exv10w28






Exhibit 10.28




EMPLOYMENT AGREEMENT




     This Employment Agreement (the “Agreement”) is
made as of the 1st day of October, 2011
by and between Armstrong Energy, Inc. (the “Company”) with offices at 7733 Forsyth
Boulevard, Suite 1625, St. Louis, Missouri 63105; and J. Hord Armstrong, III (the
“Executive”) of 748 Cella Road, St. Louis, Missouri 63124.



     Whereas, the Company desires to enter an employment contract with Executive upon the
terms and conditions set forth herein, and Executive desires to accept employment upon the same
terms and conditions;



     Now, Therefore, in consideration of the premises and mutual covenants herein set
forth, the parties hereto agree as follows:


1. Employment; Position and Responsibilities. 




     The Company agrees to continue to employ the Executive as its Chairman and Chief Executive
Officer, and the Executive agrees to continue to be employed by the Company in such capacity,
subject to the terms and conditions set forth in this Agreement. The Executive shall during the
continuance of his employment:




	 	(a)	 	serve the Company to the best of his ability in the capacity of Chairman and
Chief Executive Officer or in such other capacity or capacities, consistent with the
Executive’s level of experience and expertise as may be specified from time to time by
the Board of Directors in its sole discretion;






	 	(b)	 	faithfully and diligently perform such duties and exercise such powers
consistent with such office, subject to the direction and supervision of the Board of
Directors;






	 	(c)	 	if and so long as the Board of Directors so directs, perform and exercise the
said duties and powers on behalf of any Affiliated Company and act as a director or
other officer of any Affiliated Company; and






	 	(d)	 	unless prevented by sickness, injury or otherwise agreed by the Board of
Directors, devote the necessary time and attention and abilities during his hours of
work (which shall be normal business hours and such reasonable additional hours as may
be necessary for the proper performance of his duties) to the performance of his duties
under this Agreement.




2. Compensation.




     2.1 Salary and Bonus. The Company shall pay to the Executive during the continuance
of his employment a salary at the rate of $300,000 per year (the “Salary”), prorated for any
partial period of employment, and, at the Executive’s option, either the use of an automobile
appropriate for his position or an automobile allowance in conformity with



 









 




Employer’s existing
policy at the time, either of which may be discontinued at any time at the sole discretion of the
Board of Directors. The Salary shall be payable in equal semi-monthly installments in arrears or as
otherwise determined by the Company on a company-wide basis. During the term of his employment as
defined herein, the Executive shall also be entitled to be considered for an annual discretionary
bonus based upon the achievement of performance criteria established by the Company in its sole
discretion and to be awarded an amount for such bonus as determined by the Company’s Board of
Directors in its sole discretion, and the target amount will not be less that 75% of the
Executive’s then annual Salary (the “Bonus”). The Salary and Bonus shall be reviewed from time to
time and the rates thereof may be increased by the Company. Unless otherwise specifically provided
for in this Agreement, the Executive must be employed by the Company or an affiliate on the date
the Bonus or other discretionary payment is made to be entitled to receive the Bonus or other
discretionary payment. Any Bonus or other discretionary payments due under this Agreement shall be
paid to the Executive at the time specified by the Board of Directors at the time any such Bonus or
other discretionary payment is awarded, but in no event later than 21/2 months after the end of the
taxable year in which any substantial risk of forfeiture with respect to such Bonus or other
payment lapses.




     2.2 Vesting and Exercise of Incentive Awards. This Agreement nor any term or
provision herein shall be deemed to alter, amend or modify any provision in any agreement related
to any (i) stock options, (ii) stock appreciation rights, (iii) restricted stock, membership units
or limited partnership units, (iv) restricted stock units, (v) performance grants and (vi) any
other type of award granted to the Executive under any incentive plan, stock option plan or other
award plan by the Company or any of its affiliates or subsidiaries, including, without limitation,
Elk Creek, L.P. (the foregoing collectively being referred to herein as “Incentive Awards”) (but
subject, however, to any restriction contained in any stock incentive plan as in effect on the
date hereof).


3. Insurance and Related Benefits.




     The Executive shall be entitled to participate in any Benefit Plans (including any medical
expense insurance and health and accident insurance and travel insurance plans) of the Company
enjoyed by or made available to other senior executive officers of the Company to the extent that
the Executive qualifies under the eligibility provisions of any such plan, as presently in effect
or as they may be modified from time to time. Any employment benefits provided to the Executive
pursuant to this Agreement shall be governed by the applicable plan documents, insurance policies,
and/or employment policies, and may be modified, suspended, revoked, or terminated in accordance
with the terms of the applicable documents or policies without violating this Agreement.


4. Reimbursement of Expenses.




     The Company shall reimburse the Executive in respect of all reasonable and appropriate travel,
accommodation, entertainment and other similar out-of-pocket expenses actually incurred or expended
by him in the performance of his duties hereunder during the Term (as defined below). All expenses
shall be reimbursed in accordance with Company policy subject to the Executive providing
appropriate authorized evidence (including receipts, invoices, tickets and/or



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vouchers as may be
appropriate) of the expenditure with respect to which he seeks reimbursement.



5. Vacation.




     The Executive shall, in addition to the holidays recognized by the Company, be entitled during
the term of his employment to 25 business days paid vacation each calendar year. Such vacation
will be carried over from calendar year to calendar year or forfeited if not used by the end of the
calendar year in which it was granted in conformity with Employer’s existing policy at the time.


6. Intellectual Property. 




     If at any time in the course of his employment the Executive makes or discovers or
participates in the making or discovery of any Intellectual Property relating to or capable of
being used in the business of the Company or any Affiliated Company, he shall immediately disclose
full details of such Intellectual Property to the Company and all such Intellectual Property shall
be the sole property of the Company. At the request and expense of the Company he shall do all
things which may be necessary or desirable for obtaining appropriate forms of protection for the
Intellectual Property in such parts of the world as may be specified by the Company and for vesting
all rights in the same in the Company or its nominee. All rights and obligations under this
Paragraph 6 with respect to Intellectual Property made or discovered by the Executive during his
employment shall continue in full and force and effect after the termination of his employment and
shall be binding upon the Executive’s personal representatives. The Executive acknowledges that
all original works of authorship protectable by copyright that are produced by the Executive in the
performance of his duties, responsibilities, or authorities for the Company are “works made for
hire” as defined in the United States Copyright Act (17 U.S.C. § 101). In addition, to the extent
that any such works are not works made for hire under the United States Copyright Act, the
Executive hereby assigns without further consideration all right, title, and interest in such works
to the Company.


7. Confidentiality. 




     Except as necessary or appropriate to the proper performance of his duties, or with the prior
written consent of the Company, or as ordered by a court of competent jurisdiction, the Executive
shall not, at any time either during the term of his employment or after its termination, disclose
or communicate to any person, or use for his own benefit or the benefit of any person other than
the Company or any Affiliated Company, any information relating to the Company or any Affiliated
Company that is not generally known to the public (“Confidential Information”) which may come to
his knowledge or be made available to him in the course of his employment. All notes and memoranda
of any trade secret or other Confidential Information concerning the business of the Company and
the Affiliated Companies or any of its or their suppliers, agents, contractual counterparties,
clients, customers or others which shall have been acquired, received or made by the Executive
during the course of his employment shall be the property of the Company and shall be immediately
surrendered by the Executive to someone duly authorized in



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that behalf at the termination of his
employment or at the request of the Board of Directors at any time during the course of his
employment.



9. Term; Termination.




     9.1 Term. The term of the Executive’s employment under this Agreement shall be three
years from the date first set forth above unless sooner terminated as set forth herein and, unless
sooner terminated as set forth herein, shall automatically renew for successive one year terms
thereafter unless either party gives the other a written notice of non-renewal at least 90 days
before the end of the then current term (the “Term”).



     9.2 Termination by the Company without Cause; Termination by the Executive for Good
Reason. The Company may terminate the employment of the Executive at any time without Cause by
giving the Executive written notice of such termination within ten (10) business days prior to the
effective date of such termination. The Executive may terminate his employment by the Company at
any time for Good Reason by giving the Company written notice of such termination within ten (10)
business days prior to the effective date of such termination.



     9.3. Effect of Termination without Cause by Company or for Good Reason by Executive.
Except as provided in Paragraph 9.4, in the event of a termination by the Company without Cause,
failure to renew this Agreement by the Company pursuant to Paragraph 9.1, or termination by the
Executive for Good Reason, the Company shall have no further obligation to the Executive under this
Agreement or otherwise, except the Executive shall be entitled to receive the Accrued Obligations
and the following severance benefits:




	 	(a)	 	the Company shall continue to pay the Executive’s Salary for a period of 24
months after the Executive’s Separation from Service; and






	 	(b)	 	the Company shall pay to the Executive, within 30 days following the
Executive’s Separation from Service (as defined below), a bonus for that year equal to
75% of his Salary then in effect, provided, however, that in the event of a termination
for Good Reason pursuant to Paragraph 15.1(h)(ii) the annual salary used for
computation under this Paragraph 9.3(b) shall be the one in effect prior to the
reduction referred to in Paragraph 15.1(h)(ii); and






	 	(c)	 	during the portion, if any, of the 24-month period (unless otherwise limited by
COBRA or similar state law) commencing on the date of the Executive’s Separation from
Service (as defined below) that the Executive is eligible to elect and elects to
continue coverage for himself and his eligible dependents under the Company’s or an
affiliate’s group heath plan pursuant to the Consolidated Omnibus Budget Reconciliation
Act (COBRA) or similar state law, the Company shall reimburse the Executive on a
monthly basis for the difference between the amount the Executive pays to effect and
continue such coverage and the employee contribution amount that active senior
executive employees of the Company pay for the same or similar coverage.




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     9.4 Effect of Change of Control. Notwithstanding the other provisions of Paragraph
9.3, in the event that: (i) the Company terminates the Executive’s employment without Cause in
anticipation of, or pursuant to a notice of termination delivered to the Executive within 24 months
after, a Change in Control; (ii) the Executive terminates his employment for Good Reason pursuant
to a notice of termination delivered to the Company in anticipation of, or within 24 months after,
a Change in Control; or (iii) the Company fails to renew this Agreement in anticipation of, or
within 24 months after, a Change of Control, the Company shall have no further obligation to the
Executive under this Agreement or otherwise, except the Executive shall be entitled to receive the
Accrued Obligations and the following benefits:




	 	(a)	 	the Company shall pay to the Executive, within 30 days following the
Executive’s Separation from Service (as defined below), a lump-sum cash amount equal
to: (i) two times the sum of (A) his Salary then in effect and (B) 75% of his then
current Salary; plus (ii) a bonus for the then current fiscal year equal to 75% of his
Salary (irrespective of whether performance objectives have been achieved); plus (iii)
if such notice is given within the first 12 months after the date first set forth
above, then, the Salary the Executive should have been paid from the date of
termination through the end of such 12 month period, provided, however, that in the
event of a termination for Good Reason pursuant to Clause Paragraph 15.1(h)(ii), the
annual salary used for computation under this Paragraph 9.4(a) shall be the one in
effect prior to the reduction referred to in Paragraph 15.1(h)(ii); and






	 	(b)	 	during the portion, if any, of the 24-month period (unless otherwise limited by
COBRA or similar state law) commencing on the date of the Executive’s Separation from
Service (as defined below) that the Executive is eligible to elect and elects to
continue coverage for himself and his eligible dependents under the Company’s or an
affiliate’s group heath plan pursuant to COBRA or similar state law, the Company shall
reimburse the Executive on a monthly basis for the difference between the amount the
Executive pays to effect and continue such coverage and the employee contribution
amount that active senior executive employees of the Company pay for the same or
similar coverage.






For purposes of this Agreement, a Change of Control shall not be considered to be
anticipated unless (a) the sale of the Company is being actively marketed, (b) a letter of
intent outlining provisional sale terms and conditions are being negotiated and/or have been
offered and/or exchanged, (c) nondisclosure/confidentiality agreements have been proposed to
allow further due diligence for a prospective buyer(s) of the Company and/or its assets,
and/or (d) a contract for the sale/purchase of the Company and/or its assets is being/has
been negotiated or has been executed.



     9.5 Other Benefits upon Termination without Cause by Company or for Good Reason by
Executive. In the event of a termination without Cause by the Company, failure to renew this
Agreement by the Company or termination for Good Reason by the Executive, in addition to the rights
and benefits to which the Executive would be entitled under Paragraphs 9.3 or 9.4:



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	 	(a)	 	the Company shall provide the Executive with appropriate outplacement services
through a nationally recognized outplacement firm at a cost to the Company of no more
than 15% of the Executive’s Salary immediately prior to termination (without giving
effect to any reduction thereto unless such reduction was made with the Executive’s
consent); provided that such services are provided to the Executive prior to the end of
the second calendar year following the calendar year in which the Executive’s
Separation from Service (as defined below) occurs; and






	 	(b)	 	the Executive shall also be entitled to a contribution under the Company’s
Executive Retirement Benefit Plan for that fiscal year equal to the greater of (i) the
amount that would have been contributed for that fiscal year determined in accordance
with past practice or (ii) the highest amount contributed by the Company on behalf of
the Executive under that Plan for any of the three prior fiscal years.





     9.6 Termination by the Company for Cause. The Company may at any time terminate the
Executive’s employment for Cause by giving the Executive written notice, effective upon delivery of
such notice. In the event of a termination by the Company for Cause, the Company shall have no
further obligation to the Executive under this Agreement or otherwise, except the Executive shall
be entitled to receive the Accrued Obligations.



     9.7 Retirement. The employment of the Executive shall terminate automatically upon his
Retirement. “Retirement” shall mean a termination of the Executive’s employment initiated by the
Executive, other than for Good Reason, whereby the Executive is entitled to receive an immediately
payable benefit, including any applicable early retirement benefit, under any pension or retirement
plan then generally applicable to the Company’s salaried employees or under any retirement
arrangement established with respect to the Executive with his prior written consent; in either
case, whether or not the Executive commences to receive such benefit at the time of such
termination. In the event of the termination of the Executive’s employment pursuant to his
Retirement, the Company shall have no further obligation to the Executive under this Agreement or
otherwise, except the Executive shall be entitled to receive the Accrued Obligations.



     9.8 Disability. Subject to the requirements of the Americans with Disabilities Act of
1990, as amended, the Family and Medical Leave Act of 1993, as amended, and/or any other law
applicable to the Executive’s employment by the Company, the Company may terminate the employment
of the Executive, by giving him not less than 30 days written notice prior to the effective of such
termination, if the Executive shall have been absent from work due to sickness, injury or other
incapacity for a continuous period of more than 120 days or if, in the opinion of a physician
reasonably selected by the Company, the Executive is likely to be unable to perform his duties for
a continuous period of more than 120 days; provided, however, the Company shall withdraw such
notice if during its pendency the Executive fully resumes his performance hereunder and provides
the Company with a certificate from a physician reasonably acceptable to the Company certifying the
Executive’s ability to perform his duties hereunder. Circumstances justifying termination of the
Executive’s employment by the Company pursuant to this Paragraph



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9.8 are referred to herein as
“Disability”. Any refusal by the Executive to submit to a medical examination by a physician or
other appropriate expert selected by the Company for the purposes of certifying his ability to
perform his duties and responsibilities hereunder shall, at the option of the Company, be deemed to
constitute conclusive evidence of the Executive’s inability to perform such duties and
responsibilities. In the event of a termination by the Company for Disability, the Company shall
have no further obligation to the Executive under this Agreement or otherwise, except the Executive
shall be entitled to receive the Accrued Obligations.




     9.9 Death. In the event of the death of the Executive while employed by the Company,
his employment shall terminate automatically and the Company shall have no further obligation to
the Executive under this Agreement or otherwise, except for payment of the Accrued Obligations to
the Executive’s surviving spouse, or if there is no surviving spouse, then to the Executive’s
heirs, designee or representative (as the case may be).



     9.10 Vacation upon Termination. Upon the termination of his employment, the Executive
shall be entitled to accrued vacation pay calculated on a pro rata basis in respect of each
completed month of service in the calendar year in which his employment terminates and the
appropriate amount shall be paid in cash to the Executive within 60 days of his termination of
employment, provided that if the Executive shall have taken more days than his accrued entitlement
the Company is hereby authorized to make an appropriate deduction from the Executive’s final salary
payment.



     9.11 Mitigation; Offset. The Executive shall have no obligation to take any action to
mitigate or offset any amounts payable by the Company pursuant to this Paragraph 9, by seeking
other employment or otherwise, nor shall the amount of any payment provided for in this Agreement
be reduced by any compensation earned by the Executive as the result of employment by another
employer after the date of termination of this Agreement or otherwise.



     9.12 Survival. The termination of the Executive’s employment for any reason
whatsoever shall not operate to terminate this Agreement as an entirety or to adversely affect the
respective continuing rights and obligations of the parties under Paragraphs 6, 7 and 10, all of
which shall survive the effective date of such termination of employment in accordance with their
respective terms.



     9.13 Affiliated Companies and Related Positions. Upon the termination of his
employment (for whatever reason and howsoever arising), the Executive shall, at the request of the
Company, immediately resign without claim for compensation from office as a Director of the Company
and any Affiliated Company and from any other office held by him in the Company or any Affiliated
Company (but without prejudice to any claim he may have for damages for breach of this Agreement),
and the Executive hereby irrevocably authorizes the Company to appoint some person in his name and
on his behalf to sign and deliver such resignations to the Board in the event of the Executive’s
failure to so resign.



     9.14 Treatment of Severance and Change of Control Benefits. Any severance or change
of control benefits paid to the Executive pursuant to this Paragraph 9 are intended to be exempt
from the application of Internal Revenue Code (the “Code”) Section 409A (“Code



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Section 409A”) as
short term deferrals or as exempt separation pay and the provisions of this Agreement shall be
construed and administered in a manner consistent therewith, and any amounts payable to the
Executive as severance or change of control benefits are to be treated as separate payments for
purposes of Code Section 409A; provided, however, that if the total amount of severance or change
of control benefits payable to the Executive exceeds the amount that may be provided to the
Executive as exempt separation pay pursuant Treasury Regulation section 1.409A-1(b)(9)(iii) or any
successor provision thereto or similar applicable guidance (the “Exempt Amount”), then the total
amount of severance or change of control benefit payments due pursuant to this Paragraph 9 in
excess of such Exempt Amount shall be accelerated by payment to the Executive in a single lump sum
as soon as practicable following his Separation from Service (as defined below) with the Company
and in no event later than the 15th day of the third month following the end of the calendar year
in which such Separation from Service occurs.




     9.15 Conditions on Receipt of Severance Benefits.




     (a) Compliance with Restrictive Covenants and Execution and Non-Revocation of
General Release Agreement. Notwithstanding any other provision in this Agreement, the
Company’s payment to the Executive pursuant to this Paragraph 9 of any severance benefits,
except in the event of the termination of this Agreement as the result of or in anticipation
of a Change of Control, is subject to the conditions that (i) the Executive fully complies
with all applicable restrictive covenants under this Agreement and the Company shall have
the right to cease payment of the severance benefits, and the Executive shall immediately
repay to the Company any such severance benefits already paid, if such covenants have been
breached by the Executive but all other provisions of this Agreement shall remain in full
force and effect; and (ii) within 55 days after the date of the Executive’s Separation from
Service (as defined below), the Executive executes, delivers to the Company, and not revoke
as permitted by applicable law a General Release Agreement in a form reasonably acceptable
to the Company that fully and finally releases and waives any and all claims, demands,
actions, and suits whatsoever which he has or may have against the Company and its
affiliates, whether under this Agreement or otherwise, that arose before the General Release
Agreement was executed (the “Release”). For purposes of this Agreement, the Release shall
not become fully enforceable and irrevocable until the Executive has timely executed the
Release and not revoked his acceptance of the Release within seven days after its execution.




     (b) Separation from Service Requirement. Notwithstanding any other provision
of this Agreement, the Executive shall not be entitled to the severance or change of control
benefits under this Paragraph 9 unless the termination of the Executive’s employment
constitutes a Separation from Service. For purposes of this Agreement, “Separation from
Service” means separation from service (within the meaning of Code Section 409A and the
regulations and other guidance promulgated thereunder) with the group of employers that
includes the Company and each of its Affiliates. For this purpose, “Affiliate” means any
incorporated or unincorporated trade or business or other entity or person, other than the
Company, that along with the Company is considered a single employer under Code Section
414(b) or Code Section



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414(c), but (i) in applying Code Section 1563(a)(1), (2), and (3) for
the purposes of determining a controlled group of corporations under Code Section 414(b),
the phrase “at least 50 percent” shall be used instead of the phrase “at least 80 percent”
in each place the phrase “at least 80 percent” appears in Code Section 1563(a)(1), (2), and
(3), and (ii) in applying Treasury Regulation Section 1.414(c)-2 for the purposes of
determining trades or businesses (whether or not incorporated) that are under common control
for the purposes of Code Section 414(c), the phrase “at least 50 percent” shall be used
instead of the phrase “at least 80 percent” in each place the phrase “at least 80 percent”
appears in Treasury Regulation Section 1.414(c)-2.


10. Non-Competition; Non-Solicitation. 




     To protect the Confidential Information, goodwill, and other legitimate business interests of
the Company and its affiliates, the Executive hereby covenants with the Company that during the
term of his employment he will not either directly or indirectly engage or participate in any
activity competitive with or adverse to the business or interests of the Company or any of its
Affiliated Companies. The Executive hereby covenants with the Company that during the 18 month
period following the last day of the Executive’s employment (or 24 months with respect to Paragraph
10.1(c)), the Executive shall not, directly or indirectly, as a stockholder (other than as a less
than 1% stockholder of a publicly and traded Company), partner, officer, director, agent,
consultant, employee, or otherwise:




	 	(a)	 	engage in any business that competes with the business then conducted by the
Company or any Affiliated Company (“Company” defined in this clause to mean all
Affiliated Companies, divisions, successors, and assigns of the Company);






	 	(b)	 	purposefully interfere or attempt to interfere with any of the Company’s or any
Affiliated Company’s contracts (regardless of whether these contracts are in writing or
verbal) or business relationships or advantages existing and in effect as of the
employment date of termination of Executive’s employment;






	 	(c)	 	solicit for employment, either directly or indirectly, for himself or for
another, any persons who are or were employed by the Company or any Affiliated Company
during the six month period prior to the termination of his employment; or






	 	(d)	 	request or cause or attempt to cause any customer or supplier of the Company or
an Affiliated Company to alter or terminate, reduce, or curtail any business
relationship with the Company or any Affiliated Company.





     The covenants contained in this Paragraph 10 are intended to be separate and severable and
enforceable as such. The Executive acknowledges that the restrictive covenants contained in this
Agreement are of a special nature and that any actual or threatened breach, violation, or evasion
of the restricted covenants of this Agreement will (i) result in damages to the Company or its
Affiliated Companies in amounts difficult to ascertain, and (ii) give rise to irreparable injury to
the Company or its Affiliated Companies. Therefore, in the event of a breach of this Paragraph 10,
the Executive acknowledges and agrees that in addition to any other remedies



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available under law to
the Company and any Affiliated Company, the Company and any Affiliated Company shall be entitled to
equitable relief, including without limitation injunctive relief (in the form of a temporary
restraining order, temporary injunction, and permanent injunction) and specific performance,
without the necessity of proof of actual damage or posting a bond against the Executive or any
person or persons acting for or with the Executive in any capacity whatsoever from violating any of
the terms thereof. The Company may pursue any remedy available to it concurrently or consecutively
in any order as to any breach, violation, or threatened breach or violation of this Agreement, and
the pursuit of one of such remedies at any time shall not be deemed an election of remedies or
waiver of the right to pursue any other of such remedies as to such breach, violation, or
threatened breach or violation, or as to any other breach, violation, or threatened breach or
violation.



11. Assignment. 




     This Agreement shall be binding upon and shall inure to the benefit of the Company and any
successor or assign of the Company. This Agreement shall be binding upon and shall inure to the
benefit of Executive, his legal representatives, heirs, legatees, executors, administrators and
assigns, except that Executive’s obligations to perform services and rights to receive payments and
benefits under this Agreement are personal and are expressly declared to be non-assignable and
non-transferable by him without the consent in writing of the Company. In the event of a Change in
Control, the Company shall require the successor to the Company as the Executive’s employer
(whether such succession is direct or indirect, by purchase, merger, consolidation or otherwise, to
all or a substantial portion of the business and/or assets of the Company) to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used in this Agreement, the term
“Company” as hereinbefore defined and any successor to all or a substantial portion of its business
and/or assets as aforesaid.




	12.	 	Notices.





     Any notice to be given under the Agreement shall be given in writing and shall be deemed to be
sufficiently served by one party on the other if it is delivered personally or is sent by facsimile
transmission, overnight service or registered or recorded delivery prepaid post addressed to either
the Company’s principal office for the time being or the Executive’s last known address as the case
may be. Any purported termination of the Executive’s employment by the Company or by the Executive
or non-renewal of this Agreement shall not be effective unless communicated in writing to the other
party hereto in accordance with this Section 12. A notice of termination shall identify the
specific termination provision of this Agreement relied upon and shall specify the intended
effective date of such termination (which date shall comply with the notice period requirements of
the provision so identified) and shall summarize in reasonable detail the facts and circumstances
claimed to provide a basis for termination under the provision so identified; provided, however,
that any failure to provide such detail shall not delay the effectiveness of the termination.







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13. Parachute Payment Limitation.




     Notwithstanding any contrary provision in this Agreement, if the Executive is a “disqualified
individual” (as defined in Section 280G of the Code), and the severance or change of control
payments and benefits described in Paragraph 9, together with any other payments which the
Executive has the right to receive from the Company, would constitute a “parachute payment” (as
defined in Section 280G of the Code), the payments and benefits provided hereunder shall be reduced
(but not below zero) so that the aggregate present value of such payments and benefits received by
the Executive from the Company shall be $1.00 less than three times the Executive’s “base amount”
(as defined in Section 280G of the Code) and so that no portion of such payments received by the
Executive shall be subject to the excise tax imposed by Section 4999 of the Code. The
determination as to whether any such reduction in the amount of the payments and benefits is
necessary shall be made by the Company in good faith and such determination shall be conclusive and
binding on the Executive. If a reduced payment is made to the Executive and through error or
otherwise that payment, when aggregated with other payments from the Company (or its affiliates)
used in determining if a parachute payment exists, exceeds $1.00 less than three times the
Executive’s base amount, the Executive shall immediately repay such excess to the Company upon
notification that an overpayment has been made.


14. Miscellaneous.




     14.1 Authority. The Executive hereby warrants that by virtue of entering into this
Agreement he will not be in breach of any express or implied terms of any court order, contract or
of any other obligation legally binding upon him. The Executive further represents and warrants
that his execution of this Agreement and employment with the Company or its affiliates do not
constitute a breach of any other agreement between the Executive and any third party.



     14.2 Additional Benefits. Any benefits provided by the Company to the Executive or
his family which are not expressly referred to in this Agreement shall be regarded as ex gratia
benefits provided at the entire discretion of the Company and shall not form part of the
Executive’s agreement for employment.



     14.3 Taxes. The Executive shall be responsible for the payment of all individual taxes
on all amounts paid or benefits provided to him under this Agreement. All compensation (including
with limitation, salary and any severance or change of control payments) paid to the Executive
shall be subject to such deductions as from time to time may be required by law or regulation or by
agreement with or with the consent of the Executive.



     14.4 Waiver. Any waiver by either party of any breach of any provision of this
Agreement must be set forth in a writing signed by such party, in order for it to be effective, and
no such waiver shall operate as a waiver of any subsequent breach of that provision or any breach
of any other provision of this Agreement.



     14.4 Indemnification. The Company will indemnify the Executive and advance all costs
related thereto (and his legal representatives, heirs, estate or other successors) to the fullest
extent permitted (including payment of expenses in advance of final disposition of any proceeding)
by the laws of the State of Delaware as in effect at the time of the subject act or



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omission, or by
the certificate of incorporation and by-laws of the Company as in effect at such time or on the
date of this Agreement, or by the terms of any indemnification agreement between the Company and
the Executive, whichever affords or afforded greatest protection to the Executive, and the
Executive shall be entitled to the protection of any insurance policies the Company or an
Affiliated Company may elect to maintain generally for the benefit of its directors and officers
(and to the extent the Company or an Affiliated Company maintains such an insurance policy or
policies, the Executive shall be covered by such policy or policies, in accordance with its or
their terms, to the maximum extent of the coverage available for a person serving or having served
in the positions and offices in which the Executive is serving or has served), against all costs,
charges and expenses whatsoever incurred or sustained by him (or his legal representative, heirs,
estate or other successors) at the time such costs, charges and expenses are incurred or sustained,
in connection with any action, suit or proceeding to which he (or his legal representatives, heirs,
estate or other successors) may be made a party by reason of his being or having been a director,
officer or employee of the Company or any Affiliated Company, or be reason of he serving or having
served any other enterprise as a director, officer or employee at the request of the Company or any
Affiliated Company; provided, however, that any such indemnification obligations shall not apply
with respect to any liability imposed in connection with any such action, suit, or proceeding
caused in whole or in part by the gross negligence or intentional or willful misconduct of the
Executive.



15. Definitions; Rules of Interpretation; Miscellaneous.




     15.1 Defined Terms. In this Agreement unless the context otherwise requires or as
otherwise defined herein the following expressions have the following meanings:




	 	(a)	 	“Accrued Obligations.” Accrued Obligations means (i) payment to the Executive
of all earned but unpaid Salary through the date of termination, prorated as provided
above, within 60 days of such date of termination (ii) payment to the Executive, in
accordance with the terms of the applicable benefit plan of the Company or to the
extent required by law, of any benefits to which the Executive has a vested entitlement
as of the date of termination (other than any entitlement to severance or separation
pay, if any, or any similar benefits), and (iii) payment to the Executive of any
approved but un-reimbursed business expenses incurred in accordance with applicable
Company policy and the terms of this Agreement, all of which shall be payable in
accordance with the Company’s plans and policies and applicable law.






	 	(b)	 	“Affiliated Company.” Any legal entity that, directly or indirectly, controls,
is controlled by or is under common control with the Company, where “control” means the
power to direct or cause the direction of the management and policies of such entity,
whether through ownership of voting securities, by contract or otherwise.






	 	(c)	 	“Benefit Plans.” The 401(k) plan and any other pension, retirement, life
insurance, medical, health, accident, disability, welfare, savings, deferred
compensation or similar plans of the Company and its Affiliated Companies.




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	 	(d)	 	“Board of Directors.” The Board of Directors for the time being of the Company
including any duly appointed committee thereof.






	 	(e)	 	“Cause.” Any of the following: (i) the Executive’s willful and continued
failure substantially to perform his duties hereunder (other than as a result of
sickness, injury or other physical or mental incapacity or as a result of termination
by the Executive for Good Reason); provided, however, that such failure shall
constitute “Cause” only if (x) the Company delivers a written demand for substantial
performance to the Executive that specifies the manner in which the Company believes
the Executive has failed substantially to perform his duties hereunder and (y) the
Executive shall not have corrected such failure within 10 business days after his
receipt of such demand; (ii) willful misconduct by the Executive in the performance of
his duties hereunder that is demonstrably and materially injurious to the Company or
any Affiliated Company for which he is required to perform duties hereunder; (iii) the
Executive’s conviction of (or plea of nolo contendere or similar plea to) any
financial-related felony or other similarly material crime under the laws of the United
States or any state thereof; or (iv) any material violation of this Agreement by the
Executive. No action, or failure to act, shall be considered “willful” if it is done
by the Executive in good faith and with the reasonable belief that he action or
omission was in the best interest of the Company. If the Board of Directors determines
in its sole discretion that a cure of the acts or omissions just described above is
possible and appropriate, the Company will give the Executive written notice of the
acts or omissions constituting Cause and no termination of this Agreement shall be for
Cause unless and until the Executive fails to cure such acts or omissions within 20
business days following receipt of such written notice. If the Board of Directors
determines in its sole discretion that a cure is not possible and appropriate, the
Executive shall have no notice or cure rights before this Agreement is terminated for
Cause.






	 	(f)	 	“Change in Control.” The occurrence of any of the following: (i) a merger,
consolidation, exchange, combination or other transaction involving the Company and
another entity (or the securities of the Company and such other entity) as a result of
which the holders of all of the shares of Common Stock of the Company outstanding prior
to such transaction do not hold, directly or indirectly, shares of the outstanding
voting securities of, or other voting ownership interest in, the surviving, resulting
or successor entity in such transaction in substantially the same proportions as those
in which they held the outstanding shares of Common Stock of the Company immediately
prior to such transaction; (ii) the sale, transfer, assignment or other disposition by
the Company in one transaction or a series of transactions within any period of 18
consecutive calendar months (including, without limitation, by means of the sale of
capital stock of any subsidiary or subsidiaries of the Company) of assets which account
for an aggregate of 50% or more of the consolidated revenues of the Company and its
subsidiaries, as determined in accordance with U.S. generally accepted accounting
principles, for the fiscal year most recently ended prior to the date of such
transaction (or, in the case of a series of transactions as described above, the first
such transaction); provided, however, that no such transaction shall be taken into
account if substantially all the proceeds thereof (whether in cash or in kind) are




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	 	 	 	used
after such transaction in the ongoing conduct by the Company and/or its subsidiaries of
the business conducted by the Company and/or its subsidiaries prior to such
transaction; (iii) the Company is dissolved; or (iv) a majority of the directors of the
Company are persons who were not members of the Board of Directors as of the date (the
“Reference Date”) which is the more recent of the date hereof and the date which is two
years prior to the date on which such determination is made, unless the first election
or appointment (or the first nomination for election by the Company’s shareholders) of
each director who was not a member of the Board of Directors on the Reference Date was
approved by a vote of at least two-thirds of the Board of Directors in office prior to
the time of such first election, appointment or nomination. Notwithstanding the
foregoing, a “Change in Control” shall not be deemed to occur upon any merger or
consolidation effecting a reincorporation of the Company in another state or any other
merger or consolidation in which the equity holders of the surviving corporation and
their proportionate interests therein immediately after the merger or consolidation are
substantially similar to the equity holders of the Company and their proportionate
interests therein immediately prior to the merger or consolidation.






	 	(g)	 	“Chief Executive Officer.” The Chief Executive Officer of the Company.






	 	(h)	 	“Good Reason.” The occurrence of any of the following (other than by reason of
a termination of the Executive for Cause or Disability or with the consent of the
Executive): (i) the authority, duties or responsibilities of the Executive are
significantly and materially reduced (including, without limitation, by reason of the
elimination of the Executive’s position or the failure to elect the Executive to such
position or by reason of a change in the reporting responsibilities to and of such
position, or, following a Change in Control, by reason of a substantial reduction in
the size of the Company or other substantial change in the character or scope of the
Company’s operations); (ii) the Salary provided in Section 2 hereof (as the same may be
increased from time to time) is materially reduced (except if such reduction occurs
prior to a Change in Control and is part of an across-the board reduction applicable to
all senior level executives of the Group); (iii) the Executive is required to change
his regular work location to a location that is more than 75 miles from his regular
work location prior to such change; or (iv) any other action or inaction that
constitutes a material breach by the Company of this Agreement. To exercise his right
to terminate for Good Reason, the Executive must provide written notice to the Company
of his belief that Good Reason exists within 90 days of the initial existence of the
condition(s) giving rise to Good Reason, and that notice shall describe the
condition(s) believed to constitute Good Reason. The Company shall have 20 days to
remedy the Good Reason condition(s). If not remedied within that 20-day period, the
Executive may terminate his employment; provided, however, that such termination must
occur no later than 180 days after the date of the initial existence of the
condition(s) giving rise to the Good Reason; otherwise, the Executive is deemed to have
accepted the condition(s), or the Company’s correction of such condition(s), that may
have given rise to the existence of Good Reason.




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	 	(i)	 	“Intellectual Property.” Letters patent, trademarks, trade names, service
marks, designs, copyrights, utility models, design rights, applications for
registration of any of the foregoing and the right to apply for them in any part of the
world, inventions, drawings, computer programs, trade secrets (as defined by applicable
law) and other nonpublic proprietary information, know-how and right of like nature
arising or subsisting anywhere in the world in relation to all of the foregoing whether
registered or unregistered.






	 	(j)	 	“IRS.” The United States Internal Revenue Service, or any successor agency of
the United States Government.





     15.2 Headings. The headings in this Agreement are for convenience only and shall not
affect its construction or interpretation.



     15.3 Statutory References. Any reference in this Agreement to a statutory provision
shall be deemed to include a reference to any statutory amendment, modification or re-enactment of
it or to any legislation that supersedes it.



     15.4 Entire Agreement. This Agreement contains the entire understanding between the
parties, and all prior agreements, arrangements and understandings (written or oral) between the
Company and the Executive, relating to the employment of the Executive with the Company which such
agreements, arrangements and understandings shall be deemed to have been terminated by mutual
consent; provided, however, that this Agreement shall not terminate any agreement in effect on the
date hereof between the Company and the Executive as reflected on Exhibit B to this Agreement
granting or otherwise relating to any stock option, and any such agreement shall be deemed to be
modified and amended hereby to the extent that the terms of such agreement are inconsistent with
the terms hereof.



     15.5 Severability. The provisions of this Agreement are severable and if any
provision or identifiable part thereof is held to be invalid or unenforceable by an court of
competent jurisdiction then such invalidity or unenforceability shall not affect the validity or
enforceability of the remaining provisions or identifiable parts thereof in this Agreement, and the
parties hereto agree that the portion so held invalid, unenforceable or void shall, if possible, be
deemed amended or reduced in scope, or otherwise be stricken from this agreement, to the extent
required for the purposes of the validity and enforcement hereof.



     15.6 Legal Fees and Expenses. In the event of a dispute between the Executive and the
Company with respect to any provision of this Agreement, prevailing party as determined by a court
of competent jurisdiction shall be entitled to receive from the non-prevailing party reimbursement
of the prevailing party’s reasonable legal fees and disbursements incurred by him or it in
connection with enforcing such rights, at the time such fees and disbursements are incurred (but in
no event more frequently than monthly).



     15.7 Governing Law. This Agreement is governed by and shall be construed in
accordance with the laws of the State of Missouri and the parties to this Agreement hereby submit
to the exclusive jurisdiction of the federal and state courts sitting in St. Louis County,



15









 




Missouri. Nothing in this Agreement, however, precludes either party from seeking to remove a civil
action from any state court to federal court.




     15.8 Code Sections 409A.



          (a) Code Section 409A. The parties intend for all payments provided to the Executive
under this Agreement to be exempt from or comply with the provisions of Code Section 409A and not
be subject to the tax imposed by Code Section 409A. The provisions of this Agreement shall be
interpreted in a manner consistent with this intent. Any reimbursement or in-kind benefit provided
under this Agreement which constitutes a “deferral of compensation” within the meaning of Treasury
Regulation Section 1.409A-1(b) shall be made or provided in accordance with the requirements of
Code Section 409A, including, where applicable, the requirement that (i) any reimbursement is for
expenses incurred during the period of time specified in this Agreement, (ii) the amount of
expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not
affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other
calendar year, (iii) the reimbursement of an eligible expense will be made no later than the last
day of the calendar year following the year in which the expense is incurred, and (iv) the right to
reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.



          (b) Specified Employee Postponement. Notwithstanding any contrary provision of this
Agreement, if the Company or an affiliate is publicly traded on an established securities market
(or otherwise) and the Executive is a “specified employee” (as defined below) and is entitled to
receive a payment that is subject to Code Section 409A on account of his Separation from Service,
such payment may not be made earlier than six months following the date of his Separation from
Service if required by Code Section 409A and the regulations thereunder, in which case, the
accumulated postponed amount shall be paid in a lump sum payment on the second day after the end of
the six-month period. If the Executive dies during the postponement period prior to the payment of
the postponed amount, the amounts withheld on account of Code Section 409A shall be paid to the
personal representative of his estate within 30 days after the date of death. The determination of
whether the Executive is a “specified employee” shall be made in accordance with Code Section 409A
and the applicable regulations and other guidance thereunder using the default provisions in such
regulations and other guidance unless another method permitted pursuant to such regulations and
other guidance has been prescribed for such purpose by the Company.



     15.9 Right to Consult a Tax Advisor. Notwithstanding any contrary provision in this
Agreement, the Executive shall be solely responsible for any risk that the tax treatment of all or
part of any payments provided by this Agreement may be affected by Code Section 409A, which may
impose significant adverse tax consequences on him, including accelerated taxation, a 20%
additional tax, and interest. Because of the potential tax consequences, the Executive has the
right, and is encouraged by this paragraph, to consult with a tax advisor of his choice before
signing this Agreement.



     15.10 Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original and all of which together shall be considered one and the



16









 




same
agreement. The delivery of this Agreement in the form of a clearly legible facsimile or
electronically scanned version by e-mail shall have the same force and effect as delivery of the
originally executed document.




     15.12 Amendment of Agreement. This Agreement may not be modified or amended in any
respect except by an instrument in writing signed by the party against whom such modification or
amendment is sought to be enforced. Notwithstanding the previous sentence, the Company may modify
or amend this Agreement in its sole discretion at any time without the further consent of the
Executive in any manner necessary to comply with applicable law and regulations or the listing or
other requirements of any stock exchange upon which the Company is or may become listed. No
modification or amendment may be enforced against the Company unless such modification or amendment
is in writing and signed by the Board of Directors.


In Witness Whereof, this Agreement has been executed and delivered by an authorized
representative of the Company and by the Executive as of the date first above written.




	 	 	 	 	 
	Armstrong Energy, Inc.

 	 
	/s/ Martin D. Wilson	 
	By: Martin D. Wilson, President 	 
	 	 	 
	 



	 	 	 	 	 
	 	 
		/s/
J. Hord Armstrong, III	 
	 	J. Hord Armstrong, III 	 
	 	 	 
	 




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