Item 1.01 Entry into a Material Definitive Agreement.
On January 10, 2022, AppHarvest Pulaski Farm, LLC, a Delaware limited liability company (the “Borrower Subsidiary”) and wholly-owned indirect subsidiary of AppHarvest, Inc. (the “Company”), entered into an amended and restated promissory note (the “Amended Note”) in favor of JPMorgan Chase Bank, N.A. (the “Bank”), which amends the promissory note dated September 24, 2021 only for reference purposes (the “Existing Note”, and together with the Amended Note the “Note”). Capitalized terms used in this Current Report on Form 8-K (this “Form 8-K”) but not otherwise defined herein have the meanings ascribed to them in the Amended Note.
The material changes effected to the terms of the Existing Note by the Amended Note include the following: (i) the increase of the existing line of credit facility in the maximum amount from $25 million to $50 million; and (ii) the implementation of SOFR as the replacement of LIBOR as a benchmark interest rate for U.S. dollar borrowings.
The interest rate on the Loans is an agreed rate between the Borrower Subsidiary and the Bank that is (a) the CB Floating Rate plus the Applicable Margin, (b) the Fixed Rate for the applicable Interest Period or (c) the Adjusted Term SOFR Rate plus the Applicable Margin, 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 months, on the last day of each three month interval after the date such Loan is made, at maturity and thereafter, on demand. Any Loan not paid when due will bear interest of 2% per annum above the CB Floating Rate plus the Applicable Margin. The Borrower Subsidiary may not prepay any Fixed Rate Loan or SOFR Loan prior to the last date of the applicable Interest Period. CB Floating Rate Loans may be prepaid by the Borrower Subsidiary at any time without premium or penalty upon at least 1 business day prior written notice to the Bank. All outstanding principal and accrued interest are due upon maturity of the JPM Loan. As of the filing date of this Form 8-K, the Company has borrowed approximately $24.3 million under the Note.
AppHarvest Operations, Inc. (the “Guarantor”) and wholly-owned subsidiary of the Company, which previously executed a Guaranty-Multiple Subsidiaries (the “Guaranty”) and Assignment of Deposit Account (“Assignment”), each dated September 24, 2021 only for reference purposes, and filed by the Company, (i) acknowledged and consented to all of the terms and conditions of the Amended Note, (ii) confirmed that all obligations under the Note constitute Liabilities under and as defined in the Guaranty, and (iii) confirmed that there is no default under the Guaranty or event or occurrence which would constitute an event of default.
Consistent with the Existing Note, the Amended Note contains customary events of default, including, among others, those relating to failure to make a payment, bankruptcy, material defaults on other indebtedness, breaches of representations, material adverse changes and defaults under the Guaranty or the Assignment.
The foregoing description of the Amended Note is qualified in its entirety by reference to the full text of the Amended Note, a copy of which will be filed as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.