Exhibit 10.1

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of the Effective
Date between SILICON VALLEY BANK, a California corporation (“Bank”), and
GlobalSCAPE, Inc., a Delaware corporation (“Borrower”), provides the terms on
which Bank shall lend to Borrower and Borrower shall repay Bank.  The parties
agree as follows:

1              ACCOUNTING AND OTHER TERMS

Accounting terms not defined in this Agreement shall be construed following
GAAP.  Calculations and determinations must be made following GAAP.  Capitalized
terms not otherwise defined in this Agreement shall have the meanings set forth
in Section 13.  All other terms contained in this Agreement, unless otherwise
indicated, shall have the meaning provided by the Code to the extent such terms
are defined therein.

2              LOAN AND TERMS OF PAYMENT

2.1          Promise to Pay.  Borrower hereby unconditionally promises to pay
Bank the outstanding principal amount of all Credit Extensions and accrued and
unpaid interest thereon as and when due in accordance with this Agreement.

2.1.1       Revolving Advances.

(a)           Availability.  Subject to the terms and conditions of this
Agreement, and an audit of the Collateral, the results of which must be
satisfactory to Bank, Bank shall make Advances not exceeding the Availability
Amount.  Amounts borrowed under the Revolving Line may be repaid and, prior to
the Revolving Line Maturity Date, reborrowed, subject to the applicable terms
and conditions precedent herein.

(b)           Termination; Repayment.  The Revolving Line terminates on the
Revolving Line Maturity Date, when the principal amount of all Advances, the
unpaid interest thereon, and all other Obligations relating to the Revolving
Line shall be immediately due and payable.

2.1.2       Term Loan.

(a)           Availability.  Bank shall make one (1) term loan available to
Borrower in an amount up to the Term Loan Amount on the Effective Date subject
to the satisfaction of the terms and conditions of this Agreement.

(b)           Repayment.  Borrower shall repay the Term Loan in thirty-six (36)
equal monthly installments of principal and interest (the “Term Loan Payment”). 
Beginning on the first day of the month following the month in which the Funding
Date occurs, each Term Loan Payment shall be payable on the first day of each
month.  Borrower’s final Term Loan Payment, due on the Term Loan Maturity Date,
shall include all outstanding principal and accrued and unpaid interest under
the Term Loan.

(c)           Prepayment.  At Borrower’s option, so long as an Event of Default
has not occurred and is not continuing, Borrower shall have the option to
prepay, in whole or in part, the Term Loan Amount advanced by Bank under this
Agreement, provided Borrower (a) provides written notice to Bank of its election
to prepay the Term Loan at least five (5) Business Days prior to such
prepayment, and (b) pays, on the date of the prepayment (i) such prepayment
amount; and; (ii) if paid on or before December 31, 2006, a premium equal to the
Make-Whole Premium.  Notwithstanding the foregoing, if Borrower prepays all or
any part of the Term Loan Amount after December 31, 2006, Borrower may do so
without premium or penalty, including but not limited to the Make-Whole Premium.

2.2          Overadvances.  If, at any time, the Credit Extensions under Section
2.1.1 exceed the lesser of either (a) the Revolving Line or (b) the Borrowing
Base, Borrower shall immediately pay to Bank in cash such excess.

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2.3          Payment of Interest on the Credit Extensions.

(a)           Interest Rate.

(i)            Advances.  Subject to Section 2.3(b), the principal amount
outstanding under the Revolving Line shall accrue interest at a floating per
annum rate equal to 1.00 percentage point above the Prime Rate, which interest
shall be payable monthly in accordance with Section 2.3(f) below.

(ii)           Term Loan.  Subject to Section 2.3(b), the principal amount
outstanding under the Term Loan shall accrue interest at a fixed per annum rate
equal to 1.25 percentage points above the Prime Rate (as in effect on the
Effective Date), which interest shall be payable monthly.

(b)           Default Rate. Immediately upon the occurrence and during the
continuance of an Event of Default, Obligations shall bear interest at a rate
per annum which is five percentage points above the rate effective immediately
before the Event of Default (the “Default Rate”).  Payment or acceptance of the
increased interest rate provided in this Section 2.3(b) is not a permitted
alternative to timely payment and shall not constitute a waiver of any Event of
Default or otherwise prejudice or limit any rights or remedies of Bank.

(c)           Adjustment to Interest Rate.  Changes to the interest rate of any
Advances based on changes to the Prime Rate shall be effective on the effective
date of any change to the Prime Rate and to the extent of any such change.

(d)           360-Day Year.  Interest shall be computed on the basis of a
360-day year for the actual number of days elapsed.

(e)           Debit of Accounts.  Bank may debit any of Borrower’s deposit
accounts, including the Designated Deposit Account, for principal and interest
payments or any other amounts Borrower owes Bank when due.  These debits shall
not constitute a set-off.

(f)            Payments.  Unless otherwise provided, interest is payable monthly
on the first calendar day of each month.  Payments of principal and/or interest
received after 12:00 p.m. Pacific time are considered received at the opening of
business on the next Business Day.  When a payment is due on a day that is not a
Business Day, the payment is due the next Business Day and additional fees or
interest, as applicable, shall continue to accrue.

2.4          Fees.  Borrower shall pay to Bank:

(a)           Revolving Line Commitment Fee.  A fully earned, non-refundable
commitment fee, on account of the Revolving Line, of $5,000, on the Effective
Date;

(b)           Term Loan Commitment Fee.  A fully-earned, non-refundable
commitment fee, on account of the Term Loan, of $15,000 on the Effective Date;

(c)           Unused Revolving Line Facility Fee.  A fee (the “Unused Revolving
Line Facility Fee”), payable quarterly, in arrears, on a calendar year basis, in
an amount equal to one quarter of one percent (0.25%) per annum of the average
unused portion of the Revolving Line, as determined by Bank.  Borrower shall not
be entitled to any credit, rebate or repayment of any Unused Revolving Line
Facility Fee previously earned by Bank pursuant to this Section notwithstanding
any termination of the Agreement or the suspension or termination of Bank’s
obligation to make loans and advances hereunder; and

(d)           Bank Expenses.  All Bank Expenses (including reasonable attorneys’
fees and expenses, plus expenses, for documentation and negotiation of this
Agreement) incurred through and after the Effective Date, when due.

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3              CONDITIONS OF LOANS

3.1          Conditions Precedent to Initial Credit Extension.  Bank’s
obligation to make the initial Credit Extension is subject to the condition
precedent that Bank shall have received, in form and substance satisfactory to
Bank, such documents, and completion of such other matters, as Bank may
reasonably deem necessary or appropriate, including, without limitation:

(a)           Borrower shall have delivered duly executed original signatures to
the Loan Documents to which it (and each Guarantor) is a party;

(b)           Borrower shall have delivered its Operating Documents and a good
standing certificate of Borrower certified by the Secretary of State of the
State of Delaware as of a date no earlier than thirty (30) days prior to the
Effective Date;

(c)           Borrower shall have delivered duly executed original signatures to
the completed Borrowing Resolutions for Borrower and each Guarantor;

(d)           Bank shall have received certified copies, dated as of a recent
date, of financing statement searches, as Bank shall request, accompanied by
written evidence (including any UCC termination statements) that the Liens
indicated in any such financing statements either constitute Permitted Liens or
have been or, in connection with the initial Credit Extension, will be
terminated or released;

(e)           Borrower shall have delivered the Perfection Certificate(s)
executed by Borrower and each Guarantor;

(f)            Bank shall have received fully executed copies of the Availl
Acquisition Documents;

(g)           Borrower shall have delivered a landlord’s consent executed by the
landlord for Borrower’s Texas premises in favor of Bank;

(h)           Borrower shall have delivered the insurance policies and/or
endorsements required pursuant to Section 6.5 hereof; and

(i)            Borrower shall have paid the fees and Bank Expenses then due as
specified in Section 2.4 hereof.

3.2          Conditions Precedent to all Credit Extensions.  Bank’s obligations
to make each Credit Extension, including the initial Credit Extension, is
subject to the following:

(a)           except as otherwise provided in Section 3.4, timely receipt of an
executed Payment/Advance Form;

(b)           the representations and warranties in Section 5 shall be true in
all material respects on the date of the Payment/Advance Form and on the Funding
Date of each Credit Extension; provided, however, that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof; and
provided, further that those representations and warranties expressly referring
to a specific date shall be true, accurate and complete in all material respects
as of such date, and no Default or Event of Default shall have occurred and be
continuing or result from the Credit Extension.  Each Credit Extension is
Borrower’s representation and warranty on that date that the representations and
warranties in Section 5 remain true in all material respects; provided, however,
that such materiality qualifier shall not be applicable to any representations
and warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date; and

(c)           in Bank’s sole discretion, there has not been a Material Adverse
Change.

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3.3          Covenant to Deliver.

Borrower agrees to deliver to Bank each item required to be delivered to Bank
under this Agreement as a condition to any Credit Extension.  Borrower expressly
agrees that the extension of a Credit Extension prior to the receipt by Bank of
any such item shall not constitute a waiver by Bank of Borrower’s obligation to
deliver such item, and any such extension in the absence of a required item
shall be in Bank’s sole discretion.

3.4          Procedures for Borrowing.  Subject to the prior satisfaction of all
other applicable conditions to the making of an Advance set forth in this
Agreement, to obtain an Advance, Borrower shall notify Bank (which notice shall
be irrevocable) by electronic mail, facsimile, or telephone by 12:00 p.m.
Pacific time on the Funding Date of the Advance.  Together with any such
electronic or facsimile notification, Borrower shall deliver to Bank by
electronic mail or facsimile a completed Payment/Advance Form executed by a
Responsible Officer or his or her designee.  Bank may rely on any telephone
notice given by a person whom Bank believes is a Responsible Officer or
designee.  Bank shall credit Advances to the Designated Deposit Account.  Bank
may make Advances under this Agreement based on instructions from a Responsible
Officer or his or her designee or without instructions if the Advances are
necessary to meet Obligations which have become due.

4              CREATION OF SECURITY INTEREST.

4.1          Grant of Security Interest.  Borrower hereby grants Bank, to secure
the payment and performance in full of all of the Obligations, a continuing
security interest in, and pledges to Bank, the Collateral, wherever located,
whether now owned or hereafter acquired or arising, and all proceeds and
products thereof.  Borrower represents, warrants, and covenants that the
security interest granted herein is and shall at all times continue to be a
first priority perfected security interest in the Collateral (subject only to
Permitted Liens that may have superior priority to Bank’s Lien under this
Agreement).  If Borrower shall acquire a commercial tort claim, Borrower shall
promptly notify Bank in a writing signed by Borrower of the general details
thereof and grant to Bank in such writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing to be
in form and substance reasonably satisfactory to Bank.

If this Agreement is terminated, Bank’s Lien in the Collateral shall continue
until the Obligations (other than inchoate indemnity obligations) are repaid in
full in cash.  Upon payment in full in cash of the Obligations and at such time
as Bank’s obligation to make Credit Extensions has terminated, Bank shall, at
Borrower’s sole cost and expense, release its Liens in the Collateral and all
rights therein shall revert to Borrower.

4.2          Authorization to File Financing Statements.  Borrower hereby
authorizes Bank to file financing statements, without notice to Borrower, with
all appropriate jurisdictions to perfect or protect Bank’s interest or rights
hereunder, including a notice that any disposition of the Collateral, by either
Borrower or any other Person, shall be deemed to violate the rights of Bank
under the Code.

5              REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants as follows:

5.1          Due Organization and Authorization.  Borrower and each of its
Subsidiaries are duly existing and in good standing as Registered Organizations
in their respective jurisdictions of formation and are qualified and licensed to
do business and are in good standing in any jurisdiction in which the conduct of
their business or their ownership of property requires that they be qualified
except where the failure to do so could not reasonably be expected to have a
material adverse effect on Borrower’s business.  In connection with this
Agreement, Borrower has delivered to Bank completed certificates substantially
in the form attached hereto as Exhibit F, each signed by Borrower and each
Guarantor, respectively, entitled “Perfection Certificate”.  Borrower represents
and warrants to Bank that (a) Borrower’s and each respective GlobalScape
Subsidiaries’ exact legal name is that indicated on the Perfection Certificate
and on the signature page hereof; (b) Borrower and each respective GlobalScape
Subsidiaries’ is an organization of the type and is organized in the
jurisdiction set forth in the Perfection Certificate; (c) the Perfection
Certificate accurately sets forth Borrower’s and each respective GlobalScape
Subsidiaries’ organizational identification number or accurately states that
Borrower and each respective GlobalScape Subsidiary has none; (d)

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the Perfection Certificate accurately sets forth Borrower’s and each respective
GlobalScape Subsidiaries’ place of business, or, if more than one, its chief
executive office as well as Borrower’s and each respective GlobalScape
Subsidiaries’ mailing address (if different than its chief executive office);
(e) Borrower and each respective GlobalScape Subsidiary (and each of their
predecessors) has not, in the past five (5) years, changed its jurisdiction of
formation, organizational structure or type, or any organizational number
assigned by its jurisdiction; and (f) all other information set forth on the
Perfection Certificate pertaining to Borrower and each respective GlobalScape
Subsidiary, and each of their Subsidiaries, is accurate and complete in all
material respects.  If Borrower is not now a Registered Organization but later
becomes one, Borrower shall promptly notify Bank of such occurrence and provide
Bank with Borrower’s organizational identification number.

The execution, delivery and performance of the Loan Documents have been duly
authorized, and do not conflict with Borrower’s organizational documents, nor
constitute an event of default under any material agreement by which Borrower is
bound.  Borrower is not in default under any agreement to which it is a party or
by which it is bound in which the default could reasonably be expected to have a
material adverse effect on Borrower’s business.

5.2          Collateral.  Borrower has good title to, has rights in, and the
power to transfer each item of the Collateral upon which it purports to grant a
Lien hereunder, free and clear of any and all Liens except Permitted Liens. 
Borrower has no deposit accounts other than the deposit accounts with Bank, the
deposit accounts, if any, described in the Perfection Certificate delivered to
Bank in connection herewith, or of which Borrower has given Bank notice and
taken such actions as are necessary to give Bank a perfected security interest
therein.  The Accounts are bona fide, existing obligations of the Account
Debtors.

The Collateral is not in the possession of any third party bailee (such as a
warehouse) except as otherwise provided in the Perfection Certificate.  None of
the components of the Collateral shall be maintained at locations other than as
provided in the Perfection Certificate or as Borrower has given Bank notice
pursuant to Section 7.2.  In the event that Borrower, after the date hereof,
intends to store or otherwise deliver any portion of the Collateral to a bailee,
then Borrower will first receive the written consent of Bank and such bailee
must execute and deliver a bailee agreement in form and substance satisfactory
to Bank in its sole discretion.

All Inventory is in all material respects of good and marketable quality, free
from material defects.

Borrower is the sole owner of its owned intellectual property, except for
non-exclusive licenses granted to its customers in the ordinary course of
business.  Each patent is valid and enforceable, and no part of the intellectual
property has been judged invalid or unenforceable, in whole or in part, and to
the best of Borrower’s knowledge, no claim has been made that any part of the
intellectual property violates the rights of any third party except to the
extent such claim could not reasonably be expected to have a material adverse
effect on Borrower’s business.  Except as noted on the Perfection Certificate,
Borrower is not a party to, nor is bound by, any material license or other
agreement with respect to which Borrower is the licensee that prohibits or
otherwise restricts Borrower from granting a security interest in Borrower’s
interest in such license or agreement or any other property.  Borrower shall
provide written notice to Bank within twenty (20) days of entering or becoming
bound by any such license or agreement which is reasonably likely to have a
material impact on Borrower’s business or financial condition (other than
over-the-counter software that is commercially available to the public). 
Borrower shall take such steps as Bank requests to obtain the consent of, or
waiver by, any person whose consent or waiver is necessary for all such licenses
or contract rights to be deemed “Collateral” and for Bank to have a security
interest in it that might otherwise be restricted or prohibited by law or by the
terms of any such license or agreement (such consent or authorization may
include a licensor’s agreement to a contingent assignment of the license to Bank
if Bank determines that is necessary in its good faith judgment), whether now
existing or entered into in the future.

5.3          Accounts Receivable.  For any Eligible Account in any Borrowing
Base Certificate, all statements made and all unpaid balances appearing in all
invoices, instruments and other documents evidencing such Eligible Accounts are
and shall be true and correct and all such invoices, instruments and other
documents, and all of Borrower’s Books are genuine and in all respects what they
purport to be.  All sales and other transactions underlying or giving rise to
each Eligible Account shall comply in all material respects with all applicable
laws and governmental rules and regulations.  Borrower has no knowledge of any
actual or imminent Insolvency Proceeding of any Account Debtor whose accounts
are an Eligible Account in any Borrowing Base Certificate.  To the best of
Borrower’s knowledge, all signatures and endorsements on all documents,
instruments, and agreements relating to

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all Eligible Accounts are genuine, and all such documents, instruments and
agreements are legally enforceable in accordance with their terms.

5.4          Litigation.  There are no actions or proceedings pending or, to the
knowledge of the Responsible Officers, threatened in writing by or against
Borrower or any of its Subsidiaries involving more than $50,000.

5.5          No Material Deviation in Financial Statements.  All consolidated
financial statements for Borrower and any of its Subsidiaries delivered to Bank
fairly present in all material respects Borrower’s consolidated financial
condition and Borrower’s consolidated results of operations.  There has not been
any material deterioration in Borrower’s consolidated financial condition since
the date of the most recent financial statements submitted to Bank.

5.6          Solvency.  The fair salable value of Borrower’s assets (including
goodwill minus disposition costs) exceeds the fair value of its liabilities;
Borrower is not left with unreasonably small capital after the transactions in
this Agreement; and Borrower is able to pay its debts (including trade debts) as
they mature.

5.7          Regulatory Compliance.  Borrower is not an “investment company” or
a company “controlled” by an “investment company” under the Investment Company
Act.  Borrower is not engaged as one of its important activities in extending
credit for margin stock (under Regulations T and U of the Federal Reserve Board
of Governors).  Borrower has complied in all material respects with the Federal
Fair Labor Standards Act.  Borrower has not violated any applicable laws,
ordinances or rules, the violation of which could reasonably be expected to have
a material adverse effect on its business.  None of Borrower’s or any of its
Subsidiaries’ properties or assets has been used by Borrower or any Subsidiary
or, to the best of Borrower’s knowledge, by previous Persons, in disposing,
producing, storing, treating, or transporting any hazardous substance other than
legally.  Borrower and each of its Subsidiaries have obtained all consents,
approvals and authorizations of, made all declarations or filings with, and
given all notices to, all government authorities that are necessary to continue
its business as currently conducted.

5.8          Subsidiaries; Investments.  Borrower does not own any stock,
partnership interest or other equity securities except for Permitted
Investments.

5.9          Tax Returns and Payments; Pension Contributions.  Borrower has
timely filed all required tax returns and reports, and Borrower has timely paid
all foreign, federal, state and local taxes, assessments, deposits and
contributions owed by Borrower.  Borrower may defer payment of any contested
taxes, provided that Borrower (a) in good faith contests its obligation to pay
the taxes by appropriate proceedings promptly and diligently instituted and
conducted, (b) notifies Bank in writing of the commencement of, and any material
development in, the proceedings, (c) posts bonds or takes any other steps
required to prevent the governmental authority levying such contested taxes from
obtaining a Lien upon any of the Collateral that is other than a “Permitted
Lien”.  Borrower is unaware of any claims or adjustments proposed for any of
Borrower’s prior tax years which could result in additional taxes becoming due
and payable by Borrower.  Borrower has paid all amounts necessary to fund all
present pension, profit sharing and deferred compensation plans in accordance
with their terms, and Borrower has not withdrawn from participation in, and has
not permitted partial or complete termination of, or permitted the occurrence of
any other event with respect to, any such plan which could reasonably be
expected to result in any liability of Borrower, including any liability to the
Pension Benefit Guaranty Corporation or its successors or any other governmental
agency.

5.10        Use of Proceeds.  Borrower shall use the proceeds of (a) the Term
Loan, for the acquisition of Availl; and (b) the Revolving Line, solely as
working capital and to fund its general business requirements and not for
personal, family, household or agricultural purposes.

5.11        Full Disclosure.  No written representation, warranty or other
statement of Borrower in any certificate or written statement given to Bank, as
of the date such representations, warranties, or other statements were made,
taken together with all such written certificates and written statements given
to Bank, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained in the certificates or
statements not misleading (it being recognized by Bank that the projections and
forecasts provided by

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Borrower in good faith and based upon reasonable assumptions are not viewed as
facts and that actual results during the period or periods covered by such
projections and forecasts may differ from the projected or forecasted results).

6              AFFIRMATIVE COVENANTS

Borrower shall do all of the following:

6.1          Government Compliance.  Maintain its and all its Subsidiaries’
legal existence and good standing in their respective jurisdictions of formation
and maintain qualification in each jurisdiction in which the failure to so
qualify would reasonably be expected to have a material adverse effect on
Borrower’s business or operations.  Borrower shall comply, and have each
Subsidiary comply, with all laws, ordinances and regulations to which it is
subject, noncompliance with which could have a material adverse effect on
Borrower’s business.

6.2          Financial Statements, Reports, Certificates.

(a)           Deliver to Bank:  (i) as soon as available, but no later than
thirty (30) days after the last day of each month, company prepared consolidated
and consolidating balance sheets and income statements covering Borrower’s and
each of its Subsidiary’s operations during the period certified by a Responsible
Officer and in a form acceptable to Bank; (ii) as soon as available, but no
later than one hundred twenty (120) days after the last day of Borrower’s fiscal
year, audited consolidated financial statements prepared under GAAP,
consistently applied, together with an unqualified opinion on the financial
statements from an independent certified public accounting firm acceptable to
Bank in its reasonable discretion; (iii) within five (5) days of delivery,
copies of all statements, reports and notices made available to Borrower’s
security holders or to any holders of Subordinated Debt (iv) within five (5)
days of filing, all reports on Form 10-K, 10-Q and 8-K filed with the Securities
and Exchange Commission or a link thereto on Borrower’s or another website on
the Internet; (iv) a prompt report of any legal actions pending or threatened
against Borrower or any of its Subsidiaries that could reasonably be expected to
result in damages or costs to Borrower or any of its Subsidiaries of Fifty
Thousand Dollars ($50,000) or more; (v) prompt notice of an event that could
reasonably be expected to materially and adversely affect the value of the
intellectual property; (vi)  sales projections, operating plans and other
financial information reasonably requested by Bank; and (vii) as soon as
available, but no later than twenty (20) days after approval by the Board, or by
January 31st of each year, whichever is earlier, an annual budget.

(b)           Within thirty (30) days after the last day of each month, deliver
to Bank a duly completed Borrowing Base Certificate signed by a Responsible
Officer, with aged listings of accounts receivable and accounts payable (by
invoice date).

(c)           Within thirty (30) days after the last day of each month, deliver
to Bank with the monthly financial statements, a duly completed Compliance
Certificate signed by a Responsible Officer setting forth calculations showing
compliance with the financial covenants set forth in this Agreement.

(d)           Allow Bank to audit Borrower’s Collateral at Borrower’s expense. 
In addition to the initial audit, such audits shall be conducted no more often
than once every six (6) months unless a Default or an Event of Default has
occurred and is continuing.

6.3          Inventory; Returns.  Keep all Inventory in good and marketable
condition, free from material defects.  Returns and allowances between Borrower
and its Account Debtors shall follow Borrower’s customary practices as they
exist at the Effective Date.  Borrower must promptly notify Bank of all returns,
recoveries, disputes and claims that involve more than Fifty Thousand Dollars
($50,000).

6.4          Taxes; Pensions.  Make, and cause each of its Subsidiaries to make,
timely payment of all foreign, federal, state, and local taxes or assessments
(other than taxes and assessments which Borrower is contesting pursuant to the
terms of Section 5.9 hereof) and shall deliver to Bank, on demand, appropriate
certificates attesting to such payments, and pay all amounts necessary to fund
all present pension, profit sharing and deferred compensation plans in
accordance with their terms.

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6.5          Insurance.  Keep its business and the Collateral insured for risks
and in amounts standard for companies in Borrower’s industry and location and as
Bank may reasonably request.  Insurance policies shall be in a form, with
companies, and in amounts that are satisfactory to Bank.  All property policies
shall have a lender’s loss payable endorsement showing Bank as an additional
loss payee and waive subrogation against Bank, and all liability policies shall
show, or have endorsements showing, Bank as an additional insured.  All policies
(or the loss payable and additional insured endorsements) shall provide that the
insurer must give Bank at least twenty (20) days notice before canceling,
amending, or declining to renew its policy.  At Bank’s request, Borrower shall
deliver certified copies of policies and evidence of all premium payments. 
Proceeds payable under any policy shall, at Bank’s option, be payable to Bank on
account of the Obligations.  If Borrower fails to obtain insurance as required
under this Section 6.5 or to pay any amount or furnish any required proof of
payment to third persons and Bank, Bank may make all or part of such payment or
obtain such insurance policies required in this Section 6.5, and take any action
under the policies Bank deems prudent.

6.6          Operating Accounts.

(a)           Maintain all of its and its Subsidiaries’ primary depository,
operating and securities accounts with Bank and Bank’s affiliates.

(b)           Provide Bank five (5) days prior written notice before
establishing any Collateral Account at or with any bank or financial institution
other than Bank or its Affiliates.  In addition, for each Collateral Account
that Borrower at any time maintains, Borrower shall cause the applicable bank or
financial institution (other than Bank) at or with which any Collateral Account
is maintained to execute and deliver a Control Agreement or other appropriate
instrument with respect to such Collateral Account to perfect Bank’s Lien in
such Collateral Account in accordance with the terms hereunder.  The provisions
of the previous sentence shall not apply to deposit accounts exclusively used
for payroll, payroll taxes and other employee wage and benefit payments to or
for the benefit of Borrower’s employees and identified to Bank by Borrower as
such.

6.7          Financial Covenants.

Borrower shall maintain at all times, to be tested as of the last day of each
month on a rolling three (3) month basis, unless otherwise noted, on a
consolidated basis with respect to Borrower and its Subsidiaries:

(A)           MINIMUM FIXED CHARGE COVERAGE.  A RATIO OF (A) EBITDA LESS THE SUM
OF (I) CASH TAXES PAID AND (II) NON-FINANCED CAPITAL EXPENDITURES, TO (B) THE
SUM OF (I) PRINCIPAL PLUS (II) INTEREST PAID TO BANK, OF AT LEAST 1.50 TO 1.00.

(B)           MAXIMUM TOTAL FUNDED DEBT/EBITDA.  A RATIO OF TOTAL FUNDED DEBT TO
EBITDA OF NOT MORE THAN 2.00 TO 1.00.  FOR PURPOSES OF THIS SECTION 6.7(B),
EBITDA SHALL BE ANNUALIZED AS OF ANY DATE OF DETERMINATION.

6.8          Protection and Registration of Intellectual Property Rights. 
Borrower shall:  (a) protect, defend and maintain the validity and
enforceability of its intellectual property; (b) promptly advise Bank in writing
of material infringements of its intellectual property; and (c) not allow any
intellectual property material to Borrower’s business to be abandoned, forfeited
or dedicated to the public without Bank’s written consent.  If Borrower decides
to register any copyrights or mask works in the United States Copyright Office,
Borrower shall: (x) provide Bank with at least fifteen (15) days prior written
notice of its intent to register such copyrights or mask works together with a
copy of the application it intends to file with the United States Copyright
Office (excluding exhibits thereto); (y) execute an intellectual property
security agreement or such other documents as Bank may reasonably request to
maintain the perfection and priority of Bank’s security interest in the
copyrights or mask works intended to be registered with the United States
Copyright Office; and (z) record such intellectual property security agreement
with the United States Copyright Office contemporaneously with filing the
copyright or mask work application(s) with the United States Copyright Office. 
Borrower shall promptly provide to Bank a copy of the application(s) filed with
the United States Copyright Office together with evidence of the recording of
the intellectual property security agreement necessary for Bank to maintain the
perfection and priority of its security interest in such copyrights or mask
works.  Borrower shall provide written notice to Bank of any application filed
by

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Borrower in the United States Patent and Trademark Office for a patent or to
register a trademark or service mark within 30 days after any such filing.

6.9          Litigation Cooperation.  From the date hereof and continuing
through the termination of this Agreement, make available to Bank, without
expense to Bank, Borrower and its officers, employees and agents and Borrower’s
books and records during Borrower’s regular business hours, to the extent that
Bank may deem them reasonably necessary to prosecute or defend any third-party
suit or proceeding instituted by or against Bank with respect to any Collateral
or relating to Borrower.

6.10        Further Assurances.  Borrower shall execute any further instruments
and take further action as Bank reasonably requests to perfect or continue
Bank’s Lien in the Collateral or to effect the purposes of this Agreement.

7              NEGATIVE COVENANTS

Borrower shall not do any of the following without Bank’s prior written consent:

7.1          Dispositions.  Convey, sell, lease, transfer or otherwise dispose
of (collectively, “Transfer”), or permit any of its Subsidiaries to Transfer,
all or any part of its business or property, except for Transfers (a) of
Inventory in the ordinary course of business; (b) of worn-out or obsolete
Equipment; and (c) in connection with Permitted Liens and Permitted Investments.

7.2          Changes in Business, Management, Ownership Control, or Business
Locations.  (a) Engage in or permit any of its Subsidiaries to engage in any
business other than the businesses currently engaged in by Borrower and such
Subsidiary, as applicable, or reasonably related thereto; (b) liquidate or
dissolve; or (c) permit or suffer any Change in Control.  Borrower shall not,
without at least thirty (30) days prior written notice to Bank: (1) add any new
offices or business locations, including warehouses (unless such new offices or
business locations contain less than Ten Thousand Dollars ($10,000) in
Borrower’s assets or property), (2) change its jurisdiction of organization,
(3) change its organizational structure or type, (4) change its legal name, or
(5) change any organizational number (if any) assigned by its jurisdiction of
organization.

7.3          Mergers or Acquisitions.  Merge or consolidate, or permit any of
its Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person.  A Subsidiary may merge or
consolidate into another Subsidiary or into Borrower.

7.4          Indebtedness.  Create, incur, assume, or be liable for any
Indebtedness, or permit any Subsidiary to do so, other than Permitted
Indebtedness.

7.5          Encumbrance.  Create, incur, or allow any Lien on any of its
property, or assign or convey any right to receive income, including the sale of
any Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, permit any Collateral not to be subject to the first priority security
interest granted herein, or enter into any agreement, document, instrument or
other arrangement (except with or in favor of Bank) with any Person which
directly or indirectly prohibits or has the effect of prohibiting Borrower or
any Subsidiary from assigning, mortgaging, pledging, granting a security
interest in or upon, or encumbering any of Borrower’s or any Subsidiary’s
intellectual property, except as is otherwise permitted in Section 7.1 hereof
and the definition of “Permitted Lien” herein.

7.6          Maintenance of Collateral Accounts.  Maintain any Collateral
Account except pursuant to the terms of Section 6.6.(b) hereof.

7.7          Distributions; Investments.  (a) Directly or indirectly make any
Investment other than Permitted Investments, or permit any of its Subsidiaries
to do so; or (b) pay any dividends or make any distribution or payment or
redeem, retire or purchase any capital stock.

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7.8          Transactions with Affiliates.  Directly or indirectly enter into or
permit to exist any material transaction with any Affiliate of Borrower, except
for transactions that are in the ordinary course of Borrower’s business, upon
fair and reasonable terms that are no less favorable to Borrower than would be
obtained in an arm’s length transaction with a non-affiliated Person.

7.9          Subordinated Debt.  (a) Make or permit any payment on any
Subordinated Debt, except under the terms of the subordination, intercreditor,
or other similar agreement to which such Subordinated Debt is subject, or
(b) amend any provision in any document relating to the Subordinated Debt which
would increase the amount thereof or adversely affect the subordination thereof
to Obligations owed to Bank.

7.10        Compliance.  Become an “investment company” or a company controlled
by an “investment company”, under the Investment Company Act of 1940 or
undertake as one of its important activities extending credit to purchase or
carry margin stock (as defined in Regulation U of the Board of Governors of the
Federal Reserve System), or use the proceeds of any Credit Extension for that
purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail
to comply with the Federal Fair Labor Standards Act or violate any other law or
regulation, if the violation could reasonably be expected to have a material
adverse effect on Borrower’s business, or permit any of its Subsidiaries to do
so; withdraw or permit any Subsidiary to withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other event
with respect to, any present pension, profit sharing and deferred compensation
plan which could reasonably be expected to result in any liability of Borrower,
including any liability to the Pension Benefit Guaranty Corporation or its
successors or any other governmental agency.

8              EVENTS OF DEFAULT

Any one of the following shall constitute an event of default (an “Event of
Default”) under this Agreement:

8.1          Payment Default.  Borrower fails to (a) make any payment of
principal or interest on any Credit Extension on its due date, or (b) pay any
other Obligations within three (3) Business Days after such Obligations are due
and payable.  During the cure period, the failure to cure the payment default is
not an Event of Default (but no Credit Extension will be made during the cure
period);

8.2          Covenant Default.

(a)           Borrower fails or neglects to perform any obligation in Section
6.2, 6.5 through 6.7, or violates any covenant in Section 7; or

(b)           Borrower fails or neglects to perform, keep, or observe any other
term, provision, condition, covenant or agreement contained in this Agreement,
any Loan Documents, and as to any default (other than those specified in this
Section 8) under such other term, provision, condition, covenant or agreement
that can be cured, has failed to cure the default within ten (10) days after the
occurrence thereof; provided, however, that if the default cannot by its nature
be cured within the ten (10) day period or cannot after diligent attempts by
Borrower be cured within such ten (10) day period, and such default is likely to
be cured within a reasonable time, then Borrower shall have an additional period
(which shall not in any case exceed thirty (30) days) to attempt to cure such
default, and within such reasonable time period the failure to cure the default
shall not be deemed an Event of Default (but no Credit Extensions shall be made
during such cure period).  Grace periods provided under this section shall not
apply, among other things, to financial covenants or any other covenants set
forth in subsection (a) above;

8.3          Material Adverse Change.  A Material Adverse Change occurs;

8.4          Attachment.  (a) Any material portion of Borrower’s assets is
attached, seized, levied on, or comes into possession of a trustee or receiver
and the attachment, seizure or levy is not removed in ten (10) days; (b) the
service of process upon Bank seeking to attach, by trustee or similar process,
any funds of Borrower or of any entity under control of Borrower (including a
Subsidiary) on deposit with Bank; (c) Borrower is enjoined, restrained, or
prevented by court order from conducting a material part of its business; (d) a
judgment or other claim

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in excess of $50,000 becomes a Lien on any of Borrower’s assets; or (e) a notice
of lien, levy, or assessment is filed against any of Borrower’s assets by any
government agency and not paid within ten (10) days after Borrower receives
notice.  These are not Events of Default if stayed or if a bond is posted
pending contest by Borrower (but no Credit Extensions shall be made during the
cure period);

8.5          Insolvency. (a) Borrower is unable to pay its debts (including
trade debts) as they become due or otherwise becomes insolvent; (b) Borrower
begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun
against Borrower and not dismissed or stayed within thirty (30) days (but no
Credit Extensions shall be made while of any of the conditions described in
clause (a) exist and/or until any Insolvency Proceeding is dismissed);

8.6          Other Agreements.  There is a default in any agreement to which
Borrower or any Guarantor is a party with a third party or parties resulting in
a right by such third party or parties, whether or not exercised, to accelerate
the maturity of any Indebtedness in an amount in excess of Fifty Thousand
Dollars ($50,000) or that could have a material adverse effect on Borrower’s or
any Guarantor’s business; provided, however, that the Event of Default under
this Section 8.6 caused by the occurrence of a default under such other
agreement shall be cured or waived for purposes of this Agreement upon Bank
receiving written notice from the party asserting such default of such cure or
waiver of the default under such other agreement, if at the time of such cure or
waiver under such other agreement (a) Bank has not declared an Event of Default
under this Agreement and/or exercised any rights with respect thereto; (b) any
such cure or waiver does not result in an Event of Default under any other
provision of this Agreement or any Loan Document; and (c) in connection with any
such cure or waiver under such other agreement, the terms of any agreement with
such third party are not modified or amended in any manner which could in the
good faith judgment of Bank be materially less advantageous to Borrower or any
Guarantor;

8.7          Judgments.  A judgment or judgments for the payment of money in an
amount, individually or in the aggregate, of at least Fifty Thousand Dollars
($50,000) (not covered by independent third-party insurance) shall be rendered
against Borrower and shall remain unsatisfied and unstayed for a period of ten
(10) days after the entry thereof (provided that no Credit Extensions will be
made prior to the satisfaction or stay of such judgment);

8.8          Misrepresentations.  Borrower or any Person acting for Borrower
makes any representation, warranty, or other statement now or later in this
Agreement, any Loan Document or in any writing delivered to Bank or to induce
Bank to enter this Agreement or any Loan Document, and such representation,
warranty, or other statement is incorrect in any material respect when made;

8.9          Subordinated Debt.  A default or breach occurs under any agreement
between Borrower and any creditor of Borrower that signed a subordination,
intercreditor, or other similar agreement with Bank, or any creditor that has
signed such an agreement with Bank breaches any terms of such agreement; or

8.10        Guaranty.  (a) Any guaranty of any Obligations terminates or ceases
for any reason to be in full force and effect; (b) any Guarantor does not
perform any obligation or covenant under any guaranty of the Obligations; (c)
any circumstance described in Sections 8.3, 8.4, 8.5, 8.7, or 8.8. occurs with
respect to any Guarantor, or (d) the liquidation, winding up, or termination of
existence of any Guarantor, except in connection with (i) a merger of such
Guarantor with or into another Guarantor or Borrower, or (ii) a Transfer; in
each case, as expressly permitted hereunder; or (e) (i) a material impairment in
the perfection or priority of Bank’s Lien in the collateral provided by
Guarantor or in the value of such collateral or (ii) a material adverse change
in the general affairs, management, results of operation, condition (financial
or otherwise) or the prospect of repayment of the Obligations occurs with
respect to any Guarantor.

9              BANK’S RIGHTS AND REMEDIES

9.1          Rights and Remedies.  While an Event of Default occurs and
continues Bank may, without notice or demand, do any or all of the following:

(a)           declare all Obligations immediately due and payable (but if an
Event of Default described in Section 8.5 occurs all Obligations are immediately
due and payable without any action by Bank);

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(b)           stop advancing money or extending credit for Borrower’s benefit
under this Agreement or under any other agreement between Borrower and Bank;

(c)           demand that Borrower (i) deposits cash with Bank in an amount
equal to the aggregate amount of any Letters of Credit remaining undrawn, as
collateral security for the repayment of any future drawings under such Letters
of Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii)
pay in advance all Letter of Credit fees scheduled to be paid or payable over
the remaining term of any Letters of Credit;

(d)           settle or adjust disputes and claims directly with Account Debtors
for amounts on terms and in any order that Bank considers advisable, notify any
Person owing Borrower money of Bank’s security interest in such funds, and
verify the amount of such account;

(e)           make any payments and do any acts it considers necessary or
reasonable to protect the Collateral and/or its security interest in the
Collateral.  Borrower shall assemble the Collateral if Bank requests and make it
available as Bank designates.  Bank may enter premises where the Collateral is
located, take and maintain possession of any part of the Collateral, and pay,
purchase, contest, or compromise any Lien which appears to be prior or superior
to its security interest and pay all expenses incurred. Borrower grants Bank a
license to enter and occupy any of its premises, without charge, to exercise any
of Bank’s rights or remedies;

(f)            apply to the Obligations any (i) balances and deposits of
Borrower it holds, or (ii) any amount held by Bank owing to or for the credit or
the account of Borrower;

(g)           ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell the Collateral.  Bank is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower’s labels, patents, copyrights, mask works, rights of use of any name,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank’s exercise of its rights under this Section, Borrower’s
rights under all licenses and all franchise agreements inure to Bank’s benefit;

(h)           place a “hold” on any account maintained with Bank and/or deliver
a notice of exclusive control, any entitlement order, or other directions or
instructions pursuant to any Control Agreement or similar agreements providing
control of any Collateral;

(i)            demand and receive possession of true and completed copies of
Borrower’s Books; and

(j)            exercise all rights and remedies available to Bank under the Loan
Documents or at law or equity, including all remedies provided under the Code
(including disposal of the Collateral pursuant to the terms thereof).

9.2          Power of Attorney.  Borrower hereby irrevocably appoints Bank as
its lawful attorney-in-fact, exercisable upon the occurrence and during the
continuance of an Event of Default, to:  (a) endorse Borrower’s name on any
checks or other forms of payment or security; (b) sign Borrower’s name on any
invoice or bill of lading for any Account or drafts against Account Debtors; (c)
settle and adjust disputes and claims about the Accounts directly with Account
Debtors, for amounts and on terms Bank determines reasonable; (d) make, settle,
and adjust all claims under Borrower’s insurance policies; (e) pay, contest or
settle any Lien, charge, encumbrance, security interest, and adverse claim in or
to the Collateral, or any judgment based thereon, or otherwise take any action
to terminate or discharge the same; and (f) transfer the Collateral into the
name of Bank or a third party as the Code permits.  Borrower hereby appoints
Bank as its lawful attorney-in-fact to sign Borrower’s name on any documents
necessary to perfect or continue the perfection of any security interest
regardless of whether an Event of Default has occurred until all Obligations
have been satisfied in full and Bank is under no further obligation to make
Credit Extensions hereunder.  Bank’s foregoing appointment as Borrower’s
attorney in fact, and all of Bank’s rights and powers, coupled with an interest,
are irrevocable until all Obligations have been fully repaid and performed and
Bank’s obligation to provide Credit Extensions terminates.

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9.3          Accounts Verification; Collection.  Whether or not an Event of
Default has occurred and is continuing, Bank may notify any Person owing
Borrower money of Bank’s security interest in such funds and verify the amount
of such account.  After the occurrence of an Event of Default, any amounts
received by Borrower shall be held in trust by Borrower for Bank, and, if
requested by Bank, Borrower shall immediately deliver such receipts to Bank in
the form received from the Account Debtor, with proper endorsements for deposit.

9.4          Protective Payments.  If Borrower fails to obtain the insurance
called for by Section 6.5 or fails to pay any premium thereon or fails to pay
any other amount which Borrower is obligated to pay under this Agreement or any
other Loan Document, Bank may obtain such insurance or make such payment, and
all amounts so paid by Bank are Bank Expenses and immediately due and payable,
bearing interest at the then highest applicable rate, and secured by the
Collateral.  Bank will make reasonable efforts to provide Borrower with notice
of Bank obtaining such insurance at the time it is obtained or within a
reasonable time thereafter.  No payments by Bank are deemed an agreement to make
similar payments in the future or Bank’s waiver of any Event of Default.

9.5          Application of Payments and Proceeds.  Unless an Event of Default
has occurred and is continuing, Bank shall apply any funds in its possession,
whether from Borrower account balances, payments, or proceeds realized as the
result of any collection of Accounts or other disposition of the Collateral,
first, to Bank Expenses, including without limitation, the reasonable costs,
expenses, liabilities, obligations and attorneys’ fees incurred by Bank in the
exercise of its rights under this Agreement; second, to the interest due upon
any of the Obligations; and third, to the principal of the Obligations and any
applicable fees and other charges, in such order as Bank shall determine in its
sole discretion.  Any surplus shall be paid to Borrower or other Persons legally
entitled thereto; Borrower shall remain liable to Bank for any deficiency.  If
an Event of Default has occurred and is continuing, Bank may apply any funds in
its possession, whether from Borrower account balances, payments, proceeds
realized as the result of any collection of Accounts or other disposition of the
Collateral, or otherwise, to the Obligations in such order as Bank shall
determine in its sole discretion.  Any surplus shall be paid to Borrower or
other Persons legally entitled thereto; Borrower shall remain liable to Bank for
any deficiency.  If Bank, in its good faith business judgment, directly or
indirectly enters into a deferred payment or other credit transaction with any
purchaser at any sale of Collateral, Bank shall have the option, exercisable at
any time, of either reducing the Obligations by the principal amount of the
purchase price or deferring the reduction of the Obligations until the actual
receipt by Bank of cash therefor.

9.6          Bank’s Liability for Collateral.  So long as Bank complies with
reasonable banking practices regarding the safekeeping of the Collateral in the
possession or under the control of Bank, Bank shall not be liable or responsible
for: (a) the safekeeping of the Collateral; (b) any loss or damage to the
Collateral; (c) any diminution in the value of the Collateral; or (d) any act or
default of any carrier, warehouseman, bailee, or other Person.  Except as set
forth in the preceding sentence, Borrower bears all risk of loss, damage or
destruction of the Collateral.

9.7          No Waiver; Remedies Cumulative.  Bank’s failure, at any time or
times, to require strict performance by Borrower of any provision of this
Agreement or any other Loan Document shall not waive, affect, or diminish any
right of Bank thereafter to demand strict performance and compliance herewith or
therewith.  No waiver hereunder shall be effective unless signed by Bank and
then is only effective for the specific instance and purpose for which it is
given.  Bank’s rights and remedies under this Agreement and the other Loan
Documents are cumulative.  Bank has all rights and remedies provided under the
Code, by law, or in equity.  Bank’s exercise of one right or remedy is not an
election, and Bank’s waiver of any Event of Default is not a continuing waiver. 
Bank’s delay in exercising any remedy is not a waiver, election, or
acquiescence.

9.8          Demand Waiver.  Borrower waives demand, notice of default or
dishonor, notice of payment and nonpayment, notice of any default, nonpayment at
maturity, release, compromise, settlement, extension, or renewal of accounts,
documents, instruments, chattel paper, and guarantees held by Bank on which
Borrower is liable.

10           NOTICES

All notices, consents, requests, approvals, demands, or other communication
(collectively, “Communication”) by any party to this Agreement or any other Loan
Document must be in writing and shall be deemed to have been validly served,
given, or delivered: (a) upon the earlier of actual receipt and three (3)
Business Days after deposit in the U.S. mail, first class, registered or
certified mail return receipt requested, with proper

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postage prepaid; (b) upon transmission, when sent by electronic mail or
facsimile transmission; (c) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid; or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address, facsimile number, or email address indicated
below.  Bank or Borrower may change its address or facsimile number by giving
the other party written notice thereof in accordance with the terms of this
Section 10.

If to Borrower:

GlobalSCAPE, INC.

 

 

6000 Northwest Parkway, Suite 100

 

 

San Antonio, Texas 78249

 

 

Attn: Chief Financial Officer

 

 

Fax: (210) 690-8824

 

 

Email: bschneider@globalscape.com

 

 

 

 

If to Bank:

Silicon Valley Bank

 

 

7000 N. MoPac, Suite 360

 

 

Austin, Texas 78731

 

 

Attn: Doug Mangum

 

 

FAX: (512) 794-0855

 

 

Email:  dmangum@svb.com

 

11           CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE

California law governs the Loan Documents without regard to principles of
conflicts of law.  Borrower and Bank each submit to the exclusive jurisdiction
of the State and Federal courts in Santa Clara County, California; provided,
however, that nothing in this Agreement shall be deemed to operate to preclude
Bank from bringing suit or taking other legal action in any other jurisdiction
to realize on the Collateral or any other security for the Obligations, or to
enforce a judgment or other court order in favor of Bank.  Borrower expressly
submits and consents in advance to such jurisdiction in any action or suit
commenced in any such court, and Borrower hereby waives any objection that it
may have based upon lack of personal jurisdiction, improper venue, or forum non
conveniens and hereby consents to the granting of such legal or equitable relief
as is deemed appropriate by such court.  Borrower hereby waives personal service
of the summons, complaints, and other process issued in such action or suit and
agrees that service of such summons, complaints, and other process may be made
by registered or certified mail addressed to Borrower at the address set forth
in Section 10 of this Agreement and that service so made shall be deemed
completed upon the earlier to occur of Borrower’s actual receipt thereof or
three (3) days after deposit in the U.S. mails, proper postage prepaid.

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE
THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR
BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION,
INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A
MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.  EACH PARTY
HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial
by jury is not enforceable, the parties hereto agree that any and all disputes
or controversies of any nature between them arising at any time shall be decided
by a reference to a private judge, mutually selected by the parties (or, if they
cannot agree, by the Presiding Judge of the Santa Clara County, California
Superior Court) appointed in accordance with California Code of Civil Procedure
Section 638 (or pursuant to comparable provisions of federal law if the dispute
falls within the exclusive jurisdiction of the federal courts), sitting without
a jury, in Santa Clara County, California; and the parties hereby submit to the
jurisdiction of such court.  The reference proceedings shall be conducted
pursuant to and in accordance with the provisions of California Code of Civil
Procedure §§ 638 through 645.1, inclusive.  The private judge shall have the
power, among others, to grant provisional relief, including without limitation,
entering temporary restraining orders, issuing preliminary and permanent
injunctions and appointing receivers.  All such proceedings shall be closed to
the public and confidential and all records relating thereto shall be
permanently

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sealed.  If during the course of any dispute, a party desires to seek
provisional relief, but a judge has not been appointed at that point pursuant to
the judicial reference procedures, then such party may apply to the Santa Clara
County, California Superior Court for such relief.  The proceeding before the
private judge shall be conducted in the same manner as it would be before a
court under the rules of evidence applicable to judicial proceedings.  The
parties shall be entitled to discovery which shall be conducted in the same
manner as it would be before a court under the rules of discovery applicable to
judicial proceedings.  The private judge shall oversee discovery and may enforce
all discovery rules and order applicable to judicial proceedings in the same
manner as a trial court judge.  The parties agree that the selected or appointed
private judge shall have the power to decide all issues in the action or
proceeding, whether of fact or of law, and shall report a statement of decision
thereon pursuant to the California Code of Civil Procedure § 644(a).  Nothing in
this paragraph shall limit the right of any party at any time to exercise
self-help remedies, foreclose against collateral, or obtain provisional
remedies.  The private judge shall also determine all issues relating to the
applicability, interpretation, and enforceability of this paragraph.

12           GENERAL PROVISIONS

12.1        Successors and Assigns.  This Agreement binds and is for the benefit
of the successors and permitted assigns of each party.  Borrower may not assign
this Agreement or any rights or obligations under it without Bank’s prior
written consent (which may be granted or withheld in Bank’s discretion).  Bank
has the right, without the consent of or notice to Borrower, to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Bank’s obligations, rights, and benefits under this Agreement and the other Loan
Documents.

12.2        Indemnification.  Borrower agrees to indemnify, defend and hold Bank
and its directors, officers, employees, agents, attorneys, or any other Person
affiliated with or representing Bank harmless against:  (a) all obligations,
demands, claims, and liabilities (collectively, “Claims”) asserted by any other
party in connection with the transactions contemplated by the Loan Documents;
and (b) all losses or Bank Expenses incurred, or paid by Bank from, following,
or arising from transactions between Bank and Borrower (including reasonable
attorneys’ fees and expenses), except for Claims and/or losses directly caused
by Bank’s gross negligence or willful misconduct.

12.3        Limitation of Actions.  Any claim or cause of action by Borrower
against Bank, its directors, officers, employees, agents, accountants,
attorneys, or any other Person affiliated with or representing Bank based upon,
arising from, or relating to this Loan Agreement or any other Loan Document, or
any other transaction contemplated hereby or thereby or relating hereto or
thereto, or any other matter, cause or thing whatsoever, occurred, done, omitted
or suffered to be done by Bank, its directors, officers, employees, agents,
accountants or attorneys, shall be barred unless asserted by Borrower by the
commencement of an action or proceeding in a court of competent jurisdiction by
(a) the filing of a complaint within one year from the earlier of (i) the date
any of Borrower’s officers or directors had knowledge of the first act, the
occurrence or omission upon which such claim or cause of action, or any part
thereof, is based, or (ii) the date this Agreement is terminated, and (b) the
service of a summons and complaint on an officer of Bank, or on any other person
authorized to accept service on behalf of Bank, within thirty (30) days
thereafter.  Borrower agrees that such one-year period is a reasonable and
sufficient time for Borrower to investigate and act upon any such claim or cause
of action.  The one-year period provided herein shall not be waived, tolled, or
extended except by the written consent of Bank in its sole discretion.  This
provision shall survive any termination of this Loan Agreement or any other Loan
Document.

12.4        Time of Essence.  Time is of the essence for the performance of all
Obligations in this Agreement.

12.5        Severability of Provisions.  Each provision of this Agreement is
severable from every other provision in determining the enforceability of any
provision.

12.6        Amendments in Writing; Integration.  All amendments to this
Agreement must be in writing signed by both Bank and Borrower.  This Agreement
and the Loan Documents represent the entire agreement about this subject matter
and supersede prior negotiations or agreements.  All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement and the Loan Documents merge
into this Agreement and the Loan Documents.

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12.7        Counterparts.  This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, are an original, and all taken together, constitute
one Agreement.

12.8        Survival.  All covenants, representations and warranties made in
this Agreement continue in full force until this Agreement has terminated
pursuant to its terms and all Obligations (other than inchoate indemnity
obligations and any other obligations which, by their terms, are to survive the
termination of this Agreement) have been satisfied.  The obligation of Borrower
in Section 12.2 to indemnify Bank shall survive until the statute of limitations
with respect to such claim or cause of action shall have run.

12.9        Confidentiality.  In handling any confidential information, Bank
shall exercise the same degree of care, including maintaining in confidence
Borrower’s confidential information, that it exercises for its own proprietary
information, but disclosure of information may be made: (a) to Bank’s
Subsidiaries or Affiliates; (b) to prospective transferees or purchasers of any
interest in the Credit Extensions (provided, however, Bank shall use
commercially reasonable efforts to obtain such prospective transferee’s or
purchaser’s agreement to the terms of this provision); (c) as required by law,
regulation, subpoena, or other order; (d) to Bank’s regulators or as otherwise
required in connection with Bank’s examination or audit; and (e) as Bank
considers appropriate in exercising remedies under this Agreement.  Confidential
information does not include information that either: (i) is in the public
domain or in Bank’s possession when disclosed to Bank, or becomes part of the
public domain after disclosure to Bank; or (ii) is disclosed to Bank by a third
party, if Bank does not know that the third party is prohibited from disclosing
the information.

12.10      Attorneys’ Fees, Costs and Expenses.  In any action or proceeding
between Borrower and Bank arising out of or relating to the Loan Documents, the
prevailing party shall be entitled to recover its reasonable attorneys’ fees and
other costs and expenses incurred, in addition to any other relief to which it
may be entitled.

13           DEFINITIONS

13.1        Definitions.  As used in this Agreement, the following terms have
the following meanings:

“Account” is any “account” as defined in the Code with such additions to such
term as may hereafter be made, and includes, without limitation, all accounts
receivable and other sums owing to Borrower.

“Account Debtor” is any “account debtor” as defined in the Code with such
additions to such term as may hereafter be made.

“Availl Acquisition” means the acquisition by Borrower of 100% of the issued and
outstanding capital stock of Availl pursuant to the Availl Acquisition
Documents.

“Availl Acquisition Documents” means that certain Agreement and Plan of Merger
among Borrower, the Stockholders (as defined therein) and the other parties
thereto, all Schedules and Exhibits and all other instruments and agreements
delivered in connection therewith.

“Advance” or “Advances” means an advance (or advances) under the Revolving Line.

“Affiliate” of any Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person’s senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person’s managers and members.

“Agreement” is defined in the preamble hereof.

“Availl” means Availl, Inc., a Delaware corporation and, after the Availl
Acquisition, a wholly-owned Subsidiary of Borrower.

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“Availability Amount” is (a) the lesser of (i) the Revolving Line or (ii) the
Borrowing Base minus the outstanding principal balance of any Advances.

“Bank” is defined in the preamble hereof.

“Bank Expenses” are all audit fees and expenses, costs, and expenses (including
reasonable attorneys’ fees and expenses) for preparing, negotiating,
administering, defending and enforcing the Loan Documents (including, without
limitation, those incurred in connection with appeals or Insolvency Proceedings)
or otherwise incurred with respect to Borrower.

“Bankruptcy-Related Defaults” is defined in Section 9.1.

“Borrower” is defined in the preamble hereof.

“Borrower’s Books” are all Borrower’s books and records including ledgers,
federal and state tax returns, records regarding Borrower’s assets or
liabilities, the Collateral, business operations or financial condition, and all
computer programs or storage or any equipment containing such information.

“Borrowing Base” is (a) 80% of Eligible Accounts, as determined by Bank from
Borrower’s most recent Borrowing Base Certificate; provided, however, that Bank
may decrease the foregoing percentages in its good faith business judgment based
on events, conditions, contingencies, or risks which, as determined by Bank, may
adversely affect Collateral.

“Borrowing Base Certificate” is that certain certificate in the form attached
hereto as Exhibit C.

“Borrowing Resolutions” are, with respect to any Person, those resolutions
substantially in the form attached hereto as Exhibit D.

“Business Day” is any day that is not a Saturday, Sunday or a day on which Bank
is closed.

“Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (1) year from the date of
acquisition; (b) commercial paper maturing no more than one (1) year after its
creation and having the highest rating from either Standard & Poor’s Ratings
Group or Moody’s Investors Service, Inc., (c) Bank’s certificates of deposit
issued maturing no more than one (1) year after issue.

“Change in Control” means any event, transaction, or occurrence as a result of
which (a) any “person” (as such term is defined in Sections 3(a)(9) and 13(d)(3)
of the Securities Exchange Act of 1934, as an amended (the “Exchange Act”)),
other than a trustee or other fiduciary holding securities under an employee
benefit plan of Borrower, is or becomes a beneficial owner (within the meaning
Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of
securities of Borrower, representing twenty-five percent (25%) or more of the
combined voting power of Borrower’s then outstanding securities; or (b) during
any period of twelve consecutive calendar months, individuals who at the
beginning of such period constituted the Board of Directors of Borrower
(together with any new directors whose election by the Board of Directors of
Borrower was approved by a vote of at least two-thirds of the directors then
still in office who either were directions at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason other than death or disability to constitute a majority of the
directors then in office.

“Code” is the Uniform Commercial Code, as the same may, from time to time, be
enacted and in effect in the State of California; provided, that, to the extent
that the Code is used to define any term herein or in any Loan Document and such
term is defined differently in different Articles or Divisions of the Code, the
definition of such term contained in Article or Division 9 shall govern;
provided further, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection, or priority of, or remedies with
respect to, Bank’s Lien on any Collateral is governed by the Uniform Commercial
Code in effect in a jurisdiction other than the State of California, the term
“Code” shall mean the Uniform Commercial Code as enacted and in effect in such
other

17

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jurisdiction solely for purposes on the provisions thereof relating to such
attachment, perfection, priority, or remedies and for purposes of definitions
relating to such provisions.

“Collateral” is any and all properties, rights and assets of Borrower described
on Exhibit A.

“Collateral Account” is any Deposit Account, Securities Account, or Commodity
Account.

“Commodity Account” is any “commodity account” as defined in the Code with such
additions to such term as may hereafter be made.

“Communication” is defined in Section 10.

“Compliance Certificate” is that certain certificate in the form attached hereto
as Exhibit E.

“Contingent Obligation” is, for any Person, any direct or indirect liability,
contingent or not, of that Person for (a) any indebtedness, lease, dividend,
letter of credit or other obligation of another such as an obligation directly
or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by
that Person, or for which that Person is directly or indirectly liable; (b) any
obligations for undrawn letters of credit for the account of that Person; and
(c) all obligations from any interest rate, currency or commodity swap
agreement, interest rate cap or collar agreement, or other agreement or
arrangement designated to protect a Person against fluctuation in interest
rates, currency exchange rates or commodity prices; but “Contingent Obligation”
does not include endorsements in the ordinary course of business.  The amount of
a Contingent Obligation is the stated or determined amount of the primary
obligation for which the Contingent Obligation is made or, if not determinable,
the maximum reasonably anticipated liability for it determined by the Person in
good faith; but the amount may not exceed the maximum of the obligations under
any guarantee or other support arrangement.

“Control Agreement” is any control agreement entered into among the depository
institution at which Borrower maintains a Deposit Account or the securities
intermediary or commodity intermediary at which Borrower maintains a Securities
Account or a Commodity account, Borrower, and Bank pursuant to which Bank
obtains control (within the meaning of the Code) over such Deposit Account,
Securities Account, or Commodity Account.

“Credit Extension” is any Advance, Term Loan or any other extension of credit by
Bank for Borrower’s benefit.

“Default” means any event which with notice or passage of time or both, would
constitute an Event of Default.

“Default Rate” is defined in Section 2.3(b).

“Deposit Account” is any “deposit account” as defined in the Code with such
additions to such term as may hereafter be made.

“Designated Deposit Account” is Borrower’s deposit account, account number
3300521833, maintained with Bank.

“Dollars,” “dollars” and “$” each mean lawful money of the United States.

“EBITDA” shall mean (a) Net Income, plus (b) Interest Expense, plus (c) to the
extent deducted in the calculation of Net Income, depreciation expense and
amortization expense, plus (d) income tax expense, plus (e) non-cash expenses
incurred in connection with stock-based compensation, plus (f) non-cash expenses
incurred in connection with the issuance of warrants or options to purchase the
capital stock of Borrower.

“Effective Date” is the date Bank executes this Agreement and as indicated on
the signature page hereof.

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“Eligible Accounts” are Accounts which arise in the ordinary course of
Borrower’s business that meet all Borrower’s representations and warranties in
Section 5.3.  Bank reserves the right at any time and from time to time after
the Effective Date, to adjust any of the criteria set forth below and to
establish new criteria in its good faith business judgment.  Unless Bank agrees
otherwise in writing, Eligible Accounts shall not include:

(a)           Accounts for which the Account Debtor has not been invoiced;

(b)           Accounts that the Account Debtor has not paid within ninety (90)
days of invoice date;

(c)           Accounts owing from an Account Debtor, fifty percent (50%) or more
of whose Accounts have not been paid within ninety (90) days of invoice date;

(d)           Credit balances over ninety (90) days from invoice date;

(e)           Accounts owing from an Account Debtor, including Affiliates, whose
total obligations to Borrower exceed twenty-five (25%) of all Accounts, for the
amounts that exceed that percentage, unless Bank approves in writing;

(f)            Accounts owing from an Account Debtor which does not have its
principal place of business in the United States;

(g)           Accounts owing from an Account Debtor which is a federal, state or
local government entity or any department, agency, or instrumentality thereof
except for Accounts of the United States if Borrower has assigned its payment
rights to Bank and the assignment has been acknowledged under the Federal
Assignment of Claims Act of 1940, as amended;

(h)           Accounts owing from an Account Debtor to the extent that Borrower
is indebted or obligated in any manner to the Account Debtor (as creditor,
lessor, supplier or otherwise - sometimes called “contra” accounts, accounts
payable, customer deposits or credit accounts), with the exception of customary
credits, adjustments and/or discounts given to an Account Debtor by Borrower in
the ordinary course of its business;

(i)            Accounts for demonstration or promotional equipment, or in which
goods are consigned, or sold on a “sale guaranteed”, “sale or return”, “sale on
approval”, “bill and hold”, or other terms if Account Debtor’s payment may be
conditional;

(j)            Accounts for which the Account Debtor is Borrower’s Affiliate,
officer, employee, or agent;

(k)           Accounts in which the Account Debtor disputes liability or makes
any claim (but only up to the disputed or claimed amount), or if the Account
Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or goes out
of business;

(l)            Accounts owing from an Account Debtor with respect to which
Borrower has received deferred revenue (but only to the extent of such deferred
revenue);

(m)          Accounts for which Bank in its good faith business judgment
determines collection to be doubtful; and

(n)           other Accounts Bank deems ineligible in the exercise of its good
faith business judgment.

“Equipment” is all “equipment” as defined in the Code with such additions to
such term as may hereafter be made, and includes without limitation all
machinery, fixtures, goods, vehicles (including motor vehicles and trailers),
and any interest in any of the foregoing.

“ERISA” is the Employment Retirement Income Security Act of 1974, and its
regulations.

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“Event of Default” is defined in Section 8.

“Funding Date” is any date on which a Credit Extension is made to or on account
of Borrower which shall be a Business Day.

“GAAP” is generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other Person as
may be approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.

“General Intangibles” is all “general intangibles” as defined in the Code in
effect on the date hereof with such additions to such term as may hereafter be
made, and includes without limitation, all copyright rights, copyright
applications, copyright registrations and like protections in each work of
authorship and derivative work, whether published or unpublished, any patents,
trademarks, service marks and, to the extent permitted under applicable law, any
applications therefor, whether registered or not, any trade secret rights,
including any rights to unpatented inventions, payment intangibles, royalties,
contract rights, goodwill, franchise agreements, purchase orders, customer
lists, route lists, telephone numbers, domain names, claims, income and other
tax refunds, security and other deposits, options to purchase or sell real or
personal property, rights in all litigation presently or hereafter pending
(whether in contract, tort or otherwise), insurance policies (including without
limitation key man, property damage, and business interruption insurance),
payments of insurance and rights to payment of any kind.

“GlobalScape Subsidiaries” means each of Availl, GS General, GS Limited and
GlobalScape Texas, LLC, a Nevada limited.

“GlobalScape Texas” means GlobalSCAPE Texas, LP, a Texas limited partnership.

“GS General” means GS General, LLC, a Nevada limited liability company, a
wholly-owned Subsidiary of Borrower and the general partner of GlobalScape
Texas.

“GS Limited” means GlobalSCAPE Limited, LLC, a Nevada limited liability company,
a wholly-owned Subsidiary of Borrower and the limited partner of GlobalScape
Texas.

“Guarantor” is any present or future guarantor of the Obligations, including the
GlobalScape Subsidiaries.

“Guaranty” means each Unconditional Guaranty executed by the GlobalScape
Subsidiaries in favor of Bank, dated as of the Effective Date.

“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of
property or services, such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations, and (d)
Contingent Obligations.

“Insolvency Proceeding” is any proceeding by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

“Interest Expense” means for any fiscal period, interest expense (whether cash
or non-cash) determined in accordance with GAAP for the relevant period ending
on such date, including, in any event, interest expense with respect to any
Credit Extension and other Indebtedness of Borrower and its Subsidiaries,
including, without limitation or duplication, all commissions, discounts, or
related amortization and other fees and charges with respect to letters of
credit and bankers’ acceptance financing and the net costs associated with
interest rate swap, cap, and similar arrangements, and the interest portion of
any deferred payment obligation (including leases of all types).

“Inventory” is all “inventory” as defined in the Code in effect on the date
hereof with such additions to such term as may hereafter be made, and includes
without limitation all merchandise, raw materials, parts, supplies,

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packing and shipping materials, work in process and finished products, including
without limitation such inventory as is temporarily out of Borrower’s custody or
possession or in transit and including any returned goods and any documents of
title representing any of the above.

“Investment” is any beneficial ownership interest in any Person (including
stock, partnership interest or other securities), and any loan, advance or
capital contribution to any Person.

“IP Agreement” is those certain Intellectual Property Security Agreements
executed and delivered by Borrower and the GlobalScape Subsidiaries to Bank
dated as of the Effective Date.

“Letter of Credit” means a standby letter of credit issued by Bank or another
institution based upon an application, guarantee, indemnity or similar agreement
on the part of Bank for the account of Borrower.

“Lien” is a mortgage, lien, deed of trust, charge, pledge, security interest or
other encumbrance.

“Loan Documents” are, collectively, this Agreement, the Perfection Certificate,
the IP Agreements, the Guaranties, the Third Party Security Agreements, any
note, or notes or guaranties executed by Borrower or any Guarantor, and any
other present or future agreement between Borrower any Guarantor and/or for the
benefit of Bank in connection with this Agreement, all as amended, restated, or
otherwise modified.

“Make-Whole Premium” means an amount equal to $60,000.

“Material Adverse Change” is (a) a material impairment in the perfection or
priority of Bank’s Lien in the Collateral or in the value of such Collateral;
(b) a material adverse change in the business, operations, or condition
(financial or otherwise) of Borrower; or (c) a material impairment of the
prospect of repayment of any portion of the Obligations or (d) Bank determines,
based upon information available to it and in its reasonable judgment, that
there is a reasonable likelihood that Borrower shall fail to comply with one or
more of the financial covenants in Section 6 during the next succeeding
financial reporting period.

“Net Income” means, as calculated on a consolidated basis for Borrower and its
Subsidiaries for any period as at any date of determination, the net profit (or
loss), after provision for taxes, of Borrower and its Subsidiaries for such
period taken as a single accounting period.

“Obligations” are Borrower’s obligation to pay when due any debts, principal,
interest, Bank Expenses and other amounts Borrower owes Bank now or later,
whether under this Agreement, the Loan Documents, or otherwise, including,
without limitation, all obligations relating to letters of credit, cash
management services, and foreign exchange contracts, if any, and including
interest accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank, and the performance of Borrower’s
duties under the Loan Documents.

“Operating Documents” are, for any Person, such Person’s formation documents, as
certified with the Secretary of State of such Person’s state of formation on a
date that is no earlier than 30 days prior to the Effective Date, and, (a) if
such Person is a corporation, its bylaws in current form, (b) if such Person is
a limited liability company, its limited liability company agreement (or similar
agreement), and (c) if such Person is a partnership, its partnership agreement
(or similar agreement), each of the foregoing with all current amendments or
modifications thereto.

“Payment/Advance Form” is that certain form attached hereto as Exhibit B.

“Perfection Certificate” is defined in Section 5.1.

“Permitted Indebtedness” is:

(a)           Borrower’s Indebtedness to Bank under this Agreement and the other
Loan Documents;

(b)           Indebtedness existing on the Effective Date and shown on the
Perfection Certificate;

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(c)           Subordinated Debt;

(d)           unsecured Indebtedness to trade creditors incurred in the ordinary
course of business;

(e)           Indebtedness incurred as a result of endorsing negotiable
instruments received in the ordinary course of business;

(f)            Indebtedness secured by Permitted Liens;

(g)           Other unsecured Indebtedness in an aggregate principal amount not
to exceed $50,000; and

(h)           extensions, refinancings, modifications, amendments and
restatements of any items of Permitted Indebtedness (a) through (f) above,
provided that the principal amount thereof is not increased or the terms thereof
are not modified to impose more burdensome terms upon Borrower or its
Subsidiary, as the case may be.

“Permitted Investments” are:

(a)           Investments shown on the Perfection Certificate and existing on
the Effective Date;

(b)           Cash Equivalents;

(c)           Investments consisting of the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of Borrower;

(d)           Investments consisting of deposit accounts in which Bank has a
perfected security interest;

(e)           Investments accepted in connection with Transfers permitted by
Section 7.1;

(f)            Investments of Subsidiaries in or to other Subsidiaries or
Borrower and Investments by Borrower in Subsidiaries;

(g)           Investments consisting of (i) travel advances and employee
relocation loans and other employee loans and advances in the ordinary course of
business, and (ii) loans to employees, officers or directors relating to the
purchase of equity securities of Borrower or its Subsidiaries pursuant to
employee stock purchase plans or agreements approved by Borrower’s Board of
Directors;

(h)           Investments (including debt obligations) received in connection
with the bankruptcy or reorganization of customers or suppliers and in
settlement of delinquent obligations of, and other disputes with, customers or
suppliers arising in the ordinary course of business;

(i)            Investments consisting of notes receivable of, or prepaid
royalties and other credit extensions, to customers and suppliers who are not
Affiliates, in the ordinary course of business; provided that this paragraph (i)
shall not apply to Investments of Borrower in any Subsidiary; and

(j)            Other Investments not otherwise permitted by Section 7.7, not
exceeding $50,000 in the aggregate outstanding at any time.

“Permitted Liens” are:

(a)           Liens existing on the Effective Date and shown on the Perfection
Certificate or arising under this Agreement and the other Loan Documents;

(b)           Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, if they have no priority over
any of Bank’s Liens;

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(c)           purchase money Liens (i) on Equipment acquired or held by Borrower
incurred for financing the acquisition of the Equipment securing no more than
$50,000 in the aggregate amount outstanding, or (ii) existing on Equipment when
acquired, if the Lien is confined to the property and improvements and the
proceeds of the Equipment;

(d)           statutory Liens securing claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other Persons imposed without
action of such parties, provided, they have no priority over any of Bank’s Lien
and the aggregate amount of such Liens does not at any time exceed $50,000;

(e)           Liens to secure payment of workers’ compensation, employment
insurance, old-age pensions, social security and other like obligations incurred
in the ordinary course of business, provided, they have no priority over any of
Bank’s Liens and the aggregate amount of the Indebtedness secured by such Liens
does not at any time exceed $50,000;

(f)            Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any extension,
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase;

(g)           leases or subleases of real property granted in the ordinary
course of business, and leases, subleases, non-exclusive licenses or sublicenses
of property (other than real property or intellectual property) granted in the
ordinary course of Borrower’s business, if the leases, subleases, licenses and
sublicenses do not prohibit granting Bank a security interest;

(h)           non-exclusive license or sublicense of intellectual property
granted to third parties in the ordinary course of business; and

(i)            Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 8.4 or 8.7.

“Person” is any individual, sole proprietorship, partnership, limited liability
company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.

“Prime Rate” is Bank’s most recently announced “prime rate,” even if it is not
Bank’s lowest rate.

“Registered Organization” is any “registered organization” as defined in the
Code with such additions to such term as may hereafter be made.

“Responsible Officer” is any of the Chief Executive Officer, President, Chief
Financial Officer and Controller of Borrower.

“Revolving Line” is an Advance or Advances in an aggregate amount of up to
$750,000 outstanding at any time.

“Revolving Line Maturity Date” is September       , 2008.

“Securities Account” is any “securities account” as defined in the Code with
such additions to such term as may hereafter be made.

“Settlement Date” is defined in Section 2.1.3.

“Subordinated Debt” is indebtedness incurred by Borrower subordinated to all of
Borrower’s now or hereafter indebtedness to Bank (pursuant to a subordination,
intercreditor, or other similar agreement in form and substance satisfactory to
Bank entered into between Bank and the other creditor), on terms acceptable to
Bank.

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“Subsidiary” means, with respect to any Person, any Person of which more than
50% of the voting stock or other equity interests is owned or controlled,
directly or indirectly, by such Person or one or more Affiliates of such Person.

“Term Loan” is a loan made by Bank pursuant to the terms of Section 2.1.2
hereof.

“Term Loan Amount” is an aggregate amount equal to $5,000,000 outstanding at any
time.

“Term Loan Maturity Date” is September     , 2009.

“Term Loan Payment” is defined in Section 2.1.2(b).

“Third Party Security Agreement” means each Security Agreement executed by the
GlobalScape Subsidiaries in favor of Bank, dated as of the Effective Date.

“Total Funded Debt” means all obligations to repay borrowed money, whether
direct or indirect, incurred, assumed, or guaranteed; all capital lease
obligations; all synthetic leases; all obligations, contingent or otherwise,
under any letter of credit; all obligations under conditional sales agreements;
provided that “Total Funded Debt” does not include operating leases of Borrower
and operating leases of Borrower’s Subsidiaries guaranteed by Borrower.

“Transfer” is defined in Section 7.1.

“Unused Revolving Line Facility Fee” is defined in Section 2.4(d).

[Signature page follows.]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the Effective Date.

BORROWER:

GlobalSCAPE, Inc.

By

/s/ Charles R. Poole

 

Name:

Charles R. Poole

 

Title:

President & CEO

 

 

 

 

 

 

 

 

 

 

BANK:

 

SILICON VALLEY BANK

 

By

/s/ Phillip A. Wright

 

Name:

Phillip A. Wright

 

Title:

Vice President

 

 

 

 

 

 

 

Effective Date:

9/22/06

 

 

 

[Signature Page to Loan and Security Agreement.]

--------------------------------------------------------------------------------

EXHIBIT A

The Collateral consists of all of Borrower’s right, title and interest in and to
the following personal property:

All goods, Accounts (including health-care receivables), Equipment, Inventory,
contract rights or rights to payment of money, leases, license agreements,
franchise agreements, General Intangibles, commercial tort claims, documents,
instruments (including any promissory notes), chattel paper (whether tangible or
electronic), cash, deposit accounts, fixtures, letters of credit rights (whether
or not the letter of credit is evidenced by a writing), securities, and all
other investment property, supporting obligations, and financial assets, whether
now owned or hereafter acquired, wherever located; and

all Borrower’s Books relating to the foregoing, and any and all claims, rights
and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.

--------------------------------------------------------------------------------

EXHIBIT B

Loan Payment/Advance Request Form

DEADLINE FOR SAME DAY PROCESSING IS NOON P.S.T.*

Fax To:

 

Date:

 

 

 

 

LOAN PAYMENT:

 

 

 

GlobalSCAPE, Inc.

 

From Account #

 

 

To Account #

 

 

 

(Deposit Account #)

 

 

(Loan Account #)

 

 

 

Principal $

 

 

and/or Interest $

 

 

 

 

Authorized Signature:

 

 

Phone Number:

 

 

Print Name/Title:

 

 

 

 

LOAN ADVANCE:

 

 

 

Complete Outgoing Wire Request section below if all or a portion of the funds
from this loan advance are for an outgoing wire.

 

From Account #

 

 

To Account #

 

 

 

(Loan Account #)

 

 

(Deposit Account #)

 

 

Amount of Advance $

 

 

 

 

All Borrower’s representations and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects on the date of the
request for an advance; provided, however, that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof; and provided, further
that those representations and warranties expressly referring to a specific date
shall be true, accurate and complete in all material respects as of such date:

 

Authorized Signature:

 

 

Phone Number:

 

 

Print Name/Title:

 

 

 

 

 

 

OUTGOING WIRE REQUEST:

 

Complete only if all or a portion of funds from the loan advance above is to be
wired.

Deadline for same day processing is noon, P.S.T.

 

 

 

Beneficiary Name:

 

 

Amount of Wire: $

 

 

Beneficiary Bank:

 

 

Account Number:

 

 

City and State:

 

 

 

 

 

 

 

 

 

 

 

Beneficiary Bank Transit (ABA) #:

 

 

Beneficiary Bank Code (Swift, Sort, Chip, etc.):

 

 

 

 

 

(For International Wire Only)

 

 

Intermediary Bank:

 

 

Transit (ABA) #:

 

 

For Further Credit to:

 

 

 

Special Instruction:

 

 

 

By signing below, I (we) acknowledge and agree that my (our) funds transfer
request shall be processed in accordance with and subject to the terms and
conditions set forth in the agreements(s) covering funds transfer service(s),
which agreements(s) were previously received and executed by me (us).

 

Authorized Signature:

 

 

2nd Signature (if required):

 

 

Print Name/Title:

 

 

Print Name/Title:

 

 

Telephone #:

 

 

Telephone #:

 

 

 

--------------------------------------------------------------------------------

*  Unless otherwise provided for an Advance bearing interest at LIBOR.

--------------------------------------------------------------------------------

EXHIBIT C

BORROWING BASE CERTIFICATE

Borrower: GlobalSCAPE, Inc.

 

Lender:   Silicon Valley Bank

 

Commitment Amount:         $750,000

 

 

 

ACCOUNTS RECEIVABLE

 

2.

Accounts Receivable Book Value as of

$

3.

Additions (please explain on reverse)

$

4.

TOTAL ACCOUNTS RECEIVABLE

$

 

 

 

ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)

 

5.

Un-invoiced Accounts

$

6.

Amounts over 90 days due

$

7.

Balance of 50% over 90 day accounts

$

8.

Credit balances over 90 days

$

9.

Concentration Limits

$

10.

Foreign Accounts

$

11.

Governmental Accounts

$

12.

Contra Accounts

$

13.

Promotion or Demo Accounts

$

14.

Intercompany/Employee Accounts

$

15.

Disputed Accounts

$

16.

Deferred Revenue

$

17.

Other (please explain on reverse)

$

18.

TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS

$

19.

Eligible Accounts (#3 minus #17)

$

20.

ELIGIBLE AMOUNT OF ACCOUNTS (80% of #18)

$

 

 

 

BALANCES

 

21.

Maximum Loan Amount

$750,000

22.

Total Funds Available Lesser of #21 or #20

$

23.

Present balance owing on Line of Credit

$

24.

Outstanding under Sublimits

$

25.

RESERVE POSITION (#22 minus #23 and #24)

$

 

The undersigned represents and warrants that this is true, complete and correct,
and that the information in this Borrowing Base Certificate complies with the
representations and warranties in the Loan and Security Agreement between the
undersigned and Silicon Valley Bank.

BANK USE ONLY

 

Received by:

 

 

COMMENTS:

 

AUTHORIZED SIGNER

 

 

Date:

 

 

By:

 

 

Verified:

 

 

Authorized Signer

 

AUTHORIZED SIGNER

 

Date:

 

 

Date:

 

 

 

Compliance Status:

Yes

No

 

 

--------------------------------------------------------------------------------

EXHIBIT D

BORROWING RESOLUTIONS

[g202361bg21i001.gif]   Silicon Valley Bank

CORPORATE BORROWING CERTIFICATE

BORROWER: GlobalSCAPE, Inc.

DATE:

 

BANK:

Silicon Valley Bank

 

 

I hereby certify, in my capacity as an officer of the Borrower and not
individually, as follows, as of the date set forth above:

1.  I am the Secretary, Assistant Secretary or other officer of the Borrower.  
My title is as set forth below.

2.  Borrower’s exact legal name is set forth above.  Borrower is a corporation
existing under the laws of the State of Delaware.

3.  Attached hereto are true, correct and complete copies of Borrower’s
Certificate of Incorporation (including amendments), as filed with the Secretary
of State of the state in which Borrower is incorporated as set forth in
paragraph 1 above.  Such Certificate of Incorporation have not been amended,
annulled, rescinded, revoked or supplemented, and remain in full force and
effect as of the date hereof.

4.  The following resolutions were duly and validly adopted by Borrower’s Board
of Directors at a duly held meeting of such directors (or pursuant to a
unanimous written consent or other authorized corporate action).  Such
resolutions are in full force and effect as of the date hereof and have not been
in any way modified, repealed, rescinded, amended or revoked, and Bank may rely
on them until Bank receives written notice of revocation from Borrower.

RESOLVED, that any one of the following officers or employees of Borrower, whose
names, titles and signatures are below, may act on behalf of Borrower:

Name

 

Title

 

Signature

 

Authorized to
Add or Remove
Signatories

 

 

 

 

 

 

 

 

 

 

 

 

 

o

 

 

 

 

 

 

o

 

 

 

 

 

 

o

 

 

 

 

 

 

o

 

RESOLVED FURTHER, that any one of the persons designated above with a checked
box beside his or her name may, from time to time, add or remove any individuals
to and from the above list of persons authorized to act on behalf of Borrower.

RESOLVED FURTHER, that such individuals may, on behalf of Borrower:

Borrow Money.  Borrow money from Silicon Valley Bank (“Bank”).

Execute Loan Documents.  Execute any loan documents Bank requires.

Grant Security.  Grant Bank a security interest in any of Borrower’s assets.

Negotiate Items.  Negotiate or discount all drafts, trade acceptances,
promissory notes, or other indebtedness in which Borrower has an interest and
receive cash or otherwise use the proceeds.

--------------------------------------------------------------------------------

Letters of Credit.  Apply for letters of credit from Bank.

Foreign Exchange Contracts.  Execute spot or forward foreign exchange contracts.

Further Acts.  Designate other individuals to request advances, pay fees and
costs and execute other documents or agreements (including documents or
agreement that waive Borrowers right to a jury trial) they believe to be
necessary to effectuate such resolutions.

RESOLVED FURTHER, that all acts authorized by the above resolutions and any
prior acts relating thereto are ratified.

5.  The persons listed above are Borrower’s officers or employees with their
titles and signatures shown next to their names.

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

*** If the Secretary, Assistant Secretary or other certifying officer executing
above is designated by the resolutions set forth in paragraph 4 as one of the
authorized signing officers, this Certificate must also be signed by a second
authorized officer or director of Borrower.

I, the

 

of Borrower, hereby certify as to paragraphs 1 through 5 above, as

 

 

[print title]

 

 

of the date set forth above.

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

EXHIBIT E

COMPLIANCE CERTIFICATE

TO:

SILICON VALLEY BANK

Date:

 

FROM:

GlobalSCAPE, Inc.

 

 

The undersigned authorized officer of                     (“Borrower”) certifies
that under the terms and conditions of the Loan and Security Agreement between
Borrower and Bank (the “Agreement”), (1) Borrower is in complete compliance for
the period ending                               with all required covenants
except as noted below, (2) there are no Events of Default, (3) all
representations and warranties in the Agreement are true and correct in all
material respects on this date except as noted below; provided, however, that
such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date, (4) Borrower, and each of its
Subsidiaries, has timely filed all required tax returns and reports, and
Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower except as otherwise
permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no
Liens have been levied or claims made against Borrower or any of its
Subsidiaries relating to unpaid employee payroll or benefits of which Borrower
has not previously provided written notification to Bank.  Attached are the
required documents supporting the certification.  The undersigned certifies that
these are prepared in accordance with generally GAAP consistently applied from
one period to the next except as explained in an accompanying letter or
footnotes.  The undersigned acknowledges that no borrowings may be requested at
any time or date of determination that Borrower is not in compliance with any of
the terms of the Agreement, and that compliance is determined not just at the
date this certificate is delivered.  Capitalized terms used but not otherwise
defined herein shall have the meanings given them in the Agreement.

Please indicate compliance status by circling Yes/No under “Complies” column.

Reporting Covenant

 

Required

 

Complies

 

 

 

 

 

Monthly financial statements with Compliance Certificate

 

Monthly within 30 days

 

Yes  No

Annual financial statement (CPA Audited) + CC

 

FYE within 120 days

 

Yes  No

10-Q, 10-K and 8-K

 

Within 5 days after filing with SEC

 

Yes  No

Borrowing Base Certificate A/R & A/P Agings

 

Monthly within 30 days

 

Yes  No

Annual Budget

 

Earlier of January 31 or 20 days after approval by Board of Directors

 

Yes  No

 

The following Intellectual Property was registered after the Effective Date (if
no registrations, state “None”)

 

Financial Covenant

 

Required

 

Actual

 

Complies

 

 

 

 

 

 

 

Minimum Fixed Charge Coverage Ratio

 

1.50:1.00

 

:1.00

 

Yes  No

Maximum Fund Debt/EBITDA

 

2.00:1.00

 

:1.00

 

Yes  No

 

--------------------------------------------------------------------------------

The following financial covenant analyses and information set forth in Schedule
1 attached hereto are true and accurate as of the date of this Certificate.

The following are the exceptions with respect to the certification above:  (If
no exceptions exist, state “No exceptions to note.”)

 

 

GlobalSCAPE, Inc.

BANK USE ONLY

 

 

 

Received by:

 

 

By:

 

 

 

AUTHORIZED SIGNER

 

Name:

 

 

 

 

 

Title:

 

 

Date:

 

 

 

 

 

 

 

 

 

 

 

Verified:

 

 

 

 

 

 

AUTHORIZED SIGNER

 

 

 

 

 

 

Date:

 

 

 

 

 

 

 

Compliance Status:

Yes

No

 

--------------------------------------------------------------------------------

Schedule 1 to Compliance Certificate

Financial Covenants of Borrower

Dated:

I.              Minimum Fixed Charge Coverage Ratio (Section 6.7(a))

Required:               1.50:1.00

Actual:

 

A.

Net Income of Borrower

$

 

 

 

B.

To the extent included in the determination of Net Income

 

 

 

 

 

1.

The provision for income taxes

$

 

 

 

 

 

2.

Depreciation expense

$

 

 

 

 

 

3.

Amortization expense

$

 

 

 

 

 

4.

Net Interest Expense

$

 

 

 

 

 

5.

All other charges which are both non-cash and non-recurring

$

 

 

 

 

 

6.

All non-cash income

$

 

 

 

 

 

7.

The sum of lines 1 through 5 minus line 6

$

 

 

 

C.

EBITDA (line A plus line B.7)

 

 

 

 

D.

Cash taxes paid

$

 

 

 

E.

Non-financed capital expenditures

$

 

 

 

F.

Line C minus Line D and Line E

$

 

 

 

G.

The sum of principal plus interest paid to Bank

$

 

 

 

H.

Line F divided by Line G

 

 

Is line H equal to or greater than 1.50:1:00?

No, not in compliance

Yes, in compliance

 

--------------------------------------------------------------------------------

II.            Maximum Total Funded Debt/EBITDA (Section 6.7(b))

Required:               2.00:1.00

Actual:

A.

Total Funded Debt (as defined in the Loan and Security Agreement)

$

B.

Value of Line I.C. (EBITDA)

$

C.

Line A divided by Line B

$

 

Is line C equal to or less than 2.00:1.00?

           No, not in compliance

Yes, in compliance

 

--------------------------------------------------------------------------------

EXHIBIT F

PERFECTION CERTIFICATE

[hard copy to be inserted]

--------------------------------------------------------------------------------

 

[g202361bg21i002.jpg]

SILICON VALLEY BANK

PRO FORMA INVOICE FOR LOAN CHARGES

BORROWER:

GlobalSCAPE, Inc.

 

 

LOAN OFFICER:

Doug Mangum

 

 

DATE:

September     , 2006

 

 

 

Loan Fee

$20,000

 

 

 

 

Bank Expenses

$            (estimate)

 

 

 

 

TOTAL FEES DUE

$

 

o   A check for the total amount is attached.

o   Debit DDA #                             for the total amount.

BORROWER:

 

 

 

 

 

Authorized Signer

(Date)

 

 

 

SILICON VALLEY BANK

 

 

 

 

 

Loan Officer Signature

(Date)

 

 

--------------------------------------------------------------------------------