in connection with building the Morehead CEA facility, and we may in the future apply for federal and state grants, loans and tax incentives under government programs designed to stimulate the economy and support sustainable agriculture. Our ability to obtain funds or qualify for incentives from government or other sources is subject to availability of funds under applicable programs and approval of our applications to participate in such programs. The application process for these funds and other incentives will likely be highly competitive. We cannot assure you that we will be successful in obtaining or qualifying for any of these additional grants, loans and other incentives, and failure to obtain or qualify for these grants, loans and other incentives could have a negative effect on our operating costs and ability to open additional greenhouses.

If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report. We base our estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, as provided in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of net sales and expenses that are not readily apparent from other sources. Significant estimates and judgments involve the useful lives of fixed assets, the valuation of instruments issued for financing and stock-based compensation, and income taxes, among others. Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the market price of our securities.

Our employees and independent contractors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could negatively impact our business, prospects, financial condition and operating results.

We are exposed to the risk that our employees and independent contractors may engage in misconduct or other illegal activity. Misconduct by these parties could include intentional, reckless or negligent conduct or other activities that violate laws and regulations, including production standards, U.S. federal and state fraud, abuse, data privacy and security laws, other similar non-U.S. laws or laws that require the true, complete and accurate reporting of financial information or data. It is not always possible to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations.

In addition, we are subject to the risk that a person or government could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, prospects, financial condition and operating results, including, without limitation, the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgement, integrity oversight and reporting obligations to resolve allegations of non-compliance, imprisonment, other sanctions, contractual damages, reputational harm, diminished profits and future earnings and curtailment of our operations, any of which could adversely affect our business, prospects, financial condition and operating results.

The COVID-19 pandemic could negatively impact on our business, results of operations and financial condition.

In connection with the COVID-19 pandemic, and variants thereof, governments have implemented significant measures, including closures, quarantines, travel restrictions and other social distancing directives, intended to control the spread of the virus. Companies have also taken precautions, such as requiring employees to work remotely, imposing travel restrictions and temporarily closing businesses. While such measures have been relaxed in certain jurisdictions, to the extent that these restrictions remain in place, additional prevention and mitigation measures are implemented in the future, or there is uncertainty about the effectiveness of these or any other measures to contain, treat, or prevent COVID-19, there is likely to be an adverse impact on global economic conditions and consumer confidence and spending, which could materially and adversely affect our operations and demand for our products.

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Although we have not experienced material financial impacts due to the pandemic, the fluid nature of the COVID-19 pandemic and uncertainties regarding the related economic impact are likely to result in sustained market turmoil, which could also negatively impact our business, financial condition and cash flows. Although our business is considered an “essential business,” the COVID-19 pandemic could result in labor shortages, which could result in our inability to plant and harvest crops at full capacity and could result in spoilage or loss of unharvested crops. The impact of COVID-19 on any of our suppliers, distributors, transportation or logistics providers may negatively affect our costs of operation and our supply chain. If the disruptions caused by the COVID- 19 pandemic, including decreased availability of labor, continue despite the increasing availability of vaccines, our ability to meet the demands of distributors and customers may be materially impacted.

Further, the COVID-19 pandemic may impact customer and consumer demand. There may be significant reductions or volatility in consumer demand for our products due to the temporary inability of consumers to purchase these products due to illness, quarantine or financial hardship, shifts in demand away from one or more of our products, decreased consumer confidence and spending, expectations of inflation or pantry-loading activity, any of which may negatively impact our results, including as a result of an increased difficulty in planning for operations and future growing seasons.

The extent of the COVID-19 pandemic’s effect on our operational and financial performance will depend on future developments, including the duration, spread and intensity of the pandemic and the effectiveness of vaccines against COVID-19 and variants thereof, all of which are uncertain and difficult to predict considering the rapidly evolving landscape. As a result, it is not currently possible to ascertain the overall impact of the COVID-19 pandemic on our business. However, if the pandemic continues to persist as a severe worldwide health crisis, the disease could negatively impact our business, financial condition results of operations and cash flows, and may also have the effect of heightening many of the other risks described in this “Risk Factors” section.

Adherence to our values and our focus on long-term sustainability may negatively influence our short- or medium-term financial performance.

Our values are integral to everything we do. We are committed to empowering individuals in Appalachia, driving positive environmental change in the agriculture industry and improving the lives of our employees and the community at large. We may take actions in furtherance of those goals and, therefore, our stockholders over a longer period of time, even if those actions do not maximize short- or medium-term financial results. However, these longer-term benefits may not materialize within the timeframe we expect or at all. For example, we are a public benefit corporation under Delaware law. As a public benefit corporation, we are required to balance the financial interests of our stockholders with the best interests of those stakeholders materially affected by our conduct, including particularly those affected by the specific benefit purpose set forth in our second amended and restated certificate of incorporation (the “amended and restated certificate of incorporation”). In addition, there is no assurance that the expected positive impact from being a public benefit corporation will be realized. Accordingly, being a public benefit corporation and complying with our related obligations could negatively impact our ability to provide the highest possible return to our stockholders.

As a public benefit corporation, we are required to publicly disclose a report at least biennially on our overall public benefit performance and on our assessment of our success in achieving our specific public benefit purpose. If we are not timely or are unable to provide this report, or if the report is not viewed favorably by parties doing business with us or regulators or others reviewing our credentials, our reputation and status as a public benefit corporation may be harmed.

While not required by Delaware law or the terms of our amended and restated certificate of incorporation, we elected to have our social and environmental performance, accountability and transparency assessed against the proprietary criteria established by an independent non-profit organization. As a result of this assessment, we have been designated as a “Certified B Corporation.” The term “Certified B Corporation” does not refer to a particular form of legal entity, but instead refers to companies that are certified by an independent non-profit organization as meeting rigorous standards of social and environmental performance, accountability and transparency. The standards for Certified B Corporation certification may change over time. These standards may not be appropriately tailored to the legal requirements of publicly traded companies or to the operational requirements of larger companies. Our reputation could be harmed if we lose our status as a Certified B Corporation, whether by our choice or by our failure to meet certification requirements, if that change in status were to create a perception that we are more focused on financial performance and are no longer as committed to the values shared by Certified B Corporations. Likewise, our reputation could be harmed if our publicly reported B Corporation score declines and that created a perception that we have slipped in our satisfaction of the Certified B Corporation standards. Similarly, our reputation could be harmed if we take actions that are perceived to be misaligned with our values.

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As a public benefit corporation, our duty to balance a variety of interests may result in actions that do not maximize stockholder value.

As a public benefit corporation, our board of directors (the “Board”) has a duty to balance (i) the pecuniary interest of our stockholders, (ii) the best interests of those materially affected by our conduct and (iii) specific public benefits identified in our charter documents. While we believe that our public benefit corporation designation and obligations will benefit our stockholders, in balancing these interests the Board may take actions that do not maximize stockholder value. Any benefits to stockholders resulting from our public benefit purposes may not materialize within the timeframe we expect or at all and may have negative effects.

For example:

•We may choose to revise our policies in ways that we believe will be beneficial to our stakeholders, including farmers, employees, regional economic development organizations, retailers, sustainability experts at BSR, suppliers, local communities, and our internal senior management and Board members, even though the changes may be costly;

•We may take actions, such as building state-of-the-art facilities with technology and quality control mechanisms that exceed the requirements of USDA, EPA, and the FDA, even though these actions may be more costly than other alternatives;

•We may be influenced to pursue programs and services to demonstrate our commitment to the communities to which we serve and bringing ethically produced food to the table even though there is no immediate return to our stockholders; or

•In responding to a possible proposal to acquire the company, our Board may be influenced by the interests of our stakeholders, including farmers, employees, regional economic development organizations, retailers, sustainability experts at BSR, suppliers, local communities, and our internal senior management and Board members, whose interests may be different from the interests of our stockholders.

We may be unable or slow to realize the benefits we expect from actions taken to benefit our stakeholders, including farmers, employees, suppliers and local communities, which could adversely affect our business, financial condition and results of operations, which in turn could cause our stock price to decline.

As a public benefit corporation, we may be subject to increased derivative litigation concerning our duty to balance stockholder and public benefit interests, the occurrence of which may have an adverse impact on our financial condition and results of operations.

Stockholders of a Delaware public benefit corporation (if they, individually or collectively, own at least 2% of its outstanding capital stock shares of at least $2.0 million in market value) are entitled to file a derivative lawsuit claiming that its directors failed to balance stockholder and public benefit interests. This potential liability does not exist for traditional corporations. Therefore, we may be subject to the possibility of increased derivative litigation, which would require the attention of management and, as a result, may adversely impact management’s ability to effectively execute our strategy. Any such derivative litigation may be costly and have an adverse impact on our financial condition and results of operations.

Risks Related to Ownership of Our Securities

We have previously identified a material weakness in our internal control over financial reporting. This material weakness could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes and material weaknesses identified through such evaluation of those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. For more information, please see “Item 4. Controls and Procedures - Changes in Internal Controls over Financial Reporting” in our Quarterly Report on Form 10-Q filed with the SEC on August 11, 2021.

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The valuation of our Private Warrants could increase the volatility in our net income (loss) in our consolidated statements of earnings (loss).

The change in fair value of our Private Warrants is the result of changes in stock price and the number of warrants outstanding at each reporting period. The change in fair value of warrant liabilities represents the mark-to-market fair value adjustments to the outstanding Private Warrants issued in connection with Novus’s IPO. Significant changes in our stock price or number of Private Warrants outstanding may adversely affect our net income (loss) in our consolidated statements operations.

Concentration of ownership among our executive officers, directors and their affiliates may prevent new investors from influencing significant corporate decisions.

At the closing of the Business Combination our affiliates, executive officers, directors and their respective affiliates as a group beneficially owned approximately 38.9% of our outstanding Common Stock. As a result, these stockholders are able to exercise a significant level of control over all matters requiring stockholder approval, including the election of directors, appointment and removal of officers, any amendment of the amended and restated certificate of incorporation and approval of mergers and other business combination transactions requiring stockholder approval, including proposed transactions that would result in our stockholders receiving a premium price for their shares and other significant corporate transactions. This control could have the effect of delaying or preventing a change of control or changes in management and will make the approval of certain transactions difficult or impossible without the support of these stockholders.

There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq.

Our Common Stock and Public Warrants are currently listed on Nasdaq under the symbols “APPH” and “APPHW,” respectively. If Nasdaq delists our securities from trading on its exchange for failure to meet the listing standards, we and our stockholders could face significant negative consequences including:

•limited availability of market quotations for our securities

•a determination that the Common Stock is a “penny stock” which will require brokers trading in the Common Stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for shares of Common Stock;

•a limited amount of analyst coverage; and

•a decreased ability to issue additional securities or obtain additional financing in the future.

The market price of our securities has been and is likely to be highly volatile, and you may not be able to resell your securities at or above the purchase price. The trading price of our securities has been and is likely to be volatile, and you could lose all or part of your investment.

The following factors, in addition to other factors described in this “Risk Factors” section and included elsewhere in this Quarterly Report, may have a significant impact on the market price of our securities:

•threatened or actual litigation or government investigations;

•the occurrence of severe weather conditions and other catastrophes;

•our operating and financial performance, quarterly or annual earnings relative to similar companies;

•publication of research reports or news stories about us, our competitors or our industry, or positive or negative recommendations or withdrawal of research coverage by securities analysts;

•the public’s reaction to our press releases, our other public announcements and our filings with the SEC;

•announcements by us or our competitors of acquisitions, business plans or commercial relationships;

•any major change in our Board or senior management;

•additional sales of our securities by us, our directors, executive officers or principal stockholders;

•adverse market reaction to any indebtedness we may incur or securities we may issue in the future;

•short sales, hedging and other derivative transactions in our securities;

•exposure to capital market risks related to changes in interest rates, realized investment losses, credit spreads, equity prices, foreign exchange rates and performance of insurance linked investments;

•our creditworthiness, financial condition, performance, and prospects;

•our dividend policy and whether dividends on our Common Stock have been, and are likely to be, declared and paid from time to time;

•perceptions of the investment opportunity associated with our securities relative to other investment alternatives;

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•regulatory or legal developments;

•changes in general market, economic, and political conditions;

•conditions or trends in our industry, geographies or customers; and

•changes in accounting standards, policies, guidance, interpretations or principles.

In addition, broad market and industry factors may negatively affect the market price of our securities, regardless of our actual operating performance, and factors beyond our control may cause our stock price to decline rapidly and unexpectedly. In addition, in the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. For example, we currently have one such putative class action complaint brought against us. Litigation of this type is expensive and could result in substantial costs and diversion of management’s attention and resources, which could have an adverse effect on our business, financial condition, results of operations or prospects. Any adverse determination in litigation could also subject us to significant liabilities.

Litigation or legal proceedings could expose us to significant liabilities and have a negative impact on our reputation or business. For example, we are subject to securities litigation, which is expensive and could divert management attention and adversely impact our business.

From time to time, we may be party to various claims and litigation proceedings. For example, in September 2021, a putative securities class action complaint was filed against us and certain of our officers. The case is still pending. See Part I, Item 1. Note 12.-Commitments and Contingencies for more information. We evaluate these claims and litigation proceedings to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses. Based on these assessments and estimates, we may establish reserves, as appropriate. These assessments and estimates are based on the information available to management at the time and involve a significant amount of management judgment. Actual outcomes or losses may differ materially from our assessments and estimates.

Even when not merited, the defense of these lawsuits is expensive and may divert management’s attention, and we may incur significant expenses in defending these lawsuits. The results of litigation and other legal proceedings are inherently uncertain, and adverse judgments or settlements in some of these legal disputes may result in adverse monetary damages, penalties or injunctive relief against us, which could negatively impact our financial position, cash flows or results of operations. Any claims or litigation, even if fully indemnified or insured, could damage our reputation and make it more difficult to compete effectively or to obtain adequate insurance in the future.

Furthermore, while we maintain insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is subject to various exclusions as well as caps on amounts recoverable. Even if we believe a claim is covered by insurance, insurers may dispute our entitlement to recovery for a variety of potential reasons, which may affect the timing and, if the insurers prevail, the amount of our recovery.

If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they change their recommendations regarding our securities adversely, the price and trading volume of our securities could decline.

The trading market for our securities will be influenced by the research and reports that industry or securities analysts may publish about us, our business, market or competitors. Securities and industry analysts do not currently, and may never, publish research on us. If no securities or industry analysts commence coverage of us, the price and trading volume of our securities would likely be negatively impacted. If any of the analysts who may cover us change their recommendation regarding our shares of Common Stock adversely, or provide more favorable relative recommendations about our competitors, the price of our shares of Common Stock would likely decline. If any analyst who may cover us were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our share price or trading volume to decline.

A significant portion of our total outstanding shares of Common Stock are restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of our Common Stock to drop significantly, even if our business is doing well.

Sales of a substantial number of shares of Common Stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of Common Stock. We are unable to predict the effect that sales may have on the prevailing market price of Common Stock and Public Warrants.

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To the extent our Warrants are exercised, additional shares of Common Stock will be issued, which will result in dilution to the holders of Common Stock and increase the number of shares eligible for resale in the public market. Sales, or the potential sales, of substantial numbers of shares in the public market by the selling security holders, subject to certain restrictions on transfer until the termination of applicable lock-up periods, could increase the volatility of the market price of Common Stock or adversely affect the market price of Common Stock.

In connection with the closing of the Business Combination, Novus’s prior registration rights agreement was amended and restated to, among other things, (i) provide our stockholders with three demand registration rights; (ii) provide our stockholders and the Novus initial stockholders customary underwritten takedown rights (subject to customary priorities, minimums, frequency, and quantity limits, cutbacks, deferrals and other terms); and (iii) afford each of our stockholders and the Novus initial stockholders, on a pari passu basis, “piggy back” registration rights with respect to any underwritten offerings by the other stockholders and by us. The sale or possibility of sale of these additional securities trading in the public market may negatively impact the market price of our securities.

In addition, we have filed a registration statement on Form S-8 under the Securities Act registering the issuance of approximately 17.4 million shares of Common Stock subject to options or other equity awards issued or reserved for future issuance under our equity incentive plans. Shares registered under this registration statement on Form S-8 will be available for sale in the public market subject to vesting arrangements, exercise of options, settlement of restricted stock units and the expiration of lock-up agreements.

Because we have no current plans to pay cash dividends on the Common Stock for the foreseeable future, you may not receive any return on investment unless you sell the Common Stock for a price greater than that which you paid for it.

We may retain future earnings, if any, for future operations, expansion and debt repayment and have no current plans to pay any cash dividends for the foreseeable future. Any decision to declare and pay dividends as a public company in the future will be made at the discretion of our Board and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that our Board may deem relevant. In addition, our ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness we or our subsidiaries incur. As a result, you may not receive any return on an investment in the Common Stock unless you sell your shares of Common Stock for a price greater than that which you paid for it.

Our amended and restated certificate of incorporation designates specific courts as the exclusive forum for certain stockholder litigation matters, which could limit the ability of our stockholders to obtain a favorable forum for disputes with us or our directors, officers or employees.

Our amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against current or former directors, officers or other employees for breach of fiduciary duty, other similar actions, any other action as to which the Delaware General Corporation Law (“DGCL”) confers jurisdiction to the Court of Chancery of the State of Delaware and any action or proceeding concerning the validity of our amended and restated certificate of incorporation or our amended and restated bylaws may be brought only in the Court of Chancery in the State of Delaware (or, if and only if the Court of Chancery of the State of Delaware does not have subject matter jurisdiction thereof, any state court located in the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware), unless we consent in writing to the selection of an alternative forum. This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Our amended and restated certificate of incorporation also provides that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the U.S. shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. This provision may limit our stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us and our directors, officers or other employees and may have the effect of discouraging lawsuits against our directors, officers and other employees. Furthermore, our stockholders may be subject to increased costs to bring these claims, and the exclusive forum provision could have the effect of discouraging claims or limiting investors’ ability to bring claims in a judicial forum that they find favorable.

In addition, the enforceability of similar exclusive forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with one or more actions or proceedings described above, a court could rule that this provision in our amended and restated certificate of incorporation is inapplicable or unenforceable. In March 2020, the Delaware Supreme Court issued a decision in Salzburg et al. v. Sciabacucchi, which found that an exclusive forum provision providing for claims under the Securities Act to be brought in federal court is facially valid

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under Delaware law. We intend to enforce this provision, but we do not know whether courts in other jurisdictions will agree with this decision or enforce it. If a court were to find the exclusive forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, prospects, financial condition and operating results.

There is no guarantee that the Warrants will be in the money at the time they become exercisable, and they may expire worthless.

The exercise price for our Warrants is $11.50 per share of Common Stock. There is no guarantee that the Warrants will be in the money following the time they become exercisable and prior to their expiration, and as such, the Warrants may expire worthless.

We may amend the terms of the Warrants in a manner that may be adverse to holders with the approval by the holders of at least 50% of the then-outstanding Warrants. As a result, the exercise price of your Warrants could be increased, the exercise period could be shortened and the number of shares of Common Stock purchasable upon exercise of a Warrant could be decreased, all without your approval.

Our Warrants are issued in registered form under the Warrant Agreement, dated May 19, 2020, (the “Warrant Agreement”), between us and the Continental Stock Transfer & Trust Company, as the warrant agent. The Warrant Agreement provides that the terms of the Warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then outstanding Warrants to make any other modifications or amendments. Accordingly, we may amend the terms of the Warrants in a manner adverse to a holder if holders of at least 50% of the then- outstanding Warrants approve of such amendment. Although our ability to amend the terms of the Warrants with the consent of at least 50% of the then outstanding Warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the Warrants, convert the Warrants into cash or stock (at a ratio different than initially provided), shorten the exercise period or decrease the number of shares of Common Stock purchasable upon exercise of a Warrant.

We may redeem unexpired Public Warrants prior to their exercise at a time that is disadvantageous to Warrant holders, thereby making such Warrants worthless.

We have the ability to redeem outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per Public Warrant, provided that the last reported sales price of Common Stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which we give proper notice of such redemption and provided certain other conditions are met. If and when the Public Warrants become redeemable by us, we may not exercise our redemption right if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding Public Warrants could force you (a) to exercise your Public Warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (b) to sell your Public Warrants at the then-current market price when you might otherwise wish to hold your Public Warrants or (c) to accept the nominal redemption price which, at the time the outstanding Public Warrants are called for redemption, is likely to be substantially less than the market value of your Public Warrants.

In addition, we may redeem the Public Warrants after they become exercisable for a number of shares of Common Stock determined based on the redemption date and the fair market value of the Common Stock. Any such redemption may have similar consequences to a cash redemption described above. In addition, such redemption may occur at a time when the Public Warrants are “out- of-the-money,” in which case, you would lose any potential embedded value from a subsequent increase in the value of the Common Stock had your Public Warrants remained outstanding.

You will be diluted by any exercises of outstanding Warrants and outstanding options as well as settlement of outstanding restricted stock units. In addition, we may issue additional shares of Common Stock or other equity securities convertible into Common Stock without your approval, which would dilute your ownership interests and may depress the market price of the Common Stock.

As of September 30, 2021, we had 13,241,717 Warrants, 2,824,446 options, and 7,669,016 restricted stock units outstanding. The exercise of such Warrants or options, and the settlement of such restricted stock units, will result in dilution of your investment and could negatively impact the market price of our Common Stock.

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We may also issue additional shares of Common Stock or other equity securities of equal or senior rank in the future in connection with, among other things, future acquisitions or repayment of outstanding indebtedness, without stockholder approval, in a number of circumstances.

The issuance of additional shares or other equity securities of equal or senior rank would have the following effects:

•existing stockholders’ proportionate ownership interest in us will decrease;

•the amount of cash available per share, including for payment of dividends in the future, may decrease;

•the relative voting strength of each previously outstanding share of Common Stock may be diminished; and

•the market price of our Common Stock may decline.

Anti-takeover provisions in our amended and restated certificate of incorporation and under Delaware law could make an acquisition of our company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our then current management.

Our amended and restated certificate of incorporation contains provisions that may delay or prevent an acquisition our company or a change in our management. These provisions may make it more difficult for stockholders to replace or remove members of our Board. Because the Board is responsible for appointing the members of the management team, these provisions could in turn frustrate or prevent any attempt by our stockholders to replace or remove our current management. In addition, these provisions could limit the price that investors might be willing to pay in the future for shares of Common Stock. Among other things, these provisions include:

•the limitation of the liability of, and the indemnification of, our directors and officers;

•a prohibition on actions by our stockholders except at an annual or special meeting of stockholders;

•a prohibition on actions by our stockholders by written consent; and

•the ability of the Board to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by the Board.

Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the DGCL, which prohibits a person who owns 15% or more of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired 15% or more of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. This could discourage, delay or prevent a third party from acquiring or merging with us, whether or not we are desired by, or beneficial to, our stockholders. This could also have the effect of discouraging others from making tender offers for the Common Stock, including transactions that may be in our stockholders’ best interests. Finally, these provisions establish advance notice requirements for nominations for election to the Board or for proposing matters that can be acted upon at stockholder meetings. These provisions would apply even if the offer may be considered beneficial by some stockholders.

Our status as a public benefit corporation could make an acquisition of our company, which may be beneficial to our stockholders, more difficult.

While Delaware common law, as stated in Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., and related cases, may impose upon directors of a traditional corporation a duty to maximize short-term stockholder value in certain “sale of the company” transactions, a public benefit corporation board’s decision-making would not be subject to those same constraints. As a public benefit corporation, our Board would need to take into account interests other than short-term stockholder value when evaluating a sale, and this balancing of interests may result in accepting a bid that may not maximize short-term stockholder value. This does not mean that, as a public benefit corporation, our Board’s balancing of interests would preclude us from accepting a bid that maximizes short-term stockholder value. Rather, our Board would weigh the merits of accepting the short-term value offered by a bid against other options that may generate greater long-term value or have other meaningful effects on those materially affected by our conduct or public benefit purpose and, if appropriate, could accept a bid that does not maximize short-term value. Our Board would also be able to reject a bid in favor of pursuing other stakeholder interests or the specified public benefit, to the detriment of stockholders.

In addition, Article VIII of our amended and restated certificate of incorporation provides that we shall not, either directly or indirectly, merge or consolidate with or into another entity if, as a result of such merger or consolidation, our capital stock would become, or be converted into or exchange for the right to receive, shares or other equity interests in a domestic or foreign corporation that is not a public benefit corporation or similar entity and the certificate of incorporation (or similar governing

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document) of which does not contain identical provisions to Article III of our amended and restated certificate of incorporation identifying the public benefit or public benefits, unless we have obtained, in addition to any affirmative vote required by law or by our amended and restated certificate of incorporation, the affirmative vote of the holders of at least 66 2⁄3% of the voting power of all of the then-outstanding shares our capital stock entitled to vote generally in the election of directors, voting as a single class. This provision of our amended and restated certificate of incorporation would require us to obtain a super-majority vote in order to merge or consolidate with an entity that is not a public benefit corporation, which could discourage acquisition offers that may otherwise be beneficial to stockholders.

General Risk Factors

If we fail to retain and motivate members of our management team or other key employees, our business and future growth prospects would be harmed.

Our success and future growth depend largely upon the continued services of our executive officers as well as other key crew members. These executives and key crew members have been primarily responsible for determining the strategic direction of the business and executing our growth strategy and are integral to our brand, culture and reputation with distributors and others in the industry. From time to time, there may be changes in our executive management team or other key crew members resulting from the hiring or departure of these personnel. The loss of one or more of executive officers, or the failure by the executive team to effectively work with crew members and lead the company, could harm our business.

We incur significant costs as a result of operating as a public company, and our management will devote substantial time to compliance initiatives.

As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company, and these expenses may increase even more after we are no longer an emerging growth company, as defined in Section 2(a) of the Securities Act. As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules adopted, and to be adopted, by the SEC and Nasdaq. Our management and other personnel need to devote a substantial amount of time to these compliance requirements. Moreover, these rules and regulations substantially increase our legal and financial compliance costs and make some activities more time- consuming and costly. The increased costs may increase our net loss. For example, these rules and regulations make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be forced to accept reduced policy limits or incur substantially higher costs to maintain the same or similar coverage as we did prior to becoming a public company. We cannot predict or estimate the amount or timing of additional costs we may incur to comply with these requirements. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our Board, our board committees or as our executive officers.

Changes in tax laws may materially adversely affect our business, prospects, financial condition and operating results.

New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could adversely affect our business, prospects, financial condition and operating results. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us. For example, U.S. federal tax legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act (the “Tax Act”), enacted many significant changes to the U.S. tax laws. Future guidance from the U.S. Internal Revenue Service (the “IRS”) with respect to the Tax Act may affect us, and certain aspects of the Tax Act could be repealed or modified in future legislation. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) has already modified certain provisions of the Tax Act. In addition, it is uncertain if and to what extent various states will conform to the Tax Act, the CARES Act or any newly enacted federal tax legislation.

Our ability to use net operating loss carryforwards and other tax attributes may be limited in connection with the business combination or other ownership changes.

We have incurred losses during our history and do not expect to become profitable in the near future, and may never achieve profitability. To the extent that we continue to generate taxable losses, unused losses will carry forward to offset future taxable income, if any, until such unused losses expire, if at all. As of September 30, 2021, we had U.S. federal net operating loss carryforwards of approximately $88.6 million.

Under the Tax Act, as modified by the CARES Act, U.S. federal net operating loss carryforwards generated in taxable periods beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such net operating loss

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carryforwards in taxable years beginning after December 31, 2020, is limited to 80% of taxable income. It is uncertain if and to what extent various states will conform to the Tax Act or the CARES Act.

In addition, our net operating loss carryforwards are subject to review and possible adjustment by the IRS, and state tax authorities. Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), our federal net operating loss carryforwards and other tax attributes may become subject to an annual limitation in the event of certain cumulative changes in our ownership. An “ownership change” pursuant to Section 382 of the Code generally occurs if one or more stockholders or groups of stockholders who own at least 5% of a company’s stock increase their ownership by more than

50 percentage points over their lowest ownership percentage within a rolling three-year period. Our ability to utilize our net operating loss carryforwards and other tax attributes to offset future taxable income or tax liabilities may be limited as a result of ownership changes, including potential changes in connection with the business combination or other transactions. Similar rules may apply under state tax laws. If we earn taxable income, such limitations could result in increased future income tax liability to us and our future cash flows could be adversely affected. We have recorded a valuation allowance related to our net operating loss carryforwards and other deferred tax assets due to the uncertainty of the ultimate realization of the future benefits of those assets.

If we fail to timely and effectively implement controls and procedures required by the Sarbanes-Oxley Act that are applicable to us, our business could be harmed.

We are required to provide management’s attestation on internal controls subject to Section 404 of the Sarbanes-Oxley Act in our annual report on Form 10-K for the year ending December 31, 2021. The standards required for a public company under Section 404(a) of the Sarbanes-Oxley Act are significantly more stringent than those required of us as a privately held company. Management may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting requirements. If we are not able to implement the additional requirements of Section 404(a) in a timely manner or with adequate compliance, we may not be able to assess whether our internal controls over financial reporting are effective, which may subject us to adverse regulatory consequences and could harm investor confidence and the market price of our securities.

We qualify as an “emerging growth company” and a “smaller reporting company” within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, it could make our securities less attractive to investors and may make it more difficult to compare our performance to the performance of other public companies.

We qualify as an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the JOBS Act. As such, we are eligible for and intend to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies for as long as we continue to be an emerging growth company, including, but not limited to, (a) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (b) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (c) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important. We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year in which the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of June 30 of that fiscal year, (ii) the last day of the fiscal year in which it has total annual gross revenue of $1.07 billion or more during such fiscal year (as indexed for inflation), (iii) the date on which it has issued more than $1 billion in non-convertible debt in the prior three-year period or (iv) the last day of the fiscal year following the fifth anniversary of the date of the first sale of Novus common stock in the IPO. While we will continue to remain an emerging growth company through the end of the 2021 fiscal year and take advantage of the benefits of the extended transition period, our public float exceeded $700 million as of June 30, 2021 and we will no longer qualify as an emerging growth company as of December 31, 2021.

We are also a “smaller reporting company” as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies including, among other things, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, presenting only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and reduced disclosure obligations regarding executive compensation in this Quarterly Report and our periodic reports and proxy statements. We will be able to take advantage of these scaled disclosures for so long as the market value of our voting and non-voting Common Stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million

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during the most recently completed fiscal year and the market value of our voting and non-voting Common Stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter. While we will continue to remain a smaller reporting company through the end of the 2021 fiscal year, our public float was greater than $700.0 million as of June 30, 2021 and therefore we will no longer qualify as a smaller reporting company although we will continue to use the scaled disclosures permitted for a smaller reporting company through our annual report on Form 10-K for the fiscal year ending December 31, 2021 and plan to begin providing non-scaled larger company disclosure in our first Form 10-Q of the next fiscal year. We cannot predict whether investors will find our securities less attractive because it will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non- emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor smaller reporting company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Recent Sales of Unregistered Securities

None.

(b) Use of Proceeds

On May 19, 2020, Novus consummated its initial public offering of 10,000,000 units, consisting of shares of Common Stock and warrants to purchase shares Common Stock, generating total gross proceeds of $100.0 million. After deducting payments to existing stockholders of $0.3 million in connection with their exercise of redemption rights prior to the closing of the Business Combination, the remainder of the trust account is now held on our balance sheet to fund our operations and continued growth.

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

Exhibit

Incorporated by Reference

Number

Description

Form

File No.

Exhibit

Filing Date

3.1

Amended and Restated Certificate of Incorporation of AppHarvest, Inc.

Form 8-K

001-39288

3.1

February 2, 2021

3.2

Amended and Restated Certificate of Bylaws of AppHarvest, Inc.

Form 8-K

001-39288

3.2

February 2, 2021

10.1

Marcella Butler Separation Agreement, dated July 9, 2021

Form 10-Q

001-39288

10.2

August 11, 2021

10.2*

Amendment No. 1 2021 Equity Incentive Plan

10.3*

Amendment No. 1 2021 Employee Stock Purchase Plan

10.4†*

Credit Agreement, dated July 23, 2021, between CEFF II AppHarvest Holdings, LLC and AppHarvest Richmond Farm, LLC

10.5†*

Second Amendment to Right of First Refusal Agreement, dated July 23, 2021, by and between Equilibrium Sustainable Foods, LLC and AppHarvest, Inc.

10.6*

Promissory Note, in favor of JPMorgan Chase Bank, N.A., dated September 24, 2021 only for reference purposes, by AppHarvest Pulaski Farm, LLC

10.7*

Guaranty-Multiple Subsidiaries, dated September 24, 2021 only for reference purposes, by AppHarvest Operations, Inc.

10.8†*

Assignment of Deposit Account, dated September 24, 2021 only for reference purposes, by AppHarvest Operations, Inc.

31.1*

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*

Inline XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document

101.SCH*

Inline XBRL Taxonomy Extension Schema Document

101.CAL*

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

_____________________

† Certain portions of this exhibit (indicated by asterisks) have been omitted because they are not material and are the type that AppHarvest, Inc. treats as private or confidential.

* Filed herewith.

** In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release Nos. 33-8238 and 34-47986, Final Rule:

Management’s Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purpose of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

Table of Contents

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.


	APPHARVEST, INC.
	(Registrant)


Date: November 10, 2021	By:	/s/ Loren Eggleton
		Loren Eggleton
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

Exhibit 10.2

AppHarvest, Inc.

Amendment No. 1 2021 Equity Incentive Plan

Adopted by the Board of Directors: August 10, 2021

A. AppHarvest, Inc., a Delaware public benefit corporation (the “Company”) previously established the Company’s 2021 Equity Incentive Plan (the “Plan”);

B. The Plan currently provides for certain automatic increases in the number of shares reserved for future issuance pursuant to the Plan (the “Evergreen Provisions”); and

C. The Company now wishes to amend the Plan to remove the Evergreen Provision.

Now therefore, effective immediately, the Plan is amended as follows:

1. Section 2(a) is amended and restated to read in full as follows:

“(a) Share Reserve. Subject to adjustment in accordance with Section 2(c) and any adjustments as necessary to implement any Capitalization Adjustments, the aggregate number of shares of Common Stock that may be issued pursuant to Awards will not exceed 10,026,958 shares.”

In all other respects, the Plan remains the same.

[Signature Page Follows]

In Witness Whereof, the Company has caused this Amendment to the Plan to be executed as of the date as of August 10, 2021.

AppHarvest, Inc.

By: /s/ Jonathan Webb

Jonathan Webb

Chief Executive Officer

Exhibit 10.3

AppHarvest, Inc.
Amendment No. 1 2021 Employee Stock Purchase Plan

Adopted by the Board of Directors: August 10, 2021

A. AppHarvest, Inc., a Delaware public benefit corporation (the “Company”) previously established the Company’s 2021 Employee Stock Purchase Plan (the “ESPP”);

B. The ESPP currently provides for certain automatic increases in the number of shares reserved for future issuance pursuant to the ESPP (the “Evergreen Provision”); and

C. The Company now wishes to amend the ESPP to remove the Evergreen Provision.

Now therefore, effective immediately, the ESPP is amended as follows:

1. Section 3(a) is amended and restated to read in full as follows:

“(a) Subject to the provisions of Section 11(a) relating to Capitalization Adjustments, the maximum number of shares of Common Stock that may be issued under the Plan will not exceed 2,005,392 shares of Common Stock. For the avoidance of doubt, up to the maximum number of shares of Common Stock reserved under this Section 3(a) may be used to satisfy purchases of Common Stock under the 423 Component and any remaining portion of such maximum number of shares may be used to satisfy purchases of Common Stock under the Non-423 Component."

In all other respects, the ESPP remains the same.

[Signature Page Follows]

In Witness Whereof, the Company has caused this Amendment to the ESPP to be executed as of the date as of August 10, 2021.

AppHarvest, Inc.

By: /s/ Jonathan Webb

Jonathan Webb

Chief Executive Officer

Exhibit 10.4

CERTAIN PORTIONS OF THIS EXHIBIT (INDICATED BY ***) HAVE BEEN EXCLUDED PURSUANT TO ITEM 601(B)(10) OF REGULATION S-K BECAUSE THEY ARE BOTH NOT MATERIAL AND ARE THE TYPE THAT THE COMPANY TREATS AS PRIVATE AND CONFIDENTIAL.

CREDIT AGREEMENT

(Richmond Facility)

Dated as of July 23, 2021

between

CEFF II AppHarvest Holdings, LLC, as Lender,

and

AppHarvest Richmond Farm, LLC, as Borrower

TABLE OF CONTENTS

Page


Article I DEFINITIONS			1
1.1 Definitions			1
1.2 Rules of Interpretation			15
Article II LOAN FACILITY			16
2.1 Loans			16
2.2 Commitment; Termination and Reduction.			16
Article III PRINCIPAL AND INTEREST PAYMENT			17
3.1 Repayment of Principal and Outstanding Obligations			17
3.2 Interest Rates and Payment Dates			17
3.3 Repayment Procedures			17
3.4 Schedule of Principal and Payments			18
3.5 Mandatory Prepayments			18
3.6 Terms of Prepayments			18
3.7 Taxes			19
Article IV CONDITIONS PRECEDENT			19
4.1 Closing Date			19
4.2 Credit Events			23
Article V REPRESENTATIONS AND WARRANTIES			25
5.1 No Change			25
5.2 Existence; Compliance with Legal Requirements			25
5.3 Power; Authorization; Enforceable Obligations			25
5.4 No Legal Bar			26
5.5 Ownership			26
5.6 Litigation			26
5.7 Title			26
5.8 Environmental			28
5.9 Permits			28
5.10 No Default			29
5.11 Financial Statements			29
5.12 Taxes			29
5.13 Employee and ERISA Matters			30
5.14 Investment Company Act			30
5.15 Use of Proceeds			30
5.16 Material Project Documents			30
5.17 Accuracy of Information			31
5.18 Security Documents			31
5.19 Solvency			31


5.20 Indebtedness			32
5.21 Senior Indebtedness			32
5.22 Force Majeure			32
5.23 Partnerships and Joint Ventures			32
Article VI AFFIRMATIVE COVENANTS			32
6.1 Financial Statements			32
6.2 Certificates; Other Information			33
6.3 Taxes, Other Government Charges and Utility Charges			33
6.4 Maintenance of Existence; Compliance			34
6.5 Insurance			34
6.6 Inspection of Property; Books and Records; Discussion			34
6.7 Notices			34
6.8 Further Assurances			35
6.9 Separateness			36
6.10 Use of Proceeds			36
6.11 Membership Interest Certificates and Related Documentation			36
6.12 Parent Net Worth			36
6.13 Replacement Guaranty			37
6.14 Construction			37
6.15 As-Built Survey			37
6.16 Operation of the Project			37
Article VII NEGATIVE COVENANTS			38
7.1 Contingent Liabilities			38
7.2 Liens; Negative Pledges			38
7.3 Indebtedness			38
7.4 Asset Dispositions			38
7.5 Nature of Business; Permitted Activities			39
7.6 Distributions			39
7.7 Use of Proceeds			39
7.8 Other Changes and Transactions.			39
7.9 Organizational Changes			39
7.10 Tax Matters			39
7.11 Hazardous Substances			40
7.12 Occupancy			40
7.13 Additional Project Documents			40
7.14 Amendments; Change Orders; Completion			40
7.15 Abandonment of Project			41
Article VIII EVENTS OF DEFAULT; REMEDIES			42
8.1 Failure to Make Payments			42
8.2 Judgments			42
8.3 Misstatements			42


8.4 Bankruptcy Event			42
8.5 Cross-Default			42
8.6 Breach of Covenants			43
8.7 Invalidity of Financing Documents; Collateral			43
8.8 Loss of Collateral			44
8.9 Change of Control			44
8.10 ERISA			44
8.11 Compliance with Governmental Orders			44
8.12 No Further Loans			44
8.13 Cure by Lender			44
8.14 Acceleration and Termination of Commitments			45
8.15 Cash Collateral			45
8.16 Possession of Project			45
8.17 Other Remedies			45
Article IX MISCELLANEOUS			45
9.1 Amendments			45
9.2 Addresses			45
9.3 No Waiver; Cumulative Remedies			46
9.4 Survival of Representations and Warranties			46
9.5 Payment of Expenses, Indemnities and Taxes			46
9.6 Successors and Assigns			47
9.7 Set-off			48
9.8 Entire Agreement			48
9.9 GOVERNING LAW			48
9.10 Submission to Jurisdiction; Waivers			48
9.11 Severability			49
9.12 Interpretation			49
9.13 Acknowledgements			49
9.14 Security Documents			49
9.15 Limitation on Liability			49
9.16 Waiver of Jury Trial			49
9.17 Counterparts			50

iii

INDEX OF EXHIBITS

Exhibit A    Form of Notice of Borrowing
Exhibit B    Draw Schedule
Exhibit C    Form of ROFR Amendment
Exhibit D    Project Site
Exhibit E    Form of Date Down Endorsement
Exhibit F    Form of Independent Engineer Certificate

INDEX OF SCHEDULES

Schedule 1    Knowledge
Schedule 2    Consents
Schedule 3    Filing Jurisdictions
Schedule 4    Organizational Chart
Schedule 5    Litigation
Schedule 6    Schedule of Principal and Payments
Schedule 7    Environmental Compliance
Schedule 8    Permits
Schedule 9    Taxes
Schedule 10    Force Majeure

INDEX OF ANNEXES

Annex I Account Information

CREDIT AGREEMENT

This CREDIT AGREEMENT (this “Agreement”), dated as of July 23, 2021 (the “Effective Date”), is entered into by and between AppHarvest Richmond Farm, LLC, a Delaware limited liability company (“Borrower”), and CEFF II AppHarvest Holdings, LLC, a Delaware limited liability company (“Lender”).

RECITALS

WHEREAS, Borrower is currently constructing a controlled environment agriculture facility on the Project Site located in Richmond, Kentucky (the “Project”);

WHEREAS, Borrower has requested Lender to extend, and Lender has agreed to extend, on the terms and conditions set forth in this Agreement and the other Financing Documents (as defined below), a senior secured loan credit facility for one or more loans to support Borrower’s construction of the Project (the “Loan Facility”); and

WHEREAS, to secure the Obligations and induce Lender to provide the Loan Facilities hereunder, Borrower has entered, or has caused its Affiliates to enter, into the Security Documents (as defined below).

NOW, THEREFORE, to induce Lender to provide the Loan Facilities hereunder, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

Article I
DEFINITIONS

I.1Definitions. Except as otherwise expressly provided, capitalized terms used in this Agreement (including in the preamble hereto) and its exhibits shall have the meanings given in this Section 1.1.

1“Accounting Changes” refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement, or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC.

2“Additional Project Documents” means any contracts or agreements entered into by Borrower, or assigned to Borrower, that (i) replaces or substitutes for an existing Material Project Document, (ii) meets the criteria set forth in clause (b) of the definition of “Material Project Document,” or (iii) has a value over its term in excess of One Million Dollars ($1,000,000).

3“Affiliate” means, as to any Person, any other Person that, directly or indirectly, is in Control of, is Controlled by, or is under common Control with, such Person.

4“Agreement” has the meaning given to such term in the preamble hereto.

5“Anti-Terrorism Laws” means any federal laws of the United States or Canada relating to terrorism or money laundering, including but not limited to, Executive Order 13224, the Patriot Act and the regulations administered by OFAC, the Bank Secrecy Act (31 U.S.C. §§ 5311 et seq.), the Money Laundering Control Act of 1986 (18 U.S.C. §§ 1956 et seq.), the International Emergency Economic Powers Act (50 U.S.C. §§ 1701 et seq.), and the Trading with the Enemy Act (50 U.S.C. App. §§ 1 et seq.).

6“AppHarvest ROFR Grantee” means AppHarvest Operations, Inc. (f/k/a AppHarvest, Inc.), a Delaware corporation.

7“Availability Period” means the period commencing on the Effective Date and ending on the earlier of (a) the date that is sixty (60) days after Final Completion and (b) the Option Period Start Date.

8“Bankruptcy Event” of any Person means:

(a)such Person shall institute a voluntary case seeking liquidation or reorganization under any applicable Bankruptcy Law (or any successor statute) or shall consent to the institution of an involuntary case thereunder against it;

(b)such Person shall file a petition, answer, or consent or shall otherwise institute any similar proceeding under any other applicable federal, state, or other Governmental Rules, or shall consent thereto;

(c)such Person shall apply for, or by consent or acquiescence there shall be an appointment of, a receiver, liquidator, sequestrator, trustee, or other officer with similar powers;

(d)such Person shall make an assignment for the benefit of creditors or shall admit in writing its inability to pay its debts generally as they become due; or

(e)if an involuntary case shall be commenced seeking the liquidation or reorganization of such Person under any applicable Bankruptcy Law (or any successor statute) or any similar proceeding shall be commenced against such Person under any other applicable federal, state or other Governmental Rules, and (i) the petition commencing the involuntary case is not timely controverted; (ii) the petition commencing the involuntary case is not dismissed within sixty (60) days of its filing; (iii) an interim trustee is appointed to take possession of all or a portion of the property and/or to operate all or any part of the business of such Person and such appointment is not vacated within sixty (60) days; (iv) an order for relief shall have been issued or entered therein; (v) a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee or other officer having similar powers of such Person or of all or a part of their property, shall have been entered; or (vi) any other similar relief shall be granted against such Person under any applicable federal, state or other law.

9“Bankruptcy Law” means Title 11, United States Code, and any other state or federal insolvency, reorganization, moratorium, or similar law for the relief of debtors.

10“Borrower” has the meaning given to such term in the preamble hereto.

11“Borrower’s Knowledge” means the knowledge, after reasonable inquiry, diligence and investigation, of (a) the Persons listed on Schedule 1 hereto or any successor to any such Person in the capacity to which such Person is acting on the Effective Date; and (b) any manager, officer or director of Borrower not listed on Schedule 1.

12“Borrower Parties” means each of Parent, Holding Company, and Borrower.

13“Borrowing” means a borrowing of a Loan under this Agreement.

14“Borrowing Date” means the day on which a Borrowing is made.

15“Business Day” means a day other than a Saturday, Sunday, or other day on which commercial banks in Richmond, Kentucky, are authorized or required by law to close.

16“Capital Lease Obligations” means, as to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.

17“CEFF ROFR Holder” means Equilibrium Sustainable Foods, LLC, an Oregon limited liability company (as assignee of CEFF US Holdings, LLC, a Delaware limited liability company), an Affiliate of Lender.

18“Change of Control” means the consummation of any transaction or series of transactions that results in Parent ceasing to Control Borrower.

19“Closing Date” means the date when each of the conditions set forth in Section 4.1 has been satisfied (or waived in accordance with this Agreement).

20“Code” means the Internal Revenue Code of 1986, as amended.

21“Collateral” means the “Collateral” (as defined in the Pledge Agreement), the “Collateral” (as defined in the Security Agreement), and the “Property” (as defined in the Mortgage).

22“Commitment” has the meaning given to it in Section 2.2(a).

23“Consent and Agreement” means each third-party consent to collateral assignment or estoppel certificate contemplated by the Financing Documents and set forth on Schedule 2, in form and substance reasonably acceptable to Lender.

24“Construction Agreements” means the EPC Agreement, the Site Work Agreement, and any other agreement entered into by Borrower or its Affiliates for the

development, design, engineering, construction or operation of the Project which has an aggregate value over its term in excess of Two Hundred Fifty Thousand Dollars ($250,000).

25“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument, or other undertaking to which such Person is a party or by which it or any of its property is bound.

26“Control” means (a) the power, directly or indirectly, to vote more than fifty percent (50%) of the securities having ordinary voting power for the election of directors (or Persons performing similar functions) of a Person or (b) the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and “Controlling” and “Controlled” shall have meanings correlative thereto.

27“Credit Event” has the meaning given to such term in Section 4.2.

28“Crops” means fresh vine vegetable crops, including but not limited to tomatoes, peppers, and cucumbers.

29“Date Down Endorsement” has the meaning given to such term in Section 4.2(o).

30“Default” means any occurrence, circumstance or event, or any combination thereof, which, with the lapse of time, the giving of notice or both, would constitute an Event of Default.

31“Default Rate” means a rate per annum equal to thirteen percent (13%).

32“Discharge Date” means the date on which this Agreement shall have terminated (other than those provisions that expressly survive such termination), the Commitments shall have been terminated or fully utilized and the principal of and interest on each Loan and all fees and all other expenses or amounts payable under this Agreement (other than unasserted contingent obligations that by their nature expressly survive termination of this Agreement) shall have been paid in full in cash.

33 “Dollars” and “$” means United States dollars or such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts in the United States of America.

34“Draw Schedule” has the meaning given to such term in Section 4.1(r).

35“Effective Date” has the meaning given to such term in the preamble hereto.

36“Environmental Claim” means any and all binding obligations, liabilities (contingent or known), losses, administrative, regulatory, judicial or, as applicable, contractual actions, suits, demands, decrees, claims, liens, judgments, warning notices, notices of noncompliance or violation, investigations, proceedings, orders for removal or remedial actions, damages (foreseeable and unforeseeable, including consequential and punitive damages), penalties, or out-of-pocket costs, expenses, disbursements, attorneys’ or consultants’ fees, arising

under any Environmental Law or any Permit issued under any such Environmental Law, including any and all claims (a) for enforcement, cleanup, removal, response, remedial or other actions, costs or damages pursuant to any applicable Environmental Law, (b) arising from actual or potential injury to or noncompliance with standards for protection or preservation of health and safety (including occupational health and safety), the environment, natural, cultural, archeological or biological resources or wildlife or regarding the investigation, characterization, remediation, Release or potential Release of, or human exposure to, any Hazardous Substances, (c) nonconformance with land use or zoning requirements related to siting, construction or operation of the Project at the Project Site, or health, safety or the environment, and (d) arising from the direct or indirect taking of any organism that is protected under any Environmental Law.

37“Environmental Law” means any Governmental Rule concerning (a) protection of natural, cultural, tribal, archaeological or biological resources, wildlife or the environment, including surface soils and subsurface strata, ambient air, surface water and groundwater, (b) the Release, generation, distribution, use, treatment, storage, disposal, cleanup, transport or handling of, or exposure to Hazardous Substances, (c) the protection of human health and safety, including occupational health and safety, (d) water rights or water supply, (e) land use or zoning requirements related to siting, construction or operation of the Project at the Project Site, or health, safety or the environment, or (f) agricultural practices or food safety, each as now or may at any time hereafter be in effect.

38“Environmental Consultant” means [***]

39“Environmental Report” means the [***]

40“EPC Agreement” means that certain Engineering, Procurement and Construction Agreement, dated as of November 20, 2020, by and between Borrower and EPC Contractor.

41“EPC Contractor” means Dalsem Greenhouse Technology B.V.

42“Equity Contribution Requirement” means, as of the date of any Credit Event, an amount equal to thirty-four and a half percent (34.5%) of the aggregate amount of the Project Costs set forth in the Project Budget and Schedule.

43“Equity Interest” means any and all shares, interests, participations, or other equivalents (however designated) in a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights, or options to purchase any of the foregoing.

44“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

45“ERISA Affiliate” means any Person, trade, or business (whether or not incorporated) that, together with Borrower, is treated as a single employer under Section 414 of the Code or Section 4001 of ERISA.

46“ERISA Event” means (a) any Reportable Event, (b) the existence with respect to any ERISA Plan of a non-exempt Prohibited Transaction, (c) any failure by any Pension Plan to satisfy the minimum funding standards (within the meaning of Section 412 and 430 of the Code or Section 302 and 303 of ERISA) whether or not waived, (d) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Pension Plan, (e) the failure to make by its due date a required installment under Section 412 or 430 of the Code with respect to any Pension Plan, (f) the failure by Borrower or any of their respective ERISA Affiliates to make any required contribution to a Multiemployer Plan, (g) the incurrence by Borrower or any of its respective ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Pension Plan, including the imposition of any Lien in favor of the PBGC or any Pension Plan, (h) a determination that any Pension Plan is, or is expected to be, in “at risk” status (within the meaning of Section 430 of the Code or Section 303 of ERISA), (i) the receipt by Borrower or any of its respective ERISA Affiliates from the PBGC or a plan administrator of any notice relating to an intention to terminate any Pension Plan or to appoint a trustee to administer any Pension Plan under Section 4042 of ERISA, or the occurrence of any event or condition that could reasonably be expected to constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan, (j) the incurrence by Borrower or any of its respective ERISA Affiliates of any liability with respect to the complete or partial withdrawal from any Pension Plan that is a multiple employer plan or Multiemployer Plan, (k) any event under Section 4062(e) of ERISA with respect to a Pension Plan, (l) the receipt by Borrower or any of its respective ERISA Affiliates of any notice that a Multiemployer Plan is, or is expected to be, insolvent under ERISA Section 4245, or in “endangered” or “critical status”, within the meaning of Section 432 of the Code or Section 305 of ERISA, (m) the institution of any action brought against Borrower or any ERISA Affiliate under Section 502 of ERISA with respect to its failure to comply with Section 515 of ERISA, (n) the receipt from the Internal Revenue Service of notice of disqualification of any ERISA Plan intended to qualify under Section 401(a) of the Code, or the disqualification of any trust forming part of any ERISA Plan intended to qualify for exemption from taxation under Section 501(a) of the Code, (o) the assertion of a material claim (other than routine claims for benefits) against any ERISA Plan or the assets thereof, or against any Borrower or any of its respective ERISA Affiliates in connection with any ERISA Plan, and (p) with respect to any Foreign Plan, (i) the failure to make or, if applicable, accrue in accordance with normal accounting practices, any employer or employee contributions required by Governmental Rules or by the terms of such Foreign Plan, (ii) the failure to register or loss of good standing with applicable regulatory authorities of any such Foreign Plan required to be registered, or (iii) the failure of any Foreign Plan to comply with any material provisions of Governmental Rules and regulations or with the material terms of such Foreign Plan.

47“ERISA Plan” means any “employee benefit plan” within the meaning of Section 3(3) of ERISA (including a Pension Plan but excluding a Multiemployer Plan), sponsored, maintained, or contributed by, or required to be contributed by, Borrower or any ERISA Affiliate.

48“Event of Default” has the meaning given to such term in Article VIII.

49“Event of Loss” means (a) with respect to the Collateral, a single event or a related series of events causing any loss of, destruction of, or damage to, or any condemnation or other taking of (including by eminent domain), all or any portion of the Collateral, and (b) with respect to the property or assets of any Borrower Party that is not the Borrower, a single event or a related series of events causing any loss of, destruction of, or damage to, or any condemnation or other taking of (including by eminent domain), all or any portion of the asset of such Borrower Party resulting in an insurable event and where such Borrower Party does not use any proceeds received in respect of such insurable event to repair or restore such assets.

50“Final Completion” means that (a) Substantial Completion has occurred, and (b) all work set forth in any Construction Agreement has been completed in full, including non-critical deficiencies that do not affect operations of the Project and any other “punch list” items set forth in any Construction Agreement.

51“Financing Documents” means this Agreement, the ROFR Amendment, the Option Agreement, the Schedule of Principal and Payments, the Intercreditor Agreement, the Security Documents, and all other certificates, documents, agreements, or instruments entered into in connection with any of the foregoing.

52“Force Majeure Delay” means a delay in the construction of the Project to the extent actually caused by a delay in work by any counterparty to a Construction Agreement which delay is excused by reason of force majeure pursuant to the express terms of the applicable Construction Agreement.

53“Foreign Plan” means any employee benefit plan (within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA) that is not subject to U.S. law and is maintained or contributed to by Borrower.

54“GAAP” means generally accepted accounting principles in the United States as in effect from time to time. In the event that any Accounting Change shall occur and such change results in a change in the method of calculation of financial covenants, ratios, standards or terms in this Agreement, then Borrower and Lender agree to enter into negotiations in order to amend such provisions of this Agreement so as to reflect equitably such Accounting Changes with the desired result that the criteria for evaluating the Borrower Parties’ financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made. Until such time as such an amendment shall have been executed and delivered by Borrower and Lender, all financial covenants, ratios, standards, and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred.

55“Governmental Authority” means any United States federal or foreign government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity, including any company, business, enterprise or other entity owned in whole or in part, by any government (including any zoning authority) exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange, and any self-regulatory organization, which has jurisdiction over the Borrower Parties or Project.

56“Governmental Rule” means any statute, law (including common law), rule, regulation, ordinance, order, binding code interpretation, judgment, decree, treaty, directive, or similar form of decision of any Governmental Authority.

57“Guarantee” as to any Person (the “guaranteeing person”) means any obligation, including a reimbursement, counterindemnity or similar obligation, of the guaranteeing Person that guarantees or in effect guarantees, or that is given to induce the creation of a separate obligation by another Person (including any bank under any letter of credit) that guarantees or in effect guarantees, any Indebtedness, leases, dividends or other obligations (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, (a) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (d) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, that the term Guarantee shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee of any guaranteeing person shall be deemed to be the lower of (A) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made and (B) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by Borrower in good faith.

58“Hazardous Substances” means any and all pollutants, contaminants, wastes, materials, substances, chemicals, explosive, or radioactive substances in any form which are subject to regulation or which can give rise to liability under any Environmental Law, including petroleum or petroleum products, distillates and constituents, asbestos or asbestos-containing materials, polychlorinated biphenyls, chlorinated solvents, radon gas, per- or polyfluoroalkyl substances, polycyclic aromatic hydrocarbons, or any invasive species or pathogen in the indoor environment.

59“Holding Company” means AppHarvest Operations, Inc., a Delaware corporation.

60“Indebtedness” of any Person at any date, means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than current trade payables incurred in the ordinary course of such Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease

Obligations of such Person, (f) all obligations of such Person, contingent or otherwise, as an account party or applicant under or in respect of acceptances, letters of credit, surety bonds or similar arrangements, (g) the liquidation value of all redeemable preferred Equity Interests of such Person, (h) all Guarantee obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (g) above, and (i) all obligations of the kind referred to in clauses (a) through (h) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is not liable therefor.

61“Indemnified Liabilities” has the meaning given to such term in Section 9.5.

62“Indemnitee” has the meaning given to such term in Section 9.5.

63“Independent Engineer” means DLVge.

64“Initial Equity Contribution” means $39,000,000.

65“Insurance Consultant” means AHT Insurance.

66“Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of the Closing Date, by and between Lender and Parent.

67“Interest Payment Date” means the last Business Day of each calendar month while any Loan is outstanding and the final maturity date of such Loan.

68“Interest Rate” means a rate per annum equal to eight percent (8%); provided, that, beginning on the first (1st) Business Day of the first (1st) calendar month following the second (2nd) anniversary of the Closing Date, the Interest Rate will increase by an incremental amount equal to two-tenths of one percent (0.2%) per calendar month; provided, further, that the Interest Rate shall in no event exceed ten and four-tenths percent (10.4%).

69“Legal Requirements” means, as to any Person, the certificate of incorporation and by-laws, limited liability company agreement, partnership agreement or other organizational or governing documents, any Governmental Rule, any determination of an arbitrator or a court or other Governmental Authority or any requirement under a Permit or Governmental Rule, in each case applicable to or binding upon such Person or any of its Properties or to which such Person or any of its property is subject.

70“Lender” has the meaning given to such term in the preamble hereto.

71“Lien” means any mortgage, deed of trust, pledge, hypothecation, collateral assignment, deposit arrangement, encumbrance, lien (statutory or other), environmental lien, charge or other security interest or any preference, priority or other security agreement or

preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having substantially the same economic effect as any of the foregoing), whether or not filed, recorded or otherwise perfected or effective under Governmental Rules.

72“Loan Facility” has the meaning given such term in the recitals hereto.

73“Loan” has the meaning given to such term in Section 2.1(c).

74[***]

75“Material Adverse Effect” means a material adverse effect on (a) the status of the business, results of operation, or condition (financial or otherwise) of the Borrower Parties (taken as a whole) or the Project (taken as a whole); (b) the validity, legality, binding effect or enforceability against any Borrower Party of this Agreement or any of the other Financing Documents to which it is a party; (c) the validity, perfection or enforceability of Liens granted under the Financing Documents; (d) the ability of Lender to enforce any of the Obligations or any of its material rights and remedies under the Financing Documents; or (e) the ability of any Borrower Party to perform its obligations under any Financing Documents to which it is a party.

76“Material Project Documents” means (a) the Construction Agreements, (b) [***], (c) any contract or agreement governing the marketing or sales of Crops from the Project, and (d) any contract or agreement related to the Project or the development, construction, use, operation, maintenance, or repair of the Project that (i) is with an Affiliate of Borrower; (ii) is with a utility providing necessary utility services to the Project (e.g., water, gas, and electricity); or (iii) has an aggregate value over its term in excess of One Million Dollars ($1,000,000).

77“Maturity Date” means the third (3rd) anniversary of the Closing Date.

78“Moody’s” means Moody’s Investors Service, Inc.

79“Mortgage” means the Commercial Construction Mortgage and Assignment of Leases and Rents, dated as of the Closing Date, by and between Borrower and Lender.

80“Multiemployer Plan” means any “multiemployer plan” (as defined in Section 3(37) and 4001(a)(3) of ERISA) to which Borrower or any of its respective ERISA Affiliates is making, or has any obligation to make, contributions, or has made, or has been obligated to make, contributions within the six (6)-year period immediately preceding the Closing Date.

81“Notice of Borrowing” has the meaning given to such term in Section 2.1(b).

82“Obligations” means the unpaid principal of and interest on (including interest accruing after the maturity of the Loans and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to any Borrower Party, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans and all other obligations and liabilities of any Borrower Party to Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing

or hereafter incurred, which may arise under, out of, or in connection with this Agreement or any other Financing Document or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, indemnities, costs, expenses (including all fees, charges and disbursements of counsel to Lender that are required to be paid by any Borrower Party pursuant hereto) or otherwise (whether or not evidenced by any note or instrument and whether or not for the payment of money).

83“Option Agreement” means that certain Option Agreement, dated as of the Effective Date, by and between Borrower and Lender.

84“Option Period Start Date” has the meaning given to such term in the Option Agreement.

85“Parent” means AppHarvest, Inc., a Delaware corporation.

86“Parent Guaranty” means that certain Guaranty, dated as of the Closing Date, by Parent in favor of Lender.

87“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

88“Pension Plan” means any “pension plan” as defined in Section 3(2) of ERISA (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which Borrower or any of its respective ERISA Affiliates is (or, if such ERISA Plan were terminated, would under Section 4062 or 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA, and is sponsored, maintained, or contributed to, or required to be contributed to, by Borrower or any of its respective ERISA Affiliates.

89“Permit” means any and all franchises, licenses, leases, permits, clearances, determinations, reviews, consultations, approvals, notifications, certifications, registrations, authorizations, exemptions, qualifications, rights of way, easements, Liens and other rights, privileges and approvals required to be obtained from, or any notifications or filings made with, a Governmental Authority under any Governmental Rule.

90“Permitted Indebtedness” means (a) unsecured Indebtedness to trade creditors incurred in connection the acquisition of goods, supplies or merchandise for construction or operation of the Project in the normal course of business; provided, that Permitted Indebtedness under this subsection (a) shall not exceed Five Million Dollars ($5,000,000), (b) equipment leases entered into in the ordinary course; provided, that Permitted Indebtedness under this subsection (b) shall not exceed One Million Dollars ($1,000,000) in the aggregate outstanding at any time, (c) unsecured, interest free intercompany debt between and among the Borrower Parties and their Affiliates that is not evidenced by a note and does not have a maturity date; and (d) deposits made in the ordinary course to utility companies to secure installation of utility services for the Project.

91“Permitted Liens” means the following if not otherwise prohibited under the Financing Documents: (a) Liens in favor of Lender or any of its Affiliates; (b) Liens for taxes not

yet due, or for Taxes contested in accordance with Section 6.3; (c) pledges or deposits to secure obligations under workers’ compensation or unemployment laws or similar legislation or to secure public or statutory obligations; (d) Liens and encumbrances appearing in Lender’s Title Policy, (e) Liens which have been bonded over in accordance with applicable legal procedure or as to which title insurance coverage has been obtained for the benefit of Lender; (f) equipment leases entered into in the ordinary course that qualify as Permitted Indebtedness; (g) Liens for materialmen’s, mechanics’, carriers’, workmen’s, repairmen’s, builders, contractors, suppliers of material or architects or other similar construction and other similar Liens incidental to construction, maintenance or operations, in each case arising in a manner consistent with market practice, which secure obligations that (i) (A) are not overdue, and (B) individually or together with all other Permitted Liens outstanding on any date of determination, would not reasonably be expected to result in a Material Adverse Effect, or (ii) are contested in good faith, by appropriate proceedings, which has the effect of suspending collection and enforcement thereof, and the Borrower Parties aggregate unrestricted cash reserves (taken as a whole) are adequate are established with respect to such contested taxes in accordance with GAAP; and (h) easements and rights-of-way in favor of utility companies and government authorities required for completion of the Project in the ordinary course that would not reasonably be expected to result in a Material Adverse Effect.

92“Person” means any natural person, corporation, limited liability company, partnership, series, firm, association, Governmental Authority, or any other entity whether acting in an individual, fiduciary, or other capacity.

93“Plans and Specifications” means the detailed plans and specifications and/or project manual(s) for the construction of the Project, which are approved by Lender, including any shop or field drawings made in furtherance thereof, together with any changes made therein which are permitted under the terms of this Agreement.

94“Pledge Agreement” means the Pledge Agreement, dated as of the Closing Date, by and between Holding Company and Lender.

95 “Prohibited Transaction” has the meaning given to such term in Section 406 of ERISA and Section 4975(c) of the Code.

96“Project” has the meaning given to such term in the recitals hereto.

97“Project Budget and Schedule” has the meaning given to such term in Section 4.1(m).

98“Project Costs” means: (a) the cost of designing, engineering, equipping, procuring, and constructing the Project; (b) the cost of acquiring any necessary interest in the Project Site; (c) real and personal property taxes, ad valorem taxes, real estate transfer, document stamp, sales, use and excise taxes and insurance (including title insurance) premiums payable with respect to the Project prior to Final Completion; (d) the costs of acquiring Permits necessary for the designing, engineering, equipping, procuring, and constructing of the Project; and (e) soft costs incurred in constructing the Project, including, without limitation, the cost of surveys, inspections, environmental reports, consultant fees, and legal and accounting fees; provided, that (i) all Project Costs shall be set forth in the Project Budget and Schedule and (ii) the total

aggregate amount of such Project Costs, including any Project Costs incurred prior to the Effective Date, shall not exceed One Hundred Thirty-Nine Million Dollars ($139,000,000). Project Costs shall not include any costs of operating the Project.

99“Project Site” means the real property described on Exhibit D.

100“Property” means any right or interest of Borrower in or to property of any kind whatsoever, whether real, personal, or mixed and whether tangible or intangible.

101“Prudent Industry Practices” means those practices, methods and standards of inquiry and investigation that are, as of the date being determined, commonly used by developers of controlled environment agriculture facilities in United States which are of similar size, type, and location to the Project at issue. “Prudent Industry Practice” does not necessarily mean the best practice, method, or standard of inquiry and investigation in all cases, but is instead intended to encompass a range of acceptable practices, methods, and standards.

102“Qualified Bank” means a United States commercial bank or the United States branch office of a foreign bank, in either case, (a) having (i) assets on its most recent audited balance sheet of at least Ten Billion Dollars ($10,000,000,000) and (ii) a rating for its senior long term unsecured debt obligations of at least (A) “A” by S&P and “A3” by Moody’s, if such entity is rated by both S&P and Moody’s or (B) “A” by S&P or “A3” by Moody’s, if such entity is rated by either S&P or Moody’s but not both or (b) is otherwise approved by Lender in its sole discretion. [***]

103“Release” means disposing, discharging, injecting, spilling, leaking, leaching, dumping, pumping, pouring, emitting, escaping, emptying, seeping, placing, and migrating.

104“Repayment Period” means the period beginning on the Closing Date and ending on the Option Period Start Date.

105“Reportable Event” means any “reportable event,” as set forth in Section 4043(c) of ERISA or the regulations issued thereunder, other than those events as to which the thirty (30)-day notice period has been waived.

106“Required Insurance” has the meaning given to such term in Section 6.5(a).

107“Responsible Officer” means, as to any Person, its president, chief executive officer, treasurer, or secretary (or assistant secretary), any of its vice presidents, or any managing general partner, managing member of such Person that is a natural person or authorized signatory (or any of the preceding with regard to any managing general partner, managing member or sole member of such Person that is not a natural person).

108“ROFR Agreement” that certain Right of First Refusal Agreement, dated as of May 13, 2019, by and between AppHarvest ROFR Grantee and CEFF ROFR Holder, as amended by that certain Assignment of and First Amendment to Right of First Refusal Agreement, dated as of March 1, 2021.

109“ROFR Amendment” means an amendment to the ROFR Agreement, by and between CEFF ROFR Holder and AppHarvest ROFR Grantee, in the form attached as Exhibit C hereto.

110“S&P” means Standard and Poor’s Rating Services.

111“Schedule of Principal and Payments” has the meaning given to such term in Section 3.4.

112“Scheduled Final Completion Date” means September 12, 2022.

113“Scheduled Substantial Completion Date” means August 29, 2022.

114“Security Agreement” means the Security Agreement, dated as of the Closing Date, by and between Borrower and Lender.

115“Security Documents” means the Parent Guaranty, the Pledge Agreement, the Security Agreement, Mortgage, each Consent and Agreement, any other security documents and any financing statements and other instruments filed or recorded in connection with the foregoing.

116“Site Work Agreement” means that certain Agreement, dated as of September 16, 2020, by and between Borrower and the Site Work Contractor.

117“Site Work Contractor” means Walker Construction & Materials, LLC.

118“Substantial Completion” means that the Project is (a) mechanically, electrically, and structurally constructed in accordance with all Governmental Rules, the Plans and Specifications, and any specifications set forth in any Construction Agreement, excluding non-critical deficiencies that do not affect operations of the Project and any other “punch list” items; (b) ready for initial operations; and (c) capable of being operated in a safe and proper manner in accordance with Governmental Rules, the Plans and Specifications, and any specifications set forth in any Construction Agreement.

119“Survey” has the meaning given to such term in Section 4.1(t).

120“Tangible Net Worth” means, with respect to any Person, the net worth of such Person calculated in accordance with GAAP (using, with respect to any asset, the lesser of the appraised value of such asset and the book value of such asset), after subtracting therefrom the aggregate amount of such Person’s intangible assets, including, without limitation, goodwill, franchises, licenses, patents, trademarks, copyrights, and service marks; provided, that, with respect to Parent, the calculation of Tangible Net Worth will exclude the Obligations.

121“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, mortgage recording taxes, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax, penalties, or other similar items applicable thereto.

122“Title Company” means First American Title.

123“Title Policy” has the meaning given to such term in Section 4.1(s).

124“Title Pro Forma” has the meaning given to such term in Section 4.1(s).

125“U.S. Person” means a person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.

126“UCC” means the Uniform Commercial Code as in effect in the State of New York; provided, that, in the event that, by reason of mandatory provisions of law, any or all of the perfection or priority of, or remedies with respect to, any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions hereof relating to such perfection, priority or remedies.

127“Warranties” means any warranties and guarantees relating to the Project or any component thereof provided by any vendor, materialman, manufacturer, supplier, contractor, subcontractor, or other third party.

I.2Rules of Interpretation. Except as otherwise expressly provided, the following rules of interpretation shall apply to this Agreement and the other Financing Documents:

(a)The singular includes the plural, and the plural includes the singular.

(b)Except where otherwise specified, the word “or” is not exclusive. Thus, if a party “may do (a) or (b),” then the party may do either or both. The party is not limited to a mutually exclusive choice between the two alternatives.

(c)A reference to a Governmental Rule includes any amendment or modification to such Governmental Rule, and all regulations, rulings and other Governmental Rules promulgated under such Governmental Rule.

(d)A reference to a Person includes its successors and permitted assigns.

(e)Accounting terms have the meanings given to them by GAAP, as applied by the accounting entity to which they refer. For purposes of determining compliance with the financial covenants contained in this Agreement, any election by Borrower to measure any financial liability using fair value (as permitted by Accounting Standard Codification Topic No. 825-10-25 – Fair Value Option or any similar accounting standard) shall be disregarded and such determination shall be made as if such election had not been made.

(f)The words “include,” “includes” and “including” are not limiting.

(g)A reference in a document to an Article, Section, Exhibit, Schedule, Annex or Appendix is to the Article, Section, Exhibit, Schedule, Annex or Appendix of such

document unless otherwise indicated. Exhibits, Schedules, Annexes or Appendices to any document shall be deemed incorporated by reference in such document.

(h)References to any document, instrument, or agreement (i) shall include all exhibits, schedules, and other attachments thereto, (ii) shall include all documents, instruments or agreements issued or executed in replacement thereof, and (iii) means such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified, and supplemented from time to time to the extent permitted under the Financing Documents and in effect at any given time.

(i)The words “hereof,” “herein” and “hereunder” and words of similar import when used in any document shall refer to such document as a whole and not to any particular provision of such document.

(j)References to “days” means calendar days, unless the term “Business Days” shall be used. References to a time of day means such time in New York, New York, unless otherwise specified. If any Borrower Party or any Affiliate of any Borrower Party is required to perform an action, deliver a document, or take such other action by a calendar day and such day is not a Business Day, then such Borrower Party or such Affiliate shall take such action by the next succeeding “Business Day.”

(k)The Financing Documents are the result of negotiations between, and have been reviewed by, the Borrower Parties, Lender, and their respective counsel. Accordingly, the Financing Documents shall be deemed to be the product of all parties thereto, and no ambiguity shall be construed in favor of or against any such party.

(l)The words “will” and “shall” shall be construed to have the same meaning and effect.

Article II
LOAN FACILITY

II.1Loans.

(a)Subject to the terms and conditions hereof, during the Availability Period, the Commitment may be utilized by Borrower. All disbursements of funds to or for the benefit of the Project shall be made in accordance with the Draw Schedule unless approved in writing by the Lender in accordance with the terms and conditions of this Agreement.

(b)In order to request such a loan, Borrower shall give Lender an appropriately completed written notice in the form of Exhibit A (a “Notice of Borrowing”), which notice must be received by Lender prior to 11:00 a.m. (New York time) on or before the fifth (5th) Business Day of the applicable calendar month, at least ten (10) Business Days prior to the requested Borrowing Date, unless otherwise approved in writing by Lender in its sole discretion. Any Notice of Borrowing shall be irrevocable. Borrower may not submit more than one Notice of Borrowing during any calendar month.

(c)Subject to satisfaction of the conditions in Section 4.2, no later than ten (10) Business Days following the satisfaction of the requirements in Section 4.2, Lender agrees to make such cash available to Borrower in the amount and on the date requested in the Notice of Borrowing (each such loan, a “Loan”).

II.2Commitment; Termination and Reduction.

(a)At all times, the sum of the aggregate outstanding principal amount of all Loans then outstanding shall not at any time exceed Ninety-One Million Dollars ($91,000,000) (the “Commitment”). Any Project Costs in excess of the Commitment shall be funded solely by equity contributions from the Borrower.

(b)The amount of each Loan outstanding shall reduce the available Commitment in an amount equal to the principal (and any interest payable on such Loan if not paid when due and payable pursuant to Section 3.2 and remains outstanding) of each such Loan.

Article III
PRINCIPAL AND INTEREST PAYMENT

III.1Repayment of Principal and Outstanding Obligations.

(a)Subject to Section 3.6, at Borrower’s election, Borrower may repay the outstanding Obligations in full during the Repayment Period.

(b)Upon the earlier of (i) any early termination or acceleration of the Loans hereunder and (ii) the Maturity Date, Borrower shall repay the outstanding Obligations in full in accordance with Section 3.3.

(c)Upon any repayment of the Obligations pursuant to Section 3.1(a) or Section 3.1(b), Borrower shall also make a payment to Lender equal to (i) if such repayment is made prior to the second (2nd) anniversary of the Effective Date, three percent (3%) of the Obligations repaid, and (ii) such repayment is made on or after the second (2nd) anniversary of the Effective Date, five percent (5%) of the Obligations repaid; provided that no such fee shall be due if the Obligations are repaid with the proceeds of a sale and leaseback transaction with Lender or an Affiliate of Lender.

(d)Borrower may not reborrow the principal amount of any Loan which is prepaid.

III.2Interest Rates and Payment Dates.

(a)Each Loan shall bear interest at a rate per annum equal to the Interest Rate. Upon the occurrence and during the continuance of an Event of Default, all outstanding Obligations (whether or not overdue) shall bear interest at a rate per annum equal to the Default Rate. All unpaid interest on each Loan shall be payable in arrears on each Interest Payment Date; provided, that interest accruing at the Default Rate shall be payable from time to time on demand.

(b)Borrower shall be obligated to pay any and all interest accrued on the unpaid principal amount of each Loan from and after the date Lender made such Loan to Borrower pursuant to Section 2.1, at a rate per annum equal to the Interest Rate or Default Rate in effect during such period.

(c)Interest and fees payable pursuant to this Agreement shall be calculated on the basis of a three hundred sixty-five (365)-day year for the actual days elapsed. Any change in the interest rate on a Loan resulting from a change in interest being charged at the Interest Rate or Default Rate shall become effective as of the opening of business on the day on which such change becomes effective.

III.3Repayment Procedures. All payments (including prepayments) to be made by Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without set-off or counterclaim and shall be made prior to 12:00 noon (New York time), on the due date thereof to Lender at its account specified in Annex I (as such account information may be updated by Lender in writing from time to time), in Dollars and in immediately available funds. Any amounts received after such time on any date shall be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day.

III.4Schedule of Principal and Payments. The obligation of Borrower to repay the Loans made by Lender and to pay interest thereon at the rates provided herein, if requested by Lender, shall be evidenced by the Schedule of Principal and Payments. Borrower authorizes Lender to record on Schedule 6 (the “Schedule of Principal and Payments”) the date and amount of each applicable Loan made by Lender and each payment or prepayment of principal thereunder, and Borrower agrees that all such notations shall constitute prima facie evidence of the accuracy of the matters noted in the absence of manifest error; provided that neither the failure to make any such notation nor any error in such notation shall affect the validity of Borrower’s obligations to repay the full unpaid principal amount of the Loans or the other obligations of Borrower hereunder. Borrower further authorizes Lender to attach to and make a part of such Schedule of Principal and Payments continuations of the schedule attached thereto as necessary.

III.5Mandatory Prepayments.

(a)In the event that the result of the calculation set forth in Section 2.2(a) exceeds the Commitment, Borrower shall promptly pay Lender an amount equal to such excess amount.

(b)Borrower shall prepay the Obligations in the event of an Event of Loss (i) affecting more than fifty percent (50%) of the Project acreage or (ii) causing a monetary loss of more than fifty percent (50%) of the Obligations, whether or not insured. In all other Events of Loss, Borrower may apply all net insurance proceeds from the insurance policies required hereunder to restore the Project.

(c)Borrower shall prepay the Obligations in the event that (i) Borrower conveys, sells, leases, transfers, or otherwise disposes of any Collateral other than (A) Crops, or

(B) as permitted under Section 7.4, (ii) Holding Company conveys, sells, leases, transfers, or otherwise disposes of (A) any of the Collateral on behalf of Borrower, or (B) all or substantially all of the membership interests of Borrower, or (iii) Parent conveys, sells, leases, transfers, or otherwise disposes of (A) any of the Collateral on behalf of Borrower, (B) all or substantially all of the shares or other ownership interests of Holding Company, or (C) all or substantially all of the membership interests of Borrower.

III.6Terms of Prepayments. Upon the prepayment of any Loan (whether such prepayment is an optional prepayment or a mandatory prepayment), Borrower shall pay to Lender (a) all accrued interest to the date of such prepayment owed pursuant to the terms of this Agreement on the amount prepaid, and (b) all accrued fees to the date of such prepayment owed pursuant to the terms of this Agreement corresponding to the amount being prepaid. Any remaining amounts not so applied to the amounts in clauses (a) and (b) above shall be used to pay principal. In no event shall any mandatory or optional prepayments be funded from the proceeds of any Loan.

III.7Taxes. Any and all payments by or on account of any obligation of any Borrower Party under any Financing Document shall be made without deduction or withholding for any Taxes, except as required by Governmental Rules. If any Governmental Rule requires the deduction or withholding of any Tax from any such payment, then the applicable Person shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Governmental Rules, and then the sum payable by the applicable Borrower Party shall be increased as may be necessary so that after such deduction or withholding has been made Lender receives an amount equal to the sum it would have received had no such deduction or withholding been made.

Article IV
CONDITIONS PRECEDENT

IV.1Closing Date. The occurrence of the Closing Date is subject to the prior satisfaction by the Borrower Parties of each of the following conditions as determined in the sole and absolute discretion of Lender:

(a)Financing Documents. Lender shall have received this Agreement and each other Financing Document each in form and substance satisfactory to Lender and each duly authorized, executed and entered into by each party thereto.

(b)Representations and Warranties. Each representation and warranty set forth in the Financing Documents is true and correct in all respects on the Closing Date (or, if any representation or warranty is stated to have been made as of a specific date, as of such specific date).

(c)No Default or Event of Default. No Default or Event of Default shall have occurred and be continuing or could reasonably be expected to result from the occurrence of the Closing Date.

(d)No Material Adverse Effect. No event, condition or circumstance that could reasonably be expected to constitute a Material Adverse Effect shall have occurred and be continuing or could reasonably be expected to result from the occurrence of the Closing Date.

(e)Governing Documents. Lender shall have received:

(i)a copy of the certificate of formation, certificate of limited partnership, certificate of registration or other formation documents, including all amendments thereto, of each Borrower Party, each certified as of a recent date by the Secretary of State of Delaware or such other relevant jurisdiction;

(ii)a copy of resolutions of the board of directors, sole member, general partner(s), managing member(s) or similar governing body of each Borrower Party, approving and authorizing the execution, delivery, and performance of the Financing Documents to which such Person is a party; and

(iii)a certificate from each Borrower Party signed by an appropriate authorized officer of each such Person as to the incumbency of the natural persons authorized to execute and deliver the Financing Documents to which such Person is a party.

(f)Good Standing Certificates. Lender shall have received certificates issued by (i) the jurisdiction of organization of each Borrower Party, certifying that each such Person is in good standing and active status and is authorized to transact business in such jurisdiction and (ii) the jurisdiction where the Project is located certifying that Borrower is in good standing and active status and is qualified to do business in such jurisdiction (in each case, to the extent available in such jurisdiction).

(g)Lien Searches. Lender shall have received the results of a recent lien search in each of the jurisdictions where assets of any Borrower Party are located and the Borrower Parties’ respective jurisdictions of organization and principal place of business, and such searches shall reveal no Liens on any of the assets of such Person except for Permitted Liens or Liens to be discharged on or prior to the Closing Date pursuant to documentation satisfactory to Lender.

(h)Financial Statements. Lender shall have received (i) the most recent unaudited consolidated financial statements of the Borrower Parties, each in form and substance satisfactory to Lender, together with a certificate from a Responsible Officer of such Borrower Party, stating that such financial statements fairly represent, in all material respects, the financial position of such Borrower Party at the date thereof, subject to changes resulting from audit and normal year-end adjustments, (ii) the unaudited pro forma consolidated balance sheets of the Borrower Parties, in each case as of or about the Closing Date, and (iii) audited consolidated financial statements of Parent as of December 31, 2020, each in form and substance reasonably satisfactory to Lender.

(i)No Litigation. No suit, action or other proceeding shall have been instituted or, to the knowledge of any Borrower Party, threatened by or before any court or Governmental Authority or other Person against any Borrower, any Affiliate of Borrower, or the

Project seeking to impair, restrain, prohibit, or invalidate the transactions hereunder or under any of the other Financing Documents.

(j)Perfection of Security Interests.

(i)Each document (including any UCC financing statement) required by the Security Documents or under Legal Requirements, or requested by Lender, to be filed, registered, or recorded in order to create in favor of Lender a valid and perfected Lien on the Collateral described therein, prior and superior in right to any other Person shall be in proper form for filing, registration, or recordation.

(ii)Lender shall have received the original executed limited liability company membership interest certificates representing one hundred percent (100%) of the limited liability company membership interests in Borrower, together with an undated transfer power for each such membership or other ownership interest certificate executed in blank by a duly authorized officer of Borrower, and a related irrevocable proxy executed by a duly authorized officer of Borrower.

(iii)Lender shall have received evidence that all filing, recordation, subscription and inscription fees and all recording and other similar fees, and all recording, stamp and other Taxes and other expenses related to such filings, registrations and recordings necessary for and related to the transactions contemplated by this Agreement and the other Financing Documents to be consummated on or prior to the Closing Date have been paid in full (to the extent the obligation to make such payment then exists) by Borrower or are to be paid in full on the Closing Date.

(k)Legal Opinions. Lender shall have received a legal opinion from Cooley LLP and Dentons US LLP, counsel to the Borrower Parties, dated as of the Closing Date, addressing matters with respect to the Borrower Parties and the Financing Documents and such other matters as Lender may reasonably request and in form and substance satisfactory to Lender.

(l)Transaction Costs. Borrower shall have paid all fees, costs and other expenses, and all other amounts, then due and payable by Borrower pursuant to this Agreement.

(m)Project Budget and Schedule. Borrower shall have furnished to Lender the budget and schedule (the “Project Budget and Schedule”) for all Project Costs of the Project and a detailed project schedule, as well as estimates of revenues and cash flows expected to be generated from the Project for the period commencing on the date of the Project Budget and Schedule through the Maturity Date.

(n)Initial Equity Contribution. Lender shall have received evidence from Borrower reasonably satisfactory to Lender (including copies of invoices and other documentation) that the amount of funds contributed by or on behalf of Borrower for the payment of Project Costs on or prior to the Closing Date is equal to or greater than the Initial Equity Contribution.

(o)Plans and Specifications. Borrower shall have furnished to Lender the Plans and Specifications, which shall be satisfactory to Lender in form and content.

(p)Material Project Documents. Borrower shall have furnished to Lender a true and correct copy of each Material Project Document, including any amendments, modifications, and change orders thereto.

(q)Permits. Borrower shall have furnished to Lender a true and correct copy of each Permit obtained by or on behalf of (i) Borrower, or (ii) any other Borrower Party with respect to the Project as of the Closing Date, including any Permit applications and related communications with Governmental Authorities, and any Permit amendments and modifications.

(r)Draw Schedule. Borrower shall have furnished to Lender a schedule which, among other things, sets forth the anticipated draw schedule for the Project, showing the funding sources for the Project and the projected draw schedule for each funding source for the Project, a copy of which is attached hereto as Exhibit B (“Draw Schedule”).

(s)Title Insurance. Lender shall have received a proforma version of an extended American Land Title Association (ALTA) Loan Policy of Title Insurance, dated as of the Closing Date, together with the coverages and endorsements identified in clause (iii) below, in an amount equal to the Commitment, and otherwise in form and substance reasonably acceptable to Lender and containing only those exceptions to which Lender has not objected (the “Title Pro Forma”), and an irrevocable commitment from the Title Company (such commitment to be in the form of a counter-signed closing instruction letter from the Title Company, which letter shall be in form and substance reasonably acceptable to Lender) to issue such ALTA Loan Policy of Title Insurance in the form and substance of the Title Pro Forma (such loan policy, the “Title Policy”) and insuring (or agreeing to insure) Lender that:

(i)Borrower has a good and indefeasible fee simple interest to and right to control, occupy and use the Project Site described in Schedule A to the Title Policy, free and clear of all liens, encumbrances, and other exceptions to title except Permitted Liens;

(ii)the Mortgage is (or will be when recorded) a valid first lien on the interest of the Borrower on the Project Site (including the Project), free and clear of all liens, encumbrances, and exceptions to title other than the Permitted Liens; and

(iii)such Title Policy includes the following endorsements and affirmative coverages: 3.2 – Zoning – Land Under Development; 6-06 - Variable Rate; 8.2-06 – Commercial Environmental Protection Lien; 14.1-06 - Future Advance; 17-06 Land Abuts Street or 17.1-06 – Indirect Access and Entry, as applicable; 17.2-06 – Utility Access; 18.1-06 - Multiple Tax Parcel; 19-06 – Contiguity – Multiple Parcels; 20-06 – First Loss; 24-06 - Doing Business; 25-06 – Same as Survey; 26-06 – Subdivision, if applicable; 27-06 – Usury; 31-06 – Severable Improvements; 32.2-06 - Construction Loan - Insured's Direct Payment; 33-06 - Disbursement; 35.3-06 – Minerals and Other Subsurface Substances – Land Under Development; Deletion of Arbitration; 39 – Policy Authentication; 41.3-06 - Water - Land Under Development; 42-06 – Lender Group; First American Title Insurance Company special patent endorsement.

(t)Survey. Lender shall have received an ALTA survey of the Project Site (the “Survey”) prepared by a registered land surveyor licensed in the state where the Project is located, certified to Borrower, Lender, and the Title Company, and in form and substance sufficient for the Title Company to issue the Title Policy and the endorsements identified in Section 4.1(s)(iii) above. Notwithstanding the foregoing, if the Survey is not available on or before the Closing Date, but all other conditions of this Section 4.1 have been satisfied (except to the extent lack of the Survey affects the Title Policy required by Section 4.1(s) above), Lender agrees to proceed with Closing on the condition that Borrower shall, on or before August 15, 2021: (i) obtain and deliver to Lender and the Title Company the Survey, (ii) cause the Title Company to endorse the Title Policy provided at Closing to fully comply with the requirements of Section 4.1(s) above, and (iii) cure any material and adverse issues revealed by the Survey to Lender’s reasonable satisfaction, provided that if such cure extends beyond August 15, 2021, Borrower shall not be in default hereunder so long as Borrower diligently proceeds with curing and resolves the same within a reasonable period of time thereafter.

(u)Consultants’ Reports and Certificates.

(i)Insurance Consultant’s Report and Certificate. Lender shall have received a report from the Insurance Consultant with respect to the Project, including a review of the adequacy of the Project’s insurance policies, in form and substance satisfactory to Lender.

(ii)Independent Engineer’s Report and Certificate. Lender shall have received a report from the Independent Engineer with respect to the Project in form and substance satisfactory to Lender.

(iii)Environmental Consultant’s Report and Certificate. Lender shall have received (A) (1) the Environmental Report, and, if applicable, (2) (I) an update prepared by the Environmental Consultant to the Environmental Report in the event that the Environmental Report (or any material component thereto) has exceeded its one hundred eighty (180)-day period, but not yet exceeded its one (1)-year period, of validity under the applicable ASTM standards, or (II) a new Phase I Environmental Site Assessment prepared by the Environmental Consultant in the event that the Environmental Report has exceeded its one (1)-year period of validity under the applicable ASTM standards, each in form and substance reasonably satisfactory to Lender, and (B) a reliance letter from the Environmental Consultant with respect to the right of Lender and Borrower to rely on the Environmental Report, update and new Phase I Environmental Site Assessment, if applicable.

(v)Patriot Act Compliance. Lender shall have received all such documentation and information requested by Lender that are necessary (including the name, address, tax payer identification, Form W-9, organizational documents, copies of government issued identification and names of officers of each Borrower Party and controlling members of each Borrower Party) for Lender to identify each Borrower Party in accordance with any applicable Anti-Terrorism Laws and the requirements of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub.

L. 107-56 (a/k/a the Patriot Act) (including the “know your customer” and similar regulations thereunder).

(w)Closing Certificate. Lender shall have received a closing certificate, dated the Closing Date, signed by a Responsible Officer of Borrower, in form and substance reasonably acceptable to Lender, certifying, among other things, that the conditions set forth in this Section 4.1 have been satisfied.

IV.2Credit Events. The obligation of Lender to make any Loan (a “Credit Event”) is, in each case, subject to the prior satisfaction of the conditions set forth in Section 4.1 and each of the following conditions (each of which shall have been confirmed in a certificate of a Responsible Officer of Borrower):

(a)Closing Date. The Closing Date shall have occurred.

(b)Representations and Warranties. Each representation and warranty of each Borrower Party set forth in the Financing Documents shall be true and correct in all material respects (except if such representation is already qualified by reference to materiality, Material Adverse Effect, or a similar materiality qualifier (including a dollar threshold), in which case such representation and warranty shall be true and correct without regard to materiality) as of the date of such Credit Event (or, if any representation or warranty is stated to have been made as of a specific date, as of such specific date).

(c)No Default or Event of Default. No Default or Event of Default shall have occurred and be continuing or shall occur as a result of the occurrence of such Credit Event.

(e)Transaction Costs. Borrower shall have paid all fees, costs and other expenses, and all other amounts, then due and payable by Borrower pursuant to this Agreement.

(f)Notice of Borrowing. With respect to any Loan, Lender has received a Notice of Borrowing in accordance with Section 2.1(b) and Lender has determined that the amount of the requested Loan is consistent with the Draw Schedule and not greater than the available amount under the Commitment.

(g)Consent and Agreements. Lender shall have received each fully executed Consent and Agreement.

(h)Project Budget and Schedule. Borrower shall have furnished to Lender an updated Project Budget and Schedule, which updated Project Budget and Schedule shall be subject to Lender’s consent (such consent not to be unreasonably withheld, conditioned, or delayed).

(i)Additional Equity Contribution. In the event that, on or prior to the date of such Credit Event, the amount of the Initial Equity Contribution is less than the Equity

Contribution Requirement, Lender shall have received evidence from Borrower reasonably satisfactory to Lender (including copies of invoices and other documentation) that Borrower has contributed for the payment of Project Costs an amount equal to the difference between (i) the Equity Contribution Requirement less (ii) the Initial Equity Contribution.

(j)Material Project Documents. Borrower shall have furnished to Lender a true and correct copy of any Material Project Document not previously furnished to Lender, including any amendments, modifications, and change orders thereto.

(k)Permits. Borrower shall have furnished to Lender a true and correct copy of any Permit obtained by or on behalf of (i) Borrower, or (ii) any other Borrower Party with respect to the Project, not previously furnished to Lender, including any applications for such Permits, related material correspondence with Governmental Authorities, and Permit amendments and modifications.

(l)Draw Schedule. Borrower shall have furnished to Lender an updated Draw Schedule, if Borrower is requesting any modification to the Draw Schedule previously approved by Lender, which updated Draw Schedule shall be subject to Lender’s consent (such consent not to be unreasonably withheld, conditioned, or delayed).

(m)Title Insurance. Lender shall have received a date-down endorsement to the Title Policy to be issued and complying with the pending disbursement provisions to be set forth in the Title Policy (the “Date Down Endorsement”). Each Date Down Endorsement shall (i) extend the effective date of the Title Policy to the date of advancement of such Loans and show that since the effective date of the Title Policy (or the effective date of the last such endorsement, if any) there has been no change in the status of Borrower’s title to the real estate interests with respect to the Project Site and no new Lien thereon, other than matters constituting Permitted Liens, (ii) state the amount of coverage then existing under the Title Policy which shall not be less than the total of all disbursements of the applicable Loans, including the disbursement which is made concurrently with issuance of such Date Down Endorsement, (iii) provide coverage for any mechanic’s and materialman’s liens recorded as of the effective date of the Date Down Endorsement, and (iv) be substantially in the form of Exhibit E.

(n)Independent Engineer Certificate. Lender shall have received a certificate, duly executed and delivered by the Independent Engineer, in the form of Exhibit F.

(o)Credit Event Certificate. Lender shall have received a certificate, dated the date of the Credit Event, signed by a Responsible Officer of Borrower, in form and substance reasonably acceptable to Lender, certifying, among other things, that the conditions set forth in this Section 4.2 have been satisfied.

(p)Schedule Updates. Lender shall have received an update of the Schedules attached to this Agreement in form and substance reasonably satisfactory to Lender.

Article V
REPRESENTATIONS AND WARRANTIES

128Borrower hereby makes each of the following representations and warranties to and in favor of Lender on the Closing Date and on the date of each Credit Event:

V.1No Change. As of the Closing Date, there is not, and as of each date this representation is made after the Closing Date, there has not occurred at any time since the Closing Date, any event, occurrence, effect, or circumstance of whatever nature that has, or could reasonably be expected to have, a Material Adverse Effect.

V.2Existence; Compliance with Legal Requirements. Each Borrower Party (a) is a corporation, limited liability company, or limited partnership duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has the power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, (c) is duly qualified as a foreign corporation or other organization and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification, except where the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect, and (d) is in compliance with all Legal Requirements except if such non-compliance would not reasonably be expected to have a Material Adverse Effect.

V.3Power; Authorization; Enforceable Obligations. Each Borrower Party has the power and authority, and the legal right, to make, deliver and perform the Financing Documents to which it is a party and to obtain extensions of credit and grant liens hereunder and thereunder. Each Borrower Party has taken all necessary organizational action to authorize the execution, delivery, and performance of the Financing Documents to which it is a party, including the granting of Liens pursuant to the Financing Documents and the extensions of credit on the terms and conditions set forth herein. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the extensions of credit hereunder or with the execution, delivery and performance of any Financing Document by each Borrower Party that is a party thereto, except (a) consents, authorizations, filings and notices which have been obtained or made and are in full force and effect or that are described in Schedule 2, (b) the filings referred to in Section 5.18 and (c) consents, authorizations, filings and notices which, if not obtained or made, could not reasonably be expected to result in a Material Adverse Effect. Each Financing Document has been duly executed and delivered on behalf of each Borrower Party that is a party thereto. Each Financing Document constitutes a legal, valid, and binding obligation of each Borrower Party that is a party thereto, as applicable, enforceable against such Borrower Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). The execution, delivery, and performance by each Borrower Party of each Financing Document to which it is a party does not require the approval or consent of any holder or trustee of any Indebtedness or other obligations of any Borrower Party which has not been obtained.

V.4No Legal Bar. The execution, delivery and performance of this Agreement and the other Financing Documents, the Borrowings and the use of the proceeds thereof (a) will not conflict with or result in a violation or breach of any terms of any (i) Legal Requirements except for any such violation of a Legal Requirement that could not reasonably be expected to have a Material Adverse Effect, (ii) certificate of formation, partnership certificate, articles of incorporation, bylaws, limited liability company agreement or limited partnership agreement of any Borrower Party or (iii) Contractual Obligation of any Borrower Party, except in each case of this clause (iii), any such conflict, violation or breach that could not reasonably be expected to have a Material Adverse Effect, and (b) will not result in, or require, the creation or imposition of any Lien on the Collateral (in each case, other than the Liens created by the Security Documents).

V.5Ownership. As of the Closing Date, the organizational chart attached as Schedule 4 is a true, correct, and complete organizational chart showing the ownership of the Borrower Parties.

V.6Litigation. Other than listed on Schedule 5 (as updated pursuant to Section 4.2(p)), no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to Borrower’s Knowledge, threatened by or against any Borrower Party or against any of their respective properties or revenues, involving more than, individually or in the aggregate, Five Hundred Thousand Dollars ($500,000) with respect to Borrower or the Project, or Ten Million Dollars ($10,000,000) with respect to any of the other Borrower Parties.

V.7Title.

(a)Borrower has good and indefeasible, and with respect to real property, good and indefeasible title to the Project Site, the assets then owned or leased by it that comprise the Project as of such date and all of the Collateral then existing relating to the Project, free and clear of all Liens, encumbrances, or other exceptions to title other than Permitted Liens. No Borrower Party has received any written notice (i) that any of the real property comprising the Project Site is subject to any condemnation proceeding or (ii) of any unrecorded rights of third parties other than Permitted Liens. The real property comprising the Project Site is sufficient for the intended installation of the Project. Upon proper recordation of the Mortgage and the filing of any applicable UCC financing statements, the Liens of the Mortgage constitute a valid and subsisting first priority lien of record on the Collateral described in the Mortgage subject to Permitted Liens and a first priority perfected security interest in all the personal property described in the Security Documents that may be perfected by filing, subject (with respect to priority) to no Liens except Permitted Liens that, pursuant to applicable law, are entitled to a higher priority than the Liens of the Mortgage.

(b)The Project Site is the real property described in Schedule A of the Title Policy.

(c)To Borrower’s Knowledge, the Project Site is not burdened by any encumbrances or title defects not listed in Schedule B to such Title Policy or shown on the Survey that would materially interfere with the construction or operation of the Project.

(d)To Borrower’s Knowledge, none of the Permitted Liens or exceptions in the Title Policy will materially adversely affect the construction or operation of the Project.

(e)To Borrower’s Knowledge there are no conditions or circumstances on the Project Site that are in violation of any laws, ordinances, orders, rules, regulations, or requirements of federal, state, or municipal governments, courts, departments, commissions, or boards, and Borrower has not received notice from any Governmental Authority of any such violation.

(f)[intentionally deleted]

(g)Borrower has not granted any right or option to any other party to purchase the Project Site and Borrower is not currently obligated to sell, encumber, or transfer the Project Site.

(h)No labor has been performed or material furnished by or at the direction of Borrower with respect to the Project Site for which Borrower is liability or the Project Site bound which has not been fully paid when due.

(i)To Borrower’s Knowledge, there exist no parties in possession of any portion of the Project Site and there are no leases, tenancies, options, rights of first refusal, or similar rights affecting the Project Site, and there is no adverse claim to the Project Site asserted by any person or entity.

(j)No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to Borrower’s Knowledge, threatened by or against the Project Site which might result in any condition which would adversely affect the Project Site or Borrower right or title thereto. Borrower has not received any written notice of and has no knowledge of any condemnation or eminent domain proceedings existing or threatened with respect to the Project Site.

V.8Environmental.

(a)(i) The Project has been and will be constructed, owned, operated and maintained in material compliance with all applicable Environmental Laws; (ii) no Borrower Party is in material violation, or has received any written notice of any actual or alleged violation, of any Environmental Law; (iii) no Borrower Party and, to Borrower’s Knowledge, no third party has used, Released, generated, treated or stored any Hazardous Substances at or from the Project Site, or disposed or arranged for disposal of Hazardous Substances at any off-site location in violation of Environmental Law; (iv) to the knowledge of each Borrower Party and except as set forth on Schedule 7, there are no underground storage tanks, aboveground storage tanks or surface impoundments, whether operative or temporarily or permanently closed, located on the Project Site; (v) there are no Hazardous Substances used, stored or present at or on the Project Site in violation of Environmental Law ; (vi) except as set forth on Schedule 7, there are no Hazardous Substances used, stored or present at or on the Project Site in quantities or concentrations that would require notification to any Governmental Authority, or investigation or response under Environmental Law; and (vii) to each Borrower Party’s knowledge, there is and has been no condition, circumstance, action, activity or event that could reasonably be expected

to form the basis of any material violation of or liability under Environmental Law with respect to the Project or Project Site, or any Environmental Claim against Lender or any Borrower Party.

(b)There is no pending or, to the knowledge of any Borrower Party, threatened Environmental Claim and, to the knowledge of any Borrower Party, there is no proceeding, investigation, or inquiry by or before any Governmental Authority or third party pertaining to the Project, the Project Site, or any Borrower Party.

(c)Except as expressly set forth in the Permits, to the knowledge of any Borrower Party, no material land use restrictions, institutional controls or engineering controls have been or reasonably could be expected to be imposed under Environmental Laws with respect to the Project Site, or to Borrower’s Knowledge no other restrictions on the Project have been or reasonably could be expected to be imposed on the Project pursuant to any Environmental Laws that would prevent, suspend, enjoin, or materially adversely impact the construction or operation of the Project.

V.9Permits.

(a)No material Permits are necessary for the Project under any Governmental Rule other than the Permits described in Schedule 8 (as updated pursuant to Section 4.2(p)). As of the date of each Credit Event, each Permit that is required to be obtained by or on behalf of Borrower as of such date is either (i) in the case of those Permits listed in Part I of Schedule 8 (as updated from time to time), validly issued and in full force and effect and, if an appeal period for issuance of the Permit is specified by a Governmental Rule, such appeal period has expired and no judicial or administrative proceedings are pending or, to Borrower’s knowledge, threatened that may allow material modification, suspension or revocation; or (ii) in the case of those Permits listed in Part II of Schedule 8, of a type that is routinely granted on application, is reasonably expected to be obtained by or on behalf of Borrower on or before the date required under Applicable Law or any Material Project Document, that is ministerial in nature and that is not required to be obtained in light of the status of siting, construction and operation as of the date of the applicable Credit Event. None of the Permits listed in Part I of Schedule 8 have been materially modified, amended, or supplemented except as otherwise permitted under this Agreement. None of Borrower, or to Borrower’s knowledge, its agents and representatives, is in material violation of any Permit and no Permit is subject to any material restriction, condition, limitation, or suspension that reasonably could be expected to result in any material liability of any Borrower Party.

(b)Except as set forth in Schedule 8, as of the date of each Credit Event, Borrower and, to Borrower’s knowledge, each of the other counterparties to Material Project Documents, possesses all material licenses, Permits, franchise, patents, copyrights, trademarks and trade names, or rights thereto necessary to perform its duties as of such date under the Material Project Document to which it is a party, and Borrower is not in violation of any valid rights of another Person with respect to any of the foregoing, in each case which could reasonably be expected to have a Material Adverse Effect.

V.10No Default. No Default or Event of Default has occurred and is continuing.

V.11Financial Statements. The financial statements delivered pursuant to Section 4.1(h) or Section 6.1, as applicable, present(s) fairly in all material respects the financial position of the applicable Borrower Parties as at the date of such financial statements and their results of operations and cash flows for the period then ended, and have been prepared in conformity with GAAP, applied on a consistent basis (in the case of unaudited financial statements, subject to normal year-end adjustments), as applicable.

V.12Taxes.

(a)Each Borrower Party has filed or caused to be filed all Tax returns that it is required to file, and all such Tax returns are accurate and complete in all material respects. No written claim has been made by a Governmental Authority in a jurisdiction where a Borrower Party does not file Tax returns that such Person is or may be subject to taxation by the jurisdiction. Each Borrower Party has paid, or caused to be paid, all Taxes payable by or with respect to such Person or upon their respective properties, assets, income, businesses, and franchises, other than any such Taxes the non-payment of which is permitted under Section 6.3.

(b)There are no Liens for Taxes against any assets or properties of any Borrower Party other than inchoate Liens for Taxes not yet due and payable.

(c)Other than as set forth in Schedule 9 (as updated pursuant to Section 4.2(p)), with respect to each Borrower Party, there are no Tax audits, claims, suit, proceedings, investigations, or examination by any Governmental Authority pending or, to the knowledge of such entities, threatened against such entities. Other than as set forth in Schedule 9 (as updated pursuant to Section 4.2(p)), there are no agreements or consents currently in effect for the extension or waiver of the time for assessment or collection of any Taxes relating to any Borrower Party, and none of any Borrower Party has been requested to enter into any such agreement or consent. No power of attorney is currently in effect with respect to any Taxes of any Borrower Party.

(d)Other than as set forth in Schedule 9 (as updated pursuant to Section 4.2(p)), none of any Borrower Party (i) has entered into any agreement with any Governmental Authority that would affect the amount of Taxes due by it, (ii) has any liability for the Taxes of any other Person (A) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign law) or (B) as a transferee or successor or otherwise by operation of law, or (iii) is a party to any Tax sharing, Tax allocation, Tax indemnity or similar agreement.

(e)Borrower is, and has been at all times since its formation, an entity disregarded as separate from its owner for federal and state income Tax purposes. No election has been made pursuant to Treasury Regulation Section 301.7701-3(c)(1) or any corresponding provision of state law to classify Borrower as an entity other than a disregarded entity or partnership for federal or state income Tax purposes. Each of the other Borrower Parties is a corporation, taxable as a corporation, for which no election has been made pursuant to Section 1362(a)(1) of the Code. Each Borrower Party (or if such Person is a disregarded entity for federal and state income Tax purposes, the entity from which it is disregarded) has, since its formation, been a U.S. Person not subject to withholding under Section 1446 of the Code.

(f)Other than as previously disclosed in writing to Lender, no Borrower Party, Affiliate of a Borrower Party or any other Person acting on behalf of any of the foregoing has applied to the IRS for a private letter ruling, closing agreement or any similar item or agreement with respect to any Borrower Party or the Project, including any application or request for such item that has been withdrawn.

(g)Other than as previously disclosed in writing to Lender, none of any Borrower Party has made any material elections with respect to Taxes, and no Borrower Party or any Affiliate thereof has made any Tax elections with respect to the Project.

V.13Employee and ERISA Matters. Neither Borrower nor Holding Company has any employees or any former employees or has engaged in any unfair labor practice that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Borrower Party sponsors, maintains, participates in, contributes to, or has any liability in respect of any ERISA Plan. Without limiting the generality of the foregoing, there are no ERISA Plans, Multiemployer Plans or Foreign Plans for which any Borrower Party is reasonably likely to incur any material liability. No ERISA Event has occurred or is reasonably expected to occur.

V.14Investment Company Act. Borrower is not an “investment company,” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940. Borrower is not a “covered fund” under the Volcker Rule (Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act).

V.15Use of Proceeds. The proceeds of the Loans have been and will be applied in accordance with the uses described in Section 6.10.

V.16Material Project Documents. Except as has been previously disclosed in writing to Lender, none of the Material Project Documents has been amended, modified, or terminated, and each such Material Project Document is in full force and effect. No Borrower Party has received any notice, and has no knowledge, of any default, or alleged default, under any of the Material Project Documents.

V.17Accuracy of Information. No statement or information contained in this Agreement, any other Financing Document or any other report, document, certificate or written statement furnished by or on behalf of any Borrower Party or any of its respective Affiliates to Lender, or any of them, for use in connection with the transactions contemplated by this Agreement or the other Financing Documents or pursuant to the terms of the Financing Documents, taken as a whole, when furnished, contains as of the date such statement, information, report, document or certificate was so furnished (taking into account any updated or supplemental information), any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading in light of the circumstances in which such statements were made, where such untrue material fact or omission could reasonably be expected to have a Material Adverse Effect.

V.18Security Documents.

(a)Each of the Security Documents is effective to create in favor of Lender a legal, valid, and enforceable Lien on, and security interest in, the Collateral described therein and

proceeds thereof as security for the Obligations. All such action as is necessary on the part of the Borrower Parties to take has been taken to establish and perfect Lender’s rights in and to, and first priority Lien on and security interest in, the Collateral thereunder, including any recording, filing, registration, giving of notice or other similar action.

(b)In the case of the Collateral described in such Security Documents as to which a security interest can be perfected by filing or recordation, when the financing statements and other filings specified on Schedule 3 in appropriate form are filed in the offices specified on Schedule 3, the Lien on, and security interest in, such Collateral shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Borrower and Holding Company (as applicable) in such Collateral and the proceeds thereof as security for the Obligations, in each case prior and superior in right to any other Person, subject (with respect to priority) to no Liens except Permitted Liens that, pursuant to applicable law, are entitled to a higher priority than the Liens of the Mortgage. The financing statements and other filings on Schedule 3 in appropriate form have been duly filed or recorded in each office and in each jurisdiction where required in order to create, perfect, and maintain perfected the first Lien and security interest described above.

(c)Borrower has delivered or caused to be delivered to Lender (or otherwise provided Lender with control of) all Collateral that requires or allows for perfection of the Lien and security interest thereon by control or possession.

V.19Solvency. After giving effect to the transactions contemplated by the Financing Documents and the obligations of the Borrower Parties evidenced thereby, none of any Borrower Party is “insolvent,” as such term is used or defined in any applicable Bankruptcy Law, and each Borrower Party has and will have assets which, fairly valued, exceed its indebtedness, liabilities, or obligations. None of any Borrower Party is executing any Financing Document with any intention to hinder, delay or defraud any present or future creditor or creditors.

V.20Indebtedness. None of any Borrower Party has any outstanding Indebtedness (other than Permitted Indebtedness) or other liabilities or Liens (other than Permitted Liens), in each case other than pursuant to or allowed by the Financing Documents. None of any Borrower Party has any material Guarantee obligations, contingent liabilities, liabilities for Taxes, long-term leases or unusual forward or long-term commitments, including any material interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives that are prohibited by the terms of the Financing Documents.

V.21Senior Indebtedness. The Obligations constitute senior secured and first priority Indebtedness of Borrower, subject (with respect to priority) to Permitted Liens that, pursuant to applicable law, are entitled to a higher priority than the Liens of the Mortgage.

V.22Force Majeure. Other than as set forth in Schedule 10 (as updated pursuant to Section 4.2(p)), no Force Majeure Delay has been declared under any Construction Agreement which could reasonably be expected to have a Material Adverse Effect.

V.23Partnerships and Joint Ventures. Borrower is not a general partner or a limited partner in any general or limited partnership or joint venturer in any joint venture or a member in any limited liability company.

Article VI
AFFIRMATIVE COVENANTS

129Borrower covenants and agrees with Lender that, from the Closing Date and until the Discharge Date, it shall, and shall cause each Borrower Party to, abide by the following affirmative covenants:

VI.1Financial Statements. Furnish to Lender:

(a)as soon as available, but in any event within ninety (90) days after the end of each fiscal year of Parent (commencing with the fiscal year ending [December 31, 2021]), the audited consolidated balance sheet of Parent as at the end of such year and the related audited consolidated statements of income and of cash flows for such year, in each case setting forth comparative figures for the previous fiscal year, certified by a firm of nationally recognized independent certified public accountants (and such accountants certificate shall not be qualified);

(b)as soon as available, but in any event not later than sixty (60) days after the end of each quarterly period of each fiscal year of Borrower and Parent (beginning with the fiscal quarter ending June 30, 2021), the unaudited consolidated balance sheets of the Borrower and Parent as at the end of such quarter and the related unaudited consolidated statements of income and of cash flows for such quarter and the portion of the fiscal year through the end of such quarter, in each case setting forth comparative figures for the corresponding dates and periods in the previous fiscal year, certified by a Responsible Officer of the applicable Borrower Party (and such certificate shall provide that such financial statements present fairly in all material respects the financial condition of the applicable Person, as of the date thereof and its results of operations and cash flows for the period then ended, and such financial statements have been prepared in conformity with GAAP applied on a consistent basis, subject to normal year-end adjustments); and

(c)as soon as available, but in any event not later than sixty (60) days after the end of each quarterly period of each fiscal year of Parent (beginning with the fiscal quarter ending June 30, 2021), a calculation of the Tangible Net Worth of Parent.

All such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods.

VI.2Certificates; Other Information. Furnish to Lender:

(a)concurrently with the delivery of any financial statements pursuant to Section 6.1, a certificate of a Responsible Officer of Borrower stating that no Default or Event of Default has occurred and is continuing, except as specified in such certificate; and

(b)promptly, such additional financial and other information as Lender may from time-to-time reasonably request.

VI.3Taxes, Other Government Charges and Utility Charges.

(a)File, and cause the other Borrower Parties to file, all federal, state and local Tax returns and reports that are required to be filed by it under Governmental Rules and pay, or cause to be paid, as and when due and prior to delinquency, all Taxes, assessments and governmental charges of any kind that may at any time be assessed or levied against or with respect to any Borrower Party or the Project, all utility and other charges incurred in the ownership, operation, maintenance, use, occupancy and upkeep of the Project, and all assessments and charges lawfully made by any Governmental Authority for public improvements that may be secured by a Lien on the properties of any Borrower Party or the Project; provided, that a Borrower Party may contest in good faith any such Taxes, assessments and other charges and, in such event, may if permitted by Governmental Rules, permit the Taxes, assessments or other charges so contested to remain unpaid during any period, including appeals, when such Borrower Party is in good faith contesting the same by appropriate proceedings, so long as (i) adequate cash reserves reasonably satisfactory to Lender have been established on such Borrower Party’s books to pay any such Taxes, assessments or other charges, accrued interest thereon and any potential penalties or other costs relating thereto, or other adequate provision for the payment thereof which shall be reasonably satisfactory to Lender shall have been made, (ii) enforcement of the contested Tax, assessment or other charge is effectively stayed for the entire duration of such proceedings and such contest shall not involve any substantial danger of the sale, forfeiture or loss of the Project and (iii) any Tax, assessment or other charge determined to be due, together with any interest or penalties thereon, will be promptly paid in full when due after resolution of such contest.

(b)Each Borrower Party shall maintain its status for federal, state, and local income tax purposes as represented in Section 5.12(e).

VI.4Maintenance of Existence; Compliance.

(a)(i) Preserve, renew, and keep in full force and effect, and cause the other Borrower Parties to preserve, renew and keep in full force and effect, such Borrower Party’s existence as a limited liability company, partnership or corporation, as applicable, in its jurisdiction of organization and (ii) take reasonable actions to maintain all rights, privileges, and franchises necessary or desirable in the normal conduct of Borrower’s business, except to the extent that a failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

(b)Comply with all Contractual Obligations of Borrower and Legal Requirements applicable to Borrower, except to the extent that failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

VI.5Insurance.

(a)Maintain, through either an individual policy or as part of a group policy maintained by or for Borrower, with financially sound and reputable insurance companies, insurance in the coverages, insured amounts and deductible levels as are commercially reasonable in light of Prudent Industry Practices (the “Required Insurance”). If Borrower fails to take out or maintain the full insurance coverage required by this Section 6.5, Lender, upon ten

(10) Business Days’ prior written notice (unless the aforementioned insurance would lapse within such period or has already lapsed, in which event notice shall not be required) to Borrower of any such failure, may (but shall not be obligated to) take out the required policies of insurance and pay the premiums on the same.

(b)All policies required to be maintained pursuant to this Agreement shall name Lender additional insured thereunder as its interests may appear and shall provide that all proceeds (except with respect to proceeds of general liability, automobile liability, umbrella liability and workers’ compensation insurance) be payable to Lender as its interests may appear.

VI.6Inspection of Property; Books and Records; Discussion. Maintain, and cause the other Borrower Parties to maintain, all financial records in accordance with GAAP and permit any Persons designated by Lender, to visit and inspect such Borrower Party’s financial records and Borrower’s properties (including the Project and the Project Site) at reasonable times, upon reasonable (but in no event less than forty-eight (48) hours’) prior notice to such Borrower Party, and as often as reasonably requested and to make extracts from and copies of such financial records and, upon the occurrence and during the continuation of an Event of Default, permit any Persons designated by Borrower upon reasonable prior notice to such Borrower Party to discuss the affairs, finances and condition of such Borrower Party with the officers thereof and independent accountants therefor (subject to reasonable requirements of confidentiality, safety requirements and other requirements imposed by law or by contract).

VI.7Notices. Promptly upon receiving written notice or giving written notice, or upon obtaining knowledge, of the applicable event, give notice to Lender of the following (it being understood that delivery of such notice shall not be deemed to result in a waiver of any Default or Event of Default arising from any of the matters notified):

(a)the occurrence of any Default or Event of Default, followed by, as soon as practicable (and, in any event, within five (5) Business Days following delivery of such notice), a statement of a Responsible Officer of Borrower setting forth details of such occurrence and stating what action Borrower or other relevant Person proposes to take with respect thereto;

(b)any pending or known threatened litigation, action or proceeding involving any Borrower Party or the Project, to the extent any such litigation or proceeding (i) involves claims against any Borrower Party or the Project which exceeds One Hundred Thousand Dollars ($100,000) with respect to Borrower or the Project, or at the time public disclosure is required by applicable law with respect to any of the other Borrower Parties, (ii) seeks injunctive, declaratory or similar relief with respect to the Borrower, Parent, Project or Financing Documents, or (iii) relates to any Financing Document and involves a claim that such Financing Document, or any condition or term thereof, is not valid, binding or enforceable or a claim against or of Lender and, in the case of this clause (iii), would reasonably be expected to have a Material Adverse Effect if determined adversely to Lender;

(c)any dispute or disputes which may exist between Borrower and any Governmental Authority, and which involve (i) claims against the Borrower or the Project; (ii) injunctive, declaratory, or similar relief with respect to the Borrower, Parent, Project, Project Site or Financing Documents; or (iii) any Liens for Taxes due but not paid;

(d)the occurrence of any Event of Loss, whether or not insured;

(e)any cancellation or material change in the terms, coverages or amounts of any insurance comprising Required Insurance;

(f)the occurrence of any ERISA Event that could reasonably be expected to result in any Borrower Party incurring liability;

(g)the occurrence of any event or condition that has had or could reasonably be expected to have a Material Adverse Effect;

(h)any written notice from any Governmental Authority initiating or threatening the commencement of an investigation or proceedings against the Project, in each case, that could reasonably be expected to have a Material Adverse Effect;

(i)any notice or request for information from the Occupational Health and Safety Administration (or similar Governmental Authority investigating occupational or workplace safety) with respect to the Project Site; and

(j)such other information respecting the business, condition (financial or otherwise), operations, performance, or properties of any Borrower Party or that relates to the ability of any Borrower Party to perform its obligations under the Financing Documents to which it is party, in each case as Lender may from time-to-time reasonably request.

VI.8Further Assurances. From time to time as necessary or reasonably requested by Lender, execute, acknowledge, record, register, deliver and/or file (or cause the other Borrower Parties to the take the foregoing actions with respect to) all such notices, statements, instruments and other documents (including any memorandum of lease or other agreement, financing statement, continuation statement, fixture filing, certificate of title, subordination agreement or estoppel certificate) relating to the Loans and other Obligations stating the interest and charges then due and any known defaults, and take such other steps as may be necessary or advisable to render fully valid and enforceable under all Governmental Rules the rights, Liens and priorities of Lender with respect to all Collateral and other security from time to time furnished under this Agreement and the other Financing Documents or intended to be so furnished, in each case, in such form and at such times as shall be necessary or reasonably requested by Lender, and pay all reasonable fees and expenses (including attorneys’ fees) incident to compliance with this Section 6.8.

VI.9Separateness. Comply with the following:

(a)Maintain separate general ledger accounts for each Borrower Party separate from those of each other Borrower Party and any other Affiliate of a Borrower Party;

(b)act solely in such Borrower Party’s name and through its duly authorized officers, managers, representatives, or agents in the conduct of its businesses;

(c)conduct such Borrower Party’s business solely in its own name, in a manner not misleading to other Persons as to its identity (including all oral and written communications (if any), including invoices, purchase orders and contracts);

(d)obtain proper authorization from member(s), director(s) and manager(s) as required by such Borrower Party’s limited liability company agreement or bylaws, as applicable, for all of its limited liability company or corporate actions; and

(e)comply with the terms of such Borrower Party’s limited liability company agreement or bylaws, as applicable.

VI.10Use of Proceeds. Use the proceeds of each Loan solely for the payment of Project Costs described in the Notice of Borrowing for which Lender agreed to make such Loan.

VI.11Membership Interest Certificates and Related Documentation. Include in the limited liability company agreement of Borrower, or cause the limited liability company agreement of Borrower to include, a provision stating that the limited liability company membership interests in Borrower (i) are “securities” within the meaning of and governed by Article 8 and all other provisions of the Uniform Commercial Code as adopted and amended in the state of formation of Borrower from time to time, and (ii) shall be evidenced by one or more certificates that are stamped or otherwise imprinted with language similar to the language set forth in clause (i) above.

VI.12Parent Net Worth.

(a)Cause Parent to maintain, as of (i) the end of each fiscal quarter from the Effective Date through the end of the term of the Parent Guaranty and (ii) the date that Parent incurs, creates, assumes, or permits to exist any Indebtedness, a Tangible Net Worth of not less than one hundred fifty percent (150%) of the Obligations.

(b)In the event that Parent or any Affiliate of Parent incurs, creates, assumes, or permits to exist any Indebtedness in excess of Fifty Million Dollars ($50,000,000) in a single transaction or a series of related transactions, Borrower will, at Lender’s request, obtain, at its own cost, an appraisal conducted by an independent third-party appraiser (such appraiser to be approved by Lender, with such approval not unreasonably withheld, conditioned, or delayed) of the fair market value of all assets of Parent and all Affiliates of Parent that secure such Indebtedness.

VI.13Replacement Guaranty. In the event that any Person owns, directly or indirectly through one or more intermediate entities, more than fifty percent (50%) of the outstanding equity interests in Parent at any time from the Effective Date through the end of the term of the Parent Guaranty, cause such Person to execute and deliver to Lender a parent guaranty in the form of the Parent Guaranty.

VI.14Construction. Make or cause to be made all contracts and do or cause to be done all things reasonably necessary for the designing, engineering, equipping, procuring, and constructing of the Project, in accordance with all material respects with Prudent Industry Practices, the Material Project Documents, and the Project Budget and Schedule, subject to Force

Majeure Delay. Without limiting the generality of the foregoing, Borrower shall diligently pursue and enforce all of its material rights and material remedies under the Material Project Documents, and any other contracts or agreements related to the construction of the Project, and shall ensure that the Project is constructed in accordance with all such contracts and agreements, to the extent applicable, and that all work done on the Project is done in a good and workmanlike manner and in accordance with Prudent Industry Practices. To the extent that Project Costs exceed the sum of the Commitment and the Equity Contribution Requirement, Borrower shall pay such Project Costs in order to complete construction of the Project. Borrower shall use commercially reasonable efforts to achieve (a) Substantial Completion not later than the Scheduled Substantial Completion Date and (b) Final Completion not later than the Scheduled Final Completion Date.

VI.15As-Built Survey. At Final Completion, Borrower shall furnish an electronic copy of a final as‑built survey showing the location of all improvements on the Project Site and otherwise complying with the requirements for the Survey set forth herein.

VI.16Operation of the Project. Following Final Completion:

(a)Borrower shall (i) operate and maintain the Project in good repair, good operating condition, appearance and working order (ordinary wear and tear excepted) in compliance with (A) all Governmental Rules (including those related to food safety); (B) Permits; (C) this Agreement and the other Material Project Documents; (D) the safety regulations and standards adopted under the Occupational Safety and Health Act of 1970, as amended from time to time; (E) any effective Warranties; (F) any written manufacturer’s instructions, guidelines, or recommendations applicable to the Project or any component thereof, except where a failure to do so could not reasonably be expected to adversely impact any effective Warranty for such equipment; (G) all requirements necessary to maintain the insurance policies required pursuant to Section 6.5; and (H) Prudent Industry Practices (including those related to food safety), and (I) the Project Budget and Schedule; (ii) properly service all components of the Project and make, or cause to be made, all repairs reasonably necessary to operate and maintain the Project in such condition; and (iii) promptly replace, or cause to be replaced, all parts and equipment at the Project that may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason whatsoever.

(b)Borrower shall use and operate the Project and the Project Site for the purposes of the operation and maintenance of a controlled environmental agriculture facility to produce and sell Crops and associated products produced at the Project, and for incidental uses related thereto, including those businesses that are reasonably related thereto or reasonable extensions thereof, and for no other use or purpose.

Article VII
NEGATIVE COVENANTS

Borrower covenants and agrees with Lender that, from the Closing Date and until the Discharge Date, Borrower shall, and shall cause each Borrower Party to, abide by the following negative covenants:

VII.1Contingent Liabilities. Except as provided in this Agreement, not become liable as a surety, guarantor, accommodation endorser or otherwise, for or upon the obligation of any other Person or otherwise create, incur, assume, or suffer to exist any contingent obligation as defined by GAAP exceeding One Million Dollars ($1,000,000) by Borrower and Fifteen Million Dollars ($15,000,000) by Parent; provided that this Section 7.1 shall not be deemed to prohibit Borrower from (a) the acquisition of goods, supplies or merchandise in the normal course of operating its business on normal trade credit, (b) the endorsement of negotiable instruments received in the normal course of operating its business, (c) contingent obligations under or in respect of performance bonds, bid bonds, appeal bonds, surety bonds, financial assurances and completion guarantees, indemnification obligations, obligations to pay insurance premiums, take or pay obligations and similar obligations, or private warrant liabilities, in each case incurred in the ordinary course of business and not in connection with Indebtedness for borrowed money, or (d) incurring Permitted Indebtedness. In the event that any Borrower Party or Affiliate of a Borrower Party has outstanding Indebtedness with Lender or its Affiliates, in addition to the Obligations, nothing in this Section shall prohibit Parent from guaranteeing Indebtedness used to pay in full any outstanding Indebtedness in favor of Lender or its Affiliates on or before the maturity date thereof.

VII.2Liens; Negative Pledges. Not create, assume, or suffer to exist any Lien on any of the Collateral, any assets of the Project, real or personal, whether now owned or hereafter acquired, owned by Borrower, except for Permitted Liens.

VII.3Indebtedness. In the case of Borrower, not incur, create, assume, or permit to exist any Indebtedness except the Obligations and any Permitted Indebtedness. In the case of any Borrower Party, not incur, create, assume, or permit to exist any Indebtedness that would result in the Tangible Net Worth of Parent of less than one hundred fifty percent (150%) of the Obligations.

VII.4Asset Dispositions. Borrower shall not, and no other Borrower Party shall cause Borrower to, convey, sell, lease, transfer or otherwise dispose of any Borrower’s Property, engage in any “sale-leaseback” or similar transaction, or merge or consolidate with or into any other Person, or change Borrower’s legal form, or implement any material disposition, other than (a) any sale of the Facility or Borrower permitted by the Option Agreement, and (b) replacements of personal property and equipment in the ordinary course with replacement items of equal or greater value.

VII.5Nature of Business; Permitted Activities. Borrower shall not (a) directly conduct, transact, or otherwise engage in, or commit to conduct, transact, or otherwise engage in, any business or operations or other activity other than those related to its ownership of the Project nor (b) organize, form, or acquire any subsidiaries.

VII.6Distributions. Until Final Completion, not directly or indirectly make or declare any distribution (in cash, property or obligation) on, or other payment on account of, any interest in Borrower, or redeem, purchase or otherwise acquire any interest in Borrower, or permit any holder of any interest in Borrower to withdraw capital from Borrower, or make any payments in respect of any management fees, development fees or similar fees, in each case in excess of the amounts for such distribution, payment, or withdrawal set forth in Project Budget and Schedule.

For the avoidance of doubt, the foregoing shall not restrict Parent from making distributions with respect to the equity interests in Parent.

VII.7Use of Proceeds. Not use, pay, transfer, distribute or dispose of any Loan proceeds in any manner or for any purposes except as provided in Section 6.10.

VII.8Other Changes and Transactions.

(a)Not liquidate, wind-up or dissolve any Borrower Party.

(b)Not allow Borrower to create or acquire any new direct or indirect subsidiaries.

(c)Not directly or indirectly enter into any transaction or series of transactions with or for the benefit of an Affiliate, other than intercompany debt as described in subsection (c) of the definition of Permitted Indebtedness.

VII.9Organizational Changes. Not cause, consent to, or permit any termination, suspension, amendment, modification, assignment, variance, or waiver of timely compliance with any terms or conditions of the certificate of formation (or similar document) or limited liability company agreement of Borrower (other than ministerial amendments or corrections of scrivener’s errors thereto). Not change (a) Borrower’s name, its limited liability company structure or its jurisdiction of organization without written notice to Lender at least thirty (30) days prior to such change, (b) Borrower’s fiscal year without the prior written consent of Lender (such consent not to be unreasonably withheld) or (c) the location of Borrower’s chief executive office, principal place of business or federal identification number without written notice to Lender within thirty (30) days after such change.

VII.10Tax Matters. Not cause, make, permit, or consent to any action or election that would result in (i) classification of any Borrower Party as an association taxable as a corporation under U.S. federal income tax law, or (ii) any Borrower Party becoming a member of an affiliated, consolidated, combined or unitary group (other than the group of which they currently are a member) that files or is required to file Tax returns on a group basis.

VII.11Hazardous Substances.

(a)Not release, and shall cause each Borrower Party not to Release, into the environment any Hazardous Substances in violation of any Environmental Laws or Permits or in a manner, quantity or location that could reasonably be expected to have a Material Adverse Effect.

(b)Not, and shall not allow the Project or the Project Site to be used to, generate, manufacture, produce, process, transfer, contain, store, use or dispose of any Hazardous Substances, except to the extent reasonable or appropriate in connection with the lawful use of the Project in the ordinary course of Borrower’s business, and Borrower shall comply in all respects with all Environmental Laws and Permits in connection with such actions.

VII.12Occupancy. Not, and shall not permit any other Person to, occupy the Project for normal business operations or to otherwise commence the production of crops inside the Project prior to Substantial Completion without the prior written consent of Lender.

VII.13Additional Project Documents. Not enter into any Additional Project Documents without the prior written approval of Lender, not to be unreasonably withheld, conditioned or delayed. Lender shall approve or object (and provide a reasonably detailed list of its objections) to Borrower’s request to approve any Additional Project Documents within five (5) business days of Borrower’s written request therefor. If Lender fails to respond within such five (5) business day period, Borrower may send a second written request, which request shall contain, in bold, capital letters, the following: “THIS NOTICE CONSTITUTES BORROWER’S SECOND NOTICE OF ITS REQUEST FOR CONSENT TO AN ADDITIONAL PROJECT DOCUMENT PURSUANT TO SECTION 7.13 OF THE CREDIT AGREEMENT; LENDER’S FAILURE TO RESPOND TO THIS NOTICE WITHIN FIVE (5) BUSINESS DAYS SHALL BE DEEMED LENDER’S CONSENT TO THE REQUESTED ADDITIONAL PROJECT DOCUMENT.” If Lender fails to respond to such second notice within five (5) business days of receipt, Borrower’s request for consent to the applicable Additional Project Document shall be deemed approved.

VII.14Amendments; Change Orders; Completion.

(a)Other than with respect to amendments, modifications or supplements that (i) are solely of a ministerial, technical or administrative nature and are not adverse to Lender in any material respect or, (ii) are effected to correct a clear and manifest error in the applicable document, (iii) are amendments, modifications or supplements to the [***] and are not adverse to Lender in any material respect, or (iv) are change orders other than those specified as requiring Lender consent in Section 7.14(c) below, not (A) terminate or cancel or consent to or accept any cancellation or termination of, (B) amend, modify or supplement any provision in any material respect of, (C) sell, assign (other than pursuant to the Financing Documents) or otherwise dispose of (by operation of law or otherwise) any part of its interest in, (D) petition, request or take any other legal or administrative action that seeks, or may be expected, to impair or seeks to amend, modify or supplement, or (E) grant any material consent under or waive any material default under, or material breach of, or material provision of or the performance of a material obligation by any other Person under, any Material Project Document or any Permit without first obtaining the written approval of Lender, not to be unreasonably withheld, conditioned or delayed.

(b)Not agree to an extension of the construction period of the Project pursuant to the EPC Agreement, including pursuant to any change order with respect thereto, that would reasonably be expected to cause (i) Substantial Completion to occur more than twelve (12) months after the Scheduled Substantial Completion Date or (ii) Final Completion to occur more than six (6) months after the Scheduled Final Completion Date, in each case without first obtaining the written approval of Lender.

(c)Without the prior written approval of Lender, not (i) not amend or otherwise change the Plans and Specifications in a manner that would reduce the growing area of the Project or that could impair the intended use of the Project as a greenhouse for the production

of Crops, or (ii) execute, direct or consent to any change order with respect to any Construction Agreement if such change order (A) would increase Project Costs by more than Five Hundred Thousand Dollars ($500,000), (B) together with all previous change orders, would increase the Project Costs above the Project Costs set forth in the Project Budget and Schedule in the aggregate by more than One Million Dollars ($1,000,000), (C) together with all previous change orders, would increase any applicable line item(s) in the Project Budget and Schedule in the aggregate by more than fifteen percent (15%), or (D) would reasonably be expected to have a Material Adverse Effect.

(d)Not declare “Substantial Completion” or “Final Completion” (under and as each item is defined, or such similar term used in any Construction Agreement) with respect to the Project, without the prior written approval of Lender, which approval shall not be unreasonably withheld, conditioned, or delayed.

(e)After Final Completion, shall not, without the prior written consent of Lender, make any alteration, modification, addition, or improvement to the Project that impairs (or is reasonably expected to impair) the value of the Project, functionality of the Project, or the ability of the Project to grow, harvest, and pack Crops in accordance with Prudent Industry Practices.

VII.15Abandonment of Project. Not, at any time, willfully and voluntarily abandon and suspend the development, construction, or operation of the Project for a period of more than fifteen (15) consecutive days for any reason other than Force Majeure Delay; provided, that none of (a) scheduled maintenance of the Project or (b) repairs to the Project, whether or not scheduled, shall constitute abandonment so long as Borrower is diligently attempting to end such suspension.

Article VIII
EVENTS OF DEFAULT; REMEDIES

Events of Default

The occurrence of any of the events described in Sections 8.1 through 8.11 shall constitute an event of default (an “Event of Default”) hereunder:

VIII.1Failure to Make Payments. Borrower shall fail to pay, in accordance with the terms of the relevant Financing Document, (i) any principal on any of the Loan Facilities (including any mandatory prepayments payable hereunder) on the date that such sum is due, (ii) any interest or fee on any of the Loan Facilities within five (5) days after the date that such sum is due or (iii) any other cost, charge or other sum due under such Financing Document within ten (10) days after the date Borrower receives written notice that such sum is due.

VIII.2Judgments. A final judgment or judgments shall be entered against any Borrower Party (a) that in the aggregate for all Borrower Parties, exceeds Twenty Million Dollars ($20,000,000) (other than (i) a judgment that is fully covered by insurance, bond or other security or satisfied in full or (ii) a judgment, the execution of which is effectively stayed) or (b) that could reasonably be expected to have a Material Adverse Effect.

VIII.3Misstatements. Any (a) representation or warranty made by any Borrower Party in the Financing Documents, or (b) certificate or any financial statement made or prepared by, under the control of or on behalf of such Borrower Party and furnished to Lender pursuant to any Financing Document (i) shall contain any statement of fact that is untrue or misleading as of the date made or (ii) shall fail to state a material fact necessary to make the statements therein not misleading as of the date made; provided, that no Event of Default shall occur pursuant to this Section 8.3 if the facts or circumstances underlying any such untrue or misleading statement are capable of being cured and, within thirty (30) days of the date on which such Borrower Party obtains knowledge that such untrue or misleading statement has occurred, such Borrower Party has eliminated, corrected or otherwise cured such facts or circumstances.

VIII.4Bankruptcy Event. A Bankruptcy Event shall occur in respect of any Borrower Party.

VIII.5Cross-Default.

(a)Borrower shall default for a period beyond any applicable grace period in the payment of principal, interest, or other amount due under any agreement (other than the Financing Documents) involving the borrowing of money or Indebtedness in excess of One Million Dollars ($1,000,000). Any Affiliate of Borrower shall default for a period beyond any applicable grace period in the payment of principal, interest, or other amount due under any agreement (other than the Financing Documents) involving the borrowing of money in excess of Fifteen Million Dollars ($15,000,000).

(b)The borrowings or Indebtedness under any agreement to which Borrower is a party (other than Financing Documents) become due and payable prior to their scheduled maturity fate, and the outstanding amount of amounts payable under all such agreements exceeds One Million Dollars ($1,000,000) in the aggregate. The borrowings or Indebtedness under any agreement to which any Affiliate of Borrower is a party (other than Financing Documents) become due and payable prior to their scheduled maturity fate, and the outstanding amount of amounts payable under all such agreements exceeds Fifteen Million Dollars ($15,000,000) in the aggregate.

(c)An “Event of Default” (or similarly defined term) of Borrower or any Affiliate of Borrower shall occur under any agreement between Borrower or any Affiliate of Borrower and Lender or any Affiliate of Lender.

VIII.6Breach of Covenants.

(a)Immediate. Borrower shall fail to perform or observe any of the covenants set forth in Sections 6.4(a), 6.10 or Article VII (other than Sections 7.12 through 7.14).

(b)Ten (10)-Day Cure Period. Borrower shall fail to perform or observe any of the covenants set forth in Sections 6.5, 6.7(a), 6.9, 6.12, 7.12, 7.13 and 7.14 and such failure shall continue for a period of ten (10) days; provided, that Borrower may cure Parent’s breach of Section 6.12 by providing to Lender within one (1) Business Day additional security in the form of (i) cash collateral (which shall be subject to an account control agreement setting forth the terms and conditions of any transfer or release of such cash collateral, as acceptable to Lender in

its sole discretion) or (ii) a letter of credit in form reasonably acceptable to Lender from a Qualified Bank, in each case in an amount equal to one hundred fifty percent (150%) of the then-outstanding guaranteed amount under the Parent Guaranty.

(c)Extended Cure Period. Any Borrower Party shall fail to perform or observe any other covenant to be performed or observed by it hereunder or under any Financing Document to which it is a party and not otherwise specifically provided for elsewhere in this Article VIII, and such failure shall continue unremedied for a period of thirty (30) days; provided, that upon notice from Borrower to Lender, such cure period shall be extended to such longer period of time as is reasonably necessary to effect a cure so long as (x) such default could reasonably be expected to be susceptible of a cure after the already expired thirty (30)-day cure period and (y) such Borrower Party is diligently and continuously proceeding to cure, or cause the cure of, such default and so certifies in such notice; provided, further, that such extended cure period shall not exceed ninety (90) days in the aggregate.

VIII.7Invalidity of Financing Documents; Collateral.

(a)Any of the Security Documents or any other Financing Document, once executed and delivered, shall, except as the result solely of the acts or omissions of Lender (except any such omission in respect of which any Borrower Party is expressly obligated under the Financing Documents to which it is a party), fail to provide Lender the first priority Liens, security interest, rights, titles, interest, remedies, powers or privileges intended to be created thereby or cease to be in full force and effect, or the validity or enforceability thereof or the applicability thereof to the Obligations purported to be secured or guaranteed thereby or any part thereof shall be disaffirmed by or on behalf of Lender or any other party thereto.

(b)There shall occur a breach, default or “event of default” (however defined) under any of the Security Documents or other Financing Documents (other than this Agreement) and not otherwise specifically provided for elsewhere in this Article VIII, and such event of default shall not have been cured within the shorter of (i) any cure period provided under such Security Document or Financing Document; and (ii) thirty (30) days after its occurrence provided, that, with respect to clause (ii), upon notice from Borrower to Lender, such cure period shall be extended to such longer period of time as is reasonably necessary to effect a cure so long as (A) such default could reasonably be expected to be susceptible of a cure after the already expired thirty (30)-day cure period and (B) such Borrower Party is diligently and continuously proceeding to cure, or cause the cure of, such default and so certifies in such notice; provided, further, that such extended cure period shall not exceed ninety (90) days in the aggregate.

VIII.8Loss of Collateral. Any substantial portion of the Collateral is seized or appropriated without fair value being paid therefor such as to allow replacement of such property and/or prepayment in full of all Obligations then outstanding and to allow such Borrower Party in Lender’s reasonable judgment to continue satisfying its obligations hereunder and under the other Financing Documents.

VIII.9Change of Control. A Change of Control has occurred.

VIII.10ERISA. (a) One or more ERISA Events that would reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect shall have occurred or (b) any

fact or circumstance shall exist that could reasonably be expected to result in the imposition of a Lien or security interest under Section 430(k) of the Code against Borrower.

VIII.11Compliance with Governmental Orders. Any Borrower Party or any direct or indirect owner of Equity Interests in any Borrower Party shall fail to timely comply with any order, directive, request or similar action or decision of a Governmental Authority relating to the control or ownership of a Project.

Remedies.

Upon the occurrence and during the continuation of an Event of Default, Lender may, without further notice of default, presentment or demand for payment, protest or notice of non-payment or dishonor, or other notices or demands of any kind, all such notices and demands being waived, exercise any or all of the following rights and remedies, in any combination or order that Lender may elect, in addition to such other rights or remedies as Lender may have hereunder, under the Security Documents or at law or in equity:

VIII.12No Further Loans. Refuse to make any additional Loans or make any payments or any proceeds or other funds held under the Financing Documents or on behalf of Borrower.

VIII.13Cure by Lender. Without any obligation to do so, make disbursements or Loans to or on behalf of Borrower to cure any Event of Default hereunder and to cure any default and render any performance of Borrower as Lender in its sole discretion may consider necessary or appropriate, whether to preserve and protect the Collateral or Lender’s interests therein or for any other reason, and all sums so expended, together with interest on such total amount at the Default Rate, shall be repaid by Borrower to Lender on demand and shall be secured by the Financing Documents, notwithstanding that such expenditures may, together with amounts advanced under this Agreement, exceed the amount of the Commitments.

VIII.14Acceleration and Termination of Commitments. Accelerate the Obligations and terminate the Commitments. Anything contained herein or in any other Financing Document to the contrary notwithstanding, upon the occurrence and during the continuation of an Event of Default specified in Section 8.4 with respect to Borrower, the Commitments shall automatically and immediately terminate and the Loans (in each case, with accrued interest thereon), and all other amounts owing under this Agreement and the other Financing Documents shall automatically and immediately become due and payable, and Lender shall be deemed to have made a demand for cash collateral to the full extent permitted under this Agreement, in each case, without presentment, demand, protest or other notice of any kind, all of which are expressly hereby waived by Borrower.

VIII.15Cash Collateral. Apply or execute upon any moneys of any Borrower Party in the manner provided in the UCC and other relevant statutes and decisions and interpretations thereunder with respect to cash Collateral.

VIII.16Possession of Project. Subject to compliance with all applicable Governmental Rules, enter into possession of the Project and perform or cause to be performed any and all work and labor necessary to operate and maintain the Project, and all sums expended by Lender in so doing, together with interest on such total amount at the Default Rate, shall be repaid by

Borrower to Lender upon demand and shall be secured by the Financing Documents, notwithstanding that such expenditures may, together with amounts advanced under this Agreement, exceed the amount of the Commitments.

VIII.17Other Remedies. Exercise any and all rights and remedies available to it under any of the Financing Documents, under the UCC or under Governmental Rules, including judicial or non-judicial foreclosure or public or private sale of any of the Collateral pursuant to the Security Documents.

Article IX
MISCELLANEOUS

IX.1Amendments. Neither this Agreement or any other Financing Document, nor any terms hereof or thereof, may be amended or modified except by written consent of the parties hereto.

IX.2Addresses. Any communications between the parties hereto or regular notices provided herein to be given shall be given to the following addresses:

To Lender: CEFF II AppHarvest Holdings, LLC
c/o Controlled Environment Foods Fund, LLC
411 NW Park Ave, Suite 401
Portland, Oregon 97209
Attn: General Counsel
Email: campbell@eq-cap.com

Copy to: Amis, Patel & Brewer, LLP
1399 New York Ave, NW, Suite 701
Washington, DC 20005
Attn: Rusty Brewer
Email: rustybrewer@apbllp.com

To Borrower: AppHarvest Richmond Farm, LLC
c/o AppHarvest, Inc.
500 Appalachian Way
Morehead, Kentucky 40351
Attn: General Counsel
Email: Derek.Lyons@AppHarvest.com

Copy to: Cooley LLP
One Freedom Square
Reston Town Center
11951 Freedom Drive
Reston, VA 20190-5656
Attn: Susan Stevens Mullen
Email: smullen@cooley.com

Any notice that is personally served shall be effective upon the date of service; any notice given by U.S. Mail shall be deemed effectively given, if deposited in the United States Mail, registered or certified with return receipt requested, postage prepaid and addressed as provided above, on the date of receipt, refusal or non-delivery indicated on the return receipt. In addition, either party hereto may send notices by electronic mail, or by a nationally recognized overnight courier service which provides written proof of delivery (such as U.P.S. or Federal Express). Any notice sent by electronic mail shall be effective upon confirmation of receipt in legible form, and any notice sent by a nationally recognized overnight courier shall be effective on the date of delivery (or rejected delivery) to the applicable party at its address specified above as set forth in the courier’s delivery receipt. Either party may, by notice to the other from time to time in the manner herein provided, specify a different address for notice purposes.

IX.3No Waiver; Cumulative Remedies.

(a)No failure or delay of Lender in exercising any right or power hereunder or under any other Financing Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce any such right or power, preclude any other or further exercise thereof or the exercise of any other right or power.

(b)The rights and remedies of Lender hereunder and under the other Financing Documents are cumulative and are not exclusive of any rights or remedies that it would otherwise have.

IX.4Survival of Representations and Warranties. All representations and warranties made hereunder, in the other Financing Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans and other extensions of credit hereunder.

IX.5Payment of Expenses, Indemnities and Taxes.

(a)Borrower will pay to Lender all of its reasonable and documented third-party and out-of-pocket costs and expenses in connection with the preparation, negotiation, closing and costs of administering this Agreement and the documents contemplated hereby, including the reasonable fees, expenses and disbursements of Lender’s attorneys in connection with the preparation of such documents and any amendments hereof or thereof, or the negotiation, closing or administration of this Agreement, and the reasonable and documented fees, expenses and disbursements of any engineering, insurance, environmental and construction consultants of Lender in connection with this Agreement or the Loans.

(b)Subject to any limitations separately agreed in writing by the relevant parties, Borrower agrees (i) to pay or reimburse Lender for all its costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, including any workout and/or restructuring of the Loans, and the other Financing Documents, including the fees and disbursements of counsel (including the allocated reasonable fees and expenses of in-house counsel) to Lender, (ii) to pay, indemnify, and hold Lender harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other Taxes, if any, that may be payable or determined to be payable in

connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Financing Documents and any such other documents, and (iii) to pay, indemnify, and hold Lender and its officers, directors, employees, affiliates, agents, advisors and controlling Persons (each, an “Indemnitee”) harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses (including reasonable attorneys’ fees and expenses) or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of (or the non-compliance by any party with the terms of) this Agreement and the other Financing Documents, the use of proceeds of the Loans, any of the transactions contemplated by the Financing Documents, the Project, or the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of Borrower and the reasonable fees and expenses of legal counsel in connection with claims, actions or proceedings by any Indemnitee against the Borrower Parties under any Financing Document (all the foregoing in this clause (b), the “Indemnified Liabilities”); provided, that Borrower shall not have any obligation hereunder to any Indemnitee with respect to Indemnified Liabilities to the extent such Indemnified Liabilities are found by a final and non-appealable decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Indemnitee. Without limiting the foregoing, and to the extent permitted by Governmental Rules, Borrower agrees not to assert, and hereby waives, all rights for contribution or any other rights of recovery with respect to all claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature, under or related to Environmental Laws, that it might have by statute or otherwise against any Indemnitee. All amounts due under this Section 9.5 shall be payable not later than ten (10) days after written demand therefor. The agreements in this Section 9.5 shall survive the Discharge Date. Each Indemnitee that is not party to this Agreement shall be a third-party beneficiary of, and entitled to enforce, the provisions of this Section 9.5 as if party hereto.

IX.6Successors and Assigns. This Agreement shall be binding upon each of the parties hereto and each of their permitted successors and assigns, if any. Neither party may assign any of its or their rights or obligations under this Agreement, in whole or in part, to any other Person without obtaining the written consent or approval of the other party; provided, that Lender shall be entitled to assign this Agreement (a) to any of its Affiliates, or (b) in connection with a merger or acquisition of Lender or its Affiliates, in each case, so long as the assignee shall agree to be bound by the terms and conditions of this Agreement.

IX.7Set-off. In addition to any rights and remedies of Lender provided by law, each Lender shall have the right, without notice to the Borrower Parties, any such notice being expressly waived by the Borrower Parties to the extent permitted by Governmental Rules, upon any Obligations becoming due and payable by Borrower (whether at the stated maturity, by acceleration or otherwise), to apply to the payment of such Obligations, by set-off or otherwise, any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by Lender, any

affiliate thereof or any of their respective branches or agencies to or for the credit or the account of Borrower.

IX.8Entire Agreement. This Agreement, together with other agreements attached hereto or referred to herein and the other Financing Documents constitute the entire contract between the parties relative to the subject matter hereof. Any previous agreement among or representations from the parties or their Affiliates with respect to the subject matter hereof is superseded by this Agreement and the other Financing Documents.

IX.9GOVERNING LAW. THIS AGREEMENT AND ANY CLAIM OR CONTROVERSY ARISING HEREUNDER OR RELATED HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE AND WITHOUT REFERENCE TO CONFLICTS OF LAWS (OTHER THAN SECTION 5-1401 AND SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

IX.10Submission to Jurisdiction; Waivers.

(a)Each Borrower Party hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in the Borough of Manhattan, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York state court or, to the extent permitted by law, in such federal court. Each Borrower Party further irrevocably consents to the service of process in any action or proceeding in such courts in any manner permitted by applicable Governmental Rules. Each Borrower Party agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

(b)Each Borrower Party hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New York state or federal court. Each Borrower Party hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

IX.11Severability. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal, or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

IX.12Interpretation. The Section headings in this Agreement are for the convenience of reference only and shall not affect the meaning or construction of any provision hereof.

IX.13Acknowledgements. Each Borrower Party hereby acknowledges that: (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Financing Documents; (b) Lender has no fiduciary relationship with or duty to any Borrower Party arising out of or in connection with this Agreement or any of the other Financing Documents, and the relationship between Lender, on the one hand, and the Borrower Parties, on the other hand, in connection with the Financing Documents is solely that of debtor and creditor; and (c) no joint venture is created hereby or by the other Financing Documents or otherwise exists by virtue of the transactions contemplated hereby among Lender or among the Borrower Parties and Lender.

IX.14Security Documents. Reference is hereby made to the Security Documents for the provisions, among others, relating to the nature and extent of the security provided thereunder, the rights, duties and obligations of the Borrower Parties and the rights of Lender with respect to such security.

IX.15Limitation on Liability. NO CLAIM SHALL BE MADE BY ANY PARTY HERETO, OR ANY OF SUCH PARTY’S AFFILIATES, DIRECTORS, EMPLOYEES, ATTORNEYS OR AGENTS AGAINST ANY OTHER PARTY HERETO OR ANY OF ITS AFFILIATES, DIRECTORS, EMPLOYEES, ATTORNEYS OR AGENTS FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (WHETHER OR NOT THE CLAIM THEREFOR IS BASED ON CONTRACT, TORT, DUTY IMPOSED BY LAW OR OTHERWISE), IN CONNECTION WITH, ARISING OUT OF OR IN ANY WAY RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE OTHER FINANCING DOCUMENTS OR ANY ACT OR OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH; AND EACH PARTY HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY SUCH CLAIM FOR ANY SUCH SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.

IX.16Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY GOVERNMENTAL RULES, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER FINANCING DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.16.

IX.17Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which, when taken together, shall constitute but one contract, and shall become effective when executed and delivered by each Person intended to be a party hereto. Delivery of an executed counterpart to this Agreement by

facsimile transmission or “pdf” electronic format shall be as effective as delivery of a manually signed original.

[Signature pages follow.]

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their respective duly authorized representatives as of the day and year first above written.

LENDER:

CEFF II APPHARVEST HOLDINGS, LLC

By: EqCEF II, LLC, its manager

By: /s/ Nicholas Houshower
Name: Nicholas Houshower
Title: Principal

BORROWER:

APPHARVEST RICHMOND FARM, LLC

By: /s/ Loren Joseph Eggleton
Name: Loren Joseph Eggleton
Title: Chief Financial Officer

[Signature Page to Credit Agreement]

Exhibit 10.5

SECOND AMENDMENT TO RIGHT OF FIRST REFUSAL AGREEMENT

This SECOND AMENDMENT TO RIGHT OF FIRST REFUSAL AGREEMENT (this

“Amendment”) is made as of July 23, 2021 (the “Amendment Effective Date”) by and between Equilibrium Sustainable Foods, LLC, an Oregon limited liability company (“CEFF”), and AppHarvest, Inc., a Delaware corporation (“AppHarvest”). CEFF and AppHarvest are sometimes individually referred to as a “Party” and collectively as the “Parties.” Capitalized terms used but not defined herein shall have the meanings ascribed to them in the ROFR Agreement (as defined below).

RECITALS

WHEREAS, CEFF (as assignee of CEFF US Holdings, LLC, a Delaware limited liability company) and AppHarvest entered into that certain Right of First Refusal Agreement, dated as of May 13, 2019, as amended by that certain Assignment of and First Amendment to Right of First Refusal Agreement, dated as of March 1, 2021 (as amended the “ROFR Agreement”);

WHEREAS, CEFF II AppHarvest Holdings, LLC, a Delaware limited liability company (“Richmond Lender”), an affiliate of CEFF, and AppHarvest Richmond Farm, LLC, a Delaware limited liability company (“Richmond Borrower”), an affiliate of AppHarvest, entered into that certain Credit Agreement, dated as of July 23, 2021 (the “Richmond Credit Agreement”); and

WHEREAS, pursuant to the terms and conditions of the Richmond Credit Agreement, the Parties desire to amend the ROFR Agreement to extend the ROFR Term.

NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein, the sufficiency of which is acknowledged by both Parties, the Parties do hereby agree as follows:

ARTICLE I AMENDMENT

1.1 Amendments. The Parties hereby agree to amend the ROFR Agreement by deleting the text [***] and replacing it with [***] in Section 2.1 thereof.

ARTICLE II MISCELLANEOUS

2.1Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York, excluding any laws thereof which would direct application of law of another jurisdiction.

2.2No Modification. Except as otherwise modified by this Amendment, all terms and conditions of the ROFR Agreement shall remain in full force and effect, and the Parties do hereby ratify and confirm the ROFR Agreement as modified hereby. As of the Amendment Effective Date, the terms and conditions of this Amendment shall be deemed a part of the ROFR Agreement for all purposes and all references to the ROFR Agreement shall hereafter refer to the ROFR Agreement as modified by this Amendment.

2.3Authority. Each Party has duly authorized the execution and delivery of this Amendment and represents that the individual executing this Amendment on behalf of the Party has the legal authority to bind the respective Party.

2.4Binding Agreement. This Amendment shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and assigns.

2.5Counterparts. This Amendment may be executed in any number of counterparts, and by the different Parties in separate counterparts (which may be delivered by electronic mail which attaches a portable document format (.pdf) document), each of which when executed shall be deemed to be an original and all of which, taken together, shall be deemed to constitute one and the same instrument.

[Signature pages follow]

IN WITNESS WHEREOF, this Amendment has been duly executed by the Parties as of and on the Amendment Effective Date.

CEFF:

EQUILIBRIUM SUSTAINABLE FOODS, LLC


By:						/s/ Nick Houshower
Name:						Nicholas Houshower
Title:						Principal

APPHARVEST: APPHARVEST, INC.


By:						/s/ Loren Joseph Eggleton
Name:						Loren Joseph Eggleton
Title:						Chief Financial Officer

Exhibit 10.6

PROMISSORY NOTE

$25,000,000

Chicago, Illinois September 24, 2021

FOR VALUE RECEIVED, APPHARVEST PULASKI FARM, LLC (the “Borrower”) HEREBY PROMISES TO PAY to JPMORGAN CHASE BANK, N.A. (the “Bank”), at its offices located at 270 Park Avenue, New York, New York 10017, or at such other place as the Bank or any holder hereof may from time to time designate, the lesser of (i) the principal sum of TWENTY FIVE MILLION and no/100 DOLLARS ($25,000,000) and (ii) the aggregate unpaid principal amount of the Loans (as hereinafter defined) evidenced hereby, in lawful money of the United States, on September 24, 2022 (the “Maturity Date”) (or such earlier date as shall be specified by the Bank in accordance with the terms of this promissory note (this “Note”)), together with interest on the unpaid principal balance of each Loan at a rate equal to the Applicable Interest Rate (as hereinafter defined).

Interest

Each Loan shall bear interest at the interest rate agreed between the Borrower and the Bank as the interest rate to be paid to the Bank on such Loan in accordance with the terms of this Note (each such rate, the “Applicable Interest Rate”). The Applicable Interest Rate for any Loan shall be, at the Borrower's option and in accordance herewith and accepted by the Bank in its sole discretion, (a) the CB Floating Rate (as hereinafter defined) plus the Applicable Margin (as hereinafter defined) (the “CB Floating Rate Loan(s)”), (b) a fixed rate of interest per annum determined by and available at the Bank in its sole discretion (the “Fixed Rate”) for the applicable Interest Period (as hereinafter defined) (the “Fixed Rate Loan(s)”) or (c) the Adjusted LIBO Rate (as hereafter defined) plus the Applicable Margin (the “LIBOR Loan(s)”, and, together with the CB Floating Rate Loans and Fixed Rate Loans, each a “Loan” and collectively, “Loans”). Interest on each Loan shall be payable in arrears on the last day of the applicable Interest Period for such Loan and, if such Interest Period is in excess of three (3) months, on the last day of each three (3) month interval after the date such Loan is made, at maturity (whether at stated maturity, by acceleration or otherwise) and thereafter, on demand. Any Loan not paid when due shall bear interest at a rate two percent (2%) per annum above the CB Floating Rate plus the Applicable Margin, but in no event higher than the maximum permitted under applicable law. All interest hereunder shall be computed for actual number of days elapsed on the basis of a 360-day year.

The Bank is authorized to enter on the Bank’s books and records, which may be electronic in nature and, at the Bank’s sole and absolute discretion, at any time and from time to time (including, without limitation, prior to any transfer of the Note), on a schedule to be attached to this Note by the Bank: (i) the amount of each Loan, (ii) the date on which each Loan is made, (iii) the date on which each Loan shall be due and payable to the Bank, provided that all Loans shall be due and payable no later than the Maturity Date, (iv) the Applicable Interest Rate to be paid to the Bank on each Loan, (v) the amount of each payment made hereunder and the Loans to which such payment shall be applied (which shall be at the discretion of the Bank), and (vi) the outstanding principal balance of the Loans from time to time. At the discretion of the Bank, any such entries may aggregate Loans (and payments thereon) with the same interest rate and tenor and, if made on a given date, may show only the Loans outstanding on such date. Any such entries shall be conclusive and binding in the absence of manifest error. The failure by the Bank to make any or all such entries shall not relieve the Borrower from its obligation to pay any and all amounts due hereunder.

Prepayment

The Borrower shall not have the right to prepay any Fixed Rate Loan or LIBOR Loan prior to the last day of the applicable Interest Period. In the event the Borrower does prepay a LIBOR Loan or a Fixed Rate Loan prior to the last day of the Interest Period applicable thereto, the Borrower shall reimburse the Bank on demand for any loss incurred or to be incurred by it. CB Floating Rate Loans may be prepaid by the Borrower at any time upon at least 1 Business Day’s (as hereinafter defined) prior written notice the Bank without premium or penalty. Any prepayment of any Fixed Rate Loan or LIBOR Loan prior to the last day of the applicable Interest Period shall be accompanied by the payment on demand of the indemnity amount required under the Indemnity section below. Any prepayment shall also be accompanied by the payment of interest accrued and unpaid on the principal amount to the date of prepayment.

Discretionary Loans by the Bank/Payment

The Bank, pursuant to a letter dated of even date herewith, has approved an uncommitted line of credit (the “Line of Credit”) to the Borrower in a principal amount not to exceed the face amount of this Note. The execution and delivery of this Note and the acceptance by the Bank of this Note shall not be deemed or construed to create any contractual commitment to lend to the Borrower on the part of the Bank. The Bank may, in its sole and absolute discretion, make Loans to the Borrower from time to time pursuant to the Line of Credit. This Note evidences the Borrower’s obligations to repay those Loans. The aggregate outstanding principal amount of the Loans evidenced by this Note is the amount so reflected from time to time in the records of the Bank or a schedule attached hereto. This Note is secured by cash collateral pursuant to an assignment of deposits. Each LIBOR Loan shall be in a minimum principal amount of $500,000 and in increments of $100,000. Each Fixed Rate Loan shall be in integral multiples of

$100,000. Each CB Floating Rate Loan shall be in a minimum principal amount of $100,000. Each request for a Loan shall be made by an officer of the Borrower or other person designated in writing by an officer of the Borrower, all of whom are hereby designated and authorized by the Borrower to request Loans and agree to the terms thereof (including without limitation the Applicable Interest Rate and Interest Period with respect thereto). The Borrower shall give the Bank notice not later than 11:00 a.m. Central time) (i) in the case of a LIBOR Loan, at least three (3) Business Days (as hereinafter defined) prior to the date (which shall be a Business Day) of the proposed borrowing of (or continuation of any existing LIBOR Loan or conversion of any CB Floating Rate Loan or Fixed Rate Loan to) such LIBOR Loan, specifying the Interest Period applicable thereto, and (ii) in the case of a Fixed Rate Loan or CB Floating Rate Loan, by noon (Eastern time) on the date (which shall be a Business Day) of the proposed borrowing of such CB Floating Rate Loan or Fixed Rate Loan, specifying the Interest Period applicable thereto. If no election as to the type of Loan or Interest Period is specified, any requested Loan shall be deemed to bear interest at the applicable CB Floating Rate plus the Applicable Margin and shall have an Interest Period of one month. If no election as to the Interest Period is specified in the case of a LIBOR Loan, the LIBOR Loan shall be deemed to have an Interest Period of one month. The principal amount of each Loan shall be repaid on the earliest to occur of (i) the Maturity Date, (ii) the end of the Interest Period applicable to such Loan, and (iii) the date upon which the entire unpaid balance hereof shall otherwise become due and payable. In addition, Loans shall be prepaid with the proceeds of any reimbursement by the USDA to Borrower for capital expenditures/greenhouse improvements made by Borrower with the proceeds of any Loan; any Loans prepaid by such amount may not be reborrowed.

Increased Costs

If any there is any change, after the date of this Note, to any applicable domestic or foreign law, treaty, government rule or regulation or the interpretation or administration thereof by a governmental authority charged with such interpretation or administration, or compliance by the Bank with any guideline, request or directive of such an authority (whether or not having the force of law) (a “Change in Law”), and

such Change in Law (a) shall affect the basis of taxation of payments to the Bank of any amounts payable by the Borrower under or otherwise with respect to this Note or any other agreements or instruments executed in connection herewith (such other agreements or instruments, collectively the “Related Documents”) (other than Taxes (as hereinafter defined)), or (b) shall impose, modify or deem applicable any reserve, special deposit, liquidity or similar requirement (including, without limitation, any compulsory loan requirement, insurance charge or other assessment) against assets of, deposits with or for the account of, or credit extended by, the Bank (except any such reserve requirement reflected in the Adjusted LIBO Rate), or (c) shall impose on the Bank any other condition, cost or expense with respect to this Note or the Related Documents, or (d) regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on the capital of the Bank or its holding company as a consequence of the Borrower’s obligations under this Note or the Related Documents, to a level below that which the Bank or its holding company could have achieved but for such Change in Law (taking into consideration the Bank’s and its holding company’s policies with respect to capital adequacy and liquidity), and the result of any of the foregoing items (a), (b), (c) or (d) is to increase the cost to the Bank of extending, maintaining or funding any Fixed Rate Loan or LIBOR Loan or to reduce the amount of any sum received or receivable by the Bank under this Note or any Related Document by an amount deemed by the Bank to be material, then the Borrower shall pay to the Bank, from time to time, within 1 Business Day of a receipt of a request therefor from the Bank, additional amounts sufficient to compensate the Bank for the increased cost or reduction suffered. Whenever the Bank shall learn of circumstances described in this section which are likely to result in additional costs to the Borrower, the Bank shall give prompt written notice to the Borrower of the basis for and the estimated amount of any such anticipated additional costs. A statement as to the amount of the increased cost or reduced sum receivable, prepared in good faith and in reasonable detail by the Bank and submitted by the Bank to the Borrower, shall be conclusive and binding for all purposes absent manifest error. Notwithstanding the foregoing, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements or directives thereunder or issued in connection therewith or in implementation thereof and (y) all requests, rules, guidelines, requirements or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall be deemed to be a “Change in Law” regardless of the date enacted, adopted, issued or implemented.

Taxes

Any and all payments made by the Borrower hereunder shall be made free and clear of and without deduction for any present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges, excluding any taxes imposed on the overall net income of the Bank, franchise taxes imposed on the Bank (in lieu of net income taxes) and any branch profits taxes imposed on the Bank by the jurisdiction or by any political subdivision or taxing authority as a result of the Bank being organized or having its principal office in such jurisdiction (all such non-excluded taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges being hereinafter referred to as “Taxes”). If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this section) the Bank receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law.

In addition, the Borrower agrees to pay any present or future stamp or documentary taxes, or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Note or the Related Documents.

Illegality

If any applicable domestic or foreign law, treaty, rule or regulation now or hereafter in effect (whether or not it now applies to the Bank) or the interpretation or administration thereof by a governmental authority charged with such interpretation or administration, or compliance by the Bank with any guideline, request or directive of such an authority (whether or not having the force of law), shall make it unlawful or impossible for the Bank to maintain or fund the LIBOR Loans, then, upon notice to the Borrower by the Bank, the outstanding principal amount of the LIBOR Loans, together with accrued interest and any other amounts payable to the Bank under this Note or the Related Documents on account of the LIBOR Loans shall be repaid (a) immediately upon the Bank's demand if such change or compliance with such requests, in the Bank's judgment, requires immediate repayment, or (b) at the expiration of the last Interest Period to expire before the effective date of any such change or request. The option of the Borrower to request LIBOR Loans shall be suspended until the Bank notifies the Borrower that such Loans are no longer unlawful or impossible.

Indemnity

The Borrower shall indemnify the Bank against (i) any loss or expense which the Bank may sustain or incur as a consequence of the occurrence of any Event of Default (as hereinafter defined) and (ii) any other loss or expense sustained or incurred in respect of the Loans, including, without limitation, in connection with obtaining, liquidating or employing deposits from third parties as a consequence of the conversion of any Loan from one interest rate to another or the payment or prepayment of any principal of any Fixed Rate Loan or LIBOR Loan by the Borrower (in either case, whether pursuant to a default, change in legality or otherwise) on any day other than the last day of the applicable Interest Period therefor, or the failure by the Borrower to borrow, prepay, convert or continue any Fixed Rate Loan or LIBOR Loan or part thereof on the date specified therefor in any notice given by the Borrower. In the case of a LIBOR Loan, such loss, cost or expense shall be deemed to include an amount determined by the Bank to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, (a) in the case of a payment or prepayment thereof on any day other than the last day of the applicable Interest Period therefor, for the period from the date of such payment or prepayment to the last day of such Interest Period or (b) in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan, over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which the Bank would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market. The Bank shall provide to the Borrower a statement, supported where applicable by documentary evidence, setting forth the amount of any such loss or expense, which statement shall be conclusive and binding absent manifest error. The Bank is authorized (but not obligated) to debit any deposit account of the Borrower now or hereafter maintained by the Borrower with the Bank to pay any amount that is not paid when due under this Indemnity section and also for interest payments due under this Note.

Inability to Determine Interest Rate

If the Bank determines (which determination shall be conclusive and binding absent manifest error) that (a) adequate and reasonable means do not exist for ascertaining (including, without limitation, by means of an Interpolated Rate (as hereinafter defined)) the Adjusted LIBO Rate or the LIBO Rate, as applicable, or (b) the relevant interest rates referred to in the definition of LIBO Rate do not accurately cover the cost to the Bank of making, funding or maintaining LIBOR Loans, then the Bank shall notify the Borrower of such circumstances, whereupon (i) the option of the Borrower to request LIBOR Loans shall be suspended

until the Bank notifies the Borrower that the circumstances giving rise to the suspension no longer exist, and (ii) the Borrower shall repay in full the then outstanding principal amount of each LIBOR Loan, together with accrued interest, on the last day of the then current Interest Period applicable to such LIBOR Loan. If the Bank determines (which determination shall be conclusive and binding absent manifest error) on any day that the Adjusted One Month LIBOR Rate cannot be ascertained (including, without limitation, by means of an Interpolated Rate) for purposes of determining the interest rate on any CB Floating Rate Loan as provided in this Note, then each CB Floating Rate Loan shall bear interest at the higher of the Prime Rate (as hereinafter defined) or 2.5% plus the Applicable Margin for CB Floating Rate Loans until the Bank determines that the Adjusted One Month LIBOR Rate can be ascertained.

Notwithstanding anything to the contrary herein or in any Related Document, if a LIBOR Cessation Event has occurred, then upon written notice by the Bank to the Borrower at a time selected by the Bank, but not later than the actual date of permanent cessation of the LIBO Rate, the LIBO Rate shall be replaced, for all purposes hereunder and under any other Related Document, without any amendment to, or further action or consent of, any other party to this Note or any Related Document, by (i) the sum of Term SOFR and the related Benchmark Replacement Adjustment (such sum, the “Adjusted Term SOFR”) if the Term SOFR Transition Conditions are satisfied at such time, or (ii) the sum of Daily Simple SOFR and the related Benchmark Replacement Adjustment (such sum, the “Adjusted Daily Simple SOFR”) if the Term SOFR Transition Conditions are not satisfied; provided that if the Term SOFR Transition Conditions are satisfied after the LIBO Rate is replaced by the Adjusted Daily Simple SOFR, the Bank may by at least ten (10) days’ prior written notice to the Borrower, replace such rate with the Adjusted Term SOFR. In the event that either the Adjusted Term SOFR or the Adjusted Daily Simple SOFR shall be less than zero, such rate will be deemed to be zero for the purposes of this Agreement. If a LIBOR Cessation Event references a future date for cessation, the LIBOR Rate shall not be replaced before 90 days prior to the announced cessation date, unless the Bank and the Borrower agree otherwise. If a LIBOR Cessation Event shall have occurred and neither Term SOFR nor Daily Simple SOFR is available, then upon written notice by the Bank to the Borrower until such rates are available, the then outstanding Loan shall accrue interest at the higher of Prime or 2.5%, unless the Bank and the Borrower agree on a different rate. For avoidance of doubt, if some interest periods for the LIBO Rate become unavailable prior to a LIBOR Cessation Event, those interest periods will no longer be available for selection by the Borrower.

In connection with the implementation of a rate replacement described in the paragraph immediately above, the Bank may from time to time, upon written notice to the Borrower, make any technical, administrative or operational changes to this Note or any Related Documents (including changes to the definition of “CB Floating Rate,” the definition of “Business Day”, the timing and frequency of determining rates and making payments of interest, the timing of prepayment or conversion notices, the length of lookback periods, the applicability of breakage provisions and other technical, administrative or operational matters) that the Bank decides in its reasonable discretion may be appropriate to reflect the adoption and implementation of such rate replacement and to permit the administration thereof by the Bank.

Representations and Warranties.

The Borrower represents and warrants upon the execution and delivery of this Note and upon each loan request hereunder, that: (a) it is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and, if relevant under such laws, in good standing; (b) it has the power to execute and deliver this Note and to perform its obligations hereunder and has taken all necessary action to authorize such execution, delivery and performance; (c) such execution, delivery and performance do not violate or conflict with any law applicable to it, any provision of its organizational documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any material contractual restriction binding on or materially affecting it or any of its assets; (d) to the best of Borrower's knowledge, all governmental and other consents that are required to have been obtained by it with respect to

this Note have been obtained and are in full force and effect and all conditions of any such consents have been complied with; (e) its obligations under this Note constitute its legal, valid and binding obligations, enforceable in accordance with its terms except to the extent that such enforcement may be limited by applicable bankruptcy, insolvency or other similar laws affecting creditors' rights generally; and (f) (i) it has implemented and maintains in effect policies and procedures designed to ensure compliance by Borrower, its Subsidiaries and their respective officers, directors, employees and agents with Anti-Corruption Laws and applicable Sanctions, and the Borrower, its Subsidiaries and their respective directors and officers and to the knowledge of the Borrower their respective employees and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects and are not knowingly engaged in any activity that would reasonably be expected to result in Borrower being designated as a Sanctioned Person; (ii) none of (A) the Borrower, any Subsidiary, or, to the knowledge of the Borrower or such Subsidiary, any of their respective directors, officers, employees, or agents or (B) to the knowledge of the Borrower, any agent of the Borrower or any Subsidiary that will act in any capacity in connection with or benefit from the Loans or the line of credit, is a Sanctioned Person; and (iii) no borrowing, use of proceeds or any other transaction contemplated by this Note or the line of credit will violate Anti-Corruption Laws or applicable Sanctions. For the purposes of the foregoing: “Anti-Corruption Laws” means all laws, rules and regulations of any jurisdiction applicable to the Borrower or its Subsidiaries from time to time concerning or relating to bribery or corruption. “Sanctions” means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by the (i) U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State; or (ii) the United Nations Security Council, the European Union or any member state thereof, Her Majesty’s Treasury of the United Kingdom or other relevant sanctions authority. “Sanctioned Person” means, at any time, (i) any person listed in any Sanctions-related list of designated persons maintained by the Office of Foreign Assets Control of the

U.S. Department of the Treasury, the U.S. Department of State, the United Nationals Security Council, the European Union, any member state thereof, Her Majesty’s Treasury of the United Kingdom or other relevant sanctions authority (ii) any person operating, organized or resident in a Sanctioned Country, (iii) any person or persons owned or controlled by such person or persons or (iv) any person otherwise the subject of any Sanctions. “Sanctioned Country” means, at any time, a region, country or territory which is the subject or target of any Sanctions (at the time of this Note, Crimea, Cuba, Iran, North Korea and Syria). For the purposes of this section and the section below entitled “Sanctions and Anticorruption”, the term “person” shall be used broadly to include natural persons, corporations, partnerships, limited liability companies, trusts, joint ventures, associations, companies, and governmental authorities.

Sanctions and Anticorruption

The Borrower shall, and shall cause its Subsidiaries, if any, to maintain in effect and enforce policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions. The Borrower shall not use, and shall procure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of the Loan (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any person in violation of any Anti-Corruption Laws, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country to the extent such activities, business or transaction would be prohibited by Sanctions if conducted by a corporation incorporated in the United States or in a European Union member state, or (C) in any manner that would result in the violation of any Sanctions applicable to the Borrower or the Bank.

Events of Default

If any of the following events (each, an “Event of Default” and, collectively, the “Events of Default”) shall occur: (i) any failure by the Borrower to pay (a) any principal, interest, fees, or other obligations when

due under this Note or any Related Document; or (b) any amounts due under any other arrangements, obligations or liabilities owing to the Bank by the Borrower, (ii) any other violation or failure to comply with any provision of this Note or any Related Document, (iii) [reserved], (iv) failure by the Borrower or the Guarantor to furnish financial information required to be delivered pursuant to this Agreement or requested by Bank within 10 Business Days of request, or to permit inspection of its books and records at the Bank’s request, (v) any litigation is pending or threatened against the Borrower, any Subsidiary or the Guarantor which might have a Material Adverse Effect, (vi) there is a default under any agreement governing $5,000,000 or more, in the aggregate, of indebtedness of the Borrower, any Subsidiary or the Guarantor, (vii) any warranty, representation or statement of fact made in writing to the Bank at any time by an officer, agent or employee of the Borrower or the Guarantor is false or misleading in any material respect when made, (viii) the Borrower or the Guarantor shall be dissolved or shall fail to maintain its existence in good standing, or the usual business of the Borrower, any Subsidiary or the Guarantor shall be suspended or terminated, (ix) the Borrower, any Subsidiary or the Guarantor merges or consolidates with any third party, or sells or otherwise conveys a substantial part of its assets or property to a third party outside the ordinary course of business, grants liens over any collateral securing the loan evidenced by this Note (other than a lien solely in favor of the Bank securing the obligations of the Borrower to the Bank under this Note or any Related Document) or, in the case of a Subsidiary, the merger of such Subsidiary with and into the Borrower or agrees to do any of the foregoing, (x) any levy, execution, seizure, attachment or garnishment, or any restraining order or notice, shall be issued, made or filed on or against any material portion of the property of the Borrower, any Subsidiary or the Guarantor or the Borrower, any Subsidiary or the Guarantor shall suffer or become subject to any order, decree, judgment, verdict or other action of any court, administrative or regulatory body or agency thereof in an aggregate amount of $5,000,000 or more, (xi) any petition is filed by or against the Borrower or Guarantor under the Federal Bankruptcy Code or similar state or foreign law, (xii) the Borrower, any Subsidiary or the Guarantor becomes insolvent, howsoever evidenced, (xii) there is a default under that certain Guaranty dated September 24, 2021 and signed by Guarantor in favor of Bank (as amended, restated, replaced or modified from time to time, the “Guaranty”), the Guaranty shall fail to remain in full force and effect, or action shall be taken to discontinue the Guaranty or assert its invalidity or unenforceability, or the Guarantor shall deny that it has any further liability under the Guaranty, or give notice to such effect or (xiii) there is a default under that certain Assignment of Deposits Agreement dated September 24, 2021 signed by Guarantor in favor of the Bank (as amended, restated, replaced or modified from time to time, the “AOD”), the AOD shall fail to remain in full force and effect, or action shall be taken to discontinue the AOD, or Guarantor shall deny that it has any further liability thereunder or give notice to such effect, then and in any such event, in addition to all rights and remedies of the Bank under applicable law and otherwise, all such rights and remedies being cumulative, not exclusive and enforceable alternatively, successively and concurrently, the Bank may, at its option, declare any and all of the amounts owing under this Note to be due and payable, whereupon the maturity of the then unpaid balance hereof shall be accelerated and the same, together with all interest accrued hereon, shall forthwith become due and payable, provided, however, that if a bankruptcy event specified in subsection (xi) above shall have occurred with respect to the Borrower, any Subsidiary or the Guarantor, all amounts owing under this Note shall be immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived by the Borrower. Further, acceptance of any payments shall not waive or affect any prior demand or acceleration of amounts due hereunder, and each such payment made shall be applied first to the payment of accrued interest, then to the aggregate unpaid principal or otherwise as determined by the Bank in its sole and absolute discretion. "Subsidiary" means (i) any corporation if more than 50% of the outstanding securities having ordinary voting power is owned or controlled, directly or indirectly, by the Borrower or by one or more of its Subsidiaries or by the Borrower and one or more of its Subsidiaries, or (ii) any partnership, association, joint venture or similar business organization if more than 50% of the ownership interests having ordinary voting power are so owned or controlled. “Guarantor” means AppHarvest Operations, Inc..

Definitions

A.Adjusted LIBO Rate

“Adjusted LIBO Rate” means, with respect to any LIBOR Loan for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (i) the LIBO Rate in effect for such Interest Period multiplied by (ii) the Statutory Reserve Rate.

B.Adjusted One Month LIBO Rate

“Adjusted One Month LIBO Rate” means, for any day, an interest rate per annum equal to the sum of (i) 2.50% per annum plus (ii) the Adjusted LIBO Rate for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day); provided that, the Adjusted LIBO Rate for any day shall be based on the LIBOR Screen Rate (as defined in the definition of LIBO Rate, below) at approximately 11:00 a.m. London time on such day (without any rounding), subject to the interest rate floors set forth therein.

C.Applicable Margin

“Applicable Margin” means 1.25% per annum with respect to any CB Floating Rate Loan and 2.25% per annum with respect to any LIBOR Loan.

D.Benchmark Replacement Adjustment

“Benchmark Replacement Adjustment” means, with respect to any replacement pursuant to the second paragraph of the section above entitled “Inability to Determine Rates” of the LIBO Rate with Term SOFR or Daily Simple SOFR (such rate, an “Unadjusted SOFR Based Rate”), as applicable, for any applicable interest period and available tenor, the first of the following alternatives that can be determined by the Bank:

(1) the spread adjustment, or method for calculating or determining such spread adjustment (which may be a positive or negative value or zero) when such Unadjusted SOFR Based Rate is first set for such interest period that has been selected or recommended by the Relevant Governmental Body for the replacement of the LIBO Rate with the applicable Unadjusted SOFR Based Rate for the applicable corresponding tenor; provided that such spread adjustment is displayed on a screen or other information service that publishes such Benchmark Replacement Adjustment from time to time as selected by the Bank in its reasonable discretion; and (2) the spread adjustment (which may be a positive or negative value or zero) when such rate replacement is first set for such interest period that would apply to the fallback rate for a derivative transaction referencing the ISDA Definitions to be effective upon an index cessation event with respect to the LIBO Rate for the applicable corresponding tenor.

E.Business Day

“Business Day” means any day other than a Saturday, Sunday or other day on which the Bank is authorized or required by law or regulation to remain closed, provided that, when used in connection with a LIBOR Loan or the Adjusted One Month LIBO Rate, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

F.CB Floating Rate

“CB Floating Rate” means the Prime Rate; provided that the CB Floating Rate on any day shall never be less than the Adjusted One Month LIBO Rate on such day (or if such day is not a Business Day, the immediately preceding Business Day). Any change in the CB Floating Rate due to a change in the Prime Rate or the Adjusted One Month LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate or the Adjusted One Month LIBO Rate, as the case may be.

G.Daily Simple SOFR

“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Bank in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for business loans; provided that if the Bank decides that any such convention is not administratively feasible for the Bank, then the Bank may establish another convention in its reasonable discretion.

H.Interest Period

(i)With respect to LIBOR Loans, “Interest Period” means the period commencing on the date such Loan is made and ending on the numerically corresponding day that is 1 or 3 calendar months thereafter (as selected by the Borrower and agreed to by the Bank);

(ii)With respect to Fixed Rate Loans, “Interest Period” means the period requested by the Borrower and agreed to by the Bank, as available; and

(iii)With respect to CB Floating Rate Loans, “Interest Period” shall mean one month or such other the period agreed to by the parties hereto;

provided, in each case, that (a) if any Interest Period would end on a day which is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a LIBOR Loan only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, (b) the Interest Period for any LIBOR Loan that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period, and (c) no Interest Period may extend beyond the Maturity Date.

I.Interpolated Rate

“Interpolated Rate” means, at any time, for any Interest Period, the rate per annum (rounded upwards to the same number of decimal places as the LIBOR Screen Rate) determined by the Bank (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between (a) the LIBOR Screen Rate for the longest period (for which such LIBOR Screen Rate is available) that is shorter than the Impacted Interest Period (as defined in the definition of LIBO Rate, below) and (b) the LIBOR Screen Rate for the shortest period (for

which the LIBOR Screen Rate is available) that exceeds the Impacted Interest Period, in each case, at such time.

J.ISDA Definitions

“ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.

K.LIBO Rate

“LIBO Rate” means, with respect to any LIBOR Loan for any applicable Interest Period, the London interbank offered rate as administered by ICE Benchmark Administration (or any other person that takes over the administration of such rate, the “IBA”) for a period equal in length to such Interest Period as displayed on page LIBOR01 or LIBOR02 of the Reuters screen, or in the event that such rate does not appear on such Reuters page, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate as shall be selected by the Bank from time to time in its reasonable discretion (the “LIBOR Screen Rate”) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period; provided that if the LIBOR Screen Rate shall be less than zero, such rate shall be deemed to be zero for the purposes of this Note; provided, further, that if a LIBOR Screen Rate shall not be available at such time for a period equal in length to such period (an “Impacted Interest Period”), then the LIBO Rate for such Interest Period shall be the Interpolated Rate at such time, subject to the provisions of the paragraph entitled “Inability to Determine Interest Rate” in this Note in the event that the Bank shall conclude that it shall not be possible to determine such Interpolated Rate; provided that if any Interpolated Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Note.

L.LIBOR Cessation Event

“LIBOR Cessation Event” means the occurrence of one or more of the following events with respect to the LIBO Rate: (1) a public statement or publication of information by or on behalf of the administrator of the LIBO Rate announcing that such administrator has ceased or will cease to provide the LIBO Rate for all available interest periods, permanently or indefinitely, with no successor administrator having been appointed to provide such LIBO Rate at such time; (2) a public statement or publication of information by the regulatory supervisor for the administrator of the LIBO Rate, the Board of Governors of the Federal Reserve System, the NYFRB, an insolvency official with jurisdiction over the administrator for the LIBO Rate, a resolution authority with jurisdiction over the administrator for the LIBO Rate or a court or an entity with similar insolvency or resolution authority over the administrator for the LIBO Rate, in each case which states that the administrator of the LIBO Rate has ceased or will cease to provide the LIBO Rate for all available interest periods permanently or indefinitely, with no successor administrator having been appointed to provide such LIBO Rate at such time; and/or (3) a public statement or publication of information by the regulatory supervisor for the administrator

of the LIBO Screen Rate announcing that the LIBO Screen Rate for all available interest periods is no longer representative.

M.NYFRB

“NYFRB” means the Federal Reserve Bank of New York.

N.Prime Rate

“Prime Rate” means the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Board of Governors of the Federal Reserve System (the “Board”) in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Bank) or any similar release by the Board (as determined by the Bank). Each change in the Prime Rate shall be effective from and including the date such change is publicly announced or quoted as being effective. THE PRIME RATE IS A REFERENCE RATE AND MAY NOT BE THE BANK’S LOWEST RATE.

O.Relevant Governmental Body

“Relevant Governmental Body” means the Board of Governors of the Federal Reserve System or the NYFRB, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the NYFRB, or any successor thereto.

P.SOFR

“SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the NYFRB (or a successor administrator of the secured overnight financing rate) on its website on the immediately succeeding Business Day.

Q.Statutory Reserve Rate

“Statutory Reserve Rate” means a fraction (the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special emergency or supplemental reserves) expressed as a decimal established by the Board and any other banking authority to which the Bank is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve percentage shall include those imposed pursuant to such Regulation D. LIBOR Loans shall be deemed to constitute Eurocurrency liabilities to be subject to such reserve requirements without benefit of or credit for proration, exceptions or offsets that may be available from time to time to the Bank under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

R.Term SOFR

“Term SOFR” means, for the applicable corresponding tenor, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body, as displayed on a screen or other information service that publishes such rate from time to time as selected by and as of the time determined by the Bank in its reasonable discretion.

S.Term SOFR Transition Conditions

“Term SOFR Transition Conditions” means the occurrence of all of the following events (as determined by the Bank in its sole discretion): (i) a LIBOR Cessation Event has occurred, (ii) Term SOFR has been recommended for use by the Relevant Governmental Body, and (iii) the administration of Term SOFR is administratively feasible for the Bank.

Set-Off

The Borrower hereby gives to the Bank a right of set-off against all moneys, securities and other property of the Borrower and the proceeds thereof, now or hereafter delivered to, remaining with or in transit in any manner to the Bank, its correspondents, affiliates (including J.P. Morgan Securities LLC) or agents from or for the Borrower, whether for safekeeping, custody, pledge, transmission, collection or otherwise or coming into possession, control or custody of the Bank or its correspondents, affiliates or agents in any way, and also, any balance of any deposit accounts and credits of the Borrower with, and any and all claims of the Borrower against the Bank at any time existing, hereby authorizing the Bank at any time or times, without prior notice, to apply such balances, credits or claims, or any part thereof, to the obligations of the Borrower under this Note in such amounts as it may select, whether contingent, unmatured or otherwise.

LIBO Rate Disclosure

The interest rate on LIBOR Loans is determined by reference to the LIBO Rate, which is derived from the London interbank offered rate ("LIBOR"). LIBOR is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. LIBOR is currently the subject of regulatory reform and regulators have signaled the need to use alternative benchmark reference rates for LIBOR. On March 5, 2021, the U.K. Financial Conduct Authority (“FCA”) publicly announced that:

•immediately after December 31, 2021, publication of the 1-week and 2-month U.S. Dollar LIBOR settings will permanently cease;

•immediately after June 30, 2023, publication of the overnight and 12-month U.S. Dollar LIBOR settings will permanently cease; and

•immediately after June 30, 2023, the 1-month, 3-month and 6-month U.S. Dollar LIBOR settings will cease to be provided or, subject to the FCA’s consideration of the case, be provided on a synthetic basis and no longer be representative of the underlying market and economic reality they are intended to measure and that representativeness will not be restored.

There is no assurance that dates announced by the FCA will not change or that the administrator of LIBOR and/or regulators will not take further action that could impact the availability, composition, or characteristics of LIBOR or the currencies and/or tenors for which LIBOR is published, and Borrower should consult its own advisors to stay informed of any such developments. Public and private sector industry initiatives are currently underway to implement new or alternative reference rates to be used in place of LIBOR. In the event LIBOR is no longer available (or in certain other circumstances), the section of this Note entitled “Inability to Determine Interest Rate” provides a mechanism for determining an

alternative rate of interest. The Bank will inform the Borrower of any change to the reference rate upon which the interest rate of Loans is based. However, the Bank does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission, performance or any other matter related to LIBOR or any other rates in the definition of LIBO Rate or with respect to any alternative, successor or replacement reference rates, including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rates will be similar to or produce the same value or economic equivalence as LIBOR and/or the LIBO Rate or have the same volume or liquidity as did LIBOR prior to its discontinuance or unavailability.

Miscellaneous

The Borrower hereby waives diligence, demand, presentment, protest and notice of any kind, and consents to extensions of the time of payment, release, surrender or substitution of security, or forbearance or other indulgence, without notice.

This Note may not be changed, modified or terminated orally, but only by an agreement in writing signed by the Borrower and the Bank.

The Bank reserves the right to assign or sell participations in the Loans or this Note to any entity (including to any Federal Reserve Bank in accordance with applicable law). The Borrower’s consent to such assignment or participation is hereby deemed granted.

The Borrower hereby authorizes the Bank and any other holder of an interest in this Note (a "Holder") to disclose confidential information relating to the financial condition or operations of the Borrower (i) to any director, officer, or employee of the Bank, any Holder or any affiliate of the Bank or any Holder, (ii) to any assignee, participant, or any other purchaser or prospective assignee, participant or other purchaser of an interest in any Loan or this Note, (iii) to legal counsel, accountants, and other professional advisors to the Bank or any Holder, (iv) to regulatory officials, (v) requested or required by law, regulation, or legal process or (vi) in connection with any legal proceeding to which the Bank or any other Holder is a party.

In the event the Bank or any Holder shall refer this Note to an attorney for collection, the Borrower agrees to pay, in addition to the unpaid principal hereof and interest hereon, all the costs and expenses incurred in attempting or effecting collection hereunder, including reasonable attorney's fees of internal or outside counsel, whether or not suit is instituted.

In the event of any litigation with respect to this Note or any Related Document, THE BORROWER WAIVES THE RIGHT TO A TRIAL BY JURY and all rights of setoff and rights to interpose counter-claims and cross-claims. The Borrower hereby irrevocably consents to the jurisdiction of the courts of the State of Illinois and of any Federal court located in such State in connection with any action or proceeding arising out of or relating to this Note or any Related Document. The execution and delivery of this Note has been authorized by the Board of Directors or other governing body of the Borrower and by any necessary vote or consent of the shareholders, partners or members of the Borrower. The Borrower hereby authorizes the Bank to complete this Note in any particulars according to the terms of the Loans evidenced hereby. This Note shall be governed by and construed in accordance with the laws of the State of Illinois applicable to contracts made and to be performed in such State, and shall be binding upon the successors and assigns of the Borrower and inure to the benefit of the Bank, its successors, endorsees and assigns.

The Bank hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act") Act, it is required to obtain, verify

and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow the Bank to identify the Borrower in accordance with the Act. If any term or provision of this Note shall be held invalid, illegal or unenforceable, the validity of all other terms and provisions hereof shall in no way be affected thereby.

Delivery of an executed counterpart of a signature page of (x) this Note, and/or (y) any document, amendment, approval, consent, information, notice, certificate, request, statement, disclosure or authorization related to this Note or any other Related Document that is an Electronic Signature (as defined below) transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page shall be effective as delivery of a manually executed counterpart of this Note, or such Related Document, as applicable. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Note and/or any Related Document shall be deemed to include Electronic Signatures, deliveries or the keeping of records in any electronic form (including deliveries by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page), each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be; provided that nothing herein shall require the Bank to accept Electronic Signatures in any form or format without its prior written consent and pursuant to procedures approved by it; provided, further, without limiting the foregoing, (i) to the extent the Bank has agreed to accept any Electronic Signature, the Bank shall be entitled to rely on such Electronic Signature purportedly given by or on behalf of the Borrower without further verification thereof and (ii) upon the request of the Bank, any Electronic Signature shall be promptly followed by a manually executed counterpart. Without limiting the generality of the foregoing, the Borrower hereby (i) agrees that, for all purposes, including without limitation, in connection with any workout, restructuring, enforcement of remedies, bankruptcy proceedings or litigation among the Bank and the Borrower, Electronic Signatures transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page and/or any electronic images of this Note and/or any Related Document shall have the same legal effect, validity and enforceability as any paper original, (ii) the Bank may, at its option, create one or more copies of this Note and/or any Related Document in the form of an imaged electronic record in any format, which shall be deemed created in the ordinary course of such person’s business, and destroy the original paper document (and all such electronic records shall be considered an original for all purposes and shall have the same legal effect, validity and enforceability as a paper record), (iii) waives any argument, defense or right to contest the legal effect, validity or enforceability of this Note and/or any Related Document based solely on the lack of paper original copies of this Note and/or such Related Document, respectively, including with respect to any signature pages thereto and (iv) waives any claim against any Bank-Related Person (as defined below) for any liabilities arising solely from Bank’s reliance on or use of Electronic Signatures and/or transmissions by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page. For purposes of this Note, (x) “Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a person with the intent to sign, authenticate or accept such contract or record and (y) “Bank-Related Person” means, such the Bank’s affiliates and the respective directors, officers, employees, agents and advisors of the Bank and the Bank’s affiliates.

APPHARVEST PULASKI FARM, LLC


By:			/s/ Loren Eggleton
Name:			Loren Eggleton
Title:			Chief Financial Officer

Exhibit 10.7

GUARANTY—MULTIPLE SUBSIDIARIES

GUARANTY dated as of September 24, 2021 made by the undersigned (the "Guarantor") in favor of JPMorgan Chase Bank, N.A. and/or any of its branches, subsidiaries or affiliates (individually or collectively, as the context may require, the "Bank").

PRELIMINARY STATEMENTS: The Bank has entered, or may from time to time enter, into agreements or arrangements with the entities listed on Schedule A attached hereto and made a part hereof (collectively, the “Borrowers” and each, individually, a "Borrower") providing for credit extensions or financial accommodation to the Borrowers or any of them of any kind whatsoever, including but not limited to the making of loans, advances or overdrafts, whether or not secured, discount or purchase of notes, securities or other instruments or property, creation of acceptances, issuance or confirmation of letters of credit, guaranties or indemnities, treasury management agreements (including, without limitation, ACH and BACS agreements and provision of commercial credit card and/or merchant credit card services and pre-paid debit card services), notional pooling arrangements, physical cash concentration services, entering into Rate Management Transactions (as defined below) or any other kind of contract or agreement under which the Borrowers or any of them may be indebted to the Bank in any manner (all of the foregoing agreements or arrangements being the "Facilities" and any writing evidencing, supporting or securing a Facility, including but not limited to this Guaranty, as such writing may be amended, modified or supplemented from time to time, a "Facility Document"). The term “Rate Management Transaction”, as used herein, means (i) any transaction (including an agreement with respect thereto) now existing or hereafter entered into between any Borrower and Bank and/or its affiliates which is a rate swap, swap option, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap, floor, collar, currency swap, cross-currency rate swap, currency option, credit protection transaction, credit swap, credit default swap, credit default option, total return swap, credit spread, repurchase transaction, reverse repurchase transaction, buy/sell-back transaction, securities lending transaction, weather index transaction or forward purchase or sale of a security, commodity or other financial instrument or interest (including any option with respect to any of these transactions), or (ii) any type of transaction that is similar to any transaction referred to in clause (i) above that is currently, or in the future becomes, recurrently entered into in the financial markets and which is a forward, swap, future, option or other derivative on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, economic indices or measures of economic risk or value, or other benchmarks against which payments or deliveries are to be made, or any combination of the foregoing transactions. The Guarantor owns a substantial amount of the stock or other ownership interests of the Borrowers and is financially interested in their affairs. This Guaranty is in the Guarantor’s interest and to its financial benefit.

THEREFORE, in order to induce the Bank to extend credit or give financial accommodation under the Facilities, the Guarantor agrees as follows:

Section 1. Guaranty of Payments. The Guarantor unconditionally and irrevocably guarantees to the Bank the punctual payment of all sums now owing or which may in the future be owing by the Borrowers under the Facilities, when the same are due and payable, whether on demand, at stated maturity, by acceleration or otherwise, and whether for principal, interest, fees, expenses, indemnification or otherwise (all of the foregoing sums being the "Liabilities"); provided, however, that the Liabilities shall not include any Excluded Swap Obligations ( as defined below). The Liabilities include, without limitation, interest accruing after the commencement of a proceeding under bankruptcy, insolvency or similar laws of any jurisdiction at the rate or rates provided in the Facility Documents. This Guaranty is a guaranty of payment and not of collection only. The Bank shall not be required to exhaust any right or remedy or take any action against the Borrowers or any other person or entity or any collateral. The Guarantor agrees that, as between the Guarantor and the Bank, the Liabilities may be declared to be due and payable for the purposes of this Guaranty notwithstanding any stay,

injunction or other prohibition which may prevent, delay or vitiate any declaration as regards the Borrowers and that in the event of a declaration or attempted declaration, the Liabilities shall immediately become due and payable by the Guarantor for the purposes of this Guaranty. “Excluded Swap Obligation” means any Swap Obligation (as defined below) as to which it is unlawful under the CEA for the Guarantor to guaranty hereunder because the Guarantor is not an “eligible contract participant” (as defined in the CEA) at the time this Guaranty shall become effective with respect to such Swap Obligation. “CEA” means the Commodity Exchange Act (7

U.S.C. § 1 et seq.), as amended from time to time, and any successor statute and/or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof). “Swap Obligation” means any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the CEA.

Section 2. Guaranty Absolute. The Guarantor guarantees that the Liabilities shall be paid strictly in accordance with the terms of the Facilities. The liability of the Guarantor under this Guaranty is absolute and unconditional irrespective of: (a) any change in the time, manner or place of payment of, or in any other term of, all or any of the Facility Documents or Liabilities, or any other amendment or waiver of or any consent to departure from any of the terms of any Facility Document or Liabilities, including any increase or decrease in the rate of interest thereon; (b) any release or amendment or waiver of, or consent to departure from, or failure to act by Bank with respect to, any other guaranty or support document, or any exchange, release or non-perfection of, or failure to act by Bank with respect to, any collateral, for all or any of the Facility Documents or Liabilities;

(c) any present or future law, regulation or order of any jurisdiction (whether of right or in fact) or of any agency thereof purporting to reduce, amend, restructure or otherwise affect any term of any Facility Document or Liabilities; (d) any change in the corporate existence, structure, or ownership of the Borrowers or any of them,

(e) without being limited by the foregoing, any lack of validity or enforceability of any Facility Document or Liabilities; and (f) any other setoff, recoupment, defense or counterclaim whatsoever (in any case, whether based on contract, tort or any other theory) with respect to the Facility Documents or the transactions contemplated thereby which might constitute a legal or equitable defense available to, or discharge of, a Borrower or a guarantor.

Section 3. Guaranty Irrevocable. This Guaranty is a continuing guaranty of the payment of all Liabilities now or hereafter existing under the Facilities and shall remain in full force and effect until payment in full of all Liabilities and other amounts payable under this Guaranty and until the Facilities are no longer in effect or, if earlier, when the Guarantor has given the Bank written notice that this Guaranty has been revoked; provided that any notice under this Section shall not release the Guarantor from any Liability, absolute or contingent, existing prior to the Bank's actual receipt of the notice at its branches or departments responsible for the Facilities and reasonable opportunity to act upon such notice.

Section 4. Reinstatement. This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Liabilities is rescinded or must otherwise be returned by the Bank on the insolvency, bankruptcy or reorganization of any Borrower or otherwise, all as though the payment had not been made, whether or not the Bank is then in possession of the Guaranty.

Section 5. Subrogation. The Guarantor shall not exercise any rights which it may acquire by way of subrogation, by any payment made under this Guaranty or otherwise, until all the Liabilities have been paid in full and the Facilities are no longer in effect. If any amount is paid to the Guarantor on account of subrogation rights under this Guaranty at any time when all the Liabilities have not been paid in full, the amount shall be held in trust for the benefit of the Bank and shall be promptly paid to the Bank to be credited and applied to the Liabilities, whether matured or unmatured or absolute or contingent, in accordance with the terms of the Facilities. If the Guarantor makes payment to the Bank of all or any part of the Liabilities and all the Liabilities are paid in full and the Facilities are no longer in effect, the Bank shall, at the Guarantor's request, execute and deliver to the Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to the Guarantor of an interest in the Liabilities resulting from the payment.

Section 6. Subordination. Without limiting the Bank's rights under any other agreement, any liabilities owed by the Borrowers or any of them to the Guarantor in connection with any extension of credit or financial accommodation by the Guarantor to or for the account of the Borrowers, including but not limited to interest accruing at the agreed contract rate after the commencement of a bankruptcy or similar proceeding, are hereby subordinated to the Liabilities, and such liabilities of the Borrowers to the Guarantor, if the Bank so requests, shall be collected, enforced and received by the Guarantor as trustee for the Bank and shall be paid over to the Bank on account of the Liabilities but without reducing or affecting in any manner the liability of the Guarantor under the other provisions of this Guaranty.

Section 7. Payments Generally. All payments by the Guarantor shall be made in the manner, at the place and in the currency (the "Payment Currency") required by the Facility Documents; provided, however, that (if the Payment Currency is other than U.S. dollars) the Guarantor may, at its option (or, if for any reason whatsoever the Guarantor is unable to effect payments in the foregoing manner, the Guarantor shall be obligated to) pay to the Bank at its principal office the equivalent amount in U.S. dollars computed at the selling rate of the Bank or a selling rate chosen by the Bank, most recently in effect on or prior to the date the Liability becomes due, for cable transfers of the Payment Currency to the place where the Liability is payable. In any case in which the Guarantor makes or is obligated to make payment in U.S. dollars, the Guarantor shall hold the Bank harmless from any loss incurred by the Bank arising from any change in the value of U.S. dollars in relation to the Payment Currency between the date the Liability becomes due and the date the Bank is actually able, following the conversion of the U.S. dollars paid by the Guarantor into the Payment Currency and remittance of such Payment Currency to the place where such Liability is payable, to apply such Payment Currency to such Liability.

Section 8. Certain Taxes. The Guarantor further agrees that all payments to be made hereunder shall be made without setoff or counterclaim and free and clear of, and without deduction for, any taxes, levies, imposts, duties, charges, fees, deductions, withholdings or restrictions or conditions of any nature whatsoever now or hereafter imposed, levied, collected, withheld or assessed by any country or by any political subdivision or taxing authority thereof or therein ("Taxes"). If any Taxes are required to be withheld from any amounts payable to the Bank hereunder, the amounts so payable to the Bank shall be increased to the extent necessary to yield to the Bank (after payment of all Taxes) the amounts payable hereunder in the full amounts so to be paid. Whenever any Tax is paid by the Guarantor, as promptly as possible thereafter, the Guarantor shall send the Bank an official receipt showing payment thereof, together with such additional documentary evidence as may be required from time to time by the Bank.

Section 9. Representations and Warranties. The Guarantor represents and warrants that: (a) this Guaranty (i) has been authorized by all necessary action; (ii) does not violate any agreement, instrument, law, regulation or order applicable to the Guarantor; (iii) does not require the consent or approval of any person or entity, including but not limited to any governmental authority, or any filing or registration of any kind; and (iv) is the legal, valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, except to the extent that enforcement may be limited by applicable bankruptcy, insolvency and other similar laws affecting creditors' rights generally; and (b) in executing and delivering this Guaranty, the Guarantor has (i) without reliance on the Bank or any information received from the Bank and based upon such documents and information it deems appropriate, made an independent investigation of the transactions contemplated hereby and the Borrowers, the Borrowers’ business, assets, operations, prospects and condition, financial or otherwise, and any circumstances which may bear upon such transactions, the Borrowers or the obligations and risks undertaken herein with respect to the Liabilities; (ii) adequate means to obtain from the Borrowers on a continuing basis information concerning the Borrowers; (iii) has full and complete access to the Facility Documents and any other documents executed in connection with the Facility Documents; and (iv) not relied and will not rely upon any representations or warranties of the Bank not embodied herein or any acts heretofore or hereafter taken by the Bank (including but not limited to any review by the Bank of the affairs of the Borrowers). The Guarantor hereby further represents and warrants that the Guarantor is an “eligible contract participant” as such term is defined in the CEA. The Guarantor shall promptly notify the Bank in writing at its

addresses set forth in the Facility Documents upon the Guarantor no longer qualifying as an “eligible contract participant” under the CEA.

Section 10. Remedies Generally. The remedies provided in this Guaranty are cumulative and not exclusive of any remedies provided by law.

Section 11. Setoff. The Facilities may be booked at any office, branch, subsidiary or affiliate of the Bank, as selected by the Bank (each a “Lending Installation”). All terms of this Guaranty apply to and may be enforced by or on behalf of any Lending Installation. The Guarantor agrees that, in addition to (and without limitation of) any right of setoff, banker's lien or counterclaim the Bank may otherwise have, the Bank shall be entitled, at its option, to offset balances (general or special, time or demand, provisional or final) held by it for the account of the Guarantor at any of the Bank's offices, in U.S. dollars or in any other currency, against any amount payable by the Guarantor under this Guaranty which is not paid when due (regardless of whether such balances are then due to the Guarantor), in which case it shall promptly notify the Guarantor thereof; provided that the Bank's failure to give such notice shall not affect the validity thereof.

Section 12. Formalities. The Guarantor waives presentment, demand, notice of dishonor, protest, notice of acceptance of this Guaranty or incurrence of any Liability and any other formality with respect to any of the Liabilities or this Guaranty.

Section 13. Amendments and Waivers. No amendment or waiver of any provision of this Guaranty, nor consent to any departure by the Guarantor therefrom, shall be effective unless it is in writing and signed by the Bank, and then the waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No failure on the part of the Bank to exercise, and no delay in exercising, any right under this Guaranty shall operate as a waiver or preclude any other or further exercise thereof or the exercise of any other right.

Section 14. Expenses. The Guarantor shall reimburse the Bank on demand for all costs, expenses and charges (including without limitation fees and charges of external legal counsel for the Bank and costs allocated by its internal legal department) incurred by the Bank in connection with the preparation, performance or enforcement of this Guaranty. The obligations of the Guarantor under this Section shall survive the termination of this Guaranty.

Section 15. Assignment. This Guaranty shall be binding on, and shall inure to the benefit of the Guarantor, the Bank and their respective successors and assigns; provided that the Guarantor may not assign or transfer its rights or obligations under this Guaranty. Without limiting the generality of the foregoing: (a) the obligations of the Guarantor under this Guaranty shall continue in full force and effect and shall be binding on any successor partnership and on previous partners and their respective estates if the Guarantor is a partnership, regardless of any change in the partnership as a result of death, retirement or otherwise; and (b) the Bank may assign, sell participations in or otherwise transfer its rights under the Facilities to any other person or entity, and the other person or entity shall then become vested with all the rights granted to the Bank in this Guaranty or otherwise.

Section 16. Captions. The headings and captions in this Guaranty are for convenience only and shall not affect the interpretation or construction of this Guaranty.

Section 17. Governing Law, Etc. THIS GUARANTY SHALL BE GOVERNED BY THE LAW OF THE STATE OF ILLINOIS. THE GUARANTOR CONSENTS TO THE NONEXCLUSIVE JURISDICTION AND VENUE OF THE STATE OR FEDERAL COURTS LOCATED IN THE CITY OF CHICAGO, ILLINOIS. SERVICE OF PROCESS BY THE BANK IN CONNECTION WITH ANY SUCH DISPUTE SHALL BE BINDING ON THE GUARANTOR IF SENT TO THE GUARANTOR BY REGISTERED MAIL AT THE ADDRESS SPECIFIED BELOW OR AS OTHERWISE SPECIFIED BY THE GUARANTOR FROM TIME TO TIME. THE GUARANTOR WAIVES ANY RIGHT THE

GUARANTOR MAY HAVE TO JURY TRIAL IN ANY ACTION RELATED TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY AND FURTHER WAIVES ANY RIGHT TO INTERPOSE ANY COUNTERCLAIM RELATED TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY SUCH ACTION. TO THE EXTENT THAT THE GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER FROM SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OF A JUDGMENT, EXECUTION OR OTHERWISE), THE GUARANTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS GUARANTY.

Section 18. Integration; Effectiveness; Electronic Execution. This Guaranty alone sets forth the entire understanding of the Guarantor and the Bank relating to the guarantee of the Liabilities and constitutes the entire contract between the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. This Guaranty shall become effective when it shall have been executed and delivered by the Guarantor to the Bank. Delivery of an executed counterpart of a signature page of this Guaranty by telecopy, emailed pdf. or any other electronic means that reproduces an image of the actual executed signature page shall be effective as delivery of a manually executed counterpart of this Guaranty. Without limiting the generality of the foregoing, the Guarantor hereby (i) agrees that, for all purposes, including without limitation, in connection with any workout, restructuring, enforcement of remedies, bankruptcy proceedings or litigation among Guarantor and the Bank, electronic images of this Guaranty (in each case, including with respect to any signature pages thereto) shall have the same legal effect, validity and enforceability as any paper original, and (ii) waives any argument, defense or right to contest the validity or enforceability of this Guaranty based solely on the lack of paper original copies of this Guaranty, including with respect to any signature pages thereto.

IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed and delivered by its duly authorized officer as of the date first above written.

APPHARVEST OPERATIONS, INC.


By:						/s/ Loren Eggleton
Name:						Loren Eggleton
Title:						Chief Financial Officer
Address:						500 Appalachian Way
						Morehead, KY 40351

SCHEDULE A LIST OF BORROWERS

AppHarvest Pulaski Farm, LLC

Exhibit 10.8

Dated as of September 24, 2021

Assignment of Deposit Account

AppHarvest Operations, Inc., whose address is 500 Appalachian Way, Morehead, KY 40531 (the "Assignor"), pledges, assigns, transfers and grants a security interest to JPMorgan Chase Bank, N.A., whose address is 10 South Dearborn, Chicago, Illinois 60603 (“JPMCB”, for itself and as agent for its subsidiaries, branches and affiliates, together with their respective successors and assigns, the "Secured Party") in the Account (as defined below) to the maximum extent that the Assignor has rights in or power to transfer rights in the Account and to the maximum extent that the Assignor later acquires ownership, other rights in or the power to transfer rights in the Account. "Account" means money market deposit account number [***] held at JPMorgan Chase Bank, N.A. (together with its branches, successors and assigns, in such capacity, "Financial Institution"), any deposits in such account, including, without limitation, any interest, additions and proceeds due or to become due on such account; any successor account howsoever numbered; all accounts issued in renewal, extension or increase or decrease of or replacement or substitution for any of the foregoing (whether such accounts are deposit accounts, negotiable or non-negotiable or book entry certificates of deposit, book entry investment time deposits, savings accounts, money market accounts, time deposits, demand deposit accounts, instruments, general intangibles, chattel paper or otherwise); and all promissory notes, checks, cash, certificates of deposit, passbooks, deposit receipts, instruments, certificates and other records from time to time representing or evidencing the Account.

This Assignment secures the payment and performance of the Liabilities. The term "Borrower" in this Assignment means each and all of AppHarvest Pulaski Farm, LLC.

Control Agreement with Financial Institution and Power of Attorney. The Secured Party’s presentation of a copy of this Assignment to the Financial Institution is the Assignor's authentication of an irrevocable instruction to the Financial Institution to follow the Secured Party’s instructions with respect to the Account without the Assignor’s further consent concerning (1) the disposition of funds in the Account and (2) any other matter relating to the Account. The Assignor hereby grants and provides to the Secured Party control over the Account and this Agreement shall operate as Assignor’s authentication of an irrevocable instruction by Assignor to the Financial Institution to follow the instructions of Secured Party with respect to the disposition of funds in the Account and any other matter relating to the Account without further inquiry or consent of Assignor. The Secured Party is given an irrevocable power of attorney coupled with an interest to execute any control agreement in the Assignor’s name with the Financial Institution in form and substance satisfactory to the Secured Party and to perform any obligation of the Assignor under this Assignment. The Assignor also irrevocably authorizes and directs the Financial Institution to send duplicate notices, statements and all other communications concerning the Account to the Secured Party upon request of the Secured Party. The Secured Party is authorized at any time to restyle the Account or any portion thereof in its name or its nominee’s name. The Financial Institution is directed to follow all of the Secured Party's instructions without investigating the reason for any action taken by the Secured Party or the existence of any default and may rely on the instructions of the Secured Party without any liability to the Assignor. The rights and powers granted to the Secured Party in this Assignment are powers coupled with an interest and will neither be affected by termination of existence or bankruptcy of the Assignor nor by the lapse of time.

The Assignor agrees that neither Financial Institution nor any of its respective branches, officers, employees or affiliates will breach any duty to Assignor if any of them complies in good faith with the instructions issued by Secured Party or any instructions contained in this Agreement or if any of them fails to comply with any contrary or inconsistent instructions that may subsequently be issued by Assignor. Assignor further holds harmless and indemnifies Financial Institution and its branches, officers, employees and affiliates against any claim, loss, cost or expense arising out of any actions or omissions taken by any person in reliance on or compliance with the instructions of Secured Party and authorizations contained in this Agreement. The instructions contained in this Agreement may be

revoked and the terms of this Agreement may be amended by Assignor only if Financial Institution receives (i) Secured Party's written consent to the revocation or amendment, or (ii) Secured Party's written notification that its security interest has been terminated.

Liabilities. The term "Liabilities" in this Assignment means all debts, obligations, indebtedness and liabilities of every kind and character of the Borrower whether individual, joint and several, contingent or otherwise, now or hereafter existing in favor of the Secured Party including, without limitation, all liabilities, interest, costs and fees, arising or occurring under or from any line of credit with the Secured Party (including, without limitation, all obligations under that certain Promissory Note dated September 24, 2021 by and among the Borrower and the Secured Party, as amended, modified, restated, replaced or extended from time to time), whether payable to the Secured Party or to a third party and subsequently acquired by the Secured Party, any monetary obligations (including interest) incurred or accrued during the pendency of any bankruptcy, insolvency, receivership or other similar proceedings, regardless of whether allowed or allowable in such proceeding, and all renewals, extensions, modifications, consolidations, rearrangements, restatements, replacements or substitutions of any of the foregoing. Without limiting the foregoing, the Liabilities further include all

costs of collection of the Liabilities, whether such costs are incurred in collection from the Borrower or in proceeding against the Assignor hereunder, including, without limitation, legal fees of the Secured Party in such enforcement.

Representations, Warranties and Covenants. The Assignor represents, warrants and covenants that it will not withdraw any monies from the Account and during the term of this Agreement to the extent that the cash balance in the Account shall be less than 105% of the outstanding principal balance of the Liabilities. Any passbook, certificate or other evidence of the Account has been delivered to the Secured Party. The Assignor represents and warrants that (i) it is the sole owner of the Account, and the Account is free of all liens, security interests, and encumbrances (except for that contained herein) and the Assignor has not made any prior assignment or transfer of any kind of the Account, the proceeds thereof or interests thereon or therein, except such as may have been created in favor of the Secured Party; (ii) this Assignment does not violate, or require any consent, approval or other action by any governmental official or body or any other person or entity, under any law, regulation, decree or order or any agreement or arrangement binding upon the Assignor or the property of the Assignor; (iii) the Assignor has taken all organizational and legal action necessary to authorize the execution, delivery and performance of this Assignment and the assignment of the Account; (iv) this Assignment constitutes a legal, valid and binding obligation of the Assignor enforceable in accordance with its terms and creates in favor of the Secured Party a perfected, first priority security interest in the Account and all related monies, proceeds and interest; and (v) the execution, delivery and performance of this Assignment and the assignment of the Account are private and commercial acts.

Default/Remedies. If any of the Liabilities are not paid at maturity, whether by acceleration or otherwise, or if an event of default occurs hereunder or under the terms of any agreement related to any of the Liabilities, then the Secured Party shall have the right immediately, without notice, at the Secured Party's option, to withdraw (even if any early withdrawal penalty is imposed as a result) all or any portion of the Account and apply those moneys to the Liabilities whether or not the Liabilities have been declared to be due and owing, provided that, to the extent any Liabilities consist of extensions of credit to the Borrower by the issuance of letters of credit or other like obligations of the Secured Party to third parties which have not then been drawn upon, such proceeds shall be held by the Secured Party in a cash collateral account as security for the Liabilities. Furthermore, notwithstanding the foregoing, so long as any of the Liabilities are outstanding, the Assignor hereby unconditionally and irrevocably authorizes and instructs the Secured Party, without prior notice to or demand for payment upon the Assignor, and even if any early withdrawal or other penalty is imposed as a result, to apply all or any portion of the Account to fund or reimburse the Secured Party with respect to any such Liabilities. The Secured Party may act or decline to act upon the foregoing authorization and instruction at any time and from time to time in its sole discretion.

Collateral Maintenance. The Assignor agrees that, so long as any of the Liabilities are outstanding or any line of credit from Secured Party is in place for any Borrower, it will at all times maintain an aggregate deposits in the Account equal to at least 105% of the sum of (i) the maximum amount drawn by the Borrower under each and every line of credit (such required amount, at any time, “Required Collateral Amount”) and (ii) any other outstanding Liabilities. The Assignor will, at the Secured Party's option, either supplement the deposits in the Account or make any payment under the Liabilities to the extent necessary to ensure compliance with this provision or the Secured Party may liquidate deposits in the Account to the extent necessary to ensure compliance with this provision. In the event that any of the Liabilities are denominated in a currency other than U.S. Dollars, such Liabilities shall first be converted into U.S. Dollars using Secured Party’s selling rate for such currency most recently in effect for purposes of determining compliance with this provision.

Miscellaneous. The Assignor consents to any extension, postponement or renewal of any Liabilities, the release or discharge of all or any part of any security for the Liabilities, and the release or discharge or suspension of any rights and remedies against any person who may be liable for any of the Liabilities. The Secured Party does not have to look to any other right, any other collateral, or any other person for payment before it exercises its rights under this Assignment. The Assignor's obligations to the Secured Party under this Assignment are not subject to any condition, precedent or subsequent. If more than one person or entity signs this Assignment as Assignor, their obligations, covenants, representations and warranties are joint and several and the Account includes any property that is owned by any one or more, individually or jointly with any other person or entity. This Assignment is binding on the Assignor and its heirs, successors and assigns, and is for the benefit of the Secured Party and its successors and assigns. The use of section headings shall not limit the provisions of this Assignment. The Assignor authorizes the Secured Party to take whatever actions, and to execute any agreement, document or instrument, which the Secured Party deems necessary or desirable to accomplish the purposes of this Assignment. A carbon, photographic or other reproduction of this Assignment is sufficient as, and can be filed as, a financing statement. The Secured Party is irrevocably appointed the Assignor's attorney-in-fact to execute any financing statement on the Assignor's behalf covering the Account. The Assignor authorizes the Secured Party to file one or more financing statements related to the security interests created by this Assignment and further authorizes the Secured Party, instead of the Assignor, to sign such financing statements. The Assignor waives any presentation, demand of payment, protest and notice of non-payment or protest. The Secured Party shall not under any circumstances be deemed to assume any responsibility for or obligation or duty with respect to the Account or any proceeds thereof or interest thereon, and shall not be required to take any action of any kind to collect, preserve or protect its or the Assignor's rights in the Account. The Assignor releases the Secured Party from any claims, causes of action and demands at any time arising out of or with respect to this Assignment, the use or disposition of the Account or any action taken or omitted to be taken by the Secured Party with respect thereto, and the Assignor hereby agrees to hold the Secured Party harmless from

and with respect to any and all claims, causes of action and demands. All items of income including interest and other income, gain, expense and loss recognized in the Account must be reported by Financial Institution in the name and tax identification number of Assignor. Further, Assignor agrees to pay any charges with respect to the Account directly and not out of the monies in or proceeds of the Account. Delivery of an executed counterpart of a signature page of this Assignment by telecopy, emailed pdf. or any other electronic means that reproduces an image of the actual executed signature page or the keeping of records in electronic form in accordance with applicable law, each of which shall be of the same legal effect, validity or enforceability as a manually executed counterpart of this Assignment.

Delivery of an executed counterpart of a signature page of this Assignment by telecopy, emailed pdf. or any other electronic means that reproduces an image of the actual executed signature page or the keeping of records in electronic form in accordance with applicable law, each of which shall be of the same legal effect, validity or enforceability as a manually executed counterpart of this Assignment. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to any document to be signed in connection with this Agreement and the transactions contemplated hereby shall be deemed to include Electronic Signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that nothing herein shall require the Secured Party or the Financial Institution to accept electronic signatures in any form or format without its prior written consent. Without limiting the generality of the foregoing, the Assignor hereby (i) agrees that, for all purposes, including without limitation, in connection with any workout, restructuring, enforcement of remedies, bankruptcy proceedings or litigation between the Secured Party or the Financial Institution and the Assignor or Borrower, electronic images of this Agreement shall have the same legal effect, validity and enforceability as any paper original, and (ii) waives any argument, defense or right to contest the validity or enforceability of the Agreement based solely on the lack of paper original copies of the Agreement, including with respect to any signature pages thereto. “Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a person with the intent to sign, authenticate or accept such contract or record.

Governing Law and Venue. This Assignment shall be governed by and construed in accordance with the laws of the State of New York (without giving effect to its laws of conflicts), and to the extent applicable, federal law, except to the extent that the laws regarding the perfection and priority of security interests of the state(s) in which either the Assignor or any property securing the Liabilities is located, are applicable. The Assignor agrees that any legal action or proceeding with respect to any of its obligations under this Assignment may be brought by the Secured Party in any state or federal court located in the State of New York, as the Secured Party in its sole discretion may elect. By the execution and delivery of this Assignment, the Assignor submits to and accepts, for itself and in respect of its property, generally and unconditionally, the non-exclusive jurisdiction of those courts. The Assignor waives any claim that the State of New York is not a convenient forum or the proper venue for any such suit, action or proceeding. Furthermore, the Assignor expressly waives any immunity (whether characterized as sovereign immunity or otherwise) from suit, from the jurisdiction of any court, from attachment prior to, or in aid of execution of, a judgment, or from execution of a judgment.

WAIVER OF SPECIAL DAMAGES. THE ASSIGNOR WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT THE ASSIGNOR MAY HAVE TO CLAIM OR RECOVER FROM THE SECURED PARTY IN ANY LEGAL ACTION OR PROCEEDING ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.

JURY WAIVER. THE ASSIGNOR AND THE SECURED PARTY (BY ITS ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) BETWEEN THE ASSIGNOR AND THE SECURED PARTY ARISING OUT OF OR IN ANY WAY RELATED TO THIS DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE SECURED PARTY TO PROVIDE THE FINANCING DESCRIBED HEREIN.

Assignor: APPHARVEST OPERATIONS, INC.


By:	/s/ Loren Eggleton
	Loren Eggleton	Chief Financial Officer
	Printed Name	Title
Date Signed:	09/27/2021

The Financial Institution acknowledges that the Account has been assigned to the Secured Party and is subject to a lien, security interest, pledge and assignment in the Secured Party’s favor and that the Secured Party has control of the Account and the Financial Institution will follow the Secured Party’s instructions with respect to the disposition of funds in the Account and other matters concerning the Account without further inquiry of Assignor or the Assignor’s further consent. Financial Institution will not agree to comply with any third party entitlement orders or instructions concerning the Account without the prior written consent of Secured Party. Financial Institution will not honor any drafts, demands, requests for withdrawal, remittance debts, transfer orders or other requests and instructions by Assignor with respect to the Account after the date of this Agreement without the prior written consent of Secured Party. The Account will be subject to the sole signing authority of the Secured Party.


Financial Institution:

JPMorgan Chase Bank, N.A.

By:	/s/ Richard Barritt
	Richard Barritt	Executive Director
	Printed Name	Title

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jonathan Webb, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of AppHarvest, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:

November 10, 2021

/s/ Jonathan Webb

Jonathan Webb

Chief Executive Officer, and Chairperson

(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Loren Eggleton, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of AppHarvest, Inc.;

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:

November 10, 2021

/s/ Loren Eggleton

Loren Eggleton

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of AppHarvest, Inc., (the "Company") on Form 10-Q for the fiscal quarter ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jonathan Webb, Chief Executive Officer of the Company, certify, based on my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:

November 10, 2021

/s/ Jonathan Webb

Jonathan Webb

Chief Executive Officer, and Chairperson

(Principal Executive Officer)

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of AppHarvest, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of AppHarvest, Inc., (the "Company") on Form 10-Q for the fiscal quarter ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Loren Eggleton, Chief Financial Officer of the Company, certify, based on my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:

November 10, 2021

/s/ Loren Eggleton

Loren Eggleton

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)