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Applied UV, Puro, Acuity Enter Note Cancellation Agreement

Applied UV, Puro, Acuity Enter Note Cancellation Agreement

In connection with the transactions contemplated by the Agreement and Plan of Merger dated as of December 19, 2022 (the “Merger Agreement”), by and among Applied UV, Inc. (the “Company”), PURO Acquisition Sub I, Inc., PURO Acquisition Sub II, LLC, PURO Lighting LLC, Brian Stern and Andrew Lawrence, the Company entered into a Note Purchase and Cancellation Agreement (the “Note Cancellation Agreement”) dated as of January 5, 2023, with PURO Lighting, LLC (“PURO”), and Acuity Brands Lighting, Inc. (“Acuity”).

Pursuant to the terms of the Note Cancellation Agreement, the Company has agreed to pay Acuity a price (the “Note Cancellation Price”) that consists of (i) $2,500,000 in cash and (ii) 1,250,000 shares of the Company’s preferred stock to be designated as “2% Series B Cumulative Perpetual Preferred Stock” (the “Series B Preferred Stock”), in return for Acuity’s sale and cancellation of the $5,000,000 Unsecured Convertible Promissory Note made by PURO on September 28, 2020 and held by Acuity. The Company expects to pay Acuity the Note Cancellation Price on or before the closing of the transactions contemplated by the Merger Agreement. The Company expects to finance the cash portion of the Note Cancellation Price from an existing and unused revolving credit line. A certificate of designations for the Series B Preferred Stock will be filed in Delaware prior to the payment of the Note Cancellation Price. The Company has agreed with Acuity that the Series B Preferred Stock shall accrue quarterly cumulative dividends at a rate of 2% per annum, have a liquidation preference of $6.00 per share and be:

• Convertible at any time into shares of the Company’s common stock at a rate of one share of common stock for each share of Series B Preferred Stock (liquidation preference $6.00 per share);

• Redeemable after 30 months from issuance at the option of the holder in whole or in part, at the redemption price of $2.00 per share; provided that if such redemption occurs on or after the five (5) year anniversary of the issuance date, the redemption paid by the Company will be $6.00 per share;

• Redeemable at the option of the Company if change of control of the Company occurs at a a redemption price of $6.00;

• Ranked (i) senior to all classes or series of the Company’s common stock and to all other equity securities expressly designated as ranking junior to the Series B Preferred Stock; (ii) on parity with the Company’s 10.5% Series A Cumulative Perpetual Preferred Stock; (iii) at least on parity with any future class or series of our equity securities; and (iv) effectively junior to all our existing and future indebtedness; and

• Non-voting.

The shares of Series B Preferred Stock will be restricted securities and not be listed on any exchange.

The foregoing description of the Note Purchase Agreement is not intended to be complete and is qualified in its entirety by reference to the full text of the Note Purchase Agreement, a copy of which is filed as Exhibit 10.1 hereto and incorporated by reference herein.

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