Debt and Leases

At January 31, 2014 and October 31, 2013, debt consisted of the following:



	January 31, 2014			October 31, 2013
Revolving credit facility	$	6,500		$	6,500
Senior Unsecured Convertible Notes	23,000			38,000
Connecticut Development Authority Note	3,190			3,246
Connecticut Clean Energy and Finance Investment Authority Note	6,061			5,744
Capitalized lease obligations	451			497
Total debt	$	39,202		$	53,987
Less: Unamortized debt discount ⁽¹⁾	(1,767		)	(3,106		)
	37,435			50,881
Less: Current portion of long-term debt	(6,914		)	(6,931		)
Long-term debt	$	30,521		$	43,950

(1) The debt discount recorded in connection with the issuance of the Company’s unsecured convertible notes is recorded on the consolidated balance sheets as a reduction to associated debt balance. The Company amortizes the debt discount to interest expense over the term of the debt.

Aggregate annual principal payments under our loan agreements and capital lease obligations, excluding payments relating to the revolving credit facility, for the years subsequent to January 31, 2014 are as follows:





Year 1	$	414
Year 2	386
Year 3	282
Year 4	260
Year 5	25,299
Thereafter	6,061
	$	32,702

On June 25, 2013, the Company sold $38.0 million in aggregate principal amount of 8.0% Senior Unsecured Convertible Notes ("Notes"). Under the terms of the Notes, interest is payable semi-annually in arrears on December 15 and June 15 of each year. The Company made its first interest payment on December 15, 2013. The Notes will mature on June 15, 2018, unless earlier redeemed, repurchased or converted. The Notes are convertible into shares of the Company's common stock at a conversion rate of 645.1613 shares of common stock per $1,000 principal amount of convertible notes, equivalent to a conversion price of approximately $1.55 per share of common stock plus a "make-whole" payment in regard to interest. During the first quarter of 2014, $15.0 million of outstanding principal was converted by Note holders and the Company issued 9,677,425 shares of common stock. In connection with the conversion of the Notes, the Company recorded an increase in common stock and additional paid in capital based on the carrying value of the converted Notes which included the converted Notes principal, a proportional amount of unamortized debt discount, and a proportional amount of unamortized debt issuance costs.

The change of control put redemption and interest make-whole payment upon conversion features embedded in the Notes require bifurcation from the host debt contract. The aggregate fair value of these derivatives at January 31, 2014 and October 31, 2013 is $2.7 million and $4.7 million, respectively. As a result of the Note conversions, 2,344,080 shares were issued and a payment of $0.3 million was made to settle the make-whole payment. The total fair value of the shares issued for the make-whole payment was $4.2 million which resulted in a charge of $2.4 million and a reduction to the embedded derivative of $1.8 million. The derivatives are included in Long term debt and other liabilities on the consolidated balance sheets and the make-whole charge is included in Other income (expense), net on the consolidated statements of operations.

As of January 31, 2014, the Company has an $8.0 million revolving credit facility with JPMorgan Chase Bank, N.A. and the Export-Import Bank of the United States. The credit facility is used for working capital to finance the manufacture and production and subsequent export sale of the Company’s products or services. The agreement has a one year term with renewal provisions and the current expiration date is April 2, 2014. The outstanding principal balance of the facility will bear interest, at the option of the Company of either the one-month LIBOR plus 1.5 percent or the prime rate of JP Morgan Chase. The facility is secured by certain working capital assets and general intangibles, up to the amount of the outstanding facility balance. At January 31, 2014, and October 31, 2013 the outstanding amount owed under this facility was $6.5 million and is classified as current portion of long-term debt and other liabilities on the consolidated balance sheets.

The outstanding balance on the Connecticut Development Authority loan was $3.2 million as of January 31, 2014 and October 31, 2013.

On March 5, 2013 the Company closed on a new long-term loan agreement with the Connecticut Clean Energy and Finance Investment Authority (CEFIA) totaling $5.9 million in support of the Bridgeport fuel cell park project. The loan agreement carries an interest rate of 5.0%. Interest only payments commenced in January 2014 and principal payments will commence on the eighth anniversary of the project's provisional acceptance date, which is December 20, 2021, payable in forty eight equal monthly installments. Outstanding amounts are secured by future cash flows from the Bridgeport service agreement. The outstanding balance on the CEFIA Note as of January 31, 2014 and October 31, 2013 was $6.1 million and $5.7 million, respectively.