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Debt | 12 Months Ended
--- | ---
Oct. 31, 2019
Debt Disclosure [Abstract] |
Debt | Note 13. Debt Debt as of October 31, 2019 and 2018 consisted of the following (in thousands):
|  | 2019 |  |  | 2018 |
Connecticut Development Authority Note |  | $ | - |  |  | $ | 284 |
Orion Energy Partners Credit Facility |  |  | 14,500 |  |  |  | - |
Connecticut Green Bank Loan |  |  | 7,555 |  |  |  | 6,052 |
Liberty Bank Term Loan Agreement (BFC Loan) |  |  | 11,632 |  |  |  | - |
Fifth Third Bank Term Loan Agreement (BFC Loan) |  |  | 11,632 |  |  |  | - |
Finance obligations for sale-leaseback transactions |  |  | 45,219 |  |  |  | 46,062 |
State of Connecticut Loan |  |  | 10,000 |  |  |  | 10,000 |
Hercules Loan and Security Agreement |  |  | - |  |  |  | 25,343 |
New Britain Renewable Energy Term Loan |  |  | 497 |  |  |  | 1,107 |
Enhanced Capital Loan and Security Agreement |  |  | 1,500 |  |  |  | - |
Fifth Third Bank Construction Loan Agreement |  |  | 11,072 |  |  |  | - |
Capitalized lease obligations |  |  | 141 |  |  |  | 341 |
Deferred finance costs |  |  | (3,180 | ) |  |  | (1,311 | )
Unamortized debt discount |  |  | (4,251 | ) |  |  | - |
Total debt |  | $ | 106,317 |  |  | $ | 87,878 |
Current portion of long-term debt |  |  | (21,916 | ) |  |  | (17,596 | )
Long-term debt |  | $ | 84,401 |  |  | $ | 70,282 |
Aggregate annual principal payments under our loan agreements and capital lease obligations for the years subsequent to October 31, 2019 are as follows (in thousands):
Year 1 |  | $ | 20,974 |
Year 2 |  |  | 10,586 |
Year 3 |  |  | 11,410 |
Year 4 |  |  | 10,417 |
Year 5 |  |  | 10,736 |
Thereafter (1) |  |  | 21,917 |
|  | $ | 86,040 |
(1) | The annual principal payments included above only include sale-leaseback payments whereas the difference between debt outstanding as of October 31, 2019 and the annual principal payments represent accreted interest and amounts included in the finance obligation that exceed required principal payments.
Connecticut Development Authority Note The Company had a loan agreement with the Connecticut Development Authority that was used to finance equipment purchases associated with our prior manufacturing capacity expansion. The interest rate was 5.0% per annum and the loan was collateralized by the assets procured under this loan as well as $4.0 million of additional machinery and equipment. The original repayment terms required monthly interest and principal payments through May 2018. However, the repayment terms for the loan agreement with the Connecticut Development Authority were modified in April 2018, such that the remaining balance and interest was paid on a monthly basis through December 2018 and the loan was extinguished. Orion Energy Partners Investment Agent, LLC Credit Agreement On October 31, 2019, the Company and certain of its subsidiaries as guarantors entered into a Credit Agreement (the “Orion Credit Agreement”) with Orion Energy Partners Investment Agent, LLC, as Administrative Agent and Collateral Agent (the “Agent”), and certain lenders affiliated with the Agent for a $200.0 million senior secured credit facility (the “Orion Facility”), structured as a delayed draw term loan, to be provided by the lenders subject to certain lender approvals. Each lender will fund its commitments on each funding date in an amount equal to the principal amount of the loans to be funded by such lender on such date, less 2.50% of the aggregate principal amount of the loans funded by such lender on such date (the “Loan Discount). In conjunction with the closing of the Orion Facility, on October 31, 2019, the Company drew down $14.5 million (the “Initial Funding”) and received $14.1 million, after taking into account a discount of $0.4 million as described above, to fully repay debt outstanding to NRG Energy, Inc. (“NRG”) and Generate Lending, LLC (“Generate”) and to fund dividends paid to the holders of our Series B Preferred Stock (as defined elsewhere herein) on or before November 15, 2019. The balance of the Initial Funding was used primarily to pay third party costs and expenses associated with closing of the Orion Facility. In connection with the closing of the Orion Facility and the Initial Funding, on October 31, 2019, the Company issued to the lenders warrants to purchase up to 6.0 million shares of the Company’s common stock (the “Initial Funding Warrants”) and made a commitment to issue warrants to purchase up to an additional 14.0 million shares of the Company’s common stock (the “Second Funding Warrants”) upon closing of the Second Funding under the Orion Facility, which occurred on November 22, 2019. Subsequent to October 31, 2019, a second draw (the “Second Funding”) of $65.5 million, funded by Orion Energy Credit Opportunities Fund II, L.P., Orion Energy Credit Opportunities Fund II GPFA, L.P., Orion Energy Credit Opportunities Fund II PV, L.P., and Orion Energy Credit Opportunities FuelCell Co-Invest, L.P., was made on November 22, 2019 to fully repay outstanding third party debt of the Company with respect to the outstanding construction loan to Fifth Third Bank on the Groton Project and the outstanding loan to Webster Bank on the CCSU Project as well as to fund remaining going forward construction costs and anticipated capital expenditures relating to the Groton Project (a 7.4 MW project), the LIPA Yaphank Solid Waste Management Project (a 7.4 MW project), and the Tulare BioMAT Project (a 2.8 MW project). The Company received $63.9 million after taking into account a loan discount of $1.6 million as described above. Also in conjunction with the Second Funding, the Company issued to the Second Funding lenders warrants to purchase up to a total of 14.0 million shares of the Company’s common stock, with an initial exercise price with respect to 8.0 million of such shares of $0.242 per share and with an initial exercise price with respect to 6.0 million of such shares of $0.620 per share (the “Second Funding Warrants”). The Company may draw the remainder of the Orion Facility, $120.0 million, over the first 18 months following the Initial Funding and subject to the Agent’s approval to fund: (i) construction costs, inventory and other capital expenditures of additional fuel cell projects with contracted cash flows (under PPAs with creditworthy counterparties) that meet or exceed a mutually agreed coverage ratio; and (ii) inventory, working capital, and other costs that may be required to be delivered by the Company on purchase orders, service agreements, or other binding customer agreements with creditworthy counterparties. Under the Orion Credit Agreement, cash interest of 9.9% per annum will be paid quarterly. In addition to the cash interest, “PIK” interest of 2.05% per annum will accrue which will be added to the outstanding principal balance of the Orion Facility but will be paid quarterly in cash to the extent of available cash after payment of the Company’s operating expenses and the funding of certain reserves for the payment of outstanding indebtedness to the State of Connecticut and Connecticut Green Bank. The Orion Credit Agreement contains representations, warranties and other covenants. Outstanding principal on the Orion Facility will be amortized on a straight-line basis over a seven year term in quarterly payments beginning one year after the Initial Funding; provided that, if the Company does not have sufficient cash on hand to make any required quarterly amortization payments, such amounts shall be deferred and payable at such time as sufficient cash is available to make such payments subject to all outstanding principal being due and payable on the maturity date, which is the date that is eight years after the closing date or October 31, 2027. The Orion Credit Agreement includes mandatory prepayment requirements and a prepayment premium of up to 30% of the amount being prepaid in the event that certain triggering events occur, including events of loss (destruction of or damage to any property of a loan party) where the proceeds received from such events of loss are not applied to the repair or restoration of the affected property, the sale, transfer or other disposition of project assets funded by the Orion Facility, if the proceeds from such disposition are not reinvested in substantially similar assets that are useful and necessary for the business (as defined in the Orion Credit Agreement) pursuant to a transaction permitted under the Orion Credit Agreement within a certain period of time, the incurrence of debt other than permitted indebtedness (as defined in the Orion Credit Agreement) and certain events of default (as defined in the Orion Credit Agreement), and also includes a post-default rate increase feature in the event certain events of default occur (in each case as defined in the Orion Credit Agreement. The Company assessed these mandatory prepayment and post-default rate features and determined that while they represent embedded derivatives and are required to be bifurcated and separately valued, the probability of occurrence for events that would trigger these features was determined to be sufficiently low such that no value was assigned to these features as of October 31, 2019. Issuance of the Initial Funding Warrants and recognition of the Second Funding Warrants resulted in $3.9 million being recorded as a liability with the offset recorded as a debt discount. Refer to Note 14. “Stockholders’ Equity and Warrant Liabilities” for additional information on the Initial Funding Warrants and Second Funding Warrants including the accounting and terms. In connection with the Company’s providing collateral to the Agent for the Orion Facility, the Company granted security interests to the Agent in all of the Company’s bank accounts subject to deposit account security agreements, other than certain bank accounts referred to as “Excluded Accounts” and bank accounts maintained for Excluded Assets (as defined in the Orion Credit Agreement). Certain bank accounts have been established pursuant to the terms and conditions of the Orion Credit Agreement, for which security interests have been granted to the Agent, including general corporate accounts, accounts for each of the Covered Projects (as defined in the Orion Credit Agreement), a Project Proceeds Account (for the proceeds of Permitted Project Dispositions/Refinancings), a Borrower Waterfall Account (into which net operating cash flow of the Company after payment of operating expenses will be deposited for the payment of debt service to the Agent), a Debt Reserve Account (to fund a reserve for required debt service payments to the State of Connecticut and Connecticut Green Bank), a Preferred Reserve Account (to fund a reserve for required dividends on the Company’s Series B Preferred Stock and the Series 1 Preferred Shares (or, in lieu of such dividends, the amount required to redeem shares of Series 1 Preferred Stock in an amount equal to the amount of dividends that would otherwise have been paid in respect thereof)), a Module Replacement Reserve Account (to fund a reserve intended to be for the cost of module replacements for projects owned by the Company that would occur during the outstanding term of the Orion Facility) and certain other accounts. Excluded Accounts consist of bank accounts of the Company used to collateralize performance bonds and other sureties for projects and third party obligations and certain other certain operating accounts of the Company (i.e., payroll, benefits, sales and income tax withholding and related accounts). Connecticut Green Bank Loans As of October 31, 2018, the Company had a long-term loan agreement with the Connecticut Green Bank for a loan totaling $5.9 million in support of the Bridgeport Fuel Cell Project. During the year ended October 31, 2019, this loan was partially repaid with a new project level loan from Connecticut Green Bank (as discussed below) in connection with the Company’s acquisition of all of the membership interests in BFC. The balance under the long-term loan agreement as of October 31, 2019 was $1.8 million. Subsequent to October 31, 2019, the long-term loan agreement was amended and the Connecticut Green Bank provided the Company with an additional loan in the aggregate principal amount of $3.0 million. See Note 23. “Subsequent Events” for additional information regarding the amendment to the loan agreement and the additional loan. On May 9, 2019, in connection with the closing of the purchase of BFC, BFC entered into a subordinated credit agreement with the Connecticut Green Bank whereby Connecticut Green Bank provided financing in the amount of $6.0 million (the “Subordinated Credit Agreement”). As security for the Subordinated Credit Agreement, Connecticut Green Bank received a perfected lien, subordinated and second in priority to the liens securing the $25.0 million loaned under the BFC Credit Agreement (as defined below), in all of the same collateral securing the BFC Credit Agreement. The interest rate under the Subordinated Credit Agreement is 8% per annum. The debt service coverage ratio required to be maintained under the Subordinated Credit Agreement may not be less than 1.10 as of the end of each fiscal quarter, beginning with the quarter ended July 31, 2020. The term of the Subordinated Credit Agreement expires 7 years from the date of the advance of the loan. Principal and interest are due monthly in amounts sufficient to fully amortize the loan over an 84 month period ending in May 2026. The Subordinated Credit Agreement contains representations, warranties and other covenants. The balance under the Subordinated Credit Agreement as of October 31, 2019 was $5.8 million. BFC Loans On May 9, 2019, in connection with the purchase of the membership interests of BFC, FuelCell Finance (a subsidiary of the Company) entered into a Credit Agreement with Liberty Bank, as administrative agent and co-lead arranger, and Fifth Third Bank as co-lead arranger and swap hedger (the “BFC Credit Agreement”), whereby (i) Fifth Third Bank provided financing to BFC in the amount of $12.5 million towards the BFC Purchase Price; and (ii) Liberty Bank provided financing to BFC in the amount of $12.5 million towards the BFC Purchase Price. As security for the BFC Credit Agreement, Liberty Bank and Fifth Third Bank were granted a first priority lien in (i) all assets of BFC, including BFC’s cash accounts, fuel cells, and all other personal property, as well as third party contracts including the Energy Purchase Agreement between BFC and Connecticut Light and Power Company dated July 10, 2009, as amended; (ii) certain fuel cell modules that are intended to be used to replace the Bridgeport Fuel Cell Project’s fuel cell modules as part of routine operation and maintenance; and (iii) FuelCell Finance’s ownership interest in BFC. The maturity date under the BFC Credit Agreement is May 9, 2025. Monthly principal and interest are to be paid in arrears in an amount sufficient to fully amortize the term loan over a 72 month period. BFC has the right to make additional principal payments or pay the balance due under the BFC Credit Agreement in full provided that it pays any associated breakage fees with regard to the interest rate swap agreements fixing the interest rate. The interest rate under the BFC Credit Agreement fluctuates monthly at the 30-day LIBOR rate plus 275 basis points on an initial total notional value of $25.0 million, reduced for principal payments. An interest rate swap agreement was required to be entered into with Fifth Third Bank in connection with the BFC Credit Agreement to protect against movements in the floating LIBOR index. Accordingly, on May 16, 2019, an interest rate swap agreement (the “Swap Agreement”) was entered into with Fifth Third Bank in connection with the BFC Credit Agreement for the term of the loan. The net interest rate across the BFC Credit Agreement and the swap transaction results in a fixed rate of 5.09%. The interest rate swap will be adjusted to fair value on a quarterly basis. The estimated fair value is based on Level 2 inputs including primarily the forward LIBOR curve available to swap dealers. The valuation methodology involves comparison of (i) the sum of the present value of all monthly variable rate payments based on a reset rate using the forward LIBOR curve and (ii) the sum of the present value of all monthly fixed rate payments on the notional amount which is equivalent to the outstanding principal amount of the loan. The fair value adjustments for the fiscal year ended October 31, 2019 resulted in $0.6 million of charges. The BFC Credit Agreement requires BFC to maintain a debt service reserve at each of Liberty Bank and Fifth Third Bank of $1.25 million, which debt service reserves were funded on May 10, 2019, to be held in deposit accounts at each respective bank, with funds to be disbursed with the consent of or at the request of the required lenders in their sole discretion. Each of Liberty Bank and Fifth Third Bank also has an operation and module replacement reserve (“O&M Reserve”) of $250,000, both of which were funded at closing of the BFC Credit Agreement, to be held in deposit accounts at each respective bank, and thereafter BFC is required to deposit $100,000 per month into each O&M Reserve for the first five years of the BFC Credit Agreement, with such funds to be released at the sole discretion of Liberty Bank and Fifth Third Bank, as applicable. BFC is also required to maintain excess cash flow reserve accounts at each of Liberty Bank and Fifth Third Bank and to evenly split and deposit the excess cash flows from the Bridgeport Fuel Cell Project into these accounts. Excess cash flow consists of cash generated by BFC from the Bridgeport Fuel Cell Project after payment of all expenses (including after payment of intercompany service fees to the Company), debt service to Liberty Bank and Fifth Third Bank, the funding of all required reserves, and payments to Connecticut Green Bank for the subordinated facility. BFC is also required to maintain a debt service coverage ratio of not less than 1.20, measured for the trailing year based on fiscal quarters beginning with the quarter ended July 31, 2020. The BFC Credit Agreement contains representations, warranties and other covenants. The Company also has certain quarterly and annual financial reporting requirements under the BFC Credit Agreement. The annual financial statements to be provided pursuant to such requirements are to be audited and accompanied by a report of an independent certified public accountant, which report shall not include a “going concern” matter of emphasis or any qualification or exception as to the scope of such audit. Finance obligations for sale leaseback agreements Several of the Company’s project finance subsidiaries previously entered into sale-leaseback agreements with PNC for commissioned projects where the Company had entered into a PPA with the site host/end-user of produced power. Under the financing method of accounting for a sale-leaseback, the Company did not recognize as income any of the sale proceeds received from the lessor that contractually constitute payments to acquire the assets subject to these arrangements. Instead, the sale proceeds received were accounted for as financing obligations. The outstanding financing obligation balance as of October 31, 2019 was $45.2 million and the decrease from $46.1 million on October 31, 2018 includes lease payments offset by the recognition of interest expense. The outstanding financing obligations include an embedded gain which will be recognized at the end of each of the 10-year lease terms. State of Connecticut Loan In October 2015, the Company closed on a definitive Assistance Agreement with the State of Connecticut and received a disbursement of $10.0 million which was used for the first phase of the expansion of the Company’s Torrington, Connecticut manufacturing facility. In conjunction with this financing, the Company entered into a $10.0 million promissory note and related security agreements securing the loan with equipment liens and a mortgage on its Danbury, Connecticut location. Interest accrues at a fixed interest rate of 2.0%, and the loan is repayable over 15 years from the date of the first advance, which occurred in October of 2015. Principal payments were deferred for four years from disbursement and began on December 1, 2019. Under the Assistance Agreement, the Company was eligible for up to $5.0 million in loan forgiveness if the Company created 165 full-time positions and retained 538 full-time positions for two consecutive years (the “Employment Obligation”) as measured on October 28, 2017 (the “Target Date”). The Assistance Agreement contains representations, warranties and other covenants. The Assistance Agreement was subsequently amended in April 2017 to extend the Target Date by two years to October 28, 2019. In January 2019, the Company and the State of Connecticut entered into a Second Amendment to the Assistance Agreement (the “Second Amendment”). The Second Amendment extends the Target Date to October 31, 2022 and amends the Employment Obligation to require the Company to continuously maintain a minimum of 538 full-time positions for 24 consecutive months. Based on the Company’s current headcount and plans for fiscal year 2020, it will be short of meeting this requirement. If the Company meets the Employment Obligation, as modified by the Second Amendment, and creates an additional 91 full-time positions, the Company may receive a credit in the amount of $2.0 million to be applied against the outstanding balance of the loan. The Second Amendment deletes and cancels the provisions of the Assistance Agreement related to the second phase of the expansion project and the loans related thereto, but the Company had not drawn any funds or received any disbursements under those provisions. A job audit will be performed within 90 days of the Target Date. If the Company does not meet the Employment Obligation, then an accelerated payment penalty will be assessed at a rate of $18,587.36 times the number of employees below the Employment Obligation. Such penalty is immediately payable and will be applied first to accelerate the payment of any outstanding fees or interest due and then to accelerate the payment of outstanding principal. Hercules Loan and Security Agreement In April 2016, the Company entered into a loan and security agreement (as amended from time to time, the “Hercules Agreement”) with Hercules Capital, Inc. (“Hercules”) for a loan in an aggregate principal amount of up to $25.0 million. The original loan was a 30 month secured facility, and the original loan balance and all accrued and unpaid interest was due and payable by October 1, 2018. The Hercules Agreement was subsequently amended on September 5, 2017, October 27, 2017, March 28, 2018, August 29, 2018, December 19, 2018, February 28, 2019, March 29, 2019, May 8, 2019, June 11, 2019 and July 24, 2019. The amendments provided for lower minimum cash covenants and were entered into to avoid events of default and accelerations of amounts due under the Hercules Agreement. Principal payments under the Hercules Agreement began on April 1, 2019. The term loan interest rate for the entire term of the loan was the greater of (i) 9.90% plus the prime rate minus 4.50%, and (ii) 9.90%. The initial end of term charge of $1.7 million was paid on October 1, 2018. An additional end of term charge of $0.9 million was due on April 1, 2020 or upon repayment of the principal balance. The additional end of term charge was being accreted over a 30-month term. On September 30, 2019, the Company and Hercules entered into a payoff letter (the “Payoff Letter”). Pursuant to the Payoff Letter, the Company paid to Hercules, on September 30, 2019, a final payment of $0.8 million, plus the end of term charge described above, which amounts represented the remaining outstanding principal balance, the remaining accrued interest outstanding, all remaining fees due under the Hercules Agreement, and the end of term charge, in full repayment of the Company’s outstanding obligations under the Hercules Agreement. Upon the payment of the $0.8 million and the end of term charge, all outstanding indebtedness and obligations of the Company owing to Hercules under the Hercules Agreement were paid in full and the loan was extinguished. Webster Bank Loan In November 2016, we assumed debt with Webster Bank in the amount of $2.3 million as a part of a project asset acquisition transaction. The term loan interest rate was 5.0% per annum and payments, which commenced in January 2017, were due on a quarterly basis. The balance outstanding as of October 31, 2019 and 2018 was $0.5 million and $1.1 million, respectively. The loan was paid off and extinguished subsequent to the fiscal year ended October 31, 2019. Enhanced Capital Loan On January 9, 2019, the Company, through its indirect wholly-owned subsidiary, TRS Fuel Cell, LLC, entered into a Loan and Security Agreement (the “Enhanced Capital Loan Agreement”) with Enhanced Capital Connecticut Fund V, LLC (“Enhanced”) for a loan in the amount of $1.5 million. The collateral for this loan included any project assets, accounts receivable and inventory owned by TRS Fuel Cell, LLC. Interest accrued at a rate of 6.0% per annum and was paid on the first business day of each month. The loan maturity date was three years from the date of the Enhanced Capital Loan Agreement, upon which the outstanding principal and any accrued interest would be due and payable. Under the terms of the Enhanced Capital Loan Agreement, the Company was required to close on tax equity financing by January 14, 2020. Given that the Company did not secure tax equity financing for this project, on January 13, 2020, TRS Fuel Cell, LLC and Enhanced entered into a payoff letter whereby the loan was paid off and extinguished on January 14, 2020. Fifth Third Bank Groton Loan On February 28, 2019, the Company, through its indirect wholly-owned subsidiary, Groton Station Fuel Cell, LLC (“Groton Borrower”), entered into a Construction Loan Agreement (as amended from time to time, the “Groton Agreement”) with Fifth Third Bank pursuant to which Fifth Third Bank agreed to make available to Groton Borrower a construction loan facility in an aggregate principal amount of up to $23.0 million (the “Groton Facility”) to fund the manufacture, construction, installation, commissioning and start-up of the 7.4 MW fuel cell power plant for the Connecticut Municipal Electric Energy Cooperative located on the U.S. Navy submarine base in Groton, Connecticut (the “Groton Project”). Groton Borrower made an initial draw under the Groton Facility on the date of closing of $9.7 million and made an additional draw of $1.4 million in April 2019. The original maturity date of the Groton Facility was the earlier of (a) October 31, 2019, (b) the commercial operation date of the Groton Project, or (c) one business day after receipt of proceeds of debt financing (i.e., take out financing) in an amount sufficient to repay the outstanding indebtedness under the Groton Facility. On August 13, 2019, Groton Borrower and Fifth Third Bank entered into Amendment No. 1 to the Groton Agreement, which reduced the aggregate principal amount available to Groton Borrower under the Groton Facility from $23.0 million to $18.0 million and pursuant to which Groton Borrower committed to, among other things, deliver to Fifth Third Bank, no later than September 28, 2019 (which deadline was automatically extended to October 21, 2019 upon the Company’s repayment of its corporate loan facility with Hercules on September 30, 2019), a binding loan agreement for permanent financing and one or more binding letters of intent from tax equity investors. On October 21, 2019, Groton Borrower and Fifth Third entered into Amendment No. 2 to the Groton Agreement (the “Second Groton Amendment”), pursuant to which Groton Borrower agreed to deliver to Fifth Third Bank, no later than December 16, 2019, a binding agreement, in form and substance reasonably acceptable to Fifth Third Bank: (i) executed by Groton Borrower and one or more Take-out Lenders (as defined in the Groton Agreement), pursuant to which the Take-out Lenders shall have, individually or collectively, agreed to provide a Take-out Financing (as defined in the Groton Agreement); or (ii) executed by Groton Borrower and one or more tax equity investors or other third parties, pursuant to which such tax equity investors or third parties, via a tax equity or other financing transaction, shall have, individually or collectively, agreed to provide funds to Groton Borrower in an amount no less than the then-outstanding Construction Loans (as defined in the Groton Agreement) under the Groton Agreement and accrued interest. The Second Groton Amendment further provided, however, that if (A) neither such binding agreement nor a commitment letter for either of such agreements (which commitment letter shall not include a due diligence or similar funding condition) was provided to Fifth Third Bank by November 21, 2019, then commencing on November 22, 2019 until delivery of such commitment letter, the interest rate on the loans was to be the LIBOR rate plus 4% per annum and within three business days after such date, Groton Borrower was to pay to Fifth Third Bank a fee of $15,000 and (B) such binding agreement was not provided to Fifth Third by December 16, 2019, then commencing on December 17, 2019, the outstanding obligations under the Groton Agreement were to bear interest at a rate equal to the LIBOR rate plus 6% per annum. The total outstanding balance under the Groton Facility as of October 31, 2019 was $11.1 million. This balance was paid off and the loan was extinguished subsequent to the fiscal year ended October 31, 2019 on November 22, 2019, and the Groton Facility was terminated. NRG Loan Agreement In July 2014, the Company, through its wholly-owned subsidiary, FuelCell Finance, entered into a Loan Agreement with NRG (the “NRG Loan Agreement”). Pursuant to the NRG Loan Agreement, NRG extended a $40.0 million revolving construction and term financing facility (the “NRG Loan Facility”) to FuelCell Finance for the purpose of accelerating project development by the Company and its subsidiaries. Under the NRG Loan Agreement, FuelCell Finance and its subsidiaries were permitted to draw on the NRG Loan Facility to finance the construction of projects through the commercial operating date of the power plants. Additionally, FuelCell Finance had the option to continue the financing term for each project after the commercial operation date for a minimum term of 5 years per project. The interest rate was 8.5% per annum for construction-period financing and 8.0% per annum thereafter. On December 13, 2018, FuelCell Finance’s wholly owned subsidiary, Central CA Fuel Cell 2, LLC, drew a construction loan advance of $5.8 million under the NRG Loan Facility. This advance was used to support the completion of construction of the 2.8 MW Tulare BioMAT project in California. In conjunction with the December 13, 2018 draw, FuelCell Finance and NRG entered into an amendment to the NRG Loan Agreement to revise the definitions of the terms “Maturity Date” and “Project Draw Period” under the NRG Loan Agreement and to make other related revisions. Pursuant to this amendment, FuelCell Finance and its subsidiaries could only request draws through December 31, 2018, and the Maturity Date of each note was the earlier of (a) March 31, 2019 and (b) the commercial operation date or substantial completion date, as applicable, with respect to the fuel cell project owned by the borrower under such note. The Maturity Date was subsequently extended through amendments to the NRG Loan Agreement on March 29, 2019 (the “Third Amendment”), June 13, 2019, July 11, 2019, August 8, 2019 and September 30, 2019 (the “Seventh Amendment”). In connection with the Third Amendment, the Company agreed to make an additional payment of $750,000 at the Maturity Date, which is recorded in interest expense on the Consolidated Statement of Operations. In addition, the Seventh Amendment, extended the Maturity Date of each note to the earlier of (a) October 31, 2019, or (b) closing of a corporate refinancing or other form of liquidity; provided, however, that if NRG determined, in its sole discretion, that the Company was not making sufficient progress toward the completion of the construction of the 2.8 MW Tulare BioMAT project in California, NRG had the right to accelerate the Maturity Date. The Company repaid and extinguished the loan on October 31, 2019. Generate Construction Loan Agreement On December 21, 2018, the Company, through its indirect wholly-owned subsidiary FuelCell Energy Finance II, LLC (“FCEF II”), entered into a Construction Loan Agreement (as amended from time to time, the “Generate Agreement”) with Generate pursuant to which Generate agreed (the “Commitment”) to make available to FCEF II a credit facility in an aggregate principal amount of up to $100.0 million (the “Generate Facility”) to fund the manufacture, construction, installation, commissioning and start-up of stationary fuel cell projects to be developed by the Company on behalf of FCEF II during the 36 months from the date of the Generate Agreement. The Commitment to provide Working Capital Loans (as defined in the Generate Agreement) was to remain in place for 36 months from the date of the Generate Agreement (the “Availability Period”). Interest at 9.5% per annum was to be paid on the first business day of each month. The initial draw amount under the Generate Facility, funded at closing, was $10.0 million. The initial draw reflected loan advances for the first Approved Project (as defined in the Generate Agreement) under the Generate Facility, the Bolthouse Farms 5 MW project in California. The Company entered into amendments to the Generate Agreement on June 28, 2019, August 13, 2019 and September 30, 2019, which primarily extended the repayment date of the loan and provided additional collateral. The loan was repaid and extinguished as of October 31, 2019. Capital Leases The Company leases computer equipment under master lease agreements. Lease payment terms are generally 36 months from the date of acceptance for leased equipment. Deferred Finance Costs Deferred finance costs relate primarily to (i) sale-leaseback transactions entered into with PNC which are being amortized over a 10-year term, (ii) payments under the Hercules Agreement, which were amortized over the term of the loan, (iii) payments under the loans obtained to purchase the membership interests in BFC which are being amortized over the 8-year term of the loans and (iv) payments to enter into the Orion Facility which will be amortized over the 8 year term of the loan.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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