Item 1.01 Entry into a Material Definitive Agreement.
On December 15, 2021, AppHarvest,
Inc. (the “Company”) entered into a Common Stock Purchase Agreement (the “Purchase Agreement”)
and a Registration Rights Agreement (the “Registration Rights Agreement”) with B. Riley Principal Capital,
LLC (“B. Riley Principal Capital”). Pursuant to the Purchase Agreement, the Company has the right to sell to
B. Riley Principal Capital, up to the lesser of (i) $100,000,000 of newly issued shares (the “Shares”) of the
Company’s common stock, par value $0.0001 per share (the “Common Stock”), and (ii) the Exchange Cap (as
defined below) (subject to certain conditions and limitations), from time to time during the term of the Purchase Agreement. Sales of
Common Stock pursuant to the Purchase Agreement, and the timing of any sales, are solely at the option of the Company, and the Company
is under no obligation to sell any securities to B. Riley Principal Capital under the Purchase Agreement.
Upon the satisfaction of
the conditions to B. Riley Principal Capital’s purchase obligation set forth in the Purchase Agreement (the “Commencement”),
including that a registration statement registering under the Securities Act of 1933, as amended (the “Securities Act”),
the resale by B. Riley Principal Capital of shares of Common Stock issued to it by the Company under the Purchase Agreement, which the
Company agreed to file with the Securities and Exchange Commission (the “SEC”) pursuant to the Registration
Rights Agreement, is declared effective by the SEC and a final prospectus relating thereto is filed with the SEC, the Company will have
the right, but not the obligation, from time to time at the Company’s sole discretion over the 24-month period from and after the
Commencement, to direct B. Riley Principal Capital to purchase a specified amount of shares of Common Stock, not to exceed 20% of the
Purchase Volume Reference Amount (as defined below) applicable to such Purchase (each, a “Purchase”), by delivering
written notice to B. Riley Principal Capital prior to the commencement of trading of the Common Stock on The Nasdaq Global Select Market
(“Nasdaq”) on any trading day (the “Purchase Date”), so long as, (i) the closing
sale price of the Common Stock on the trading day immediately prior to such trading day is not less than the specified threshold price
set forth in the Purchase Agreement and (ii) all shares of Common Stock subject to all prior purchases by Principal Capital under the
Purchase Agreement have theretofore been received by B. Riley Principal Capital electronically as set forth in the Purchase Agreement.
The per share purchase price
for the shares of Common Stock that the Company elects to sell to B. Riley Principal Capital in a Purchase pursuant to the Purchase Agreement,
if any, will be determined by reference to the volume weighted average price of the Common Stock (the “VWAP”),
during the full regular trading hour period on Nasdaq on the applicable Purchase Date, calculated in accordance with the Purchase Agreement,
or, if the trading volume threshold calculated in accordance with the Purchase Agreement is reached during such regular trading hour period,
then only during the portion of the regular trading hour period on the applicable Purchase Date prior to the time such volume threshold
is reached, the precise commencement and ending times of such period determined in accordance with the Purchase Agreement (the “Purchase
Valuation Period”), less a variable discount ranging from 3% to 5%. The applicable discount for a Purchase will depend on
the aggregate number of shares of Common Stock purchased by B. Riley Principal Capital on the applicable Purchase Date for the Purchase
and all Additional Purchases effected on the same Purchase Date as such Purchase (as applicable) (such amount, the “Aggregate
Daily Purchase Share Amount”) relative to the Purchase Volume Reference Amount.
In addition to the regular
Purchases described above (subject to certain additional conditions and limitations as described in the Purchase Agreement), the Company
may also direct B. Riley Principal Capital, on the same Purchase Date on which the Company has properly submitted a Purchase Notice for
a Purchase, with respect to which the Purchase Valuation Period has ended prior to 1:30 p.m., New York City time, on such Purchase Date
(provided all shares of Common Stock subject to all prior Purchases and Additional Purchases effected by us under the Purchase Agreement
theretofore required to have been received by B. Riley Principal Capital electronically on the applicable settlement date therefor have
been so received by B. Riley Principal Capital in accordance with the Purchase Agreement), to purchase an additional amount of Common
Stock (each such additional purchase, an “Additional Purchase”) by delivering written notice to B. Riley Principal
Capital by no later than 1:30 p.m., New York City time, on such Purchase Date, not to exceed 20% of the Purchase Volume Reference Amount
applicable to such Additional Purchase.
The per share purchase price
for the shares of Common Stock that the Company elects to sell to B. Riley Principal Capital in an Additional Purchase pursuant to the
Purchase Agreement, if any, will be calculated in the same manner as in the case of a Purchase, provided that the VWAP will be measured
during the portion of the normal trading hours on the applicable Purchase Date determined in accordance with the Purchase Agreement (such
period, the “Additional Purchase Valuation Period”).
The “Purchase Volume
Reference Amount” is the lowest of: (i) the total number of shares of Common Stock traded on Nasdaq during the trading day immediately
preceding the applicable purchase date for the Purchase; (ii) the average daily number of shares of Common Stock traded on Nasdaq during
the five consecutive trading day-period ending on (and including) the trading day immediately preceding the applicable purchase date for
the Purchase; and (iii) the average daily number of shares of Common Stock traded on Nasdaq during the 21 consecutive trading day-period
ending on (and including) the trading day immediately preceding the applicable purchase date for the Purchase. If the Aggregate Daily
Purchase Share Amount for a Purchase is equal to or less than 6.67% of the Purchase Volume Reference Amount applicable to such Purchase,
the discount for such Purchase will be 3%. If the Aggregate Daily Purchase Share Amount for a Purchase or Additional Purchase, as applicable,
is greater than 6.67%, but less than 15%, of the Purchase Volume Reference Amount applicable to such Purchase or Additional Purchase,
the discount for such Purchase or Additional Purchase will be 4%. If the Aggregate Daily Purchase Share Amount for a Purchase or Additional
Purchase is equal to or greater than 15% of the Purchase Volume Reference Amount applicable to such Purchase or Additional Purchase, the
discount for such Purchase or Additional Purchase will be 5%.
There is no upper limit on
the price per share that B. Riley Principal Capital could be obligated to pay for the Common Stock the Company may elect to sell to it
in any Purchase or any Additional Purchase under the Purchase Agreement. The purchase price per share of Common Stock that the Company
may elect to sell to B. Riley Principal Capital in a Purchase and an Additional Purchase under the Purchase Agreement will be equitably
adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring
during the applicable Purchase Valuation Period for such Purchase or during the applicable Additional Purchase Valuation Period for such
Additional Purchase.
From and after Commencement,
the Company will control the timing and amount of any sales of Common Stock to B. Riley Principal Capital. Actual sales of shares of Common
Stock to B. Riley Principal Capital under the Purchase Agreement will depend on a variety of factors to be determined by the Company from
time to time, including, among other things, market conditions, the trading price of the Company’s Common Stock and determinations
by the Company as to the appropriate sources of funding for its business and its operations.
Under the applicable Nasdaq
rules, in no event may the Company issue to B. Riley Principal Capital under the Purchase Agreement more than 20,143,404 shares of Common
Stock, which number of shares is equal to 19.99% of the shares of the Common Stock outstanding immediately prior to the execution of
the Purchase Agreement (the “Exchange Cap”), unless (i) the Company obtains stockholder approval to issue shares
of Common Stock in excess of the Exchange Cap in accordance with applicable Nasdaq rules, or (ii) the average price per share paid by
B. Riley Principal Capital for all of the shares of Common Stock that the Company directs B. Riley Principal Capital to purchase from
the Company pursuant to the Purchase Agreement, if any, equals or exceeds $5.11 per share (representing the lower of the official closing
price of the Common Stock on Nasdaq on the trading day immediately preceding the date of the Purchase Agreement and the average official
closing price of the Common Stock on Nasdaq for the five consecutive trading days ending on the trading day immediately preceding the
date of the Purchase Agreement, as adjusted pursuant to applicable Nasdaq rules). Moreover, the Company may not issue or sell any shares
of Common Stock to B. Riley Principal Capital under the Purchase Agreement which, when aggregated with all other shares of Common Stock
then beneficially owned by B. Riley Principal Capital and its affiliates (as calculated pursuant to Section 13(d) of the Securities Exchange
Act of 1934, as amended, (the "Exchange Act") and Rule 13d-3 promulgated thereunder), would result in B. Riley Principal
Capital beneficially owning more than 4.99% of the outstanding shares of Common Stock.
The net proceeds under
the Purchase Agreement to the Company will depend on the frequency and prices at which the Company sells shares of its stock to B.
Riley Principal Capital. The Company expects that any proceeds received by it from such sales to B. Riley Principal Capital will be
used for working capital and general corporate purposes.
There are no restrictions
on future financings, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement or Registration
Rights Agreement other than a prohibition on entering (with certain limited exceptions) into a “Variable Rate Transaction,”
as defined in the Purchase Agreement. B. Riley Principal Capital has agreed that none of B. Riley Principal Capital, its officers, its
sole member or any entity managed or controlled by B. Riley Principal Capital or its sole member will engage in or effect, directly or
indirectly, for its own account or for the account of any other of such persons or entities, any short sales of the Common Stock or hedging
transaction that establishes a net short position in the Common Stock during the term of the Purchase Agreement.
The Purchase Agreement will
automatically terminate on the earliest to occur of (i) the first day of the month next following the 24-month anniversary of the date
of the Commencement, (ii) the date on which B. Riley Principal Capital shall have purchased from the Company under the Purchase Agreement
shares of Common Stock for an aggregate gross purchase price of $100 million, (iii) the date on which the Common Stock shall have failed
to be listed or quoted on Nasdaq or another U.S. national securities exchange identified as an “eligible market” in the Purchase
Agreement, (iv) the 30th trading day after the date on which a voluntary or involuntary bankruptcy proceeding involving the
Company has been commenced that is not discharged or dismissed prior to such trading day, and (v) the date on which a bankruptcy custodian
is appointed for all or substantially all of the Company’s property or the Company makes a general assignment for the benefit of
creditors. The Company has the right to terminate the Purchase Agreement at any time after Commencement, at no cost or penalty, upon ten
(10) trading days’ prior written notice to B. Riley Principal Capital. The Company and B. Riley Principal Capital may also agree
to terminate the Purchase Agreement by mutual written consent, provided that no termination of the Purchase Agreement will be effective
during the pendency of any Purchase that has not then fully settled in accordance with the Purchase Agreement. Neither the Company nor
B. Riley Principal Capital may assign or transfer the Company’s respective rights and obligations under the Purchase Agreement or
the Registration Rights Agreement, and no provision of the Purchase Agreement or the Registration Rights Agreement may be modified or
waived by the Company or B. Riley Principal Capital.
As consideration for B.
Riley Principal Capital’s commitment to purchase shares of Common Stock at the Company’s direction upon the terms and
subject to the conditions set forth in the Purchase Agreement, upon execution of the Purchase Agreement, the Company issued 197,628
shares of Common Stock to B. Riley Principal Capital.
The foregoing descriptions
of the Purchase Agreement and the Registration Rights Agreement do not purport to be complete and are qualified in their entirety by reference
to, and incorporate herein by reference, the full text of the Purchase Agreement and the Registration Rights Agreement, which are filed
herewith as Exhibit 10.1 and Exhibit 10.2, respectively.
This Current Report on Form
8-K shall not constitute an offer to sell or a solicitation of an offer to buy any Shares, nor shall there be any sale of Shares in any
state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the
securities laws of any such state or other jurisdiction.