GSB Globalscape Inc

On November 18, 2019, GlobalSCAPE, Inc. (the “Company”) entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., in its capacity as administrative agent, the lenders party thereto, and the other loan parties party thereto (together with the Company, the “Loan Parties”). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement.

The Credit Agreement provides for a term loan facility in the principal amount of $50,000,000 (the “Term Loan”) and revolving commitments in an aggregate principal amount of $5,000,000 (the “Revolving Loans”).

The proceeds of the Term Loan shall be used to (i) fund the Special Dividend (as defined below) and (ii) pay the fees and expenses incurred in connection with the Credit Agreement and related transactions. The proceeds of the Revolving Loans and the Letters of Credit shall be used to finance the working capital needs and for general corporate purposes of the Company and its subsidiaries. The Credit Agreement also permits the Company to reduce the aggregate principal amount of revolving credit commitments under the Credit Agreement, provided that (i) each reduction of the Revolving Commitments shall be in an amount that is an integral multiple of $250,000 and not less than $250,000 and (ii) the Company shall not terminate or reduce the Revolving Commitments if, after giving effect to any concurrent prepayment of the Revolving Loans in accordance with the prepayment of the loans, the Aggregate Revolving Exposure would exceed the aggregate Revolving Commitments.

The Credit Agreement has a five-year term. Borrowings under the Credit Agreement are collateralized by substantially all of the assets of the Company. The Loans comprising each ABR Borrowing (including each Swingline Loan) shall bear interest at the Alternate Base Rate plus the Applicable Rate and the Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate.

The Credit Agreement also contains financial covenants, including a leverage ratio not to exceed (i) 3.25 to 1.00 for each quarterly period ending on or prior to June 30, 2020, (ii) 3.00 to 1.00 for each quarterly period ending on or prior to December 31, 2020, (iii) 2.75 to 1.00 for each quarterly period ending on or prior to December 31, 2021 and (iv) 2.25 to 1.00 commencing January 1, 2022 and continuing for the remainder of the term of the Credit Agreement; and a fixed charge coverage ratio, for any period of four consecutive fiscal quarters ending on the last day of any fiscal quarter, to be less than 1.25 to 1.00.

The Credit Agreement also contains standard representations, warranties and covenants for a transaction of this nature, including, among other things, covenants relating to (i) financial reporting and notification, (ii) payment of obligations, (iii) compliance with law, (iv) maintenance of insurance and (v) maintenance of properties.

The above description of the Credit Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Credit Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.