AudioEye, Inc. and its wholly-owned subsidiary, Springtime, Inc, entered into a Loan and Security Agreement with SG Credit Partners, Inc., a Delaware corporation (the ?Lender?). The Loan Agreement provides for a $7.0 million term loan, with a maturity date of 36 months and no amortization payments such that the entire principal amount is due and payable on the maturity date. The interest rate is 6.25% in excess of the base rate, which is defined as the greater of the prime rate and 7.00% per annum, payable in cash on a monthly basis.

In the event of default under the Loan Agreement, the Borrowers would be required to pay interest on principal and all other due and unpaid obligations at the current rate in effect plus 3.00%. The proceeds of the Term Loan may be used to repurchase shares of the Company?s common stock, to fund an earnout related to an acquisition and for working capital and general corporate purposes. The Borrowers provided a first priority security interest in all existing and future acquired assets owned by the Borrowers.

The Loan Agreement contains certain customary covenants that limit the Borrowers? ability to engage in certain transactions. The Loan Agreement also contains customary indemnification obligations and customary events of default, including, among other things, (i) non-payment, (ii) breach of warranty, (iii) non-performance of covenants and obligations, (iv) default on other indebtedness, (v) judgments, (vi) change of control, (vii) bankruptcy and insolvency and (viii) impairment of assets.

In addition, the Borrowers must maintain (i) at all times and reported as of the last day of each calendar month minimum liquidity of not less than $2.0 million (plus, prior to Borrowers? payment in full of an earnout related to an acquisition, an amount equal to the greater of $2.1 million and the expected amount of the earnout) and (ii) minimum monthly recurring revenue levels measured on a trailing three (3) month average basis as of the last day of each calendar month. The minimum monthly recurring revenue levels commence at $2.3 million and increase for each month after the month ending November 30, 2024 to the greater of $2.3 million and 105.00% of Borrowers?

monthly recurring revenue for the applicable month in the prior year. The Term Loan has a prepayment fee for payments made (i) on or before the 1st anniversary of the closing date equal to a make-whole amount plus 3% of the prepaid principal amount, (ii) after the 1st anniversary of the closing date but before the 2nd anniversary of the closing date equal to 2.00%, and (iii) after the 2nd anniversary of the closing date but before the maturity date equal to 1.00%. The Borrowers are also required to pay an exit fee equal to $105,000 upon the earlier of repayment in full of the obligations, the maturity date and the occurrence of a liquidity event.

The Borrowers also paid a commitment fee equal to $105,000 on the closing date.