Document:

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 OfficerExhibit 10.1
    

    

    

    
      EMPLOYMENT AGREEMENT
    

    
      This employment agreement (this “Agreement”) is made and effective as of
      the 16th day of June, 2008 (such date shall be no earlier
      than the Visa Date – as defined below), by and between Neil Warma
      (hereinafter referred to as “Employee”) and Opexa Therapeutics, Inc.
      (hereinafter referred to as “Opexa”)
    

    
      W I T N E S S E T H:
    

    
      WHEREAS, Employee desires to be employed by Opexa, and Opexa
      desires to employ Employee;
    

    
      WHEREAS, Opexa desires to retain key executives and promote their
      dedication;
    

    
      WHEREAS, Opexa’s success requires the protection of its
      intellectual property, proprietary information and goodwill and Opexa is
      willing to employ Employee, subject to the terms and conditions below;
    

    
      WHEREAS, the Employee and Opexa jointly wish to enter into this
      Agreement.
    

    
      NOW, THEREFORE, for and in consideration of the employment by
      Opexa, the compensation and other remuneration to be paid by Opexa and
      received by the Employee for such employment, and for other good and
      valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged by Employee, it is agreed by and between the parties hereto
      as follows:
    

    
    	
          
            1.
          

        	
          
            Employment
          

        

    

    
      Opexa agrees to employ the Employee, and Employee agrees that Employee
      will devote Employee’s full business time, skill, and commercially
      reasonable efforts during Employee’s employment to such duties as may be
      reasonably assigned to Employee.  Employee will faithfully and
      diligently endeavor to further the best interests of Opexa during
      Employee’s employment.  Employee has been issued a H-1B visa or
      otherwise maintains an immigration status which allows him to work in
      the United States as contemplated by this Agreement (the date of
      obtaining such visa or status being the “Visa Date”), and Employee will
      continue to maintain such visa or such status in full force and effect
      throughout the term of this Agreement so long as Opexa performs such
      undertakings as are required or reasonably appropriate with respect
      thereto (e.g., as Employee’s employer).  The foregoing, however,
      shall not preclude the Employee from (i) engaging in appropriate civic,
      charitable, professional or trade association activities, (ii) subject
      to Board of Director written approval, serving on one or more other
      boards of directors of public or private companies, as long as such
      activities and services do not conflict with the responsibilities to
      Opexa, or (iii) engaging in the activities set forth on Exhibit A
      attached hereto as long as such activities do not conflict with the
      responsibilities to Opexa.
    

    
      
        

        

      

      
        
          Page 1 of 16
        

        
          

        

      

      
        

        

      

    

    

    

    
    	
          
            2.
          

        	
          
            Duties and Title
          

        

    

    
      Employee shall have the titles of and shall act as the President and
      Chief Executive Officer of Opexa and be nominated by the Board as a
      director nominee on the slate of directors set forth in the proxy
      statement to be voted upon by the shareholders at the 2008 annual
      meeting of Opexa shareholders (as well as each annual meeting of Opexa
      shareholders thereafter during the term of this Agreement).  Employee
      shall have the following responsibilities and duties as President and
      Chief Executive Officer: Employee shall report to Opexa’s Board of
      Directors, shall have general supervision over the operations of Opexa
      and will have such other duties and responsibilities consistent with his
      position as Chief Executive Officer, as may reasonably be assigned to
      Employee by Opexa’s Board of Directors from time to
      time.  Notwithstanding the above, Employee will not assume the title and
      role of Chief Executive Officer until the earlier of (i) the effective
      termination date of David McWilliams’ current employment agreement or
      (ii) July 1, 2008.
    

    
    	
          
            3.
          

        	
          
            Term of Employment
          

        

    

    
      The term of employment of Employee is through June 16, 2011, subject to
      (i) automatic 12 month renewal periods (which shall take effect 12
      months from the end of the then current term, such that the remaining
      term will never be less than 12 months) and (ii) termination pursuant to
      Section 6.
    

    
    	
          
            4.
          

        	
          
            Compensation; Bonus Payments; Option Grants; and Expense
            Reimbursement
          

        

    

    
      As compensation, Opexa shall pay Employee a salary of $285,000 for the
      12-month period ending June 16, 2009, $335,000 for the 12-month period
      ending June 16, 2010, $385,000 for the 12-month period ending June 16,
      2011, and thereafter as determined by the Board, but not less than
      $385,000, paid consistent with the then payroll practices of Opexa. If
      the 12-month period referred to in the prior sentence ends on a date
      that is not the last day of the pay period, then such 12 month period
      shall not end until the last day of that pay period, and the salary
      increase shall then take effect on the following day.
    

    
      Opexa shall pay Employee (i) an annual bonus in cash of up to 50% of
      base salary paid during the annual bonus calculation period based upon
      milestones to be mutually agreed to by Employee and Compensation
      Committee, and (ii) a one-time bonus of $50,000 cash and 25,000 shares
      of Opexa common stock (subject to adjustment for any stock split,
      dividend, recapitalization or other event affecting the common stock
      after the date hereof and prior to issuance), such cash to be paid and
      stock to be issued within thirty days of the date that the last sales
      price per share of Opexa common stock equals or exceeds $4.00 for twenty
      consecutive trading days provided that Employee remains employed by
      Opexa on such date.  The restricted stock, which will be granted
      pursuant to the Company’s 2004 Compensatory Stock Option Plan (the
      “Plan”), may not be granted hereunder until the earlier of (i) the
      shareholders having approved an amendment to add shares to the Plan at
      the 2008 annual shareholders meeting, or (ii) September 30, 2008.
    

    
      Opexa shall issue Employee a ten-year incentive stock option pursuant to
      Opexa’s 2004 Compensatory Stock Option plan to purchase 250,000 shares
      of Opexa common stock with an exercise price equal to the fair market
      value on the date of grant which shall be the date of this Agreement.
    

    
      
        

        

      

      
        
          Page 2 of 16
        

        
          

        

      

      
        

        

      

    

    

    

    
      The Option granted hereunder, which is granted pursuant to the Plan, is
      not exercisable until the earlier of (i) the shareholders having
      approved an amendment to add shares to the Plan at the 2008 annual
      shareholders meeting, or (ii) September 30, 2008.  The option shall vest
      as follows:  (i) 50,000 shares upon the date of grant; and (ii) the
      balance quarterly in equal amounts (i.e., 16,666.67 shares) over
      three years. Employee shall be eligible for subsequent grants as
      determined in the sole discretion of the Compensation Committee.
    

    
      Employee shall receive prompt reimbursement for all reasonable and
      customary travel, entertainment and other out-of-pocket business
      expenses incurred by Employee in fulfilling his duties and
      responsibilities.
    

    
    	
          
            5.
          

        	
          
            Benefits; One-Time Moving Benefits
          

        

    

    
      Opexa will provide Employee with the benefits and insurance coverage as
      generally provided by Opexa to its management employees, but only if and
      when such benefits and/or coverage are provided.  If provided, such
      benefits and insurance coverages may be changed by Opexa from time to
      time.  Employee shall be entitled to four (4) weeks of vacation for
      every twelve (12) months of employment with Opexa (to be pro rated over
      such period).  
    

    
      Opexa will provide Employee with: (i) a monthly payment of $2,400.00, in
      advance, for a period of six months from the date of this Agreement;
      (ii) reimbursement of actual costs of coach-class airfare expense
      incurred in bi-weekly trips to visit family until the earlier of
      Employee relocating his family to the greater Houston, Texas area, or
      December 1, 2008; and (iii) reimbursement of actual costs of one
      coach-class roundtrip airfare for wife and children for a house-hunting
      trip to Houston that occurs on or before December 1,
      2008.  Additionally, Opexa will provide Employee with the following
      one-time moving benefits: (i) moving and immigration/visa expenses; (ii)
      closing fees/costs (excluding adjustments for items unpaid by seller)
      for sale of current home; and (iii) closing fees/costs (excluding all
      insurance premiums other than title, adjustments for items unpaid by
      seller, and interest payments that lender requires in advance) for
      purchase of new home. The aggregate one-time benefits set forth in the
      preceding sentence not to exceed $75,000, of which $40,000 is
      reimbursable on a current basis and the balance will only be
      reimbursable to the Employee if Opexa has raised at least $5 million in
      the placement of equity or equity-equivalent securities through the
      exercise of outstanding warrants or in a series of new offerings that
      closes on or before December 31, 2008.  In addition, should such
      benefits not exceed $75,000, then Employee shall be paid any unused
      portion of such amount as a bonus upon Opexa raising at least $5 million
      in the placement of equity or equity-equivalent securities through the
      exercise of outstanding warrants or in a series of new offerings that
      closes on or before December 31, 2008.  Opexa shall also pay to Employee
      additional payments not to exceed 50% of the value of the benefits set
      forth in this paragraph to cover United States federal income tax
      obligations of Employee with respect to these benefits, excepting the
      closing fees/costs related to sale of the existing home and the purchase
      of a new home in the greater Houston area and also excepting any unused
      portion treated as a bonus.
    

    
    	
          
            6.
          

        	
          
            Termination
          

        

    

    
      
        

        

      

      
        
          Page 3 of 16
        

        
          

        

      

      
        

        

      

    

    

    

    
      The Employee’s employment hereunder may be terminated prior to the term
      provided for in Section 3 only under the following circumstances:  
    

    
      6.1       Death.  The
      Employee’s employment shall terminate automatically on the date of his
      death.
    

    
      6.2       Disability.  If a
      Disability (as defined below) occurs and is continuing, the Employee's
      employment shall terminate 180 days after Opexa gives the Employee
      written notice that it intends to terminate his Employment on account of
      that Disability, or on such later date as Opexa specifies in such
      notice. If the Employee resumes the performance of substantially all of
      his duties under this Agreement before the termination becomes
      effective, the notice of intent to terminate shall be deemed to have
      been revoked.  Disability of Employee shall not prevent Opexa from
      making necessary changes during the period of Employee’s Disability to
      conduct its affairs. “Disability” shall mean that the Employee, with
      reasonable accommodation, has been unable to perform his essential
      duties under this Agreement for a period of at least six consecutive
      months as a result of his incapacity due to injury or physical or mental
      illness, any disability as defined in a disability insurance policy
      which provides coverage for the Employee, or any disability as defined
      by the Americans with Disabilities Act of 1990, Public Law 101_336, 42
      U.S.C.A. § 12101 et seq.
    

    
      6.3       Employee’s Voluntary
      Termination.  The Employee may terminate his employment at any time
      upon 30 days’ prior written notice to Opexa.
    

    
      6.4       Termination by Opexa
      Without Cause.  Upon 30 days’ prior written notice to Employee by
      the Board of Directors, Opexa may terminate Employee’s employment
      without Cause (as defined below).  Upon termination without Cause the
      Employee shall be entitled to the following severance:
    

    
    	
           
        	
          
            (i)
          

        	
           
        	
          
            twelve months base salary at the rate in effect (as provided for
            by Section 4 of this Agreement) at the time of such termination,
            to be paid in one lump sum prior to the effective date of
            termination;
          

        
	

        	

        	

        	
           
        
	

        	
          
            (ii)
          

        	

        	
          
            a payment equal to 30% of the average base salary paid to Employee
            during the 12 month period prior to the date of termination, in
            lieu of any potential bonus, to be paid in one lump sum prior to
            the effective date of termination; provided, however, that if
            Employee has been awarded a bonus that has not yet been paid, then
            Employee shall also be paid the amount of such bonus;
          

        
	

        	

        	

        	
           
        
	

        	
          
            (iii)
          

        	

        	
          
            reimbursement of Employee’s COBRA expenses for a 12-month period
            following the effective date of termination, subject to a cap
            equal to Opexa’s standard contribution to health benefits on
            behalf of Employee at the time of termination;
          

        
	

        	

        	

        	
           
        
	

        	
          
            (iv)
          

        	

        	
          
            reimbursement for expenses incurred but not yet paid prior to such
            termination of employment, to be paid prior to the effective date
            of termination;
          

        

    

    

    

    
      
        

        

      

      
        
          Page 4 of 16
        

        
          

        

      

      
        

        

      

    

    

    

    
    	
           
        	
          
            (v)
          

        	
           
        	
          
            compensation in respect of any accrued vacation pay, to be paid
            prior to the effective date of termination;
          

        
	

        	

        	

        	
           
        
	

        	
          
            (vi)
          

        	

        	
          
            any other compensation and benefits, including deferred
            compensation, as may be provided in accordance with the terms and
            provisions of any applicable plans and programs of Opexa;
          

        
	

        	

        	

        	
           
        
	

        	
          
            (vii)
          

        	

        	
          
            the vesting under any and all stock options, restricted shares,
            stock units or other equity-based compensation granted to Employee
            prior to termination shall accelerate as follows:  (i) if the
            effective date of termination is at least two years after
            Employee’s commencement of employment with Opexa, then all vesting
            schedules shall accelerate in full; and (ii) if the effective date
            of termination is less than two years after Employee’s
            commencement of employment with Opexa, then all vesting schedules
            shall accelerate to reflect an additional 12 months’ worth of
            vesting beyond the effective date of termination; and
          

        
	

        	

        	

        	
           
        
	

        	
          
            (viii)
          

        	

        	
          
            Employee shall have no less than 90 days from termination to
            exercise any and all stock options, restricted shares, stock units
            or other equity-based compensation granted to Employee prior to
            termination (or any such longer periods as provided by any
            applicable grant or plan).
          

        

    

    
      6.5       Termination by Opexa
      With Cause.  Opexa may terminate Employee’s employment with Cause as
      set forth herein.  Upon termination with Cause, Employee shall not be
      entitled to any severance described in clauses (i), (ii), (iii) and
      (vii) of Section 6.4, although Employee shall be entitled to the
      arrangements outlined in the other clauses of Section 6.4.  “Cause” as
      used herein shall be limited to: (i) commission of a felony or other
      crime involving moral turpitude; (ii) Employee losing his H-1B visa or
      otherwise failing to maintain an immigration status which allows him to
      work in the United States as contemplated by this Agreement, so long as
      Opexa has not failed to perform such undertakings as are required or
      reasonably appropriate with respect thereto (e.g., as Employee’s
      employer); (iii) failure of Employee to relocate his principal residence
      to the greater Houston area prior to June 1, 2009; or  (iv) any of the
      following so long as Employee is provided with prompt notice and within
      30 days of receipt of such notice, Employee fails to either cure such
      action if such violation is curable or cease such action if such
      cessation will result in no future violation: (x) any material violation
      of the policies and practices established by the Board or a material
      violation of this Agreement; (y) failure to exercise reasonable efforts
      to perform duties consistent with Employee’s position with Opexa as
      reasonably instructed by the Board; or (z) breach of fiduciary duty or
      misconduct that is likely to cause a material adverse effect upon the
      financial condition or business operations of Opexa.
    

    

    

    
      6.6       Defacto Termination.  Opexa
      shall be deemed to have terminated Employee without Cause, unless
      consented to by Employee, upon: (i) any unilateral reduction of
      Employee’s salary or target or minimum bonus arrangement; (ii) any
      material reduction in other benefits available to Employee as provided
      for in Section 5 not generally applicable to all employees;
    

    

    

    
      
        

        

      

      
        
          Page 5 of 16
        

        
          

        

      

      
        

        

      

    

    

    

    
      (iii) any diminution in Employee’s role of President and Chief Executive
      Officer as described in Section 2; or (iv) movement of Employee’s
      principal place of employment to a site that is more than 50 miles from
      Opexa’s current offices (although clause (iv) will not apply until
      Employee has relocated his family to Texas).
    

    
      6.7       Change of Control.
      The effectiveness of a Change of Control (as defined below) shall be
      deemed a termination without Cause.  Upon the effectiveness of a Change
      of Control, Opexa shall pay the Employee:
    

    
    	
           
        	
          
            (i)
          

        	
           
        	
          
            eighteen months base salary at the rate in effect (as provided for
            by Section 4 of this Agreement) at the time of such termination,
            to be paid in one lump sum prior to the effective date of
            termination;
          

        
	

        	

        	

        	
           
        
	

        	
          
            (ii)
          

        	

        	
          
            a payment equal to 45% of the average base salary paid to Employee
            during the 12 month period prior to the date of termination, in
            lieu of any potential bonus, to be paid in one lump sum prior to
            the effective date of termination; provided, however, that if
            Employee has been awarded a bonus that has not yet been paid, then
            Employee shall also be paid the amount of such bonus;
          

        
	

        	

        	

        	
           
        
	

        	
          
            (iii)
          

        	

        	
          
            reimbursement of Employee’s COBRA expenses for an 18-month period
            following the effective date of termination, subject to a cap
            equal to Opexa’s standard contribution to health benefits on
            behalf of Employee at the time of termination;
          

        
	

        	

        	

        	
           
        
	

        	
          
            (iv)
          

        	

        	
          
            reimbursement for expenses incurred but not yet paid prior to such
            termination of employment, to be paid prior to the effective date
            of termination;
          

        
	

        	

        	

        	
           
        
	

        	
          
            (v)
          

        	

        	
          
            compensation in respect of any accrued vacation pay, to be paid
            prior to the effective date of termination;
          

        
	

        	

        	

        	
           
        
	

        	
          
            (vi)
          

        	

        	
          
            any other compensation and benefits, including deferred
            compensation, as may be provided in accordance with the terms and
            provisions of any applicable plans and programs of Opexa;
          

        
	

        	

        	

        	
           
        
	

        	
          
            (ix)
          

        	

        	
          
            the vesting under any and all stock options, restricted shares,
            stock units or other equity-based compensation granted to Employee
            prior to termination shall accelerate in full; and
          

        
	

        	

        	

        	
           
        
	

        	
          
            (x)
          

        	

        	
          
            Employee shall have no less than 90 days from termination to
            exercise any and all stock options, restricted shares, stock units
            or other equity-based compensation granted to Employee prior to
            termination (or any such longer periods as provided by any
            applicable grant or plan).
          

        

    

    
      “Change of Control” as used herein shall mean the occurrence of the
      following events:
    

    
      
        

        

      

      
        
          Page 6 of 16
        

        
          

        

      

      
        

        

      

    

    

    

    
    	
           
        	
          
            (i)
          

        	
           
        	
          
            A sale, transfer, or other disposition by Opexa through a single
            transaction or a series of transactions occurring within a 90-day
            period of securities of Opexa representing Beneficial Ownership
            (as defined below) of fifty (50%) percent or more of the combined
            voting power of Opexa then outstanding to any “Unrelated Person”
            or “Unrelated Persons” acting in concert with one another.  For
            purposes of this definition, the term “Person” shall mean and
            include any individual, partnership, joint venture, association,
            trust corporation, or other entity [including a “group” as
            referred to in Section 13(d)(3) of the Securities Exchange Act of
            1934, as amended (“1934 Act”)].  For purposes of this definition,
            the term “Unrelated Person” shall mean and include any Person
            other than the Employee, Opexa, a wholly-owned subsidiary of
            Opexa, an existing shareholder, or an employee benefit plan of
            Opexa; provided however, a sale of Opexa’s securities in a capital
            raising transaction shall not be a Change of Control.
          

        
	

        	

        	

        	
           
        
	

        	
          
            (ii)
          

        	

        	
          
            A sale, transfer, or other disposition through a single
            transaction or a series of transactions occurring within a 365-day
            period of all or substantially all of the assets of Opexa to an
            Unrelated Person or Unrelated Persons acting in concert with one
            another.
          

        
	

        	

        	

        	
           
        
	

        	
          
            (iii)
          

        	

        	
          
            A change in the ownership of Opexa through a single transaction or
            a series of transactions occurring within a 365-day period such
            that any Unrelated Person or Unrelated Persons acting in concert
            with one another become the “Beneficial Owner,” directly or
            indirectly, of securities of Opexa representing more than fifty
            (50%) percent of the combined voting power of Opexa then
            outstanding.  For purposes of this Agreement, the term “Beneficial
            Owner” shall have the same meaning as given to that term in Rule
            13d-3 promulgated under the 1934 Act, provided that any pledgee of
            voting securities is not deemed to be the Beneficial Owner of the
            securities prior to its acquisition of voting rights with respect
            to the securities.
          

        
	

        	

        	

        	
           
        
	

        	
          
            (iv)
          

        	

        	
          
            Any consolidation or merger of Opexa with or into an Unrelated
            Person, unless (i) immediately after the consolidation or merger
            the holders of the common stock of Opexa immediately prior to the
            consolidation or merger are the beneficial owners of securities of
            the surviving corporation representing more than fifty (50%)
            percent of the combined voting power of the surviving
            corporation’s then outstanding securities.
          

        

    

    
      6.8   Execution of Release Prior to Opexa’s Obligation to
      Effect Termination Payments. Disbursement of any benefits or
      payments to be made to Employee as a result of his termination or a
      Change of Control shall be conditioned upon the Employee first executing
      an agreement (in a form reasonably satisfactory to Employee and his
      counsel) which waives, releases and discharges Opexa, its officers and
      directors from all claims, liabilities, demands and causes of action,
      known or unknown, which Employee may have against any of them as a
      result of Employee’s employment, termination of employment and/or any
      other matter or claim arising during the time of Employee’s employment,
      except for any claims, liabilities, demands and causes of action
      regarding (i) unpaid compensation or other benefits, (ii) any other
      obligations of Opexa set forth in this Agreement or any other written
      agreement or arrangement between Opexa and Employee or (iii) any
      indemnification or expense payment or reimbursement obligations of Opexa.
    

    
      
        

        

      

      
        
          Page 7 of 16
        

        
          

        

      

      
        

        

      

    

    

    

    
      6.9       Section 280G  If any
      payment or benefit Employee would receive pursuant to a Change of
      Control or otherwise (“Payment”) would (i)
      constitute a “parachute payment” within the
      meaning of Section 280G of the Internal Revenue Code (the “Code”), and
      (ii) but for this sentence, be subject to the excise tax imposed by
      Section 4999 of the Code (the “Excise Tax”),
      then such Payment shall be reduced to the Reduced Amount.  The “Reduced
      Amount” shall be either (x) the largest portion of the
      Payment that would result in no portion of the Payment being subject to
      the Excise Tax or (y) the largest portion, up to and including the
      total, of the Payment, whichever amount, after taking into account all
      applicable federal, state and local employment taxes, income taxes, and
      the Excise Tax, results in the Executive’s receipt, on an after-tax
      basis, of the greater amount of the Payment notwithstanding that all or
      some portion of the Payment may be subject to the Excise Tax.  If a
      reduction in payments or benefits constituting “parachute
      payments” is necessary so that the Payment equals the
      Reduced Amount, reduction shall occur in the following order: (1)
      reduction of cash payments (in reverse order of the date otherwise due),
      (2) cancellation of accelerated vesting of equity-based compensation
      awards, and (3) reduction of employee benefits (in reverse order of the
      date otherwise due).  In the event that acceleration of vesting of
      equity-based compensation awards is to be reduced, such acceleration of
      vesting shall be cancelled in the reverse order of the date of grant
      unless Employee elects in writing a different order for
      cancellation.  The accounting firm engaged by Opexa for general audit
      purposes as of the day prior to the effective date of the Change of
      Control shall perform the foregoing calculations.  Opexa shall bear all
      expenses with respect to the determinations by such accounting firm
      required to be made hereunder.  Such accounting firm shall provide its
      calculations, together with detailed supporting documentation, to
      Employee and Opexa within fifteen (15) calendar days after the date on
      which the Executive’s right to a Payment is triggered (if requested at
      that time by Employee and Opexa) or such other time as requested by
      Employee or Opexa.  If such accounting firm determines that no Excise
      Tax is payable with respect to a Payment, either before or after the
      application of the Reduced Amount, it shall furnish Employee and Opexa
      with an opinion reasonably acceptable to Employee that no Excise Tax
      will be imposed with respect to such Payment.  Any good faith
      determinations of the accounting firm made hereunder shall be final,
      binding and conclusive upon Employee and Opexa.
    

    
    	
          
            7.
          

        	
          
            Confidential and Proprietary Information; Documents
          

        

    

    
      7.1       Opexa shall, during the term of Employee’s employment
      hereunder, provide Employee with information deemed secret and
      confidential by Opexa.  Such secret or confidential information or
      know-how of Opexa  (referred to collectively as “Confidential
      Information”) shall include, without limitation, the following:  the
      status and plans for research and development; materials, cells,
      tissues, and other biological samples and specimens; cell banking
      methods, apparatus, and services; pending and planned patent
      applications (until published by the Patent Office); invention
      disclosures; research and technical data and information; methods of
      creating, preparing, and using stem cells and other biological
      materials; license, sublicense, and other agreements relating to
      intellectual property rights; Opexa’s plans; customer or contact
      information; contributor information; strategies, costs, prices, uses,
      applications of products and services; results of and data from
      investigations or experiments; all apparatus, products, processes,
      compositions, samples, formulas, computer programs, pricing policy,
      financial information, and methods of doing business; policy and/or
      procedure manuals, training and recruiting procedures; accounting
      procedures; the status and content of Opexa’s contracts with its
      contributors, clients, and customers; Opexa’s business philosophy, and
      servicing methods and techniques; all at any time used, developed, or
      investigated by Opexa, before or during the Employee’s tenure of
      employment, which are not generally available to the public or which are
      maintained as confidential by Opexa.
    

    
      
        

        

      

      
        
          Page 8 of 16
        

        
          

        

      

      
        

        

      

    

    

    

    
      7.2       Employee recognizes and acknowledges that Employee will have
      access to certain information of Opexa that is confidential and
      proprietary and constitutes valuable and unique property of
      Opexa.  Employee agrees that Employee will not at any time, either
      during or subsequent to Employee’s employment, disclose to others, use,
      copy or permit to be copied, except in pursuance of Employee’s duties on
      behalf of Opexa, its successors, assigns or nominees, any Confidential
      Information or know-how of Opexa (whether or not developed by the
      Employee) without Opexa’s prior written consent.  Employee further
      agrees to maintain in confidence any confidential information of third
      parties received as a result of Employee’s employment with Opexa.
    

    
      7.3       Employee further agrees to deliver to Opexa at the termination
      of Employee’s employment all biological materials correspondence,
      memoranda, notes, records, drawings, sketches, plans, customer, client
      and/or contributor lists, product compositions, or other documents and
      all copies thereof (all of which are hereafter referred to as the
      “Documents”), made, composed or received by Employee, solely or jointly
      with others, and which are in Employee’s possession, custody, or control
      at such date and which are related in any manner to the past, present,
      or anticipated business of Opexa.  In this regard, Employee hereby
      grants and conveys to Opexa all right, title and interest in and to,
      including without limitation, the right to possess, print, copy, and
      sell or otherwise dispose of, any biological materials, reports,
      records, papers summaries, photographs, drawings or other documents, and
      writings, copies, abstracts or summaries thereof, or any other works of
      authorship, which may be prepared by Employee or under Employee’s
      direction or which may come into Employee’s possession in any way during
      the term of Employee’s employment with Opexa which relate in any manner
      to the past, present or anticipated business of Opexa.
    

    
      7.4       Employee further agrees that Employee will not use or disclose
      to other employees of Opexa, during Employee’s employment with Opexa,
      confidential information belonging to Employee’s former employers, or
      any other third parties unless written permission has been given by such
      persons to Opexa to use and/or disclose such information.
    

    
      7.5       In the event of a breach or threatened breach of any of the
      provisions of Section 7, Opexa shall be entitled to seek an injunction
      ordering the return of such Documents and any and all copies thereof and
      restraining Employee from using or disclosing, for Employee’s benefit or
      the benefit of others, in whole or in part, any Confidential
      Information, including but not limited to the Confidential Information
      which such Documents contain, constitute, or embody.  Employee further
      agrees that any breach or threatened breach of any of the provisions of
      Section 7 would cause irreparable injury to Opexa for which it would
      have no adequate remedy at law.  Nothing herein shall be construed as
      prohibiting Opexa from pursuing any other remedies available to it for
      any such breach or threatened breach, including the recovery of damages.
    

    
      
        

        

      

      
        
          Page 9 of 16
        

        
          

        

      

      
        

        

      

    

    

    

    
    	
          
            8.
          

        	
          
            Noncompetition/No-Hire Agreement
          

        

    

    
      8.1       Employee agrees that, from the date hereof until a period of
      twelve months following the date of the termination of Employee’s
      employment (the “Noncompetition Period”), Employee will not directly or
      indirectly, either as an employee, employer, consultant, agent,
      principal, partner, corporate officer, director, or in any other
      individual or representative capacity, engage or participate in any
      “Competitive Business” anywhere in the United States of America (the
      “Noncompetition Territory”).  As used herein, a “Competitive Business”
      is defined as any business developing autologous cellular therapies to
      treat multiple sclerosis (MS).
    

    
      8.2       Employee further agrees that from the date hereof until a
      period of one year following the date of the termination of Employee’s
      employment (the “Nonsolicitation Period”) and within the Noncompetition
      Territory Employee will not, directly or indirectly, either as an
      employee, employer, consultant, agent, principal, partner, corporate
      officer, director, or in any other individual or representative
      capacity, call on, solicit, recruit, or attempt to call on, solicit, or
      recruit any of the employees of Opexa, regardless of whether for the
      benefit of the Employee or for any other person, firm, or corporation.
    

    
      8.3       Employee shall not during the Nonsolicitation Period and
      within the Noncompetition Territory, either directly or indirectly (i)
      make known to any Competitive Business, to the extent such information
      is not public, the names and addresses of any of Opexa’s customers or
      contacts or any other information pertaining to such persons or
      businesses or (ii) call on, solicit, or take away, or attempt to call
      on, solicit or take away, in each instance for any Competitive Business,
      any of the customers of Opexa with whom Employee first became acquainted
      during Employee’s association with Opexa.
    

    
      8.4       Employee agrees that the restraints created by the covenants
      in Section 8 are no greater than necessary to protect Opexa’s legitimate
      interests.  Furthermore, Employee agrees that such covenants of Section
      8 do not hinder, or otherwise cause hardship to Employee in finding and
      performing employment elsewhere upon termination of this
      Agreement.  Similarly, Employee agrees that Opexa’s need for the
      protection afforded by the covenants of Section 8 is not outweighed by
      either the hardship to Employee or any injury likely to the public.
    

    
      8.5       Employee agrees that this Section 8 is ancillary to this
      Agreement, and independent of any other agreement related to Employee’s
      employment with Opexa, and Employee acknowledges that the consideration
      given by Opexa for this Agreement includes Opexa’s agreement to provide
      to the Employee access to the Confidential Information, as well as
      employment.  Further, the existence of any claim or cause of action of
      Employee against Opexa or any officer, director, or employee of Opexa,
      whether predicated on this Agreement or otherwise, shall not constitute
      a defense to the enforcement by Opexa of Employee’s covenants contained
      in this Agreement.  In addition, this Section 8 shall continue to be
      binding upon Employee in accordance with its terms, notwithstanding the
      termination of Employee’s employment.
    

    
      8.6       Employee agrees that Employee’s breach or violation, or threat
      thereof, of this covenant not to compete shall entitle Opexa, as a
      matter of right, to seek an injunction without the necessity of posting
      bond, issued by any court of competent jurisdiction, restraining any
      further or continued breach or violation of this covenant.
    

    
      
        

        

      

      
        
          Page 10 of 16
        

        
          

        

      

      
        

        

      

    

    

    

    
      Such right to an injunction shall be cumulative and in addition to, and
      not in lieu of, any other remedies to which Opexa may show itself justly
      entitled.  Further, during any period in which Employee is in breach of
      this covenant not to compete, the time period of this covenant shall be
      extended for an amount of time that Employee is in breach.
    

    
    	
          
            9.
          

        	
          
            Inventions and Other Intellectual Property
          

        

    

    
      9.1       Employee agrees to hold in complete trust for the benefit of
      Opexa, and to disclose promptly and fully to Opexa in writing, and
      hereby assigns, and binds Employee’s heirs, executors, administrators,
      and all legal representatives to assign, to Opexa any and all
      inventions, discoveries, ideas, concepts, improvements, copyrightable
      works, biological materials, and other developments (all of the above
      are collectively referred to as the “Developments”) conceived, made,
      discovered or developed by him, solely or jointly with others, during
      Employee’s employment by Opexa, whether during or outside of usual
      working hours and whether on Opexa’s premises or not, which relate in
      any manner to the past, present or anticipated business of Opexa.  Any
      and all such Developments shall be the sole and exclusive property of
      Opexa, whether patentable, copyrightable, or neither, and Employee
      agrees that Employee will assist and fully cooperate in every way, at
      Opexa’s expense, in securing, maintaining, and enforcing, for the
      benefit of Opexa or its designee, patents, copyrights or other types of
      proprietary or intellectual property protection for such Developments in
      any and all countries.  Employee acknowledges and agrees that any and
      all such Developments conceived, created, or authored by him within the
      scope of Employee’s employment is a “work made for hire,” as defined by
      the federal copyright laws, and therefore all copyrights in and to such
      works are and will be owned by Opexa.  To the extent that Employee
      authors any copyrightable work in any medium during the Term of this
      Agreement which relates or pertains to Opexa or its operations or
      activities and which was not prepared within the scope of Employee’s
      employment, Employee hereby assigns all right, title, and interest,
      including but not limited to all rights of copyright, in and to such
      works to Opexa.  Within six months following the termination of
      Employee’s employment, and without limiting the generality of the
      foregoing, any Development of the Employee relating to any Opexa subject
      matter on which Employee worked or was informed during Employee’s
      employment by Opexa shall be conclusively presumed to have been
      conceived and made prior to the termination of Employee’s employment
      (unless the Employee clearly proves that such Development was conceived
      and made following the termination of Employee’s employment), and shall
      accordingly belong, and be assigned, to Opexa and shall be subject to
      this Agreement.
    

    
      9.2       Without limiting the foregoing, Employee agrees at the request
      of Opexa (but without additional compensation from Opexa during
      Employee’s employment by Opexa) to execute any and all papers and
      perform all lawful acts which Opexa deems necessary for the preparation,
      filing, prosecution, and maintenance of applications for United States
      and foreign letters patent, or for United States and foreign copyrights,
      on the Developments, and to execute such instruments as are necessary or
      convenient to assign to Opexa, its successors, assigns or nominees, all
      of the Employee’s right, title, and interest in the Developments and the
      like, so as to establish, maintain or perfect, in Opexa, its successors,
      assigns or nominees, the entire right, title, and interest to the
      Developments, and also to execute any instruments necessary or which
      Opexa may deem desirable it connection with any continuation, renewal or
      reissue thereof, or in the conduct of any proceedings or litigation in
      regard thereto.
    

    
      
        

        

      

      
        
          Page 11 of 16
        

        
          

        

      

      
        

        

      

    

    

    

    
      9.3       All expenses incurred by the Employee by reason of the
      performance of any of the obligations set forth in this Section 9 on
      Inventions shall be borne by Opexa.  Should the Employee’s assistance be
      requested by Opexa after termination of employment, Opexa would
      compensate the Employee at a reasonable rate.
    

    
    	
          
            10.
          

        	
          
            Conflicts of Interest
          

        

    

    
      10.1      In keeping with Employee’s fiduciary duties to Opexa, Employee
      agrees that Employee shall not during the term of his employment with
      Opexa hereunder, directly or indirectly, become knowingly involved in
      any conflict of interest with reference to any transaction or
      opportunity including Opexa (“Conflict”), or upon discovery thereof,
      allow such a Conflict to continue. Moreover, Employee agrees that
      Employee shall promptly disclose to the Board of Opexa any facts known
      to Employee which might involve any reasonable possibility of a
      Conflict.  Employee shall maintain the highest standards of conduct, and
      shall not do anything likely to injure the reputation or goodwill of
      Opexa, or embarrass or otherwise generate adverse publicity for or bring
      unwanted attention to Opexa.
    

    
      10.2      It is agreed that any direct or indirect interest in,
      connection with, or benefit from any outside activities, particularly
      commercial activities, which interest might in any way adversely affect
      Opexa or any of its subsidiaries or affiliates, involves a possible
      Conflict.  Circumstances in which a Conflict on the part of Employee
      would or might arise, and which should be reported immediately by
      Employee to an officer of Opexa, include, without limitation, the
      following: (a) ownership of a material interest in, acting in any
      capacity for, or accepting directly or indirectly any payments, services
      or loans from a supplier, contractor, subcontractor, customer or other
      entity with which Opexa does business; (b) misuse of information or
      facilities to which Employee has access in a manner which will be
      detrimental to Opexa’s interest; (c) disclosure or other misuse of
      information of any kind obtained through the Employee’s connection with
      Opexa; (d) acquiring or trading in, directly or indirectly, other
      properties or interests connected with the design, manufacture or
      marketing of products designed, manufactured or marketed by Opexa; (e)
      the appropriation to the Employee or the diversion to others, directly
      or indirectly, of any opportunity in which it is known or could
      reasonably be anticipated that Opexa would be interested; and (f) the
      ownership, directly or indirectly, of a material interest in an
      enterprise in competition with Opexa or its dealers and distributors or
      acting as a director, officer, partner, consultant, employee or agent of
      any enterprise which is in competition with Opexa or its dealers or
      distributors.
    

    
    	
          
            11.
          

        	
          
            Activities Associated With Maintenance of Professional Status
            and Community Activities
          

        

    

    
      Opexa will reimburse Employee for the costs of activities associated
      with the maintenance of the Employee’s professional status, including
      the payment of licensing fees and required continuing education,
      expenses for professional/network meetings, as well as community
      activities.
    

    
      
        

        

      

      
        
          Page 12 of 16
        

        
          

        

      

      
        

        

      

    

    

    

    
    	
          
            12.
          

        	
          
            Prior Discoveries
          

        

    

    
      Employee does not have any unpatented inventions and discoveries made or
      conceived by Employee prior to Employee’s employment with Opexa and
      which are to be excluded from this Agreement.  
    

    
    	
          
            13.
          

        	
          
            Publicity
          

        

    

    
      13.1      Employee agrees that Opexa may use, and hereby grants Opexa
      the nonexclusive and worldwide right to use, Employee’s name, picture,
      likeness, photograph, signature, or any other attribute of Employee’s
      persona (all of such attributes are hereafter collectively referred to
      as “Persona”) in any media for any advertising, publicity or other
      purpose at any time, either during or subsequent to Employee’s
      employment by Opexa.  Employee agrees that such use of Employee’s
      Persona will not result in any invasion or violation of any privacy or
      property rights Employee may have; and Employee agrees that Employee
      will receive no additional compensation for the use of Employee’s
      Persona.  Employee further agrees that any negatives, prints or other
      material for printing or reproduction purposes prepared in connection
      with the use of Employee’s Persona by Opexa shall be and are the sole
      property of Opexa.
    

    
      13.2      Employee further agrees that at no time during Employee’s
      employment by Opexa shall Employee write, author, publish, distribute,
      or cause to be published or distributed any pictorial, graphic, or
      literary works, such as but without limitation, books, articles,
      stories, or pamphlets, in any medium of expression, tangible or
      intangible, that relate, describe, or pertain in any way to Opexa or to
      the operations, activities, or employees of Opexa without first
      obtaining the prior written consent of the Board of Directors of Opexa
      to do so and also the prior written approval of the contents of any such
      work by the Board of Directors of Opexa.
    

    
    	
          
            14.
          

        	
          
            Indemnification
          

        

    

    
      14.1      Agreement to Indemnify.  Opexa
      shall, to the fullest extent permitted by the Texas Business Corporation
      Act, as amended, indemnify Employee if he is or was involved in any
      manner (including, but not limited to, as a party or a witness) in any
      threatened, pending, or completed investigation, claim, action, suit, or
      proceeding, whether civil, criminal, administrative, or investigative
      (including, but not limited to, any action, suit, or proceeding brought
      by or in the right of the corporation to procure a judgment in its
      favor) (a “Proceeding”) by reason of the fact that the Employee is or
      was a director, officer, or employee of Opexa, against all liabilities
      and expenses actually and reasonably incurred by Employee in connection
      with such proceeding. Such indemnification shall include the right to
      receive payment of any expenses incurred by Employee in connection with
      any investigation, claim, action, suit, or proceeding, as and when
      incurred, consistent with the provisions of the Texas Business
      Corporation Act, as amended.  Notwithstanding the above, Employee shall
      not be indemnified in an instance to the extent (and then only to the
      extent) such indemnification by Opexa in such instance would be
      prohibited by applicable law.  The provisions of this Section 14.1 shall
      not limit, and shall be in addition to, any other obligation of Opexa to
      indemnify Employee (including, without limitation, pursuant to any
      provision of Opexa’s Articles of Incorporation or Bylaws, insurance
      maintained by Opexa, other agreements with Opexa, or otherwise).
    

    
      
        

        

      

      
        
          Page 13 of 16
        

        
          

        

      

      
        

        

      

    

    

    

    
      14.2      Further Arrangements.  In
      addition to the provisions of Section 14.1, to the extent that Opexa
      offers any further or additional indemnification arrangements to any of
      its directors or executive officers, such arrangements shall be made
      available promptly to Employee.
    

    
    	
          
            15.
          

        	
          
            Remedies
          

        

    

    
      Employee and Opexa agree that, because damages at law for any breach or
      nonperformance of this Agreement, while recoverable, are and will be
      inadequate, each party may seek to have this Agreement enforced in
      equity by specific performance, injunction, accounting or otherwise.
    

    
    	
          
            16.
          

        	
          
            Miscellaneous
          

        

    

    
      16.1      This Agreement is made and entered into as of the date hereof
      and the rights and obligations of the parties hereto shall be binding
      upon the heirs and legal representatives of the Employee and the
      successors and assigns of Opexa.  This Agreement may be assigned by
      Opexa but is personal to the Employee and no rights, duties, and
      obligations of Employee hereunder may be assigned.
    

    
      16.2      No waiver or non-action with respect to any breach by the
      other party of any provision of this Agreement, nor the waiver or
      non-action with respect to any breach of the provisions of similar
      agreements with other employees shall be construed to be a waiver of any
      succeeding breach of such provision, or as a waiver of the provision
      itself.
    

    
      16.3      Should any portions hereof be held to be invalid or wholly or
      partially unenforceable, such holding shall not invalidate or void the
      remainder of this Agreement.  The portions held to be invalid or
      unenforceable shall be revised and reduced in scope so as to be valid
      and enforceable, or, if such is not possible, then such portions shall
      be deemed to have been wholly excluded with the same force and effect as
      if it had never been included herein.
    

    
      16.4      Each party’s obligations under this Agreement shall survive
      the termination, for whatever reason, of Employee’s employment.
    

    
      16.5      This Agreement supersedes, replaces and merges any and all
      prior and contemporaneous understandings, representations, agreements
      and discussions relating to the same or similar subject matter as that
      of this Agreement between Employee and Opexa and constitutes the sole
      and entire agreement between the Employee and Opexa with respect to the
      subject matter of this Agreement.
    

    
      16.6      The laws of the State of Texas, excluding any conflicts of law
      rule or principle that might otherwise refer to the substantive law of
      another jurisdiction, will govern the interpretation, validity and
      effect of this Agreement without regard to the place of execution or the
      place for performance thereof, and Opexa and Employee agree that the
      appropriate courts in Montgomery County, Texas, shall have personal
      jurisdiction and venue over Opexa and Employee to hear all disputes
      arising under this Agreement.
    

    
      
        

        

      

      
        
          Page 14 of 16
        

        
          

        

      

      
        

        

      

    

    

    

    
      16.7      All notices and other communications required or permitted
      hereunder or necessary or convenient in connection herewith shall be in
      writing and shall be deemed to have been given when mailed by registered
      mail or certified mail, return receipt requested, as follows:
    

    
    	
           
        	
          If to Opexa, to:
        
	

        	
           
        
	

        	
          2635 N. Crescent Ridge Drive
        
	

        	
          The Woodlands, TX 77381
        
	

        	
          Attn: Scott Seaman
        
	

        	
          Attn: Lynne Hohlfeld
        
	

        	
           
        
	

        	
          If to Employee, to:
        
	

        	
           
        
	

        	
          Mr. Neil Warma
        
	

        	
          1084 Mahogany Road
        
	

        	
          London, Ontario N6H 2W5
        

    

    
      or to such other addresses as either party may designate by notice to
      the other party hereto in the manner specified in this section 16.
    

    
      16.8      This Agreement may not be changed or terminated orally, and no
      change, termination or waiver of this Agreement or of any of the
      provisions herein contained shall be binding unless made in writing and
      signed by both parties, and in the case of Opexa, by an authorized
      officer of Opexa.
    

    
      

    

    
    	
          
            OPEXA THERAPEUTICS, INC.
          

        	
           
        	
          
            EMPLOYEE
          

        
	

        	
           
        	

        	

        	

        	

        
	

        	

        	

        	

        	

        	
           
        
	
          By:
        	
           
        	
          /s/Lynne Hohlfeld
        	

        	
          By:
        	
          
            /s/ Neil Warma
          

        
	

        	

        	
          Lynne Hohlfeld
        	

        	

        	
          Neil Warma
        
	

        	

        	
          Chief Financial Officer
        	

        	

        	

        

    

    

    

    
      
        

        

      

      
        
          Page 15 of 16
        

        
          

        

      

      
        

        

      

    

    

    

    
      EXHIBIT A
    

    
      Certain Other Activities
    

    
      

    

    
    	
          1)
        	
          
            Chairman of SAB for Genome Canada Project: “Structural and
            Functional Annotation of
          

        
	

        	
          the Human Genome for Disease Study”
        
	

        	
          i)
        	
          From Sept 2007 – Sept 2010
        
	

        	

        	
           
        
	
          2)
        	
          
            Member of London Economic Development Board
          

        
	

        	
          i)
        	
          Will terminate by Sept 2008
        
	

        	

        	
           
        
	
          3)
        	
          Advisory Board Member Medtrode Inc. (medical device company
          developing electrodes
        
	

        	
          for neurostimulation)
        
	

        	
          i)
        	
          Dec 2007 – Dec 2009
        
	

        	

        	
           
        
	
          4)
        	
          BioteCanada Emerging Company Advisory Board
        
	

        	
          i)
        	
          Will terminate by Jul 2008
        

    

    

    

    

    

    
      Page 16 of 16

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