Item 1.01 Entry into a Material
Definitive Agreement.
The Acquisition
On March 25, 2022, MunnWorks,
LLC (“Purchaser”), a New York limited liability company and a wholly-owned subsidiary of Applied UV, Inc. (the “Company”)
entered into an asset purchase agreement (the “APA”) with VisionMark, LLC (“Seller”), Maya Systems, LLC d/b/a
Benchmark Furniture MFG (“Maya”), Mega Vision, Inc. (“MV” and, together with Maya, the “Members”),
Sandy Marks (“Marks”) and Michael Chiriac, Sr. (“Chiriac” and, together with Marks, the “Key Persons”).
Pursuant to the APA, Purchaser acquired substantially all of the assets of Seller (the “Business”), including raw materials,
inventory and work-in-progress, and assumed certain limited obligations of Seller, as set forth in the APA (the “Acquisition”).
On March 25, 2022 (the
“Closing Date”), the Acquisition was completed.
On the Closing Date,
Seller received, as consideration for the Acquisition, the purchase price consisting of: (i) $10 in cash; and (ii) the agreement by Purchaser
to assume approximately $1.2 million in past due rent owing by Seller (the “Past Due Rent”) under that certain lease agreement
by and between MV and the landlord thereunder (the “Prime Lease”), payable in equal monthly installments spread over thirty
six (36) months, as set forth in the Sublease, dated as of March 29, 2022 among the Purchaser, the Seller and Randolph Associates (the
“Sublease”).
Sales Commission Payments
Pursuant to the APA,
Purchaser agreed to make certain additional payments to Seller in the form of a sales commission during the four (4) year period following
the Closing Date (the “Sales Commission Payments”), as follows: (i) during the first two (2) years following the Closing Date
(the “Initial Period”), Purchaser will pay to Seller, on a quarterly basis, an amount equal to 2.5% of certain net sales generated
by the Business; and (ii) during the two (2) years following the Initial Period, Purchaser will pay to Seller, on a quarterly basis, an
amount equal to 5% of certain net sales generated the Business. Sales that qualify for the Sales Commission Payments will be limited to
(i) sales made to new clients generated by the Members or the Key Persons, and (ii) sales to certain existing clients of Seller specified
under the APA; provided that Sales Commission Payments related to such existing clients are conditioned on the Members and the Key Persons
providing support to Purchaser in the transition and maintenance of those existing clients as described in the APA.
Sublease and Sublease
Guaranty
Purchaser has agreed
to sublease all of Seller’s right, title and interest in the Prime Lease, subject to the terms of the Sublease, which include: (i)
an initial term expiring June 30, 2023, with two (2) successive 1-year renewal options to be exercised at Purchaser’s discretion;
(ii) Purchaser’s obligation to pay base rent, as defined in the Prime Lease, directly to the landlord each month; (iii) Purchaser’s
obligation to pay Past Due Rent in equal monthly payments spread over thirty six (36) months. However, if the Purchaser does not renew
the Sublease, its aggregate obligation to pay Past Due Rent shall be decreased to $600,000.
Additionally, the Company
has agreed to guarantee the obligations of the Purchaser under the Sublease pursuant to a Guaranty of Sublease dated as of March 29, 2022
made by the Company in favor of the Seller and Randolph Associates (the “Sublease Guaranty”). Under the terms of the Sublease
Guaranty, the Company will guarantee the Purchaser’s obligations under the Sublease, including base rent payable during the term
of the Sublease and the Purchaser’s obligations to pay Past Due Rent.
The foregoing summary does not purport
to be complete and is subject to, and qualified in its entirety by, the full text of the APA, Sublease and Sublease Guaranty, which are
filed as Exhibits 2.1, 10.1 and 10.2 to this Current Report on Form 8-K, respectively, and are incorporated herein by reference.