Document:

exv10w3

EXHIBIT 10.3

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     This Amended and Restated Employment Agreement (this “Agreement”) dated as of December 9, 2008
(the “Effective Date”) is by and between United Fuel & Energy Corporation, a Nevada corporation
(“Employer”), and Joseph M. Juliano (“Employee” and, together with Employer, the “Parties” and each
individually, a “Party”).

RECITALS:

     A. Employer and Employee are each a party to that certain Employment Agreement (the “Original
Agreement”) dated March 30, 2008 (the “Commencement Date”).

     B. This Agreement is intended to amend and restate the Original Agreement as of the Effective
Date. Only the terms of the Original Agreement are applicable to the employment relationship
between the Employer and the Employee prior to the Effective Date.

AGREEMENT:

     In consideration of the premises and the mutual promises herein made, and in consideration of
the representations, warranties, and covenants contained herein, each Party agrees as follows:

     1. Employment Term. This Agreement will remain in effect from the Commencement Date and shall
end on the date that is the first anniversary of the Commencement Date unless this Agreement is
earlier terminated in accordance with its express terms (the “Initial Term”); provided, however,
that upon the expiration of the Initial Term, and on each anniversary of the Commencement Date
thereafter, the term of this Agreement shall automatically extend for an additional one-year term
(each a “Renewal Term,” and together with the Initial Term, the “Employment Term”) unless (a)
either Party gives the other Party three (3) months’ notice of its desire not to extend this
Agreement prior to the expiration of the Initial Term or Renewal Term, as applicable, or (b) this
Agreement is earlier terminated in accordance with its express terms.

     2. Responsibilities and Authority. Employer hereby employs Employee to serve as its President
and Chief Operating Officer. In such capacity, Employee will have such duties and responsibilities
as determined by Employer’s Board of Directors and Chief Executive Officer consistent with the
Employer’s Bylaws. If requested by Employer, Employee will serve as an officer or director of any
subsidiary of Employer without additional compensation.

     3. Acceptance of Employment. Employee accepts employment by Employer on the terms and
conditions herein provided and agrees, subject to the terms of this Agreement, to devote all of
Employee’s full business time to Employer’s affairs. Employee shall not during the Employment Term
engage, directly or indirectly, in any other business activity (whether or not pursued for
pecuniary advantage) which might interfere with Employee’s duties and responsibilities hereunder.

     4. Compensation and Benefits. As compensation for Employee’s services hereunder, Employee
will be entitled to the following:

     4.1 Base Salary. From and after the Commencement Date, Employee will receive a base salary at
the rate of $225,000 per annum (“Base Salary”). Beginning January 1, 2009,

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Employee’s Base Salary will be increased to the rate of $255,000 per annum. The Base Salary
will be paid in substantially equal installments in accordance with Employer’s regular payroll
practices, as in effect from time to time, and subject to all appropriate withholdings.

     4.2 Bonus. Employee shall be eligible to receive a cash bonus on an annual basis in the event
that Employee meets certain performance criteria established in advance in writing by the
Compensation Committee of Employer’s Board of Directors (the “Compensation Committee”) for such
year (“Performance Criteria”). Additional bonuses may be paid to Employee at such times and in
such amounts as may be determined in the sole discretion of the Compensation Committee. If
awarded, payment of all bonuses will be subject to all appropriate withholdings.

     4.3 Equity Incentive Grants.

     (a) Original Stock Options. Pursuant to the terms of the Original Agreement, Employee
received a one-time grant of options to purchase up to 300,000 shares of common stock of
Employer at an exercise price equal to $1.20 per share (the “Original Stock Options”). The
Original Stock Options were granted pursuant to the terms and conditions of the Employer’s
2005 Stock Incentive Plan, and were evidenced by a separate stock option agreements between
the Employer and the Employee. The Original Stock Options had a term of ten years from the
date of grant, and vested and became exercisable in twelve equal quarterly installments
beginning on June 30, 2008. As consideration for the Employer’s new equity incentive grants
described below in Sections 4.3(b) and 4.3(c), Employee hereby agrees to the
immediate cancellation of all Original Stock Options.

     (b) New Stock Options. As will be evidenced by a separate stock option agreement in
substantially the form attached hereto as Exhibit A, the Employer shall grant to
Employee an incentive stock option on the Effective Date or as soon as administratively
feasible thereafter, to purchase 150,000 shares of the Employer’s common stock pursuant to
the Employer’s 2005 Equity Incentive Plan (the “2005 Plan”). The option will vest in twelve
(12) equal quarterly installments with an exercise price equal to the Fair Market Value of
the Employer’s common stock (as defined in the 2005 Plan) on the Effective Date or the
actual date of grant if the grant occurs after the Effective Date.

     (c) Restricted Stock. As will be evidenced by a separate restricted stock agreement
in substantially the form attached hereto as Exhibit B, the Employer shall grant to
Employee pursuant to the 2005 Plan 150,000 shares of the Employer’s common stock on the
Effective Date or as soon as administratively feasible thereafter. The restricted stock
shall be subject to forfeiture, and will vest in twelve (12) equal quarterly installments.

     4.4 Benefits. Employee will be entitled to receive the benefits specified on Exhibit
A (“Benefits”).

     4.5 Expense Reimbursement. Employer will promptly reimburse Employee for all authorized
expenses reasonably incurred or paid by Employee in connection with the performance of Employee’s
services under this Agreement upon presentation of expense statements or vouchers and such other
supporting information as Employer may from time to time reasonably require or request
(“Reimbursable Expenses”).

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     5. Termination; Payments upon Termination. This Agreement may be terminated upon the
following terms:

     5.1 Termination Upon Death. If Employee should die during the Employment Term, this Agreement
will terminate on the date of death. All Base Salary through such date and any amounts owed for
Reimbursable Expenses that Employee incurs through such date, as well as any previously awarded but
unpaid bonuses, will be paid to Employee’s designated beneficiary as promptly as practicable
following the date of death. All Benefits will, unless otherwise expressly set forth on
Exhibit A, otherwise provided by Employer policy applicable to its employees generally, or
otherwise required by law, terminate on the date of death. In the event of Employee’s death, the
stock option described in Section 4.3(b) shall fully vest and become exercisable by
Employee’s legal representative or authorized assignee for a period of no more than six (6) months
following Employee’s date of death and the restrictions shall immediately lapse with respect to the
restricted stock grant described in Section 4.3(c) above.

     5.2 Termination Upon Disability. This Agreement shall automatically terminate upon the
Employee’s Disability (as defined below). The Base Salary will continue to be paid to Employee
through the date of Disability, and any amounts owed for Reimbursable Expenses that Employee incurs
through such date and any previously awarded but unpaid bonuses will be paid as promptly as
practicable following such date. In such event of Employee’s Disability, Employer will also
continue to pay Employee the Base Salary in effect at the time of such Disability for a period of 6
months following the date of Disability. All Benefits will, unless otherwise expressly set forth
on Exhibit A, otherwise provided by Employer policy applicable to its employees generally,
or otherwise required by law, terminate on the date of termination. In the event of Employee’s
Disability, the stock option described above in Section 4.3(b) shall fully vest and become
exercisable by Employee for a period of no more than six (6) months following Employee’s date of
Disability and the restrictions shall immediately lapse with respect to the restricted stock grant
described in Section 4.3(c) above. “Disability” means that the (i) Employee is unable to
engage in any substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months; (ii) Employee is, by reason of any medically
determinable physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, receiving income replacement
benefits for a period of not less than three months under an accident and health plan covering
employee’s of Employer; (iii) Employee is determined to be totally disabled by the Social Security
Administration; or (iv) Employee is determined to be disabled in accordance with the disability
insurance program under which the Employer has provided disability insurance to the Employee,
provided that the definition of disability applied under such disability insurance program complies
with the requirements of Treasury Regulation Section 1.409A-3(i)(4). If a disagreement arises
between Employee and Employer as to whether Employee is suffering from Disability, such issue will
be determined by a physician designated by Employer. Nothing in this Paragraph relieves the
Employer of any of its obligations of reasonable accommodation under the Americans with
Disabilities Act.

     5.3 Termination by Employer With Cause. Employer will be entitled to terminate Employee’s
employment at any time for Cause. The Base Salary will continue to be paid to Employee through the
date of termination, and any amounts owed for Reimbursable Expenses that Employee incurs through
such date will be paid to Employee following termination, subject to Employer’s right to offset
against such sum the amount of any damages which Employer may suffer as a result of the actions of
Employee constituting Cause. All Benefits will, unless

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otherwise required by law, terminate on the date of termination. “Cause” will constitute any
one of the following:

     (a) Employee’s continued failure to perform substantially Employee’s duties and
responsibilities (other than a failure resulting from a Disability), provided that the
Employer has previously addressed these failures with Employee and has given Employee a
reasonable opportunity to cure;

     (b) Employee engaging in willful, reckless, or grossly negligent misconduct that is
materially injurious to Employer, monetarily or otherwise;

     (c) Employee’s conviction of, plea of guilty or nolo contender to, or the issuance of
an indictment or an information by a grand jury or prosecutor, as applicable, for, a felony
or a crime involving moral turpitude;

     (d) Employee commits an act of fraud, misappropriation, or personal dishonesty (that is
not de minimus); and

     (e) Employee commits a breach of this Agreement and fails to cure such breach within
thirty (30) days from the date that Employer gives notice thereof to Employee identifying
the provision of this Agreement that Employer has determined has been breached.

     5.4 Termination by Employer Without Cause. Employer may at any time terminate Employee’s
employment without Cause. In such event, the Base Salary will continue to be paid through such the
date of termination, and any amounts owed for Reimbursable Expenses that Employee incurs through
such date and any previously awarded but unpaid bonus will be paid to Employee promptly following
termination. Employer will also continue to pay Employee, as severance, the Base Salary for the
remaining Employment Term in substantially equal installments in accordance with Employer’s regular
payroll practices, as in effect from time to time, and subject to all appropriate withholdings.
All Benefits will, unless otherwise expressly set forth on Exhibit A or provided by
Employer policy applicable to its employees generally or otherwise required by law, terminate on
the date of termination. In the event that the Employee is involuntarily terminated without Cause,
the stock option described above in Section 4.3(b) shall remain exercisable by Employee for
a period of no more than twelve (12) months following the date of termination to the extent such
option was vested and exercisable as of the date of termination.

     5.5 Resignation for Good Reason. Employee may terminate this Agreement for Good Reason (as
defined below) by giving written notice of such termination, which termination will become
effective on the thirtieth (30th) day following receipt by the Employer. As used in this
Agreement, “Good Reason” shall mean any one of the following: (i) a material reduction in
Employee’s Base Salary and/or a material failure to provide the benefits required in Section
4; (ii) any other action or inaction that constitutes a material breach by the Employer of this
Agreement; (iii) a material diminution in Employee’s authority, duties or responsibilities such
that they are materially inconsistent with his position as Chief Operating Officer of the Employer;
(iv) relocation of the Employer’s headquarters to a location more than thirty (30) miles from 1800
W. Katella Avenue in Orange, California; and (v) in the event of a Change in Control (as defined
below), failure of the successor to the Employer or to the Employer’s business (A) to offer
Employee the position of President and Chief Operating Officer of the successor company, reporting
only to the board of directors and/or the chief executive officer of the successor to the

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Employer, with duties, responsibilities, compensation and benefits materially similar to those
enjoyed by Employee immediately preceding the Change in Control, or (B) to assume the obligations
of the Employer under and to become a party to this Agreement, provided that no termination for
Good Reason shall be effective until Employee has given the Employer written notice (pursuant to
Section 8(g) below) within sixty (60) days of the initial occurrence of any of the
foregoing specifying the event or condition constituting the Good Reason and the specific
reasonable cure requested by Employee, the Employer has failed to cure the occurrence within thirty
(30) days of receiving written notice from Employee, and Employee resigns within six (6) months
following the initial occurrence. In the event of a termination for Good Reason, the Base Salary
will continue to be paid through such the date of termination, and any amounts owed for
Reimbursable Expenses that Employee incurs through such date and any previously awarded but unpaid
bonus will be paid to Employee promptly following termination. Employer will also continue to pay
Employee, as severance, the Base Salary for the remaining Employment Term in substantially equal
installments in accordance with Employer’s regular payroll practices, as in effect from time to
time, and subject to all appropriate withholdings. All Benefits will, unless otherwise expressly
set forth on Exhibit A or provided by Employer policy applicable to its employees generally
or otherwise required by law, terminate on the date of termination. In the event that the Employee
terminates this Agreement for Good Reason, the stock option described above in Section
4.3(b) shall remain exercisable by Employee for a period of no more than twelve (12) months
following the date of termination to the extent such option was vested and exercisable as of the
date of termination.

     As used in this Agreement, a “Change in Control” shall mean any of the following events:

     (1) the acquisition by any Group or Person (as such terms are defined in Section 13(d)
or 14(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”)), other than
(A) a trustee or other fiduciary holding securities of the Employer under an employee
benefit plan of the Employer, (B) an entity in which the Employer directly or indirectly
beneficially owns fifty percent (50%) or more of the voting securities of such entity (an
“Affiliate”), or (C) Frank Greinke or an affiliate of Frank Greinke, of any securities of
the Employer, immediately after which such Group or Person has beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the 1934 Act) of more than fifty percent (50%)
of (X) the outstanding shares of Common Stock or (Y) the combined voting power of the
Employer’s then outstanding securities entitled to vote generally in the election of
directors;

     (2) the Employer (and/or its subsidiaries) is a party to a merger or consolidation with
a Person, or series or related transactions, with a Person other than an Affiliate, which
results in the holders of voting securities of the Employer outstanding immediately before
such merger or consolidation failing to continue to represent (either by remaining
outstanding or being converted into voting securities of the surviving entity) more than
fifty percent (50%) of the combined voting power of the then outstanding voting securities
of the corporation resulting from such merger or consolidation; or

     (3) all or substantially all of the assets of the Employer and its subsidiaries are, in
any transaction or series of transactions, sold or otherwise disposed of (or consummation of
any transaction, or series of related transactions, having similar effect , other than to an
Affiliate;

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     provided, however, that in no event shall a “Change in Control” be deemed to have occurred
for purposes of this Agreement solely because the Employer engages in an internal
reorganization, which may include a transfer of assets to, or a merger or consolidation
with, one or more Affiliates.

     5.6 Voluntary Resignation without Good Reason. In the event that Employee resigns without
Good Reason as defined above in Section 5.5, Employee will be entitled only to the Base
Salary to be paid to Employee through the date of termination, and any amounts owed for
Reimbursable Expenses that Employee incurs through such date. The Employer will have no further
obligation to pay any compensation of any kind (including without limitation any bonus or portion
of a bonus that otherwise may have become due and payable to Employee with respect to the year in
which such termination date occurs), or severance payments of any kind.

     5.7 Effect of Termination. Except as expressly provided in this Section 5 and except
for the obligations set forth in Sections 6 and 7, all further obligations of the
Parties under this Agreement will terminate upon termination of Employee’s employment with
Employer.

     6. Restrictive Covenants. Employee hereby acknowledges that, as a result of Employee’s
employment by Employer hereunder, Employee will receive special training and education with respect
to the operations of Employer’s and/or Employer’s affiliates’ businesses and other related matters,
and will obtain access to such persons’ confidential information and business and professional
contacts. In consideration of such special and unique opportunities afforded by Employer and its
affiliates to Employee as a result of Employee’s employment, the Employee hereby agrees that
Employee will not:

     6.1 From the Commencement Date until one year after Employer no longer employs Employee (the
date on which such person no longer employs Employee is hereinafter referred to as the “Employment
Termination Date”), directly or indirectly, alone or as a partner, joint venturer, officer,
director, member, employee, consultant, agent, independent contractor, or equity interest holder
of, or lender to, any person or business, engage in the business of distributing gasoline, diesel,
propane or lubricant products in any state of the United States where the Employer or its
subsidiaries or affiliates do business as of the Employment Termination Date, other than of, by or
through SC Fuels or any other business owned or operated by Frank P. Greinke or his family members
or heirs by will or intestate succession.

     6.2 From the Commencement Date until one year after the Employment Termination Date, directly
or indirectly (i) induce any person that is a customer of Employer to enter into any contract with
or otherwise patronize any business directly or indirectly in competition with the Employer; (ii)
request or advise any person who is a customer or vendor of Employer to withdraw, curtail, or
cancel any such customer’s or vendor’s business with Employer.

     6.3 From the Commencement Date until six months after the Employment Termination Date,
directly or indirectly employ, or knowingly permit any affiliate of Employee to employ, any person
whom Employer employed within the prior six month period.

     6.4 From the Commencement Date until one year after the Employment Termination Date, directly
or indirectly (i) solicit for employment or other similar relationship with Employee, any of
Employee’s affiliates or any other person, any employee of Employer or any person who was an
employee of Employer within the six month period immediately preceding such solicitation of
employment, other than such person (A) whose employment was terminated by the applicable person, or
(B) who independently responded to a general solicitation for

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employment by Employee or Employee’s affiliate; or (ii) induce, or attempt to induce, any
employee of Employer to terminate such employee’s employment relationship with such person.

     6.5 Employee will not use for Employee’s personal benefit, disclose, communicate, divulge to,
or use for the direct or indirect benefit of any person other than Employer any of Employer’s
Confidential Information. This Section 6.5 will apply during and after the period when
Employee is an employee of Employer and will be in addition to (and not a limitation of) any
legally applicable protections of Employer’s interest in confidential information, trade secrets
and the like. “Confidential Information” includes (a) any information concerning the businesses and
affairs of the Employer or its subsidiaries or affiliates transferred or transmitted in writing,
orally, visually, electronically or by any other means, whether prior to, on or after the date
hereof, (b) information provided to you by third parties under circumstances where you have an
obligation not to disclose that information, and (c) any memoranda, reports, analyses, extracts or
notes you produce that are based on, reflect or contain any of the Confidential Information.
Confidential Information does not include any information that is or becomes generally available to
the public other than as a result of a disclosure by you in violation of this Agreement.

     6.6 Any and all writings, inventions, improvements, processes, procedures advances,
discoveries, works of authorship, and/or techniques (“Developments”) that Employee may make,
conceive, discover, or develop, whether or not patentable, copyrightable, or protectable under mask
works legislation or trademark laws, either solely or jointly with any other person, at any time
during Employee’s employment with the Employer, whether or not during working hours and whether or
not at the request or upon the suggestion of Employer that relate to or are useful in connection
with any business now or hereafter carried on or contemplated by Employer, including developments
or expansions of its present fields of operations, will be Employer’s sole and exclusive property.
Employee hereby assigns to Employer and/or Employer’s nominees all of Employee’s right, title, and
interest in any Developments, and hereby irrevocably designates and appoints Employer and each of
Employer’s duly authorized officers and agents as Employee’s agent and attorney-in-fact to act for
and in Employee’s behalf and stead to execute and file any document and to do all other lawfully
permitted acts to further the prosecution, issuance, and enforcement of Developments. Employee
will make full disclosure to Employer of all such Developments and will do everything necessary or
desirable to vest the absolute title thereto in Employer. Employee will write and prepare all
specifications and procedures regarding such Developments and otherwise aid and assist Employer,
any Acquired Entity, or any of their affiliates so that Employer, such Acquired Entity, or such
affiliate, as the case may be, can prepare and present applications for copyright, letters patent
therefor and can secure such copyright, letters patent, mask works, or trademark registrations,
wherever possible, as well as reissues, renewals, and extensions thereof, and can obtain the record
title to such copyright, letters patent, mask works, or trademark registrations so that Employer
and/or its nominees will be the sole and absolute owner(s) thereof in all countries in which it may
desire to have copyright, patent, mask work, or trademark protection. Employee will not be
entitled to any additional or special compensation or reimbursement regarding any and all such
Developments.

     6.7 Notwithstanding the foregoing, the beneficial ownership of less than 1% of the equity
interests of any person having a class of equity interests actively traded on a national securities
exchange or over-the-counter market will not be deemed, in and of itself, to breach the
prohibitions of this Section 6. Employee agrees and acknowledges that the restrictions in
this Section 6 are reasonable in scope and duration and are necessary to protect Employer.
If any provision of this Section 6, as applied to either Party or to any circumstance, is
adjudged by

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a governmental body, arbitrator, or mediator not to be enforceable in accordance with its
terms, the same will in no way affect any other circumstance or the enforceability of the remainder
of this Agreement. If any such provision, or any part thereof, is held not to be enforceable in
accordance with its terms because of the duration of such provision, the area covered thereby, or
the scope of the activities covered, the Parties agree that the governmental body, arbitrator, or
mediator making such determination will have the power to reduce the duration, area, and/or scope
of activities of such provision, and/or to delete specific words or phrases, and in its reduced
form such provision will then be enforceable in accordance with its terms and will be enforced.
The Parties agree and acknowledge that the breach of any provision of this Section 6 will
cause irreparable damage to Employer and upon breach of any provision of this Section 6,
Employer will be entitled to injunctive relief, specific performance, or other equitable relief
without bond or other security; provided, however, that the foregoing remedies will in no way limit
any other remedies that Employer may have. Employer may, without notifying Employee, notify any
subsequent employer of Employee of Employee’s rights and obligations under this Section 6.

     7. Conflicts of Interest.

     7.1 Employee represents to Employer as follows: (a) there are no restrictions, agreements, or
understandings, oral or written, to which Employee is a party or by which Employee is bound that
prevent or make unlawful Employee’s execution or performance of this Agreement, and (b) Employee
does not have any business or other relationship that creates a conflict between the interests of
Employee and Employer.

     7.2 Employee recognizes and agrees that Employee owes Employer and its affiliates a fiduciary
duty of loyalty, fidelity, and allegiance to act at all times in the best interests of Employer and
its affiliates and to do no act which might injure the business, interests, or reputation of
Employer or any of its affiliates. Employee’s duty of loyalty will extend throughout the
Employment Term. In keeping with Employee’s fiduciary duty to Employer and its affiliates,
Employee agrees that, during the Employment Term, Employee will not knowingly become involved in a
conflict between his personal interests and those of Employer or any of its affiliates, and, upon
discovery thereof, will not willfully allow such conflict of interest to continue. Notwithstanding
the foregoing, Employer acknowledges that Employee may have ownership interests in, may take
certain actions on behalf of, or accept payments, services or loans from, SC Fuels or other
businesses owned or operated by Frank P. Greinke or his family members or heirs by will or
intestate succession and Employer shall not require Employee to discontinue such relationships;
provided, however, that all such ownership interests, actions, payments, services or loans are
disclosed in writing to the Employer in accordance with the Employer’s Code of Business Conduct and
Ethics. Employee agrees to disclose in writing to Employer any facts that could reasonably be
expected to involve a material conflict of interest upon Employee’s conscious awareness that such a
material conflict could exist. Employee recognizes that it is impossible to provide an exhaustive
list of actions or activities that constitute or might constitute a conflict of interest, but
recognizes that these actions or activities may include the following:

     (a) ownership of more than a 1% interest in any supplier, contractor, customer, or
other person that does business with Employer or any of its affiliates;

     (b) acting in any capacity, including as a director, officer, employee, partner,
consultant, or agent, for any supplier, contractor, customer, or other person that does
business with Employer or any of its affiliates;

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     (c) acceptance, directly or indirectly, of payments, services, or loans (other than
entertainment, gifts, or other sales incentives that may be furnished in the ordinary course
of business) from a supplier, contractor, customer, or other person that does business with
Employer or any of its affiliates;

     (d) misuse or disclosure of information of any kind obtained through Employee’s
relationship with Employer; and

     (e) appropriation by Employee or diversion to any other person, directly or indirectly,
of any business opportunity in which it is known or could reasonably be anticipated that
Employer or its affiliates would be interested.

In further recognition of the fiduciary duties Employee owes to Employer and its affiliates,
Employee agrees that all documentation that Employee provides to Employer will be accurate in all
material respects, when taken as a whole and in light of the circumstances in which it was made.

     8. Miscellaneous.

     8.1 Entire Agreement. This Agreement constitutes the entire agreement and understanding of
the Parties in respect of its subject matter and supersedes all prior understandings, agreements,
or representations by or among the Parties, written or oral, to the extent they relate in any way
to the subject matter hereof. Except for Employer’s affiliates, each of which will be deemed a
third party beneficiary of all obligations of Employee under this Agreement, there are no third
party beneficiaries having rights under or with respect to this Agreement.

     8.2 Successors. All of the terms, agreements, covenants, representations, warranties, and
conditions of this Agreement are binding upon, and inure to the benefit of and are enforceable by,
the Parties and their respective successors.

     8.3 Assignment. No Party may assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of Employer and Employee; provided,
however, that Employer may (a) assign any or all of its rights and interests hereunder to one or
more of its affiliates and (b) designate one or more of its affiliates to perform its obligations
hereunder (in any or all of which cases Employer nonetheless will remain responsible for the
performance of all of its obligations hereunder).

     8.4 Notices. All notices, requests, demands, claims and other communications hereunder will
be in writing. Any notice, request, demand, claim or other communication hereunder will be deemed
duly given if (and then three business days after) it is sent by registered or certified mail,
return receipt requested, postage prepaid, and addressed to the intended recipient as set forth
below:

If to Employer:

Attn: Corporate Secretary

1800 W. Katella Ave., Suite 102

Orange, California 92867

Fax: (714) 633-3718

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If to Employee:

1800 W. Katella Ave., Suite 102

Orange, California 92867

Fax: (714) 633-3834

Either Party may send any notice, request, demand, claim, or other communication hereunder to the
intended recipient at the address set forth above using any other means (including personal
delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim, or other communication will be deemed to have
been duly given unless and until it actually is received by the intended recipient. Either Party
may change the address to which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Parties notice in the manner herein set forth.

     8.5 Submission to Jurisdiction; No Jury Trial.

     (a) Submission to Jurisdiction. Each Party submits to the jurisdiction of any state or
federal court sitting in Orange County, California, in any action arising out of or relating
to this Agreement and agrees that all claims in respect of the action may be heard and
determined in any such court. Nothing in this Section 8.5(a) will affect the right
of any Party to bring any action arising out of or relating to this Agreement in any other
court. Each Party agrees that a final judgment in any action so brought will be conclusive
and may be enforced by action on the judgment or in any other manner provided at law or in
equity. Each Party waives any defense of inconvenient forum to the maintenance of any
action so brought and waives any bond, surety, or other security that might be required of
any other Party with respect thereto.

     (b) Waiver of Jury Trial. THE PARTIES EACH HEREBY AGREE TO WAIVE THEIR RESPECTIVE
RIGHTS TO JURY TRIAL OF ANY DISPUTE BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER
AGREEMENTS RELATING HERETO OR ANY DEALINGS BETWEEN THEM RELATING TO THE TRANSACTIONS
CONTEMPLATED HEREBY. The scope of this waiver is intended to be all encompassing of any and
all Actions that may be filed in any court and that relate to the subject matter of the
transactions contemplated hereby, including Contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. The Parties each acknowledge that
this waiver is a material inducement to enter into a business relationship and that they
will continue to rely on the waiver in their related future dealings. Each Party further
represents and warrants that it has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following consultation with
legal counsel. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED ORALLY OR IN WRITING, AND THE WAIVER WILL APPLY TO ANY
AMENDMENTS, RENEWALS, SUPPLEMENTS, OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING HERETO. In the event of an Action, this Agreement may be
filed as a written consent to trial by a court.

     8.6 Time. Time is of the essence in the performance of this Agreement.

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     8.7 Counterparts. This Agreement may be executed in two or more counterparts, each of which
will be deemed an original but all of which together will constitute one and the same instrument.

     8.8 Headings. The article and section headings contained in this Agreement are inserted for
convenience only and will not affect in any way the meaning or interpretation of this Agreement.

     8.9 Governing Law. This Agreement and the performance of the Parties’ obligations hereunder
will be governed by and construed in accordance with the laws of the State of California, without
giving effect to any choice of law principles.

     8.10 Amendments and Waivers. No amendment, modification, replacement, termination, or
cancellation of any provision of this Agreement will be valid, unless the same will be in writing
and signed by the Parties. No waiver by any Party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, may be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any
way any rights arising because of any prior or subsequent such occurrence.

     8.11 Severability. The provisions of this Agreement will be deemed severable and the
invalidity or unenforceability of any provision will not affect the validity or enforceability of
the other provisions hereof; provided that if any provision of this Agreement, as applied to any
Party or to any circumstance, is adjudged by a governmental body, arbitrator, or mediator not to be
enforceable in accordance with its terms, the Parties agree that the governmental body, arbitrator,
or mediator making such determination will have the power to modify the provision in a manner
consistent with its objectives such that it is enforceable, and/or to delete specific words or
phrases, and in its reduced form, such provision will then be enforceable and will be enforced.

     8.12 Expenses. Except as otherwise expressly provided in this Agreement, each Party will bear
its own costs and expenses incurred in connection with the preparation, execution and performance
of this Agreement, including all fees and expenses of agents, representatives, financial advisors,
legal counsel and accountants.

     8.13 Construction. The Parties have participated jointly in the negotiation and drafting of
this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement
will be construed as if drafted jointly by the Parties and no presumption or burden of proof will
arise favoring or disfavoring any Party because of the authorship of any provision of this
Agreement. Any reference to any federal, state, local, or foreign law will be deemed also to refer
to law as amended and all rules and regulations promulgated thereunder, unless the context requires
otherwise. The words “include,” “includes,” and “including” will be deemed to be followed by
“without limitation.” Pronouns in masculine, feminine, and neuter genders will be construed to
include any other gender, and words in the singular form will be construed to include the plural
and vice versa, unless the context otherwise requires. The words “this Agreement,” “herein,”
“hereof,” “hereby,” “hereunder,” and words of similar import refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. The Parties intend that each
representation, warranty, and covenant contained herein will have independent significance. If any
Party has breached any representation, warranty, or covenant contained herein in any respect, the
fact that there exists another representation, warranty or covenant relating to the same subject
matter (regardless of the relative levels of specificity)

11

 

which the Party has not breached will not detract from or mitigate the fact that the Party is
in breach of the first representation, warranty, or covenant.

     8.14 Incorporation of Exhibits. The Exhibits identified in this Agreement are incorporated
herein by reference and made a part hereof.

     8.15 Remedies. Except as expressly provided herein, the rights, obligations and remedies
created by this Agreement are cumulative and in addition to any other rights, obligations, or
remedies otherwise available at law or in equity. Except as expressly provided herein, nothing
herein will be considered an election of remedies.

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

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     IN WITNESS WHEREOF, the parties have executed and delivered this Agreement on the date first
above written.

	 	 	 	 	 
	 	UNITED FUEL & ENERGY CORPORATION

 	 
	 	By:  	 /s/ William C. Bousema
 	 
	 	 	William C. Bousema 	 
	 	 	Executive Vice President, Chief Financial

Officer and Secretary 	 
	 
	 	EMPLOYEE

 	 
	 	 /s/ Joseph M. Juliano
 	 
	 	Joseph M. Juliano, individually 	 
	 	 	 

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EXHIBIT A

Description of Benefits

	1.	 	Car allowance of $1,000 per month.

	2.	 	Employee and, to the extent applicable, Employee’s spouse, dependents and
beneficiaries, shall be allowed to participate in all benefit plans and programs of
Employer which are now, or may hereafter be, available to similarly situated employees
of Employer. Employer shall not, however, be obligated to institute, maintain or
refrain from changing, amending or discontinuing any such benefit plan or program, so
long as such changes are similarly applicable to similarly situated employees of
Employer generally.

14exv10w4

EXHIBIT 10.4

INDEMNIFICATION AGREEMENT

     This Indemnification Agreement (this “Agreement”) dated the 12th day of November 2008, by and
between United Fuel & Energy Corporation, a Nevada corporation (the “Company”), and Joseph M.
Juliano, an individual (“Indemnitee”).

RECITALS

     A. Competent and experienced persons are reluctant to serve or to continue to serve as
officers of corporations or in other capacities unless they are provided with adequate protection
through insurance or indemnification (or both) against claims against them arising out of their
service and activities on behalf of the corporation.

     B. The current uncertainties relating to the availability of adequate insurance have increased
the difficulty for corporations of attracting and retaining competent and experienced persons to
serve in such capacity.

     C. The Board of Directors of the Company (the “Board of Directors”) has determined that the
continuation of present trends in litigation will make it more difficult to attract and retain
competent and experienced persons to serve as officers of the Company, that this situation is
detrimental to the best interests of the Company’s stockholders and that the Company should act to
assure such persons that there will be increased certainty of adequate protection in the future.

     D. As a supplement to and in the furtherance of the Company’s Articles of Incorporation, as
amended (the “Articles”), and Bylaws, as amended (the “Bylaws”), it is reasonable, prudent,
desirable and necessary for the Company contractually to obligate itself to indemnify, and to pay
in advance expenses on behalf of the Company’s Executive Vice President and Chief Operating Officer
to the fullest extent permitted by law so that he will serve or continue to serve the Company free
from concern that he will not be so indemnified and that his expenses will not be so paid in
advance;

     E. This Agreement is not a substitute for, nor does it diminish or abrogate any rights of
Indemnitee under, the Articles and the Bylaws or any resolutions adopted pursuant thereto
(including any contractual rights of Indemnitee that may exist).

     F. Indemnitee is the Executive Vice President and Chief Operating Officer of the Company and
his willingness to continue to serve in such capacity is predicated, in substantial part, upon the
Company’s willingness to indemnify him to the fullest extent permitted by the laws of the State of
Nevada and upon the other undertakings set forth in this Agreement.

AGREEMENT

     NOW, THEREFORE, in consideration of the premises and covenants contained herein, the Company
and Indemnitee hereby agree as follows:

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ARTICLE 1

CERTAIN DEFINITIONS

     Capitalized terms used but not otherwise defined in this Agreement have the meanings set forth
below:

     “Corporate Status” means the status of a person who is or was a director, officer, employee,
partner, member, manager, trustee, fiduciary or agent of the Company or of any other Enterprise
which such person is or was serving at the request of the Company. In addition to any service at
the actual request of the Company, Indemnitee will be deemed, for purposes of this Agreement, to be
serving or to have served at the request of the Company as a director, officer, employee, partner,
member, manager, trustee, fiduciary or agent of another Enterprise if Indemnitee is or was serving
as a director, officer, employee, partner, member, manager, fiduciary, trustee or agent of such
Enterprise and (i) such Enterprise is or at the time of such service was a Controlled Affiliate,
(ii) such Enterprise is or at the time of such service was an employee benefit plan (or related
trust) sponsored on maintained by the Company or a Controlled Affiliate or (iii) the Company or a
Controlled Affiliate directly or indirectly caused Indemnitee to be nominated, elected, appointed,
designated, employed, engaged or selected to serve in such capacity.

     “Controlled Affiliate” means any corporation, limited liability company, partnership, joint
venture, trust or other Enterprise, whether or not for profit, that is directly or indirectly
controlled by the Company. For purposes of this definition, the term “control” means the
possession, directly or indirectly, of the power to direct, or cause the direction of, the
management or policies of an Enterprise, whether through the ownership of voting securities,
through other voting rights, by contract or otherwise; provided, however, that direct or indirect
beneficial ownership of capital stock or other interests in an Enterprise entitling the holder to
cast 30% or more of the total number of votes generally entitled to be cast in the election of
directors (or persons performing comparable functions) of such Enterprise will be deemed to
constitute “control” for purposes of this definition.

     “Disinterested Director” means a director of the Company who is not and was not a party to the
Proceeding in respect of which indemnification is sought by Indemnitee.

     “Enterprise” means the Company and any other corporation, partnership, limited liability
company, joint venture, employee benefit plan, trust or other entity or other enterprise of which
Indemnitee is or was serving at the request of the Company in a Corporate Status.

     “Expenses” means all attorney’s fees, disbursements and retainers, court costs, transcript
costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding
costs, telephone charges, postage, fax transmission charges, secretarial services, delivery service
fees and all other disbursements or expenses paid or incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in,
or otherwise participating in, a Proceeding, or in connection with seeking indemnification under
this Agreement. Expenses will also include Expenses paid or incurred in connection with any appeal
resulting from any Proceeding, including the premium, security for and other costs relating to any
appeal bond or its equivalent. Expenses, however, will not include amounts paid in settlement by
Indemnitee or the amount of judgments or fines against Indemnitee.

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     “Independent Counsel” means an attorney or firm of attorneys that is experienced in matters of
corporation law and neither currently is, nor in the past five (5) years has been, retained to
represent: (i) the Company or Indemnitee in any matter material to either such party (other than
with respect to matters concerning the Indemnitee under this Agreement and/or the indemnification
provisions of the Articles or Bylaws, or of other indemnitees under similar indemnification
agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification
hereunder. Notwithstanding the foregoing, the term “Independent Counsel” does not include any
person who, under the applicable standards of professional conduct then prevailing, would have a
conflict of interest in representing either the Company or Indemnitee in an action to determine
Indemnitee’s rights under this Agreement.

     “Losses” means any loss, liability, judgments, damages, amounts paid in settlement, fines
(including excise taxes and penalties assessed with respect to employee benefit plans), penalties
(whether civil, criminal or otherwise) and all interest, assessments and other charges paid or
payable in connection with or in respect of any of the foregoing.

     “Proceeding” means any threatened, pending or completed action, suit, claim, demand,
arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing
or any other actual, threatened or completed proceeding, including any and all appeals, whether
brought by or in the right of the Company or otherwise, whether civil, criminal, administrative or
investigative, whether formal or informal, and in each case whether or not commenced prior to the
date of this Agreement, in which Indemnitee was, is or will be involved as a party or otherwise, by
reason of or relating to Indemnitee’s Corporate Status and by reason of or relating to either (i)
any action or alleged action taken by Indemnitee (or failure or alleged failure to act) or of any
action or alleged action (or failure or alleged failure to act) on Indemnitee’s part, while acting
in his Corporate Status or (ii) the fact that Indemnitee is or was serving at the request of the
Company as director, officer, employee, partner, member, manager, trustee, fiduciary or agent of
another Enterprise, in each case whether or not serving in such capacity at the time any Loss or
Expense is paid or incurred for which indemnification or advancement of Expenses can be provided
under this Agreement, except one initiated by Indemnitee to enforce his rights under this
Agreement. For purposes of this definition, the term “threatened” will be deemed to include
Indemnitee’s good faith belief that a claim or other assertion may lead to institution of a
Proceeding.

     References to “serving at the request of the Company” include any service as a director,
officer, employee or agent of the Company which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to any employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he or she reasonably believed
to be in the best interests of the participants and beneficiaries of an employee benefit plan will
be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred
to under applicable law or in this Agreement.

ARTICLE 2

SERVICES TO THE COMPANY

     2.1 Services to the Company. Indemnitee agrees to serve as the Executive Vice President and
Chief Operating Officer of the Company. Indemnitee may at any time and for any reason resign from
such position (subject to any other contractual obligation or any obligation imposed by operation
of law), in which event the Company will have no obligation under this Agreement to continue
Indemnitee in such position. This Agreement will not be construed as

3

 

giving Indemnitee any right to be retained in the employ of the Company (or any other
Enterprise).

ARTICLE 3

INDEMNIFICATION

     3.1 Company Indemnification. Except as otherwise provided in this Article 3, if
Indemnitee was, is or becomes a party to, or was or is threatened to be made a party to, or was or
is otherwise involved in, any Proceeding, the Company will indemnify and hold harmless Indemnitee
to the fullest extent permitted by the Articles, Bylaws and applicable law, as the same exists or
may hereafter be amended, interpreted or replaced (but in the case of any such amendment,
interpretation or replacement, only to the extent that such amendment, interpretation or
replacement permits the Company to provide broader indemnification rights than were permitted prior
thereto), against any and all Expenses and Losses, and any federal, state, local or foreign taxes
imposed as a result of the actual or deemed receipt of any payments under this Agreement, that are
actually and reasonably paid or incurred by Indemnitee in connection with such Proceeding. For
purposes of this Agreement, the meaning of the phrase “to the fullest extent permitted by law” will
include to the fullest extent permitted by the Nevada Revised Statues, as amended (the “NRS”), with
respect to such matters.

     3.2 Mandatory Indemnification if Indemnitee is Wholly or Partly Successful. Notwithstanding
any other provision of this Agreement (other than Section 6.9), to the extent that
Indemnitee has been successful, on the merits or otherwise, in defense of any Proceeding or any
part thereof, the Company will indemnify Indemnitee against all Expenses that are actually and
reasonably paid or incurred by Indemnitee in connection therewith. If Indemnitee is not wholly
successful in such Proceeding, but is successful, on the merits or otherwise, as to one or more but
fewer than all claims, issues or matters in such Proceeding, the Company will indemnify and hold
harmless Indemnitee against all Expenses paid or incurred by Indemnitee in connection with each
successfully resolved claim, issue or matter on which Indemnitee was successful. For purposes of
this Section 3.2, the termination of any Proceeding, or any claim, issue or matter in such
Proceeding, by dismissal with or without prejudice will be deemed to be a successful result as to
such Proceeding, claim, issue or matter.

     3.3 Indemnification for Expenses of a Witness. Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a witness in any
Proceeding to which Indemnitee is not a party, the Company will indemnify Indemnitee against all
Expenses actually and reasonably paid or incurred by Indemnitee on his behalf in connection
therewith.

     3.4 Exclusions. Notwithstanding any other provision of this Agreement, the Company will not be
obligated under this Agreement to provide indemnification in connection with the following:

     (a) Any Proceeding (or part of any Proceeding) initiated or brought voluntarily by
Indemnitee against the Company or its directors, officers, employees or other indemnities,
unless the Board of Directors has authorized or consented to the initiation of the
Proceeding (or such part of any Proceeding); provided, however, that nothing in this
Section 3.4(a) shall limit the right of Indemnitee to be indemnified under
Section 8.4.

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     (b) For an accounting of profits made from the purchase and sale (or sale and purchase)
by Indemnitee of securities of the Company within the meaning of Section 16(b) of the
Exchange Act or any similar successor statute.

ARTICLE 4

ADVANCEMENT OF EXPENSES

     4.1 Expense Advances. Except as set forth in Section 4.2, the Company will, if
requested by Indemnitee, advance, to the fullest extent permitted by law, to Indemnitee
(hereinafter an “Expense Advance”) any and all Expenses actually and reasonably paid or incurred by
Indemnitee in connection with any Proceeding (whether prior to or after its final disposition).
Indemnitee’s right to each Expense Advance will not be subject to the satisfaction of any standard
of conduct and will be made without regard to Indemnitee’s ultimate entitlement to indemnification
under the other provisions of this Agreement, or under provisions of the Articles or Bylaws or
otherwise. Each Expense Advance will be unsecured and interest free and will be made by the Company
without regard to Indemnitee’s ability to repay the Expense Advance; provided, however, that, if
applicable law requires, an Expense Advance will be made only upon delivery to the Company of an
undertaking (hereinafter an “Undertaking”), by or on behalf of Indemnitee, to repay such Expense
Advance if it is ultimately determined, by final decision by a court or arbitrator, as applicable,
from which there is no further right to appeal, that Indemnitee is not entitled to be indemnified
for such Expenses under the Articles, Bylaws, the NRS, this Agreement or otherwise. An Expense
eligible for an Expense Advance will include any and all reasonable Expenses incurred pursuing an
action to enforce the right of advancement provided for in this Article 4, including
Expenses incurred preparing and forwarding statements to the Company to support the Expense
Advances claimed.

     4.2 Exclusions. Indemnitee will not be entitled to any Expense Advance in connection with any
of the matters for which indemnity is excluded pursuant to Section 3.4.

     4.3 Timing. An Expense Advance pursuant to Section 4.1 will be made within five
business days after the receipt by the Company of a written statement or statements from Indemnitee
requesting such Expense Advance (which statement or statements will include, if requested by the
Company, reasonable detail underlying the Expenses for which the Expense Advance is requested),
whether such request is made prior to or after final disposition of such Proceeding. Such request
must be accompanied by or preceded by the Undertaking, if then required by the NRS or any other
applicable law.

ARTICLE 5

CONTRIBUTION IN THE EVENT OF JOINT LIABILITY

     5.1 Contribution by Company. To the fullest extent permitted by law, if the indemnification
provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company,
in lieu of indemnifying Indemnitee, will contribute to the amount of Expenses and Losses actually
and reasonably incurred or paid by Indemnitee in connection with any Proceeding in proportion to
the relative benefits received by the Company and all officers, directors and employees of the
Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such
Proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which
such Proceeding arose; provided, however, that the proportion determined on the basis of relative
benefit may, to the extent necessary to conform to law, be further adjusted by reference to the
relative fault of the Company and all officers, directors and employees of the Company other than
Indemnitee who are jointly liable

5

 

with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee,
on the other hand, in connection with the events that resulted in such Expenses and Losses, as well
as any other equitable considerations which applicable law may require to be considered. The
relative fault of the Company and all officers, directors and employees of the Company other than
Indemnitee who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on
the one hand, and Indemnitee, on the other hand, will be determined by reference to, among other
things, the degree to which their actions were motivated by intent to gain personal profit or
advantage, the degree to which their liability is primary or secondary, and the degree to which
their conduct was active or passive.

     5.2 Indemnification for Contribution Claims by Others. To the fullest extent permitted by law,
the Company will fully indemnify and hold Indemnitee harmless from any claims of contribution which
may be brought by other officers, directors or employees of the Company who may be jointly liable
with Indemnitee for any Loss or Expense arising from a Proceeding.

ARTICLE 6

PROCEDURES AND PRESUMPTIONS FOR THE

DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION

     6.1 Notification of Claims; Request for Indemnification. Indemnitee agrees to notify promptly
the Company in writing of any claim made against Indemnitee for which indemnification will or could
be sought under this Agreement; provided, however, that a delay in giving such notice will not
deprive Indemnitee of any right to be indemnified under this Agreement unless, and then only to the
extent that, the Company did not otherwise learn of the Proceeding and such delay is materially
prejudicial to the Company’s ability to defend such Proceeding; and, provided, further, that notice
will be deemed to have been given without any action on the part of Indemnitee in the event the
Company is a party to the same Proceeding. The omission to notify the Company will not relieve the
Company from any liability for indemnification which it may have to Indemnitee otherwise than under
this Agreement. Indemnitee may deliver to the Company a written request to have the Company
indemnify and hold harmless Indemnitee in accordance with this Agreement. Subject to Section
6.9, such request may be delivered from time to time and at such time(s) as Indemnitee deems
appropriate in his sole discretion. Following such a written request for indemnification,
Indemnitee’s entitlement to indemnification shall be determined according to Section 6.2.
The Secretary of the Company will, promptly upon receipt of such a request for indemnification,
advise the Board of Directors in writing that Indemnitee has requested indemnification. The Company
will be entitled to participate in any Proceeding at its own expense.

     6.2 Determination of Right to Indemnification. Upon written request by Indemnitee for
indemnification pursuant to Section 6.1 hereof with respect to any Proceeding, a
determination, if, but only if, required by applicable law, with respect to Indemnitee’s
entitlement thereto will be made by one of the following, at the election of Indemnitee: (1) so
long as there are Disinterested Directors with respect to such Proceeding, a majority vote of the
Disinterested Directors, even though less than a quorum of the Board of Directors, (2) so long as
there are Disinterested Directors with respect to such Proceeding, a committee of such
Disinterested Directors designated by a majority vote of such Disinterested Directors, even though
less than a quorum of the Board of Directors or (3) Independent Counsel in a written opinion
delivered to the Board of Directors, a copy of which will also be delivered to Indemnitee. The
election by Indemnitee to use a particular person, persons or entity to make such determination is
to be included in the written request for indemnification submitted by Indemnitee (and if no
election is

6

 

made in the request it will be assumed that Indemnitee has elected the Independent Counsel to
make such determination). The person, persons or entity chosen to make a determination under this
Agreement of the Indemnitee’s entitlement to indemnification will act reasonably and in good faith
in making such determination.

     6.3 Selection of Independent Counsel. If the determination of entitlement to indemnification
pursuant to Section 6.2 will be made by an Independent Counsel, the Independent Counsel
will be selected as provided in this Section 6.3. The Independent Counsel will be selected
by Indemnitee (unless Indemnitee requests that such selection be made by the Board of Directors, in
which event the immediately following sentence will apply) and Indemnitee will give written notice
to the Company advising it of the identity of the Independent Counsel so selected. If the
Independent Counsel is selected by the Board of Directors, the Company will give written notice to
Indemnitee advising him of the identity of the Independent Counsel so selected. In either event,
Indemnitee or the Company, as the case may be, may, within ten days after such written notice of
selection is given, deliver to the Company or to Indemnitee, as the case may be, a written
objection to such selection; provided, however, that such objection may be asserted only on the
ground that the Independent Counsel so selected does not meet the requirements of “Independent
Counsel” as defined in this Agreement, and the objection will set forth with particularity the
factual basis of such assertion. Absent a proper and timely objection, the person so selected will
act as Independent Counsel. If a written objection is made and substantiated, the Independent
Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn
or a court has determined that such objection is without merit. If, within 30 days after submission
by Indemnitee of a written request for indemnification pursuant to Section 6.1, no
Independent Counsel is selected, or an Independent Counsel for which an objection thereto has been
properly made remains unresolved, either the Company or Indemnitee may petition the appropriate
court of the State of Nevada or other court of competent jurisdiction for resolution of any
objection which has been made by the Company or Indemnitee to the other’s selection of Independent
Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by
such other person as the court may designate, and the person with respect to whom all objections
are so resolved or the person so appointed will act as Independent Counsel under Section
6.2. The Company will pay any and all fees and expenses incurred by such Independent Counsel in
connection with acting pursuant to Section 6.2 hereof, and the Company will pay all fees
and expenses incident to the procedures of this Section 6.3, regardless of the manner in
which such Independent Counsel was selected or appointed.

     6.4 Burden of Proof. In making a determination with respect to entitlement to indemnification
hereunder, the person, persons or entity making such determination will presume that Indemnitee is
entitled to indemnification under this Agreement. Anyone seeking to overcome this presumption will
have the burden of proof and the burden of persuasion, by clear and convincing evidence. In making
a determination with respect to entitlement to indemnification hereunder which under this
Agreement, the Articles, Bylaws or applicable law requires a determination of Indemnitee’s good
faith and/or whether Indemnitee acted in a manner which he or she reasonably believed to be in or
not opposed to the best interests of the Company, the person, persons or entity making such
determination will presume that Indemnitee has at all times acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interests of the Company. Anyone
seeking to overcome this presumption will have the burden of proof and the burden of persuasion, by
clear and convincing evidence. Indemnitee will be deemed to have acted in good faith if
Indemnitee’s action with respect to a particular Enterprise is based on the records or books of
account of such Enterprise, including financial statements, or on information supplied to
Indemnitee by the

7

 

officers of such Enterprise in the course of their duties, or on the advice of legal counsel
for such Enterprise or on information or records given or reports made to such Enterprise by an
independent certified public accountant or by an appraiser or other expert selected by such
Enterprise; provided, however this sentence will not be deemed to limit in any way the other
circumstances in which Indemnitee may be deemed to have met such standard of conduct. In addition,
the knowledge and/or actions, or failure to act, of any other director, officer, agent or employee
of such Enterprise will not be imputed to Indemnitee for purposes of determining the right to
indemnification under this Agreement.

     6.5 No Presumption in Absence of a Determination or As Result of an Adverse Determination;
Presumption Regarding Success. Neither the failure of any person, persons or entity chosen to make
a determination as to whether Indemnitee has met any particular standard of conduct or had any
particular belief to make such determination, nor an actual determination by such person, persons
or entity that Indemnitee has not met such standard of conduct or did not have such belief, prior
to or after the commencement of legal proceedings by Indemnitee to secure a judicial determination
that Indemnitee should be indemnified under this Agreement under applicable law, will be a defense
to Indemnitee’s claim or create a presumption that Indemnitee has not met any particular standard
of conduct or did not have any particular belief. In addition, the termination of any Proceeding by
judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea
of nolo contendere, or its equivalent, will not create a presumption that Indemnitee did not meet
any particular standard of conduct or have any particular belief or that a court has determined
that indemnification is not permitted by this Agreement or applicable law. In the event that any
Proceeding to which Indemnitee is a party is resolved in any manner other than by final adverse
judgment (as to which all rights of appeal therefrom have been exhausted or lapsed) against
Indemnitee (including, without limitation, settlement of such Proceeding with or without payment of
money or other consideration) it will be presumed that Indemnitee has been successful on the merits
or otherwise in such Proceeding. Anyone seeking to overcome this presumption will have the burden
of proof and the burden of persuasion, by clear and convincing evidence.

     6.6 Timing of Determination. The Company will use its reasonable best efforts to cause any
determination required to be made pursuant to Section 6.2 to be made as promptly as
practicable after Indemnitee has submitted a written request for indemnification pursuant to
Section 6.1. If the person, persons or entity chosen to make a determination does not make
such determination within 30 days after the later of the date (a) the Company receives Indemnitee’s
request for indemnification pursuant to Section 6.1 and (b) on which an Independent Counsel
is selected pursuant to Section 6.3, if applicable (and all objections to such person, if
any, have been resolved), the requisite determination of entitlement to indemnification will be
deemed to have been made and Indemnitee will be entitled to such indemnification, so long as (i)
Indemnitee has fulfilled his obligations pursuant to Section 6.8 and (ii) such
indemnification is not prohibited under applicable law; provided, however, that such 30 day period
may be extended for a reasonable time, not to exceed an additional 15 days, if the person, persons
or entity making the determination with respect to entitlement to indemnification in good faith
requires such additional time for the obtaining of or evaluating of documentation and/or
information relating thereto.

     6.7 Timing of Payments. All payments of Expenses, including any Expense Advance, and other
amounts by the Company to the Indemnitee pursuant to this Agreement will be made as soon as
practicable after a written request or demand therefor by Indemnitee is presented to the Company,
but in no event later than thirty (30) days after (i) such demand is presented or (ii) such later
date as a determination of entitlement to indemnification is made in

8

 

accordance with Section 6.6, if applicable; provided, however, that an Expense Advance
will be made within the time provided in Section 4.3 hereof.

     6.8 Cooperation. Indemnitee will cooperate with the person, persons or entity making a
determination with respect to Indemnitee’s entitlement to indemnification, including providing to
such person, persons or entity, upon reasonable advance request, any documentation or information
which is not privileged or otherwise protected from disclosure and which is reasonably available to
Indemnitee and reasonably necessary to such determination. Any Expenses incurred by Indemnitee in
so cooperating with the person, persons or entity making such determination will be borne by the
Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and
the Company will indemnify Indemnitee therefor and will hold Indemnitee harmless therefrom.

     6.9 Time for Submission of Request. Indemnitee will be required to submit any request for
Indemnification pursuant to this Article 6 within a reasonable time, not to exceed two
years, after any judgment, order, settlement, dismissal, arbitration award, conviction, acceptance
of a plea of nolo contendere (or its equivalent) or other full or partial final determination or
disposition of the Proceeding (with the latest date of the occurrence of any such event to be
considered the commencement of the two year period).

ARTICLE 7

LIABILITY INSURANCE

     7.1 Company Insurance. Subject to Section 7.3, the Company will obtain and maintain a
policy or policies of insurance with one or more reputable insurance companies providing Indemnitee
with coverage in such amount as will be determined by the Board of Directors for Losses and
Expenses paid or incurred by Indemnitee as a result of acts or omissions of Indemnitee in his
Corporate Status, and to ensure the Company’s performance of its indemnification obligations under
this Agreement; provided, however, in all policies of director and officer liability insurance
obtained by the Company, Indemnitee will be named as an insured party in such manner as to provide
Indemnitee with the same rights and benefits as are afforded to the most favorably insured
directors or officers, as applicable, of the Company under such policies. Any reductions to the
amount of director and officer liability insurance coverage maintained by the Company as of the
date hereof will be subject to the approval of the Board of Directors.

     7.2 Notice to Insurers. If, at the time of receipt by the Company of a notice from any source
of a Proceeding as to which Indemnitee is a party or participant, the Company will give prompt
notice of such Proceeding to the insurers in accordance with the procedures set forth in the
respective policies, and the Company will provide Indemnitee with a copy of such notice and copies
of all subsequent correspondence between the Company and such insurers related thereto. The Company
will thereafter take all necessary or desirable actions to cause such insurers to pay, on behalf of
Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such
policies.

     7.3 Insurance Not Required. Notwithstanding Section 7.1, the Company will have no
obligation to obtain or maintain the insurance contemplated by Section 7.1 if the Board of
Directors determines in good faith that such insurance is not reasonably available, if the premium
costs for such insurance are disproportionately high compared to the amount of coverage provided,
or if the coverage provided by such insurance is limited by exclusions so as

9

 

to provide an insufficient benefit. The Company will promptly notify Indemnitee of any such
determination not to provide insurance coverage.

ARTICLE 8

REMEDIES OF INDEMNITEE

     8.1 Action by Indemnitee. In the event that (i) a determination is made pursuant to
Article 6 of this Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) an Expense Advance is not timely made pursuant to Section 4.3 of this
Agreement, (iii) no determination of entitlement to indemnification is made within the applicable
time periods specified in Section 6.6 or (iv) payment of indemnified amounts is not made
within the applicable time periods specified in Section 6.7, Indemnitee will be entitled to
an adjudication in an appropriate court of the State of Nevada, or in any other court of competent
jurisdiction, of his entitlement to such indemnification or payment of an Expense Advance.
Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration to be conducted
by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration
Association. The provisions of Nevada law (without regard to its conflict of laws rules) will apply
to any such arbitration. The Company will not oppose Indemnitee’s right to seek any such
adjudication or award in arbitration.

     8.2 De Novo Review if Prior Adverse Determination. In the event that a determination is made
pursuant to Article 6 that Indemnitee is not entitled to indemnification, any judicial
proceeding or arbitration commenced pursuant to this Article 8 will be conducted in all
respects as a de novo trial or arbitration, as applicable, on the merits and Indemnitee will not be
prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration
commenced pursuant to this Article 8, Indemnitee will be presumed to be entitled to
indemnification under this Agreement, the Company will have the burden of proving Indemnitee is not
entitled to indemnification and the Company may not refer to or introduce evidence of any
determination pursuant to Article 6 adverse to Indemnitee for any purpose. If Indemnitee
commences a judicial proceeding or arbitration pursuant to this Article 8, Indemnitee will
not be required to reimburse the Company for any Expense Advance made pursuant to Article 4
until a final determination is made with respect to Indemnitee’s entitlement to indemnification (as
to which all rights of appeal have been exhausted or lapsed).

     8.3 Company Bound by Favorable Determination by Reviewing Party. If a determination is made
that Indemnitee is entitled to indemnification pursuant to Article 6, the Company will be
bound by such determination in any judicial proceeding or arbitration commenced pursuant to this
Article 8, absent (i) a misstatement by Indemnitee of a material fact or an omission of a
material fact necessary to make Indemnitee’s statements in connection with the request for
indemnification not materially misleading or (ii) a prohibition of such indemnification under law.

     8.4 Company Bears Expenses if Indemnitee Seeks Adjudication. In the event that Indemnitee,
pursuant to this Article 8, seeks a judicial adjudication or arbitration of his rights
under, or to recover damages for breach of, this Agreement, any other agreement for
indemnification, the indemnification or advancement of expenses provisions in the Articles or
Bylaws, payment of Expenses in advance or contribution hereunder or to recover under any director
and officer liability insurance policies maintained by the Company, the Company will, to the
fullest extent permitted by law, indemnify and hold harmless Indemnitee against any and all
Expenses which are paid or incurred by Indemnitee in connection with such judicial adjudication or
arbitration, regardless of whether Indemnitee ultimately is determined to be entitled to such

10

 

indemnification, payment of Expenses in advance or contribution or insurance recovery. In
addition, if requested by Indemnitee, the Company will (within five days after receipt by the
Company of the written request therefor), pay as an Expense Advance such Expenses, to the fullest
extent permitted by law.

     8.5 Company Bound by Provisions of this Agreement. The Company will be precluded from
asserting in any judicial or arbitration proceeding commenced pursuant to this Article 8
that the procedures and presumptions of this Agreement are not valid, binding and enforceable and
will stipulate in any such judicial or arbitration proceeding that the Company is bound by all the
provisions of this Agreement.

ARTICLE 9

NON-EXCLUSIVITY, SUBROGATION; NO DUPLICATIVE PAYMENTS;

MORE FAVORABLE TERMS

     9.1 Non-Exclusivity. The rights of indemnification and to receive Expense Advances as provided
by this Agreement will not be deemed exclusive of any other rights to which Indemnitee may at any
time be entitled under applicable law, the Articles, the Bylaws, any agreement, a vote of
stockholders, a resolution of the directors or otherwise. To the extent Indemnitee otherwise would
have any greater right to indemnification or payment of any advancement of Expenses under any other
provisions under applicable law, the Articles, Bylaws, any agreement, vote of stockholders, a
resolution of directors or otherwise, Indemnitee will be entitled under this Agreement to such
greater right. No amendment, alteration or repeal of this Agreement or of any provision hereof
limits or restricts any right of Indemnitee under this Agreement in respect of any action taken or
omitted by such Indemnitee prior to such amendment, alteration or repeal. To the extent that a
change in the NRS, whether by statute or judicial decision, permits greater indemnification than
would be afforded currently under the Articles, Bylaws and this Agreement, it is the intent of the
parties hereto that Indemnitee enjoy by this Agreement the greater benefits so afforded by such
change. No right or remedy herein conferred is intended to be exclusive of any other right or
remedy, and every other right and remedy will be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, will not prevent the
concurrent assertion or employment of any other right or remedy.

     9.2 Subrogation. In the event of any payment by the Company under this Agreement, the Company
will be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee
with respect thereto and Indemnitee will execute all papers required and take all action necessary
to secure such rights, including execution of such documents as are necessary to enable the Company
to bring suit to enforce such rights (it being understood that all of Indemnitee’s reasonable
Expenses related thereto will be borne by the Company).

     9.3 No Duplicative Payments. The Company will not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable (or any Expense for which advancement is provided)
hereunder if and to the extent that Indemnitee has otherwise actually received such payment under
any insurance policy, contract, agreement or otherwise. The Company’s obligation to indemnify or
advance Expenses hereunder to Indemnitee in respect of Proceedings relating to Indemnitee’s service
at the request of the Company as a director, officer, employee, partner, member, manager, trustee,
fiduciary or agent of any other Enterprise will be reduced by any amount Indemnitee has actually
received as indemnification or advancement of Expenses from such other Enterprise.

11

 

     9.4 More Favorable Terms. In the event the Company enters into an indemnification agreement
with another officer or director, as the case may be, containing terms more favorable to the
indemnitee thereof than the terms contained herein (and absent special circumstances justifying
such more favorable terms), Indemnitee will be afforded the benefit of such more favorable terms
and such more favorable terms will be deemed incorporated by reference herein as if set forth in
full herein. As promptly as practicable following the execution thereof, the Company will (a) send
a copy of the agreement containing more favorable terms to Indemnitee, and (b) prepare, execute and
deliver to Indemnitee an amendment to this Agreement containing such more favorable terms.

ARTICLE 10

DEFENSE OF PROCEEDINGS

     10.1 Company Assuming the Defense. Subject to Section 10.3 below, in the event the
Company is obligated to pay in advance the Expenses of any Proceeding pursuant to Article
4, the Company will be entitled, by written notice to Indemnitee, to assume the defense of such
Proceeding, with counsel approved by Indemnitee, which approval will not be unreasonably withheld.
The Company will identify the counsel it proposes to employ in connection with such defense as part
of the written notice sent to Indemnitee notifying Indemnitee of the Company’s election to assume
such defense, and Indemnitee will be required, within ten days following Indemnitee’s receipt of
such notice, to inform the Company of its approval of such counsel or, if it has objections, the
reasons therefor. If such objections cannot be resolved by the parties, the Company will identify
alternative counsel, which counsel will also be subject to approval by Indemnitee in accordance
with the procedure described in the prior sentence.

     10.2 Right of Indemnitee to Employ Counsel. Following approval of counsel by Indemnitee
pursuant to Section 10.1 and retention of such counsel by the Company, the Company will not
be liable to Indemnitee under this Agreement for any fees and expenses of counsel subsequently
incurred by Indemnitee with respect to the same Proceeding; provided, however, that (a) Indemnitee
has the right to employ counsel in any such Proceeding at Indemnitee’s expense and (b) the Company
will be required to pay the fees and expenses of Indemnitee’s counsel if (i) the employment of
counsel by Indemnitee has been previously authorized by the Company, (ii) Indemnitee reasonably
concludes that there is an actual or potential conflict between the Company (or any other person or
persons included in a joint defense) and Indemnitee in the conduct of such defense or
representation by such counsel retained by the Company or (iii) the Company does not continue to
retain the counsel approved by Indemnitee.

     10.3 Company Not Entitled to Assume Defense. Notwithstanding Section 10.1, the Company
will not be entitled to assume the defense of any Proceeding brought by or on behalf of the Company
or any Proceeding as to which Indemnitee has reasonably made the conclusion provided for in
Section 10.2(b)(ii).

ARTICLE 11

SETTLEMENT

     11.1 Company Bound by Provisions of this Agreement. Notwithstanding anything in this Agreement
to the contrary, the Company will have no obligation to indemnify Indemnitee under this Agreement
for any amounts paid in settlement of any Proceeding effected without the Company’s prior written
consent.

12

 

     11.2 When Indemnitee’s Prior Consent Required. The Company will not, without the prior written
consent of Indemnitee, consent to the entry of any judgment against Indemnitee or enter into any
settlement or compromise which (i) includes an admission of fault of Indemnitee, any non-monetary
remedy imposed on Indemnitee or a Loss for which Indemnitee is not wholly indemnified hereunder or
(ii) with respect to any Proceeding with respect to which Indemnitee may be or is made a party or a
participant or may be or is otherwise entitled to seek indemnification hereunder, does not include,
as an unconditional term thereof, the full release of Indemnitee from all liability in respect of
such Proceeding, which release will be in form and substance reasonably satisfactory to Indemnitee.
Neither the Company nor Indemnitee will unreasonably withhold its consent to any proposed
settlement; provided, however, Indemnitee may withhold consent to any settlement that does not
provide a full and unconditional release of Indemnitee from all liability in respect of such
Proceeding.

ARTICLE 12

DURATION OF AGREEMENT

     12.1 Duration of Agreement. This Agreement will continue until and terminate upon the latest
of (a) the statute of limitations applicable to any claim that could be asserted against an
Indemnitee with respect to which Indemnitee may be entitled to indemnification and/or an Expense
Advance under this Agreement, (b) ten years after the date that Indemnitee has ceased to serve as
an officer of the Company or as a director, officer, employee, partner, member, manager, fiduciary
or agent of any other Enterprise which Indemnitee served at the request of the Company, or (c) if,
at the later of the dates referred to in (a) and (b) above, there is pending a Proceeding in
respect of which Indemnitee is granted rights of indemnification or the right to an Expense Advance
under this Agreement or a Proceeding commenced by Indemnitee pursuant to Article 8 of this
Agreement, one year after the final termination of such Proceeding, including any and all appeals.

ARTICLE 13

MISCELLANEOUS

     13.1 Entire Agreement. This Agreement constitutes the entire agreement and understanding of
the parties in respect of the subject matter hereof and supersedes all prior understandings,
agreements or representations by or among the parties, written or oral, to the extent they relate
in any way to the subject matter hereof; provided, however, it is agreed that the provisions
contained in this Agreement are a supplement to, and not a substitute for, any provisions regarding
the same subject matter contained in the Articles, the Bylaws and any employment or similar
agreement between the parties.

     13.2 Assignment; Binding Effect; Third Party Beneficiaries. No party may assign either this
Agreement or any of its rights, interests or obligations hereunder without the prior written
approval of the other party and any such assignment by a party without prior written approval of
the other parties will be deemed invalid and not binding on such other parties; provided, however,
that the Company may assign all (but not less than all) of its rights, obligations and interests
hereunder to any direct or indirect successor to all or substantially all of the business or assets
of the Company by purchase, merger, consolidation or otherwise and will cause such successor to be
bound by and expressly assume the terms and provisions hereof. All of the terms, agreements,
covenants, representations, warranties and conditions of this Agreement are binding upon, and inure
to the benefit of and are enforceable by, the parties and their respective successors, permitted
assigns, heirs, executors and personal and legal

13

 

representatives. There are no third party beneficiaries having rights under or with respect to
this Agreement.

     13.3 Notices. All notices, requests and other communications provided for or permitted to be
given under this Agreement must be in writing and be given by personal delivery, by certified or
registered United States mail (postage prepaid, return receipt requested), by a nationally
recognized overnight delivery service for next day delivery, or by facsimile transmission, as
follows (or to such other address as any party may give in a notice given in accordance with the
provisions hereof):

	 	 	 
	If to the Company:

	 	United Fuel & Energy Corporation
	 

	 	1800 Katella Avenue, Suite 102
	 

	 	Anaheim, California, 92863
	 

	 	Attn: Chief Executive Officer
	 

	 	Fax No:                                         
	 
	 	 
	If to Indemnitee:

	 	Joseph M. Juliano
	 

	 	1800 Katella Avenue, Suite 102
	 

	 	Anaheim, California 92863
	 

	 	Fax No:                                         

All notices, requests or other communications will be effective and deemed given only as follows:
(i) if given by personal delivery, upon such personal delivery, (ii) if sent by certified or
registered mail, on the fifth business day after being deposited in the United States mail, (iii)
if sent for next day delivery by overnight delivery service, on the date of delivery as confirmed
by written confirmation of delivery, (iv) if sent by facsimile, upon the transmitter’s confirmation
of receipt of such facsimile transmission, except that if such confirmation is received after 5:00
p.m. (in the recipient’s time zone) on a business day, or is received on a day that is not a
business day, then such notice, request or communication will not be deemed effective or given
until the next succeeding business day. Notices, requests and other communications sent in any
other manner, including by electronic mail, will not be effective.

     13.4 Specific Performance; Remedies. Each party acknowledges and agrees that the other party
would be damaged irreparably if any provision of this Agreement were not performed in accordance
with its specific terms or were otherwise breached. Accordingly, the parties will be entitled to an
injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and its provisions in any action or proceeding instituted in any court
of the United States or any state thereof having jurisdiction over the parties and the matter, in
addition to any other remedy to which they may be entitled, at law or in equity. Except as
expressly provided herein, the rights, obligations and remedies created by this Agreement are
cumulative and in addition to any other rights, obligations or remedies otherwise available at law
or in equity. Except as expressly provided herein, nothing herein will be considered an election of
remedies.

     13.5 Headings. The article and section headings contained in this Agreement are inserted for
convenience only and will not affect in any way the meaning or interpretation of this Agreement.

     13.6 Governing Law. This Agreement will be governed by and construed in accordance with the
laws of the State of Nevada, without giving effect to any choice of law principles.

14

 

     13.7 Amendment. This Agreement may not be amended or modified except by a writing signed by
all of the parties.

     13.8 Extensions; Waivers. Any party may, for itself only, (i) extend the time for the
performance of any of the obligations of any other party under this Agreement, (ii) waive any
inaccuracies in the representations and warranties of any other party contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein. Any such extension or waiver will be
valid only if set forth in a writing signed by the party to be bound thereby. No waiver by any
party of any default, misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, may be deemed to extend to any prior or subsequent default, misrepresentation
or breach of warranty or covenant hereunder or affect in any way any rights arising because of any
prior or subsequent such occurrence. Neither the failure nor any delay on the part of any party to
exercise any right or remedy under this Agreement will operate as a waiver thereof, nor will any
single or partial exercise of any right or remedy preclude any other or further exercise of the
same or of any other right or remedy.

     13.9 Severability. The provisions of this Agreement will be deemed severable and the
invalidity or unenforceability of any provision will not affect the validity or enforceability of
the other provisions hereof; provided that if any provision of this Agreement, as applied to any
party or to any circumstance, is judicially determined not to be enforceable in accordance with its
terms, the parties agree that the court judicially making such determination may modify the
provision in a manner consistent with its objectives such that it is enforceable, and/or to delete
specific words or phrases, and in its modified form, such provision will then be enforceable and
will be enforced.

     13.10 Counterparts; Effectiveness. This Agreement may be executed in two or more counterparts,
each of which will be deemed an original but all of which together will constitute one and the same
instrument. This Agreement will become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties, which delivery may be made by exchange of
copies of the signature page by facsimile transmission or email of a .pdf or .tiff formatted
document.

     13.11 Construction. This Agreement has been freely and fairly negotiated among the parties. If
an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if
drafted jointly by the parties and no presumption or burden of proof will arise favoring or
disfavoring any party because of the authorship of any provision of this Agreement. Any reference
to any law will be deemed also to refer to such law as amended and all rules and regulations
promulgated thereunder, unless the context requires otherwise. The words “include,” “includes,” and
“including” will be deemed to be followed by “without limitation.” Pronouns in masculine, feminine,
and neuter genders will be construed to include any other gender, and words in the singular form
will be construed to include the plural and vice versa, unless the context otherwise requires. The
words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder,” and words of similar import
refer to this Agreement as a whole and not to any particular subdivision unless expressly so
limited. The parties intend that each representation, warranty, and covenant contained herein will
have independent significance. If any party has breached any representation, warranty, or covenant
contained herein in any respect, the fact that there exists another representation, warranty or
covenant relating to the same subject matter (regardless of the relative levels of specificity)
which the party has not breached will not detract from or mitigate the fact that the party is in
breach of the first representation, warranty, or covenant. Time is of the essence in the
performance of this Agreement.

15

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.

	 	 	 	 	 
	 	UNITED FUEL & ENERGY CORPORATION

 	 
	 	By:  	/s/ William C. Bousema
 	 
	 	 	William C. Bousema 	 
	 	 	Executive Vice President, Chief Financial

Officer and Secretary 	 
	 
	 	INDEMNITEE

 	 
	 	/s/ JOSEPH M. JULIANO
 	 
	 	JOSEPH M. JULIANO 	 
	 	 	 
	 

16

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