EXHIBIT 10.31

 

 

AMENDMENT AND WAIVER NO. 1 TO CREDIT AGREEMENT

 

 

This AMENDMENT AND WAIVER NO. 1 TO CREDIT AGREEMENT, dated as of January 3, 2020
(this “Amendment”), is by and among GLOBALSCAPE, INC., a Delaware corporation
(the “Borrower”), the Lenders party hereto, and JPMORGAN CHASE BANK, N.A., as
administrative agent for the Lenders (in such capacity, the “Administrative
Agent”). Capitalized terms which are used in this Amendment without definition
and which are defined in the Credit Agreement shall have the same meanings
herein as in the Credit Agreement.

 

 

R E C I T A L S:

 

WHEREAS, the Borrower, the Lenders party thereto from time to time, and the
Administrative Agent have entered into that certain Credit Agreement, dated as
of November 18, 2019 (as amended or modified from time to time, the “Credit
Agreement”);

 

WHEREAS, the Borrower acknowledges and agrees that certain Defaults and/or
Events of Default under clause (d) of Article VII of the Credit Agreement, as
applicable, have occurred in connection with the Closing Date Dividend (the
“Subject Defaults”);

 

WHEREAS, the Borrower has requested that the Administrative Agent and the
Required Lenders amend the Credit Agreement in certain respects and waive the
Subject Defaults; and

 

WHEREAS, the Administrative Agent and the Required Lenders are willing to amend
the Credit Agreement in certain respects and waive the Subject Defaults on the
terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and the agreements, provisions
and covenants herein contained, and subject to the terms and conditions hereof,
the parties hereto agree as follows:

 

SECTION 1. Amendments. Subject to the satisfaction of the conditions precedent
set forth in Section 3 hereof, the definition of “Fixed Charges” as set forth in
Section 1.01 of the Credit Agreement is hereby amended and restated as follows:

 

““Fixed Charges” means, for any period, without duplication, cash Interest
Expense, plus scheduled principal payments on Indebtedness actually made, plus
expense for taxes paid in cash, plus Restricted Payments paid in cash (other
than (x) the Closing Date Dividend and (y) the dividend paid by the Borrower on
May 28, 2019), all calculated for the Borrower and its Subsidiaries on a
consolidated basis in accordance with GAAP.”

 

SECTION 2. Waiver. Subject to the satisfaction of the conditions precedent set
forth in Section 3 hereof, the Required Lenders waive the Subject Defaults.

 

SECTION 3. Conditions. This Amendment shall become effective as of the date
hereof (the “First Amendment Effective Date”) upon receipt by the Administrative
Agent of duly executed counterparts to this Amendment from the Borrower and the
Required Lenders.

 

 

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

 

 

SECTION 4. Representations and Warranties.

 

4.1     Authorization; Enforceability. This Amendment has been duly executed and
delivered by the Borrower and constitutes a legal, valid and binding obligation
of the Borrower, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.

 

4.2     No Default; Representations and Warranties in Loan Documents. The
Borrower hereby represents and warrants that, after giving effect to this
Amendment (a) no Default or Event of Default has occurred and is continuing and
(b) each representation and warranty contained in the Credit Agreement and in
each Loan Document is true and correct in all material respects as of the date
hereof, except to the extent that such representation or warranty expressly
relates to an earlier date, in which case, such representation and warranty is
true and correct in all material respects as of such earlier date, and that any
representation or warranty which is subject to any materiality qualifier shall
be required to be true and correct in all respects.

 

SECTION 5. Ratification and Release.

 

5.1     Ratification. The Borrower hereby (a) ratifies and reaffirms all of its
payment and performance obligations, contingent or otherwise, and each grant of
security interests and liens in favor of the Administrative Agent or the
Lenders, as the case may be, under each Loan Document, (b) agrees and
acknowledges that the liens in favor of the Administrative Agent and the Lenders
under each Loan Document constitute valid, binding, enforceable and perfected
first priority liens and security interests in the Collateral and are not
subject to avoidance, disallowance or subordination pursuant to any applicable
law, (c) agrees and acknowledges the Obligations constitute legal, valid and
binding obligations of such Loan Parties and that (i) no offsets, defenses or
counterclaims to the Obligations or any other causes of action with respect to
the Obligations or the Loan Documents exist and (ii) no portion of the
Obligations is subject to avoidance, disallowance, reduction or subordination
pursuant to any applicable law, (d) agrees that such ratification and
reaffirmation is not a condition to the continued effectiveness of the Loan
Documents, and (e) agrees that neither such ratification and reaffirmation, nor
the Administrative Agent’s nor any Lender’s solicitation of such ratification
and reaffirmation, constitutes a course of dealing giving rise to any obligation
or condition requiring a similar or any other ratification or reaffirmation from
each party to the Credit Agreement or other Loan Documents with respect to any
subsequent modifications, consent or waiver with respect to the Credit Agreement
or other Loan Documents. The Borrower acknowledges and agrees that any of the
Loan Documents to which it is a party or otherwise bound shall continue in full
force and effect and that all of its obligations thereunder shall be valid and
enforceable and shall not be impaired or limited by the execution or
effectiveness of this Amendment. The Credit Agreement and each other Loan
Document is in all respects hereby ratified and confirmed. This Amendment shall
constitute a “Loan Document” for purposes of the Credit Agreement.

 

5.2      Release; Covenant Not to Sue; Acknowledgement.

 

(a)     Each Loan Party and its Affiliates hereby absolutely and unconditionally
releases and forever discharges the Administrative Agent, each Lender and
Issuing Bank, and any and all participants, parent corporations, subsidiary
corporations, affiliated corporations, insurers, indemnitors, successors and
assigns thereof, together with all of the present and former directors,
officers, agents, representatives and employees of any of the foregoing (each a
“Released Party”), from any and all claims, demands or causes of action of any
kind, nature or description, whether arising in law or equity or upon contract
or tort or under any state or federal law or otherwise, which any Loan Party has
had, now has, has made claim to have or in the future may have against any such
person for or by reason of any act, omission, matter, cause or thing whatsoever
arising from the beginning of time to and including the date of this Amendment,
whether such claims, demands and causes of action are matured or unmatured or
known or unknown. It is the intention of each Loan Party and each of its
Affiliates in providing this release that the same shall be effective as a bar
to each and every claim, demand and cause of action specified. Each Loan Party
and its Affiliates acknowledges that it may hereafter discover facts different
from or in addition to those now known or believed to be true with respect to
such claims, demands, or causes of action and agree that this instrument shall
be and remain effective in all respects notwithstanding any such differences or
additional facts. Each Loan Party and its Affiliates understands, acknowledges
and agrees that the release set forth above may be pleaded as a full and
complete defense and may be used as a basis for an injunction against any
action, suit or other proceeding which may be instituted, prosecuted or
attempted in breach of the provisions of such release.

 

 

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

 

 

(b)     Each Loan Party and its Affiliates, on behalf of itself and its
respective successors, assigns, and other legal representatives, hereby
absolutely, unconditionally and irrevocably, covenants and agrees with and in
favor of each Released Party above that it will not sue (at law, in equity, in
any regulatory proceeding or otherwise) any Released Party on the basis of any
claim released, remised and discharged by any Loan Party pursuant to the above
release. If any Loan Party, any of its Affiliates or any of their respective
successors, assigns or other legal representatives violates the foregoing
covenant, each Loan Party and its Affiliates, for itself and its respective
successors, assigns and legal representatives, agrees to pay, in addition to
such other damages as any Released Party may sustain as a result of such
violation, all reasonable attorneys’ fees and costs incurred by such Released
Party as a result of such violation.

 

(c)     Each Loan Party hereby represents and warrants that, to its knowledge,
there are no liabilities, claims, suits, debts, liens, losses, causes of action,
demands, rights, damages or costs, or expenses of any kind, character or nature
whatsoever, known or unknown, fixed or contingent, which any Loan Party may have
or claim to have against any Released Party arising with respect to the
Obligations, the Credit Agreement or any other Loan Documents.

 

SECTION 6. Miscellaneous.

 

6.1     Effect.

 

(a)     Upon the effectiveness of this Amendment, each reference in each Loan
Document to “this Agreement,” “hereunder,” “hereof” or words of like import
shall mean and be a reference to such Loan Document as modified hereby and each
reference in the other Loan Documents to the Credit Agreement, “thereunder,”
“thereof,” or words of like import shall mean and be a reference to the Credit
Agreement and as modified hereby. This Amendment constitutes a Loan Document and
any breach of any representation or warranty made herein or covenant or
agreement contained herein will constitute an Event of Default under the Credit
Agreement (subject to any applicable grace periods, materiality qualifications
or other qualifications set forth in the Credit Agreement).

 

(b)     Except as specifically set forth in this Amendment, the execution,
delivery and effectiveness of this Amendment shall not (i) limit, impair,
constitute an amendment, forbearance or waiver by, or otherwise affect any
right, power or remedy of, Agent or any Lender under the Credit Agreement or any
other Loan Document or waive, affect or diminish any right of Agent to demand
strict compliance and performance therewith, (ii) constitute a waiver of, or
forbearance with respect to, any Default or Event of Default, whether known or
unknown or (iii) alter, modify, amend or in any way affect any of the terms,
conditions, obligations, covenants or agreements contained in the Credit
Agreement or in any of the other Loan Documents, all of which are ratified and
affirmed in all respects and shall continue in full force and effect.

 

6.2     Severability. Any provision of this Amendment or any other Loan Document
held to be invalid, illegal or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability without affecting the validity, legality and enforceability
of the remaining provisions thereof; and the invalidity of a particular
provision in a particular jurisdiction shall not invalidate such provision in
any other jurisdiction.

 

6.3     Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall constitute an original, but all of which taken
together shall be one and the same instrument. This Amendment may also be
executed by facsimile or electronic transmission and each facsimile or
electronic transmission signature hereto shall be deemed for all purposes to be
an original signatory page.

 

6.4     Governing Law. This Amendment shall be governed by and construed in
accordance with the internal laws of the State of New York, but giving effect to
federal laws applicable to national banks.

 

6.5     Headings. Article and Section headings used herein are for convenience
of reference only, are not part of this Amendment and shall not affect the
construction of, or be taken into consideration in interpreting, this Amendment.

 

 

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

 

 

6.6     Reimbursement of Agent’s Expenses. Without limiting any of the
Administrative Agent’s rights, or any of Borrower’s or other Loan Party’s
obligations, under Section 9.03 of the Credit Agreement, the Loan Parties agree
to reimburse the Administrative Agent for all reasonable and documented out of
pocket expenses incurred by the Administrative Agent and its Affiliates in
connection with entering into this Amendment and the other Loan Documents
entered into in connection herewith.

 

6.7     Entire Agreement. This Amendment contains the final and complete
integration of all prior expressions by the parties hereto with respect to the
subject matter hereof and shall constitute the entire agreement among the
parties hereto with respect to the subject matter hereof superseding all prior
oral or written understandings or agreements.