6. Long-Term Debt

In July 2013, the Company entered into an amendment to its Revolving Credit and Term Loan Agreement with Wells Fargo Capital Finance. Under the terms of the amendment, the Company is entitled to borrow up to $18.2 million. The total amount that can be borrowed under the credit agreement is based on a multiplier factor of the trailing twelve months of maintenance and Software-As-A-Service revenue. The Wells Fargo Credit Agreement consists of two term notes and a revolving line of credit. Term Note A is for $12.2 million with quarterly principal payments of $306,000 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. To the extent the Company makes annual principal payments based on free cash flow, the quarterly principal payments will be reduced. The Company incurs interest at the prevailing LIBOR rate plus 4.5-5.0% per annum with a minimum rate of 6.50% (6.50% at July 31, 2013). Term Note B is for $1.0 million payable in full at maturity, June 30, 2015. The Company incurs interest at the prevailing LIBOR rate plus 9-10% per annum with a minimum rate of 12.0% (12.0% at July 31, 2013). Under the terms of the revolving line of credit, the Company can borrow up to $5.0 million. The Company incurs interest expense on funds borrowed at the prevailing LIBOR rate plus 4.50-5.00% per annum with a minimum rate of 6.50% (6.50% as of July 31, 2013). The revolver has a maturity date of June 30, 2015. As of July 31, 2013, there is $2.5 million outstanding on the revolving line of credit, none of which is current.

The Company’s long-term debt consists of the following at July 31, 2013 and April 30, 2013 (in thousands):


		July 31,		April 30,
		2013		2013
Term Note A	$	12,241	$	7,883
Term Note B		1,000		4,000
Revolving line of credit		2,500		5,500
Capital leases		251		306
		15,992		17,689
Less current portion		(1,348)		(2,519)
Total long term debt, net	$	14,644	$	15,170

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 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.

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 in compliance with all such covenants and requirements at July 31, 2013.

A summary of future principal payments on long-term debt obligations as of July 31, 2013 is as follows (in thousands):


Fiscal Year Ending April 30,		Amount
Remainder of 2014	$	1,011
2015		1,350
2016		13,631
	$	15,992

The summary of future principal payments on long-term debt obligations does not account for the annual payments based on the Company’s free cash flow under Term Note A as noted above. The amount of these payments is not known; however, when they are determined it will accelerate the payment schedule outlined above.