Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Amendment to Employment Agreement with Chief Financial Officer
On February 20, 2023, the Compensation Committee (the "Compensation Committee")
of the Board of Directors (the "Board") of AppHarvest, Inc. (the "Company")
approved an Amendment to Employment Agreement (the "Amendment"), which amends
the Employment Agreement, dated December 11, 2020, between the Company and Loren
Eggleton, the Company's Chief Financial Officer. The Amendment provides for
changes to certain severance benefits, each subject to a requirement that Mr.
Eggleton provide the Company with a general release of claims in a termination
agreement acceptable to the Company, as follows. In the event Mr. Eggleton's
employment is terminated without cause or he resigns for good reason (each as
defined in the employment agreement), he will be entitled to receive (i)
continuation of his base salary for twelve (12) months, less applicable
withholdings and deductions and (ii) payment or reimbursement of COBRA premiums
for twelve (12) months or, if earlier, the date when he becomes eligible for
substantially equivalent health insurance coverage in connection with new
employment or the date he ceases to be eligible for COBRA continuation coverage
for any reason.
In addition, on February 20, 2023, the Compensation Committee approved an
increase to the base salary payable to Mr. Eggleton, effective as of January 1,
2023. As previously reported in the Company's Definitive Proxy Statement on
Schedule 14A, filed with the Securities and Exchange Commission on April 1,
2022, prior to this increase, Mr. Eggleton's base salary was $345,000 per year,
and effective as of January 1, 2023, Mr. Eggleton's base salary is $400,000 per
year.
The foregoing description of the Amendment does not purport to be complete and
is qualified in its entirety by reference to the Amendment, a copy of which will
be filed with the Company's Annual Report on Form 10-K for the year ending
December 31, 2022.
Retention Agreement with Chief Financial Officer
On February 20, 2023, the Compensation Committee approved a Retention Bonus
Agreement between Mr. Eggleton and the Company (the "Retention Agreement"),
pursuant to which Mr. Eggleton is eligible for a one-time bonus payment (the
"Transaction Bonus"), subject to his continued service with the Company through
and until the consummation of a strategic transaction, whether through the
issuance and sale of equity securities of the Company in a bona fide financing
transaction, the sale of an asset or assets of the Company or its subsidiaries
or the consummation of a Change in Control (as defined in the Company's 2021
Equity Incentive Plan) (a "Strategic Transaction"). If achieved, the Transaction
Bonus will be calculated as a portion of the gross proceeds received by the
Company in a qualifying Strategic Transaction as follows: (i) $300,000 if the
Strategic Transaction results in gross proceeds to the Company or its
stockholders, as applicable, of at least $75 million but less than $100 million;
(ii) $600,000 if the Strategic Transaction results in gross proceeds to the
Company or its stockholders, as applicable, of at least $100 million but less
than $125 million; (iii) $900,000 if the Strategic Transaction results in gross
proceeds to the Company or its stockholders, as applicable, of at least $125
million but less than $150 million; or (iv) $1.2 million if the Strategic
Transaction results in gross proceeds to the Company or its stockholders, as
applicable, of at least $150 million. If Mr. Eggleton's employment terminates
for any reason prior to the closing date of a Strategic Transaction, no
Transaction Bonus shall be paid subject to certain exceptions.
The foregoing description of the Retention Agreement does not purport to be
complete and is qualified in its entirety by reference to the Retention
Agreement, a copy of which will be filed with the Company's Annual Report on
Form 10-K for the year ending December 31, 2022.
Restricted Stock Unit and One-Time Bonus Award
On February 20, 2023, the Compensation Committee approved (i) the issuance of a
special, one-time cash bonus to Mr. Eggleton in the amount of $200,000, less
applicable withholding taxes, payable immediately and (ii) the grant to Mr.
Eggleton of 600,000 RSUs pursuant to the terms of the Company's 2021 Equity
Incentive Plan. The RSUs will vest subject to Mr. Eggleton's continuous service
to the Company through the applicable vesting dates in accordance with the
following schedule: one-third will vest on the one-year anniversary of the
vesting commencement date and the remainder will vest in two equal installments
on the two subsequent one-year anniversaries of the vesting commencement date.
Upon the closing of a Change of Control, 100% of the unvested RSUs shall vest
immediately subject to Mr. Eggleton's continuous service through such
consummation of a Strategic Transaction.
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