EXHIBIT
        4.1

       

      STOCKHOLDERS
        AGREEMENT

    

    
      


      This
        STOCKHOLDERS AGREEMENT (this “Agreement”)
        is
        entered into this 5th day
        of
        October, 2007 by and among UNITED FUEL & ENERGY CORPORATION, a Nevada
        corporation (the “Company”),
        FRANK
        P. GREINKE (“Greinke”),
        FRANK
        P. GREINKE, AS TRUSTEE UNDER THE GREINKE BUSINESS LIVING TRUST DATED APRIL
        20,
        1999 (“Trust”),
        THOMAS
        E. KELLY (“Kelly”),
        FALCON
        SEABOARD INVESTMENT COMPANY, L.P. (“Falcon
        Seaboard”)
        and
        CHARLES McARTHUR (“McArthur”)
        .

      


      


      W
        I T N E
        S S E T H:

      


      WHEREAS,
        the Company, Greinke, Trust and Cardlock Fuels System, Inc., a California
        corporation (“CFS”),
        have
        entered into a Mutual Stock Purchase Agreement dated September 14, 2007 (the
        “Purchase
        Agreement”),
        pursuant to which the parties thereto have agreed, upon the terms and subject
        to
        the conditions set forth therein, for the Company to acquire all of the
        outstanding capital stock of CFS from Trust in exchange for the Company’s
        issuance to Trust of 26,641,276 shares
        of
        the Company’s Common Stock;

      


      WHEREAS,
        upon receipt of the shares of Common Stock upon consummation of the transactions
        contemplated by the Purchase Agreement, Trust will become a significant
        stockholder of the Company; 

      


      WHEREAS,
        as a condition to its willingness to enter into the Purchase Agreement, the
        Company has required that Greinke and Trust agree, and to induce the Company
        to
        enter into the Purchase Agreement, each of Greinke and Trust is willing to
        agree
        to certain arrangements and understandings respecting Trust’s contemplated share
        ownership in the Company and certain other matters as set forth in this
        Agreement; and 

      


      WHEREAS,
        as a condition to their willingness to enter into the Purchase Agreement,
        Greinke and Trust have required that Kelly, Falcon Seaboard and McArthur
        agree,
        and to induce Greinke and Trust to enter into the Purchase Agreement, each
        of
        Kelly, Falcon Seaboard and McArthur is willing to agree to certain arrangements
        and understandings respecting their respective share ownership in the
        Company.

      


      NOW,
        THEREFORE, in consideration of the foregoing and the mutual covenants and
        agreements herein contained, and intending to be legally bound hereby, the
        Company, Greinke, Trust, Kelly, Falcon Seaboard and McArthur hereby agree
        as
        follows:

       

      ARTICLE
        1

      CERTAIN
        DEFINITIONS

      


      Capitalized
        terms used but not otherwise defined herein shall have the meanings ascribed
        to
        such terms in the Purchase Agreement. In addition, the following terms, as
        used
        in this Agreement, shall have the respective meanings set forth in this Article
        1:

       

      “Beneficial
        owner”
or
        “beneficially
        owned”
or
        “beneficial
        ownership”
shall
        have the meaning assigned to such term in Rule 13d-3 under the Exchange
        Act.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Board”
or
        “Board
        of Directors”
means
        the board of directors of the Company, as constituted from time to
        time.

      


      “Common
        Stock”
means
        the common stock of the Company, par value $0.001 per share.

      


      “Effective
        Time”
means
        the time at which the Purchase Agreement is consummated.

      


      “Exchange
        Act”
means
        the Securities Exchange Act of 1934, as amended, or any successor federal
        statute, as in effect from time to time.

      


      “Governmental
        Entity”
means
        any government or any agency, bureau, board, commission, court, department,
        official, political subdivision, tribunal or other instrumentality of any
        government, whether federal, state or local, domestic or foreign.

      


      “Person”
means
        any natural person, firm, individual, business trust, trust, association,
        corporation, partnership, joint venture, company, unincorporated entity or
        Governmental Entity. 

      


      “Voting
        Securities”
means
        the Common Stock and any other securities of the Company or its successors
        that
        are entitled by their terms to vote generally in the election of directors
        of
        the Company or its successors and all options, rights, warrants and other
        securities convertible into, or exercisable or exchangeable for, any shares
        of
        the Common Stock or other securities possessing such voting rights.


       

      ARTICLE
        2

      VOTING
        AGREEMENTS

       

      Section
        2.1 Greinke
        and Trust Voting Agreement.

      


      From
        the
        Effective Time and ending on the first anniversary of the Effective Time,
        each
        of Greinke and Trust hereby agrees to vote (or cause to be voted) all of
        the
        Voting Securities which Greinke and Trust is entitled to vote (or to provide
        his
        written consent thereto), at any annual, special or other meeting of the
        stockholders of Company, and at any adjournment or adjournments thereof,
        or
        pursuant to any consent in lieu of a meeting or otherwise:

      


      (i) against
        any action or proposal to remove any member of the Board of Directors in
        office
        at the Effective Time; 

      


      (ii) for
        any
        action or proposal to reelect the members of the Board of Directors in office
        at
        the Effective Time at any annual meeting of the stockholders of the Company;
        and

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      (iii) in
        accordance with the written recommendations of McArthur; provided,
        however,
        that if
        the provisions of this subsection (iii) conflict with the provisions of
        subsection (i) or subsection (ii) with respect to a particular action or
        proposal, the provisions of subsection (i) or subsection (ii) shall
        control.

      


      Section
        2.2. Kelly,
        Falcon Seaboard and McArthur Voting Agreement.

      


      From
        the
        Effective Time and ending on the first anniversary of the Effective Time,
        each
        of Kelly, Falcon Seaboard and McArthur hereby agrees to vote (or cause to
        be
        voted) all of the Voting Securities which Kelly, Falcon Seaboard and McArthur
        is
        entitled to vote (or to provide his written consent thereto), at any annual,
        special or other meeting of the stockholders of Company, and at any adjournment
        or adjournments thereof, or pursuant to any consent in lieu of a meeting
        or
        otherwise, in such a manner as to ensure that Greinke is appointed or elected
        a
        member of the Board of Directors; provided,
        however,
        that
        Kelly’s and McArthur’s agreement under this Section 2.2 is contingent on Falcon
        Seaboard not objecting to the election of Greinke to the Board of Directors.
        From the Effective Time and ending on the first anniversary of the Effective
        Time, Falcon Seaboard hereby agrees not to object to Greinke’s election as a
        member of the Board of Directors so as to prevent Messrs. Kelly and McArthur
        from voting (or causing to be voted) all of the Voting Securities which they
        are
        entitled to vote in favor of the election of Greinke as a member of the Board
        of
        Directors pursuant to the terms of that certain Voting Agreement dated as
        of
        April 21, 2006 by and among Falcon Seaboard, Kelly and McArthur.

      


      ARTICLE
        3

      REPRESENTATIONS
        AND WARRANTIES

      


      Section
        3.1. Representations
        and Warranties of Greinke and Trust. 

      


      (a)
        Binding
        Agreement.
        Each of
        Greinke and Trust represents and warrants as follows: (i) Greinke and Trust
        has
        the capacity to execute and deliver this Agreement and to consummate the
        transactions contemplated hereby; and (ii) Greinke and Trust has duly and
        validly executed and delivered this Agreement and this Agreement constitutes
        a
        legal, valid, and binding obligation of Greinke and Trust, enforceable against
        Greinke and Trust in accordance with its terms, except as such enforceability
        may be limited by applicable bankruptcy, insolvency, reorganization or other
        similar laws affecting creditors’ rights generally and by general equitable
        principles (regardless of whether enforceability is considered in a proceeding
        in equity or at law).

      


      (b)
        No
        Conflict.
        Each of
        Greinke and Trust represents and warrants that neither the execution and
        delivery of this Agreement, nor the compliance with any of the provisions
        hereof
        in each case by Greinke or Trust (i) requires any consent, approval,
        authorization or permit of, registration, declaration, or filing with, or
        notification to, any Governmental Entity (except for filings or notifications
        under the Exchange Act), (ii) results in a default (or an event which, with
        notice or lapse of time or both, will result in a default) or gives rise
        to any
        right of termination by any third party, cancellation, amendment, or
        acceleration under any material contract, agreement, instrument, commitment,
        arrangement, or understanding, or results in the creation of a security
        interest, lien, charge, encumbrance, equity, or claim with respect to any
        of the
        securities of CFS beneficially owned by Greinke or Trust, (iii) requires
        any
        material consent, authorization, or approval of any person other than a
        Governmental Entity which has not been obtained, or (iv) violates or conflicts
        with any order, writ, injunction, decree or law applicable to Greinke or
        Trust
        or the securities of the Company beneficially owned by Greinke or
        Trust.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      Section
        3.2. Representations
        and Warranties of Kelly, Falcon Seaboard and McArthur.

      


      (a)
        Binding
        Agreement.
        Each of
        Kelly, Falcon Seaboard and McArthur represents and warrants as to himself
        or
        itself that: (i) he or it has the capacity to execute and deliver this Agreement
        and to consummate the transactions contemplated hereby; and (ii) he or it
        has
        duly and validly executed and delivered this Agreement and this Agreement
        constitutes a legal, valid, and binding obligation, enforceable against him
        or
        it in accordance with its terms, except as such enforceability may be limited
        by
        applicable bankruptcy, insolvency, reorganization or other similar laws
        affecting creditors’ rights generally and by general equitable principles
        (regardless of whether enforceability is considered in a proceeding in equity
        or
        at law).

      


      (b) No
        Conflict.
        Each of
        Kelly, Falcon Seaboard and McArthur represents and warrants as to himself
        or
        itself that neither the execution and delivery of this Agreement, nor the
        compliance with any of the provisions hereof by himself or itself (i)
        requires any consent, approval, authorization or permit of, registration,
        declaration, or filing with, or notification to, any Governmental Entity
        (except
        for filings or notifications under the Exchange Act), or (ii) violates or
        conflicts with any agreement, order, writ, injunction, decree or law applicable
        to him or it or the securities of the Company beneficially owned by him or
        it;
provided,
        however,
        that in
        the case of Kelly and McArthur, the voting agreement provided under Section
        2.3(b) hereof may conflict with the terms of that certain Voting Agreement
        dated
        as of April 21, 2006 by and among Falcon Seaboard, Kelly and McArthur in
        the
        event that Falcon Seaboard notifies Kelly and McArthur that it objects to
        the
        election of Greinke to the Board of Directors in violation of Falcon Seaboard’s
        agreement pursuant to Section
        2.2
        hereof.

      


      ARTICLE
        4

      MISCELLANEOUS

      


      Section
        4.1. Termination.
        This
        Agreement shall terminate upon the earlier to occur of the following: (i)
        one
        (1) year following the Effective Time, or (ii) the termination of the Purchase
        Agreement prior to consummation of the transactions contemplated thereby.
        

      


      Section
        4.2. Survival.
        The
        representations and warranties herein contained shall survive indefinitely
        following the termination of this Agreement, subject to applicable statutes
        of
        limitation, if any; provided, however, that no representations and warranties
        shall survive the termination of this Agreement pursuant to Section
        4.1(ii).

      


      Section
        4.3. Specific
        Enforcement.
        The
        parties hereto agree that if any of the provisions of this Agreement were
        not
        performed in accordance with their specific terms or were otherwise breached,
        irreparable damage would occur and it would be extremely impracticable and
        difficult to measure damages. Accordingly, in addition to any other rights
        and
        remedies to which the parties may be entitled by law or equity, each party
        shall
        be entitled to seek specific performance of the terms hereof. Further, the
        parties hereto expressly waive (a) the defense that a remedy in damages will
        be
        adequate and (b) any requirement, in an action for specific performance,
        for the
        posting of a bond. 

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      Section
        4.4. No
        Waiver.
        The
        parties hereby agree that no failure or delay by a party to this Agreement,
        in
        exercising any right, power or privilege hereunder will operate as a waiver
        thereof, nor will a single or partial exercise thereof preclude any other
        or
        further exercise thereof or the exercise of any right, power or privilege
        hereunder. 

      


      Section
        4.5. Governing
        Law.
        This
        Agreement shall be governed and construed in all respects in accordance with
        the
        laws of the State of Nevada (without giving effect to the provisions thereof
        relating to conflicts of law). 

      


      Section
        4.6. Successors
        and Assigns.
        Except
        as otherwise provided herein, the provisions hereof shall inure to the benefit
        of and be binding upon, the successors, permitted assigns, heirs, executors
        and
        administrators of the parties hereto. 

      


      Section
        4.7. Entire
        Agreement; Amendment.
        This
        Agreement constitutes the entire agreement between the parties with respect
        to
        the subject matter hereof and supersedes all other prior agreements and
        understandings, both written and oral, between the parties with respect to
        the
        subject matter hereof, and no party shall be liable or bound to any other
        party
        in any manner by any warranties, representations, or covenants except as
        specifically set forth herein or therein. Except as expressly provided herein,
        neither this Agreement nor any term hereof may be amended, waived, discharged
        or
        terminated other than by a written instrument signed by the party against
        whom
        enforcement of any such amendment, waiver, discharge, or termination is sought.
        

      


      Section
        4.8. Notices.
        Unless
        otherwise provided, any notice, request, demand or other communication required
        or permitted under this Agreement shall be given in writing and shall be
        deemed
        effectively given upon personal delivery to the party to be notified, or
        when
        sent by telex or telecopier (with receipt confirmed), or one business day
        following deposit with overnight courier or three business days following
        deposit with the United States Post Office, by registered or certified mail,
        postage prepaid and addressed as follows (or at such other address as a party
        may designate by notice to the other): 

      


      If
        to the Company:

      


      United
        Fuel & Energy Corporation

      405
        Marienfeld, Suite 300

      Midland,
        Texas 79701

      Attention:
        Charles McArthur

      Telephone:
        (432) 571-8055

      Facsimile:
        (432) 687-5580

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      With
        a copy to (which shall not constitute notice):

      


      Akin
        Gump
        Strauss Hauer & Feld LLP

      300
        Convent Street, Suite 1500

      San
        Antonio, Texas 78205

      Attention:
        Will Liebmann, Esq.

      Telephone:
        (210) 281-7000

      Facsimile:
        (210) 224-2035

      


      If
        to Greinke:

      


      Frank
        P.
        Greinke

      P.O.
        Box
        1258

      Tacoma,
        Washington 98401-1258

      


      With
        a copy to (which shall not constitute notice):

      


      Robert
        W.
        Bollar

      General
        Counsel

      P.O.
        Box
        4159

      Orange,
        California 92863-4159

      Telephone:
        (714) 516-7260 

      Facsimile:
        (714) 922-7230 

      


      And

      


      Rutan
        & Tucker, LLP

      Attn:
        Larry A. Cerutti

      611
        Anton
        Blvd., 14th
        Floor

      Costa
        Mesa, California 92626-9035

      Telephone:
        (714) 641-3450

      Facsimile:
        (714) 546-9035

      


      Section
        4.9. Assignment.
        Without
        the prior written consent of the other parties hereto, no party hereto may
        assign this Agreement or any of its rights or obligations hereunder, in whole
        or
        in part, by operation of law or otherwise except that the Company may, without
        the prior written consent of the other parties, assign this Agreement upon
        a
        merger, consolidation, “combination” as defined in Section 78.416 of the Nevada
        Revised Statutes as in effect on the date hereof, compulsory share exchange,
        recapitalization or other similar transaction, provided that holders of the
        capital stock of the Company or the surviving entity immediately prior to
        such
        transaction hold at least a majority of the capital stock of the Company
        or the
        surviving entity immediately after such transaction.

      


      Section
        4.10. Severability.
        Whenever
        possible, each provision or portion of any provision of this Agreement will
        be
        interpreted in such manner as to be effective and valid under applicable
        law but
        if any provision or portion of any provision of this Agreement is held to
        be
        invalid, illegal or unenforceable in any respect under any applicable law
        or
        rule in any jurisdiction, such invalidity, illegality or unenforceability
        will
        not affect any other provision or portion of any provision in such jurisdiction,
        and this Agreement will be reformed, construed and enforced in such jurisdiction
        as if such invalid, illegal or unenforceable provision or portion of any
        provision had never been contained herein.

       

      
        
          
          

        

        
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      Section
        4.11. Electronic
        Signatures.
        Delivery
        of a copy of this Agreement bearing an original signature by facsimile
        transmission (whether directly from one facsimile device to another by means
        of
        a dial-up connection or whether mediated by the worldwide web), by electronic
        mail in “portable document format” (“.pdf”) form, or by any other electronic
        means intended to preserve the original graphic and pictorial appearance
        of a
        document, will have the same effect as physical delivery of the paper document
        bearing the original signature. “Originally signed” or “original signature”
means or refers to a signature that has not been mechanically or electronically
        reproduced.

      


      Section
        4.13. Counterparts.
        This
        Agreement may be executed in two or more counterparts, each of which shall
        be
        deemed to be an original, but all of which, taken together, shall constitute
        one
        and the same Agreement.

      


      Section
        4.14. Stockholder Capacity.
        Neither
        Greinke, Kelly nor McArthur makes any agreement or understanding herein in
        their
        capacities as directors or officers of the Company. Nothing herein will limit
        or
        affect any actions taken by Greinke, Kelly or McArthur in their capacities
        as
        officers or directors of the Company or any of its Subsidiaries to comply
        with
        their fiduciary obligations as officers or directors of the
        Company.

      


      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      


      IN
        WITNESS WHEREOF,
        the
        parties have caused this Stockholders Agreement to be duly executed as of
        the
        day and year first above written.

      

        
          	 	
                  UNITED
                    FUEL & ENERGY CORPORATION

                	 
	 	 	 	 
	 	 	 	 
	 	
                  By: 
                    

                	
                  /s/
                    Charles McArthur

                	 
	 	
                   

                	
                  Charles
                    McArthur

                	 
	 	
                   

                	
                  President
                    and Chief Executive Officer

                	 
	 	 	 	 
	 	 	 	 
	 	
                  FRANK
                    P. GREINKE, AS TRUSTEE UNDER THE GREINKE BUSINESS LIVING TRUST
                    DATED APRIL
                    20, 1999

                
	 	 	 	 
	 	 	 	 
	 	
                  /s/
                    Frank P. Greinke

                	 
	 	
                  FRANK
                    P. GREINKE, TRUSTEE

                	 
	 	 	 	 
	 	 	 	 
	 	
                  /s/
                    Frank P. Greinke

                	 
	 	
                  FRANK
                    P. GREINKE

                	 
	 	 	 	 
	 	 	 	 
	 	
                  /s/
                    Charles McArthur

                	 
	 	
                  CHARLES
                    MCARTHUR

                	 
	 	 	 	 
	 	 	 	 
	 	
                  /s/
                    Thomas E. Kelly

                	 
	 	
                  THOMAS
                    E. KELLY

                	 
	 	 	 	 
	 	 	 	 
	 	
                  FALCON
                    SEABOARD INVESTMENT COMPANY, L.P.

                
	 	 	 	 
	 	 	 	 
	 	
                  By:
                    

                	
                   /s/
                    Gene Dewhurst

                	 
	 	
                   

                	
                  Name:
                    E. H. (Gene) Dewhurst

                	 
	 	
                   

                	
                  Title:
                    Authorized Representative

                	 


        

         

      

      
        
          
          

        

        
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