Note 8. Long-Term Debt

The Company’s long-term debt consists of the following at April 30, 2013 and April 30, 2012 (in thousands):


		April 30,		April 30,
		2013		2012
Term Note A payable to Wells Fargo Capital Finance, LLC. Interest is incurred at the prevailing LIBOR rate plus 5.0% per annum with a minimum rate of 6.50% (6.50% at April 30, 2013), payable monthly. Principal is payable over four years with principal payments of $239 quarterly plus an additional annual payment based on the Company’s free cash flow for the year with any remaining amount due at maturity, June 30, 2015. As a result of prior free cash flow payments, the quarterly principal payment was decreased from $300 to $239. This note is secured by an interest in substantially all of the Company's assets. This note includes certain financial covenants and the Company is in compliance with such covenants at April 30, 2013.	$	7,883	$	11,100

Term Note B payable to Wells Fargo Capital Finance, LLC. Interest is incurred at the prevailing LIBOR rate plus 10.0% per annum with a minimum rate of 12.0% (12.0% at April 30, 2013) payable monthly. Principal is due in full at maturity, June 30, 2015.		4,000		4,000

Wells Fargo Capital Finance, LLC, revolving line of credit, interest rate at prevailing LIBOR rate plus 5.0% per annum with a minimum rate of 6.50% (6.50% at April 30, 2013), payable June 30, 2015.		5,500		5,500

Capital leases, payable in monthly installments through July 2015.		306		651
		17,689		21,251
Less current portion		(2,519)		(2,945)
Total long term debt, net	$	15,170	$	18,306

In June 2011 the Company incurred a loss on extinguishment of debt of $2.2 million as a result of the refinancing of the Hercules Term Loan and Credit Facility. The loss included $1.0 million of unamortized loan costs and $0.8 million of warrant discounts on notes payable that were associated with the borrowings under the Hercules Term Loan and Credit Facility. Additionally, the Company was assessed prepayment fees of $0.4 million.

In June 2011 the Company entered into the Wells Fargo Credit Agreement. The Wells Fargo Credit Agreement consists of a $12.0 million Term Note A, a $4.0 million Term Note B, and a revolving credit note agreement whereby Wells Fargo would provide up to $8.0 million. The Term Note A, Term Note B, and revolving line of credit have interest rate of LIBOR plus 5.00%, 10.00% and 5.00%, respectively. The minimum LIBOR used in the interest rate is 1.50% for Term Note A and the revolving line of credit and 2.00% for Term Note B. The Company capitalized $0.6 million of loan costs related to Wells Fargo Credit Agreement.

The Wells Fargo Credit Agreement requires ongoing compliance with certain affirmative and negative covenants. The affirmative covenants include, but are not limited to: (i) maintenance of existence and conduct of business; (ii) compliance with laws; (iii) use of proceeds; and (iv) books and records and inspection. The negative covenants set forth in the Wells Fargo Credit Agreement include, but are not limited to, restrictions on the ability of the Company (and the Company’s subsidiaries): (i) with certain limited exceptions, to create, incur, assume or allow to exist indebtedness; (ii) with certain limited exceptions, to create, incur, assume or allow to exist liens on properties; (iii) with certain limited exceptions, to make certain payments, transfers of property, or investments; or (iv) with certain limited exceptions, to make acquisitions.

The Wells Fargo Credit Agreement also contains customary events of default, including without limitation events of default based on payment obligations, repudiation of guaranty obligations, material inaccuracies of representations and warranties, covenant defaults, insolvency proceedings, monetary judgments in excess of certain amounts, change in control, certain ERISA events, and defaults under certain other obligations.

The Company is obligated to maintain certain minimum consolidated adjusted EBITDA levels, certain minimum liquidity levels, certain total leverage ratios, and certain fixed charge coverage ratios, all as calculated in accordance with the terms and definitions determining such amounts as contained in the Wells Fargo Credit Agreement. The Wells Fargo Credit Agreement also contains various information and financial reporting requirements. We are in compliance with all such covenants and requirements at April 30, 2013.

A summary of future payments on long-term debt obligations as of April 30, 2013 is as follows (in thousands):


Fiscal Year Ending April 30,		Amount
2014	$	2,519
2015		1,081
2016		14,089
	$	17,689

The summary of future payments on long-term debt obligations accounts for the fiscal year 2013 annual payment of $1.2 million based on the Company’s free cash flow under Term Note A as noted above, however, it does not account for any future annual payments. The amount of these payments is not known; however, when they are determined it will accelerate the payment schedule outlined above. The summary of future payments on long-term debt obligations also includes a one-time payment of $0.4 million made in the first quarter of fiscal 2014 related to a sale of assets. Refer to Note 19 for additional discussion.