Item 1.01 Entry into a Material Definitive Agreement.
On September 27, 2021, AppHarvest Pulaski Farm, LLC, a Delaware limited liability company (the “Borrower Subsidiary”) and wholly-owned indirect subsidiary of AppHarvest, Inc. (the “Company”), entered into a promissory note (the “Note”) in favor of JPMorgan Chase Bank, N.A. (the “Bank”), dated September 24, 2021 only for reference purposes, providing for a line of credit facility in the maximum amount of $25 million (the “JPM Loan”) for capital expenditures and greenhouse construction and improvements. The JPM Loan will mature on September 24, 2022. 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 Note.
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 LIBO 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 LIBOR 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 $6.9 million under the Note.
Pursuant to a Guaranty-Multiple Subsidiaries (the “Guaranty”) executed by AppHarvest Operations, Inc. (the “Guarantor”) and wholly-owned subsidiary of the Company, on September 27, 2021, dated September 24, 2021 only for reference purposes, the Guarantor unconditionally and irrevocably guarantees to the Bank the punctual payment of the sums owed pursuant to the Note, with certain limited exceptions. Pursuant to an Assignment of Deposit Account (the “Assignment”) executed by the Guarantor on September 27, 2021, dated September 24, 2021 only for reference purposes, the Note is collateralized by cash collateral at the Bank. Access to funds under the JPM Loan is subject to a borrowing base requirement, which is calculated as cash collateral at the Bank and will be 105% of the aggregate borrowings under the JPM Loan.
The 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 descriptions of the Note, the Guaranty or the Assignment are qualified in their entirety by reference to the full text of the Note, the Guaranty and the Assignment, copies of which will be filed as exhibits to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.