To: LLCF who wrote (80127 ) 11/29/2012 10:06:37 PM From: Pogeu Mahone Read Replies (1) | Respond to Form 8-K for ENERGY SERVICES OF AMERICA CORP 29-Nov-2012 Entry into a Material Definitive Agreement, Financial Statements Item 1.01 Entry into a Material Definitive Agreement On November 28, 2012, Energy Services of America Corp. (the "Registrant") and its subsidiary corporations, C.J. Hughes Construction Company, Inc., Contractors Rental Corporation, Nitro Electric Company, Inc. and S.T. Pipeline, Inc. (collectively, the "Obligors") entered into a forbearance agreement with United Bank, Inc., whereby the Obligors acknowledge that they are in default under the terms of two credit facilities between United Bank, Inc. and the Registrant and United Bank, Inc. has agreed to forbear from exercising certain of its rights and remedies under the loan agreements and related documents. The loan agreements consist of an $18.0 million revolving line of credit and an $11.3 million term loan. At November 20, 2012 the outstanding balances on the revolving line of credit and term loan were $18,081,100 and $8,744,152, respectively. The Obligors acknowledge defaulting on the loan agreements by failing to maintain the debt to tangible net worth covenant and current ratio covenant as set forth in each loan note. United Bank agrees to forbear from exercising and enforcing its default related rights against the Obligors resulting from the default so long the Obligors comply with the terms of the Forbearance Agreement. During the forbearance period the outstanding balances of the borrowings will bear interest at a fixed rate of 6.5% per annum. During the forbearance period the Registrant must continue to make monthly loan payments, but will be unable to take further advances on the line of credit. As part of the Forbearance Agreement the Obligors agree to take specific actions including the retention of a Chief Restructuring Officer and providing to the United Bank on-going reports regarding its business operations and cash flow, among other matters. The Chief Restructuring Officer must prepare a restructuring plan for the Registrant that provides for the sale of S.T. Pipeline, and must prepare recommendations relating to the on-going operations of Nitro Electric Company, Inc., C.J. Hughes Construction Company and Contractors Rental Corporation. The Forbearance Agreement may be terminated upon certain events, and in any case on May 31, 2013. The foregoing is not a complete description of the terms of the Forbearance Agreement and such description is qualified in its entirety by the Forbearance Agreement which is filed as exhibits 10.1 to this Form 8-K. On November 28, 2012, the Registrant entered into an agreement with Centrus Group, Inc. ("Centrus") pursuant to which Centrus will provide Chief Restructuring Agent services to the Registrant. A copy of the agreement with Centrus Group, Inc. is filed as Exhibit 10.2 to this Form 8-K.
