AUVIP Applied UV Inc

Item 1.01. Entry into a Material Definitive Agreement.

On December 9, 2022, Applied UV, Inc. (the “Company”), SteriLumen, Inc. and MunnWorks, LLC (together with SteriLumen, Inc., the “Subsidiaries”) entered into that certain Loan and Security Agreement, as amended on December 9 by the First Modification to Loan and Security Agreement and Loan Documents (the “Loan Agreement”), with Pinnacle Bank (the “Lender”).

The Loan Agreement provides for a two year $5 million secured revolving credit facility (the “Loan Facility”) that is effect on December 9, 2022 (the “Effective Date”), of which consists of (i) a maximum advance rate of up to 85% of Net Face Amount of Eligible Accounts, plus (ii) the least of (A) the sum of 20% of the aggregate Eligible Inventory Value of raw materials Eligible Inventory and 35% of the aggregate Eligible Inventory Value of finished goods Eligible Inventory, (B) $1 million, (C) 80% of the net orderly liquidation value of raw materials and finished goods Eligible Inventory as determined by an outside inventory appraisal, or (D) 100% of the aggregate outstanding principal amount of Advances. In no event shall the aggregate amount of the outstanding Advances under the Loan Facility be greater than $5 million.

The loans under the Loan Facility bear interest at a rate equal to 1.5% per annum above the greater of: (i) the Prime Rate; and (ii) 4%. The Interest Margin with respect to that portion of the Daily Balance consisting of Advances against Eligible Inventory shall be at a rate equal to 2% per annum.

On the Effective Date the Company paid a loan fee of 2% of the amount of the Loan Facility and will be required to pay a loan fee of 1.5% of the amount of the Loan Facility annually thereafter.

The Loan Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to the Company and the Subsidiaries, including, without limitation, restrictions on liens, indebtedness, fundamental changes, capital expenditures, consignments of inventory and distributions.

The Loan Agreement contains customary events of default, including, without limitation, payment defaults, covenant defaults, breaches of certain representations and warranties, certain events of bankruptcy and insolvency, certain events under ERISA and judgments. If an event of default occurs and is not cured within any applicable grace period or is not waived, the Lender is entitled to take various actions, including, without limitation, the acceleration of amounts due thereunder and termination of commitments under the Loan Facility.

Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed thereto by the Loan Agreement. The foregoing description of the Loan Agreement is not intended to be complete and is qualified in its entirety by reference to the full text of the Loan Agreement, a copy of which is filed as Exhibit 10.1 hereto and Exhibit 10.2 hereto and each is incorporated by reference herein.