In exchange for the forbearance granted under the Seventeenth Amendment, the Company agreed, among other
things, to (i) pay a $25,000 fee, (ii) fully cooperate with Bank of America’s field examiner to ensure that Bank of America shall receive a full inspection, audit and/or field examination of the Obligors’ books and records by
October 15, 2019 (the “Field Report”), (iii) deliver to Bank of America a plan and schedule related to the reduction of certain unbilled accounts and the subsequent accounts receivables by September 30, 2019, (iv) deliver to Bank
of America financial statements for fiscal year 2018 and each of the first three fiscal quarters of 2019 by no later than November 30, 2019, (v) allow Bank of America to communicate directly with the Obligors’ financial consultant
regarding all services to be rendered by such consultant to the Obligors, (vi) not terminate or materially alter the engagement of the Obligors’ financial consultant without Bank of America’s consent, (vii) limit the cumulative
use of cash by the Company for July-December 2019 in accordance with a new cash burn schedule, (viii) provide Bank of America with bi-weekly updated cash flow reports and monthly account statements for
certain pledged securities collateral and pledged cash collateral and (ix) pay Bank of America’s expenses, including attorneys’ fees, in connection with the Seventeenth Amendment. Further, the Company agreed that Bank of
America’s obligation to make revolver loans and issue letters of credit is immediately reduced from $30.0 million to $27.5 million.
Pursuant to the Seventeenth Amendment, Bank of America reserves the right to, in its sole discretion, make changes to advance rates or availability reserves
and/or the criteria of Eligible Accounts, Eligible Energy Source – TNT Unbilled Accounts and/or Eligible Inventory (as each term is defined in the Loan Agreement), such changes to be implemented within 15 days of receipt of the Field Report.
After the receipt by the Company of the Field Report, any failure by the Company to reflect in any subsequent borrowing base certificate any of the foregoing revisions implemented by Bank of America within 15 days thereof shall constitute an Event
of Default under the Loan Agreement, and the forbearance amendment fee shall automatically be increased by an additional $10,000, due immediately.
Robert
V. LaPenta, Sr., the Company’s Chairman, CEO and President, agreed to guaranty up to $5.5 million of borrowings under the Loan Agreement and agreed to maintain a minimum balance in a securities account of at least $11.0 million. In
connection with Mr. LaPenta’s guaranty, the Company and its subsidiaries reaffirmed a reimbursement agreement, dated August 16, 2019 (the “Reimbursement Agreement”), under which the Company and its direct and indirect
subsidiaries promise to reimburse Mr. LaPenta in the event any amounts are paid by Mr. LaPenta under such guaranty, plus interest at a market rate determined at the time of such payment. The Reimbursement Agreement replaces in its entirety
that certain reimbursement agreement, dated January 26, 2017, by and among Mr. LaPenta, the Company and the Company’s direct and indirect subsidiaries thereto. The foregoing is a summary of the material terms of the Reimbursement
Agreement and does not purport to be complete. The full text of the Reimbursement Agreement is attached hereto as Exhibit 99.2 and incorporated herein by reference.
As previously disclosed, Mr. LaPenta and his affiliate, Aston Capital, LLC (“Aston”), have funded the Company through continued periodic loans,
and the Company previously issued a consolidated note, dated as of November 21, 2018, to Mr. LaPenta and Aston (the “Consolidated Note”) to reflect these loans. Subsequent to the issuance of the Consolidated Note,
Mr. LaPenta has also made additional loans to the Company, and the Company may borrow additional funds from Mr. LaPenta (each, “Additional LaPenta Loans”). Pursuant to the Seventeenth Amendment, the aggregate principal amount of
Additional LaPenta Loans which can be made to the Company is $16.0 million. Any Additional LaPenta Loans must be made pursuant to notes on the same terms as the Consolidated Note and will be subject to approval by the Audit Committee of the
Company’s Board of Directors (the “Board of Directors”).
Any Additional LaPenta Loans to the Company in excess of $16.0 million would
require the approval of both the Audit Committee of the Board of Directors and Bank of America. As of the effective date of the Seventeenth Amendment, the aggregate principal amount of Additional LaPenta Loans was $12.5 million. In addition,
the Seventeenth Amendment limits the amount of cash payments that the Company may make for scheduled principal and interest payments on the Consolidated Note and any Additional LaPenta Loans to $125,000 per month.
As of August 21, 2019, the Company had total debt of approximately $73.7 million, including aggregate principal and interest outstanding under the
Company’s line of credit with Bank of America of approximately $20.4 million, aggregate principal and interest outstanding under loans from Mr. LaPenta and Aston of approximately $52.2 million and approximately $1.2 million
from other sources. As of August 21, 2019, the Company estimates that it had $3.0 million of available liquidity, reflecting its net cash position plus the remaining borrowing availability under the Loan Agreement.