UNITED FUEL & ENERGY CORP
<DOCUMENT>
<TYPE>EX-10.10
<SEQUENCE>139
<FILENAME>v018353_ex10-10.txt
<TEXT>
                              EMPLOYMENT AGREEMENT

      This Employment Agreement ("Agreement") is made as of the 1st day of May
2004 (the "Effective Date"), between UNITED FUEL & ENERGY CORPORATION, a
corporation having its principal place of business in Midland, Texas, and its
wholly-owned subsidiaries (collectively, the "Company"), and BOBBY W. PAGE
("Employee").

      WHEREAS, the Company is currently engaged in the distribution of fuel
products through the following methods: (a) gasoline and diesel sales through
unattended re-fueling stations for commercial vehicles and fleets (known as
card-lock sites); (b) wholesale distribution of gasoline and diesel products to
commercial customers, which car dealers, gas stations, state and municipal
government, trucking companies, and oil field service companies; (c) wholesale
distribution of lubricant products (including gear oil, gas engine oil,
heavy-duty motor oil, hydraulic oil, transmission oil, hi-temp [specialty]
greases, and synthetics) to commercial customers, which include power generation
facilities, gas engine compressors, fleets, and oil field equipment; (d)
stand-by bobtail trucking services to oil field companies; and (e) sale and
distribution, through bulk plants, of regular propane (used in heating) and
refrigerant propane (used in commercial facilities for chilling) to residential
and commercial customers; all in the State of Texas and the eastern portion of
the State of New Mexico (the "Business"); and

      WHEREAS, the Company desires to obtain the services of Employee and
Employee desires to be employed by the Company upon the terms and conditions
hereinafter set forth; and

      WHEREAS, as an ancillary and integral part of this Agreement, the Company
desires to obtain Employee's covenant not to compete and other covenants, and
Employee desires to make a covenant not to compete and such other covenants as
hereinafter set forth;

      NOW, THEREFORE, in consideration of the covenants herein contained, and
other good and valuable consideration, the receipt and adequacy of which are
hereby forever acknowledged, the parties, with the intent of being legally bound
hereby, agree as follows:

1.    Position and Responsibilities.

      1.1   Position. The Company agrees to employ Employee, and Employee agrees
            to accept employment as a Vice President, Chief Financial Officer
            and Secretary of the Company, all in accordance with the terms and
            conditions of this Agreement. Employee shall perform such duties and
            responsibilities as are normally related to such position in
            accordance with the standards of the industry and any additional
            duties normally associated with this position now or hereafter
            assigned to Employee by the Company. Employee shall use his best
            efforts to promote the interests of the Company. This Agreement
            shall supersede any and all employment agreements, letters of
            intent, term sheets, arrangements and/or any other understanding,
            whether written or oral, between Employee and the Company, regarding
            any and all matters relating to employment, compensation, benefits,
            or similar matters.

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                                     - 2 -


      1.2   Other Activities. Employee shall devote his full business time,
            attention, and skill to perform any assigned duties, services, and
            responsibilities while employed by the Company, for the furtherance
            of the Company's business, in a diligent, loyal, and conscientious
            manner. Employee shall diligently provide full time services to the
            Company by performing all services, acts, or things necessary or
            advisable to manage and conduct the business of the Company, subject
            to the Bylaws of the Company and the policies set forth by the Board
            of Directors of the Company ("the Board) not inconsistent with the
            provisions of this Agreement. Employee shall not, during the term of
            this Agreement: (a) accept any other employment, or (b) engage,
            directly or indirectly, in any other business activity (whether or
            not pursued for pecuniary advantage) that might interfere with
            Employee's duties and responsibilities hereunder or create a
            conflict of interest with the Company. The foregoing limitations
            shall not be construed to prohibit Employee from: (i) investing in
            and advising management of a non-competing business (provided such
            activities do not materially interfere or conflict with the
            performance of Employee's duties under this Agreement), or (ii)
            investing in the stock of any competing corporation listed on a
            national securities exchange or traded in the over-the-counter
            market if Employee does not manage or advise the corporation's
            business and Employee and his associates (as that term is defined in
            Regulation 15(A) promulgated under the Securities Exchange Act of
            1934, as in effect on the date of this Agreement), collectively, do
            not own more than 2% of the corporation's stock.

      1.3   No Conflict. Employee represents and warrants that Employee's
            execution of this Agreement, Employee's employment with the Company,
            and the performance of Employee's proposed duties under this
            Agreement shall not violate any obligations Employee may have to any
            other employer, person, or entity, including any obligations with
            respect to proprietary or confidential information of any other
            person or entity. Further, Employee shall indemnify the Company for
            any claim, including, but not limited to, reasonable attorneys' fees
            and expenses of investigation, by any such third party that such
            third party may now have or may hereafter come to have against the
            Company, based upon or arising out of any non-competition agreement,
            invention, or secrecy agreement between Employee and such third
            party which was in existence as of the date of this Agreement.

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                                     - 3 -


2.    Compensation and Benefits.

      2.1   Base Salary. As compensation for the services to be rendered by
            Employee, the Company shall pay Employee a Base Salary equivalent to
            one hundred fifty thousand dollars ($150,000.00), paid in equal
            installments in accordance with the Company's regular payroll
            practices ("Base Salary"). Such Base Salary shall be subject to such
            withholding and deductions as required by law and as may be mutually
            agreed to by Employee and the Company. Employee's Base Salary shall
            increase to one hundred seventy-five thousand dollars ($175,000.00)
            beginning May 1, 2005, provided Employee remains continuously
            employed by the Company to that date. Employee's Base Salary will be
            reviewed from time to time in accordance with the established
            procedures of the Company for adjusting salaries for
            similarly-situated employees and increased in the sole discretion of
            the Company. Employee's Base Salary may not be decreased during the
            Term of this Agreement unless the Company implements a Company-wide
            salary reduction.

      2.2   Bonus. As additional compensation for employment under this
            Agreement, Employee will receive a bonus of twenty-five thousand
            dollars ($25,000.00) on April 29, 2005 if Employee has been
            continuously employed by the Company to that date. Any other bonuses
            or incentive pay will be determined and paid by the Company from
            time to time, or not at all, in its sole discretion.

      2.3   Stock Options. In addition to the other compensation provided for in
            this Agreement, the parties agree that Employee will become entitled
            in the future to an option to purchase the number of shares of
            common stock of the Company in an amount not less that three percent
            (3%), but not to exceed 300,000 shares, of the common stock of the
            Company issued and outstanding at the time specified below, at a
            price per share equal to the fair market value of a share of common
            stock of the Company at the time of the issuance of such stock
            option. Such stock option is to be issued upon the effective date of
            the anticipated reverse merger of the Company.

      2.4   Fringe Benefits. In addition to the Base Salary payable to Employee
            under this Agreement, and so long as Employee meets the applicable
            eligibility requirements, Employee shall be eligible to participate
            in the benefits made generally available by the Company to
            similarly-situated employees, in accordance with the benefit plans
            established by the Company from time to time, and as may be amended
            from time to time, in the Company's sole discretion. The Company
            reserves the right to terminate any benefit plan for any reason or
            no reason. Employee shall be entitled to three (3) weeks paid
            vacation each year, consistent with Company policy for senior
            executive officers.

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                                     - 4 -


      2.5   Business Expenses. Throughout the Term of this Agreement, the
            Company shall reimburse Employee for all reasonable and necessary
            business expenses which may be incurred by Employee in the course of
            performing his duties. Authorized expenses shall be reimbursed by
            the Company in accordance with policies and practices adopted, from
            time to time, by the Company concerning expense reimbursement for
            employees and shall be reimbursed upon timely presentation to the
            Company of an itemized expense statement with respect thereto,
            including substantiation of expenses incurred and such other
            documentation as may be required by the Company's reimbursement
            policies from time to time and in accordance with Internal Revenue
            Service guidelines.

3.    Term. This Agreement shall be effective as of the Effective Date, and
      shall continue in effect for a three (3) year period ending April 30,
      2007, unless earlier terminated in accordance with Section 4 (the "Initial
      Term"); provided however, that this Agreement shall be automatically
      extended beyond the Initial Term for a period of one (1) year, and
      successive one-year periods thereafter (the "Renewal Term"), unless either
      party notifies the other party of the termination of this Agreement in
      writing by placing such notice in the United States mail, certified,
      return receipt requested, postage prepaid to the address shown below, at
      least thirty (30) days prior to the end of the Initial Term or any Renewal
      Term. The term of this Agreement, whether during the Initial Term or any
      Renewal Term, shall be referred to as the "Term."

4.    Termination. This Agreement and Employee's employment may be terminated in
      any one of the followings ways:

      a.    Death. The death of Employee shall immediately and automatically
            terminate this Agreement.

      b.    Disability. If Employee is under a Disability (as defined below),
            the Company may terminate his employment under this Agreement during
            the continuance of the Disability by providing at least thirty (30)
            days prior written notice. The Board, in the exercise of its
            reasonable judgment acting in good faith, shall determine whether
            Employee is under a Disability. The determination may not be
            arbitrary or unreasonable, and the Board shall take into
            consideration the opinion of Employee's personal physician, if
            reasonably available, as well as applicable provisions of the
            Americans with Disabilities Act and the opinion of any qualified
            physician selected by the Company to evaluate Employee, but the
            determination by the Board shall be final and binding on the parties
            to this Agreement, provided such determination is made consistent
            with the provisions of this Agreement. "Disability," as used in this
            Agreement, means the Employee is unable, by reason of illness or
            physical or mental incapacity or disability (from any cause
            whatsoever) to perform the essential functions of his position under
            this Agreement, whether with or without reasonable accommodation by
            the Company, in substantially the manner and to the extent required
            under this Agreement before the commencement of the Disability, for
            a total period of ninety (90) days in any one hundred eighty (180)
            day period.

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                                     - 5 -


      c.    Cause. The Company may terminate this Agreement and Employee's
            employment immediately upon written notice to Employee for cause.
            "Cause" as used in this Agreement shall mean the occurrence of any
            of the following events:

            (1)   a material breach by Employee of any of the terms and
                  conditions of this Agreement, or Employee's intentional
                  non-performance (other than by reason of Disability) of any of
                  Employee's duties or responsibilities under this Agreement or
                  of any reasonable, lawful instructions from the Board, which
                  has not been cured by Employee after reasonable notice and
                  opportunity to cure;

            (2)   Employee's dishonesty, fraud, disloyalty, or misconduct with
                  respect to the business or affairs of the Company which the
                  Board determines in the exercise of its reasonable judgment
                  has been or is likely to be injurious to the interest,
                  property, operations, business, or reputation of the Company;

            (3)   Employee's conviction of a crime other than a minor traffic
                  violation or similar minor offense;

            (4)   the good faith determination by the Board in the exercise of
                  its reasonable judgment that Employee has committed an act
                  that: (i) materially and negatively affects the Company's
                  business or reputation (including its relationships with its
                  customers, suppliers, or employees); (ii) constitutes moral
                  turpitude; or (iii) indicates alcohol or drug abuse by
                  Employee that adversely affects his performance under this
                  Agreement; or

            (5)   Employee's gross negligence in the performance of any of his
                  duties or responsibilities under this Agreement.

      d.    Without Cause. The Company may terminate this Agreement and
            Employee's employment hereunder without Cause and for any or no
            reason by providing thirty (30) days written notice to Employee
            placed in the United States mail, certified, return receipt
            requested, postage prepaid to the address shown below. Any such
            termination is effective upon the date of service of the notice in
            accordance with this Agreement.

<PAGE>
                                     - 6 -


      e.    Resignation or Retirement. Employee may terminate this Agreement and
            his employment hereunder upon at least (30) days written notice to
            the Company placed in the United States mail, certified, return
            receipt requested, postage prepaid to the address shown below.

      f.    Change in Control. This Agreement and Employee's employment
            hereunder may be terminated in connection with a Change in Control,
            as defined in Section 9.

5.    Effect of Termination. If Employee's employment under this Agreement is
      terminated, the following shall occur:

      a.    Employee's Base Salary shall cease to accrue;

      b.    Employee shall cease to accrue vacation days and any other paid time
            off (including sick days and personal days). Employee shall be paid
            for accrued unused vacation time in accordance with the Company's
            policies and practices. Employee shall not be paid for unused sick
            days or other paid time off;

      c.    Employee shall submit any claims for reimbursement of business
            expenses incurred within the time period required under the
            Company's policies generally, or the Company will not be obligated
            to reimburse such expenses;

      d.    Employee shall return all Company property in accordance with
            Section 7;

      e.    The obligations and restrictions imposed on Employee under Section 8
            shall continue in full force and effect;

      f.    Any vested benefits of Employee under any plan or agreement shall
            not be affected; and

      g.    The Company shall continue to have all other rights available under
            this Agreement.

6.    Compensation After Termination. If Employee's employment under this
      Agreement is terminated by:

      a.    Employee's death or Disability, Employee or Employee's estate shall
            not be paid any Base Salary or severance pay after the date of death
            or the date of determination of Employee's Disability. To the extent
            consistent with Company policy for all senior executive officers,
            Employee or Employee's estate may receive other benefits upon his
            death or Disability.

<PAGE>
                                     - 7 -


      b.    The Company for Cause, the Company shall have no further obligations
            under this Agreement or otherwise with respect to Employee's
            employment from and after the termination date. Employee shall not
            be entitled to any severance pay or other compensation.

      c.    The Company without Cause, Employee shall be paid the greater of the
            Base Salary then in effect for the remaining Term of this Agreement
            or, after the end of the second year, 12 months salary at the Base
            Salary rate.

      d.    The Employee through resignation or retirement, the Employee will be
            paid his Base Salary and the benefits referred to in Section 2.4 on
            a pro rata basis through the last day worked. Employee shall be
            expected to continue to perform his duties under this Agreement
            between the date of written notice to the Company and the effective
            date of resignation or retirement; provided, however, that the
            Company reserves the right, in its sole discretion, to relieve
            Employee of his duties and continue Employee's Base Salary and
            benefits through the effective date of resignation or retirement.

      e.    Expiration of the Term of the Agreement, Employee shall not be
            entitled to any severance pay or other compensation and all
            obligations of the parties shall end, except that the obligations
            and restrictions imposed on Employee under Section 8 shall continue
            in full force and effect.

7.    Return of Company Property. Upon the termination of Employee's employment
      with the Company, for any reason, and at any time upon the Company's
      request, Employee shall deliver to the Company all Company property,
      including: (a) all documents, contracts, writings, disks, diskettes,
      computer files or programs, computer-generated materials, information,
      documentation, or data stored in any medium, recordings and drawings
      pertaining to trade secrets, proprietary or confidential information, or
      other inventions and works of the Company; (b) all records, designs,
      plans, sketches, specifications, patents, business plans, financial
      statements, accountings, flow charts, manuals, notebooks, memoranda, lists
      (including price lists and customer lists), and other property delivered
      to or compiled by Employee, by or on behalf of the Company or any of its
      representatives, vendors, or customers which pertain to the business of
      the Company, all of which shall be and remain the property of the Company,
      and shall be subject, at all times, to its discretion and control; (c) all
      equipment, devices, products, and tangible personal property entrusted to
      Employee by the Company, including but not limited to computers, printers
      and other computer equipment or accessories, cellular telephones, pagers,
      keys, access cards, identification cards, and credit cards; and (d) all
      correspondence, reports, records, notes, charts, advertisement materials,
      and other similar data pertaining to the business, activities, or future
      plans of the Company, in the possession or control of Employee, shall be
      delivered promptly to the Company without request by it. Employee shall
      certify to the Company, in writing, within five (5) days of any request by
      the Company, that, to the best of his knowledge and belief, all such
      materials have been returned to the Company.

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                                     - 8 -


8.    Covenant Not to Compete.

      8.1   Acknowledgements. Employee acknowledges that he will be employed by
            the Company in a confidential relationship wherein Employee, in the
            course of his employment with the Company, will become familiar with
            and aware of information as to the Company and its customers, the
            Company's specific manner of doing business, including the
            processes, techniques, and trade secrets utilized by the Company,
            and the Company's future plans with respect thereto, all of which
            have been and will continue to be established and maintained at
            great expense to the Company, which information is a trade secret
            and constitutes valuable good will of the Company. Employee further
            acknowledges that Employee's services to the Company will be unique
            in nature and of extraordinary value to the Company, and that the
            Company would be irreparably damaged if Employee were to provide
            similar services, or reveal trade secrets or confidential
            information, to any person or entity competing with the Company or
            engaged in a similar business. Employee further acknowledges that
            the Company would be irreparably damaged if Employee were to disrupt
            the Company's existing relationships with its employees,
            contractors, consultants, agents, or customers. Employee further
            acknowledges that the agreements and covenants contained in this
            Section 8 are essential to protect the Company and the goodwill of
            the Business.

      8.2   Restriction on Competition. During the Restricted Period (as defined
            below) and within the Territory (as defined below), Employee agrees
            that he may not, directly or indirectly, for himself or on behalf of
            or in conjunction with any other person(s), company, partnership,
            limited liability company, corporation, entity, or business of
            whatever nature,

            a.    Engage, as an officer, director, shareholder, owner, partner,
                  joint venturer, principal, individual proprietor, or in any
                  other capacity, whether as an agent, employee, independent
                  contractor, consultant, or advisor, or as a sales
                  representative, in the Business (as defined above) or any
                  other business whose products or services compete in whole or
                  in part with the Company or with any material portion of the
                  Company during the Restricted Period and within the Territory;

            b.    Call upon any person who is, at that time, an employee of the
                  Company, for the purpose or with the intent of enticing such
                  employee away from or out of the employ of the Company;

            c.    Call upon any person or entity which is, at that time, or
                  which has been, within the two (2) years prior to that time, a
                  customer or prospective customer of the Company with whom
                  Employee has had material contact (as defined below), for the
                  purpose of soliciting or selling products and services similar
                  in nature to those which are or were provided by the Company
                  to such customer; or persuade or attempt to persuade any
                  agent, vendor, supplier, client, customer, prospective
                  customer, independent contractor, or other person who has a
                  business or professional relationship with the Company to
                  cease to do business with the Company, reduce the amount of
                  business that it historically has done with the Company, or
                  otherwise adversely or materially alter its business or
                  professional relationship with the Company. For purposes of
                  this subsection, "material contact" exists between Employee
                  and an actual or prospective customer of the Company if
                  Employee: (i) personally dealt with such customer; (ii)
                  coordinated or supervised dealings with such customer; or

<PAGE>
                                     - 9 -


                  (iii) obtained Confidential Information (as defined below)
                  about such customer in the ordinary course of business through
                  Employee's association with the Company; provided, however,
                  that "material contact" shall not exist if Employee had a
                  relationship with such customer that predates Employee's
                  employment with the Company and such customer became a
                  customer of the Company without Employee utilizing any of the
                  resources or goodwill of the Company. "Confidential
                  Information," as used in this Agreement, means any information
                  relating to the Company's business or affairs of the Business,
                  including information relating to financial statements,
                  customer identities, customer specifications, potential
                  customers, employees, suppliers, servicing methods, equipment,
                  drawings, patterns, devices, programs, strategies and
                  information, analyses, profit margins or other proprietary
                  information used by the Company in connection with the
                  Business, but Confidential Information excludes any
                  information which is in the public domain or becomes known in
                  the industry through no wrongful act on Employee's part.
                  Employee acknowledges that the Confidential Information is
                  vital, sensitive, confidential, and proprietary to the
                  Company;

            d.    Call upon any prospective acquisition or merger candidate, on
                  the Employee's own behalf or on behalf of any competitor,
                  which candidate was, to the Employee's actual knowledge after
                  due inquiry, either called upon by the Company or for which
                  the Company made an acquisition or merger analysis, for the
                  purpose of acquiring such entity, provided that the Employee
                  shall not be charged with violating this section unless and
                  until the Employee shall have knowledge or notice that such
                  prospective acquisition or merger candidate was called upon,
                  or that an acquisition or merger analysis was made by the
                  Company for the purpose of acquiring or merging with such
                  entity; or

            e.    Disclose any Confidential Information regarding customers,
                  whether existing or prospective, of the Company to any person,
                  firm, partnership, corporation, or business for any reason or
                  purpose whatever.

"Restricted Period," as used in this Agreement, means the period beginning on
the Effective Date and ending one (1) year after the termination or expiration
date of this Agreement. "Territory," as used in this Agreement, means the area
within a one hundred (100) mile radius of Midland, Texas.

<PAGE>
                                     - 10 -


Notwithstanding the above, nothing in this Agreement shall prohibit Employee
from investing in the stock of any competing corporation listed on a national
securities exchange or traded in the over-the-counter market if Employee is not
involved in the corporation's business and Employee and his associates (as that
term is defined in Regulation 15(A) promulgated under the Securities Exchange
Act of 1934, as in effect on the date of this Agreement), collectively, do not
own more than two percent (2%) of the corporation's stock.

      8.3   Remedies. Due to the difficulty of measuring economic losses to the
            Company as a result of a breach of the foregoing covenants, and
            because of the immediate and irreparable damage that could be caused
            to the Company for which it would have no other adequate remedy, the
            foregoing covenants may be enforced by the Company, in the event of
            a breach by the Employee, by injunctive relief and/or restraining
            orders. If a court having jurisdiction determines for any reason
            that the Company is not entitled to injunctive relief, the Company
            shall be entitled to recover from Employee all losses and damages
            suffered by the Company as a result of the breach (including treble,
            punitive, incidental, and consequential damages) and all profit,
            remuneration, or other consideration that Employee gains from
            breaching this covenant; and reimbursement from Employee of all
            costs incurred by the Company in enforcing the covenant or otherwise
            defending or prosecuting any mediation, arbitration, or litigation
            arising out of the covenant, including attorneys' fees and court
            costs. The Company may exercise any of the foregoing remedies
            concurrently, independently, or successively.

      8.4   Reasonable Restraint. Employee acknowledges and agrees that the
            foregoing covenants in this Section 8 are reasonable and necessary
            to protect the Company's legitimate business interests and do not
            impose any limitations greater than those necessary to protect those
            interests.

      8.5   Severability. The covenants in this Section 8 are severable and
            separate, and the unenforceability of any specific covenant shall
            not affect the provisions of any other covenant. Moreover, in the
            event any court of competent jurisdiction shall determine that the
            scope, time, or territorial restriction of any specific covenant as
            set forth is unreasonable, then it is the intention of the parties
            that such restriction be enforced to the fullest extent which the
            court deems reasonable, and the Agreement shall thereby be reformed.

      8.6   Independent Provisions. All of the covenants in this Section 8 shall
            be construed as an agreement independent of any other provision in
            this Agreement, and the existence of any claim or cause of action of
            the Employee against the Company, whether predicated on this
            Agreement or otherwise, shall not constitute a defense to the
            enforcement by the Company of any of such covenants. It is
            specifically agreed that the period of one (1) year following
            termination of employment stated at the beginning of this Section 8,
            during which the agreements and covenants of the Employee made in
            this Section 8 shall be effective, shall be computed by excluding
            from such computation any time during which the Employee is in
            violation of any provision of this Section 8.

<PAGE>
                                     - 11 -


9.    Change in Control. In the event of a Change in Control (as defined below)
      that results in the termination of Employee's employment or that causes
      Employee to take a material reduction in Base Salary, the following shall
      occur: (a) Employee shall be entitled to receive (12) months Base Salary
      if the event occurs after completion of employee's second year or, if
      within the first two years of employment the balance of the term remaining
      of this agreement, payable thirty (30) days after the occurrence of the
      Change in Control; and (b) all options granted to Employee to purchase
      shares of common stock of the Company shall immediately become fully
      vested and exercisable. A "Change in Control" shall occur for purposes of
      this Agreement if: (a) members of the Board as of the date of this
      Agreement cease for any reason at any time to constitute at least a
      majority of the Board, except to the extent that the incumbent Board
      consents to such change; (b) the shareholders of the Company as of the
      Effective Date no longer own more than fifty percent (50%) of the issued
      and outstanding common stock of the Company; (c) the Company sells all or
      substantially all of the assets of the Company; or (d) Employee is
      required by the Company to relocate and work from a location more than
      fifty (50) miles from Midland, Texas. This provision shall be binding upon
      any successor in interest to the Company, which shall assume all
      obligations of the Company set forth in this Section.

10.   Additional Provisions.

      10.1  Amendments; Waivers; Remedies. This Agreement may not be amended or
            waived except by a writing signed by Employee and by a duly
            authorized representative of the Company. Employee agrees that he
            may not, at any time during the Term of this Agreement, rely on any
            oral representations of any sort or character regarding his
            employment status, salary, bonuses, or benefits. Failure to exercise
            any right under this Agreement shall not constitute a waiver of such
            right. Any waiver of any breach of this Agreement shall not operate
            as a waiver of any subsequent breaches. All rights or remedies
            specified for a party herein shall be cumulative and in addition to
            all other rights and remedies of the party hereunder or under
            applicable law.

      10.2  Assignment. The performance of Employee is personal hereunder, and
            Employee agrees that Employee shall have no right to assign and
            shall not assign or purport to assign any rights or obligations
            under this Agreement. This Agreement may be assigned or transferred
            by the Company to: (i) any subsidiary or affiliate of the Company to
            which the Business is assigned at any time, or (ii) the purchaser of
            all or substantially all of the Company's assets. Nothing in this
            Agreement shall prevent the consolidation, merger, or sale of the
            Company or a sale of any or all or substantially all of its assets.

<PAGE>
                                     - 12 -


      10.3  Binding Effect. Subject to the foregoing restriction on assignment
            by Employee, this Agreement shall inure to the benefit of and be
            binding upon each of the parties; the affiliates, officers,
            directors, agents, successors, and assigns of the Company; and the
            heirs, devisees, spouses, legal representatives, and successors of
            Employee.

      10.4  Notices. For purposes of this Agreement, notices and all other
            communications provided for in this Agreement shall be in writing
            and shall be deemed to have been duly received five (5) days after
            being placed in the United States mail, certified, return receipt
            requested, postage prepaid, addressed as follows:

                  If to Employee:

                  Bobby W. Page
                  1207 Douglas Ave.
                  Midland, TX  79701

                  If to the Company:

                  United Fuel & Energy Corp.
                  405 N. Marienfeld
                  Third Floor
                  Midland, TX  79701

      or to such other address as either party may have furnished to the other
      in writing in accordance herewith, except that notices of change of
      address sent to an address other than as listed above sent through the
      United States mail shall be effective only upon receipt, or if sent by any
      other means, upon delivery.

      10.5  Severability. If any provision of this Agreement shall be held to be
            invalid, unenforceable, or void, such provision shall be enforced to
            the fullest extent permitted by law, and the remainder of this
            Agreement shall remain in full force and effect and shall be
            enforced to the fullest extent permitted by law. In the event that
            the time period or scope of any provision is declared by a court of
            competent jurisdiction to exceed the maximum time period or scope
            that such court deems enforceable, then such court shall reduce the
            time period or scope to the maximum time period or scope permitted
            by law.

      10.6  Taxes. All amounts paid under this Agreement (including, without
            limitation, Base Salary) shall be reduced by all applicable state
            and federal tax withholdings and any other withholdings required by
            any applicable jurisdiction.

      10.7  Governing Law. The validity, interpretation, enforceability and
            performance of this Agreement shall be governed by and construed in
            accordance with the laws of the State of Texas, without regard to
            conflict of laws principles.

<PAGE>
                                     - 13 -


      10.8  Interpretation. This Agreement shall be construed as a whole,
            according to its fair meaning, and not in favor of or against any
            party. Sections and section headings contained in this Agreement are
            for reference purposes only, and shall not affect, in any manner,
            the meaning or interpretation of this Agreement. Whenever the
            context requires, references to the singular shall include the
            plural and the plural the singular.

      10.9  Authority. Each party represents and warrants that such party has
            the right, power, and authority to enter into and execute this
            Agreement and to perform and discharge all of the obligations
            hereunder, and that this Agreement constitutes the valid and legally
            binding agreement and obligation of such party and is enforceable in
            accordance with its terms.

      10.10 Additional Assurances. The provisions of this Agreement shall be
            self-operative and shall not require further agreement by the
            parties except as may be herein specifically provided to the
            contrary; provided, however, that at the request of the Company,
            Employee shall execute such additional instruments and take such
            additional acts as the Company may deem necessary to effectuate this
            Agreement.

      10.11 Entire Agreement. This Agreement is the final, complete, and
            exclusive agreement of the parties with respect to the subject
            matter hereof and supersedes and merges all prior or contemporaneous
            representations, discussions, proposals, negotiations, conditions,
            communications, and agreements, whether written or oral, between the
            parties relating to the subject matter hereof and all past courses
            of dealing or industry custom. No oral statements or prior written
            material not specifically incorporated herein shall be of any force
            and effect, and no changes in or additions to this Agreement shall
            be recognized unless incorporated herein by amendment, as provided
            herein (such amendment to become effective on the date stipulated
            therein).

      10.12 Employee Acknowledgment. Employee acknowledges that, before signing
            this Agreement, he was advised of his right to consult with an
            attorney of his choice to review this Agreement and that Employee
            had sufficient opportunity to have an attorney review the provisions
            of this Agreement and negotiate its terms. Employee further
            acknowledges that he had a full and adequate opportunity to review
            this Agreement before signing it; that he carefully read and fully
            understood all the provisions of this Agreement before signing it,
            including the rights and obligations of the parties; and that he has
            entered into this Agreement knowingly and voluntarily.

<PAGE>
                                     - 14 -


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

      EMPLOYEE:


      /s/ Bobby W. Page
      -----------------------------------
      Bobby W. Page


      UNITED FUEL & ENERGY CORPORATION

      By: /s/ Scott Heller
      -----------------------------------
      Title: President/COO
</TEXT>
</DOCUMENT>
