SEPARATION
      AGREEMENT AND RELEASE OF ALL CLAIMS

     

    This
      SEPARATION AGREEMENT AND RELEASE OF ALL CLAIMS (“Agreement”)
      is
      made and entered into between Charles McArthur, his heirs and assigns
      (hereinafter “McArthur”)
      and
      United Fuel & Energy Corporation (hereinafter “United”)
      for
      the consideration and mutual promises hereinafter stated, as
      follows:

     

    RECITALS

     

    WHEREAS,
      McArthur is presently employed by United pursuant to the terms of an Amended
      and
      Restated Executive Employment Agreement dated October 5, 2007 (the “Employment
      Agreement”);
      and

     

    WHEREAS,
      United
      and McArthur have mutually agreed that it is in the Parties’ best interests to
      terminate the employment relationship and the Employment Agreement pursuant
      to
      the terms identified herein, as opposed to those identified in the Employment
      Agreement; 

     

    THEREFORE,
      McArthur
      and United hereby enter into this Agreement for the consideration and mutual
      promises stated herein as follows:

     

    1. Separation:
      The
      Parties acknowledge that McArthur has resigned his position as United’s
      President and Chief Executive Officer and as a member of United’s Board of
      Directors as of June 10, 2008. In addition, McArthur has resigned from all
      of
      his officer and director positions from each of United’s subsidiaries as of June
      10, 2008. McArthur and United agree that the Employment Agreement shall
      terminate, and McArthur’s employment with United shall also terminate, as of
      August 31, 2008 (the “Effective
      Date of Separation”).
      McArthur agrees that all benefits of employment with United will terminate
      as of
      the Effective Date of Separation, unless specifically provided to the contrary
      in this Agreement or by law. McArthur shall continue to be paid his current
      base
      salary of $325,000 per annum consistent
      with United’s normal payroll practices through the Effective Date of
      Separation.

     

    2. Payment
      Following Separation:
      As
      consideration in support of this Agreement, should McArthur execute this
      Agreement and not revoke it as permitted in Paragraph 20, United shall pay
      to
      McArthur the amount of four hundred thirty three thousand three hundred thirty
      three dollars ($433,333) (the “Separation
      Payment”),
      less
      applicable payroll deductions and withholding, payable in thirty-two (32)
      semi-monthly payments consistent with United’s normal payroll practices
      beginning on United’s first regularly scheduled payroll date in September, 2008,
      and ending on United’s last regularly scheduled payroll date in December, 2009.
      By signing this Agreement, McArthur acknowledges the sufficiency of the
      Separation Payment as consideration for this Agreement. Payment of the
      Separation Payment shall constitute full satisfaction of any obligation to
      McArthur by United arising out of or in any way related to his employment,
      the
      termination of his employment and/or the termination of the Employment
      Agreement, and McArthur further acknowledges and agrees that he is not owed
      any
      additional amounts by United arising out of or related to his employment,
      including, without limitation, bonuses, accrued but unused vacation or sick
      leave or expense reimbursements.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3. Continuation
      of Health and Life Insurance Benefits:
      McArthur understands and agrees that, except as otherwise provided herein,
      United shall cease making payments for his health and life insurance premiums
      as
      of the Effective Date of Separation. McArthur acknowledges that he will receive
      notification that he may continue coverage under United’s health insurance
      program as provided by the Consolidated Omnibus Budget Reconciliation Act of
      1985 (“COBRA”).
      For
      purposes of COBRA coverage, the Effective Date of Separation or other date
      of
      employment termination will constitute the date of the qualifying event.
      McArthur acknowledges and agrees that he shall be responsible for taking all
      steps necessary to elect continuation of health insurance as provided by COBRA
      and that he shall be solely responsible for payment of any and all health
      insurance premiums due as a result of his election to continue such coverage.
      Notwithstanding the foregoing, should McArthur execute this Agreement and not
      revoke it as permitted in Paragraph 20, and should McArthur further timely
      elect
      to continue health insurance through COBRA, United will pay McArthur’s COBRA
      premium for individual and dependent coverage for the period of time from July,
      2008, through December, 2009; thereafter, McArthur may continue his insurance
      as
      provided by COBRA by making any and all insurance premium payments that may
      be
      required. In addition to paying health insurance premiums as provided in this
      Paragraph, United shall also pay life insurance premiums for the same period
      of
      time identified in this Paragraph for life insurance benefits in an amount
      equal
      to those currently provided by United to McArthur as of the Effective Date
      of
      Separation.

     

    4. Stock
      Options and Grants:
      Upon
      the Effective Date of Separation, all restrictions on any restricted stock
      grants issued to McArthur by United shall lapse and all stock options and grants
      granted to McArthur by United shall become fully vested and exercisable. The
      expiration dates for all of McArthur’s outstanding stock options shall be
      amended to provide that such options shall remain exercisable following the
      Effective Date of Separation until January 3, 2011. All such stock options
      shall
      expire as of the 5:00 p.m. Central time on January 3, 2011. McArthur
      acknowledges and agrees that his stock options that currently qualify as
      incentive stock options shall no longer qualify for incentive stock option
      treatment as a result of the foregoing extension of the expiration date and
      that
      United shall not be held responsible for any failure of such stock options
      to
      qualify for incentive stock option treatment.

     

    5. Other
      Employee Benefits:
      McArthur understands and agrees that this Agreement does not modify the Parties’
rights and obligations under any employee benefit plans. McArthur further
      understands and agrees that his right to receive benefits as provided in any
      of
      United’s employee benefit plans shall be determined solely as provided by, and
      in accordance with, the terms and conditions of the applicable benefit plans
      as
      they may currently exist or as they may be modified in the future.

     

    6. Release,
      Assignment of All Claims and Covenant Not to Sue -
      McArthur:
      It is
      agreed and understood by McArthur that this Agreement shall resolve any and
      all
      obligations and disputes between McArthur and United, its
      past,
      present and future directors, officers, managers, members, shareholders,
      representatives, subsidiaries, related companies, insurance carriers, agents,
      servants, employees, successors, assigns, predecessors, assignors, heirs,
      legatees, insurers and (collectively, the “United
      Released Parties”).
      McArthur, with full understanding of the contents and legal effects of this
      Agreement, completely and voluntarily releases the United Released Parties
      from
      any and all claims, rights, demands, liabilities and causes of action, of any
      character, known or unknown, asserted or unasserted, in law or in equity, of
      any
      nature, that he may have against them that arose or may have arisen in whole
      or
      in part before the date of this Agreement, including but not limited to any
      and
      all:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	 	
              a.

            	
              Claims
                related to McArthur’s employment with United and the termination of his
                employment with United;

            


    

     

    
      	 	
              b.

            	
              Claims
                arising under contract, tort or common law, including, but not limited
                to,
                breach of contract, promissory estoppel, detrimental reliance, fraud,
                wrongful discharge, false imprisonment, assault, battery, intentional
                infliction of emotional distress, defamation, slander, libel, fraud,
                invasion of privacy, breach of the covenant of good faith and fair
                dealing, breach of fiduciary duty, conversion and tortious interference
                with any type of third-party relationship, as well as any and all
                damages
                that may arise out of any such claims, including, without limitation,
                claims for economic loss, lost profits, loss of capital, lost wage
                earning
                capacity, emotional distress, mental anguish, personal injuries,
                punitive
                damages, or future damages;

            


    

     

    
      	 	
              d.

            	
              Claims
                arising under state or federal constitution, state or federal statute,
                city ordinance or public policy, including, but not limited to, the
                Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001
                et
                seq.
                (“ERISA”)
                and claims involving employment discrimination of any form and/or
                harassment (including, but not limited to, claims under the Age
                Discrimination in Employment Act, 29 U.S.C. § 621 et
                seq.,
                Title VII of the Civil Rights Act of 1964 as amended, 42 U.S.C. § 2000e
                et
                seq.,
                the Civil Rights Act of 1870, 42 U.S.C. § 1981, and/or the Texas
                Commission on Human Rights Act, Tex. Lab. Code Ann. § 21.001 et
                seq.);

            


    

     

    
      	 	
              e.

            	
              Claims
                of retaliation of any nature, including, but not limited to, the
                anti-retaliatory provisions of the statutes identified in Subparagraph
                (d)
                of this Paragraph and claims under Tex.
                Lab. Code Ann.
§
                451.001 et
                seq.;
                and

            


    

     

    
      	 	
              f.

            	
              NEGLIGENCE
                OF ANY KIND, INCLUDING WITHOUT LIMITATION GROSS NEGLIGENCE, AGAINST
                THE
                UNITED RELEASED PARTIES BASED UPON THE ACTION OR INACTION OF THE
                UNITED
                RELEASED PARTIES.

            


    

     

    (collectively
      the “Claims”).
      It is
      also understood and agreed by McArthur that this Agreement may be pleaded as,
      and shall constitute an absolute and final bar to, any and all suits now
      pending, or which may hereafter be filed or prosecuted by McArthur, or anyone
      claiming by, through or under McArthur against the United Released Parties,
      arising out of or connected with any of the Claims. Additionally, McArthur
      covenants not to sue and agrees that at no time subsequent to the execution
      of
      this Agreement will he permit the filing or maintenance, in any state, federal
      or foreign court, or before any local, state, federal or foreign administrative
      agency, or any other tribunal, of any charge, claim or action of any kind
      arising out of or in any way related to the Claims, although the Parties agree
      that the Claims do not include any cause of action or claim related to action
      or
      inaction following the date on which this Agreement was fully executed by the
      Parties, including any claim relating to the breach of this Agreement. Finally,
      it is understood and agreed by McArthur that this Agreement shall be construed
      as broadly and all-encompassing as permitted by law and that it is the intent
      of
      the parties that this Agreement shall fully and finally resolve all existing
      claims that McArthur has against United; if it is found in contravention of
      the
      Parties’ intent that a claim has not been so released, McArthur agrees that any
      such claim is hereby assigned to United. Notwithstanding the foregoing, the
      parties expressly agree that the provisions of this Agreement do not restrict
      McArthur’s ability to challenge this Agreement’s compliance with the Older
      Workers Benefit Protection Act. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    7. Release,
      Covenant Not to Sue and Assignment of All Claims -
      United:
      It is
      agreed and understood by United that this Agreement shall resolve any and all
      obligations and disputes between it and McArthur arising out of or related
      to
      his employment or the termination of his employment with United. United, with
      full understanding of the contents and legal effects of this Agreement,
      completely and voluntarily releases McArthur from any and all claims, rights,
      demands, liabilities and causes of action, of any character, known or unknown,
      asserted or unasserted, in law or in equity, of any nature, that it may have
      against him that arose or may have arisen in whole or in part before the date
      of
      this Agreement, including but not limited to any and all:

     

    
      	 	
              a.

            	
              Claims
                arising under contract, tort or common law (including without limitation
                claims for economic loss, lost profits, loss of capital, emotional
                distress, mental anguish, personal injuries, punitive damages, or
                future
                damages), including, but not limited to claims for defamation, fraudulent
                inducement, or breach of contract;
                and

            


    

     

    
      	 	
              b.

            	
              NEGLIGENCE
                (EXCLUDING GROSS NEGLIGENCE) AGAINST MCARTHUR BASED UPON THE ACTION
                OR
                INACTION OF MCARTHUR,

            


    

     

    (collectively
      the “United
      Claims”).
      It is
      also understood and agreed by United that this Agreement may be pled as, and
      shall constitute, an absolute and final bar to any and all suits now pending,
      or
      that may hereafter be filed or prosecuted by United, or anyone claiming by,
      through, or under United against McArthur, arising out of or in connection
      with
      any of the United Claims. Additionally, United agrees and covenants that at
      no
      time subsequent to the execution of this Agreement will it sue McArthur or
      permit the filing or maintenance, in any state, federal, or foreign court,
      or
      before any local, state, federal or foreign administrative agency, or any other
      tribunal, of any charge, claim or action of any kind arising out of or in any
      way related to the United Claims, although the Parties agree that the United
      Claims do not include (i) any cause of action or claim related to action or
      inaction following the date on which this Agreement was fully executed by the
      Parties, including any claim relating to the breach of this Agreement, or (ii)
      any claims for fraud or claims arising under a state or federal constitution,
      state or federal statute or regulation, city ordinance or public policy.
      Finally, it is understood and agreed by United that this Agreement shall be
      construed as broadly and all-encompassing as permitted by law and that it is
      the
      intent of the parties that this Agreement shall fully and finally resolve all
      existing claims that United has against McArthur; if it is found in
      contravention of the Parties’ intent that a claim has not been so released,
      United agrees that any such claim is hereby assigned to McArthur.

     

    8. Return
      of Property:
      McArthur agrees that as soon as possible and in no event later than seven (7)
      days following the date the Agreement is executed and delivered by both Parties,
      he will return to United any and all property in his possession or custody
      owned
      by any of the United Released Parties, including, but not limited to, keys
      associated with all vehicles and buildings owned by the United Released Parties,
      credit cards, mobile phones, computers, access cards, PDAs and other items
      and
      documents. Notwithstanding the foregoing, United agrees that McArthur may keep
      his laptop computer and PDA provided that McArthur first give United’s IT
      department access to said laptop computer and PDA in order to remove all
      software and proprietary information owned by United from the memory storage
      thereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    9. Continuation
      of Contractual and Other Obligations:
      The
      Parties acknowledge and agree that McArthur has previously agreed to various
      “Restrictive Covenants” pursuant to Paragraph 6 of the Employment Agreement. The
      Parties also acknowledge and agree that McArthur’s obligations pursuant to
      paragraph 6 of the Employment Agreement shall remain in full force and effect
      as
      provided therein, notwithstanding the Parties’ agreement to terminate such
      Employment Agreement, and that this Agreement shall not modify McArthur’s
      obligations, whether imposed by contract or common law, not to use or disclose
      United’s confidential and proprietary information. The Parties further agree
      that United has agreed to indemnify McArthur as provided in Paragraph 8.2 of
      the
      Employment Agreement and in an Indemnification Agreement dated October 5, 2007
      (the “Indemnity
      Agreement”)
      and
      that such obligations shall remain in full force and effect as provided in
      both
      the Employment Agreement, notwithstanding the Parties’ agreement to terminate
      such Employment Agreement, and the Indemnity Agreement. Finally, McArthur
      acknowledges and agrees that the provisions of Paragraph 6 of the Employment
      Agreement are a reasonable and necessary protection of substantial interests
      and
      that any violation of such restrictions could cause substantial injury to the
      United Released Parties; therefore, McArthur agrees that, in the event of a
      breach or threatened breach by McArthur of such provisions, the United Released
      Parties, individually or collectively, shall be entitled to seek a temporary
      and/or permanent injunction through the appropriate forum restraining McArthur
      from such breach or threatened breach, provided, however, that nothing contained
      herein shall be construed to preclude the United Released Parties from pursuing
      any other available remedy for such breach or threatened breach in addition
      to,
      or in lieu of, such injunctive relief.

     

    10. Assignment
      of Interest:
      McArthur represents and warrants that he has not assigned to any person or
      entity all or any part of the claims released herein, other than as may be
      provided in this Agreement. McArthur acknowledges and agrees that he shall
      satisfy all obligations to any party, including his attorney(s), if any, related
      in any way to McArthur’s employment with United, the termination of his
      employment with United
      and/or
      preparation of this Agreement.

     

    11. Indemnity:
      McArthur agrees to indemnify and hold free and harmless the United Released
      Parties from and against any and all claims, demands, causes of action or
      judgments made, brought or recovered by any parent, spouse (ceremonial or at
      common law) or child (born, adopted or adoption by estoppel), whether by birth
      or marriage, arising out of or in any manner related to claims released by
      this
      Agreement and all moneys paid to McArthur as a result of this Agreement. This
      agreement to indemnify the United Released Parties from such claims includes
      the
      agreement to pay all attorneys' fees and other costs that any and all of the
      United Released Parties may incur in the defense of such claims. McArthur
      understands and agrees that the choice of counsel to represent the United
      Released Parties in any such proceedings to which this agreement to indemnify
      applies shall at all times rest within the sole discretion of that member of
      the
      United Released Parties seeking indemnification pursuant to this
      Paragraph.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    12. Taxation
      of Settlement Payment and Indemnity:
      McArthur acknowledges and agrees that the United Released Parties have made
      no
      representations to him regarding taxes that may be due as a result of the
      consideration provided to him pursuant to this Agreement. McArthur understands
      and agrees that the United Released Parties have no duty to defend him against
      any claims brought by taxing authorities related in any way to any payments
      made
      to him pursuant to this Agreement. Finally, McArthur understands and agrees
      that
      he shall fully indemnify the United Released Parties for any claims brought
      by
      taxing authorities against the United Released Parties, whether individually
      or
      collectively, seeking payment of taxes, penalties and/or interest related in
      any
      way to the assessment, determination and/or reporting of taxes under federal,
      state and/or local law. This agreement to indemnify the United Released Parties
      includes the agreement to pay all attorneys' fees and other costs that any
      and
      all of the United Released Parties may incur in the defense of such claims;
      additionally, the choice of counsel to represent the United Released Parties
      in
      any proceedings to which this agreement to indemnify applies shall at all times
      rest within the sole discretion of that member of the United Released Parties
      seeking indemnification pursuant to this Paragraph.

     

    13. Entire
      Agreement:
      McArthur acknowledges that, except as expressly set forth herein, no
      representations of any kind or character have been made by or on behalf of
      the
      United Released Parties to induce his execution of this Agreement and that
      this
      Agreement constitutes the complete understanding and agreement between him
      and
      the United Released Parties. McArthur also acknowledges that this Agreement
      supersedes any and all prior agreements, promises or inducements concerning
      this
      subject matter, if any, unless otherwise provided herein. By signing this
      Agreement, McArthur expressly disclaims any reliance on any representations,
      promises, or other statements by the United Released Parties, their
      representatives, agents or attorneys, except to the extent such representations,
      promises or other statements are expressly contained in this
      Agreement.

     

    14. Miscellaneous:
      McArthur acknowledges and agrees that the terms of this Agreement are
      contractual and not mere recitals. McArthur also acknowledges and agrees that
      this Agreement shall be construed and governed by the laws of the State of
      Texas, including, but not limited to, the doctrine of severability, as that
      doctrine may be considered to have been modified by state and/or federal
      statutes and/or regulations. McArthur further acknowledges that this Agreement
      may be executed in any number of counterparts, each of which shall be deemed
      an
      original and all of which shall constitute one and the same instrument. McArthur
      also agrees that venue for this Agreement shall be proper and irrevocably set
      in
      Dallas County, Texas, regardless of his present or future domicile. Finally,
      McArthur agrees that the existence of any claim or cause of action by McArthur
      against the United Released Parties that arises following his execution of
      this
      Agreement, whether predicated on this Agreement or otherwise, will not
      constitute a defense to the enforcement by any of the United Parties of any
      provision of this Agreement or any other agreement that may exist as between
      the
      parties

     

    15. Exercise
      of Remedies:
      No
      delay or omission by the United Released Parties in exercising any right under
      this Agreement shall operate as a waiver of any rights or remedies that they
      may
      have under this Agreement, either at law or in equity, and no single or partial
      exercise of any such right shall preclude any other or further exercise thereof
      or of the exercise of any other right or remedy.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    16. Agreement
      of Further Cooperation:
      McArthur and United each agree to execute and deliver such further documents
      and
      to cooperate in such manner as may be necessary to implement and give effect
      to
      the agreements contained in this Agreement. In addition, McArthur agrees that
      if
      the other parties to that certain Stockholders Agreement dated October 5, 2007
      by and among United, Frank P. Greinke, Frank P. Greinke, as Trustee under the
      Greinke Business Living Trust dated April 20, 1999, Thomas E. Kelly, Falcon
      Seaboard Investment Company, L.P. and McArthur agree to amend or terminate
      such
      agreement so as to eliminate McArthur’s ability to influence or control the
      voting of United shares held by Frank P. Greinke or his affiliates, he will
      execute and deliver such further documents and cooperate in such manner as
      may
      be necessary to so amend or terminate such agreement.

     

    17. Confirmation
      of No Additional Claims.
      McArthur acknowledges and agrees that he has not initiated any administrative
      proceedings or litigation with respect to the Claims. United acknowledges and
      agrees that it has not initiated any administrative proceedings or litigation
      with respect to the United Claims.

     

    18. No
      Admission of Wrongdoing:
      McArthur acknowledges and agrees that this Agreement shall not be construed
      as
      an admission by the United Released Parties of any wrongdoing and that neither
      this Agreement nor the furnishing of consideration for this Agreement shall
      be
      deemed or construed at any time for any purpose as an admission of the United
      Released Parties’ liability or responsibility for any alleged wrongdoing of any
      kind. McArthur agrees that he shall not be deemed to have prevailed in any
      respect against the United Released Parties for the purpose of an attorneys’ fee
      award or for any other purpose.

     

    19. No
      Presumption Against Interest:
      This
      Agreement has been jointly negotiated, drafted, and reviewed by the Parties.
      Therefore, no provision arising directly or indirectly therefrom shall be
      construed against McArthur or the United Released Parties as being drafted
      by
      that party.

     

    20. Understanding
      of Agreement:
      By
      signing this Agreement, McArthur acknowledges that:

     

    
      	 	
              a.

            	
              He
                has read and considered the terms of this Agreement, including the
                Release, Assignment of All Claims and Covenant Not to Sue in Paragraph
                6;

            


    

     

    
      	 	
              b.

            	
              This
                Agreement, including the Release, Assignment of All Claims and Covenant
                Not to Sue, is written in a manner that he understands and that he
                agrees
                to the terms of this Agreement of his own free will and
                accord;

            


    

     

    
      	 	
              c.

            	
              He
                has been advised in writing to consult with an attorney of his choosing
                prior to executing this Agreement, he has consulted with an attorney
                of
                his choosing and that such attorney has explained the terms and conditions
                of this Agreement to him;

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	 	
              d.

            	
              The
                Release, Assignment of All Claims and Covenant Not to Sue specifically
                refers to rights and/or claims that may arise under the Age Discrimination
                in Employment Act, 29 U.S.C. § 621 et
                seq.
                and any similar state or local protective
                statute;

            


    

     

    
      	 	
              e.

            	
              He
                has twenty-one (21) calendar days from the date on which this Agreement
                is
                given to him (the “Consideration
                Period”)
                to consider the terms of this Agreement and whether he will execute it,
                although he may execute the Agreement before the expiration of the
                Consideration Period;

            


    

     

    
      	 	
              f.

            	
              If
                the executed original of this Agreement is not received by United
                within
                twenty-two (22) days of its presentation to McArthur, the Agreement
                shall
                expire and be considered null and void;
                and

            


    

     

    
      	 	
              g.

            	
              This
                Agreement will only become effective or enforceable, and the consideration
                identified in this Agreement will only be provided to McArthur, if
                he (1)
                signs this Agreement before the end of the Consideration Period and
                (2)
                does not revoke this Agreement during the seven (7) day period of
                time
                following the date on which he signs it (the “Revocation Period”), which
                revocation must be in writing sent by certified mail, return-receipt
                requested, to United Fuel & Energy Corporation, Attn: Frank Greinke,
                405 N. Marienfeld, Suite 300, Midland, Texas 79701 and post-marked
                within
                the Revocation Period.

            


    

     

    [signature
      page follows]

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    READ
      CAREFULLY BEFORE SIGNING. BY SIGNING, YOU NOT ONLY AGREE TO ALL OF THE TERMS
      OF
      THIS AGREEMENT, BUT YOU ALSO ACKNOWLEDGE THAT YOU UNDERSTAND THE TERMS AND
      EFFECT OF THIS AGREEMENT AND HAVE WILLINGLY AND VOLUNTARILY ENTERED INTO THIS
      SEPARATION AGREEMENT.

     

    SIGNED
      at
      Midland, Midland County, Texas, this 12th
      day of
      June, 2008.

     

    /s/
      Charles McArthur    

    Charles
      McArthur

     

    
      	 THE STATE OF
              TEXAS  	 §
	 	 §
	 COUNTY OF
              MIDLAND  	 §


    

     

    BEFORE
      ME, the undersigned authority, on this day personally appeared Charles McArthur,
      known to me to be the person whose name is subscribed to the foregoing
      Separation Agreement and Release of All Claims, and acknowledged to me that
      he
      executed the same for the purposes and consideration therein
      expressed.

     

    GIVEN
      UNDER MY HAND AND SEAL OF OFFICE on this the 12th
      day of
      June, 2008.

     

    /s/
      B.
      Ross                                                       
     

    NOTARY
      PUBLIC, State of Texas

     

    SIGNED
      at
      Midland, Midland County, Texas, this 12th
      day of
      June, 2008.

     

    UNITED
      FUEL & ENERGY CORPORATION

     

    /s/
      Frank P. Greinke    

    By: Frank
      P. Greinke 

    Its: President
      and Chief Executive Officer