FORBEARANCE AGREEMENT AND THIRD AMENDMENT TO SECOND AMENDED AND RESTATED FINANCING AGREEMENT
FORBEARANCE
AGREEMENT
AND
THIRD AMENDMENT TO
SECOND
AMENDED AND
RESTATED
FINANCING AGREEMENT
THIS
FORBEARANCE AGREEMENT AND THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
FINANCING AGREEMENT
(the
“Agreement”)
is
made and entered into on this 28th day of December, 2007, to be effective,
unless another effective date is otherwise herein specified, as of the date
hereof, 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
Lenders), CIT as administrative and collateral agent (“Agent”),
and
United Fuel & Energy Corporation, a Texas corporation (“United”),
and
Three D Oil Co. of ▇▇▇▇▇▇▇, Inc., a Texas corporation (“Three D”),
and
Cardlock Fuels Systems, 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, 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 failed to comply (i) with the Fixed Charge Coverage Ratio financial
covenant specified in Section 7.10(a)
of the
Financing Agreement for the respective measurement periods ending on
October 31, 2007, and November 30, 2007 and (ii) the deadline for
furnishing to the Lenders with required financial information for the period
ending October 31, 2007 as required by Section 7.8 of the Financing Agreement;
and accordingly Events of Default have occurred and are continuing under
Section 10.1(e)
of the
Financing Agreement (the “Existing
Events of Default”).
D. 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.
E. Companies
have requested that Agent and Lenders, for the period from the date hereof
until
March 7, 2008, forbear from exercising their rights and remedies under the
Loan Documents.
F. Agent
and
Lenders are willing for the period from the date hereof until March 7,
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 the date hereof and ending on the earlier to occur
of
(i) 5:00 p.m. (Dallas, Texas time) on March 7, 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 such additional documents, instruments and information
as
Agent may request; and
(c) 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.
2
(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.
(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.
3
5. Additional
Agreements.
(a) Suspension
of Compliance with Fixed Charge Coverage Ratio for Testing Periods respectively
ending on December 31, 2007, and January 31, 2008; Addition of New
EBITDA Financial Covenant.
The
parties hereto agree that during the Forbearance Period, compliance by the
Companies with the Fixed Charge Coverage Ratio financial covenant set forth
in
Section 7.10(a)
of the
Financing Agreement for the respective testing periods ending on
December 31, 2007, and January 31, 2008, is hereby suspended. In lieu
thereof, the parties hereto agree that the Companies, on a consolidated basis,
shall maintain EBITDA of not less than the amount set forth below for the time
period set forth below:
| Period |
Minimum
EBITDA
|
||
| (i) |
One
calendar month period ending
November 30,
2007
|
(i)
$0.00
|
|
| (ii) |
Two
calendar month period
ending
December 31, 2007
|
(ii)
$0.00
|
|
| (iii) |
Three
calendar month period
ending
January 31, 2008
|
(iii)
$250,000.00
|
|
(b) Temporary
Line Increase Fee.
In
consideration for the temporary increase in the Line of Credit and Revolving
Line of Credit under the Financing Agreement, as amended by this Agreement,
Companies hereby agree to pay Agent, for the pro rata benefit of the Lenders,
a
fee (the “Temporary
Line Increase Fee”),
in
immediately available funds in the amount of $50,000, which Temporary Line
Increase Fee shall be deemed fully earned and non-refundable as of the date
hereof, and which Temporary Line Increase Fee shall be due and payable as
follows:
(i) $25,000
shall be due and payable on January 1, 2008; and
(ii) $25,000
shall be due and payable on March 7, 2008, or, if earlier, on the
termination of the Forbearance Period.
Agent
and
Lenders agree that if the Line of Credit and Revolving Line of Credit are
hereafter prior to December 31, 2008, permanently increased, Companies and
Parent hereby agreeing and acknowledging that Agent and Lenders have no
obligation at any time to agree to such a permanent increase, no line increase
fee shall be payable by Companies as to the first $10,000,000 of any such
permanent increase in the Line of Credit and Revolving Line of
Credit.
4
(c) Additional
Interest During Forbearance Period.
In
consideration for the forbearance provided for in this Agreement, Companies
hereby agree to pay Agent, for the pro rata benefit of the Lenders, additional
interest on the Revolving Loans and such additional interest shall be payable
monthly on the first day of each month. Base Rate Loans shall accrue interest
at
a per annum rate equal to the Base
Rate
plus
the
Applicable Base Rate Margin, plus
60 basis
points (the “Additional
Interest”)
as
calculated as set forth in the Financing Agreement subject to the Maximum Legal
Rate. The LIBOR Loans shall bear interest for each Interest Period with respect
thereto on the unpaid principal amount thereof at a rate per annum equal to
the
LIBOR determined for each Interest Period in accordance with the terms of this
Financing Agreement plus the Applicable LIBOR Margin, plus
the
Additional Interest as calculated as set forth in the Financing Agreement
subject to the Maximum Legal Rate. The Agent, on behalf of the Lenders, shall
be
entitled to charge each such Companies’ Revolving Loan Account for the amount of
Additional Interest required to be paid above. The Additional Interest shall
be
deemed fully earned and non-refundable as of the date when due.
(d) 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 to
Agent, in form and substance satisfactory to Agent, each of the following by
the
applicable date set forth below:
(i) By
January 15, 2008, a cash flow statement, in form and substance satisfactory
to
Agent, which describes and provides the Companies’ projected cash flow for each
week during the Forbearance Period, including projected Availability,
collections, disbursements and the Loan balance for each week;
(ii) By
January 31, 2008:
(w) Consolidated
Balance Sheet as of December 31, 2007, and statements of profit and loss,
cash flow and surplus of Parent, the Companies and their subsidiaries for the
month ended December 31, 2007, certified by an authorized financial or
accounting officer of Companies;
(x) 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;
5
(y) Analysis
by management of Parent and Companies of such historical performance issues
as
shall be required by Agent, which analysis shall in any event include a
performance analysis of the changes in sales and EBITDA between calendar year
2006 and the eleven month period ended November 30, 2007 and a performance
analysis of the changes in sales and EBITDA between calendar year 2007 and
projected calendar year 2008; and
(z)
Summary by management of Parent and Companies of the turnaround efforts by
management supporting the projected changes in sales and EBITDA from calendar
year 2007 to projected calendar year 2008 and the 2008 calendar year
projections; and
(iii) On
a
daily basis, a borrowing base certificate as required pursuant to Section
3.2
of the
Financing Agreement and United shall use its commercially reasonable efforts
to
cause Cardlock to provide a borrowing base certificate as required pursuant
to
Section
3.2
of the
Financing Agreement on a daily basis, but at a minimum Cardlock shall provide
such borrowing base certificate on a weekly basis.
6. Amendments
to Financing Agreement and Other Loan Documents.
The
parties hereto agree to the following amendments to the Financing Agreement
and
other Loan Documents:
(a) Amendment
to Section 1 of Financing Agreement; Addition of New Definitions.
Section
1
of the
Financing Agreement is hereby amended by adding thereto the following new
definitions to be inserted in their proper alphabetical order and to read in
their entirety as follows:
“Forbearance
Agreement
shall
mean that certain Forbearance Agreement and Third Amendment to Second Amended
and Restated Financing Agreement executed by Agent, Lenders, Companies and
Parent.
Forbearance
Default
shall
have the same meaning as in the Forbearance Agreement.
Forbearance
Period
shall
have the same meaning as in the Forbearance Agreement.
Temporary
Line Increase Period
shall
mean the period beginning on the date of execution of the Forbearance Agreement
and ending on March 7, 2008 or, if earlier, upon the termination of the
Forbearance Period.”
6
(b) Amendment
of Section 1 of Financing Agreement; Amendment and Restatement of Definition
of
“Borrowing Base”.
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) one
hundred percent (100%) of the aggregate Eligible Cash Surrender Value of
Eligible Life Insurance Policy, plus
(E) the
lesser of
(x) one
hundred percent (100%) of the Dollar balance of the Eligible Cash Collateral
or
(y) $10,000,000, minus
(F) as long as the Temporary Line Increase Period is in existence,
$7,500,000, minus
(b) any
applicable Availability Reserves.”
(c) Amendment
to Section 1 of Financing Agreement; Amendment and Restatement of Definition
of
“Commitment”.
Section
1
of the
Financing Agreement is hereby amended by amending and restating the definition
of “Commitment” to read in its 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 Forbearance Agreement 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.”
(d) Amendment
to Section 1 of Financing Agreement; Amendment and Restatement of Definition
of
“Line of Credit”.
Section
1
of the
Financing Agreement is hereby amended by amending and restating the definition
of “Line of Credit” to read in its entirety as follows:
“Line
of Credit
shall
mean the aggregate commitment of the Lenders in an amount equal to (a) during
the existence of the Temporary Line Increase Period, $100,000,000 (as the same
may be reduced from time as a result of a Temporary Revolving Line of Credit
Reducing Event), and (b) at all other times, $90,000,000, to (i) make
Revolving Loans pursuant to Section
3
of this
Financing Agreement, (ii) assist Companies in opening Letters of Credit pursuant
to Section 5
of this
Financing Agreement, and (iii) make the Term Loans pursuant to Section
4
of this
Financing Agreement.”
7
(e) Amendment
to Section 1 of Financing Agreement; Amendment and Restatement of Definition
of
“Revolving Line of Credit”.
Section
1
of the
Financing Agreement is hereby amended by amending and restating the definition
of “Revolving Line of Credit” to read in its entirety as follows:
“Revolving
Line of Credit
shall
mean the aggregate commitment of the Lenders to make loans and advances pursuant
to Section
3
hereof
and issue Letters of Credit Guaranties to the Companies in the aggregate amount
of (a) during the existence of the Temporary Line Increase Period, $80,000,000,
provided,
that,
upon
the occurrence of a Forbearance Default, if the Required Lenders have not
elected to terminate the Forbearance Agreement pursuant to Section 1(ii)
thereof, the Revolving Line of Credit shall automatically be reduced by an
amount equal to $2,500,000 on the Wednesday following the date that such
Forbearance Default occurred and the Revolving Line of Credit continue to reduce
by an additional $2,500,000 on each Wednesday thereafter until the earlier
to
occur of (i) the date that the Forbearance Default has been cured or waived
by
the Required Lenders or (ii) the date that the Revolving Line of Credit has
been
reduced to $70,000,000 (any such reduction, the “Temporary
Revolving Line of Credit Reducing Event”),
and
(b) at all other times, $70,000,000.”
(f) Amendment
to Amended and Restated Revolving Credit Notes.
(i) As
long
as the Temporary Line Increase Period is in existence, each Amended and Restated
Revolving Credit Note, dated October 30, 2007, executed by Companies, and
respectively payable to Wachovia, SunTrust and PNC, shall be deemed amended
as
follows:
| (x) |
Each
reference to the dollar amount “$15,555,555.56” shall be deemed to be a
reference to the dollar amount “$17,775,555.56”
|
| (y) |
Each
reference to the phrase “FIFTEEN MILLION FIVE HUNDRED FIFTY-FIVE THOUSAND
FIVE HUNDRED FIFTY-FIVE AND 56/100 DOLLARS” shall be deemed to be a
reference to the phrase “SEVENTEEN MILLION SEVEN HUNDRED SEVENTY-FIVE
THOUSAND FIVE HUNDRED FIFTY AND 56/100
DOLLARS”
|
8
Upon
(i)
any Temporary Revolving Line of Credit Reducing Event, each Amended and Restated
Revolving Credit Note shall be deemed to have automatically reduced by such
Lender’s pro rata share amount of such reduction and (ii) the termination of the
Temporary Line Increase Period, each Amended and Restated Revolving Credit
Note
shall be deemed to be amended so as to revert to the prior dollar amount and
phrase.
(ii) As
long
as the Temporary Line Increase Period is in existence, the Amended and Restated
Revolving Credit Note, dated October 30, 2007, executed by Companies and
payable to the order of CIT, shall be deemed amended as follows:
| (x) |
Each
reference to the dollar amount “$23,333,333.32” shall be deemed to be a
reference to the dollar amount “$26,673,333.32”
|
| (y) |
Each
reference to the phrase “TWENTY THREE MILLION THREE HUNDRED THIRTY-THREE
THOUSAND THREE HUNDRED THIRTY-THREE AND 32/100THS DOLLARS” shall be deemed
to be a reference to the phrase “TWENTY SIX MILLION SIX HUNDRED
SEVENTY-THREE THOUSAND THREE HUNDRED THIRTY-THREE AND 32/100THS
DOLLARS”.
|
Upon
(i)
any Temporary Revolving Line of Credit Reducing Event, each Amended and Restated
Revolving Credit Note shall be deemed to have automatically reduced by CIT’s pro
rata share amount of such reduction and (ii) termination of the Temporary Line
Increase Period, the Amended and Restated Revolving Credit Note shall be deemed
to be amended so as to revert back to the prior dollar amount and
phrase.
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 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
9
(d) 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.
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.
10
(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.
(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
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.
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.
12
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 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 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.
13
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first above written.
|
COMPANIES:
|
|
|
UNITED
FUEL & ENERGY CORPORATION,
|
|
|
a
Texas corporation
|
|
|
By:
|
/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
|
|
Name:
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
|
|
Title:
|
President
and Chief Executive Officer
|
|
THREE
D OIL CO. OF ▇▇▇▇▇▇▇, INC.,
|
|
|
a
Texas corporation
|
|
|
By:
|
/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
|
|
Name:
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
|
|
Title:
|
President
and Chief Executive Officer
|
|
CARDLOCK
FUELS SYSTEM, INC.,
|
|
|
a
California corporation
|
|
|
By:
|
/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
|
|
Name:
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
|
|
Title:
|
President
and Chief Executive Officer
|
|
PARENT:
|
|
|
UNITED
FUEL & ENERGY CORPORATION,
|
|
|
a
Nevada corporation
|
|
|
By:
|
/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
|
|
Name:
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
|
|
Title:
|
President
and Chief Executive Officer
|
|
AGENT:
|
|
|
THE
CIT GROUP/BUSINES CREDIT, INC.,
|
|
|
as
Agent
|
|
|
By:
|
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ |
|
Name:
|
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ |
|
Title:
|
Vice President |
|
LENDERS:
|
|
|
THE
CIT GROUP/BUSINES CREDIT, INC.,
|
|
|
as
a Lender
|
|
|
By:
|
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ |
|
Name:
|
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ |
|
Title:
|
Vice President |
|
Amount
of Commitment:
|
|||||||
|
(i)
|
During
Temporary
|
||||||
|
|
Line
Increase Period:
|
$
|
33,340,000
|
||||
|
(ii)
|
At
All Other Times
|
$
|
30,000,000
|
||||
|
SUNTRUST
BANK, as a Lender
|
|
|
By:
|
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ |
|
Name:
|
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ |
|
Title:
|
Vice President |
|
Amount
of Commitment:
|
|||||||
|
(i)
|
During
Temporary
|
||||||
|
Line
Increase Period:
|
$
|
22,220,000
|
|||||
|
(ii)
|
At
All Other Times
|
$
|
20,000,000
|
||||
|
PNC
BANK NATIONAL ASSOCIATION,
|
|
|
as
a Lender
|
|
|
By:
|
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇ |
|
Name:
|
▇▇▇▇ ▇. ▇▇▇▇▇ |
|
Title:
|
Senior Vice President, PNC Business Credit |
|
Amount
of Commitment:
|
|||||||
|
(i)
|
During
Temporary
|
||||||
|
Line
Increase Period:
|
$
|
22,220,000
|
|||||
|
(ii)
|
At
All Other Times
|
$
|
20,000,000
|
||||
|
WACHOVIA
BANK, N.A., as a Lender
|
|
|
By:
|
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ |
|
Name:
|
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ |
|
Title:
|
Vice President |
|
During
Temporary
|
|||||||
|
Line
Increase Period:
|
$
|
22,220,000
|
|||||
|
(ii)
|
At
All Other Times
|
$
|
20,000,000
|
||||