Exhibit
10.12


 


ASSIGNMENT
AGREEMENT AND


AMENDMENT TO
EMPLOYMENT AGREEMENT


 


This Assignment Agreement and Amendment to
Employment Agreement (this “Agreement”) is entered into this       th
day of             ,
2008, to be effective as of the Effective Date (as defined below), among Rhino
Energy LLC (“Assignor”), a Delaware limited liability company, Rhino Resources, Inc.
(“Assignee”), a Delaware corporation, and Christopher N. Moravec (the “Employee”).  Capitalized terms used herein but not
otherwise defined herein shall have the meaning ascribed to them in the Employment
Agreement (as defined below).


 


WHEREAS, the Assignor and the Employee are
parties to the Employment Agreement dated March 11, 2007 by and between
Assignor and Employee (the “Employment Agreement”);


 


WHEREAS, the Assignee is an affiliate of the Assignor;
and


 


WHEREAS, the Assignor desires to assign all
of its rights and obligations under the Employment Agreement to the Assignee
upon the completion of an initial public offering of common stock of Assignee (the
“IPO”);


 


NOW, THEREFORE, the parties hereto agree as
follows:


 


1.                                       The Assignor
hereby assigns to the Assignee all of the Assignor’s rights and obligations
under the Employment Agreement pursuant to Section 11 of the Employment
Agreement, such assignment to become effective upon the closing of the IPO (the
“Effective Date”).   The Assignor
acknowledges that this Assignment shall not relieve the Assignor from its
obligations under the Employment Agreement up to and through the Effective Date.


 


2.                                       The Assignee
hereby accepts from the Assignor all of the Assignor’s rights under the Employment
Agreement and undertakes, assumes and agrees to perform, pay and become liable
for and discharge when due all of the Assignor’s liabilities and obligations
under the Employment Agreement accruing from and after the Effective Date.


 


3.                                       This Assignment
Agreement shall operate as, and constitute an, amendment to the Employment
Agreement pursuant to which Assignee replaces Assignor as the Employer under
the Employment Agreement and Employee ceases to be employed by Assignor and
becomes an employee of Assignee.


 


4.                                       Employee hereby (a) acknowledges
and accepts the assignment by Assignor to the Assignee of all of the Assignor’s
rights and obligations under the Employment Agreement with such assignment to
be effective as of the Effective Date and (b) acknowledges that the assignment
of Employee’s employment and Assignor’s rights and obligations under the
Employment Agreement shall not cause a termination of Employee’s employment for
purposes of the Employment Agreement.


 


1

















 


5.                                       At the Effective
Time, the Employment Agreement shall be amended to add a new paragraph 9 (and
existing Paragraphs 9 through 17 of the Employment Agreement shall be deemed
renumbered accordingly) as follows:


 


9.              Indemnification.  Subject to the Employer’s bylaws, Employer
shall indemnify and hold harmless Employee from and against any loss, cost,
damage, expense, or liability incurred by Employee for any action taken by Employee
in the scope of Employee’s employment for the Employer, provided such action (i) is
within the scope, duties, and authority of Employee, (ii) is not in
willful violation of any law, regulation, or code of conduct adopted by the
Employer, and (iii) does not constitute gross negligence or intentional
misconduct by Employee.  The obligations
of Employer under this Section 9 shall survive the termination of this
Agreement.  If there is any conflict
between this Section 9 and the Employer’s bylaws, the Employer’s bylaws
shall control.


 


6.                                       This Assignment
Agreement shall be construed and enforced pursuant to the laws of the
Commonwealth of Kentucky, including matters of law relating to choice of
law.  Employee hereby consents to the jurisdiction
of the courts of the Commonwealth of Kentucky, including the Fayette Circuit
Court and hereby waives any objection to venue of any action brought in said
court.


 


[The remainder of this page is
intentionally left blank.]


 


2

















 


IN WITNESS WHEREOF, the parties hereto have
each caused this Assignment Agreement to be executed, each as of the date first
above written.


 


 


	
   

  	
  ASSIGNOR:

  
	
   

  	
   

  
	
   

  	
  RHINO ENERGY LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Nicholas R. Glancy

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE:

  
	
   

  	
   

  
	
   

  	
  RHINO RESOURCES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Nicholas R. Glancy

  
	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
  CHRISTOPHER N. MORAVEC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  



 

















 


EMPLOYMENT AGREEMENT


 


THIS
EMPLOYMENT AGREEMENT (the “Agreement”) executed this 11th
day of March, 2007, and effective on the date provided herein, is between Rhino Energy LLC (“Employer”) and Christopher N. Moravec (“Employee”).


 


W I T N E S S E T H


 


WHEREAS
Employer desires to employ Employee on the terms
hereof, and Employee desires to accept employment on such terms; and


 


WHEREAS
the parties hereto acknowledge that this Agreement is
to be effective upon the resignation by Employee of his current employment, but
no later than March 31, 2007 (the “Effective Date”).


 


In consideration of the mutual
covenants herein contained, the parties agree as follows:


 


1.                                      Terms
and Duties.  Commencing on the
Effective Date (such date being the “Commencement Date”) and continuing through
March 31, 2010, unless sooner terminated as herein provided or extended by
mutual agreement of the parties (the “Employment Term”), the Employer hereby
employs the Employee as Senior Vice President, Business Development, with such
duties as Employer may designate during the Employment Term.  The Employee agrees to devote all of his
business time and his best efforts to the business of Employer as may be
necessary to perform his duties in accordance with the policies and budgets
established from time to time by Employer. During the Employment Term, the
Employee will not have any other employment. 
Employee shall be bound by, and agree to comply with, all policies,
procedures, and employment conditions of Employer in effect from time to time
applicable to its employees.  Employee
agrees to 


 

















 


give Employer at least 14 days
prior written notice of any voluntary resignation by Employee; provided that
upon such notice Employer shall have the option of having the voluntary
resignation by the Employee effective earlier. 
Upon termination of Employee’s Employment for any reason, Employee shall
immediately resign all offices held by Employee in the Employer and all of its
affiliates and subsidiaries.


 


2.                                      Compensation.  For Employee’s services hereunder during
the Employment Term, Employer shall pay to Employee a salary at the rate of
$240,000 per year, payable periodically in accordance with Employer’s usual
executive payroll payment procedures. 
The Base Salary shall be reviewed annually by Employer for possible
increase.


 


3.                                      Bonus.


 


(a)                                  Annual Discretionary Bonus. 
Employee shall be eligible for an annual discretionary bonus of up to
40% of Employee’s base salary.  This
bonus is discretionary with the Employer and shall be based upon Employer’s
evaluation of Employee’s performance and the general performance of the
Employer.  Such bonus shall commence with
a bonus for a pro-rated portion of calendar year 2007, and shall be determined
and paid within 120 days of the end of each calendar year of the Employment
Term.


 


(b)                                 Term Bonus.     In addition to the Annual Discretionary
Bonus, and provided that Employee remains employed by Employer as of such date,
Employee shall be entitled to receive a bonus (a “Term Bonus”) in the
following amounts on the following dates:


 


	
  Amount

  	
   

  	
  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  150,000

  	
   

  	
  March 31,
  2008

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  250,000

  	
   

  	
  March 31,
  2009

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  350,000

  	
   

  	
  March 31,
  2010

  	
   

  



 

















 


If paid the aggregate of the
Term Bonuses shall equal $750,000.  Each
of the foregoing dates shall be a “Term Bonus Payment Date”.  In the event that (i) Employee shall have
elected to terminate his employment with Employer, or (ii) Employer shall have
terminated Employee’s employment for “Cause” as defined in Section 9 of the
Agreement, in each case prior to a Term Bonus Payment Date, Employee shall not
be entitled to receive a Term Bonus on such Term Bonus Payment Date or any
subsequent Term Bonus Payment Date.  In
the event that Employer terminates Employee’s employment other than for “Cause”
prior to any Term Bonus Payment Date, Employee shall be entitled to receive a
partial Term Bonus calculated by multiplying the number of months from the
Commencement Date of the Employment Term to the date of such termination by
$20,833.33, and subtracting any Term Bonus previously paid to Employee; provided,
however, if Employer terminates Employee other than for “Cause” prior to
eighteen (18) months following the Commencement Date of the Employment Term and
such termination follows a “Change of Control”, as hereinafter defined, the
Term Bonus payment payable to Employee under the foregoing provision, plus any
Term Bonus previously paid to Employee, shall total no less than $375,000.  For purposes hereof, the term “Change of
Control” shall mean (i) a sale by the Employer of substantially all of its
assets, unless such transaction results in such assets being owned or
controlled by Wexford Capital LLC and/or its affiliates, either directly or
indirectly, or (ii) a sale of the ownership interests in Employer by entities
affiliated with Wexford Capital, LLC and constituting more than a 50% interest
in Employer, unless such transaction results in at least 51% of such ownership
interests being owned or controlled by Wexford Capital LLC and/or its
affiliates, either directly or indirectly.


 

















 


(c)                                  Offering Bonus.  In
the event that during the Employment Term the Employer successfully complete a
public offering of equity, Employee shall receive a one-time bonus of $150,000
in connection with the successful completion of such public offering and shall
be eligible to participate in any incentive plan adopted by Employer for executives
of the Employer which is to be effective upon and after such public offering.


 


4.                                      Place
of Employment; Relocation Payment. The Employee’s regular place of
employment during the Employment Term shall be at the Employer’s offices in
Fayette County, Kentucky.  Employer
agrees that for up to the first five (5) months of the Employment Term
Employee will not reside in the Fayette County, Kentucky area.  Employer shall provide Employee with a one
time relocation payment of $35,000 (“Relocation Bonus”) within ten (10) days
of the Commencement Date.  In the event
the Employee voluntarily resign his employment with Employer within twelve (12)
months of the Commencement Date, Employee shall repay to Employer the sum of
$2,916 multiplied by the number of whole or partial months remaining between
the Employee’s voluntary resignation and twelve (12) months from the
Commencement Date.


 


5.                                      Travel;
Expenses.  The Employee shall engage
in such travel as may reasonably be required in connection with the performance
of his duties. All reasonable travel and other expenses incurred by the
Employee (in accordance with the policies and the budget of the Employer
established from time to time) in carrying out his duties hereunder will be
reimbursed by the Employer on presentation to it of expense accounts and
appropriate documentation in accordance with the customary procedures of the
Employer for reimbursement of employee expenses.


 

















 


6.                                      Confidentiality;
Competition.


 


(a)                                  The
Employer possesses and will continue to possess confidential information to
which the Employee may gain access. For the purposes hereof, all non-public
information about the business and affairs of the Employer (including, without
limitation, business plans, real and personal property leases, financial,
engineering and marketing information and information about costs, mining and
processing methods, suppliers and customers, including such information created
by Employee and confidential information of others obtained by Employer
pursuant to confidentiality agreements) constitute “Employer Confidential
Information.” Employee acknowledges that he will have access to and knowledge
of Employer Confidential Information, and that improper use or disclosure of
same by the Employee during  or
after the Employment Term could cause serious injury to the business of the
Employer. Accordingly, the Employee agrees that he will forever keep secret and
inviolate all Employer Confidential Information which comes into his
possession, and that he will not use the same for his own private benefit, or
directly or indirectly for the benefit of others, and that he will not disclose
such Employer Confidential Information to any other person except as necessary
in the proper pursuance of his duties. 
Employee’s obligations with respect to the Confidential Information
shall not apply to any information which is (i) either at the time of
disclosure, or later becomes, through disclosure by someone other than
Employee, public domain, or commonly known through the industry or (ii) received
by Employee from a third party who does not owe a duty of confidentiality to
the Employer.


 


(b)                                 The
Employee agrees that during the Employment Term (and for a period of one (1) year
after Employee’s voluntary resignation and ninety (90) days after 


 

















 


termination of the Employee by
the Employer with or without Cause) the Employee will not (whether as an
officer, director, partner, proprietor, member, shareholder, investor,
associate, employee, consultant, adviser, agent, contractor, public relations or
advertising representative or otherwise), directly or indirectly, be engaged in
the business of coal mining, coal processing, coal loading or coal marketing
within the United States of America. 
There is excluded from the foregoing non-compete and not restricted
hereby Employee working after the Employment Term for a financial institution
in the financial services industry even if such work involves providing
financial services to the coal industry. 
For purposes of the foregoing, the Employee shall be deemed to be
engaged in any business with any person for whom he shall be an employee,
officer, director, owner, employer, consultant, agent, contractor, shareholder,
member or partner. Notwithstanding the foregoing, there shall be no restriction
under this subsection (b) on the Employee owning, as a passive investment,
less than five percent (5%) of the voting or non-voting securities of any
publicly traded company. During such period of non-competition, and for a
period of six (6) months thereafter, Employee shall not directly or
indirectly solicit, interview or make any decision or recommendation to hire or
to retain as a consultant or advisor or in any other capacity, any current
employee of Employer, for himself, or for or to, any other person or entity.  Employee shall notify any subsequent employer
of Employee of the foregoing agreement


 


(c)                                  The
terms of this Agreement are intended to limit disclosure and competition by the
Employee to the maximum extent permitted by law. If it shall be finally
determined by any court of competent jurisdiction ruling on this Agreement that
the scope or duration of any limitation contained in this paragraph 6 is too
extensive to be legally 


 

















 


enforceable, then the parties
hereby agree that the scope and duration (not greater than that provided for
herein) of such limitation shall be the maximum scope and duration which shall
be legally enforceable and the Employee hereby consents to the enforcement of
such limitation as so modified.


 


(d)                                 The
Employee acknowledges that any violation by him of the provisions of this
paragraph 6 could cause serious and irreparable harm and damage to the
Employer. He further acknowledges that it might not be possible to measure such
damages in money and that Employer’s remedy at law for a breach or threatened
reach of the provisions of paragraph 6 would be inadequate. Accordingly, the
Employee agrees that, in the event of a breach or threatened breach by him of
the provisions of this paragraph 6, the Employer may seek, in addition to any
other rights or remedies, including money damages, an injunction or restraining
order, restraining the Employee from doing or continuing to do or perform any
acts constituting such breach or threatened breach. In the event Employer seeks
an injunction or restraining order, Employee and Employer agree that Employer
shall not be required to post a bond to obtain the necessary equitable relief.


 


7.                                      Benefits;
Vacation. The Employer agrees to provide to the Employee the benefits
available to all salaried employees generally, as modified from time to
time.  Without limiting the foregoing,
such benefits shall include family participation in Employer’s group health
insurance plan, with Employer paying all premiums (but not deductibles or
co-pays) in connection with such participation by Employee. Employee shall be
entitled to three (3) weeks of vacation per year.  Unused vacation shall not carry over to
future years.


 

















 


8.                                      Employee’s
Representation Regarding Prior and Future Employment.  Employee hereby represents to the Employer
that he has full lawful right and power to enter into this Agreement and carry
out his duties hereunder, and that same will not constitute a breach of or
default under any employment, confidentiality, non-competition or other
agreement by which he may be bound. Further, Employee hereby represents to the
Employer that he is not listed in the Office of Surface Mining’s Applicant
Violator System database.  Employee
further agrees to provide prompt notice to Employer of Employee’s first
subsequent employment after ceasing to be an employee of Employer.


 


9.                                      Termination
for Cause or Voluntary Resignation by Employee.   If Employee shall:


 


(a)                                  commit
an act of dishonesty against the Employer or fraud upon the Employer; or


 


(b)                                 breach
his obligations under this Agreement and fail to cure such breach within five (5) days
after written notice thereof, or


 


(c)                                  be
indicted for or convicted of a crime involving moral turpitude; or


 


(d)                                 materially
fail or neglect to diligently perform his duties hereunder;


 


then, and in any such case, the Employer may terminate the employment
of the Employee for “Cause” hereunder. 
In the event of termination for “Cause” or voluntary resignation by
Employee, the Employee shall no longer have any right to any of the benefits
(including future salary or bonus payments) which would otherwise have accrued
or been payable after such termination. 
However, in addition to the provisions of Section 3(b) above,
in the event of a termination by Employer of the employment of the Employee
other than for “Cause”, the Employer shall (i) pay to the Employee a
severance payment equal to six (6) months of Employee’s base salary then
in effect., plus (ii) continue Employee’s family 


 

















 


health insurance coverage under Employer’s group plan, at no premium
cost to Employee, until the earlier of (x) six (6) months following
such termination other than “for cause”, or (y) the date Employee is
covered under a health insurance policy through a subsequent employer.


 


10.                               Successors.  The rights, benefits, duties and obligations
under this Agreement shall inure to and be binding upon the Employer, its
successors and assigns and upon the Employee and his legal representatives,
legatees and heirs. It is specifically understood, however, that this Agreement
may not be transferred or assigned by the Employee. The Employer may assign any
of its rights and obligations hereunder to any subsidiary or affiliate of the
Employer, or to a successor or survivor resulting from a merger, consolidation,
sale of assets or stock or other corporate reorganization, on condition that
the assignee shall assume all of the Employer’s obligations hereunder and it is
agreed that such successor or surviving corporation shall continue to be
obligated to perform the provisions of this Agreement.


 


11.                               Waiver
of Breach.  The failure of either
party to insist upon the strict performance of any of the terms, conditions,
and provisions of this Agreement shall not be construed as a waiver or
relinquishment of future compliance therewith, and said terms, conditions, and
provisions shall remain in full force and effect. No waiver of any term or
condition of this Agreement on the part of the Employer shall be effective for
any purposes whatsoever unless such waiver is in writing by Employer’s
President.


 


12.                               Amendments.  No amendment or variations of the terms
and conditions of this Agreement shall be made unless the terms of such
amendment are in writing and-duly executed by Employee and Employer’s
President.


 

















 


13.                               Entire
Agreement; Survival.  This Agreement
constitutes the complete and entire agreement governing the terms and
conditions of the employment relationship between the parties and supersedes
any and all prior agreements or understandings. Both Employee and Employer
acknowledge and agree that there are no oral or written understandings
concerning the Employee’s employment by Employer outside of this
Agreement.  The terms of this Agreement
shall survive the termination or expiration of this Agreement and the
conclusion of the Employment Term.


 


14.                               Governing
Law.  This Agreement shall be
construed and enforced pursuant to the laws of the Commonwealth of Kentucky,
including matters of law relating to the choice of law.  Employee hereby consents to the jurisdiction
of the courts of the Commonwealth of Kentucky, including the Fayette Circuit
Court and hereby waives any objection to venue of any action brought in said
court.


 


15.                               Counterparts.  This Agreement, as executed separately by the
individual parties, shall be deemed to be an original, but all of which
together shall constitute one document.


 


16.                               Confidential Terms. 
Employee agrees to maintain as confidential the terms and conditions of
this Agreement, provided however Employee may disclose the terms of this
agreement to his legal counsel, and accountant or tax preparer, or as may be
otherwise required by law.


 


17.                               JURY TRIAL WAIVER.  EMPLOYEE
HEREBY VOLUNTARILY AND IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY WITH
REGARD TO ANY ACTION ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE EMPLOYMENT
OF THE EMPLOYEE BY THE EMPLOYER.


 

















 


IN WITNESS WHEREOF,
the parties hereto have executed and delivered this Agreement as of the day and
year first above written.


 


 


	
   

  	
  EMPLOYER:

  
	
   

  	
   

  
	
   

  	
  Rhino Energy LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Nicholas R. Glancy

  
	
   

  	
  Nicholas R. Glancy, President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Christopher N. Moravec

  
	
   

  	
  Christopher N. Moravec