Debt and Leases

At July 31, 2013 and October 31, 2012, debt consisted of the following:



	July 31, 2013			October 31, 2012
Revolving credit facility	$	4,000		$	4,000
Senior Unsecured Convertible Notes	38,000			—
Connecticut Development Authority Note	3,302			3,466
Connecticut Clean Energy Fund Note	—			847
Connecticut Clean Energy and Finance Investment Authority Note	4,425			—
Capitalized lease obligations	352			234
Total debt	$	50,079		$	8,547
Less: Unamortized debt discount ⁽¹⁾	(3,131		)	—
	46,948			8,547
Less: Current portion of long-term debt	(4,403		)	(5,161		)
Long-term debt	$	42,545		$	3,386

(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, excluding payments relating to the revolving credit facility, and capital lease obligations for the years subsequent to July 31, 2013 are as follows:





Year 1	$	403
Year 2	309
Year 3	277
Year 4	256
Year 5	40,410
Thereafter	4,424
	$	46,079

On June 20, 2013, the Company closed an offering of $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, beginning 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. The net proceeds of the offering to the Company were approximately $35.5 million, after deducting underwriting discounts, commissions and offering expenses. Financing costs of $2.5 million associated with this debt offering are being amortized over the term of the debt. At July 31, 2013, these costs are capitalized in Other current assets for the current portion and Other assets, net for the long-term portion.

We evaluated the instrument for embedded derivatives and bifurcation thereof. There is a change of control put redemption and an interest make-whole payment upon conversion feature embedded in the Notes which each require bifurcation from the host debt contract. The aggregate fair value of these derivatives at June 20, 2013 was $3.2 million. The aggregate fair value of these derivatives at July 31, 2013 is $3.5 million. The derivatives are included in Long term debt and other liabilities on the consolidated balance sheets and any change to the fair values are recorded in operations.

As of July 31, 2013, 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 revolver was increased from $5.0 million on April 12, 2013. 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 July 31, 2013, the outstanding amount owed under this facility was $4.0 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 $3.3 million and $3.5 million for the periods ended July 31, 2013 and October 31, 2012, respectively.

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 project. The loan agreement carries an interest rate of 5.0% and principal repayments will commence on the eighth anniversary of the project's provisional acceptance date in forty eight equal monthly installments. Outstanding amounts are secured by future cash flows from the Bridgeport contracts. Advances of $2.6 million and $0.9 million, respectively, were made under the CEFIA loan during the second quarter and third quarter of fiscal year 2013. The Connecticut Clean Energy Fund Note in the amount outstanding of $0.9 million was rolled into the new CEFIA Note. The outstanding balance on the CEFIA Note as of July 31, 2013 was $4.4 million.