Exhibit 10.16


 


CONTRIBUTION,
CONVEYANCE AND ASSUMPTION AGREEMENT


 


This Contribution, Conveyance and Assumption
Agreement, dated as of                                   ,
2008 (this “Agreement”), is entered into by and among Rhino Resources, Inc.,
a Delaware corporation (the “Issuer”) Rhino Energy LLC, a Delaware
limited liability company (“Rhino Energy”), Rhino Energy Holdings LLC, a
Delaware limited liability company (“Holdings”),  Artis Investors LLC, a Delaware limited
liability company (“Artis”), Solitair LLC, a Delaware limited liability
company (“Solitair”), Valentis Investors LLC, a Delaware limited
liability company (“Valentis”), Taurus Investors LLC, a Delaware limited
liability company (“Taurus”), Callidus Investors LLC, a Delaware limited
liability company (“Callidus”), Wexford Spectrum Fund, L.P., a Delaware
limited partnership (“Spectrum”), Wexford Spectrum Fund Liquidating LLC,
a Delaware limited liability company (“Liquidating”), Wexford Offshore CAM
Preferred Corp., a Delaware corporation (“Preferred Corp”), Wexford Offshore
CAM Common Corp., a Delaware corporation (“Common Corp” and together
with Artis, Solitair, Valentis, Taurus, Callidus, Spectrum, Liquidating and Preferred
Corp, “Wexford Funds”), Peter Savitz (Peter Savitz and Wexford Funds
collectively, “Rhino Owners”), Wexford Offshore Partners VII Ltd., a Cayman
Island exempt company (“Offshore Partners”), Wexford Offshore Spectrum
Fund [Ltd.], a Cayman Island exempt company (“Offshore Fund”), and
Wexford Capital LLC, a Connecticut limited liability company (“Wexford”).  The above-named entities and individuals are
sometimes referred to as “Party” and collectively as the “Parties.”


 


WITNESSETH:


 


WHEREAS,
Rhino Owners collectively own 100% membership interest in Rhino Energy;


 


WHEREAS,
Offshore Partners and Offshore Fund indirectly own     %
membership interest in Rhino through Common Corp and Preferred Corp;


 


WHEREAS,
Rhino Owners formed Holdings pursuant to the Delaware Limited Liability Act;


 


WHEREAS, Rhino Owners
desire to transfer their direct or indirect ownership in Rhino Energy into the
Issuer in connection of the initial public offering of the common stock of the
Issuer (the “Common Stock”);


 


NOW, THEREFORE, in
consideration of their mutual undertakings and agreements hereunder, the Parties
undertake and agree as follows:


 


ARTICLE
I


 


CONTRIBUTIONS,
ACKNOWLEDGMENTS AND DISTRIBUTIONS


 


Section 1.1             Contribution of Interests in Rhino Energy by Artis, Solitair, Valentis,
Taurus, Callidus, Spectrum, Liquidating and Peter Savitz.  Each of Artis, Solitair, Valentis, Taurus,
Callidus, Spectrum, Liquidating and Peter Savtiz hereby grants, contributes,
bargains, conveys, assigns, transfers, sets over and delivers to Holdings, its
successors and assigns, for its and their own use forever, all of its limited
liability company interests in Rhino Energy in 


 

















 


exchange for a pro rata limited liability company interest in Holdings,
and Holdings hereby accepts such interests in Rhino Energy as a contribution to
the capital of Holdings.


 


Section 1.2             Contribution of Interests in Rhino Energy by Holdings.  Holdings hereby grants, contributes,
bargains, conveys, assigns, transfers, sets over and delivers to the Issuer,
its successors and assigns, for its and their own use forever, all of its
limited liability company interests in Rhino Energy in exchange for             
shares of Common Stock, and the Issuer hereby accepts such interests in Rhino
Energy as a contribution to the capital of Issuer.


 


Section 1.3             Contribution of Interests in Common Corp and Preferred Corp by Offshore
Partners and Offshore Fund. 
Each of Offshore Partners and Offshore Fund hereby grants, contributes,
bargains, conveys, assigns, transfers, sets over and delivers to the Issuer,
its successors and assigns, for its and their own use forever, all of their
interests in Common Corp and Preferred Corp in exchange for             
shares of Common Stock, of which (a) Offshore Partners receives                   
shares of Common Stock and (b) Offshore Funds receives               
shares of Common Stock, and the Issuer hereby accepts such interests in Common
Corp and Preferred Corp as a contribution to the capital of Issuer.


 


Section 1.4             Contribution of Interests in the Issuer by Offshore Partners and
Offshore Fund.  Each of
Offshore Partners and Offshore Fund hereby grants, contributes, bargains,
conveys, assigns, transfers, sets over and delivers to Holdings, its successors
and assigns, for its and their own use forever, all of their interests in the
Issuer in exchange for a pro rata limited liability company interest in
Holdings identical to their respective indirect interests in Rhino Energy, and
Holdings hereby accepts such interests in the Issuer as a contribution to the
capital of Holdings.


 


Section 1.5             Sale of Common Stock by Holdings.  The Parties acknowledge a sale by Holdings
through Morgan Stanley & Co. Incorporated, Lehman Brothers Inc., Raymond
James & Associates, Inc., RBC Capital Markets Corporation,             
and               
(the “Underwriters”) of             
shares of Common Stock in the Issuer, representing         %
of the outstanding shares of Common Stock, in exchange for approximately $            
million ($            
million after the Underwriters’ discount).


 


Section 1.6             Public Cash Contribution. 
The Parties acknowledge a cash contribution by the public to the Issuer through
the Underwriters of approximately $            
million ($            
million after the Underwriters’ discount) in exchange for             
shares of Common Stock.


 


Section 1.7             Payment of Expenses, Reimbursement for Capital Expenditures and Cash
Contribution by the Issuer.  The
Parties acknowledge (a) the payment by the Issuer of expenses of
approximately $         million in
connection with the transactions contemplated hereby (exclusive of the
Underwriters’ discount) and (b) the contribution by the Issuer of the
remaining net proceeds of approximately $            
million to Rhino Energy as a capital contribution, of which approximately $            
million will be used to repay outstanding indebtedness.


 


Section 1.8             Over-Allotment Option. 
The Parties acknowledge that in the event the Underwriters exercise
their over-allotment option, Holdings shall sell an appropriate number of 


 


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shares of Common Stock.


 


ARTICLE
II



FURTHER ASSURANCES


 


From time to time after the Effective Time and without
any further consideration, the Parties agree to execute, acknowledge and
deliver all such additional deeds, assignments, bills of sale, conveyances,
instruments, notices, releases, acquittances and other documents, and shall do
all such other acts and things, all in accordance with applicable law, as may
be necessary or appropriate (a) more fully to assure that the applicable
Parties own all of the properties, rights, titles, interests, estates,
remedies, powers and privileges granted by this Agreement, or which are
intended to be so granted, (b) more fully and effectively to vest in the
applicable Parties and their respective successors and assigns beneficial and
record title to the interests contributed and assigned by this Agreement or
intended so to be and (c) more fully and effectively carry out the
purposes and intent of this Agreement.


 


ARTICLE
III



MISCELLANEOUS


 


Section 3.1             Single Plan.  The transactions
referenced in this Agreement, including but not limited to Sections 1.2, 1.3, 1.5
and 1.6, shall be effected and be treated as being part of a single plan,
pursuant to which the Parties intend for Holdings and the public purchasing the
Common Stock from the Issuer “control” the Issuer after the transactions referenced
in the Agreement within the meaning of Sections 351 and 368(c) of the
Internal Revenue Code.


 


Section 3.2             Transfers, Successors and Assigns.  No Party shall have the right to assign any
rights or obligations under this Agreement without the prior written consent of
the other Parties hereto.  The Agreement
shall be binding upon and inure to the benefit of the Parties and their
respective successors and assigns.


 


Section 3.3             No Third Party Rights. 
The provisions of this Agreement are intended to bind the Parties as to
each other and are not intended to and do not create rights in any other Person
or confer upon any other Person any benefits, rights or remedies and no Person
is or is intended to be a third party beneficiary of any of the provisions of
this Agreement.


 


Section 3.4             Severability.  The
invalidity of unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.


 


Section 3.5             Entire Agreement/Amendment Entire Agreement.  This Agreement constitutes the entire
agreement among the Parties with respect to the subject matter hereof and
except as otherwise provided herein, supersedes all prior agreements or
understandings written or oral in respect thereof.  This Agreement may be amended or modified at
any time or from time to time only by a written instrument specifically stating
that such written instrument is intended to amend or modify this Agreement signed
by the Parties hereto.


 


3

















 


Section 3.6             Governing Law.  This
Agreement and the rights and obligations hereunder shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to the conflict of laws principles thereof.


 


Section 3.7             Headings.  The
paragraph headings contained herein are for convenience and reference only and
shall not be given effect in the interpretation of any term or condition of
this Agreement.


 


Section 3.8             Counterparts.  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, and all of which together shall be deemed one and the same
instrument.


 


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remainder of this page is intentionally left blank]


 


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IN WITNESS WHEREOF, this
Agreement has been duly executed by the Parties as of the date first written
above.


 


	
   

  	
  RHINO RESOURCES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Nicholas R. Glancy

  
	
   

  	
   

  	
  President and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  RHINO ENERGY LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Wexford Capital LLC,

  
	
   

  	
   

  	
  its Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Arthur H. Amron

  
	
   

  	
   

  	
   

  	
  Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  RHINO ENERGY HOLDINGS LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Wexford Capital LLC,

  
	
   

  	
   

  	
  its Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Arthur H. Amron

  
	
   

  	
   

  	
   

  	
  Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTIS INVESTORS LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


 


SIGNATURE PAGE


CONTRIBUTION, CONVEYANCE
AND ASSUMPTION AGREEMENT


 

















 


	
   

  	
  SOLITAIR LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VALENTIS INVESTORS LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TAURUS INVESTORS LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CALLIDUS INVESTORS LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WEXFORD SPECTRUM FUND, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Wexford Spectrum Advisors,

  
	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  



 


SIGNATURE PAGE


CONTRIBUTION, CONVEYANCE AND ASSUMPTION AGREEMENT


 

















 


	
   

  	
  WEXFORD SPECTRUM FUND 

  LIQUIDATING LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  WEXFORD OFFSHORE CAM 

  PREFERRED CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WEXFORD OFFSHORE CAM COMMON 

  CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WEXFORD OFFSHORE PARTNERS VII 

  LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name

  
	
   

  	
   

  	
  Title:

  



 


 


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CONTRIBUTION, CONVEYANCE
AND ASSUMPTION AGREEMENT


 

















 


	
   

  	
  WEXFORD OFFSHORE SPECTRUM 

  FUND [LTD.]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WEXFORD CAPITAL LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Arthur H. Amron

  
	
   

  	
   

  	
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PETER SAVITZ

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
					



 


 


SIGNATURE PAGE


CONTRIBUTION, CONVEYANCE
AND ASSUMPTION AGREEMENT