Secured Credit Facility

On February 23, 2016, in connection with our acquisition of TCS, we entered into a $400,000,000 secured credit facility (the "Secured Credit Facility") with a syndicate of lenders. The Secured Credit Facility, as amended June 6, 2017 (the "June 2017 Amendment"), comprises a senior secured term loan A facility of $250,000,000 (the "Term Loan Facility") and a secured revolving loan facility of up to $150,000,000, including a $25,000,000 letter of credit sublimit (the "Revolving Loan Facility") and, together, with the Term Loan Facility, matures on February 23, 2021. The proceeds of these borrowings were primarily used to finance our acquisition of TCS, including the repayment of certain existing indebtedness of TCS. The Term Loan Facility requires quarterly repayments. During the fiscal years ended July 31, 2018 and 2017, we repaid $18,960,000 and $33,567,000, respectively, principal amount of borrowings under the Term Loan Facility. The repayments in the fiscal year ended July 31, 2017 include a payment of $22,500,000 made in connection with the June 2017 amendment to reduce the balloon or final payment of the Term Loan Facility, which is discussed further below. Under the Revolving Loan Facility, we had outstanding balances ranging from $34,904,000 to $66,804,000 during the fiscal year ended July 31, 2018.

As of July 31, 2018 and 2017, net amounts outstanding under our Secured Credit Facility were as follows:



	2018		2017
Term Loan Facility	$	120,121,000	139,080,000
Less unamortized deferred financing costs related to Term Loan Facility	3,427,000		4,763,000
Term Loan Facility, net	116,694,000		134,317,000
Revolving Loan Facility	48,604,000		57,405,000
Amount outstanding under Secured Credit Facility, net	165,298,000		191,722,000
Less current portion of long-term debt	17,211,000		15,494,000
Non-current portion of long-term debt	$	148,087,000	176,228,000

Interest expense, including amortization of deferred financing costs, recorded during the fiscal years ended July 31, 2018, 2017 and 2016 related to the Secured Credit Facility was $9,614,000, $11,106,000 and $6,933,000, respectively, and reflects a blended interest rate of approximately 5.40%, 4.90% and 5.00% in fiscal 2018, 2017 and 2016, respectively.

At July 31, 2018, we had $3,166,000 of standby letters of credit outstanding under our Secured Credit Facility, as amended, related to our guarantees of future performance on certain customer contracts and no outstanding commercial letters of credit.

The Revolving Loan Facility is primarily used for working capital and other general corporate purposes of the Company and its subsidiaries, including the issuance of letters of credit. Borrowings under the Secured Credit Facility, pursuant to terms defined in the Secured Credit Facility, shall be either (i) Alternate Base Rate ("ABR") borrowings, which bear interest from the applicable borrowing date at a rate per annum equal to (x) the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 0.50% per annum and (c) the Adjusted LIBO Rate on such day (or, if such day is not a business day, the immediately preceding business day) plus 1.00% per annum (provided that if the LIBO Rate is less than 1.00%, then the LIBO Rate shall be deemed to be 1.00%), plus (y) the Applicable Rate, or (ii) Eurodollar borrowings, which bear interest from the applicable borrowing date at a rate per annum equal to (x) the Adjusted LIBO Rate for such interest period (provided that if the LIBO Rate is less than 1.00%, then the LIBO Rate shall be deemed to be 1.00%) plus (y) the Applicable Rate. The Applicable Rate is determined based on a pricing grid that is dependent upon our leverage ratio as of the end of each fiscal quarter. The Secured Credit Facility contains customary representations, warranties and affirmative covenants and customary negative covenants, subject to negotiated exceptions, on (i) liens, (ii) investments, (iii) indebtedness, (iv) significant corporate changes, including mergers and acquisitions, (v) dispositions, (vi) restricted payments, including stockholder dividends, and (vii) certain other restrictive agreements. The Secured Credit Facility also contains certain financial covenants and customary events of default (subject to grace periods, as appropriate), such as payment defaults, cross-defaults to other material indebtedness, bankruptcy and insolvency, the occurrence of a defined change in control and the failure to observe the negative covenants and other covenants related to the operation of our business.

We believe the June 2017 Amendment provides increased operating and acquisition flexibility and simplifies the calculations of our financial covenants. In particular, the June 2017 Amendment provides, among other things, that the:


(i)	Consolidated EBITDA definition more closely aligns with our Adjusted EBITDA metric by eliminating favorable adjustments to operating income related to settlements of TCS intellectual property matters;


(ii)	Leverage Ratio is calculated on a "gross" basis using the quotient of Total Indebtedness (excluding unamortized deferred financing costs) divided by our trailing twelve month ("TTM") Consolidated EBITDA. The prior Leverage Ratio was calculated on a "net" basis but did not include a reduction for any cash or cash equivalents above $50,000,000;


(iii)	Fixed Charge Coverage Ratio includes a deduction for all cash dividends, regardless of the amount of our cash and cash equivalents and the related allowable Quarterly Dividend Amount, as defined, now aligns with our current quarterly dividend target of $0.10 per common share;


(iv)	Balloon or final payment of the Term Loan Facility, (which is not due until February 23, 2021), was reduced by $22,500,000 through increased borrowings from the Revolving Loan Facility, (which does not expire until February 23, 2021); and


(v)	Leverage Ratios will be adjusted, in certain conditions, to provide for additional flexibility for us to make acquisitions.

In connection with the June 2017 Amendment, there were no changes to: (i) the committed borrowing capacity; (ii) the maturity date; or (iii) interest rates payable (except that the interest rate pricing grid is now based on the new Leverage Ratio). Also, the June 2017 Amendment did not result in an extinguishment for accounting purposes (as such term is defined in ASC 470 "Debt"); instead, the June 2017 Amendment was accounted for as a debt modification. As a result, deferred financing costs (including incremental fees for the June 2017 Amendment) will continue to be amortized over the remaining maturity term of the Secured Credit Facility.

As of July 31, 2018, our Leverage Ratio was 2.19x TTM Consolidated EBITDA compared to the maximum allowable Leverage Ratio of 3.00x TTM Consolidated EBITDA. Our Fixed Charge Coverage Ratio as of July 31, 2018 was 2.33x compared to the minimum required Fixed Charge Coverage Ratio of 1.25x. Given our expected future business performance, we anticipate maintaining compliance with the terms and financial covenants in our Secured Credit Facility, as amended, for the foreseeable future.

The obligations under the Secured Credit Facility, as amended, are guaranteed by certain of our domestic subsidiaries (the "Subsidiary Guarantors"). As collateral security for amounts outstanding under our Secured Credit Facility, as amended, and the guarantees thereof, we and our Subsidiary Guarantors have granted to an administrative agent, for the benefit of the lenders, a lien on, and first priority security interest in, substantially all of our tangible and intangible assets.

Capitalized terms used but not defined herein have the meanings set forth for such terms in the Secured Credit Facility, dated as of February 23, 2016, and the First Amendment of the Secured Credit Facility, dated as of June 6, 2017, both of which have been documented and filed with the SEC.