FORBEARANCE AGREEMENT
AND SIXTH AMENDMENT TO
SECOND AMENDED AND
RESTATED FINANCING AGREEMENT
 
THIS FORBEARANCE AGREEMENT AND SIXTH AMENDMENT TO SECOND AMENDED AND RESTATED
FINANCING AGREEMENT (the “Agreement”) is made and entered into on this 10th day
of July, 2008, to be effective, unless another effective date is otherwise
herein specified, as of June 17, 2008, by and among The CIT Group/Business
Credit, Inc. (“CIT”), SunTrust Bank (“SunTrust”), Wachovia Bank, N.A.
(“Wachovia”), and PNC Bank, National Association (“PNC”) (CIT, SunTrust,
Wachovia and PNC being herein collectively referred to as the “Existing
Lenders”), The Greinke Personal Living Trust, Frank P. Greinke, an individual
residing in Tacoma, Washington, Trustee (“Greinke Trust”) (the Greinke Trust
being herein referred to as the “Additional Lender”, and together with the
Existing Lenders, being herein collectively referred to as the “Lenders”), CIT
as administrative and collateral agent (“Agent”), and United Fuel & Energy
Corporation, a Texas corporation (“United”), and Three D Oil Co. of Kilgore,
Inc., a Texas corporation (“Three D”), and Cardlock Fuels System, Inc., a
California corporation (“Cardlock”) (United, Three D and Cardlock being herein
individually referred to as a “Company” and collectively referred to as the
“Companies”), and United Fuel & Energy Corporation, a Nevada corporation
(“Parent”).
 
RECITALS
 
A.  Companies, Lenders and Agent are the present parties to that certain Second
Amended and Restated Financing Agreement, dated as of March 27, 2007, originally
executed by United, Three D, Existing Lenders and Agent (as amended from time to
time, the “Financing Agreement”). Capitalized terms not otherwise defined herein
shall have the meanings given such terms in the Financing Agreement.
 
B.  To induce Agent and Lenders to make the loans under the Financing Agreement
to Companies, Parent has delivered to Agent that certain Guaranty dated
October 5, 2007 (“Guaranty”) guaranteeing payment and performance by Companies
of their Obligations.
 
C.  Companies have requested that Agent and Lenders agree and, subject to the
terms and conditions of this Agreement, Agent and Lenders have agreed, to amend
the Financing Agreement to provide, effective as of the date the conditions
hereinafter specified in Section 2 of this Agreement have been satisfied in
Agent’s credit judgment or waived by Agent, to provide for Additional Lender
becoming a party to and a “Lender” under the Financing Agreement with a
Commitment of $5,000,000, which Commitment shall consist entirely of Revolving
Loans pursuant to the Revolving Line of Credit Commitment, with the aggregate
Revolving Line of Credit Commitments being increased from $80,000,000 to
$85,000,000.
 
D.  Companies have failed to comply with the EBITDA financial covenant specified
in Section 7.10(c) of the Financing Agreement for the measurement period ending
on April 30, 2008, and have informed Agent and Lenders that Companies will fail
to comply with the EBITDA financial covenant specified in Section 7.10(c) for
the measurement period ending on May 31, 2008, and accordingly Events of Default
have occurred and are continuing under Section 10.1(e) of the Financing
Agreement (the “Existing Events of Default”).
 

 
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E.  By reason of the existence of the Existing Events of Defaults, Agent and
Lenders have full legal right to exercise their rights and remedies under the
Financing Agreement and the other Loan Documents. Companies have no defenses,
offsets or counterclaims to the exercise of such rights and remedies.
 
F.  Companies have requested that Agent and Lenders, for the period from
June 17, 2008, until July 18, 2008, forbear from exercising their rights and
remedies under the Loan Documents.
 
G.  Agent and Lenders are willing for the period from June 17, 2008 until
July 18, 2008, to forbear from exercising their rights and remedies under the
Loan Documents, on the terms and conditions set forth herein.
 
AGREEMENT
 
In consideration of the Recitals and of the mutual promises and covenants
contained herein, Agent, Lenders, Companies and Parent agree as follows:
 
1.  Agreement to Forbear. During the period commencing on June 17, 2008 and
ending on the earlier to occur of (i) 5:00 p.m. (Dallas, Texas time) on July 18,
2008 and (ii) the date the Agent receives written notice from the Required
Lenders to terminate this Agreement after the occurrence of any Forbearance
Default (as defined in Section 7 hereof) (the “Forbearance Period”), and subject
to the other terms and conditions of this Agreement, each of Agent and each
Lender agrees that it will forbear from exercising its rights and remedies under
the Loan Documents due to the Existing Events of Default; provided, however,
nothing herein shall limit the rights of Agent pursuant to the Financing
Agreement to establish reserves or the amount of any reserves. Upon the
expiration or termination of the Forbearance Period, Agent’s and Lenders’
forbearance shall automatically terminate and Agent and Lenders shall be
entitled to exercise any and all of their rights and remedies under this
Agreement and the Loan Documents without further notice. Companies and Parent
agree that Agent and Lenders shall have no obligation to extend the Forbearance
Period.
 
2.  Conditions Precedent to Effectiveness of Agreement Against Agent and
Lenders. This Agreement shall not be effective against Agent and Lenders unless
and until each of the following conditions shall have been satisfied in Agent’s
credit judgment or waived by Agent:
 
(a)  Agent shall have received this Agreement, duly executed by Companies,
Parent and Lenders;
 
(b)  Agent shall have received an agreement among the Lenders as to certain
inter-lender issues, in form and substance satisfactory to Agent and Existing
Lenders, duly executed by Lenders and duly accepted and agreed to by Companies
and Parent (the “Agreement Among Lenders”), the Agreement Among Lenders to be
considered to be a Loan Document for purposes of the Financing Agreement;
 

 
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(c)  Agent shall have received a Promissory Note in the original principal
amount of $5,000,000, duly executed by Companies and payable to the order of the
Greinke Trust, to evidence Revolving Loans made by the Greinke Trust;
 
(d)  Agent shall have received such additional documents, instruments and
information as Agent may request; and
 
(e)  Agent shall have received evidence satisfactory to Agent that all
organizational proceedings taken in connection with the transactions
contemplated by this Agreement and all documents, instruments and other legal
matters incident thereto shall be satisfactory to Agent.
 
3.  Representations and Warranties. Each of each Company and Parent hereby
represents and warrants to Agent and Lenders as follows:
 
(a)  Recitals. The Recitals in this Agreement are true and correct in all
material respects.
 
(b)  Incorporation of Representations. All representations and warranties of
Companies and Parent in the Loan Documents are incorporated herein in full by
this reference and are true and correct in all material respects as of the date
hereof.
 
(c)  Organizational Power; Authorization. Each of each Company and Parent has
the organizational power, and has been duly authorized by all requisite
organizational action, to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement has been duly executed and delivered by
each Company and by Parent.
 
(d)  Enforceability. This Agreement is the legal, valid and binding obligation
of each Company and Parent, enforceable against each Company and Parent in
accordance with its terms.
 
(e)  No Violation. Each of each Company’s and Parent’s execution, delivery and
performance of this Agreement does not and will not (i) violate any law, rule,
regulation or court order to which any Company or Parent is subject;
(ii) conflict with or result in a breach of any Company’s or Parent’s Articles
or Certificate of Incorporation or Bylaws or any agreement or instrument to
which any Company or Parent is party or by which it or its properties are bound,
or (iii) result in the creation or imposition of any lien, security interest or
encumbrance on any property of any Company or Parent, whether now owned or
hereafter acquired.
 
(f)  Obligations Absolute. The obligation of Companies to repay the loans and
the other Obligations, together with all interest accrued thereon, is absolute
and unconditional, and there exists no right of set off or recoupment,
counterclaim or defense of any nature whatsoever to payment of the Obligations.
 

 
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(g)  Full Opportunity for Review; No Undue Influence. This Agreement was
reviewed by each of each Company and Parent which acknowledges and agrees that
it (i) understands fully the terms of this Agreement and the consequences of the
issuance hereof; (ii) has been afforded an opportunity to have this Agreement
reviewed by, and to discuss this Agreement with, such attorneys and other
persons as it may wish; and (iii) has entered into this Agreement of its own
free will and accord and without threat or duress. This Agreement and all
information furnished to Agent and Lenders is made and furnished in good faith,
for value and valuable consideration. This Agreement has not been made or
induced by any fraud, duress or undue influence exercised by Agent or Lenders or
any other person.
 
(h)  No Other Defaults. Other than the Existing Events of Default, no Event of
Default exists under the Financing Agreement or any of the other Loan Documents
and each of each Company and Parent is in full compliance with all covenants and
agreements contained therein.
 
4.  Ratification of Guaranty. Parent hereby acknowledges and consents to all of
the terms and conditions of this Agreement and the Loan Documents and hereby
ratifies and confirms the Guaranty for the benefit of Agent and Lenders.
Guarantor hereby represents and acknowledges that it has no claims,
counterclaims, offsets, credits or defenses to the Loan Documents or the
performance of its obligations thereunder. Guarantor agrees that nothing
contained in this Agreement or the Loan Documents shall adversely affect any
right or remedy of either Agent or Lenders under the Guaranty. Guarantor hereby
agrees that with respect to the Guaranty, all references in such Guaranty to the
“Obligations” shall include, without limitation, the obligations of Companies to
Agent and Lenders under the Financing Agreement, as amended hereby. Guarantor
hereby represents and acknowledges that the execution and delivery of this
Agreement and the other Loan Documents executed in connection herewith shall in
no way change or modify its obligations as a guarantor, debtor, pledgor,
assignor, obligor and/or grantor under its Guaranty and each other Loan Document
to which it is a party and shall not constitute a waiver by either Agent or any
Lender of any of either Agent’s or any Lender’s rights against Guarantor.
 
5.  Additional Agreements.
 
(a)  Interest During Forbearance Period. In consideration for the forbearance
provided for in this Agreement, Companies hereby agree with Agent and Lenders
that notwithstanding any provision in the Financing Agreement or any other Loan
Document to the contrary, during the Forbearance Period all Obligations shall
bear interest at the Default Rate of Interest.
 
(b)  Additional Reporting and Information Requirements. In addition to any
presently existing reporting and informational requirements set forth in the
Financing Agreement, Companies and Parent agree to deliver by July 3, 2008, to
Agent, in form and substance satisfactory to Agent, updated monthly projections
for calendar year 2008 for Parent and Companies including, without limitation,
income statement, balance sheet, Availability projection and Fixed Charge
Coverage Ratio financial covenant projections.
 

 
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(c)  Additional Lender $5,000,000 Revolving Line of Credit Commitment; Increase
in Aggregate Revolving Line of Credit Commitments from $80,000,000 to
$85,000,000. Effective as of the date the conditions specified in Section 2 of
this Agreement have been satisfied in Agent’s credit judgment or waived by
Agent, Additional Lender shall become a party to and a “Lender” under the
Financing Agreement with a Commitment of $5,000,000, which Commitment shall
consist entirely of Revolving Loans pursuant to the Revolving Line of Credit
Commitment and the aggregate Revolving Line of Credit Commitments shall
accordingly be increased from $80,000,000 to $85,000,000, and the Lenders shall,
through Agent, make such adjustments among themselves as shall be necessary so
that after giving effect to such adjustments, the Lenders shall hold Revolving
Loans in an amount not greater than their respective Pro Rata Percentages.
Additional Lender has no Commitment regarding the Term Loans. The parties hereto
agree that Additional Lender becoming a Lender pursuant to the terms and
conditions of this Agreement and the Financing Agreement shall in no event be
deemed to be a violation of Section 7.13 of the Financing Agreement.
 
(d)  Additional Lender Obligations. Notwithstanding anything to the contrary in
the Financing Agreement, the parties hereto agree that as to Additional Lender,
the term “Obligations”, including, without limitation, in connection with
Obligations which are secured by the Collateral, shall only apply to
indebtedness and obligations of the Companies to Additional Lender specifically
arising pursuant to the Financing Agreement.
 
(e)  Termination of Additional Lender Commitment. Notwithstanding anything to
the contrary in the Financing Agreement, the parties hereto agree that
Additional Lender’s $5,000,000 Commitment (consisting entirely of a Revolving
Line of Credit Commitment) shall terminate on July 18, 2008, provided that on
such date (i) the Existing Events of Default have been waived and (ii) no other
Default or Event of Default shall be in existence. If Additional Lender’s
Commitment and Revolving Line of Credit Commitment so terminates on July 18,
2008, Additional Lender shall thereafter have no further commitment to make new
loans or advances pursuant to Section 3 of the Financing Agreement or to incur
new obligations in connection with Letters of Credit Guaranties, but the
relevant Commitments of the Existing Lenders, including, without limitation, the
respective Revolving Line of Credit Commitment of each Existing Lender, shall
remain the same, such that the aggregate Revolving Line of Credit Commitments
shall thereafter be permanently reduced from $85,000,000 to $80,000,000.
 
6.  Amendments to Financing Agreement.
 
(a)  Amendment to Section 1 of Financing Agreement; Additional New Definition.
Section 1 of the Financing Agreement is hereby amended by adding thereto the
following new definition to be inserted in its proper alphabetical order and to
read in its entirety as follows:
 
“Sixth Amendment” shall mean that certain Forbearance Agreement and Sixth
Amendment to Second Amended and Restated Financing Agreement executed by Agent,
Lenders, Companies and Parent.”
 

 
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(b)  Amendment to Section 1 of Financing Agreement; Amendment and Restatement of
Definition of “Borrowing Base”. Effective as of July 9, 2008, the parties hereto
agree that Section 1 of the Financing Agreement is hereby amended by amending
and restating the definition of “Borrowing Base” to read in its entirety as
follows:
 
“Borrowing Base shall mean, as to Companies, the amount calculated as follows:
(a) the lesser of (i) Revolving Line of Credit or (ii) the sum of (A)
eighty-five percent (85%) of Companies’ aggregate outstanding Eligible Accounts
Receivable and Companies’ aggregate outstanding Eligible Unbilled Card-Lock
Customer Accounts; provided, however, that if the then Dilution Percentage is
greater than five percent (5.0%), then the rate of advance herein shall be
reduced by the percentage points by which the Dilution Percentage exceeds five
percent (5.0%), plus (B) the sum of (x) sixty-five percent (65%) of the
aggregate value of Companies’ Eligible Inventory, valued at the lower of cost or
market, on an average cost basis, plus (y) sixty-five percent (65%) of the
aggregate value of Companies’ Eligible Card-Lock Inventory, valued at the lower
of cost or market, on an average cost basis, plus (C) the Eligible Equipment
Based Amount, plus (D) the lesser of (x) one hundred percent (100%) of the
Dollar balance of the Eligible Cash Collateral or (y) $10,000,000, minus (E) the
Availability Block, minus (b) any applicable Availability Reserves.”
 
(c)  Amendment to Section 1 of Financing Agreement; Deletion of Definition of
“Eligible Life Insurance Policy”. Effective as of July 9, 2008, Section 1 of the
Financing Agreement is amended by deleting therefrom the definition of “Eligible
Life Insurance Policy”.
 
(d)  Amendment to Section 1 of Financing Agreement; Amendment and Restatement of
Definitions of “Commitment” and “Revolving Line of Credit”. Effective as of the
date the conditions specified in Section 2 of this Agreement have been satisfied
in Agent’s credit judgment or waived by Agent, Section 1 of the Financing
Agreement is amended by amending and restating the definitions of “Commitment”
and “Revolving Line of Credit” to read in their entirety as follows:
 
“Commitment shall mean, as to any Lender, the amount of the commitment for such
Lender set forth on the signature page to the Sixth Amendment or in the
Assignment and Transfer Agreement to which such Lender is a party, as such
amount may be reduced or increased in accordance with the provisions of
Paragraph 13.4(b) of Section 13 or any other applicable provisions of this
Financing Agreement.
 

 
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Revolving Line of Credit shall mean the aggregate commitment of the Lenders to
make loans and advances pursuant to Section 3 and issue Letters of Credit
Guaranties to the Companies in the aggregate amount equal to the aggregate
Revolving Line of Credit Commitment for each Lender as set forth on the
signature page of the Sixth Amendment or in the Assignment and Transfer
Agreement to which such Lender is a party, as such amount may be reduced or
increased in accordance with the provisions of Paragraph 13.4(b) of Section 13
or any other applicable provision of this Financing Agreement.”
 
(e)  Amendment to Section 3.10 of Financing Agreement. Effective as of July 9,
2008, Section 3.10 of the Financing Agreement is amended by deleting therefrom
the present provisions of Section 3.10 and replacing such provisions with
“[Reserved]”.
 
7.  Default. Each of the following shall constitute a “Forbearance Default”
hereunder:
 
(a)  any representation or warranty of any Company or Parent contained in this
Agreement proves to have been false or misleading in any material respect when
made or furnished; or
 
(b)  any Company or Parent shall fail to keep or perform any of the covenants or
agreements contained herein; or
 
(c)  any Company or Parent shall begin to pay SC Fuels or any Affiliate of SC
Fuels for fuel or other goods purchased from SC Fuels or such Affiliate on a
quicker basis than such Company or Parent has historically paid SC Fuels or such
Affiliate for fuel or such other goods, even if paying on such quicker basis is
otherwise consistent with written documentation between such Company or Parent
and SC Fuels or such Affiliate of SC Fuels; or
 
(d)  any Company or Parent shall fail to keep or perform any of the covenants or
agreements contained in the Financing Agreement or the other Loan Documents
(other than an Existing Event of Default); or
 
(e)  the existence of any Event of Default (other than an Existing Event of
Default) under the Financing Agreement.
 
8.  Effect and Construction of Agreement. Except as expressly provided herein,
the Financing Agreement and the other Loan Documents are hereby ratified and
confirmed and shall be and shall remain in full force and effect in accordance
with their respective terms, and this Agreement shall not be construed to:
(i) impair the validity, perfection or priority of any lien or security interest
securing the Obligations; (ii) waive or impair any rights, powers or remedies of
Agent and Lenders under the Financing Agreement or the other Loan Documents upon
termination of the Forbearance Period; (iii) constitute an agreement by Agent or
Lenders or require Agent and Lenders to extend the Forbearance Period, or grant
additional forbearance periods, or extend the term of the Financing Agreement or
the time for payment of any of the Obligations; or (iv) make any loans or other
extensions of credit to Companies after termination of the Forbearance Period.
In the event of any inconsistency between the terms of this Agreement and the
Loan Documents, this Agreement shall govern. Each of each Company and Parent
acknowledges that it has consulted with counsel and with such other experts and
advisors as it has deemed necessary in connection with the negotiation,
execution and delivery of this Agreement. This Agreement shall be construed
without regard to any presumption or rule requiring that it be construed against
the party causing this Agreement or any part hereof to be drafted.
 

 
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9.  Expenses. Companies agree to pay all costs, fees and expenses of Agent and
Agent’s attorneys incurred in connection with the negotiation, preparation,
administration and enforcement of, and the preservation of any rights under,
this Agreement, the Financing Agreement and/or the other Loan Documents, and the
transactions and other matters contemplated hereby and thereby, including, but
not limited to, the fees, costs and expenses incurred by Agent in the employment
of auditors and/or consultants to perform work on Agent’s behalf to audit,
appraise, monitor and otherwise review any and all portions of the Collateral.
 
10.  Miscellaneous.
 
(a)  Further Assurances. Each of Company and Parent agrees to execute such other
and further documents and instruments as Agent may request to implement the
provisions of this Agreement and to perfect and protect the liens and security
interests created by the Financing Agreement and the other Loan Documents.
 
(b)  Benefit of Agreement. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto, their respective successors
and assigns. No other person or entity shall be entitled to claim any right or
benefit hereunder, including, without limitation, the status of a third-party
beneficiary of this Agreement.
 
(c)  Integration. This Agreement, together with the Financing Agreement and the
other Loan Documents, constitutes the entire agreement and understanding among
the parties relating to the subject matter hereof, and supersedes all prior
proposals, negotiations, agreements and understandings relating to such subject
matter. In entering into this Agreement, each of each Company and Parent
acknowledges that it is relying on no statement, representation, warranty,
covenant or agreement of any kind made by the Agent or any Lender or any
employee or agent of the Agent or any Lender, except for the agreements of Agent
and Lenders set forth herein.
 
(d)  Severability. The provisions of this Agreement are intended to be
severable. If any provisions of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
enforceability without in any manner affecting the validity or enforceability of
such provision in any other jurisdiction or the remaining provisions of this
Agreement in any jurisdiction.
 

 
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(e)  Governing Law. This Agreement shall be governed by and construed in
accordance with the internal substantive laws of the State of Texas, without
regard to the choice of law principles of such state.
 
(f)  Counterparts; Telecopied Signatures. This Agreement may be executed in any
number of counterparts and by different parties to this Agreement on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.
 
(g)  Notices. Any notices with respect to this Agreement shall be given in the
manner provided for in Section 12.6 of the Financing Agreement.
 
(h)  Survival. All representations, warranties, covenants, agreements,
undertakings, waivers and releases of each Company and Parent contained herein
shall survive the termination of the Forbearance Period and payment in full of
the Obligations.
 
(i)  Amendment. No amendment, modification, rescission, waiver or release of any
provision of this Agreement shall be effective unless the same shall be in
writing and signed by the parties hereto.
 
(j)  No Limitation on Lender. Nothing in this Agreement shall be deemed in any
way to limit or restrict any of Agent’s or any Lender’s rights to seek in a
bankruptcy court or any other court of competent jurisdiction, any relief Agent
may deem appropriate in the event that a voluntary or involuntary petition under
any title of the Bankruptcy Code is filed by or against any Company or Parent.
 
(k)  Material Inducement. Each of each Company and Parent further acknowledges
and agrees that the representations, acknowledgments, agreements and warranties
in this Agreement have been made by such Company or Parent as a material
inducement to Agent and Lenders to enter into this Agreement, that each of Agent
and each Lender is relying on such representations and warranties, has changed
and will continue to change its position in reliance thereon and that each of
Agent and each Lender would not have entered into this Agreement without such
representations, acknowledgments, agreements, and warranties.
 
11.  Misrepresentation. Each of each Company and Parent shall indemnify and hold
Agent and Lenders harmless from and against any and all losses, damages, costs
and expenses (including attorneys’ fees) incurred by Agent or Lenders as a
direct or indirect result of (i) any breach of any representation or warranty
contained in this Agreement, or (ii) any breach or default under any of the
covenants or agreements contained in this Agreement.
 
12.  Ratification of Liens and Security Interest. Each of each Company and
Parent hereby acknowledges and agrees that the liens and security interests of
the Financing Agreement and the other Loan Documents are valid, subsisting,
perfected and enforceable liens and security interests and are superior to all
liens and security interests other than those exceptions approved by Lender in
writing.
 

 
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13.  No Commitment. Each of each Company and Parent agrees that neither Agent
nor any Lender has made any commitment or other agreement regarding the
Financing Agreement or the other Loan Documents, except as expressly set forth
in this Agreement. Each of each Company and Parent warrants and represents that
it will not rely on any commitment, further agreement to forbear or other
agreement on the part of Agent or Lenders unless such commitment or agreement is
in writing and signed by Agent and Lenders.
 
14.  NO COUNTERCLAIMS; RELEASE OF CLAIMS; WAIVER; HOLD HARMLESS. EACH OF EACH
COMPANY AND PARENT REPRESENTS AND WARRANTS THAT IT HAS NO SET-OFF, RECOUPMENT,
COUNTERCLAIM, DEFENSE, CROSS-COMPLAINT, CLAIM, DEMAND OR OTHER CAUSE OF ACTION
OF ANY NATURE WHATSOEVER (TOGETHER, THE “COUNTERCLAIMS”) AGAINST AGENT OR ANY
LENDER WHICH ARISE OUT OF THE TRANSACTIONS EVIDENCED BY THE FINANCING AGREEMENT
OR THE OTHER LOAN DOCUMENTS, ANY TRANSACTIONS THAT WERE RENEWED OR EXTENDED BY
THE FINANCING AGREEMENT OR THE OTHER LOAN DOCUMENTS, ANY OTHER TRANSACTION WITH
AGENT OR ANY LENDER, OR WHICH COULD BE ASSERTED TO REDUCE OR ELIMINATE ALL OR
ANY PART OF ANY COMPANY’S OR PARENT’S LIABILITY TO REPAY THE OBLIGATIONS OR TO
SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM AGENT OR ANY
LENDER, IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT,
VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, INCLUDING, WITHOUT LIMITATION,
ANY CONTRACTING FOR, CHANGING, TAKING, RESERVING, COLLECTING OR RECEIVING
INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY
RIGHTS AND REMEDIES UNDER THE FINANCING AGREEMENT OR THE OTHER LOAN DOCUMENTS,
THE NEGOTIATION FOR AND EXECUTION OF THIS AGREEMENT AND ANY SETTLEMENT
NEGOTIATIONS. TO THE EXTENT THAT ANY COUNTERCLAIMS MAY EXIST, WHETHER KNOWN OR
UNKNOWN, SUCH ARE WAIVED AND HEREBY RELEASED BY EACH COMPANY AND PARENT.
FURTHERMORE, EACH OF EACH COMPANY AND PARENT, ON BEHALF OF ITSELF, ITS
SUCCESSORS, AGENTS, ATTORNEYS, OFFICERS, DIRECTORS, ASSIGNS AND PERSONNEL AND
LEGAL REPRESENTATIVES, DOES HEREBY RELEASE, REMISE, ACQUIT AND FOREVER DISCHARGE
AGENT AND EACH LENDER AND AGENT’S AND EACH LENDER’S EMPLOYEES, AGENTS,
REPRESENTATIVES, CONSULTANTS, ATTORNEYS, FIDUCIARIES, SERVANTS, OFFICERS,
DIRECTORS, PARTNERS, PREDECESSORS, SUCCESSORS AND ASSIGNS, SUBSIDIARY
CORPORATIONS, PARENT CORPORATIONS, AND RELATED CORPORATE DIVISIONS (ALL OF THE
FOREGOING HEREINAFTER CALLED THE “RELEASED PARTIES”), FROM ANY AND ALL ACTIONS
AND CAUSES OF ACTION, JUDGMENTS, EXECUTIONS, SUITS, DEBTS, CLAIMS, DEMANDS,
LIABILITIES, OBLIGATIONS, DAMAGES AND EXPENSES OF ANY AND EVERY CHARACTER, KNOWN
OR UNKNOWN, DIRECT AND/OR INDIRECT, AT
 

 
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LAW OR IN EQUITY, OF WHATSOEVER KIND OR NATURE, WHETHER HERETOFORE OR HEREAFTER
ARISING, FOR OR BECAUSE OF ANY MATTER OR THINGS DONE, OMITTED OR SUFFERED TO BE
DONE BY ANY OF THE RELEASED PARTIES PRIOR TO AND INCLUDING THE DATE OF EXECUTION
HEREOF, AND IN ANY WAY DIRECTLY OR INDIRECTLY ARISING OUT OF OR IN ANY WAY
CONNECTED TO THIS AGREEMENT, THE FINANCING AGREEMENT OR THE OTHER LOAN
DOCUMENTS, IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT,
VIOLATION OF LAW OR REGULATIONS OR OTHERWISE, INCLUDING BUT NOT LIMITED TO, ANY
CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST
IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND
REMEDIES UNDER THE FINANCING AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, THE
NEGOTIATION FOR AND EXECUTION OF THIS AGREEMENT, OR ANY SETTLEMENT NEGOTIATIONS
(ALL OF THE FOREGOING HEREINAFTER CALLED THE “RELEASED MATTERS”); AND EACH OF
EACH COMPANY AND PARENT HEREBY COVENANTS AND AGREES NEVER TO INSTITUTE ANY
ACTION OR SUIT AT LAW OR IN EQUITY, NOR INSTITUTE, PROSECUTE, OR IN ANY WAY AID
IN THE INSTITUTION OR PROSECUTION OF, ANY CLAIM, ACTION OR CAUSE OF ACTION,
RIGHTS TO RECOVER DEBTS OR DEMANDS OF ANY NATURE AGAINST ANY OF THE RELEASED
PARTIES ARISING OUT OF OR RELATED TO AGENT’S OR ANY LENDER’S ACTIONS, OMISSIONS,
STATEMENTS, REQUESTS OR DEMANDS IN ADMINISTERING, ENFORCING, MONITORING,
COLLECTING OR ATTEMPTING TO COLLECT, THE OBLIGATIONS, INDEBTEDNESS AND OTHER
OBLIGATIONS OF COMPANIES AND PARENT TO AGENT AND LENDERS. EACH OF EACH COMPANY
AND PARENT AGREES TO INDEMNIFY AND HOLD AGENT AND EACH LENDER HARMLESS FROM ANY
AND ALL COUNTERCLAIMS THAT ANY COMPANY OR PARENT OR ANY OTHER PERSON OR ENTITY
CLAIMING BY, THROUGH, OR UNDER ANY COMPANY OR PARENT MAY AT ANY TIME ASSERT
AGAINST AGENT OR ANY LENDER. EACH OF EACH COMPANY AND PARENT ACKNOWLEDGES THAT
THE AGREEMENTS IN THIS PARAGRAPH ARE INTENDED TO BE IN FULL SATISFACTION OF ALL
OR ANY ALLEGED INJURIES OR DAMAGES TO EACH OF EACH COMPANY AND PARENT, ITS
SUCCESSORS, AGENTS, ATTORNEYS, OFFICERS, DIRECTORS, ASSIGNS AND PERSONAL AND
LEGAL REPRESENTATIVES ARISING IN CONNECTION WITH THE RELEASED MATTERS. EACH OF
EACH COMPANY AND PARENT REPRESENTS AND WARRANTS TO AGENT AND LENDERS THAT IT HAS
NOT PURPORTED TO TRANSFER, ASSIGN OR OTHERWISE CONVEY ANY RIGHT, TITLE OR
INTEREST OF SUCH COMPANY OR PARENT IN ANY RELEASED MATTER TO ANY OTHER PERSON
AND THAT THE FOREGOING CONSTITUTES A FULL AND COMPLETE RELEASE OF EACH OF EACH
COMPANY’S AND PARENT’S CLAIMS WITH RESPECT TO ALL RELEASED MATTERS. THE
PROVISIONS OF THIS SECTION 14 AND THE REPRESENTATIONS, WARRANTIES, RELEASES,
WAIVERS, REMISES, ACQUITTANCES, DISCHARGES, COVENANTS, AGREEMENTS AND
 

 
22

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INDEMNIFICATIONS CONTAINED HEREIN (A) CONSTITUTE A MATERIAL CONSIDERATION FOR
AND INDUCEMENT TO AGENT AND EACH LENDER ENTERING INTO THIS AGREEMENT, (B) DO NOT
CONSTITUTE AN ADMISSION OF OR BASIS FOR ESTABLISHING ANY DUTY, OBLIGATION OR
LIABILITY OF AGENT OR ANY LENDER TO ANY COMPANY OR PARENT OR ANY OTHER PERSON,
(C) DO NOT CONSTITUTE AN ADMISSION OF OR BASIS FOR ESTABLISHING ANY LIABILITY,
WRONGDOING, OR VIOLATION OF ANY OBLIGATION, DUTY OR AGREEMENT OF AGENT OR ANY
LENDER TO ANY COMPANY OR PARENT OR ANY OTHER PERSON, AND (D) SHALL NOT BE USED
AS EVIDENCE AGAINST AGENT OR ANY LENDER BY ANY COMPANY OR PARENT OR ANY OTHER
PERSON FOR ANY PURPOSE.
 
 
23

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written to be effective as of the respective date set forth
above.
 

 
COMPANIES:
 
UNITED FUEL & ENERGY CORPORATION,
 
a Texas corporation
 
 
 
 
By:
/s/ D. Lyndon James
 
Name:
D. Lyndon James
 
Title:
Vice President and Chief Financial Officer
 
 
 
THREE D OIL CO. OF KILGORE, INC.,
 
a Texas corporation
 
 
 
By: 
/s/ D. Lyndon James
 
Name:
D. Lyndon James
 
Title:
Vice President and Chief Financial Officer
 
 
 
CARDLOCK FUELS SYSTEM, INC.,
 
a California corporation
 
 
 
 
By:
/s/ D. Lyndon James
 
Name:
D. Lyndon James
 
Title:
Vice President and Chief Financial Officer
 
 
 
 
PARENT:
 
 
UNITED FUEL & ENERGY CORPORATION,
 
a Nevada corporation
 
 
 
 
By:
/s/ D. Lyndon James
 
Name:
D. Lyndon James
 
Title:
Vice President and Chief Financial Officer

 

 
 

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AGENT:
 
 
THE CIT GROUP/BUSINESS CREDIT, INC.,
 
as Agent
 
 
 
 
By:
/s/ Robyn Pingree
 
Name:
Robyn Pingree
 
Title:
Vice President
 
 
 
 
LENDERS:
 
 
THE CIT GROUP/BUSINESS CREDIT, INC.,
 
as a Lender
 
 
 
 
By:
/s/ Robyn Pingree
 
Name:
Robyn Pingree
 
Title:
Vice President

 
Amount of Commitment:        $29,099,147.82
 
 
Amount of Revolving Line
 
of Credit Commitment:          $26,666,666.67

 

 

 
 
SUNTRUST BANK, as a Lender
 
 
 
 
By:
/s/ Brian O’Fallon
 
Name:
Brian O’Fallon
 
Title:
Director

 
Amount of Commitment:        $19,399,431.88
 
 
Amount of Revolving Line
 
of Credit Commitment:          $17,777,777.78

 
 

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PNC BANK, NATIONAL ASSOCIATION,
 
as a Lender
 
 
 
 
By:
/s/ Paul R. Frank
 
Name:
Paul R. Frank
 
Title:
Vice President
 
 
Amount of Commitment:        $19,399,431.88
 
 
Amount of Revolving Line
 
of Credit Commitment:          $17,777,777.78
 
 
 
 
WACHOVIA BANK, N.A., as a Lender
 
 
 
 
By:
/s/ Thomas P. Floyd
 
Name:
Thomas P. Floyd
 
Title:
Vice President
 
 
Amount of Commitment:        $19,399,431.88
 
 
Amount of Revolving Line
 
of Credit Commitment:          $17,777,777.78
 
 
       
THE GREINKE PERSONAL LIVING TRUST
 
 
       
By:
 /s/ Frank P. Greinke
 
 
Frank P. Greinke, Trustee
 
 
Amount of Commitment:        $5,000,000.00
 
 
Amount of Revolving Line
 
of Credit Commitment:          $5,000,000.00