6.Long-Term Debt

In June 2011, the Company entered into a credit agreement with Wells Fargo Capital Finance (the “Credit Agreement”). The Credit Agreement consisted of two term notes and a revolving credit line agreement. Effective July 31, 2014, the Company entered into an amendment to its Credit Agreement. In order to secure its obligations under the Credit Agreement, we granted the lender a first priority security interest in substantially all of our assets. The total amount that is allowed under the Credit Agreement is based on a multiplier factor of the trailing twelve months of maintenance and Software-as-a-Service revenue.

The amendment extended the term of the Credit Agreement through June 30, 2017, reduced the interest rate and modified certain financial covenants. This amendment, in conjunction with a prepayment made on July 31, 2014 under the Credit Agreement, reduced the outstanding principal balance on the Term A Loan to $10.1 million, and the Term B Loan, which incurred a minimum interest rate of 12.0%, was fully repaid. The Term Note A requires quarterly principal payments of $0.3 million plus an additional annual payment based on the Company’s free cash flow for the year with any remaining amount due at maturity.

Effective April 30, 2015, the Company entered into an amendment to the Credit Agreement. This amendment, in conjunction with a $1.5 million elective pre-payment, standard principal payment of $0.3 million and principal pre-payment of $0.3 million reduced the principal balance on the Term A loan to $7.3 million. This amendment also modified certain financial covenants and requires additional borrowing under the revolver to be subject to the bank’s sole and absolute discretion. The Company now incurs interest at the prevailing LIBOR rate plus 6% per annum.

Our long-term debt consists of the following (in thousands):


		July 31,		April 30,
		2015		2015
Term Note A	$	7,313	$	9,317
Revolving line of credit		2,500		2,500
Capital leases		-		22
		9,813		11,839
Less current portion		(755)		(1,029)
Total long term debt, net	$	9,058	$	10,810

The 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 Credit Agreement include, but are not limited to, restrictions on our ability (and on our 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.

We are obligated to maintain certain minimum consolidated adjusted EBITDA levels, and a certain minimum amount of qualified cash, and recurring revenues, all as calculated in accordance with the terms and definitions determining such amounts as contained in the Credit Agreement. The Credit Agreement, as amended, also contains various information and financial reporting requirements.

Effective July 31, 2015, the Company entered into an amendment to the Credit Agreement. This amendment modified certain financial covenants, waived the one time excess cash flow payment due in respect of fiscal year end April 30, 2015, and provided that the lenders agree, subject to no other defaults occurring and other conditions, to forbear from exercising their rights and remedies under the Credit Agreement through November 30, 2015. The Company is in compliance with all such covenants and requirements, as modified by the amendment, as of July 31, 2015.

A summary of expected future principal payments, excluding any annual principal payments based on free cash flow, on long-term debt obligations as of July 31, 2015, is as follows (in thousands):


Fiscal Year Ending April 30,		Amount
Remainder of 2016	$	504
2017		1,007
2018		8,302
	$	9,813