TSSI TSS Inc (QB)

VTC, L.L.C. (the “Borrower”), a wholly-owned subsidiary of TSS, Inc. (“TSS” or the “Company”), applied to Texas Capital Bank, N.A. (the “Lender”) under the Small Business Administration Paycheck Protection Program of the Coronavirus Air, Relief and Economic Security Act of 2020 (the “CARES Act”) for a loan of $889,858 (the “Loan”). On April 17, 2020, the Loan was approved and the Borrower received the Loan proceeds, which the Borrower plans to use for covered payroll costs, rent and utilities in accordance with the relevant terms and conditions of the CARES Act.

The Loan, which took the form of a promissory note issued by the Borrower (the “Promissory Note”), has a two-year term, matures on April 12, 2022, and bears interest at a rate of 1.00% per annum. Monthly principal and interest payments, less the amount of any potential forgiveness (discussed below), will commence on October 12, 2020. The Borrower did not provide any collateral or guarantees for the Loan, nor did the Borrower pay any facility charge to obtain the Loan. The Promissory Note provides for customary events of default, including, among others, failure to make an payment when due, cross-defaults under any loan documents with the Lender, certain cross-defaults under agreements with third parties, events of bankruptcy or insolvency, certain change of control events, and material adverse changes in the Borrower’s financial condition. If an event of default occurs, the Lender will have the right to accelerate indebtedness under the Loan and/or pursue other remedies available to the Lender pursuant to the terms of the Promissory Note.

The Borrower may apply to the Lender for forgiveness of some or all of the Loan, with the amount which may be forgiven equal to the sum of eligible payroll costs, mortgage interest, covered rent, and covered utility payments, in each case incurred by the Borrower during the eight-week period following the Effective Date of the Promissory Note, calculated in accordance with the terms of the CARES Act. Certain reductions in Borrower payroll costs during the eight-week period may reduce the amount of the Loan eligible for forgiveness. There is no guarantee, and the Lender does not make any representation, that the Borrower will receive forgiveness for any fixed amount of any Loan proceeds received by the Borrower.

The above description of the Promissory Note and the transactions contemplated thereby is only a summary and does not purport to be complete and is qualified in its entirety by reference to the full text of the Promissory Note, a copy of which is filed as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.